EDGAR 10-K Filing

Company CIK: 1634447
Filing Year: 2023
Filename: 1634447_10-K_2023_0001493152-23-012598.json

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ITEM 1. BUSINESS
Item 1. Business.
Forward-looking Statements
Statements in this Annual Report on Form 10-K that are not historical facts constitute forward-looking statements. Examples of forward-looking statements include statements relating to industry prospects, our future economic performance including anticipated revenues and expenditures, results of operations or financial position, and other financial items, our business plans and objectives, and may include certain assumptions that underlie forward-looking statements. Risks and uncertainties that may affect our future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements include, among other things, those listed under “Risk Factors” and elsewhere in this Annual Report.
These risks and uncertainties include but are not limited to:
● the potential impact of a subsequent wave of the COVID-19 pandemic on our business;
● our limited operating history;
● our ability to raise additional capital to maintain our business and operations and meet our objectives;
● our ability to compete in the solar power industry;
● our ability to sell solar power systems;
● our ability to arrange financing for our residential customers;
● government incentive programs related to solar energy;
● our ability to increase the size of our company and manage growth;
● our ability to acquire and integrate other businesses;
● disruptions to our supply chain from protective tariffs on imported components, supply shortages and/or fluctuations in pricing;
● our ability or inability to attract and/or retain competent employees;
● relationships with employees, consultants, customers, and suppliers; and
● the concentration of our business in one industry in limited geographic areas;
In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.
These statements are subject to business and economic risk and reflect management’s current expectations and involve subjects that are inherently uncertain and difficult to predict. Actual events or results may differ materially. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of these statements. We are under no duty to update any of the forward-looking statements after the date of this Annual Report to conform these statements to actual results.
Business Introduction/Summary
Throughout our 50-year history, we have always embraced innovative change. There has never been a more meaningful, or impactful time to be a leader in the innovation that will help fight climate change. We have built a team that is passionate about transitioning American power generation and consumption to clean solar energy. We are passionately focused on our mission to accelerate the adoption of solar energy.
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, design, development and professional services, engineering, procurement, installation, O&M and storage. We uniquely target all solar markets including residential, commercial, industrial and utility segments.
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. 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 to facilitate the adoption of solar energy is the only sustainable strategy to achieve these objectives. We have positioned the company to serve all segments of the rapidly evolving solar energy markets. We are able to originate valuable solar assets through our development and design services team. We are able to leverage our digital sales and marketing capabilities to generate high quality leads for our Residential, Commercial and Industrial and Utility divisions. Our experience provides for the high-quality craftsmanship required for installing long-term assets for all customers. Our team approach allows us to collaborate across divisions in order to efficiently utilize our internal labor resources. The diversity of our service offerings allows us to serve our customer needs in the evolving solar energy environment.
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. Immediately prior to 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 was a utility-scale solar Engineering, Procurement, Construction, Development and Design company and a wholly-owned subsidiary of Adani. The Project IP included 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.
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. The benefits of the newly enacted Inflation Reduction Act of 2022 (“IRA”) provide stability and certainty of incentives for the next 10 years that create value to our shareholders and provides a long-term commitment for the energy transformation. Prior to the enactment of the IRA, the federal investment tax credits associated with solar projects had a planned reduction to 22% and 10% in 2023 and 2024. The IRA offers a stable tax rate over the next ten years as well as several potential adders to the fixed investment tax credit. These credits increase the valuation of solar assets which provides margin protection on future projects. 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 600 megawatts of solar systems since inception and are focused on contracting projects that meet our margin objectives. 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 planning to expand 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.
The diverse nature of our service offerings allows us to manage our operations based on the maximization of value for our customers in the evolving energy market. Our core revenue stream is generated from our engineering, procurement and installation services and products consisting of solar, electrical and data installations but has expanded to include project origination, design and development services as well. Approximately 85% of our revenue is derived from our solar Engineering, Procurement and Construction business, approximately 10% of revenue is derived from our electrical and data business and approximately 5% of revenue is derived from our project origination, development and design services. Recently our growth has been derived by increasing our solar customer base starting in 2013, mergers and acquisitions and expansion into new territories. We currently operate in Vermont, Maine, New Hampshire, New York, Massachusetts, Maryland, Alabama, Georgia and North and South Carolina. 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 plan to make investments in solar development projects and currently own approximately three megawatts of operating solar arrays operating under long-term power purchase agreements. Our joint ventures allow for a retained ownership in originated projects. 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.
Consummation of the Business Combinations
On January 19, 2021, we completed a business combination (the “iSun Merger Agreement”) pursuant to which we acquired iSun Energy LLC (“iSun Energy”). The Business Combination was an acquisition treated as a merger and reorganization. iSun Energy, LLC became a wholly owned subsidiary of The Peck Company Holdings, Inc. Immediately prior to the iSun Merger Agreement, we changed our name to iSun, Inc.
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 was a utility-scale solar EPC company and a wholly-owned subsidiary of Adani. The Project IP included 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, we entered into an Agreement and Plan of Merger (the “SunCommon 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 “SunCommon Merger”) with SunCommon as the surviving company in the Merger and SunCommon became a wholly-owned subsidiary of iSun Residential. The SunCommon Merger was effective on October 1, 2021.
We now conduct all of our business operations exclusively through our 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.
Market Overview
We believe that domestic solar capacity and production will experience explosive growth over the short (through 2035) and long (2050) terms. Both short-term and long-term solar production estimates by research groups vary, however even the most conservative estimates project significant growth in domestic solar deployment through 2035 and again through 2050. Current domestic production is estimated at 100GW, which services only 3% of the rapidly growing US electricity demand. According to an October 2021 US DOE Solar Futures Studyi, absent any concerted policy efforts towards decarbonization, domestic solar capacity is projected to increase by 700% by 2050. Modest decarbonization efforts such as those incorporated in the current administration’s Inflation Reduction Act would require cumulative solar deployment to increase much more significantly from current levels - 100 GW serving ~3% of US electricity demand in 2021 to 760-1000 GW serving 37-42% by 2035, an increase of 1150%, according to Solar Power World. The International Energy Agency (IEA) projects 270 GW of domestic solar capacity by 2026 - nearly 3x the current domestic production levels. As incentives increase and technology costs fall, the EIA also predicts renewables could account for nearly 60 percent of capacity additions through 2050. S&P Global Market Intelligence’s projections are significantly more aggressive, projecting that domestic production will achieve 87% of the IEA’s 2050 projection within the next 5 yearsii.
We agree with the conclusions of the aforementioned reports suggesting that broader decarbonization initiatives involving the decarbonization of the broader U.S. energy system through large-scale electrification of buildings, transportation, and industry will have an impact on both supply (solar deployment) and demand (electricity consumed). The EIA forecasts electricity demand growth owing to electrification of fuel-based building demands (e.g., heating), vehicles, and industrial processes of 30% from 2020 to 2035, and an additional 34% increase in energy demand from 2035 to 2050.
The Inflation Reduction Act of 2022 (“IRA”) legislation will invest nearly $370 billion in energy security and climate change programs over the next decade. The IRA renews the full 30% credit rate for Investment Tax Credit (“ITC”) eligible facilities that meet the prevailing wage and apprenticeship requirements. The IRA provides a direct pay provision for tax exempt entities including local government, tribal nations, nonprofits, cooperative and municipal utilities while also allowing for the transferability of those tax credits. The IRA allows for additional bonus credits for qualifications related to domestic content, energy communities and low- and moderate-income communities. The ITC will step down to 26% in 2033 and 22% in 2034.
While these efforts will further accelerate growth, iSun also concurs with the conclusions of these reports that domestic solar capacity and production will grow regardless of legislative efforts supporting the aforementioned decarbonization efforts. Each report concludes that decarbonization efforts occurring within specific geographic markets and select industries are already underway and are driving demand for additional domestic solar capacity accordingly:
Targeted High-Value Geographic Markets: These markets offer:
1. A higher internal rate of return (“IRR”) on solar investments:
2. Statewide legislation promoting decarbonization efforts that will in-turn increase electricity demand:
3. High concentrations of consumers who are proactively taking steps towards decarbonization by electrifying their homes, appliances, small businesses, and automobiles; and
4. Utilities with a favorable composition of interconnection requests and transmission and distribution capacity.
Targeted Rapidly Growing Industry Sectors: The anticipated widespread adoption of electric vehicles in the U.S. will dramatically change the landscape for domestic energy consumption and production. Mercedes, Ford, and General Motors have all committed to moving to electric or EV hybrid platforms within the decade, ensuring that by 2035, it will be difficult - if not impossible - for consumers to purchase a new car with an internal combustion engine. The average electric vehicle requires 30 kilowatt-hours to travel 100 miles - essentially the same amount of electricity an average American home uses each day. This will have a profound impact on electricity demand across each segment of the marketplace. Overnight, household electricity demand could double for the average American 2-car family. As widespread EV adoption begins to accelerate, consumers will begin looking for ways to reduce their electric bills, increasing demand for household solar solutions. Although consumer behaviors may change with EV adoption…expectations will not. Consumers will still expect that they will be able to recharge their cars quickly and easily at the places they most often frequent. This will in turn prompt commercial enterprises small and large to also look for ways to manage such expectations at reasonable costs. Expectations will be even greater at destination locations such as hotels, municipal facilities, or even remote trailheads or parks, prompting asset owners and municipalities to explore scalable solutions that may not be able to be addressed on-site. And of course, all this activity will in turn be met with an increase in electricity demand, prompting utilities to begin exploring ways of rapidly increasing their capacity.
Strategy
iSun is uniquely positioned in the marketplace to address the generational opportunity presented by automotive electrification and decarbonization. iSun’s Solar Platform serves the evolving energy needs and increased energy demands presented by automotive electrification and decarbonization within of each segment of the solar marketplace. Our:
1. Residential solar brand, SunCommon: Supports EV purchases with at-home charging, promotes residential solar + storage installation, and provides other smart home energy upgrades.
2. Commercial & Industrial Division: Supports EV fleet and workplace charging adoption, promotes solar projects at the workplace to help employers and businesses provide for their customers and employees, and stabilize their energy costs. Enables municipalities, destination locations, and communities and/or dwellings where on-site or roof-top installation may not be a viable option to adopt EV charging and solar solutions via resilient microgrid and community solar projects.
3. Utility and Development Division: Helps utilities meet increased demand and upgrade their infrastructure to with utility-scale solar projects and utilize current design and development services to originate solar projects for all divisions.
i US Residential PV Customer Acquisition Costs and Trends, Woods Mackenzie Power & Renewables, October 2021 (Connelly, White).
ii Solar Power World Reference.
Some of the customer needs that will result from automotive electrification and decarbonization are agnostic to scale and will be universal across all segments. A customer-centric organization, iSun has created cross-division service teams to proactively address these needs. iSun’s:
1. EV Charging Services provides proprietary, solar-powered charging hardware and software solutions that enable grid-tied or off-grid EV charging.
2. Development and Professional Services provide solar developers with an a la carte menu of services they can use to help accelerate the development process, and more quickly bring their projects on-line, all without having to scale their operation.
3. Solar Installation, Operations and Management Services incorporates iSun’s expertise as one of the largest solar contractors into a comprehensive suite of services solar asset owners can use to keep their arrays operating at peak performance levels.
Because we provide services to each segment of the marketplace, our Solar Platform enables us to adapt to the evolving range of customer demand and energy innovations resulting from decarbonization and vehicle electrification.
Customer Acquisition: iSun’s growth and new customer acquisition strategies are unique to each division.
Residential: SunCommon values high-touch customer service capabilities that foster long-term customer relationships. Our focus ideally suits the contemporary market environment, where recent technologies like EV charging, energy storage and grid management are arriving early and often. The rapid pace of these deployments mean consumers will be looking to enhance their systems more regularly, increasing long-term customer value. We can cultivate and maintain these relationships at an exceptionally low cost. SunCommon reported new customer acquisition costs of $0.30/w for the 12 months ending December 31, 2022.
Commercial and Industrial: We continue to experience organic growth from our established relationships with national developers requesting development and EPC services. Additionally, we have made strategic investments in entities capable of providing a robust pipeline of industrial-scale EPC projects. On November 24, 2021, iSun entered into a Membership Unit Purchase agreement (the “MUPA”) with Encore Redevelopment LLC (“Encore”) in exchange for a fully diluted 9.1% ownership interest in Encore. The investment provides for collaboration opportunities across Encore’s robust project pipeline, which has doubled in 2022 partially as a result of the capital infusion. Additionally, the transaction has provided insights into new prospective geographic markets, which has informed iSun’s geographic growth strategy for its Residential and Commercial divisions.
Utility: With the acquisition of Oakwood Construction Services intellectual property, we were able to expand our utility-scale capabilities to include EPC as well as our development and professional services. Unlike EPC services, development and professional services occur prior to the commencement of construction and are not contingent upon a project proceeding to construction status. Development and professional services not only enhance cash-flows and margins on a month-to-month basis, but also afford us the rights to construction services for each project that proceeds to construction, effectively transforming the lead generation funnel for iSun’s Utility Division into a revenue generator instead of an expense. Immediate success of this strategy is demonstrated by contracts for development and professional services work on 566MW of solar projects across 4 project sites across the US.
Ancillary Markets
Our capabilities allow for expansion into high-growth adjacent markets. We began operations as a traditional electric contractor and hold a wide range of capabilities to install electric equipment for a variety of end uses. Today, these core capabilities have developed our business in solar array installation, traditional electric, and data services. We can deploy these capabilities to other large, rapidly growing clean/renewable end market within each segment; namely electric vehicle (“EV”) charging stations, data centers, energy storage and other markets. The rapid proliferation of EV charging stations has followed the shift in auto sales to electronic vehicles, and the EV charging market is expected to expand to over $30 billion by 2024 with a CAGR of 40% over the next 2-year period. Energy storage measured by megawatts expanded by 44% year-over-year in 2018 and is projected to grow into a $4.7 billion market by 2024. Both markets represent adjacent, high growth expansion opportunities for us, and both require minimal investment of resources, infrastructure or capital spend given its complementary nature to our existing capabilities.
Employees
As of March 30, 2023, we employed approximately 290 full-time employees. We may also utilize outside subcontractors to assist with installing solar systems for our commercial and residential customers. Our direct installation labor is a combination of employees and contract labor.
We have direct access to unionized labor, which provides a unique advantage for growth, because workforce resources can be scaled efficiently utilizing local labor unions in other states to meet specific project needs in other states without increasing fixed labor costs for us.
Financing
To promote residential sales, we assist customers in obtaining financing options. Our objective is to arrange the most flexible terms that meet the needs and wants of the customer. Although we do not yet directly provide financing, we have relationships to arrange financing with numerous private and public sources, including SunLight, and the Vermont State Employees Credit Union, which offers VGreen financing to maximize solar investment savings.
We believe it is best for customers to own their own systems, but some customers prefer not to own their systems. We also have the ability to arrange financing with third parties through power purchase agreements and leases for our customers.
Suppliers
We purchase solar panels, inverters and materials directly from multiple manufacturers and through distributors. We intend to further coordinate purchases across all business segments and to optimize supply relationships to realize the advantages of greater scale.
If one or more of our suppliers fail to meet our supply needs, ceases or reduces production due to its financial condition, acquisition by a competitor or otherwise, it may be difficult to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and our ability to satisfy this demand may be adversely affected. We do not, however, rely on any single supplier and our management believes that we can obtain needed solar panels and materials from a number of different suppliers. Accordingly, we believe that the loss of any single supplier would not materially affect our business.
We also utilize companies with subcontractors for electrical installations, for racking and solar panel installations, as well as numerous subcontractors for grading, landscaping, and construction for our commercial, and industrial customers.
Installation
We are a licensed contractor in the markets that we serve, and we are responsible for every customer installation. We manage the entire process from permitting through inspection to interconnection to the power grid, thereby making the system installation process simple and seamless for its customers. Controlling every aspect of the installation process allows us to minimize costs, ensure quality and deliver high levels of customer satisfaction.
Even with controlling every aspect of the installation process, the ability to perform on a contract is subject to limitations. There remain jurisdictional approval processes outside our immediate control including, but not limited to, approvals of city, county, state or Federal government bodies or one of their respective agencies. Other aspects outside of our direct control include approvals from various utility companies and weather conditions.
After-Sales Support
It is our intent to provide continuing operation and maintenance services for our installed residential and commercial solar systems. We provide extended factory equipment technical support and act as a service liaison using our proprietary knowledge, technology, and solar electric energy engineering staff. We do this through a 5-year limited workmanship warranty and operations and maintenance program, which among other things, provides a service and technical support line to our customers. We generally respond to our job site related issues within 24 hours and offer assistance as long as required to maintain customer satisfaction. Our price to customers includes this warranty, and also includes the pass through of various manufacturers’ warranties that are typically up to 25 years.
Customers
Historically, the majority of our revenue came from commercial and industrial solar installations ranging in size from 100 kilowatts to 10 megawatts. In 2022, we expanded our capabilities to serve customers across the residential, commercial, industrial and utility markets. We expanded our services based on customer demand to include development and professional services, engineering, procurement, installation, storage, monitoring and electric vehicle infrastructure support.
In 2022, approximately 52% of revenues were generated by residential installations, approximately 33% of revenues were generated by commercial and industrial installations, 10% of revenues were generated from electrical and data contracts, and 5% of revenues were generated by project origination services. In 2021, approximately 28% of our revenues were generated by residential installations, approximately 58% of revenues were generated by commercial and industrial installations, 11% of revenue were generated from our electrical and data contracts, and 3% of revenues were generated by project origination services.
We believe that we have an advantage in the commercial solar market in New England given our extensive contact list, resulting from our experience in the commercial and industrial construction market, which also provides access to customers that trust us. Through our network of vendors, participation in variety of industry trade associations and independent sales consultants, we now have a growing list of repeat clients, as well as an active and loyal referral network. As new markets open in other key geographic regions, we are able to leverage our reputation and long-term customer relationships for market entry.
Competitors
In the solar installation market, we compete with companies that offer products similar to our products. Some of these companies have greater financial resources, operational experience, and technical capabilities than we do. When bidding for solar installation projects, however, our current experience suggests that we are the dominant or preferred competitor in the markets in which we compete. We do not believe that any competitor has more than 10% of the market across all the areas in which we currently operate. We compete with other solar installers on our expertise and proven track record of performance. Also, pricing, service and the ability to arrange financing may be important for a project award.
Seasonality
We often find that some customers tend to book projects by the end of a calendar year to realize the benefits of available subsidy programs prior to year-end. This results in third and fourth quarter sales being more robust usually at the expense of the first quarter. In the future, this seasonality may cause fluctuations in financial results. In addition, other seasonality trends may develop and the existing seasonality that we experience may change. Weather can also be an important factor affecting project timelines.
Technology and Intellectual Property
Generally, the solar EPC business is not dependent on intellectual property. We did acquire the intellectual property of Oakwood Construction Services, LLC which provides proprietary capabilities for solar asset development and execution of large utility scale solar projects at a significant value to our customers.
Government Regulation and Incentives
Government Regulation
We are not regulated as a public utility in the United States under applicable national, state or other local regulatory regimes where we conduct business.
To operate our systems, we obtain interconnection permission from the applicable local primary electric utility. Depending on the size of the solar energy system and local law requirements, interconnection permission is provided by the local utility and we and/or our customer. In almost all cases, interconnection permissions are issued on the basis of a standard process that has been pre-approved by the local public utility commission or other regulatory body with jurisdiction overnet metering procedures. As such, no additional regulatory approvals are required once interconnection permission is given.
Our operations are subject to stringent and complex federal, state and local laws, including regulations governing the occupational health and safety of our employees and wage regulations. For example, we are subject to the requirements of OSHA, the DOT and comparable state laws that protect and regulate employee health and safety.
Government Incentives
Federal, state and local government bodies provide incentives to owners, end users, distributors, system integrators and manufacturers of solar energy systems to promote solar energy in the form of rebates, tax credits and other financial incentives such as system performance payments, payments for renewable energy credits associated with renewable energy generation and exclusion of solar energy systems from property tax assessments. These incentives enable iSun to lower the price it charges customers to own or lease, our solar energy systems, helping to catalyze customer acceptance of solar energy as an alternative to utility-provided power.
The Inflation Reduction Act of 2022 (“IRA”) legislation will invest nearly $370 billion in energy security and climate change programs over the next decade. The Act renews the full 30% credit rate for Investment Tax Credit (“ITC”) of eligible facilities that meet the prevailing wage and apprenticeship requirements. The IRA provides a direct pay provision for tax exempt entities including local governments, tribal nations, nonprofits, cooperative and municipal utilities while also allowing for the transferability of those tax credits. The IRA allows for additional bonus credits for qualifications related to domestic content, energy communities and low- and moderate-income communities. The ITC will step down to 26% in 2033 and 22% in 2034.
The economics of purchasing a solar energy system are also improved by eligibility for accelerated depreciation, also known as the modified accelerated cost recovery system, or MACRS depreciation, which allows for the depreciation of equipment according to an accelerated schedule set forth by the Internal Revenue Service. The acceleration of depreciation creates a valuable tax benefit that reduces the overall cost of the solar energy system and increases the return on investment.
Approximately 50% of states in the U.S. offer a personal and/or corporate investment or production tax credit for solar energy that is additive to the ITC. Further, these states, and many local jurisdictions, have established property tax incentives for renewable energy systems that include exemptions, exclusions, abatements, and credits. Many state governments, traditional utilities, municipal utilities and co-operative utilities offer a rebate or other cash incentive for the installation and operation of a solar energy system or energy efficiency measures. Capital costs or “up-front” rebates provide funds to solar customers based on the cost, size or expected production of a customer’s solar energy system. Performance-based incentives provide cash payments to a solar energy system owner based on the energy generated by their solar energy system during a pre-determined period, and they are paid over that time period. Depending on the cost of the system and other site-specific variables, tax incentives can typically cover 30-40% of the cost of a commercial or residential solar system.
Many states also have adopted procurement requirements for renewable energy production that requires regulated utilities to procure a specified percentage of total electricity delivered to customers in the State from eligible renewable energy sources, such as solar energy systems, by a specified date.
Environmental, Social and Corporate Governance
Governance and Strategic Overview
In 2022, iSun built upon its historic foundation of environmentally and socially responsible business by formalizing an enterprise-level ESG strategy. This strategy is overseen by an ESG Executive Committee and guided by the Corporate Governance Committee on the Board of Directors. Our governance efforts have included developing and publishing a core set of policies that speak to our position on and approach to a range of environmental, social, and governance issues. Through a stakeholder engagement process and iSun employee interviews, we have identified a set of material issues that are critical to both our business and to our key stakeholders. As such, we have developed policies and are implementing initiatives related to climate change and environmental stewardship, diversity, equity and inclusion (DEI), labor management and human rights, and stakeholder engagement. We are also formalizing and implementing a Business Code of Conduct as well as a Supplier Code of Conduct.
Our strategic plan is designed to mitigate the risks and capitalize on the opportunities associated with these issues, with an explicit focus on aligning our commercial goals and impact aspirations to drive both shareholder and broader stakeholder value. This strategy will be guided by cross-functional working groups comprised of leaders from across the company and will have explicit goals, key performance indicators (KPIs), and timelines for implementing the initiatives that address each issue.
iSun will be focused on integrating, aligning, and scaling the impact programs developed over the years by SunCommon, our recently purchased subsidiary, which is a Vermont benefit corporation and a certified B corporation and a recognized leader in the world of socially responsible business.
iSun is currently in compliance with all ESG-related requirements of the SEC and of Nasdaq including the Board Diversity Disclosure Matrix provided below.
iSun, Inc. Board Diversity Matrix
Total Number of Directors : 5
Female Male Non-Binary Did Not
Disclose
Gender
Part 1: Gender Identity
Directors 0
Part 2: Demographic Background
African American or Black 0
Alaskan Native or Native American 0
Asian 0
Hispanic or Latin 0
Native Hawaiian or Pacific Islander 0
White 0
Two or more Races/Ethnicities 0
LGBTQ+ 0
Did Not Disclose Demographic Background 0
Risks and Opportunities
Climate change, and its associated issues like emissions, energy management, waste, and water management - have been identified as critical to our social mission and the concerns of our commercial customers, employees, and investors. Our mission to accelerate the world’s transition from dirty to clean energy can only be achieved if we are also decarbonizing our own operations and supply chains. We will be setting long-term goals on climate change and these associated environmental issues after we conduct our first enterprise Greenhouse Gas (GHG) accounting exercise to determine our scopes 1, 2, and 3 emissions.
Human capital, and diversity, equity, and inclusion (DEI), have been identified as critical to our long-term success and social impact aspirations. Human capital has become an increasingly important topic for investors and society at large. It is also integral to the long-term success of our business as we rely heavily on our installation teams and the union members we employ. In turn, we will be ramping up our focus on workforce development and upward mobility opportunities for our employees, advancing work opportunities for diverse and at-risk populations, as well as supporting economic inclusion within our supply chains through a minority-owned business procurement program.
Governance and corporate transparency, both internally and externally, is another core risk and opportunity to address. Our revamped ESG governance structure and utilization of the ESG project management platform, ESGProgram.io, will ensure alignment and integration of these efforts across the iSun enterprise. An internal and external ESG communications plan will also ensure our intentions, efforts, and outcomes are well understood by our external stakeholders and greater operational alignment with our internal teams. Lastly, we will be providing ESG education to our executive leaders and Board to ensure they can actively contribute to the success of our ESG strategy.
Climate Change and Human Capital Management
Climate change and human capital management are two leading ESG issues across industries. From investor expectations to SEC disclosure regulations, climate risk management and human capital management have emerged as the two most critical issues from a stakeholder and general public perspective.
Our objectives for climate change include measuring and reducing our emissions, waste, and water, enhancing our operational climate risk resilience, and developing service offerings that support the climate risk resilience of our customers. We will be setting long-term climate change goals, KPI’s, and timelines for achievement, as well as reporting our progress in a 2023 Task Force for Climate-Related Financial Disclosures (TCFD) report.
Our objectives for human capital management include increasing the diversity of our workforce and procurement partners, creating upward mobility opportunities for diverse employees and field staff, as well as increasing the visibility and importance of the trades in the communities we live and work. We will be setting long-term human capital goals, KPI’s, and timelines for achievement, as well as reporting our progress in 2023 with the relevant metrics from the Sustainable Accounting Standards Boards (SASB).
Commitments
We will be implementing our enterprise ESG strategic plan across our operations. As our cross-functional working groups get up and running, we will begin our enterprise GHG emissions assessment and develop the internal infrastructure for consistent ESG data collection. All material issues will be overseen by their relevant functional leaders and will have explicit and quantified goals, KPI’s, and timelines for achievement. We will be reporting on our progress throughout the year, culminating in a ESG report and complete with a Sustainable Accounting Standards Boards (SASB) and Task Force for Climate-related Financial Disclosures (TCFD) reports. Our progress will be actively communicated externally on our website and in governance documents to ensure full visibility into our ESG intentions, efforts, and results.
Corporate Information
Our address is 400 Avenue D, Suite 10, Williston, VT 05495 and our telephone number is (802) 658-3378. Our corporate website is: www.isunenergy.com. The content of our website shall not be deemed incorporated by reference in this Annual Report.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
An investment in our Common Stock involves significant risks. You should carefully consider the risk factors contained in this Annual Report and in our filings with the SEC before you decide to invest in our Common Stock. Our business, prospects, financial condition and results of operations may be materially and adversely affected as a result of any of such risks. The value of our Common Stock could decline as a result of any of these risks. You could lose all or part of your investment in our Common Stock. Some of our statements in sections entitled “Risk Factors” are forward-looking statements. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations.
The impact of a subsequent wave of the coronavirus pandemic (COVID-19) on general market and economic conditions has yet to be determined and if it occurs it is likely to have a material adverse effect on our business and results of operations.
As of the date of this Annual Report on Form 10-K, the coronavirus pandemic (COVID-19) has resulted in widespread disruption to capital markets and general economic and business climate. For the year ended December 31, 2021, we experienced significant disruption to our supply chain, instability in material pricing and labor shortages due to the long-term impact of COVID-19. On June 14, 2021, Vermont Governor Phil Scott removed all COVID-19 restrictions and Vermont’s State of Emergency expired on June 15, 2021. The extent to which COVID-19 affects our results, or those of our suppliers, will depend on future developments, which are highly uncertain and cannot be predicted. At this time, no material impact to our business and operations is anticipated.
The Russian-Ukraine conflict and the impact of related sanctions may impact our business.
As of the date of this Annual Report on Form 10-K, the Russia-Ukraine conflict and related sanctions have not had any impact on our business. However, we may be impacted by the disruptions of the global supply chain.
Risks Related to Our Financial Position and Capital Requirements
We operated at a loss in 2022 and 2021 and cannot predict when we will achieve profitability.
Our management believes that achieving profitability will depend in large part on our ability to increase market share in our existing market segments and expand our geographic foot print and to consummate synergistic acquisitions. No assurance can be given that we will achieve profitably or that we will have adequate working capital to meet our obligations as they become due.
We may require substantial additional funding which may not be available to it on acceptable terms, or at all. If we fail to raise the necessary additional capital, we may be unable to maintain our business and operations.
The Company was not profitable in 2022 and 2021. In order to grow our operations, we may increase our spending for our operating expenses, capital expenditures and acquisitions.
We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue our organic growth or corporate acquisitions. Any of these events could significantly harm our business, financial condition, and strategy.
In order to carry out our business plan and implement our strategy, we anticipate that we will need to obtain additional financing from time to time, and we may choose to raise additional funds through strategic collaborations, public or private equity or debt financing, bank lines of credit, asset sales, government grants, or other arrangements. Our management cannot be sure that any additional funding, if needed, will be available on favorable terms or at all. Furthermore, any additional equity or equity-related financing obtained may be dilutive to our stockholders, and debt or equity financing, if available, may subject us to restrictive covenants and significant interest costs.
An inability to raise capital when needed could harm our business, financial condition and results of operations, and could cause our stock price to decline or require that we cease operations.
Our management discovered a material weakness in our disclosure controls and procedures and internal control over financial reporting as required to be implemented by Section 404 of the Sarbanes-Oxley Act of 2002.
We are currently subject to Section 404 of the Sarbanes-Oxley Act of 2002 and are required to provide management’s attestation on internal controls. Our management has identified control deficiencies and the need for a stronger internal control environment relating to the financial statement close process. The ineffectiveness of the design, implementation and operation of the controls surrounding these matters creates a reasonable possibility that a material misstatement to the consolidated financial statements would not be prevented or detected on a timely basis. Accordingly, our management concluded that this deficiency represents a material weakness in our internal control over financial reporting as of December 31, 2022. Although our management has taken significant steps to remediate this weakness, our management can give no assurance that all the measures it has taken will on a permanent and sustainable basis remediate the material weaknesses in our disclosure controls and procedures and internal control over financial reporting or that any other material weaknesses or restatements of financial results will not arise in the future. We plan to take additional steps to remedy this material weakness. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in the future, we will not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our Common Stock.
Risks Related to Our Business and Industry
A material reduction in the retail price of traditional utility generated electricity or electricity from other sources could harm our business, financial condition, results of operations and prospects.
Our management believes that a significant number of our customers decide to buy solar energy because they want to pay less for electricity than what is offered by the traditional utilities.
The customer’s decision to choose solar energy may also be affected by the cost of other renewable energy sources. Decreases in the retail prices of electricity from the traditional utilities or from other renewable energy sources would harm our ability to offer competitive pricing and could harm our business. The price of electricity from traditional utilities could decrease as a result of:
● construction of a significant number of new power generation plants, including plants utilizing natural gas, nuclear, coal, renewable energy or other generation technologies;
● relief of transmission constraints that enable local centers to generate energy less expensively;
● reductions in the price of natural gas;
● utility rate adjustment and customer class cost reallocation;
● energy conservation technologies and public initiatives to reduce electricity consumption;
● development of new or lower-cost energy storage technologies that have the ability to reduce a customer’s average cost of electricity by shifting load to off-peak times; or
● development of new energy generation technologies that provide less expensive energy.
A reduction in utility electricity prices would make the purchase or the lease of our solar energy systems less economically attractive. If the retail price of energy available from traditional utilities were to decrease due to any of these reasons, or other reasons, we would be at a competitive disadvantage, may be unable to attract new customers and our growth would be limited.
Existing electric utility industry regulations, and changes to regulations, may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our solar energy systems.
Federal, state and local government regulations and policies concerning the electric utility industry, and internal policies and regulations promulgated by electric utilities, heavily influence the market for electricity generation products and services. These regulations and policies often relate to electricity pricing and the interconnection of customer-owned electricity generation. In the United States, governments and utilities continuously modify these regulations and policies. These regulations and policies could deter customers from purchasing renewable energy, including solar energy systems. This could result in a significant reduction in the potential demand for our solar energy systems. For example, utilities commonly charge fees to larger, industrial customers for disconnecting from the electric grid or for having the capacity to use power from the electric grid for back-up purposes. These fees could increase our customers’ cost to use our systems and make them less desirable, thereby harming our business, prospects, financial condition and results of operations. In addition, depending on the region, electricity generated by solar energy systems competes most effectively with expensive peak-hour electricity from the electric grid, rather than the less expensive average price of electricity. Modifications to the utilities’ peak hour pricing policies or rate design, such as to a flat rate, would require us to lower the price of our solar energy systems to compete with the price of electricity from the electric grid.
In addition, any changes to government or internal utility regulations and policies that favor electric utilities could reduce our competitiveness and cause a significant reduction in demand for our products and services. For example, certain jurisdictions have proposed assessing fees on customers purchasing energy from solar energy systems or imposing a new charge that would disproportionately impact solar energy system customers who utilize net metering, either of which would increase the cost of energy to those customers and could reduce demand for our solar energy systems. It is possible charges could be imposed on not just future customers but our existing customers, causing a potentially significant consumer relations problem and harming our reputation and business. Due to the current concentration of our business in Vermont, any such changes in these markets would be particularly harmful to our business, results of operations, and future growth.
Our growth strategy depends on the widespread adoption of solar power technology.
The market for solar power products is emerging and rapidly evolving, and our future success is uncertain. If solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, we would be unable to generate enough revenues to achieve and sustain profitability and positive cash flow. The factors influencing the widespread adoption of solar power technology include but are not limited to:
● cost-effectiveness of solar power technologies as compared with conventional and non-solar alternative energy technologies;
● performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;
● fluctuations in economic and market conditions which impact the viability of conventional and non-solar alternative energy sources, such as increases or decreases in the prices of oil and other fossil fuels;
● continued deregulation of the electric power industry and broader energy industry; and
● availability of governmental subsidies and incentives.
Our business currently depends on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits and incentives would adversely impact our business.
U.S. federal, state and local government bodies provide incentives to end users, distributors, system integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments and payments for renewable energy credits associated with renewable energy generation. These governmental rebates, tax credits and other financial incentives enhance the return on investment for our customers and incent them to purchase solar systems. These incentives enables us to lower the price that we charge customers for energy and for solar energy systems. However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as solar energy adoption rates increase. These reductions or terminations often occur without warning.
Reductions in, or eliminations or expirations of, governmental incentives could adversely impact our results of operations and our ability to compete in our industry, causing us to increase the prices of our solar energy systems, and reducing the size of our addressable market. In addition, this would adversely impact our ability to attract investment partners and to form new financing funds and our ability to offer attractive financing to prospective customers.
Our business depends in part on the regulatory treatment of third-party owned solar energy systems.
Our leases and any power purchase agreements are third-party ownership arrangements. Sales of electricity by third parties face regulatory challenges in some states and jurisdictions. Other challenges pertain to whether third-party owned systems qualify for the same levels of rebates or other non-tax incentives available for customer-owned solar energy systems, whether third-party owned systems are eligible at all for these incentives, and whether third-party owned systems are eligible for net metering and the associated significant cost savings. Reductions in, or eliminations of, this treatment of these third-party arrangements could reduce demand for our systems, adversely impact our access to capital and could cause us to increase the price that we charge our customers for energy.
Our ability to provide solar energy systems to customers on an economically viable basis depends on our ability to help customers arrange financing for such systems.
Our solar energy systems have been eligible for federal investment tax credits or U.S. Treasury grants, as well as depreciation benefits. We have relied on, and will continue to rely on, financing structures that monetize a substantial portion of those benefits and provide financing for our solar energy systems. With the lapse of the U.S. Treasury grant program, we anticipate that our customers’ reliance on these tax-advantaged financing structures will increase substantially. If, for any reason, our customers were unable to continue to monetize those benefits through these arrangements, we may be unable to provide and maintain solar energy systems for new customers on an economically viable basis.
The availability of this tax-advantaged financing depends upon many factors, including, but not limited to:
● the state of financial and credit markets;
● changes in the legal or tax risks associated with these financings; and
● non-renewal of these incentives or decreases in the associated benefits.
U.S. Treasury grants are no longer available for new solar energy systems. Changes in existing law and interpretations by the Internal Revenue Service and the courts could reduce the willingness of funding sources to provide funds to customers of these solar energy systems. We cannot assure you that this type of financing will be available to our customers. If, for any reason, we are unable to find financing for solar energy systems, we may no longer be able to provide solar energy systems to new customers on an economically viable basis. This would have a material adverse effect on our business, financial condition, and results of operations.
Rising interest rates could adversely impact our business.
Increases in interest rates could have an adverse impact on our business by increasing our cost of capital, which would increase our interest expense on any variable rate indebtedness and make acquisitions more expensive to undertake.
Further, rising interest rates may negatively impact our ability to arrange financing for our customers on favorable terms to facilitate our customers’ purchases of our solar energy systems. The majority of our cash flows to date have been from the sales of solar energy systems. Rising interest rates may have the effect of depressing the sales of solar energy systems because many consumers finance their purchases.
As a result, an increase in interest rates may negatively affect our costs and reduce our revenues, which would have an adverse effect on our business, financial condition, and results of operations.
If we cannot compete successfully against other solar and energy companies, we may not be successful in developing our operations and our business may suffer.
The solar and energy industries are characterized by intense competition and rapid technological advances, both in the United States and internationally. We compete with solar companies with business models that are similar to ours. In addition, we compete with solar companies in the downstream value chain of solar energy. For example, we face competition from purely finance driven organizations that acquire customers and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, from large construction companies and utilities, and increasingly from sophisticated electrical and roofing companies. Some of these competitors specialize in the residential solar energy market, and some may provide energy at lower costs than we do. Further, some competitors are integrating vertically in order to ensure supply and to control costs. Many of our competitors also have significant brand name recognition and have extensive knowledge of our target markets.
If we are unable to compete in the market, we will experience an adverse effect on our business, financial condition, and results of operations.
Adverse economic conditions may have material adverse consequences on our business, results of operations and financial condition.
Unpredictable and unstable changes in economic conditions, including recession, inflation, increased government intervention, or other changes, may adversely affect our general business strategy. We rely upon our ability to generate additional sources of liquidity and we may need to raise additional funds through public or private debt or equity financings in order to fund existing operations or to take advantage of opportunities, including acquisitions of complementary businesses or technologies. Any adverse event would have a material adverse impact on our business, results of operations and financial condition.
Our business is concentrated in certain markets, putting it at risk of region-specific disruptions.
As of December 31, 2022, a vast majority of our total solar installations were in the Northeast. Our management expects our near-term future growth to occur throughout the Eastern United States, and to further expand our customer base and operational infrastructure. Accordingly, our business and results of operations are particularly susceptible to adverse economic, regulatory, political, weather and other conditions in such markets and in other markets that may become similarly concentrated.
If we are unable to retain and recruit qualified technicians and advisors, or if our key executives, key employees or consultants discontinue their employment or consulting relationship with us, we may delay our development efforts or otherwise harm our business.
We may not be able to attract or retain qualified management or technical personnel in the future due to the intense competition for qualified personnel among solar, energy, and other businesses. Our industry has experienced a high rate of turnover of management personnel in recent years. If we are not able to attract, retain, and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the successful development of any product candidates, our ability to raise additional capital, and our ability to implement our overall business strategy.
We are highly dependent on members of our management and technical staff. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level, and senior managers as well as junior, mid-level, and senior technical personnel. The loss of any of our executive officers, key employees, or consultants and our inability to find suitable replacements could potentially harm our business, financial condition, and prospects. We may be unable to attract and retain personnel on acceptable terms given the competition among solar and energy companies. Certain of our current officers, directors, and/or consultants hereafter appointed may from time to time serve as officers, directors, scientific advisors, and/or consultants of other solar and energy companies. We do not maintain “key man” insurance policies on any of our officers or employees. Other than certain members of our senior management team, all of our employees are employed “at will” and, therefore, each employee may leave our employment and join a competitor at any time.
We plan to grant stock options, restricted stock grants, or other forms of equity awards in the future as a method of attracting and retaining employees, motivating performance, and aligning the interests of employees with those of our stockholders. If we are unable to implement and maintain equity compensation arrangements that provide sufficient incentives, we may be unable to retain our existing employees and attract additional qualified candidates. If we are unable to retain our existing employees and attract additional qualified candidates, our business and results of operations could be adversely affected.
The execution of our business plan and development strategy may be seriously harmed if integration of our senior management team is not successful.
As our business continues to grow and in the event that we acquire new businesses, we may experience significant changes in our senior management team. Failure to integrate our Board of Directors and senior management teams may negatively affect the operations of our business.
We may not successfully implement our business model.
Our business model is predicated on our ability to build and sell solar systems at a profit, and through organic growth, geographic expansion and strategic acquisitions. Our management intends to continue to operate our business as it has previously, with sourcing and marketing methods that we have used successfully in the past. However, our management cannot assure you that our methods will continue to attract new customers nor that we can achieve profitability in the very competitive solar systems marketplace.
We may not be able to effectively manage our growth.
Our future growth, if any, may cause a significant strain on our management and our operational, financial, and other resources. Our ability to manage our growth effectively will require us to implement and improve our operational, financial, and management systems and to expand, train, manage, and motivate our employees. These demands may require the hiring of additional management personnel and the development of additional expertise by our management. Any increase in resources used without a corresponding increase in our operational, financial, and management systems could have a material adverse effect on our business, financial condition, and results of operations.
We may not realize the anticipated benefits of completed and future acquisitions, and integration of these acquisitions may disrupt our business and management.
We have acquired and, in the future, we may acquire companies, project pipelines, products or technologies or enter into joint ventures or other strategic initiatives. We may not realize the anticipated benefits of these acquisition and any acquisition has numerous risks. These risks include the following:
● difficulty in assimilating the operations and personnel of the acquired company;
● difficulty in effectively integrating the acquired technologies or products with our current technologies;
● difficulty in maintaining controls, procedures and policies during the transition and integration;
● disruption of our ongoing business and distraction of management and employees from other opportunities and challenges due to integration issues;
● difficulty integrating the acquired company’s accounting, management information, and other administrative systems;
● inability to retain key technical and managerial personnel of the acquired business;
● inability to retain key customers, vendors, and other business partners of the acquired business;
● inability to achieve the financial and strategic goals for the acquired and combined businesses;
● incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact operating results;
● potential failure of the due diligence processes to identify significant issues with product quality, legal and financial liabilities, among other things;
● potential inability to assert that internal controls over financial reporting are effective; and
● potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.
Mergers and acquisitions of companies are inherently risky and, if we do not complete the integration of acquired businesses successfully and in a timely manner, we may not realize the anticipated benefits of the acquisitions to the extent anticipated, which could adversely affect our business, financial condition, or results of operations.
With respect to providing electricity on a price-competitive basis, solar systems face competition from traditional regulated electric utilities, from less-regulated third party energy service providers and from new renewable energy companies.
The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large traditional utilities. We believe that our primary competitors are the traditional utilities that supply electricity to our potential customers. Traditional utilities generally have substantially greater financial, technical, operational and other resources than we do. As a result, these competitors may be able to devote more resources to the research, development, promotion, and sale of their products or respond more quickly to evolving industry standards and changes in market conditions than we can. Traditional utilities could also offer other value-added products or services that could help them to compete with us even if the cost of electricity they offer is higher than that of ours. In addition, a majority of utilities’ sources of electricity is non-solar, which may allow utilities to sell electricity more cheaply than electricity generated by our solar energy systems.
We also compete with companies that are not regulated like traditional utilities, but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies. These energy service companies are able to offer customers electricity supply-only solutions that are competitive with our solar energy system options on both price and usage of renewable energy technology while avoiding the long-term agreements and physical installations that our current fund-financed business model requires. This may limit our ability to attract new customers; particularly those who wish to avoid long-term contracts or have an aesthetic or other objection to putting solar panels on their roofs.
As the solar industry grows and evolves, we will also face new competitors who are not currently in the market. Low technological barriers to entry characterize our industry and well-capitalized companies could choose to enter the market and compete with it. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors will limit our growth and will have a material adverse effect on our business and prospects.
Developments in alternative technologies or improvements in distributed solar energy generation may materially adversely affect demand for our offerings.
Significant developments in alternative technologies, such as advances in other forms of distributed solar power generation, storage solutions such as batteries, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of centralized power production may materially and adversely affect our business and prospects in ways management does not currently anticipate. Any failure by us to adopt new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay deployment of our solar energy systems, which could result in product obsolescence, the loss of competitiveness of our systems, decreased revenue and a loss of market share to competitors.
Due to the limited number of suppliers in our industry, the acquisition of any of these suppliers by a competitor or any shortage, delay, price change, imposition of tariffs or duties or other limitation in our ability to obtain components or technologies that we use could result in sales and installation delays, cancellations, and loss of market share.
While we purchase our products from several different suppliers, if one or more of the suppliers on which we rely to meet anticipated demand ceases or reduces production due to its financial condition, is acquired by a competitor or otherwise is unable to increase production as industry demand increases, or is otherwise unable to allocate sufficient production to us, it may be difficult for us to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and our ability to satisfy this demand may be adversely affected. There are a limited number of suppliers of solar energy system components and technologies. While we believe there are other sources of supply for these products available, transitioning to a new supplier may result in additional costs and delays in acquiring our solar products and deploying our systems. These issues could harm our business or financial performance.
In addition, the acquisition of a component supplier or technology provider by one of our competitors could limit our access to such components or technologies and require significant redesigns of our solar energy systems or installation procedures and have a material adverse effect on our business.
There have also been periods of industry-wide shortages of key components, including solar panels, in times of industry disruption. The manufacturing infrastructure for some of these components has a long lead-time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. The solar industry is frequently experiencing significant disruption and, as a result, shortages of key components, including solar panels, may be more likely to occur, which in turn may result in price increases for such components. Even if industry-wide shortages do not occur, suppliers may decide to allocate key components with high demand or insufficient production capacity to more profitable customers, customers with long-term supply agreements or customers other than us and our supply of such components may be reduced as a result.
Typically, we purchase the components for our solar energy systems on an as-needed basis and do not operate under long-term supply agreements. The vast majority of our purchases are denominated in U.S. dollars. Since our revenue is also generated in U.S. dollars, we are mostly insulated from currency fluctuations. However, since our suppliers often incur a significant amount of their costs by purchasing raw materials and generating operating expenses in foreign currencies, if the value of the U.S. dollar depreciates significantly or for a prolonged period of time against these other currencies, this may cause our suppliers to raise the prices they charge us, which could harm our financial results. Any supply shortages, delays, price changes or other limitation in our ability to obtain components or technologies that we use could limit our growth, cause cancellations or adversely affect our profitability, and result in loss of market share and damage to our brand.
We act as the licensed general contractor for our customers and are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on our business and results of operations.
We are a licensed contractor and we are normally the general contractor, electrician, construction manager, and installer for our solar energy systems. We may be liable to customers for any damage that we cause to the home, business premises, belongings or property of our customers during the installation of our systems. For example, we penetrate our customers’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of installation of solar energy systems. In addition, because the solar energy systems that we deploy are high-voltage energy systems, we may incur liability for the failure to comply with electrical standards and manufacturer recommendations. Because our profit on a particular installation is based in part on assumptions as to the cost of such project, cost overruns, delays, or other execution issues may cause us to not achieve our expected results or cover our costs for that project.
In addition, the installation of solar energy systems is subject to oversight and regulation in accordance with national, state, and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters. We also rely on certain employees to maintain professional licenses in many of the jurisdictions in which we operate, and our failure to employ properly licensed personnel could adversely affect our licensing status in those jurisdictions. It is difficult and costly to track the requirements of every authority having jurisdiction over our operations and our solar energy systems. Any new government regulations or utility policies pertaining to our systems, or changes to existing government regulations or utility policies pertaining to our systems, may result in significant additional expenses to our customers and, as a result, could cause a significant reduction in demand for our systems.
If we experience a significant disruption in our information technology systems or if we fail to implement new systems and software successfully, our business could be adversely affected. A cyberattack could lead to a material disruption of our information technology systems or the IT systems of our third-party providers and the loss of business information, which may hinder our ability to conduct our business effectively and may result in lost revenues and additional costs.
We depend on information systems throughout our company to process orders, manage inventory, process and bill shipments and collect cash from our customers, respond to customer inquiries, contribute to our overall internal control processes, maintain records of our property, plant and equipment, and record and pay amounts due vendors and other creditors. If we were to experience a prolonged disruption in our information systems that involve interactions with customers and suppliers, it could result in the loss of sales and customers and/or increased costs, which could adversely affect our overall business operation.
Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays, and adverse publicity.
The installation of solar energy systems requires our employees to work at heights with complicated and potentially dangerous electrical systems. The evaluation and modification of buildings as part of the installation process requires our employees to work in locations that may contain potentially dangerous levels of asbestos, lead, mold or other materials known or believed to be hazardous to human health. We also maintain a fleet of trucks and other vehicles to support our installers and operations. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health Act (“OSHA”), the U.S. Department of Transportation (“DOT”), and equivalent state laws. Changes to OSHA or DOT requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs.
If we fail to comply with applicable OSHA regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures or suspend or limit operations. While we have not experienced a high level of injuries to date, high injury rates could expose us to increased liability. In the past, we have had workplace accidents and received citations from OSHA regulators for alleged safety violations, resulting in fines. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive position and adversely affect our business.
Problems with product quality or performance may cause us to incur warranty expenses, damage our market reputation, and prevent us from maintaining or increasing our market share.
If our products fail to perform as expected while under warranty, or if we are unable to support the warranties, sales of our products may be adversely affected, or our costs may increase, and our business, results of operations, and financial condition could be materially and adversely affected.
We may also be subject to warranty or product liability claims against us that are not covered by insurance or are in excess of our available insurance limits. In addition, quality issues can have various other ramifications, including delays in the recognition of revenue, loss of revenue, loss of future sales opportunities, increased costs associated with repairing or replacing products, and a negative impact on our goodwill and reputation. The possibility of future product failures could cause us to incur substantial expenses to repair or replace defective products. Furthermore, widespread product failures may damage our market reputation and reduce our market share causing sales to decline.
Seasonality may cause fluctuations in our financial results.
We often find that some customers tend to book projects by the end of a calendar year to realize the benefits of available subsidy programs prior to year-end. This results in third and fourth quarter sales being more robust usually at the expense of the first quarter. In the future, this seasonality may cause fluctuations in financial results. In addition, other seasonality trends may develop and the existing seasonality that we experience may change. Weather can also be an important factor affecting project timelines.
A failure to comply with laws and regulations relating to our interactions with current or prospective commercial or residential customers could result in negative publicity, claims, investigations, and litigation, and adversely affect our financial performance.
Our business includes contracts and transactions with commercial and residential customers. We must comply with numerous federal, state, and local laws and regulations that govern matters relating to our interactions with residential consumers, including those pertaining to privacy and data security, consumer financial and credit transactions, home improvement contracts, warranties, and door-to-door solicitation. These laws and regulations are dynamic and subject to potentially differing interpretations, and various federal, state and local legislative and regulatory bodies may expand current laws or regulations, or enact new laws and regulations, regarding these matters. Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information that we collect from and about current and prospective customers and the costs associated therewith. We strive to comply with all applicable laws and regulations relating to our interactions with residential customers. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices. Non-compliance with any such law or regulations could also expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments, including non-U.S. governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Risks Related to the Regulation of Our Company
Because we were previously considered to be a “shell company” under applicable securities laws and regulations, investors may not be able to rely on the resale exemption provided by Rule 144 of the Securities Act until certain requirements have been satisfied. As a result, investors may not be able to easily re-sell our securities and could lose their entire investment.
Prior to June 20, 2019, we were considered to be a “shell company” under Rule 405 of Regulation C of the Securities Act. A “shell company” is a company with either no or nominal operations or assets, or assets consisting solely of cash and cash equivalents. In order to rely on the resale exemption provided by Rule 144, certain requirements must be met, including that the Company is current in the filings required by the Securities Exchange of 1934, as amended. Because shareholders may not be able to rely on an exemption for the resale of their securities other than Rule 144, they may not be able to easily re-sell our securities in the future and could lose their entire investment as a result. See “Shares Eligible For Future Sale - Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies”.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an “emerging growth company” for up to five years, although we will cease to be an “emerging growth company” upon the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering (“IPO”), (ii) the last day of the first fiscal year in which our annual gross revenues are $1.07 billion or more, (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities or (iv) the date on which we are deemed to be a “large accelerated filer” as defined in the Exchange Act. We cannot predict if investors will find shares of our Common Stock less attractive or us less comparable to certain other public companies because we will rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our Common Stock price may be more volatile.
Pursuant to the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act for so long as we are an “emerging growth company.”
Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, and generally requires in the same report a report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. We are required to provide management’s attestation on internal controls effective December 31, 2025 However, under the JOBS Act, our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company.” We will be an “emerging growth company” until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An “emerging growth company” can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to “opt out” of such extended transition period and, as a result, we must comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
If we are not able to comply with the applicable continued listing requirements or standards of Nasdaq, Nasdaq could delist our Common Stock.
Our Common Stock is currently listed on Nasdaq. In order to maintain such listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price, and certain corporate governance requirements. There can be no assurances that we will be able to comply with the applicable listing standards. Although we are currently in compliance with such listing standards, we may in the future fall out of compliance with such standards. If we are unable to maintain compliance with these Nasdaq requirements, our Common Stock will be delisted from Nasdaq.
Our Common Stock currently trades on Nasdaq, and, to date, trading of our Common Stock has been limited. If a more active market does not develop, it may be difficult for you to sell the Common Stock you own or result in your sale at a price that is less than the price you paid.
To date, trading of our Common Stock on Nasdaq has been limited and there can be no assurance that there will be a more active market for our Common Stock either now or in the future. If a more active and liquid trading market does not develop or if developed cannot be sustained, you may have difficulty selling any of the shares of Common Stock that you purchased. The market price for our Common Stock may decline below the price you paid, and you may not be able to sell your shares of Common Stock at or above the price you paid, or at all.
In the event that our Common Stock is delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because they may be considered penny stocks and thus be subject to the penny stock rules.
The SEC has adopted a number of rules to regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on NASDAQ if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares of Common Stock have in the past constituted, and may again in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such shares of common stock and impede their sale in the secondary market.
A U.S. broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to the “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.
Stockholders should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
Anti-takeover provisions contained in our Third Amended and Restated Certificate of Incorporation and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
The Company’s Third Amended and Restated Certificate of Incorporation and Bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our Board of Directors. These provisions include:
● A classified Board of Directors with three-year staggered terms, which may delay the ability of stockholders to the change the membership of a majority of our Board of Directors;
● no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
● the exclusive right of our Board of Directors to elect a director to fill a vacancy created by the expansion of the Board of Directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors;
● the ability of our Board of Directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
● the requirement that an Annual Meeting of Stockholders may be called only by the Chairman of the Board of Directors, the Chief Executive officer, or the Board of Directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
● limiting the liability of, and providing indemnification to, our directors and officers;
● controlling the procedures for the conduct and scheduling of stockholder meetings;
● providing that directors may be removed prior to the expiration of their terms by stockholders only for cause; and
● advance notice procedures that stockholders must comply with in order to nominate candidates to our Board of Directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our Board of Directors and management.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the General Corporation Law of the State of Delaware (“DGCL”), which prevents some stockholders holding more than 15% of our outstanding Common Stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding Common Stock. Any provision of our Third Amended and Restated Certificate of Incorporation or Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Common Stock and could also affect the price that some investors are willing to pay for our Common Stock.
Risks Related to Offerings and Ownership of Our Common Stock
The issuance of our Common Stock pursuant to the Form S-3 Registration Statement may cause dilution and could cause the price of our Common Stock to fall.
A substantial majority of the outstanding shares of our Common Stock and exercisable options are freely tradable without restriction or further registration under the Securities Act of 1933, as amended.
The Company filed an S-3 Registration Statement which was declared effective by the SEC on December 11, 2020. The Registration Statement contains a Base Prospectus, which covers the offering, issuance and sale by iSun of up to $50,000,000 in the aggregate of our shares of Common Stock from time to time in one or more offerings.
Pursuant to a direct offering pursuant to the S-3 Registration Statement the Company sold an aggregate of 840,000 shares of Common Stock and received aggregate gross proceeds of approximately $10,500,000. The Company entered into a Sales Agreement dated September 30, 2021 as amended (the “Sales Agreement”), with B Riley Capital (the “Agent”). Pursuant to the Sales Agreement, iSun may offer and sell from time to time up to an aggregate of $39,500,000 of shares of Common Stock (the “Placement Shares”) through the Agent. Sales of the Placement Shares pursuant to the Sales Agreement, may be made in sales deemed to be “at the market offerings” (“ATM”) as defined in Rule 415 promulgated under the Securities Act. The Agent will act as sales agent and will use commercially reasonable efforts to sell on iSun’s behalf all of the Placement Shares requested to be sold by iSun, consistent with its normal trading and sales practices, on mutually agreed terms between the Agent and iSun. As of March 16, 2023, B. Riley has sold an aggregate of 4,995,212 shares of Common Stock in ATM offerings and the Company has received aggregate gross proceeds of approximately $23.5 million.
Sales of a substantial number of shares of our Common Stock in the public market, future sales of substantial amounts of shares of our Common Stock in the public market, or the perception that these sales could occur, could cause the market price of our Common Stock to decline. Increased sales of our Common Stock in the market for any reason could exert significant downward pressure on our stock price.
We may require additional financing to sustain our operations, without which we may not be able to continue operations, and the terms of subsequent financings may adversely impact our stockholders.
As of December 31, 2022, we had negative working capital of $4.5 million, net of non-cash liabilities, and had a net loss of $53.8 million for the year ended December 31, 2022. We may utilize proceeds from the sale of shares in ATM offerings to fund our business and operations. The extent that we rely on such sales as a source of funding will depend on a number of factors including, the prevailing market price of our Common Stock and the extent to which we are able to secure working capital from other sources. After the sale of shares in a registered direct offering providing gross proceeds of $10.5 million and sales of shares in ATM offerings providing gross proceeds of $23.5 million through March 16, 2023, the Company has the potential to generate approximately $16.0 million in gross proceeds from additional ATM offerings.
We may still need additional capital to finance our future plans and working capital needs, and we may have to raise funds through the issuance of equity or debt securities. Depending on the type and the terms of any financing we pursue, stockholders’ rights and the value of their investment in our Common Stock could be reduced. A financing could involve one or more types of securities including Common Stock, preferred stock, convertible debt or warrants to acquire Common Stock. These securities could be issued at or below the then prevailing market price for our Common Stock. In addition, if we issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on these debt securities would increase costs and negatively impact operating results. If the issuance of new securities results in diminished rights to holders of our Common Stock, the market price of our Common Stock could be negatively impacted.
Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.
We expect that the value of the Convertible Notes will be significantly affected by the price of our common stock, which may be volatile.
The market price of our common stock, as well as the general level of interest rates and our credit quality, will likely significantly affect the market price of the Convertible Notes. This may result in significantly greater volatility in the value of the Convertible Notes than would be expected for nonconvertible debt securities we may issue. We cannot predict whether the price of our common stock or interest rates will rise or fall. Trading prices of our common stock will be influenced by our operating results and prospects and by economic, financial, regulatory and other factors. General market conditions, including the level of, and fluctuations in, the trading prices of stocks generally, could affect the price of our common stock. Holders who receive shares of our common stock upon the conversion of their Convertible Notes will be subject to the risk of volatile and depressed market prices of our common stock. There can be no assurances that the market price of our common stock will not fall in the future.
Our management has broad discretion over the use of the net proceeds from our sale of shares of Common Stock under the Sales Agreement with B. Riley Financial, LLC., you may not agree with how we use the proceeds and the proceeds may not be invested successfully.
Our management has broad discretion as to the use of the net proceeds from our sale of shares of Common Stock under the Sales Agreement with B. Riley Financial, LLC and we could use them for purposes other than those contemplated at the time of commencement of the offerings. Accordingly, you will be relying on the judgment of our management with regard to the use of those net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that, pending their use, we may invest those net proceeds in a way that does not yield a favorable, or any, return for us. The failure of our management to use such funds effectively could have a material adverse effect on our business, financial condition, operating results and cash flows.
The share price of our Common Stock is subject to fluctuation, has been and may continue to be volatile and may decline regardless of our operating performance, resulting in substantial losses for investors who have purchased shares of our Common Stock.
We expect that the market price of our Common Stock may continue to be volatile for the foreseeable future. The market price of our Common Stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors listed below and other factors described in this “Risk Factors” section:
● actual or anticipated fluctuations in our operating results;
● the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
● failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
● ratings changes by any securities analysts who follow our company;
● announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;
● changes in operating performance and Common stock market valuations of other technology companies generally;
● price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
● changes in our Board of Directors or management;
● sales of large blocks of our Common Stock, including sales by our executive officers, directors and significant stockholders;
● potential lawsuits threatened or filed against us;
● short sales, hedging and other derivative transactions involving our Common Stock;
● general economic conditions in the United States and abroad; and
● other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many energy companies. Stock prices of many energy companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, operating results, financial condition and cash flows.
We have no history of paying dividends on our Common Stock, and we do not anticipate paying dividends in the foreseeable future.
We have not previously paid dividends on our Common Stock. We currently anticipate that we will retain all of our available cash, if any, for use as working capital and for other general corporate purposes. Any payment of future dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our Board of Directors deems relevant. Investors must rely on sales of their Common Stock after price appreciation, which may never occur, as the only way to realize a return on their investment.
Our Third Amended and Restated Certificate of Incorporation authorizes us to issue shares of blank check preferred stock, and issuances of such preferred stock, or securities convertible into or exercisable for such preferred stock, may result in immediate dilution to existing stockholders.
If we raise additional funds through future issuances of preferred stock or debt securities convertible into preferred stock, our stockholders could suffer significant dilution, and any new preferred stock or debt securities that we issue could have rights, preferences and privileges superior to those of holders of shares of Common Stock. Although we have no present plans to issue any additional shares of preferred stock, in the event that we issue additional shares of our preferred stock, or securities convertible into or exercisable for such preferred stock, the holders of Common Stock will be diluted. We may choose to raise additional capital using such preferred stock or debt securities because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
A market for our securities may not continue, which would adversely affect the liquidity and price of our securities.
The price of our securities may fluctuate significantly due to general market and economic conditions. An active trading market for our securities may never develop or, if developed, it may not be sustained. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business condition and the release of our financial reports. Additionally, if our securities become delisted from Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if we were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our Common Stock adversely, the price and trading volume of our Common Stock could decline.
The trading market for our Common Stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts provide coverage of us, our stock price and trading volume would likely be negatively impacted. If any of the analysts who may cover us change their recommendation regarding our Common Stock adversely, or provide more favorable relative recommendations about our competitors, the price of our Common Stock would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our Common Stock price or trading volume to decline.
Our executive officers, directors and principal stockholders own a significant percentage of our Common Stock and will be able to exert significant control over matters subject to stockholder approval.
As of March 30, 2023, our directors, executive officers and holders of more than 5% of our equity securities, together with their affiliates, beneficially own approximately 30% of our outstanding shares of Common Stock. As a result, these stockholders have significant influence to determine the outcome of matters submitted to our stockholders for approval, including the ability to control the election of our directors, amend or prevent amendment of our Third Amended and Restated Certificate of Incorporation or Bylaws or effect or prevent a change in corporate control, merger, consolidation, takeover or other business combination. In addition, any sale of a significant amount of our Common Stock held by our directors, executive officers and principal stockholders, or the possibility of such sales, could adversely affect the market price of our Common Stock. Our management’s stock ownership may also discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our Common Stock price or prevent our stockholders from realizing any gains from our Common Stock.
Implications of Being an “Emerging Growth Company”
As a public reporting company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company, we:
● are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act (the “Sarbanes-Oxley Act”);
● are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);
● are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);
● are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;
● may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) disclosure; and
● are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act.
We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.
Certain of these reduced reporting requirements and exemptions were already available to us due to the fact that we also qualify as a “smaller reporting company” under the SEC’s rules. For instance, smaller reporting companies are not required to obtain an auditor attestation and report regarding internal control over financial reporting, are not required to provide a compensation discussion and analysis, are not required to provide a pay-for-performance graph or CEO pay ratio disclosure, and may present only two years of audited financial statements and related MD&A disclosure.
Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act, or such earlier time that we no longer meet the definition of an emerging growth company. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our Common Stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period. Under current SEC rules, however, we will continue to qualify as a “smaller reporting company” for so long as we have a public float (i.e., the market value of common equity held by non-affiliates) of less than $700 million and annual revenue of less than $100 million as of the last business day of our most recently completed second fiscal quarter.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
We leased and occupy 6,250 square feet of office space and 6,750 square feet of warehouse space at 400 Avenue D, Suite 10, Williston, VT 05495. Solar Communities, Inc. our indirect wholly-owned subsidiary leases and occupies 8,640 square feet of office space and 5,360 square feet of warehouse space in Waterbury, Vermont and 15,000 square feet of warehouse space, 10,000 square feet of shop space and 5,000 square feet of office space in Rhinebeck, New York. We believe that these spaces are sufficient to meet our current needs across all business segments.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. 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 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. On January 17, 2023, the Company entered into a settlement agreement effectively resolving all claims with no additional consideration paid as a result of settlement.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our Common Stock is traded on Nasdaq under the symbol “ISUN.” The last reported sale price of our Common Stock on March 31, 2023 on Nasdaq was $1.03 per share
Holders of Common Stock.
On March 29, 2023, we had 461 registered holders of record of our Common Stock.
Dividends and dividend policy.
We have never declared or paid any cash dividend on our Common Stock, nor do we currently intend to pay any cash dividend on our Common Stock in the foreseeable future. We expect to retain our earnings, if any, for the growth and development of our business.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Reserved

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Business Introduction / Overview
Throughout our 50-year history, we have always embraced innovative change. There has never been a more meaningful, or impactful time to be a leader in the innovation that will help fight climate change. We have built a team that is passionate about transitioning American power generation and consumption to clean solar energy, we are passionately focused on our mission to accelerate the adoption of solar energy.
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, design, development and professional services, engineering, procurement, installation, O&M and storage. We uniquely target all solar markets including residential, commercial, industrial and utility segments.
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. We have positioned the company to serve all segments of the rapidly evolving energy markets. We are able to originate valuable solar assets through our development and design services team. We are able to leverage our digital sales and marketing capabilities to generate high quality leads for our Residential, Commercial and Industrial divisions. Our experience provides for the high-quality craftsmanship required for installing long-term assets for all customers. Our team approach allows us to collaborate across divisions in order to efficiently utilize our internal labor resources. The diversity of our service offerings allows us to serve our customer needs in the evolving energy environment.
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. Immediately prior to 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 was a utility-scale solar EPC, Development and Design company and a wholly-owned subsidiary of Adani. The Project IP included 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.
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. The benefits of the newly enacted Inflation Reduction Act of 2022 (“IRA”) provide stability and certainty of incentives for the next 10 years that create value to our shareholders and provides a long-term commitment for the energy transformation. 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. We have installed over 600 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.
The diverse nature of our service offerings allows us to manage our operations based on the maximization of value for our customers in the evolving energy market. Our core revenue stream is generated from our engineering, procurement and installation services and products consisting of solar, electrical and data installations but has expanded to include project origination, design and development services as well. . Approximately 85% of our revenue is derived from our solar EPC business, approximately 10% of revenue is derived from our electrical and data business and approximately 5% of revenue is derived from our project origination, development and design services. Recently our growth has been derived by increasing our solar customer base starting in 2013, mergers and acquisitions and expansion into new territories. We currently operate in Vermont, Maine, New Hampshire, New York, Massachusetts, Maryland, Alabama, Georgia and North and South Carolina. 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. Our joint ventures allow for a retained ownership in originated projects. 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.
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. Immediately prior to the Merger Agreement, we changed our name to iSun, Inc. (formerly The Peck Company Holdings, Inc,).
On April 6, 2021, iSun Utility, LLC (“iSun Utility”), a Delaware limited liability company and wholly-owned subsidiary of iSun, 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 was 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., 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 wholly-owned direct and indirect 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, intangibles, goodwill, investments, impairment on investment, estimates in recording business combinations, revenue recognition utilizing a cost to cost method, allowances for uncollectible accounts, 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.
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 years ended December 31, 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 December 31, 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
The Company 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”). The Company’s contract with the IBEW expires May 31, 2023.
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 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.
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 YEAR ENDED DECEMBER 31, 2022 COMPARED TO THE YEAR ENDED DECEMBER 31, 2021
REVENUE AND COST OF EARNED REVENUE
For the year ended December 31, 2022, our revenue increased 68.7% to a record of high of $76.5 million compared to $45.3 million for the year ended December 31, 2021. Cost of earned revenue for the year ended December 31, 2022, was 55.4% higher at $60.5 million compared to $38.9 million for the year ended December 31, 2021. Our revenue increased as a result of the deployment of our robust suite of services over a full year. In addition to our historical commercial and industrial customer base, we added the capabilities to serve residential, small commercial and utility customers as well as support the demand for electric vehicle infrastructure across all our customer demographics. For the year ended December 31, 2022, our residential division represented 52% of our revenue mix compared to 28% for the year ended December 31, 2021. For the year ended December 31, 2022, our commercial and industrial division represented 43% of our revenue mix compared to 69% for the year ended December 31, 2021. For the year ended December 31, 2022, our utility, design and development division represented 5% of our revenue mix compared to 3% for the year ended December 31, 2021.
Gross profit was $16.0 million for the year ended December 31, 2022. This compares to $6.4 million of gross profit for the year ended December 31, 2021. The gross margin was 20.89% in the year ended December 31, 2022 compared to 14.10% in the year ended December 31, 2021. Approximately 85% of revenues for the years ended December 31, 2022 and 2021 were from solar installations. The residential revenue, on an annualized basis, grew at a higher rate than the commercial and industrial revenue. The margin enhancement was driven by the increase in the residential installation revenue mix which operates at a higher margin than our commercial and industrial division. Since the residential backlog is completed on a more frequent basis than the other divisions, it is anticipated that the higher margin will be maintained on a go-forward basis.
For 2023, we anticipate an increase in revenue over 2022 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 $20.5 million expected to be completed within four to six months, our commercial division has a contracted backlog of approximately $11.2 million expected to be completed within six to eight months, our industrial division has a contracted backlog of approximately $132.5 million expected to be completed within twelve to eighteen months and our utility division has 1.6 GW of projects currently under development that will transition to the respective divisions backlog when approaching notice to proceed. Historically, we have engaged with existing customers throughout the Northeast. The capabilities of our development and professional services team have allowed us to engage in project development in new geographic regions which will further our expansion opportunities.
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. Total selling and marketing expenses, included in general and administrative expenses, increased to $1.2 million for the year ended December 31, 2022 compared to $0.2 million for the year ended December 31, 2021. Selling and marketing expenses were 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 $22.4 million for the year ended December 31, 2022, compared to $13.2 million for the year ended December 31, 2021. As a percentage of revenue, G&A expenses were consistent year over year at 29.3% in the year ended December 31, 2022 compared to 29.2% in the year ended December 31, 2021. In total dollars, G&A increased as we developed our internal platform to support the growth of our new customer revenue channels. For the year ended December 31, 2022, our G&A increased significantly as this was the first full year of operations of our newly acquired entities. As we continue to generate efficiencies through shared services and a consolidation of overhead, we anticipate our G&A expenses to remain consistent through our next revenue scale but decrease as a percentage of revenue.
WAREHOUSE AND OTHER OPERATING EXPENSES
Warehousing and other operating expenses increased to $1.8 million for the year ended December 31, 2022, compared to $0.6 million for the year ended December 31, 2021. The main contributions to the increase were a full year of operations of the entities acquired in 2021.
IMPAIRMENT
During the year ended December 31, 2022, we experienced a significant decline in our market capitalization, which continued into the first quarter of 2023, and management deemed such decline a triggering event related to goodwill. As a result, we performed an impairment assessment as of December 31, 2022 and determined that impacts of supply chain shortage, the anti-circumvention investigation and labor shortages have depressed market capitalizations across our peer group in the solar industry.
We utilized a weighted combination of the income-based approach and market-based approach to determine the fair value. Key assumptions used in the income-based approach included forecasts of revenue, operating income, cash flows, terminal growth rates and discount rates associated for the risks associated with the operations at the time of the assessment. Key assumptions used in the market-based approach included the selection of recent acquisitions by appropriate peer companies and associated valuation multiples. Our assessment, which was largely based on our current backlog of $164.2 million of revenue, yielded a range of valuations that were approximately 15% to 20% above carrying value. Due to the depressed market capitalizations across our peer groups, we believe that the current market capitalization is not an appropriate indicator of our valuation. Our income-based valuation, as well as that of independent analysts, provided results in excess of our carrying value. As we continue our growth towards cash flow positive operations, we believe that our market capitalization will appreciate to reflect our appropriate valuation. Although we believe, but we cannot say with a high degree of certainty that the decline in our market capitalization is temporary, in reconciling our current market capitalization to our carrying value, an impairment in the amount of $37.15 million was recorded consistent with U.S. GAAP.
OTHER INCOME (EXPENSES)
Interest expense for the twelve months ended December 31, 2022, was $1.4 million compared to $0.5 million for the same period of the prior year as a result of the B. Riley Capital credit facility utilized to support the acquisition of SunCommon. We recognized a gain on the forgiveness of PPP loan of $2.6 million and $2.0 million for the twelve months ended December 31, 2022 and December 31, 2021, respectively. We recognized gains from the change in fair value of the warrant liability of $0.1 million and $1.0 million for the years ended December 31, 2022 and 2021, respectively.
INCOME (BENEFIT) TAX EXPENSE
The U.S. GAAP effective tax rate for the years ended December 31, 2022 was 4.36% and December 31, 2021 was 23.48%. The proforma effective tax rate for the years ended December 31, 2022 was 21.0% and December 31, 2021 was 21.0%. At December 31, 2022 and 2021, the change in the effective tax rate (“ETR”) is driven by the non-taxable income generated from the forgiveness of a loan under the CARES Act Payroll Protection Program (“PPP”) of $2.6 million and $2.0 million, respectively.
NET LOSS
The net loss for the year ended December 31, 2022 was $53.8 million compared to a net loss of $6.2 million for the year ended December 31, 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. 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.
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:
Year ended
December 31,
Net loss $ (53,779 ) $ (6,241 )
Depreciation and amortization 7,071
Impairment of goodwill 37,150
-
Interest expense 1,351
Stock compensation 2,981 2,315
Change in fair value of warrant liability (138 ) (976 )
Income tax (benefit) (752 ) (1,915 )
EBITDA (6,116 ) (5,317 )
Other costs(1) 1,418
Adjusted EBITDA(2) $ (5,602 ) $ (3,899 )
Weighted Average shares outstanding 14,089,499 9,264,919
Adjusted EPS $ (0.40 ) $ (0.42 )
(1) For the year ended December 31, 2022, other costs consist of one-time expenses incurred related to a debt transaction that was not consummated. For the year ended December 31, 2021, other costs consist of one-time expenses related to the acquisitions of iSun Energy LLC, Oakwood Construction Services, LLC and SolarCommunities, Inc. The Company also held two Special Meetings of Stockholders in order to amend its Second Amended and Restated Certificate of Incorporation.
(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 $2.0 million for the years ended December 31, 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 $5.5 million in unrestricted cash at December 31, 2022, as compared to $2.2 million at December 31, 2021.
As of December 31, 2022, our working capital deficit was $4.5 million compared to a working capital deficit of $10.3 million at December 31, 2021. To date, the Company has relied predominantly on operating cash flow 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. The Company restructured its indebtedness in November 2022. The new debt facility allows for repayment of the obligation to pay principal and interest in shares of Common Stock which to the extent the Company elects to pay in shares of Common Stock preserves cash. If the Company elects to repay the convertible note in shares of Common Stock, the Company’s working capital would increase by $4.8 million to $0.3 million at December 31, 2022.
We believe that the aggregate of our existing cash and cash equivalents, debt facility 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 $20,500 expected to be completed within four to six months, our commercial division has a contracted backlog of approximately $11,200 expected to be completed within six to eight months, our industrial division has a contracted backlog of approximately $132,500 expected to be completed within twelve to eighteen months and our utility division has 1.6 GW of projects currently under development that will transition to the respective divisions backlog when approaching notice to proceed. The customer demand across our segments will provide short-term operational cash flow.
Sales of Common Stock pursuant to the Form S-3 Registration Statement filed on December 4, 2020, provided funds to support our operations and growth strategy. The access to capital accelerates our growth process and allows us to continue our expansion plans into new territories, aggressively pursue accretive merger and acquisition transactions and continue investing in our company-owned solar assets which now consist of the product offerings of iSun Energy LLC. As of March 16, 2023, there is currently approximately $16.0 million potentially available for sales pursuant to the Registration Statement as we received aggregate proceeds of approximately $10.5 million through a Registered Direct Offering and approximately $23.5 million through the sale of Common Stock in ATM offerings.
Cash flow used by operating activities was $6.3 million and $5.2 million for the years ended December 31, 2022 and 2021, respectively. The increase in cash used by operating activities was primarily the result of the decrease in accrued liabilities of $1.7 million which was due to payout of employee retention bonuses related to the SunCommon acquisition and payments of the earnout provision.
Net cash provided by investing activities was $1.2 million for the year ended December 31, 2022, compared to $36.7 million used in the year ended December 31, 2021. The change was attributable to the sale of solar assets in 2022 and the acquisition of SunCommon for $25.2 million and minority investments of $8.0 million, both taking place in 2021.
Net cash provided by financing activities was $8.4 million for the year ended December 31, 2022 compared to $43.4 million of cash provided by financing activities for the year ended December 31, 2021. Cash flow provided by financing activities was primarily driven by proceeds from the sale of common stock of $14.4 million.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
As of December 31, 2022, our fixed interest rate debt of $13.6 million aggregate principal amount of which accrued interest at a weighted average interest rate of approximately 5.0%. None of this debt subjects us to interest rate risk, but we may be subject to changes in interest rates if and when we refinance this debt at maturity or otherwise.
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.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 688)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
iSun, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of iSun, Inc. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Change in Accounting Principle
As discussed in Note 6 to the consolidated financial statements, the Company changed its method of accounting for leases on January 1, 2022 due to the adoption of Accounting Standards Codification, Leases (ASC 842).
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2019.
New York, NY
April 17, 2023
iSun, Inc.
Consolidated Balance Sheets
December 31, 2022 and 2021
(In thousands, except number of shares)
Assets
Current Assets:
Cash $ 5,455 $ 2,242
Accounts receivable, net of allowance 8,783 14,337
Contract assets 7,324 4,004
Inventory 2,536 2,480
Other current assets 1,625 1,071
Total current assets 25,723 24,134
Property and equipment:
Building and improvements
Vehicles 3,824 2,908
Tools and equipment 2,152 3,127
Software
Construction in process -
Solar arrays 6,708 6,859
Property plant and equipment, gross 13,475 14,098
Less accumulated depreciation (5,035 ) (3,007 )
Property plant and equipment, net 8,440 11,091
Other Assets:
Operating lease right-of-use asset 6,960 -
Captive insurance investment
Goodwill -
36,907
Intangible assets 14,038 18,858
Investments 12,020 12,420
Other assets
Total noncurrent assets 33,318 68,552
Total assets $ 67,481 $ 103,728
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable $ 12,941 $ 13,188
Accrued expenses 5,868 7,628
Operating lease liability -
Contract liabilities 5,419 2,389
Line of credit - 4,468
Current portion of deferred compensation
Current portion of long-term debt 5,374 6,694
Total current liabilities 30,221 34,398
Long-term liabilities:
Deferred compensation, net of current portion -
Deferred tax liability -
Warrant liability
Operating lease liability 6,711 -
Other liabilities 3,026 3,375
Long-term debt, net of current portion 8,226 5,149
Total liabilities 48,194 43,870
Commitments and Contingencies (Note 9) -
Stockholders’ equity:
Common stock - 0.0001 par value 49,000,000 shares authorized, 15,083,109 and 11,825,878 issued and outstanding as of December 31, 2022 and 2021, respectively
Additional paid-in capital 74,070 60,863
Accumulated deficit (54,785 ) (1,006 )
Total Stockholders’ equity 19,287 59,858
Total liabilities and stockholders’ equity $ 67,481
$ 103,728
The accompanying notes are an integral part of these consolidated financial statements.
iSun, Inc.
Consolidated Statements of Operations
For the Years Ended December 31, 2022 and 2021
(In thousands, except number of shares)
Earned revenue $ 76,453 $ 45,312
Cost of earned revenue 60,481 38,921
Gross profit 15,972 6,391
Warehouse and other operating expenses 1,765
General and administrative expenses 22,411 13,330
Stock based compensation - general and administrative 2,981 2,315
Impairment of goodwill 37,150
-
Depreciation and amortization 7,071
Total operating expenses 71,378 17,005
Operating loss (55,406 ) (10,614 )
Other expenses
Gain on forgiveness of PPP loan 2,592 2,000
Change in fair value of warrant liability
Other expense (504 ) -
Interest expense (1,351 ) (518 )
Loss before income taxes (54,531 ) (8,156 )
Benefit for income taxes (752 ) (1,915 )
Net loss (53,779 ) (6,241 )
Preferred stock dividend - (70 )
Net loss available to shares of common stockholders $ (53,779 ) $ (6,311 )
Weighted average shares of common stock outstanding
Basic and diluted 14,089,499 9,264,919
Basic and diluted $ (3.82 ) $ (0.67 )
The accompanying notes are an integral part of these consolidated financial statements.
iSun, Inc.
Consolidated Statement of Changes in Stockholders’ Equity
December 31, 2022 and 2021
(In thousands, except number of shares)
Shares Amounts Shares Amounts Capital Deficit) Total
Preferred Stock Common Stock Additional
Paid-In
Retained Earnings/
(Accumulated
Shares Amounts Shares Amounts Capital Deficit) Total
Balance as of January 1, 2021 200,000 $ - 5,313,268 $ 1 $ 2,577 $ 5,304 $ 7,882
Registered Direct Offering
840,000 - 9,585 - 9,585
Acquisition of iSun Energy, LLC - - 300,000 - 2,922 - 2,922
Exercise of Unit Purchase Option - - 130,000 - - - -
Redemption of Common Stock - - (34,190 ) - (673 ) - (673 )
Conversion of Preferred Shares (200,000 ) - 370,370 - - - -
Dividends Payable on Preferred Shares - - - - - (70 ) (70 )
Conversion of Solar Project Partners, LLC warrant - - 117,376 - - - -
Stock compensation under equity incentive plan - - 139,664 - 2,315 - 2,315
Exercise of options - - 100,666 - -
Exercise of public warrants - - 1,820,509 - 20,906 - 20,906
Acquisition of Solar Communities, Inc. - - 1,810,915 - 15,965 - 15,965
Acquisition of Liberty Electric, Inc. - - 29,749 - -
Sale of Common Stock pursuant to S-3 registration statement - - 887,551 - 6,866 - 6,866
Net loss - - - - - (6,241 ) (6,241 )
Balance as of December 31, 2021 - - 11,825,878 60,863 (1,006 ) 59,858
Beginning balance - - 11,825,878 60,863 (1,006 ) 59,858
Issuance under equity incentive plan - - 619,300
3,866 - 3,866
Redemption of Put Agreements
(575,966 )
(5,079 )
(5,079 )
Sale of Common Stock pursuant to S-3 registration statement - - 3,213,897 14,420 - 14,421
Net loss
-
- - (53,779 ) (53,779 )
Balance as of, December 31, 2022 - $ - 15,083,109 $ 2 $ 74,070 $ (54,785 ) $ 19,287
Ending balance - $ - 15,083,109 $ 2 $ 74,070 $ (54,785 ) $ 19,287
The accompanying notes are an integral part of these consolidated financial statements.
iSun, Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2022 and 2021
(In thousands, except number of shares)
Cash flows from operating activities
Net loss $ (53,779 ) $ (6,241 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Impairment of goodwill 37,150
-
Depreciation 2,252
Bad debt expense -
Amortization expense 4,820
Amortization of right-of-use asset -
Gain on forgiveness of PPP loan (2,592 ) (2,000 )
(Gain) on sale of fixed assets (63 )
Change in fair value of warrant liability (138 ) (976 )
Stock based compensation 3,866 2,315
Deferred finance charge amortization
Deferred income taxes (772 ) (1,909 )
Changes in operating assets and liabilities:
Accounts receivable 5,409 (8,121 )
Prepaid expenses (554 ) (825 )
Contract assets (3,320 ) (2,649 )
Inventory (56 ) (112 )
Accounts payable (247 ) 9,101
Accrued expenses (1,760 ) 3,956
Contract liabilities 3,030 1,248
Other assets (47 )
Other liabilities (349 )
Deferred compensation (28 ) (32 )
Operating lease liability (564 ) -
Net cash (used in) provided by operating activities (6,318 ) 5,195
Cash flows from investing activities:
Purchase of equipment (512 ) (976 )
Proceeds from sale of fixed assets 1,267 -
Acquisition of SolarCommunities, Inc. - (25,650 )
Acquisition of Liberty Electric, Inc. - (1,195 )
Acquisition of Oakwood Construction Services, LLC - (1,000 )
Acquisition of iSun Energy, LLC - (85 )
Dividend receivable
Minority investments - (8,000 )
Investment in captive insurance - (72 )
Net cash used in investing activities 1,155 (36,678 )
Cash flows from financing activities:
Proceeds from line of credit 20,453 30,684
Payments to line of credit (24,921 ) (29,697 )
Proceeds from long-term debt 12,500 10,616
Payments of deferred finance charges (1,654 ) -
Exercise of stock options -
Payments of long-term debt (7,344 ) (4,997 )
Redemption of shares of Common Stock - (673 )
Due to stockholders - (24 )
Proceeds from warrant exercise - 20,906
Proceeds from sales of common stock, gross proceeds of $14,867 less issuance costs of $446 14,421 6,866
Redemption of Put agreements (5,079 ) -
Registered direct offering - 9,585
Net cash provided by financing activities 8,376 43,416
Net increase in cash 3,213 1,543
Cash, beginning of year 2,242
Cash, end of year $ 5,455 $ 2,242
Supplemental disclosure of cash flow information
Cash paid during the year for:
Interest $ 1,351 $ 36
Income taxes -
Supplemental schedule of non-cash investing and financing activities:
Accrued employee incentive compensation settled in stock $ 885 $ -
Preferred dividends satisfied with distribution from investment $ - $ 70
Operating right-of-use lease asset and operating lease liability upon adoption of ASU 2016-02, Leases (Topic 842) -
Vehicles purchased and financed $ 465 $ -
Shares of Common Stock issued for acquisition of iSun Energy LLC $ - $ 2,922
Shares of Common Stock issued for acquisition of SolarCommunities, Inc. $ - $ 15,965
Shares of Common Stock issued for acquisition of Liberty Electric, Inc. $ - $ 250
The accompanying notes are an integral part of these consolidated financial statements.
iSUN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021 AND 2020
(in thousands, except share and per share data)
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
a) Organization
iSun, Inc. is a solar energy company providing design, development, engineering, procurement, installation, storage and electric vehicle infrastructure services for residential, commercial, industrial and utility customers across the United States. 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.
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., 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.
On April 6, 2021, iSun Utility, LLC (“iSun Utility”), a Delaware limited liability company and wholly-owned subsidiary of iSun, Inc., a Delaware corporation (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.
Effective January 19, 2021, the Company changed its corporate name from The Peck Company Holdings, Inc. to iSun, Inc. (the “Name Change”). The Name Change was effected through a parent/subsidiary short-form merger of iSun, Inc., our wholly-owned Delaware subsidiary formed solely for the purpose of the name change, with and into us. We were the surviving entity. To effectuate the short-form merger, we filed a Certificate of Merger with the Secretary of State of the State of Delaware on January 19, 2021. The merger became effective on January 19, 2021 with the State of Delaware and, for purposes of the quotation of our Common Stock on the Nasdaq Capital Market (“Nasdaq”), effective at the open of the market on January 20, 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) Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
The Company would cease to be an “emerging growth company” upon the earliest to occur of: the last day of the fiscal year in which it has more than $1.07 billion in annual revenue; the date it qualifies as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period, by it of more than $1.0 billion in non-convertible debt or December 31, 2021.
d) 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 December 31, 2022 and 2021, the Company had $0 in pre-contract costs classified as a current asset under contract assets on the 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, all recognized over time, based on the timing of satisfaction of performance obligations for the years ended December 31:
(In thousands)
SCHEDULE OF DISAGGREGATION OF REVENUE
Performance obligations satisfied over time
Solar $ 68,936 $ 40,512
Electric 6,354 3,631
Data and Network 1,163 1,169
Totals $ 76,453 $ 45,312
The following table disaggregates the Company’s revenue based operational division for the years ended December 31:
(In thousands)
SCHEDULE OF REVENUE BASED OPERATIONAL SEGMENT
Operations
Residential $ 39,513 $ 12,525
Commercial and Industrial 32,750 31,413
Utility 4,190 1,374
Totals $ 76,453 $ 45,312
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.
e) 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 $302 at December 31, 2022 and $84 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.
f) Contract Assets and Liabilities
Contract assets consist of (i) the earned, but unbilled, portion of a project for which payment is deferred by the customer until certain met; (ii) direct costs, including commissions, labor related costs and permitting fees paid prior to recording revenue, and (iii) unbilled receivables which represent revenue that has been recognized in advance of billing the customer, which is common for larger construction contracts. Contract liabilities consist of deferred revenue, customer deposits and customer advances, which represent consideration received from a customer prior to transferring control of goods or services to the customer under the terms of a contract. Total contract assets and contract liabilities balances as of the respective dates are as follows:
SCHEDULE OF CONTRACT ASSETS AND LIABILITIES
(In thousands)
Contract Assets $ 7,324 $ 4,004
Contract Liabilities 5,419 2,389
Project Assets
Project assets primarily consist of costs related to solar power projects that are in various stages of development that are capitalized prior to the completion of the sale of the project, and are actively marketed and intended to be sold. In contrast to contract assets, the Company holds a controlling interest in the project itself. These project related costs include costs for land, development, and construction of a PV solar power system. Development costs may include legal, consulting, permitting, transmission upgrade, interconnection, and other similar costs. The Company typically classifies project assets as noncurrent due to the nature of solar power projects (long-lived assets) and the time required to complete all activities to develop, construct, and sell projects, which is typically longer than 12 months. Once the Company enters into a definitive sales agreement, such project assets are classified as current until the sale is completed and the Company has met all of the criteria to recognize the sale as revenue. Any income generated by a project while it remains within project assets is accounted for as a reduction to the basis in the project. If a project is completed and begins commercial operation prior to the closing of a sales arrangement, the completed project will remain in project assets until placed in service. All expenditures related to the development and construction of project assets, whether fully or partially owned, are presented as a component of cash flows from operating activities. Project assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A project is considered commercially viable or recoverable if it is anticipated to be sold for a profit once it is either fully developed or fully constructed. A partially developed or partially constructed project is considered to be commercially viable or recoverable if the anticipated selling price is higher than the carrying value of the related project assets. The Company examines a number of factors to determine if the project is expected to be recoverable, including whether there are any changes in environmental, permitting, market pricing, regulatory, or other conditions that may impact the project. Such changes could cause the costs of the project to increase or the selling price of the project to decrease. If a project is not considered recoverable, we impair the respective project assets and adjust the carrying value to the estimated fair value, with the resulting impairment recorded within “Selling, general and administrative” expense.
Project Asset were $0 for the years ended December 31, 2022 and 2021, respectively.
g) Property and Equipment
Property and equipment greater than $5 are recorded at cost. Cost includes the price paid to acquire or construct the assets, required installation costs, and any expenditures that substantially add to the value or substantially extend the useful life of the assets.
The solar arrays represent project assets that the Company may temporarily own and operate after being placed into service. The Company reports solar arrays at cost, less accumulated depreciation. The Company begins depreciation on the solar arrays when they are placed in service.
Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
SCHEDULE OF ESTIMATED USEFUL LIVES
Buildings and improvements years
Vehicles 3-5 years
Tools and equipment 3-7 years
Solar arrays years
Software 3-7 years
Total depreciation expense for the years ended December 31, 2022 and 2021 was $2,252 and $681, respectively.
The cost of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation are eliminated from the accounts and any resulting gain or loss is included in operations. The cost of maintenance and repairs are charged to expense as incurred, while significant renewals or betterments are capitalized.
h) Intangible Assets
Intangible assets primarily consist of trademarks, intellectual property and backlog They are amortized ratably over a range of 1 to 10 years. The Company assesses the carrying value of its intangible assets for impairment each year. Based on its assessments, the Company has recorded any impairment during the years ended December 31, 2022 and 2021, respectively.
i) Goodwill
The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations,” where the total purchase price is allocated to the tangible and identified intangible assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The purchase price in excess of the fair value of the tangible and identified intangible assets acquired less liabilities assumed is recognized as goodwill.
The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. The Company has determined that the reporting unit is the entire company, due to the integration of all of the Company’s activities. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.
The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations. However, due to the decline in Company’s market price, it was determined that it was more likely and not that the Goodwill was fully impaired as of December 31, 2022 and recorded an impairment of $37,150, a nonrecurring fair value measurement.
j) Long-Lived Assets
The Company assesses long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances arise, including consideration of technological obsolescence, that may indicate that the carrying amount of such assets may not be recoverable. These events and changes in circumstances may include a significant decrease in the market price of a long-lived asset; a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; a significant adverse change in the business climate that could affect the value of a long-lived asset; an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; a current period operating or cash flow loss combined with a history of such losses or a projection of future losses associated with the use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
When impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If the carrying value of the asset group exceeds the undiscounted future cash flows, the Company measures any impairment by comparing the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed discounted cash flows for the asset group, (ii) third-party valuations, and/or (iii) information available regarding the current market value for such assets.
If the fair value of an asset group is determined to be less than its carrying value, an impairment in the amount of the difference is recorded in the period that the impairment indicator occurs. Estimating future cash flows requires significant judgment, and such projections may vary from the cash flows eventually realized.
The Company considers a long-lived asset to be abandoned after the Company has ceased use of such asset and it has no intent to use or repurpose the asset in the future. Abandoned long-lived assets are recorded at their salvage value, if any.
k) Asset Retirement Obligations
The Company develops, constructs, and operates certain solar arrays with land lease agreements that include a requirement for the removal of the assets at the end of the term of the agreement. The Company recognizes such asset retirement obligations (“ARO”) in the period in which they are incurred based on the present value of estimated third-party recommissioning costs, and it capitalizes the associated asset retirement costs as part of the carrying amount of the related assets. Once an asset is placed into service, the asset retirement cost is subsequently depreciated on a straight-line basis over the estimated useful life of the asset. Changes in AROs resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense. The AROs were not deemed significant to the financial statements and were therefore, not recorded as a liability at December 31, 2022 and 2021.
l) 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) limit of up to $250 per financial institution. The differences between book and bank balances are outstanding checks and deposits in transit. At December 31, 2022 and 2021, the uninsured balances were approximately $3,300 and $900, respectively.
m) Income Taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The financial statements of the Company account for deferred tax assets and liabilities in accordance with Accounting Standards Codification (“ASC”) 740, Income taxes.
The Company also 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. If the Company were to incur interest and penalties related to income taxes, these would be included in the provision for income taxes. Generally, the three tax years previously filed remain subject to examination by federal and state tax authorities.
o) Sales Tax
The Company’s accounting policy is to exclude state sales tax collected and remitted from revenues and costs of sales, respectively.
p) 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, discount rate used in lease analysis, investments, impairment on investments and valuation of deferred tax assets. Actual results could differ from those estimates.
q) Recently Issued Accounting Pronouncements
The Company is an emerging growth company until at minimum December 31, 2023. The Company will maintain the election available to an emerging growth company to use any extended transition period applicable to non-public companies when complying with a new or revised accounting standard. The Company retains its emerging growth status and therefore elects to adopt new or revised accounting standards on the adoption date required for a private company.
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. The new guidance requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers, as if it had originated the contracts. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of this standard on its 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 to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The ASU was effective years beginning after December 15, 2021, including interim periods within those years and the Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The ASU is effective for public companies, excluding entities eligible to be smaller reporting companies, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption was permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption had to be as of the beginning of the Company’s annual fiscal year. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In September 2020, the FASB issued ASU No. 2020-09, Debt (Topic 470). This ASU amends SEC paragraphs pursuant to SEC release No. 33-10762. We are currently assessing the provisions of this guidance to determine whether or not its adoption will have an impact on our consolidated financial statements and related disclosures. This guidance is effective for fiscal years beginning after December 15, 2021 with early adoption permitted. The adoption of this standard does not have a material impact on the consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either operating or financing, with such classifications affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. This standard is effective for the Company’s annual reporting period beginning after December 15, 2021.
In June 2016 the FASB issued ASU No. 2016-13, Financial Instruments-Credit losses (Topic 326). This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. The update will replace the current incurred loss model with an expected loss model. Under the incurred loss model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (that is has been “incurred”). Under the expected loss model, a loss (or allowance) is recognized upon initial recognitions of the asset that reflects all future events that leads to a loss being realized, regardless of whether it is probable that the future event will occur. The incurred loss model considers past events and conditions, while the expected loss model includes expectations for the future which have yet to occur. ASU 2018-19 was issued in November 2018 and excludes operating leases from the new guidance. The standard will require entities to record a cumulative-effect adjustment to the balance sheet as of the beginning of the first reporting period in which the guidance is effective. As an emerging growth company, the standard was effective for the Company’s 2021 annual reporting period and interim periods beginning first quarter of 2022. The adoption of this standard does not have a material impact on the Company’s consolidated financial statements and related disclosures.
r) Deferred Finance Costs
Deferred financing costs relate to the Company’s debt and equity instruments. Deferred financing costs relating to debt instruments are amortized over the terms of the related instrument using the effective interest method. The Company incurred $1,654 and $400 of deferred financing costs during the year ended December 31, 2022 and 2021, respectively. Amortization expense associated with deferred financing costs, which is included in interest expense, totaled $413 and $103 for the years ended December 31, 2022 and 2021, respectively.
s) 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.
t) 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 $2,592 has been recognized in the income statement as a gain upon debt extinguishment for the year ended December 31, 2022. On December 6, 2021, 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 $2,000 has been recognized in the income statement as a gain upon debt extinguishment for the year ended December 31, 2021.
u) 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. No inventory allowance exists at December 31, 2022 and December 31, 2021, respectively.
v) 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.
w) 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.
x) 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 December 31, 2022 and 2021, there are no material contingent liabilities arising from pending litigation.
2. ACQUISITIONS
iSun Energy, LLC
On January 19, 2021, the Company entered into an Agreement and Plan of Merger and Reorganization with iSun Energy LLC. iSun Energy LLC became a wholly-owned subsidiary of the Company. iSun Energy, LLC is a provider of products and services designed to support the electric vehicle market. In connection with Merger, Sassoon Peress, the sole member, will receive 400,000 shares of the Company’s Common Stock over five years valued at $2,404, 200,000 shares of which were issued at the closing, warrants to purchase up 200,000 shares of the Company’s Common Stock, valued at $518, cash considerations of $85 and up to 240,000 shares of the Company’s Common Stock based on certain performance milestones for an aggregate value of $3,007.
The 400,000 shares of Company’s Common Stock were valued utilizing the market close price of $6.01 on the date, December 30, 2020, which the binding letter of intent was executed. For the warrants, the Company determined the fair market value of these options by using the Black Scholes option valuation model. The key assumptions used in the valuation of the warrants were as follows; a) volatility of 103.32%, b) term of 3 years, c) risk free rate of 0.36% and d) a dividend yield of 0%.
At December 31, 2022 and 2021, the amount of $2,406 and $2,706, net of amortization of $601 and $301, respectively, is included as an Intangible Asset. The Company deemed the acquisition an asset acquisition in as much as the acquired assets consisted primarily of the iSun brand and know-how and contained no other business processes. Amortization is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life is 10 years. For the year ending December 31, 2022 and 2021, amortization expense is $600 and $301, respectively.
Assignment Agreement
On April 6, 2021, iSun Utility, LLC (“iSun Utility”), a Delaware limited liability company and wholly-owned subsidiary of 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 will acquire all rights to the intellectual property of Oakwood and its affiliates (the “Project IP”). Oakwood was 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.
Under the Assignment, iSun Utility purchased the Project IP from Adani and Oakwood for total consideration of $2.7 million, with $1.0 million due immediately and the remaining $1.7 million contingent upon the achievement of certain milestones, as described in this paragraph. Under the Assignment provides that iSun Utility acquired all membership interests in Hartsel Solar, LLC (“Hartsel”), and through this transaction iSun Utility acquired all rights to Hartsel’s in-process solar project (the “Hartsel Project”). If Hartsel achieves certain milestones, iSun Utility will pay to Adani $0.7 million to secure equipment previously purchased allowing for safe harbor of the 30% ITC and an additional amount of $1.0 million for key development milestones. The contingent provisions of the Assignment Agreement entered into with Oakwood and Adani are considered Level 3 measurements. Given that the probability of such provisions being achieved is highly unlikely and still remote at December 31, 2022, no value was assigned to the contingent provision.
At December 31, 2022 and 2021, the amount of $800 and $1,000, net of amortization of $150 and $0, respectively, is included as an Intangible Asset. The Company deemed the acquisition an asset acquisition in as much as the acquired assets consisted primarily of the know-how and contained no other business processes. Amortization is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life is 10 years. For the year ending December 31, 2022 and 2021, amortization expense is $150 and $0, respectively.
Business Combination
On September 8, 2021, the Company 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., 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. In connection with Merger, the SunCommon Shareholders received merger consideration totaling $48,300 consisting of (i) cash in the amount of $25,535; (ii) Common Stock of the Company (“Common Stock”) in the amount of $15,965, priced at $8.816 per share; and (iii) earn out consideration of up to $10,000 upon the fulfillment of certain conditions. The net present value of the earnout provision was determined to be $6,800 and the Company has included the $3,500 and $3,300 as current in accrued expenses and long-term liabilities in other liabilities, respectively. The shares of the Common Stock issued in connection with the Merger were listed on the NASDAQ Capital Market. The Merger closed and was effective on October 1, 2021.
The Company will begin reporting in segments in the future as we do not currently allocate labor amongst the operating divisions.
The purchase price for SolarCommunities, Inc. consisted of approximately $48,300,000 in cash, equity and earnout provision subject to post-closing adjustments related to working capital, cash, indebtedness and transaction expenses. The Acquisition was accounted for under ASC 805 and the financial results of SunCommon have been included in the Company’s consolidated financial statements since the date of the Acquisition.
Purchase Price Allocation
Under the purchase method of accounting, the transaction was valued for accounting purposes at approximately $48,300,000 which was the fair value of SolarCommunities, Inc. at the time of acquisition. The assets and liabilities of SolarCommunities, Inc. were recorded at their respective fair values as of the date of acquisition. Any difference between the purchase price of SolarCommunities, Inc. and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. There were no material changes between the preliminary and final estimated fair values. The acquisition date preliminary estimated fair value of the consideration transferred consisted of the following:
SCHEDULE OF BUSINESS ACQUISITIONS
Purchase price (in 000’s):
Fair value of iSun’s shares of Common Stock issued (1,810,955 shares), at $8.816 per share
$ 15,965
Cash paid
25,535
Earnout provision
6,800
Total consideration transferred
$ 48,300
Fair value of identifiable assets acquired:
Cash and cash equivalents $ 581
Accounts receivable 3,409
Inventory 2,653
Contract assets
Premises and equipment 4,447
Trademark and brand 11,980
Backlog 3,220
Other current assets
Total identifiable assets $ 27,662
Fair value of identifiable liabilities assumed:
Accounts payable and accrued liabilities $ 5,562
Contract liabilities 1,103
Customer deposits
Deferred tax liabilities 2,070
Loans payable 6,282
Other liabilities
Total identifiable liabilities $ 15,632
Net assets acquired including identifiable intangible assets
12,030
Goodwill
$ 36,270
During the year ended December 31, 2021, we recorded non-recurring total transaction costs related to the Acquisition of $1,235. These expenses were accounted for separately from the net assets acquired and are included in general and administrative expense.
Business Combination
On November 18, 2021, John Stark Electric, Inc., a New Hampshire corporation (“JSI”) and wholly-owned subsidiary of iSun, Inc., a Delaware corporation (the “Company”), Liberty Electric, Inc., a New Hampshire Corporation (“Liberty”) and John P. Comeau (“Comeau”) after obtaining required consents released signature pages and closed an Asset Purchase Agreement (the “Asset Purchase Agreement”), pursuant to which JSI acquired all of the assets of Liberty (the “Acquisition”) for a purchase price of $1,400, subject to a post-closing working capital adjustment. The purchase price was paid as follows: (i) cash in the amount of $1,200; (ii) Common Stock of the Company in the amount of $250, priced at $8.4035 per share, which was the 10-day volume weighted average Nasdaq closing price immediately prior to the Closing Date; and (iii) earn out consideration of up to $300 upon the fulfillment of certain conditions.
The purchase price for Liberty Electric, Inc. consisted of $1,400 in cash, equity and cash consideration for existing working capital subject to post-closing adjustments related to working capital, cash, indebtedness and transaction expenses. The Acquisition was accounted for under ASC 805 and the financial results of Liberty have been included in the Company’s consolidated financial statements since the date of the Acquisition.
Purchase Price Allocation
Under the purchase method of accounting, the transaction was valued for accounting purposes at $1,400 which was the fair value of Liberty Electric, Inc. at the time of acquisition. The assets and liabilities of Liberty Electric, Inc. were recorded at their respective fair values as of the date of acquisition. Any difference between the purchase price of Liberty Electric, Inc. and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The acquisition date estimated fair value of the consideration transferred consisted of the following:
SCHEDULE OF BUSINESS ACQUISITIONS
Purchase price (in 000’s):
Fair value of iSun’s shares of Common Stock issued (29,749 shares), at $8.4035 per share
$
Cash paid
1,195
Earnout provision
-
Total consideration transferred
$ 1,445
Fair value of identifiable assets acquired:
Accounts receivable
$
Inventory
Contract assets
Premises and equipment
Other current assets
Total identifiable assets
$
Fair value of identifiable liabilities assumed:
Accounts payable and accrued liabilities
$
Contract liabilities
Total identifiable liabilities
$
Net assets acquired including identifiable intangible assets
Goodwill
$
(1) The earnout provision has not been met and has not been included in the allocation of the purchase price.
Pro Forma Information (Unaudited)
The results of operations for the acquisitions of SolarCommunities, Inc. and Liberty Electric Inc. since 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 $12,500 and $700 of total revenue. The following unaudited pro forma financial information represents a summary of the consolidated results of operations for the years ended December 31, 2022 and 2021, assuming the acquisition had been completed as of January 1, 2020. 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 incurred in 2021. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of these dates, or of future results.
SCHEDULE OF BUSINESS PRO FORMA INFORMATION
(in 000’s)
Year Ended December 31,
(in 000’s)
Revenue, net $ 76,453 $ 72,501
Net loss $ (53,779 ) $ (9,202 )
Weighted average shares of common stock outstanding, basic and diluted 14,089,499 10,657,665
Net loss per share, basic and diluted $ (3.82 ) $ (0.86 )
3. LIQUIDITY AND FINANCIAL CONDITION
In 2022, the Company experienced a net operating loss and negative cash flow from operations. At December 31, 2022, the Company had balances of cash of $5,455, working capital deficit of $4,498, and total stockholders’ equity of $19,287. To date, the Company has relied predominantly on operating cash flow to fund its operations, borrowings from its credit facilities, sales of Common Stock and exercise of public warrants. Cash used in operations gives rise to substantial doubt however the availability of financing and the cash flow from operations mitigates the potential for substantial doubt. In November 2022, the Company borrowed funds pursuant to a secured fixed rate debt facility and paid and terminated its previously existing line of credit. The new debt facility allows for repayment of the obligation in shares of Common Stock which, if the Company choses to do, will conserve cash.
The Company does not expect to continue to incur losses from operations. For the years ended December 31, 2022 and 2021, margin was impacted significantly due to material and commodity price increases and inefficiencies resulting from labor shortages. The Company modified contract terms to allow for an adjustment in contract terms to account for any fluctuations in material pricing.
The demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has customer orders of approximately $20,500 expected to be completed within four to six months, our commercial division has a contracted backlog of approximately $11,200 expected to be completed within six to eight months, our industrial division has a contracted backlog of approximately $132,500 expected to be completed within twelve to eighteen months and our utility division has 1.6 GW of projects currently under development that will transition to the respective divisions backlog when approaching notice to proceed.. The customer demand across our segments will provide short-term operational cash flow.
As of March 16, 2023, the Company had approximately $16,000 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 operating cash flow, current cash on hand, and additional sales of Common Stock, the collectability of its accounts receivable and proceeds generated from its 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:
SCHEDULE OF ACCOUNTS RECEIVABLE
December 31,
December 31,
Accounts receivable - contracts in progress $ 8,502 $ 13,886
Accounts receivable - retainage
Accounts receivable 9,085 14,421
Allowance for doubtful accounts (302 ) (84 )
Total $ 8,783 $ 14,337
Bad debt expense was $145 and $0 for the years ended December 31, 2022 and 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 December 31, 2022 and 2021:
SUMMARY OF CONTRACT ASSETS AND LIABILITIES
December 31,
December 31,
Contract assets $ 7,231 $ 3,452
- -
Unbilled receivables, included in costs in excess of billings
Costs and estimated earnings in excess of billings 7,324 4,004
Retainage, included in Accounts Receivable
Total $ 7,907 $ 4,539
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 costs associated with contract assets as of December 31, 2022 will be billed and collected within one year. Contract liabilities were as follows at December 31, 2022 and 2021:
December 31,
December 31,
Contract Liabilities $ 5,419 $ 2,389
Retainage - -
Total $ 5,419 $ 2,389
5. CONTRACTS IN PROGRESS
Information with respect to contracts in progress are as follows:
SCHEDULE OF CONTRACTS IN PROGRESS
December 31,
December 31,
Expenditures to date on uncompleted contracts $ 31,215 $ 13,716
Estimated earnings thereon 2,509 2,784
Contract costs 33,744 16,499
Less billings to date (31,912 ) (15,436 )
Contract costs, net of billings 1,812 1,063 )
Plus under billings remaining on contracts 100% complete
Total $ 1,905 $ 1,615
Included in accompany balance sheets under the following captions:
December 31,
December 31,
Contract assets $ 7,324 $ 4,004
Contract liabilities (5,419 ) (2,389 )
Total $ 1,905 $ 1,615
6. LEASES
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842): Accounting for Leases. This update requires that lessees recognize right-of-use assets and lease liabilities that are measured at the present value of the future lease payments at lease commencement date. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will largely remain unchanged and shall continue to depend on its classification as a finance or operating lease. The Company adopted the ASU and related amendments on January 1, 2022 and elected certain practical expedients permitted under the transition guidance. The Company elected the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods, retained historical lease classification, and not applying hindsight in determining the lease term. The Company also elected the short-term lease exception for all classes of assets, and therefore does not apply the recognition requirements for leases of 12 months or less.
Under the new guidance, the majority of the Company’s leases continued to be classified as operating. During the fourth quarter of 2022, the Company completed its implementation of its processes and policies to support the new lease accounting and reporting requirements. Based on the Company’s lease portfolio as of January 1, 2022, the impact of adopting ASU 2016-02 increased both the Company’s total assets and total liabilities by approximately $7,539 and $7,808 respectively. The adoption of this ASU did not have a significant impact on the Company’s Consolidated Statements of Operations or Cash Flows.
The Company has operating leases for offices, warehouse, vehicles, office equipment and land leases for its solar assets. The Company’s leases have remaining lease terms of 1 year to 18 years, some of which include options to extend.
The Company’s lease expense for the year ended December 31, 2022 was entirely comprised of operating leases and amounted to $753. Operating lease payments, which reduced operating cash flows for the year ended December 31, 2022 amounted to $835. The difference between the ROU asset amortization of $660 and the associated lease expense of $642 consists of interest, new vehicles, new facilities and lease extensions, office and office equipment leases originated during the year ended December 31, 2022.
SCHEDULE OF OPERATING LEASE
December 31,
Operating lease right-of-use assets $ 6,960
Operating lease liabilities-short term
Operating lease liabilities-long term 6,711
Total operating lease liabilities $ 7,299
As of December 31, 2022, the weighted average remaining lease term for operating leases was 10.94 years and the weighted average discount rate for the Company’s operating leases was 3.33%.
Estimated minimum future lease obligations are as follows:
SCHEDULE OF ESTIMATED FUTURE MINIMUM LEASE
Year ending December 31: Amount
$ 817
Thereafter 4,740
Total lease payments 8,753
Less: interest (1,454 )
Total $ 7,299
7. LONG-TERM DEBT
A summary of long-term debt is as follows:
SUMMARY OF LONG-TERM DEBT
December 31,
December 31,
NBT Bank, National Association, 4.25% interest rate, secured by all business assets, payable in monthly installments of $5,869 through September 2026, with a balloon payment at maturity. $ 598 $ 641
NBT Bank, National Association, 4.20% interest rate, secured by building, payable in monthly installments of $3,293 through September 2026, with a balloon payment at maturity. -
NBT Bank, National Association, 4.15% interest rate, secured by all business assets, payable in monthly installments of $3,677 through April 2026.
NBT Bank, National Association, 4.20% interest rate, secured by all business assets, payable in monthly installments of $5,598 through October 2026, with a balloon payment at maturity.
NBT Bank, National Association, 4.85% interest rate, secured by a piece of equipment, payable in monthly installments of $2,932 including interest, through May 2023.
Various vehicle loans, interest ranging from 0% to 10.09%, total current monthly installments of approximately $34,878 secured by vehicles, with varying terms through 2027. 1,271 1,147
National Bank of Middlebury, 3.95% interest rate for the initial 5 years, after which the loan rate will adjust equal to the Federal Home Loan Bank of Boston 5/10 - year Advance Rate plus 2.75%, loan is subject to a floor rate of 3.95%, secured by solar panels and related equipment, payable in monthly installments of $2,388 including interest, through December 2024.
B. Riley Commercial Capital, LLC, 8.0% interest rate, payable in full on October 15, 2022 - 6,046
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 1% through April 2026. The Company has not yet applied for forgiveness. - 2,592
Senior secured convertible notes payable, 5% interest rate, monthly payments of 1/26th of the original purchase amount plus accrued but unpaid interest beginning March 1, 2023 until maturity date of May 4, 2025. 12,500 -
December 31,
December 31,
CSA 5: Payable in monthly installments of $2,414, including interest at 5.5%, due August 2026. -
CSA 17: Payable in monthly installments of $2,414, including interest at 5.5%. The interest rate will become variable at the VEDA Prime Rate from April 2025 through maturity in April 2027. -
CSA 36: Payable in monthly installments of $2,414, including interest at 5.5%. The interest rate will become variable at the VEDA Prime Rate from June 2025 through maturity in June 2027.
CSA 5: Payable in monthly interest only installments of $1,104 through August 2019; then payments of $552, representing half of monthly interest only payments, through August 2026 with other half of interest only payments capitalized into principal; then $2,485 monthly payments of principal and interest, with a balloon payment of $20,142 due August 2034; interest at 11.25% throughout the loan term. -
CSA 17: Payable in monthly interest only installments of $1,104 through April 2020; then payments of $552, representing half of monthly interest only payments, through April 2027 with other half of interest only payments capitalized into principal; then $2,485 monthly payments of principal and interest, with a balloon payment of $20,142 due April 2035; interest at 11.25% throughout the loan term. -
CSA 36: Payable in monthly interest only installments of $1,104 through June 2020; then payments of $552, representing half of monthly interest only payments, through June 2027 with other half of interest only payments capitalized into principal; then $2,485 monthly payments of principal and interest, with a balloon payment of $20,142 due June 2035; interest at 11.25% throughout the loan term.
Equipment loans
Easement liabilities -
Long-term debt 15,155 12,157
Less current portion (5,374 ) (6,694 )
Long-term debt, including debt issuance costs 9,781 5,463
Less debt issuance costs (1,555 ) (314 )
Long-term debt $ 8,226 $ 5,149
Maturities of long-term debt are as follows:
SCHEDULE OF MATURITIES OF LONG-TERM DEBT
Year ending December 31: Amount
$ 5,374
6,285
2,356
Thereafter
Total $ 15,155
Senior Secured Convertible Notes Payable
On November 4, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with two affiliated investors. At the Closing, the Company issued and sold to each Purchaser a Senior Secured Convertible Note, the aggregate original principal amount of the two Notes was $12,500. The Purchase Agreement provided for a six percent (6%) original interest discount resulting in gross proceeds to the Company of $11,750. Upon (i) the effectiveness of a Registration Statement covering the Registrable Securities (as defined in the SPA), (ii) the Stockholder Approval (as defined in the SPA), (iii) the Company’s achievement of certain revenue and EBITDA targets, (iv) the Company having sufficient authorized shares of Common Stock (v) the 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, the two notes being in the aggregate principal amount of $12,500 having identical terms and conditions as the original Note, including a six percent (6%) original interest discount, for an aggregate principal amount of $25,000 in Notes that may be issued and sold pursuant to the Purchase Agreement. The Conversion Price of $2.66 is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for, Common Stock at a price below the then-applicable Conversion Price (subject to certain exceptions). Beginning on March 1, 2023 and on the first day of each month thereafter, the Company will be required to redeem 1/26th of the original principal amount of each Note, plus accrued but unpaid interest, until the maturity date of May 4, 2025.
Payroll Protection Loan
In June, 2020, SolarCommunities, Inc. entered into a Promissory Note with Citizens Bank, N.A. as the lender (“Lender”), pursuant to which the Lender agreed to make a loan to the Company under the Payroll Protection Program (“PPP Loan”) offered by the U.S. Small Business Administration (“SBA”) in a principal amount of $2,592 pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (“CARES”). On January 21, 2022, SolarCommunities, Inc. received notification from Citizens Bank, N.A. that the Small Business Administration had approved the forgiveness of the PPP loan in its entirety and accordingly $2,592 was recognized in the consolidated income statement as a gain upon debt extinguishment for the year ended December 31, 2022.
In February 2021, SolarCommunities, Inc., an indirect wholly-owned subsidiary of the Company, entered into a Promissory Note with Citizens Bank, N.A. as the lender (“Lender”), pursuant to which the Lender agreed to make a loan to the Company under the Payroll Protection Program (“PPP Loan”) offered by the U.S. Small Business Administration (“SBA”) in a principal amount of $2,000 pursuant to Title 1 of the Coronavirus Aid, Relief and Economic Security Act (“CARES”). On December 6, 2021, SolarCommunities, Inc. received notification from the Lender that the Small Business Administration has approved the forgiveness of the PPP loan in its entirety and accordingly $2,000 has been recognized in the consolidated income statement as a gain upon debt extinguishment for the year ended December 31, 2021.
8. LINE OF CREDIT
The Company had a working capital line of credit with NBT Bank N.A. with a limit of $6,000 and a variable interest rate based on the Wall Street Journal Prime rate. The balance outstanding was $0 and $4,468 at December 31, 2022 and December 31, 2021, respectively. The line was paid in full and terminated during November 2022.
9. COMMITMENTS AND CONTINGENCIES
In 2020, the Company entered into a ten-year 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. The 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.
In 2015, the Company entered into two twenty-five-year non-cancelable lease agreements for land on which they constructed solar arrays. One lease has fixed annual rent of $3. The second lease has annual rent of $3 with an annual increase of 2%.
In 2017, the Company entered into a twenty-year non-cancelable lease agreement for land on which it constructed solar arrays. The lease has annual rent of $4 with an annual increase of 2%.
In 2018, the Company entered into a twenty-year non-cancelable lease agreement for land on which it constructed solar arrays. The lease has annual rent of $26.
In 2019, the Company entered into a two-year non-cancelable lease agreement for equipment used in solar installations. The lease has an annual rent of $50 and expired in 2021.
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.
The Company leases vehicles and office equipment under various agreements expiring through June 2026. As of December 31, 2022, aggregate monthly payments required under these leases approximates $35.
Settlement of Pending Litigation
On January 26, 2022 a Complaint was filed in the U.S. District Court for the District of Vermont by Sassoon Peress and Renewz Sustainable Solutions, Inc. against the Company, 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 sought legal and equitable remedies. On January 17, 2023, the Company entered into a Settlement Agreement resolving all claims in consideration of a modification of the timing of the delivery of the Acquisition consideration and payment of Mr. Peress’ attorneys’ fees. The matter was dismissed with prejudice on March 13, 2023.
10. WARRANTS
On March 9, 2021, the Company announced its intention to redeem all of its outstanding public warrants to purchase shares of the Company’s Common Stock that were issued under the Warrant Agreement.
On April 12, 2021, the Company redeemed approximately 453,764 Warrants for $0.01 per warrant that remained outstanding on the Redemption Date, in accordance with the Public Warrant terms. After the redemption, as of April 12, 2021, the Company had no outstanding public warrants outstanding.
As of December 31, 2021, the Company received notification that (3,641,018) warrants issued in connection with the Company’s (Jensyn Acquisition Corp.) initial public offering were exercised and 1,820,509 shares of Common Stock were issued in connection with such exercise resulting in cash proceeds to the Company of $20,906.
SCHEDULE OF WARRANTS
December 31,
December 31,
Beginning balance 69,144 4,163,926
Granted - -
Exercised - (3,641,018 )
Redeemed - (453,764 )
Ending balance 69,144 69,144
11. FAIR VALUE MEASUREMENTS
The Public Warrants were traded under the symbol ISUNW and the fair values were based upon the closing price of the Public Warrants at each measurement date. The Private Warrants were valued using a Black-Scholes model, pursuant to the inputs provided in the table below:
SCHEDULE OF FAIR VALUE MEASUREMENT INPUTS
Input Mark-to-Market
Measurement at
December 31, 2022
Mark-to-Market
Measurement at
December 31, 2021
Risk-free rate 3.88 % 0.06 %
Remaining term in years 1.47 2.47
Expected volatility 147.02 % 152.90 %
Exercise price $ 11.50 $ 11.50
Fair value of common stock $ 1.30 $ 5.96
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:
SCHEDULE OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS
Fair Value Measurement as of
December 31, 2022
Total Level 1 Level 2 Level 3
Liabilities:
Public Warrants $ - $ - $ - $ -
Private Warrants - -
Fair Value Measurement as of
December 31, 2021
Total
Level
Level
Level
Liabilities:
Public Warrants
$ -
$ -
$ -
$ -
Private Warrants
-
-
The following is a roll forward of the Company’s Level 3 instruments:
SCHEDULE OF ROLL FORWARD OF LEVEL 3 INSTRUMENTS
December 31,
December 31,
Beginning balance $ 148 $ 350
Fair value adjustment - Warrant liability (138 ) (202 )
Ending balance $ 10 $ 148
12. 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, 2023. During the years ended December 31, 2022 and 2021, the Company incurred the following union assessments (in thousands):
SCHEDULE OF UNION ASSESSMENTS
December 31,
December 31,
Pension fund $ 350 $ 322
Welfare fund 1,120
National employees benefit fund
Joint apprenticeship and training committee
401(k) matching
Total $ 1,785 $ 1,538
Multiemployer Plans
The Company is party to collective bargaining agreements with unions representing certain of their employees, which require the Company to pay specified wages, provide certain benefits to their union employees and contribute certain amounts to Multi-Employer Pension Plans (“MEPP”). The Pension Plan Agreement (“PPA”) defines the funding rules for defined benefit pension plans and establishes funding classifications for U.S.-registered multiemployer pension plans. Under the PPA, plans are classified into one of the following five categories, based on multiple factors, also referred to as a plan’s “zone status”: Green (safe), Yellow (endangered), Orange (seriously endangered), and Red (critical or critical and declining). Factors included in the determination of a plan’s zone status include: funded percentage, cash flow position and whether the plan is projecting a minimum funding deficiency.
A multiemployer plan that is so underfunded as to be in “endangered,” “seriously endangered,” “critical,” or “critical and declining” status (as determined under the PPA) is required to adopt a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”), which, among other actions, could include decreased benefits and increased employer contributions, which could take the form of a surcharge on benefit contributions. These actions are intended to improve their funding status over a period of years. If a pension fund is in critical status, a participating employer must pay an automatic surcharge in addition to contributions otherwise required under the collective bargaining agreement (“CBA”). With some exceptions, the surcharge is equal to 5% of required contributions for the initial critical year and 10% for each succeeding plan year in which the plan remains in critical status. The surcharge ceases on the effective date of a CBA (or other agreement) that includes contribution and benefit terms consistent with the rehabilitation plan. Certain plans in which the Company participates are in “endangered,” “seriously endangered,” “critical,” or “critical and declining” status. The amount of additional funds, if any, that the Company may be obligated to contribute to these plans in the future cannot be estimated due to the uncertainty of the future levels of work that could be required of the union employees covered by these plans, as well as the required future contribution rates and possible surcharges applicable to these plans.
Details of significant multiemployer pension plans as of and for the periods indicated, based upon information available to the Company from plan administrators as well as publicly available information on the U.S. Department of Labor website, are provided in the following table:
SCHEDULE OF MULTIEMPLOYER PLANS
Multiemployer Employer
Identification
Plan Contributions
For the Years Ended
December 31,
Expiration
Date of
Pension Protection Act Zone Status FIP/RP
Pension Plan Number Number CBA As of As of Status Surcharge
National Electrical Benefit Fund 53-0181657 99,907 91,180 5/31/2023 Green 12/31/2022 Green 12/31/2021 NA No
13. INCOME TAXES
The provision for income taxes for the years ended December 31, 2022 and 2021 consists of the following:
SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)
Current
Federal $ - $ (1 )
State (5 )
Total Current (6 )
Deferred
Federal (585 ) (1,447 )
State (187 ) (462 )
Total Deferred $ (772 ) (1,909 )
Benefit for Income Taxes $ (752 ) $ (1,915 )
The Company’s total deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows:
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets (liabilities)
Accruals and reserves $ 219 $ 170
Tax credits
Net operating loss 19,673
6,182
Stock-based compensation -
Less valuation allowance (15,171 ) -
Total deferred tax assets 5,335 6,866
Property and equipment (5,335 ) (3,466 )
Intangibles - (3,857 )
Stock-based compensation - (315 )
Total deferred tax liabilities (5,335 ) (7,638 )
Net deferred tax liability $ - $ (772 )
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 December 31, 2022 and 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 for the year ended December 31, 2022 and 2021 respectively. Generally, the three tax years previously filed remain subject to examination by federal and state tax authorities. The Company does not expect a material change in uncertain tax positions to occur within the next 12 months.
For the years ended December 31, 2022 and 2021, respectively, the reconciliation between the effective tax of 4.36% and 23.48% on income from operations and the statutory tax rate of 21% and 21% is as follows:
SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION
Income tax expense at federal statutory rate $ (11,450 ) $ (1,683 )
Paycheck Protection Program tax exempt loan forgiveness (544 ) (420 )
Permanent differences
Permanent differences for change in fair value of warrants (29 ) (205 )
Stock compensation subject to §162(m) limitation -
Non-deductible intangible assets -
Other adjustments -
State and local taxes net of federal benefit (3,902 ) (671 )
Valuation allowance 15,171
-
Income tax benefit $ (752 ) $ (1,915 )
The Company received a loan under the CARES Act Payroll Protection Program (“PPP”) of $1,488. The Company’s acquisition of SolarCommunities, Inc. and its subsidiaries included the assumption of outstanding “PPP” loans of $2,592 and $2,000. 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 and its subsidiaries PPP loan were forgiven in its entirety in 2022 and 2021.
The Company has federal net operating losses of approximately $34,000 of which $2,200 will expire beginning in 2035, $31,800 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 state net operating losses of approximately $29,600 which will expire beginning in 2029. The Company has tax credit carryforwards of approximately $592 which will expire beginning in 2034. A valuation allowance has been recorded for a portion of the tax credits and net operating loss. 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. Utilization of net operating losses and tax credit carryforwards may be limited by ownership change rules, as defined in Section 382 and 383 of the Internal Revenue Code.
14. CAPTIVE INSURANCE
The Company and other companies are members of an offshore heterogeneous group captive insurance holding company entitled Navigator Casualty, LTD. (NCL). NCL is located in the Cayman Islands and insures claims relating to workers’ compensation, general liability, and auto liability coverage.
Premiums are developed through the use of an actuarially determined loss forecast. Premiums paid totaled $235 and $248 for the years ended December 31, 2022 and 2021, respectively. The loss funding, derived from the actuarial forecast, is broken-out into two categories by the actuary known as the “A & B” Funds. The “A” Fund pays for the first $100,000 of any loss and the “B” Fund contributes to the remainder of the loss layer up to $300,000 total per occurrence.
Each shareholder has equal ownership and invests a one-time cash capitalization of $36,000. This is broken out into two categories, $35,900 of redeemable preference shares and $100 for a single common share. Each shareholder represents a single and equal vote on NCL’s Board of Directors.
Summary financial information on NCL as of September 30, 2022 is:
SUMMARY OF FINANCIAL INFORMATION
Total assets $ 147,394
Total liabilities $ 80,785
Comprehensive income $ 2,137
NCL’s fiscal year end is September 30, 2022.
December 31,
December 31,
Investment in NCL
Capital $ 36 $ 36
Cash security
Investment income in excess of losses (incurred and reserves)
Total $ 270 $ 270
15. RELATED PARTY TRANSACTIONS
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 $400 of the net proceeds as paid in capital. At December 31, 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 $250 for the stock purchase which is included in the “due from stockholders”. At December 31, 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 December 31, 2022 and December 31, 2021, the amounts owed of $0 and $60, respectively, are included in the “due to stockholders” as there is a right to offset.
16. DEFERRED COMPENSATION PLAN
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 $59. 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 December 31, 2022 and 2021 and recorded in the statement of operations when incurred.
17. 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.
SCHEDULE OF POTENTIAL SHARE ISSUANCES EXCLUDED FROM COMPUTATION OF EARNINGS (LOSS) PER SHARE
Years Ended December 31,
Option to purchase Common Stock, from Jensyn’s IPO 429,000 429,000
Warrants to purchase Common Stock, from Jensyn’s IPO 34,572 34,572
Unvested restricted stock awards 305,023 160,667
Unexercised options to purchase Common Stock 225,666 -
Unvested options to purchase Common Stock 350,667 201,334
Totals 1,344,928 825,573
The Company has contingent share arrangements and warrants with the potential issuance of additional shares of Common Stock from these arrangements which were excluded from the diluted EPS calculation because the prevailing market and operating conditions at the present time do not indicate that any additional shares of Common Stock will be issued. These instruments could result in dilution in future periods.
18. RESTRICTED STOCK AND STOCK OPTIONS
Options
As of December 31, 2022, the Company has 201,334 non-qualified stock options outstanding to purchase 201,334 shares of Common Stock, per the terms set forth in the option agreements. The stock options vest at various times and are exercisable for a period of five years from the date of grant at an exercise price of $1.49 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 $1.7 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 187.94%, b) term of 2 years, c) risk free rate of 0.13% and d) a dividend yield of 0%.
SCHEDULE OF SHARE BASED PAYMENT ARRANGEMENT, OPTION, ACTIVITY
December 31, 2022
Number of
Options
Weighted average
exercise price
Outstanding, beginning January 1, 2022 201,334 $ 1.49
Granted 375,000 $ 5.04
Exercised - $ 1.49
Outstanding, ending December 31, 2022 576,334 $ 3.80
Exercisable at December 31, 2022 225,666 $ 3.46
December 31, 2021
Number of
Options
Weighted average
exercise price
Outstanding, beginning January 1, 2021 - $ -
Granted 302,000 $ 1.49
Exercised 100,666 $ 1.49
Outstanding, ending December 31, 2021 201,334 $ 1.49
Exercisable at December 31, 2021 - $ -
The above table does not include the 429,000 options issued as part of the Jensyn IPO.
Aggregate intrinsic value of options outstanding at December 31, 2022 and 2021 was $0 and $900. Aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the fiscal period which was $5.96 as of December 31, 2021 and the exercise price multiplied by the number of options outstanding.
During the years ended December 31, 2022 and 2021, the Company charged a total of $1,359 and $1,136, respectively to operations to recognize stock based compensation expense for stock options. As of December 31, 2021, the Company had $395 in unrecognized stock-based compensation expense related to 576,334 stock option awards, which is expected to be recognized over a weighted average period of less than three years. All options are expected to vest.
During the years ended December 31, 2022 and 2021, stock options were exercised for 0 and 100,666 shares of Common Stock providing approximately $0 and $100 of proceeds to the Company, respectively.
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 issuable under the January 2021 RSGA are valued as of the grant date at $6.15 per share representing the fair market value. The January 2021 RSGA provides for the issuance of up to 241,000 shares of the Company’s Common Stock. The restricted shares shall vest as follows: 80,333 of the restricted shares shall vest immediately, 80,333 of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or 80,334 restricted shares, shall vest on the two (2) year anniversary of the effective date.
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 issuable under the January 2022 RSGA are valued as of the grant date at $5.04 per share representing the fair market value. The January 2022 RSGA provides for the issuance of up to 187,500 shares of the Company’s Common Stock. The restricted shares shall vest as follows: 62,500 of the restricted shares shall vest immediately, 62,500 of the restricted shares shall vest on the one (1) year anniversary of the effective date, and the balance, or 62,500 restricted shares, shall vest on the two (2) year anniversary of the effective date.
With an effective date of April 18, 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 April 2022 (the April 2022 RSGAs). All shares issuable under the April 2022 RSGA are valued as of the grant date at $3.63 per share representing the fair market value. The April 2022 RSGA provides for the issuance of up to 337,033 shares of the Company’s Common Stock. The restricted shares shall vest as follows: 112,345 of the restricted shares shall vest on December 31, 2022, 112,345 of the restricted shares shall vest on December 31, 2023, and the balance, or 112,343 restricted shares, shall vest on December 31, 2024.
During the year ended December 31, 2022 and 2021, stock-based compensation expense of $1,532 and $915 was recognized for the January 2021 RSGA, January 2022 RSGA and April 2022 RSGA, respectively.
Stock-based compensation, excluding the January 2021 RSGA, January 2022 RSGA and April 2022 RSGA, related to employee and director options totaled $90 and $264 for the year ended December 31, 2021 and 2020, respectively.
On December 17, 2021, the stockholders approved an amendment to the 2020 Equity Incentive Plan increasing the available shares of Common Stock to 3,000,000 shares of Common Stock.
19. INVESTMENTS
Investments consist of:
SCHEDULE OF INVESTMENT
December 31,
December 31,
GreenSeed Investors, LLC $ 3,924 $ 4,324
Investment in Solar Project Partners, LLC
Investment in Gemini Electric Mobility Co. 2,000 2,000
Investment in NAD Grid Corp. d/b/a AmpUp 1,000 1,000
Investment in Encore Renewables 5,000 5,000
Total $ 12,020 $ 12,420
GreenSeed Investors, LLC (“GSI”) and Solar Project Partners, LLC (“SPP”)
For the year ended December 31, 2022, the Company received a return of capital from GSI in the amount of $400. The dividend receivable of $400 is included in other current assets as of December 31, 2022.
The GSI and SPP investments are measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in ordinary transactions for the identical or similar investment of the same issuer. As the Company does not have significant influence over operating or financial policies of GSI and SPP, the cost method of accounting for the investment was determined to be appropriate. Changes in the fair value of the investment are recorded as net appreciation in fair value of investment in the Consolidated Statements of Operations. No net appreciation or depreciation in fair value of the investments was recorded during the year ended December 31, 2021, as there were no observable price changes.
Gemini and AmpUp
On March 18, 2021, the Company made a minority investment of $1,500 in Gemini Electric Mobility Co. (“Gemini”) pursuant to a Simple Agreement for Future Equity. On May 6, 2021, the Company made an additional minority investment of $500 in Gemini.
On March 18, 2021, the Company made a minority investment of $1,000 in Nad Grid Corp (“AmpUp”) pursuant to a Simple Agreement for Future Equity.
The Gemini and AmpUp investments are measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in ordinary transactions for the identical or similar investment of the same issuer. These investments are minority investments intended to support electric vehicle infrastructure development. The Company has no control in these entities. Changes in the fair value of the investment are recorded as net appreciation in fair value of investment in the Consolidated Statements of Operations. At December 31, 2022 and 2021, the equity investment for Gemini and AmpUp was $2,000 and $1,000, respectively. No net appreciation or depreciation in fair value of the investments was recorded during the year ended December 31, 2022 and 2021, respectively, as there were no observable price changes.
Encore Renewables
On November 24, 2021, the Company entered into a Membership Unit Purchase Agreement pursuant to which the Company invested $5,000 in Encore Redevelopment, LLC (“Encore”) representing a fully-diluted 9.1% ownership interest.
The Encore investment is measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in ordinary transactions for the identical or similar investment of the same issuer. As the Company does not have significant influence over operating or financial policies of Encore, the cost method of accounting for the investment was determined to be appropriate. Changes in the fair value of the investment are recorded as net appreciation in fair value of investment in the Consolidated Statements of Operations. No net appreciation or depreciation in fair value of the investments was recorded during the year ended December 31, 2022 and2021, respectively, as there were no observable price changes.
20. INTANGIBLES
The Company’s intangible assets at December 31, 2022 consist of:
SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS
Amortization
periods December 31,
December 31,
iSun Trademark and Brand 10 Years $ 3,007 $ 3,007
Intellectual property 10 Years 1,000 1,000
Backlog of projects 12 Months 3,220 3,220
SunCommon Trademark and Brand 10 Years 11,980 11,980
Accumulated amortization
(5,169 ) (349 )
Total
$ 14,038 $ 18,858
At December 31, 2022 and 2021, amortization expense was $4,819 and $107, respectively.
Estimated future amortization expense for the Company’s intangible assets as of December 31, 2022 is as follows:
SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE
Cost
$ 1,599
1,599
1,599
1,599
1,599
Thereafter 6,043
Total $ 14,038
The estimated weighted average remaining period of amortization is 9 years.
21. STOCK REDEMPTION
On January 25, 2021, the Company purchased 34,190 shares of Common Stock from certain executives at $19.68, which was the 5-day average of the closing prices for the Common Stock as reported by the Nasdaq Capital Market for the five trading days immediately preceding January 22, 2021, for a total of approximately $673,000. Upon redemption, the shares of Common Stock were retired.
22. EXERCISE OF PUT AGREEMENTS
As part of the Merger Agreement with SunCommon, Shareholders were provided the right (the “Put Right”) to cause the Company to purchase all or any of the shares of Common Stock issued at closing at the Put Purchase Price of $8.816. During the year ended December 31, 2022, Shareholders exercised the Put Right for the sale of 575,966 shares of Common Stock for $5,079. At December 31, 2022, all unexercised Put Rights have expired.
23. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
Settlement of Pending Litigation
On January 26, 2022 a Complaint was filed in the U.S. District Court for the District of Vermont by Sassoon Peress and Renewz Sustainable Solutions, Inc. against the Company, 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 sought legal and equitable remedies. On January 17, 2023, the Company entered into a Settlement Agreement resolving all claims in consideration of a modification of the timing of the delivery of the Acquisition consideration and payment of Mr. Peress’ attorneys’ fees. The matter was dismissed with prejudice on March 13, 2023.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive officer and principal financial and accounting officer, did not carry out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 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. These control deficiencies constitute material weaknesses 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”
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.
Limitations on the Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013).
Management previously identified control deficiencies regarding the need for a stronger internal control environment relating to the financial statement closing process, formal documentation and designed disclosure controls and procedures and testing of the operating effectiveness of the controls. In 2022, Management took additional steps to remediate these control deficiencies as part of the expansion of the internal control environment. Management implemented a new Enterprise Resource Planning (“ERP”) system which provides the necessary control environment to mitigate the potential for misstatements in the financial reporting. In addition, specific procedures were implemented to enhance overall controls, dual authorization of payments, purchase order approval process and authorization matrix, segregation of duties related to financial reporting and user permissions and controls within the ERP. Management continues to enhance the internal control environment but has not completed the implementation and testing of the new and revised internal controls. Management believes that these control deficiencies constitute material weaknesses in internal control over financial reporting for the year ended December 31, 2022.
Based upon the criteria established in “Internal Control-Integrated Framework” issued by the COSO, management believes that the controls currently in place are not adequate. As such, a material weakness existed as of December 31, 2022.
Changes in Internal Control Over Financial Reporting
Other than the control improvements discussed in Management’s Report on Internal Control Over Financial Reporting above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the year ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
No Attestation Report by Independent Registered Accountant
The effectiveness of our internal control over financial reporting as of December 31, 2022 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a non-accelerated smaller reporting company.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
The information required for item is incorporated by reference from our Proxy Statement to be filed in connection with our 2023 Annual Meeting of Shareholders.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information required for this item is incorporated by reference from our Proxy Statement to be filed in connection with our 2023 Annual Meeting of Shareholders.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required for this item is incorporated by reference from our Proxy Statement to be filed in connection with our 2023 Annual Meeting of Shareholders.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required for this item is incorporated by reference from our Proxy Statement to be filed in connection with our 2023 Annual Meeting of Shareholders.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The information required for this item is incorporated by reference from our Proxy Statement to be filed in connection with our 2023 Annual Meeting of Shareholders.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules.
(1) Financial Statements.
The financial statements required by Item 15 are submitted in a separate section of this report, beginning on Page, incorporated herein and made a part hereof.
(2) Financial Statement Schedules.
Schedules have been omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements or notes thereto.
(3) Exhibits.
The following exhibits are filed with this report, or incorporated by reference as noted:
(a)
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
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*
Filed herewith.
(b)
Exhibits.
See (a)(3) above.
(c) Financial Statement Schedules.
See (a)(2) above.
See (a)(2) above.
Exhibits Index
Exhibit
No.
Description
Included
Form
Filing Date
1.1
Underwriting Agreement, dated March 2, 2016, between Jensyn Acquisition Corp. and Chardan Capital Markets, LLC, as representative of the underwriters named on Schedule A thereto.
By Reference
8-K
March 10, 2016
1.2
Sales Agreement, dated December 4, 2020, between The Peck Company Holdings, Inc. and A.G.P./Alliance Global Partners
By Reference
S-3
December 4, 2020
2.4
Exchange and Subscription Agreement, dated April 22, 2020, among The Peck Company Holdings, Inc., GreenSeed Investors, LLC and Solar Project Partners, LLC
By Reference
8-K
April 28, 2020
2.5
Agreement and Plan of Merger, dated January 19, 2021, by and among iSun Energy LLC and iSun, Inc . and Peck Mercury, Inc.
By Reference
8-K
January 25, 2021
2.6
Merger Agreement by and among iSun, Inc., iSun Residential Merger Sub, Inc., iSun Residential, Inc., SolarCommunities, Inc., Jeffrey Irish, James Moore, and Duane Peterson, dated September 8, 2021
By Reference
8-K
September 13, 2021
2.7
First Amendment to Agreement and Plan of Merger, by and among iSun, Inc., iSun Residential, Inc., iSun Residential Merger Sub, Inc., SolarCommunities, Inc. d/b/a SunCommon, Duane Peterson, James Moore, and Jeffrey Irish, dated September 30, 2021
By Reference
8-K
October 5, 2021
2.8
Asset Purchase Agreement by and among John Stark Electric, Inc., Liberty Electric, Inc. and John P. Comeau, dated as of October 31, 2021
By Reference
8-K
November 19, 2021
3.1(a)
Certificate of Designation, Preferences and Rights of Preferred Stock of The Peck Company Holdings, Inc.
By Reference
8-K
April 28, 2020
3.1(b)
Third Amended & Restated Certificate of Incorporation of iSun, Inc.
By Reference
8-K
February 2, 2022
3.1(c)
First Amended and Restated Certificate of Designation, Preferences and Rights of Preferred Stock of iSun, Inc.
By Reference
8-K
Februay 26, 2021
3.1(d)
Certificate of Cancellation of Series A Convertible Preferred Stock of iSun, Inc.
By Reference
8-K
December 30, 2021
3.2
Bylaws.
By Reference
S-1
November 23, 2015
4.1
Specimen Common Stock Certificate.
By Reference
S-1
November 23, 2015
4.2
Promissory Note, dated September 17, 2019, issued to NBT Bank, National Association
By Reference
10-Q
November 18, 2019
4.3
Warrant Agreement, dated March 2, 2016, between Jensyn Acquisition Corp. and Continental Stock Transfer & Trust Company.
By Reference
8-K
March 10, 2016
4.4
Warrant, dated April 22, 2020, issued by The Peck Company Holdings, Inc. to GreenSeed Investors, LLC
By Reference
8-K
April 28, 2020
4.5
Promissory Note, dated January 13, 2020, issued by Peck Electric Co. to NBT Bank, National Association
By Reference
8-K
April 28, 2020
4.6
Paycheck Protection Program Note and Disbursement Authorization, dated April 24, 2020 issued by Peck Electric Co. to NBT Bank, National Association
By Reference
8-K
April 28, 2020
4.7
Amendment No. 1 to Warrant Agreement, dated March 9, 2021
By Reference
8-K
March 9, 2021
4.8
Notice of Redemption, dated March 9, 2021
By Reference
8-K
March 9, 2021
4.9
Form of Securities Purchase Agreement, dated January 8, 2021 between The Peck Company Holdings, Inc. and certain investors
By Reference
8-K
January 12, 2021
4.10
Senior Secured Convertible Notes, issued by iSun, Inc. dated November 4, 2022
By Reference
8-K
November 8, 2022
10.1
Business Loan Agreement, dated September 17, 2019, between Peck Electric Co. and NBT Bank, National Association, as lender
By Reference
10-Q
November 18, 2019
10.2
Commercial Security Agreement, dated September 17 2019, between Peck Electric Co. and NBT Bank, National Association
By Reference
10-Q
November 18, 2019
10.3
Commercial Guaranty, dated September 17, 2019
By Reference
10-Q
November 18, 2019
10.4
Voting Agreement, dated June 20, 2019, between Peck Company Holdings Inc. and Jeffrey Peck
By Reference
10-K
April 14, 2020
10.5
Lease Agreement, dated December 7, 2020, between Peck Electric Co. and Unsworth Properties, LLC as agent for Meach, LLC, 306 West Indian, LLC, Cooper Two, LLC, Trek Communities, LLC, Masthead, LLC and Stephen and Shona Unsworth
By Reference
8-K
December 10, 2020
10.6
2020 Equity Incentive Plan
By Reference
S-8
October 28, 2020
10.7
Placement Agent Agreement, dated January 8, 2021, between The Peck Company Holdings, Inc. and A.G.P./Alliance Global Partners
By Reference
8-K
January 12, 2021
10.8
Irrevocable Proxy between The Peck Company Holdings, Inc. and Sassoon M. Peress, dated January 19, 2021
By Reference
8-K
January 25, 2021
10.9
Purchase and Sale Agreement, dated April 6, 2021, by and between Peck Electric Co. and Nedde Real Estate, LLC
By Reference
8-K
April 8, 2021
10.10
Assignment Agreement by and among Adani Solar USA, Inc., Oakwood Construction Services, Inc. and iSun Utility, LLC, dated April 6, 2021
By Reference
8-K
April 8, 2021
10.11
Sales Agreement, dated June 21, 2021, between iSun, Inc. and B. Riley Securities, Inc.
By Reference
8-K
June 22, 2021
10.12
Form of Put Agreement between iSun, Inc. and certain SunCommon Shareholders
By Reference
8-K
September 13, 2021
10.13
Form of Stockholder Lockup Agreement between iSun, Inc. and each of Jeffrey Irish, James Moore, and Duane Peterson
By Reference
8-K
September 13, 2021
10.14
Form of Employment Agreement between iSun, Inc. and each of Jeffrey Irish, James Moore, and Duane Peterson
By Reference
8-K
September 13, 2021
10.15
First Amended and Restated Letter Agreement, by and among iSun, Inc., iSun Residential, Inc., iSun Residential Merger Sub, Inc., SolarCommunities, Inc. d/b/a SunCommon, Duane Peterson, James Moore, and Jeffrey Irish, dated September 30, 2021
By Reference
8-K
October 5, 2021
10.16
Employment Agreement between iSun, Inc. and Michael D’Amato, dated July 1, 2021
By Reference
10-Q
November 15, 2021
Change of Control Agreement between iSun, Inc. and Michael D’Amato, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.18
Employment Agreement between iSun, Inc. and Frederick Myrick, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.19
Change of Control Agreement between iSun, Inc. and Frederick Myrick, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.20
Employment Agreement between iSun, Inc. and Jeffrey Peck, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.21
Change of Control Agreement between iSun, Inc. and Jeffrey Peck, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.22
Employment Agreement between iSun, Inc. and John Sullivan, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.23
Change of Control Agreement between iSun, Inc. and John Sullivan, dated July 1, 2021
By Reference
10-Q
November 15, 2021
10.24
Employment Agreement between John Stark Electric, Inc. and John P. Comeau, dated as of October 31, 2021
By Reference
8-K
November 19, 2021
10.25
Irrevocable Proxy between iSun, Inc. and John P. Comeau, dated as of October 31, 2021
By Reference
8-K
November 19, 2021
10.26
Membership Unit Purchase Agreement between iSun, Inc. and Encore Redevelopment, LLC, dated November 24, 2021
By Reference
8-K
December 1, 2021
10.27
Sixth Amended and Restated Operating Agreement of Encore Redevelopment, Inc, dated November 24, 2021
By Reference
8-K
December 1, 2021
10.28
Industrial Building Lease by and Between Industry Landing 115 LLC and SolarCommunities, Inc., dated August 1, 2021
By Reference
10-K
April 15, 2022
10.29
Lease Agreement between Malone Route 2 Waterbury Properties, LLC and SolarCommunities, Inc., dated October 19, 2015
By Reference
10-K
April 15, 2022
10.30
Addendum #1 to Lease Agreement between Malone Route 2 Waterbury Properties, LLC and SolarCommunities, Inc., dated July 19, 2016
By Reference
10-K
April 15, 2022
10.31
Addendum #2 to Lease Agreement between Malone Route 2 Waterbury Properties, LLC and SolarCommunities, Inc., dated March 2, 2019
By Reference
10-K
April 15, 2022
10.32
Securities Purchase Agreement between iSun, Inc. and certain Purchasers, dated November 4, 2022
By Reference
8-K
November 8, 2022
10.33
Security Agreement between iSun, Inc. and certain Purchasers, dated November 4, 2022
By Reference
8-K
November 8, 2022
10.34
Trademark Security Agreement between iSun, Inc. and certain Purchasers, dated November 4, 2022
By Reference
8-K
November 8, 2022
10.35
Subsidiary Guaranty by and among iSun, Inc. and its direct and indirect subsidiaries, dated November 4, 2022
By Reference
8-K
November 8, 2022
10.36
Registration Rights Agreement between iSun, Inc. and certain Purchasers, dated November 4, 2022
By Reference
8-K
November 8, 2022
10.37
Voting Agreement by and among iSun, Inc. and certain other parties, dated November 4, 2022
By Reference
8-K
November 8, 2022
10.38
First Amendment to Agreement and Plan of Merger and Reorganization by and among iSun, Inc., iSun Energy LLC, and Sassoon M. Peress, dated November 28, 2022
Herewith
Form of Code of Ethics.
By Reference
S-1
November 23, 2015
List of subsidiaries of iSun, Inc.
Herewith
23.1
Independent Registered Public Accounting Firm’s Consent
Herewith
31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Herewith
31.2
Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Herewith
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Herewith
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.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).