UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-37707
iSUN, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 47-2150172 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
400 Avenue D, Suite 10 Williston, Vermont |
05495 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(802) 658-3378
(Registrant’s telephone number)
N/A
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.0001 par value | ISUN | Nasdaq Capital Market |
Common Stock, Par Value $0.0001
(Title of class)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
The number of shares of the Registrant’s Common Stock outstanding at August 12, 2022 was .
ISUN, INC.
Form 10-Q
Table of Contents
| 2 |
iSun, Inc.
Consolidated Balance Sheets
June 30, 2022 (Unaudited) and December 31, 2021
(In thousands, except number of shares)
| June 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 1,296 | $ | 2,242 | ||||
| Accounts receivable, net of allowance | 9,777 | 14,337 | ||||||
| Costs and estimated earnings in excess of billings | 3,132 | 4,004 | ||||||
| Inventory | 5,458 | 2,480 | ||||||
| Other current assets | 1,312 | 1,071 | ||||||
| Total current assets | 20,975 | 24,134 | ||||||
| Other Assets: | ||||||||
| Property and equipment, net of accumulated depreciation | 9,084 | 11,042 | ||||||
| Captive insurance investment | 270 | 270 | ||||||
| Goodwill | 36,907 | 36,907 | ||||||
| Intangible assets, net | 16,447 | 18,907 | ||||||
| Investments | 12,220 | 12,420 | ||||||
| Other assets | 48 | 48 | ||||||
| Total other assets | 74,976 | 79,594 | ||||||
| Total assets | $ | 95,951 | $ | 103,728 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 9,644 | $ | 13,188 | ||||
| Accrued expenses | 7,325 | 7,628 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 3,464 | 2,389 | ||||||
| Line of credit | 4,754 | 4,468 | ||||||
| Current portion of deferred compensation | 31 | 31 | ||||||
| Current portion of long-term debt | 571 | 6,694 | ||||||
| Total current liabilities | 25,789 | 34,398 | ||||||
| Long-term liabilities: | ||||||||
| Deferred compensation, net of current portion | 14 | 28 | ||||||
| Deferred tax liability | 772 | |||||||
| Warrant liability | 57 | 148 | ||||||
| Other liabilities | 2,303 | 3,375 | ||||||
| Long-term debt, net of current portion | 2,157 | 5,149 | ||||||
| Total liabilities | 30,320 | 43,870 | ||||||
| Commitments and Contingencies (Note 8) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock – par value shares authorized, and issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 1 | 1 | ||||||
| Additional paid-in capital | 75,222 | 60,863 | ||||||
| Accumulated deficit | (9,592 | ) | (1,006 | ) | ||||
| Total Stockholders’ equity | 65,631 | 59,858 | ||||||
| Total liabilities and stockholders’ equity | $ | 95,951 | $ | 103,728 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
iSun, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
For the Three and Six Months Ended June 30, 2022 and 2021
(In thousands, except number of shares)
| Three Months ended | Six Months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Earned revenue | $ | 16,476 | $ | 4,353 | $ | 31,563 | $ | 11,614 | ||||||||
| Cost of earned revenue | 12,723 | 4,988 | 24,640 | 12,130 | ||||||||||||
| Gross profit | 3,753 | (635 | ) | 6,923 | (516 | ) | ||||||||||
| Warehousing and other operating expenses | 1,017 | 80 | 1,367 | 127 | ||||||||||||
| General and administrative expenses | 5,982 | 1,655 | 11,509 | 3,120 | ||||||||||||
| Stock based compensation – general and administrative | 591 | 265 | 1,835 | 1,336 | ||||||||||||
| Depreciation and amortization | 1,778 | 169 | 3,530 | 305 | ||||||||||||
| Total operating expenses | 9,368 | 2,169 | 18,241 | 4,888 | ||||||||||||
| Operating loss | (5,615 | ) | (2,804 | ) | (11,318 | ) | (5,404 | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Gain on forgiveness of PPP Loan | 2,592 | |||||||||||||||
| Change in fair value of the warrant liability | 28 | 1,079 | 91 | 818 | ||||||||||||
| Interest expense, net | (87 | ) | (50 | ) | (716 | ) | (88 | ) | ||||||||
| Loss before income taxes | (5,674 | ) | (1,775 | ) | (9,351 | ) | (4,674 | ) | ||||||||
| (Benefit) provision for income taxes | 7 | (451 | ) | (765 | ) | (236 | ) | |||||||||
| Net loss | (5,681 | ) | (1,324 | ) | (8,586 | ) | (4,438 | ) | ||||||||
| Preferred shareholders’ dividend | (70 | ) | ||||||||||||||
| Net loss available to shares of common stockholders | $ | (5,681 | ) | $ | (1,324 | ) | $ | (8,586 | ) | $ | (4,508 | ) | ||||
| Net loss per share of Common Stock - Basic and diluted | $ | (0.40 | ) | $ | (0.15 | ) | $ | (0.64 | ) | $ | (0.53 | ) | ||||
| Weighted average shares of Common Stock - Basic and diluted | 14,070,117 | 9,058,483 | 13,364,352 | 8,382,930 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
iSun, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
For the Three and Six Months Ended June 30, 2022 and 2021
(In thousands, except number of shares)
| Preferred Stock | Common Stock | Additional Paid-In | Retained
Earnings/ (Accumulated | |||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | Capital | Deficit) | Total | ||||||||||||||||||||||
| Balance as of January 1, 2022 | 11,825,878 | $ | 1 | $ | 60,863 | $ | (1,006 | ) | $ | 59,858 | ||||||||||||||||||
| Issuance under equity incentive plan | 164,067 | 1,244 | 1,244 | |||||||||||||||||||||||||
| Sale of common stock pursuant to S-3 registration statement | - | 1,749,209 | 10,400 | 10,400 | ||||||||||||||||||||||||
| Net loss | - | - | (2,905 | ) | (2,905 | ) | ||||||||||||||||||||||
| Balance as of March 31, 2022 | 13,739,154 | $ | 1 | $ | 72,507 | $ | (3,911 | ) | $ | 68,597 | ||||||||||||||||||
| Issuance under equity incentive plan | 333,888 | 1,476 | 1,476 | |||||||||||||||||||||||||
| Sale of common stock pursuant to S-3 registration statement | - | 309,038 | 1,239 | 1,239 | ||||||||||||||||||||||||
| Net
Loss | - | - | (5,681 | ) | (5,681 | ) | ||||||||||||||||||||||
| Balance as of June 30, 2022 | 14,382,080 | 1 | 75,222 | (9,592 | ) | 65,631 | ||||||||||||||||||||||
| 5 |
iSun, Inc.
Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
For the Three and Six Months Ended June 30, 2021
(In thousands, except number of shares)
| Preferred Stock | Common Stock | Additional Paid-In | Retained
Earnings/ (Accumulated | |||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | Capital | Deficit) | Total | ||||||||||||||||||||||
| Balance as of January 1, 2021 | 200,000 | $ | 1 | 5,313,268 | $ | 1 | $ | 2,577 | $ | 5,304 | $ | 7,883 | ||||||||||||||||
| 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 | - | 133,684 | ||||||||||||||||||||||||||
| Redemption of common stock | - | (34,190 | ) | (673 | ) | (673 | ) | |||||||||||||||||||||
| Conversion of preferred shares | (200,000 | ) | (1 | ) | 370,370 | (1 | ) | |||||||||||||||||||||
| Dividends payable on preferred shares | - | - | (70 | ) | (70 | ) | ||||||||||||||||||||||
| Conversion of Solar Project Partners, LLC warrant | - | 117,376 | ||||||||||||||||||||||||||
| Issuance under equity incentive plan | - | 126,083 | 1,071 | 1,071 | ||||||||||||||||||||||||
| Exercise of options | - | 100,667 | 150 | 150 | ||||||||||||||||||||||||
| Exercise of warrants | - | 1,516,938 | 17,444 | 17,444 | ||||||||||||||||||||||||
| Net loss | - | - | (3,113 | ) | (3,113 | ) | ||||||||||||||||||||||
| Balance as of March 31, 2021 | 8,784,196 | $ | 1 | $ | 33,076 | $ | 2,121 | $ | 35,198 | |||||||||||||||||||
| Exercise of Warrants | - | 303,571 | 3,462 | 3,462 | ||||||||||||||||||||||||
| Stock based compensation | - | - | 265 | 265 | ||||||||||||||||||||||||
| Net loss | - | - | (1,324 | ) | (1,324 | ) | ||||||||||||||||||||||
| Balance as of June 30, 2021 | 9,087,767 | 1 | 36,803 | 797 | 37,601 | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
iSun, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months ended June 30, 2022 and 2021
(In thousands)
| 2022 | 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (8,586 | ) | $ | (4,438 | ) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: | ||||||||
| Depreciation | 1,121 | 305 | ||||||
| Amortization expense | 2,409 | |||||||
| Gain on forgiveness of PPP loan | (2,592 | ) | ||||||
| Change in fair value of warrant liability | (91 | ) | (818 | ) | ||||
| Stock based compensation | 2,720 | 1,336 | ||||||
| Deferred finance charge amortization | 2 | |||||||
| Deferred taxes | (772 | ) | (238 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 4,560 | 2,158 | ||||||
| Other current assets | (241 | ) | 22 | |||||
| Costs and estimated earnings in excess of billings | 872 | (1,257 | ) | |||||
| Inventory | (2,978 | ) | (1,535 | ) | ||||
| Accounts payable | (3,544 | ) | (1,753 | ) | ||||
| Accrued expenses | (303 | ) | (90 | ) | ||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 1,075 | (566 | ) | |||||
| Other liabilities | (1,102 | ) | ||||||
| Deferred compensation | (14 | ) | (16 | ) | ||||
| Net cash used in operating activities | (7,466 | ) | (6,888 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of solar arrays and equipment | (359 | ) | (331 | ) | ||||
| Proceeds from sale of fixed assets | 1,247 | |||||||
| Acquisition of Oakwood Construction Services, LLC | (1,000 | ) | ||||||
| Acquisition of iSun Energy, LLC | (85 | ) | ||||||
| Dividend receivable | 200 | 100 | ||||||
| Minority investments | (3,000 | ) | ||||||
| Investment in captive insurance | (35 | ) | ||||||
| Net cash provided by (used in) investing activities | 1,088 | (4,351 | ) | |||||
| Cash flows from financing activities: | ||||||||
| Proceeds from line of credit | 16,227 | 16,643 | ||||||
| Payments to line of credit | (15,941 | ) | (15,607 | ) | ||||
| Equity incentive program | 150 | |||||||
| Proceeds from long-term debt | 230 | |||||||
| Payments of long-term debt | (6,723 | ) | (218 | ) | ||||
| Due to stockholders | (24 | ) | ||||||
| Proceeds from warrant exercise | 20,906 | |||||||
| Redemption of shares | (673 | ) | ||||||
| Proceeds from sales of common stock, gross proceeds of $12,000 less issuance cost of $361 | 11,639 | |||||||
| Registered direct offering | 9,585 | |||||||
| Net cash provided by financing activities | 5,432 | 30,762 | ||||||
| Net (decrease) increase in cash | (946 | ) | 19,523 | |||||
| Cash, beginning of period | 2,242 | 699 | ||||||
| Cash, end of period | $ | 1,296 | $ | 20,222 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | 716 | $ | 88 | ||||
| Income taxes | 7 | |||||||
| Supplemental schedule of non-cash investing and financing activities | ||||||||
| Preferred dividends satisfied with distribution from investment | 70 | |||||||
| Shares of Common Stock issued for acquisition of iSun Energy LLC | 2,922 | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
iSun, Inc
Notes to Consolidated Financial Statements
June 30, 2022 and 2021
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
a) Organization
iSun, Inc. is a solar engineering, construction and procurement contractor for commercial, industrial, residential and utility customers. The Company also provides electrical contracting services and data and communication services. The work is performed under fixed-price and modified fixed-price contracts and time and materials contracts. The Company is incorporated in the State of Delaware and has its corporate headquarters in Williston, Vermont.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or any other period. The accompanying financial statements should be read in conjunction with the Company’s audited financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of iSun, Inc. and its direct and indirect wholly owned operating subsidiaries, iSun Residential, Inc., SolarCommunities, Inc., iSun Industrial, LLC, Peck Electric Co., Liberty Electric, Inc., iSun Utility, LLC, iSun Corporate, LLC and iSun Energy, LLC. All material intercompany transactions have been eliminated upon consolidation of these entities.
c) Revenue Recognition
The majority of the Company’s revenue arrangements generally consist of a single performance obligation to transfer promised goods or services.
1) Revenue Recognition Policy
Solar Power Systems Sales and Engineering, Procurement, and Construction Services
The Company recognizes revenue from the sale of solar power systems, Engineering, Procurement and Construction (“EPC”) services, and other construction-type contracts over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Construction contracts, such as the sale of a solar power system combined with EPC services, are generally accounted for as a single unit of account (a single performance obligation) and are not segmented between types of services. Our contracts often require significant services to integrate complex activities and equipment into a single deliverable, and are therefore generally accounted for as a single performance obligation, even when delivering multiple distinct services. For such services, the Company recognizes revenue using the cost to cost method, based primarily on contract cost incurred to date compared to total estimated contract cost. The cost to cost method (an input method) is the most faithful depiction of the Company’s performance because it directly measures the value of the services transferred to the customer. Cost of revenue includes an allocation of indirect costs including depreciation and amortization. Subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that the Company is acting as a principal rather than as an agent (i.e., the Company integrates the materials, labor and equipment into the deliverables promised to the customer). Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless they are expected to be recovered from the customer. As of June 30, 2022 and December 31, 2021, the Company had $0 in pre-contract costs classified as a current asset under contract assets on its Consolidated Balance Sheet. Project mobilization costs are generally charged to project costs as incurred when they are an integrated part of the performance obligation being transferred to the client. Customer payments on construction contracts are typically due within 30 to 45 days of billing, depending on the contract. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.
| 8 |
For sales of solar power systems in which the Company sells a controlling interest in the project to a customer, revenue is recognized for the consideration received when control of the underlying project is transferred to the customer. Revenue may also be recognized for the sale of a solar power system after it has been completed due to the timing of when a sales contract has been entered into with the customer.
Energy Generation
Revenue from net metering credits is recorded as electricity is generated from the solar arrays and billed to customers (PPA off-taker) at the price rate stated in the applicable power purchase agreement (PPA).
Operation and Maintenance and Other Miscellaneous Services
Revenue for time and materials contracts is recognized as the service is provided.
2) Disaggregation of Revenue from Contracts with Customers
The following table disaggregates the Company’s revenue based on the timing of satisfaction of performance obligations for the three and six months ended June 30, 2022 and June 30, 2021:
(In thousands)
| Three
Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Performance obligations satisfied over time | ||||||||||||||||
| Solar | $ | 14,867 | $ | 3,516 | $ | 28,475 | $ | 9,609 | ||||||||
| Electric | 1,249 | 605 | 2,516 | 1,494 | ||||||||||||
| Data and Network | 360 | 232 | 572 | 511 | ||||||||||||
| Totals | $ | 16,476 | $ | 4,353 | $ | 31,563 | $ | 11,614 | ||||||||
The following table disaggregates the Company’s revenue based on operational division for the three and six months ended June 30, 2022 and June 30, 2021:
(In thousands)
| Three
Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operations | ||||||||||||||||
| Residential | $ | 9,949 | $ | $ | 16,346 | $ | ||||||||||
| Commercial and Industrial | 5,992 | 4,103 | 13,153 | 11,364 | ||||||||||||
| Utility | 535 | 250 | 2,064 | 250 | ||||||||||||
| Totals | $ | 16,476 | $ | 4,353 | $ | 31,563 | $ | 11,614 | ||||||||
| 9 |
3) Variable Consideration
The nature of the Company’s contracts gives rise to several types of variable consideration, including claims and unpriced change orders; award and incentive fees; and liquidated damages and penalties. The Company recognizes revenue for variable consideration when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The Company estimates the amount of revenue to be recognized on variable consideration using the expected value (i.e., the sum of a probability-weighted amount) or the most likely amount method, whichever is expected to better predict the amount. Factors considered in determining whether revenue associated with claims (including change orders in dispute and unapproved change orders in regard to both scope and price) should be recognized include the following: (a) the contract or other evidence provides a legal basis for the claim, (b) additional costs were caused by circumstances that were unforeseen at the contract date and not the result of deficiencies in the Company’s performance, (c) claim-related costs are identifiable and considered reasonable in view of the work performed, and (d) evidence supporting the claim is objective and verifiable. If the requirements for recognizing revenue for claims or unapproved change orders are met, revenue is recorded only when the costs associated with the claims or unapproved change orders have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of cost when it is determined that recovery of such cost is probable and the amounts can be reliably estimated. Disputed back charges are recognized when the same requirements described above for claims accounting have been satisfied.
4) Remaining Performance Obligation
Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less.
5) Warranties
The Company generally provides limited workmanship warranties up to five years for work performed under its construction contracts. The warranty periods typically extend for a limited duration following substantial completion of the Company’s work on a project. Historically, warranty claims have not resulted in material costs incurred, and any estimated costs for warranties are included in the individual contract cost estimates for purposes of accounting for long-term contracts.
d) Accounts Receivable
Accounts receivable are recorded when invoices are issued and presented on the balance sheet net of the allowance for doubtful accounts. The allowance, which was $84,000 at June 30, 2022 and $84,000 at December 31, 2021, is estimated based on historical losses, the existing economic condition, and the financial stability of the Company’s customers. Accounts are written off against the reserve when they are determined to be uncollectible.
e) Concentration and Credit Risks
The Company occasionally has cash balances in a single financial institution during the year in excess of the Federal Deposit Insurance Corporation (FDIC) limits. The differences between book and bank balances are outstanding checks and deposits in transit. At June 30, 2022, the uninsured balances were approximately $571,000.
| 10 |
f) Use of Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates their estimates, including those related to inputs used to recognize revenue over time, estimates in recording the business combinations, goodwill, intangibles, investments, impairment on investments, warranty liability and valuation of deferred tax assets. Actual results could differ from those estimates.
g) Recently Issued Accounting Pronouncements
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. 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.
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 ASU is effective for the Company’s annual reporting period and subsequent interim reporting periods beginning December 31, 2022. 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.
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. This ASU is effective for the Company’s annual reporting period and subsequent interim reporting periods beginning December 31, 2022. 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.
h) Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable, cash collateral deposited with insurance carriers, deferred compensation plan liabilities, accounts payable and other current liabilities, and debt obligations.
Fair value is the price that would be received to sell an asset or the amount paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value. The three levels of inputs that may be used are: (i) Level 1 - quoted market prices in active markets for identical assets or liabilities; (ii) Level 2 - observable market-based inputs or other observable inputs; and (iii) Level 3 - significant unobservable inputs that cannot be corroborated by observable market data, which are generally determined using valuation models incorporating management estimates of market participant assumptions. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Management’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
| 11 |
Fair values of financial instruments are estimated using public market prices, quotes from financial institutions and other available information. Due to their short-term maturity, the carrying amounts of cash, accounts receivable, accounts payable and other current liabilities approximate their fair values. Management believes the carrying values of notes and other receivables, cash collateral deposited with insurance carriers, and outstanding balances on its line of credit and long-term debt approximate their fair values as these amounts are estimated using public market prices, quotes from financial institutions and other available information.
i) Debt Extinguishment
Under ASC 470, debt should be derecognized when the debt is extinguished, in accordance with the guidance in ASC 405-20, Liabilities: Extinguishments of Liabilities. Under this guidance, debt is extinguished when the debt is paid, or the debtor is legally released from being the primary obligor by the creditor. On January 21, 2022, SunCommon received notification from Citizens Bank N.A. that the Small Business Administration has approved the forgiveness of the PPP loan in its entirety and as such, the full $2,591,500 has been recognized in the income statement as a gain upon debt extinguishment for the three and six months ended June 30, 2022.
j) Inventory
Inventory is valued at lower of cost or net realizable value determined by the first-in, first-out method. Inventory primarily consists of solar panels and other materials. The Company reviews the cost of inventories against their estimated net realizable value and records write-downs if any inventories have costs in excess of their net realizable values. Inventory is presented net of an allowance of $0 at June 30, 2022 and December 31, 2021.
k) Warrant liability
The Company accounts for warrants to acquire shares of Common Stock as liabilities held at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a change in fair value of warrant liabilities in the Company’s consolidated statements of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the warrants. At that time, the warrant liability will be reclassified to additional paid-in capital.
l) Segment Information
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment with different product offerings for financial reporting purposes, which represents the Company’s core business. The Company will begin reporting in segments for the interim and annual reporting periods subsequent to December 31, 2022.
m) Legal contingencies
The Company accounts for liabilities resulting from legal proceedings when it is possible to evaluate the likelihood of an unfavorable outcome in order to provide an estimate for the contingent liability. At June 30, 2022 and 2021, there are no material contingent liabilities arising from pending litigation.
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n) Reclassification
Certain reclassifications have been made to prior year’s financial statement to conform to classifications used in the current year.
2. BUSINESS ACQUISITIONS
Business Combination- SunCommon
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 $48,300,000 consisting of (i) cash in the amount of $25,534,621; (ii) Common Stock of the Company (“Common Stock”) in the amount of $15,965,027, priced at $ per share; and (iii) earn out consideration of up to $10,000,000 upon the fulfillment of certain conditions. The net present value of the earnout provision was determined to be $6.8 million and the Company has included the $3.5 million and $3.3 million 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 for the interim and annual reporting periods subsequent to December 31, 2022 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.
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Preliminary 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 cost of SolarCommunities, Inc. and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The estimated fair value of the consideration transferred consisted of the following:
| Purchase price (in thousands except shares and per share): | ||||||||
| Fair value of iSun’s shares of Common Stock issued ( shares), at $ 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 | 610 | |||||||
| Premises and equipment | 4,447 | |||||||
| Trademark and brand | 11,980 | |||||||
| Backlog | 3,220 | |||||||
| Other current assets | 762 | |||||||
| Total identifiable assets | $ | 27,662 | ||||||
| Fair value of identifiable liabilities assumed: | ||||||||
| Accounts payable and accrued liabilities | $ | 5,562 | ||||||
| Contract liabilities | 1,103 | |||||||
| Customer deposits | 355 | |||||||
| Deferred tax liabilities | 2,070 | |||||||
| Loans payable | 6,282 | |||||||
| Other liabilities | 17 | |||||||
| Total identifiable liabilities | $ | 15,389 | ||||||
| Net assets acquired including identifiable intangible assets | 12,273 | |||||||
| Goodwill | $ | 36,027 |
During the year ended December 31, 2021, we recorded non-recurring total transaction costs related to the Acquisition of $1.235 million. These expenses were accounted for separately from the net assets acquired and are included in general and administrative expense.
We will continue to conduct assessments of the net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. We expect that it may take into the third quarter of 2022 until all post-closing assessments and adjustments are finalized.
Business Combination- JSI
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 for a purchase price of $1.4 million, subject to a post-closing working capital adjustment. The purchase price was paid as follows: (i) cash in the amount of $1.2 million; (ii) Common Stock of the Company in the amount of $250,000, priced at $ per share, which is the 10-day volume weighted average Nasdaq closing price immediately prior to the Closing Date; and (iii) earn out consideration of up to $300,000 (1) upon the fulfillment of certain conditions.
The purchase price for Liberty Electric, Inc. consisted of $1.4 million 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.
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Purchase Price Allocation
Under the purchase method of accounting, the transaction was valued for accounting purposes at $1.4 million 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 cost 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:
| Purchase price (in thousands except for share and per share): | ||||||||
| Fair value of iSun’s shares of Common Stock issued ( shares), at $ per share | $ | 250 | ||||||
| Cash paid | 1,195 | |||||||
| Total consideration transferred | $ | 1,445 | ||||||
| Fair value of identifiable assets acquired: | ||||||||
| Accounts receivable | $ | 562 | ||||||
| Inventory | 90 | |||||||
| Contract assets | 97 | |||||||
| Premises and equipment | 38 | |||||||
| Other current assets | 2 | |||||||
| Total identifiable assets | $ | 789 | ||||||
| Fair value of identifiable liabilities assumed: | ||||||||
| Accounts payable and accrued liabilities | $ | 219 | ||||||
| Contract liabilities | 5 | |||||||
| Total identifiable liabilities | $ | 224 | ||||||
| Net assets acquired including identifiable intangible assets | 565 | |||||||
| Goodwill | $ | 880 |
| (1) | The earnout provision has been deemed unlikely to be achieved 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 $12.5 million and $0.7 million of total revenue. The following unaudited pro forma financial information represents a summary of the consolidated results of operations for the three and six months ended June 30, 2021, assuming the acquisition had been completed as of January 1, 2021. The pro forma financial information includes certain non-recurring pro forma adjustments that were directly attributable to the business combination. The proforma adjustments include the elimination of Acquisition transaction expenses totaling $1.235 million incurred in 2021. The pro forma financial information is not necessarily indicative of the results of operations that would have been achieved if the acquisition had been effective as of these dates, or of future results.
(in thousands)
| Three
Months Ended June 30, 2021 | Six
Months Ended June 30, 2021 | |||||||
| Revenue, net | $ | 13,943 | $ | 28,372 | ||||
| Net Income (Loss) | 1,031 | (542 | ) | |||||
| Weighted average shares of common stock outstanding, basic and diluted | 10,223,594 | 10,899,147 | ||||||
| Net Loss per share, basic and diluted | $ | 0.10 | $ | (0.05 | ) | |||
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3. LIQUIDITY AND FINANCIAL CONDITION
In the six months ended June 30, 2022, the Company experienced a net operating loss and negative cash flow from operations. At June 30, 2022, the Company had cash on hand of approximately $1.3 million and a working capital deficit of approximately $4.8 million. The Company utilized approximately $7.5 million in cash to support operations during the six months ending June 30, 2022. To date, the Company has relied predominantly on operating cash flow, borrowings from its credit facilities, and sales of Common Stock. The availability of financing and the cash flow from operations mitigates the potential for substantial doubt.
The demand for solar and electric vehicle infrastructure continues to increase across all customer groups. Our residential division has
customer orders of approximately $30.7 million expected to be completed within to five months, our commercial division has a contracted
backlog of approximately $11.4 million expected to be completed within to eight months, our industrial division has a contracted
backlog of approximately $105.8 million expected to be completed within twelve to eighteen months and our utility division has 993 MW
of projects currently under development with an estimated commencement date in the second quarter of 2023. The customer demand across
our segments will provide short-term operational cash flow.
As of June 30, 2022, the Company had approximately $20.3 million in gross proceeds potentially available from sales of Common Stock pursuant to the S-3 Registration Statement which could be utilized to support any short-term deficiencies in operating cash flow.
The Company believes its current cash on hand, potential additional sales of Common Stock, the collectability of its accounts receivable and project backlog are sufficient to meet its operating and capital requirements for at least the next twelve months from the date these financial statements are issued.
4. ACCOUNTS RECEIVABLE
Accounts receivable consist of:
(In thousands)
| June 30, 2022 | December 31, 2021 | |||||||
| Accounts receivable - contracts in progress | $ | 9,073 | $ | 13,886 | ||||
| Accounts receivable - retainage | 788 | 535 | ||||||
| 9,861 | 14,421 | |||||||
| Allowance for doubtful accounts | (84 | ) | (84 | ) | ||||
| Total | $ | 9,777 | $ | 14,337 | ||||
Bad debt expense was immaterial for the three and six months ended June 30, 2022 and 2021, respectively.
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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 June 30, 2022 and 2021:
| (In thousands) | June 30, 2022 | December 31, 2021 | ||||||
| Costs in excess of billings | $ | 1,514 | $ | 3,452 | ||||
| Unbilled receivables, included in costs in excess of billings | 1,618 | 552 | ||||||
| 3,132 | 4,004 | |||||||
| Retainage – open contracts | ||||||||
| Total | $ | 3,132 | $ | 4,004 | ||||
Contract liabilities represent amounts billed to clients in excess of revenue recognized to date, billings in excess of costs, and retainage. The Company anticipates that substantially all incurred cost associated with contract assets as of June 30, 2022 will be billed and collected within one year. Contract liabilities were as follows at June 30, 2022 and December 31, 2021:
| (In thousands) | June 30, 2022 | December 31, 2021 | ||||||
| Billings in excess of costs | $ | 3,464 | $ | 2,389 | ||||
5. CONTRACTS IN PROGRESS
Information with respect to contracts in progress are as follows:
| (In thousands) | June 30, 2022 | December 31, 2021 | ||||||
| Expenditures to date on uncompleted contracts | $ | 16,427 | $ | 13,716 | ||||
| Estimated earnings thereon | 2,225 | 2,783 | ||||||
| 18,652 | 16,499 | |||||||
| Less billings to date | (20,603 | ) | (15,436 | ) | ||||
| (1,951 | ) | 1,063 | ||||||
| Plus under billings remaining on contracts 100% complete | 1,619 | 552 | ||||||
| Total | $ | (332 | ) | $ | 1,615 | |||
Included in accompany balance sheets under the following captions:
| (In thousands) | June 30, 2022 | December 31, 2021 | ||||||
| Cost and estimated earnings in excess of billings | $ | 3,132 | $ | 4,004 | ||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | (3,464 | ) | (2,389 | ) | ||||
| Total | $ | (332 | ) | $ | 1,615 | |||
6. LONG-TERM DEBT
A summary of long-term debt is as follows:
| (In thousands) | June 30, 2022 | December 31, 2021 | ||||||
| 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. | $ | 620 | $ | 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. | 216 | |||||||
| NBT Bank, National Association, 4.15% interest rate, secured by all business assets, payable in monthly installments of $3,677 through April 2026. | 156 | 174 | ||||||
| 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. | 351 | 377 | ||||||
| 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. | 31 | 48 | ||||||
| Various vehicle loans, interest ranging from 0% to 10.09%, total current monthly installments of approximately $37,000 secured by vehicles, with varying terms through 2027. | 1,228 | 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. | 34 | 48 | ||||||
| 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. | 2,592 | |||||||
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June 30, 2022 | December 31, 2021 | |||||||
| CSA 5: Payable in monthly installments of $2,414, including interest at 5.5%, due August 2026. | 119 | |||||||
| 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. | 133 | |||||||
| 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. | 126 | 137 | ||||||
| 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. | 118 | |||||||
| 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. | 118 | |||||||
| 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. | 118 | 118 | ||||||
| Equipment loans | 76 | 94 | ||||||
| Easement liabilities | 31 | |||||||
| 2,740 | 12,157 | |||||||
| Less current portion | (571 | ) | (6,694 | ) | ||||
| 2,169 | 5,463 | |||||||
| Less unamortized debt issuance costs | (12 | ) | (314 | ) | ||||
| Long-term debt | $ | 2,157 | $ | 5,149 | ||||
Maturities of long-term debt are as follows:
(In thousands)
| Year ending December 31: | Amount | |||
| Remainder of 2022 | $ | 294 | ||
| 2023 | 538 | |||
| 2024 | 482 | |||
| 2025 | 395 | |||
| 2026 | 793 | |||
| 2027 and thereafter | 238 | |||
| $ | 2,740 | |||
On September 30, 2021, the Company entered into a Loan and Security Agreement with B. Riley Commercial Capital, LLC, as Lender. The proceeds of the Loan Agreement were used for acquisition finance, general corporate purposes and working capital. The Loan Agreement provided for a $10,000,000 loan facility with a maturity date of October 15, 2022, at an interest rate of 8.0% per annum. As of June 30, 2022, the balance was paid in full.
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7. LINE OF CREDIT
The Company’s wholly owned subsidiary, Peck Electric Co., has a working capital line of credit with NBT Bank with a limit of $6 million and a variable interest rate based on the Wall Street Journal Prime rate, currently 4.75%. The line of credit is payable upon demand and is subject to an annual review in September 2022. The balance outstanding was $4.8 million and $4.5 million, at June 30, 2022 and December 31, 2021, respectively. Borrowing is based on 80% of eligible accounts receivable. The line is secured by all business assets and is subject to certain financial covenants. These financial covenants consist of a minimum debt service coverage ratio of 1.20 to 1.00 measured on a quarterly basis. As of June 30, 2022, the Company was not in compliance with the financial covenants but received a waiver of covenant default from NBT Bank.
8. COMMITMENTS AND CONTINGENCIES
Leases
(All dollar amounts in thousands)
In 2020, the Company entered into a -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. Monthly base rent for the office and warehouse facilities currently approximates $28, subject to annual 3% increases.
The Company leases an office and warehouse facility in Rhinebeck, New York from a stockholder. Monthly base rent currently approximates $7 and is on a month-to-month basis.
The Company leases a vehicle under a non-cancelable operating lease. In addition, the Company occasionally pays rent for storage on a month-to-month basis.
Total rent expense for all of the non-cancelable leases above were $180 and $49 for the three months ended June 30, 2022 and 2021, respectively. Total rent expense for all of the non-cancelable leases above were $375 and $111 for the six months ended June 30, 2022 and 2021, respectively.
The Company leases vehicles and office equipment under various agreements expiring through June 2026. As of June 30, 2021, aggregate monthly payments required under these leases approximates $12.
The Company also rents equipment to be used on jobs under varying terms not exceeding one year. Total rent expense under short term rental agreements was $109 and $99 for the three months ended June 30, 2022 and 2021, respectively. Total rent expense under short term rental agreements was $319 and $196 for the six months ended June 30, 2022 and 2021, respectively.
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Future minimum lease payments required under all of the non-cancelable operating leases are as follows:
| Years ending December 31: | Amount | |||
| Remainder of 2022 | $ | 399 | ||
| 2023 | 804 | |||
| 2024 | 812 | |||
| 2025 | 800 | |||
| 2026 | 718 | |||
| 2027 | 452 | |||
| Thereafter | 1,016 | |||
| $ | 5,001 | |||
Litigation
On January 27, 2022, the Company became aware of pending litigation in the U.S. District Court for the District of Vermont, entitled Sassoon Peress and Renewz Sustainable Solutions, Inc. v. iSun, Inc., alleging various claims including breach of contract, defamation, and unjust enrichment arising out of the acquisition of iSun Energy, LLC, the sole owner of which was Mr. Peress. The litigation seeks legal and equitable remedies. The Company was granted an extension of time to plead to Plaintiffs’ Amended Complaint until April 29, 2022. On April 29, 2022, the Company filed its Answer and Counterclaims. Plaintiffs filed their Answer to the Company’s Counterclaims on May 31, 2022. The Court granted the parties’ Stipulated Discovery Schedule on June 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 June 7, 2022, Plaintiffs served their 1st Set of Discovery on June 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 is scheduled for September 30, 2022 before Mediator/ENE Evaluator Michael Marks, Esq. The Company plans to vigorously contest the litigation. It is not possible to evaluate the likelihood of an unfavorable outcome or provide an estimate or range of potential loss.
9. 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 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 June 30, 2021, the Company received notification that warrants issued in connection with the Company’s (Jensyn Acquisition Corp.) initial public offering were exercised and shares of Common Stock were issued in connection with such exercise resulting in cash proceeds to the Company of $20,906,015.
June 30, 2022 | December 31, 2021 | |||||||
| Beginning balance | 69,144 | 4,163,926 | ||||||
| Granted | ||||||||
| Exercised | (3,641,018 | ) | ||||||
| Redeemed | (453,764 | ) | ||||||
| Ending balance | 69,144 | 69,144 | ||||||
10. 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:
| Input | Mark-to-Market Measurement at June 30, 2022 | Mark-to-Market Measurement at December 31, 2021 | ||||||
| Risk-free rate | 2.98 | % | 0.06 | % | ||||
| Remaining term in years | ||||||||
| Expected volatility | 148.92 | % | 152.90 | % | ||||
| Exercise price | $ | 11.50 | ||||||