SNPW 10-K
Sun Pacific Holding Corp. (SNPW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices)
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value per share
(Title of class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☐ Yes ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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 ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer”, “smaller reporting company” and “emerging growth” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s Knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Yes ☐ No
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
As
of June 30, 2022, the last business day of the Registrant’s most recently completed fiscal year, the market value of our common
stock held by non-affiliates was $
The number of shares of the Registrant’s common stock, $0.0001 par value per share, outstanding as of April 17, 2023 was .
TABLE OF CONTENTS
GENERAL INFORMATION
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FORWARD-LOOKING STATEMENTS
Certain statements discussed in Item 1 (Business), Item 3 (Legal Proceedings), Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Annual Report on Form 10-K as well as in other materials and oral statements that the Company releases from time to time to the public constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any future results, performance or achievements discussed or implied by such forward-looking statements. Such risks, uncertainties and other important factors are discussed and Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations. In addition, these statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995. It should be understood that it is not possible to predict or identify all such factors. Consequently, the following should not be considered to be a complete discussion of all potential risks or uncertainties. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.
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PART I
Item 1. Business
Company Overview
The Company was incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together with its subsidiaries, are referred to as the “Company”. On August 24, 2017, the Company entered into an Acquisition Agreement with EXOlifestyle, Inc. whereby the Company became a wholly owned subsidiary of EXOlifestyle, Inc. The acquisition was accounted for as a reverse merger, resulting in the Company being considered the accounting acquirer. Accordingly, the accompanying consolidated financial statements included the accounts of EXOlifestyle, Inc. since August 24, 2017.
Utilizing management’s history in general contracting, coupled with our subject matter expertise and intellectual property (“IP”) knowledge of solar panels and other leading-edge technologies, the Company is focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. We provide solar bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and local municipalities with costs efficient solutions.
Our green energy solutions can be customized to meet most enterprise and/or government mandated regulations and advanced system requirements. Our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard product offering that focuses on the goals of the client’s entire organization.
Currently, the Company has four (4) subsidiary holdings. Sun Pacific Power Corp., which was the initial company that specialized in solar & other renewable energy projects., The Company also formed National Mechanical Group Corp, a New Jersey corporation focused on holding the Company’s patents. The Company also formed Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks.” The Company also formed Elba Power Corp, an Alabama Corp for the development of a Solar Assembly company. Elba Power Corp has entered into a property purchase contract for approximately $3 million, pending financing, and has obtained the approval for an inducement resolution for $50 million dollars from the State of Alabama, along with a 100% tax abatement on sales and use tax in support of the development of a solar assembly plant. Elba Power Corp is currently working with potential funders in support of the capitalization and development of the project.
Sun Pacific Power Corp. has entered into an agreement with FoxEss, a global leader in the development of inverter and energy storage solutions as a wholesale distributer for North and South America and Australia. Sun Pacific Power Corp. has also entered into an agreement with a South Asian solar manufacturer to act as an original equipment manufacturer (“OEM”) for Sun Pacific Solar Panels and associated products. Sun Pacific Power Corp has also commenced in April 2023, a sales, marketing, and affiliate program to market and install residential solar panels in various markets within the United States.
As of today, our principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in New Jersey and Florida.
On September 19, 2019, the United States Patent and Trademark Office published patent US 2019 288 139 A1 for the Frame-Less Encapsulated Photo-Voltaic (PV) Solar Power Panel Supporting Solar Cell Modules Encapsulated Within Optically-Transparent Epoxy-Resin Material Coating a Phenolic Resin Support Sheet issued to National Mechanical Group Corp. Originally designed for application in the solar bus shelters operated by Street Smart Outdoor Corp, as a glassless solar panel, the Company has developed a patent protected product and process for creating solar panels that can be integrated directly into the design of products as a molded, weather resistant plastic. The Company began work developing a business plan for expanding on either manufacturing or licensing of the technology in 2020, with such work continuing into 2023.
Strategic Vision
Our objective is to grow our business as a premier green energy-based provider of both product and services to the public and private sectors. We are working to deploy our strategy in building upon our green energy expertise in conjunction with our intellectual property and subject matter expertise that may allow us to grow a group of business lines in solar and other unique energy related areas.
Recent advances in a multitude of different yet converging technologies have significantly improved the ability to integrate energy efficient products and solutions into infrastructure related projects. These technological advances decrease the requirements needed to jointly operate a multitude of differing assets, devices, and tools that create new ways to integrate evolving new technologies. This technological change and convergence in energy efficient devices, integrated communications among devices, and societal needs to more effectively and environmentally friendly we believe presents a significant opportunity for us in providing and supporting simple to complex integrated solutions.
Our challenges continue to be reaching critical mass in our solar shelter business, expanding into other green energy related projects, and securing operational capital. While the Company has never been adequately funded from inception, the Company has attempted to use debt, equity, and other opportunistic in-kind compensation to further the Company’s strategic vision.
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Going Concern
The Company has an accumulated deficit of approximately $8.0 million and a working capital deficit of approximately $3.1 million as of December 31, 2022. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtain additional financing from its stockholders and/or other third parties.
In order to further implement its business plan and satisfy its working capital requirements, the Company will need to raise additional capital. There is no guarantee that the Company will be able to raise additional equity or debt financing at acceptable terms, if at all.
There is no assurance that the Company will ever be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Competition
Our competitive market is made up of a variety of small to large company’s depending upon the area that we are competing within. In the solar and advertising shelter marketplace it is made up of a smaller amount of direct competitors including JC Decaux, Lamar, Clear Chanel, Signal Outdoor, and various others. We believe the Shelter marketplace and the new areas in other green energy marketplace may be subject to more technological change. Given this we believe that the major competitive factors in our marketplace are distinctive technical competencies, governmental certifications and approvals to operate within this space, successful past contract performance, price of services, reputation for quality, and key management personnel with domain expertise.
Marketing and Sales
We currently engage in a limited amount of marketing activities related to request for proposals for projects related to government contracts and or other contracting activities with commercial and private entities. We are developing a variety of new marketing activities designed to broaden our market awareness of our products, services and solutions, that may include e-mail and direct mail campaigns, co-marketing strategies designed to leverage developing strategic relationships, website marketing, topical webcasts, public relations campaigns, speaking engagements and forums and industry analyst visibility initiatives. We plan to participate in and sponsor conferences that cater to our target market and demonstrate and promote our products, services and solutions at trade shows targeted to green energy companies and executives. We also plan to publish white papers relating to green energy projects and develop customer reference programs, such as customer case studies, in an effort to promote better awareness of industry issues and demonstrate that our solutions can address many of the benefits of our solutions.
Our marketing strategy is to build our brand and increase market awareness of our products, services, and solutions in our target markets and to generate qualified sales leads that will allow us to successfully build strong relationships with key decision makers. We plan to use partnerships and other business arrangements to augment our marketing and sales reach in both our outdoor advertising, construction, and waste to energy business.
Clients
Our client base is presently made up predominately of U.S. based national advertisers. Historically, we have derived, and may continue to derive in the future, a significant percentage of our total revenues from a relatively small number of contracts. Due to the nature of our business and the relative size of certain contracts, which are entered into in the ordinary course of business, the loss of any single significant customer would have a material adverse effect on our results of operations. In future periods, we will continue to focus on diversifying our revenue by increasing the number of our customer contracts and seeking out partnerships that will allow us to increase our customer reach.
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Intellectual Property
Our intellectual property rights are important to our business. We believe we will come to rely on a combination of patent, copyright, trademark, service mark, trade secret and other rights in the United States and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect our proprietary technology, processes and other intellectual property. We will protect our intellectual property rights in a number of ways including entering into confidentiality and other written agreements with our employees, customers, consultants and partners in an attempt to control access to and distribution of our documentation and other proprietary technology and other information. Despite our efforts to protect our proprietary rights, third parties may, in an unauthorized manner, attempt to use, copy or otherwise obtain and market or distribute our intellectual property rights or technology.
U.S. patent filings are intended to provide the holder with a right to exclude others from making, using, selling or importing in the United States the inventions covered by the claims of granted patents. Our patents, including our pending patents, if granted, may be contested, circumvented or invalidated. Moreover, the rights that may be granted in those issued and pending patents may not provide us with proprietary protection or competitive advantages, and we may not be able to prevent third parties from infringing those patents. Therefore, the exact benefits of our issued patents and, if issued, our pending patents and the other steps that we have taken to protect our intellectual property cannot be predicted with certainty.
On September 19, 2019, the United States Patent and Trademark Office published patent US 2019 288 139 A1 for the Frame-Less Encapsulated Photo-Voltaic (PV) Solar Power Panel Supporting Solar Cell Modules Encapsulated Within Optically-Transparent Epoxy-Resin Material Coating a Phenolic Resin Support Sheet issued to National Mechanical Group Corp. Originally designed for application in the solar bus shelters operated by Street Smart Outdoor Corp, as a glassless solar panel, the Company has developed a patent protected product and process for creating solar panels that can be integrated directly into the design of products as a molded, weather resistant plastic. The Company began work developing a business plan for expanding on either manufacturing or licensing of the technology in 2020, with such work continuing into 2023.
Seasonality
Our business is not seasonal. However, our revenues and operating results may vary significantly from quarter-to-quarter, due to revenues earned on contracts, the commencement and completion of contracts during any particular quarter; as well as the schedule of government agencies awarding contracts, the term of each contract that we have been awarded and general economic conditions. Because a portion of our expenses, such as personnel and facilities costs, are fixed in the short term, successful contract performance and variation in the volume of activity as well as in the number of contracts commenced or completed during any quarter may cause significant variations in operating results from quarter to quarter.
Employees
As of December 31, 2022, we had 2 full-time employees. We periodically engage additional consultants and employ temporary or full-time employees as needed. Potential employees possessing the unique qualifications required are readily available for both part-time and full-time employment. The primary method of soliciting personnel is through recruiting resources directly utilizing all known sources including electronic databases, public forums, and personal networks of friends and former co-workers.
We believe that our future success will depend in part on our continued ability to offer market competitive compensation packages to attract and retain highly skilled, highly motivated and disciplined managerial, technical, sales and support personnel. We generally do not have employment contracts with our employees, but we do selectively maintain employment agreements with key employees. In addition, confidentiality and non-disclosure agreements are in place with many of our customer, employees and consultants and such agreements are included our policies and procedures. None of our employees are subject to a collective bargaining agreement. We believe that our relations with our employees are good.
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Corporate Information
The Company was incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together with its subsidiaries, are referred to as the “Company”. On August 24, 2017, the Company entered into an Acquisition Agreement with EXOlifestyle, Inc. whereby the Company became a wholly owned subsidiary of EXOlifestyle, Inc. The acquisition was accounted for as a reverse merger, resulting in the Company being consider the accounting acquirer.
On October 3, 2017, pursuant to the written consent of the majority of the shareholders in lieu of a meeting, Sun Pacific Holding Corp., f/k/a EXOlifestyle, Inc. (the “Company”) filed a Certificate of Amendment with the state of Nevada to change the name of the Company from EXOlifestyle, Inc. to Sun Pacific Holding Corp.
Our principal executive offices are located at 345 Highway 9 South Suite 388 Manalapan NJ 07726. Our internet address www.sunpacificholding.com . Information on our website is not incorporated into this Form 10-K. We make available free of charge through our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the United States Securities and Exchange Commission (the “SEC”). The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
Item 2. Properties
Currently, we operate in a virtual setting and have no direct costs related to office space. We believe we will obtain additional facilities required to accommodate projected needs without difficulty and at commercially reasonable prices.
Item 3. Legal Proceedings
From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company.
There is no material bankruptcy, receivership, or similar proceeding with respect to the Company or any of its significant subsidiaries.
There are no administrative or judicial proceedings arising from any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primary for the purpose of protecting the environment.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
The high and low per share closing sales prices of the Company’s stock on the OTC Markets (ticker symbol: SNPW) for each quarter for the years ended December 31, 2022 and 2021 were as follows:
| Quarter Ended | High | Low | ||||||
| March 31, 2021 | 0.210 | 0.002 | ||||||
| June 30, 2021 | 0.062 | 0.025 | ||||||
| September 31, 2021 | 0.041 | 0.015 | ||||||
| December 31, 2021 | 0.027 | 0.012 | ||||||
| March 31, 2022 | 0.014 | 0.014 | ||||||
| June 30, 2022 | 0.014 | 0.006 | ||||||
| September 31, 2022 | 0.021 | 0.009 | ||||||
| December 31, 2022 | 0.014 | 0.006 | ||||||
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Holders of our Common Stock
As of April 15, 2023, there were approximately 581 stockholders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form. The stock transfer agent for our securities is VStock Transfer.
Dividend Policy
We have never paid dividends on our Common Stock and intend to continue this policy for the foreseeable future. We plan to retain earnings for use in growing our business base. Any future determination to pay dividends will be at the discretion of our Board of Directors and will be dependent on our results of operations, financial condition, contractual and legal restrictions and any other factors deemed by the management and the Board to be a priority requirement of the business.
Our Series C Preferred Stockholders were to be paid an annual dividend in the amount of $0.125 per year, for a total of $0.25, over an eighteen (18) month term, from the date of issuance (the “Commencement Date. Dividend payments shall be payable as follows: (i) dividend in the amount of $0.0625 per share of Series C Preferred Stock at the end of each of the third quarter and fourth quarter of the first twelve (12) months of the twenty-four (24) month period after the Commencement Date; and (ii) dividend in the amount of $0.03125 per share of Series C Preferred Stock at the end of each of the four quarters of the second twelve ( 12) months of the twenty-four (24) month period after the Commencement Date. The source of payment of the dividends will be derived from up to thirty-five percent (35%) of net revenues (“Net Revenues”) from the Street Furniture Division of the Corporation following the seventh (7th) month after the Commencement Date. To the extent the amount derived from the Net Revenues of the Street Furniture Division is insufficient to pay dividends of Series C Preferred Stock, if a sufficient amount is available, the next quarterly payment date the funds will first pay dividends of Series C Preferred Stock past due. As of today’s date, no dividend payments have been made. 275,000 shares of Series C Preferred Stock were originally issued as Series B Preferred Stock of Sun Pacific Holding Corp. and all dividend payments have ceased, leaving only accrued payments due.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company has not adopted an equity compensation plan.
Unregistered Sales of Equity Securities
On or about January 29, 2021 we issued 50,000 shares of common stock to one entity pursuant to a subscription agreement for $0.20 per share.
On or about February 8, 2021 we issued 250,000 shares of common stock to one entity pursuant to a subscription agreement for $0.10 per share.
On or about March 11, 2021, we issued 300,000 shares of common stock to one entity pursuant to a cashless exercise of a warrant, with an exercise price of $0.031 per share of common stock.
On or about March 11, 2021, we issued 7,626,978 shares of common stock to one entity pursuant to a conversion of a convertible note, with an conversion price of $0.02035 per share of common stock.
All the offers and sales of securities listed above were made to accredited investors. The issuance of the above securities is exempt from the registration requirements under Rule 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 as promulgated under Regulation D.
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Repurchases of Equity Securities
We repurchased no shares of our Common Stock during the years ended December 31, 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. This discussion should be read in conjunction with the other sections of this Form 10-K, including “Risk Factors,” and the Financial Statements. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Annual Report on Form 10-K. See “Forward-Looking Statements.” Our actual results may differ materially. The preparation of these consolidated financial statements requires us 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, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except where the context otherwise requires, the term “we,” “us,” “our,” or “the Company,” refers to the business of Sun Power Holdings Corp.
Organizational Overview
Utilizing managements history in general contracting, coupled with our subject matter expertise and intellectual property (“IP”) knowledge of solar panels and other leading-edge technologies, Sun Pacific Holding (“the Company”) is focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. We provide solar bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and local municipalities with costs efficient solutions.
Our green energy solutions can be customized to meet most enterprise and/or government mandated regulations and advanced system requirements. Our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard product offering that focuses on the goals of the client’s entire organization.
Currently, the Company has four (4) subsidiary holdings. Sun Pacific Power Corp., which was the initial company that specialized in solar & other renewable energy projects., The Company also formed National Mechanical Group Corp, a New Jersey corporation focused on holding the Company’s patents. The Company also formed Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks.” The Company also formed Elba Power Corp, an Alabama Corp for the development of a Solar Assembly company. Elba Power Corp has entered into a property purchase contract for approximately $3 million, pending financing, and has obtained the approval for an inducement resolution for $50 million dollars from the State of Alabama, along with a 100% tax abatement on sales and use tax in support of the development of a solar assembly plant. Elba Power Corp is currently working with potential funders in support of the capitalization and development of the project.
Sun Pacific Power Corp. has entered into an agreement with FoxEss, a global leader in the development of inverter and energy storage solutions as a wholesale distributer for North and South America and Australia. Sun Pacific Power Corp. has also entered into an agreement with a South Asian solar manufacturer to act as an original equipment manufacturer (“OEM”) for Sun Pacific Solar Panels and associated products. Sun Pacific Power Corp has also commenced in April 2023, a sales, marketing, and affiliate program to market and install residential solar panels in various markets within the United States.
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As of today, our principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in New Jersey and Florida.
Strategic Vision
Our objective is to grow our business as a premier green energy-based provider of both product and services to the public and private sectors. We are working to deploy our strategy in building upon our green energy expertise in conjunction with our intellectual property and subject matter expertise that may allow us to grow a group of business lines in solar and other unique energy related areas.
Recent advances in a multitude of different yet converging technologies have significantly improved the ability to integrate energy efficient products and solutions into infrastructure related projects. These technological advances decrease the requirements needed to jointly operate a multitude of differing assets, devices, and tools that create new ways to integrate evolving new technologies. This technological change and convergence in energy efficient devices, integrated communications among devices, and societal needs to more effectively and environmentally friendly we believe presents a significant opportunity for us in providing and supporting simple to complex integrated solutions.
Our challenges continue to be reaching critical mass in our solar shelter business, expanding into other green energy related projects, and securing operational capital. While the Company has never been adequately funded from inception, the Company has attempted to use debt, equity, and other opportunistic in-kind compensation to further the Company’s strategic vision.
Going Concern
The Company has an accumulated deficit of approximately $8.0 million and a working capital deficit of approximately $3.1 million as of December 31, 2022. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtain additional financing from its stockholders and/or other third parties.
In order to further implement its business plan and satisfy its working capital requirements, the Company will need to raise additional capital. There is no guarantee that the Company will be able to raise additional equity or debt financing at acceptable terms, if at all.
There is no assurance that the Company will ever be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.
Use of estimates in the preparation of consolidated financial statements
Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates include the allowance for doubtful accounts and impairment assessments related to long-lived assets.
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Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned, and less-than-wholly owned subsidiaries of which the Company holds a controlling interest. All significant intercompany balances and transactions have been eliminated. Amounts attributable to minority interests in the Company’s less-than-wholly owned subsidiary are presented as non-controlling interest on the accompanying consolidated balance sheets and statements of operations.
Cash and cash equivalents
For purposes of the consolidated statements of cash flows, cash and cash equivalents includes demand deposits and short-term liquid investments with original maturities of three months or less when purchased. The Federal Deposit Insurance Corporation (“FDIC”) provided insurance coverage of up to $250,000, per depositor, per institution. At December 31, 2022 and 2021, none of the Company’s cash balances were in excess of federally insured limits. Any and all withdrawals are strictly controlled by the lending institution and use of proceeds must be approved prior to release of funds.
Accounts Receivable
In the normal course of business, we decide to extend credit to certain customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. Periodically we estimate this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change and can have an impact on collections and our estimation process. The Company determined that an allowance for doubtful accounts was not necessary as of December 31, 2022 and 2021.
Leases
In February 2016, the FASB issued ASU No. 2016-02 (Topic 842). Topic 842 amends several aspects of lease accounting, including requiring lessees to recognize leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. In July 2018, the FASB issued supplemental adoption guidance and clarification to Topic 842 within ASU 2018-10 Codification Improvements to Topic 842, Leases and ASU 2018-11 Leases (Topic 842): Targeted Improvements. The new guidance aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. A modified retrospective application is required with an option to not restate comparative periods in the period of adoption.
The Company, effective January 1, 2019 has adopted the provisions of the new standard. The Company has operating leases for warehouses and offices. Management evaluates each lease independently to determine the purpose, necessity to its future operations in addition to other appropriate facts and circumstances.
We adopted Topic 842 using a modified retrospective approach for all existing leases at January 1, 2019. The adoption of Topic 842 impacted our balance sheet by the recognition of the operating lease right-of-use assets and the liability for operating leases. Accordingly, upon adoption, leases that were classified as operating leases under the previous guidance were classified as operating leases under Topic 842. The lease liability is based on the present value of the remaining lease payments, discounted using a market based incremental borrowing rate as the effective date of January 1, 2019 using current estimates as to lease term including estimated renewals for each operating lease. As of January 1, 2019, the Company recorded an adjustment of approximately $1,339,000 to operating lease right-of-use assets (“ROU”) and the related lease liability (Note 7).
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Contingencies
Certain conditions may exist as of the date financial statements are issued, which may result in a loss, but which will only be resolved when one or more future events occur or do not occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to pending legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.
Fair value of financial instruments
The carrying amounts of the Company’s accounts receivable, accounts payable, accrued expenses, and accrued expenses due to related parties approximate fair value due to their short-term nature. The Company’s long-term debt approximates fair value given the instruments bear market rates of interest.
Property and equipment
Property and equipment are stated at cost. Additions and improvements that significantly add to the productive capacity or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over three to five years for vehicles and five to ten years for equipment. Leasehold improvements are amortized over the lesser of the estimated remaining useful life of the asset or the remaining lease term.
Impairment of long-lived assets
The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At December 31, 2022 and 2021, the Company has not identified any such impairment losses.
Income taxes
Under ASC Topic 740, Income Taxes, the Company is required to account for its income taxes through the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating losses, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized.
Revenue Recognition
The Company recognizes revenue when or as it satisfies a performance obligation by transferring a promised good or service to a customer in accordance with Topic 606. Revenue from the sale of advertising space on displays from the Company’s Outdoor Advertising Shelter Revenues is generally recognized ratably over the term of the contract as the advertisement is displayed.
The Company recognizes revenue in amounts that reflect the consideration it expects to receive in exchange for transferring goods or services to customers, excluding sales taxes and other similar taxes collected on behalf of governmental authorities (the “transaction price”). When this consideration includes a variable amount, the Company estimates the amount of consideration it expects to receive and only recognizes revenue to the extent that it is probable it will not be reversed in a future reporting period. Because the transfer of promised goods and services to the customer is generally within a year of scheduled payment from the customer, the Company is not typically required to consider the effects of the time value of money when determining the transaction price. Advertising revenue is reported net of agency commissions.
In order to appropriately identify the unit of accounting for revenue recognition, the Company determines which promised goods and services in a contract with a customer are distinct and are therefore separate performance obligations. If a promised good or service does not meet the criteria to be considered distinct, it is combined with other promised goods or services until a distinct bundle of goods or services exists.
For revenue arrangements that contain multiple distinct goods or services, the Company allocates the transaction price to these performance obligations in proportion to their relative standalone selling prices. The Company has concluded that the contractual prices for the promised goods and services in its standard contracts generally approximate management’s best estimate of standalone selling price as the rates reflect various factors such as the size and characteristics of the target audience, market location and size, and recent market selling prices. However, where the Company provides customers with free or discounted services as part of contract negotiations, management uses judgment to determine how much of the transaction price to allocate to these performance obligations.
The Company receives payments from customers based on billing schedules that are established in its contracts, and deferred revenue is recorded when payment is received from a customer before the Company has satisfied the performance obligation or a non-cancelable contract has been billed in advance in accordance with the Company’s normal billing terms.
All of the Company’s revenue for the years ended December 31, 2022 and 2021, is recognized based on the Company’s satisfaction of distinct performance obligations identified in each agreement, generally at a point in time as defined by Topic 606, as amended.
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This standard replaced most existing revenue recognition guidance and is codified in FASB ASC Topic 606. Effective January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method. Under the new guidance, the Company recognizes revenue from contracts based on the Company’s satisfaction of distinct performance obligations identified in each agreement. The adoption of the guidance under ASU No. 2014-09 did not result in a material impact on the Company’s consolidated revenues, results of operations, or financial position. As part of the implementation of ASC 606 the Company must present disaggregation of revenues from contracts with customers into categories that depict how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. Quantitative disclosures on the disaggregation of revenue are as follows:
| 2022 | 2021 | |||||||
| Outdoor Advertising Shelter Revenues | $ | 265,573 | $ | 377,593 | ||||
| 12 |
Earnings Per Share
Under ASC 260, Earnings Per Share (“EPS”), the Company provides for the calculation of basic and diluted earnings per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the year ended December 31, 2022, basic and diluted loss per share are the same as the calculation of diluted per share amounts would result in an anti-dilutive calculation. The following summarizes the calculation of diluted income per share for the year ended December 31, 2021:
| Net Income | Weighted Average Shares Outstanding | |||||||
| Basic | $ | 2,968,950 | 974,192,392 | |||||
| Convertible Debt | 41,814 | 142,645,305 | ||||||
| Diluted | $ | 3,010,764 | 1,116,837,697 | |||||
| Diluted Net Income Per Share | $ | 0.00 | ||||||
Results of Operations for the Year Ended December 31, 2022 as Compared to the Year Ended December 31, 2021
Revenues
During the year ended December 31, 2022, revenues decreased $112,020, from $377,593 for the year ended December 31, 2021 to $265,573 in 2022, as a result of more advertising revenues and less general contracting services as the Company migrates away from general contracting services and towards the development of Green Energy Projects including the sale of Solar powered shelters and other energy related projects that derive income from advertising sources. The Company has entered into revenue sharing agreements with the City of Tallahassee and the State of New Jersey, along with others. Depending upon the timing of installation and advertising revenue generated per shelter and or other advertising-based product, the Company’s Revenue may increase materially from this green energy offering.
Cost of Revenues
During the year ended December 31, 2022, cost of revenues decreased by $10,401, from $27,044 for the year ended December 31, 2021 to $16,643 in 2022, as a result of less general contracting services revenues. Costs of revenues may shift dramatically depending upon how the Company’s comparative revenue profile of the products and services shift in the future.
Operating Expenses
During the year ended December 31, 2022, operating expenses increased by $95,248, from $441,311 for the year ended December 31, 2021 to $536,559 in need to disclose the reason for the increase - professional fees increased $33,083 and general and administrative increased $63,284.
| 13 |
Other Income (Expenses)
During the year ended December 31, 2022, other income (expenses) decreased by $42,865 from total other expense of $33,846 for the year ended December 31, 2021 to $9,019 total other income for the year ended December 31, 2022.
Net Loss from Continuing Operations
As a result of the above, the Company incurred Net (Loss) Income from Continuing Operations of $(278,610) and $696,113 for the years ended December 31, 2022 and 2021, respectively.
Liquidity and Capital Resources
Net Working Capital
We have, since inception, financed operations and capital expenditures through the sale of stock and convertible notes and debt. Our immediate sources of liquidity include cash and cash equivalents, accounts receivable, and unbilled receivables.
At December 31, 2022, we had a net working capital deficit of approximately $3,120,589 compared to $2,883,433 at December 31, 2021.
We intend to seek additional financing for our working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation. There can be no assurance that we will be successful in our efforts to raise additional capital.
During the years ended December 31, 2022 and 2021, we received $0 and $35,905, respectively, from the Payroll Protection Program.
Generally, the Company has insufficient capital to maintain operations. Cashflows from operations of the Company and all its subsidiary holdings will not sustain the Company’s operations, let alone its filing requirements, unless there is substantial influx of cash flow through either debt and/or equity financing.
Cash Flows from Operating Activities
Cash provided by operating activities provides an indication of our ability to generate sufficient cash flow from our recurring business activities. Fixed costs such as labor, direct materials, and office rent represent a significant portion of the Company’s continuing operating costs.
For the year ended December 31, 2022, net cash used in operations was $17,925 driven primarily by net loss offset by decreases in accounts receivable and increases in accrued compensation to officers.
For the year ended December 31, 2021, net cash used in operations was approximately $522,748 driven primarily by current year operating loss, and $272,304 of cash deconsolidated.
Cash Flows from Investing Activities
For the year ended December 31, 2022, cash provided by investing activities was approximately $96,000, from the sale of property.
There were no investing activities for the year ended December 31, 2021.
Cash Flows from Financing Activities
Cash provided by financing activities provides an indication of our debt financing and proceeds from capital raise transactions.
There were no financing activities for the year ended December 31, 2022.
| 14 |
For the year ended December 31, 2021, cash provided by financing activities was approximately $535,905, from the issuance of convertible debt of $500,000 and $35,905 of proceeds from the payroll protection program.
In the short term, we must raise additional capital through debt or equity financing to support our business operations and grow our business. Over the long term, we must successfully execute our growth plans to increase profitable revenue and income streams to generate positive cash flows to sustain adequate liquidity without impairing growth initiatives or requiring the infusion of additional funds from external sources to meet minimum operating requirements. We may need to raise additional capital to fund our operations and there can be no assurance that additional capital will be available on acceptable terms or at all.
Off-Balance Sheet Arrangements
We have no off-balance sheet financing arrangements.
Contractual Obligations
Not required of smaller reporting companies.
Item 8. Financial Statements and Supplementary Data
Our consolidated financial statements and notes thereto and the report of our independent registered public accounting firm, are set forth on pages F-1 through F-15 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
As of the end of the period covered by this Annual Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the evaluation and the identification of the material weaknesses in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, the Company’s disclosure controls and procedures were not effective.
Evaluation of Disclosure Controls and Procedures
The Company’s management is responsible for establishing and maintaining adequate disclosure controls and procedures for the Company. 3As of the end of the period covered by this Annual Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the evaluation and the identification of the material weaknesses in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, the Company’s disclosure controls and procedures were not effective.
| 15 |
Management’s Report on Internal Control over Financial Reporting
Pursuant to Rule 13a-15(c) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s internal control over financial reporting as of the end of the period covered by this report , using the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The term “internal control over financial reporting”, as defined under Rule 13a-15(f) under the Exchange Act, means a process designed by, or under the supervision of, the issuer’s principal executive officer and principal financial officers, or persons performing similar functions, and effected by issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. Based upon the evaluation of the internal control over financial reporting at the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting were not effective as a result of continuing weaknesses principally due to the following:
| - | The Company has not established adequate financial reporting monitoring activities to mitigate the risk of management override, specifically because there are few employees and only one officers with management functions and therefore there is lack of segregation of duties. | |
| - | An outside consultant assists in the preparation of the annual and quarterly financial statements and partners with the Company to ensure compliance with US GAAP and SEC disclosure requirements. | |
| - | Outside counsel assists the Company in the external attorneys to review and editing of the annual and quarterly filings and to ensure compliance with SEC disclosure requirements. |
At such time as the Company raises additional working capital it plans to add staff, initiate training, add additional subject matter expertise in its finance area so that it may improve it processes, policies, procedures, and documentation of its internal control processes.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance;
The current Directors and Officers of the Company are as follows:
| Executive | Age | Position | ||
| Nicholas Campanella | 58 | Chairman of the Board, Chief Executive Officer and Director | ||
| Vincent Randazzo | 61 | Director |
Nicholas Campanella, Director, CEO, and President is the founder of Sun Pacific Power Corp. and has been its President and a director since its inception in 2009. Mr. Campanella has been a serial entrepreneur. He has managed, owned, and led a number of companies in the development, contracting, insurance and manufacturing industries. From 1996 until 2015 he was the President of CGA Associates, an insurance brokerage company. From 2005 until 2009 he was the President of Northwoods Manufacturing and from 2004 to the present he is the President of Triplet Square, a real estate development company. Prior to 2004 he held positions of Vice President and Account Executive in the insurance industry. He has also served in many roles in community service including as an environmental commissioner and as the chairman of the economic development committee, along with serving as the Grand Knight for the Knights of Columbus. Mr. Campanella attended New York Institute of Technology in 1984, where he majored in Business Management.
| 16 |
Vincent Randazzo, Director was appointed to the Board of Directors of Sun Pacific Holding Corp. because of his management experience with manufacturing operations and financial reporting. Mr. Randazzo received his Bachelor of Science in Business Administration from Saint Francis College. Mr. Randazzo started his career as an accounting clerk for Agip, USA. Thereafter, he quickly became a Manager of General Accounting for Time Warner Corporation rising to Plant Manager within 10 years with the company. In 1998, Mr. Randazzo joined I.L Walker, Inc., a folding carton manufacturing operation, as Vice President/General Manager. I.L. Walker, Inc. at the time had annual sales of $23,000,000. Mr. Randazzo was responsible for 155 employees, initiated new manufacturing and quality standards. Based on his experience with I.L. Walker, Inc., in 2001, Mr. Randazzo started his own firm, Zapp Packaging, Inc. driving sales from $1,500,000 the first year of operations to $15,000,000 in 2005 when he sold the company. In 2006, Mr. Randazzo joined MyPrint a division of e-Tools Corporation as V.P. of Operations until he was appointed C.E.O. in 2007. Mr. Randazzo’s experience brings expertise in building and growing businesses.
Committees
As of the date of this Annual Report, the Company’s board of directors does not have any committees.
The Board of Directors does not currently have a formal nominating committee as we are deemed a “controlled company” in that our CEO and Chairman, Nicholas Campanella holds greater than 50% voting control. As such, nominations of additional board members or nominees for shareholder election are set forth by Mr. Campanella. Mr. Campanella will consider shareholder nomination. However, there are currently no formal standards for accepting or rejecting such nominations.
The Board of Directors does not currently have a formal auditing committee nor a member of the board that is a “audit committee financial expert” as defined by Item 507(d)(5).
Family Relationships
Nicholas Campanella and Vincent Randazzo are brothers in law. There are no other family relationships among the directors and executive officers of the Company. There is no arrangement or understanding between or among the directors or executive officers of the Company to which a director or executive officer of the Company was or is to be selected as a director.
Involvement in Certain Legal Proceedings
To our knowledge, during the last ten years, none of our directors and executive officers has:
| ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. | |
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. | |
| ● | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. | |
| ● | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. | |
| ● | Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Code of Ethics
We do not currently have a code of ethic that applies to any member of the Board of Directors or our executive officers.
| 17 |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2021 all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with.
Item 11. Executive Compensation
| Name and Principal Position | Year Ended | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation Earnings | Non- Qualified Deferred Compensation Earnings | All Other Compensation(1) | Total | |||||||||||||||||||||||||
| Nicholas Campanella | 2022 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||
| 2021 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
(1) In 2022 and 2021, Mr. Campanella received a salary for his services rendered for MedRcycler-RI, Inc.
Executive Employment Agreement
On December 20, 2017, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer. Under the terms of the agreement, the Company is required to pay a base compensation of $180,000 annually, subject to increases in cost of living and performance bonuses as awarded by the Board of Directors. After 5 years, the agreement is automatically renewed for an additional two years unless terminated by either party. As part of the agreement Mr. Campanella opted to defer, with no interest, the receipt of compensation under the agreement until the Company has the funds to pay its obligation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of April 17, 2023, each person known by the Company to be the officer or director of the Company or a beneficial owner of five percent or more of the Company’s common stock. Except as noted, the holder thereof has sole voting and investment power with respect to the shares shown. Except as otherwise indicated, the address of each beneficial owner is c/o Sun Pacific Holding Corporation, 345 Highway 9 South, Suite 388, Manalapan, New Jersey 07726.
| 18 |
| Name | Position | Number of Shares of Common Stock | Percentage of Common Stock (1) | |||||||
| Officers & Directors | ||||||||||
| Nicholas Campanella | Chairman of the Board. CEO, & Director | 33,897,166 | (2) | 3.48 | % | |||||
| Vincent Randazzo | Director | 44,150 | * | |||||||
| Total Owned by all Officers and Directors | 33,941,316 | 3. 48 | % | |||||||
| (1) | Applicable percentage ownership is based on 974,953,335 shares of common stock outstanding as of April 13, 2021. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of are deemed to be beneficially owned by the person holding such securities for computing the percentage of ownership of such person but are not treated as outstanding for computing the percentage ownership of any other person. Nicholas Campanella, our Chairman and Chief Executive Officer holds 12,000,000 shares of Series A Preferred Stock as of April 17, 2023. The Series A Preferred Stock has voting rights equal to 125 votes on all matters submitted to a vote to the stockholders of the Company, does not have conversion, dividend or distribution upon liquidation rights. As a result, Mr. Campanella has the equivalent to 1,500,000,000 votes. Therefore, although the officers, directors and beneficial holders of shares greater than 5% of the common stock have voting rights equal to 3.48% of the voting rights of the common stock, this amounts to only 3.67% of the total voting rights available. Mr. Campanella thus has just over 50% of the total voting rights. | |
| (2) | Includes shares held by family members. |
Item 13. Certain Relationships and Related Transactions and Director Independence
On August 24, 2017, the Company closed a share exchange agreement with the shareholder of Sun Pacific Power Corporation, a New Jersey corporation whereby the shareholders of Sun Pacific Power Corporation received 284,248,605 shares of common stock (pre-reverse stock split of 50:1) on a pro rata basis. Pursuant to the share exchange agreement, Nicholas Campanella was issued 976,351 shares of Series B Preferred Shares, which automatically converted into 30,126,775 shares of post reverse stock split common shares.
Vincent Randazzo, our Director, is the brother-in-law of Nicholas Campanella, our Chairman and Chief Executive Office.
On April 1, 2023, the Company’s wholly owned subsidiary, Sun Pacific Power Corp. entered into a joint venture agreement with CAC Realty, LLC, an entity wholly owned by Nicholas Campanella, our sole director and chief executive officer. The joint venture provides that Mr. Campanella will provide the working capital to operate Sun Pacific Power Corp.’s solar sales operations for a period of up to 4 months. In return, CAC Realty, LLC will receive a 12 month, 5% promissory note for all moneys paid to the joint venture and 30% of gross profits earned by Sun Pacific Power Corp.
For the fiscal year ended December 30, 2022, please refer to Note 8 of the financial statements for details related to related party transactions.
Item 14. Principal Accountant Fees and Services.
Our independent public accounting firm is Turner Stone & Company, L.L.P. Dallas, Texas, PCAOB Auditor ID 76.
The aggregate fees incurred for each of the last two years for professional services rendered by Turner, Stone & Company, L.L.P. the independent registered public accounting firm for the audit of the Company’s annual financial statements included in the Company’s Form 10-K and review of financial statements for its quarterly reports (Form 10-Qs) are reported below.
The total fees charged by Turner, Stone & Company, L.L.P. in 2022 and 2021 aggregated $42,200 and $33,280, respectively, which includes fees for the 2021 and 2020 audited financial statements and review of the quarterly financial statements.
| Audit | Taxes | Filings | Oher | Total | ||||||||||||||||
| 2022 | $ | 42,200 | $ | - | $ | - | $ | - | $ | 42,200 | ||||||||||
| 2021 | $ | 32,280 | $ | - | $ | - | $ | - | $ | 33,280 | ||||||||||
| 19 |
PART IV
Item 15. Exhibits, Financial Statement Schedules
| 20 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Sun Pacific Power Corp. | ||
| Date: 4/17/2023 | By: | /s/ Nicholas Campanella |
| Name: | Nicholas Campanella | |
| Title: | Chairman of the Board of Directors, & Chief Executive Officer (Principal Executive Officer) | |
| Date: 4/17/2023 | By: | /s/ Nicholas Campanella |
| Name: | Nicholas Campanella | |
| Title: | Chief
Financial Officer (Principal Financial and Accounting Officer) | |
In accordance with the Exchange Act, this report has been signed below by the following persons on April 17, 2023 on behalf of the registrant and in the capacities indicated.
| Signature | Title | |
| /s/ Nicholas Campanella | Chairman of the Board of Directors, Chief | |
| Nicholas Campanella | Executive Officer, & Chief Financial Officer (Principal Executive Officer) (Principal Financial and Accounting Officer) | |
| /s/ Vincent Randanzzo | Director | |
| Vincent Randanzzo |
| 21 |
FINANCIAL STATEMENTS
| F-1 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Sun Pacific Holding Corp. and Subsidiaries
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Sun Pacific Holding Corp. and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ deficit 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 “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated 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.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 of the notes to consolidated financial statements, the Company has suffered recurring losses from operations since inception and has a significant working capital deficiency, both of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2017.
April 17, 2023
| F-2 |
SUN PACIFIC HOLDING CORP
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (restated) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Deposits and other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable, related party | ||||||||
| Accrued compensation to officer | ||||||||
| Accrued expenses | ||||||||
| Accrued expenses, related party | ||||||||
| Dividends payable, related party | ||||||||
| Advances from related parties | ||||||||
| Project financing obligation | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable, related party | ||||||||
| Notes payable, net of discounts | ||||||||
| Total current liabilities | ||||||||
| Long Term Liabilities | ||||||||
| Notes payable, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 7) | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock $ par value, million shares authorized | ||||||||
| Series A preferred stock: shares designated; shares issued and outstanding | ||||||||
| Series B preferred stock: shares designated; -- shares issued and outstanding | ||||||||
| Series C preferred stock: shares designated; -- shares issued and outstanding | ||||||||
| Common stock $ par value, shares authorized; | - | - | ||||||
| shares issued and outstanding | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
| F-3 |
SUN PACIFIC HOLDING CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021
| 2022 | 2021 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating Expenses: | ||||||||
| Wages and compensation | ||||||||
| Professional fees | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from continuing operations | ( | ) | ( | ) | ||||
| Other Expenses: | ||||||||
| Other income | ||||||||
| Loan forgiveness | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other income (expense), net | ( | ) | ||||||
| Net loss from continuing operations before income tax benefit | ( | ) | ( | ) | ||||
| Income tax benefit - continuing operations | ||||||||
| Net (loss) income from continuing operations | ( | ) | ||||||
| Income from discontinued operations before taxes | ||||||||
| Income tax expense - discontinued operations | ( | ) | ||||||
| Income from discontinued operations | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Net income attributable to non-controlling interest | ||||||||
| Net (loss) income attributable to common stockholders | $ | ( | ) | $ | ||||
| Net (Loss) Income Per Common Share - Basic | $ | ( | ) | $ | ||||
| Weighted Average Shares Outstanding - Basic | ||||||||
| Net (Loss) Income Per Common Share - Diluted | $ | ( | ) | $ | ||||
| Weighted Average Shares Outstanding - Diluted | ||||||||
| F-4 |
SUN PACIFIC HOLDING CORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021
| Series A Preferred | Additional | Non- | ||||||||||||||||||||||||||||||
| Stock | Common Stock | Paid In | Accumulated | Controlling | Total | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Deficit | |||||||||||||||||||||||||
| Balances at December 31, 2020 (restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance of previously subscribed common stock | - | ( | ) | |||||||||||||||||||||||||||||
| Conversion of convertible debt | - | |||||||||||||||||||||||||||||||
| Cashless exercise of common stock warrants | - | ( | ) | |||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| Balances at December 31, 2021 (restated) | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balances at December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| F-5 |
SUN PACIFIC HOLDING CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022 and 2021
| 2022 | 2021 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net (loss) income | $ | ( | ) | $ | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Gain on sale of property | ( | ) | ||||||
| Gain on deconsolidation | ( | ) | ||||||
| Loan forgiveness | ( | ) | ( | ) | ||||
| Effect of discontinue operations on cash | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in accounts receivable | ( | ) | ||||||
| Increase in deposits and other assets | ( | ) | ||||||
| Increase (decrease) in accounts payable | ( | ) | ||||||
| Decrease in accounts payable, related party | ( | ) | ||||||
| Increase in accrued compensation to officer | ||||||||
| Increase in accrued expenses | ||||||||
| Increase in accrued expenses and advances, related parties | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from Investing Activities | ||||||||
| Proceeds from sale of property | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from Financing Activities: | ||||||||
| Proceeds from payroll protection loan | ||||||||
| Proceeds from the issuance of convertible debt | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of year | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Note payable extension fee added to principal | $ | $ | ||||||
| Issuance of common stock upon conversion of convertible debt and accrued interest | $ | $ | ||||||
| F-6 |
SUN PACIFIC HOLDING CORP
NOTES TO CONSOLIDATED FINACNIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2022 and 2021
NOTE 1 - DESCRIPTION OF THE BUSINESS
The Company was incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together with its subsidiaries, are referred to as the “Company”. On August 24, 2017, the Company entered into an Acquisition Agreement with EXOlifestyle, Inc. whereby the Company became a wholly owned subsidiary of EXOlifestyle, Inc. The acquisition was accounted for as a reverse merger, resulting in the Company being considered the accounting acquirer. Accordingly, the accompanying consolidated financial statements included the accounts of EXOlifestyle, Inc. since August 24, 2017.
Utilizing management’s history in general contracting, coupled with our subject matter expertise and intellectual property (“IP”) knowledge of solar panels and other leading-edge technologies, the Company is focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. We provide solar bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and local municipalities with costs efficient solutions.
Our green energy solutions can be customized to meet most enterprise and/or government mandated regulations and advanced system requirements. Our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard product offering that focuses on the goals of the client’s entire organization.
Currently,
the Company has four (4) subsidiary holdings. Sun Pacific Power Corp., which was the initial company that specialized in solar &
other renewable energy projects., The Company also formed National Mechanical Group Corp, a New Jersey corporation focused on holding
the Company’s patents. The Company also formed Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company
for the Company’s state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks.”
The Company also formed Elba Power Corp, an Alabama Corp for the development of a Solar Assembly company. Elba Power Corp has entered
into a property purchase contract for approximately $
Sun Pacific Power Corp. has entered into an agreement with FoxEss, a global leader in the development of inverter and energy storage solutions as a wholesale distributer for North and South America and Australia. Sun Pacific Power Corp. has also entered into an agreement with a South Asian solar manufacturer to act as an original equipment manufacturer (“OEM”) for Sun Pacific Solar Panels and associated products. Sun Pacific Power Corp has also commenced in April 2023, a sales, marketing, and affiliate program to market and install residential solar panels in various markets within the United States.
As of today, our principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in New Jersey and Florida.
| F-7 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates In The Preparation of Consolidated Financial Statements
Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates include the allowance for doubtful accounts and impairment assessments related to long-lived assets.
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned, and less-than-wholly owned subsidiaries of which the Company holds a controlling interest. All significant intercompany balances and transactions have been eliminated. Amounts attributable to minority interests in the Company’s less-than-wholly owned subsidiary are presented as non-controlling interest within the accompanying consolidated financial statements.
Discontinued Operations
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.
The Company disposed of a component of its business pursuant to a Net Profit Participation Agreement dated May 28, 2021, resulting in the Company no longer controlling the subsidiary, which met the definition of a discontinued operation. Accordingly, the operating results of the business disposed are reported as income (loss) from discontinued operations in the accompanying consolidated statements of operations for the year ended December 31, 2021:
| Years Ended December 31, 2021: | ||||
| Operating expenses | $ | ( | ) | |
| Interest and other expenses | ( | ) | ||
| Gain on deconsolidation | ||||
| Income tax expense | ( | ) | ||
| Income from discontinued operations | $ |
Cash and Cash Equivalents
For
purposes of the consolidated statements of cash flows, cash and cash equivalents includes demand deposits and short-term liquid
investments with original maturities of three months or less when purchased. As of December 31, 2022, the Federal Deposit Insurance
Corporation (“FDIC”) provided insurance coverage of up to $
Accounts Receivable
In the normal course of business, we decide to extend credit to certain customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. Periodically we estimate this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change and can have an impact on collections and our estimation process. The Company determined that an allowance for doubtful accounts was not necessary as of December 31, 2022 and 2021.
| F-8 |
Contingencies
Certain conditions may exist as of the date financial statements are issued, which may result in a loss, but which will only be resolved when one or more future events occur or do not occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to pending legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.
Fair Value of Financial Instruments
The carrying amounts of the Company’s accounts receivable, accounts payable, accrued expenses, and shareholder advances approximate fair value due to their short-term nature. The Company’s long-term debt approximates fair value given the instruments bear market rates of interest.
Property and Equipment
Property
and equipment are stated at cost. Additions and improvements that significantly add to the productive capacity or extend the life of
an asset are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over
Impairment of Long-Lived Assets
The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At December 31, 2022 and 2021, the Company has not identified any such impairment losses.
Income Taxes
Under ASC Topic 740, Income Taxes, the Company is required to account for its income taxes through the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating losses, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized.
| F-9 |
Leases
The Company accounts for leases in accordance with FASB ASC Topic 842, Leases, which prescribes the accounting for several aspects of lease accounting, including requiring lessees to recognize leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at the present value of the lease payments.
The Company, effective January 1, 2019 has adopted the provisions of the new standard. The Company had operating leases for warehouses and offices. Management evaluates each lease independently to determine the purpose, necessity to its future operations in addition to other appropriate facts and circumstances.
The Company adopted Topic 842 using a modified retrospective approach for all existing leases at January 1, 2019. The adoption of Topic 842 impacted its balance sheet by the recognition of the operating lease right-of-use assets and the liability for operating leases. The Company had no leases subject to Topic 842 as of December 31, 2022.
Revenue Recognition
The Company recognizes revenue when or as it satisfies a performance obligation by transferring a promised good or service to a customer in accordance with Topic 606. Revenue from the sale of advertising space on displays from the Company’s Outdoor Advertising Shelter Revenues is generally recognized ratably over the term of the contract as the advertisement is displayed.
The Company recognizes revenue in amounts that reflect the consideration it expects to receive in exchange for transferring goods or services to customers, excluding sales taxes and other similar taxes collected on behalf of governmental authorities (the “transaction price”). When this consideration includes a variable amount, the Company estimates the amount of consideration it expects to receive and only recognizes revenue to the extent that it is probable it will not be reversed in a future reporting period. Because the transfer of promised goods and services to the customer is generally within a year of scheduled payment from the customer, the Company is not typically required to consider the effects of the time value of money when determining the transaction price. Advertising revenue is reported net of agency commissions.
In order to appropriately identify the unit of accounting for revenue recognition, the Company determines which promised goods and services in a contract with a customer are distinct and are therefore separate performance obligations. If a promised good or service does not meet the criteria to be considered distinct, it is combined with other promised goods or services until a distinct bundle of goods or services exists.
For revenue arrangements that contain multiple distinct goods or services, the Company allocates the transaction price to these performance obligations in proportion to their relative standalone selling prices. The Company has concluded that the contractual prices for the promised goods and services in its standard contracts generally approximate management’s best estimate of standalone selling price as the rates reflect various factors such as the size and characteristics of the target audience, market location and size, and recent market selling prices. However, where the Company provides customers with free or discounted services as part of contract negotiations, management uses judgment to determine how much of the transaction price to allocate to these performance obligations.
The Company receives payments from customers based on billing schedules that are established in its contracts, and deferred revenue is recorded when payment is received from a customer before the Company has satisfied the performance obligation or a non-cancelable contract has been billed in advance in accordance with the Company’s normal billing terms.
All of the Company’s revenue for the years ended December 31, 2022 and 2021, is recognized based on the Company’s satisfaction of distinct performance obligations identified in each agreement, generally at a point in time as defined by Topic 606, as amended.
In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This standard replaced most existing revenue recognition guidance and is codified in FASB ASC Topic 606. Effective January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method. Under the new guidance, the Company recognizes revenue from contracts based on the Company’s satisfaction of distinct performance obligations identified in each agreement. The adoption of the guidance under ASU No. 2014-09 did not result in a material impact on the Company’s consolidated revenues, results of operations, or financial position. As part of the implementation of ASC 606 the Company must present disaggregation of revenues from contracts with customers into categories that depict how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. Quantitative disclosures on the disaggregation of revenue are as follows:
| 2022 | 2021 | |||||||
| Outdoor Advertising Shelter Revenues | $ | $ | ||||||
Advertising Costs
Advertising
costs are expensed in the period incurred and totaled $
Under ASC 260, Earnings Per Share (“EPS”), the Company provides for the calculation of basic and diluted earnings per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity.
For
the year ended December 31, 2022, shares underlying convertible debt subject to a forbearance agreement, shares
underlying convertible debt and warrants to acquire
For
the year ended December 31, 2021, warrants to acquire
| Net Income | Weighted Average Shares Outstanding | |||||||
| Basic | $ | |||||||
| Convertible Debt | ||||||||
| Diluted | $ | |||||||
| Diluted Net Income Per Share | $ | |||||||
| F-10 |
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.
Restatement
During the year ended December 31, 2022, the Company
discovered its previously reported balance sheet as of December 31, 2021 included $
| December 31, | December 31, | |||||||||||
| 2021 | 2021 | |||||||||||
| (previously reported) | (restatement) | (restated) | ||||||||||
| ASSETS | ||||||||||||
| Current Assets | $ | $ | $ | |||||||||
| Property and Equipment, Net | ||||||||||||
| Deposits and Other Assets | ||||||||||||
| Total assets | $ | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||
| Current Liabilities | $ | $ | ( | ) | $ | |||||||
| Note payable | ||||||||||||
| Total liabilities | ( | ) | ||||||||||
| Stockholders’ Deficit | ( | ) | ( | ) | ||||||||
| Total liabilities and stockholders’ deficit | $ | $ | $ | |||||||||
The accompanying consolidated statement of stockholders’ deficit for the year ended December 31, 2021 reflects the above adjustment in accumulated deficit as of December 31, 2020 and 2021.
NOTE 3 - GOING CONCERN
The
accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America, assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. The Company had a working capital and accumulated deficit of $
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following as of December 31, 2022 and 2021:
| 2022 | 2021 | |||||||
| Furniture and equipment | $ | $ | ||||||
| Vehicles | ||||||||
| Leasehold improvements | ||||||||
| Less: Accumulated depreciation | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expenses totaled $
NOTE 5 - BORROWINGS
Convertible Notes Payable
On
August 24, 2016, the Company issued two -year
unsecured convertible notes payable totaling $
| F-11 |
Convertible Notes Payable, Related Party
On
October 23, 2015, a total of $
On
August 24, 2016, a total of $
Accrued
interest on the convertible notes, related party totaled $
Project Financing Obligation
In
June 2018, the Company received proceeds of $
Line of Credit, Related Party
On
October 23, 2015, the Company entered into a line of credit agreement with Nicholas Campanella, Chief Executive Office of the Company,
for a total value of $
Notes Payable
On
June 21, 2019, the Company issued a six-month ten percent interest promissory note in the amount of $
NOTE 6 – STOCKHOLDERS’ DEFICIT
Preferred stock
The Company is authorized to issue shares of $ par value preferred stock. As of December 31, 2022 and 2021, the Company has designated shares of Series A Preferred Stock, shares of Series B Convertible Preferred Stock, and shares of Series C Convertible Preferred Stock.
| F-12 |
Series
A Preferred Stock -
Series B Preferred Stock - In connection with the reverse merger, the Company issued shares of Series B Preferred Stock. Each share of Series B Preferred Stock automatically converted into shares of common stock after giving effect to the reverse stock split that occurred on October 3, 2017. Holders of Series B Preferred Stock are entitled to vote and receive distributions upon liquidation with common stockholders on an as-if converted basis.
Series
C Preferred Stock - In connection with the reverse merger, the Company issued shares of Series C Preferred Stock.
Common stock
During
the year ended December 31, 2021, one of the holders of convertible debt elected to convert principal of $
Warrants
The following summarizes warrant activity for the years ended December 31, 2022 and 2021:
| Weighted | Weighted | |||||||||
| Average | Average | |||||||||
| Number of | Exercise | Remaining | ||||||||
| Shares | Price | Life | ||||||||
| Outstanding, December 31, 2020 | $ | Years | ||||||||
| Expired | ( | ) | $ | |||||||
| Exercised | ( | ) | $ | |||||||
| Outstanding, December 31, 2021 | $ | | Years | |||||||
| Expired | ||||||||||
| Exercised | ||||||||||
| Outstanding, December 31, 2022 | $ | Years | ||||||||
The following summarizes warrant information as of December 31, 2022:
| Exercise Price | Number of Shares | Expiration Date | ||||||
| $ | | |||||||
| $ | ||||||||
| F-13 |
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Employment Agreement
On
December 20, 2014, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer. Under
the terms of the agreement, the Company is required to pay a base compensation of $
Significant Customers
For
the year ended December 31, 2022, two Customers accounted for
For
the year ended December 31, 2021, two Customers accounted for
Legal Matters
From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the consolidated financial condition or results of operations of the Company.
There is no material bankruptcy, receivership, or similar proceeding with respect to the Company or any of its significant subsidiaries.
There are no administrative or judicial proceedings arising from any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primary for the purpose of protecting the environment.
NOTE 8 - RELATED PARTY TRANSACTIONS
Certain
affiliates have made non-interest-bearing advances. The balances of these advances, which are due on demand and include the advances
from related parties noted in Note 5, totaled $
NOTE 9 – INCOME TAXES
The
Company accounts for income taxes in accordance with ASC 740 which prescribes a recognition threshold and measurement process for financial
statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance
on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There were
| F-14 |
The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended December 31, 2022 and 2021:
| 2022 | 2021 | |||||||
| US federal statutory rate | ( | )% | % | |||||
| State taxes | ( | ) | ||||||
| Permanent items | ( | ) | ||||||
| Change in prior year estimate | ||||||||
| Change in valuation allowance | ( | ) | ( | ) | ||||
| Effective tax rate | % | % | ||||||
The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2022 and 2021 are summarized as follows:
| 2022 | 2021 | |||||||
| Deferred Tax Assets: | ||||||||
| Net operating loss carry-forwards | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total deferred tax assets, net | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets and liabilities, net | $ | $ |
As
of December 31, 2022, the Company has available net operating loss carry forwards of approximately $
The
Company assesses the recoverability of its net operating loss carry forwards and other deferred tax assets and records a valuation allowance
to the extent recoverability does not satisfy the “more likely than not” recognition criteria. The Company continues to maintain
the valuation allowance until sufficient positive evidence exists to support full or partial reversal. As of December 31, 2022 the Company
had a valuation allowance totaling $
NOTE 10 – SEGMENT INFORMATION
During the years ended December 31, 2022 and 2021, the Company only operated in one segment, outdoor advertising.
NOTE 11 – SUBSEQUENT EVENTS
Management of the Company has performed a review of all events and transactions occurring after the consolidated balance sheet date to determine if there were any such events or transactions requiring adjustment to or disclosure in the accompanying consolidated financial statements, noting that there were no such events or transactions that occurred other than the following item:
On
April 1, 2023, the Company’s wholly owned subsidiary, Sun Pacific Power Corp. entered into a joint venture agreement with CAC
Realty, LLC, an entity wholly owned by Nicholas Campanella, our sole director and chief executive officer. The joint venture
provides that Mr. Campanella will provide the working capital to operate Sun Pacific Power Corp.’s solar sales operations for
a period of up to 4 months.
| F-15 |