SNPW 10-Q
Sun Pacific Holding Corp. (SNPW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period 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 Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Office) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last report)
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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company | ||
| (Do not check if a smaller reporting company) | ||
| Emerging
growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
As of November 20, 2023, there were shares of the registrant’s common stock, $0.0001 par value, outstanding.
SUN PACIFIC HOLDING CORP AND SUBSIDIARIES
INDEX
| Page | ||
| PART I – FINANCIAL INFORMATION | 4 | |
| Item 1. | Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 19 |
| Item 4. | Controls and Procedures | 19 |
| PART II – OTHER INFORMATION | 20 | |
| Item 1. | Legal Proceedings | 20 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
| Item 3. | Defaults Upon Senior Securities | 20 |
| Item 5. | Other Information | 20 |
| Item 6. | Exhibits | 21 |
| Signatures | 22 | |
| 2 |
FORWARD-LOOKING STATEMENTS
Except for any historical information contained herein, the matters discussed in this quarterly report on Form 10-Q contain certain “forward-looking statements’’ within the meaning of the federal securities laws. This includes statements regarding our future financial position, economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the information referred to under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
These forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,’’ “will,’’ “expect,’’ “intend,’’ “estimate,’’ “anticipate,’’ “believe,’’ “continue’’ or similar terminology, although not all forward-looking statements contain these words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Important factors that may cause actual results to differ from projections include, for example:
| ● | the success or failure of management’s efforts to implement our business plan; | |
| ● | our ability to fund our operating expenses; | |
| ● | our ability to compete with other companies that have a similar business plan; | |
| ● | the effect of changing economic conditions impacting our plan of operation; and | |
| ● | our ability to meet the other risks as may be described in future filings with the Securities and Exchange Commission (the “SEC”). |
Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this quarterly report on Form 10-Q.
When considering these forward-looking statements, you should keep in mind the cautionary statements in this quarterly report on Form 10-Q and in our other filings with the SEC. We cannot assure you that the forward-looking statements in this quarterly report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all.
| 3 |
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
| 4 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
(unaudited)
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Total current assets | ||||||||
| 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 | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 6) | ||||||||
| 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 | $ | $ | ||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 5 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Wages and compensation | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Other income (expense), net | ( | ) | ||||||||||||||
| Gain on forgiveness of debt | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense), net | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Common Share - Basic | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Shares Outstanding - Basic | ||||||||||||||||
| Net Loss Per Common Share - Diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted Average Shares Outstanding - Diluted | ||||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 6 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(unaudited)
| Series A Preferred | Additional | |||||||||||||||||||||||||||
| Stock | Common Stock | Paid In | Accumulated | Total | ||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2022 | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||||||
| Balances at December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balances at June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Three and Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||
| Balances at December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at March 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||
| Balances at June 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances at September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 7 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(unaudited)
| 2023 | 2022 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) | ||||||||
| provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Gain on sale of property | ( | ) | ||||||
| Gain on forgiveness of debt | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in accounts receivable | ||||||||
| Decrease (increase) in other assets | ( | ) | ||||||
| Increase in accounts payable | ||||||||
| Decrease in accounts payable, related party | ( | ) | ||||||
| Increase in accrued compensation to officer | ||||||||
| Increase in accrued expenses | ||||||||
| Increase in accrued expenses, related party | ||||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| Cash flows from Investing Activities: | ||||||||
| Proceeds from sale of property | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from Financing Activities: | ||||||||
| Advances from related parties | ||||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Interest paid | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Note payable extension fee added to principal | $ | $ | ||||||
| Issuance of common stock upon conversion of convertible debt and accrued interest | $ | $ | ||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 8 |
SUN PACIFIC HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
NOTE 1 - DESCRIPTION OF THE BUSINESS
Sun Pacific Holding Corporation was incorporated under the laws of the State of New Jersey on July 28, 2009, 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 condensed consolidated financial statements included the accounts of EXOlifestyle, Inc. since August 24, 2017.
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, 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. (“SPPC”), which was the initial company that specialized in solar and 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. (“EPC”), an Alabama Corp. for the development of a solar assembly company. EPC is currently working with potential funders in support of the capitalization and development of the project.
SPPC 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. SPPC 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. We have also signed a two year exclusive sales and distribution agreement with GEP New Energy for their solar panels manufactured in Vietnam.
As of today, the Company’s principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in New Jersey. The Company’s focus is shifting away from offering outdoor advertising and towards the assembly and sales of solar panels and associated products.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles of the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
| 9 |
Use of Estimates in the Preparation of Financial Statements
Preparation of financial statements in conformity with GAAP in the United States requires management to make estimates and assumptions that affect reported amounts in the 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 condensed 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 condensed consolidated balance sheets and statements of operations.
Cash, and Cash Equivalents
For
purposes of the condensed consolidated statements of cash flows, cash includes demand deposits and short-term liquid investments with
original maturities of three months or less when purchased. As of September 30, 2023, 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’s allowance for doubtful accounts was $
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 condensed 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.
| 10 |
Income Taxes
Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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.
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 consolidated 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 ASC 842 as of September 30, 2023.
Revenue Recognition
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 condensed consolidated revenues, results of operations, or financial position.
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 ASC 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.
| 11 |
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.
100% of the Company’s revenue for the nine months ended September 30, 2023 and 2022, is recognized based on the Company’s satisfaction of distinct performance obligations identified generally at a point in time as defined by Topic 606, as amended.
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:
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| 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 three and nine months ended September 30, 2023 and 2022, warrants to acquire shares have been excluded from the calculated of diluted EPS because their impact was anti-dilutive. The following summarizes the diluted income and weighted average shares outstanding for the three and nine months ended September 30, 2023 and 2022:
| Three Months Ended September 30, 2023 | Net Loss | Weighted Average Shares | ||||||
| Basic | $ | ( | ) | |||||
| Convertible Debt | ||||||||
| Diluted | $ | ( | ) | |||||
| Nine Months Ended September 30, 2023 | Net Loss | Weighted Average Shares | ||||||
| Basic | $ | ( | ) | |||||
| Convertible Debt | ||||||||
| Diluted | $ | ( | ) | |||||
| 12 |
| Three Months Ended September 30, 2022 | Net Loss | Weighted Average Shares | ||||||
| Basic | $ | ( | ) | |||||
| Convertible Debt | ||||||||
| Diluted | $ | ( | ) | |||||
| Nine Months Ended September 30, 2022 | Net Loss | Weighted Average Shares | ||||||
| Basic | $ | ( | ) | |||||
| Convertible Debt | ||||||||
| Diluted | $ | ( | ) | |||||
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 condensed consolidated financial statements.
NOTE 3 - GOING CONCERN
The
accompanying condensed consolidated financial statements have been prepared in conformity with GAAP 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. For the nine months ended September 30, 2023 and 2022, the Company incurred losses from operations of
$
NOTE 4 - BORROWINGS
Convertible Notes Payable
On
August 24, 2016, the Company issued two -year unsecured convertible notes payable totaling $
Convertible Notes Payable, Related Party
On
October 23, 2015, a total of $
| 13 |
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 Officer of the Company,
for a total value of $
Note Payable
On
June 21, 2019, the Company issued a six-month ten percent interest promissory note in the amount of $
NOTE 5 – STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company is authorized to issue shares of $ par value preferred stock. As of September 30, 2023, the Company has designated shares of Series A Preferred Stock, shares of Series B Convertible Preferred Stock, and shares of Series C Convertible Stock.
Series
A Preferred Stock -
| 14 |
Series B Preferred Stock - In connection with the reverse merger, the Company issued shares of Series B Preferred Stock on August 24, 2017. 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. The note is currently in default.
Series
C Preferred Stock - In connection with the reverse merger, the Company issued shares of Series C Preferred Stock on August
24, 2017.
Warrants
There was no warrant-related activity for the nine months ended September 30, 2023. The following summarizes warrant information as of September 30, 2023:
| Exercise Price | Number of Shares | Expiration Date | ||||||
| $ | ||||||||
| $ | ||||||||
NOTE 6 - 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 $
| 15 |
Significant Customers
For
the nine months ended September 30, 2023, three customers accounted for
Approximately
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. Currently, the Company is not involved in any pending or threatened material litigation or other material legal proceedings, nor have we been made aware of any pending or threatened regulatory audits.
NOTE 7 - 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 of $
NOTE 8 – SUBSEQUENT EVENTS
Management of the Company has performed a review of all events and transactions occurring after the condensed consolidated balance sheet date and determined there were no events or transactions requiring adjustment to or disclosure in the accompanying condensed consolidated financial statements.
| 16 |
Item 2. 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 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 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. (“SPPC”) 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. (“EPC”) an Alabama Corp. for the development of a solar assembly company. EPC is currently working with potential funders in support of the capitalization and development of the project.
SPPC 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. SPPC 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. We have also signed a two year exclusive sales and distribution agreement with GEP New Energy for their solar panels manufactured in Vietnam
As of today, the Company’s principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in New Jersey. The Company’s focus is shifting away from offering outdoor advertising towards the assembly and sales of solar panels and associated products.
| 17 |
Strategic Vision
Our objective is to grow our business profitably 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 general and other contracting expertise in conjunction with our intellectual property and subject matter expertise in green energy that may allow us to grow a group of profitable business lines in solar, efficient lighting, and other unique energy related areas.
Going Concern
The Company has an accumulated deficit of $8,447,732 and a working capital deficit of $3,524,185 as of September 30, 2023. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, 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 condensed 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.
Results of Operations
Three months ended September 30, 2023 compared to Three months ended September 30, 2022.
Revenues: Revenues decreased by $29,863 from $29,863 for the three months ended September 30, 2022 to $0 for the three months ended September 30, 2023 as a result of the Company ceasing outdoor advertising activities as the Company continues to focus on developing and ramping up its strategy and objectives to build and resell solar panels and other solar related products and services.
Cost of Revenues: Cost of revenues decreased by $4,255 from $4,255 for the three months ended September 30, 2022 to $0 for the three months ended September 30, 2023.
Operating Expenses: Operating expenses increased by $307,837 from $80,973 for the three months ended September 30, 2022 to $388,810 for the three months ended September 30, 2023 due to increases in wages and compensation, professional fees, and general and administrative expenses as a result of its strategic shift to build and resell solar panels and other solar related products and services.
Other Income (Expenses): Other income (expenses), net, consisting of other expense and interest expense, decreased by $72,125 from $82,614 for the three months ended September 30, 2022 to $10,489 for the three months ended September 30, 2023 as a result of other expenses in 2023.
Net Loss: As a result of the above, net loss increased by $261,320 from $137,979 for the three months ended September 30, 2022 to $399,299 for the three months ended September 30, 2023.
Nine months ended September 30, 2023 compared to Nine months ended September 30, 2022.
Revenues: Revenues decreased by $206,299 from $252,114 for the nine months ended September 30, 2022 to $45,815 for the nine months ended September 30, 2023 as a result of the Company ceasing outdoor advertising activities as the Company continues to focus on developing and ramping up its strategy and objectives to build and resell solar panels and other solar related products and services.
Cost of Revenues: Cost of revenues decreased by $5,623 from $12,320 for the nine months ended September 30, 2022 to $6,697 for the nine months ended September 30, 2023.
Operating Expenses: Operating expenses increased by $332,743 from $349,043 for the nine months ended September 30, 2022 to $681,786 for the nine months ended September 30, 2023 due to an increase in wages and compensation, professional fees, and general and administrative expenses as a result of its strategic shift to build and resell solar panels and other solar related products and services.
| 18 |
Other Income (Expenses): Other income (expenses), net, consisting of other income and interest expense, increased by $264,964 from net other expense of $26,571 for the nine months ended September 30, 2022 to net other income of $237,964 for the nine months ended September 30, 2023 as a result of a gain on forgiveness of debt and accrued interest in 2023.
Net Loss: As a result of the above, the net loss increased by $268,884 from $135,820 for the nine months ended September 30, 2022 to $404,704 for the nine months ended September 30, 2023.
Operations, Liquidity and Capital Resources
As of September 30, 2023, we had a working capital deficit of approximately $3,524,185. 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 nine months ended September 30, 2023, we used $439,605 of cash in operating activities driven materially from our operating loss offset by an increase in accrued expenses and gain on forgiveness of debt. During the nine months ended September 30, 2022, we generated $118,791 of cash in operating activities driven by the Company’s operating loss, offset by noncash charges for accrued compensation, bad debt and depreciation.
Off-Balance Sheet Arrangements
As of September 30, 2023, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2023. Based on such review and evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, the disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure and (c) that the Company’s disclosure controls and procedures were not effective as a result of continuing weaknesses in its internal control over financial reporting 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 two officers with management functions and therefore there is lack of segregation of duties. |
| 19 |
| ● | 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 and 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 were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the fiscal quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. 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.
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.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities
None.
Item 5. Other Information
(a) Not applicable.
(b) During the quarter ended September 30, 2023, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.
| 20 |
Item 6. Exhibits
| Exhibit Number | Description of Exhibit | |
| 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 21 |
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 Holding Corp. | ||
| Date: November 20, 2023 | By: | /s/ Nicholas Campanella |
| Nicholas Campanella | ||
Chief Executive Officer and Chief Financial Officer (principal executive officer, principal accounting officer and principal financial officer) | ||
| 22 |