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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2019

Accounting Changes and Error Corrections [Abstract]

Schedule of Impact on Financial Statements

The effect of the Restatement described above on the accompanying consolidated statements of operations for the fiscal year ended December 31, 2018 is as follows:

		For the Year Ended December 31, 2018
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
Revenue		$	83,929,270			$	(13,563,254	)		$	—			$	—			$	70,366,016
Cost of sales			65,765,007				671,122				(280,143	)			—				66,155,986
Gross profit			18,164,263				(14,234,376	)			280,143				—				4,210,030
Selling, general and administrative expenses			9,528,883				—				251,144				—				9,780,027
Income (loss) from operations			8,635,380				(14,234,376	)			28,999				—				(5,569,997	)
Other expense:
Other income			28,709				—				—				—				28,709
Interest expense			(1,989,417	)			—				—				—				(1,989,417	)
Total other expense, net			(1,960,708	)			—				—				—				(1,960,708	)
Income (loss) before provision for income taxes			6,674,672				(14,234,376	)			28,999				—				(7,530,705	)
Provision for income taxes			4,463,109				—				—				(4,447,061	)			16,048
Net income (loss)			2,211,563				(14,234,376	)			28,999				4,447,061				(7,546,753	)
Other comprehensive income net of tax – change
Change in unrealized loss-interest rate swap			14,800																14,800
Comprehensive income (loss)		$	2,226,363			$	(14,234,376	)		$	28,999			$	4,447,061			$	(7,531,953	)
Income (loss) per common share – basic		$	0.23															$	(0.80	)
Income (loss) per common share – diluted		$	0.23															$	(0.80	)
Shares used in computing earnings per common share:
Basic			9,480,948																9,480,948
Diluted			9,489,630																9,480,948

The effect of the Restatement described above on the accompanying consolidated balance sheet as of December 31, 2018 is as follows:

		As of December 31, 2018
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
ASSETS
Current Assets:
Cash		$	4,128,142			$	—			$	—			$	—			$	4,128,142
Restricted cash			2,000,000				—				—				—				2,000,000
Accounts receivable, net			8,623,329				—				99,242				—				8,722,571
Contract assets			113,333,491				(95,744,625	)			—				—				17,588,866
Inventory			9,711,997				—				(350,386	)			—				9,361,611
Refundable income taxes			435,000				—				—				(97	)			434,903
Prepaid expenses and other current assets			1,972,630				—				—				—				1,972,630
Total Current Assets			140,204,589				(95,744,625	)			(251,144	)			(97	)			44,208,723
Property and equipment, net			2,545,192				—				—				—				2,545,192
Refundable income taxes			435,000				—				—				(97	)			434,903
Deferred income taxes			279,318				—				—				(279,318	)			—
Other assets			249,575				—				—				—				249,575
Total Assets		$	143,713,674			$	(95,744,625	)		$	(251,144	)		$	(279,512	)		$	47,438,393
Liabilities and Shareholders' Equity (Deficit)
Current Liabilities:
Accounts payable		$	9,902,481			$	—			$	—			$	—			$	9,902,481
Accrued expenses			1,558,160				—				—				—				1,558,160
Contract liabilities			3,588,500				1,664,079				—				—				5,252,579
Loss reserve			216,606				3,446,952				—				—				3,663,558
Current portion of long-term debt			2,434,981				—				—				—				2,434,981
Income taxes payable			115,000				—				—				(1,008	)			113,992
Total Current Liabilities			17,815,728				5,111,031				—				(1,008	)			22,925,751
Line of credit			24,038,685				—				—				—				24,038,685
Long-term debt, net of current portion			3,876,238				—				—				—				3,876,238
Deferred income taxes			4,028,553				—				—				(4,028,553	)			—
Other liabilities			531,124				—				—				—				531,124
Total Liabilities			50,290,328				5,111,031				—				(4,029,561	)			51,371,798
Shareholders’ Equity (Deficit):
Common stock			11,718				—				—				—				11,718
Additional paid-in capital			70,651,413				—				—				—				70,651,413
Retained earnings (accumulated deficit)			22,760,215				(100,855,656	)			(251,144	)			3,750,049				(74,596,536	)
Total Shareholders’ Equity (Deficit)			93,423,346				(100,855,656	)			(251,144	)			3,750,049				(3,933,405	)
Total Liabilities and Shareholders’ Equity (Deficit)		$	143,713,674			$	(95,744,625	)		$	(251,144	)		$	(279,512	)		$	47,438,393

The following table presents the impact of the Restatement on the Company’s shareholders’ equity (deficit) as of January 1, 2018:

		Common Stock				Additional Paid-in Capital				Retained Earnings (accumulated deficit)				Accumulated Other Comprehensive Loss				Total Shareholders’ Equity (Deficit)
Balance, January 1, 2018  (As previously reported)		$	8,864			$	53,770,617			$	20,548,652			$	(14,800	)		$	74,313,333
Adjustments:
Revenue recognition			—				—				(86,621,280	)			—				(86,621,280	)
Other			—				—				(280,143	)			—				(280,143	)
Income taxes			—				—				(697,012	)			—				(697,012	)
Cumulative restatement adjustments			—				—				(87,598,435	)			—				(87,598,435	)
Balance, January 1, 2018  (As Restated)		$	8,864			$	53,770,617			$	(67,049,783	)		$	(14,800	)		$	(13,285,102	)

The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the fiscal year ended December 31, 2018 is as follows:

		For the Year Ended December 31, 2018
		As Previously Reported				Restatement Adjustments				As Restated
Cash flows from operating activities:
Net income (loss)		$	2,211,563			$	(9,758,316	)		$	(7,546,753	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			710,197				—				710,197
Amortization of debt issuance cost			95,942				(436	)			95,506
Deferred rent			(70,764	)			—				(70,764	)
Stock-based compensation expense			671,620				—				671,620
Common stock issues as employee compensation			45,913				—				45,913
Deferred income taxes			5,337,053				(5,337,053	)			—
Adjustment for maturity of interest rate swap			20,600				(5,800	)			14,800
Bad debt expense			125,000				(99,242	)			25,758
Changes in operating assets and liabilities, net of effects of acquisition:
Increase in accounts receivable			(1,796,225	)			(50,283	)			(1,846,508	)
(Increase) decrease in contract assets			(2,174,941	)			12,629,627				10,454,686
(Increase) decrease in inventory			(57,272	)			350,038				292,766
(Increase) decrease in prepaid expenses and other current assets			5,702				(27,957	)			(22,255	)
Increase in refundable income taxes			(870,000	)			870,000				—
Decrease in accounts payable and accrued expenses			(7,696,024	)			(230,771	)			(7,926,795	)
Increase in contract liabilities			866,968				1,563,954				2,430,922
Increase (decrease) in loss reserve			44,933				(59,329	)			(14,396	)
Decrease in other liabilities			(10,976	)			5,801				(5,175	)
Increase in income taxes payable			5,673				(1,008	)			4,665
Net cash used in operating activities			(2,535,038	)			(150,775	)			(2,685,813	)
Cash flows from investing activities:
Purchase of property and equipment			(559,037	)			—				(559,037	)
Purchase of WMI			(6,050,906	)			98,906				(5,952,000	)
Net cash used in investing activities			(6,609,943	)			98,906				(6,511,037	)
Cash flows from financing activities:
Net proceeds from sale of common stock			16,166,117				—				16,166,117
Payment of line of credit			(6,500,000	)			—				(6,500,000	)
Proceeds from line of credit			7,700,000				—				7,700,000
Payment of long-term debt			(3,314,789	)			—				(3,314,789	)
Debt issuance costs			(209,082	)			51,869				(157,213	)
Net cash provided by financing activities			13,842,246				51,869				13,894,115
Net increase in cash and restricted cash			4,697,265				—				4,697,265
Cash and restricted cash at beginning of year			1,430,877				—				1,430,877
Cash and restricted cash at end of year		$	6,128,142			$	—			$	6,128,142
Supplemental schedule of noncash investing and financing activities:
Equipment acquired under capital leases		$	649,410			$	—			$	649,410
Supplemental schedule of cash flow information:
Cash paid during the year for interest		$	2,134,574			$	—			$	2,134,574
Cash paid for income taxes		$	10,947			$	—			$	10,947

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Tabular disclosure of prior period adjustments to previously issued financial statements including (1) the effect of the correction on each financial statement line item and any per-share amounts affected for each prior period presented (2) the cumulative effect of the change on retained earnings or other appropriate components of equity or net assets in the statement of financial position, as of the beginning of the earliest period presented, and (3) the effect of the prior period adjustments (both gross and net of applicable income tax) on the net income of each prior period presented in the entity's annual report for the year in which the adjustments are made.

+ References

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-Publisher FASB
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