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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables)

6 Months Ended

Jun. 30, 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 three and six months ended June 30, 2019 is as follows:

		Three Months Ended June 30, 2019
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
Revenue		$	23,158,251			$	(3,056,538	)		$	—			$	—			$	20,101,713
Cost of sales			18,202,069				(175,696	)			(168,303	)			—				17,858,070
Gross profit			4,956,182				(2,880,842	)			168,303				—				2,243,643
Selling, general and administrative expenses			2,709,313				—				(161,551	)			—				2,547,762
Income (loss) from operations			2,246,869				(2,880,842	)			329,854				—				(304,119	)
Interest expense			575,412				—				—				—				575,412
Income (loss) before provision for (benefit from) income taxes			1,671,457				(2,880,842	)			329,854				—				(879,531	)
Provision for (benefit from) income taxes			(1,039,000	)			—				—				1,040,636				1,636
Net income (loss)		$	2,710,457			$	(2,880,842	)		$	329,854			$	(1,040,636	)		$	(881,167	)
Income (loss) per common share – basic		$	0.23															$	(0.07	)
Income  (loss) per common share – diluted		$	0.23															$	(0.07	)
Shares used in computing earnings per common share:
Basic			11,607,415																11,817,713
Diluted			11,644,768																11,817,713

		Six Months Ended June 30, 2019
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
Revenue		$	48,741,782			$	(6,651,686	)		$	—			$	—			$	42,090,096
Cost of sales			38,369,790				(838,449	)			(168,303	)			—				37,363,038
Gross profit			10,371,992				(5,813,237	)			168,303				—				4,727,058
Selling, general and administrative expenses			5,515,756				—				(62,309	)			—				5,453,447
Income (loss) from operations			4,856,236				(5,813,237	)			230,612				—				(726,389	)
Interest expense			1,086,181				—				—				—				1,086,181
Income (loss) before provision for (benefit from) income taxes			3,770,055				(5,813,237	)			230,612				—				(1,812,570	)
Provision for (benefit from) income taxes			(599,000	)			—				—				602,313				3,313
Net income (loss)		$	4,369,055			$	(5,813,237	)		$	230,612			$	(602,313	)		$	(1,815,883	)
Income (loss) per common share – basic		$	0.37															$	(0.15	)
Income (loss) per common share – diluted		$	0.37															$	(0.15	)
Shares used in computing earnings per common share:
Basic			11,710,357																11,776,107
Diluted			11,747,711																11,776,107

The effect of the Restatement described above on the accompanying consolidated statements of operations for the three and six months ended June 30, 2018 is as follows:

		Three Months Ended June 30, 2018
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
Revenue		$	20,261,239			$	(3,085,560	)		$	—			$	—			$	17,175,679
Cost of sales			15,676,421				452,682				—				—				16,129,103
Gross profit			4,584,818				(3,538,242	)			—				—				1,046,576
Selling, general and administrative expenses			2,557,759				—				(45,086	)			—				2,512,673
Income (loss) from operations			2,027,059				(3,538,242	)			45,086				—				(1,466,097	)
Interest expense			416,834				—				—				—				416,834
Income (loss) before provision for (benefit from) income taxes			1,610,225				(3,538,242	)			45,086				—				(1,882,931	)
Provision for (benefit from) income taxes			353,000				—				—				(351,825	)			1,175
Net income (loss)			1,257,225				(3,538,242	)			45,086				351,825				(1,884,106	)
Other comprehensive income net of tax – Change
in unrealized loss on interest rate swap			20,600				—				—				—				20,600
Comprehensive income (loss)		$	1,277,825			$	(3,538,242	)		$	45,086			$	351,825			$	(1,863.506	)
Income (loss) per common share – basic		$	0.14															$	(0.21	)
Income (loss) per common share – diluted		$	0.14															$	(0.21	)
Shares used in computing earnings per common share:
Basic			8,938,331																8,938,331
Diluted			8,980,155																8,938,331

		Six Months Ended June 30, 2018
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
Revenue		$	38,452,862			$	(6,287,232	)		$	—			$	—			$	32,165,630
Cost of sales			29,818,176				480,544				(280,143	)			—				30,018,577
Gross profit			8,634,686				(6,767,776	)			280,143				—				2,147,053
Selling, general and administrative expenses			4,607,599				—				—				—				4,607,599
Income (loss) from operations			4,027,087				(6,767,776	)			280,143				—				(2,460,546	)
Interest expense			864,097				—				—				—				864,097
Income (loss) before provision for (benefit from) income taxes			3,162,990				(6,767,776	)			280,143				—				(3,324,643	)
Provision for (benefit from) income taxes			649,000				—				—				(646,630	)			2,370
Net income (loss)			2,513,990				(6,767,776	)			280,143				646,630				(3,327,013	)
Other comprehensive income net of tax – Change
in unrealized loss on interest rate swap			14,800				—				—				—				14,800
Comprehensive income (loss)		$	2,528,790			$	(6,767,776	)		$	280,143			$	646,630			$	(3,312,213	)
Income (loss) per common share – basic		$	0.28															$	(0.37	)
Income (loss) per common share – diluted		$	0.28															$	(0.37	)
Shares used in computing earnings per common share:
Basic			8,913,394																8,913,394
Diluted			8,953,321																8,913,394

The effect of the Restatement described above on the accompanying consolidated balance sheets as of June 30, 2019 and December 31, 2018 is as follows:

		As of June 30, 2019
		As Previously Reported				Revenue Recognition				Other				Income Taxes				As Restated
ASSETS
Current Assets:
Cash		$	752,607			$	—			$	—			$	—			$	752,607
Restricted cash			2,000,000				—				—				—				2,000,000
Accounts receivable, net			8,399,920				—				161,551				—				8,561,471
Contract assets			120,254,379				(104,091,748	)			—				—				16,162,631
Inventory			11,956,006				—				(182,083	)			—				11,773,923
Refundable income taxes			435,000				—				(47,035	)			273,249				661,214
Prepaid expenses and other current assets			1,118,620				—				—				—				1,118,620
Total Current Assets			144,916,532				(104,091,748	)			(67,567	)			273,249				41,030,466
Operating lease right-of-use assets			4,626,916				—				—				—				4,626,916
Property and equipment, net			3,362,084				—				—				—				3,362,084
Refundable income taxes			—				—				—				434,903				434,903
Deferred income taxes			488,319				—				435,000				(923,319	)			—
Other assets			230,258				—				—				—				230,258
Total Assets		$	153,624,109			$	(104,091,748	)		$	367,433			$	(215,167	)		$	49,684,627
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities:
Accounts payable		$	11,540,234			$	—			$	—			$	—			$	11,540,234
Accrued expenses			927,672				—				—				—				927,672
Contract liabilities			3,272,217				(38,340	)			—				—				3,233,877
Loss reserve			216,606				2,615,485				—				—				2,832,091
Current portion of long-term debt			2,507,060				—				—				—				2,507,060
Operating lease liabilities			1,637,869				—				—				—				1,637,869
Income taxes payable			453,828				—				387,965				(724,488	)			117,305
Total Current Liabilities			20,555,486				2,577,145				387,965				(724,488	)			22,796,108
Line of credit			25,738,685				—				—				—				25,738,685
Long-term operating lease liabilities			3,464,146				—				—				—				3,464,146
Long-term debt, net of current portion			2,981,869				—				—				—				2,981,869
Deferred income taxes			2,638,415				—				—				(2,638,415	)			—
Total Liabilities			55,378,601				2,577,145				387,965				(3,362,903	)			54,980,808
Shareholders’ Equity (Deficit):
Common stock			11,820				—				—				—				11,820
Additional paid-in capital			71,104,418				—				—				—				71,104,418
Retained earnings (accumulated deficit)			27,129,270				(106,668,893	)			(20,532	)			3,147,736				(76,412,419	)
Total Shareholders’ Equity (Deficit)			98,245,508				(106,668,893	)			(20,532	)			3,147,736				(5,296,181	)
Total Liabilities and Shareholders’ Equity (Deficit)		$	153,624,109			$	(104,091,748	)		$	367,433			$	(215,167	)		$	49,684,627

		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 statements of cash flows for the six months ended June 30, 2019 and 2018 is as follows:

		Six Months Ended June 30, 2019
		As Previously Reported				Restatement Adjustments				As Restated
Cash flows from operating activities:
Net income (loss)		$	4,369,055			$	(6,184,938	)		$	(1,815,883	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			483,982				—				483,982
Amortization of debt issuance cost			44,317				16,929				61,246
Cash expended in excess of rent expense			(56,024	)			—				(56,024	)
Stock-based compensation			540,354				—				540,354
Common stock issued as employee compensation			32,324				—				32,324
Bad debt expense			—				(62,309	)			(62,309	)
Deferred income taxes			(1,599,139	)			1,599,139				—
Changes in operating assets and liabilities:
Decrease in accounts receivable			223,409				—				223,409
(Increase) decrease in contract assets			(6,920,888	)			8,347,122				1,426,234
Increase in inventory			(2,244,009	)			(168,303	)			(2,412,312	)
(Increase) decrease in refundable income taxes			435,000				(661,311	)			(226,311	)
Decrease in prepaid expenses and other current assets			645,522				(17,053	)			628,469
Increase in accounts payable and accrued expenses			1,007,265				—				1,007,265
Decrease in contract liabilities			(694,408	)			(1,702,294	)			(2,396,702	)
Decrease in loss reserve			—				(831,467	)			(831,467	)
Increase in income taxes payable			338,828				(335,515	)			3,313
Net cash used in operating activities			(3,394,412	)			—				(3,394,412	)
Cash flows from investing activities:
Purchase of property and equipment			(314,462	)			—				(314,462	)
Net cash used in investing activities			(314,462	)			—				(314,462	)
Cash flows from financing activities:
Payments of long-term debt			(1,222,090	)			—				(1,222,090	)
Proceeds from line of credit			2,000,000				—				2,000,000
Payments of line of credit			(300,000	)			—				(300,000	)
Stock offering costs paid			(119,571	)			—				(119,571	)
Debt issuance costs			(25,000	)			—				(25,000	)
Net cash provided by financing activities			333,339				—				333,339
Net decrease in cash and restricted cash			(3,375,535	)			—				(3,375,535	)
Cash and restricted cash at beginning of period			6,128,142				—				6,128,142
Cash and restricted cash at end of period		$	2,752,607			$	—			$	2,752,607
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	1,329,678			$	—			$	1,329,678
Cash paid during the period for income taxes		$	141,702			$	—			$	141,702
Supplemental schedule of noncash investing and financing activities:
Equipment acquired under financing lease		$	399,800			$	—			$	399,800

		Six Months Ended June 30, 2018
		As Previously Reported				Restatement Adjustments				As Restated
Cash flows from operating activities:
Net income (loss)		$	2,513,990			$	(5,841,003	)		$	(3,327,013	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization			333,276				—				333,276
Amortization of debt issuance cost			42,785				—				42,785
Cash expended in excess of rent expense			(35,384	)			—				(35,384	)
Stock-based compensation			459,716				—				459,716
Common stock issued as employee compensation			45,913				—				45,913
Adjustment for maturity of interest rate swap			20,600				(5,800	)			14,800
Bad debt expense			—				—				—
Deferred income taxes			755,500				(755,500	)			—
Changes in operating assets and liabilities:
Increase in accounts receivable			(10,724	)			—				(10,724	)
(Increase) decrease in contract assets			(4,021,904	)			6,638,916				2,617,012
Increase in inventory			(125,526	)			—				(125,526	)
Increase in prepaid expenses, other current assets and refundable income taxes			(158,636	)			(130	)			(158,766	)
Decrease in accounts payable and accrued expenses			(3,619,073	)			(280,143	)			(3,899,216	)
Increase in contract liabilities			292,317				(2,658	)			289,659
Increase in loss reserve			44,933				131,518				176,451
Decrease in other liabilities			(10,976	)			5,800				(5,176	)
Decrease in income taxes payable			(109,327	)			109,000				(327	)
Net cash used in operating activities			(3,582,520	)			—				(3,582,520	)
Cash flows from investing activities:
Purchase of property and equipment			(369,738	)			—				(369,738	)
Net cash used in investing activities			(369,738	)			—				(369,738	)
Cash flows from financing activities:
Payments of long-term debt			(946,521	)			—				(946,521	)
Proceeds from line of credit			4,500,000				—				4,500,000
Net cash used in financing activities			3,553,479				—				3,553,479
Net decrease in cash			(398,779	)			—				(398,779	)
Cash at beginning of period			1,430,877				—				1,430,877
Cash at end of period		$	1,032,098			$	—			$	1,032,098
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	1,047,457			$	—			$	1,047,457
Supplemental schedule of noncash investing and financing activities:
Equipment acquired under financing lease		$	497,602			$	—			$	497,602

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- Definition

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

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 9
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Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
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Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22658-107794

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