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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables)

6 Months Ended

Jun. 30, 2021

Accounting Changes and Error Corrections [Abstract]

The effect of the Restatement described above on the accompanying consolidated balance sheet as of December 31, 2020 is as follows:

The effect of the Restatement described above on the accompanying consolidated balance sheet as of December 31, 2020 is as follows:

		Consolidated Balance Sheet as at December 31, 2020
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Additional Inventory Reserve				As Restated
ASSETS
Current Assets:
Cash		$	6,033,537			$	—			$	—			$	—			$	6,033,537
Accounts receivable, net			4,962,906																4,962,906
Contract assets			19,729,638																19,729,638
Inventory			9,567,921				(1,875,950	)							(1,305,683	)			6,386,288
Refundable income taxes			40,000																40,000
Prepaid expenses and other current assets			534,857																534,857
Total Current Assets			40,868,859				(1,875,950	)			—				(1,305,683	)			37,687,226
Operating lease right-of-use assets			4,075,048																4,075,048
Property and equipment, net			2,521,742																2,521,742
Intangibles, net			250,000																250,000
Goodwill			1,784,254																1,784,254
Other assets			191,179																191,179
Total Assets		$	49,691,082			$	(1,875,950	)		$	—			$	(1,305,683	)		$	46,509,449
Liabilities and Shareholders' Deficit
Current Liabilities:
Accounts payable		$	12,092,684			$	—			$	—			$	—			$	12,092,684
Accrued expenses			5,693,518				244,403												5,937,921
Contract liabilities			1,650,549																1,650,549
Loss reserve			800,971								1,208,276								2,009,247
Current portion of long-term debt			6,501,666																6,501,666
Operating lease liabilities			1,819,237																1,819,237
Income taxes payable			862				86												948
Total Current Liabilities			28,559,487				244,489				1,208,276				—				30,012,252
Line of credit			20,738,685																20,738,685
Long-term operating lease liabilities			2,537,149																2,537,149
Long-term debt, net of current portion			6,205,095																6,205,095
Total Liabilities			58,040,416				244,489				1,208,276				—				59,493,181
Shareholders' Deficit:
Common stock			11,951																11,951
Additional paid-in capital			72,005,841																72,005,841
Accumulated deficit			(80,367,126	)			(2,120,439	)			(1,208,276	)			(1,305,683	)			(85,001,524	)
Total Shareholders’ Deficit			(8,349,334	)			(2,120,439	)			(1,208,276	)			(1,305,683	)			(12,983,732	)
Total Liabilities and Shareholders’ Deficit		$	49,691,082			$	(1,875,950	)		$	—			$	(1,305,683	)		$	46,509,449

The effect of the Restatement described above on the accompanying consolidated statement of operations for the three and six months ended June 30, 2020 is as follows:

The effect of the Restatement described above on the accompanying consolidated statement of operations for the three and six months ended June 30, 2020 is as follows:

		Consolidated Statement of Operation For the three months ended June 30, 2020 (Unaudited)
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Inventory Reserve				As Restated
Revenue		$	19,740,767			$	—			$	—			$	—			$	19,740,767
Cost of sales			17,160,698			$	510,244				190,035				63,451				17,924,428
Gross profit			2,580,069				(510,244	)			(190,035	)			(63,451	)			1,816,339
Selling, general and administrative expenses			2,815,252																2,815,252
Loss from operations			(235,183	)			(510,244	)			(190,035	)			(63,451	)			(998,913	)
Other expense:
Interest expense			(360,126	)			—				—				—				(360,126	)
Profit before provision for income taxes			(595,309	)			(510,244	)			(190,035	)			(63,451	)			(1,359,039	)
Provision for income taxes			1,522				—				—				—				1,522
Net profit		$	(596,831	)		$	(510,244	)		$	(190,035	)		$	(63,451	)		$	(1,360,561	)
Loss per common share - basic		$	(0.05	)		$	(0.04	)		$	(0.02	)		$	(0.00	)		$	(0.11	)
Loss per common share - diluted		$	(0.05	)		$	(0.04	)		$	(0.02	)		$	(0.00	)			(0.11	)
Basic			11,855,404				—				—				—				11,855,404
Diluted			11,855,404				—				—				—				11,855,404

		Consolidated Statement of Operation For the six months ended June 30, 2020 (Unaudited)
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Inventory Reserve				As Restated
Revenue		$	36,599,154			$	—			$	—			$	—			$	36,599,154
Cost of sales			33,321,265				826,243				199,406				282,917				34,629,831
Gross profit			3,277,889				(826,243	)			(199,406	)			(282,917	)			1,969,323
Selling, general and administrative expenses			5,908,342																5,908,342
Loss from operations			(2,630,453	)			(826,243	)			(199,406	)			(282,917	)			(3,939,019	)
Other expense:
Interest expense			(776,797	)															(776,797	)
Loss before provision for income taxes			(3,407,250	)			(826,243	)			(199,406	)			(282,917	)			(4,715,816	)
Provision for income taxes			2,100				—				—				—				2,100
Net loss		$	(3,409,350	)		$	(826,243	)		$	(199,406	)		$	(282,917	)		$	(4,717,916	)
Loss per common share - basic		$	(0.29	)		$	(0.07	)		$	(0.02	)		$	(0.02	)		$	(0.40	)
Loss per common share - diluted		$	(0.29	)		$	(0.07	)		$	(0.02	)		$	(0.02	)			(0.40	)
Basic			11,846,260				—				—				—				11,846,260
Diluted			11,846,260				—				—				—				11,846,260

The following table presents the impact of the Restatement on the Company’s shareholders’ deficit as of December 31, 2019 (as restated), March 31, 2020 (as restated), June 30, 2020 (as restated), September 30, 2020 (as restated) and December 31, 2020 (as restated):

 The following table presents the impact of the Restatement on the Company’s shareholders’ deficit as of December 31, 2019 (as restated), March 31, 2020 (as restated), June 30, 2020 (as restated), September 30, 2020 (as restated) and December 31, 2020 (as restated):

		Common Stock Shares				Common Stock				Additional Paid-in Capital				Accumulated Deficit				Total Shareholders’ Deficit
Balance, December 31, 2019
(As Restated)			11,818,830			$	11,819			$	71,294,629			$	(81,346,771	)		$	(10,040,323	)
Net Loss (as previously reported)
														$	(2,812,519	)		$	(2,812,519	)
Inventory Costing Errors			—				—				—				(315,999	)			(315,999	)
Loss Contract Reserve			—				—				—				(9,371	)			(9,371	)
Inventory Reserve			—				—				—				(219,466	)			(219,466	)
Cumulative restatement adjustments			—				—				—				(544,836	)			(544,836	)
Net Loss (as restated)															(3,357,355	)			(3,357,355	)
Stock-based compensation			18,388				18				347,167				—				347,185
Balance, March 31, 2020
(As Restated)			11,837,218			$	11,837			$	71,641,796			$	(84,704,126	)		$	(13,050,493	)
Net Loss (as previously reported)														$	(596,831	)		$	(596,831	)
Inventory Costing Errors			—				—				—				(510,244	)			(510,244	)
Loss Contract Reserve			—				—				—				(190,035	)			(190,035	)
Inventory Reserve			—				—				—				(63,451	)			(63,451	)
Cumulative restatement adjustments			—				—				—				(763,730	)			(763,730	)
Net Loss (as restated)															(1,360,561	)			(1,360,561	)
Stock-based compensation			18,388				19				189,184				—				189,203
Balance, June 30, 2020
(As Restated)			11,855,606			$	11,856			$	71,830,980			$	(86,064,687	)		$	(14,221,851	)
Net Income (as previously reported)														$	815,209			$	815,209
Inventory Costing Errors			—				—				—				(112,446	)			(112,446	)
Loss Contract Reserve			—				—				—				206,159				206,159
Inventory Reserve			—				—				—				(69,157	)			(69,157	)
Cumulative restatement adjustments			—				—				—				24,556				24,556
Net Income (as restated)															839,765				839,765
Stock-based compensation			70,571				70				141,031				—				141,101
Balance, September 30, 2020
(As Restated)			11,926,177			$	11,926			$	71,972,011			$	(85,224,922	)		$	(13,240,985	)
Net Income														$	1,273,703			$	1,273,703
Inventory Costing Errors			—				—				—				(1,071,395	)			(1,071,395	)
Loss Contract Reserve			—				—				—				99,921				99,921
Inventory Reserve			—				—				—				(78,831	)			(78,831	)
Cumulative restatement adjustments			—				—				—				(1,050,305	)			(1,050,305	)
Net Income (as restated)															223,398				223,398
Stock-based compensation			25,094				25				33,830				—				33,855
Balance, December 31, 2020
(As Restated)			11,951,271			$	11,951			$	72,005,841			$	(85,001,524	)		$	(12,983,732	)

The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the six months ended June 30, 2020 is as follows:

 The effect of the Restatement described above on the accompanying consolidated statement of cash flows for the six months ended June 30, 2020 is as follows:

		Consolidated Statements of Cash Flows for the six months ended June 30, 2020 (Unaudited)
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Inventory Reserve				As Restated
Cash flows from operating activities:
Net Loss		$	(3,409,350	)		$	(826,243	)		$	(199,406	)		$	(282,917	)		$	(4,717,916	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			512,567				—				—				—				512,567
Amortization of debt issuance cost			56,055																56,055
Cash expended in excess of rent expense			(77,288	)															(77,288	)
Stock-based compensation expense			536,388				—				—				—				536,388
Bad debt expense			(73,352	)															(73,352	)
Changes in operating assets and liabilities:
Decrease in accounts receivable			144,537				—				—				—				144,537
Increase in contract assets			(285,875	)															(285,875	)
Increase in inventory			(1,767,122	)			684,605				—				282,917				(799,600	)
Increase in prepaid expenses and other current assets			(142,816	)			—				—				—				(142,816	)
Decrease in refundable income taxes			437,931				—				—				—				437,931
Increase in accounts payable and accrued expenses			2,332,263				141,638				—				—				2,473,901
Decrease in contract liabilities			1,433,720				—				—				—				1,433,720
Decrease in loss reserve			(549,840	)			—				199,406				—				(350,434	)
Net cash used in operating activities			(852,182	)			—				—				—				(852,182	)
Cash flows from investing activities:
Purchase of property and equipment			(8,000	)															(8,000	)
Net cash used in investing activities			(8,000	)			—				—				—				(8,000	)
Cash flows from financing activities:
Proceeds from PPP loan			4,795,000																4,795,000
Payments on long-term debt			(1,237,726	)															(1,237,726	)
Net cash provided by financing activities			3,557,274				—				—				—				3,557,274
Net increase in cash and restricted cash			2,697,092																2,697,092

Cash and restricted cash at beginning of year			5,432,793																5,432,793
Cash and restricted cash at end of year		$	8,129,885			$	—			$	—			$	—			$	8,129,885
Supplemental schedule of cash flow information:
Cash paid during the year for interest		$	845,962			$	—			$	—			$	—			$	845,962
Cash (received) from income taxes		$	(449,749	)		$	—			$	—			$	—			$	(449,749	)

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Tabular disclosure of condensed balance sheet, including, but not limited to, balance sheets of consolidated entities and consolidation eliminations.

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