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RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS (Tables)

9 Months Ended

Sep. 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 nine months ended September 30, 2020 is as follows:

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

		Consolidated Statement of Operation For the three months ended September 30, 2020 (Unaudited)
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Inventory Reserve				As Restated
Revenue		$	25,576,718			$	—			$	—			$	—			$	25,576,718
Cost of sales			21,394,243				112,446				(206,159	)			69,157				21,369,687
Gross profit			4,182,475				(112,446	)			206,159				(69,157	)			4,207,031
Selling, general and administrative expenses			3,050,644																3,050,644
Profit from operations			1,131,831				(112,446	)			206,159				(69,157	)			1,156,387
Other expense:
Interest expense			(309,008	)															(309,008	)
Income before provision for income taxes			822,823				(112,446	)			206,159				(69,157	)			847,379
Provision for income taxes			7,614				—				—				—				7,614
Net Income		$	815,209			$	(112,446	)		$	206,159			$	(69,157	)		$	839,765
Income per common share - basic		$	0.07			$	(0.01	)		$	0.02			$	(0.01	)		$	0.07
Income per common share - diluted		$	0.07			$	(0.01	)		$	0.02			$	(0.01	)		$	0.07
Basic			11,894,469				—				—				—				11,894,469
Diluted			11,894,469				—				—				—				11,917,149

		Consolidated Statement of Operation For the nine months ended September 30, 2020 (Unaudited)
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Inventory Reserve				As Restated
Revenue		$	62,175,872			$	—			$	—			$	—			$	62,175,872
Cost of sales			54,715,508				938,689				(6,753	)			352,074				55,999,518
Gross profit			7,460,364				(938,689	)			6,753				(352,074	)			6,176,354
Selling, general and administrative expenses			8,958,986																8,958,986
Loss from operations			(1,498,622	)			(938,689	)			6,753				(352,074	)			(2,782,632	)
Other expense:
Interest expense			(1,085,805	)															(1,085,805	)
Loss before provision for income taxes			(2,584,427	)			(938,689	)			6,753				(352,074	)			(3,868,437	)
Provision for income taxes			9,714				—				—				—				9,714
Net loss		$	(2,594,141	)		$	(938,689	)		$	6,753			$	(352,074	)		$	(3,878,151	)
Loss per common share - basic		$	(0.22	)		$	(0.08	)		$	0.00			$	(0.03	)		$	(0.33	)
Loss per common share - diluted		$	(0.22	)		$	(0.08	)		$	0.00			$	(0.03	)			(0.33	)
Basic			11,862,506				—				—				—				11,862,506
Diluted			11,862,506				—				—				—				11,862,506

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 nine months ended September 30, 2020 is as follows:

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

		Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 (Unaudited)
		As Previously Reported				Inventory Costing Errors				Loss Contract Reserve				Inventory Reserve				As Restated
Cash flows from operating activities:
Net Loss		$	(2,594,141	)		$	(938,689	)		$	6,753			$	(352,074	)		$	(3,878,151	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			769,690																769,690
Amortization of debt issuance cost			80,764																80,764
Cash expended in excess of rent expense			(115,932	)															(115,932	)
Stock-based compensation expense			677,489																677,489
Bad debt expense			(47,410	)			—				—				—				(47,410	)
Changes in operating assets and liabilities:
Increase in accounts receivable			(232,310	)															(232,310	)
Increase in contract assets			(3,128,460	)															(3,128,460	)
Increase in inventory			(2,850,707	)			852,222								352,074				(1,646,411	)
Decrease in prepaid expenses and other current assets			121,075																121,075
Decrease in refundable income taxes			439,445				—				—				—				439,445
Increase in accounts payable and accrued expenses			5,770,902				86,467												5,857,369
Decrease in contract liabilities			(1,092,266	)															(1,092,266	)
Decrease in loss reserve			(1,081,516	)							(6,753	)							(1,088,269	)
Net cash used in operating activities			(3,283,377	)			—				—				—				(3,283,377	)
Cash flows from investing activities:
Purchase of property and equipment			(11,888	)			—				—				—				(11,888	)
Net cash used in investing activities			(11,888	)			—				—				—				(11,888	)
Cash flows from financing activities:
Proceeds from PPP loan			4,795,000																4,795,000
Payments on long-term debt			(1,855,209	)															(1,855,209	)
Debt issuance costs			(107,540	)			—				—				—				(107,540	)
Net cash provided by financing activities			2,832,251				—				—				—				2,832,251
Net decrease in cash and restricted cash			(463,014	)															(463,014	)
Cash and restricted cash at beginning of year			5,432,793				—				—				—				5,432,793
Cash and restricted cash at end of year		$	4,969,779			$	—			$	—			$	—			$	4,969,779
Supplemental schedule of cash flow information:
Cash paid during the year for interest		$	1,156,126			$	—			$	—			$	—			$	1,156,126
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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