The following discussion should be read in conjunction with our audited
financial statements and the related notes that appear elsewhere in this Annual
Report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include,but are not limited to
those discussed below and elsewhere in this Annual Report. Our audited financial
statements are stated in United States Dollars and are prepared in accordance
with United States Generally Accepted Accounting Principles.
Plan of Operation
We are focused on providing renewable energy solutions and energy-efficient
applications to drive better health and living. We currently have core
subsidiaries including solar and air purification. We built our portfolio
through synergistic acquisitions, products, and partnerships to provide a rich,
diversified holding base. The Company's initial focus is on solar energy and we
are committed to building a foundation for future expansion opportunities and
building brands based on technology solutions we believe will increase
efficiencies across various markets. We strive to create long-term value for our
shareholders by helping our partner companies to increase their market
penetration, grow revenue and improve cash flow and that complement our desire
to build a comprehensive national renewable energy network. The Company is
actively looking for and executing on strategic initiatives to sell, partner
with or spin-off other non renewable energy related assets.
Results from Operations - For the year ended December 31, 2020 as compared to
December 31, 2019.
Net Revenue
For the years ended December 31, 2020 and 2019, the Company had total sales of
$2,878,161 and $3,343,833, respectively. The decrease of $465,672 in revenues
was due primarily to the pandemic which shut down the traditional door to door
sales model of Singlepoint Direct Solar, LLC. Additionally, the Company
experienced delays in permitting, and site visits which continued throughout the
year and into 2021. Social distancing guidelines, stay-at-home orders and
similar government measures associated with the COVID-19 pandemic, as well as
actions by individuals to reduce their potential exposure to the virus,
contributed to a decline in origination, with new contract origination. This
decline reflected an inability by our dealers to perform in-person sales calls
based on the stay-at-home orders in some locations. In the third quarter 2020
the Company also took a one-time adjustment for the proportional sales related
to residential solar revenue derived from Direct Solar America of $276,382.68
for cancelled projects.
Cost of Revenue
Cost of revenue decreased from $2,353,056 for the year ending December 31, 2019
to $2,204,391 for the year ended December 31, 2020, a decrease of $148,665. This
decrease was due primarily to the decreased revenues from our subsidiary Direct
Solar America.
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Gross Profit
As a result of the foregoing, our gross profit was $673,770 for the year ended
December 31, 2020, compared with $990,777, for the year ended December 31, 2019.
The decrease in our overall gross profit was primarily a result of the
subsidiary Direct Solar America.
Operating Expenses
Total operating expenses decreased from $6,455,236 in 2019 to $3,972,882 in
2020, a decrease of $2,482,354. The decrease was primarily due to a decrease in
general and administrative expense of $3,111,304 as a result of additional costs
related to our newly acquired subsidiaries, our new office, marketing, insurance
and travel. We had a decrease in consulting fees of $219,649 in the year ended
December 31, 2020 from the year ending December 31, 2019. Professional and legal
fees increased $22,970 for the year ending December 31, 2020, as compared to
year ending December 31, 2019, primarily due to increased audit and legal
expenses as a result of the Company complying with 1934 Act reporting
obligations of the SEC. Investor relations expense increased from $168,117 for
the year ending December 31, 2019, as compared to $181,637 for the year ending
December 31, 2020, an increase of $13,460.
Other Expense
Other expense decreased from $2,604,274 in 2019 to $1,145,393 in 2020 due
primarily to the decrease in interest expense and amortization of debt discounts
as a result of our decrease in convertible notes payable during the year ended
December 31, 2020.
Net Loss
For the year ended December 31, 2019 the Company had a net loss of approximately
$8,068,733 compared to a net loss of approximately $4,444,505 for the year ended
December 31, 2020, a decrease in net loss of $3,624,228. The decrease in net
loss is primarily a result of the change in fair value of derivative liabilities
as well as a decrease in overall operating expenses during the year ended
December 31, 2020.
Liquidity and Capital Resources
As of December 31, 2020 the Company had $2,915,680 in total assets, including
$198,473 in cash, $3,368 of accounts receivable, $4,834 in prepaid expenses,
$63,456 in inventory, and non-current assets of $2,645,549 related to property,
investments and goodwill. The Company had negative working capital of $5,646,208
as of December 31, 2020.
As of December 31, 2020, the Company has yet to achieve profitable operations,
and while the Company hopes to achieve profitable operations in the future, if
not it may need to raise capital from stockholders or other sources to sustain
operations and to ultimately achieve viable operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The Company's principal sources of liquidity have been cash provided by
operating activities, as well as its ability to raise capital. The Company's
operating results for future periods are subject to numerous uncertainties and
it is uncertain if the Company will be able to become profitable and continue
growth for the foreseeable future. If management is not able to increase revenue
and/or manage operating expenses, the Company may not be able to achieve
profitability. The Company's ability to continue in existence is dependent on
the Company's ability to achieve profitable operations.
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To continue operations for the next 12 months we will have a cash need of
approximately $2.0 million. Should we not be able to fulfill our cash needs
through the increase of revenue we will need to raise money through outside
investors through convertible notes, debt or similar instrument(s). The Company
plans to pay off current liabilities through sales and increasing revenue
through sales of Company services and or products, or through financing
activities as mentioned above, although there is no guarantee that the Company
will ultimately do so.
Advances from Officer
The Company's CEO advanced the Company funds during 2020 and 2019, with a
balance due of $911,826 and $735,000 respectfully, plus accrued interest of
$216,807 and $96,273 as of December 31, 2020 and 2019, respectively. These
balances accrue interest at 12% beginning October 1, 2018, are unsecured and due
on demand.
In November 2020 the Company effectuated the sale of 1,075,527 shares of Common
Stock of Jacksam Corporation in exchange for the extinguishment of $218,874 of
bona fide debt owed by the Company to its CEO.
Our cash flows for the year ended December 31, 2020 and 2019 are summarized
below:
Year Ending Year Ending
December 31, December 31,
2020 2019
Net cash used in operating activities $ (1,955,379 ) $ (1,787,690 )
Net cash used in investing activities $ 25,000 $ -
Net cash provided by financing activities $ 2,018,724 $ 1,829,037
Net Change in Cash $ 88,345 $ 41,347
Cash at beginning of year $ 110,128 $ 68,781
Cash at end of year $ 198,473 $ 110,128
Net Cash Used in Operating Activities
For the year ended December 31, 2020, $1,955,379 net cash was used in operating
activities due primarily from our net loss of $4,033,717 partially offset by
non-cash charges, including preferred stock issued for services, common stock
issued for services and amortization of loan costs.
Net Cash Provided in Investing Activities
We had $25,000 net cash provided in investing activities from a return of
investment in the year ended December 31, 2020 as compared to $0 for the year
ended December 31, 2019.
Net Cash Provided by Financing Activities
For the year ended December 31, 2020, net cash provided by financing activities
was $2,018,724 as compared to $1,829,037 for the year ended December 31, 2019.
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Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities of the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Notes to the Consolidated Financial Statements
describes the significant accounting policies and methods used in the
preparation of the Consolidated Financial Statements. Estimates are used for,
but not limited to, contingencies and taxes. Actual results could differ
materially from those estimates. The following critical accounting policies are
impacted significantly by judgments, assumptions, and estimates used in the
preparation of the Consolidated Financial Statements.
Loss Contingencies
The Company is subject to various loss contingencies arising in the ordinary
course of business. The Company considers the likelihood of loss or impairment
of an asset or the incurrence of a liability, as well as its ability to
reasonably estimate the amount of loss in determining loss contingencies. An
estimated loss contingency is accrued when management concludes that it is
probable that an asset has been impaired or a liability has been incurred and
the amount of the loss can be reasonably estimated. The Company regularly
evaluates current information available to us to determine whether such accruals
should be adjusted.
Income Taxes
The Company recognizes deferred tax assets (future tax benefits) and liabilities
for the expected future tax consequences of temporary differences between the
book carrying amounts and the tax basis of assets and liabilities. The deferred
tax assets and liabilities represent the expected future tax return benefits or
consequences of those differences, which are expected to be either deductible or
taxable when the assets and liabilities are recovered or settled.
Recent Accounting Pronouncements
See Note 2 of the consolidated financial statements for discussion of Recent
Accounting Pronouncements.
Off-Balance Sheet Arrangements
We are not currently a party to, or otherwise involved with, any off-balance
sheet arrangements that have or are reasonably likely to have a current or
future material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
Recently Adopted Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with
Customers (Topic 606). This standard provides a single set of guidelines for
revenue recognition to be used across all industries and requires additional
disclosures. It is effective for annual and interim reporting periods beginning
after December 15, 2017. We adopted this standard on January 1, 2018 and it did
not have a material impact on our financial position or results of operations.
Purchase of Significant Equipment
We have not previously, nor do we intend to purchase any significant equipment
during the next twelve months.
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