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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Sunworks, Inc.    SUNW

SUNWORKS, INC.

(SUNW)
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SUNWORKS, INC. : Other Events (form 8-K)

11/02/2020 | 06:06am EST

Item 8.01. Other Events.

Supplemental Disclosures to the Proxy Statement/Prospectus




As previously announced, on August 10, 2020, Sunworks, Inc., a Delaware
corporation ("Sunworks"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") with The Peck Company Holdings, Inc., a Delaware corporation
("Peck"), and Peck Mercury, Inc., a Delaware corporation and direct wholly owned
subsidiary of Peck ("Merger Sub"), pursuant to which Merger Sub will merge with
and into Sunworks, with Sunworks continuing as the surviving corporation (the
"Merger").


This Current Report on Form 8-K (this "Form 8-K") is being filed to update and
supplement the Joint Proxy Statement/Prospectus (the "Joint Proxy
Statement/Prospectus") (1) included in the Registration Statement on Amendment
No. 1 to Form S-4, File No. 333-249183 (the "Registration Statement"), filed by
Peck with the Securities and Exchange Commission (the "SEC") on October 14, 2020
and declared effective by the SEC on October 15, 2020, (2) filed by Peck with
the SEC as a prospectus on October 15, 2020, (3) filed by Sunworks with the SEC
as a definitive proxy statement on Schedule 14A on October 15, 2020, and (4)
mailed by Sunworks to its stockholders commencing on October 15, 2020. The
information contained in this Form 8-K is incorporated by reference into the
Joint Proxy Statement/Prospectus. Terms used in this Form 8-K, but not otherwise
defined, shall have the meanings ascribed to such terms in the Joint Proxy
Statement/Prospectus.



Following the announcement of the Merger Agreement and as of the date of this
Form 8-K, eight lawsuits have been filed by alleged stockholders of Sunworks
challenging the Merger.


Peck, Sunworks and the other named defendants deny that they have violated any
laws or breached any duties to Peck's or Sunworks' stockholders and believe that
these lawsuits are without merit and that no supplemental disclosure is required
to the Joint Proxy Statement/Prospectus under any applicable law, rule or
regulation. However, solely to eliminate the burden and expense of litigation
and to avoid any possible disruption to the Merger that could result from
further litigation, Peck and Sunworks are providing the supplemental disclosures
set forth in this Form 8-K. Nothing in this Form 8-K shall be deemed an
admission of the legal necessity or materiality under applicable laws of any of
the disclosures set forth herein.



If you have not already submitted a proxy for use at the Sunworks virtual
special meeting, you are urged to do so promptly. This Form 8-K does not affect
the validity of any proxy card or voting instructions that Sunworks stockholders
may have previously received or delivered. No action is required by any Sunworks
stockholder who has previously delivered a proxy or voting instructions and who
does not wish to revoke or change that proxy or voting instructions.



Supplemental Disclosures



The following supplemental disclosures should be read in conjunction with the
Joint Proxy Statement/Prospectus, which should be read in its entirety. To the
extent that information in the supplemental disclosures differs from or updates
information contained in the Joint Proxy Statement/Prospectus, the information
in the supplemental disclosures shall supersede or supplement the information in
the Joint Proxy Statement/Prospectus. Defined terms used but not defined in the
supplemental disclosures have the meanings set forth in the Joint Proxy
Statement/Prospectus. Paragraph and page references used herein refer to the
Joint Proxy Statement/Prospectus before any additions or deletions resulting
from the supplemental disclosures. The supplemental disclosures speak only as of
the date on which the information contained therein was prepared and provided to
the Board of Directors of Sunworks (the "Sunworks Board") in connection with,
and at the time of, the Sunworks Board's evaluation of the Merger (including
with respect to any forecasts, projections, or other forward-looking statements
contained in the supplemental disclosures with respect to Sunworks), and no such
information has been updated or otherwise revised to reflect subsequent events
since such date. The inclusion of financial projections in the Joint Proxy
Statement/Prospectus (the "Projections") should not be regarded as an indication
that any of Sunworks or its respective affiliates, advisors or representatives
considered such Projections to be predictive of actual future events, and the
Projections should not be relied upon as such. The Projections constitute
forward-looking statements and no assurances can be given that the assumptions
made in preparing such Projections will accurately reflect future conditions.
Accordingly, there can be no assurance that the prospective results will be
realized or that actual results will not be significantly higher or lower than
estimated. None of Sunworks or its respective affiliates, advisors, officers,
directors, partners or representatives undertake any obligation to update or
otherwise revise or reconcile these Projections to reflect circumstances
existing after the date the Projections were generated or to reflect the
occurrence of future events even in the event that any or all of the assumptions
underlying the Projections are shown to be in error, in each case, except as may
be required under applicable law. Sunworks advised the recipients of the
Projections that its internal financial forecasts upon which the Projections
were based are subjective in many respects. While presented with numerical
specificity, the Projections were based on numerous variables and assumptions
known to Sunworks at the time of their preparation. These variables and
assumptions are inherently uncertain and many are beyond the control of
Sunworks. Unless stated otherwise, the revised text in the supplemental
disclosures is underlined to highlight the supplemental information being
disclosed.










1. The following disclosure replaces the second and third full paragraphs on

     page 17 of the Joint Proxy Statement/Prospectus. The modified text is
     underlined below:

     Litigation Relating to the Merger (page 161)

On October 12, 2020, a putative class action complaint was filed in the Court

of Chancery in the State of Delaware by a purported stockholder of Sunworks

regarding the Merger against each of the members of the Sunworks Board (the

"First Complaint"). On October 15, 2020, a second complaint was filed in the

United States District Court in the District of Delaware by a purported

stockholder of Sunworks regarding the Merger against Sunworks, Peck, Merger

Sub and each of the members of the Sunworks Board (the "Second Complaint").

On October 19, 2020, a third complaint was filed in the United States

District Court in the Southern District of New York by a purported

stockholder of Sunworks regarding the Merger against Sunworks and each of the

members of the Sunworks Board (the "Third Complaint"). On October 20, 2020, a

fourth complaint was filed in the United States District Court in the

Southern District of New York by a purported stockholder of Sunworks

regarding the Merger against Sunworks and each of the members of the Sunworks

Board (the "Fourth Complaint"). On October 21, 2020, a fifth complaint was

filed in the United States District Court in the District of New Jersey by a

purported stockholder of Sunworks regarding the Merger against Sunworks and

each of the members of the Sunworks Board (the "Fifth Complaint"). On October

22, 2020, a sixth complaint was filed in the United States District Court in

the Eastern District of California by a purported stockholder of Sunworks

regarding the Merger against Sunworks, Peck, Merger Sub, and each of the

members of the Sunworks Board (the "Sixth Complaint"). On October 23, 2020, a

seventh complaint was filed in the United States District Court in the

Eastern District of California by a purported stockholder of Sunworks

regarding the Merger against Sunworks and each of the members of the Sunworks

Board (the "Seventh Complaint"). On October 23, 2020, an eighth complaint was

filed in the United States District Court in the Northern District of

California by a purported stockholder of Sunworks regarding the Merger

against Sunworks and each of the members of the Sunworks Board (the "Eighth

Complaint" and together with the First, Second, Third, Fourth, Fifth, Sixth,

     and Seventh Complaints, the "Complaints").

     The First and Sixth Complaints contend, among other things, that (i) the

consideration to be paid to Sunworks stockholders pursuant to the Merger is

inadequate and (ii) the Registration Statement on Form S-4 filed with the

Commission by Peck on October 1, 2020, and serving as the preliminary Joint

Proxy Statement/Prospectus (the "Original S-4"), contained materially

incomplete and misleading information regarding the Merger. The First

Complaint further alleges that in facilitating the Merger for the alleged

inadequate consideration and the dissemination of the preliminary Joint Proxy

Statement/Prospectus, each member of the Sunworks Board breached his or her

fiduciary duties. The Second Complaint contends, among other things, that the

Original S-4 omits material information regarding the Merger, rendering it

false and misleading. The Third, Fourth, Fifth, Sixth, Seventh, and Eighth

Complaints contend, among other things, that the definitive proxy statement

on Schedule 14A, filed with the Commission by Sunworks on October 15, 2020

(the "Proxy Statement"), omits material information regarding the Merger,

     rendering it false and misleading.











Each of the Complaints seeks injunctive relief and an award of plaintiff's

costs, including reasonable attorneys' fees and experts' fees, and other

remedies.

For a more detailed description of litigation in connection with the Merger,

see the section entitled "The Merger-Litigation Relating to the Merger"

beginning on page 161 of this Joint Proxy Statement/Prospectus.

2. The following disclosure replaces the paragraph beginning at the end of page

131 and continuing onto page 132 of the Joint Proxy Statement/Prospectus. The

     modified text is underlined below:

     Opinion of Sunworks' Financial Advisor

Sunworks retained Holthouse Carlin & Van Trigt LLP ("HCVT") to act as its

financial advisor in connection with the proposed Merger. HCVT is a

nationally recognized advisory firm which is engaged in the valuation of

businesses and securities in connection with mergers and acquisitions and

valuations for corporate and other purposes. Sunworks selected HCVT to act as

Sunworks' financial advisor in connection with the Merger on the basis of

HCVT's experience in transactions similar to the Merger and its reputation in

the investment community. Sunworks first initiated conversations regarding

engaging HCVT on March 20, 2020. Sunworks subsequently engaged HCVT to

conduct a quality of earnings analysis of Peck on July 6, 2020 and further

engaged HCVT to render an opinion regarding whether the Exchange Ratio is

fair to the Sunworks' stockholders from a financial point of view on July 20,

2020. HCVT had no previous working relationships with Sunworks prior to these

     two engagements.












  3. The following table replaces the table on page 137 of the Joint Proxy
     Statement/Prospectus. The modified text is underlined below:




                                                                       Market Value                Enterprise
                                             Per Share                 of Equity(3)                 Value(4)                                 Enterprise Value /
                                                                                                ($ in millions)                Revenue
Selected Public Companies(1)                  Price(2)               ($ in

millions) ​ ​ EBITDA

            Backlog
                                                       $30.00$1,463$2,182
Ameresco, Inc. ​      ​       ​       ​                      2.29x
​                     ​       ​       ​       ​               22.6 x             2.14 x
                                                        43.77                        685                        325
Argan, Inc. ​         ​       ​       ​                      1.20x
​                     ​       ​       ​       ​                NMF               0.25 x
Canadian Solar Inc.                                     23.77                      1,428                      2,699
​                     ​       ​       ​                      0.85x
​                     ​       ​       ​       ​                5.5 x               NA
First Solar, Inc.                                       65.73                      7,013                      5,931
​                     ​       ​       ​                      1.98x
​                     ​       ​       ​       ​               11.1 x               NA
Gibraltar Industries, Inc.                              61.07              
       1,996                      1,899
​                     ​       ​       ​                      1.74x
​                     ​       ​       ​       ​               14.1 x             8.71 x
IES Holdings, Inc.                                      24.10                        505                        494
​                     ​       ​       ​                        NMF
​                     ​       ​       ​       ​                NMF               0.84 x
Infrastructure and Energy Alts, Inc.                     4.06              
          91                        488
​                     ​       ​       ​                      0.30x
​                     ​       ​       ​       ​                4.0 x             0.24 x
Quanta Services, Inc.                                   42.78                      5,988                      7,131
​                     ​       ​       ​                      0.61x
​                     ​       ​       ​       ​                8.4 x             0.48 x
                                                         1.63                         78                        224

ReneSola Ltd ​ ​ ​ ​

                      1.65x
​                     ​       ​       ​       ​               18.1 x               NA
Solar Integrated Roofing Corp                            0.04              
          13                         15
​                     ​       ​       ​                        NMF
​                     ​       ​       ​       ​                NMF                 NA
SPI Energy Co., Ltd.                                     1.59                         88                        110
​                     ​       ​       ​                        NMF
​                     ​       ​       ​       ​                NMF                 NA
Sunnova Energy International Inc.*                      27.50              
       2,450                      4,316
​                     ​       ​       ​                     30.21x
​                     ​       ​       ​       ​                NMF               3.32 x
SunPower Corporation                                    11.50                      2,049                      2,739
​                     ​       ​       ​                      1.46x
​                     ​       ​       ​       ​               27.3 x             4.81 x
                                                        46.40                      5,583                      9,042

Sunrun Inc.* ​ ​ ​ ​

                     10.55x
​                     ​       ​       ​       ​                NMF               1.39 x
The Peck Company Holdings, Inc.                          4.52              
          24                         32
​                     ​       ​       ​                        NMF
​                     ​       ​       ​       ​                NMF               1.08 x
Vivo Power International PLC                             1.87              
          26                         43
​                     ​       ​       ​                        NMF
​                     ​       ​       ​       ​                NMF                 NA




*Outliers excluded from summary data

NA = Not Available; NMF = No Meaningful Figure; projections per analysts' estimates or actuals, if available

Note: On July 6, 2020, Sunrun Inc. entered into a definitive agreement to acquire Vivint Solar, Inc. for $3.3 billion.


Note: Ameresco, Inc., Sunnova Energy International, Inc., Gibralter Industries,
Inc., SunPower Corporation and Vivint Solar Inc. reported Q2'2020 results on
August 4-5, 2020, and therefore the figures above reflect actual Q2'2020
results.



1 No company used in this analysis for comparative purposes is identical to

Sunworks.

2 Based on closing prices as of August 5, 2020. 3 Based on reported fully-diluted shares outstanding. 4 Enterprise Value equals equity market value + debt outstanding + preferred

  stock + minority interests - cash and cash equivalents.



4. The following table replaces the first table on page 138 of the Joint Proxy

     Statement/Prospectus. The modified text is underlined below:




                  Selected Public Companies Analysis           Enterprise Value /
                                                        Revenue      EBITDA       Backlog
                  High                                      2.29 x      27.3 x        4.81 x
                  Mean                                      1.34 x      13.9 x        1.62 x
                  Median                                    1.46 x      12.6 x        1.08 x
                  Low                                       0.30 x       4.0 x        0.24 x












5. The following table replaces the second table on page 138 of the Joint Proxy

     Statement/Prospectus. The modified text is underlined below:




                                                        Market Value          Enterprise
                                       Per Share         of Equity              Value
                                         Price        ($ in millions)      ($ in millions)              Enterprise Value /
                                                                                                Revenue      EBITDA       Backlog
Sunworks, Inc. (Implied Multiples)*   $      1.38     $             23    
$             21        0.39x          NMF        0.58x






* Implied multiples based on market capitalization plus net debt as of the most

recent public filing (Q1'2020) relative to non-public actual financials for

    the latest twelve months ended Q2'2020.



6. The following disclosure replaces the second to last paragraph on page 138 of

the Joint Proxy Statement/Prospectus. The modified text is underlined below:

Based on the selected public companies analysis performed by HCVT described

above, it derived a range of multiples of 0.20x to 0.25x based on the (i)

enterprise value to projected revenue multiples based on the last 12 months

ended June 30, 2020 and (ii) enterprise value to reported backlog multiples

as of the last reported backlog date, respectively. The derived range of

multiples gives consideration to size, profitability, industry segment,

intellectual property and other factors of comparable companies. Using these

various factors, HCVT concluded that Selected Public Companies with lower

revenue and backlog multiples were more comparable to Sunworks than Selected

Public Companies with higher revenue and backlog multiples. Based on the

foregoing analysis, HCVT derived implied per share reference ranges from its

selected public companies analysis of (x) $0.72 to $0.87 per share, based on

the projected revenue multiples and (y) $0.54 to $0.65 per share, based on

the latest backlog multiples. The foregoing analysis indicated that the

implied per share consideration range derived by HCVT (as further described

in the Section titled "Implied Range of Per Share Consideration") was greater

than the implied per share reference range indicated by the backlog multiples

of the Selected Public Companies and within the implied per share reference

range indicated by the projected revenue multiples of the Selected Public

     Companies.












  7. The following table replaces the table on page 139 of the Joint Proxy
     Statement/Prospectus. The modified text is underlined below:




                                                ​
                                                ​          Transaction Value(1) /
Announced                      Target                                          Revenue
​    ​           Acquiror          ​
​    ​     ​    ​     EBITDA
                       Vivint Solar, Inc.*      Sunrun Inc.
07/06/2020             (NYSE:VSLR)              (NasdaqGS:RUN)           8.05x
​   ​     ​     ​
​   ​     ​     ​      (29.9)x
                       Gruppo Green Power
08/06/2019             S.p.A. (BIT:GGP)         Alperia S.p.A.           0.63x
​   ​     ​     ​
​   ​     ​     ​        19.7x
                                                Jensyn Acquisition
02/27/2019             The Peck Company, Inc.   Corp. (NasdaqCM:JSYN)    1.13x
​   ​     ​     ​
​   ​     ​     ​         9.1x
                                                Recomm Co., Ltd.
12/17/2018             Sunden Co., Ltd.         (JASDAQ:3323)            0.44x
​   ​     ​     ​
​   ​     ​     ​           NA
                                                Gibraltar Industries,
08/23/2018             SolarBOS, Inc.           Inc. (NasdaqGS:ROCK)     0.42x
​   ​     ​     ​
​   ​     ​     ​           NA
                                                Oaktree Capital
12/04/2017             NAPEC Inc.               Management, L.P.         0.74x
​   ​     ​     ​
​   ​     ​     ​         9.8x
                       Voltalia Portugal,       Voltalia SA
08/19/2016             S.A.                     (ENXTPA:VLTSA)           0.06x
​   ​     ​     ​
​   ​     ​     ​         4.3x
                       Tesla Energy             Tesla, Inc.
06/21/2016             Operations, Inc.*        (NasdaqGS:TSLA)          11.90x
​   ​     ​     ​
​   ​     ​     ​      (11.7)x
                       Commonwealth Dynamics,
5/6/2016(2)            Inc.                     Beroa Corporation LLC    0.12x
​   ​     ​     ​
​   ​     ​     ​           NA
                                                Enercare Solutions
03/07/2016             Service Experts LLC      Inc.                     0.78x
​   ​     ​     ​
​   ​     ​     ​           NA
                       PowerSecure              The Southern Company
02/24/2016             International, Inc.      (NYSE:SO)                0.96x
​   ​     ​     ​
​   ​     ​     ​        18.7x












* Outliers and negative multiples excluded from summary data

NA = Not Available; NMF = No Meaningful Figure; EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization

Note: Transactions study based on announced and completed, controlling interest acquisitions greater than $1.0 million.

Note: Transactions with announcements dates between 2016 and the Opinion Reference Date for which purchase price multiples were available were considered.

Note: Target companies were required to have SIC codes of 15, 16, 36, 49 or 50.

Note: No transaction used in this analysis for comparative purposes is identical to the Merger.

Note: Based on reported metric for the most recent LTM period prior to the announcement of the transaction.

(1) Transaction value refers to the implied enterprise value of target company,

based on the announced transaction equity price and other public information

    available at the time of the announcement.
(2) Purchase consideration includes an earnout of $3.9 million.





Sources: Capital IQ, public filings, earnings transcripts, and "heard-on-the-street."

8. The following disclosure replaces the paragraph beginning at the end of page

139 and continuing onto page 140 and the first full paragraph of page 140 of

the Joint Proxy Statement/Prospectus. The modified text is underlined below:

Based on the selected precedent M&A transactions analysis performed by HCVT . . .

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Financials (USD)
Sales 2020 47,6 M - -
Net income 2020 -10,0 M - -
Net Debt 2020 - - -
P/E ratio 2020 -28,6x
Yield 2020 -
Capitalization 468 M 468 M -
Capi. / Sales 2020 9,83x
Capi. / Sales 2021 8,28x
Nbr of Employees -
Free-Float 98,7%
Chart SUNWORKS, INC.
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Technical analysis trends SUNWORKS, INC.
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Income Statement Evolution
Consensus
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Mean consensus HOLD
Number of Analysts 1
Average target price 0,80 $
Last Close Price 22,90 $
Spread / Highest target -96,5%
Spread / Average Target -96,5%
Spread / Lowest Target -96,5%
EPS Revisions
Managers and Directors
NameTitle
Gaylon Morris Chief Executive Officer & Director
Charles F. Cargile Chairman
Krista Mendoza Chief Operating Officer
Paul Clayton McDonnel Chief Financial & Accounting Officer
Mikhail V. Podnebesnyy Director-Engineering
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