PECK : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements as of and for the three and six months ended
June 30, 2020 and June 30, 2019 and related notes included in Part 1, Item 1 of
this Quarterly Report on Form 10-Q. The following discussion and analysis should
also be read together with our audited consolidated financial statements and
related notes for the year ended December 31, 2019.



Forward-Looking Statements

This discussion and analysis contains forward-looking statements about our plans
and expectations of what may happen in the future. Forward-looking statements
are based on a number of assumptions and estimates that are inherently subject
to significant risks and uncertainties, and our actual results could differ
materially from the results anticipated by our forward-looking statements. Our
future results and financial condition may also differ materially from those
that we currently anticipate as a result of the factors described in the
sections entitled "Risk Factors" in the filings that we make with the U.S.
Securities and Exchange Commission (the "SEC"). Throughout this section, unless
otherwise noted, "we," "us," "our" and the "Company" refer to The Peck Company
Holdings, Inc.

Business Introduction / Overview

The Peck Company Holdings, Inc., the principal office of which is located in
South Burlington, Vermont, is one of the largest commercial solar engineering,
procurement and construction ("EPC") companies in the country and is expanding
across the Northeastern United States ("U.S."). The Company is a
second-generation family business founded under the name Peck Electric Co.
("Peck Electric") in 1972 as a traditional electrical contractor. The Company's
core values are to align people, purpose, and profitability, and since taking
leadership in 1994, Jeffrey Peck, the Company's Chief Executive Officer, has
applied such core values to expand into the solar industry. Today, the Company
is guided by the mission to facilitate the reduction of carbon emissions through
the expansion of clean, renewable energy and we believe that leveraging such
core values to deploy resources toward profitable business is the only
sustainable strategy to achieve these objectives.



The world recognizes the need to transition to a reliable, renewable energy grid
in the next 50 years. Vermont and Hawaii are leading the way in the U.S. with
renewable energy goals of 75% by 2032 and 100% by 2045, respectively. California
committed to 100% carbon-free energy by 2045. The majority of the other states
in the U.S. also have renewable energy goals regardless of current Federal solar
policy. We are a member of Renewable Energy Vermont, an organization that
advocates for clean, practical and renewable solar energy. The Company intends
to use near-term incentives to take advantage of long-term, sustainable energy
transformation with a commitment to the environment and to its shareholders. Our
triple bottom line, which is geared towards people, environment, and profit, has
always been our guide since we began installing renewable energy and we intend
that it remain our guide over the next 50 years as we construct our energy
future.



After installing more than 125 megawatts of solar energy, we believe that we are
well-positioned for what we believe to be the coming transformation to an all
renewable energy economy. As a result of the completion of our business
combination transaction with Jensyn Acquisition Corp. ("Jensyn") on June 20,
2019, pursuant to which we acquired Peck Electric Co. (the "Reverse Merger and
Recapitalization"), we have now opened our family company to the public market
as part of our strategic growth plan. We are expanding across the Northeastern
U.S. to serve the fast-growing demand for clean renewable energy. We are open to
partnering with others to accelerate our growth process, and we are expanding
our portfolio of company-owned solar arrays to establish recurring revenue
streams for many years to come. We have established a leading presence in the
market after five decades of successfully serving our customers, and we are now
ready for new opportunities and the next five decades of success.

We have a three-pronged growth strategy that includes (1) organic expansion across the Northeastern United States, (2) conducting accretive merger and acquisition transactions to expand geographically, and (3) investing into company-owned solar assets.

Equity and Ownership Structure

On June 20, 2019, Jensyn consummated the Reverse Merger and Recapitalization,
which resulted in the acquisition of 100% of the issued and outstanding equity
securities of Peck Electric by Jensyn, and in Peck Electric becoming a
wholly-owned subsidiary of Jensyn. Jensyn was originally incorporated as a
special purpose acquisition company, formed for the purpose of entering into a
merger, share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar Recapitalization. Simultaneously with the
Reverse Merger and Recapitalization, we changed our name to "The Peck Company
Holdings, Inc." We conduct all of our business operations exclusively through
our wholly-owned subsidiary, Peck Electric. Unless the context otherwise
requires, "we," "us," "our" and the "Company" refers to The Peck Company
Holdings, Inc. and its subsidiary after June 20, 2019, and "Peck Electric"
refers to the business of Peck Electric before June 20, 2019. Upon closing of
the Reverse Merger and Recapitalization, Peck Electric was deemed the accounting
acquirer and takes over the historical information for the Company.



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Critical Accounting Policies

The following discussion and analysis of the Company's financial condition and
results of operations are based upon the Company's financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States of America ("GAAP"). The preparation of these financial
statements requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities.



Use of Estimates



The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Significant estimates include estimates
used to review the Company's, impairments and estimations of long-lived assets,
revenue recognition utilizing a cost to cost method, allowances for
uncollectible accounts, valuation of preferred shares, warrants and the
valuation allowance on deferred tax assets. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable in the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.



Revenue Recognition



We recognize revenue from contracts with customers under Accounting Standards
Codification ("ASC") Topic 606 ("Topic 606"). Under Topic 606, revenue is
recognized when, or as, control of promised goods and services is transferred to
customers, and the amount of revenue recognized reflects the consideration to
which an entity expects to be entitled in exchange for the goods and services
transferred. We primarily recognize revenue over time utilizing the cost-to-cost
measure of progress on contracts for specific projects and for certain master
service and other service agreements.



Contracts. We derive revenue primarily from construction projects performed
under: (i) master and other service agreements, which are typically priced using
either a time and materials or a fixed price per unit basis; and (ii) contracts
for specific projects requiring the construction and installation of an entire
infrastructure system or specified units within an infrastructure system, which
are subject to multiple pricing options, including fixed price, unit price, time
and materials, or cost plus a markup.



The total contract transaction price and cost estimation processes used for
recognizing revenue over time under the cost-to-cost method is based on the
professional knowledge and experience of our project managers, engineers and
financial professionals. Management reviews estimates of total contract
transaction price and total project costs on an ongoing basis. Changes in job
performance, job conditions and management's assessment of expected variable
consideration are factors that influence estimates of the total contract
transaction price, total costs to complete those contracts and our profit
recognition. Changes in these factors could result in revisions to revenue in
the period in which the revisions are determined, which could materially affect
our consolidated results of operations for that period. Provisions for losses on
uncompleted contracts are recorded in the period in which such losses are
determined.



Performance Obligations. A performance obligation is a contractual promise to
transfer a distinct good or service to a customer and is the unit of account
under Topic 606. The transaction price of a contract is allocated to each
distinct performance obligation and recognized as revenue when or as the
performance obligation is satisfied. Our contracts often require significant
services to integrate complex activities and equipment into a single deliverable
and are therefore generally accounted for as a single performance obligation,
even when delivering multiple distinct services. Contract amendments and change
orders, which are generally not distinct from the existing contract, are
typically accounted for as a modification of the existing contract and
performance obligation. The vast majority of our performance obligations are
completed within one year.

When more than one contract is entered into with a customer on or close to the
same date, management evaluates whether those contracts should be combined and
accounted for as a single contract as well as whether those contracts should be
accounted for as one, or more than one, performance obligation. This evaluation
requires significant judgment and is based on the facts and circumstances of the
various contracts.



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Union Labor

The Company uses union labor in order to construct and maintain the solar,
electric and data work that comprise the core activities of its business. As
such, contributions were made by the Company to the National Joint
Apprenticeship and Training Committee, the National Electrical Benefit Funds,
Union Pension Plans and a union Health and Welfare Fund. Each employee
contributes monthly to the International Brotherhood of Electrical Workers
("IBEW"). The Company's contract with the IBEW expires May 31, 2022.

The Company's management believes that access to unionized labor provides a unique advantage for growth, because workforce resources can be scaled efficiently utilizing labor unions in other states to meet specific project needs in other states without substantially increasing fixed costs for the Company.

Business Insurance / Captive Insurance Group

In 2018, Peck Electric joined a captive insurance group. The Company's
management believes that belonging to a captive insurance group will stabilize
business insurance expenses and will lock in lower rates that are not subject to
change from year-to-year and instead are based on the Company's favorable
experience modification rate.



Revenue Drivers

The Company's business includes the design and construction of solar arrays for
its customers. Revenue is recognized for each construction project on a
percentage of completion basis. From time to time, the Company constructs solar
arrays for its own account or purchases a solar array that must still be
constructed. In these instances, no revenue is recognized for the construction
of the solar array. In instances where the Company owns the solar array, revenue
is recognized for the sale of the electricity generated to third parties. As a
result, depending on whether it is building for others or for its own account,
the Company's revenue is subject to significant variation.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2020 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2019

REVENUE AND COST OF GOODS SOLD

Consolidated revenue for the three months ended June 30, 2020 decreased 56% to
$2.8 million, compared to $6.3 million in the corresponding period in 2019. Due
to the State of Emergency declared by the State of Vermont, the Company was
unable to complete or begin several projects due to the current COVID-19
pandemic. The Company anticipates that these projects will resume or commence
once the current State of Emergency expires which is scheduled to occur on
August 15, 2020.



Gross profit decreased 100% to $0.0 million for the three months ended June 30,
2020, compared to $1.7 million in the corresponding period in 2019. Gross margin
as a percentage of sales was 0.0% for the three months ended June 30, 2020,
compared to 27.1% in the corresponding period in 2019. Lower gross margin for
the three months ended June 30, 2020 was the result of maintaining our labor
force during the uncertainty of the COVID-19 pandemic. The Company was able to
secure a loan through the CARES Act Payroll Protection Program to support our
workforce.

Total operating expenses for the three months ended June 30, 2020 were $1.0
million, or 38% of sales, compared to $1.3 million in the corresponding period
in 2019, or 21% of sales. The decrease in operating expenses for the three
months ended June 30, 2020 was the result of the closure of our facilities

due
to the COVID-19 pandemic.



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Income tax benefit for the three months ended June 30, 2020 was $279,274 compared to the income tax provision for the three months ended June 30, 2019 of $1,506,362. Please the rate reconciliation table included in FN 11 for an explanation of the effective tax rate.

Backlog for the three months ended June 30, 2020 was $26 million, compared to the corresponding period in 2019 of $21.5 million. The Company expects to realize nearly all of the backlog within the next 12 months.

SELLING AND MARKETING EXPENSES

We rely on referrals from customers and on its industry reputation, and therefore has not historically incurred significant selling and marketing expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

Total general and administrative ("G&A") expenses were $0.9 million for the
three months ended June 30, 2020, compared to $0.8 million for the three months
ended June 30, 2019. As a percentage of revenue, G&A expenses increased to 31%
of revenue in the three months ended June 30, 2020, compared to 12% in the three
months ended June 30, 2019. In total dollars, G&A expense increased primarily
due to activities related to administrative expenses, consisting of accounting
and legal fees, costs of becoming a public company, additional business
development and investor/public relations expenses, as well as supporting
infrastructure expansion in the three months ended June 30, 2020, compared to
the three months ended June 30, 2019.

DEPRECIATION AND AMORTIZATION

Depreciation expenses for the three months ended June 30, 2020 were $155,012,
compared to $160,570 for the three months ended June 30, 2019. Depreciation
expenses were stable when compared to the three months ended June 30, 2019 as
the Company has not had significant capital expenditures for the three months
ended June 30, 2020.



OTHER EXPENSES

Warehousing and other operating expenses were $183,514 for the three months
ended June 30, 2020, compared to $533,304 for the three months ended June 30,
2020. Warehousing and other operating expenses include Company-owned solar array
depreciation and salaries associated with Company-owned solar arrays, general
warehousing costs, project-related travel and performance related expenses.

NET INCOME



The net loss for the three months ended June 30, 2020 was $0.8 million, compared
to a net loss of $1.2 million for the three months ended June 30, 2019. The net
loss was the result of a lack of revenue generated from operations due to the
uncertainty of the COVID-19 pandemic and the State of Emergency declared by

the
State of Vermont.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2020 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2019

REVENUE AND COST OF GOODS SOLD

Consolidated revenue for the six months ended June 30, 2020 decreased 33% to
$6.8 million, compared to $10.1 million in the corresponding period in 2019. Due
to the State of Emergency declared by the State of Vermont, the Company was
unable to complete or begin several projects due to the current COVID-19
pandemic. The Company anticipates that these projects will resume or commence
once the current Vermont State of Emergency expires which is scheduled to occur
on August 15, 2020.



Gross profit decreased 88% to $0.3 million for the six months ended June 30,
2020, compared to $2.6 million in the corresponding period in 2019. Gross margin
as a percentage of sales was 5% for the six months ended June 30, 2020, compared
to 26% in the corresponding period in 2019. Lower gross margin for the six
months ended June 30, 2020 was the result of maintaining our labor force during
the uncertainty of the COVID-19 pandemic. The Company was able to secure a loan
through the CARES Act Payroll Protection Program to support our workforce.



Total operating expenses for the six months ended June 30, 2020 were $1.9
million, or 28% of sales, compared to $1.8 million in the corresponding period
in 2019, or 17% of sales. The decrease in operating expenses for the six months
ended June 30, 2020 was the result of the closure of our facilities due to

the
COVID-19 pandemic.



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Income tax benefit for the six months ended June 30, 2020 was $421,585 compared to the income tax provision for the six months ended June 30, 2019 of $1,506,862. Please the rate reconciliation table included in FN 11 for an explanation of the effective tax rate.

Backlog for the six months ended June 30, 2020 was $26 million, compared to the
corresponding period in 2019 of $21.5 million. The Company expects to realize
nearly all of the backlog within the next 12 months.

SELLING AND MARKETING EXPENSES

We rely on referrals from customers and on its industry reputation, and therefore has not historically incurred significant selling and marketing expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

Total general and administrative ("G&A") expenses were $1.5 million for the six
months ended June 30, 2020, compared to $1.0 million for the six months ended
June 30, 2019. As a percentage of revenue, G&A expenses increased to 22% of
revenue in the six months ended June 30, 2020, compared to 10% in the six months
ended June 30, 2019. In total dollars, G&A expense increased primarily due to
activities related to administrative expenses, consisting of accounting and
legal fees, costs of operating as a public company, additional business
development and investor/public relations expenses, as well as supporting
infrastructure expansion in the three months ended June 30, 2020, compared to
the three months ended June 30, 2019.

DEPRECIATION AND AMORTIZATION

Depreciation expenses for the six months ended June 30, 2020 were $310,024,
compared to $311,053 for the six months ended June 30, 2019. Depreciation
expenses were stable when compared to the six months ended June 30, 2019 as the
Company has not had significant capital expenditures for the three months ended
June 30, 2020.



OTHER EXPENSES



Warehousing and other operating expenses were $376,456 for the six months ended
June 30, 2020, compared to $740,811 for the six months ended June 30, 2020.
Warehousing and other operating expenses include Company-owned solar array
depreciation and salaries associated with Company-owned solar arrays, general
warehousing costs, project-related travel and performance related expenses.

NET INCOME



The net loss for the six months ended June 30, 2020 was $1.2 million, compared
to a net loss of $0.8 million for the six months ended June 30, 2019. The net
loss was the result of a lack of revenue generated from operations due to the
uncertainty of the COVID-19 pandemic and the State of Emergency declared by

the
State of Vermont.



Certain Non-GAAP Measures

We periodically review the following key non-GAAP measures to evaluate our business and trends, measure our performance, prepare financial projections and make strategic decisions.

EBITDA and, Adjusted EBITDA

Included in this presentation are discussions and reconciliations of earnings
before interest, income tax and depreciation and amortization ("EBITDA") and
EBITDA adjusted for certain non-cash, non-recurring or non-core expenses
("Adjusted EBITDA") to net income in accordance with GAAP. Adjusted EBITDA
excludes certain non-cash and other expenses, certain legal services costs,
professional and consulting fees and expenses, and one-time Merger expenses and
certain adjustments. We believe that these non-GAAP measures illustrate the
underlying financial and business trends relating to our results of operations
and comparability between current and prior periods. We also use these non-GAAP
measures to establish and monitor operational goals.



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These non-GAAP measures are not in accordance with, or an alternative to, GAAP
and should be considered in addition to, and not as a substitute or superior to,
the other measures of financial performance prepared in accordance with GAAP.
Using only the non-GAAP financial measures, particularly Adjusted EBITDA, to
analyze our performance would have material limitations because such
calculations are based on a subjective determination regarding the nature and
classification of events and circumstances that investors may find significant.
We compensate for these limitations by presenting both the GAAP and non-GAAP
measures of our operating results. Although other companies may report measures
entitled "Adjusted EBITDA" or similar in nature, numerous methods may exist for
calculating a company's Adjusted EBITDA or similar measures. As a result, the
methods that we use to calculate Adjusted EBITDA may differ from the methods
used by other companies to calculate their non-GAAP measures.



The reconciliations of EBITDA to net loss, the most directly comparable
financial measure calculated and presented in accordance with GAAP, are shown in
the table below:



                                           Three months ended                Six months ended
                                                June 30,                         June 30,
                                         2020             2019             2020            2019
Net income (loss)                     $  (829,040 )   $ (1,150,716 )   $ (1,261,662 )   $  (774,064 )
Depreciation and amortization             155,012          160,570          310,024         311,053
Other expense, net                         65,410           58,887          146,176         103,546
Income Tax                               (279,274 )      1,503,362         (421,585 )     1,506,862
EBITDA                                   (887,892 )        572,103       (1,227,047 )     1,147,397
Other costs                                     -           99,888                -         165,431

Adjusted EBITDA                          (887,892 )        671,991       (1,227,047 )     1,312,828

Weighted Average shares outstanding     5,298,159        3,480,676        5,298,159       3,356,916

Adjusted EPS                                (0.17 )           0.19            (0.23 )          0.39




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LIQUIDITY AND CAPITAL RESOURCES

The Company had $93,187 in cash at June 30, 2020, as compared to $95,930 at December 31, 2019.

As of June 30, 2020, The Company's working capital surplus was $244,515,
compared to a working capital surplus of $362,586 at December 31, 2019. The
Company believes that the aggregate of its existing cash and cash equivalents
and working line of credit will be sufficient to meet its operating cash
requirements for at least the next 12 months. On April 24, 2020, the Company
secured a PPP loan in the amount of $1,487,624 through the CARES Act. The
Company anticipates utilizing the forgiveness provisions of the PPP loan to
support cashflow needs during the continuing COVID-19 pandemic. The State of
Vermont recently relaxed restrictions on outside construction allowing for work
crews of up to 25 individuals to operate at a worksite. The Company has
implemented the training provided by the Vermont Occupational Safety and Health
Administration. The Company has received notice to proceed on several new
projects and restarted projects previously delayed.



Due to the impact of the COVID-19 pandemic, the Company had several current
projects delayed and the commencement of certain future projects were unknown as
of the date of this filing. All projects are anticipated to begin promptly once
the State of Emergency declared by the State of Vermont expires. The current
State of Emergency is scheduled to expire on August 15, 2020. However, as the
Company does support and maintain critical infrastructure, several projects were
deemed essential and allowed to continue.



During 2019, the Company entered into an equity line of credit facility with
potential to sell at-the-market shares. The Company would receive the cash
proceeds of this sale which would help support any cash flow deficiencies that
may arise. Under this agreement, Lincoln Park Capital is required to purchase
the shares the Company offers in a timely manner. The Company believes the cash
proceeds can be raised very quickly in the event there is a liquidity issue. The
equity line of credit is in place for $15,000,000. The total number of shares
authorized under the Lincoln Park Capital Purchase Agreement total 3,024,194
which would allow the Company to maximize the equity line of credit within 10
business days. As of August 7, 2020, the closing price per share of Common Stock
was $4.36 which would allow the Company to utilize the equity line of credit to
generate approximately $13.2 million.

Certain of the Company's loan agreements contain a clause requiring lender approval for changes to the guarantor under such agreements. If this clause is implicated, such lenders may require outstanding indebtedness to become immediately due.

Cash flow used in operating activities was $2,963,125 for the six months ended
June 30, 2020, compared to $626,462 of cash provided by operating activities in
the six months ended June 30, 2019. The decrease in cash provided by operating
activities was primarily the result of the decrease in accounts payable of
approximately 2.5 million and the net loss of $1.5 million for the six months
ended June 30, 2020.



Net cash used in investing activities was $57,230 for the three months ended
June 30, 2020, compared to $221,163 used in the six months ended June 30, 2019.
During the six months ended June 30, 2020, the Company took a conservative
approach to investing in property and equipment given the uncertain nature of
the current COVID-19 pandemic.



Net cash provided by financing activities was $3,017,612 for the six months
ended June 30, 2020 compared to $560,382 used for the six months ended June 30,
2019. Cash provided by financing activities in the six months ended June 30,
2020 consisted of funds received as proceeds from line of credit increase and
was partially offset by principal payments for equipment notes and amounts to
due to shareholders. In addition, the Company secured financing through the
CARES Act in the amount $1.5 million.



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The Company believes its current cash on hand including the proceeds received
under the PPP loan, the availability under the equity line of credits, the
collectability of its accounts receivable and project backlog are sufficient to
meet its operating and capital requirements for at least the next twelve months
from the date these financial statements are issued.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that are reasonably
likely to have a current or future effect on its financial condition, revenues,
results of operations, liquidity, or capital expenditures.

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