UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended
Commission File No.
(Name of small business issuer in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Issuer’s telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 11, 2023, the Company had
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, of Part I of this report include forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “proposed,” “intended,” or “continue” or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other “forward-looking” information. There may be events in the future that we are not able to accurately predict or control. Before you invest in our securities, you should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline and you could lose all or part of your investment. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
2 |
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION |
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Item 1. | Financial Statements |
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| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) |
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| Notes to Condensed Consolidated Financial Statements (unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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3 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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| June 30, 2023 |
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| December 31, 2022 |
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ASSETS |
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CURRENT ASSETS: |
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Cash |
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Accounts receivable, net |
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Prepaid expenses |
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Inventory, net |
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Contract assets |
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Notes receivable from related party |
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Total Current Assets |
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NON-CURRENT ASSETS: |
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Property, net |
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Right of use asset |
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Investment, at fair value |
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Intangible assets, net |
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Goodwill |
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Total Assets |
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LIABILITIES, MEZZANINE AND STOCKHOLDERS' EQUITY (DEFICIT) |
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LIABILITIES |
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CURRENT LIABILITIES: |
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Accounts payable |
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Accrued expenses, including accrued officer salaries |
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Current portion of convertible notes payable, net of debt discount |
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Unearned revenue |
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Lease liability, current portion |
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Advances from related party |
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Accrued preferred share dividends |
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Current portion of notes payable, net of debt discount |
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Total Current Liabilities |
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LONG-TERM LIABILITIES: |
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Convertible notes payable, net of current portion and debt discount |
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Lease liability, net of current portion |
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Advances from related party, net of current portion |
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Long-term notes payable, net of current portion and debt discount |
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Total Liabilities |
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COMMITMENTS AND CONTINGENCIES (Note 9) |
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Class D convertible preferred stock, par value $ |
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Class E convertible preferred stock, par value $ |
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STOCKHOLDERS' EQUITY (DEFICIT) |
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Undesignated preferred stock, par value $ |
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Class A convertible preferred stock, par value $ |
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Class B convertible preferred stock, par value $ |
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Class C convertible preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Singlepoint Inc. stockholders' deficit |
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Non-controlling interest |
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Total Stockholders' Equity (Deficit) |
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Total Liabilities, Mezzanine, and Stockholders' Equity (Deficit) |
| $ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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| For the Three Months Ended |
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| For the Six Months Ended |
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| June 30, 2023 |
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REVENUE |
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Cost of revenue |
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Gross profit |
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Selling, general and administrative expense ("SG&A") |
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LOSS FROM OPERATIONS |
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OTHER INCOME (EXPENSE): |
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Interest expense |
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Amortization of debt discounts |
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Other income |
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Loss on settlement of debt |
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Other expense, net |
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LOSS BEFORE INCOME TAXES |
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Income taxes |
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NET LOSS |
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Loss attributable to non-controlling interests |
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NET LOSS ATTRIBUTABLE TO SINGLEPOINT INC. |
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Deemed dividends - Series A Preferred shares |
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NET INCOME (LOSS) AVAILABLE FOR COMMON STOCKHOLDERS |
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Net income (loss) per share - basic |
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Net income (loss) per share - diluted |
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Weighted average shares outstanding - basic |
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Weighted average shares outstanding - diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(unaudited)
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| Preferred Stock Class A Par Value $0.0001 |
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| Preferred Stock Class B Par Value $0.0001 |
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| Preferred Stock Class C Par Value $0.0001 |
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| Common Stock Par Value $0.0001 |
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| Additional |
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| Non- |
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| Stockholders' |
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| Number of Shares |
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| Number of Shares |
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| paid-in Capital |
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Balance, December 31, 2022 |
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Issuance of common shares for cash |
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Issuance of common shares for acquisition expenses |
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Issuance of common shares for principal and accrued interest on notes |
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Conversion of preferred shares |
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Issuance of preferred shares |
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Issuance of preferred shares for cash |
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Accrued preferred stock dividends |
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Net loss |
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Balance, March 31, 2023 |
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Issuance of common shares for cash |
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Conversion of preferred shares |
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Accrued preferred stock dividends |
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( |
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Net loss |
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Balance, June 30, 2023 |
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| $ | - |
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| $ | - |
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| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | ||||
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Balance, December 31, 2021 |
|
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| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
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|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||||||||
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Issuance of common shares for services |
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| ||||
Issuance of common shares for cash |
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|
| ||||
Conversion of preferred shares |
|
| ( | ) |
|
| ( | ) |
|
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|
|
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|
|
|
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| ( | ) |
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|
| |||
Rounding adjustment in connection with reverse split |
|
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| |
Net loss |
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|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
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|
|
|
|
|
|
|
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|
Balance, March 31, 2022 |
|
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|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |||||||||
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Issuance of common shares for services and closing costs |
|
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|
| ||||
Issuance of preferred shares for cash |
|
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|
|
|
|
|
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|
|
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|
|
| |||
Conversion of preferred shares |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
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|
| |||||
Issuance of common shares for convertible note |
|
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| ||||
Accrued preferred stock dividends |
|
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|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ( | ) | |
Effect of acquisition on non-controlling interest |
|
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|
| ||
Net loss |
|
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|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
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|
|
|
|
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|
|
|
|
|
|
|
|
Balance, June 30, 2022 |
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(Unaudited) |
|
| For the Six Months Ended |
| |||||
|
| June 30, 2023 |
|
| June 30, 2022 |
| ||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net loss attributable to Singlepoint Inc. stockholders |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
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|
|
|
Loss attributable to non-controlling interests |
|
| ( | ) |
|
| ( | ) |
Common stock issued for services |
|
|
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|
|
| ||
Bad debt expense |
|
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|
|
| ||
Depreciation |
|
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|
| ||
Amortization of intangibles |
|
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|
|
| ||
Amortization of debt discounts |
|
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|
|
| ||
Amortization of deferred compensation |
|
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|
|
| ||
Goodwill impairment charge |
|
|
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|
|
| ||
Loss on settlement of debt |
|
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|
|
| ||
Changes in operating assets and liabilities (net of acquisitions): |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
| ( | ) | |
Prepaid expenses |
|
|
|
|
| ( | ) | |
Inventory |
|
| ( | ) |
|
| ( | ) |
Contract assets |
|
| ( | ) |
|
| ( | ) |
Accounts payable |
|
| ( | ) |
|
|
| |
Accrued expenses |
|
|
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|
|
| ||
Unearned revenue |
|
|
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|
|
| ||
|
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|
|
NET CASH USED IN OPERATING ACTIVITIES |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Acquisitions, net of cash acquired |
|
|
|
|
| ( | ) | |
Cash paid for notes receivable from related party |
|
| ( | ) |
|
|
| |
Cash paid for property |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from sale of common stock |
|
|
|
|
|
| ||
Proceeds from advances from related party |
|
|
|
|
|
| ||
Proceeds from issuance of convertible notes |
|
|
|
|
|
| ||
Payments on advances to related party |
|
| ( | ) |
|
| ( | ) |
Payments on convertible notes payable |
|
| ( | ) |
|
|
| |
Payments on capital lease obligations |
|
| ( | ) |
|
| ( | ) |
Payments on notes payable |
|
| ( | ) |
|
| ( | ) |
Proceeds from sale of preferred stock - Class C |
|
|
|
|
|
| ||
Proceeds from sale of preferred stock - Class E |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash at end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: |
|
|
|
|
|
|
|
|
Interest paid |
| $ |
|
| $ |
| ||
Income tax paid |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Recognition of new right of use assets and lease liabilities |
| $ |
|
| $ |
| ||
Non-cash consideration given for acquisitions through issuance of common stock and notes payable |
| $ |
|
| $ |
| ||
Original issue discount from issuance of notes payable |
| $ |
|
| $ |
| ||
Common stock issued for conversion of debt and accrued interest |
| $ |
|
| $ |
| ||
Conversion of preferred stock to common stock |
| $ |
|
| $ |
| ||
Accrual of preferred stock dividends |
| $ |
|
| $ |
|
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
7 |
Table of Contents |
SINGLEPOINT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
Corporate History
On May 14, 2019, Singlepoint Inc. (“Singlepoint” or “the Company”) established a subsidiary, Singlepoint Direct Solar LLC (“Direct Solar America”), completing the acquisition of certain assets of Direct Solar, LLC and AI Live Transfers LLC. The Company owns Fifty One Percent (
Business
The Company is a diversified holding company principally engaged through its subsidiaries on providing renewable energy solutions and energy-efficient applications to drive better health and living. Our primary focus is on sustainability by providing an integrated solar energy solution for our customers and clean environment solutions through our air purification business. We conduct our solar operations primarily through our subsidiary, Boston Solar, in which we hold an
We conduct our air purification operations through Box Pure Air, in which we hold a
We also have ownership interests outside of our primary solar and air purification businesses. We consider these subsidiaries to be noncore businesses of ours. These noncore businesses are:
| · | Discount Indoor Garden Supply, Inc. (“DIGS”), in which we hold a |
| · | EnergyWyze, a wholly owned subsidiary and which is a digital and direct marketing firm focused on customer lead generation in the solar energy industry; |
| · | ShieldSaver, LLC (“ShieldSaver”), in which we hold a |
| · | Direct Solar America, in which we hold a |
We built and plan to continue to build our portfolio through organic growth, synergistic acquisitions, products, and partnerships. We generally acquire majority and/or controlling stakes in innovative and promising businesses that are expected to appreciate in value over time. We are particularly focused on businesses where our engagement will be potentially significant for that entity’s growth prospects. We strive to create long-term value for our stockholders by helping our subsidiary companies to increase their market penetration, grow revenue and improve operating margins and cash flow. Our emphasis is on building businesses in industries where our management team has in-depth knowledge and experience, or where our management can provide value by advising on new markets and expansion.
Going Concern
The consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2023, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. These factors raise substantial doubt about the Company’s ability to continue as a going concern. As of June 30, 2023, Company had $
The Company’s ability to continue in existence is dependent on its ability to develop the existing businesses and to achieve profitable operations. Since the Company does not anticipate achieving profitable operations and/or adequate cash flows in the near term, management will continue to pursue additional debt and equity financing.
8 |
Table of Contents |
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly our consolidated financial position as of June 30, 2023, and December 31, 2022, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the year ended December 31, 2022, and our other reports on file with the Securities and Exchange Commission (“SEC”).
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Singlepoint, Direct Solar America, Box Pure Air, EnergyWyze, DIGS, and ShieldSaver as of June 30, 2023, and December 31, 2022, and for the three and six months ended June 30, 2023 and 2022, and the accounts of Boston Solar as of June 30, 2023, and December 31, 2022, and for the three and six months ended June 30, 2023, and the period from April 21, 2022 (acquisition date) through June 30, 2022. All significant intercompany transactions have been eliminated in consolidation.
Use of Estimates in the Preparation of Financial Statements
The preparation of consolidated 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, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and assumptions.
Reclassifications
Certain 2022 and 2021 amounts have been reclassified to conform to the 2023 presentation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of ninety days or less at the time of purchase to be cash equivalents. The Company maintains deposits in financial institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company had $
Revenues
The Company records revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” by analyzing exchanges with its customers using a five-step analysis:
| (1) | identifies the contract(s) with a customer; |
|
|
|
| (2) | identifies the performance obligations in the contract(s); |
|
|
|
| (3) | determines the transaction price; |
|
|
|
| (4) | allocates the transaction price to the performance obligations in the contract(s); and |
|
|
|
| (5) | recognizes revenue when (or as) the entity satisfies a performance obligation. |
9 |
Table of Contents |
The Company incurs costs associated with product distribution, such as freight and handling costs. The Company has elected to treat these costs as fulfillment activities and recognizes these costs at the same time that it recognizes the underlying product revenue. In accordance with ASC 606, the Company recognizes revenue at an amount that reflects the consideration that the Company expects to be entitled to receive in exchange for transferring goods or services to its customers. The Company’s policy is to record revenue when control of the goods transfers to the customer.
The Company uses three categories for disaggregated revenue classification:
| (1) | Retail Sales (Box Pure Air, DIGS, Singelpoint (parent company)), |
|
|
|
| (2) | Distribution (DIGS) and, |
|
|
|
| (3) | Services Revenue (Boston Solar, Direct Solar of America, EnergyWyze). |
Additionally, the Company also disaggregates revenue by subsidiary:
| (1) | Singlepoint (parent company) |
|
|
|
| (2) | Boston Solar |
|
|
|
| (3) | Box Pure Air |
|
|
|
| (4) | DIGS |
|
|
|
| (5) | Direct Solar of America |
|
|
|
| (6) | EnergyWyze |
Retail Sales. Our retail sales include our products sold directly to consumers, with sales recognized upon delivery of the product to the customer, with the customer taking risk of ownership and assuming risk of loss. Payment is due upon delivery. Box Pure Air provides advanced air purification devices to businesses and consumers. DIGS operates an online store and sells nutrients, lights, HVAC systems and other products to consumers.
Distribution Revenue. Our distribution revenue DIGS, and related product sales to third-party resellers with revenue recognized upon delivery of the product to the reseller, with the reseller taking risk of ownership and assuming risk of loss. Payment is due upon delivery or within 30 days of invoicing, except for when sold direct to consumer upon which payment is due immediately.
Services Revenue. Our services revenue includes services provided by Direct Solar America, which earns commission revenue for solar services placed with third-party contractors and recognizes revenue upon date of completion of installation. Cash received in advance of contract completion is recognized as deferred revenue until contracts are complete. Singlepoint’s merchant services provides payment services to businesses with revenue recognized upon the close and remittance of commissions each month. ShieldSaver offers business-to business services related to windshield repair and replacement for consumers. EnergyWyze generates and sells marketing leads to the solar industry. Service revenue is recognized as the performance obligations are fulfilled, with the customer taking risk of ownership and assuming risk of loss. Payment for service revenue is generally due upon completion.
10 |
Table of Contents |
Returns and other adjustments. The Company records an estimate for provisions of discounts, returns, allowances, customer rebates and other adjustments for each shipment, and are netted with gross sales. The Company’s discounts and customer rebates are known at the time of sale and the Company appropriately reduces net product revenues for these transactions based on the known discount and customer rebates. The Company estimates for customer returns and allowances based on estimates of historical transactions and accounts for such provisions during the same period in which the related revenues are earned. Customer discounts, returns and rebates on product revenues during the three and six months ended June 30, 2023 and 2022, are not material.
Construction Contract Performance Obligations, Revenues and Costs. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. The Company evaluates whether two or more contracts should be combined and accounted for as one performance obligation and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment, and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. The Company’s installation contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contract and integrated and, therefore, not distinct. Less commonly, the Company may promise to provide distinct goods or services within a contract, in which case the contract is separated into more than one performance obligation. If a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.
The primary method used to estimate standalone selling price of each performance obligation is the expected cost plus a margin approach, under which the Company estimates the costs of satisfying the performance obligations and then adds appropriate margins.
The Company recognizes revenue over time on its contracts when it satisfies a performance obligation by continuously transferring control to a customer. The customer typically controls the contract and related service, as evidenced by contractual termination clauses or by contract terms specifying the Company’s rights to payment for work performed to date, plus a reasonable profit to deliver products or services that do not have an alternative use to the Company.
Management has determined that using contract costs as an input method depicts the continuous transfer of control to customers as the Company incurs these costs from fixed-price or lump-sum contracts.
Under this method, actual direct contract costs incurred are compared to total estimated contract costs for each contract to determine a percentage depicting progress toward contract completion or satisfaction of performance obligations. This percentage is applied to the contract price or allocated transaction price to determine the amount of cumulative revenue to recognize.
Contract costs include all installed materials, direct labor and subcontract costs. Operating costs are charged to expense as incurred.
Contract costs incurred that do not contribute to satisfying performance obligations and are not reflective of transferring control to the customer, such as uninstalled materials and rework labor, are excluded from the percent complete calculation.
Contract Estimates
The estimation of total revenue and cost at completion requires significant judgment and involves the use of various estimation techniques. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract penalty provisions and final contract settlements, may result in revisions to costs and revenue. Such changes are recognized in the period in which the revisions are determined. If, at any time, the estimate of contract profitability indicates an anticipated loss on the contract, a provision for the entire loss is recognized in the period in which it is identified.
11 |
Table of Contents |
Contract Modifications
Contract modifications are routine in the performance of the Company’s contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct and are accounted for as part of the existing contract.
Contract Assets and Liabilities
Billing practices are governed by the contract terms of each project based primarily on costs incurred, achievement of milestones or predetermined schedules. Billings do not necessarily correlate with revenue recognized over time. Contract assets represent revenues recognized in excess of amounts billed. Contract liabilities represents billings in excess of revenues recognized.
Accrued revenue includes amounts which have met the criteria for revenue recognition and have not yet been billed to the client.
The Company’s residential contracts include payments terms that call for payment upon receipt of the invoice, and their commercial contracts call for payment between 15 and 60 days from the invoice date, primarily within 30 days.
Accounts Receivable
The Company carries its accounts receivable at the amount management expects to collect from outstanding receivables. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, when deemed necessary, based on historic write offs and collections and current credit conditions.
Accounts receivable are net of an allowance for doubtful accounts of $
Inventory
Inventory consists primarily of photovoltaic modules, inverters, racking and associated finished parts required for the assembly of photovoltaic systems. Inventories are valued at the lower of cost or net realizable value determined by the first-in, first-out method. The Company writes down its inventory for estimated obsolescence equal to the difference between the carrying value of the inventory and the estimated net realizable value based upon assumptions about future demand and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required.
Inventory is net of a reserve for obsolescence of $
Accrued Warranty and Production Guarantee Liabilities
As a standard practice, the Company warranties its labor for ten years from the completion date of the installation projects and passes through manufacturer warranties on products installed. These warranties are not separately priced, therefore, costs related to the warranties are accrued when management determines they are able to estimate them. Management has not separately accounted for the actual warranty costs each year, and has accrued based on their best estimates as of each year end.
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As a standard practice, the Company provides a two-year production guarantee on installed solar systems. These production guarantees are not separately priced, therefore, costs related to production guarantees are accrued based on management’s best estimates as of each year end. Separately, the Company offers customers an optional ten-year production guarantee that can be purchased for $
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 815 “Derivatives and Hedging”. It provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and is reclassified to equity. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of notes redemption.
Leases
ASC 842, “Leases”, requires recognition of leases on the consolidated balance sheets as right-of-use (“ROU”) assets and lease liabilities. ROU assets represent the Company’s right to use underlying assets for the lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company used its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. A number of the lease agreements may contain options to renew and options to terminate the leases early. The lease term used to calculate ROU assets and lease liabilities only includes renewal and termination options that are deemed reasonably certain to be exercised. The Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months. The ROU assets were adjusted per ASC 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in selling, general and administrative expenses. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur. The Company has elected not to separate lease and non-lease components for all property leases for the purposes of calculating ROU assets and lease liabilities.
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. The Company has a net operating loss carryforward, however, due to the uncertainty of realization, the Company has provided a full valuation allowance for deferred tax assets resulting from this net operating loss carryforward.
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Net Income (loss) Per Common Share
Basic net income (loss) per share is calculated by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents.
The Company’s potentially dilutive securities, which include common shares issuable under certain preferred shares classes and convertible notes, and warrants, have been included in the computation of diluted net income per share for the three and six-month periods ended June 30, 2023. Diluted net income per share, for the three and six-month periods ending June 30, 2023, was calculated by dividing the net income by the weighted-average number of common shares outstanding for the period determined using the treasury-stock method and the if-converted method.
For the three and six-month periods ending June 30, 2022, the potentially dilutive securities were excluded from the computation of diluted loss per share as the effect would be to reduce the net loss per common share. Therefore, the weighted-average common stock outstanding is used to calculate both basic and diluted net loss per share for the three and six-months periods ending June 30, 2022.
A reconciliation of the weighted average shares outstanding used in basic and diluted earnings per share computation is as follows:
|
| Three months Ended June 30, |
|
| Six months Ended June 30, |
| ||||||||||
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| 2023 |
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| 2022 |
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| 2022 |
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Numerator: |
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Net income (loss) available for common stockholders |
| $ |
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| $ | ( | ) |
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Denominator: |
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Weighted-average shares to compute basic earnings per share |
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Class D preferred stock, including preferred dividends |
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| - |
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| - |
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Class E preferred stock, including preferred dividends |
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| - |
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| - |
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Convertible notes |
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| - |
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| - |
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Warrants |
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| - |
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| - |
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Weighted-average shares to compute diluted earnings per share |
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Income (loss) per share: |
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Basic |
| $ |
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| $ | ( | ) |
| $ |
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| $ | ( | ) | ||
Diluted |
| $ |
|
| $ | ( | ) |
| $ |
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| $ | ( | ) |
Fair Value Measurements
The Company’s financial instruments consist of cash, accounts receivable, investments, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, accounts receivable, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.
Certain non-financial assets are measured at fair value on a nonrecurring basis. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic impairment tests.
The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.
Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.
Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.
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Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.
In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company’s fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of ASU 2016-13 had no material impact on the Company’s consolidated financial statements for the interim period ended June 30, 2023.
Subsequent Events
Other than the events described in Note 11, there were no subsequent events that required recognition or disclosure. The Company evaluated subsequent events through the date the consolidated financial statements were issued and filed with the SEC.
NOTE 3 – CONTRACT ASSETS
Deferred costs and estimated earnings and billings on uncompleted contracts consist of the following as of June 30, 2023 and December 31, 2022:
|
| June 30, 2023 |
|
| December 31, 2022 |
| ||
Deferred costs |
| $ |
|
| $ |
| ||
Estimated earnings |
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| ||
Total deferred costs and estimated earnings |
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Add: billings to date |
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| ||
Deferred costs and costs and estimated earnings in excess of related billings on uncompleted contracts |
| $ |
|
| $ |
|
Deferred costs include permitting costs to fulfill contracts on installations in progress.
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NOTE 4 – GOODWILL, INTANGIBLE ASSETS, AND INVESTMENTS
Boston Solar Acquisition
On April 21, 2022, the Company completed the acquisition of 80.1% of the membership interests in Boston Solar, a leading residential, small commercial solar energy, procurement, and construction (“EPC”) company focused on customers in the greater Boston area. This acquisition solidifies the Company’s EPC acquisition strategy. The total consideration paid for the purchased interests was $
The Company accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The total purchase price was allocated as follows:
Goodwill |
| $ |
| |
Tangible assets |
|
|
| |
Intangible asset – tradename/trademarks ( |
|
|
| |
Intangible asset – IP/technology ( |
|
|
| |
Intangible asset – non-competes ( |
|
|
| |
Total liabilities |
|
| ( | ) |
Non-controlling interest |
|
| (1,506,750 | ) |
Total consideration paid for 80.1% interest |
| $ |
|
Revenue of $
The following supplemental unaudited pro forma information presents the consolidated results of the Company’s operations as if the acquisition of Boston Solar on April 21, 2022 had been consummated on January 1, 2022. This supplemental unaudited pro forma information is based solely on the historical unaudited financial results for the Boston Solar acquisition and does not include operational or other changes which might have been affected by the Company. The supplemental unaudited pro forma information presented below is for illustrative purposes only and is not necessarily indicative of the results which would have been achieved or results which may be achieved in the future:
|
| Three months Ended June 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Revenue, net |
| $ |
|
| $ |
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
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Goodwill
The following table presents details of the Company’s goodwill as of June 30, 2023, and December 31, 2022:
|
| Boston Solar |
|
| Box Pure Air |
|
| Total |
| |||
Balances at December 31, 2022: |
| $ |
|
| $ |
|
| $ |
| |||
Aggregate goodwill acquired |
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Impairment losses |
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|
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| |||
Balances at June 30, 2023 |
| $ |
|
| $ |
|
| $ |
|
The Company periodically reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment using fair value measurement techniques. These events could include a significant change in the business climate, legal factors, a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically, a goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The Company uses level 3 inputs and a discounted cash flow methodology. A discounted cash flow analysis requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount rate assumptions are based on an assessment of the risk inherent in the respective reporting units.
Intangible Assets
The following table presents details of the Company’s intangible assets (excluding goodwill) as of June 30, 2023 and December 31, 2022:
|
| IP/ Technology |
|
| Tradename Trademarks |
|
| Non- Competes |
|
| Total |
| ||||
Balances at December 31, 2022: |
| $ |
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| $ |
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| $ |
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| $ |
| ||||
Intangibles acquired |
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Less: Amortization |
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Balances at June 30, 2023 |
| $ |
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| $ |
|
| $ |
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| $ |
|
Estimated amortization expense:
|
| Year Ending |
| |
|
| December 31, |
| |
2023 (Remainder) |
| $ |
| |
2024 |
|
|
| |
2025 |
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2026 |
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| |
2027 |
|
|
| |
Thereafter |
|
|
| |
Total |
| $ |
|
Investments
On August 9, 2022, the Company acquired a minority interest, with the right to acquire the remaining interests, of Frontline Power Solutions LLC (“Frontline”), a Multi-state Licensed Energy Services Company (“ESCO”). Frontline is a comprehensive energy service Company with the ability to operate in deregulated markets across the country and provide energy supply agreements to all sizes of commercial, industrial, and institutional properties. The Company signed a Membership Interest Purchase Agreement (“MIPA”) with Frontline whereby the Company agreed to:
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NOTE 5 - NOTES PAYABLE
Notes Payable
Seller Note Payable. On April 21, 2022 the Company entered into an unsecured note payable with a former owner of Boston Solar as part of the Boston Solar acquisition. The face value of the note is $
Note Purchase Agreement. In July 2021, the Company entered into a note purchase agreement with Bucktown Capital LLC (“BCL”) whereby the Company agreed to issue and sell to BCL a promissory note in the principal amount of $
OID Purchase Agreement. On October 25, 2022,
SBA Loan. In May 2020, the Company received loan proceeds of $
Settlement and Release Agreement. In March 2023, Boston Solar entered into a settlement and release with a third party in which Boston Solar agreed to make payments totaling $
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Convertible Notes Payable
Purchase Agreement. On April 21, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with Cameron Bridge LLC, Target Capital LLC, and Walleye Opportunities Master Fund Ltd. (collectively the “Investors”), whereby the Investors purchased from the Company, and the Company issued, an aggregate principal amount of $
Seller Note Payable in Shares. On April 21, 2022, the Company issued an unsecured 36-month seller note to the chief executive officer of Boston Solar in the amount of $
19 |
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Promissory Note. On February 7, 2023, the Company entered into a securities purchase agreement providing for the issuance of a Convertible Promissory Note (“Promissory Note”) in the principal amount of $
Promissory Note 2. On June 26, 2023, the Company entered into a securities purchase agreement providing for the issuance of a Convertible Promissory Note (“Promissory Note 2”) in the principal amount of $
As of June 30, 2023, the Company was in compliance with all covenants of its debt agreements, with the exception for the Other convertible note that is currently in default and included in current portion of convertible notes payable, and the Note Purchase Agreement, the Purchase Agreements and the Seller Convertible notes which are past maturity. These notes are past maturity and the Company is working with the investors. No default provision options have been exercised to date and no warrants have been issued.
NOTE 6 – LEASES
Boston Solar was acquired on April 21, 2022 and has fixed rate non-cancelable operating lease agreements for office, warehouse, and parking real estate, vehicles, and tools. The monthly operating lease payments for real estate are from $
20 |
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Future minimum lease payments are as follows:
|
| Year Ending |
| |
|
| December 31 |
| |
2023 (remainder) |
| $ |
| |
2024 |
|
|
| |
2025 |
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2026 |
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| |
2027 |
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| |
Thereafter |
|
|
| |
Total |
|
|
| |
Less: Interest |
|
| ( | ) |
Present value of lease liabilities |
|
|
| |
Less: Current portion |
|
| ( | ) |
Lease liability, net of current portion |
| $ |
|
NOTE 7 - STOCKHOLDERS’ EQUITY
Class A Convertible Preferred Shares
As of June 30, 2023, and December 31, 2022, the Company had authorized
Class B Convertible Preferred Stock
As of June 30, 2023, and December 31, 2022, the Company had authorized
Class C Convertible Preferred Stock
As of June 30, 2023, and December 31, 2022, the Company had authorized
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Class D Convertible Preferred Shares
As of June 30, 2023, and December 31, 2022, the Company had authorized
Class E Convertible Preferred Shares
As of June 30, 2023, and December 31, 2022, the Company had authorized
The Company shall pay a dividend of eight percent (
From the date of issuance until the date when the original holder no longer holds any shares of Class E Preferred Stock, upon any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents for cash consideration, Indebtedness or a combination of units thereof (a “Subsequent Financing”), such holder may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the shares of Class E Preferred Stock then held for any securities or units issued in a
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Undesignated Preferred Shares
As of June 30, 2023, and December 31, 2022, a total of
Common Stock
As of June 30, 2023, and December 31, 2022, the Company’s authorized common stock was
Equity Financing and Registration Rights Agreements
On January 26, 2023 (the “Effective Date”), the Company entered into an equity financing agreement (the “Equity Financing Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with GHS Investments LLC (“GHS”) pursuant to which GHS shall purchase from the Company, up to that number of shares of common stock of the Company (the “Shares”) having an aggregate Purchase Price of Ten Million Dollars ($
The Equity Financing Agreement grants the Company the right, from time to time at its sole discretion (subject to certain conditions) during the Contract Period, to direct GHS to purchase shares of Common Stock on any business day (a “Put”), provided that at least ten trading days has passed since the most recent Put. The Purchase Price of the Put shall be eighty percent (80%) percent of the traded price of the Common Stock during the ten (10) consecutive Trading Days preceding the relevant Trading Day on which GHS receives a Put Notice. Following an up-list of the Company’s Common Stock to the NASDAQ or equivalent national exchange, the Purchase Price shall be ninety percent (90%) of the Market Price, subject to a floor price of $.02 per share, below which the Company shall not deliver a Put.
The maximum dollar amount of each Put will not exceed five hundred thousand dollars ($
The Company will pay a fee of 2% of the gross proceeds the Company receives from sales of common stock under the Purchase Agreement, to Icon Capital Group, LLC (“Icon”) pursuant to a placement agent agreement between the Company and Icon (the “Placement Agent Agreement”).
The Equity Financing Agreement, Placement Agent Agreement and the Registration Rights Agreement contain customary representations, obligations, rights, warranties, agreements, and conditions of the parties. The Equity Financing Agreement terminates upon any of the following events: when GHS has purchased an aggregate of Ten Million Dollars ($10,000,000) in the Common Stock of the Company pursuant to the Equity Financing Agreement; or on the date that is twenty-four (24) calendar months from the date the Equity Financing Agreement was executed.
Actual sales of shares of Common Stock to GHS under the Equity Financing Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Common Stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations.
The Registration Rights Agreement provides that the Company shall (i) use its best efforts to file with the SEC the Registration Statement within 30 days of the date of the Registration Rights Agreement; and (ii) have the Registration Statement declared effective by the SEC within 30 days after the date the Registration Statement is filed with the SEC, but in no event more than 90 days after the Registration Statement is filed.
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Shares issued during the three months ended June 30, 2023
On April 10, 2023, the Company issued
On April 17, 2023, the Company issued
On April 17, 2023, the Company issued
On April 17, 2023, the Company issued
On April 17, 2023, the Company issued
On April 24, 2023, the Company issued
On April 28, 2023, the Company issued
On June 1, 2023, the Company issued
On June 29, 2023, the Company issued
NOTE 8 - RELATED PARTY TRANSACTIONS
Accrued Officer Compensation
As of June 30, 2023, and December 31, 2022, a total of $
Other
On April 17, 2023, the Company issued
On April 17, 2023, the Company issued
On April 17, 2023, the Company issued
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, we are a party to claims and actions for matters arising out of our business operations. We regularly evaluate the status of the legal proceedings and other claims in which we are involved to assess whether a loss is probable or there is a reasonable possibility that a loss, or an additional loss, may have been incurred and determine if accruals are appropriate. If accruals are not appropriate, we further evaluate each legal proceeding to assess whether an estimate of possible loss or range of possible loss can be made for disclosure. Although the outcome of claims and litigation is inherently unpredictable, we believe that we have adequate provisions for any probable and estimable losses. It is possible, nevertheless, that our consolidated financial position, results of operations or liquidity could be materially and adversely affected in any particular period by the resolution of a claim or legal proceeding. Legal expenses related to defense, negotiations, settlements, rulings and advice of outside legal counsel are expensed as incurred.
Equity Incentive Plan
On January 30, 2020, the Company adopted the 2019 Equity Incentive Plan (the “Plan”) to provide additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. As of the date of this report the Company has not issued any awards under the Plan.
24 |
Table of Contents |
NOTE 10 - REVENUE CLASSES AND CONCENTRATIONS
Selected financial information for the Company’s operating revenue for disaggregated revenue purposes are as follows:
|
| Six Months Ended June 30, 2023 |
|
| Six Months Ended June 30, 2022 |
| ||
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Revenue by product/service lines: |
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| ||
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|
|
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| ||
Retail |
| $ |
|
| $ |
| ||
Distribution |
|
|
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|
| ||
Services |
|
|
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|
|
| ||
Total |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
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|
|
Revenue by subsidiary: |
|
|
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|
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|
|
|
|
|
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|
|
Singlepoint (parent company) |
| $ |
|
| $ |
| ||
Boston Solar |
|
|
|
|
|
| ||
Box Pure Air |
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|
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|
| ||
Direct Solar America |
|
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|
|
|
| ||
DIGS |
|
|
|
|
|
| ||
Energy Wyze |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
|
No customer comprised
NOTE 11 - SUBSEQUENT EVENTS
On July 20, 2023,
On April 21, 2022 the Company issued an unsecured promissory note (the "Note") in the aggregate principal amount of $
25 |
Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
You should read the following discussion together with our condensed consolidated financial statements and the related notes included elsewhere in this document. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements included in our latest annual report on Form 10-K for the year ended December 31, 2022, and our other reports on file with the Securities and Exchange Commission (“SEC”).
Overview
We are focused on providing renewable energy solutions and energy-efficient applications to drive better health and living. We conduct our solar operations primarily through our Boston Solar subsidiary and we conduct our air purification operations through our Box Pure Air subsidiary. We also have ownership interests in businesses we consider not to be core to our overall operations. The Company plans to expand its footprint and market share in the residential solar, small commercial solar and indoor air purification business through acquisition and organic internal growth. We strive to create long-term value for our stockholders by increasing market penetration for our subsidiaries, growing revenue and improving cash flow. The Company is actively looking for and executing strategic initiatives to sell, partner with or spin-off other non-renewable energy related assets.
The subsidiaries of Singlepoint in our core businesses are as follows:
Subsidiary |
| Current Ownership |
|
| Business |
| Date of Acquisition |
| |
The Boston Solar Company LLC |
|
| 80.1 | % |
| Solar |
| April 2022 |
|
Box Pure Air, LLC |
|
| 51 | % |
| Air Purification |
| Feb 2021 |
|
The subsidiaries of Singlepoint in our non-core businesses are as follows:
Subsidiary |
| Current Ownership |
|
| Business |
| Date of Acquisition |
| |
Discount Indoor Garden Supply, Inc. |
|
| 90 | % |
| Agriculture |
| May 2017 |
|
EnergyWyze LLC |
|
| 100 | % |
| Solar |
| Feb 2021 |
|
ShieldSaver, LLC |
|
| 51 | % |
| Vehicle Repair Tracking |
| January 2018 |
|
Singlepoint Direct Solar, LLC |
|
| 51 | % |
| Solar |
| May 2018 |
|
Results of Operations
Comparison of the Three Months Ended June 30, 2023 with the Three Months Ended June 30, 2022
Revenue. For the three months ended June 30, 2023, we generated revenue of $8,149,480 as compared to $4,534,681 for the three months ended June 30, 2022. The increase in revenue was due primarily to the inclusion of a full quarter of Boston Solar revenue partially offset by lower sales of air purification system.
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Cost of Revenue. For the three months ended June 30, 2023, cost of revenue increased to $5,449,120 from $3,204,841 for the three months ended June 30, 2022. The increase was due primarily to the inclusion of a full quarter of Boston Solar costs partially offset by lower sales of air purification system with corresponding decreases in cost of revenue.
Gross Profit. As a result of the foregoing, our gross profit was $2,700,360 for the three months ended June 30, 2023, compared with $1,329,840 for the three months ended June 30, 2022. The increase was due primarily to the inclusion of a full quarter of Boston Solar revenue partially offset by lower sales of air purification system.
Selling, General and Administrative Expenses (“SG&A”). Our SG&A expenses decreased to $3,226,357 for the three months ended June 30, 2023, from $4,522,284 for the three months ended June 30, 2022. The decrease was due primarily to lower operational, legal and other professional costs.
Other Income (Expense). For the three months ended June 30, 2023, other expense was ($818,927), compared to other expense of ($260,045) for the three months ended June 30, 2022. The increase in other expense was primarily due to a loss on settlement of debt primarily related to a settlement agreement entered into by Boston Solar.
Net Income (Loss). The Company’s net loss attributable to Singlepoint Inc was ($1,339,901) compared to net loss of ($3,326,610) for the three months ended June 30, 2023, and 2022 respectively. The decrease in net loss was primarily a result of higher revenues and lower operating expenses.
Comparison of the Six Months Ended June 30, 2023 with the Six Months Ended June 30, 2022
Revenue. For the six months ended June 30, 2023, we generated revenue of $13,868,850 as compared to $6,086,223 for the six months ended June 30, 2022. The increase of revenue was due primarily to the inclusion of Boston Solar revenues for six months in the 2023 period compared to a little over two months in the 2022 period.
Cost of Revenue. For the six months ended June 30, 2023, cost of revenue increased to $9,515,414 from $4,574,357 for the six months ended June 30, 2022. The increase was mainly due to inclusion of Boston Solar costs for six months in the 2023 period compared to a little over two months in the 2022 period.
Gross Profit. As a result of the foregoing, our gross profit was $4,353,436 for the six months ended June 30, 2023, compared with $1,511,866 for the six months ended June 30, 2022. The increase was due primarily to the inclusion of Boston Solar revenues and costs for a full six months in the 2023 period compared to a little over two months in the 2022 period.
Selling, General and Administrative Expenses. Our general and administrative expenses increased to $6,706,130 for the six months ended June 30, 2023 from $6,141,746 for the six months ended June 30, 2022. The increase was primarily due to inclusion of Boston Solar expenses for six months in the 2023 period compared to a little over two months in the 2022 period, partially offset by lower operational, legal and other professional costs.
Other Income (Expense). For the six months ended June 30, 2023, other expense was ($1,412,826), compared to other expenses of ($320,382) for the six months ended June 30, 2022. The increase in other expenses was primarily due to higher interest expense and a loss on settlement of debt.
Net Loss. The Company’s net loss attributable to Singlepoint Inc was ($3,526,593) and ($4,749,073) for the six months ended June 30, 2023 and 2022, respectively. The decrease in net loss was primarily due to higher revenues and lower operating costs.
Liquidity and Capital Resources
As of June 30, 2023, we had cash and cash equivalents of approximately $0.5 million. To continue operations for the next 12 months we will have a cash need of approximately $4.0 million. We anticipate funding our operations for the next 12 months using available cash, cash flow generated from our operations and proceeds from equity and debt financing. 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. Should we not be able to fulfill our cash needs through the increase of revenue we will need to raise money through the sale of additional shares of common stock, convertible notes, debt or similar instrument(s). Our net losses and need for additional funding 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 capital raised from the sale of securities. 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 maintain profitability. The Company’s ability to continue in existence is dependent on the Company’s ability to achieve profitable operations.
Operating Activities
Cash used in operating activities – Net cash used in operating activities was ($556,518) for the six months ended June 30, 2023, primarily as a result of our net loss attributable to Singlepoint Inc stockholders of ($3,426,593), partially offset by a net positive change in operating assets and liabilities. Net cash used in operating activities was ($1,844,442) for the six months ended June 30, 2022, primarily as a result of our net loss attributable to Singlepoint Inc stockholders of ($4,749,073), partially offset by non-cash expenses and positive changes in operating assets and liabilities
Investing Activities
Cash flow provided by (used in) investing activities – During the six months ended June 30, 2023, the Company used ($108,336) for investing activities related to cash paid for notes receivable from related party and for property. The Company used ($1,355,579) in investing activities during the six months ended June 30, 2022, primarily for the acquisition of Boston Solar.
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Financing Activities
Cash flow from financing activities – During the six months ended June 30, 2023, our financing activities provided cash of $551,518 primarily from the issuance of convertible debt and preferred stock. During the six months ended June 30, 2022, our financing activities provided cash of $5,399,010, primarily from the issuance of debt and preferred stock.
Off Balance Sheet Arrangements
We do not have any significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Recent Accounting Pronouncements
During the three months ended June 30, 2023, there were no accounting standards and interpretations issued which are expected to have a material impact on the Company’s financial position, operations or cash flows.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have performed an evaluation under the supervision and with the participation of our management, including our President and Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of our disclosure controls and procedures, (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2023. Based on that evaluation, our management, including our President and CEO and CFO, concluded that our disclosure controls and procedures were not effective as of June 30, 2023 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer, as appropriate to allow timely decisions regarding required disclosure due to the material weaknesses described below.
Based on our evaluation under the framework described above, our management concluded that we had “material weaknesses” (as such term is defined below) in our control environment and financial reporting process consisting of the following as of the Evaluation Date:
| 1) | lack of a functioning audit committee resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures; and |
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| 2) | inadequate segregation of duties consistent with control objectives. |
A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2023, there were no changes in our internal control over financial reporting identified in connection with management’s evaluation of the effectiveness of our internal control over the financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. Except as discussed below are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.
Item 1A. Risk Factors
The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits
Exhibit Number |
| Name of Exhibit |
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
101.SCH |
| Inline XBRL Taxonomy Extension Schema |
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase |
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase |
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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(1) Filed herewith. In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| SINGLEPOINT INC. |
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Dated: August 14, 2023 | By: | /s/ William Ralston |
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| William Ralston |
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| Chief Executive Officer, Director |
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