CONSOLIDATED FINANCIAL STATEMENTS - Form 8-K

CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITOR'S REPORT

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

DECEMBER 31, 2020 AND 2019

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

DECEMBER 31, 2020 AND 2019

CONTENTS

Independent Auditor's Report

To the Board of Directors of

SolarCommunities, Inc. and Subsidiaries D/B/A SunCommon

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of SolarCommunities, Inc. and Subsidiaries D/B/A SunCommon, which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SolarCommunities, Inc. and Subsidiaries D/B/A SunCommon as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

South Burlington, Vermont

June 30, 2021

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,

ASSETS

The accompanying notes are an integral part of these statements.

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SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,

LIABILITIES AND STOCKHOLDERS' EQUITY

The accompanying notes are an integral part of these statements.

- 4 -

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31,

The accompanying notes are an integral part of these statements.

- 5 -

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2020 AND 2019

The accompanying notes are an integral part of these statements.

- 6 -

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,

(CONTINUED)

- 7 -

SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,

Noncash investing and financing activities:

During 2020 and 2019, the Company purchased vehicles totaling $179,570 and $460,832 under long-term debt agreements, respectively (see Note F).

The accompanying notes are an integral part of these statements.

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SOLARCOMMUNITIES, INC. AND SUBSIDIARIES

D/B/A SUNCOMMON

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES

Operations:

SolarCommunities, Inc. (SunCommon) was formed as a Vermont benefit corporation in 2011. SunCommon sells solar power systems to Vermont homeowners and business owners with minimal or no up-front cost through innovative marketing techniques. SunCommon's goal is to dramatically increase solar energy production in Vermont by making it more affordable and accessible.

During 2018, the Company acquired Hudson Valley Clean Energy, Inc. and its wholly owned subsidiary, Hudson Solar Services, LLC (collectively referred to as "Hudson Solar"). Hudson Solar now operates under the SunCommon brand name and provides similar services, as described below, to residential and commercial customers in New York's Hudson Valley and Albany Capital District.

The aforementioned companies generate revenue and profit from three primary sources: (i) direct sale of solar arrays, heat pumps and battery storage systems to residential and commercial customers, (ii) direct sale of community solar arrays to third parties, and (iii) sale of power generated by community solar arrays owned by the Company to residential and commercial customers. For direct sales, the Company buys solar panels, heat pumps, batteries and related equipment, procures permits and other regulatory approvals, designs and engineers the systems, and completes the installation and related site work with its own staff or sub-contractors. For sale of power generated by community solar arrays, in addition to the above services, the Company also sells and administers the participation agreements with individual off-takers.

Community solar arrays (CSAs) operate under Vermont's and New York's group net metering regulations. The Company has developed a portfolio of CSAs in Vermont and New York, which are owned by single-member limited liability companies (LLCs) ("project entities"). The Company has sold a number of these project entities to third parties upon commissioning, at which time all membership units of the project entity, which owns the CSA, are transferred to the third parties. The Company's CSA-related activities include the acquisition of land easements, permitting and related site work, engineering, procurement, contracting for construction of the arrays, as well as securing participation agreements with individual consumers of the solar power to be generated by the array. Once operational, the Company may also provide administrative, operating and maintenance services for the CSA owners under separate arrangements.

The Company wholly owns three single-member Vermont LLCs (Sun CSA 5, LLC, Sun CSA 17, LLC, and Sun CSA 36, LLC), which were formed in 2014 and 2015 with the primary business purpose of operating CSAs (collectively, the CSA LLCs). As described in Note A1, the CSA LLCs are consolidated in the accompanying financial statements.

Operations (continued):

The Company funded approximately 20% of the cost of construction of the CSA LLCs' community solar array assets with cash; the remaining balance was funded by long-term debt of the CSA LLCs. The related debt is secured by the CSA assets of each CSA LLC and is guaranteed by the Company. The Vermont CSA LLCs generate revenue through the sale of energy generated by the CSA assets, the proceeds from which are used to fund the CSA LLCs' debt service payments. The CSA LLCs have no direct employees, and contract with the Company for administrative and maintenance services.

During 2020 and 2019, the Company formed additional single-member LLCs, with the primary purpose of operating CSA's in Vermont and New York. The Company constructed the arrays for these CSAs and sold solar panels and partial ownership of racking, inverters, and other equipment related to these CSAs to third parties during 2019 and 2020. Upon final completion and commissioning of the CSAs, all membership units of the project entities are transferred to the third parties in proportion to their share of the related solar equipment. Related projects are described as "other community solar array projects" in Note A2.

At December 31, 2020, the Company has formed an additional 4 inactive single-member LLCs for the purpose of potential future CSA development in Vermont.

The Company maintained positive cash flows from operations but incurred operating losses in 2020 and 2019. Based on projections for the remainder of 2021, the preliminary financial plan for 2022, the renewal of the Company's line of credit in June 2021, proceeds from a second Paycheck Protection Program (PPP) loan (see Note N) and the expected forgiveness of the PPP loans, management expects to generate sufficient cash to maintain operations at least through June 30, 2022.

Accounting policies:

A summary of the Company's significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows:

The accompanying consolidated financial statements include the accounts of SolarCommunities, Inc. D/B/A SunCommon and its wholly owned subsidiaries (collectively, the Company). All material intercompany accounts and transactions have been eliminated in consolidation.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), along with several related ASUs, which provides a robust framework for addressing revenue recognition issues and replaces almost all existing revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. Effective January 1, 2020, the Company adopted the new revenue recognition guidance which provides a single framework in which revenue is required to be recognized to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The adoption of this guidance did not result in any significant impact to the consolidated financial statements.

Revenues recognized over time

Revenue recognized over time primarily consists of the commercial solar installations and community solar arrays built for predetermined buyers of the related project entities, residential solar, heat pump and battery storage system installations, which collectively accounted for 95% and 85% of total net revenue in 2020 and 2019, respectively. Substantially all related contract revenue is recognized over time, because control is transferred continuously to customers. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include all direct labor, material, subcontract and equipment costs.

The amount of consideration expected to be received and revenue recognized varies based on cash discounts offered to customers and financing fees incurred on behalf of the customer. Revenue is recorded net of these cash discounts and financing fees which were approximately $993,000 and $1,628,000 in 2020 and 2019, respectively.

Contracts are often modified for a change in scope or other requirements. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company's contract modifications are for the goods or services that are not distinct from the existing performance obligations. The effect of contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or decrease) on a cumulative catch-up basis.

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

2.

Revenue recognition (continued)

Accounting for these contracts involves the use of various techniques to estimate total contract revenue and costs. The Company estimates the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognizes that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events over the course of the contract. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and the performance of subcontractors.

As a significant change in one or more of these estimates could affect the profitability of the Company's contracts, the Company reviews and updates contract-related estimates regularly. The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the total loss is recognized in the period it is identified.

Billing practices for the Company's contracts noted above are governed by the contract terms of each project based on either achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized under the cost-to-cost method (formerly known as the percentage-of-completion method). The Company records contract assets and contract liabilities to account for these differences in timing.

The contract asset, "Costs and estimated earnings in excess of billings on uncompleted contracts", arises when the Company recognizes revenues for services performed under its contracts, but the Company is not yet entitled to bill the customer under the terms of the contract. Amounts billed to customers are excluded from this asset and are reflected on the consolidated balance sheets as "Accounts receivable." Included in costs and estimated earnings on uncompleted contracts are amounts the Company seeks or will seek to collect from customers or others for (i) errors, (ii) changes in contract specifications or design, (iii) contract change orders in dispute, unapproved as to scope and price, or (iv) other customer-related causes of unanticipated additional contracts costs (such as claims). Such amounts are recorded to the extent that the amount can be reasonably estimated, and recovery is probable.

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

2.

Revenue recognition (continued)

The contract liability, "Billings in excess of costs and estimated earnings on uncompleted contracts", represents the Company's obligation to transfer goods or services to a customer for which the Company has been paid by the customer or for which the Company has billed the customer under the terms of the contract. Revenue for future services reflected in this account are recognized, and the liability is reduced, as the Company subsequently satisfies the performance obligation under the contract.

Other community solar array projects

Consists of CSA projects whereby the Company forms an LLC, constructs an array, and sells the related solar equipment to various CSA customers who commit to becoming members of the related LLC project entity. The customers are not identified prior to commencement of the project. Revenues under these arrangements are recognized when control of the solar equipment is transferred to customers. Total community solar array revenue accounted for approximately 4% and 13% of total net revenue in 2020 and 2019, respectively. The Company assigns membership interests in the LLC to the buyers of the related solar equipment when the array is placed in service. Related contract costs include all direct labor, material, subcontract and equipment costs. Contract costs incurred for unsold portions of the array are reported as inventory.

Other revenues

Each of the wholly owned CSAs has entered into group net metering arrangements with individual subscribers ("participation agreements") for a fixed monthly fee. These participation agreements allow subscribers to receive a credit on the monthly electric bill received from their utility for the value of their contracted portion of the array's output. The Company records the revenue on a straight-line basis. The Company guarantees the performance of these CSA's at specified aggregate levels over the term of the customer participation agreements, with monetary remedies payable to customers if performance levels are not attained. These performance guarantees are considered to be separate performance obligations, but performance under these guarantees is not expected to be material and therefore no consideration was allocated to these performance obligations.

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

Other revenues (continued)

The Company also contracts with certain CSA project entities and commercial customers to provide ongoing operating and maintenance services, and certain administrative functions including billing and customer service on behalf of the entity. The Company also secures participation agreements and provides other services in connection with various agreements (see Note G).

Maintenance and administrative revenue is recognized using the input method to recognize revenue. In most cases, maintenance and administrative fees are fixed annual fees. Because the Company is on-site to perform maintenance services, the services are typically a distinct series of promises, and those services have the same pattern of transfer to the customer (i.e., evenly over time), the Company records the revenue on a straight- line basis. Administrative billing services are provided on a monthly basis and revenue is recorded on a straight-line basis. Total other revenues accounted for approximately 1% and 2% of total net revenue in 2020 and 2019, respectively.

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments purchased with maturities of three months or less to be cash equivalents.

Restricted cash represents amounts required to be reserved by agreements between the Company and its lenders, in connection with long-term debt arrangements (see Note F).

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows as of December 31:

		2020			2019
Cash and cash equivalents		$	306,190			$	76,771
Restricted cash			74,232				575,953
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows		$	380,422			$	652,724

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

Accounts receivable consist of amounts billed to customers but not yet collected, unbilled receivables consist of revenue recognized in excess of amounts billed to customers related to projects completed but not yet invoiced in full. Accounts receivable and unbilled receivables are stated at the amount the Company expects to collect. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Management considers the following factors when determining the collectability of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. If the financial condition of the Company's customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. Based on management's assessment, the Company provides for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

Inventories are stated at the lower of first in, first out (FIFO) cost or net realizable value.

The Company records property and equipment at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. Leasehold improvements are amortized over the lives of the respective leases or the service lives of the improvements, whichever is shorter. The straight-line method of depreciation is followed for substantially all assets for financial reporting purposes, but accelerated methods are used for tax purposes.

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

Goodwill represents the excess of the purchase price over the fair value of net assets of the business acquired. The Company follows accounting guidance which allows for accounting alternatives related to the identified intangible assets recognized in the accounting for a business combination and for the subsequent measurement of goodwill for non-public entities. Companies that elect these alternatives would not separately recognize intangible assets that would otherwise arise from non-compete agreements or customer-related intangible assets that cannot be separately sold or licensed and amortize goodwill on a straight-line basis over its remaining useful life, which was determined to be ten years. Under these alternatives, the value of customer-related and non-compete agreements is included in goodwill. In 2020, the Company adopted ASU 2021-03, Accounting Alternatives for Evaluating Triggering Events, which allows goodwill to be reviewed for impairment at the entity level at year-end when circumstances indicate that the carrying value may not be recoverable. The Company recorded goodwill amortization expense of approximately $424,000 in 2020 and 2019. Estimated amortization expense for each of the ensuing five years is approximately $424,000. No impairment charges were required in 2020 or 2019.

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows. An impairment charge, if required, would be recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. No impairment charges were required in 2020 or 2019.

Product and installation warranties are provided by the equipment manufacturer and the Company's subcontractors, respectively. In certain cases, the Company may be liable for re-installation costs resulting from faulty hardware. Related costs have not historically been significant. The Company does not consider these warranties to be performance obligations.

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

The Company has perpetual easements on the land on which its CSA assets are situated. In connection with the easements, if a site goes unused for a period of two years, the Company has an obligation to decommission the CSA asset, and return the site to its original state. As of December 31, 2020 and 2019, the estimated cost of decommissioning is not material and has not been recorded.

The Company has two stock-based compensation plans which are described more fully in Note I. Compensation cost is measured based on the grant-date fair value of the award. The cost is recognized as compensation expense over the requisite service (vesting) period using the straight-line method. Forfeitures of awards are recorded as they occur, rather than using an estimated forfeiture rate.

Advertising costs are charged to operations when incurred. Advertising expenses charged to operations were approximately $492,000 in 2020 and $554,000 in 2019.

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The accounting standard on accounting for uncertainty in income taxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more- likely-than-not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Interest and penalties associated with unrecognized tax benefits, if any, are classified as additional income taxes in the consolidated statements of operations.

A)	SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)

The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of 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.

The Company is currently evaluating the impact on its consolidated financial statements of adopting the following recently issued accounting pronouncements.

Leases

In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842). This ASU was issued in three parts: (a) Section A, Leases: Amendments to the FASB Accounting Standards Codification, (b) Section B, Conforming Amendments Related to Leases: Amendments to the FASB Accounting Standards Codification, and (c) Section C, Background Information and Basis for Conclusions. While both lessees and lessors are affected by the new guidance which includes many changes, the effects on lessees are much more significant. The most significant change for lessees is the requirement to recognize right-of-use assets and lease liabilities for all leases not considered short- term leases, affecting leases which previously were accounted for as operating leases. This ASU is effective for fiscal years beginning after December 15, 2021, and must be implemented using a modified retrospective approach.

Income taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions for investments, intraperiod allocations and interim calculations, and adds guidance to reduce complexity in accounting for income taxes. The ASU is effective for years beginning after December 15, 2021.

Reference rate reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The ASU is effective as of March 12, 2020 through December 31, 2022.

In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through June 30, 2021, the date the consolidated financial statements were available to be issued.

Coronavirus pandemic

On January 30, 2020, the World Health Organization declared the coronavirus outbreak a "Public Health Emergency of International Concern" and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While it is unknown how long these conditions will last and what the complete financial effect will be to the Company, the Company was negatively impacted in 2020.

In response to state mandates, the Company shut down all new construction in both Vermont and New York in late March 2020, and temporarily furloughed approximately 90% of its staff in early April. The Company resumed operations and recalled most of its staff in late May when the state construction bans were lifted. The Company suffered a decline in year over year revenue and significant operating losses in the second quarter as a result of the shutdown. The unexpected operating losses stemming from the pandemic strained the Company's balance sheet in April and May. Accounts receivable declined significantly with no new installations, and accounts payable increased as the Company deferred payment on vendor invoices. The Company relied heavily on its line of credit from Citizens Bank during this period. In April and May, the Company defaulted on a financial covenant on this line of credit but received a waiver from Citizens Bank based in part on pending funding of a loan under the PPP (see Note F). Prior to December 31, 2020, the Company paid off the line of credit balance in full.

Order volume rebounded faster than expected in the later part of the second quarter, and as a result, the Company sustained monthly operating profits from June through year end. The sum of these monthly profits, however, was not sufficient to overcome the pandemic related losses from the second quarter, and the Company therefore realized an operating loss on a 20% decline in net revenue for the full year.

Concentration of credit risk

The Company maintains cash and cash equivalents in financial institution accounts that, at times during the year, may exceed federally insured limits. The Company has not experienced any losses with these accounts. Management believes the Company is not exposed to any significant credit risk on domestic cash balances.

Major vendors

The Company procured substantially all solar panels for customer installations from three vendors in 2020 and one vendor in 2019.

Major customers

During 2019, the Company derived approximately 10% of its net revenue from one customer, approximating $4,033,000. At December 31, 2019, the amount due from this customer, included in accounts receivable, was approximately $605,000, in addition to approximately $403,000 of unbilled receivables. During 2020, no customer concentrations were noted.

Long-term contracts in process, recognized under the percentage-of-completion method, consist of the following at December 31:

These are included in the accompanying consolidated balance sheets under the following captions at December 31:

Property and equipment consists of the following at December 31:

The Company has a $3,750,000 revolving line of credit agreement with Citizens Bank, N.A. Advances on the line of credit are subject to lender approval. The line of credit bears interest at LIBOR (0.15% at December 31, 2020), plus 3.25%, and expires June 2022 (see Note N). The agreement and accompanying long-term debt agreement (see Note F) are secured by a first priority security interest in substantially all business assets of the Company. The agreements provide for, among other things, the maintenance of certain financial ratios. There was $0 and $1,779,555 outstanding at December 31, 2020 and 2019, respectively.

Long-term debt consists of the following at December 31:

F)	LONG-TERM DEBT (continued)

F)	LONG-TERM DEBT (continued)

Years ending December 31,			Amount
2021		$	290,054
2022			251,985
2023			210,304
2024			179,532
2025			119,046
Thereafter			483,008
PPP Loan expected to be forgiven			2,591,500
		$	4,125,429

G)	OPERATING LEASES AND OTHER COMMITMENTS

Years ending December 31,		Amount
2021		$	483,600
2022			407,900
2023			364,900
2024			371,500
2025			377,700
Thereafter			762,800
Total minimum lease payments		$	2,768,400

H)	INCOME TAXES (continued)

I)	SHARE-BASED COMPENSATION PLAN

Expected volatility			62	%
Expected dividends			0	%
Expected term (in years)			10
Risk-free rate			2.66	%

Options		Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term
Outstanding at January 1, 2020			657,278			$	2.37		6.5 years
Granted			-				-
Exercised			-				-
Forfeited or expired			(101,694	)			(1.96	)
Outstanding at December 31, 2020			555,584			$	2.33		5.6 years
Exercisable at December 31, 2020			465,524			$	2.19		5.2 years

I)	SHARE-BASED COMPENSATION PLAN (continued)

Nonvested Options		Shares			Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2020			172,648			$	1.14
Granted			-				-
Exercised			-				-
Forfeited or expired			(20,750	)			1.78
Vested			(61,838	)			1.14
Nonvested at December 31, 2020			90,060			$	1.14

		2020			2019
Series A		$	438,000			$	377,900
Series B		$	544,600			$	448,200
Series C		$	117,800			$	63,800

J)	CAPITAL STOCK (continued)

		Minimum Redemption Value
		2020			2019		Earliest Redemption Date
Series A		$	1,263,000			$	1,202,900		January 1, 2015
Series B		$	2,025,000			$	1,928,600		January 1, 2016
Series C		$	1,133,000			$	1,079,100		January 1, 2021

K)	RETIREMENT PLAN

L)	GOVERNMENT RELIEF FUNDING

M)	RELATED PARTY TRANSACTIONS

N)	SUBSEQUENT EVENTS