Sunworks (SUNWQ) 10-Q 13 May 21 2021 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 12, 2021
Cover [Abstract]
Entity Registrant Name	Sunworks, Inc.
Entity Central Index Key	0001172631
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,047,744
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2021

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current Assets:
Cash and cash equivalents	$ 82,409	$ 38,991
Restricted cash	348	348
Accounts receivable, net	3,894	2,890
Inventory	1,469	1,179
Contract assets	2,200	2,397
Other current assets	1,278	137
Total Current Assets	91,598	45,942
Property and equipment, net	148	198
Operating lease right-of-use asset	726	694
Deposits	65	47
Goodwill	5,464	5,464
Total Assets	98,001	52,345
Current Liabilities:
Accounts payable and accrued liabilities	8,563	7,356
Contract liabilities	6,362	5,961
Customer deposits	89	299
Operating lease liability, current portion	382	649
Paycheck Protection Program loan payable, current portion	1,260	787
Total Current Liabilities	16,656	15,052
Long-Term Liabilities:
Operating lease liability, net of current portion	344	45
Paycheck Protection Program loan payable, net of current portion	1,587	2,060
Warranty liability	1,161	1,131
Total Long-Term Liabilities	3,092	3,236
Total Liabilities	19,748	18,288
Commitments and contingencies
Shareholders' Equity:
Preferred stock Series B, $0.001 par value, 5,000,000 authorized shares; no shares issued and outstanding
Common stock, $0.001 par value; 50,000,000 authorized shares; 27,047,744 and 23,835,258 shares issued and outstanding, at March 31, 2021 and December 31, 2020, respectively	27	24
Additional paid-in capital	171,674	122,668
Accumulated deficit	(93,448)	(88,635)
Total Shareholders' Equity	78,253	34,057
Total Liabilities and Shareholders' Equity	$ 98,001	$ 52,345

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	27,047,744	23,835,258
Common stock, shares outstanding	27,047,744	23,835,258
Series B Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Revenue, net	$ 6,169	$ 12,361
Cost of Goods Sold	6,078	10,535
Gross Profit	91	1,826
Operating Expenses:
Selling and marketing	1,231	1,527
General and administrative	3,452	2,609
Goodwill impairment		4,000
Stock-based compensation	151	98
Depreciation and amortization	65	81
Total Operating Expenses	4,899	8,315
Operating Loss	(4,808)	(6,489)
Other (Expense) Income
Other income, net	4
Interest expense	(9)	(259)
Total Other Expense, net	(5)	(259)
Loss Before Income Taxes	(4,813)	(6,748)
Income Tax Expense
Net Loss	$ (4,813)	$ (6,748)
LOSS PER SHARE:
Basic	$ (0.19)	$ (0.60)
Diluted	$ (0.19)	$ (0.60)
WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING
Basic	25,233,586	11,163,902
Diluted	25,233,586	11,163,902

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2019	$ 7	$ 81,132	$ (72,696)	$ 8,443
Balance, shares at Dec. 31, 2019	6,805,697
Stock-based compensation for options		35		35
Issuance of common stock under terms of restricted stock grants		63		63
Issuance of common stock under terms of restricted stock grants, shares	5,952
Sales of common stock pursuant to S-3 registration statement, net	$ 10	7,726		7,736
Sales of common stock pursuant to S-3 registration statement, net, shares	9,817,343
Net loss			(6,748)	(6,748)
Balance at Mar. 31, 2020	$ 17	88,956	(79,444)	9,529
Balance, shares at Mar. 31, 2020	16,628,992
Balance at Dec. 31, 2020	$ 24	122,668	(88,635)	34,057
Balance, shares at Dec. 31, 2020	23,835,258
Stock-based compensation for options		151		151
Sales of common stock pursuant to S-3 registration statement, net	$ 3	48,855		48,858
Sales of common stock pursuant to S-3 registration statement, net, shares	3,212,486
Net loss			(4,813)	(4,813)
Balance at Mar. 31, 2021	$ 27	$ 171,674	$ (93,448)	$ 78,253
Balance, shares at Mar. 31, 2021	27,047,744

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (4,813)	$ (6,748)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	65	81
Amortization of right-of-use asset	205	131
Stock-based compensation	151	98
Goodwill impairment		4,000
Amortization of debt issuance costs		143
Bad debt expense	5	122
Changes in Operating Assets and Liabilities:
Accounts receivable	(1,009)	731
Inventory	(290)	963
Deposits and other current assets	(1,159)	(422)
Contract assets	197	(290)
Accounts payable and accrued liabilities	1,207	(987)
Contract liabilities	401	(1,181)
Customer deposits	(210)	(149)
Warranty liability	30	30
Operating lease liability	(205)	(131)
NET CASH USED IN OPERATING ACTIVITIES	(5,425)	(3,609)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(15)	(27)
NET CASH USED IN INVESTING ACTIVITIES	(15)	(27)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans payable and acquisition convertible promissory note repayments		(283)
Promissory note payable repayment		(1,500)
Proceeds from sales of common stock, net	48,858	7,736
NET CASH PROVIDED BY FINANCING ACTIVITIES	48,858	5,953
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	43,418	2,317
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH BEGINNING OF PERIOD	39,339	3,539
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	82,757	5,856
Cash and cash equivalents	82,409	5,471
Restricted cash	348	385
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	82,757	5,856
CASH PAID FOR:
Interest	1	83
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 437

Organization and Basis of Prese

Organization and Basis of Presentation	3 Months Ended
	Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	1. ORGANIZATION AND BASIS OF PRESENTATION Sunworks, Inc. (NASDAQ:SUNW) through its wholly owned subsidiaries is a provider of high-performance solar power systems. Sunworks sells, engineers, procures materials, constructs and maintains photo-voltaic solar power systems for customers in a wide range of industries including agricultural, commercial and industrial, state and federal, public works, and residential. Systems range in size from 2 kilowatt to multi-megawatt in size. The accompanying unaudited condensed consolidated financial statements (“financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. These accounting policies conform to GAAP and have been consistently applied in the preparation of the financial statements. There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Sunworks, Inc., and its wholly owned operating subsidiaries, Sunworks United, MD Energy, and Plan B. All material intercompany transactions have been eliminated upon consolidation of these entities. Reclassifications Certain reclassifications have been made to prior year’s financial statements to conform to classifications used in the current year. Sales commissions, finders’ fees and financing fees paid to third parties have been reclassified from cost of goods sold to selling and marketing in the condensed consolidated statement of operations with no change in the previously reported net loss. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on construction contracts recognized over time, allowances for uncollectible accounts, operating lease right-of-use (“ROU”) assets and liabilities, warranty reserves, inventory valuation, valuations of non-cash capital stock issuances and the valuation allowance on deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Revenue Recognition Revenues and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, engineering, procurement and construction (“EPC”) projects for residential and smaller commercial systems that require us to deliver functioning solar power systems are generally completed within two to twelve months from commencement of construction. Construction on larger commercial projects may be completed within eighteen to thirty-six months, depending on the size and location. We recognize revenue from EPC services over time as our performance creates or enhances an energy generation asset controlled by the customer. The cost of materials or equipment will generally be excluded from our recognition of profit, unless specifically produced or manufactured for a project, because such costs are not considered to be a measure of progress. All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss in the period it is determined. Revisions in cost and profit estimates, during the course of the contract, are reflected in the accounting period in which the facts, which require the revision, become known. We use an input method based on costs incurred as we believe that this method most accurately reflects our progress toward satisfaction of the performance obligation. Under this method, revenue arising from fixed-price construction contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Contract assets represent revenues recognized in excess of amounts invoiced to customers on contracts in progress. Contract liabilities represent amounts invoiced to customers in excess of revenues recognized on contracts in progress. Basic and Diluted Net (Loss) per Share Calculations (Loss) per Share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing income (loss) available to holders of common stock by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive. The shares for employee options, restricted stock, warrants and convertible notes were not used in the calculation of the net loss per share. A net loss causes all outstanding common stock options to be anti-dilutive. As a result, the basic and diluted losses per common share are the same for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the potentially dilutive securities that have been excluded from the computations of weighted average shares outstanding include 88,411 stock options and 210,000 unvested restricted stock grants. As of March 31, 2020, the potentially dilutive securities have been excluded from the computations of weighted average shares outstanding include 142,195 stock options. Dilutive per share amounts are computed using the weighted-average number of shares of common stock outstanding and potentially dilutive securities, using the treasury stock method, if their effect would be dilutive. Fair Value of Financial Instruments Disclosures about fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2021, the amounts reported for cash, accrued interest and other expenses, and notes payable approximate their fair value because of their short maturities. We account for financial instruments measured as fair value on a recurring basis under ASC Topic 820. ASC Topic 820 defines fair value and established a framework for measuring fair value in accordance with GAAP. ASC Topic 820 also expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. New Accounting Pronouncements Management reviewed currently issued pronouncements during the three months ended March 31, 2021, and believes that any recently issued, but not yet effective, accounting standards, if currently adopted, would not have a material effect on the accompanying condensed consolidated financial statements.

Revenue from Contracts with Cus

Revenue from Contracts with Customers	3 Months Ended
	Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Revenue from Contracts with Customers	3. REVENUE FROM CONTRACTS WITH CUSTOMERS The following table represents a disaggregation of revenue by customer type from contracts with customers for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 Commercial $ 2,995 $ 4,610 Public Works 1,644 3,978 Residential 1,530 3,773 Total $ 6,169 $ 12,361 Contract assets represent revenue recognized in excess of amounts invoiced on contracts in progress. Contract liabilities represent billings in excess of revenue recognized on contracts in progress. At March 31, 2021 and December 31, 2020, the contract asset balances were $2,200 and $2,397, and the contract liability balances were $6,362 and $5,961, respectively. During the three months ended March 31, 2021, the Company recognized revenue of approximately $1,511 from the $5,961 contract liabilities balance as of December 31, 2020.

Leases

Leases	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Leases	4. Leases The Company has operating leases for offices, warehouses, vehicles, and office equipment. The Company’s leases have remaining lease terms of 1 year to 4 years, some of which include options to extend. The Company’s lease expense for the three months ended March 31, 2021 and 2020 was entirely comprised of operating leases and amounted to $314 and $260, respectively. Operating lease payments, which reduced operating cash flows for the three months ended March 31, 2021 and 2020 amounted to $314 and $260, respectively. For the three months ended March 31, 2021, the difference between the right of use (“ROU”) asset amortization of $205 and the associated lease expense of $314 consists of early cancellation of a facility lease obligation and basic operating lease expenses including interest, vehicle licensing and registrations, and common area charges for facilities and other charges. Supplemental balance sheet information related to leases was as follows: March 31, 2021 (in thousands) Operating lease right-of-use assets $ 726 Operating lease liabilities—short term 382 Operating lease liabilities—long term 344 Total operating lease liabilities $ 726 As of March 31, 2021, the weighted average remaining lease term was 1.43 years and the discount rate for the Company’s leases was 10.0%. Maturities for leases were as follows: Operating Leases (in thousands) Remainder of 2021 $ 415 2022 227 2023 130 2024 18 Total lease payments $ 790 Less: imputed interest 64 Total $ 726

Paycheck Protection Program Loa

Paycheck Protection Program Loan Payable	3 Months Ended
	Mar. 31, 2021
Debt Disclosure [Abstract]
Paycheck Protection Program Loan Payable	5. PAYCHECK PROTECTION PROGRAM Loan Payable On April 28, 2020 the Company’s operating subsidiary, Sunworks United, received a Paycheck Protection Program (“PPP”) loan, which was established by the Coronavirus Aid, Relief, and Economic Security Act, of $2,847. As modified by the subsequent PPP Flexibility Act of 2020, proceeds from the loan were used to cover documented expenses related to payroll, rent and utilities, during the 24-week period after the cash was received by the Company. The 24-week period ended on October 12, 2020. The loan is being accounted for as a financial liability in accordance with ASC Topic 470, Debt. Proceeds from the loan will remain recorded as a liability until either (1) the loan is, in part or wholly forgiven, and the Company has been “legally released” from the liability or (2) the Company pays off the loan. Once the loan is in part or wholly forgiven, and a legal release is received, the liability will be reduced by the amount forgiven and the Company will record a gain on forgiveness of the debt. The eligible forgiveness amount allows for not more than 40% of the forgiveness to be for non-payroll items and is subject to reduction if employees are terminated or wages are reduced. The remaining unforgiven amount of the loan bears interest at 1% per annum. Eighteen equal principal and interest payments of $159 are deferred for up to ten months after the initial 24-week covered period, with payments scheduled to begin on August 12, 2021; however, interest is being accrued from the inception date of the loan. There are no collateral requirements or prepayment penalties associated with the loan. The underlying expenses, included in the forgiveness application filed with the Small Business Administration (“SBA”), are sufficient to have the entire $2,847 PPP loan completely forgiven. Until final approval is received from the SBA and the Company has been “legally released” from the liability, there is no guarantee when forgiveness will be received or whether the loan will be completely or partially forgiven. Paycheck Protection Program loan payable at March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Paycheck Protection Program loan payable $ 2,847 $ 2,847 Less: Current portion (1,260 ) (787) Long-term portion $ 1,587 $ 2,060

Capital Stock

Capital Stock	3 Months Ended
	Mar. 31, 2021
Equity [Abstract]
Capital Stock	6. CAPITAL STOCK On January 27, 2021, the Company filed a Registration Statement on Form S-3 (File No. 333-252475) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”). The Registration Statement allows the Company to offer and sell, from time to time in one or more offerings, any combination of common stock, preferred stock, warrants, or units having an aggregate initial offering price not to exceed $100 million. The Registration Statement was declared effective by the SEC on February 3, 2021. On February 10, 2021, the Company entered into a Sales Agreement (the “Roth Sales Agreement”) with Roth Capital Partners, LLC (the “Agent RCP”), pursuant to which the Company could offer and sell from time to time, through the Agent RCP, shares of the Company’s common stock, registered under the Securities Act, pursuant to the Registration Statement filed on Form S-3. Sales of shares pursuant to the Roth Sales Agreement are deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act. The Agent RCP has agreed to act as sales agent and use commercially reasonable efforts to sell on the Company’s behalf all of the shares requested to be sold by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the Agent RCP and the Company. 3,212,486 shares of common stock (the “Placement Shares”) were sold under the Roth Sales Agreement between February 11, 2021 and February 23, 2021, pursuant to a prospectus supplement that was filed with the SEC on February 10, 2021. Total gross proceeds for the Placement Shares were $49,937 or $15.54 per share. Net proceeds after brokerage costs, professional, registration and other fees were $48,858 or $15.21 per share.

Stock-based Compensation

Stock-based Compensation	3 Months Ended
	Mar. 31, 2021
Share-based Payment Arrangement [Abstract]
Stock-based Compensation	7. STOCK-BASED COMPENSATION Options As of March 31, 2021, the Company has non-qualified stock options outstanding to purchase 88,441 shares of common stock, per the terms set forth in the option agreements. The stock options vest at various times and are exercisable for a period of five years from the date of grant at exercise prices ranging from $2.10 to $21.70 per share, the market value of the Company’s common stock on the date of each grant. The Company determined the fair market value of these options by using the Black Scholes option valuation model. March 31, 2021 Number Weighted average of Options exercise price Outstanding, beginning December 31, 2020 88,441 $ 11.02 Granted - - Exercised - - Forfeited - $ - Outstanding at the end of March 31, 2021 88,441 $ 11.02 Exercisable at the end of March 31, 2021 76,228 $ 12.31 During the three months ended March 31, 2021 and 2020, the Company charged a total of $12 and $35, respectively, to operations to recognize stock-based compensation expense for stock options. Restricted Stock Grant to CEO On January 11, 2021, subject to the Sunworks, Inc. 2016 Equity Incentive Plan, (the “2016 Plan”), the Company entered into a restricted stock grant agreement with its Chief Executive Officer, Gaylon Morris (the “January 2021 RSGA”). All shares issuable under the January 2021 RSGA are valued as of the grant date at $7.95 per share. The January 2021 RSGA provides for the issuance of up to 210,000 shares of the Company’s common stock. The restricted shares will vest as follows: 70,000 of the restricted shares will vest on the one year anniversary of the effective date, and the balance, or 140,000 restricted shares, will vest in 24 equal monthly installments commencing on the one year anniversary of the effective date. During the three months ended March 31, 2021, stock-based compensation expense of $139 was recognized for the January 2021 RSGA. The total combined option and restricted stock compensation expense recognized in the condensed consolidated statements of operations during the three months ended March 31, 2021 and 2020 was $151 and $98, respectively.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2021
Related Party Transactions [Abstract]
Related Party Transactions	8. RELATED PARTY TRANSACTIONS The Company rents a facility in Durham, California from Plan D Enterprises, Inc., an entity controlled by the Company’s President of Commercial Operations, for $9 per month. During the three months ended March 31, 2021, the Company also rented a scissor lift from Plan D Enterprises, Inc. for a cost of $14.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	9. COMMITMENTS AND CONTINGENCIES Litigation From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party for which management believes the ultimate outcome would have a negative impact on the Company’s financial position except as noted below: On October 12, 2020, a putative class complaint was filed by a purported stockholder of Sunworks regarding the contemplated, but terminated, merger among iSun, Inc. (formerly The Peck Company Holdings, Inc.), Peck Mercury, Inc. and Sunworks (the “Merger”). The complaint names, as defendants, each of the Sunworks’ Board of Directors (the “Directors”) and asserts that the Directors breached their fiduciary duties. The plaintiff alleges that the consideration to be received by stockholders of Sunworks was inadequate and that the Registration Statement on Form S-4 contained materially incomplete and misleading information regarding the proposed Merger. On November 24, 2020, the parties filed a joint stipulation to dismiss the action without prejudice with a reservation for plaintiff to seek attorneys’ fees and costs; the Court granted that stipulation and ordered the dismissal on November 25, 2020. There are seven other actions related to the same proposed transaction, of which six have been voluntarily dismissed by the respective plaintiffs. All eight complaints seek: (i) injunctive relief to prevent the consummation of the Merger; (ii) damages suffered by the plaintiff; and (iii) an award of Plaintiff’s expense, including reasonable attorneys’ and experts’ fees. On November 2, 2020, Sunworks filed a Form 8-K that included supplemental disclosures intended to moot the allegations in all of the complaints. Sunworks and the Directors believe the claims asserted in the complaints are without merit and intend to vigorously defend themselves. Sunworks has had on-going settlement discussion, but Sunworks has not entered into any agreement to settle any of the lawsuits. Sunworks is insured against such claims and losses to the extent losses exceed a $1,000 retention amount.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	10. SUBSEQUENT EVENTS On April 8, 2021, the Company, through Sunworks United, acquired all of the issued and outstanding membership interests of Solcius LLC, a California limited liability company (“Solcius”), from Solcius Holdings, LLC. Located in Provo, Utah, Solcius is a full-service, residential solar systems provider. The acquisition was consummated on April 8, 2021 pursuant to a Membership Interest Purchase Agreement (“the Purchase Agreement”). The purchase price for Solcius consisted of $51,750 in cash, subject to post-closing adjustments related to working capital, cash, indebtedness and transaction expenses. The Purchase Agreement contains customary representations and warranties as well as indemnification obligations. In addition, the Purchase Agreement contains, among other customary restrictive covenants. As a result of the acquisition, Solcius became a wholly-owned subsidiary of Sunworks United, a wholly-owned subsidiary of Sunworks, Inc. The financial results of Solcius will be included in our consolidated financial results for the quarter ending June 30, 2021 from the date of completion of the acquisition. Our acquisition of Solcius will be accounted for as a business combination using the acquisition method of accounting in the second quarter of 2021. Given the recent timing of the transaction close, we are in the process of estimating fair values of the assets acquired and liabilities assumed in the business combination. As a result, we are currently unable to provide preliminary allocation of purchase consideration based on the acquisition date fair values of the assets acquired and liabilities assumed as well as other related information, but we will disclose such information in our Quarter Report on Form 10-Q for the quarter ending June 30, 2021. Sunworks granted an aggregate of 77,500 shares of restricted common stock to certain employees of Solcius in connection with the commencement of their employment with Sunworks. The restricted common stock cliff vests on the one-year anniversary date of the date of grant, or April 12, 2022. The restricted shares granted are priced at $12.15 per share, the closing price of Sunworks’ common stock on April 12, 2021. In addition, options to purchase up to 260,000 shares of common stock were granted to certain employees of Solcius in connection with their commencement of their employment with Sunworks. The common stock options are dated as of April 12, 2021 with an exercise price of $12.15 and vest on the one-year anniversary date of the date of grant, or April 12, 2022.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation The accompanying consolidated financial statements include the accounts of Sunworks, Inc., and its wholly owned operating subsidiaries, Sunworks United, MD Energy, and Plan B. All material intercompany transactions have been eliminated upon consolidation of these entities.
Reclassifications	Reclassifications Certain reclassifications have been made to prior year’s financial statements to conform to classifications used in the current year. Sales commissions, finders’ fees and financing fees paid to third parties have been reclassified from cost of goods sold to selling and marketing in the condensed consolidated statement of operations with no change in the previously reported net loss.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to review the Company’s goodwill, impairments and estimations of long-lived assets, revenue recognition on construction contracts recognized over time, allowances for uncollectible accounts, operating lease right-of-use (“ROU”) assets and liabilities, warranty reserves, inventory valuation, valuations of non-cash capital stock issuances and the valuation allowance on deferred tax assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition	Revenue Recognition Revenues and related costs on construction contracts are recognized as the performance obligations for work are satisfied over time in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Under ASC 606, revenue and associated profit, engineering, procurement and construction (“EPC”) projects for residential and smaller commercial systems that require us to deliver functioning solar power systems are generally completed within two to twelve months from commencement of construction. Construction on larger commercial projects may be completed within eighteen to thirty-six months, depending on the size and location. We recognize revenue from EPC services over time as our performance creates or enhances an energy generation asset controlled by the customer. The cost of materials or equipment will generally be excluded from our recognition of profit, unless specifically produced or manufactured for a project, because such costs are not considered to be a measure of progress. All un-allocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss in the period it is determined. Revisions in cost and profit estimates, during the course of the contract, are reflected in the accounting period in which the facts, which require the revision, become known. We use an input method based on costs incurred as we believe that this method most accurately reflects our progress toward satisfaction of the performance obligation. Under this method, revenue arising from fixed-price construction contracts is recognized as work is performed based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligations. Contract assets represent revenues recognized in excess of amounts invoiced to customers on contracts in progress. Contract liabilities represent amounts invoiced to customers in excess of revenues recognized on contracts in progress.
Basic and Diluted Net (Loss) Per Share Calculations	Basic and Diluted Net (Loss) per Share Calculations (Loss) per Share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing income (loss) available to holders of common stock by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive. The shares for employee options, restricted stock, warrants and convertible notes were not used in the calculation of the net loss per share. A net loss causes all outstanding common stock options to be anti-dilutive. As a result, the basic and diluted losses per common share are the same for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the potentially dilutive securities that have been excluded from the computations of weighted average shares outstanding include 88,411 stock options and 210,000 unvested restricted stock grants. As of March 31, 2020, the potentially dilutive securities have been excluded from the computations of weighted average shares outstanding include 142,195 stock options. Dilutive per share amounts are computed using the weighted-average number of shares of common stock outstanding and potentially dilutive securities, using the treasury stock method, if their effect would be dilutive.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Disclosures about fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of March 31, 2021, the amounts reported for cash, accrued interest and other expenses, and notes payable approximate their fair value because of their short maturities. We account for financial instruments measured as fair value on a recurring basis under ASC Topic 820. ASC Topic 820 defines fair value and established a framework for measuring fair value in accordance with GAAP. ASC Topic 820 also expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
New Accounting Pronouncements	New Accounting Pronouncements Management reviewed currently issued pronouncements during the three months ended March 31, 2021, and believes that any recently issued, but not yet effective, accounting standards, if currently adopted, would not have a material effect on the accompanying condensed consolidated financial statements.

Revenue from Contracts with C_2

Revenue from Contracts with Customers (Tables)	3 Months Ended
	Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Schedule of Disaggregation of Revenue	The following table represents a disaggregation of revenue by customer type from contracts with customers for the three months ended March 31, 2021 and 2020: Three Months Ended March 31, 2021 2020 Commercial $ 2,995 $ 4,610 Public Works 1,644 3,978 Residential 1,530 3,773 Total $ 6,169 $ 12,361

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Schedule of Supplemental Balance Sheet Information Related to Lease	Supplemental balance sheet information related to leases was as follows: March 31, 2021 (in thousands) Operating lease right-of-use assets $ 726 Operating lease liabilities—short term 382 Operating lease liabilities—long term 344 Total operating lease liabilities $ 726
Schedule of Maturities for Leases	Maturities for leases were as follows: Operating Leases (in thousands) Remainder of 2021 $ 415 2022 227 2023 130 2024 18 Total lease payments $ 790 Less: imputed interest 64 Total $ 726

Paycheck Protection Program L_2

Paycheck Protection Program Loan Payable (Tables)	3 Months Ended
	Mar. 31, 2021
Debt Disclosure [Abstract]
Schedule of Paycheck Protection Program Loan Payable	Paycheck Protection Program loan payable at March 31, 2021 and December 31, 2020 are as follows: March 31, 2021 December 31, 2020 Paycheck Protection Program loan payable $ 2,847 $ 2,847 Less: Current portion (1,260 ) (787) Long-term portion $ 1,587 $ 2,060

Stock-based Compensation (Table

Stock-based Compensation (Tables)	3 Months Ended
	Mar. 31, 2021
Share-based Payment Arrangement [Abstract]
Schedule of Share-based Compensation, Stock Options Activity	The Company determined the fair market value of these options by using the Black Scholes option valuation model. March 31, 2021 Number Weighted average of Options exercise price Outstanding, beginning December 31, 2020 88,441 $ 11.02 Granted - - Exercised - - Forfeited - $ - Outstanding at the end of March 31, 2021 88,441 $ 11.02 Exercisable at the end of March 31, 2021 76,228 $ 12.31

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Stock Options [Member]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	88,411	142,195
Unvested Restricted Stock Grants [Member]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	210,000

Revenue from Contracts with C_3

Revenue from Contracts with Customers (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Revenue from Contract with Customer [Abstract]
Contract assets	$ 2,200	$ 2,397
Contract liabilities	6,362	$ 5,961
Revenue recognized from contract liabilities	$ 1,511

Revenue from Contracts with C_4

Revenue from Contracts with Customers - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Total	$ 6,169	$ 12,361
Commercial [Member]
Total	2,995	4,610
Public Works [Member]
Total	1,644	3,978
Residential [Member]
Total	$ 1,530	$ 3,773

Leases (Details Narrative)

Leases (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Operating leases expense	$ 314	$ 260
Operating lease payments	314	260
Amortization of right-of-use asset	$ 205	$ 131
Weighted average remaining lease term	1 year 5 months 5 days
Weighted average lease discount rate	10.00%
Addition to Basic Operating Lease Expense [Member]
Operating leases expense	$ 314
Minimum [Member]
Remaining lease term	1 month
Maximum [Member]
Remaining lease term	4 years

Leases - Schedule of Supplement

Leases - Schedule of Supplemental Balance Sheet Information Related to Lease (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease right-of-use assets	$ 726	$ 694
Operating lease liabilities-short term	382	649
Operating lease liabilities-long term	344	$ 45
Total operating lease liabilities	$ 726

Leases - Schedule of Maturities

Leases - Schedule of Maturities for Leases (Details) $ in Thousands	Mar. 31, 2021USD ($)
Leases [Abstract]
Remainder of 2021	$ 415
2022	227
2023	130
2024	18
Total lease payments	790
Less: imputed interest	64
Total operating lease liabilities	$ 726

Paycheck Protection Program L_3

Paycheck Protection Program Loan Payable (Details Narrative) - Paycheck Protection Program Loan [Member] $ in Thousands	Apr. 28, 2020USD ($)	Apr. 28, 2020USD ($)
Sunworks United, Inc [Member]
Proceeds from loan	$ 2,847
Debt instrument, interest rate	1.00%	1.00%
Debt instrument, description	The remaining unforgiven amount of the loan bears interest at 1% per annum. Eighteen equal principal and interest payments of $159 are deferred for up to ten months after the initial 24-week covered period, with payments scheduled to begin on August 12, 2021; however, interest is being accrued from the inception date of the loan. There are no collateral requirements or prepayment penalties associated with the loan.
Debt instrument, principal and interest payments	$ 159
Sunworks United, Inc [Member] | Maximum [Member]
Eligible forgiveness amount, percentage	40.00%	40.00%
Small Business Administration [Member]
Proceeds from loan		$ 2,847

Paycheck Protection Program L_4

Paycheck Protection Program Loan Payable - Schedule of Paycheck Protection Program Loan Payable (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Less: Current portion	$ (1,260)	$ (787)
Long-term portion	1,587	2,060
Paycheck Protection Program [Member]
Paycheck Protection Program loan payable	2,847	2,847
Less: Current portion	(1,260)	(787)
Long-term portion	$ 1,587	$ 2,060

Capital Stock (Details Narrativ

Capital Stock (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	Jan. 27, 2021	Feb. 23, 2021	Mar. 31, 2021	Mar. 31, 2020
Aggregate sale value of common stock	$ 100,000
Net proceeds from common stock			$ 48,858	$ 7,736
Roth Sales Agreement [Member] | Placement Shares [Member]
Sale of shares of common stock		3,212,486
Gross proceeds from offerings		$ 49,937
Share issued price per shares gross		$ 15.54
Net proceeds from common stock		$ 48,858
Share issued price per shares		$ 15.21

Stock-based Compensation (Detai

Stock-based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	Jan. 11, 2021	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Number of non-qualified stock options outstanding to purchase shares of common stock		88,441		88,441
Exercise price per share		$ 11.02		$ 11.02
Share-based compensation		$ 151	$ 98
Restricted Stock Grant Agreement [Member] | January 11, 2021 [Member]
Share-based compensation		$ 139
Restricted Stock Grant Agreement [Member] | Gaylon Morris [Member]
Exercise price per share	$ 7.95
Restricted shares shall vest, description	The January 2021 RSGA provides for the issuance of up to 210,000 shares of the Company's common stock. The restricted shares will vest as follows: 70,000 of the restricted shares will vest on the one year anniversary of the effective date, and the balance, or 140,000 restricted shares, will vest in 24 equal monthly instalments commencing on the one year anniversary of the effective date.
Maximum [Member] | Restricted Stock Grant Agreement [Member] | Gaylon Morris [Member]
Share-based compensation arrangement by share-based payment award, number of shares authorized	210,000
Stock Option [Member]
Number of non-qualified stock options outstanding to purchase shares of common stock		88,441
Stock options vest at various time and exercisable period		5 years
Share-based compensation		$ 12	$ 35
Stock Option [Member] | Minimum [Member]
Exercise price per share		$ 2.10
Stock Option [Member] | Maximum [Member]
Exercise price per share		$ 21.70
One Year Anniversary [Member] | Restricted Stock Grant Agreement [Member] | Gaylon Morris [Member]
Restricted shares shall vest	70,000
24 Equal Monthly Installments [Member] | Restricted Stock Grant Agreement [Member] | Gaylon Morris [Member]
Restricted shares shall vest	140,000

Stock-based Compensation - Sche

Stock-based Compensation - Schedule of Share-based Compensation, Stock Options Activity (Details)	3 Months Ended
	Mar. 31, 2021$ / sharesshares
Share-based Payment Arrangement [Abstract]
Number of Options, Outstanding, beginning | shares	88,441
Number of Options, Granted | shares
Number of Options, Exercised | shares
Number of Options, Forfeited | shares
Number of Options, Outstanding, end | shares	88,441
Number of Options, Exercisable at the end | shares	76,228
Weighted Average Exercise Price, Outstanding, beginning | $ / shares	$ 11.02
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Forfeited | $ / shares
Weighted Average Exercise Price, Outstanding, end | $ / shares	11.02
Weighted Average Exercise Price, Exercisable at the end | $ / shares	$ 12.31

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - Plan D Enterprises, Inc [Member] - President [Member] $ in Thousands	3 Months Ended
	Mar. 31, 2021USD ($)
Facility [Member]
Rent paid to related party	$ 9
Scissor Lift [Member]
Related party costs	$ 14

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative) $ in Thousands	Nov. 02, 2020USD ($)
Commitments and Contingencies Disclosure [Abstract]
Maximum retention amount	$ 1,000

Subsequent Events (Details Narr

Subsequent Events (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	Apr. 08, 2021	Mar. 31, 2021
Stock options to purchase shares of common stock
Membership Interest Purchase Agreement [Member] | Solcius LLC [Member] | Subsequent Event [Member]
Purchase price	$ 51,750
Aggregate number of restricted common stock, shares issued	77,500
Share price	$ 12.15
Stock options description	The restricted common stock cliff vests on the one-year anniversary date of the date of grant, or April 12, 2022. The restricted shares granted are priced at $12.15 per share, the closing price of Sunworks' common stock on April 12, 2021. In addition, options to purchase up to 260,000 shares of common stock were granted to certain employees of Solcius in connection with their commencement of their employment with Sunworks. The common stock options are dated as of April 12, 2021 with an exercise price of $12.15 and vest on the one-year anniversary date of the date of grant, or April 12, 2022.
Membership Interest Purchase Agreement [Member] | Solcius LLC [Member] | Subsequent Event [Member] | Maximum [Member]
Stock options to purchase shares of common stock	260,000