| Summary of Operations and Significant Accounting Policies | Note
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES a) Organization The
Peck Company Holdings, Inc. is a solar engineering, construction and procurement contractor for commercial and industrial customers
across the Northeast. The Company also provides electrical contracting services and data and communication services. The work
is performed under fixed-price and modified fixed-price contracts and time and materials contracts. The Company is incorporated
in the State of Delaware and has its corporate headquarters in South Burlington, Vermont. On
February 26, 2019, Peck Electric Co. (also referred to herein as the “Former Peck Company Holdings, Inc.”),
a privately held company, entered into a Share Exchange Agreement (the “Exchange Agreement”) with Jensyn Acquisition
Corp. (“Jensyn”), a publicly held company whose primary business objective was to acquire, through a merger, share
exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination (the “Business
Combination”), with one or more target businesses (a Special Purpose Acquisition Company or “SPAC”). On
June 20, 2019, with the approval of the stockholders of each of Peck Electric Co. and Jensyn, the Business Combination
was completed. In connection with the Business Combination, Jensyn issued 3,234,501 shares of Jensyn’s common
stock, par value $0.0001 per share (the “Common Stock”), to the stockholders of the Peck Electric Co.
in exchange for all of the equity securities of Peck Electric Co., and Peck Electric Co. became a wholly-owned subsidiary
of Jensyn. While Jensyn was the surviving legal entity, Former Peck Company Holdings, Inc. was deemed the acquiring entity for
accounting purposes. Concurrent with the completion of the Business Combination, Jensyn changed its name from “Jensyn
Acquisition Corp.” to “The Peck Company Holdings, Inc.” and the symbol for its common stock on Nasdaq became
PECK. Unless the context otherwise requires, “we,” “us,” “our,” “Peck Company”
and the “Company” refer to the combined company. b) Basis of Presentation The
accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in
the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q
and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2019 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other period. The
accompanying financial statements should be read in conjunction with the Company’s audited financial statements and related
notes as of and for the year ended December 31, 2018. As a SPAC, Jensyn had substantially
no business operations prior to June 20, 2019. For financial accounting and reporting purposes, the Business Combination
was accounted for as a “reverse spinoff” in accordance with U.S. GAAP. Under this method of accounting, Jensyn
was treated as the “acquired” company for financial reporting purposes. This determination was primarily based on
Peck Electric Co. shareholders having a majority of the voting power of the combined company, Peck Electric Co.
comprising the ongoing operations of the combined entity, Peck Electric Co. comprising a majority of the governing body
of the combined company, and Peck Electric Co.’s senior management comprising the senior management of the combined
company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of the Peck Electric
Co. issuing stock for the net assets and equity of Jensyn, consisting of $0 assets, accompanied by a recapitalization. The
net assets of Jensyn were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to
June 20, 2019, the date of completion of the Business Combination, are those of Peck Electric Co. Prior to June 20, 2019, Peck Electric
Co. was a “pass-through” (S-corporation) entity for income tax purposes and had no material income tax accounting
reflected in its financial statements for financial reporting purposes since taxable income and deductions were “passed
through” to Peck Electric Co.’s stockholders. Jensyn is a taxable C Corporation for income tax purposes. As a result
of the acquisition by Jensyn, the consolidated company is now a taxable C corporation. The financial statements of the Company
now account for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, Income taxes. Since Jensyn had substantially
no business operations as a SPAC, its limited accounting policies were not in conflict with those of Peck Electric Co.
The consolidated Company uses the accounting policies of Peck as described in note 1 to Peck’s audited financial statements
as of and for the year ended December 31, 2018. There have been no material changes to these accounting policies, except for the
adoption of an accounting policy for income taxes for the company for the 2 nd c) Emerging Growth Company Status The Company is an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”),
as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act
exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. The
Company would cease to be an “emerging growth company” upon the earliest to occur of: the last day of the fiscal year
in which it has more than $1.07 billion in annual revenue; the date it qualifies as a “large accelerated filer,” with
at least $700 million of equity securities held by non-affiliates; the issuance, in any three-year period, by it of more than
$1.0 billion in non-convertible debt securities; or December 31, 2021. d) Contract Revenue and Cost Recognition The
Company recognizes revenue using cost based input methods, which recognize revenue and gross profit as work is performed based
on the relationship between actual costs incurred compared to the total estimated costs of the contract, after consideration of
the customers’ commitment to perform their obligations under the contract, which is typically measured through receipt of
cash deposits or other forms of financial security issued by creditworthy financial institutions. Cost based input methods of
revenue recognition are considered a reasonable depiction of the Company’s efforts to satisfy long-term construction contracts
with customers and therefore reflect the transfer of goods to a customer under such contracts. Costs incurred towards contract
completion may include costs associated with materials, labor, subcontractors, and other indirect costs related to contract performance. At
the time a loss on a contract becomes apparent, a provision is made for the entire amount of the estimated loss, if the loss is
directly attributed to actions in that year. Revenue
for time and materials contracts is recognized as the work is performed. Revenue from net metering credits is recorded as electricity
is generated from the solar arrays and paid by the off-takers. e)
Accounts Receivable Accounts
receivable are recorded when invoices are issued and presented on the balance sheet net of the allowance for doubtful accounts.
The allowance, which was $15,000 at June 30, 2019 and December 31, 2018, is estimated annually based on historical losses, the
existing economic condition, and the financial stability of the Company’s customers. Accounts are written off against the
reserve when they are determined to be uncollectible. f) Costs and Estimated Earnings on Uncompleted Contracts The
asset, “Costs and Estimated Earnings in Excess of Billings”, represents revenues recognized in excess of amounts billed.
The liability “Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts,” represents billings in
excess of revenues recognized. g) Property and Equipment Property
and equipment greater than $1,000 are recorded at cost, less accumulated depreciation. Cost includes the price paid to acquire
or construct the assets, required installation costs, and any expenditures that substantially add to the value or substantially
extend the useful life of the assets. The
solar arrays represent project assets that the Company may temporarily own and operate after being placed into service. The Company
reports solar arrays at cost, less accumulated depreciation. The Company begins depreciation on the solar arrays when they are
placed in service. Depreciation
is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
Buildings
and improvements 39
years
Vehicles 3-5
years
Tools
and equipment 3-7
years
Solar
arrays 20
years Total
depreciation expense for the quarters ended June 30, 2019 and June 30, 2018 is $160,570 and $96,329, respectively. The
cost of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation are eliminated from the accounts
and any resulting gain or loss is included in operations. The cost of maintenance and repairs are charged to expense as incurred,
while significant renewals or betterments are capitalized. h)
Long-Lived Assets The
Company assesses long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances
arise, including consideration of technological obsolescence, that may indicate that the carrying amount of such assets may not
be recoverable. These events and changes in circumstances may include a significant decrease in the market price of a long-lived
asset; a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition;
a significant adverse change in the business climate that could affect the value of a long-lived asset; an accumulation of costs
significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset; a current
period operating or cash flow loss combined with a history of such losses or a projection of future losses associated with the
use of a long-lived asset; or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed
of significantly before the end of its previously estimated useful life. For purposes of recognition and measurement of an impairment
loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities. When
impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of
the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If
the carrying value of the asset group exceeds the undiscounted future cash flows, the Company measures any impairment by comparing
the fair value of the asset group to its carrying value. Fair value is generally determined by considering (i) internally developed
discounted cash flows for the asset group, (ii) third-party valuations, and/or (iii) information available regarding the current
market value for such assets. If
the fair value of an asset group is determined to be less than its carrying value, an impairment in the amount of the difference
is recorded in the period that the impairment indicator occurs. Estimating future cash flows requires significant judgment, and
such projections may vary from the cash flows eventually realized. The
Company considers a long-lived asset to be abandoned after the Company has ceased use of such asset and they have no intent to
use or repurpose the asset in the future. Abandoned long-lived assets are recorded at their salvage value, if any. i)
Captive Insurance The
Company and other companies are members of an offshore heterogeneous group captive insurance holding company entitled Navigator
Casualty, LTD. (NCL). NCL is located in the Cayman Islands and insures claims relating to workers’ compensation, general
liability, and auto liability coverage. Premiums
are developed through the use of an actuarially determined loss forecast. The loss funding, derived from the actuarial forecast,
is broken-out into two categories by the actuary known as the “A & B” Funds. The “A” Fund pays for
the first $100,000 of any loss and the “B” Fund contributes to the remainder of the loss layer up to $300,000 total
per occurrence. Each
shareholder has equal ownership and invests a one-time cash capitalization of $36,000. This is broken out into two categories,
$35,900 of redeemable preference shares and $100 for a single common share. Each shareholder represents a single and equal vote
on NCL’s Board of Directors. Summary
financial information on NCL as of September 30, 2018 is:
Total assets $ 46,647,571
Total liabilities $ 22,762,283
Comprehensive income $ 3,991,828 NCL’s
fiscal year end is September 30, 2018, therefore amounts represent balances and activities through and for the years ending September
30, 2018. As
part of the investment in NCL, the Company provided $43,340 as cash security in 2018 and an additional $58,215 in 2019. The captive
insurance equity of $139,038 consists of $36,000 of capital, $101,555 of cash security and $1,483 of investment income in excess
of losses (incurred and reserves). j) Asset Retirement Obligations The
Company develops, constructs, and operates certain solar arrays with land lease agreements that include a requirement for the
removal of the assets at the end of the term of the agreement. The Company recognizes such asset retirement obligations (“ARO”)
in the period in which they are incurred based on the present value of estimated third-party recommissioning costs, and they capitalize
the associated asset retirement costs as part of the carrying amount of the related assets. Once an asset is placed into service,
the asset retirement cost is subsequently depreciated on a straight-line basis over the estimated useful life of the asset. Changes
in AROs resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion
expense. The AROs were not deemed significant to the financial statements and were therefore, not recorded as a liability at June
30, 2019 and December 31, 2018. k) Concentration and Credit Risks The
Company occasionally has cash balances in a single financial institution during the year in excess of the Federal Deposit Insurance
Corporation (FDIC) limit of up to $250,000 per financial institution. The differences between book and bank balances are outstanding
checks and deposits in transit. At June 30, 2019 and December 31, 2018, the uninsured balances were $0 and $457,422, respectively. l)
Defined Contribution Pension Plan The
Company has a union contract under which the union and administrative employees are covered by the union’s defined contribution
pension plan. Pension costs include current service costs, which are based on hours worked, or a percentage of gross wages. m)
Income Taxes Through June 20, 2019 (the date
of the completion of the Business Combination) the Former Peck Company Holdings, Inc. had elected to be taxed as
an S-Corporation under the Internal Revenue Code and similar codes in states in which the Company was subject to taxation. While
this election was in effect, the income (whether distributed or not) was taxed for federal income tax purposes to Former Peck
Company Holdings, Inc. stockholders. Accordingly, no provision for federal income tax was required. The provision for income
taxes for Former Peck Company Holdings, Inc. was primarily for Vermont minimum taxes. As of the date of the completion
of the Business Combination, the Company effectively became a C-Corporation, which changed the level of taxation from the
stockholders to the Company. The deferred tax assets and liabilities that arise out of the change of tax status have been recorded
to account for the temporary differences that existed on the date of the change. The
Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected
to be applied 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 income in the period that includes the
enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax
liabilities. 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 all classified
as long-term as adopted under Accounting Standards Update 2015-17. The
Company also uses a more-likely-than-not measurement for all tax positions taken or expected to be taken on a tax return in order
for those tax positions to be recognized in the financial statements. If the Company were to incur interest and penalties related
to income taxes, these would be included in the provision for income taxes. Generally, the three tax years previously filed remain
subject to examination by federal and state tax authorities. n)
Sales Tax The
Company’s accounting policy is to exclude state sales tax collected and remitted from revenues and costs of sales, respectively. o)
Use of Estimates The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and revenues and expenses during the reporting period. On an ongoing basis, the Company
evaluates their estimates, including those related to inputs used to recognize revenue over time, specifically percentage-of-completion.
Actual results could differ from those estimates. p)
Recently Issued Accounting Pronouncements Prior
to June 20, 2019, the Company was defined as a non-public entity for purposes of applying transition guidance related to new or
revised accounting standards under GAAP, and was required to adopt new or revised accounting standards after the required adoption
dates that applied to public companies. Subsequent to June 20, 2019 the company maintains its emerging growth company status until
no later than December 31, 2021. The Company will maintain the election available to an emerging growth company to use any extended
transition period applicable to non-public companies when complying with a new or revised accounting standard. The company retains
its emerging growth status and therefore elects to adopt new or revised accounting standards on the adoption date required for
a private company. In
February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), In
June 2016 the FASB issued ASU No. 2016-13, Financial Instruments-Credit losses (Topic 326) In August 2016 the FASB issued
ASU No. 2016-15, Statement of Cash Flows (Topic 230). q)
Subsequent Events The
Company has evaluated subsequent events through August 14, 2019, which is the date that the unaudited financials were available
to be issued. Based on its evaluation, there are no events that are required to be disclosed herein. |
