RESULTS OF OPERATIONS - OVERVIEW
FOR THE THREE MONTHS ENDED MARCH 31, 2022
AND MARCH 31, 2021
UNAUDITED
Our discussion of operating results for the Three months ended March 31, 2021
and March 31, 2020 are presented below with major category details of revenues
and expenses including the components of operating expenses. Sales consist of
photovoltaic products, electrical services and LED lighting products and
installation during both periods.
Sales for the three months ended March 31, 2022 and 2021 were $293,233 and
$335,721, respectively. This is an decrease of $42,493 or 13% of the 2021 sales.
The Solar sales revenue in 2022 and 2021 reflected seasonal and changing market
conditions in the financing of solar installations in the Arizona markets and
the effects of the COVID-19 Pandemic. ABCO has begun its focus on commercial
sales in 2017 and has been able to grow every period since that decision. ABCO
has worked diligently to overcome the utility changes by focusing on commercial
applications and the increased interest of business and government in the LED
lighting contracts.
Cost of sales for the three months ended March 31, 2022 and 2021 was $195,343
and $294,142, respectively, and 67% and 88% of sales for each period then ended.
Gross margins were 33% of revenue for the first three months ended March 31,
2022 and 13% of revenue for the three months ended March 31, 2021. During 2021
and 2020 we have been offering new products and have found our entry market
prices for steel parking structures have added gross margins higher than usual
because we use outside contractors for the entire projects. Our gross profit
reflects this decision. We feel that we have made progress in entering the
parking shade markets and that our gross margins will stabilize as growth lowers
these margins in the future.
Total selling, general and administrative expenses were $183,327 or 63% of
revenues during the three months ended March 31, 2022 and $166,164 or 64% of
revenues for the three months ended March 31, 2021, respectively. Net loss from
operations for the three-month period ended March 31, 2022 was $(85,437) as
compared to a net loss of $(124,580) for the same three-month period ended March
31, 2021, respectively. Our operating expenses for the three months ending March
31, 2022 period were lower by $17,163 over the comparative period in 2020. The
interest expense during the three months ended March 31, 2022 increased by
$7,155 over the period ended March 31, 2021 due mostly to the lack of new
convertible loans during this period where accounting treatment requires the
recording of prepaid interest during the first phase of the loan and because of
higher loans from related parties. This combination of factors decreased the
loss for the three months ended March 31, 2022 to $(280,937) as compared to
$93,701 for the three months ended March 31, 2021, respectively.
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STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
AND THE YEAR ENDED DECEMBER 31, 2021
During the three months ended March 31, 2022 our net cash used by operating
activities was $(178,951) and comparatively the net cash used by operating
activities in the three months ended March 31, 2021 was $(97,106). Net cash used
by operating activities in the period ended March 31, 2022 consisted primarily
of net losses from operations of $(280,937) for 2022 as compared to a loss of
$(93,701) for 2020. Depreciation adjustments of non-cash expenses were $4,942
and $5,967 for each period, respectively. Derivative portion of convertible debt
accounted for charges to income for future changes in value of the underlying
stock in the amount of $135,879 for the period ended March 31, 2022 as compared
to derivative liability change of $20,600 in the three months period ended March
31, 2021. The Company experienced an decrease in Accounts Payable of $12,202
during the three months in 2022 as compared to an increase of $150,293 for the
comparative period in 2021. This increase is primarily due to the Company's
ability to apply cash receipts from investors and operations to pay past and
current creditors at the end of each period, respectively. Accounts Receivable
increased by $31,959, net of adjustments for contracts in process, during the
period ended March 31, 2022 due to increases in contracts as compared to a
reduction of $180,353 at March 31, 2021.
Net cash provided by or (used for) investing activities for the three months
ended March 31, 2022 and 2021 was $(2,745) and $1,580 respectively due to
receipt of principal on leases paid or terminated and equipment sales and
acquisitions.
Net cash provided by financing activities for the three months ended March 31,
2022 and 2021 was $161,093 and $110,511, respectively. Net cash provided by
financing activities resulted primarily from the sale of Common Stock, loans
from a financial institution and loans from a Director, Officer and Directors.
Any future conversions will increase the number of shares outstanding and the
Stockholders Equity by the amount of the original investment.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity and capital requirements have been for carrying cost of
accounts receivable after completion of contracts. The industry typically
requires solar contractors to wait for the utility approval in order to be paid
for contracts. This process can exceed 90 days and sometimes requires the
Company as the contractor to pay all or most of the cost of projects without
assistance from suppliers. Our working capital deficit at March 31, 2022 was
$(1,636,595) and it was $(1,439,632) at December 31, 2021. This decrease of
$196,963 was primarily due to losses from operations during the three months
ended March 31, 2022. Bank financing has not been available to the Company, but
we have been able to increase our credit lines with our suppliers because of
good credit. There are no material covenants on our credit lines, normally due
in 30 days since they are standard in the industry and the balances vary daily.
Most are personally guaranteed by the Officer of the Company.
The total borrowings from Directors and officers totaled $596,168 including
accrued interest of $198,512 at March 31, 2022. There are no existing agreements
or arrangement with any Director to provide additional funds to the Company.
During the three and twelve months ended March 31, 2022 and December 31, 2021
there were no transactions, or proposed transactions, which have materially
affected or will materially affect the Company in which any director, executive
officer, or beneficial holder of more than 5% of the outstanding common, or any
of their respective relatives, spouses, associates, or affiliates, has had or
will have any direct or material indirect interest. We have no policy regarding
entering into transactions with affiliated parties.
PLAN OF OPERATIONS
Based on our current financial position, we cannot anticipate whether we will
have sufficient working capital to sustain operations for the next year if we do
not raise additional capital. We will not, however, be able to reach our goals
and projections for multistate expansion without a cash infusion. We have been
able to raise sufficient capital through the sale of our common shares and we
have incurred substantial increases in debt from our trade creditors in the
normal course of business. Management will not expand the business until
adequate working capital is provided. Our ability to maintain sufficient
liquidity is dependent on our ability to attain profitable operations or to
raise additional capital. We have no anticipated timeline for obtaining neither
additional financing nor the expansion of our business. We will continue to keep
our expenses as low as possible and keep our operations in line with available
working capital as long as possible. There is no guarantee that the Company will
be able to obtain adequate capital from any sources, or at all.
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