The discussion and analysis of our financial condition and results of operations
are based on our financial statements, which we have prepared in accordance with
accounting principles generally accepted in the United States of America. This
discussion should be read in conjunction with the other sections of this Form
10-K, including "Risk Factors," and the Financial Statements. The various
sections of this discussion contain a number of forward-looking statements, all
of which are based on our current expectations and could be affected by the
uncertainties and risk factors described throughout this Annual Report on Form
10-K. See "Forward-Looking Statements." Our actual results may differ
materially. The preparation of these financial statements requires us 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, as well as the reported revenues and expenses
during the reporting periods. On an ongoing basis, we evaluate estimates and
judgments, including those described in greater detail below. We base our
estimates on historical experience and on various other factors that we believe
are reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
As used in this "Management's Discussion and Analysis of Financial Condition and
Results of Operation," except where the context otherwise requires, the term
"we," "us," "our," or "the Company," refers to the business of Sun Power
Holdings Corp.
Organizational Overview
Utilizing managements history in general contracting, coupled with our subject
matter expertise and intellectual property ("IP") knowledge of solar panels and
other leading-edge technologies, Sun Pacific Holding ("the Company") is focused
on building a "Next Generation" green energy company. The Company offers
competitively priced "Next Generation" solar panel and lighting products by
working closely with design, engineering, integration and installation firms in
order to deliver turnkey solar and other energy efficient solutions. We provide
solar bus stops, solar trashcans and "street kiosks" that utilize our unique
advertising offerings that provide State and local municipalities with costs
efficient solutions.
Our green energy solutions can be customized to meet most enterprise and/or
government mandated regulations and advanced system requirements. Our portfolio
of products and services allow our clients to select a solution that enables
them to establish a viable standard product offering that focuses on the goals
of the client's entire organization.
Currently, the Company has five (5) subsidiary holdings. Sun Pacific Power
Corp., which was the initial company that specialized in solar, electrical and
general construction. Bella Electric, LLC that in conjunction with the Company
operated our electrical contracting work. Bella Electric, LLC is a Pennsylvania
limited liability company. The Company also formed Sun Pacific Security Corp., a
New Jersey corporation. Bella Electric, LLC and Sun Pacific Security Corp. have
generally ceased operations and we are in the process of dissolving both legal
entities. The Company also formed National Mechanical Group Corp, a New Jersey
corporation focused on holding the Company's patents. The Company also formed
Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company
for the Company's state specific operations in unique advertising through solar
bus stops, solar trashcans and "street kiosks." MedRecycler, LLC, is a wholly
owned subsidiary duly formed in the state of Nevada. MedRecycler, LLC was
created in 2018 to act as a holding company for potential waste to energy
projects. On May 28, 2021, MedRecycler, LLC, exchanged its 51% interest in
MedRecycler RI, Inc. a Rhode Island Corporation for a profit participation
agreement with MedRecycler RI, Inc. MedRecycler RI, Inc. was created for the
Medical Waste to Energy facility that the Company was attempting to finance and
operate in West Warrick, Rhode Island. The Company no longer consolidates
MedRecycler RI, Inc. as of May 28, 2021 and all Assets and Liabilities have been
sold and/or settled.
As of today, our principal source of revenues is derived from Street Smart
Outdoor Corp. operations in the outdoor advertising business with contracts in
place in New Jersey, and Tallahassee, Florida, along with some other minor
contracting work that we are currently reviewing to determine if we shall
continue pursuing in the future. We are currently in discussions with a
nationally known outdoor advertising firm to manage and expand our operations,
either through a joint venture, partnership, and or a management arrangement as
a result of the company's insufficient working capital and as an option to allow
for the expansion of our technologies and or contracts by working with other
parties that can bring management expertise and or other resources that may
allow us to further optimize our growth strategies
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Sun Pacific Power Corp. has entered into an agreement with Fox-ess, a global
leader in the development of inverter and energy storage solutions as a
wholesale distributer for North and South America and Australia. Sun Pacific
Power Corp. has also entered into an agreement with a South Asian solar
manufacturer to act as an original equipment manufacturer ("OEM") for Sun
Pacific Solar Panels and associated products.
Sun Pacific Power Corp. is in the development stage of undertaking the financing
and building of a one gigawatt solar panel manufacturing plant.
On September 19, 2019, the United States Patent and Trademark Office published
patent US 2019 288 139 A1 for the Frame-Less Encapsulated Photo-Voltaic (PV)
Solar Power Panel Supporting Solar Cell Modules Encapsulated Within
Optically-Transparent Epoxy-Resin Material Coating a Phenolic Resin Support
Sheet issued to National Mechanical Group Corp. Originally designed for
application in the solar bus shelters operated by Street Smart Outdoor Corp, as
a glassless solar panel, the Company has developed a patent protected product
and process for creating solar panels that can be integrated directly into the
design of products as a molded, weather resistant plastic. The Company will
begin work developing a business plan for expanding on either manufacturing or
licensing of the technology in the future.
Currently, the Company has been and is insolvent if you factor in the Company's
debt obligations. Over its history and to augment the Company's strategy, it has
sought out partnerships and other arrangements with professionals and companies
at the operating subsidiary level to counter its insolvent state, coupled with
the Company's use of debt and equity financings. The Company continues to look
for opportunities that will allow it to partner with others in the form of debt
and or equity and other contributions at the subsidiary level, and where
possible attempt to keep control of at least fifty one percent (51%) of those
subsidiaries. While it will also look for the means to correct its insolvent
state at the holding company level, given its current negative economic
condition, many parties continue to prefer to work with the Company at an
operational subsidiary level. The Company is currently exploring other equity
and or debt opportunities to correct its overall insolvent state. Although we
continue operations through our subsidiary holdings, revenues generated do not
fully produce cash flows sufficient to meet our basic capital requirements. In
order to meet our reporting requirements, we may have to seek additional capital
through debt or equity financing and/or request deferred payment or other
in-kind payments for services. Street Smart Outdoor is undercapitalized making
expansion of our advertising products highly unlikely or difficult to expand
without the use of potential partnerships and or commission only sales
representatives. Neither the Company nor Street Smart Outdoor have secured
additional financing to support operations. We are attempting to partner or
otherwise develop a capital strategy to allow us to grow the outdoor advertising
business that includes financing outdoor structures with other parties, in which
we arrange financing arrangements, and we continue to look for other
professional organizations that we can partner with in expanding our contracts.
Strategic Vision
Our objective is to grow our business profitably as a premier green energy-based
provider of both product and services to the public and private sectors. We are
working to deploy our strategy in building upon our general and other
contracting expertise in conjunction with our intellectual property and subject
matter expertise in green energy that may allow us to grow a group of profitable
business lines in solar, waste to energy, efficient lighting, and other unique
energy related areas.
Recent advances in a multitude of different yet converging technologies have
significantly improved the ability to integrate energy efficient products and
solutions into infrastructure related projects. These technological advances
decrease the requirements needed to jointly operate a multitude of differing
assets, devices, and tools that create new ways to integrate evolving new
technologies. This technological change and convergence in energy efficient
devices, integrated communications among devices, and societal needs to more
effectively and environmentally friendly we believe presents a significant
opportunity for us in providing and supporting simple to complex integrated
solutions.
Our challenges continue to be reaching critical mass in our solar shelter
business and expanding into other green energy related projects. While the
Company has never been adequately funded from inception, the Company has
attempted to use debt, equity, and other opportunistic in-kind compensation to
further the Company's strategic vision.
19
Going Concern
The Company has an accumulated deficit of $7,900,238 and a working capital
deficit of $2,941,894 as of September 30, 2022. The Company's continuation as a
going concern is dependent on its ability to generate sufficient cash flows from
operations to meet its obligations, which it has not been able to accomplish to
date, and/or obtain additional financing from its stockholders and/or other
third parties.
In order to further implement its business plan and satisfy its working capital
requirements, the Company will need to raise additional capital. There is no
guarantee that the Company will be able to raise additional equity or debt
financing at acceptable terms, if at all.
There is no assurance that the Company will ever be profitable. These
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classifications of liabilities that may result should the
Company be unable to continue as a going concern.
There is no assurance that the Company will ever be profitable. These
consolidated financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classifications of liabilities that may result should the
Company be unable to continue as a going concern.
RISK FACTORS
Generally, as a smaller reporting company, we are permitted to omit risk
factors. However, we believe the following Risk Factors are material to our
business. These do not encompass all risks related to our operations.
You should carefully consider the risks described below together with all of the
other information included in this annual report before making an investment
decision with regard to our securities. The statements contained in or
incorporated herein that are not historic facts are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business,
financial condition or results of operations could be harmed. In that case, you
may lose all or part of your investment. In addition to the other information
provided in this prospectus, you should carefully consider the following risk
factors in evaluating our business before purchasing any of our common stock.
Risks Related to Our Financial Condition
Since our inception, we have been insolvent and have required debt and equity
financing to maintain operations.
Since our inception, we have failed to create cashflows from revenues sufficient
to cover basic costs. As a result, we have relied heavily on debt and equity
financing. Equity financing, in particular, has created a dilutive effect on our
common stock, which has hampered our ability to attract reasonable financing
terms. For the foreseeable future, we will continue to rely upon debt and equity
financing to maintain operation of the Company and its subsidiaries.
We have generated minimal revenues from operations, which makes it difficult for
us to evaluate our future business prospects and make decisions based on those
estimates of our future performance.
As of September 30, 2022, we had generated insufficient revenues. As a
consequence, it is difficult, if not impossible, to forecast our future results
based upon our historical data. Our projections are based upon our best
estimates on future growth. Because of the related uncertainties, we may be
hindered in our ability to anticipate and timely adapt to increases or decreases
in sales, revenues, or expenses. If we make poor budgetary decisions as a result
of unreliable data, we may never become profitable or incur losses, which may
result in a decline in our stock price.
There is substantial doubt about our ability to continue as a going concern and
if we are unable to generate significant revenue or secure additional financing,
we may be unable to implement our business plan and grow our business.
We are just graduating as an emerging growth company and are in the process of
selling and developing our products. Consequently, we have not generated enough
revenues as of the date of this prospectus. We have an accumulated deficit and
have incurred operating losses since our inception and expect losses to continue
during the remainder of fiscal 2022. Our independent registered public
accounting firm has indicated in their report that these conditions raise
substantial doubt about our ability to continue as a going concern for a period
of 12 months from the issuance date of this report. The continuation of our
business as a going concern is dependent upon the continued financial support
from our stockholders.
20
There is uncertainty regarding our ability to grow our business to a greater
extent than we can with our existing financial resources, also described above,
without additional financing. We have no agreements, commitments, or
understandings to secure additional financing at this time. Our long-term future
growth and success is dependent upon our ability to continue selling our
products and services, generate cash from operating activities and obtain
additional financing. There is no assurance that we will be able to continue
selling our products and services, generate sufficient cash from operations,
sell additional shares of common stock or borrow additional funds. Our inability
to obtain additional cash could have a material adverse effect on our ability to
grow our business to a greater extent than we can with our existing financial
resources, also described above.
Expenses required to operate as a public company will reduce funds available to
implement our business plan and could negatively affect our stock price and
adversely affect our results of operations, cash flow and financial condition.
Operating as a public company is more expensive than operating as a private
company, including additional funds required to obtain outside assistance from
legal, accounting, investor relations, or other professionals that could be
costlier than planned. We may also be required to hire additional staff to
comply with additional SEC reporting requirements. We anticipate that the cost
of SEC reporting will be approximately $100,000 annually. Our failure to comply
with reporting requirements and other provisions of securities laws could
negatively affect our stock price and adversely affect our results of
operations, cash flow and financial condition. If we fail to meet these
requirements, we will be unable to secure a qualification for quotation of our
securities on the OTCQB, or if we have secured a qualification, we may lose the
qualification and our securities would no longer trade on the OTCQB. Further, if
we fail to meet these obligations and consequently fail to satisfy our SEC
reporting obligations, investors will then own stock in a company that does not
provide the disclosure available in quarterly, annual reports and other required
SEC reports that would be otherwise publicly available leading to increased
difficulty in selling their stock due to our becoming a non-reporting issuer.
Risks Related to Our Business
We rely on our Chief Executive Officer to operate our business. The loss of our
Chief Executive Officer could have a material adverse effect on our business.
Our operations are highly dependent upon the efforts of our Chief Executive
Officer, Nicholas Campanella. The success of our Company is heavily reliant upon
the efforts and resources of Nicholas Campanella. The loss of our Chief
Executive Officer would have a material adverse effect on our business,
financial condition, and results of operations, particularly if we are unable to
hire or relocate and integrate suitable replacements on a timely basis or at
all. Further, in order to continue to grow our business, we will need to expand
our senior management team. We may be unable to attract or retain these persons.
This could hinder our ability to grow our business and could disrupt our
operations or otherwise have a material adverse effect on our business.
We are unable to attract additional management personnel and members to our
Board of Directors.
Due to our insolvency, we are unable to dedicate any amount of cashflows to
executive salaries and/or directors' and officers' insurance, therefore we are
unable to attract additional executive personnel or Board Members. Until we can
secure, at a minimum directors' and officers' insurance, the executive duties
shall remain with our Chief Executive Officer.
21
The current ownership has the effect of concentrating voting control with our
Chief Executive Officer and his family; this limits our other stockholders' and
your ability to influence corporate matters.
Nicholas Campanella currently holds 12,000,000 shares of Series A Preferred
Stock. Each share of Series A Preferred Stock is entitled to 125 votes per
share. As a result, Nicholas Campanella has 1,500,000,000 voting rights. As a
result of this concentration of voting power, Nicholas Campanella will have
significant influence over the management and affairs of the Company and control
over matters requiring stockholder approval, including the election of directors
and significant corporate transactions, such as mergers or other sales of the
Company or our assets, for the foreseeable future. This concentration of voting
control will limit your ability to influence corporate matters and could
adversely affect the market price of our Common Stock once a market is
established.
Our director and officer, Nicholas Campanella will control and make corporate
decisions that may differ from those that might be made by the other
shareholders.
Due to the controlling amount of their share ownership in our Company, Nicholas
Campanella will have a significant influence in determining the outcome of all
corporate transactions, including the power to prevent or cause a change in
control. His interests may differ from the interests of other stockholders and
thus result in corporate decisions that are disadvantageous to other
shareholders.
Our director and officer, Nicholas Campanella, holds substantial debt that is
convertible into common stock, resulting in even greater control over the
Company.
Nicholas Campanella holds convertible promissory notes in excess of $800,000,
making Nicholas Campanella the largest creditor of the Company. The convertible
promissory notes are convertible into common stock at rate of a 50% discount to
market. If Nicholas Campanella were to foreclose upon the limited assets of the
Company, we would likely have to file for bankruptcy. Alternatively, Nicholas
Campanella could convert the promissory note into common stock increasing his
control over the Company.
22
Results of Operations
Three Months Ended September 30, 2022 compared to Three Months Ended September
30, 2021.
Revenues: Revenues decreased by $84,144 from $114,007 for the three months ended
September 30, 2021 to $29,863 for the three months ended September 30, 2022 as a
result of a reduction in revenues attributable to the loss of a contract in the
state of Rhode Island associated with advertising of bus shelters.
Cost of revenues: Cost of revenues decreased by $3,941 from $8,196 for the three
months ended September 30, 2021 to $4,255 for the three months ended September
30, 2022.
Operating Expenses: Operating expenses decreased by $14,661 from $95,634 for the
three months ended September 30, 2021 to $80,973 for the three months ended
September 30, 2022 due to due to increases in wages and compensation and
offsetting decreases in general and administrative expenses.
Other Income (Expenses), Net: Other Expense, Net, was $82,614 for the three
months ended September 30, 2022 consisting of other expense and interest expense
compared other income, net of $15,038, for the three months ended September 30,
2021 comprised of other income net of interest expense.
Net (Loss) Income From Continuing Operations: As a result of the above, the net
loss from continuing operations for the three months ended September 30 2022 was
$137,979 compared to net income from continuing operations of $25,215 for the
three months ended September 30, 2022.
Nine Months Ended September 30, 2022 compared to Nine Months Ended September 30,
2021.
Revenues: Revenues increased by $36,136 from $215,978 for the nine months ended
September 30, 2021 to $252,114 for the nine months ended September 30, 2022 as a
result of an increase in revenues recognized from an expansion of national
advertisers that increased marketing and networking efforts in the first half of
the year. With the loss of a contract with the State of Rhode Island, revenues
from advertising associated with bus shelters will be lower on a going forward
basis until such time as new opportunities are either put into place or an
expansion of other revenues are generated.
Cost of revenues: Cost of revenues decreased by $6,489 from $18,809 for the nine
months ended September 30, 2021 to $12,320 for the nine months ended September
30, 2022.
Operating Expenses: Operating expenses increased by $82,587 from $266,456 for
the nine months ended September 30, 2021 to $349,043 for the nine months ended
September 30, 2022 due to increases in wages and compensation, general and
administrative and professional and other filing fees.
Other Income (Expenses), Net: Other expense, net increased by $8,179 from other
expense, net of $18,392 for the nine months ended September 30, 2021 to other
income, net of $26,571 for the nine months ended September 30, 2022.
Net (Loss) Income From Continuing Operations: As a result of the above, the net
income from continuing operations decreased by $1,005,054 from net income from
continuing operations of $869,234 for the nine months ended September 30 2021 to
net loss from continuing operations of $135,820 for the nine months ended
September 30, 2022 as a result income tax benefit - continuing operations.
Continuing Operations, Liquidity and Capital Resources
As of September 30, 2022, we had a working capital deficit of approximately
$2,941,894. We intend to seek additional financing for our working capital, in
the form of equity or debt, to provide us with the necessary capital to
accomplish our plan of operation. There can be no assurance that we will be
successful in our efforts to raise additional capital.
During the nine months ended September 30, 2022, we generated $118,791 of cash
in operating activities driven by the company's operating loss, offset by
noncash charge for accrued compensation, bad debt, and deprecation. During the
nine months ended September 30, 2021, we used $530,885 cash in operating
activities driven materially from the company's operating loss and
reclassification of $272,304 of cash to discontinued operations.
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Off-Balance Sheet Arrangements
As of September 30, 2022, we did not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors. The term "off-balance sheet arrangement" generally
means any transaction, agreement or other contractual arrangement to which an
entity unconsolidated with us is a party, under which we have any obligation
arising under a guarantee contract, derivative instrument or variable interest
or a retained or contingent interest in assets transferred to such entity or
similar arrangement that serves as credit, liquidity or market risk support for
such assets.
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SUN PACIFIC HOLDING CORP. 
