Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Neighborhood Sun is a platform that provides customer acquisition and management to connect thousands of residents to community shared solar projects in their area.We are a community solar company dedicated to empowering all individuals to choose solar power. We put our customers first to make sure that clean energy is accessible to everyone, especially those who are the most vulnerable in the face of climate change.
We want to be the top community solar platform in the country, helping fight climate change and save people money through the benefits of shared community solar. Since the start of community solar (less than two years ago), we've acquired more than 1/3 of the market and have helped our state prevent the extraction and combustion of 3.8 million pounds of coal each year.
Milestones
Neighborhood Sun Benefit Corp was incorporated in the State of Maryland in November 2016.
Since then, we have:
- Proven track record of success already - in 2019 alone we completed and fully subscribed 4 major community solar projects with more than 2,000 households.
- A mission-focused company with a B Corp score that leads the entire community solar industry!
- Fastest growing part of the solar market. Community Solar is growing at more than twice the rate of all other solar combined - 53% 5 year growth versus 25
- Built an industry-leading software platform that will help us achieve scale more quickly.
- Market leaders in Maryland - went from 24% of Maryland market share to 36% in less than a year and are growing.
- Featured in Business Insider, NPR, NBC, Solar Power World, and more!
- 2019 revenue grew by more than 100% while operating expenses grew by 27%.
Historical Results of Operations
Our company was organized in November 2016 and has limited operations upon which prospective investors may base an evaluation of its performance.
Revenues & Gross Margin. For the period ended December 31, 2019, the Company had revenues of $727,696 compared to the year ended December 31, 2018, when the Company had revenues of $416,906. Our gross margin was 91.79% in fiscal year 2019, compared to 100.0% in 2018.
Assets. As of December 31, 2019, the Company had total assets of $39,863, including $16,533 in cash. As of December 31, 2018, the Company had $128,604 in total assets, including $53,079 in cash.
Net Loss. The Company has had net losses of $211,339 and net losses of $349,978 for the fiscal years ended December 31, 2019 and December 31, 2018, respectively.
Liabilities. The Company's liabilities totaled $161,876 for the fiscal year ended December 31, 2019 and $134,684 for the fiscal year ended December 31, 2018.
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $153,000 in debt and $1,250,000 in equity.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 18 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 12 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Neighborhood Sun Benefit Corp cash in hand is $300,000, as of June 2020. Over the last three months, revenues have averaged $90,000/month, cost of goods sold has averaged $70,000/month, and operational expenses have averaged $115,000/month, for an average burn rate of $95,000 per month. Our intent is to be profitable in 18 months.
We have enlarged our pipeline of projects substantially, which will lead to an increase in revenue. Further, we completed work on our software platform, so going forward our costs will be lower and our profit higher. Continuing to scale while holding new expenses down will allow us to reach profitability.
In six months, our revenue should increase to an average of $149,000 per month and our expenses should decrease to an average of $143,000, although this cannot be guaranteed.
If we run into a cash shortfall, we have the ability to get a loan from several sources.