10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 001-35496

Summer Energy Holdings, Inc.
(Exact name of registrant as specified in charter)
Nevada	20-2722022
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5847 San Felipe Street, Suite 3700, Houston, Texas	77057
(Address of principal executive offices)	(Zip Code)
(713) 375-2790
(Issuer’s telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No o.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer                   o
Non-accelerated filer   þ	Smaller reporting company  þ
Emerging growth company o

Indicate by check mark whether the registrant is a shell company (as defined by Section 12b-2 of the Exchange Act). Yes oNo þ.  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act.           ¨

1

The number of shares of the issuer’s common stock, $0.001 par value, outstanding as of August 13, 2020 was 31,764,710.

2

Summer Energy Holdings, Inc.

FORM 10-Q

ITEM 1. FINANCIAL STATEMENTS4 

CONDENSED CONSOLIDATED BALANCE SHEETS4 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS5 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY6 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS8 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS9 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS28 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK35 

ITEM 4. CONTROLS AND PROCEDURES35 

PART II – OTHER INFORMATION36 

ITEM 1A. RISK FACTORS36 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS37 

ITEM 6. EXHIBITS38 

SIGNATURES39 

3

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMER ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

		June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash	$	3,533,068	$	814,360
Restricted cash		2,026,023		3,197,708
Accounts receivable, net		47,794,975		41,847,949
Prepaid and other current assets		4,111,808		3,612,607
Total current assets		57,465,874		49,472,624
Property and equipment, net		63,339		58,418
Deferred financing cost, net		464,246		3,125
Operating lease right-of-use assets, net		905,558		979,185
Intangible asset, net		393,768		984,420
Total assets	$	59,292,785	$	51,497,772
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,327,194	$	1,496,461
Accrued wholesale power purchased		20,276,581		17,538,120
Accrued transportation and distribution charges		6,514,082		5,320,851
Accrued expenses		5,456,943		4,809,533
Related party loans		-		1,850,000
Current-portion operating lease obligation		144,899		144,902
Current-portion of obligations		5,094,761		5,038,397
Total current liabilities		38,814,460		36,198,264
Long-term liabilities:
Long-term obligations, net of current portion		16,913,965		10,265,289
Total liabilities		55,728,425		46,463,553
Commitments and contingencies
Stockholders’ equity:
Common stock - $.001 par value, 100,000,000 shares authorized,
31,663,598 and 31,532,486 shares issued and outstanding at
June 30, 2020 and December 31, 2019, respectively		31,663		31,531
Subscription receivable		(52,000)		(52,000)
Additional paid-in capital		32,200,230		30,879,055
Accumulated deficit		(28,615,533)		(25,824,367)
Total stockholders’ equity		3,564,360		5,034,219
Total liabilities and stockholders’ equity	$	59,292,785	$	51,497,772

See accompanying notes to the condensed consolidated financial statements.

4

SUMMER ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

		For the Three Months Ended June 30, 2020				For the Six Months Ended June 30,
		2020		2019		2020		2019
Revenue	$	42,522,436	$	40,498,587	$	81,389,426	$	75,324,456
Cost of goods sold
Power purchases and balancing/ancillary		21,977,158		22,027,541		39,079,786		37,398,195
Transportation and distribution providers charge		15,958,473		15,116,171		32,144,193		28,765,332
Total cost of goods sold		37,935,631		37,143,712		71,223,979		66,163,527
Gross profit		4,586,805		3,354,875		10,165,447		9,160,929
Operating expenses		5,603,791		5,359,717		11,438,832		10,633,483
Operating loss		(1,016,986)		(2,004,842)		(1,273,385)		(1,472,554)
Other expense
Financing costs		(43,522)		(1,563)		(61,155)		(3,125)
Interest expense, net		(722,628)		(361,066)		(1,448,310)		(779,538)
Total other expense		(766,150)		(362,629)		(1,509,465)		(782,663)
Net loss		(1,783,136)		(2,367,471)		(2,782,850)		(2,255,217)
Income tax expense		8,316		-		8,316		-
Net loss	$	(1,791,452)	$	(2,367,471)	$	(2,791,166)	$	(2,255,217)
Net loss per common share:
Basic	$	(0.06)	$	(0.08)	$	(0.09)	$	(0.07)
Dilutive	$	(0.06)	$	(0.08)	$	(0.09)	$	(0.07)
Weighted average number of shares:
Basic		31,653,598		31,081,975		31,608,037		30,156,821
Dilutive		31,653,598		31,081,975		31,608,037		30,156,821

See accompanying notes to the condensed consolidated financial statements.

5

SUMMER ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

	Common Stock				Subscription		Additional paid in		Accumulated
	Shares		Amount		Receivable		capital		Deficit		Total
Balance at March 31, 2019	30,660,833	$	30,660	$	(52,000)	$	28,384,102	$	(14,979,024)	$	13,383,738
Issuance of warrants	-		-		-		143,731		-		143,731
Vesting of stock options and restricted shares associated with the 2015 Stock Option and Award Plan	-		-		-		16,433		-		16,433
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan	-		-		-		284,777		-		284,777
Issuance of common stock associated with a private placement offering	640,000		640		-		959,360		-		960,000
Issuance of common stock as interest payment for personal guaranty	81,112		81		-		121,586		-		121,667
Issuance of common stock associated with the cashless exercise of warrants	106,053		106		-		(106)		-		-
Net loss	-		-		-		-		(2,367,471)		(2,367,471)
Balance at June 30, 2019	31,487,998	$	31,487	$	(52,000)	$	29,909,883	$	(17,346,495)	$	12,542,875
	Common Stock				Subscription		Additional paid in		Accumulated
	Shares		Amount		Receivable		capital		Deficit		Total
Balance at March 31, 2020	31,562,486	$	31,562	$	(52,000)	$	31,475,796	$	(26,824,081)	$	4,631,277
Vesting of stock options and restricted shares associated with the 2015 Stock Option and Award Plan	-		-		-		80,102		-		80,102
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan	-		-		-		440,114		-		440,114
Vesting of stock options and restricted shares outside of stock option and award plans	-		-		-		52,651		-		52,651
Issuance of common stock as interest payment for personal guaranty	101,112		101		-		151,567		-		151,668
Net loss	-		-		-		-		(1,791,452)		(1,791,452)
Balance at June 30, 2020	31,663,598	$	31,663	$	(52,000)	$	32,200,230	$	(28,615,533)	$	3,564,360

See accompanying notes to the condensed consolidated financial statements.

6

SUMMER ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

	Common Stock				Subscription		Additional paid in		Accumulated
	Shares		Amount		Receivable		capital		Deficit		Total
Balance at December 31, 2018	27,480,833	$	27,480	$	(52,000)	$	23,357,951	$	(15,091,278)	$	8,242,153
Issuance of warrants	-		-		-		248,678		-		248,678
Vesting of stock options and restricted shares associated with the 2015 Stock Option and Award Plan	-		-		-		32,866		-		32,866
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan	-		-		-		422,728		-		422,728
Issuance of common stock associated with a private placement offering	3,820,000		3,820		-		5,726,180		-		5,730,000
Issuance of common stock as interest payment for personal guaranty	81,112		81		-		121,586		-		121,667
Issuance of common stock associated with the cashless exercise of warrants	106,053		106		-		(106)		-		-
Net loss	-		-		-		-		(2,255,217)		(2,255,217)
Balance at June 30, 2019	31,487,998	$	31,487	$	(52,000)	$	29,909,883	$	(17,346,495)	$	12,542,875
	Common Stock				Subscription		Additional paid in		Accumulated
	Shares		Amount		Receivable		capital		Deficit		Total
Balance at December 31, 2019	31,532,486	$	31,531	$	(52,000)	$	30,879,055	$	(25,824,367)	$	$5,034,219
Issuance of warrants	-		-		-		245,352		-		245,352
Vesting of stock options and restricted shares associated with the 2015 Stock Option and Award Plan	-		-		-		90,592		-		90,592
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan	-		-		-		678,284		-		678,284
Vesting of stock options and restricted shares outside of stock option and award plans	-		-		-		110,411		-		110,411
Issuance of common stock associated with a private placement offering	30,000		31		-		44,969		-		45,000
Issuance of common stock as interest payment for personal guaranty	101,112		101		-		151,567		-		151,668
Net loss	-		-		-		-		(2,791,166)		(2,791,166)
Balance at June 30, 2020	31,663,598	$	31,663	$	(52,000)	$	32,200,230	$	(28,615,533)	$	3,564,360

See accompanying notes to the condensed consolidated financial statements.

7

SUMMER ENERGY HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		For the Six Months Ended June 30,
		2020		2019
Cash Flows from Operating Activities
Net loss	$	(2,791,166)	$	(2,255,217)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash amortization of deferred financing costs		61,155		3,125
Broker warrant compensation expense		15		104,947
Consulting compensation expense		-		143,731
Stock compensation expense		879,287		455,594
Interest payment in common stock for personal guaranty		151,668		121,667
Depreciation of property and equipment		17,740		20,423
Amortization of non-cash lease costs		73,627		153,894
Amortization of intangible asset		590,652		590,652
Bad debt expense		204,053		297,550
Changes in operating assets and liabilities:
Accounts receivable		(6,151,079)		(7,271,990)
Prepaid and other current assets		(357,849)		126,521
Accounts payable		(169,267)		(1,836,571)
Accrued wholesale power purchased		2,738,461		5,276,539
Accrued transportation and distribution charges		1,193,231		1,631,460
Accrued expenses and other		573,783		(673,092)
Net cash used in operating activities		(2,985,689)		(3,110,767)
Cash Flows from Investing Activities
Purchase of property and equipment		(22,661)		-
Net cash used in investing activities		(22,661)		-
Cash Flows from Financing Activities
Deferred financing costs		(276,939)		-
Repayment of Blue Water Capital Funding, LLC		(4,920,000)		-
Advances from wholesale provider for collateral support		850,000		963,000
Repayments to wholesale provider for collateral support		(550,000)		-
Proceeds from Digital Lending Services US Corp.		9,000,000		-
Payments on Comerica Bank Revolving Note		-		(2,200,000)
Payments on financing of directors and officer's insurance policy		(84,988)		(35,385)
Proceeds from related party lines of credit		1,000,000		-
Repayment of related party lines of credit		(1,000,000)		-
Proceeds from related party promissory notes		600,000		498,000
Repayment of related party promissory notes		(2,450,000)		(498,000)
Proceeds from issuance of common shares in a private placement		45,000		5,730,000
Proceeds from Paycheck Protection Program Loan		2,342,300		-
Net cash provided by financing activities		4,555,373		4,457,615
Net Increase in Cash and Restricted Cash		1,547,023		1,346,848
Cash and Restricted Cash at Beginning of Period		4,012,068		3,854,885
Cash and Restricted Cash at End of Period	$	5,559,091	$	5,201,733
Supplemental Disclosure of Cash Flow Information
Income taxes paid	$	-	$	-
Interest paid in cash	$	1,219,870	$	739,946
Non-Cash Investing and Financing Activities
Operating lease right of use assumed through operating lease obligation	$	-	$	1,265,563
Cashless exercise of warrant for 106,053 shares of common stock	$	-	$	106
Deferred financing cost associated with issuance of warrant	$	245,337	$	-
Financing of directors and officer's insurance policy	$	141,352	$	150,575

See accompanying notes to the condensed consolidated financial statements.

8

SUMMER ENERGY HOLDINGS, INC.

AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - ORGANIZATION

The condensed consolidated financial statements include the accounts of Summer Energy Holdings, Inc. and its wholly-owned subsidiaries Summer Energy, LLC (“Summer LLC”), Summer Energy Midwest, LLC (“Summer Midwest”), Summer EM Marketing, LLC (“Marketing LLC”) and Summer Energy Northeast, LLC (“Summer Northeast”) (collectively referred to as the “Company,” “we,” “us,” or “our”). All significant intercompany transactions and balances have been eliminated in these consolidated financial statements.

Summer LLC is a retail electric provider in the state of Texas under a license with the Public Utility Commission of Texas (“PUCT”). Summer LLC procures wholesale energy and resells to commercial and residential customers. Summer LLC was organized on April 6, 2011 under the laws of the state of Texas.

Summer Midwest (formerly Summer Energy of Ohio, LLC) was formed in the state of Ohio on December 16, 2013 to procure and sell electricity in the state of Ohio. The Public Utilities Commission of Ohio issued a certificate as a Retail Electric Service Provider to Summer Midwest on June 16, 2015. On May 2, 2019, the Illinois Commerce Commission approved Summer Midwest as a Retail Electric Service Provider in the state of Illinois.

Marketing LLC was formed in the state of Texas on November 6, 2012 to provide marketing services to Summer LLC. Marketing LLC is currently inactive and there is no business activity.

Summer Northeast, a Texas limited liability company formerly named REP Energy, LLC, was acquired on November 1, 2017 and became a wholly-owned subsidiary of Summer Energy Holdings, Inc. Summer Northeast is a retail electric provider serving electric load to both residential and commercial customers in the Northeastern U.S. and holds licenses in Massachusetts, New Hampshire, Connecticut and Rhode Island.  

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by 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 six month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on March 27, 2020.

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 and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.

9

Uses and Sources of Liquidity

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does 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 from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

For the six months ended June 30, 2020 and 2019, the Company incurred net losses of $2,791,166 and $2,255,217, respectively, and used cash in continuing operations of $2,985,689 and $3,110,767, respectively. The Company’s operations have been financed principally from electricity revenues, net proceeds from outside debt and equity financing of $4,080,000, funding from the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) totaling $2,342,300 established pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) as well as from capital raised under private placement offerings totaling $45,000 and $5,730,000 during the six months ended June 30, 2020 and 2019, respectively.   The Company’s liquidity requirements are to finance current operations, meet financial commitments, fund organic growth and/or acquisitions, and service debt. The liquidity requirements fluctuate with the level of customer acquisition costs, collateral posting requirements, the effects of the timing between the settlement of payables and receivables, including the effect of weather conditions, and our general working capital needs for ongoing operations. Estimating liquidity requirements is highly dependent on then-current market conditions, including impacts of the COVID-19 pandemic, weather events, forward prices for electricity, market volatility and our then existing capital structure and requirements.

The Company’s continuation as a going concern is dependent upon its ability to increase sales, and/or raise additional funds through the capital markets as well as outside lending. During the six months ended June 30, 2020, the Company secured additional financing for a revolving loan in the amount of $10,000,000 with a maturity date of March 2023 and proceeds from the PPP loan. In addition, commitments for additional lending up to $2,000,000 may be provided by members of the Board of Directors of the Company, if necessary. Management has concluded that its existing capital resources and availability, proceeds from a 2020 offering and outside lending will be sufficient to fund operations through the third quarter of 2021.

Revenue and Cost Recognition

Our revenues are primarily derived from the sale of electricity to residential and small commercial customers. Revenues for sales of electricity are recognized under the accrual method of accounting.

Direct energy costs are recorded when the electricity is delivered to the customer’s meter.

Cost of goods sold (“COGS”) within the Texas market include electric power purchased and pass through charges from the transmission and distribution service providers (“TDSPs”) in the areas serviced by the Company. TDSP charges are costs for metering services and maintenance of the electric grid. TDSP charges are established by regulation of the PUCT. COGS within the Independent System Operator (“ISO”) for the New England market is comprised of wholesale costs based upon the wholesale power tariff rate for volumes purchased during the delivery month and scheduling fees. Summer Midwest began flowing electricity within the Pennsylvania, New Jersey, Maryland Power Pool (“PJM”) market in July 2019, and the COGS for the PJM market is comprised of wholesale costs based upon the wholesale power tariff for volumes purchased during the delivery month as well as scheduling fees.

The energy portion of our COGS is comprised of two components: bilateral wholesale costs and balancing/ancillary costs. These two cost components are incurred and recognized differently as follows:

Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. We are invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 20 days after the end of the month.

Balancing/ancillary costs are based on the customer load and are determined by the Electric Reliability Council of Texas (“ERCOT”), ISO New England and PJM through a multiple-step settlement process. Balancing costs/revenues are related to the differential between supply that we provided through our bilateral wholesale supply and the supply required to serve our customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through our load forecasting and forward purchasing programs.

10

Cash and Restricted Cash

The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. There were no such investments at June 30, 2020 or December 31, 2019.

Restricted cash in the amount of $2,026,023 as of June 30, 2020 and $3,197,708 as of December 31, 2019 represents funds held in escrow for customer deposits, funds held in a controlled account by the wholesale provider (Note 12) and funds securing irrevocable stand-by letters of credit (Note 4).

		June 30, 2020		December 31, 2019
Cash	$	3,533,068	$	814,360
Restricted cash:
Escrow for customer deposits		510,749		511,461
Funds securing letters of credit		750,000		750,000
Funds controlled by wholesale provider		765,274		1,936,247
Total restricted cash		2,026,023		3,197,708
Total cash and restricted cash	$	5,559,091	$	4,012,068

Basic and Diluted Income (Loss) Per Share

Basic income/(loss) per share are computed by dividing net income/(loss) applicable to the weighted-average number of shares outstanding during the period. Diluted income per share is determined using the weighted-average number of shares outstanding during the period, adjusted for the dilutive effect of share equivalents, using the treasury method, consisting of shares that might be issued upon exercise of share equivalents. In periods where losses are reported, the weighted average number of shares excludes share equivalents, because their inclusion would be anti-dilutive. 

For the six months ended June 30, 2020 and 2019, the weighted average number of outstanding excludes share equivalents due to dilutive stock options and stock warrants because their inclusion would be anti-dilutive. The Company had potentially dilutive securities totaling approximately 5,022,692 and 4,067,682 as of June 30, 2020 and 2019, respectively.

Recent Pronouncements

New Accounting Standards Recently Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires entities to use a current expected credit loss ("CECL") model, which is a new impairment model based on expected losses rather than incurred losses on financial assets, including trade accounts receivables. The model requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted ASU 2016-13 and the related amendments effective January 1, 2020, and there was no material impact to our condensed consolidated financial statements.

Standards Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, which reduces the complexity of FASB ASC Topic 740, “Income Taxes” as part of the FASB’s Simplification Initiative. The amendments in this guidance simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for annual reporting periods ending after December 15, 2020, with early adoption permitted, and should be applied on either a retrospective basis for all periods presented or a modified retrospective basis. Management is still assessing the impact this might have on the Company’s consolidated financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

11

NOTE 3 - REVENUE

The table below represents the Company’s reportable revenues for the three and six month periods ended June 30, 2020 and 2019, respectively, from customers, net of respective provisions for refund:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Electricity Revenues from Contracts with Customers
ERCOT Market	$	38,599,697	$	36,294,807	$	73,860,940	$	67,097,505
ERCOT Pre-paid Market		1,843,514		1,387,147		3,290,291		2,600,937
ISO New England Market		861,350		1,906,856		1,968,628		3,831,267
PJM Market		298,328		-		487,763		-
Total Electricity Revenues from Contracts with Customers		41,602,889		39,588,810		79,607,622		73,529,709
Other Revenues:
Fees Revenue		919,547		909,777		1,781,804		1,794,747
Total Revenues:	$	42,522,436	$	40,498,587	$	81,389,426	$	75,324,456

Presented in the following table are the components of accounts receivable and accrued revenue:

		June 30, 2020		December 31, 2019
Accounts receivable from customers
ERCOT Market	$	10,874,702	$	9,041,871
ISO New England Market		148,453		257,942
PJM Market		104,312		11,244
Total accounts receivable from customers		11,127,467		9,311,057
Accrued revenue from customers
ERCOT Market		36,850,685		32,916,970
ISO New England Market		626,461		788,395
PJM Market		85,307		15,088
Total accrued revenue with customers		37,562,453		33,720,453
Allowance for credit losses		(894,945)		(1,183,561)
Total accounts receivable and accrued revenue	$	47,794,975	$	41,847,949

The Company recognizes revenue from the sale of electricity to consumers and is recognized upon the performance obligation to deliver electricity to the customer’s meter. This method of revenue recognition is commonly referred to as the flow method. The Company’s customer base consists of a mix of residential and commercial customers in the ERCOT, ISO New England and PJM markets. Also, the Company recognizes revenues from contract cancellation fees, disconnection fees and late fees.

The invoice practical expedient within the accounting guidance allows for the recognition of revenue from performance obligations in the amount of consideration to which there is a right to invoice the customer and when the amount for which there is a right to invoice corresponds directly to the value transferred to the customer. The purpose of the invoice practical expedient is to depict an entity’s measure of progress toward completion of the performance obligation within a contract and can only be applied to performance obligations that are satisfied over time and when the invoice is representative of services provided to date. The Company elected to apply the invoice practical expedient to recognize revenue for performance obligations satisfied over time as the invoices from the respective revenue streams are representative of services or goods provided to date to the customer.

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Performance Obligations

Residential and Commercial – The Company has performance obligations for the service to deliver electricity to its customers and it satisfies these performance obligations over time as electricity is provided continuously to the customer who simultaneously receives and consumes the benefits provided. The Company recognizes revenue at a fixed base amount and a price per kilowatt hour as it provides these services on a fixed term contract. Contracts generally have fixed terms of 3-month increments not to exceed a 24-month fixed term. For customers whose fixed contracts have expired, the Company recognizes revenue at the market price per kilowatt hour as the service is provided.  

Residential pre-paid – The Company has performance obligations for the service to deliver electricity to its customers and these performance obligations are satisfied over time as electricity is provided continuously to the customer who simultaneously receives and consumes the benefits provided. Revenues in the pre-paid market are variable at the market rate per kilowatt hour as the service is provided.

Accounts Receivable and Unbilled Revenue

Accounts receivable are comprised of trade receivables and unbilled receivables (accrued revenue). Customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity that they have not been billed for as of month-end. Therefore, at the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed in the calendar month are recorded from the unbilled account to the customer’s receivable account.

In the Texas market, electricity revenues not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by our average billing rate per kilowatt hour (“kWh”) in effect at the time. At the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed in the calendar month are recorded from the unbilled account to the customer’s receivable account. Accounts receivable are customer obligations billed at the customer’s monthly meter read date for that period’s electricity usage and due within 16 days of the date of the invoice. The past due customer balances are subject to a late fee that is assessed on that billing. Unbilled accounts in the Texas market as of June 30, 2020 and December 31, 2019 were estimated at $36,850,685 and $32,916,970, respectively.

In the ISO New England market, electricity services not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ISO New England multiplied by our average billing rate per kWh in effect at the time. The customer billing in the ISO New England market is performed by the local utility company. Unbilled accounts in the ISO New England market as of June 30, 2020 and December 31, 2019 were estimated at $626,461and $788,395, respectively.

The Company began service in the PJM market during the third quarter of 2019. In the PJM market, electricity services not billed by month end are accrued based upon estimated deliveries to customers as tracked and recorded by PJM multiplied by our average billing rate per kWh in effect at the time. The customer billing in the PJM market is performed by the local utility company. Unbilled accounts in the PJM market as of June 30, 2020 and December 31, 2019 were estimated at $85,307 and $15,088, respectively.

Prior to January 1, 2020, accounts receivables were recorded at cost less an allowance for doubtful accounts. The Company, in the Texas market, maintained an allowance for uncollectible accounts receivable for estimated losses resulting from the failure or inability of our customers to make required payments. Within the ISO New England and the PJM markets, the local utility companies within the state of operation, purchase the Company’s billed receivables at a statutory published discount rate without recourse; therefore, no allowance for doubtful accounts was recorded for these markets. The allowance for doubtful accounts was $1,183,561 at December 31, 2019.

Subsequent to January 1, 2020, the Company’s accounts receivables are recorded at cost less an allowance for credit losses. We estimate losses on receivables at the reporting date based on expected losses resulting from the inability of our customers to make required payments, including our historical experience of actual losses and the aging of such receivables. These receivables have been pooled by market including the Texas market, the ISO New England market, and PJM market, because the receivables from each market share risk characteristics. Based on known information we may also establish specific reserves for customers in an adverse financial condition or adjust our expectations of changes in conditions that may impact the collectability of outstanding receivables. Receivables past due over 90 days are considered delinquent and are reviewed individually for collectability. After all

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means of collection have been exhausted, delinquent receivables are written-off. The allowance for credit losses at June 30, 2020 was $894,945.

NOTE 4 - LETTERS OF CREDIT AND DEPOSITS

As of June 30, 2020 and December 31, 2019, Summer LLC had no outstanding secured irrevocable stand-by letters of credit. As of June 30, 2020 and December 31, 2019, deposits held by various local utilities in the ERCOT market totaled at $1,038,719 and $1,004,059, respectively.

As of June 30, 2020 and December 31, 2019, Summer Northeast had two secured irrevocable stand-by letters of credit totaling $750,000 with a financial institution. The letters of credit were issued for the benefit of the following parties: Connecticut Department of Public Utility Control in the amount of $250,000 and the State of New Hampshire Public Utilities Committee in the amount of $500,000. The letter of credit issued to Connecticut Department of Public Utility Control in the amount of $250,000 was automatically extended on the expiration date of May 26, 2020 to May 26, 2021. On April 24, 2020, the irrevocable standby letter of credit in the amount of $500,000 issued to the State of New Hampshire Public Utilities Commission was amended to reflect an expiration date of May 1, 2021. As of June 30, 2020 and December 31, 2019, Summer Northeast had collateral posted with ISO New England in the amount of $896,299 and $1,387,181, respectively.

As of June 30, 2020 and December 31, 2019, Summer Midwest had no secured irrevocable stand-by letters of credit. As of June 30, 2020 and December 31, 2019, Summer Midwest had collateral held by various local utilities in the PJM market totaling $1,488,000 and $713,000, respectively.

As of June 30, 2020, none of the letters of credit issued on behalf of the Company were drawn upon.

NOTE 5 - SURETY BONDS

As of June 30, 2020, Summer Midwest had a surety bond in the amount of $500,000 issued to the Illinois Commerce Commission and a surety bond in the amount of $250,000 issued to the Pennsylvania Public Utility Commission. Both bonds are secured with $375,000 in deposits held by the surety bond company.

NOTE 6 - FINANCING FROM FIRST INSURANCE FUNDING

In May 2020, the Company entered into a finance agreement with First Insurance Funding to finance the Company’s Director’s and Officer’s insurance policy premium for the period of May 1, 2020 through May 1, 2021. The amount for the premiums, taxes and fees totaled $141,352. A cash down payment in the amount of $34,349 was made by the Company in May 2020 leaving a remaining balance of $107,003 to be paid in 10 installments from June 1, 2020 through March 1, 2021. The annual percentage interest rate of the financing is 5.85%.

In May 2019, the Company entered into a finance agreement with First Insurance Funding to finance the Company’s Director’s and Officer’s insurance policy premium for the period of May 1, 2019 through May 1, 2020. The amount for the premiums, taxes and fees totaled $150,575. A cash down payment in the amount of $22,586 was made by the Company in May 2019 leaving a remaining balance of $127,989 to be paid in 10 installments from June 1, 2019 through March 1, 2020. The annual percentage interest rate of the financing is 6.45%. The Company paid in full the balance of the finance agreement during March 2020.

At June 30, 2020 and December 31, 2019, the outstanding balance due to First Insurance Funding was $94,761 and $38,397, respectively. Interest expense accrued to First Insurance Funding was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
First Insurance Funding interest expense	$	-	$	455	$	1,365	$	455

NOTE 7 – FINANCING FROM DIGITAL LENDING SERVICES US CORP.

On March 12, 2020, Summer LLC (the “Borrower”) entered into a Loan Agreement (the “Agreement”) with Digital Lending Services US Corp., a Delaware corporation (“Digital Lending”). Pursuant to the Agreement, Digital Lending agreed to provide a revolving loan (the “Loan”) to the Borrower, and the Borrower agreed to borrow and repay funds loaned by Digital Lending.  

The amount of available credit under the Loan is $10,000,000. The Loan is revolving in nature and is evidenced by a Revolving Promissory Note (the “Note”). The maturity date of the Loan is March 11, 2023. The Loan bears interest at a rate of 12.75% per

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annum, with monthly installment payments of accrued interest only. The principal balance of the Loan may be prepaid at any time at the option of the Borrower, subject to certain prepayment charges.

The Loan was used by the Company to repay indebtedness owed to Blue Water (Note 8) and additional indebtedness, as well as for working capital and other general corporate purposes.

In connection with the Agreement, the Borrower made certain customary representations and warranties, and agreed that while the Loan amount remains outstanding, it would not take certain actions, including that it will not incur certain debts (as defined in the Agreement); create, assume, or suffer to exist any lien on any property or asset of the Borrower, except those set forth in and allowed by the Agreement; consolidate or merge with any other entity; or sell, lease, or transfer all or substantially all of the assets of the Borrower. Also, in connection with the Agreement, the Borrower made certain affirmative and negative covenants, and agreed to designate a representative of Digital Lending to attend the Company’s board of directors’ meetings in a non-voting, observer capacity. As of June 30, 2020, Summer LLC was in compliance with the covenants of the Agreement.

In connection with the Agreement, the Borrower and Digital Lending also entered into a Security Agreement (the “Security Agreement”), and Summer Energy Holdings, Inc. executed a Guaranty (the “Guaranty”) and issued a Common Stock Purchase Warrant (“Warrant”) in favor of Digital Lending.

Security Agreement

Pursuant to the Security Agreement, the Borrower granted to Digital Lending a second position security interest in and to the Borrower’s collateral, as more fully defined in the Security Agreement, and which includes receivables, equipment, inventory, personal property, other intangibles, and proceeds from any of these, to secure the Borrower’s payment of its obligations under the Loan. The security interest granted to Digital Lending is subordinate to a security interest granted to EDF Energy Services, LLC (“EDF”) pursuant to an Amended and Restated Energy Services Agreement dated June 19, 2019, as amended (Note 12).

Guaranty

Pursuant to the Guaranty, the Company agreed to guaranty the Borrower’s obligations under the Agreement and Note.   

Warrant

In connection with the Agreement and the Loan, the Company agreed to issue to Digital Lending a Warrant (Note 20). Pursuant to the Warrant, Digital Lending may purchase up to 250,000 shares of the Company’s common stock. The Warrant has a term of five years, has an exercise price of $1.50 per share, and is subject to adjustment as set forth in the Warrant. The Warrant also contains a cashless or net exercise provision, pursuant to which the holder of the Warrant may elect to convert all or a portion of the Warrant without the payment of additional consideration, by receiving a net number of shares calculated pursuant to a formula set forth in the Warrant.

As of June 30, 2020, the outstanding balance of the Digital Lending loan was $9,000,000 and the interest expense was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Digital Lending interest expense	$	286,875	$	-	$	350,625	$	-

The foregoing summaries of the terms and conditions of the Agreement, the Note, the Security Agreement, and the Guaranty do not purport to be complete, and are qualified in their entirety by reference to the full text of the Agreement, the Note, the Security Agreement and the Guaranty, each of which is attached as an exhibit to our Current Report on Form 8-K, filed with the SEC on March 18, 2020.

NOTE 8 - FINANCING FROM BLUE WATER CAPITAL FUNDING LLC

On June 29, 2016, Summer LLC (the “Borrower”) entered into a Loan Agreement (the “Agreement”) with Blue Water Capital Funding, LLC (“Blue Water”) and guaranteed by the Company (the “Guaranty”). Pursuant to the Agreement, Blue Water agreed to provide a revolving loan (the “Loan”) to the Borrower, and the Borrower agreed to borrow and repay funds loaned by Blue Water. Further, in connection with the Agreement, the Borrower granted to Blue Water a second position security interest in and to the Borrower’s collateral, which includes receivables, equipment, inventory, personal property, other intangibles, and proceeds from any of these, to secure the Borrower’s payment of its obligation under the Loan.

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The amount of available credit under the Loan was $5,000,000. The Loan was revolving in nature and was evidenced by a Revolving Promissory Note (the “Note”). The maturity date of the Loan was June 30, 2018. On June 27, 2018, Summer LLC entered into an amendment to the agreement (the “Amendment”) with Blue Water with respect to the Agreement.  

Pursuant to the Amendment, the maturity date of the Note was extended through June 30, 2020, and the interest rate on the Note was changed from 11% per annum to a variable rate equal to the Prime Rate published by the Wall Street Journal plus 475 basis points. The amount of credit available pursuant to the Agreement, as amended by the Amendment, was $5,000,000. The Note included a minimum monthly financing fee of $22,500 per month. Interest was payable on the tenth day of each month and on the maturity date of the Note. Summer LLC and Blue Water agreed that the security interest granted pursuant to the Agreement remained in effect, and the Company reaffirmed its obligations under the Guaranty. Further, under the Agreement, Summer LLC was subject to certain restrictive covenants, and Summer LLC was in compliance with such covenants during the three months ended March 31, 2020.

On March 12, 2020, simultaneous with the closing of the loan from Digital Lending (Note 7), the outstanding debt due and owing to Blue Water was paid in full and the Agreement, as amended by the Amendment, was terminated.

As of June 30, 2020 and December 31, 2019, the outstanding balance of financing from Blue Water Capital was $0 and $4,920,000, respectively. Interest expense to Blue Water was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Blue Water interest expense	$	-	$	127,476	$	167,900	$	253,550

NOTE 9 - COMERICA BANK MASTER REVOLVING NOTE 

On December 18, 2018, the Company signed a single payment note (the “Note”) with Comerica Bank (the “Bank”) in the amount of $2,900,000. The Note has a maturity date of June 11, 2020, with interest thereon at a per annum rate equal to the “Prime Referenced Rate” plus the “Applicable Margin.” The “Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the “Prime Rate” in effect on such day, but in no event and at no time shall the “Prime Reference Rate” be less than the sum of the Daily Adjusting LIBOR rate for such day plus 2.5% per annum. “Prime Rate” means the per annum rate established by the Bank as its prime rate for its borrowers at any such time. “Applicable Rate” means 0.25% per annum. Accrued and unpaid interest on the unpaid principal balance outstanding on the Note is payable monthly on the first day of each month, commencing on February 1, 2019.

On December 9, 2019, the Note was converted from a single payment note to a master revolving note (the “Revolver Note”), which is payable in full on demand from the Bank. The Revolver Note provides for advances, repayments and re-advances from time to time. Interest thereon at a per annum rate equal to the “Prime Referenced Rate” plus the “Applicable Margin.” The “Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the “Prime Rate” in effect on such day, but in no event and at no time shall the “Prime Reference Rate” be less than the sum of the Daily Adjusting LIBOR rate for such day plus 2.5% per annum. “Prime Rate” means the per annum rate established by the Bank as its prime rate for its borrowers at any such time. “Applicable Rate” means 0.25% per annum. Unless sooner demanded, accrued and unpaid interest on the unpaid principal balance of each outstanding advance shall be payable monthly, in arrears on the first business day of each month, from the date made until the same is paid in full. As of June 30, 2020, the interest rate was 3.5%.  

Guaranty of the Revolver Note has been made by four members of the Company’s board of directors (“Guarantors”). The Company agreed to issue the four Guarantors shares of the Company’s common stock on a monthly basis depending on the outstanding balance due and owing under the Revolver Note for agreeing to act as a Guarantor.

As of June 30, 2020 and December 31, 2019, the outstanding balance of financing on the Comerica Revolver Note was $2,900,000. Interest expense related to the Comerica Revolver Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Revolver Note interest expense	$	24,822	$	15,781	$	59,058	$	52,277

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NOTE 10 – COMERICA BANK SINGLE PAYMENT NOTE

On December 20, 2019, the Company signed a Single Payment Note (the “Single Note”) with Comerica Bank in the amount of $2,100,000. The Note has a maturity date of June 20, 2020, with interest thereon at a per annum rate equal to the “Prime Referenced Rate” plus the “Applicable Margin.” The “Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the “Prime Rate” in effect on such day, but in no event and at no time shall the “Prime Referenced Rate” be less than the sum of the Daily Adjusting LIBOR Rate for such day plus 2.5% per annum. “Prime Rate” means the per annum rate established by Comerica Bank as its prime rate for its borrowers at any such time. “Applicable Margin” means 0.25% per annum. Accrued and unpaid interest on the unpaid principal balance outstanding on the Note shall be payable monthly on the twentieth day of each month, commencing on January 20, 2020.  

On June 20, 2020, the Single Note was amended to reflect a due date of June 20, 2021 and the Application Margin was amended to mean 0.35% per annum. As of June 30, 2020, the interest rate was 3.5%

Guaranty of the Single Note has been made by four members of the Company’s board of directors (“Guarantors”). The Company agreed to issue the four Guarantors shares of the Company’s common stock on a monthly basis depending on the outstanding balance due and owing under the Note for agreeing to act as a Guarantor of the Single Note.

As of June 30, 2020 and December 31, 2019, the outstanding balance of financing on the Comerica Single Note was $2,100,000. Interest expense related to the Comerica Single Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Single Note interest expense	$	18,849	$	-	$	43,641	$	-

NOTE 11 – PAYCHECK PROTECTION PROGRAM LOAN

On April 20, 2020, the Company received $2,342,300 in loan funding as part of the Paycheck Protection Program (“PPP”) from the Small Business Administration (“SBA”) established pursuant to the recently enacted the CARES Act. The unsecured loan (the “Loan”) is evidenced by a promissory note issued by the Company (the “Note”) in favor of Frost Bank (the “Bank”), as lender. The Company plans to use the Loan proceeds to cover payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed.

Under the terms of the Note and the Loan, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the Note is two years, unless sooner provided in connection with an event of default under the Note. To the extent the Loan amount is not forgiven under the PPP, the Company is obligated to make equal monthly payments of principal and interest in the amount of $130,128 beginning on November 17, 2020 through April 17, 2022. The Note may be prepaid in part or in full, at any time, without penalty. The Company may prepay 20% or less of the unpaid principal balance of the Note at any time without notice, and may prepay more than 20% of the unpaid principal balance of the Note subject to certain conditions. If any payment on the Note is more than 11 days late, the Bank may charge the Company a late fee of up to $15.00 or 5% of the unpaid portion of the regularly scheduled payment, whichever is greater. The Note provides for certain customary events of default, including (i) failing to make a payment when due under the Note, (ii) failure to do anything required by the Note or any other loan document, (iii) defaults of any other loan with the Bank, (iv) failure to disclose any material fact or make a materially false or misleading representation to the Bank or SBA, (v) default on any loan or agreement with another creditor, if the Bank believes the default may materially affect the Company’s ability to pay the Note, (vi) failure to pay any taxes when due, (vii) becoming the subject of a proceeding under any bankruptcy or insolvency law, having a receiver or liquidator appointed for any part of the Company’s business or property, or making an assignment for the benefit of creditors, (viii) having any adverse change in financial condition or business operation that the Bank believes may materially affect the Company’s ability to pay the Note, (ix) if the Company reorganizes, merges, consolidates, or otherwise changes ownership or business structure without the Bank’s prior written consent, (x) if the Company makes a distribution or disposes of any assets, other than in the ordinary course of business, which would adversely affect the Company’s financial condition, (xi) failing to submit required information to the Bank or has payments on the Loan returned or reversed for any reason, or (xii) becoming the subject of a civil or criminal action that the Bank believes may materially affect the Company’s ability to pay the Note. Upon the occurrence of an event of default, the Bank has customary remedies and may, among other things, require immediate payment of all amounts owed under the Note, collect all amounts owing from the Company, and file suit and obtain judgment against the Company.

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As of June 30, 2020 and December 31, 2019, the outstanding balance of financing on the Loan was $2,342,300 and $0. Interest expense related to the Loan was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
PPP Loan Interest	$	4,813	$	-	$	4,813	$	-

NOTE 12 - WHOLESALE POWER PURCHASE AGREEMENT WITH EDF

On May 1, 2018, Summer Energy Holdings, Inc. (for purposes of this Note, “SEH”), together with its subsidiaries Summer LLC and Summer Northeast (collectively the “Company”) closed a transaction with EDF Energy Services, LLC and EDF Trading North America, LLC (collectively, “EDF”). As part of the transaction, Summer LLC, Summer Northeast and EDF entered into an Energy Services Agreement (the “Energy Services Agreement”) pursuant to which Summer LLC and Summer Northeast agreed to purchase their electric power and associated services requirements from EDF, and EDF agreed to provide Summer LLC and Summer Northeast with certain credit facilities to assist Summer LLC and Summer Northeast in the purchase of their electric power and associated service requirements (such transaction with EDF, the “Original Transaction”).  The terms of the Energy Services Agreement are governed by the ISDA Master Agreement, as well as a Schedule and Power Annex thereto and the Credit Support Annex thereto.

In conjunction therewith, the Company and EDF also entered into a Security Agreement (the “Security Agreement”), a Pledge Agreement (the “Pledge Agreement”) and a Guaranty (the “Guaranty”) in favor of EDF. The Energy Services Agreement has a term of three years, and automatically renews for successive one-year periods unless either party provides written notice of termination 180 days prior to the renewal date. In addition to the market-based commodity price charged by EDF for each underlying commodity transaction, the Company will pay a “Commodity Fee” for each megawatt hour (“MWh”) of power that the Company requests for delivery from EDF during the term of the Energy Services Agreement. In addition, the Company is responsible for other mutually agreed upon fees incurred by EDF on its behalf. The Company is also responsible for any reasonable transmission or transportation costs incurred in connection with power transactions. Monthly supply obligations will accrue interest at a rate equal to three-month LIBOR plus 6% per annum. Any additional credit support will bear interest at the per annum rate equal to the lesser of (i) a rate per annum equal to three-month LIBOR rate plus 3% per annum, and (ii) the maximum rate of interest permitted by applicable law.  

In consideration of the services and credit support provided by EDF to Summer LLC and Summer Northeast, and pursuant to the Security Agreement, Summer LLC and Summer Northeast agreed to, among other things (i) grant a priority security interest to EDF in all of their assets, equipment and inventory; (ii) require their customers to remit monthly payments into a lockbox account over which EDF has a security interest; and (iii) deliver monthly and annual forecasted and audited statements to EDF.  

Pursuant to the Pledge Agreement, SEH pledged to EDF, and granted to EDF a security interest in, all of the membership interests of Summer LLC and Summer Northeast owned by SEH as well as all additional membership interests of such subsidiaries from time to time acquired by SEH. Pursuant to the Guaranty, SEH agreed to guaranty the obligations of Summer LLC and Summer Northeast under the Energy Services Agreement.

The foregoing is only a brief description of the material terms of the transaction with EDF and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the text of the Energy Services Agreement, the ISDA Master Agreement, the Security Agreement, the Pledge Agreement and the Guaranty, which are filed as Exhibits 10.1 through 10.5, respectively, to our quarterly report on Form 10-Q filed with the SEC on August 14, 2018.

On June 19, 2019, the Company closed a transaction (the “Amendment Transaction”) with EDF Trading North America, LLC (“EDFTNA”) in order to amend and/or restate certain of the agreements with EDF entered into in the Original Transaction.

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Pursuant to the Amendment Transaction, the Company and EDFTNA entered into an Amended and Restated Energy Services Agreement, which amended and restated the Energy Services Agreement (the “Amended Energy Services Agreement”), an amendment to ISDA Master Agreement which amends the ISDA Agreement (the “Amended ISDA Agreement”), an Omnibus Amendment to Pledge Agreement and Security Agreement and Joinder, which amends both the Security Agreement and the Pledge Agreement (the “Omnibus Amendment”) and an Amended and Restated Guaranty, which amends and restates the Guaranty (the “Amended Guaranty”).  In general, the Amended Energy Services Agreement, the Amended ISDA Agreement, the Omnibus Amendment and the Amended Guaranty amend and/or restate the documents from the Original Transaction to (i) remove EDF Energy Services, LLC as a party to the agreements and (ii) add an additional subsidiary of SEH, Summer Midwest, as a party to the agreements, such that Summer Midwest is able to purchase its electric power and associated services requirements from EDFTNA and also utilize EDFTNA’s credit support.   The term, pricing and interest payable under the Amended Energy Services Agreement are unchanged from the original Energy Services Agreement.  

Pursuant to the Omnibus Amendment, in consideration of the services and credit support provided by EDFTNA to the Company, Summer Midwest agreed to, among other things (i) grant a priority security interest to EDFTNA in all of its assets, equipment and inventory; and (ii) require its customers to remit monthly payments into a lockbox account over which EDFTNA has a security interest. The security interest previously granted by Summer LLC and Summer Northeast is unchanged, except that EDFTNA is now the sole secured party. Also pursuant to the Omnibus Amendment, SEH pledged to EDFTNA, and granted to EDFTNA a security interest in, all of SEH’s membership interest in Summer Midwest. The previous pledge by SEH of its membership interest in Summer LLC and Summer Northeast is unchanged, except that EDFTNA is now the sole secured party. Pursuant to the Guaranty, SEH agreed to guaranty the obligations of Summer LLC, Summer Northeast and Summer Midwest under the Amended Energy Services Agreement.      

The foregoing is only a brief description of the material terms of the Amendment Transaction and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the text of the Amended Energy Services Agreement, the Amended ISDA Master Agreement, the Omnibus Amendment and the Amended Guaranty, which are filed as Exhibits 10.1 through 10.4, respectively, to our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2019.

As of June 30, 2020 and December 31, 2019, EDF has provided collateral credit support in the amount of $4,811,006 and $4,511,006, respectively, to secure letters of credit (Note 4) and surety bonds (Note 5) for the benefit of the Company.

The Company incurred interest expense to EDF for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
EDF Interest	$	240,517	$	199,234	$	504,781	$	391,998

NOTE 13 - LEASE LIABILITIES, COMMITMENTS AND CONTINGENCIES

Office Space

The Company leases office space and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. For leases beginning in 2019 and later, the Company accounts for lease components separately from the non-lease components. Most leases include one or more options to renew. The exercise of the lease renewal options is at the sole discretion of the Company. Certain leases also include options to purchase the leased property. The depreciable life of the assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Beginning December 1, 2017, the Company procured approximately 20,073 square feet of office space on the 37^th floor of 5847 San Felipe, Houston, Texas, pursuant to a sublease agreement dated October 13, 2017 with ENSCO International Incorporated, which subsequently changed its name to Valaris PLC, (“Sublandlord”) for a term beginning on December 1, 2017 and terminating on December 31, 2025. The base rent payments are approximately $15,900 per month during the term of the sublease agreement. The Company is also responsible for 12.08% of the operating expenses, utilities and taxes charged to the Sublandlord.

Summer LLC assumed an operating lease for office space on November 1, 2011 at 800 Bering Drive, Suite 260, Houston, Texas, under a non-cancellable lease obligation that expired on August 31, 2016. The Sixth Amendment to the office space lease extended the obligation to October 31, 2019.

Summer Northeast entered into a sublease agreement with PDS Management Group, LLC (“PDS”) on October 31, 2017 at 800 Bering Drive, Suite 250, Houston, Texas, under a non-cancellable lease obligation that expired on February 28, 2020. On

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September 1, 2018, PDS subleased 800 Bering Drive, Suite 250, Houston, Texas to an outside party, and Summer Northeast receives a monthly credit in the amount of $1,698 until the end of the lease obligation on February 28, 2020. The monthly base rent, net of credit, is $2,255.

As of June 30, 2020 and December 31, 2019, the operating lease right-of-use assets and operating lease liabilities were $905,558 and $979,185, respectively. The long-term portion of the operating lease liabilities as of June 30, 2020 and December 31, 2019 in the amounts of $760,659 and $834,283, respectively, was included in long-term obligations.

As of June 30, 2020, the weighted-average remaining lease term for operating leases was 5.44 years. As of June 30, 2020, the weighted-average discount rate for operating leases was 6.5%.

Operating lease future minimum payments together with their present values as of June 30, 2020 are summarized as follows:

		Operating Leases
2020	$	99,748
2021		199,494
2022		199,494
2023		197,294
2024		190,693
Thereafter		190,693
Total future minimum lease payments		1,077,416
Less amounts representing interest		(171,858)
Present value of lease liability	$	905,558
Current-portion operating lease liability		(144,899)
Long-term portion operating lease liability	$	760,659

Lease expense for the office space for the three and six months ended June 30, 2020 and 2019, respectively, was included in operating expenses on the consolidated statements of operations as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Operating Lease expense	$	34,781	$	77,571	$	73,627	$	153,893

NOTE 14 – LONG-TERM OBLIGATIONS 

Long-term obligations of the Company are comprised as follows:

		June 30, 2020		December 31, 2019
Financing from First Insurance Funding (Note 6)	$	94,761	$	38,397
Financing from Digital Lending Services US Corp. (Note 7)		9,000,000		-
Financing from Blue Water Capital Funding, LLC (Note 8)		-		4,920,000
Comerica Bank Master Revolving Note (Note 9)		2,900,000		2,900,000
Comerica Bank Single Payment Note (Note 10)		2,100,000		2,100,000
Financing from Paycheck Protection Program Loan (Note 11)		2,342,300		-
Wholesale Power Purchase Agreement with EDF collateral credit support (Note 12)		4,811,006		4,511,006
Operating lease obligations (Note 13)		905,558		979,185
Total obligations	$	22,153,625	$	15,448,588
Less current portion of obligations		(5,094,761)		(5,038,397)
Less current portion operating lease obligations (Note 13)		(144,899)		(144,902)
Long-term portion of obligations	$	16,913,965	$	10,265,289

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For the three and six months ended June 30, 2020 and 2019, respectively, interest expense consists of the following on obligations:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Financing from First Insurance Funding (Note 6)	$	-	$	455	$	1,365	$	455
Financing from Digital Lending Services US Corp. (Note 7)		286,875		-		350,625		-
Financing from Blue Water Capital Funding, LLC (Note 8)		-		127,476		167,900		253,550
Comerica Master Revolving Note (Note 9)		24,822		15,781		59,058		52,277
Comerica Bank Single Payment Note (Note 10)		18,849		-		43,641		-
Financing from Paycheck Protection Program Loan (Note 11)		4,813		-		4,813		-
Wholesale Power Purchase Agreement with EDF (Note 12)		240,517		199,234		504,781		391,998
Related Party Line of Credit (Note 21)		2,877		-		2,877		-
Related Party Promissory Loans (Note 22)		-		-		23,233		2,115
Related Party Guarantors (Note 23)		151,668		32,934		303,334		109,101
Other interest		96		45		409		130
Total interest expense	$	730,517	$	375,925	$	1,462,036	$	809,626
Interest income		(7,889)		(14,859)		(13,726)		(30,088)
Interest expense, net	$	722,628	$	361,066	$	1,448,310	$	779,538

NOTE 15 - 2012 STOCK OPTION AND STOCK AWARD PLAN 

During 2012, the Company approved the 2012 Stock Option and Stock Award Plan (“2012 Plan”) established to advance the interest of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company.

The maximum aggregate number of (i) shares of stock that may be issued under the 2012 Plan, and (ii) shares of stock with respect to which stock appreciation rights may be granted, is 785,000 and consists of authorized but unissued or reacquired shares of stock or any combination thereof. Such number of shares of stock may be issued under the 2012 Plan pursuant to incentive stock options, nonstatutory stock options, restricted stock grants, stock appreciation right grants or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted.   

The 2012 Plan continues in effect until the earlier of its termination by the Board or the date on which all the shares of stock available for issuance under the 2012 Plan have been issued and all restrictions on such shares under the terms on the 2012 Plan and the agreement evidencing awards granted under the 2012 Plan have lapsed. However, all awards shall be granted, if at all, within ten years from the earlier of the date the 2012 Plan is adopted by the Board or the date the 2012 Plan is duly approved by the stockholders of the Company.

During the six months ended June 30, 2020 and 2019, the Company granted no stock options under the 2012 Plan and recognized no stock compensation expense relating to the vesting of stock options issued from the 2012 Plan.

As of June 30, 2020, there are 2,000 shares that remain available for issuance under the 2012 Plan.

NOTE 16 - 2015 STOCK OPTION AND STOCK AWARD PLAN

During the year ended December 31, 2015, the Company’s stockholders approved the 2015 Stock Option and Stock Award Plan (“2015 Plan”), which was established to advance the interest of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company.

The maximum aggregate number of (i) shares of stock that may be issued under the 2015 Plan, and (ii) shares of stock with respect to which stock appreciation rights may be granted, is 1,500,000 and consists of authorized but unissued or reacquired shares of stock or any combination thereof. Such number of shares of stock may be issued under the 2015 Plan pursuant to incentive stock options, nonstatutory stock options, restricted stock grants, stock appreciation right grants or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted.

The 2015 Plan continues in effect until the earlier of its termination by the Board or the date on which all the shares of stock available for issuance under the 2015 Plan have been issued and all restrictions on such shares under the terms on the 2015 Plan and the agreements evidencing awards granted under the 2015 Plan have lapsed. However, all awards shall be granted, if at all,

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within ten years from the earlier of the date the 2015 Plan is adopted by the Board or the date the 2015 Plan is duly approved by the stockholders of the Company.

During the six months ended June 30, 2020, the Company granted under the 2015 Plan a total of 3,000 stock options to a key employee. The stock options had an exercise price of $2.50, vested immediately and had an approximate fair value of $6,678 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.05% (ii) estimated volatility of 99.01% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years. The Company issued no stock options under the 2015 Plan during the six months ended June 30, 2019.

During the three and six months ended June 30, 2020 and 2019, respectively, the Company recognized total stock compensation expenses for vesting options issued from the 2015 Plan as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
2015 Stock Plan	$	80,102	$	16,433	$	90,592	$	32,866

As of June 30, 2020, there are 16,000 shares that remain available for issuance under the 2015 Plan and the number of unvested shares in the 2015 Plan is zero.

NOTE 17 - 2018 STOCK OPTION AND STOCK AWARD PLAN

Effective February 12, 2018, the Board of Directors of the Company approved and adopted the Summer Energy Holdings, Inc. 2018 Stock Option and Stock Award Plan (“2018 Plan”), which was established to advance the interest of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Company’s named executive officers are eligible for grants or awards under the 2018 Plan. The Company’s stockholders approved the 2018 Plan on June 8, 2018.

The maximum aggregate number of (i) shares of stock that may be issued under the 2018 Plan and (ii) shares of stock with respect to which stock appreciation rights may be granted, is 1,500,000 and consists of authorized but unissued or reacquired shares of stock or any combination thereof. Such number of shares of stock may be issued under the 2018 Plan pursuant to incentive stock options, non-statutory stock options, restricted stock grants, restricted stock units, stock appreciation right grants or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted. The 2018 Plan or any increase in the maximum aggregate number of shares of stock issuable thereunder shall be approved by the stockholders of the Company within twelve months of the date of adoption by the Board. Awards granted prior to stockholder approval of the 2018 Plan shall become exercisable no earlier than the date of stockholder approval of the 2018 Plan. 

The 2018 Plan continues in effect until the earlier of its termination by the Board or the date on which all shares of stock available for issuance under the 2018 Plan have been issued and all restrictions on such shares under the terms on the 2018 Plan and the agreement evidencing awards granted under the 2018 Plan have lapsed. However, all awards shall be granted, if at all, within ten years from the earlier of the date the 2018 Plan is adopted by the Board or the date the 2018 Plan is duly approved by the stockholders of the Company. 

During the six months ended June 30, 2020, the Company granted under the 2018 Plan a total of 85,000 stock options to key employees. The stock options had a weighted average exercise price of $2.18 and had an approximate fair value of $87,161 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.51% (ii) estimated volatility of 110.33% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

During the six months ended June 30, 2019, the Company granted under the 2018 Plan a total of 210,000 stock options to key employees and members of the Company’s board of directors. The stock options had a weighted average exercise price of $1.90 and had an approximate fair value of $357,158 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.18% (ii) estimated volatility of 149.27% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

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During the three and six month periods ended June 30, 2020 and 2019, respectively, the Company recognized total stock compensation expense for the vesting of options issued from the 2018 Plan as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
2018 Stock Plan	$	440,114	$	284,777	$	678,284	$	422,728

As of June 30, 2020, the unrecognized expense for vesting of options issued from the 2018 Plan is $378,497 relating to 600,000 of unvested shares expected to be recognized over a weighted average period of approximately 7.03 years.

As of June 30, 2020, the Company had outstanding granted stock options under the 2018 Plan, net of forfeitures to purchase 1,416,250, and 83,750 shares remaining available for issuance.

NOTE 18 - NONQUALIFIED STOCK OPTIONS GRANTED OUTSIDE OF A STOCK OPTION OR STOCK AWARD PLAN

In September 2019, the Company entered into stock option grant agreements with six non-employee members of the Company’s Board of Directors whereby the Company agreed to grant non-qualified stock options outside of a stock option or a stock award plan during the months of September 2019, December 2019, March 2020 and June 2020 as compensation for services. The stock options granted pursuant to these agreements and the shares issuable upon the exercise thereof have not been registered under the Securities Act of 1933, as amended.

During the six months ended June 30, 2020, pursuant to the aforementioned grant agreements, the Company granted a total of 107,500 nonqualified stock options with an exercise price of $2.25 to six non-employee board members of the Company as compensation. The stock options granted had an approximate fair value of $110,411 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.50% (ii) estimated volatility of 111.10% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

For the three and six months ended June 30, 2020 and 2019, the stock compensation expense associated with the non-qualified stock options issued outside of a stock option or stock award plan is as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Outside of Stock Option or Stock Award Plan	$	52,651	$	-	$	110,411	$	-

NOTE 19 - PRIVATE PLACEMENT OFFERINGS

During the six months ended June 30, 2020, the Company accepted a subscription from an accredited investor to purchase 30,000 shares of common stock in exchange for cash proceeds in the amount of $45,000.

During the six months ended June 30, 2019, the Company commenced a private placement offering (the “2019 Offering”) to certain investors with whom the Company, its management and/or agents have a pre-existing relationship during the year ended December 31, 2019. The 2019 Offering was to accredited investors to purchase shares of the Company’s common stock at a purchase price of $1.50 per share. The 2019 Offering resulted in the issuance of 3,820,000 shares of common stock in exchange for cash proceeds in the amount of $5,730,000.

NOTE 20 - WARRANTS 

The Company has issued warrants to purchase shares of the Company’s common stock associated with various agreements and has vested warrants from a previously terminated Master Marketing Agreement.

On March 12, 2020, the Company issued a warrant for 250,000 shares of the Company’s common stock under the agreement with Digital Lending (Note 7). The five-year warrant has an exercise price of $1.50 per share and is subject to adjustment as set for in the Warrant. The fair value of warrant was $245,337 determined using the Black-Scholes option-pricing model and was expensed during the quarter ended March 31, 2020. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.66%, (ii) estimated volatility of 123.91%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.  

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On January 31, 2020, the Company issued a warrant to purchase up to eight shares of the Company’s common stock under a Referral Agreement whereby the sales broker introduces the Company to potential electricity sales leads. The five-year warrant has an exercise price of $1.50 per share. The fair value of the warrant is $15 determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair value are as follows: (i) risk-free interest rate of 1.62% (ii) estimated volatility of 136.59% (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

On June 11, 2019, the Company issued 106,053 shares of common stock to Black Ink Energy, LLC (“Black Ink”) pursuant to

the cashless exercise of a warrant dated March 2, 2015 issued by the Company to Black Ink to purchase up to 536,000 shares

of common stock of the Company at $1.50 per share. The Black Ink warrant was terminated and cancelled upon the issuance

of the 106,053 shares of common stock.

On May 22, 2019, the Company issued a warrant for 80,000 shares of common stock under a Consulting Agreement (Note

25). The five-year warrant has an exercise price of $1.50 per share. The fair value of the 80,000 warrant was $143,731

determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as

follows: (i) risk-free interest rate of 2.19%, (ii) estimated volatility of 149.28%, (iii) dividend yield of 0.00%, and (iv)

expected life of the warrant of 5 years.

On January 25, 2019, the Company issued a warrant for 43,772 shares of the Company’s common stock under a Referral

Agreement whereby the sales broker introduces the Company potential sales leads. The five-year warrant has an exercise

price of $1.50 per share. The fair value of the 43,772 warrants was $80,307 determined using the Black-Scholes option pricing

model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.58%, (ii)

estimated volatility of 148.70%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

On January 25, 2019, the Company issued two warrants, each for 6,715 shares, of the Company’s common stock under a

Referral Agreement whereby the sales broker introduces the Company potential sales leads. The five-year warrants have an

exercise price of $1.50 per share. The fair value of the 13,430 warrants was $24,640 determined using the Black-Scholes

option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of

2.58%, (ii) estimated volatility of 148.70%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

As of June 30, 2020, the Company had outstanding warrants to purchase up to 976,212 shares of the Company’s common stock, of which 710,975 are fully vested.

NOTE 21 - RELATED PARTY LINES OF CREDIT 

Effective March 12, 2020, the Company entered into two separate line of credit agreements with related parties, Mr. Neil Leibman and LaRose Holdings LLLP. Mr. Leibman is an officer of the Company and serves on the Company’s board of directors. LaRose Holdings LLLP is an entity controlled by Al LaRose, Jr. who serves on the Company’s board of directors.

The Company entered into a line of credit agreement (the “Leibman Line”) with Mr. Leibman (“Lender Leibman”). The line of credit allows the Company to borrow a maximum principal amount of $1,000,000 to be used by the Company for working capital and other purposes determined by the board of directors of the Company. During the term of the Leibman Line, Lender Leibman may make periodic loans as requested by the Company so long as the aggregate principal amount outstanding at any time does not exceed the maximum amount of the Leibman Line. Simple interest shall accrue on the unpaid principal balance outstanding under the Leibman Lines at the rate of 5% per annum and interest will be calculated on the basis of a 365-day year. Any unpaid principal and all accrued but unpaid interest shall be due and payable in full by the Company no later than May 15, 2023.  

The Company entered into a line of credit agreement (the “LaRose Line”) with LaRose Holdings, LLLP (“Lender LaRose”). The line of credit allows the Company to borrow a maximum principal amount of $1,000,000 to be used by the Company for working capital and other purposes determined by the board of directors of the Company. During the term of the LaRose Line, Lender LaRose may make periodic loans as requested by the Company so long as the aggregate principal amount outstanding at any time does not exceed the maximum amount of the LaRose Line. Simple interest shall accrue on the unpaid principal balance outstanding under the LaRose Line at the rate of 5% per annum and interest will be calculated on the basis of a 365-day year. Any unpaid principal and all accrued but unpaid interest shall be due and payable in full by the Company no later than May 15, 2023.  

On April 8, 2020, the Company was advanced $1,000,000 by Mr. Leibman under the terms and conditions of the Leibman Line to be utilized as short-term working capital for the Company. On April 28, 2020, the Company paid in full the $1,000,000 of principal advanced from the Leibman Line and paid Mr. Leibman $2,877 of accrued interest.

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For the three and six months ended June 30, 2020 and 2019, the interest incurred on related party lines of credit is as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Leibman Line	$	2,877	$	-	$	2,877	$	-
LaRose Line		-		-		-		-
Total	$	2,877	$	-	$	2,877	$	-

As of June 30, 2020, the outstanding balances of the Leibman Line and the LaRose Line were both $0.

NOTE 22 - RELATED PARTY PROMISSORY NOTES 

On January 15, 2020, the Company executed a promissory note in the amount of $600,000 to evidence an advance by Mr. Leibman for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of April 14, 2020. On March 13, 2020, the Company paid in full the outstanding balance of the loan from Mr. Leibman with interest in the amount of $4,849. As of June 30, 2020, the balance of the loan from Mr. Leibman was $0.

On November 8, 2019, the Company executed a promissory note in the amount of $850,000 to evidence an advance by Mr. Leibman for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of February 6, 2020. On February 6, 2020, the Company amended such promissory note to extend the maturity date of such note to May 7, 2020 with all other provisions of the original note remaining in full force and effect. On March 13, 2020, the Company paid Mr. Leibman in full the outstanding balance of the loan with interest in the amount of $8,384. As of June 30, 2020, the balance of the loan from Mr. Leibman was $0.

On November 8, 2019, the Company executed a promissory note in the amount of $1,000,000 to evidence an advance by LaRose Holdings LLLP, an entity controlled by Al LaRose, for purposes of short-term financing. Mr. LaRose is a director of the Company. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of February 6, 2020. On February 6, 2020, the Company amended such promissory note to extend the maturity date of such note to May 7, 2020 with all other provisions of the original note remain in full force and effect. On March 13, 2020, the Company paid LaRose Holdings in full the outstanding balance of the loan with interest in the amount of $10,000. As of June 30, 2020, the balance of the loan from LaRose Holdings LLLP was $0.

On January 7, 2019, the Company entered into a promissory note in the amount of $473,000 for an advance by Mr. O’Leary, a member of the Company’s board of directors, for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of July 7, 2019. On February 7, 2019, the Company paid back in full the loan from Mr. O’Leary with interest in the amount of $2,009. As of June 30, 2020 and 2019, the balance of the loan from Mr. O’Leary was $0, respectively.

On January 7, 2019, the Company entered into a promissory note in the amount of $25,000 for an advance by Messrs. O’Leary and Leibman for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of July 7, 2019. On February 7, 2019, the Company paid back in full the loan from Messrs. O’Leary and Leibman with interest in the amount of $106. As of June 30, 2020 and 2019, the balance of the loan from Messrs. O’Leary and Leibman was $0, respectively.

The following table summarizes interest paid to related parties on promissory notes for the three and six months ended June 30, 2020 and 2019 is as follows:

			For the Three Months Ended June 30,				For the Six Months Ended June 30,
	Original Date of Loan		2020		2019		2020		2019
Related party interest expense for $600,000 loan	1/15/2020	$	-	$	-	$	4,849	$	-
Related party interest expense for $590,000 loan	11/8/2019		-		-		-		-
Related party interest expense for $850,000 loan	11/8/2019		-		-		8,384		2,009
Related party interest expense for $1,000,000 loan	11/8/2019		-		-		10,000		106
Related party interest expense for $473,000 loan	1/7/2019		-		-		-		-
Related party interest expense for $25,000 loan	1/7/2019		-		-		-		-
Total		$	-	$	-	$	23,233	$	2,115

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NOTE 23 - RELATED PARTY GUARANTORS

On December 18, 2018, four members of the Company’s Board of Directors, Stuart Gaylor, Andrew Bursten, Tom O’Leary and Neil Leibman (Mr. Leibman is also an executive officer) (collectively, the “Guarantors”) guaranteed a single payment note with Comerica Bank (See Note 9) in the amount of $2,900,000 which was converted to a master revolving note on December 9, 2019. The Company agreed to pay interest at a rate of 12% for the guarantee and such interest is to be paid with the issuance of the Company’s common stock.

On December 20, 2019, four members of the Company’s Board of Directors, Stuart Gaylor, Andrew Bursten, Tom O’Leary and Neil Leibman (Mr. Leibman is also an executive officer) (collectively, the “Guarantors”) guaranteed a single payment note with Comerica Bank (See Note 10) in the amount of $2,100,000. The Company agreed to pay interest at a rate of 12% for the guarantee and such interest is to be paid with the issuance of the Company’s common stock.

The Company incurred interest expense to the Guarantors during the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Guarantor interest expense incurred on Comerica Revolver Note	$	87,968	$	32,934	$	175,935	$	109,101
Guarantor interest expense incurred on Comerica Single Payment Note		63,700		-		127,400		-
	$	151,668	$	32,934	$	303,335	$	109,101

The Company paid interest by the issuance of the Company’s common stock for the three and six months ended June 30, 2020 and 2019 as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	Number of Shares Issued		Amount	Number of Shares Issued		Amount	Number of Shares Issued		Amount	Number of Shares Issued		Amount
Guarantor Interest paid on Comerica Revolving Note	58,644	$	87,968	81,112	$	121,667	58,644	$	87,968	81,112	$	121,667
Guarantor interest paid on Comerica Single Payment Note	42,468		63,700	-		-	42,468		63,700	-		-
	101,112	$	151,668	81,112	$	121,667	101,112	$	151,668	81,112	$	121,667

NOTE 24 - OTHER RELATED PARTY TRANSACTIONS 

In February 2019, Mr. Leibman provided aviation transportation for business purposes, and the Company paid $23,469 in fuel costs.

On October 31, 2017, Summer Northeast entered into a sublease agreement with PDS Management Group, LLC (“PDS”) for office space located at 800 Bering Drive, Suite 250, Houston, Texas. PDS is 100% owned by Tom O’Leary who is a member of the Company’s Board of Directors. The Company paid for lease expense related to the agreement with PDS for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Summer Northeast sublease payments	$	-	$	6,993	$	4,662	$	13,986

NOTE 25 - SUMMER ENERGY 401(K) PLAN

In January 2017, the Company adopted a qualified 401(K) Retirement Plan (the “Plan”) whereby eligible employees may elect to save for retirement on a tax-advantaged basis. There are two types of salary deferrals: pre-tax 401(K) deferrals and Roth 401(K) deferrals. Eligible employee participants are automatically enrolled at 3% of compensation unless a participant elects an alternative deferral percentage limited to dollar amount of $19,500 in 2020 or elects not to defer under the Plan. There is no Company match to the Plan.

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NOTE 26 - EMPLOYEE STOCK PURCHASE PLAN

Effective May 2017, the Company began offering an Employee Stock Purchase Plan (the “ESPP”) whereby eligible employees may elect to purchase common stock of the Company through a registered broker/dealer. Eligible employees who so elect may authorize payroll deductions for contributions to the ESPP up to a maximum of $25,000 each calendar year. The Company will match 10% of eligible employee contributions up to an aggregate maximum of $24,000 for all ESPP participants (not each individual ESPP participant). The employer match for the three and six months ended June 30, 2020 and 2019 is follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Employee Stock Purchase Plan	$	1,038	$	659	$	1,728	$	1,586

NOTE 27 - CORONAVIRUS (COVID-19)

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The Company is monitoring this closely, and the ultimate severity of the outbreak is uncertain. Operations of the Company are ongoing as the delivery of electricity to customers is considered an essential business. Further the uncertain nature of its spread globally may impact our business operations resulting from quarantines of employees, customers, and third-party service providers. At this time, the Company is unable to estimate the impact of this event on its operations.

NOTE 28 - SUBSEQUENT EVENTS

On July 20, 2020 the Company issued 101,112 shares of the Company’s common stock as payment for the accrued interest for the personal guarantees of the Comerica Bank master revolving note (Note 9) and the Comerica Bank single payment note (Note 10).

On July 24, 2020, the Company granted 30,000 stock options from the 2018 Stock Option and Stock Award Plan (Note 17) to purchase common stock of the Company to two officers for achieving certain performance benchmarks established by the employment agreements of the two officers. The stock options had a weighted average exercise price of $2.50 and had an approximate fair value of $35,719 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.27% (ii) estimated volatility of 98.63% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act, and is subject to the safe harbors created by those sections. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. We undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements.

Due to possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this Quarterly Report, which speak only as of the date of this Quarterly Report, or to make predictions about future performance based solely on historical financial performance. We disclaim any obligation to update forward-looking statements contained in this Quarterly Report.

Readers should carefully review the risk factors described below under the heading “Risk Factors” and in other documents we file from time to time with the SEC, including our Form 10-K for the fiscal year ended December 31, 2019, and our Form 10-Q for the fiscal quarter ended March 31, 2020. You should interpret many of the risks identified in these reports as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. Our filings with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those filings, pursuant to Sections 13(a) and 15(d) of the Exchange Act, are available free of charge at www.summerenergy.com, when such reports are available via the EDGAR system maintained by the SEC at www.sec.gov.

Recent Developments

COVID-19

The recent outbreak of the novel Coronavirus (“COVID-19”) is a rapidly developing situation around the globe that has adversely impacted economic activity and conditions worldwide. Some industries have been impacted more severely than others.

In response to the COVID-19 pandemic, the Company deployed a remote working strategy for the Company’s call center that enabled certain employees of the Company to work from home, provided timely communication to team members and customers, implemented protocols for team members' safety, and initiated strategies for monitoring and responding to local COVID-19 impacts. The Company's preparedness efforts, coupled with quick and decisive plan implementation, resulted in minimal impacts to operations. The Company is closely monitoring bad debt as a result of the COVID-19 pandemic.

We are continuing to monitor developments involving our workforce, customers and suppliers and cannot predict at this time the extent of the impact that COVID-19 will have on our operations, business, financial condition, liquidity or results of operations going forward. Please see “Item 1A - Risk Factors” in this Report.

Appointment of President

Effective April 1, 2020, Neil Leibman was appointed by the Company’s Board of Directors to serve as President of the Company, in addition to his current role of Chief Executive Officer.

Organization 

The condensed consolidated financial statements above include the accounts of Summer Energy Holdings, Inc. and its wholly-owned subsidiaries Summer Energy, LLC (“Summer LLC”), Summer Energy Midwest, LLC (“Summer Midwest”), Summer EM Marketing, LLC (“Marketing LLC”) and Summer Energy Northeast, LLC (“Summer Northeast”) (collectively referred to as the “Company,” “we,” “us,” or “our”). All significant intercompany transactions and balances have been eliminated in these consolidated financial statements.

On March 27, 2012, Summer LLC became a wholly-owned subsidiary of Summer Energy Holdings, Inc. (previously known as Castwell Precast Corporation) through a reverse acquisition transaction, which resulted in the former members of Summer LLC owning approximately 92.3% of Summer Energy Holdings, Inc.’s outstanding common stock. The transaction was treated as a

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recapitalization of Summer LLC, and Summer LLC (and its historical financial statements) is the continuing entity for financial reporting purposes.

Summer LLC is a Retail Electricity Provider (“REP”) in the state of Texas under a license with the Public Utility Commission of Texas (“PUCT”). Summer LLC procures wholesale energy and resells to commercial and residential customers. Summer LLC was organized on April 6, 2011, under the laws of the state of Texas.

Marketing, LLC was formed in the state of Texas on November 6, 2012 to provide marketing services to Summer LLC.

Summer Midwest was formed in the state of Ohio on December 16, 2013 to procure and sell electricity in the state of Ohio. The Public Utilities Commission of Ohio issued a certificate as a Retail Electric Service Provider to Summer Midwest on June 16, 2015. On May 2, 2019, the Illinois Commerce Commission approved Summer Midwest as a Retail Electric Service Provider in the state of Illinois.

Summer Northeast, a Texas limited liability company, was acquired on November 1, 2017 and became a wholly-owned subsidiary of Summer Energy Holdings, Inc. Summer Northeast is a REP serving electric load to both residential and commercial customers in New Hampshire and Massachusetts and holds licenses in Massachusetts, Rhode Island, New Hampshire and Connecticut.

Plan of Operation

Our wholly-owned subsidiary, Summer LLC, is a licensed REP in the state of Texas. In general, Texas regulatory structure permits REPs, such as Summer LLC, to procure and sell electricity at unregulated prices. REPs pay the local transmission and distribution utilities a regulated tariff rate for delivering electricity to their customers. As a REP, Summer LLC sells electricity and provides the related billing, customer service, collections and remittance services to residential and commercial customers. Summer LLC offers retail electricity to commercial and residential customers in designated target markets within the state of Texas. In the commercial market, the primary target is small to medium-sized customers (less than one megawatt of peak usage), but we also selectively pursue larger commercial customers through Management’s existing, historical relationships. Residential customers are a secondary target market. We anticipate that a majority of Summer LLC’s customers will be located in the Houston and Dallas-Fort Worth metropolitan areas; although, we anticipate a growing number will be located in a variety of other metropolitan and rural areas within Texas. We began delivering electricity to customers in the Texas market mid-February 2012.

Our wholly-owned subsidiary, Summer Northeast, is a licensed REP in the states of Massachusetts, New Hampshire, Rhode Island and Connecticut. In general, the regulatory structure in these states permits REPs, such as Summer Northeast, to procure and sell electricity at unregulated prices. As a REP, Summer Northeast sells electricity to residential and commercial customers. In the commercial market, the primary target is small to medium-sized customers (less than one megawatt of peak usage), but we will also selectively pursue larger commercial customers through Management’s existing, historical relationships. Residential customers are a secondary target market. As of the date of this Report, Summer Northeast sold electricity in Massachusetts and New Hampshire. There were no sales activity in the states of Connecticut and Rhode Island.

Our wholly-owned subsidiary, Summer Midwest, is a licensed REP in the states of Ohio and Illinois. In general, the regulatory structure in these states permits REPs, such as Summer Midwest, to procure and sell electricity at unregulated prices. As a REP, Summer Midwest sells electricity to residential and commercial customers. In the commercial market, the primary target is small to medium-sized customers (less than one megawatt of peak usage), but we will also selectively pursue larger commercial customers through Management’s existing, historical relationships. Residential customers are a secondary target market. Summer Midwest began flowing electricity in the state of Ohio which is in the Pennsylvania, Jersey, Maryland Power Pool (“PJM”) market during the month of July 2019 and in the state of Illinois during the month of January 2020.

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Results of Operations

Three Months Ended June 30, 2020, compared to the Three Months Ended June 30, 2019

The success of our business and our profitability is impacted by a number of drivers with customer growth and weather conditions being at the forefront.

Customer Growth

Customer growth is a key driver of our operations as well as our ability to acquire customers organically, by acquisition or through customer attrition. Our organic sales strategies are designed to offer competitive pricing and price certainty to residential and commercial customers. We manage growth on a market-by-market basis by developing price curves in each of the markets we serve and comparing the market prices to the price offered by the local regulated utility. We then determine if there is an opportunity in a particular market based on our ability to create a competitive product on economic terms that provides customer value and satisfies our profitability objectives. We develop marketing campaigns using a combination of sales channels. Our marketing team continuously evaluates the effectiveness of each customer acquisition channel and makes adjustments in order to achieve desired targets. Customer attrition occurs primarily as a result of: (i) customer-initiated switches; (ii) residential moves and (iii) disconnection resulting from customer payment defaults. Our customer growth strategy includes growing organically through traditional sales channels complemented by customer portfolio and business acquisitions as well as our expansion into new markets.

In 2020, the Company’s growth strategy is to continue to focus on the expansion of the PJM market within the states of Ohio, Illinois and Pennsylvania as well as to continue to expand within the ERCOT pre-paid market. Management plans to continue to execute on its current sales and marketing program to solicit individual commercial and residential customers and to evaluate and acquire portfolios of commercial and residential customers where they make sense economically or strategically.

The current COVID-19 pandemic has caused regulatory agencies and other governmental authorities to take, and potentially continue to take, emergency or other actions in light of the pandemic that may impact our overall customer attrition, including prohibiting the termination of service for non-payment during the current COVID-19 pandemic. Those orders may cause our attrition to be lower than what it would be otherwise. We are unable to predict the ultimate impact of these actions on overall customer attrition at this time. Please see “Item 1A—Risk Factors” in this Report.

For the quarter ended June 30, 2020 compared to 2019, the Company’s overall delivered volumes of electricity increased by 10.20% attributed primarily to the increase in the ERCOT market, the ERCOT pre-paid market and the start-up of operations in the PJM market. The delivered volumes in the Northeast market continues to decline as the customer base declines. Delivered volumes for the Northeast market declined 51.73% during the quarter ended June 2020 compared to the quarter ended June 2019.

Weather Conditions 

Weather conditions are a key driver to our success and weather directly influences the demand for electricity and affects the prices of energy commodities. We are particularly sensitive to this variability with our residential customers in which energy is highly sensitive to weather conditions that impart heating and cooling demand. Our hedging strategy is based on forecasted customer energy usage, which can vary substantially as a result of weather patterns deviating from historical norms. Our risk management policies direct that we hedge substantially all of our forecasted demand, which is typically hedged to long-term weather patterns. We also attempt to add additional contracts from time to time to protect us from volatility in markets where we have historically experienced higher exposure to extreme weather conditions. Because we attempt to match commodity purchases to anticipated demand, unanticipated changes in weather patterns can have a significant impact on our operating results and cash flows from period to period.

Due to the COVID-19 pandemic, we are experiencing changes in customer demand that we cannot fully anticipate. While not weather related, these changes in demand may lead us to experience financial gains and/or losses in much the same fashion as a weather event as the current circumstances make it more difficult to accurately predict demand. While we continue to conduct analytics on our customer base to anticipate these changes in demand, we cannot predict how the COVID-19 pandemic will ultimately impact our hedging strategy with regard to our load forecasts. Please see “Item 1A—Risk Factors” in this Report.

Delivered volumes were higher during the second quarter ended June 2020 compared to June 2019 although slightly below expectations due to the COVID-19 pandemic. Weather adjusted volumes indicate the impact of the COVID-19 pandemic to 10% to 15% decline in volumes for the ERCOT market and a 15% to 18% decline in volumes for the PJM and ISO-NE markets. Despite the decline in the anticipated delivered volumes for the second quarter 2020, profit margins for the quarter ended June 30, 2020

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were 36.72% higher between the quarter ended June 30, 2020 and the quarter ended June 30, 2019 due to an increase in the Company’s overall customer base.

For the quarter ended June 30, 2020 compared to 2019, the Company’s unit gross margin is as follows:

		For the Three Months Ended June 30,
		2020		2019	Variance	Percentage Variance
Revenue	$	42,522,436	$	40,498,587	2,023,849	5.00%
Cost of goods sold
Power purchases and balancing/ancillary		21,977,158		22,027,541	(50,383)	-0.23%
Transportation and distribution providers charge		15,958,473		15,116,171	842,302	5.57%
Total cost of goods sold		37,935,631		37,143,712	791,919	2.13%
Gross Margin	$	4,586,805	$	3,354,875	1,231,930	36.72%

Revenue – For the quarter ended June 30, 2020, we generated $42,522,436 in electricity revenue primarily from commercial customers, and from various long and short-term residential customers. The majority of our revenue comes from the flow of electricity to customers and includes revenues from contract cancellation fees, disconnection fees and late fees of $919,547.  

Revenues for the quarter ended June 30, 2019 were $40,498,587 from electricity revenue and includes $909,777 from cancellation and disconnection and late fees.

	For the Three Months Ended June 30,
	2020			2019			Variances
	Delivered Volume after Line Loss (Mwh)		$$	Delivered Volume after Line Loss (Mwh)		$$	Change in Delivered Volume (Mwh)	Volume Percentage Change		Change in $$	$$   Percentage Change
Electricity Revenues from Contracts with Customers
ERCOT Market	468,685	$	38,599,697	423,881	$	36,294,807	44,804	10.57%	$	2,304,890	6.35%
ERCOT Pre-Paid Market	14,945		1,843,514	12,027		1,387,147	2,918	24.26%		456,367	32.90%
Northeast Market	7,923		861,350	16,414		1,906,856	(8,491)	-51.73%		(1,045,506)	-54.83%
Midwest Market	6,892		298,328	-		-	6,892	100.00%		298,328	100.00%
Total	498,445		41,602,889	452,322		39,588,810	46,123	10.20%		2,014,079	5.09%
Other Revenues:
Fees Revenue			919,547			909,777				9,770	1.07%
Total Revenues:		$	42,522,436		$	40,498,587			$	2,023,849	5.00%

Total revenues for the quarter ended June 30, 2020 compared to June 30, 2019 increased by approximately 5.00%. In the ERCOT Pre-Paid Market, the revenue increased by 32.90% due to customer growth. The Northeast market had a 54.83% decrease in revenue related to the continuing decrease in the customer base in 2020 compared to 2019. The Company began flowing electricity in the PJM market in July 2019 and the anticipated customer base as this market grows will consist of residential and commercial customers. 

Management plans to continue to execute on its sales and marketing program to solicit individual commercial and residential customers and to realign key sales personnel to focus on rebuilding the customer base in the Northeast market. In addition, management also plans to continue to acquire portfolios of commercial and residential customers when offered at reasonable prices.

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Cost of Goods Sold and Gross Margin – For the three months ended June 30, 2020, cost of goods sold and gross profit totaled $37,935,631 and $4,586,805, respectively. Cost of goods sold and gross margin for the three months ended June 30, 2019 was $37,143,712 and $3,354,875, respectively.

		For the Three Months Ended June 30,
		2020		2019		Increase (Decrease) in Costs ($$)	Percentage Increase (Decrease)
Power Purchases and balancing/ancillary
ERCOT Market	$	36,729,439	$	34,814,204	$	1,915,235	5.50%
Northeast Market		947,969		2,329,508		(1,381,539)	-59.31%
Midwest Market		258,223		-		258,223	100.00%
	$	37,935,631	$	37,143,712	$	791,919	2.13%

Cost of goods sold for the quarter ended June 30, 2020 compared to June 30, 2019, increased in total by approximately 2.13% due to the increased volumes delivered. The gross profit margin increased for the quarter ended June 30, 2020 compared to June 30, 2019 by 36.72%. The delivered volumes were higher during the second quarter ended June 2020 compared to June 2019, and the overall revenue rate increased. The escalation in the revenue rate coupled with the marginal increase in costs of goods sold resulted in an increase in the gross margin. The Northeast market decreased by 59.31% due to continued compression of the customer base during 2020 compared to 2019.

Operating Expenses – Operating expenses for the quarter ended June 30, 2020, totaled $5,603,791, consisting primarily of general and administrative expenses of $3,089,878, stock compensation of $572,867, bank service fees of $348,500, professional fees of $78,213, outside commissions of $1,265,117, collection fees/sales verification fees $16,594, and $232,622 of billing fees. Billing fees are primarily costs paid to a third-party Electronic Data Inter-Chain (EDI) provider to handle transactions between us, ERCOT and the TDSPs in order to produce customer bills.

Operating expenses for the quarter ended June 30, 2019, totaled $5,359,717 consisting primarily of general and administrative expenses of $ 2,782,975, stock compensation of $301,210, bank service fees of $305,662, professional fees of $576,247, outside commissions of $1,102,748, collection fees/sales verification fees $21,265 and $269,250 of billing fees.

		For the Three Months Ended June 30,
		2020		2019		Variance	Percentage Change
General and administrative	$	3,089,878	$	2,782,975	$	306,903	11.03%
Stock compensation		572,867		301,210		271,657	90.19%
Bank service fees		348,500		305,662		42,838	14.01%
Professional fees		78,213		576,247		(498,034)	-86.43%
Outside commission expense		1,265,117		1,102,748		162,369	14.72%
Collection fees/sales verification fees		16,594		21,625		(5,031)	-23.26%
Billing fees		232,622		269,250		(36,628)	-13.60%
	$	5,603,791	$	5,359,717	$	244,074	4.55%

Operating expenses for the three months ended June 30, 2020 reflects an increase of approximately $244,074, or 4.55%, as compared to the three months ended June 30, 2019. This increase was primarily attributable to increase in stock compensation related to the issuance of stock options to key employees and to the Company’s board of directors as well as expenses related to increased volume of customers, specifically bank fees and outside commissions to brokers. Professional fees for the quarter ended June 2020 compared to the quarter ended June 2019 decreased by 86.43%.

Net Loss – Net loss for the three months ended June 30, 2020 and 2019, totaled ($1,791,452) and ($2,367,471), respectively.

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Six Months Ended June 30, 2020, compared to the Six Months Ended June 30, 2019

Revenue – For the six months ended June 30, 2020, we generated $79,607,622 in electricity revenue primarily from commercial customers, and from the addition of various long and short-term residential customers. The majority of our revenue comes from the flow of electricity to customers. However, we also generated revenues from contract cancellation fees, disconnection fees and late fees of $1,781,804. For the six months ended June 30, 2019, the Company generated $73,529,709 in electricity revenue and $1,794,747 from contract cancellation, disconnection fees and late fees.

	For the Six Months Ended June 30,
	2020			2019			Variances
	Delivered Volume after Line Loss (Mwh)		$$	Delivered Volume after Line Loss (Mwh)		$$	Change in Delivered Volume (Mwh)	Volume Percentage Change		Change in $$	$$   Percentage Change
Electricity Revenues from Contracts with Customers
ERCOT Market	886,410	$	73,860,940	781,693	$	67,097,505	104,717	13.40%	$	6,763,435	10.08%
ERCOT Pre-Paid Market	26,843		3,290,291	22,259		2,600,937	4,584	20.59%		689,354	26.50%
Northeast Market	17,272		1,968,628	34,049		3,831,267	(16,777)	-49.27%		(1,862,639)	-48.62%
Midwest Market	11,147		487,763	-		-	11,147	100.00%		487,763	100.00%
Total	941,672		79,607,622	838,001		73,529,709	103,671	12.37%		6,077,913	8.27%
Other Revenues:
Fees Revenue			1,781,804			1,794,747				(12,943)	-0.72%
Total Revenues:		$	81,389,426		$	75,324,456			$	6,064,970	8.05%

Total revenues for the six months ended June 30, 2020 compared to June 30, 2019, increased by approximately 8.05%. In the ERCOT Pre-Paid Market, revenues increased by 26.50% due to customer growth. The Northeast Market had a 48.62% decrease in revenue related to the decrease in the customer base in 2020 compared to 2019.

Cost of Goods Sold and Gross Margin – For the six months ended June 30, 2020, cost of goods sold and gross profit totaled $71,223,979 and $10,165,447, respectively. Cost of goods sold and gross profit in the six months ended June 30, 2019 totaled $66,163,527 and $9,160,929.

		For the Six Months Ended June 30,
		2020		2019		Increase (Decrease) in Costs ($$)	Percentage Increase (Decrease)
Power Purchases and balancing/ancillary
ERCOT Market	$	68,781,415	$	61,800,939	$	6,980,476	11.30%
Northeast Market		2,044,403		4,362,588		(2,318,185)	-53.14%
Midwest Market		398,161		-		398,161	100.00%
	$	71,223,979	$	66,163,527	$	5,060,452	7.65%

The six months ended June 30, 2020 compared to the six months ended June 30, 2019 reflects a 10.97% higher profit margin which is the result of increased volumes and efficiencies.

Operating Expenses – Operating expenses for the six months ended June 30, 2020 totaled $11,438,832, consisting primarily of general and administrative expenses of $6,597,385, stock compensation expense of $879,287, bank service fees of $693,746, commission expense of $2,454,454, collection fees/sales and verification fees of $36,119, professional fees of $263,807, and $514,034 of billing fees. Billing fees are primarily costs paid to third party Electronic Data Inter-Chain (EDI) provider to handle transactions between us, ERCOT and the TDSPs in order to produce customer bills.

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Operating expenses for the six months ended June 30, 2019 totaled $10,633,483, consisting primarily of general and administrative expenses of $5,958,041, stock compensation expense of $455,594, bank service fees of $591,948, commission expense of $2,292,552, collection fees/sales and verification fees of $37,574, professional fees of $791,553, and $506,221 of billing fees.

		For the Six Months Ended June 30,
		2020		2019		Variance	Percentage Change
General and administrative	$	6,597,385	$	5,958,041	$	639,344	10.73%
Stock compensation		879,287		455,594		423,693	93.00%
Bank service fees		693,746		591,948		101,798	17.20%
Professional fees		263,807		791,553		(527,746)	-66.67%
Outside commission expense		2,454,454		2,292,552		161,902	7.06%
Collection fees/sales verification fees		36,119		37,574		(1,455)	-3.87%
Billing fees		514,034		506,221		7,813	1.54%
	$	11,438,832	$	10,633,483	$	805,349	7.57%

Operating expenses for the six months ended June 30, 2020 reflects an increase of approximately $805,349, or 7.57%, as compared to the six months ended June 30, 2019. This increase was primarily attributable to an increase in stock compensation, outside commission expense, and payroll cost.

Net loss – Net loss for the six months ended June 30, 2020 and 2019, totaled ($2,791,166) and ($2,255,217), respectively.

Liquidity and Capital Resources

At June 30, 2020 and December 31, 2019, our cash totaled $3,533,068 and $814,360, respectively. Our principal cash requirements for the quarter ended June 30, 2020 were for operating expenses and cost of goods sold (including power purchases, employee cost, and customer acquisition), collateral for TDSPs and capital expenditures. During the six months ended June 30, 2020, the primary source of cash was from electricity revenues, proceeds of a private placement offering in the amount of $45,000, gross loan proceeds of $11,342,300 of which included $2,342,300 from the Paycheck Protection Program (“PPP Loan”). During the six months ended June 30, 2019, the primary source of cash was from electricity revenues and proceeds in a private placement offering in the amount of $5,730,000.

General – The Company’s decrease in net cash flow during the first six months of 2020 is attributable to $2,985,689 cash used in operating activities, $22,661 cash used in investing activities, and $4,555,373 provided by financing activities, which includes $45,000 from proceeds received in private placement and gross loan proceeds of $11,342,300. The Company’s increase in net cash flow during the six months ended June 30, 2019 is attributable to $3,110,767 cash used in operating activities, $0 used in investing activities for the purchase of property and equipment, and $4,457,615 provided by financing activities of which $5,730,000 were from private placement proceeds.

The Company has no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies. However, we will continue to evaluate acquisitions of and/or investments in products, technologies, or companies that complement our business and may make such acquisitions and/or investments in the future. Accordingly, we may need to obtain additional sources of capital in the future to finance any such acquisitions and/or investments. We may not be able to obtain such financing on commercially reasonable terms, if at all. If we are able to obtain additional financing, such financing may result in restrictions on our operations, in the case of debt financing, or substantial dilution for stockholders, in the case of equity financing.

Cash Outflows for Capital Assets, Customer Acquisition and Deposits

We expect to expend funds for capital assets, customer acquisition and deposits in connection with the expansion of our business during the remainder of the current fiscal year. The anticipated source of funds will be cash on hand and the capital raised or borrowed during the year ended December 31, 2020.

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Future Financing Needs

With the proceeds received from equity investments and loans (including the PPP Loan), management believes that we have adequate liquidity to support operations, but this belief is based upon many assumptions and is subject to numerous risks.

While we believe in the viability of our plan of operations and strategy to generate revenues and in our ability to raise additional funds, there can be no assurances that our plan of operations or ability to raise capital will be successful. The ability to grow is dependent upon our ability to further implement our business plan, generate revenues, and obtain additional financing, if and as needed.

As stated above, in late 2019, a novel strain of coronavirus (COVID-19) was first detected in Wuhan, China. Following the outbreak of this virus, governments throughout the world, including in the United States of America, have quarantined certain affected regions, restricted travel and imposed significant limitations on other economic activities. The Company’s operations team is closely monitoring the potential impact to the Company’s business, including its cash flows, customers and employees. If the situation continues to impact our customers, our cash flows, financial position and operating results for fiscal year 2020 and beyond will be negatively impacted. Neither the length of time nor the magnitude of the negative impacts can be presently determined.

Our financial results for the second quarter of 2020 were impacted by COVID-19, primarily due to approximately 10% to 15% decline in delivered volume than projected for the quarter in ERCOT and approximately 15% to 18% decline in delivered volume for the quarter in PJM and ISO-NE. The severity and duration of the COVID-19 pandemic is uncertain and such uncertainty will likely continue in the near term and we will continue to actively monitor the situation taking into account the impact to our employees, customers, suppliers and partners. The impact of the COVID-19 pandemic on the economy and our operations is fluid and constantly evolving, we will continue to assess a variety of measures to improve our financial performance and liquidity.

Off-Balance Sheet Arrangements

Our existing wholesale power purchase agreement provides that we will provide additional credit support to cover mark-to-market risk in connection with the purchase of long-term power. A mark-to-market credit risk occurs when the price of previously purchased long term power is greater than the current market price for power purchased for the same term. While we believe that the current environment of historically low power prices limits our exposure to risk, a collateral call, should it occur, could limit our working capital and, if we fail to meet the collateral call, could cause liquidation of power positions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “small reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report, were effective at the reasonable assurance level to ensure that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

35

Changes in Internal Control over Financial Reporting

There has been no change in internal control over financial reporting during the period of time covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.

PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

Security holders and potential investors in our securities should carefully consider the Risk Factors (“Item 1A – Risk Factors”) included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 27, 2020 (the “2019 Form 10-K”). The following is an update to the risk factors set forth in the 2019 Form 10-K. Other than the following update, as of the date of this filing, there have been no material changes to the Risk Factors included in our 2019 Form 10-K. The Risk Factors set forth in the 2019 Form 10-K should be read carefully in connection with evaluating our business and in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q. Any of the risks described in the 2019 Form 10-K could materially adversely affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made. These are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We face risks related to health epidemics, pandemics and other outbreaks, including COVID-19.

The recent outbreak of COVID-19 is a rapidly developing situation around the globe that has adversely impacted economic activity and conditions worldwide. In particular, efforts to control the spread of COVID-19 have led to shutdowns of various facilities as well as disrupted supply chains around the world. The extent of such impact on our operations is unknown at this time. We are continuing to monitor developments involving our workforce, customers and suppliers and cannot predict whether COVID-19 will have a material impact on our business, financial condition or results of operations. However, an extended slowdown of the United States’ economic growth, demand for commodities and/or material changes in governmental policy could result in lower economic growth and lower demand for natural gas and electricity in our key markets as well as the ability of various employees, customers, contractors, suppliers and other business partners to fulfill their obligations, which could have a material adverse effect on our business, financial condition or results of operations.

We are subject to direct credit risk for certain customers who may fail to pay their bills as they become due.

We bear direct credit risk related to customers located in markets that have not implemented POR programs as well as indirect credit risk in those POR markets that pass collection efforts along to us after a specified non-payment period. We generally have the ability to terminate contracts with customers in the event of non-payment, but in most states in which we operate we cannot disconnect their electricity service. In POR markets where the local regulated utility has the ability to return non-paying customers to us after specified periods, we may realize a loss for several billing periods until we can terminate these customers’ contracts. We may also realize a loss on fixed-price customers in this scenario due to the fact that we will have already fully hedged the customer’s expected commodity usage for the life of the contract and we also remain liable to our suppliers of electricity for the cost of our supply commodities. Furthermore, in the Texas market, we are responsible for billing the distribution charges for the local regulated utility and are at risk for these charges, in addition to the cost of the commodity, in the event customers fail to pay their bills. Changing economic factors, such as rising unemployment rates and energy prices, also result in a higher risk of customers being unable to pay their bills when due.

In addition, the current COVID-19 pandemic has caused regulatory agencies and other governmental authorities to take, and potentially continue to take, emergency or other actions in light of the pandemic that may impact us, including prohibiting the termination of service for non-payment during the current COVID-19 pandemic, requiring deferred payment plans for certain customers unable to pay their bill, and utilities increasing POR fees they charge us in an effort to recoup their bad debts losses. Because of the time lag between the delivery of electricity and natural gas, the issuance of an invoice, and the customer’s payment due date, there may be a substantial lag in time before we are able to determine specific trends in bad debt expense as a result of COVID-19. These actions taken by regulatory agencies and governmental authorities may impact our financial results, cash flow and liquidity and the duration of these changes are unknown. At this time, we are unable to predict the impact that this or other related events may have on our collection efforts due to non-payment.

36

Our financial results may be adversely impacted by weather conditions; changes in consumer demand.

Due to the COVID-19 pandemic, we are experiencing changes in customer demand that we cannot fully anticipate. While not weather related, these changes in demand may lead us to experience financial gains and/or losses in much the same fashion as a weather event as the current circumstances make it more difficult to accurately predict demand. While we continue to conduct analytics on our customer base to anticipate these changes in demand, we cannot predict how the COVID-19 pandemic will ultimately impact our hedging strategy with regard to our load forecasts.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 9, 2020, the Company issued 101,112 shares of the Company’s common stock in lieu of cash to four individuals in consideration for acting as guarantors of a loan to the Company from Comerica Bank. The Company agreed to pay interest at a rate of 12% of the outstanding balance of such loan for the guarantee and such interest is to be paid with the issuance of shares of the Company’s common stock. The four individuals are also members of the Company’s Board of Directors:  Neil Leibman, Tom O’Leary, Andrew Bursten and Stuart Gaylor. The shares of common stock were issued in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act.

On July 20, 2020, the Company issued one warrant to purchase six shares of the Company’s common stock, to a sales broker pursuant to separate referral agreements whereby the sales brokers introduce potential sales leads to the Company for electricity services. The warrant has a strike price of $1.50 per share and a term of five (5) years. The warrant was issued in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act.  

Our reliance upon Section 4(a)(2) of the Securities Act was based in part upon the following factors: (a) the issuance of the securities was in connection with isolated private transactions which did not involve any public offering; (b) there were a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by the Company; (d) the purchasers made certain representations to the Company relating to their investment intent, that they were acquiring the securities for their own accounts and not for the accounts of others; and (e) the negotiations for the sale of the securities took place directly between the offerees and the Company.

37

ITEM 6. EXHIBITS

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of the CEO and CFO pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

** Pursuant to Rule 406T of Regulation S-T, this XBRL information will not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor will it be deemed filed or made a part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or otherwise subject to liability under those sections.

38

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

SUMMER ENERGY HOLDINGS, INC.

Date:	August 14, 2020	By:	/s/ Neil Leibman
			Neil Leibman
			Chief Executive Officer
			(Principal Executive Officer)
Date:	August 14, 2020		/s/ Jaleea P. George
			Jaleea P. George
			Chief Financial Officer
			(Principal Accounting Officer)

39

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Jaleea P. George, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Summer Energy Holdings, Inc. (the “Registrant”); 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 

4.The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have: 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

(c)Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and 

5.The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. 

Date:  August 14, 2020

/s/ Jaleea P. George

Jaleea P. George,

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B) AND RULE 15D-14(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Summer Energy Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2020 as filed with the Securities and Exchange Commission (the “Report”), we, Neil M. Leibman, Chief Executive Officer and Jaleea P. George, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and the results of operations of the Company for the periods presented. 

Date: August 14, 2020

By:	/s/ Neil Leibman
	Neil Leibman, Chief Executive Officer

By:	/s/ Jaleea P. George
	Jaleea P. George,
	Chief Financial Officer

A signed original of this written statement required by section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Quarterly Report pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 13, 2020
Document and Entity Information:
Entity Registrant Name	SUMMER ENERGY HOLDINGS INC
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Amendment Flag	false
Entity Central Index Key	0001396633
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Common Stock, Shares Outstanding		31,764,710
Entity File Number	001-35496
Entity Incorporation, State Country Code	NV
Entity Address, Address Line One	5847 San Felipe Street
Entity Address, Address Line Two	Suite 3700, Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77057
City Area Code	713
Local Phone Number	375-2790

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash	$ 3,533,068	$ 814,360
Restricted cash	2,026,023	3,197,708
Accounts receivable, net	47,794,975	41,847,949
Prepaid and other current assets	4,111,808	3,612,607
Total current assets	57,465,874	49,472,624
Property and equipment, net	63,339	58,418
Deferred financing cost, net	464,246	3,125
Operating lease right-of use assets, net	905,558	979,185
Intangible asset, net	393,768	984,420
Total assets	59,292,785	51,497,772
Current liabilities:
Accounts payable	1,327,194	1,496,461
Accrued wholesale power purchased	20,276,581	17,538,120
Accrued transportation and distribution charges	6,514,082	5,320,851
Accrued expenses	5,456,943	4,809,533
Related party loans	0	1,850,000
Current-portion operating lease obligation	144,899	144,902
Current-portion of obligations	5,094,761	5,038,397
Total current liabilities	38,814,460	36,198,264
Long-term liabilities:
Long-term obligations, net of current portion	16,913,965	10,265,289
Total liabilities	55,728,425	46,463,553
Stockholders' Equity
Common stock - $.001 par value, 100,000,000 shares authorized, 31,663,598 and 31,532,486 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	31,663	31,531
Subscription receivable	(52,000)	(52,000)
Additional paid in capital	32,200,230	30,879,055
Accumulated deficit	(28,615,533)	(25,824,367)
Total stockholders' equity	3,564,360	5,034,219
Total liabilities and stockholders' equity	$ 59,292,785	$ 51,497,772

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (PARENTHETICAL) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common Stock, par or stated value	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	31,663,598	31,532,486
Common Stock, shares outstanding	31,663,598	31,532,486

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Revenue	$ 42,522,436	$ 40,498,587	$ 81,389,426	$ 75,324,456
Cost of goods sold
Power purchases and balancing/ancillary	21,977,158	22,027,541	39,079,786	37,398,195
Transportation and distribution providers charge	15,958,473	15,116,171	32,144,193	28,765,332
Total cost of goods sold	37,935,631	37,143,712	71,223,979	66,163,527
Gross Profit	4,586,805	3,354,875	10,165,447	9,160,929
Operating expenses	5,603,791	5,359,717	11,438,832	10,633,483
Operating loss	(1,016,986)	(2,004,842)	(1,273,385)	(1,472,554)
Other expense
Financing costs	(43,522)	(1,563)	(61,155)	(3,125)
Interest expense, net	(722,628)	(361,066)	(1,448,310)	(779,538)
Total other expense	(766,150)	(362,629)	(1,509,465)	(782,663)
Net income (loss) before income taxes	(1,783,136)	(2,367,471)	(2,782,850)	(2,255,217)
Income tax expense	8,316	0	8,316	0
Net loss	$ (1,791,452)	$ (2,367,471)	$ (2,791,166)	$ (2,255,217)
Net loss per common share:
Basic	$ (0.06)	$ (0.08)	$ (0.09)	$ (0.07)
Dilutive	$ (0.06)	$ (0.08)	$ (0.09)	$ (0.07)
Weighted average number of shares
Basic	31,653,598	31,081,975	31,608,037	30,156,821
Dilutive	31,653,598	31,081,975	31,608,037	30,156,821

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($)	Common Stock	Subscription Receivable	Additional Paid-In Capital	Accumulated Deficit	Total
Stockholders' Equity, beginning of period, Value at Dec. 31, 2018	$ 27,480	$ (52,000)	$ 23,357,951	$ (15,091,278)	$ 8,242,153
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2018	27,480,833
Issuance of warrants			248,678		248,678
Vesting of Stock Options and restricted shares associated with the 2015 Stock Option and Award Plan			32,866		32,866
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan			422,728		422,728
Issuance of Common Stock associated with a Private Placement Offering, Value	$ 3,820		5,726,180		5,730,000
Issuance of Common Stock associated with a Private Placement Offering, Shares	3,820,000
Issuance of common stock as interest payment for personal guaranty, Value	$ 81		121,586		121,667
Issuance of common stock as interest payment for personal guaranty, shares	81,112
Issuance of common stock associated with the cashless exercise of warrants, value	$ 106		(106)
Issuance of common stock associated with the cashless exercise of warrants, shares	106,053
Net loss				(2,255,217)	(2,255,217)
Stockholders' Equity, end of period, Value at Jun. 30, 2019	$ 31,487	(52,000)	29,909,883	(17,346,495)	12,542,875
Stockholders' Equity, end of period, Shares at Jun. 30, 2019	31,487,998
Stockholders' Equity, beginning of period, Value at Mar. 31, 2019	$ 30,660	(52,000)	28,384,102	(14,979,024)	13,383,738
Stockholders' Equity, beginning of period, Shares at Mar. 31, 2019	30,660,833
Issuance of warrants			143,731		143,731
Vesting of Stock Options and restricted shares associated with the 2015 Stock Option and Award Plan			16,433		16,433
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan			284,777		284,777
Issuance of Common Stock associated with a Private Placement Offering, Value	$ 640		959,360		960,000
Issuance of Common Stock associated with a Private Placement Offering, Shares	640,000
Issuance of common stock as interest payment for personal guaranty, Value	$ 81		121,586		121,667
Issuance of common stock as interest payment for personal guaranty, shares	81,112
Issuance of common stock associated with the cashless exercise of warrants, value	$ 106		(106)
Issuance of common stock associated with the cashless exercise of warrants, shares	106,053
Net loss				(2,367,471)	(2,367,471)
Stockholders' Equity, end of period, Value at Jun. 30, 2019	$ 31,487	(52,000)	29,909,883	(17,346,495)	12,542,875
Stockholders' Equity, end of period, Shares at Jun. 30, 2019	31,487,998
Stockholders' Equity, beginning of period, Value at Dec. 31, 2019	$ 31,531	(52,000)	30,879,055	(25,824,367)	5,034,219
Stockholders' Equity, beginning of period, Shares at Dec. 31, 2019	31,532,486
Issuance of warrants			245,352		245,352
Vesting of Stock Options and restricted shares associated with the 2015 Stock Option and Award Plan			90,592		90,592
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan			678,284		678,284
Vesting of stock options and restricted shares outside of stock option and award plans			110,411		110,411
Issuance of Common Stock associated with a Private Placement Offering, Value	$ 31		44,969		45,000
Issuance of Common Stock associated with a Private Placement Offering, Shares	30,000
Issuance of common stock as interest payment for personal guaranty, Value	$ 101		151,567		151,668
Issuance of common stock as interest payment for personal guaranty, shares	101,112
Net loss				(2,791,166)	(2,791,166)
Stockholders' Equity, end of period, Value at Jun. 30, 2020	$ 31,663	(52,000)	32,200,230	(28,615,533)	3,564,360
Stockholders' Equity, end of period, Shares at Jun. 30, 2020	31,663,598
Stockholders' Equity, beginning of period, Value at Mar. 31, 2020	$ 31,562	(52,000)	31,475,796	(26,824,081)	4,631,277
Stockholders' Equity, beginning of period, Shares at Mar. 31, 2020	31,562,486
Vesting of Stock Options and restricted shares associated with the 2015 Stock Option and Award Plan			80,102		80,102
Vesting of stock options and restricted shares associated with the 2018 Stock Option and Award Plan			440,114		440,114
Vesting of stock options and restricted shares outside of stock option and award plans			52,651		52,651
Issuance of common stock as interest payment for personal guaranty, Value	$ 101		151,567		151,668
Issuance of common stock as interest payment for personal guaranty, shares	101,112
Net loss				(1,791,452)	(1,791,452)
Stockholders' Equity, end of period, Value at Jun. 30, 2020	$ 31,663	$ (52,000)	$ 32,200,230	$ (28,615,533)	$ 3,564,360
Stockholders' Equity, end of period, Shares at Jun. 30, 2020	31,663,598

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash Flows from Operating Activities
Net loss	$ (2,791,166)	$ (2,255,217)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash financing costs	61,155	3,125
Broker referral warrant compensation expense	15	104,947
Consulting compensation expense	0	143,731
Stock compensation expense	879,287	455,594
Interest payment in common stock for personal guaranty	151,668	121,667
Depreciation of property and equipment	17,740	20,423
Amortization of non-cash lease costs	73,627	153,894
Amortization of intangible asset	590,652	590,652
Bad debt expense	204,053	297,550
Changes in operating assets and liabilities:
Accounts receivable	(6,151,079)	(7,271,990)
Prepaid and other current assets	(357,849)	126,521
Accounts payable	(169,267)	(1,836,571)
Accrued wholesale power purchased	2,738,461	5,276,539
Accrued transportation and distribution charges	1,193,231	1,631,460
Accrued expenses and other	573,783	(673,092)
Net cash used in operating activities	(2,985,689)	(3,110,767)
Cash Flows from Investing Activities
Purchase of property and equipment	(22,661)	0
Net cash used in investing activities	(22,661)	0
Cash Flows from Financing Activities
Deferred financing costs	(276,939)	0
Repayment of Blue Water Capital Funding, LLC	(4,920,000)	0
Advances from wholesale provider for collateral support	850,000	963,000
Repayments to wholesale provider for collateral support	(550,000)	0
Proceeds from Digital Lending Services US Corp.	9,000,000	0
Payments on Comerica Bank note	0	(2,200,000)
Payment on financing of directors and officer's insurance policy	(84,988)	(35,385)
Proceeds from related party lines of credit	1,000,000	0
Repayment of related party lines of credit	(1,000,000)	0
Proceeds from related party debt	600,000	498,000
Repayment of related party debt	(2,450,000)	(498,000)
Proceeds from issuance of common shares in a private placement	45,000	5,730,000
Proceeds from Paycheck Protection Program Loan	2,342,300	0
Net cash provided by financing activities	4,555,373	4,457,615
Net Increase in Cash and Restricted Cash	1,547,023	1,346,848
Cash and Restricted Cash at Beginning of Period	4,012,068	3,854,885
Cash and Restricted Cash at End of Period	5,559,091	5,201,733
Supplemental Disclosure of Cash Flow Information:
Income taxes paid	0	0
Interest paid	1,219,870	739,946
Non-Cash Investing and Financing Activity
Operating lease right of use assumed through operating lease obligation	0	1,265,563
Cashless exercise of warrant for 106,053 shares of common stock	0	106
Deferred financing cost associated with issuance of warrant	245,337	0
Financing of directors and officer's insurance policy	$ 141,352	$ 150,575

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical)	6 Months Ended
	Jun. 30, 2019 USD ($)
Statement of Cash Flows [Abstract]
Proceeds from Warrant Exercises	$ 106,053

XML

Note 1 - Organization	6 Months Ended
	Jun. 30, 2020
Disclosure Text Block [Abstract]
Note 1 - Organization

XML

Note 2 - Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 2 - Significant Accounting Policies

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by 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 six month period ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (“SEC”) on March 27, 2020.

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 and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Uses and Sources of Liquidity

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does 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 from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

For the six months ended June 30, 2020 and 2019, the Company incurred net losses of $2,791,166 and $2,255,217, respectively, and used cash in continuing operations of $2,985,689 and $3,110,767, respectively. The Company’s operations have been financed principally from electricity revenues, net proceeds from outside debt and equity financing of $4,080,000, funding from the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) totaling $2,342,300 established pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) as well as from capital raised under private placement offerings totaling $45,000 and $5,730,000 during the six months ended June 30, 2020 and 2019, respectively. The Company’s liquidity requirements are to finance current operations, meet financial commitments, fund organic growth and/or acquisitions, and service debt. The liquidity requirements fluctuate with the level of customer acquisition costs, collateral posting requirements, the effects of the timing between the settlement of payables and receivables, including the effect of weather conditions, and our general working capital needs for ongoing operations. Estimating liquidity requirements is highly dependent on then-current market conditions, including impacts of the COVID-19 pandemic, weather events, forward prices for electricity, market volatility and our then existing capital structure and requirements.

The Company’s continuation as a going concern is dependent upon its ability to increase sales, and/or raise additional funds through the capital markets as well as outside lending. During the six months ended June 30, 2020, the Company secured additional financing for a revolving loan in the amount of $10,000,000 with a maturity date of March 2023 and proceeds from the PPP loan. In addition, commitments for additional lending up to $2,000,000 may be provided by members of the Board of Directors of the Company, if necessary. Management has concluded that its existing capital resources and availability, proceeds from a 2020 offering and outside lending will be sufficient to fund operations through the third quarter of 2021.

Revenue and Cost Recognition

Our revenues are primarily derived from the sale of electricity to residential and small commercial customers. Revenues for sales of electricity are recognized under the accrual method of accounting.

Direct energy costs are recorded when the electricity is delivered to the customer’s meter.

Cost of goods sold (“COGS”) within the Texas market include electric power purchased and pass through charges from the transmission and distribution service providers (“TDSPs”) in the areas serviced by the Company. TDSP charges are costs for metering services and maintenance of the electric grid. TDSP charges are established by regulation of the PUCT. COGS within the Independent System Operator (“ISO”) for the New England market is comprised of wholesale costs based upon the wholesale power tariff rate for volumes purchased during the delivery month and scheduling fees. Summer Midwest began flowing electricity within the Pennsylvania, New Jersey, Maryland Power Pool (“PJM”) market in July 2019, and the COGS for the PJM market is comprised of wholesale costs based upon the wholesale power tariff for volumes purchased during the delivery month as well as scheduling fees.

The energy portion of our COGS is comprised of two components: bilateral wholesale costs and balancing/ancillary costs. These two cost components are incurred and recognized differently as follows:

Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. We are invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 20 days after the end of the month.

Balancing/ancillary costs are based on the customer load and are determined by the Electric Reliability Council of Texas (“ERCOT”), ISO New England and PJM through a multiple-step settlement process. Balancing costs/revenues are related to the differential between supply that we provided through our bilateral wholesale supply and the supply required to serve our customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through our load forecasting and forward purchasing programs.

Cash and Restricted Cash

The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. There were no such investments at June 30, 2020 or December 31, 2019.

Restricted cash in the amount of $2,026,023 as of June 30, 2020 and $3,197,708 as of December 31, 2019 represents funds held in escrow for customer deposits, funds held in a controlled account by the wholesale provider (Note 12) and funds securing irrevocable stand-by letters of credit (Note 4).

		June 30, 2020		December 31, 2019
Cash	$	3,533,068	$	814,360
Restricted cash:
Escrow for customer deposits		510,749		511,461
Funds securing letters of credit		750,000		750,000
Funds controlled by wholesale provider		765,274		1,936,247
Total restricted cash		2,026,023		3,197,708
Total cash and restricted cash	$	5,559,091	$	4,012,068

Basic and Diluted Income (Loss) Per Share

Basic income/(loss) per share are computed by dividing net income/(loss) applicable to the weighted-average number of shares outstanding during the period. Diluted income per share is determined using the weighted-average number of shares outstanding during the period, adjusted for the dilutive effect of share equivalents, using the treasury method, consisting of shares that might be issued upon exercise of share equivalents. In periods where losses are reported, the weighted average number of shares excludes share equivalents, because their inclusion would be anti-dilutive. 

For the six months ended June 30, 2020 and 2019, the weighted average number of outstanding excludes share equivalents due to dilutive stock options and stock warrants because their inclusion would be anti-dilutive. The Company had potentially dilutive securities totaling approximately 5,022,692 and 4,067,682 as of June 30, 2020 and 2019, respectively.

Recent Pronouncements

New Accounting Standards Recently Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires entities to use a current expected credit loss ("CECL") model, which is a new impairment model based on expected losses rather than incurred losses on financial assets, including trade accounts receivables. The model requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted ASU 2016-13 and the related amendments effective January 1, 2020, and there was no material impact to our condensed consolidated financial statements.

Standards Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, which reduces the complexity of FASB ASC Topic 740, “Income Taxes” as part of the FASB’s Simplification Initiative. The amendments in this guidance simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for annual reporting periods ending after December 15, 2020, with early adoption permitted, and should be applied on either a retrospective basis for all periods presented or a modified retrospective basis. Management is still assessing the impact this might have on the Company’s consolidated financial statements.

The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

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Note 3 - Revenue

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Note 3 - Revenue

NOTE 3 - REVENUE

The table below represents the Company’s reportable revenues for the three and six month periods ended June 30, 2020 and 2019, respectively, from customers, net of respective provisions for refund:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Electricity Revenues from Contracts with Customers
ERCOT Market	$	38,599,697	$	36,294,807	$	73,860,940	$	67,097,505
ERCOT Pre-paid Market		1,843,514		1,387,147		3,290,291		2,600,937
ISO New England Market		861,350		1,906,856		1,968,628		3,831,267
PJM Market		298,328		-		487,763		-
Total Electricity Revenues from Contracts with Customers		41,602,889		39,588,810		79,607,622		73,529,709
Other Revenues:
Fees Revenue		919,547		909,777		1,781,804		1,794,747
Total Revenues:	$	42,522,436	$	40,498,587	$	81,389,426	$	75,324,456

Presented in the following table are the components of accounts receivable and accrued revenue:

		June 30, 2020		December 31, 2019
Accounts receivable from customers
ERCOT Market	$	10,874,702	$	9,041,871
ISO New England Market		148,453		257,942
PJM Market		104,312		11,244
Total accounts receivable from customers		11,127,467		9,311,057
Accrued revenue from customers
ERCOT Market		36,850,685		32,916,970
ISO New England Market		626,461		788,395
PJM Market		85,307		15,088
Total accrued revenue with customers		37,562,453		33,720,453
Allowance for credit losses		(894,945)		(1,183,561)
Total accounts receivable and accrued revenue	$	47,794,975	$	41,847,949

The Company recognizes revenue from the sale of electricity to consumers and is recognized upon the performance obligation to deliver electricity to the customer’s meter. This method of revenue recognition is commonly referred to as the flow method. The Company’s customer base consists of a mix of residential and commercial customers in the ERCOT, ISO New England and PJM markets. Also, the Company recognizes revenues from contract cancellation fees, disconnection fees and late fees.

The invoice practical expedient within the accounting guidance allows for the recognition of revenue from performance obligations in the amount of consideration to which there is a right to invoice the customer and when the amount for which there is a right to invoice corresponds directly to the value transferred to the customer. The purpose of the invoice practical expedient is to depict an entity’s measure of progress toward completion of the performance obligation within a contract and can only be applied to performance obligations that are satisfied over time and when the invoice is representative of services provided to date. The Company elected to apply the invoice practical expedient to recognize revenue for performance obligations satisfied over time as the invoices from the respective revenue streams are representative of services or goods provided to date to the customer.

Performance Obligations

Residential and Commercial – The Company has performance obligations for the service to deliver electricity to its customers and it satisfies these performance obligations over time as electricity is provided continuously to the customer who simultaneously receives and consumes the benefits provided. The Company recognizes revenue at a fixed base amount and a price per kilowatt hour as it provides these services on a fixed term contract. Contracts generally have fixed terms of 3-month increments not to exceed a 24-month fixed term. For customers whose fixed contracts have expired, the Company recognizes revenue at the market price per kilowatt hour as the service is provided.  

Residential pre-paid – The Company has performance obligations for the service to deliver electricity to its customers and these performance obligations are satisfied over time as electricity is provided continuously to the customer who simultaneously receives and consumes the benefits provided. Revenues in the pre-paid market are variable at the market rate per kilowatt hour as the service is provided.

Accounts Receivable and Unbilled Revenue

Accounts receivable are comprised of trade receivables and unbilled receivables (accrued revenue). Customers are billed monthly in cycles having billing dates that do not generally coincide with the end of a calendar month. This results in customers having received electricity that they have not been billed for as of month-end. Therefore, at the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed in the calendar month are recorded from the unbilled account to the customer’s receivable account.

In the Texas market, electricity revenues not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by our average billing rate per kilowatt hour (“kWh”) in effect at the time. At the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed in the calendar month are recorded from the unbilled account to the customer’s receivable account. Accounts receivable are customer obligations billed at the customer’s monthly meter read date for that period’s electricity usage and due within 16 days of the date of the invoice. The past due customer balances are subject to a late fee that is assessed on that billing. Unbilled accounts in the Texas market as of June 30, 2020 and December 31, 2019 were estimated at $36,850,685 and $32,916,970, respectively.

In the ISO New England market, electricity services not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ISO New England multiplied by our average billing rate per kWh in effect at the time. The customer billing in the ISO New England market is performed by the local utility company. Unbilled accounts in the ISO New England market as of June 30, 2020 and December 31, 2019 were estimated at $626,461 and $788,395, respectively.

The Company began service in the PJM market during the third quarter of 2019. In the PJM market, electricity services not billed by month end are accrued based upon estimated deliveries to customers as tracked and recorded by PJM multiplied by our average billing rate per kWh in effect at the time. The customer billing in the PJM market is performed by the local utility company. Unbilled accounts in the PJM market as of June 30, 2020 and December 31, 2019 were estimated at $85,307 and $15,088, respectively.

Prior to January 1, 2020, accounts receivables were recorded at cost less an allowance for doubtful accounts. The Company, in the Texas market, maintained an allowance for uncollectible accounts receivable for estimated losses resulting from the failure or inability of our customers to make required payments. Within the ISO New England and the PJM markets, the local utility companies within the state of operation, purchase the Company’s billed receivables at a statutory published discount rate without recourse; therefore, no allowance for doubtful accounts was recorded for these markets. The allowance for doubtful accounts was $1,183,561 at December 31, 2019.

Subsequent to January 1, 2020, the Company’s accounts receivables are recorded at cost less an allowance for credit losses. We estimate losses on receivables at the reporting date based on expected losses resulting from the inability of our customers to make required payments, including our historical experience of actual losses and the aging of such receivables. These receivables have been pooled by market including the Texas market, the ISO New England market, and PJM market, because the receivables from each market share risk characteristics. Based on known information we may also establish specific reserves for customers in an adverse financial condition or adjust our expectations of changes in conditions that may impact the collectability of outstanding receivables. Receivables past due over 90 days are considered delinquent and are reviewed individually for collectability. After all means of collection have been exhausted, delinquent receivables are written-off. The allowance for credit losses at June 30, 2020 was $894,945.

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Note 5 - Surety Bonds

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 5 - Surety Bonds

NOTE 5 - SURETY BONDS

As of June 30, 2020, Summer Midwest had a surety bond in the amount of $500,000 issued to the Illinois Commerce Commission and a surety bond in the amount of $250,000 issued to the Pennsylvania Public Utility Commission. Both bonds are secured with $375,000 in deposits held by the surety bond company.

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Note 6 - Financing From First Insurance Funding

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 6 - Financing From First Insurance Funding

NOTE 6 - FINANCING FROM FIRST INSURANCE FUNDING

In May 2020, the Company entered into a finance agreement with First Insurance Funding to finance the Company’s Director’s and Officer’s insurance policy premium for the period of May 1, 2020 through May 1, 2021. The amount for the premiums, taxes and fees totaled $141,352. A cash down payment in the amount of $34,349 was made by the Company in May 2020 leaving a remaining balance of $107,003 to be paid in 10 installments from June 1, 2020 through March 1, 2021. The annual percentage interest rate of the financing is 5.85%.

In May 2019, the Company entered into a finance agreement with First Insurance Funding to finance the Company’s Director’s and Officer’s insurance policy premium for the period of May 1, 2019 through May 1, 2020. The amount for the premiums, taxes and fees totaled $150,575. A cash down payment in the amount of $22,586 was made by the Company in May 2019 leaving a remaining balance of $127,989 to be paid in 10 installments from June 1, 2019 through March 1, 2020. The annual percentage interest rate of the financing is 6.45%. The Company paid in full the balance of the finance agreement during March 2020.

At June 30, 2020 and December 31, 2019, the outstanding balance due to First Insurance Funding was $94,761 and $38,397, respectively. Interest expense accrued to First Insurance Funding was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
First Insurance Funding interest expense	$	-	$	455	$	1,365	$	455

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Note 7 - Financing From Digital Lending Services Us Corp.

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 7 - Financing From Digital Lending Services Us Corp.

NOTE 7 – FINANCING FROM DIGITAL LENDING SERVICES US CORP.

On March 12, 2020, Summer LLC (the “Borrower”) entered into a Loan Agreement (the “Agreement”) with Digital Lending Services US Corp., a Delaware corporation (“Digital Lending”). Pursuant to the Agreement, Digital Lending agreed to provide a revolving loan (the “Loan”) to the Borrower, and the Borrower agreed to borrow and repay funds loaned by Digital Lending.  

The amount of available credit under the Loan is $10,000,000. The Loan is revolving in nature and is evidenced by a Revolving Promissory Note (the “Note”). The maturity date of the Loan is March 11, 2023. The Loan bears interest at a rate of 12.75% per annum, with monthly installment payments of accrued interest only. The principal balance of the Loan may be prepaid at any time at the option of the Borrower, subject to certain prepayment charges.

The Loan was used by the Company to repay indebtedness owed to Blue Water (Note 8) and additional indebtedness, as well as for working capital and other general corporate purposes.

In connection with the Agreement, the Borrower made certain customary representations and warranties, and agreed that while the Loan amount remains outstanding, it would not take certain actions, including that it will not incur certain debts (as defined in the Agreement); create, assume, or suffer to exist any lien on any property or asset of the Borrower, except those set forth in and allowed by the Agreement; consolidate or merge with any other entity; or sell, lease, or transfer all or substantially all of the assets of the Borrower. Also, in connection with the Agreement, the Borrower made certain affirmative and negative covenants, and agreed to designate a representative of Digital Lending to attend the Company’s board of directors’ meetings in a non-voting, observer capacity. As of June 30, 2020, Summer LLC was in compliance with the covenants of the Agreement.

In connection with the Agreement, the Borrower and Digital Lending also entered into a Security Agreement (the “Security Agreement”), and Summer Energy Holdings, Inc. executed a Guaranty (the “Guaranty”) and issued a Common Stock Purchase Warrant (“Warrant”) in favor of Digital Lending.

Security Agreement

Pursuant to the Security Agreement, the Borrower granted to Digital Lending a second position security interest in and to the Borrower’s collateral, as more fully defined in the Security Agreement, and which includes receivables, equipment, inventory, personal property, other intangibles, and proceeds from any of these, to secure the Borrower’s payment of its obligations under the Loan. The security interest granted to Digital Lending is subordinate to a security interest granted to EDF Energy Services, LLC (“EDF”) pursuant to an Amended and Restated Energy Services Agreement dated June 19, 2019, as amended (Note 12).

Guaranty

Pursuant to the Guaranty, the Company agreed to guaranty the Borrower’s obligations under the Agreement and Note.   

Warrant

In connection with the Agreement and the Loan, the Company agreed to issue to Digital Lending a Warrant (Note 20). Pursuant to the Warrant, Digital Lending may purchase up to 250,000 shares of the Company’s common stock. The Warrant has a term of five years, has an exercise price of $1.50 per share, and is subject to adjustment as set forth in the Warrant. The Warrant also contains a cashless or net exercise provision, pursuant to which the holder of the Warrant may elect to convert all or a portion of the Warrant without the payment of additional consideration, by receiving a net number of shares calculated pursuant to a formula set forth in the Warrant.

As of June 30, 2020, the outstanding balance of the Digital Lending loan was $9,000,000 and the interest expense was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Digital Lending interest expense	$	286,875	$	-	$	350,625	$	-

The foregoing summaries of the terms and conditions of the Agreement, the Note, the Security Agreement, and the Guaranty do not purport to be complete, and are qualified in their entirety by reference to the full text of the Agreement, the Note, the Security Agreement and the Guaranty, each of which is attached as an exhibit to our Current Report on Form 8-K, filed with the SEC on March 18, 2020.

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Note 8 - Financing From Blue Water Capital Funding LLC

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 8 - Financing From Blue Water Capital Funding LLC

NOTE 8 - FINANCING FROM BLUE WATER CAPITAL FUNDING LLC

On June 29, 2016, Summer LLC (the “Borrower”) entered into a Loan Agreement (the “Agreement”) with Blue Water Capital Funding, LLC (“Blue Water”) and guaranteed by the Company (the “Guaranty”). Pursuant to the Agreement, Blue Water agreed to provide a revolving loan (the “Loan”) to the Borrower, and the Borrower agreed to borrow and repay funds loaned by Blue Water. Further, in connection with the Agreement, the Borrower granted to Blue Water a second position security interest in and to the Borrower’s collateral, which includes receivables, equipment, inventory, personal property, other intangibles, and proceeds from any of these, to secure the Borrower’s payment of its obligation under the Loan.

The amount of available credit under the Loan was $5,000,000. The Loan was revolving in nature and was evidenced by a Revolving Promissory Note (the “Note”). The maturity date of the Loan was June 30, 2018. On June 27, 2018, Summer LLC entered into an amendment to the agreement (the “Amendment”) with Blue Water with respect to the Agreement.  

Pursuant to the Amendment, the maturity date of the Note was extended through June 30, 2020, and the interest rate on the Note was changed from 11% per annum to a variable rate equal to the Prime Rate published by the Wall Street Journal plus 475 basis points. The amount of credit available pursuant to the Agreement, as amended by the Amendment, was $5,000,000. The Note included a minimum monthly financing fee of $22,500 per month. Interest was payable on the tenth day of each month and on the maturity date of the Note. Summer LLC and Blue Water agreed that the security interest granted pursuant to the Agreement remained in effect, and the Company reaffirmed its obligations under the Guaranty. Further, under the Agreement, Summer LLC was subject to certain restrictive covenants, and Summer LLC was in compliance with such covenants during the three months ended March 31, 2020.

On March 12, 2020, simultaneous with the closing of the loan from Digital Lending (Note 7), the outstanding debt due and owing to Blue Water was paid in full and the Agreement, as amended by the Amendment, was terminated.

As of June 30, 2020 and December 31, 2019, the outstanding balance of financing from Blue Water Capital was $0 and $4,920,000, respectively. Interest expense to Blue Water was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Blue Water interest expense	$	-	$	127,476	$	167,900	$	253,550

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Note 9 - Comerica Bank Master Revolving Note

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 9 - Comerica Bank Master Revolving Note

NOTE 9 - COMERICA BANK MASTER REVOLVING NOTE

On December 18, 2018, the Company signed a single payment note (the “Note”) with Comerica Bank (the “Bank”) in the amount of $2,900,000. The Note has a maturity date of June 11, 2020, with interest thereon at a per annum rate equal to the “Prime Referenced Rate” plus the “Applicable Margin.” The “Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the “Prime Rate” in effect on such day, but in no event and at no time shall the “Prime Reference Rate” be less than the sum of the Daily Adjusting LIBOR rate for such day plus 2.5% per annum. “Prime Rate” means the per annum rate established by the Bank as its prime rate for its borrowers at any such time. “Applicable Rate” means 0.25% per annum. Accrued and unpaid interest on the unpaid principal balance outstanding on the Note is payable monthly on the first day of each month, commencing on February 1, 2019.

On December 9, 2019, the Note was converted from a single payment note to a master revolving note (the “Revolver Note”), which is payable in full on demand from the Bank. The Revolver Note provides for advances, repayments and re-advances from time to time. Interest thereon at a per annum rate equal to the “Prime Referenced Rate” plus the “Applicable Margin.” The “Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the “Prime Rate” in effect on such day, but in no event and at no time shall the “Prime Reference Rate” be less than the sum of the Daily Adjusting LIBOR rate for such day plus 2.5% per annum. “Prime Rate” means the per annum rate established by the Bank as its prime rate for its borrowers at any such time. “Applicable Rate” means 0.25% per annum. Unless sooner demanded, accrued and unpaid interest on the unpaid principal balance of each outstanding advance shall be payable monthly, in arrears on the first business day of each month, from the date made until the same is paid in full. As of June 30, 2020, the interest rate was 3.5%.

Guaranty of the Revolver Note has been made by four members of the Company’s board of directors (“Guarantors”). The Company agreed to issue the four Guarantors shares of the Company’s common stock on a monthly basis depending on the outstanding balance due and owing under the Revolver Note for agreeing to act as a Guarantor.

As of June 30, 2020 and December 31, 2019, the outstanding balance of financing on the Comerica Revolver Note was $2,900,000. Interest expense related to the Comerica Revolver Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Revolver Note interest expense	$	24,822	$	15,781	$	59,058	$	52,277

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Note 10 - Comerica Bank Single Payment Note

6 Months Ended

Jun. 30, 2020

Note 10 - Comerica Bank Single Payment Note

Note 10 - Comerica Bank Single Payment Note

NOTE 10 – COMERICA BANK SINGLE PAYMENT NOTE

On December 20, 2019, the Company signed a Single Payment Note (the “Single Note”) with Comerica Bank in the amount of $2,100,000. The Note has a maturity date of June 20, 2020, with interest thereon at a per annum rate equal to the “Prime Referenced Rate” plus the “Applicable Margin.” The “Prime Referenced Rate” means, for any day, a per annum interest rate which is equal to the “Prime Rate” in effect on such day, but in no event and at no time shall the “Prime Referenced Rate” be less than the sum of the Daily Adjusting LIBOR Rate for such day plus 2.5% per annum. “Prime Rate” means the per annum rate established by Comerica Bank as its prime rate for its borrowers at any such time. “Applicable Margin” means 0.25% per annum. Accrued and unpaid interest on the unpaid principal balance outstanding on the Note shall be payable monthly on the twentieth day of each month, commencing on January 20, 2020.

On June 20, 2020, the Single Note was amended to reflect a due date of June 20, 2021 and the Application Margin was amended to mean 0.35% per annum. As of June 30, 2020, the interest rate was 3.5%

Guaranty of the Single Note has been made by four members of the Company’s board of directors (“Guarantors”). The Company agreed to issue the four Guarantors shares of the Company’s common stock on a monthly basis depending on the outstanding balance due and owing under the Note for agreeing to act as a Guarantor of the Single Note.

As of June 30, 2020 and December 31, 2019, the outstanding balance of financing on the Comerica Single Note was $2,100,000. Interest expense related to the Comerica Single Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Single Note interest expense	$	18,849	$	-	$	43,641	$	-

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Note 11 - Paycheck Protection Program Loan

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 11 - Paycheck Protection Program Loan

NOTE 12 - WHOLESALE POWER PURCHASE AGREEMENT WITH EDF

On May 1, 2018, Summer Energy Holdings, Inc. (for purposes of this Note, “SEH”), together with its subsidiaries Summer LLC and Summer Northeast (collectively the “Company”) closed a transaction with EDF Energy Services, LLC and EDF Trading North America, LLC (collectively, “EDF”). As part of the transaction, Summer LLC, Summer Northeast and EDF entered into an Energy Services Agreement (the “Energy Services Agreement”) pursuant to which Summer LLC and Summer Northeast agreed to purchase their electric power and associated services requirements from EDF, and EDF agreed to provide Summer LLC and Summer Northeast with certain credit facilities to assist Summer LLC and Summer Northeast in the purchase of their electric power and associated service requirements (such transaction with EDF, the “Original Transaction”).  The terms of the Energy Services Agreement are governed by the ISDA Master Agreement, as well as a Schedule and Power Annex thereto and the Credit Support Annex thereto.

In conjunction therewith, the Company and EDF also entered into a Security Agreement (the “Security Agreement”), a Pledge Agreement (the “Pledge Agreement”) and a Guaranty (the “Guaranty”) in favor of EDF. The Energy Services Agreement has a term of three years, and automatically renews for successive one-year periods unless either party provides written notice of termination 180 days prior to the renewal date. In addition to the market-based commodity price charged by EDF for each underlying commodity transaction, the Company will pay a “Commodity Fee” for each megawatt hour (“MWh”) of power that the Company requests for delivery from EDF during the term of the Energy Services Agreement. In addition, the Company is responsible for other mutually agreed upon fees incurred by EDF on its behalf. The Company is also responsible for any reasonable transmission or transportation costs incurred in connection with power transactions. Monthly supply obligations will accrue interest at a rate equal to three-month LIBOR plus 6% per annum. Any additional credit support will bear interest at the per annum rate equal to the lesser of (i) a rate per annum equal to three-month LIBOR rate plus 3% per annum, and (ii) the maximum rate of interest permitted by applicable law.  

In consideration of the services and credit support provided by EDF to Summer LLC and Summer Northeast, and pursuant to the Security Agreement, Summer LLC and Summer Northeast agreed to, among other things (i) grant a priority security interest to EDF in all of their assets, equipment and inventory; (ii) require their customers to remit monthly payments into a lockbox account over which EDF has a security interest; and (iii) deliver monthly and annual forecasted and audited statements to EDF.  

Pursuant to the Pledge Agreement, SEH pledged to EDF, and granted to EDF a security interest in, all of the membership interests of Summer LLC and Summer Northeast owned by SEH as well as all additional membership interests of such subsidiaries from time to time acquired by SEH. Pursuant to the Guaranty, SEH agreed to guaranty the obligations of Summer LLC and Summer Northeast under the Energy Services Agreement.

The foregoing is only a brief description of the material terms of the transaction with EDF and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the text of the Energy Services Agreement, the ISDA Master Agreement, the Security Agreement, the Pledge Agreement and the Guaranty, which are filed as Exhibits 10.1 through 10.5, respectively, to our quarterly report on Form 10-Q filed with the SEC on August 14, 2018.

On June 19, 2019, the Company closed a transaction (the “Amendment Transaction”) with EDF Trading North America, LLC (“EDFTNA”) in order to amend and/or restate certain of the agreements with EDF entered into in the Original Transaction.

Pursuant to the Amendment Transaction, the Company and EDFTNA entered into an Amended and Restated Energy Services Agreement, which amended and restated the Energy Services Agreement (the “Amended Energy Services Agreement”), an amendment to ISDA Master Agreement which amends the ISDA Agreement (the “Amended ISDA Agreement”), an Omnibus Amendment to Pledge Agreement and Security Agreement and Joinder, which amends both the Security Agreement and the Pledge Agreement (the “Omnibus Amendment”) and an Amended and Restated Guaranty, which amends and restates the Guaranty (the “Amended Guaranty”).  In general, the Amended Energy Services Agreement, the Amended ISDA Agreement, the Omnibus Amendment and the Amended Guaranty amend and/or restate the documents from the Original Transaction to (i) remove EDF Energy Services, LLC as a party to the agreements and (ii) add an additional subsidiary of SEH, Summer Midwest, as a party to the agreements, such that Summer Midwest is able to purchase its electric power and associated services requirements from EDFTNA and also utilize EDFTNA’s credit support.   The term, pricing and interest payable under the Amended Energy Services Agreement are unchanged from the original Energy Services Agreement.  

Pursuant to the Omnibus Amendment, in consideration of the services and credit support provided by EDFTNA to the Company, Summer Midwest agreed to, among other things (i) grant a priority security interest to EDFTNA in all of its assets, equipment and inventory; and (ii) require its customers to remit monthly payments into a lockbox account over which EDFTNA has a security interest. The security interest previously granted by Summer LLC and Summer Northeast is unchanged, except that EDFTNA is now the sole secured party. Also pursuant to the Omnibus Amendment, SEH pledged to EDFTNA, and granted to EDFTNA a security interest in, all of SEH’s membership interest in Summer Midwest. The previous pledge by SEH of its membership interest in Summer LLC and Summer Northeast is unchanged, except that EDFTNA is now the sole secured party. Pursuant to the Guaranty, SEH agreed to guaranty the obligations of Summer LLC, Summer Northeast and Summer Midwest under the Amended Energy Services Agreement.      

The foregoing is only a brief description of the material terms of the Amendment Transaction and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the text of the Amended Energy Services Agreement, the Amended ISDA Master Agreement, the Omnibus Amendment and the Amended Guaranty, which are filed as Exhibits 10.1 through 10.4, respectively, to our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2019.

As of June 30, 2020 and December 31, 2019, EDF has provided collateral credit support in the amount of $4,811,006 and $4,511,006, respectively, to secure letters of credit (Note 4) and surety bonds (Note 5) for the benefit of the Company.

The Company incurred interest expense to EDF for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
EDF Interest	$	240,517	$	199,234	$	504,781	$	391,998

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Note 12 - Wholesale Power Purchase Agreement with EDF

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 12 - Wholesale Power Purchase Agreement with EDF

NOTE 12 - WHOLESALE POWER PURCHASE AGREEMENT WITH EDF

On May 1, 2018, Summer Energy Holdings, Inc. (for purposes of this Note, “SEH”), together with its subsidiaries Summer LLC and Summer Northeast (collectively the “Company”) closed a transaction with EDF Energy Services, LLC and EDF Trading North America, LLC (collectively, “EDF”). As part of the transaction, Summer LLC, Summer Northeast and EDF entered into an Energy Services Agreement (the “Energy Services Agreement”) pursuant to which Summer LLC and Summer Northeast agreed to purchase their electric power and associated services requirements from EDF, and EDF agreed to provide Summer LLC and Summer Northeast with certain credit facilities to assist Summer LLC and Summer Northeast in the purchase of their electric power and associated service requirements (such transaction with EDF, the “Original Transaction”).  The terms of the Energy Services Agreement are governed by the ISDA Master Agreement, as well as a Schedule and Power Annex thereto and the Credit Support Annex thereto.

In conjunction therewith, the Company and EDF also entered into a Security Agreement (the “Security Agreement”), a Pledge Agreement (the “Pledge Agreement”) and a Guaranty (the “Guaranty”) in favor of EDF. The Energy Services Agreement has a term of three years, and automatically renews for successive one-year periods unless either party provides written notice of termination 180 days prior to the renewal date. In addition to the market-based commodity price charged by EDF for each underlying commodity transaction, the Company will pay a “Commodity Fee” for each megawatt hour (“MWh”) of power that the Company requests for delivery from EDF during the term of the Energy Services Agreement. In addition, the Company is responsible for other mutually agreed upon fees incurred by EDF on its behalf. The Company is also responsible for any reasonable transmission or transportation costs incurred in connection with power transactions. Monthly supply obligations will accrue interest at a rate equal to three-month LIBOR plus 6% per annum. Any additional credit support will bear interest at the per annum rate equal to the lesser of (i) a rate per annum equal to three-month LIBOR rate plus 3% per annum, and (ii) the maximum rate of interest permitted by applicable law.  

In consideration of the services and credit support provided by EDF to Summer LLC and Summer Northeast, and pursuant to the Security Agreement, Summer LLC and Summer Northeast agreed to, among other things (i) grant a priority security interest to EDF in all of their assets, equipment and inventory; (ii) require their customers to remit monthly payments into a lockbox account over which EDF has a security interest; and (iii) deliver monthly and annual forecasted and audited statements to EDF.  

Pursuant to the Pledge Agreement, SEH pledged to EDF, and granted to EDF a security interest in, all of the membership interests of Summer LLC and Summer Northeast owned by SEH as well as all additional membership interests of such subsidiaries from time to time acquired by SEH. Pursuant to the Guaranty, SEH agreed to guaranty the obligations of Summer LLC and Summer Northeast under the Energy Services Agreement.

The foregoing is only a brief description of the material terms of the transaction with EDF and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the text of the Energy Services Agreement, the ISDA Master Agreement, the Security Agreement, the Pledge Agreement and the Guaranty, which are filed as Exhibits 10.1 through 10.5, respectively, to our quarterly report on Form 10-Q filed with the SEC on August 14, 2018.

On June 19, 2019, the Company closed a transaction (the “Amendment Transaction”) with EDF Trading North America, LLC (“EDFTNA”) in order to amend and/or restate certain of the agreements with EDF entered into in the Original Transaction.

Pursuant to the Amendment Transaction, the Company and EDFTNA entered into an Amended and Restated Energy Services Agreement, which amended and restated the Energy Services Agreement (the “Amended Energy Services Agreement”), an amendment to ISDA Master Agreement which amends the ISDA Agreement (the “Amended ISDA Agreement”), an Omnibus Amendment to Pledge Agreement and Security Agreement and Joinder, which amends both the Security Agreement and the Pledge Agreement (the “Omnibus Amendment”) and an Amended and Restated Guaranty, which amends and restates the Guaranty (the “Amended Guaranty”).  In general, the Amended Energy Services Agreement, the Amended ISDA Agreement, the Omnibus Amendment and the Amended Guaranty amend and/or restate the documents from the Original Transaction to (i) remove EDF Energy Services, LLC as a party to the agreements and (ii) add an additional subsidiary of SEH, Summer Midwest, as a party to the agreements, such that Summer Midwest is able to purchase its electric power and associated services requirements from EDFTNA and also utilize EDFTNA’s credit support.   The term, pricing and interest payable under the Amended Energy Services Agreement are unchanged from the original Energy Services Agreement.  

Pursuant to the Omnibus Amendment, in consideration of the services and credit support provided by EDFTNA to the Company, Summer Midwest agreed to, among other things (i) grant a priority security interest to EDFTNA in all of its assets, equipment and inventory; and (ii) require its customers to remit monthly payments into a lockbox account over which EDFTNA has a security interest. The security interest previously granted by Summer LLC and Summer Northeast is unchanged, except that EDFTNA is now the sole secured party. Also pursuant to the Omnibus Amendment, SEH pledged to EDFTNA, and granted to EDFTNA a security interest in, all of SEH’s membership interest in Summer Midwest. The previous pledge by SEH of its membership interest in Summer LLC and Summer Northeast is unchanged, except that EDFTNA is now the sole secured party. Pursuant to the Guaranty, SEH agreed to guaranty the obligations of Summer LLC, Summer Northeast and Summer Midwest under the Amended Energy Services Agreement.      

The foregoing is only a brief description of the material terms of the Amendment Transaction and does not purport to be a complete description of the rights and obligations of the parties thereunder and such descriptions are qualified in their entirety by reference to the text of the Amended Energy Services Agreement, the Amended ISDA Master Agreement, the Omnibus Amendment and the Amended Guaranty, which are filed as Exhibits 10.1 through 10.4, respectively, to our Quarterly Report on Form 10-Q filed with the SEC on August 14, 2019.

As of June 30, 2020 and December 31, 2019, EDF has provided collateral credit support in the amount of $4,811,006 and $4,511,006, respectively, to secure letters of credit (Note 4) and surety bonds (Note 5) for the benefit of the Company.

The Company incurred interest expense to EDF for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
EDF Interest	$	240,517	$	199,234	$	504,781	$	391,998

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Note 13 - Lease Liabilities, Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 13 - Lease Liabilities, Commitments and Contingencies

NOTE 13 - LEASE LIABILITIES, COMMITMENTS AND CONTINGENCIES

Office Space

The Company leases office space and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the term of the lease. For leases beginning in 2019 and later, the Company accounts for lease components separately from the non-lease components. Most leases include one or more options to renew. The exercise of the lease renewal options is at the sole discretion of the Company. Certain leases also include options to purchase the leased property. The depreciable life of the assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Beginning December 1, 2017, the Company procured approximately 20,073 square feet of office space on the 37^th floor of 5847 San Felipe, Houston, Texas, pursuant to a sublease agreement dated October 13, 2017 with ENSCO International Incorporated, which subsequently changed its name to Valaris PLC, (“Sublandlord”) for a term beginning on December 1, 2017 and terminating on December 31, 2025. The base rent payments are approximately $15,900 per month during the term of the sublease agreement. The Company is also responsible for 12.08% of the operating expenses, utilities and taxes charged to the Sublandlord.

Summer LLC assumed an operating lease for office space on November 1, 2011 at 800 Bering Drive, Suite 260, Houston, Texas, under a non-cancellable lease obligation that expired on August 31, 2016. The Sixth Amendment to the office space lease extended the obligation to October 31, 2019.

Summer Northeast entered into a sublease agreement with PDS Management Group, LLC (“PDS”) on October 31, 2017 at 800 Bering Drive, Suite 250, Houston, Texas, under a non-cancellable lease obligation that expired on February 28, 2020. On September 1, 2018, PDS subleased 800 Bering Drive, Suite 250, Houston, Texas to an outside party, and Summer Northeast receives a monthly credit in the amount of $1,698 until the end of the lease obligation on February 28, 2020. The monthly base rent, net of credit, is $2,255.

As of June 30, 2020 and December 31, 2019, the operating lease right-of-use assets and operating lease liabilities were $905,558 and $979,185, respectively. The long-term portion of the operating lease liabilities as of June 30, 2020 and December 31, 2019 in the amounts of $760,659 and $834,283, respectively, was included in long-term obligations.

As of June 30, 2020, the weighted-average remaining lease term for operating leases was 5.44 years. As of June 30, 2020, the weighted-average discount rate for operating leases was 6.5%.

Operating lease future minimum payments together with their present values as of June 30, 2020 are summarized as follows:

		Operating Leases
2020	$	99,748
2021		199,494
2022		199,494
2023		197,294
2024		190,693
Thereafter		190,693
Total future minimum lease payments		1,077,416
Less amounts representing interest		(171,858)
Present value of lease liability	$	905,558
Current-portion operating lease liability		(144,899)
Long-term portion operating lease liability	$	760,659

Lease expense for the office space for the three and six months ended June 30, 2020 and 2019, respectively, was included in operating expenses on the consolidated statements of operations as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Operating Lease expense	$	34,781	$	77,571	$	73,627	$	153,893

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Note 14 - Long Term Obligations

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Note 14 - Long Term Obligations

NOTE 14 – LONG-TERM OBLIGATIONS

Long-term obligations of the Company are comprised as follows:

		June 30, 2020		December 31, 2019
Financing from First Insurance Funding (Note 6)	$	94,761	$	38,397
Financing from Digital Lending Services US Corp. (Note 7)		9,000,000		-
Financing from Blue Water Capital Funding, LLC (Note 8)		-		4,920,000
Comerica Bank Master Revolving Note (Note 9)		2,900,000		2,900,000
Comerica Bank Single Payment Note (Note 10)		2,100,000		2,100,000
Financing from Paycheck Protection Program Loan (Note 11)		2,342,300		-
Wholesale Power Purchase Agreement with EDF collateral credit support (Note 12)		4,811,006		4,511,006
Operating lease obligations (Note 13)		905,558		979,185
Total obligations	$	22,153,625	$	15,448,588
Less current portion of obligations		(5,094,761)		(5,038,397)
Less current portion operating lease obligations (Note 13)		(144,899)		(144,902)
Long-term portion of obligations	$	16,913,965	$	10,265,289

For the three and six months ended June 30, 2020 and 2019, respectively, interest expense consists of the following on obligations:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Financing from First Insurance Funding (Note 6)	$	-	$	455	$	1,365	$	455
Financing from Digital Lending Services US Corp. (Note 7)		286,875		-		350,625		-
Financing from Blue Water Capital Funding, LLC (Note 8)		-		127,476		167,900		253,550
Comerica Master Revolving Note (Note 9)		24,822		15,781		59,058		52,277
Comerica Bank Single Payment Note (Note 10)		18,849		-		43,641		-
Financing from Paycheck Protection Program Loan (Note 11)		4,813		-		4,813		-
Wholesale Power Purchase Agreement with EDF (Note 12)		240,517		199,234		504,781		391,998
Related Party Line of Credit (Note 21)		2,877		-		2,877		-
Related Party Promissory Loans (Note 22)		-		-		23,233		2,115
Related Party Guarantors (Note 23)		151,668		32,934		303,334		109,101
Other interest		96		45		409		130
Total interest expense	$	730,517	$	375,925	$	1,462,036	$	809,626
Interest income		(7,889)		(14,859)		(13,726)		(30,088)
Interest expense, net	$	722,628	$	361,066	$	1,448,310	$	779,538

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Note 15 - 2012 Stock Option and Stock Award Plan

6 Months Ended

Jun. 30, 2020

2012 Stock Option and Stock Award Plan

Note 15 - 2012 Stock Option and Stock Award Plan

NOTE 15 - 2012 STOCK OPTION AND STOCK AWARD PLAN

During 2012, the Company approved the 2012 Stock Option and Stock Award Plan (“2012 Plan”) established to advance the interest of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company.

The maximum aggregate number of (i) shares of stock that may be issued under the 2012 Plan, and (ii) shares of stock with respect to which stock appreciation rights may be granted, is 785,000 and consists of authorized but unissued or reacquired shares of stock or any combination thereof. Such number of shares of stock may be issued under the 2012 Plan pursuant to incentive stock options, nonstatutory stock options, restricted stock grants, stock appreciation right grants or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted.   

The 2012 Plan continues in effect until the earlier of its termination by the Board or the date on which all the shares of stock available for issuance under the 2012 Plan have been issued and all restrictions on such shares under the terms on the 2012 Plan and the agreement evidencing awards granted under the 2012 Plan have lapsed. However, all awards shall be granted, if at all, within ten years from the earlier of the date the 2012 Plan is adopted by the Board or the date the 2012 Plan is duly approved by the stockholders of the Company.

During the six months ended June 30, 2020 and 2019, the Company granted no stock options under the 2012 Plan and recognized no stock compensation expense relating to the vesting of stock options issued from the 2012 Plan.

As of June 30, 2020, there are 2,000 shares that remain available for issuance under the 2012 Plan.

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Note 16 - 2015 Stock Option and Stock Award Plan

6 Months Ended

Jun. 30, 2020

2015 Stock Option and Stock Award Plan

Note 16 - 2015 Stock Option and Stock Award Plan

NOTE 16 - 2015 STOCK OPTION AND STOCK AWARD PLAN

During the year ended December 31, 2015, the Company’s stockholders approved the 2015 Stock Option and Stock Award Plan (“2015 Plan”), which was established to advance the interest of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company.

The maximum aggregate number of (i) shares of stock that may be issued under the 2015 Plan, and (ii) shares of stock with respect to which stock appreciation rights may be granted, is 1,500,000 and consists of authorized but unissued or reacquired shares of stock or any combination thereof. Such number of shares of stock may be issued under the 2015 Plan pursuant to incentive stock options, nonstatutory stock options, restricted stock grants, stock appreciation right grants or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted.

The 2015 Plan continues in effect until the earlier of its termination by the Board or the date on which all the shares of stock available for issuance under the 2015 Plan have been issued and all restrictions on such shares under the terms on the 2015 Plan and the agreements evidencing awards granted under the 2015 Plan have lapsed. However, all awards shall be granted, if at all, within ten years from the earlier of the date the 2015 Plan is adopted by the Board or the date the 2015 Plan is duly approved by the stockholders of the Company.

During the six months ended June 30, 2020, the Company granted under the 2015 Plan a total of 3,000 stock options to a key employee. The stock options had an exercise price of $2.50, vested immediately and had an approximate fair value of $6,678 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.05% (ii) estimated volatility of 99.01% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years. The Company issued no stock options under the 2015 Plan during the six months ended June 30, 2019.

During the three and six months ended June 30, 2020 and 2019, respectively, the Company recognized total stock compensation expenses for vesting options issued from the 2015 Plan as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
2015 Stock Plan	$	80,102	$	16,433	$	90,592	$	32,866

As of June 30, 2020, there are 16,000 shares that remain available for issuance under the 2015 Plan and the number of unvested shares in the 2015 Plan is zero.

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Note 17 - 2018 Stock Option and Stock Award Plan

6 Months Ended

Jun. 30, 2020

2018 Stock Option and Stock Award Plan

Note 17 - 2018 Stock Option and Stock Award Plan

NOTE 17 - 2018 STOCK OPTION AND STOCK AWARD PLAN

Effective February 12, 2018, the Board of Directors of the Company approved and adopted the Summer Energy Holdings, Inc. 2018 Stock Option and Stock Award Plan (“2018 Plan”), which was established to advance the interest of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Company’s named executive officers are eligible for grants or awards under the 2018 Plan. The Company’s stockholders approved the 2018 Plan on June 8, 2018.

The maximum aggregate number of (i) shares of stock that may be issued under the 2018 Plan and (ii) shares of stock with respect to which stock appreciation rights may be granted, is 1,500,000 and consists of authorized but unissued or reacquired shares of stock or any combination thereof. Such number of shares of stock may be issued under the 2018 Plan pursuant to incentive stock options, non-statutory stock options, restricted stock grants, restricted stock units, stock appreciation right grants or any combination thereof, so long as the aggregate number of shares so issued does not exceed such number of shares, as adjusted. The 2018 Plan or any increase in the maximum aggregate number of shares of stock issuable thereunder shall be approved by the stockholders of the Company within twelve months of the date of adoption by the Board. Awards granted prior to stockholder approval of the 2018 Plan shall become exercisable no earlier than the date of stockholder approval of the 2018 Plan. 

The 2018 Plan continues in effect until the earlier of its termination by the Board or the date on which all shares of stock available for issuance under the 2018 Plan have been issued and all restrictions on such shares under the terms on the 2018 Plan and the agreement evidencing awards granted under the 2018 Plan have lapsed. However, all awards shall be granted, if at all, within ten years from the earlier of the date the 2018 Plan is adopted by the Board or the date the 2018 Plan is duly approved by the stockholders of the Company. 

During the six months ended June 30, 2020, the Company granted under the 2018 Plan a total of 85,000 stock options to key employees. The stock options had a weighted average exercise price of $2.18 and had an approximate fair value of $87,161 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.51% (ii) estimated volatility of 110.33% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

During the six months ended June 30, 2019, the Company granted under the 2018 Plan a total of 210,000 stock options to key employees and members of the Company’s board of directors. The stock options had a weighted average exercise price of $1.90 and had an approximate fair value of $357,158 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.18% (ii) estimated volatility of 149.27% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

During the three and six month periods ended June 30, 2020 and 2019, respectively, the Company recognized total stock compensation expense for the vesting of options issued from the 2018 Plan as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
2018 Stock Plan	$	440,114	$	284,777	$	678,284	$	422,728

As of June 30, 2020, the unrecognized expense for vesting of options issued from the 2018 Plan is $378,497 relating to 600,000 of unvested shares expected to be recognized over a weighted average period of approximately 7.03 years.

As of June 30, 2020, the Company had outstanding granted stock options under the 2018 Plan, net of forfeitures to purchase 1,416,250, and 83,750 shares remaining available for issuance.

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Note 18 - Nonqualified Stock Options Granted Outside of a Stock Option or Stock Award Plan

6 Months Ended

Jun. 30, 2020

Note 18 - Nonqualified Stock Options Granted Outside Of Stock Option Or Stock Award Plan

Note 18 - Nonqualified Stock Options Granted Outside Of A Stock Option Or Stock Award Plan

NOTE 18 - NONQUALIFIED STOCK OPTIONS GRANTED OUTSIDE OF A STOCK OPTION OR STOCK AWARD PLAN

In September 2019, the Company entered into stock option grant agreements with six non-employee members of the Company’s Board of Directors whereby the Company agreed to grant non-qualified stock options outside of a stock option or a stock award plan during the months of September 2019, December 2019, March 2020 and June 2020 as compensation for services. The stock options granted pursuant to these agreements and the shares issuable upon the exercise thereof have not been registered under the Securities Act of 1933, as amended.

During the six months ended June 30, 2020, pursuant to the aforementioned grant agreements, the Company granted a total of 107,500 nonqualified stock options with an exercise price of $2.25 to six non-employee board members of the Company as compensation. The stock options granted had an approximate fair value of $110,411 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.50% (ii) estimated volatility of 111.10% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

For the three and six months ended June 30, 2020 and 2019, the stock compensation expense associated with the non-qualified stock options issued outside of a stock option or stock award plan is as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Outside of Stock Option or Stock Award Plan	$	52,651	$	-	$	110,411	$	-

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Note 19 - Private Placement Offering

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 19 - Private Placement Offering

NOTE 19 - PRIVATE PLACEMENT OFFERINGS

During the six months ended June 30, 2020, the Company accepted a subscription from an accredited investor to purchase 30,000 shares of common stock in exchange for cash proceeds in the amount of $45,000.

During the six months ended June 30, 2019, the Company commenced a private placement offering (the “2019 Offering”) to certain investors with whom the Company, its management and/or agents have a pre-existing relationship during the year ended December 31, 2019. The 2019 Offering was to accredited investors to purchase shares of the Company’s common stock at a purchase price of $1.50 per share. The 2019 Offering resulted in the issuance of 3,820,000 shares of common stock in exchange for cash proceeds in the amount of $5,730,000.

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Note 20 - Warrants

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 20 - Warrants

NOTE 20 - WARRANTS

The Company has issued warrants to purchase shares of the Company’s common stock associated with various agreements and has vested warrants from a previously terminated Master Marketing Agreement.

On March 12, 2020, the Company issued a warrant for 250,000 shares of the Company’s common stock under the agreement with Digital Lending (Note 7). The five-year warrant has an exercise price of $1.50 per share and is subject to adjustment as set for in the Warrant. The fair value of warrant was $245,337 determined using the Black-Scholes option-pricing model and was expensed during the quarter ended March 31, 2020. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.66%, (ii) estimated volatility of 123.91%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.  

On January 31, 2020, the Company issued a warrant to purchase up to eight shares of the Company’s common stock under a Referral Agreement whereby the sales broker introduces the Company to potential electricity sales leads. The five-year warrant has an exercise price of $1.50 per share. The fair value of the warrant is $15 determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair value are as follows: (i) risk-free interest rate of 1.62% (ii) estimated volatility of 136.59% (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

On June 11, 2019, the Company issued 106,053 shares of common stock to Black Ink Energy, LLC (“Black Ink”) pursuant to the cashless exercise of a warrant dated March 2, 2015 issued by the Company to Black Ink to purchase up to 536,000 shares of common stock of the Company at $1.50 per share. The Black Ink warrant was terminated and cancelled upon the issuance of the 106,053 shares of common stock.

On May 22, 2019, the Company issued a warrant for 80,000 shares of common stock under a Consulting Agreement (Note 25). The five-year warrant has an exercise price of $1.50 per share. The fair value of the 80,000 warrant was $143,731 determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.19%, (ii) estimated volatility of 149.28%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

On January 25, 2019, the Company issued a warrant for 43,772 shares of the Company’s common stock under a Referral Agreement whereby the sales broker introduces the Company potential sales leads. The five-year warrant has an exercise price of $1.50 per share. The fair value of the 43,772 warrants was $80,307 determined using the Black-Scholes option pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.58%, (ii) estimated volatility of 148.70%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

On January 25, 2019, the Company issued two warrants, each for 6,715 shares, of the Company’s common stock under a Referral Agreement whereby the sales broker introduces the Company potential sales leads. The five-year warrants have an exercise price of $1.50 per share. The fair value of the 13,430 warrants was $24,640 determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 2.58%, (ii) estimated volatility of 148.70%, (iii) dividend yield of 0.00%, and (iv) expected life of the warrant of 5 years.

As of June 30, 2020, the Company had outstanding warrants to purchase up to 976,212 shares of the Company’s common stock, of which 710,975 are fully vested.

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Note 21 - Related Party Lines of Credit

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 21- Related Party Lines of Credit

NOTE 21 - RELATED PARTY LINES OF CREDIT

Effective March 12, 2020, the Company entered into two separate line of credit agreements with related parties, Mr. Neil Leibman and LaRose Holdings LLLP. Mr. Leibman is an officer of the Company and serves on the Company’s board of directors. LaRose Holdings LLLP is an entity controlled by Al LaRose, Jr. who serves on the Company’s board of directors.

The Company entered into a line of credit agreement (the “Leibman Line”) with Mr. Leibman (“Lender Leibman”). The line of credit allows the Company to borrow a maximum principal amount of $1,000,000 to be used by the Company for working capital and other purposes determined by the board of directors of the Company. During the term of the Leibman Line, Lender Leibman may make periodic loans as requested by the Company so long as the aggregate principal amount outstanding at any time does not exceed the maximum amount of the Leibman Line. Simple interest shall accrue on the unpaid principal balance outstanding under the Leibman Lines at the rate of 5% per annum and interest will be calculated on the basis of a 365-day year. Any unpaid principal and all accrued but unpaid interest shall be due and payable in full by the Company no later than May 15, 2023.

The Company entered into a line of credit agreement (the “LaRose Line”) with LaRose Holdings, LLLP (“Lender LaRose”). The line of credit allows the Company to borrow a maximum principal amount of $1,000,000 to be used by the Company for working capital and other purposes determined by the board of directors of the Company. During the term of the LaRose Line, Lender LaRose may make periodic loans as requested by the Company so long as the aggregate principal amount outstanding at any time does not exceed the maximum amount of the LaRose Line. Simple interest shall accrue on the unpaid principal balance outstanding under the LaRose Line at the rate of 5% per annum and interest will be calculated on the basis of a 365-day year. Any unpaid principal and all accrued but unpaid interest shall be due and payable in full by the Company no later than May 15, 2023.

On April 8, 2020, the Company was advanced $1,000,000 by Mr. Leibman under the terms and conditions of the Leibman Line to be utilized as short-term working capital for the Company. On April 28, 2020, the Company paid in full the $1,000,000 of principal advanced from the Leibman Line and paid Mr. Leibman $2,877 of accrued interest.

For the three and six months ended June 30, 2020 and 2019, the interest incurred on related party lines of credit is as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Leibman Line	$	2,877	$	-	$	2,877	$	-
LaRose Line		-		-		-		-
Total	$	2,877	$	-	$	2,877	$	-

As of June 30, 2020, the outstanding balances of the Leibman Line and the LaRose Line were both $0.

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Note 22 - Related Party Promissory Notes

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 22 - Related Party Promissory Notes

NOTE 22 - RELATED PARTY PROMISSORY NOTES

On January 15, 2020, the Company executed a promissory note in the amount of $600,000 to evidence an advance by Mr. Leibman for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of April 14, 2020. On March 13, 2020, the Company paid in full the outstanding balance of the loan from Mr. Leibman with interest in the amount of $4,849. As of June 30, 2020, the balance of the loan from Mr. Leibman was $0.

On November 8, 2019, the Company executed a promissory note in the amount of $850,000 to evidence an advance by Mr. Leibman for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of February 6, 2020. On February 6, 2020, the Company amended such promissory note to extend the maturity date of such note to May 7, 2020 with all other provisions of the original note remaining in full force and effect. On March 13, 2020, the Company paid Mr. Leibman in full the outstanding balance of the loan with interest in the amount of $8,384. As of June 30, 2020, the balance of the loan from Mr. Leibman was $0.

On November 8, 2019, the Company executed a promissory note in the amount of $1,000,000 to evidence an advance by LaRose Holdings LLLP, an entity controlled by Al LaRose, for purposes of short-term financing. Mr. LaRose is a director of the Company. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of February 6, 2020. On February 6, 2020, the Company amended such promissory note to extend the maturity date of such note to May 7, 2020 with all other provisions of the original note remain in full force and effect. On March 13, 2020, the Company paid LaRose Holdings in full the outstanding balance of the loan with interest in the amount of $10,000. As of June 30, 2020, the balance of the loan from LaRose Holdings LLLP was $0.

On January 7, 2019, the Company entered into a promissory note in the amount of $473,000 for an advance by Mr. O’Leary, a member of the Company’s board of directors, for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of July 7, 2019. On February 7, 2019, the Company paid back in full the loan from Mr. O’Leary with interest in the amount of $2,009. As of June 30, 2020 and 2019, the balance of the loan from Mr. O’Leary was $0, respectively.

On January 7, 2019, the Company entered into a promissory note in the amount of $25,000 for an advance by Messrs. O’Leary and Leibman for purposes of short-term financing. The promissory note accrued interest at a rate of 5% per annum based upon 365 days in a year and had a maturity date of July 7, 2019. On February 7, 2019, the Company paid back in full the loan from Messrs. O’Leary and Leibman with interest in the amount of $106. As of June 30, 2020 and 2019, the balance of the loan from Messrs. O’Leary and Leibman was $0, respectively.

The following table summarizes interest paid to related parties on promissory notes for the three and six months ended June 30, 2020 and 2019 is as follows:

			For the Three Months Ended June 30,				For the Six Months Ended June 30,
	Original Date of Loan		2020		2019		2020		2019
Related party interest expense for $600,000 loan	1/15/2020	$	-	$	-	$	4,849	$	-
Related party interest expense for $590,000 loan	11/8/2019		-		-		-		-
Related party interest expense for $850,000 loan	11/8/2019		-		-		8,384		2,009
Related party interest expense for $1,000,000 loan	11/8/2019		-		-		10,000		106
Related party interest expense for $473,000 loan	1/7/2019		-		-		-		-
Related party interest expense for $25,000 loan	1/7/2019		-		-		-		-
Total		$	-	$	-	$	23,233	$	2,115

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Note 23 - Related Party Guarantors

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 23 - Related Party Guarantors

NOTE 23 - RELATED PARTY GUARANTORS

On December 18, 2018, four members of the Company’s Board of Directors, Stuart Gaylor, Andrew Bursten, Tom O’Leary and Neil Leibman (Mr. Leibman is also an executive officer) (collectively, the “Guarantors”) guaranteed a single payment note with Comerica Bank (See Note 9) in the amount of $2,900,000 which was converted to a master revolving note on December 9, 2019. The Company agreed to pay interest at a rate of 12% for the guarantee and such interest is to be paid with the issuance of the Company’s common stock.

On December 20, 2019, four members of the Company’s Board of Directors, Stuart Gaylor, Andrew Bursten, Tom O’Leary and Neil Leibman (Mr. Leibman is also an executive officer) (collectively, the “Guarantors”) guaranteed a single payment note with Comerica Bank (See Note 10) in the amount of $2,100,000. The Company agreed to pay interest at a rate of 12% for the guarantee and such interest is to be paid with the issuance of the Company’s common stock.

The Company incurred interest expense to the Guarantors during the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Guarantor interest expense incurred on Comerica Revolver Note	$	87,968	$	32,934	$	175,935	$	109,101
Guarantor interest expense incurred on Comerica Single Payment Note		63,700		-		127,400		-
	$	151,668	$	32,934	$	303,335	$	109,101

The Company paid interest by the issuance of the Company’s common stock for the three and six months ended June 30, 2020 and 2019 as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	Number of Shares Issued		Amount	Number of Shares Issued		Amount	Number of Shares Issued		Amount	Number of Shares Issued		Amount
Guarantor Interest paid on Comerica Revolving Note	58,644	$	87,968	81,112	$	121,667	58,644	$	87,968	81,112	$	121,667
Guarantor interest paid on Comerica Single Payment Note	42,468		63,700	-		-	42,468		63,700	-		-
	101,112	$	151,668	81,112	$	121,667	101,112	$	151,668	81,112	$	121,667

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Note 24 - Other Related Party Transactions

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 24 - Other Related Party Transactions

NOTE 24 - OTHER RELATED PARTY TRANSACTIONS

In February 2019, Mr. Leibman provided aviation transportation for business purposes, and the Company paid $23,469 in fuel costs.

On October 31, 2017, Summer Northeast entered into a sublease agreement with PDS Management Group, LLC (“PDS”) for office space located at 800 Bering Drive, Suite 250, Houston, Texas. PDS is 100% owned by Tom O’Leary who is a member of the Company’s Board of Directors. The Company paid for lease expense related to the agreement with PDS for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Summer Northeast sublease payments	$	-	$	6,993	$	4,662	$	13,986

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Note 25 - Summer Energy 401(K) Plan

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 25 - Summer Energy 401(k) Plan

NOTE 25 - SUMMER ENERGY 401(K) PLAN

In January 2017, the Company adopted a qualified 401(K) Retirement Plan (the “Plan”) whereby eligible employees may elect to save for retirement on a tax-advantaged basis. There are two types of salary deferrals: pre-tax 401(K) deferrals and Roth 401(K) deferrals. Eligible employee participants are automatically enrolled at 3% of compensation unless a participant elects an alternative deferral percentage limited to dollar amount of $19,500 in 2020 or elects not to defer under the Plan. There is no Company match to the Plan.

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Note 26 - Employee Stock Purchase Plan

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 26 - Employee Stock Purchase Plan

NOTE 26 - EMPLOYEE STOCK PURCHASE PLAN

Effective May 2017, the Company began offering an Employee Stock Purchase Plan (the “ESPP”) whereby eligible employees may elect to purchase common stock of the Company through a registered broker/dealer. Eligible employees who so elect may authorize payroll deductions for contributions to the ESPP up to a maximum of $25,000 each calendar year. The Company will match 10% of eligible employee contributions up to an aggregate maximum of $24,000 for all ESPP participants (not each individual ESPP participant). The employer match for the three and six months ended June 30, 2020 and 2019 is follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Employee Stock Purchase Plan	$	1,038	$	659	$	1,728	$	1,586

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Note 27 - Coronavirus (Covid-19)

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Note 27 - Coronavirus (Covid-19)

NOTE 27 - CORONAVIRUS (COVID-19)

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. The Company is monitoring this closely, and the ultimate severity of the outbreak is uncertain. Operations of the Company are ongoing as the delivery of electricity to customers is considered an essential business. Further the uncertain nature of its spread globally may impact our business operations resulting from quarantines of employees, customers, and third-party service providers. At this time, the Company is unable to estimate the impact of this event on its operations.

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Note 28 - Subsequent Events

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Note 28 - Subsequent Events

NOTE 28 - SUBSEQUENT EVENTS

On July 20, 2020 the Company issued 101,112 shares of the Company’s common stock as payment for the accrued interest for the personal guarantees of the Comerica Bank master revolving note (Note 9) and the Comerica Bank single payment note (Note 10).

On July 24, 2020, the Company granted 30,000 stock options from the 2018 Stock Option and Stock Award Plan (Note 17) to purchase common stock of the Company to two officers for achieving certain performance benchmarks established by the employment agreements of the two officers. The stock options had a weighted average exercise price of $2.50 and had an approximate fair value of $35,719 determined using the Black Scholes option pricing model. The weighted average assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.27% (ii) estimated volatility of 98.63% (iii) dividend yield of 0.00% and (iv) expected life of all options averaging eight years.

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Note 2 - Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Policy Text Block [Abstract]

Uses and Sources of Liquidity

Uses and Sources of Liquidity

The condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and does 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 from uncertainty related to its ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements.

For the six months ended June 30, 2020 and 2019, the Company incurred net losses of $2,791,166 and $2,255,217, respectively, and used cash in continuing operations of $2,985,689 and $3,110,767, respectively. The Company’s operations have been financed principally from electricity revenues, net proceeds from outside debt and equity financing of $4,080,000, funding from the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) totaling $2,342,300 established pursuant to the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) as well as from capital raised under private placement offerings totaling $45,000 and $5,730,000 during the six months ended June 30, 2020 and 2019, respectively. The Company’s liquidity requirements are to finance current operations, meet financial commitments, fund organic growth and/or acquisitions, and service debt. The liquidity requirements fluctuate with the level of customer acquisition costs, collateral posting requirements, the effects of the timing between the settlement of payables and receivables, including the effect of weather conditions, and our general working capital needs for ongoing operations. Estimating liquidity requirements is highly dependent on then-current market conditions, including impacts of the COVID-19 pandemic, weather events, forward prices for electricity, market volatility and our then existing capital structure and requirements.

The Company’s continuation as a going concern is dependent upon its ability to increase sales, and/or raise additional funds through the capital markets as well as outside lending. During the six months ended June 30, 2020, the Company secured additional financing for a revolving loan in the amount of $10,000,000 with a maturity date of March 2023 and proceeds from the PPP loan. In addition, commitments for additional lending up to $2,000,000 may be provided by members of the Board of Directors of the Company, if necessary. Management has concluded that its existing capital resources and availability, proceeds from a 2020 offering and outside lending will be sufficient to fund operations through the third quarter of 2021

Revenue and Cost Recognition

Revenue and Cost Recognition

Our revenues are primarily derived from the sale of electricity to residential and small commercial customers. Revenues for sales of electricity are recognized under the accrual method of accounting.

Direct energy costs are recorded when the electricity is delivered to the customer’s meter.

Cost of goods sold (“COGS”) within the Texas market include electric power purchased and pass through charges from the transmission and distribution service providers (“TDSPs”) in the areas serviced by the Company. TDSP charges are costs for metering services and maintenance of the electric grid. TDSP charges are established by regulation of the PUCT. COGS within the Independent System Operator (“ISO”) for the New England market is comprised of wholesale costs based upon the wholesale power tariff rate for volumes purchased during the delivery month and scheduling fees. Summer Midwest began flowing electricity within the Pennsylvania, New Jersey, Maryland Power Pool (“PJM”) market in July 2019, and the COGS for the PJM market is comprised of wholesale costs based upon the wholesale power tariff for volumes purchased during the delivery month as well as scheduling fees.

The energy portion of our COGS is comprised of two components: bilateral wholesale costs and balancing/ancillary costs. These two cost components are incurred and recognized differently as follows:

Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. We are invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 20 days after the end of the month.

Balancing/ancillary costs are based on the customer load and are determined by the Electric Reliability Council of Texas (“ERCOT”), ISO New England and PJM through a multiple-step settlement process. Balancing costs/revenues are related to the differential between supply that we provided through our bilateral wholesale supply and the supply required to serve our customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through our load forecasting and forward purchasing programs.

Cash and Restricted Cash

Cash and Restricted Cash

The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. There were no such investments at June 30, 2020 or December 31, 2019.

Restricted cash in the amount of $2,026,023 as of June 30, 2020 and $3,197,708 as of December 31, 2019 represents funds held in escrow for customer deposits, funds held in a controlled account by the wholesale provider (Note 12) and funds securing irrevocable stand-by letters of credit (Note 4).

		June 30, 2020		December 31, 2019
Cash	$	3,533,068	$	814,360
Restricted cash:
Escrow for customer deposits		510,749		511,461
Funds securing letters of credit		750,000		750,000
Funds controlled by wholesale provider		765,274		1,936,247
Total restricted cash		2,026,023		3,197,708
Total cash and restricted cash	$	5,559,091	$	4,012,068

Basic and Diluted (Loss) Per Share

Basic and Diluted Income (Loss) Per Share

Basic income/(loss) per share are computed by dividing net income/(loss) applicable to the weighted-average number of shares outstanding during the period. Diluted income per share is determined using the weighted-average number of shares outstanding during the period, adjusted for the dilutive effect of share equivalents, using the treasury method, consisting of shares that might be issued upon exercise of share equivalents. In periods where losses are reported, the weighted average number of shares excludes share equivalents, because their inclusion would be anti-dilutive. 

For the six months ended June 30, 2020 and 2019, the weighted average number of outstanding excludes share equivalents due to dilutive stock options and stock warrants because their inclusion would be anti-dilutive. The Company had potentially dilutive securities totaling approximately 5,022,692 and 4,067,682 as of June 30, 2020 and 2019, respectively.

Recent Pronouncements

Recent Pronouncements

New Accounting Standards Recently Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 requires entities to use a current expected credit loss ("CECL") model, which is a new impairment model based on expected losses rather than incurred losses on financial assets, including trade accounts receivables. The model requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We adopted ASU 2016-13 and the related amendments effective January 1, 2020, and there was no material impact to our condensed consolidated financial statements.

Standards Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, which reduces the complexity of FASB ASC Topic 740, “Income Taxes” as part of the FASB’s Simplification Initiative. The amendments in this guidance simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for annual reporting periods ending after December 15, 2020, with early adoption permitted, and should be applied on either a retrospective basis for all periods presented or a modified retrospective basis. Management is still assessing the impact this might have on the Company’s consolidated financial statements. The Company has reviewed all other recently issued, but not yet adopted, accounting standards, in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that no other pronouncements will have a significant effect on its financial statements.

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Note 2 - Significant Accounting Policies (Table)

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Schedule of cash and restricted cash

		June 30, 2020		December 31, 2019
Cash	$	3,533,068	$	814,360
Restricted cash:
Escrow for customer deposits		510,749		511,461
Funds securing letters of credit		750,000		750,000
Funds controlled by wholesale provider		765,274		1,936,247
Total restricted cash		2,026,023		3,197,708
Total cash and restricted cash	$	5,559,091	$	4,012,068

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Note 3 - Revenue (Tables)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Summary of revenues from customers net of respective provisions for refund

The table below represents the Company’s reportable revenues for the three and six month periods ended June 30, 2020 and 2019, respectively, from customers, net of respective provisions for refund:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Electricity Revenues from Contracts with Customers
ERCOT Market	$	38,599,697	$	36,294,807	$	73,860,940	$	67,097,505
ERCOT Pre-paid Market		1,843,514		1,387,147		3,290,291		2,600,937
ISO New England Market		861,350		1,906,856		1,968,628		3,831,267
PJM Market		298,328		-		487,763		-
Total Electricity Revenues from Contracts with Customers		41,602,889		39,588,810		79,607,622		73,529,709
Other Revenues:
Fees Revenue		919,547		909,777		1,781,804		1,794,747
Total Revenues:	$	42,522,436	$	40,498,587	$	81,389,426	$	75,324,456

Components of accounts receivable and accrued revenue

Presented in the following table are the components of accounts receivable and accrued revenue:

		June 30, 2020		December 31, 2019
Accounts receivable from customers
ERCOT Market	$	10,874,702	$	9,041,871
ISO New England Market		148,453		257,942
PJM Market		104,312		11,244
Total accounts receivable from customers		11,127,467		9,311,057
Accrued revenue from customers
ERCOT Market		36,850,685		32,916,970
ISO New England Market		626,461		788,395
PJM Market		85,307		15,088
Total accrued revenue with customers		37,562,453		33,720,453
Allowance for credit losses		(894,945)		(1,183,561)
Total accounts receivable and accrued revenue	$	47,794,975	$	41,847,949

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Note 6 - Financing From First Insurance Funding (Tables)

6 Months Ended

Jun. 30, 2020

First Insurance Funding

Schedule of interest expense

Interest expense accrued to First Insurance Funding was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
First Insurance Funding interest expense	$	-	$	455	$	1,365	$	455

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Note 7 - Financing From Digital Lending Services Us Corp. (Tables)

6 Months Ended

Jun. 30, 2020

Digital Lending Services

Schedule of interest expense

As of June 30, 2020, the outstanding balance of the Digital Lending loan was $9,000,000 and the interest expense was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Digital Lending interest expense	$	286,875	$	-	$	350,625	$	-

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Note 8 - Financing From Blue Water Capital Funding LLC (Tables)

6 Months Ended

Jun. 30, 2020

Blue Water Capital Funding

Schedule of accrued interest

Interest expense to Blue Water was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Blue Water interest expense	$	-	$	127,476	$	167,900	$	253,550

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Note 9 - Comerica Bank Master Revolving Note (Tables)

6 Months Ended

Jun. 30, 2020

Comerica Bank

Schedule of accrued interest

Interest expense related to the Comerica Revolver Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Revolver Note interest expense	$	24,822	$	15,781	$	59,058	$	52,277

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Note 10 - Comerica Bank Single Payment Note (Tables) - Comerica Bank

6 Months Ended

Jun. 30, 2020

Schedule of accrued interest

Interest expense related to the Comerica Revolver Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Revolver Note interest expense	$	24,822	$	15,781	$	59,058	$	52,277

Single Note

Schedule of accrued interest

Interest expense related to the Comerica Single Note was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Comerica Single Note interest expense	$	18,849	$	-	$	43,641	$	-

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Note 11 - Paycheck Protection Program Loan (Tables)

6 Months Ended

Jun. 30, 2020

PPP Loan

Schedule of interest expenses

Interest expense related to the Loan was as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
PPP Loan Interest	$	4,813	$	-	$	4,813	$	-

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Note 12 - Wholesale Power Purchase Agreement with EDF (Tables)

6 Months Ended

Jun. 30, 2020

EDF

Schedule of accrued interest

The Company incurred interest expense to EDF for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
EDF Interest	$	240,517	$	199,234	$	504,781	$	391,998

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Note 13 - Lease Liabilities, Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Schedule of Future Minimum Rental Payments for Operating Leases

Operating lease future minimum payments together with their present values as of June 30, 2020 are summarized as follows:

		Operating Leases
2020	$	99,748
2021		199,494
2022		199,494
2023		197,294
2024		190,693
Thereafter		190,693
Total future minimum lease payments		1,077,416
Less amounts representing interest		(171,858)
Present value of lease liability	$	905,558
Current-portion operating lease liability		(144,899)
Long-term portion operating lease liability	$	760,659

Schedule of Operating lease expense

Lease expense for the office space for the three and six months ended June 30, 2020 and 2019, respectively, was included in operating expenses on the consolidated statements of operations as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Operating Lease expense	$	34,781	$	77,571	$	73,627	$	153,893

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Note 14 - Long Term Obligations (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of Long-term debt

Long-term obligations of the Company are comprised as follows:

		June 30, 2020		December 31, 2019
Financing from First Insurance Funding (Note 6)	$	94,761	$	38,397
Financing from Digital Lending Services US Corp. (Note 7)		9,000,000		-
Financing from Blue Water Capital Funding, LLC (Note 8)		-		4,920,000
Comerica Bank Master Revolving Note (Note 9)		2,900,000		2,900,000
Comerica Bank Single Payment Note (Note 10)		2,100,000		2,100,000
Financing from Paycheck Protection Program Loan (Note 11)		2,342,300		-
Wholesale Power Purchase Agreement with EDF collateral credit support (Note 12)		4,811,006		4,511,006
Operating lease obligations (Note 13)		905,558		979,185
Total obligations	$	22,153,625	$	15,448,588
Less current portion of obligations		(5,094,761)		(5,038,397)
Less current portion operating lease obligations (Note 13)		(144,899)		(144,902)
Long-term portion of obligations	$	16,913,965	$	10,265,289

Schedule of accrued interest

For the three and six months ended June 30, 2020 and 2019, respectively, interest expense consists of the following on obligations:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Financing from First Insurance Funding (Note 6)	$	-	$	455	$	1,365	$	455
Financing from Digital Lending Services US Corp. (Note 7)		286,875		-		350,625		-
Financing from Blue Water Capital Funding, LLC (Note 8)		-		127,476		167,900		253,550
Comerica Master Revolving Note (Note 9)		24,822		15,781		59,058		52,277
Comerica Bank Single Payment Note (Note 10)		18,849		-		43,641		-
Financing from Paycheck Protection Program Loan (Note 11)		4,813		-		4,813		-
Wholesale Power Purchase Agreement with EDF (Note 12)		240,517		199,234		504,781		391,998
Related Party Line of Credit (Note 21)		2,877		-		2,877		-
Related Party Promissory Loans (Note 22)		-		-		23,233		2,115
Related Party Guarantors (Note 23)		151,668		32,934		303,334		109,101
Other interest		96		45		409		130
Total interest expense	$	730,517	$	375,925	$	1,462,036	$	809,626
Interest income		(7,889)		(14,859)		(13,726)		(30,088)
Interest expense, net	$	722,628	$	361,066	$	1,448,310	$	779,538

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Note 16 - 2015 Stock Option and Stock Award Plan (Tables)

6 Months Ended

Jun. 30, 2020

2015 Stock Option and Stock Award Plan

Schedule of stock compensation expenses

During the three and six months ended June 30, 2020 and 2019, respectively, the Company recognized total stock compensation expenses for vesting options issued from the 2015 Plan as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
2015 Stock Plan	$	80,102	$	16,433	$	90,592	$	32,866

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Note 17 - 2018 Stock Option and Stock Award Plan (Tables)

6 Months Ended

Jun. 30, 2020

2018 Stock Option and Stock Award Plan

Schedule of stock compensation expenses

During the three and six month periods ended June 30, 2020 and 2019, respectively, the Company recognized total stock compensation expense for the vesting of options issued from the 2018 Plan as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
2018 Stock Plan	$	440,114	$	284,777	$	678,284	$	422,728

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Note 18 - Nonqualified Stock Options Granted Outside of a Stock Option or Stock Award Plan (Tables)

6 Months Ended

Jun. 30, 2019

Nonqualified stock options

Schedule of stock compensation expenses

For the three and six months ended June 30, 2020 and 2019, the stock compensation expense associated with the non-qualified stock options issued outside of a stock option or stock award plan is as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Outside of Stock Option or Stock Award Plan	$	52,651	$	-	$	110,411	$	-

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Note 21 - Related Party Lines of Credit (Tables)

6 Months Ended

Jun. 30, 2020

Shares to be issued to each Guarantor per month

Summary interest incurred on related parties

For the three and six months ended June 30, 2020 and 2019, the interest incurred on related party lines of credit is as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Leibman Line	$	2,877	$	-	$	2,877	$	-
LaRose Line		-		-		-		-
Total	$	2,877	$	-	$	2,877	$	-

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Note 22 - Related Party Promissory Notes (Tables)

6 Months Ended

Jun. 30, 2020

Note 24Related Party Loans Abstract

Summary interest paid to related parties

The following table summarizes interest paid to related parties on promissory notes for the three and six months ended June 30, 2020 and 2019 is as follows:

			For the Three Months Ended June 30,				For the Six Months Ended June 30,
	Original Date of Loan		2020		2019		2020		2019
Related party interest expense for $600,000 loan	1/15/2020	$	-	$	-	$	4,849	$	-
Related party interest expense for $590,000 loan	11/8/2019		-		-		-		-
Related party interest expense for $850,000 loan	11/8/2019		-		-		8,384		2,009
Related party interest expense for $1,000,000 loan	11/8/2019		-		-		10,000		106
Related party interest expense for $473,000 loan	1/7/2019		-		-		-		-
Related party interest expense for $25,000 loan	1/7/2019		-		-		-		-
Total		$	-	$	-	$	23,233	$	2,115

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Note 23 - Related Party Guarantors (Tables) - Guarantors

6 Months Ended

Jun. 30, 2020

Schedule of accrued interest

The Company incurred interest expense to the Guarantors during the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Guarantor interest expense incurred on Comerica Revolver Note	$	87,968	$	32,934	$	175,935	$	109,101
Guarantor interest expense incurred on Comerica Single Payment Note		63,700		-		127,400		-
	$	151,668	$	32,934	$	303,335	$	109,101

Schedule of interest paid by issuance of common stock

The Company paid interest by the issuance of the Company’s common stock for the three and six months ended June 30, 2020 and 2019 as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	Number of Shares Issued		Amount	Number of Shares Issued		Amount	Number of Shares Issued		Amount	Number of Shares Issued		Amount
Guarantor Interest paid on Comerica Revolving Note	58,644	$	87,968	81,112	$	121,667	58,644	$	87,968	81,112	$	121,667
Guarantor interest paid on Comerica Single Payment Note	42,468		63,700	-		-	42,468		63,700	-		-
	101,112	$	151,668	81,112	$	121,667	101,112	$	151,668	81,112	$	121,667

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Note 24 - Other Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2020

PDS

Schedule of lease expense

The Company paid for lease expense related to the agreement with PDS for the three and six months ended June 30, 2020 and 2019 as follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Summer Northeast sublease payments	$	-	$	6,993	$	4,662	$	13,986

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Note 26 - Employee Stock Purchase Plan (Tables)

6 Months Ended

Jun. 30, 2020

Disclosure Text Block [Abstract]

Schedule of employer match

The employer match for the three and six months ended June 30, 2020 and 2019 is follows:

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2020		2019		2020		2019
Employee Stock Purchase Plan	$	1,038	$	659	$	1,728	$	1,586

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Note 1 - Organization (Details)	6 Months Ended
	Jun. 30, 2020
Midwest
Entity Incorporation, Date of Incorporation	Dec. 16, 2013
Marketing LLC
Entity Incorporation, Date of Incorporation	Nov. 06, 2012
Summer LLC
Entity Incorporation, Date of Incorporation	Apr. 06, 2011

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Note 2 - Significant Accounting Policies: (Uses and Sources of Liquidity) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Net loss	$ (2,791,166)	$ (2,255,217)
Net cash used in operating activities	(2,985,689)	(3,110,767)
Private placement offerings	45,000	5,730,000
Revolving loan in amount	10,000,000
Additional loan	2,000,000
Proceeds from loan	2,342,300	$ 0
Proceeds from outside financing	4,080,000
Small Business Administration
Proceeds from loan	$ 2,342,300

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Note 2 - Significant Accounting Policies: Cash and Restricted Cash (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Text Block [Abstract]
Restricted cash	$ 2,026,023	$ 3,197,708
Investments	$ 0	$ 0

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Note 2 - Significant Accounting Policies: Cash and Restricted Cash: Schedule of Cash and Restricted Cash (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Text Block [Abstract]
Cash	$ 3,533,068	$ 814,360
Restricted cash:
Escrow for customer deposits	510,749	511,461
Funds controlled by wholesale provider	750,000	750,000
Funds securing letters of credit	765,274	1,936,247
Total restricted cash	2,026,023	3,197,708
Total cash and restricted cash	$ 5,559,091	$ 4,012,068	$ 5,201,733	$ 3,854,885

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Note 2 - Significant Accounting Policies: Basic and Diluted Loss Per Unit (Details) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Text Block [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5,022,692	4,067,682

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Note 3 - Revenue (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Allowance for doubtful accounts	$ 894,945	$ 1,183,561
Allowance for credit losses	894,945
Texas Market
Unbilled accounts	36,850,685	32,916,970
ISO New England Market
Unbilled accounts	626,461	788,395
PJM Market
Unbilled accounts	$ 85,307	$ 15,088

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Note 3 - Revenue: Summary of revenues from customers net of respective provisions for refund (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Total Electricity Revenues from Contracts with Customers	$ 41,602,889	$ 39,588,810	$ 79,607,622	$ 73,529,709
Fees Revenue	919,547	909,777	1,781,804	1,794,747
Total Revenues	42,522,436	40,498,587	81,389,426	75,324,456
ERCOT Market
Total Electricity Revenues from Contracts with Customers	38,599,697	36,294,807	73,860,940	67,097,505
ERCOT Pre-Paid Market
Total Electricity Revenues from Contracts with Customers	1,843,514	1,387,147	3,290,291	2,600,937
ISO New England Market
Total Electricity Revenues from Contracts with Customers	861,350	1,906,856	1,968,628	3,831,267
PJM Market
Total Electricity Revenues from Contracts with Customers	$ 298,328	$ 0	$ 487,763	$ 0

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Note 3 - Revenue: Components of accounts receivable and accrued revenue (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Total accounts receivable from customers	$ 11,127,467	$ 9,311,057
Total accrued revenue with customers	37,562,453	33,720,453
Allowance for doubtful accounts	(894,945)	(1,183,561)
Total accounts receivable and accrued revenue	47,794,975	41,847,949
ERCOT Market
Total accounts receivable from customers	10,874,702	9,041,871
Total accrued revenue with customers	36,850,685	32,916,970
ISO New England Market
Total accounts receivable from customers	148,453	257,942
Total accrued revenue with customers	626,461	788,395
PJM Market
Total accounts receivable from customers	104,312	11,244
Total accrued revenue with customers	$ 85,307	$ 15,088

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Note 4 - Letters of Credit and Deposits (Details) - Letter of Credit - USD ($)	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Line of Credit Facility, Maximum Borrowing Capacity	$ 0
Letters of Credit Outstanding, Amount	0
Letters of credit facility	750,000	$ 750,000
Summer Northeast
Cash deposits	896,299	1,387,181
Summer Midwest
Line of Credit Facility, Maximum Borrowing Capacity	0	50,000
Cash deposits	1,488,000	713,000
Connecticut Department
Letters of credit facility	250,000
State of New Hampshire
Letters of credit facility	$ 500,000
Letters of credit facility, expiration period	May 01, 2021
ERCOT Market
Cash deposits	$ 1,038,719	$ 1,004,059

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Note 5 - Surety Bonds (Details)	Jun. 30, 2020 USD ($)
Cash held by surety bond	$ 375,000
Illinois Commerce Commission
Surety Bonds	500,000
Pennsylvania Public Utility Commission
Surety Bonds	$ 250,000

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Note 6 - Financing From First Insurance Funding (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Shares to be issued to each Guarantor per month
Premiums, taxes and fees	$ 141,352	$ 150,575
Periodic payment	$ 34,349	$ 22,586
Interest rate	5.85%	6.45%
Outstanding balance	$ 94,761		$ 38,397

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Note 6 - Financing From First Insurance Funding: Interest accrued (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
First Insurance Funding
Interest accrued	$ 0	$ 455	$ 1,365	$ 455

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Note 7 - Financing From Digital Lending Services Us Corp. (Details) - USD ($)	Mar. 12, 2020	Jun. 30, 2020	Dec. 31, 2019
Long-term debt		$ 16,913,965	$ 10,265,289
Digital Lending
Long-term debt		$ 9,000,000
Agreement | Digital Lending
Amount of available credit	$ 10,000,000
Interest rate	12.75%
Maturity date	Mar. 11, 2023

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Note 7 - Financing From Digital Lending Services Us Corp. Interest accrued (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
Digital Lending Services
Interest accrued	$ 286,875	$ 0	$ 350,625	$ 0

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Note 8 - Financing From Blue Water Capital Funding LLC (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Long-term debt	$ 16,913,965	$ 10,265,289
Blue Water Capital Funding
Debt Instrument, Face Amount	$ 5,000,000
Debt Instrument, Maturity Date	Jun. 30, 2020
Debt Instrument, Interest Rate, Stated Percentage	11.00%
Financing fee	$ 22,500
Long-term debt	$ 0	$ 4,920,000

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Note 8 - Financing From Blue Water Capital Funding LLC: Interest accrued (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
Blue Water Capital Funding
Interest accrued	$ 0	$ 127,476	$ 167,900	$ 253,550

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Note 9 - Comerica Bank Master Revolving Note (Details) - Comerica Bank - USD ($)	Dec. 20, 2019	Dec. 18, 2018	Jun. 30, 2020	Dec. 31, 2019
Proceeds from Comerica Bank note	$ 2,100,000	$ 2,900,000
Note
Proceeds from Comerica Bank note		$ 2,900,000
Maturity Date		Jun. 11, 2020
Interest rate		3.50%
Comerica Bank Loan outstanding			$ 2,900,000	$ 2,900,000

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Note 9 - Comerica Bank Master Revolving Note: Interest accrued (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
Comerica Bank | Note
Interest accrued	$ 24,822	$ 15,781	$ 59,058	$ 52,277

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Note 10 - Comerica Bank Single Payment Note (Details) - Comerica Bank - USD ($)	Dec. 20, 2019	Dec. 18, 2018	Jun. 30, 2020	Dec. 31, 2019
Proceeds from Comerica Bank note	$ 2,100,000	$ 2,900,000
Single Note
Proceeds from Comerica Bank note	$ 2,100,000
Maturity Date	Jun. 20, 2020
Interest rate	3.50%
Comerica Bank Loan outstanding			$ 2,100,000	$ 2,100,000

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Note 10 - Comerica Bank Single Payment Note: Interest accrued (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
Comerica Bank | Single Note
Interest accrued	$ 18,849	$ 0	$ 43,641	$ 0

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Note 11 - Paycheck Protection Program Loan (Details) - USD ($)	1 Months Ended	6 Months Ended
	Apr. 20, 2020	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Proceeds from loan		$ 2,342,300	$ 0
Periodic payment		34,349	$ 22,586
PPP Loan
Loan payable		$ 2,342,300		$ 0
Frost Bank
Proceeds from loan	$ 2,342,300
Interest rate	1.00%
Term	2 years
Periodic payment	$ 130,128

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Note 11 - Paycheck Protection Program Loan: Interest expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest expenses	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
PPP Loan
Interest expenses	$ 4,813	$ 0	$ 4,813	$ 0

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Note 12 - Wholesale Power Purchase Agreement with EDF (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Long-term debt	$ 16,913,965	$ 10,265,289
EDF
Long-term debt	$ 4,811,006	$ 4,511,006

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Note 12 - Wholesale Power Purchase Agreement with EDF: Interest accrued (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
EDF
Interest accrued	$ 240,517	$ 199,234	$ 504,781	$ 391,998

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Note 13 - Lease Liabilities, Commitments and Contingencies (Details) - USD ($)			1 Months Ended
	Sep. 01, 2019	Dec. 01, 2018	Feb. 28, 2020	Jun. 30, 2020	Dec. 31, 2019
Operating lease right-of-use assets				$ 905,558	$ 979,185
Operating lease liabilities				905,558	979,185
Long-term portion operating lease liability				$ 760,659	$ 834,283
Weighted-average remaining lease term for operating leases				5 years 5 months 9 days
Weighted-average discount rate for operating leases				6.50%
Summer LLC
Rent payments		$ 15,900
Termination Date		Dec. 31, 2025
PDS Management Group, LLC
Rent payments	$ 1,698		$ 2,255
Termination Date	Feb. 28, 2020

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Note 13 - Lease Liabilities, Commitments and Contingencies : Operating lease future minimum payments (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Shares to be issued to each Guarantor per month
2020	$ 99,748
2021	199,494
2022	199,494
2023	197,294
2024	190,693
Thereafter	190,693
Total future minimum lease payments	1,077,416
Less amounts representing interest	(171,858)
Present value of lease liability	905,558	$ 979,185
Current-portion operating lease liability	(144,899)	(144,902)
Long-term portion operating lease liability	$ 760,659	$ 834,283

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Note 13 - Lease Liability: Operating lease expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Shares to be issued to each Guarantor per month
Operating lease expense	$ 34,781	$ 77,571	$ 73,627	$ 153,893

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Note 14 - Long Term Obligations: Schedule of Long-term debt (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Operating lease obligations	$ 905,558	$ 979,185
Total obligations	22,153,625	15,448,588
Less current portion of obligations	(5,094,761)	(5,038,397)
Less current portion operating lease obligations	(144,899)	(144,902)
Long-term debt	16,913,965	10,265,289
EDF
Total obligations	4,811,006	4,511,006
Long-term debt	4,811,006	4,511,006
PPP Loan
Total obligations	2,342,300	0
Comerica Bank | Note
Total obligations	2,900,000	2,900,000
Comerica Bank | Single Note
Total obligations	2,100,000	2,100,000
First Insurance Funding
Total obligations	94,761	38,397
Digital Lending Services
Total obligations	9,000,000	0
Blue Water Capital Funding
Total obligations	0	4,920,000
Long-term debt	$ 0	$ 4,920,000

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Note 14 - Long Term Obligations: Interest expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest expense	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
Interest income	(7,889)	(14,859)	(13,726)	(30,088)
Interest expense, net	722,628	361,066	1,448,310	779,538
PPP Loan
Interest expense	4,813	0	4,813	0
EDF
Interest expense	240,517	199,234	504,781	391,998
DTE
Interest expense	0	0	23,233	2,115
Guarantors
Interest expense	151,668	32,934	303,335	109,101
Others
Interest expense	96	45	409	130
Comerica Bank | Note
Interest expense	24,822	15,781	59,058	52,277
Comerica Bank | Single Note
Interest expense	18,849	0	43,641	0
Line of Credit [Member]
Interest expense	2,877	0	2,877	0
First Insurance Funding
Interest expense	0	455	1,365	455
Digital Lending Services
Interest expense	286,875	0	350,625	0
Blue Water Capital Funding
Interest expense	$ 0	$ 127,476	$ 167,900	$ 253,550

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Note 15 - 2012 Stock Option and Stock Award Plan (Details) - 2012 Stock Option and Stock Award Plan - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Number of Shares Authorized	785,000
Shares available for issuance	2,000
Expected life of the options	10 years
Allocated Share-based Compensation Expense	$ 0	$ 0

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Note 16 - 2015 Stock Option and Stock Award Plan (Details) - 2015 Stock Option and Stock Award Plan	6 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares
Number of Shares Authorized	1,500,000
Shares available for issuance	16,000
Non-vested shares	0
Employee Stock Option
Option vested	3,000
Stock options exercise price | $ / shares	$ 2.50
Fair value of option vested | $	$ 6,678
Fair Value Assumptions, Method Used	Black-Scholes option-pricing model
Risk-free interest rate	2.05%
Estimated volatility	99.01%
Dividend yield	0.00%
Expected life of options	8 years

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Note 16 - 2015 Stock Option and Stock Award Plan: Stock compensation expenses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
2015 Stock Option and Stock Award Plan
Allocated Share-based Compensation Expense	$ 80,102	$ 16,433	$ 90,592	$ 32,866

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Note 17 - 2018 Stock Option and Stock Award Plan (Details) - 2018 Stock Option and Stock Award Plan - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Number of Shares Authorized	1,500,000
Shares available for issuance	83,750
Option net of forfeitures	1,416,250
Unrecognized expense for unvested options	$ 378,497
Non-vested shares	600,000
Deferred Compensation Arrangement with Individual, Requisite Service Period	7 years 11 days
Employee Stock Option
Option vested	85,000
Stock options exercise price	$ 2.18
Fair value of option vested	$ 87,161
Fair Value Assumptions, Method Used	Black-Scholes option-pricing model
Risk-free interest rate	0.51%
Estimated volatility	110.33%
Dividend yield	0.00%
Expected life of options	8 years
NonEmployee Stock Option
Option vested		210,000
Stock options exercise price		$ 1.90
Fair value of option vested		$ 357,158
Fair Value Assumptions, Method Used		Black-Scholes option-pricing model
Risk-free interest rate		2.18%
Estimated volatility		149.27%
Dividend yield		0.00%
Expected life of options		8 years

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Note 17 - 2018 Stock Option and Stock Award Plan: Schedule of options granted to purchase common stock (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
2018 Stock Option and Stock Award Plan
Allocated Share-based Compensation Expense	$ 440,114	$ 284,777	$ 678,284	$ 422,728

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Note 18 - Nonqualified Stock Options Granted Outside of a Stock Option or Stock Award Plan (Details) - Nonqualified stock options	6 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares
Option granted | shares	107,500
Stock options exercise price | $ / shares	$ 2.25
Fair value of option vested | $	$ 110,411
Fair Value Assumptions, Method Used	Black Scholes option pricing model
Risk-free interest rate	0.50%
Estimated volatility	111.10%
Dividend yield	0.00%
Expected life of the options	8 years

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Note 18 - Nonqualified Stock Options Granted Outside of a Stock Option or Stock Award Plan : Options granted (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Nonqualified stock options
Allocated Share-based Compensation Expense	$ 52,651	$ 0	$ 110,411	$ 0

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Note 19 - Private Placement Offering (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock Issued During Period, Shares	$ 960,000	$ 45,000	$ 5,730,000
Investor | Private Placement
Stock Issued During Period, Shares		$ 30,000	$ 3,820,000
Stock Issued During Period, Value		45,000	5,730,000
Purchase price per share		$ 1.50

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Note 20 - Warrants (Details) - USD ($)			1 Months Ended
	Mar. 12, 2020	Jun. 11, 2019	Jan. 31, 2020	May 22, 2019	Jan. 25, 2019	Jun. 30, 2020
Warrants Outstanding						710,975
Warrants vested						976,212
Black Ink
Warrants issued		106,053
Purchase of common stock		536,000
Share Price		$ 1.50
Warrants cancelled		106,053
Consulting Agreement | Warrant [Member]
Warrants issued			8	80,000
Exercise price of warrants			$ 1.50	$ 1.50
Warrants Term			5 years	5 years
Fair value of warrants			$ 15	$ 143,731
Fair Value Assumptions, Method Used			Black-Scholes option-pricing model	Black-Scholes option-pricing model
Risk-free interest rate			1.62%	2.19%
Estimated volatility			136.59%	149.28%
Dividend yield			0.00%	0.00%
Expected life of the options			5 years	5 years
Referral Agreement | Warrant [Member]
Warrants issued	250,000				43,772
Exercise price of warrants	$ 1.50				$ 1.50
Warrants Term	5 years				5 years
Fair value of warrants	$ 245,337				$ 80,307
Fair Value Assumptions, Method Used	Black-Scholes option-pricing model				Black-Scholes option-pricing model
Risk-free interest rate	0.66%				2.58%
Estimated volatility	123.91%				148.70%
Dividend yield	0.00%				0.00%
Expected life of the options	5 years				5 years
Referral Agreement | Warrant 2[Member]
Warrants issued					13,430
Exercise price of warrants					$ 1.50
Warrants Term					5 years
Fair value of warrants					$ 24,640
Fair Value Assumptions, Method Used					Black-Scholes option-pricing model
Risk-free interest rate					2.58%
Estimated volatility					148.70%
Dividend yield					0.00%
Expected life of the options					5 years

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Note 21- Related Party Lines of Credit (Details) - USD ($)		1 Months Ended	6 Months Ended		24 Months Ended
	Apr. 08, 2020	Apr. 28, 2020	Jun. 30, 2020	Jun. 30, 2019	Mar. 12, 2020
Related Party Loans			$ 600,000	$ 498,000
Neil Leibman | Promissory note
Related Party Loans	$ 1,000,000	$ 1,000,000
Accrued interest		$ 2,877
Letter of Credit | Lender Leibman
Related Party Loans					$ 1,000,000
Interest rate					5.00%
Term					365 days
Maturity date					May 15, 2023
Line of credit			0
Letter of Credit | Lender LaRose
Related Party Loans					$ 1,000,000
Interest rate					5.00%
Term					365 days
Maturity date					May 15, 2023
Line of credit			$ 0

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Note 21- Related Party Lines of Credit: Interest incurred (Details) - Line of Credit [Member] - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest incured	$ 2,877	$ 0	$ 2,877	$ 0
Lender Leibman
Interest incured	2,877	0	2,877	0
Lender LaRose
Interest incured	$ 0	$ 0	$ 0	$ 0

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Note 22 - Related Party Promissory Notes (Details) - USD ($)						1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 08, 2020	Jan. 15, 2020	Nov. 08, 2019	Feb. 07, 2019	Jan. 07, 2019	Apr. 28, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Related Party Loans									$ 600,000	$ 498,000
Repayment of related party loan									2,450,000	498,000
Loan							$ 2,000,000		2,000,000
Promissory notes | Neil Leibman
Related Party Loans		$ 600,000
Interest rate		5.00%
Term		365 days
Maturity date		Apr. 14, 2020
Loan
Interest paid to related parties							0	$ 0	4,849	0
Promissory notes | Neil Leibman
Loan							0		0
Promissory notes | LaRose Holdings
Interest paid to related parties							0	0	10,000	106
Promissory notes | OLeary and Leibman
Related Party Loans				$ 25,000
Repayment of related party loan				$ 25,000
Interest rate				5.00%
Term				365 days
Maturity date				Jul. 07, 2019
Loan							0		0
Interest paid to related parties							0		0
Promissory notes | Neil Leibman
Interest paid to related parties							0	0	8,384	2,009
Promissory note
Interest paid to related parties							0	0	23,233	2,115
Promissory note | Neil Leibman
Related Party Loans	$ 1,000,000					$ 1,000,000
Promissory note | Neil Leibman
Related Party Loans			$ 850,000
Repayment of related party loan			$ 850,000
Interest rate			5.00%
Term			365 days
Maturity date			May 07, 2020
Interest paid to related parties									0
Promissory note | LaRose Holdings
Related Party Loans			$ 1,000,000
Repayment of related party loan			$ 1,000,000
Interest rate			5.00%
Term			365 days
Maturity date			May 07, 2020
Loan							0		0
Promissory note | Tom O Leary
Related Party Loans					$ 473,000
Repayment of related party loan					$ 473,000
Interest rate					5.00%
Term					365 days
Maturity date					Jul. 07, 2019
Loan							0		0
Interest paid to related parties							$ 0	0	$ 0	0
Promissory note | OLeary and Leibman
Interest paid to related parties								$ 0		$ 0

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Note 22 - Related Party Promissory Notes: Interest paid to related parties (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Promissory notes | Neil Leibman
Interest paid to related parties	$ 0	$ 0	$ 4,849	$ 0
Promissory notes | Neil Leibman
Interest paid to related parties	0	0	0	0
Promissory notes | Neil Leibman
Interest paid to related parties	0	0	8,384	2,009
Promissory notes | LaRose Holdings
Interest paid to related parties	0	0	10,000	106
Promissory notes | OLeary and Leibman
Interest paid to related parties	0		0
Promissory note
Interest paid to related parties	0	0	23,233	2,115
Promissory note | Tom O Leary
Interest paid to related parties	$ 0	0	$ 0	0
Promissory note | OLeary and Leibman
Interest paid to related parties		$ 0		$ 0

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Note 23 - Related Party Guarantors (Details) - Comerica Bank - USD ($)	Dec. 20, 2019	Dec. 18, 2018
Proceeds from Comerica Bank note	$ 2,100,000	$ 2,900,000
Interest rate	12.00%	12.00%

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Note 23 - Related Party Guarantors : Accrued interest expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest accrued	$ 730,517	$ 375,925	$ 1,462,036	$ 809,626
Comerica revolver note
Interest accrued	87,968	32,934	175,935	109,101
Comerica Single note
Interest accrued	63,700	0	127,400	0
Guarantors
Interest accrued	$ 151,668	$ 32,934	$ 303,335	$ 109,101

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Note 23 - Related Party Guarantors : Interest paid by issuance of common stock (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Amount		$ 960,000	$ 45,000	$ 5,730,000
Comerica revolver note
Number of Shares Issued	58,644	81,112	58,644	2
Amount	$ 87,968	$ 121,667	$ 87,968	$ 121,667
Comerica Single note
Number of Shares Issued	42,468	0	42,468	0
Amount	$ 63,700	$ 0	$ 63,700	$ 0
Guarantors
Number of Shares Issued	101,112	81,112	101,112	81,112
Amount	$ 151,668	$ 121,667	$ 151,668	$ 121,667

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Note 24 - Other Related Party Transactions (Details)	1 Months Ended
	Feb. 28, 2019 USD ($)
Neil Leibman
Fuel costs	$ 23,469

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Note 24 - Other Related Party Transactions: Lease Expenses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Lease expense	$ 34,781	$ 77,571	$ 73,627	$ 153,893
PDS
Lease expense	$ 0	$ 6,993	$ 4,662	$ 13,986

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Note 25 - Summer Energy 401(K) Plan (Details)	6 Months Ended
	Jun. 30, 2020
Text Block [Abstract]
401 (K) Plan	Eligible employee participants are automatically enrolled at 3% of compensation unless a participant elects an alternative deferral percentage limited to dollar amount of $19,500 in 2020 or elects not to defer under the Plan. There is no Company match to the Plan.

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Note 26 - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan	6 Months Ended
	Jun. 30, 2020 USD ($)
Maximum Annual Contributions Per Employee, Amount	$ 25,000
Employers Matching Contribution, Annual Vesting Percentage	10.00%
Maximum Contributions for All Employees	$ 24,000

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Note 26 - Employee Stock Purchase Plan: Employer match (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disclosure Text Block [Abstract]
Employer match	$ 1,038	$ 659	$ 1,728	$ 1,586

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Note 28 - Subsequent Events (Details) - USD ($)	1 Months Ended		6 Months Ended
	Jul. 24, 2020	Jul. 20, 2020	Jun. 30, 2020
2018 Stock Option and Stock Award Plan
Option granted			1,416,250
Subsequent Event [Member]
Number of common stock issued		101,112
Subsequent Event [Member] | 2018 Stock Option and Stock Award Plan
Option granted	30,000
Stock options exercise price	$ 2.50
Fair value of option vested	$ 35,719
Fair Value Assumptions, Method Used	Black Scholes option pricing model
Risk-free interest rate	0.27%
Estimated volatility	98.63%
Dividend yield	0.00%
Expected life of options	8 years