Form 10-Q Correlate Infrastructure For: Jun 30
Tweet
Share
E-mail
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated Filer ☐ | Smaller reporting company |
| Accelerated Filer ☐ | Emerging growth company |
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 standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
The number of shares of Common Stock, par value $0.0001 per share, outstanding as of August 12, 2022 was .
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered |
| None | N/A | N/A |
CORRELATE INFRASTRUCTURE PARTNERS INC.
Index
PART 1 — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CORRELATE INFRASTRUCTURE PARTNERS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2022 AND DECEMBER 31, 2021
(Unaudited)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Other assets | ||||||||
| Intangible assets - trademark/trade name | ||||||||
| Intangible assets - customer relationships, net | ||||||||
| Intangible assets - developed technology, net | ||||||||
| Goodwill | ||||||||
| Total other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Customer deposits | ||||||||
| Shareholder advances | ||||||||
| Line of credit | ||||||||
| Notes payable, current portion, net of discount | ||||||||
| Total current liabilities | ||||||||
| Notes payable, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 3) | ||||||||
| Stockholders' equity (deficit) | ||||||||
| Preferred stock $ par value; authorized shares with -- issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||||||||
| Common stock- Class A $ par value; authorized shares with -- and shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||||||||
| Common stock- Class B $ par value; authorized shares with -- shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||||||||
| Common stock $ par value; authorized shares with and -- shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders' equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Gross profit (loss) | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Insurance | ||||||||||||||||
| Legal and professional | ||||||||||||||||
| Travel | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| Class A Common Stock | Class B Common Stock | Common Stock | Additional | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Paid in Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balances, December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, March 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Effect of pre-merger TCCR transactions | ( | ) | ( | ) | ( | ) | ( | ) | - | |||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, June 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balances, December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Issuance of warrants in connection with debt | - | - | - | |||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | |||||||||||||||||||||||||||||||||
| Issuances of shares for cash | - | - | - | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | |||||||||||||||||||||||||||||||||
| Elimination of Class A and Class B common stock for single class of common stock | ( | ) | ( | ) | - | |||||||||||||||||||||||||||||||
| Issuances of shares for services | - | - | ||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balances, June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(Unaudited)
| For the six months ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization | ||||||||
| Amortization of debt discount | ||||||||
| Shares issued for services | ||||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Unbilled revenues | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued expenses | ( | ) | ||||||
| Customer deposits | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities | ||||||||
| Net cash provided by investing activities | ||||||||
| Financing activities | ||||||||
| Proceeds from issuance of notes payable | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | $ | $ | ( | ) | ||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental schedule of non-cash investing and financing activities | ||||||||
| Discount on note payable from issuance of warrants | $ | $ | ||||||
| Original issuance discount on note payable | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS |
Name Change
Effective April 5, 2022, Triccar, Inc. changed its name to Correlate Infrastructure Partners Inc. (“CIPI” or the “Company”) to better reflect its operations.
Nature of the Business
The accompanying condensed consolidated financial statements include the accounts of the Company, and its subsidiaries Correlate, Inc. (“Correlate”), a Delaware corporation, and Loyal Enterprises LLC dba Solar Site Design (“Loyal”), a Tennessee limited liability company.
Correlate is a portfolio-scale development and finance platform offering commercial and industrial facilities access to clean electrification solutions focused on locally-sited solar, energy storage, EV infrastructure, and intelligent efficiency measures. Its unique data-driven approach is powered by proprietary analytics and concierge subscription services.
Loyal provides consulting services on acquisitions and project development tools to customers in the commercial solar industry.
Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception and has not generated positive cash flows from operations. These matters, among others, raise substantial doubt about the Company's ability to continue as a going concern.
The Company’s ability to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and positive cash flows. Management’s plans with respect to operations include aggressive marketing, acquisitions, and raising additional capital through sales of equity or debt securities as may be necessary to pursue its business plans and sustain operations until such time as the Company can achieve profitability. Management believes that aggressive marketing combined with acquisitions and additional financing as necessary will result in improved operations and cash flow in 2022 and beyond. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.
| 5 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. There were no cash equivalents as of June 30, 2022 and December 31, 2021.
The Company maintains its cash balances at financial
institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC provides coverage of up to
$
Accounts Receivable
Accounts receivable consists of unpaid revenues.
The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis
of the Company’s prior collection experience, customer credit worthiness, and current economic trends. Accounts are considered
delinquent when payments have not been received within the agreed upon terms and are written off when management determines that collection
is not probable. As of June 30, 2022 and December 31, 2021, the Company’s allowance for doubtful accounts was $
Intangible Assets
Intangible assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Management tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Impairment Assessment
The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an asset's carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.
The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter of each fiscal year or more often if and when circumstances indicate that goodwill may not be recoverable.
| 6 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition
The Company accounts for revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers.
A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of accounting in Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation based on the relative standalone selling price. Determining relative standalone selling price and identifying separate performance obligations require judgment. Contract modifications may occur in the performance of the Company’s contracts. Contracts may be modified to account for changes in the contract specifications, requirements or duration. If a contract modification results in the addition of performance obligations priced at a standalone selling price or if the post-modification services are distinct from the services provided prior to the modification, the modification is accounted for separately. If the modified services are not distinct, they are accounted for as part of the existing contract.
The Company’s revenues are derived from contracts for consulting and engineering, procurement and construction services (“EPC”). These contracts may have different terms based on the scope, performance obligations and complexity of the engagement, which may require us to make judgments and estimates in recognizing revenues.
The Company’s performance obligations are satisfied over time as work progresses or at a point in time (for defined milestones). The selection of the method to measure progress towards completion requires judgment and is based on the contract and the nature of the services to be provided.
The Company’s contracts for consulting services are typically less than a year in duration and require us to a) assist the client in achieving certain defined milestones for milestone fees or b) provide a series of distinct services each period over the contract term for a pre-determined fee for each period. When contractual billings represent an amount that corresponds directly with the value provided to the client, revenues are recognized as amounts become billable in accordance with contract terms.
The Company’s contracts for EPC services are typically less than a year in duration and require us to a) provide engineering services and b) obtain and install materials to agreed-upon specifications. The Company recognizes revenues as materials are transferred to the client and as performance obligations are satisfied.
Financial Instruments
The Company’s financial instruments include cash and cash equivalents, receivables, payables, and debt and are accounted for under the provisions of ASC Topic 825, “Financial Instruments”. The carrying amount of these financial instruments, with the exception of discounted debt, as reflected in the balance sheets approximates fair value.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when management assesses that it is probably that a liability has been incurred and the amount can be reasonable estimated.
| 7 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
In accordance with FASB ASC Topic 740, "Income Taxes," the Company provides for the recognition of deferred tax assets if realization of such assets is more likely than not. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
In addition, the Company’s management performs an evaluation of all uncertain income tax positions taken or expected to be taken in the course of preparing the Company’s income tax returns to determine whether the income tax positions meet a “more likely than not” standard of being sustained under examination by the applicable taxing authorities. This evaluation is required to be performed for all open tax years, as defined by the various statutes of limitations, for federal and state purposes. If the Company has interest or penalties associated with insufficient taxes paid, such expenses are reported in income tax expense.
FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.
Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.
The Company had potential additional dilutive securities outstanding at June 30, 2022 except for the options and warrants detailed at Note 5.
Recently Issued Accounting Standards
During the period ended June 30, 2022, there were several new accounting pronouncements issued by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s condensed consolidated financial statements.
| NOTE 3 – COMMITMENTS AND CONTINGENCIES |
From time to time, the Company may be involved in litigation in the ordinary course of business. The Company is not currently involved in any litigation that the Company believes could have a material adverse effect on its financial condition or results of operations.
Executive Employment Agreements
On January 18, 2022, the Company entered into
an employment agreement with Mr. Channing Chen, CFO, providing for an annual salary of $
| 8 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 4 – DEBT |
Notes Payable
On May 29, 2020, Loyal received a $20,400 Economic Injury Disaster Loan through the Small Business Administration. The note bears interest at 3.75% until maturity in March 2050. The note requires $100 monthly payments beginning in May 2022 until maturity.
On January 11, 2022, the Company entered into
a
Line of Credit
On October 3, 2014, Loyal entered into a $
| NOTE 5 – EQUITY |
The total number of common stock authorized that may be issued by the Company is four hundred million () shares of common stock with a par value of one hundredth of one cent ($) per share.
The total number of preferred stock authorized that may be issued by the Company is fifty million () shares of preferred stock with a par value of one hundredth of one cent ($) per share.
At December 31, 2021, common stock authorized
consisted of three hundred seventy-two million five hundred thousand () Class A shares with
On April 5, 2022, the Company amended its Articles
of Incorporation such that Class A or Class B common shares were eliminated and replaced by a single class of common stock with
At June 30, 2022, common stock authorized consisted
of four hundred million () common shares with
To the fullest extent permitted by the laws of the state of Nevada (currently set forth in NRS 78.195), as the same now exists or may hereafter be amended or supplemented, the board of directors may fix and determine the designations, rights, preferences or other variations of each class or series within each class of capital stock of the corporation.
During January 2022, the Company received proceeds totaling $ for Class A shares issued in December 2021.
During May 2022, the Company issued 500,000 shares of common stock valued at $500,000 for services.
| 9 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Warrants
During the period ended June 30, 2022, the Company calculated the fair value of the warrants granted based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock on the date of issuance; a risk-free interest rate of %, and volatility of % based on the historical volatility of the Company’s common stock, exercise price of $, and terms of months.
During January 2022, the Company issued
The following table presents the Company’s warrants as of June 30, 2022:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (in years) | ||||||||||
| Warrants as of December 31, 2021 | $ | |||||||||||
| Issued | $ | |||||||||||
| Exercised | $ | |||||||||||
| Warrants as of June 30, 2022 | $ | |||||||||||
At June 30, 2022, all of the Company’s outstanding warrants were vested.
Options
During the period ended June 30, 2022, the Company calculated the fair value of the options granted based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock on the date of issuance, risk-free interest rates ranging from % to 2.54%, volatility ranging from % to 285% based on the historical volatility of the Company’s common stock, exercise prices ranging from $ to $1.00, and terms of years. The fair value of options granted is expensed as vesting occurs over the applicable service periods.
During January 2022, the Company issued options valued at $ as part of an executive employment agreement (Note 3).
During February 2022, the Company issued options valued at $ as part of three non-executive employment agreements.
During March 2022, the Company issued options valued at $ as part of a non-executive employment agreement.
The following table presents the Company’s options as of June 30, 2022:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (in years) | ||||||||||
| Options as of December 31, 2021 | $ | |||||||||||
| Issued | $ | |||||||||||
| Forfeited | $ | |||||||||||
| Exercised | $ | |||||||||||
| Options as of June 30, 2022 | $ | |||||||||||
At June, 2022, options to purchase shares of common stock were vested and options to purchase shares of common stock remained unvested. The Company expects to incur expenses for the unvested options totaling $ as they vest.
| 10 |
CORRELATE INFRASTRUCTURE PARTNERS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| NOTE 6 – CONCENTRATIONS |
The Company had the following revenue concentrations for the three and six months ended June 30, 2022 and 2021 and accounts receivable concentrations as of June 30, 2022 and December 31, 2021:
| Revenues | Revenues | Accounts Receivable | ||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | June 30, | December 31, | |||||||||
| Customer | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||
| Customer A | * | * | * | * | ||||||||
| Customer B | * | * | * | |||||||||
| Customer C | * | * | * | |||||||||
| Customer D | * | * | * | * | ||||||||
| Customer E | ||||||||||||
| Customer F | * | |||||||||||
| * = Less than 10% | ||||||||||||
| NOTE 7 – RELATED PARTY TRANSACTIONS |
Shareholder Advances and Payables
At June 30, 2022 and December 31, 2021, the Company
had informal advances payable of $
At June 30, 2022 and December 31, 2021, the Company
had advances payable of $
At June 30, 2022 and December 31, 2021, the Company had advances payable of $ due to an individual who is the Company’s largest shareholder.
At June 30, 2022 and December 31, 2021, the Company
had accounts payable of $
Michaels Consulting
As of June 30, 2022 and December 31, 2021, the
Company had accounts payable due to Michaels Consulting totaling $
P&C Ventures, Inc.
Mr. Cory Hunt, who was named a director of the Company on December 28, 2021, is an owner and officer of P&C Ventures, Inc. During January 2022, the Company entered into a note agreement with P&C Ventures, Inc. and issued warrants related to the note, as disclosed in Note 4.
| NOTE 8 – SUBSEQUENT EVENTS |
During July 2022, the Company issued options valued at $ as part of a non-executive employment agreement.
During July 2022, the Company issued a 10% secured
promissory note in the amount of $
On August 11, 2022, the Company issued a 10% secured promissory note in the amount
of $
| 11 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forwarding looking statements as a result of certain factors, including but not limited to, those which are not within our control.
Overview
Correlate Infrastructure Partners Inc. (OTCQB: CIPI), formerly Triccar Inc., together with its subsidiaries (collectively the “Company”, “Correlate”, “we”, “us” and “our”), is a technology-enabled clean energy optimization provider that offers a complete suite of proprietary clean energy assessment and deployment solutions for commercial and industrial (C&I) building and property owners in the United States. Through our true tech-enabled project development and financing platform, we provide portfolio energy optimization and clean energy solutions for sustainable profit growth in buildings nationwide and bring project financing where needed.
We were originally formed as a Texas corporation in 1995 under the name TBX Resources, Inc. In December 2011 we changed our name to Frontier Oilfield Services Inc. In January 2020, we merged with and into Triccar Inc., a Nevada corporation and Triccar Inc. was the surviving entity. In December 2021, we acquired one hundred percent of the equity interests of each of Correlate Inc. and Loyal Enterprises LLC. In February 2022, a majority of our stockholders approved an amendment to our articles of incorporation and the change of our corporate name from Triccar Inc. to Correlate Infrastructure Partners Inc., to better reflect our future growth and focus. On April 5, 2022, we filed an amendment to our articles of incorporation with the State of Nevada to change our corporate name from Triccar Inc. to Correlate Infrastructure Partners Inc. Our principal executive offices are located at 220 Travis Street, Suite 501, Shreveport, Louisiana 71101, and our telephone number is (855) 264-4060.
Recently Issued Accounting Pronouncements
During the six months ended June 30, 2022, and through August 12, 2022, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”). Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s financial statements.
All other new accounting pronouncements issued but not yet effective or adopted have been deemed not to be relevant to us, hence are not expected to have any impact once adopted.
Summary of Significant Accounting Policies
There have been no changes from the Summary of Significant Accounting Policies described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2022.
Liquidity and Capital Resources
At June 30, 2022, the Company had a cash balance of $414,940, as compared to a cash balance of $252,189 at December 31, 2021. The Company incurred negative cash flow from operations of $1,337,249 for the six months ended June 30, 2022, as compared to negative cash flow from operations of $42,961 in the prior year. The increase in negative cash flow from operations was primarily the result of increased compensation costs for additional employees beginning during the current period, added legal and professional fees primarily related to the Company’s growth, acquisition and capital raising plans, inventory purchases and prepaid expenses. Cash flows from financing activities during the six months ended June 30, 2022, totaled $1,500,000 and were the result of proceeds from a loan agreement (see Footnote 4) and $150,000 from the issuance of our common stock. Going forward, the Company expects capital expenditures to increase significantly as operations are expanded pursuant to its current growth plans. The Company anticipates the requirement to raise significant debt or equity capital in order to fund future operations.
Loan Agreement
On January 11, 2022, the Company entered into a 10% note agreement with P&C Ventures, Inc. in the amount of $1,485,000, pursuant to which we received proceeds of $1,350,000. The note requires quarterly interest payments with the principal due at maturity on January 11, 2023.
| 12 |
Results of Operations
Comparison of the Three Months Ended June 30, 2022 and 2021
For the three months ended June 30, 2022 and 2021, the Company’s revenues totaled $236,690 and $1,584, respectively. The increase of $235,106, or 14,843%, was driven by the Company increasing operations during the current period coupled with the negative impacts of the COVID pandemic during the prior period. We anticipate the Company’s revenues in upcoming quarters to increase as revenues are recognized on projects in progress, including the $1,114,000 in customer deposits, and as we begin projects in our current pipeline.
Gross profit for the three months ended June 30, 2022, totaled $42,744 compared to a gross profit of $729 in the comparable prior year period. The $42,015 increase in gross profit was due to the Company’s increased operations and its growth plans. We anticipate future gross margins to increase from the current level as we commercialize new project sales opportunities, increase revenues, cover more fixed costs within cost of sales and expand our margins.
For the three months ended June 30, 2022, our operating expenses increased to $1,444,794 compared to $4,937 for the comparable period in 2021. The increase of $1,439,857, or 29,165%, was primarily driven by higher legal and professional fees and greater compensation expenses associated with added strategic management and staff commencing during the period ended June 30, 2022. The increased legal and professional fees were incurred primarily in connection with the Company’s acquisition and capital raising programs. Compensation expenses for the three months ended June 30, 2022 included approximately $327,000 and $179,000 in salaries and wages and the non-cash expenses from stock-based compensation, respectively, compared to no similar expenses in the comparable period in 2021. Additionally, the Company incurred non-cash operating expenses from depreciation and amortization and shares issued for services totaling $15,160 and $500,000, respectively, for the three months ended June 30, 2022 compared to no similar non-cash operating expenses during the three months ended June 30, 2021. We anticipate future operating expenses to increase with the expansion of operations, resulting in increased expenses related to wages and compensation, advertising, and insurance partially offset by added contribution margins from anticipated revenue growth.
For the three months ended June 30, 2022, Other Expenses totaled $299,280, compared to $-0- in the comparable period in 2021. This increase in Other Expenses was due to $37,623 in added interest expense and $261,657 in amortization of debt discount incurred during 2022. We anticipate our Other Expenses to increase as the Company incurs interest from debt and related financing costs to expand its operations.
The activities above resulted in a net loss of $1,701,330 for the three months ended June 30, 2022.
Comparison of the Six Months Ended June 30, 2022 and 2021
For the six months ended June 30, 2022 and 2021, the Company’s revenues totaled $305,098 and $9,235, respectively. The increase of $295,863, or 3,204%, was driven by the Company increasing operations during the current period coupled with the negative impacts of the COVID pandemic during the prior period. We anticipate the Company’s revenues in upcoming quarters to increase as revenues are recognized on projects in progress, including the $1,114,000 in customer deposits, and as we begin projects in our current pipeline.
Gross profit for the six months ended June 30, 2022, totaled $42,038 compared to a gross profit of $5,519 in the comparable prior year period. The $36,519 increase in gross profit was due to the Company’s increased operations and its growth plans. We anticipate future gross margins to increase from the current level as we commercialize new project sales opportunities, increase revenues, cover more fixed costs within cost of sales and expand our margins.
For the six months ended June 30, 2022, our operating expenses increased to $2,218,322 compared to $13,234 for the comparable period in 2021. The increase of $2,205,088, or 16,662%, was primarily driven by higher legal and professional fees and greater compensation expenses associated with added strategic management and staff commencing during the six months ended June 30, 2022. The increased legal and professional fees were incurred primarily in connection with the Company’s acquisition and capital raising programs. Compensation expenses for the six months ended June 30, 2022 included approximately $606,000 and $330,000 in salaries and wages and the non-cash expenses of stock-based compensation, respectively, compared to no similar expenses in the comparable period in 2021. Additionally, the Company incurred non-cash operating expenses from depreciation and amortization and shares issued for services totaling $30,320 and $500,000, respectively, for the six months ended June 30, 2022 compared to no similar non-cash operating expenses during the six months ended June 30, 2021. We anticipate future operating expenses to increase with the expansion of operations, resulting in increased expenses related to wages and compensation, advertising, and insurance partially offset by added contribution margins from anticipated revenue growth.
For the six months ended June 30, 2022, Other Expenses totaled $498,506, compared to $-0- in the comparable period in 2021. This increase in Other Expenses was due to $70,364 in added interest expense and $428,142 in amortization of debt discount incurred during 2022. We anticipate our Other Expenses to increase as the Company incurs interest from debt and related financing costs to expand its operations.
The activities above resulted in a net loss of $2,674,790 for the six months ended June 30, 2022.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
| 13 |
| Item 3. | Qualitative and Quantitative Disclosures about Market Risk. |
We are a smaller reporting company and, therefore, we are not required to provide information required by this item.
| Item 4. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures: Our management carried out an evaluation of the effectiveness and design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the Exchange Act). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, at June 30, 2022, such disclosure controls and procedures were not effective.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management including our Chief Executive Officer and Interim Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Limitations on the Effectiveness of Controls: Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this Quarterly Report that our disclosure controls and procedures were not sufficiently effective to provide reasonable assurance that the objectives of our disclosure control system were met.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the three month period ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
| Item 1. | Legal Proceedings. |
None.
| Item 1A. | Risk Factors. |
We are a smaller reporting company and, therefore, we are not required to provide information required by this item.
| 14 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
During the quarter ended June 30, 2022, the Company issued an aggregate of 500,000 shares of its common stock (“Shares”) to a service provider for services to be rendered. The Shares were issued pursuant to Section 4(2) of the Securities Act of 1933, as amended.
| Item 3. | Defaults upon Senior Securities. |
None.
| Item 4. | Mine Safety Disclosures. |
Not applicable.
| Item 5. | Other Information. |
None.
| Item 6. | Exhibits. |
| Exhibit No. | Description of Document | |
| 31.1 * | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | |
| 31.2 * | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | |
| 32.1 * | Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350). | |
| 32.2 * | Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350). | |
| 101.ins |
XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
| 101.sch | XBRL Taxonomy Extension Schema Document | |
| 101.cal | XBRL Taxonomy Calculation Linkbase Document | |
| 101.def | XBRL Taxonomy Definition Linkbase Document | |
| 101.lab | XBRL Taxonomy Label Linkbase Document | |
| 101.pre | XBRL Taxonomy Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | 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. |
| 15 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: | August 12, 2022 | Correlate Infrastructure Partners Inc. (Registrant) /s/ Todd Michaels | |
Todd Michaels (Principal Executive Officer) | |||
| Dated: | August 12, 2022 | Correlate Infrastructure Partners Inc. (Registrant) /s/ Channing F. Chen | |
Channing F. Chen (Principal Financial Officer) |
16
EXHIBIT 31.1
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Todd Michaels, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Correlate Infrastructure Partners 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. |
| 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 12, 2022
| /s/ Todd Michaels | ||
| Name: | Todd Michaels | |
| Title: | Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION
Pursuant to 18 U.S.C. Section 1350,
As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Channing F. Chen, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Correlate Infrastructure Partners 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 Company’s internal control over financial reporting. |
| 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 12, 2022 | ||
| /s/ Channing F. Chen | ||
| Name: | Channing F. Chen | |
| Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Correlate Infrastructure Partners Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on August 12, 2022 (the “Report”), Todd Michaels, Chief Executive Officer of the Company, certifies, 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 his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 12, 2022 | /s/ Todd Michaels | ||
| Name: | Todd Michaels | ||
| Title: | Chief Executive Officer | ||
| (Principal Executive Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Correlate Infrastructure Partners Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on August 12, 2022 (the “Report”), Channing F. Chen, Chief Financial Officer of the Company, certifies, 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 his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 12, 2022 | /s/ Channing F. Chen | ||
| Name: | Channing F. Chen | ||
| Title: | Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- AmeriCorps Releases Report on Volunteer Generation Fund Evaluation and Capacity Building Project
- Built environment thought leaders discuss pathways to circular economy at Tarkett's third annual Circularity Summit
- CV Societies Propel Plans Forward for a New Board of Cardiovascular Medicine
Create E-mail Alert Related Categories
SEC FilingsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
