The accompanying notes are an integral part of these
condensed consolidated financial statements.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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.
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 March 31, 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 $250,000
per depositor, per financial institution, for the aggregate total of depositors' interest and non-interest-bearing accounts. At March
31, 2022, $700,556 of the Company's cash balances were in excess of FDIC limits. The Company has not experienced any losses on these accounts
and management does not believe that the Company is exposed to any significant risks.
Accounts Receivable
Accounts receivable consists of invoiced and unpaid
sales. 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 March 31, 2022 and December 31, 2021, the Company’s allowance for doubtful accounts was $90,189,
respectively.
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.
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. While determining relative standalone selling price and identifying separate performance
obligations require judgment, generally relative standalone selling prices and the separate performance obligations are readily identifiable
as the Company sells those performance obligations unaccompanied by other performance obligations. 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 services. 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.
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.
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.
Basic and Diluted Loss Per Share
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 no potential additional dilutive securities
outstanding at March 31, 2022 except for the options and warrants detailed at Note 5.
Recently Issued Accounting Standards
During the period ended March 31, 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.
Employment Agreements
On January 18, 2022, the Company entered into an
employment agreement with Mr. Channing Chen, CFO, providing for an annual salary of $200,000
per year. As part of the agreement, the Company issued Mr. Chen 1,000,000
options exercisable at $0.96
per share for ten
years. The options, valued at approximately $868,000,
vest
monthly over 36 months upon issuance.
NOTE 4 – DEBT
Notes Payable
On January 11, 2022, the Company entered into a 10%
note agreement with P&C Ventures, Inc. totaling $1,350,000.
The note requires quarterly
interest payments with the principal due at maturity on January
11, 2023. In connection with the note agreement, the Company issued P&C Ventures, Inc., 2,700,000
warrants exercisable at $0.25 per share (Note 5). The warrants were fully vested at issuance and expire on July 11, 2023. The
warrants, valued at approximately $1,958,000,
represented approximately 59% of the total consideration received and resulted in a discount on the note totaling $799,128 pursuant to
ASC 470-20-30. The discount is being amortized over the life of the note with a discount balance of $632,643
at March 31, 2022.
Line of Credit
On October 3, 2014, the Company entered into a $30,000
line of credit agreement. The line of credit has no maturity with interest increasing from 8.00% at issuance to 34.00% for the period
ended March 31, 2022. As of March 31, 2022, the outstanding principal and accrued interest totaled $40,330.
NOTE 5 – EQUITY
The total number of common stock authorized that may
be issued by the Company is four hundred million (400,000,000) shares of common stock with a par value of one hundredth of one cent ($0.0001)
per share. At March 31, 2022 and December 31, 2021, common stock authorized consisted of three hundred seventy-two million five hundred
thousand (372,500,000) shares Class A shares with 1:1 voting rights and twenty-seven million five hundred thousand (27,500,000) Class
B shares with 20:1 voting rights, and fifty million (50,000,000) shares of preferred stock with a par value of one hundredth of a cent
($0.0001) per share. 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 sold 600,000 Class
A shares for proceeds totaling $150,000.
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 1:1 voting
rights.
Warrants
During the period ended March 31, 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 0.70%, and volatility
of 428% based on the historical volatility of the Company’s common stock, exercise price of $0.25, and terms of 18 months.
During January 2022, the Company issued 2,700,000
warrants valued at $1,958,000 as part of a note agreement (Note 4).
The following table presents the Company’s warrants
as of March 31, 2022:
| | |
Number of Shares | |
Weighted Average Exercise Price | |
Weighted Average Remaining Life (in years) |
| | Warrants as of December 31, 2021 | | |
| - | | |
$ | - | | |
| - | |
| | Issued | | |
| 2,700,000 | | |
$ | 0.25 | | |
| 1.50 | |
| | Exercised | | |
| - | | |
$ | - | | |
| - | |
| | Warrants as of March 31, 2022 | | |
| 2,700,000 | | |
$ | 0.25 | | |
| 1.28 | |
At March 31, 2022, all of the Company’s outstanding
warrants were vested.
Options
During the period ended March 31, 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; a risk-free interest rate of 1.65%, and volatility
of 282% based on the historical volatility of the Company’s common stock, exercise price of $0.96, and terms of 5 years. The fair
value of options granted is expensed as vesting occurs over the applicable service periods.
During January 2022, the Company issued 1,000,000
options valued at $868,000 as part of an employment agreement (Note 3).
The following table presents the Company’s options
as of March 31, 2022:
| | |
Number of Shares | |
Weighted Average Exercise Price | |
Weighted Average Remaining Life (in years) |
| | Options as of December 31, 2021 | | |
| 2,059,068 | | |
$ | 0.52 | | |
| 5.13 | |
| | Issued | | |
| 1,000,000 | | |
$ | 0.96 | | |
| 5.00 | |
| | Forfeited | | |
| - | | |
$ | - | | |
| - | |
| | Exercised | | |
| - | | |
$ | - | | |
| - | |
| | Options as of March 31, 2022 | | |
| 3,059,068 | | |
$ | 0.66 | | |
| 4.86 | |
At March 31, 2022, options to purchase 309,070 shares
of common stock were vested and options to purchase 2,749,998 shares of common stock remained unvested. The Company expects to incur expenses
for the unvested options totaling $1,655,525 as they vest.
NOTE 6 – CONCENTRATIONS
The
Company had the following revenue concentrations for the three months ended March 31, 2022 and 2021 and Accounts
Receivable Concentrations as of March 31, 2022 and December 31, 2021:
| | |
|
|
|
|
|
|
| |
|
|
| |
|
|
|
| | |
Revenues | |
| |
|
| | |
Three Months Ended March 31, | |
Accounts Receivable |
| Customer | |
2022 | |
2021 | |
3/31/2022 | |
12/31/2021 |
| Customer A | |
| 65 | % | |
| * | | |
| 19 | % | |
| * | |
| Customer B | |
| 23 | % | |
| * | | |
| * | | |
| * | |
| Customer C | |
| 10 | % | |
| * | | |
| * | | |
| * | |
| Customer D | |
| * | | |
| 100 | % | |
| 50 | % | |
| 69 | % |
| Customer E | |
| * | | |
| * | | |
| 14 | % | |
| 19 | % |
| Customer F | |
| * | | |
| * | | |
| * | | |
| 12 | % |
| | |
| | | |
| | | |
| | | |
| | |
| * = Less than 10% | |
| | | |
| | | |
| | | |
| | |
NOTE 7 – RELATED PARTY TRANSACTIONS
Shareholder Advances and Payables
At March 31, 2022 and December 31, 2021, the Company
had advances payable of $22,154, respectively, due to the Company’s President and CEO, Mr. Todd Michaels.
At March 31, 2022 and December 31, 2021, the Company
had advances payable of $11,865, respectively, due to an individual who holds 3% of the Company’s Class A Common Stock.
At March 31, 2022 and December 31, 2021, the Company
had advances payable of $62,500 due to an individual who is the Company’s largest shareholder.
At March 31, 2022 and December 31, 2021, the Company
had accounts payable of $120,000, respectively, due to Elysian Fields Disposal, LLC, an entity owned by the Company’s largest shareholder.
Michaels Consulting
As of March 31, 2022 and December 31, 2021, the Company
had accounts payable due to Michaels Consulting totaling $344,000 and $364,000, respectively.
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.