SOLAR INTEGRATED ROOFING CORP. [SIRC] Filings

10-Q 1 sirc_10q.htm FORM 10-Q sirc_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2022

Commission File Number: 000-56256

SOLAR INTEGRATED ROOFING CORP.

(Exact name of registrant as specified in its charter)

Nevada

90-1502972

(State or other jurisdiction of

incorporation or organization)

(I.R.S. EIN)

2831 St. Rose Parkway, Ste 200

Henderson, Nevada 89052

(Address of principal executive offices, Zip Code)

(702) 589-4651

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Not applicable.

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 ☐ No ☒

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). Yes ☒ No ☐

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	☐	Accelerated Filer	☐
Non-Accelerated Filer	☒	Smaller reporting company	☒
		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 ☐ No ☒

As of November 18, 2022, the registrant had 625,898,657 shares of common stock outstanding.

SOLAR INTEGRATED ROOFING CORP.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)	3
	Consolidated Statements of Operations for the three months and nine months ended September 30, 2022 and 2021 (unaudited)	4
	Consolidated Statements of Stockholders’ Equity for the three months and nine months ended September 30, 2022 and 2021 (unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	35
Item 1A	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38

SIGNATURES		40

Table of Contents

PART I. FINANCIAL INFORMATION

SOLAR INTEGRATED ROOFING CORP.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
	2022			2021
ASSETS
Cash	$	480,141		$	1,124,533
Accounts receivable, net		5,511,696			3,652,176
Work in progress receivable, net		76,976,192			33,242,296
Note receivable		4,200,000			4,200,000
Prepaid and other current assets		273,826			736,548
Inventory		151,363			142,955
TOTAL CURRENT ASSETS		87,593,218			43,098,508

OTHER ASSETS
Operating lease right-of-use assets		2,888,171			1,646,049
Property and equipment, net		1,004,016			1,122,057
Goodwill		62,047,800			58,401,851
Other assets		154,390			265,071
TOTAL ASSETS		153,687,595			104,533,536

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	8,516,321		$	7,984,710
Accrued interest		1,519,387			1,157,113
Due to related parties		11,204,126			11,510,413
Operating lease liabilities, current portion		504,981			115,623
Notes payable		21,955,667			5,112,773
Debenture payable		2,400,000			2,400,000
Convertible note payable, net of unamortized discounts		10,684,800			23,688,886
Derivative liabilities		53,295			10,049
Total Current Liabilities		56,838,577			51,979,567

OTHER LIABILITIES
Note payable, long-term		2,273,531			2,426,698
Operating lease liabilities, non-current portion		2,383,190			1,530,426
TOTAL LIABILITIES		61,495,298			55,936,691

COMMITMENTS AND CONTINGENCIES (Note 13)

STOCKHOLDER’S EQUITY
Preferred stock, $0.00001 par value: authorized 25,000,041 shares		—			—
Series A Preferred stock, $0.00001 par value: 5,000,000 shares authorized, 2,500,000 shares issued and outstanding, respectively		25			25
Series B Preferred stock, $0.00001 par value: 20,000,000 shares authorized, 5,701,000 and 8,000,000 shares issued and outstanding, respectively		57			80
Series C Preferred stock, $0.00001 par value: 1 share authorized, 1 share issued and outstanding, respectively		-			-
Series D Preferred stock, $0.00001 par value: 40 shares authorized, 40 shares issued and outstanding, respectively		-			-
Common stock, $0.00001 par value: 900,000,000 shares authorized, 542,817,941 and 453,498,555 shares issued and outstanding, respectively		5,428			4,535
Stock payable		2,652,300			11,790,200
Stock receivable		-			(36,450,000	)
Additional paid-in capital		59,570,943			74,087,246
Non-controlling interest		(415,389	)		(60,487	)
Retained earnings (accumulated deficit)		30,378,933			(774,754	)
TOTAL STOCKHOLDER’S EQUITY		92,192,297			48,596,845
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	153,687,595		$	104,533,536

The accompanying notes are an integral part of these consolidated unaudited financial statements

Table of Contents

SOLAR INTEGRATED ROOFING CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021

Revenue	$	57,267,460		$	13,224,759		$	150,541,535		$	24,674,807
Cost of Sales		43,071,432			8,418,340			94,558,164			19,484,806
Gross Profit		14,196,028			4,806,419			55,983,371			5,190,001

Operating expenses
Salaries and wages		3,989,043			2,863,858			12,437,116			5,488,167
Professional fees		1,400,473			1,585,673			4,499,397			4,474,413
Depreciation expense		69,807			222,613			277,601			303,982
Marketing		186,093			229,259			445,828			575,038
General and administrative		1,179,561			1,275,383			3,768,121			3,136,619
Total operating expenses		6,824,977			6,176,786			21,428,063			13,978,219

Income (loss) from operations		7,371,051			(1,370,367	)		34,555,308			(8,788,218	)

Other income (expense)
Interest expense		(1,077,710	)		(586,638	)		(2,190,637	)		(949,454	)
Other income (expense)		-			(108,489	)		(253,707	)		90,793
PPP loans forgiveness		-			20,830			-			1,018,130
Loss on debt modification		-			-			(1,268,933	)		-
Gain (loss) on change in fair value of derivative liabilities		(53,295	)		359,009			(43,246	)		1,285,675
Total other income (expense)		(1,131,005	)		(315,288	)		(3,756,523	)		1,445,144

Income (loss) before taxes		6,240,046			(1,685,655	)		30,798,785			(7,343,074	)
Provision for income taxes		-			-			-			-
Net income (loss)		6,240,046			(1,685,655	)		30,798,785			(7,343,074	)
Net income (loss) attributable to non-controlling interest		(331,918	)		(24,233	)		(354,902	)		(40,415	)
Net income (loss) attributable to the Company	$	6,571,964			(1,661,422	)	$	31,153,687			(7,302,659	)
Basic income (loss) per Common Share	$	0.01		$	(0.00	)	$	0.06		$	(0.02	)
Diluted income (loss) per Common Share	$	0.01		$	(0.00	)	$	0.06		$	(0.02	)
Basic weighted average number of common shares outstanding		539,902,975			378,468,171			502,470,756			343,348,974
Diluted weighted average number of common shares outstanding		616,917,439			481,083,476			579,485,220			445,964,279

The accompanying notes are an integral part of these consolidated unaudited financial statements.

Table of Contents

SOLAR INTEGRATED ROOFING CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited)

	Series A Preferred Stock				Series B Preferred Stock						Series C Preferred Stock				Series D Preferred Stock				Common Stock						Additional									Non
	Shares Outstanding		Amount		Shares Outstanding			Amount			Shares Outstanding		Amount		Shares Outstanding		Amount		Shares			Amount			Paid in Capital			Stock Receivable			Stock Payable			controlling Interest			Accumulated Deficit			Total

Balance, December 31, 2020		5,000,000	$	50		13,000,000		$	130			-	$	-		-	$	-		209,003,623		$	2,090		$	11,808,329		$	-		$	-		$	-		$	(14,835,507	)	$	(3,024,908	)
Common stock issued for services		-		-		-			-											500,000			5			54,995												-			55,000
Common stock issued for conversion of debt and interest		-		-		-			-											49,393,025			494			617,192			-						-			-			617,686
Common stock issued for cash		-		-		-			-											2,000,000			20			139,980			-						-			-			140,000
Common stock issued for compensation		-		-		-			-											1,850,000			18			283,482												-			283,500
Common stock issued for warrant exercise		-		-		-			-											306,148			3			(3	)											-			-
Common stock issued for acquisition		-		-		-			-											45,000,000			450			39,128,050												-			39,128,500
Series B stock to be issued for acquisition																																4,870,000									4,870,000
Non controlling interest		-		-		-			-			-																							11,195			-			11,195
Net loss		-		-		-			-											-			-			-			-						-			(2,282,511	)		(2,282,511	)

Balance, March 31, 2021		5,000,000	$	50		13,000,000		$	130			-	$	-		-	$	-		308,052,796		$	3,080		$	52,032,025		$	-		$	4,870,000		$	11,195		$	(17,118,018	)	$	39,798,462

Common stock issued for services		-		-		-			-											818,090			8			449,992												-			450,000
Common stock issued for conversion of debt and interest		-		-		-			-											30,856,201			309			693,957			-						-			-			694,266
Common stock issued for warrant exercise		-		-		-			-											16,479,564			165			16,315												-			16,480
Common stock issued for acquisition		-		-		-			-																							24,403,900						-			24,403,900
Non controlling interest		-		-		-			-			-																							(27,377	)		-			(27,377	)
Net loss		-		-		-			-											-			-			-			-						-			(3,358,726	)		(3,358,726	)

Balance, June 30, 2021		5,000,000	$	50		13,000,000		$	130			-	$	-		-	$	-		356,206,651		$	3,562		$	53,192,289		$	-		$	29,273,900		$	(16,182	)	$	(20,476,744	)	$	61,977,005

Common stock issued for services		-		-		-			-											250,000			2			140,148															140,150
Common stock issued for conversion of debt and interest		-		-		-			-											10,383,782			104			86,592															86,695
Common stock repurchased and cancelled		-		-		-			-											(200,000	)		(2	)		(99,998	)														(100,000	)
Common stock issued for acquisition																				37,500,000			375			22,530,970						(24,403,900	)								(1,872,555	)
Preferred stock Class B issued for acquisition		-		-		1,000,000			10														-			4,869,990						(4,870,000	)								-
Preferred stock Class B cancelled and retired						(5,000,000	)		(50	)																(9,999,950	)														(10,000,000	)
Preferred stock Class C issued for acquisition		-		-		-			-		1																														-
Preferred stock Class D issued for acquisition																40		-																	-
Non controlling interest		-		-		-			-			-																							(24,233	)					(24,233	)
Net profit		-		-		-			-											-			-			-			-									(1,661,422	)		(1,661,422	)

Balance, September 30, 2021		5,000,000	$	50		9,000,000		$	90		1		$	-		40	$	-		404,140,433		$	4,041		$	70,720,041		$	-		$	-		$	(40,415	)	$	(22,138,166	)	$	48,545,641

Balance, December 31, 2021		2,500,000	$	25		8,000,000		$	80		1		$	-		40	$	-		453,498,555		$	4,535		$	74,087,246		$	(36,450,000	)		11,790,200		$	(60,487	)	$	(774,754	)	$	48,596,845
Common stock issued for services		-		-		-			-											500,000			5			177,895									-			-			177,900
Common stock issued for conversion of debt and interest		-		-		-			-			-		-		-		-		27,075,035			271			26,804									-			-			27,075
Common stock issued for compensation		-		-		-			-											150,000		1				74,024						-			-			-			74,025
Common stock payable for cash																																514,040									514,040
Non controlling interest		-		-		-			-											-															(29,058	)					(29,058	)
Net profit		-		-		-			-			-		-		-		-														-			-			5,693,889			5,693,889

Balance, March 31, 2022		2,500,000	$	25		8,000,000		$	80		1		$	-		40	$	-		481,223,590		$	4,812		$	74,365,969		$	(36,450,000	)	$	12,304,240		$	(89,545	)	$	4,919,135		$	55,054,716

Common stock issued for services		-		-		-			-											1,500,000			15			336,735									-			-			336,750
Common stock issued for conversion of debt and interest		-		-		-			-			-		-		-		-		7,559,285			76			1,058,224									-			-			1,058,300
Common stock issued for compensation		-		-		-			-											4,104,603			41			1,869,736						1,820,387						-			3,690,164
Common stock issued for acquisition																				35,339,242			353			11,229,496						(9,137,900	)								2,091,949
Non controlling interest		-		-		-			-											-															6,074						6,074
Net profit		-		-		-			-			-		-		-		-														-			-			18,887,834			18,887,834

Balance, June 30, 2022		2,500,000	$	25		8,000,000		$	80			1	$	-		40	$	-		529,726,720		$	5,297		$	88,860,160		$	(36,450,000	)	$	4,986,727		$	(83,471	)	$	23,806,969		$	81,125,787

Common stock issued for services		-		-		-			-											200,000			2			98,698									-			-			98,700
Common stock issued for conversion of debt and interest		-		-		-			-			-		-		-		-		25,074,285			251			1,754,949									-			-			1,755,200
Common issued for cash		-		-		-			-			-		-		-		-		3,315,000			33			594,507						(514,040	)		-			-			80,500
Common stock issued for compensation		-		-		-			-											11,111,936			111			2,523,540						(1,820,387	)					-			703,264
Common stock issued for acquisition																				3,400,000			34			781,966															782,000
Common stock returned and cancelled																				(45,000,000	)		(450	)		(36,449,550	)		36,450,000												-
Conversion of preferred stock Class B into common shares						(1,499,000	)		(15	)										14,990,000			150			(135	)														-
Preferred stock cancelled and retired						(800,000	)		(8	)																8															-
Warrant expense																										147,500															147,500
Stock option expense																										1,259,300															1,259,300
Non controlling interest		-		-		-			-																										(331,918	)					(331,918	)
Net profit		-		-		-			-			-		-		-		-																				6,571,964			6,571,964

Balance, September 30, 2022		2,500,000	$	25		5,701,000		$	57			1	$	-		40	$	-		542,817,941		$	5,428		$	59,570,943		$	-		$	2,652,300		$	(415,389	)	$	30,378,933		$	92,192,297

The accompanying notes are an integral part of these consolidated unaudited financial statements.

Table of Contents

SOLAR INTEGRATED ROOFING CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	September 30, 2022			September 30, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	30,798,785		$	(7,343,074	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation		3,260,418			928,650
Loss on debt modification		1,268,933			-
Amortization of debt discount		6,724			186,146
(Gain) Loss on change in fair value of derivative liabilities		43,246			(1,285,675	)
Depreciation		277,601			303,982
Warrant expense		147,500			-
Stock option expense		1,259,300			-
PPP loans forgiveness		-			(1,018,130	)
Changes in operating assets and liabilities:
Accounts and work in progress receivable		(45,593,416	)		(2,456,396	)
Prepaid expenses and other assets		462,722			(617,892	)
Inventory		(8,408	)		141,162
Accounts payables and accrued liabilities		2,773,650			1,734,326
Due to related parties		(306,287	)		8,104,145
Net Cash Used in Operating Activities		(5,609,232	)		(1,322,756	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid in acquisition of subsidiaries		(600,000	)		(10,100,000	)
Purchase of property and equipment		(159,560	)		(1,112,644	)
Net Cash Used in Investing Activities		(759,560	)		(11,212,644	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		5,452,105			6,813,218
Repayments of notes payable		(2,762,245	)		(1,841,218	)
Proceeds from convertible notes payable		2,440,000			21,055,610
Proceeds from warrant exercise		-			16,480
Repurchase of preferred stock class B					(10,000,000	)
Repurchase of common stock					(100,000	)
Proceeds from sale of common stock		594,540			140,000
Net Cash Provided by Financing Activities		5,724,400			16,084,090

Net change in cash and cash equivalents		(644,392	)		3,548,690
Cash and cash equivalents, beginning of period		1,124,533			710,091
Cash and cash equivalents, end of period	$	480,141		$	4,258,781

Supplemental cash flow information