UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-K

 

 

 

x

ANNUAL REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the fiscal year ended December 31, 2019

 

Or

 

 

 

o

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

 

 

 

For the transition period from __________ to __________ 

    

Commission File Number:   001-35923

 

AUSCRETE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

 

Wyoming

 

 27-1692457

 

 

(State of Incorporation)

 

(IRS Employer ID Number)

 

 

410 Industrial Way, P.O. Box 230, Goldendale, WA 98920

(Address of principal executive offices and Zip Code)

 

Registrants telephone number, including area code (509) 261-2525

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, par value 0.0001

OTCPink

 

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

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨  No ý

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes ¨  No ý

 


1


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 x yes o no

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x yes o no

  

Indicate by check mark whether the registrant is a large Accelerated filer, an Accelerated filer, a non-Accelerated filer, or a smaller reporting company. Or an emerging growth company.

See the definitions of "large Accelerated filer," "Accelerated filer," "non-Accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer o Accelerated filer  o 

Non-Accelerated filer   x Smaller reporting company x Emerging growth Company x

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with the new or revised financial accounting standards provided pursuant to Section13(a)of the Exchange Act o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  yes  o no x

 

APPLICABLE TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o yes o no

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock. The number of shares outstanding of the issuer's common stock as of April 10, 2020 is 78,031,329 shares.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


2


AUSCRETE CORPORATION

DECEMBER 31, 2019

TABLE OF CONTENTS

 

 

 

 

 

 

Page

 

PART I  

 

 

 

 

 

 

 

Item 1 - Business

 

4

 

 

 

 

 

Item 1A - Risk Factors

 

5

 

 

 

 

 

Item 2 - Properties

 

5

 

 

 

 

 

Item 3 - Legal Proceedings

 

6

 

 

 

 

 

Item 4 - Mine Safety Disclosures

 

6

 

 

 

 

 

PART II  

 

 

 

 

 

 

 

Item 5 - Market for Registrant's Common Equity, related Stockholder Matters and Issuer Purchases of Equity Securities

 

6

 

 

 

 

 

Item 6 - Selected Financial Data

 

6

 

 

 

 

 

Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations

 

6

 

 

 

 

 

Item 8 - Financial Statements and Supplementary Data

 

9

 

 

 

 

 

Report of Independent Registered Public Accounting Firm

 

10

 

 

 

 

 

Balance Sheets as at December 31, 2019 and 2018

 

11

 

 

 

 

 

Statements of Operations for the period ended December 31, 2019 and 2018

 

12

 

 

 

 

 

Statements of Changes in Shareholders' Equity for the period ended December 31, 2019 and 2018

 

13

 

 

 

 

 

Statements of Cash Flows for the period ended December 31, 2019 and 2018

 

14

 

 

 

 

 

Notes to Financial Statements

 

15

 

 

 

 

 

Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

22

 

 

 

 

 

Item 9A - Controls and Procedures

 

22

 

 

 

 

 

Item 9B - Other Information

 

23

 

 

 

 

 

PART III

 

 

 

 

 

 

 

Item 10 - Directors, Executive Officers and Corporate Governance

 

23

 

 

 

 

 

Item 11 - Executive Compensation

 

24

 

 

 

 

 

Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

25

 

 

 

 

 

Item 13 - Certain Relationships and Related Transactions, and Director Independence

 

245

 

 

 

 

 

Item 14 - Principal Accounting Fees and Services

 

25

 

 

 

 

 


3


PART IV

 

 

 

 

 

 

 

Item 15 - Exhibits

 

 26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibits 31.1 and 32.1 Certifications of the Sarbanes-Oxley Act of 2002

 

Attached

 

 

 

 

 

Signatures

 

26

 

 

 

 

 

 

PART I

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

We make forward-looking statements in this annual report that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe", "expect", "anticipate", "estimate", "intend", "should", "may", "plans", "projects", "will", or similar expressions, or the negative of these words, we intend to identify forward-looking statements. Statements regarding the following subjects are forward-looking by their nature:

Although Registrant believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, such statements are subject to risks and uncertainties, which may cause the actual results to differ materially from those anticipated in the forward-looking statements. Such factors include, but are not limited to, the following: general economic and business conditions, which will, among other things, affect demand for housing, the availability of prospective buyers; adverse changes in Registrant's real estate and construction market; including, among other things, competition with other manufacturers, risks of real estate development and acquisitions; governmental actions and initiatives; and environmental/safety requirements.

 

ITEM 1. BUSINESS

 

Our Company Overview

Auscrete Corporation was formed as an enterprise to take advantage of technologies developed for the construction of affordable, thermally efficient and structurally superior commercial structures and residential housing. This "GREEN" product is the culmination of design and development since the early 1980's and is the result of the amalgamation of various material development stages, taking an idea to a product and further developing that product to address an ongoing problem in the world's largest consumer marketplace, the quest for affordable, efficient and enduring housing. Auscrete's structures are monetarily highly competitive. A turnkey house, ready to move in sells for around $100-$110 per square foot. That is very competitive in today's market but is brought about by Auscrete's ability to manufacture large building products in mass production format. Each house is constructed on site an this produces an attractive site-built home, a durable home that will combat all kinds of adverse weather and age conditions. It will not burn, is not affected by termites or rot, its thermal efficiency saves extensively on energy costs, has extreme longevity and has very low maintenance needs.

 

Founder's Development Activities to Date

Auscrete's CEO and founder, John Sprovieri, possessed certain proprietary technology in lighter-weight concrete manufacturing that has been acquired by the corporation. He has applied his engineering and


4


marketing expertise to develop and promote products under the product name, Auscretehomes and Auscrete. These products are the culmination of the refinements made to a technology developed in Australia in the mid 1980's. The Australian product has been used in many parts of the world in construction, and Mr. Sprovieri has further developed it in the US by creating a highly thermally efficient building system. The process enables infusion of millions of tiny air bubbles into a special inert concrete mix enabling the creation of an insulated and lightweight product without sacrificing strength or structural integrity.

Since commencing re-development of the basic technology almost thirteen years ago, Mr. Sprovieri has refined and modified the basic insulating formula that involves a number of purpose-built machines that have been fabricated for the manufacturing of Auscrete’s product.

The process includes machinery that can produce and infuse various sized aggregates, product specific hydraulically operated casting beds, concrete batching plant, materials handling equipment, specialized finishing machines and a "Hot Box" materials thermal testing cabinet that gives thermal "R" ratings of materials to ASTM specifications. Additionally, many sample panels were produced for testing and for the construction of structures. At the outset and putting the Company’s technology to practical use, Auscrete Corporation has produced many and varied housing and commercial buildings.

 

Future Strategy

Auscrete Corporation intends to position itself as a major supplier in the affordable housing market. Housing is generally considered "affordable" when its cost does not exceed 30 percent of the median family income in a given area. In many parts of the country, housing costs have shown signs of adversely affecting workers, corporations and local economies. Yet still the availability of affordable housing is becoming increasingly scarce forcing large numbers of working families to live on the streets overwhelming Governmental services.

 

The company is offering a product that not only makes housing affordable, but also offers some luxuries as well, such as standard heat pump/air conditioning that would not be available in other houses at such comparable pricing. By constructing with the Auscrete Building System, those luxuries will result in lower cost utilities and a comfortable 'feel' to the living environment, as can be achieved with a product offering excellent thermal and soundproofing qualities as well as superb fire resistance.

Developers and contractors will offer the homes as complete, turnkey ready constructed site-built dwellings. Even though they are technologically advanced, they are just plain good value masonry homes built of a time proven product, concrete.

Auscrete can economically deliver whole house panel sets throughout the entire West Coast and as far away as Texas or Alberta, Canada servicing a fast-emerging market in this above average, affordable housing growth area.

The company plans on selling most of its output to developers, contractors and builders who will purchase the complete set of wall, roof and interior panels from Auscrete and use their own construction crews to construct and complete the houses.

 

ITEM 1A. RISK FACTORS

Not required for smaller reporting companies.

 

ITEM  2. PROPERTIES.

The Company has divested its interest in its ownership of a 5-acre Industrial Property in Goldendale WA repurposing the investment to assist with startup capital used for major specialized batch plant equipment purchases.


5


The Company has moved its Manufacturing Plant into a leased facility to more quickly begin its production operations. On June 14, 2019 the company signed a 6 month lease on a 8,000 sq. ft. facility located in outer Goldendale and monthly lease cost is $2,000. The lease converted to a month to month on December 14, 2019. The total lease payments for 2019 were $12,000.

 

ITEM 3.  LEGAL PROCEEDINGS.

The Company is not party to any material pending legal proceedings as described in Item 103 of Regulation S-K.

 

ITEM 4.  MINE SAFETY DISCLOSURES.

Not Applicable.

 

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The company’s stock is listed on the OTCPINK under the symbol "ASCK". The company has not repurchased stock or declared or paid dividends on its capital stock in 2019. On November 13, 2019 the Company had executed a reverse Stock split of 1 for 200. All shares presented herein are retrospectively adjusted to reflect the reverse split, unless otherwise noted.

 

 

ITEM 6. SELECTED FINANCIAL DATA.

Not required for smaller reporting companies.

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

All statements other than statements of historical fact included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. Forward-looking statements involve various important assumptions, risks, uncertainties and other factors which could cause our actual results to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this discussion can be identified by words such as "anticipate," "believe," "could," "estimate," "expect," "plan," "intend," "may," "should" or the negative of these terms or similar expressions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievement. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors including but not limited to, competitive factors and pricing pressures, changes in legal and regulatory requirements, cancellation or deferral of customer orders, technological change or difficulties, difficulties in the timely development of new products, difficulties in manufacturing, commercialization and trade difficulties and general economic conditions as well as the factors set forth in our public filings with the Securities and Exchange Commission.

You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Annual Report or the date of any document incorporated by reference, in this Annual Report. We are under no obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.


6


For these statements, we claim the protection of the safe harbor for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934.

The Company's financial statements have been presented on the basis that it will continue as a going concern. The Company has not generated revenues from construction related operations to date. The Company has an Accumulated deficit of $8,436,608 as of December 31, 2019 which raises substantial doubt about the Company’s ability to continue as a going concern.

 

To the extent that the Company's capital resources are not adequate to meet current and planned operating requirements, the Company will use additional funds through equity and debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has subsequent current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will be required to provide any portion of the Company's future financing requirements.

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms Acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company and raise doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.

 

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The summary of significant accounting policies of Auscrete Corporation is presented to assist in the understanding of the Company's financial statements.  The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity. You should read this section together with our financial statements and related notes thereto included elsewhere in this report.

 

The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

 

Please see the notes to the financial statements for further discussion on Significant accounting plicies.

 

GOING CONCERN AND PLAN OF OPERATION

The Company's financial statements have been presented on the basis that it will continue as a going concern. The Company has not generated revenues from construction related operations to date. The Company has an Accumulated deficit of $8,436,608 as of December 31, 2019 and no current revenue stream, which raises substantial doubt about the Company’s ability to continue as a going concern.

The Company will use additional funds through equity and debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has subsequent current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will be required to provide any portion of the Company's future financing requirements.

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms Acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company and raise doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.


7


 

RELATED PARTY TRANSACTIONS

During quarter 1, 2 and in to quarter 3, the Company did not have banking credit cards to assist with the normal everyday purchases and payments of corporate needs such as utilities etc. The CEO and other involved parties often used their own cards for this purpose and, to represent this, the company had a continuous Related Party Advances section in its financial statements. This was adjusted typically at the end of each reporting period. The Company since mid-quarter 3 has started using a corporate business card for Company related purchases.

As of December 31, 2019, and December 31, 2018, the balance owed to John Sprovieri was $6,766 and $1,079 respectively.

 

Results of Operations  comparison of the fiscal year ended December 31, 2018 to the fiscal year ended December 31, 2019.

The company had a net loss of $(1,728,448) for the year ended December 31, 2019 compared to a net loss of $(3,517,089) for the year ended December 31, 2018. The main reason is the reduction in share based espense of $2,540,000 in 2018 compared to $210,000 in 2019.

 

The company's operational expenses during 2019 were involved in fund-raising, day to day operations, payroll, facility lease, utilities, compliance fees and major equipment purchases. The company acquired access to investment funds which were to produce results in limited cash acquisitions throughout 2019.

The intended set up of facilities and subsequent operations of the company, being the manufacture of construction products for commercial and residential structures, had not commenced in 2019 but will begin in early 2020.

 

Liquidity and Capital Resources

We have had minimal operating activity since inception of the company in 2010. Our 2019 short-term obligations are being covered by funding received from convertible notes with a total value of $210,500 issued in 2019.

Net cash used in operating activities was $258,560 in the year ended December 31, 2019 compared to net cash used in operating activity of 242,663 for the year ended December 31, 2018.

Net cash provided by investing activities was $47,746 in the year ended December 31, 2019. Net cash used in investing activities for the year ended December 31, 2018 was $(105,364).

Net cash provided by financing activities was $210,500 in the year ended December 31, 2019. Net cash provided by financing activities in the year ended December 31, 2018 was $349,000.

As of December 31, 2019, the Company had inadequate cash to operate its business at the current level for the next six months and to achieve its business goals. The success of our business plan during and beyond the next 6 months will be provided by additional loan financing of a minimum of $300,000

Financing

Auscrete Corporation, a Wyoming public company was incorporated on December 31, 2009 and first became effective for an IPO with the SEC on August 16, 2012. It was established to finance an expansion of a current pilot facility operated by the founders in Rufus, OR. The IPO was not commenced and expired in February 2014. The company became Effective with a Registration Statement in December 2014 registering shareholder held shares for sale enabling re-application to FINRA for listing on the

OTCPink. The company engaged the services of a registered broker-dealer and market maker, Glendale Securities, LLC, who subsequently applied with the Financial Industry Regulatory Authority (FINRA). 


8


 

Use of Funds Raised Through Financing

Initial Stage One targeted funding was $1.2 million and the company, during 2018, had purchased 5 acres of land on the Goldendale Industrial Estate. Initially it cost $102,000, including fees, to purchase the land.

 

In 2019 a change in Company strategy brought Management to make the decision to sell back its land investment and utilize the funds to establish an operational plant within a newly leased facility also in the Goldendale Washington area.

During the fiscal year both land sale funds and additional capital raised were used for major production equipment purchases and to fabricate startup provisions within a newly plant facility.

This Corporate profit orientated decision has provided greater advantageous results in assuring faster revenue generation.

The balance was used for working capital and expenses including wages, marketing and other working capital and reserves.

 

Marketing

Principal marketing efforts are initially aimed at leveraging specific contacts and relationships that have developed over the last 12 years since the inception of the founders’ pilot plant. The company has interviewed and chosen an experienced sales person who will have the luxury of dealing with existing contacts as well as the multitude of inquiries received every week.

Auscrete's product is also extremely suitable for the construction of commercial and industrial structures. Company marketing will also explore the commercial world for applications and it is believed that such construction will become a large part of the company's future direction.

 

Financial Projections

The typical structure will be a home in the 1,100 - 3,000 sq. ft. range that will sell to the contractor or developer for around $80K-$200K with the average being over $150,000. Obviously, the company will look to increase output to meet future demands and expects to do this through internal financing.

 

 

Off-balance Sheet Arrangement

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

ITEM 7a. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The company has no exposure at this time.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

   

 

FINANCIAL STATEMENTS  

Report of Independent Registered Public Accounting Firm - 10 

Balance Sheets as of December 31, 2019 and 2018 - 11 


9


Statements of Operations for the years ended December 31, 2019 and 2018 - 12 

Statements of Changes in Stockholders' Equity for the Period ended December 31, 2019 and 2018 - 13 

Statements of Cash Flows for the years ended December 31, 2019 and 2018 - 14 

Notes to Financial Statements - 15 

 

 


10


 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Board of Directors and Shareholders of Auscrete Corporation

 

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Auscrete Corporation (“the Company”) as of December 31, 2019 and 2018, and the related statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated revenue to date and has a significant accumulated deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

 

 

 

We have served as the Company’s auditor since 2014.

 

Spokane, Washington

April 14, 2020

 


11


 

 

 

AUSCRETE CORPORATION

BALANCE SHEETS

 

 

 

 

 

 

 

 

December 31,

December 31,

ASSETS

2019

2018

CURRENT ASSETS:

 

 

Cash

$15,634  

$15,948  

Prepaid Expenses

6,265  

1,217  

Inventory

2,100  

47,000  

TOTAL CURRENT ASSETS

23,999  

64,165  

 

 

 

Property, Plant and Equipment (net)

59,061  

122,035  

Deposits

 

 

TOTAL ASSETS

$83,060  

$186,200  

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

CURRENT LIABILITIES:

 

 

Accounts Payable

$50,838  

$21,229  

Accrued Interest Payable

96,507  

102,815  

Notes Payable (net of discount)

370,786  

411,071  

Derivative Liability

729,308  

372,151  

Related Party Advances

6,766  

1,079  

TOTAL CURRENT LIABILITIES

1,254,205  

908,345  

TOTAL LIABILITIES

1,254,205  

908,345  

 

 

 

Commitments and Contingencies

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

Common Stock, 0.0001 par value, authorized 2,000,000,000 shares (increased from 500,000,000)

 

 

15,597,927 and 286,137 shares issued and outstanding as of  December 31, 2019 and December 31, 2018 respectively, restated to APIC below for the 1000 for 1 and the 200 for 1 reverse stock splits.

1,560  

29  

Additional Paid In Capital

7,263,903  

5,985,986  

Shares to be issued

 

 

Accumulated deficit

(8,436,608) 

(6,708,160) 

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

(1,171,145) 

(722,145) 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$83,060  

$186,200  

 

 

The Accompanying notes are an integral part of these financial statements


12


 

 

 

 

 

AUSCRETE CORPORATION

STATEMENTS OF OPERATIONS

for the years ended December 31,

 

 

 

 

2019  

2018  

REVENUE

$ 

$ 

 

 

 

EXPENSES

 

 

Accounting and Legal

42,850  

36,397  

Salaries and wages

125,919  

 

Share based expense

210,000  

2,540,000  

Inventory Write off

44,900  

 

G&A Expenses

113,538  

207,261  

Depreciation expense

5,228  

5,228  

TOTAL EXPENSES

542,435  

2,788,886  

 

 

 

OTHER INCOME (EXPENSES)

 

 

Gain / (Loss) on Derivative

(400,868) 

(314,182) 

Loss on Sale of Land

(10,000) 

 

Financing cost

(543,541) 

(297,248) 

Interest Expense

(231,604) 

(116,773) 

TOTAL OTHER INCOME (EXPENSES)

(1,186,013) 

(728,203) 

 

 

 

LOSS BEFORE TAXES

(1,728,448) 

(3,517,089) 

Provision for Income Taxes

 

 

NET LOSS

$(1,728,448) 

$(3,517,089) 

 

 

 

NET LOSS PER COMMON SHARE - BASIC & DILUTED

$(0.51) 

$(30.63) 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED

3,359,142  

114,826  

 

 

The Accompanying notes are an integral part of these financial statements


13


 

 

 

 

 

AUSCRETE CORPORATION

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

as of December 31, 2019 and 2018

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

Shares

Amount

Additional Paid in Capital

Shares to be issued

Accumulated Deficit

TOTAL

BALANCE, DECEMBER 31, 2017

3,853 

$1 

$2,467,654  

$17,981  

$(3,190,966) 

$(705,331) 

 

 

 

 

 

 

 

Note conversion

32,017 

3 

1,101,058  

(17,981) 

 

1,083,080  

 

 

 

 

 

 

 

Rounding

266 

0 

(0) 

 

(104) 

(104) 

Shares issued for services

250,000 

25 

2,417,274  

 

 

2,417,299  

Net Loss

 

 

 

 

(3,517,089) 

(3,517,089) 

BALANCE, December 31, 2018,

286,137 

29 

5,985,986  

 

(6,708,159) 

(722,145) 

 

 

 

 

 

 

 

Issuance Common stock for services

5,250,000 

525 

209,475  

 

 

210,000  

Stock issued for Note conversions

10,061,438 

1,005 

1,045,941  

 

 

1,046,947  

Rounding shares

353 

0 

 

 

(1) 

 

Beneficial conversion feature

 

 

22,500  

 

 

22,500  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

(1,728,448) 

(1,728,448) 

 

 

 

 

 

 

 

BALANCE, December 31, 2019

15,597,927 

1,560 

7,263,903  

 

(8,436,608) 

(1,171,145) 

 

The Accompanying notes are an integral part of these financial statements


14


 

 

 

AUSCRETE CORPORATION

STATEMENT OF CASH FLOWS

for the years ended December 31,

 

 

 

 

2019  

2018  

OPERATING ACTIVITIES

NET LOSS

$(1,728,448) 

$(3,517,089) 

Finance Costs

543,541  

297,248  

Loss on sale of fixed asset

10,000  

 

Depreciation

5,228  

5,228  

Change in other assets

(5,048) 

(1,147) 

Change in inventory

44,900  

 

Share Based expense

210,000  

2,540,000  

Change in Accounts Payable and Accrued Expenses

83,452  

31,903  

Change in Related Party Advances

5,687  

(20) 

Change in Derivative and Note Discount

572,128  

401,214  

Net Cash Used by Operating Activities

(258,560) 

(242,663) 

 

 

 

INVESTING ACTIVITIES:

 

 

Purchase of Equipment

(42,254) 

(5,364) 

Purchase of Land

-  

(100,000) 

Sale of land

90,000  

 

Net cash used by investing activities

47,746  

(105,364) 

 

 

 

FINANCING ACTIVITIES:

 

 

Payments on notes payable

 

(45,000) 

Proceeds from notes payable

210,500  

394,000  

Net cash provided by financing activities  

210,500  

349,000  

NET INCREASE (DECREASE) IN CASH

(314) 

973  

 

 

 

Cash and Cash Equivalents at Beginning of Period

15,948  

14,975  

 

 

 

Cash and Cash Equivalents at End of Period

$15,634  

$15,948  

 

 

 

Supplemental Cashflow Information

 

 

Interest Paid

$-  

$-  

Taxes Paid

$-  

$-  

 

 

 

Supplemental Non-Cash Disclosure

 

 

Discounts recognized on new debt issuances

$173,000 

$82,400 

Shares issued for note conversions

$1,046,947 

$956,073 

 

The Accompanying notes are an integral part of these financial statements


15


AUSCRETE CORPORATION

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

HISTORY

Auscrete Corporation ("the Company") was formed as an enterprise to take advantage of technologies developed for the construction of affordable, thermally efficient and structurally superior housing. This "GREEN" product is the culmination of design and development since the early 1980's. The company's Registration Statement outlines the result of the amalgamation of various material development stages, taking an idea to a product and further developing that product to address an ongoing problem in the world's largest marketplace, the quest for affordable, efficient and enduring housing. Auscrete's structures are monetarily highly competitive. A turnkey house, ready to move in sells for around $100-110 per square foot. That is very low in today's market but is brought about by Auscrete's ability to manufacture large panels in mass production format. The house is virtually "fastened" together on site to produce an attractive site-built home, a home that will stay where it is put through all kinds of adverse weather and age conditions. It will not burn, is not affected by bugs, termites or rot, it saves extensively on energy costs and has very low maintenance needs.

 

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The summary of significant accounting policies of Auscrete Corporation is presented to assist in the understanding of the Company's financial statements.  The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity.

 

The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

 

INCOME TAXES

 

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted.  Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018.  The Company will compute its income tax expense for the year ended December 31, 2019 using a Federal Tax Rate of 21%.

 

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition.  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.

 

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist primarily of cash in banks and highly liquid investments with original maturities of 90 days or less. There were $15,634 cash equivalents as of December 31, 2019 and $15,948 as of December 31, 2018.

 


16


 

 

Fair Value Measurements

 

The Company adopted guidance which defines fair value, establishes a framework for using fair value to measure financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent sources. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

 

Level 1 - Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in accessible active markets.

 

Level 2 - Valuation is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.

 

Level 3 - Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect a company’s own assumptions about the inputs that market participants would use.

 

The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments.

 

 

The Company’s derivative liabilities have been valued as Level 3 instruments.

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of convertible notes derivative liability – December 31, 2019

 

$

 

 

$

 

 

$

729,308

 

 

$

729,308

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of convertible notes derivative liability – December 31, 2018

 

$

 

 

$

 

 

$

372,151

 

 

$

372,151

 

 


17


 

 

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of December 31, 2019 and 2018:

 

 

Derivative

 

Liability

Balance, December 31, 2017

$           309,487

Additions recognized as debt discount

             362,262

Note Conversions

             613,781

Mark-to-market at December 31, 2018

             314,183

Balance, December 31, 2018

$           372,151

 

 

 

Derivative

 

Liability

Balance, December 31, 2018

$                372,151

Additions recognized as debt discount

                  634,378

Note Conversions

                 (678,089)

Mark-to-market at December 31, 2019

                  400,868

Balance, December 31, 2019

$                729,308

 

 

REVENUE RECOGNITION POLICY

 

The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” (“ASC 606”).    The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:



·Identify the contract with the customer 

·Identify the performance obligations in the contract 

·Determine the transaction price 

·Allocate the transaction price to the performance obligations in the contract 

·Recognize revenue when the company satisfies a performance obligation 

 

COST OF SALES

Amounts that will be recorded as cost of sales relate to direct expenses incurred in order to fulfill orders of our products. Such costs are recorded as incurred. Our cost of sales will consist primarily of the cost of product; labor, selling costs and the cost of G&A expenses.

 

PROPERTY AND EQUIPMENT

Property and Equipment was stated at historical cost less Accumulated depreciation and amortization. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.


18


Depreciation is provided on a straight-line basis over the assets' estimated useful lives. The useful lives of the assets are as follows: equipment 7-years, vehicles 7-years, and buildings 30-years. Additions and improvements are capitalized while routine repairs and maintenance are charged to expense as incurred. Upon sale or disposition, the historically recorded asset cost and Accumulated depreciation are removed from the Accounts and the net amount less proceeds from disposal is charged or credited to other income or expense.

 

IMPAIRMENT OF LONG-LIVED ASSETS

We evaluate long-lived assets for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate their net book value may not be recoverable. When these events occur, we compare the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There can be no assurance, however, that market conditions will not change or demand for the Company's products will continue. Either of these could result in the future impairment of long-lived assets. Estimates of fair value are determined through various techniques, including discounted cash flow models and market approaches, as considered necessary.

 

LOSS PER COMMON SHARE

Basic loss per common share is computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share consists of the weighted average number of common shares outstanding plus the dilutive effects of options and warrants calculated using the treasury stock method. In loss periods, dilutive common equivalent shares are excluded as the effect would be anti-dilutive. It is estimated that the Company will issue approximately 25,500,000 as a result of conversion of notes. As of December 31, 2019, and 2018. Fully diluted weighted average common shares and equivalents were withheld from the calculation as they were considered anti-dilutive. All calculations reflect the effects of the 200 to 1 reverse stock split.

 

RECLASSIFICATION

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, or stockholders’ equity as previously reported.

 

USE OF ESTIMATES

The preparation of the 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.

 

EMERGING GROWTH COMPANY

The Company qualifies as an Emerging Growth Company, thus takes advantage of the 1-year deferral period for the adoption of all new accounting standards updates.   

 

Adverting cost


19


We recognizes advertising costs reported within general and administrative costs of 50,757 in 2018 and 41,527 in 2019.

 

NOTE 2 - GOING CONCERN AND PLAN OF OPERATION

The Company's financial statements have been presented on the basis that it will continue as a going concern. The Company has not generated revenues from construction related operations to date. The Company has an Accumulated deficit of $8,436,608 as of December 31, 2019 which raises substantial doubt about the Company’s ability to continue as a going concern.

The Company will use additional funds through equity and debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has subsequent current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will be required to provide any portion of the Company's future financing requirements.

No assurance can be given that additional financing will be available when needed or that such financing will be available on terms Acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company and raise doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.

 

 

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

Update 2018-07—Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This was early adopted and there were no outstanding equity awards to be re-valued.

 

 

NOTE 4 -RELATED PARTY TRANSACTIONS

During quarter 1, 2 and in to quarter 3, the Company did not have banking credit cards to assist with the normal everyday purchases and payments of corporate needs such as utilities etc. The CEO and other involved parties often used their own cards for this purpose and, to represent this, the company had a continuous Related Party Advances section in its financial statements. This was adjusted typically at the end of each reporting period. The Company since mid-quarter 3 has started using a corporate business card for Company related purchases.

As of December 31, 2019, and December 31, 2018, the balance owed to John Sprovieri was $6,766 and $1,079 respectively.

 

NOTE 5 - PROPERTY, INVENTORY AND EQUIPMENT

Notes to Inventory Type and Value:

Inventory consists of Finished Product and Raw Materials that are valued at the lower of cost or market.

Management performed an analysis a elected to fully impair the inventory on hand at December 31, 2019

 

Raw Materials:

Raw materials consist of rebar, insulation, surfactant, powdered cement, threaded inserts and sundry items. The cost of $2,100 is based on the cost of purchase from a non-related supplier.


20


Property and Equipment at December 31, 2019 were comprised of the following at:

 

 

 

 

 

December 31, 2019

December 31, 2018

Capital Equipment

 $              75,355

 $              34,517

Property

-

100,000

Vehicles

6,344

4,844

Accumulated Depreciation

                (22,638)

               (17,846)

Net Fixed Assets

59,061 

 $            122,035

 

Depreciation expense was $5,228 for the year ended December 31, 2019 and 5,228 for the year ending December 31, 2018

 

 

NOTE 6 - Equity

Common Stock:

The Company Authorized Capital to 20,000,000,000 common shares at $0.0001 par value.

 

During November 2019 the company performed a reverse split in the ratio of 1 for 200.

There were 15,597,927 shares issued and outstanding as of December 31, 2019.

During the Period January 1, 2019 to December 31, 2019, the Company issued 5,250,000 shares for services based on post-split numbers.

 

During the Period January 1, 2019 to December 31, 2019, the Company issued 10,061,438 shares for convertible note conversions based on post-split numbers.

  

The following table is a list of the foremost 6 shareholders of the Company as of December 31, 2019.

 

    

NAME                            ADDRESS

Number of Shares 

 

 

1. John Sprovieri  PO Box 813, Rufus OR 97050      

1,750,000

2. CEDE & Company  570 Washington Blvd. 5th. Floor, Jersey City, NJ  07310             

10,851,802

3. Kathleen D Jett PO Box 846 618 W. First Street, Rufus, OR  97050.  

1,025,128

4. Kimberly Grimm 15011 SE Mt Royale Ct. Milwaukie, OR  97267.  

5,000,300 

5. E. Lee Odom Jr.7011 Park Green Drive Arlington, TX  76001.  

12,513 

7. Michael Young 4405 Hwy. 30 W, The Dalles, OR  97058 

100,000

 

 

NOTE 7 - INCOME TAXES

 

We currently have no current tax liability, as we have had no revenue and incurred losses since inception.

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted.  Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal


21


corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018.  The Company will compute its income tax expense for the year ended December 31, 2019 using a Federal Tax Rate of 21%.

 

Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes – Recognition.  Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard required by ASC 740-10-25-5.

 

Deferred income tax amounts reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting purposes.

As of December 31, 2019, we had a net operating loss carry-forward of approximately $(8,436,608) and a deferred tax asset of approximately $1,771,688 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years for 2018 and prior and post 2018 are indefinite. 

However, due to the uncertainty of future events, we have booked valuation allowance of $(1,771,688).  FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  At December 31, 2019, the Company had not taken any tax positions that would require disclosure under FASB ASC 740.

 

 

 

 

 

 

December 31, 2019

December 31, 2018

Deferred Tax Asset

 $1,771,688

$1,408,714 

Valuation Allowance

  (1,771,688)

  (1,408,714)

Deferred Tax Asset (Net)

$                            -

$                            -

.

The Company is subject to tax in the U.S. federal and Washington jurisdictions. These filings are subject to a three-year statute of limitations unless the returns have not been filed at which point the statute of limitations becomes indefinite. No filings are currently under examination. No adjustments have been made to reduce the estimated income tax benefit at year end. Any valuations relating to these income tax provisions will comply with U.S. generally Accepted Accounting principles.

  

 

Note 8 – Notes payable and Derivative Liabilities

 

On May 8, 2018, the company issued a 12-month Convertible Note for the sum of $50,000 to RB Capital at 12%. Convertible at $.004. No beneficial conversion was recognized as the conversion price was higher than the stock price.

 

On June 28, 2018, the company issued a 12-month Convertible Note for the sum of $10,000 to RB Capital at 12%. Convertible at $.004. No beneficial conversion was recognized as the conversion price was higher than the stock price.

 

On December 7, 2018, the company issued a 12-month Convertible Note for the sum of $25,000 to RB Capital at 12%. Convertible at $.004. No beneficial conversion was recognized as the conversion price was higher than the stock price.


22


 

On October 25, 2019, the company issued a 12-month Convertible Note for the sum of $15,000 to RB Capital at 12%. Convertible at $.01. As a result we recognized a beneficial conversion cost of $45,000.

 

On November 15, 2019, the company issued a 12-month Convertible Note for the sum of $25,000 to RB Capital at 12%. Convertible at $.01. As a result, we recognized a beneficial conversion cost of $7,500.

 

On December 13, 2019, the company issued a 12-month Convertible Note for the sum of $20,000 to RB Capital at 12%. Convertible at $.03. No beneficial conversion was recognized as the conversion price was higher than the stock price.

 

On January 28, 2019 we entered into a one-year convertible promissory note in the amount of $38,000 with and interest rate of 12% and a conversion rate of 55% of the lowest prior 20 days trading period.

 

On May 28, 2019 we entered into a one-year convertible promissory note in the amount of $27,500 with and interest rate of 12% and a conversion rate of 55% of the lowest prior 25 days trading period.

 

On May 1, 2019 we entered into a one-year convertible promissory note in the amount of $13,000 with and interest rate of 12% and a conversion rate of 55% of the lowest prior 25 days trading period.

 

On August 20, 2019, the company issued a 12-month Convertible Note for the sum of $40,000 to LG Capital at 8%. Convertible at 60% of lowest of the prior 20 days trading period.

 

On December 16, 2019, the company issued a 12-month Convertible Note for the sum of $32,000 to LG Capital at 8%. Convertible at 60% of lowest of the prior 20 days trading period.

 

On December 16, 2019, the company issued a 12-month Convertible Note for the sum of $32,000 to LG Capital at 8%. Convertible at 60% of lowest of the prior 20 days trading period.

 

As a result of the convertible notes we recognized the embedded derivative liability on the date that the note was convertible. We also revalued the remaining derivative liability on the outstanding note balance on the date of the balance sheet. The inputs used were a weighted volatility of 228% to 304% and a risk free discount rate of 1.60% to 2.09 The remaining derivative liabilities valued using the level 3 inputs in the fair value hierarchy were:

 

As a result of the convertible notes we recognized the embedded derivative liability on the date that the note was convertible. We also revalued the remaining derivative liability on the outstanding note balance on the date of the balance sheet. The inputs used were a weighted volatility of 290% and a risk free discount rate of 2.56%

The convertible notes have interest rates that range from 8% to 12% per annum and default rates that range from 12% to 24% per annum. The maturity dates range from six months to one year. The conversion rates range from 55% discount to the market to 62% discount to the market. As of December 31, 2019 twelve convertible notes outstanding,

The remaining derivative liabilities valued using the level 3 inputs in the fair value hierarchy were:

 

 

 

 

 

December 31, 2019

December 31, 2018

Derivative Liabilities on Convertible Loans:

 

 

Outstanding Balance

729,308 

372,151 

 


23


 

NOTE - 10 COMMITMENTS

 

On June 14, 2019 the company signed a 6 month lease on a 8,000 sq. ft. facility located in outer Goldendale and monthly lease cost is $2,000. The lease converted to a month to month on December 14, 2019. The total lease payments for 2019 were $12,000.

 

 NOTE - 11 SUBSEQUENT EVENTS

 

At the time of filing the Company has fully implemented its planned start-up strategy which has now positioned itself in an operational state of production.

The Company’s specialized systems and major new equipment procurements have been integrated and installed into a fully operational batch plant and product manufacturing is in process.

The Company is at the verge of delivering full house sets as its next tactical step in securing self-sustaining revenue capital.

Subsequent to December 31, 2019 the company has procured funding by the issue of 3 convertible notes. On January 13, we issued a $20K, 12-month, 10% interest note to RB Capital. On February 10, we issued a $25K, 12-month, 10% interest note to RB Capital and on March 9, we issued a $35K, 12-month, 8% interest note to LG Capital.

During the period January 1st, 2020 to April 7th, 2020, the Company issued a total of 62,433,402 shares from treasury. There were 12,433,402 shares issued to Noteholders through stock conversions and 50 million shares were issued to Management and Associates as compensation for services to the Company.

In accordance with ASC 855, the Company has analyzed its operations subsequent to December 31, 2019 through the date these financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial statements.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a)                 Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports pursuant to the Securities Exchange Act, of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As required by Rules 13a-15(b) of the Exchange Act, an evaluation as of December 31, 2019 was conducted under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2018. 

 

(b)                 Report of Management on Internal Control over Financial Reporting

 


24


We are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management including  of our chief executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.

 

Based on our evaluation under the 2013 Internal Control-Integrated Framework, our chief executive officer and chief financial officer concluded that our internal control over financial reporting was not effective as of December 31, 2018.

 

(c)             Changes in Internal Control over Financial Reporting

 

There have been no other changes in our internal control over financial reporting that occurred during the period covered by this Annual Report on Form 10-K for the year ended 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

There are no other disclosures at this time.

 

 

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Directors and Executive Officers

 Our directors and executive officers and their respective ages, positions, term of office and biographical information are set forth below.

 

Our bylaws require at least three directors to serve for a term of one year or until they are replaced by a qualified director. Our executive officers are chosen by our board of directors and serve at its discretion. There are no existing family relationships between or among any of our executive officers or directors.19

John Sprovieri – CEO/Director, Age 71

John Sprovieri's background is in Mechanical Engineering being in the manufacturing industry for many years. He is an American, born in Australia and moved permanently to the US in 1994. He and his wife, Mary have been married nearly 51 years and have no children.

 

In 1975, Mr. Sprovieri developed an Australian agricultural/industrial tractor line and developed both the manufacturing and marketing segments of his company. The corporation produced nearly 500 units over the next 14 years until he sold the company to Just Australia China Holdings Ltd. (JACH) with interests in China, Korea and Russia. The company was operating profitably at the time it was sold. JACH were setting up overseas operations and were going to manufacture in China or South Korea. He stayed on with the corporation liaising with overseas licensed manufacturers and markets. He traveled extensively into Europe, USSR, the Middle East and North America.

 

Following completion of his obligations to JACH in 1993, he researched the US West Coast Market for Affordable Housing development opportunities. In 1997 Mr. Sprovieri launched an interstate transport company and was responsible for all facets of management including finance, operations, personnel and government compliance. In 2003, Mr. Sprovieri commenced development of the Auscrete technology and acquired financing to further develop the Cellucon based technology and product with a view to creating an affordable housing manufacturing operation.

 


25


During the past 13 years since 2006, Mr. Sprovieri has been principally involved with launching and managing the Auscrete Brand development activities. During this time, he has set up a manufacturing facility, trained personnel, redeveloped technology and started production of Auscrete products in 2008.

Michael Young – VP / CFO Age 66

Mike Young is Auscrete’s VP of Operations and CFO, he is currently also serving a position with the Company as an interim Director. Mike provides internal operational initiatives supporting compliance, accounting and regulations. He also possesses many years of diverse Management experience within Business and the Transportation Industry.

 

Mike spent 33 years of earlier life in IT and Broadcast Engineering working in Portland Oregon. His responsibilities included day to day employee Management and Technical Engineering and design of numerous Technologies.

 

Mike provides extensive internal and financial operational experience and knowledge which allows him to keep Auscrete’s business both accurate and correct.

 

 Code of Ethics

 

 Since we have only two persons serving as executive officers and directors and because we have minimal operations, we have not adopted a code of ethics for our principal executive and financial officers. Our board of directors will revisit this issue in the future to determine if adoption of a code of ethics is appropriate. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC and comply with applicable governmental laws and regulations.

 

Corporate Governance

 

We are a smaller reporting company with minimal operations and only two directors and officers. As a result, we do not have a standing nominating committee for directors, nor do we have an audit committee with an audit committee financial expert serving on that committee. Our entire Board of Directors acts as our nominating and audit committee.

 

ITEM 11. - EXECUTIVE COMPENSATION

 

Name and Principal Position

Fiscal Year

Salary ($)

Bonus

Stock Awards ($)

Option Awards ($)

All Other Compensation ($)

Total

($)

John Sprovieri   CEO

2019

31,105

 

31,105

 

2018

 17,602

-

-

17,602

Clifford Jett    Director   Dec.

2019

-

-

-

-

 

2018

-

125,000

William Beers   Director   Ret.

2019

-

-

-

-

 

2018

 -

-

50,000

Michael Young VP Operation.

2019

32,117

-

-

34,117

 

2018

 18,746

18,746 

 

Our CEO, John Sprovieri currently draws a flat yearly salary of $39,000 ($750 p/week) and our CFO, Mike Young draws a flat yearly salary of $37,440 ($720 p/week). Clifford Jett is deceased and no longer acts as Director and William Beers is retired and no longer acts as a Director.


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DIRECTOR’S COMPENSATION.

 

Name and Principal Position

Fiscal Year

Director

Fees $

Stock Awards ($)

Option Awards ($)

All Other Compensation ($)

Total

($)

John Sprovieri   Director

2019

140,000

140,000

 

2018

875,000

-

892,602

Clifford Jett    Director   Dec.

2019

-

-

-

 

2018

125,000

125,000

William Beers   Director   Ret.

2019

-

-

-

 

2018

50,000

50,000

Michael Young CFO Director

2019

4,000

-

4,000

 

2018

 

 

ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding beneficial ownership of our common stock as of December 31, 2019. We did not have any equity compensation plans as of December 31, 2019.

  

 

 

Name & Address

# Class A Common Stock

Percentage

John Sprovieri - PO Box 813, Rufus OR 97050

3,675,855

23.6

Clifford & Kay Jett - PO Box 846, Rufus OR 97050

1,025,128

6.6

William S. Beers – PO Box 825, Rufus 97050

110,022

7.0

 

We have determined beneficial ownership in Accordance with the rules of the SEC. We believe, based on the information furnished to us, that the persons and entities named in the table above have sole voting and investment power with respect to all shares of common stock that they beneficially own.

ITEM 13. - CERTAIN RELATIONSHIPS, AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

There are no notable outside director and officer related transactions or relationships to report other than minimal advances made by directors to finance interim operations.

 

ITEM 14. - PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

Audit Fee

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by Fruci & Associates II, PLLC for the audit of Auscrete Corporation annual financial statements and review of financial statements included in Auscrete Corporation's 10-Q reports and services normally provided by the Accountant in connection with statutory and regulatory filings or engagements were $19,850 for fiscal year ended 2019 and $14,600 for professional services for fiscal year 2018.

 

Audit-Related Fees

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal Accountant that are reasonably related to the performance of the audit or review of Auscrete Corporation financial statements that are not reported above were $7,450 for fiscal year ended 2019 and $0 for fiscal year ended 2018.

 

Tax Fees

 

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal Accountant for tax compliance, tax advice, and tax planning were $0 for fiscal year 2019 and $0 for 2018.

 

All Other Fees

 


27


The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal Accountant, other than the services reported above were $0 for fiscal years ended 2019 and 2018.

 

We do not have an audit committee currently serving and as a result our board of directors performs the duties of an audit committee.  Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services.  We do not rely on pre-approval policies and procedures.

 

PART IV

 

ITEM 15. - EXHIBITS.

Exhibit 31.1 - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1 - Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

AUSCRETE CORPORATION

 By:

/s/ A John Sprovieri

A. John Sprovieri
(President/Chief Executive Officer)

Date April 14, 2020


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