UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|
|
|
|
|
|
|
[x]
|
QUARTERLY REPORT
PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
|
|
For the quarterly
period ended September 30, 2020
|
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)
|
|
WA
98620
(Address of principal executive offices and Zip Code)
Registrant’s
telephone number, including area code (509) 261-2525
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.
1
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 registrant has
elected not to extended transition period for complying with any
new of revise financial accounting standards provided pursuant
to ‘Section 7(a)(2)(B) of the Security
Act. o yes [x] no
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). o yes [x] no
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 as of November 20, 2020 of the
Issuer's Common Stock is 120,719,111
.
2
AUSCRETE CORPORATION
September 30,
2020
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
PART I - FINANCIAL
STATEMENTS
|
|
|
|
|
|
|
|
|
|
Item 1 - Financial
Statements
|
|
|
|
|
Balance Sheets as at September 30, 2020 (unaudited) and December
31, 2019 (audited)
|
|
4
|
|
|
|
|
|
|
|
Statements of Operations (unaudited) for the three and nine months
ended September 30, 2020 and 2019 respectively
|
|
5
|
|
|
|
|
|
|
|
Statements of Stockholders Equity (unaudited) for the nine months
ended September 30, 2020 and Year Ended December 31, 2019
respectively
|
|
6
|
|
|
|
|
|
|
|
Statements of Cash Flows (unaudited) for the nine months ended
September 30, 2020 and 2019 respectively
|
|
7
|
|
|
|
|
|
|
|
Notes to Financial Statements
|
|
8
|
|
|
|
|
|
|
|
Item 2 -
Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
|
15
|
|
|
|
|
|
|
|
Item 3 -
Quantitive and Qualitive Disclosures about Market Risk
|
|
19
|
|
|
|
|
|
|
|
Item 4 - Controls
and Procedures
|
|
19
|
|
|
|
|
|
|
|
PART II - OTHER
INFORMATION
|
|
|
|
|
|
|
|
|
|
Item 1 - Legal
Proceedings
|
|
19
|
|
|
|
|
|
|
|
Item 2 -
Unregistered Sales of Equity Securities and Use of Proceeds
|
|
19
|
|
|
|
|
|
|
|
Item 3 - Defaults
Upon Senior Securities
|
|
20
|
|
|
|
|
|
|
|
Item 4 - Mine
Safety Disclosures
|
|
20
|
|
|
|
|
|
|
|
Item 5 - Other
Information
|
|
20
|
|
|
|
|
|
|
|
Item 6 - Exhibits
- Exhibit 31.1 and 32.1
|
|
Attached
|
|
3
|
AUSCRETE
CORPORATION
|
|
BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
Un-audited
|
|
|
|
September
30,
|
December 31,
|
|
ASSETS
|
2020
|
2019
|
|
CURRENT
ASSETS:
|
|
|
|
Cash
|
$309
|
$15,634
|
|
Accounts Receivable
|
13,000
|
-
|
|
Prepaid
Expenses
|
3,905
|
6,265
|
|
Inventory
|
6,197
|
2,100
|
|
TOTAL
CURRENT ASSETS
|
23,411
|
23,999
|
|
|
|
|
|
Property, Plant and Equipment (net)
|
58,831
|
59,061
|
|
Deposits
|
-
|
-
|
|
TOTAL
ASSETS
|
$82,242
|
$83,060
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts Payable and Accrued Expenses
|
$79,973
|
$50,838
|
|
Accrued
Interest Payable
|
130,729
|
96,507
|
|
Notes
Payable (net of discount)
|
547,219
|
370,786
|
|
Derivative Liability
|
334,447
|
729,308
|
|
Related
Party Advances
|
-
|
6,766
|
|
TOTAL
CURRENT LIABILITIES
|
1,092,368
|
1,254,205
|
|
TOTAL
LIABILITIES
|
1,092,368
|
1,254,205
|
|
|
|
|
|
Commitments and Contingencies
|
-
|
-
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
Common
Stock, 0.0001 par value, authorized 2,000,000,000 shares (increased
from 500,000,000)
|
|
|
|
114,040,787 and 15,597,928 shares issued and outstanding as of
September 30, 2020 and December 31, 2019 respectively, restated to
APIC below for the 200 for 1 reverse stock split.
|
11,400
|
1,560
|
|
Additional Paid In Capital
|
8,759,701
|
7,263,903
|
|
Shares
to be issued
|
-
|
-
|
|
Accumulated deficit
|
(9,781,227)
|
(8,436,608)
|
|
TOTAL
STOCKHOLDERS' EQUITY (DEFICIT)
|
(1,010,126)
|
(1,171,145)
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$82,242
|
$83,060
|
The accompanying
notes are an integral part of these financial statements
4
|
AUSCRETE
CORPORATION
|
|
STATEMENTS OF
OPERATIONS
|
|
for the three
and nine months ended September 30,
|
|
Un-audited
|
|
|
|
|
three months
ended
September 30,
|
nine months
ended
September 30,
|
|
|
2020
|
2019
|
2020
|
2019
|
|
REVENUE
|
$13,000
|
$-
|
$13,000
|
$-
|
|
|
|
|
|
|
|
Cost of
Goods sold
|
8,359
|
|
8,359
|
|
|
Gross
Profit
|
4,641
|
-
|
4,641
|
-
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
Accounting and Legal
|
12,200
|
18,100
|
28,950
|
37,800
|
|
Salaries and wages
|
42,042
|
33,142
|
139,204
|
74,480
|
|
Share
based expense
|
-
|
-
|
1,150,000
|
-
|
|
G&A
Expenses
|
21,088
|
38,966
|
104,975
|
85,297
|
|
Depreciation expense
|
1,307
|
1,307
|
3,921
|
3,921
|
|
TOTAL
EXPENSES
|
76,637
|
91,515
|
1,427,050
|
201,498
|
|
Income
(loss) from operations
|
(71,996)
|
(91,515)
|
(1,422,409)
|
(201,498)
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSES)
|
|
|
|
|
|
Gain /
(Loss) on Derivative
|
(39,766)
|
(172,784)
|
340,152
|
(21,634)
|
|
Loss on
sale of fixed assets
|
-
|
(10,000)
|
-
|
(10,000)
|
|
Financing cost
|
(15,530)
|
(302,722)
|
(107,797)
|
(447,361)
|
|
Interest Expense
|
(42,979)
|
(70,793)
|
(154,566)
|
(181,486)
|
|
TOTAL
OTHER INCOME (EXPENSES)
|
(98,275)
|
(556,299)
|
77,789
|
(660,481)
|
|
|
|
|
|
|
|
LOSS
BEFORE TAXES
|
(170,271)
|
(647,814)
|
(1,344,620)
|
(861,979)
|
|
Provision for Income Taxes
|
-
|
-
|
-
|
-
|
|
NET
LOSS
|
$(170,271)
|
$(647,814)
|
$(1,344,620)
|
$(861,979)
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE - BASIC & DILUTED
|
$(0.00)
|
$(0.40)
|
$(0.02)
|
$(1.13)
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC &
DILUTED
|
101,164,101
|
1,607,108
|
81,669,862
|
760,908
|
The accompanying
notes are an integral part of these financial statements
5
|
AUSCRETE
CORPORATION
|
|
STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
|
|
as of September
30, 2020
|
|
(Un-audited)
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
Shares
|
Amount
|
Additional Paid
in Capital
|
Shares to be
issued
|
Accumulated
Deficit
|
TOTAL
|
|
BALANCE,
December 31, 2018,
|
286,137
|
29
|
5,985,986
|
-
|
(6,708,159)
|
(722,145)
|
|
|
|
|
|
|
|
|
|
Note
conversion
|
28,294
|
3
|
83,022
|
-
|
-
|
83,025
|
|
Net
Loss
|
|
|
|
|
(118,258)
|
(118,258)
|
|
BALANCE,
March 31, 2019
|
314,430
|
32
|
6,069,008
|
-
|
(6,826,417)
|
(757,378)
|
|
|
|
|
|
|
|
|
|
Issuance
Common stock for services
|
|
|
|
|
|
-
|
|
Note
conversion
|
77,667
|
8
|
109,310
|
-
|
-
|
109,318
|
|
Net
Loss
|
|
|
|
|
(95,908)
|
(95,908)
|
|
BALANCE,
June 30, 2019
|
392,098
|
$40
|
$6,178,318
|
$-
|
$(6,922,325)
|
$(743,968)
|
|
|
|
|
|
|
|
|
|
Issuance
Common stock for services
|
|
|
|
|
|
-
|
|
Note
conversion
|
4,387,625
|
438
|
692,873
|
-
|
-
|
693,311
|
|
Net
Loss
|
|
|
|
|
(647,815)
|
(647,815)
|
|
BALANCE,
September 30, 2019
|
4,779,722
|
$478
|
$6,871,191
|
$-
|
$(7,570,140)
|
$(698,472)
|
|
|
|
|
|
|
|
|
|
Issuance
Common stock for services
|
5,250,000
|
525
|
209,475
|
|
|
210,000
|
|
Note
conversion
|
5,567,852
|
556
|
160,736
|
-
|
-
|
161,292
|
|
Rounding
shares
|
353
|
1
|
-
|
|
(1)
|
-
|
|
Beneficial conversion feature
|
|
|
22,500
|
|
|
22,500
|
|
Net
Loss
|
|
|
|
|
(866,467)
|
(866,467)
|
|
BALANCE,
December 31, 2019
|
15,597,928
|
$1,560
|
$7,263,902
|
$-
|
$(8,436,608)
|
$(1,171,146)
|
|
|
|
|
|
|
|
|
|
Issuance
Common stock for services
|
50,000,000
|
5000
|
1,145,000
|
|
|
1,150,000
|
|
Note
conversion
|
12,433,402
|
1,243
|
151,504
|
-
|
-
|
152,747
|
|
Net
Loss
|
|
|
|
|
(882,344)
|
(882,344)
|
|
|
|
|
|
|
|
-
|
|
BALANCE,
March 31, 2020
|
78,031,330
|
$7,803
|
$8,560,406
|
$-
|
$(9,318,952)
|
$(750,743)
|
|
|
|
|
|
|
|
|
|
Note
conversion
|
14,589,623
|
1,459
|
100,056
|
|
|
101,515
|
|
Net
Loss
|
|
|
|
|
(292,004)
|
(292,004)
|
|
|
|
|
|
|
|
-
|
|
BALANCE,
June 30, 2020
|
92,620,953
|
$9,262
|
$8,660,462
|
$-
|
$(9,610,956)
|
$(941,232)
|
|
|
|
|
|
|
|
|
|
Note
conversion
|
21,419,834
|
2,138
|
99,239
|
|
|
101,377
|
|
NET LOSS
|
|
|
|
|
(170,271)
|
(170,271)
|
|
|
|
|
|
|
|
-
|
|
BALANCE,
September 30, 2020
|
114,040,787
|
$11,400
|
$8,759,701
|
$-
|
$(9,781,226)
|
$(1,010,126)
|
6
The
accompanying notes are an integral part of these financial
statements
7
|
AUSCRETE
CORPORATION
|
|
STATEMENT OF
CASH FLOWS
|
|
for the nine
months ended September 30, 2020
|
|
Un-audited
|
|
|
|
|
|
|
2020
|
2019
|
|
OPERATING ACTIVITIES
|
|
NET LOSS
|
$(1,344,620)
|
$(861,979)
|
|
Finance
Costs
|
107,797
|
447,359
|
|
Loss on
sale of fixed asset
|
-
|
10,000
|
|
Depreciation
|
3,921
|
3,921
|
|
Change
in other assets
|
2,360
|
(4,444)
|
|
Change
in Accounts Receivable
|
(13,000)
|
-
|
|
Change
in inventory
|
(4,097)
|
-
|
|
Share
Based expense
|
1,150,000
|
-
|
|
Change
in Accounts Payable and Accrued Expenses
|
63,357
|
116,632
|
|
Change
in Related Party Advances
|
(6,766)
|
4,874
|
|
Change
in Derivative and Note Discount
|
(204,587)
|
110,209
|
|
Net
Cash Used by Operating Activities
|
(245,635)
|
(173,428)
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
Purchase of Equipment
|
(3,690)
|
(18,891)
|
|
Sale of Land
|
-
|
90,000
|
|
Net
cash used by investing activities
|
(3,690)
|
71,109
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
Payments on notes payable
|
|
-
|
|
Proceeds from notes payable
|
234,000
|
118,500
|
|
Net
cash provided by financing activities
|
234,000
|
118,500
|
|
NET
INCREASE (DECREASE) IN CASH
|
(15,325)
|
16,181
|
|
|
|
|
|
CASH, BEGINNING OF PERIOD
|
15,634
|
15,948
|
|
|
|
|
|
CASH, END OF PERIOD
|
$309
|
$32,129
|
|
|
|
|
|
Supplemental Cashflow Information
|
|
|
|
Interest Paid
|
$-
|
$-
|
|
Taxes
Paid
|
$-
|
$-
|
|
|
|
|
|
Supplemental Non-Cash Disclosure
|
|
|
|
Shares
issued for note conversions
|
$254,262
|
$827,841
|
|
|
|
|
8
The accompanying
notes are an integral part of these financial statements
9
AUSCRETE
CORPORATION
UNAUDITED NOTES
TO FINANCIAL STATEMENTS
September 30,
2020
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”). The financial statements are
presented in condensed format and should be read in conjunction
with the audited financial statement on the form 10K for the year
ended December 31, 2019.
INCOME TAXES
Federal Income taxes
are not currently due since we have had 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 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 nine Months ended September 30,
2020 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.
The Company has no uncertain tax positions or related interest or
penalties requiring Accrual at September 30, 2020 and 2019.
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 $309 in cash equivalents as of September 30, 2020
and $15,634 as of December 31, 2019.
10
Accounts Receivable
We grant
credit to our customers and do not require collateral. Our ability
to collect receivables is affected by economic fluctuations in the
geographic areas and industries served by us. Reserves for
un-collectable amounts are provided, based on past experience and a
specific analysis of the accounts. Although we expect to collect
amounts due, actual collections may differ from the estimated
amounts. As of September 30, 2020, and December 31, 2019, we had a
reserve for potentially un-collectable accounts of $0 and $0
respectively. The three and nine months ended
September 30, 2020; our bad debt expense
was $0 compared to $0 for the same period in 2019.
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
September 30,
2020
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
334,447
|
|
|
$
|
334,447
|
|
11
The
following table provides a summary of changes in fair value of the
Company’s Level 3 financial liabilities as of September 30,
2020
|
|
Derivative
|
|
|
Liability
|
|
Balance, December 31, 2019
|
$ 729,308
|
|
Additions recognized as debt discount
|
121,179
|
|
Note
Conversions
|
(175,886)
|
|
Mark-to-market at September 30, 2020
|
(362,404)
|
|
Balance, September 30, 2020
|
$ 334,447
|
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
For the three months ended September 30, 2020 we completed and sold
one unit for $13,000.
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. 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.
Share-Based
Compensation
The
Company has adopted the use of Statement of Financial Accounting
Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now
contained in FASB Codification Topic 718, Compensation-Stock
Compensation), which supersedes APB Opinion No. 25, “Accounting
for Stock Issued to Employees,” and its related implementation
guidance and eliminates the alternative to use Opinion 25’s
intrinsic value method of accounting that was provided in
12
Statement 123 as originally
issued. This Statement requires an entity to measure the cost of
employee services received in exchange for an award of an equity
instruments, which includes grants of stock options and stock
warrants, based on the fair value of the award, measured at the
grant date (with limited exceptions). Under this standard, the fair
value of each award is estimated on the grant date, using an
option-pricing model that meets certain requirements. We use the
Black-Scholes option-pricing model to estimate the fair value of
our equity awards, including stock options and warrants. The
Black-Scholes model meets the requirements of SFAS No. 123R;
however, the fair values generated may not reflect their actual
fair values, as it does not consider certain factors, such as
vesting requirements, employee attrition and transferability
limitations. The Black-Scholes model valuation is affected by our
stock price and a number of assumptions, including expected
volatility, expected life, risk-free interest rate and expected
dividends. We estimate the expected volatility and estimated life
of our stock options at grant date based on historical volatility.
For the “risk-free interest rate,” we use the Constant Maturity
Treasury rate on 90-day government securities. The term is equal to
the time until the option expires. The dividend yield is not
applicable, as the Company has not paid any dividends, nor do we
anticipate paying them in the foreseeable future. The fair value of
our restricted stock is based on the market value of our free
trading common stock, on the grant date calculated using a
20-trading-day average. At the time of grant, the share-based
compensation expense is recognized in our financial statements
based on awards that are ultimately expected to vest using
historical employee attrition rates and the expense is reduced
accordingly. It is also adjusted to account for the restricted and
thinly traded nature of the shares. The expense is reviewed and
adjusted in subsequent periods if actual attrition differs from
those estimates.
We
re-evaluate the assumptions used to value our share-based awards on
a quarterly basis and, if changes warrant different assumptions,
the share-based compensation expense could vary significantly from
the amount expensed in the past. We may be required to adjust any
remaining share-based compensation expense, based on any additions,
cancellations or adjustments to the share-based awards. The expense
is recognized over the period during which an employee is required
to provide service in exchange for the award—the requisite service
period (usually the vesting period). No compensation cost is
recognized for equity instruments for which employees do not render
the requisite service. The three months ended September 30, 2020
and 2019 we had $1,150,000 and $0 respectively, in share-based
expense, due to the issuance of common stock. As of September 30,
2020, we had no further non-vested expense to be recognized.
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 approximately
400,000,000 shares of common stock
could be issued as a result of conversion of notes
payable. As of September 30, 2020, and 2019. 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 completed November 13th, 2019.
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.
13
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.
LEASES
ASB ASU 2016-02 “Leases (Topic 842)” – In February
2016, the FASB issued ASU 2016-02, which requires lessees to
recognize almost all leases on their balance sheet as a
right-of-use asset and a lease liability. For income statement
purposes, the FASB retained a dual model, requiring leases to be
classified as either operating or finance. Classification will be
based on criteria that are largely similar to those applied in
current lease accounting, but without explicit bright lines. Lessor
accounting is similar to the current model, but has been updated to
align with certain changes to the lessee model and the new revenue
recognition standard. This ASU is effective for fiscal years
beginning after December 15, 2018, including interim periods within
those fiscal years. The adoptions of this standard has not
significantly impacted the company.
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.
During the three-month period ending September 30, 2020 the Company
had started generating revenues from construction related
operations. This involved the sale of 420 square foot contracted
display home for $13,000.
During the prior six months of 2020 the Company had not generated
revenues from construction related operations. The Company has an
Accumulated deficit of $9,781,227 as of September 30, 2020 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. This also may be affected given the
uncertainties surrounding the Covid 19 pandemic. 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
The
Company is reviewing the effects of following recent updates. The
Company has no expectation that any of these items will have a
material effect upon the financial statements.
In
June 2016, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2016-13, Financial
Instruments—Credit Losses [codified as Accounting Standards
Codification Topic (ASC) 326]. ASC 326 adds to US generally
accepted accounting principles (US GAAP) the current expected
credit loss (CECL) model, a measurement model based on expected
losses rather than incurred losses. Under this new guidance, an
entity recognizes its estimate of expected credit losses as an
allowance, which the FASB believes will result in more timely
recognition of such losses. This will become effective in January
2023 and the impact on the company is under evaluation.
14
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.
Update 2020-06—Debt—Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s
Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity’s Own Equity. This was
issued in August of 2020 and will become effective for fiscal years
beginning after December 15, 2021, including interim periods within
those fiscal years. We are in the process of evaluating the impact
to the company.
NOTE - 4
RELATED PARTY TRANSACTIONS
As of, September 30, 2020 and December 31, 2019, the balance owed
to Company CEO, John Sprovieri was $0 and $6,766 respectively.
These advances were primarily for operating expenses.
NOTE 5 - PROPERTY, INVENTORY AND EQUIPMENT
During July 2019, the Company sold their Industrial Property they
had bought from the city of Goldendale in February 2018. The
original purchase price was $100,000 for the 5 acre lot. The
Company sold the land back to the City under the original contract
for a discounted price of $90,000.
Notes to Inventory Type and Value:
Inventory consists of Raw Materials that are valued at the lower of
cost or market.
Raw Materials:
Raw materials consist of rebar, insulation, surfactant, powdered
cement, threaded inserts and sundry items. The cost of $8,359 is
based on the cost of purchase from a non-related supplier.
Property and Equipment at September 30, 2020 were comprised of the
following at:
|
|
|
|
|
|
September 30, 2020
|
December 31, 2019
|
|
Property Plant and
Equipment (Gross)
|
$79,482
|
$75,355
|
|
Vehicles
|
6,344
|
6,344
|
|
Accumulated
Depreciation
|
(26,995)
|
(22,638)
|
|
Property, Plant and
Equipment (net)
|
$58,831
|
$59,061
|
During the nine months ended September 30, 2020, the Company
purchased $3,690 in manufacturing equipment. The Depreciation
expense for the three and nine months ended September 30, 2020 and
2019 was $1,307 and $3,921 respectively.
NOTE 6 - COMMON STOCK
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.
15
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.
During
the Period January 1, 2020 to September 30, 2020, the Company
issued 48,442,859 shares for convertible note conversions based on
post-split numbers. On one of the conversions the conversion price was modified
during the period to induce the share settlement, resulting in loss
on the conversion of $19,250.
During
the Period January 1, 2020 to September 30, 2020 there were
50,000,000 shares issued to
these
individuals to recompense post-split roll back numbers issued for
service compensation to the Company.
These
shares were valued on the date of issuance using the closing stock
price on that day resulting in share based expense of
1,150,000.
|
Shareholder
|
Issued
|
Cost
Basis
|
|
Michael
A. Young
|
1,000,000
|
17,000
|
|
Otto B.
Paulette
|
1,000,000
|
17,000
|
|
William
S. Beers
|
1,000,000
|
17,000
|
|
Julie
Jett-Regnell
|
1,000,000
|
17,000
|
|
Elbert
L. Odom
|
1,000,000
|
17,000
|
|
Kimberly A. Grimm
|
3,000,000
|
51,000
|
|
Kathleen D. Jett
|
5,000,000
|
85,000
|
|
John
& Mary Sprovieri
|
37,000,000
|
629,000
|
During
the three-month period July 1, 2020 to September 30, 2020, the Company issued
21,419,834 shares for convertible note conversions. Total shares
issued for the period January 1, 2020 to September 30, 2020 was
98,442,859. On one of the conversions prior to the third quarter the
conversion price was modified to induce the share settlement,
resulting in loss on the conversion of $19,250.
NOTE 7 - INCOME TAXES
Federal
Income taxes are not currently due since we have had 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 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 nine months ended September 30,
2020 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.
16
As of
September 30, 2020, we had a net operating loss carry-forward of
approximately $(9,781,227) and a deferred tax asset of
approximately $2,054,058 using the statutory rate of 21%. The
deferred tax asset may be recognized in future periods, not to
exceed 20 years. However, due to the uncertainty of future
events we have booked valuation allowance of $(2,054,058).
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 September 30, 2020,
the Company had not taken any tax positions that would require
disclosure under FASB ASC 740.
|
|
|
|
|
|
September 30, 2020
|
December 31, 2019
|
|
Deferred Tax
Asset
|
$2,054,058
|
$
1,771,688
|
|
Valuation
Allowance
|
(2,054,058)
|
(1,771,688)
|
|
Deferred Tax Asset
(Net)
|
$
-
|
$
-
|
he
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.
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 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
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
January 13, 2020, the company issued a 12-month Convertible Note
for the sum of $20,000 to RB Capital at 12%. Convertible at $.1. No
beneficial conversion was recognized as the conversion price was
higher than the stock price.
17
On
February 10, 2020, the company issued a 12-month Convertible Note
for the sum of $25,000 to RB Capital at 12%. Convertible at $.15.
No beneficial conversion was recognized as the conversion price was
higher than the stock price.
On
March 6, 2020, the company issued a 12-month Convertible Note for
the sum of $35,000 to LG Capital at 8%. Convertible at 60% of
lowest of the prior 20 days trading period. We recognized a
derivative liability of $66,811, an original debt discount of
$35,000 and a loss on issuance of $31,811
On
April 7, 2020, the company issued a 12-month Convertible Note for
the sum of $15,000 to RB Capital at 12%. Convertible at $.05. No
beneficial conversion was recognized as the conversion price was
higher than the stock price.
On June
5, 2020, the company issued a 12-month Convertible Note for the sum
of $20,000 to RB Capital at 12%. Convertible at $.1. No beneficial
conversion was recognized as the conversion price was higher than
the stock price.
On June
25, 2020, the company issued a 12-month Convertible Note for the
sum of $30,000 to Samuel Rotbard at 8%. Convertible at 60% of
lowest of the prior 20 days trading period. We recognized a
derivative liability of $66,811, an original debt discount of
$35,000 and a loss on issuance of $31,811
On July
23, 2020 the company issued a 12-month Convertible Note to RB
Capital for the sum of $15,000 at 10% interest at a rate of
$0.05.
On
August 17, 2020 the company issued a 12-month Convertible Note to
RB Capital for the sum of $50,000 at 10% interest at a rate of
$0.05.
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 101% to 130% and a risk free discount rate
of .11% to .42 The remaining derivative liabilities valued using
the level 3 inputs in the fair value hierarchy were:
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 nine months to one year. The
conversion rates range from 55% discount to the market to 62%
discount to the market.
For the nine months
ended September 30, 2020 the convertible notes had converted into
48,442,859 shares of common stock and we recognized $107,797 in
finance fees on the conversions.
Outstanding
Derivative Liabilities:
|
|
|
|
|
|
September 30, 2020
|
December 31, 2019
|
|
Derivative
Liabilities on Convertible Loans:
|
|
|
|
Outstanding
Balance
|
$334,447
|
$729,308
|
NOTE -
9 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 at $2,000 per month. The total lease payments for 2019 were
$18,000.
ASB ASU 2016-02 “Leases (Topic 842)” – In February
2016, the FASB issued ASU 2016-02, which requires lessees to
recognize almost all leases on their balance sheet as a
right-of-use asset and a lease liability. For income statement
purposes, the FASB retained a dual model, requiring leases to be
classified as either operating or finance. Classification will be
based on criteria that are largely similar to those applied in
current lease accounting, but without explicit bright lines. Lessor
accounting is similar to the current model but has been updated to
align with certain changes to the lessee model and the new revenue
recognition standard. This ASU is effective for fiscal years
beginning
18
after December 15, 2018,
including interim periods within those fiscal years. We are not
materially impacted by this, as we have no long-term
leases.
NOTE
10 – SUBSEQUENT EVENTS
From October 1, 2020 thru November 20, 2020 we had two note
conversions for a total of $8,414 into6,678,325 shares of our
common stock.
In accordance with ASC 855, the Company
has analyzed its operations subsequent to September 30, 2020
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
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Statements
Readers of this discussion are advised that the discussion should
be read in conjunction with the financial statements of Registrant
(including related notes thereto) appearing elsewhere in this Form
10-Q. Certain statements in this discussion may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements reflect Registrant's current expectations regarding
future results of operations, economic performance, financial
condition and achievements of Registrant, and do not relate
strictly to historical or current facts. Registrant has tried,
wherever possible, to identify these forward-looking statements by
using words such as "believe," "expect," "anticipate," "intend,"
"plan," "estimate" or words of similar meaning.
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.
Results of Operations
During the three-month period ending September 30, 2020 the Company
had commenced its manufacturing operations which brought material
operational changes from the last audited financials of December
31, 2019 Revenue for the three and nine months ended September 30,
2020 was $13,000 and $13,000 respectively compared to $0 for the
same periods in 2019. This increase was due to the sale of one
house.
For the three months ended September 30, 2020 our gross profit was
$4,641 compared to $0 for the same period in 2019. This increase
was due to the sale of one house.
For the nine months ended September 30, 2020 our gross profit was
$4,641 compared to $0 for the same period in 2019. This increase
was due to the sale of one house.
For the three months ended September 30, 2020 our accounting and
legal was $12,200 compared to $18,100 for the same period in
2019.
For the nine months ended September 30, 2020 our accounting and
legal was $28,950 compared to $37,800 for the same period in
2019.
For the three months ended September 30, 2020 our salaries expense
was $42,042 compared to $33,142 for the same period in 2019.
For the nine months ended September 30, 2020 our salaries expense
was $139,204 compared to $74,480 for the same period in 2019.
For the three months ended September 30, 2020 our share based
expense was $0 compared to $0 for the same period in 2019.
For the nine months ended September 30, 2020 our share based
expense was $1,149,999 compared to $0 for the same period in
2019.
For the three months ended September 30, 2020 our G&A expense
was $21,088 compared to $38,996 for the same period in 2019.
19
For the nine months ended September 30, 2020 our G&A expense
was $104,975 compared to $85,297 for the same period in 2019.
For the three months ended September 30, 2020 our depreciation
expense was $1,307 compared to $1,307 for the same period in
2019.
For the nine months ended September 30, 2020 our depreciation
expense was $3,921 compared to $3,921 for the same period in
2019.
For the three months ended September 30, 2020 our gain / (loss) on
derivatives was $(39,766 compared to $(172,784) for the same period
in 2019.
For the nine months ended September 30, 2020 our gain / (loss) on
derivatives was $340,152 compared to $(21,634) for the same period
in 2019.
For the three months ended September 30, 2020 our (loss) on sale of
fixed assets was $0 compared to $(10,000) for the same period in
2019.
For the nine months ended September 30, 2020 our (loss) on sale of
fixed assets was $0 compared to $(10,000) for the same period in
2019.
For the three months ended September 30, 2020 our financing expense
was $(15,530) compared to $(302,722) for the same period in
2019.
For the nine months ended September 30, 2020 our financing expense
was $(107,797) compared to $(447,361) for the same period in
2019.
For the three months ended September 30, 2020 our Interest expense
was $(42,979) compared to $(70,793) for the same period in
2019.
For the nine months ended September 30, 2020 our Interest expense
was $(154,566) compared to $(181,486) for the same period in
2019.
For the three months ended September 30, 2020 our net loss was
$(170,271) compared to $(647,814) for the same period in 2019.
For the three months ended September 30, 2020 our net loss was
$(1,344,620) compared to $(861,979) for the same period in
2019.
Liquidity
Our prior six months of 2020’s
short-term obligations were covered by funding received from convertible notes
with a total value of $143,000.
The three-month Quarter ending September 30 resulted in the
issuance of (2) convertible notes totaling $65,000
and there was one sale of a constructed Home for $13,000 to cover
finance fees, interest and G&A costs.
Net cash used in operating activities was $245,635 for the
nine months ended September 30, 2020 compared to net cash used
in operating activity of $173,428 for the same period in
2019.
Net cash used in investing activities was ($3,690) in the nine
months ended September 30, 2020, compared to net cash provided by
investing activity of $71,109 for the same period in 2019.
Net cash provided by financing activities was $234,000 for the nine months ended
September 30, 2020, compared to $118,500 for same period in
2019.
We have had minimal operating activity since inception of the
company in 2010. Our 2020 short-term obligations are being covered by funding received
from convertible notes with a total value of $234,000 issued in
2020.
As of September 30, 2020, the Company
had inadequate cash to operate its business at the current level
for the next nine 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.
Overview
Auscrete Corporation 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
20
design and development
since the early 1980's. The current technology is the amalgamation
of various material stages of Company development, 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 very competitive. A turnkey
house, ready to move in sells for around $105 per square foot. That
is very competitive in today's market but is brought about by
Auscrete's ability to manufacture large panels in mass production
format. The house is very quickly constructed on site to produce an
attractive and functional 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 insect infestation
or rot, it saves extensively on energy costs and has very low
maintenance needs.
Financing
Auscrete Corporation, a Wyoming public company was incorporated on
December 31, 2009 and initially became effective with the SEC for
an IPO on August 16, 2012. The IPO was never exercised and
expired.
Subsequently the company had an S-1 become Effective on December
30, 2014. This was not an Offering and not used for
fundraising.
The company has been quoted on the OTCQB Bulletin Board under the
symbol "ASCK" since February 2019 and is DWAC registered.
Financial Statements in this document represent the full results of
the company during the three-month period to September 30, 2020.
There are no "off balance sheet" arrangements.
Marketing
Principal marketing efforts will be 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.
Operations Management
The Auscrete Team will comprise of a minimal tiered management
structure that enables control and knowledge to be firmly at the
hands of senior management ensuring rapid and simplified direct
reporting to action.
Under control of the CEO will be marketing, manufacturing
operations, design architecture and engineering, administration and
safety compliance. Additionally, the Construction Manager will
oversee Auscrete's own construction activities as well as liaise
with contractors and developers.
Operations
Design and Engineering will prepare new design concepts and adapt
customer's designs, either residential or commercial, to the
Auscrete style of construction as well as preparing all drawings
for manufacturing on the production floor.
The construction manager will be responsible for liaising with
contractors, developers and other customers to ensure the
satisfactory completion of their contract. As well, the company
will have its own construction division that will not conflict with
other contractors but will enable the company the ability to carry
out construction operations where no alternative exists. The
construction manager will also oversee these operations.
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 corporations,
workers and local economies. Yet, still the availability of
affordable housing is becoming increasingly scarce.
The company is promoting a product that will not only make housing
affordable but also offers some luxuries as well, such as
incorporated heat pump/air conditioning units that would not be
available in other houses at such
21
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 ready
constructed site-built units on suitable land. They are NOT and
will not be offered under the banner of such categories as
'pre-fabricated', ‘modular” or 'factory built' homes.
They are just plain good value masonry homes built
of a time proven product, concrete.
Although Auscrete can economically deliver whole house panel
sets as far away as New Mexico or Alberta, Canada, the Company will
concentrate mostly on its home markets here in the Northwest where
future growth will be achieved by servicing this fast-emerging
market in this above average (for affordable housing) evolving
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 the houses.
The Plant’s
specialized line equipment installation has been completed with end
line product fabrication meeting the Company’s expectations in high
construction standards.
Housing construction
planning is currently in a number of project stages. The Company’s
Marketing efforts have recently diversified to also include designs
of small dwellings sometimes referred to as “Tiny Homes.” These
structures are 80 – 500 square feet housing units built to
fill the gap in urban multi-unit homeless transitional housing.
This additional new venture in fabrication fits well with
Auscrete’s overall model in concrete panel construction for housing
and commercial structures.
Auscrete has recently
had considerable interest and meaningful conversations with
associates of the Veterans Administration in Washington State
discussing opportunities with the Company involving the “VA’s
Homeless Providers Grant” program. This Governmental funding will
finance the building of transitional housing to homeless Veterans
of the State. There is no guarantee that this will ultimately
involve a contract/order.
Over the next few
weeks, the Company will be
manufacturing two current designs of “Tiny Homes” which will
include a 324 sq. ft. and 420 sq. ft. home which will be used for a
time as display units at two separate locations prior to delivery
to their customers.
The Company has also
entered into recent discussions between its Marketing division and
a builder to furnish panels for another traditional medium size
home to be built 32 miles from Auscrete’s plant in Washington
State.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Not required for smaller reporting companies.
Item
4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
our Chief Executive and Financial Officer, we conducted an
evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act, as of the end of the period
covered by this quarterly report. Based on this evaluation, our
Chief Executive and Financial Officer concluded as of September
30th, that our disclosure controls and procedures are
not effective such that the information required to be disclosed in
our reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in SEC
rules and forms, and is accumulated and communicated to our
management, including our Chief Executive and Financial Officer, as
appropriate to allow timely decisions regarding required
disclosure.
(b) Changes in internal controls
There were no changes in our internal control over financial
reporting during the nine months ended September 30, 2020 that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
22
PART II - OTHER INFORMATION
Item
1. Legal Proceedings
At present, the Company is not engaged in or the subject of any
material pending legal proceedings.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
The Company has sold shares for the purpose of Note Conversion but
has not received proceeds from any of these sales during the nine
months ended September 30, 2020.
Item 3.
Defaults Upon Senior Securities
None.
Item
4. Mine Safety Disclosures
Not applicable.
Item
5. Other Information
None.
Item 6. Exhibits
|
Number
|
|
Description
|
|
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer Pursuant to Sarbanes-Oxley
Section 302
|
|
|
|
|
|
32.1*
|
|
Certification Pursuant To 18 U.S.C. Section 1350, as adopted to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS*
|
|
XBRL Instance
Document
|
|
101.SCH*
|
|
XBRL Taxonomy
Extension Schema Document
|
|
101.CAL*
|
|
XBRL Taxonomy
Extension Calculation Linkbase Document
|
|
101.DEF*
|
|
XBRL Taxonomy
Extension Definition Linkbase Document
|
|
101.LAB*
|
|
XBRL Taxonomy
Extension Label Linkbase Document
|
|
101.PRE*
|
|
XBRL Taxonomy
Extension Presentation Linkbase Document
|
* Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AUSCRETE CORPORATION
Date:
November 23, 2020
By:
/s/ A John Sprovieri
A. John Sprovieri
(Chief Executive and Financial Officer)
23
24
