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)

 

 

 

 

 

 

Statements of Operations (unaudited) for the three and nine months ended September 30, 2020 and 2019 respectively

 

 

 

 

 

 

Statements of Stockholders Equity (unaudited) for the nine months ended September 30, 2020 and Year Ended December 31, 2019 respectively

 

 

 

 

 

 

Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and 2019 respectively

 

 

 

 

 

 

Notes to Financial Statements

 

 

 

 

 

 

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.

 


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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.


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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)


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