AUSCRETE CORPORATION The Company's financial statements have been presented on the basis that it will continue as a going concern. The Company has not generated revenues from construction related operations to date. The Company has an Accumulated deficit of$10,058,180 as ofJune 30, 2021 which raises substantial doubt about the Company's ability to continue as a going concern.
The Company will use additional funds through equity and debt financing, collaborative or other arrangements with corporate partners, licensees or others, and from other sources, which may have the effect of diluting the holdings of existing shareholders. The Company has subsequent current arrangements with respect to, or sources of, such additional financing and the Company does not anticipate that existing shareholders will be required to provide any portion of the Company's future financing requirements.
No assurance can be given that additional financing will be available when needed or that such financing will be available on terms Acceptable to the Company. If adequate funds are not available, the Company may be required to delay or terminate expenditures for certain of its programs that it would otherwise seek to develop and commercialize. This would have a material adverse effect on the Company and raise doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that may result from the outcome of this uncertainty.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
Update 2018-07-Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. This was early adopted and there were no outstanding equity awards to be re-valued.
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 afterDecember 15, 2021 , including interim periods within those fiscal years. We are in the process of evaluating the impact to the company. 10 Table of Contents
NOTE 4 - RELATED PARTY TRANSACTIONS
Though the company has established banking credit cards to assist with the normal everyday purchases and payments of corporate needs such as utilities etc., The CEO and other involved parties often use their own cards for this purpose and, to represent this, the company has a continuous Related Party Advances section in its financial statements. This is adjusted typically at the end of each reporting period.
As of
NOTE 5 - PROPERTY, INVENTORY AND EQUIPMENT
Notes to Inventory Type and Value:
Inventory consists of Finished Product and Raw Materials that are valued at the lower of cost or market.
Raw Materials:
Raw materials consist of rebar, insulation, surfactant, powdered cement,
threaded inserts and sundry items. The cost is based on the cost of purchase
from a non-related supplier. As of
Property and Equipment atJune 30, 2021 were comprised of the following at:
June 30, December 31,
2021 2020
Capital Equipment $ 79,631 $ 79,631
Vehicles 6,344 6,344Accumulated Depreciation (40,730 ) (34,767 ) Net Fixed Assets
$ 45,245 $ 51,208
Depreciation expense for the three months ended
Depreciation expense for the six months endedJune 30, 2021 and 2021 was$5,970 and$2,614 respectively. 11 Table of Contents NOTE 6 - EQUITY Common Stock:
During the Period
Shareholder Issued Cost Basis
Michael A. Young 25,000 23,000
Otto B. Paulette 25,000 23,000
William S. Beers 25,000 23,000
Julie Jett-Regnell 25,000 23,000
Elbert L. Odom 25,000 23,000
Kimberly A. Grimm 75,000 69,000
Kathleen D. Jett 125,000 115,000
John & Mary Sprovieri 925,000 851,000
During the Period
During the Period
OnFebruary 22 of 2021 the company performed a 40 for 1 reverse stock split. All share amounts have been adjusted retroactively to reflect the split and adjustments have been made to reflect the par value and adjusted to additional paid in capital. The following table is a list of the foremost 6 shareholders of the Company as ofDecember 31, 2020 . Number of NAME ADDRESS Shares
1. John Sprovieri PO Box 813, Rufus OR 97050
43,750
2.
271,295
3. Kathleen D Jett PO Box 846
125,008
5.E. Lee Odom Jr .7011 Park Green DriveArlington, TX 76001.
313
6.Michael Young 4405 Hwy. 30 W,The Dalles, OR 97058
2,500
12
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Warrants
OnMay 28, 2019 we issued 2,000,000 in cashless warrants in connection with the issuance of the convertible promissory note datedMay 29, 2019 withCrown Bridge Partners, LLC in the amount of$27,500 . Warrants Warrants - Weighted exercisable - Weighted Common Share Average Common Share Average Equivalents Exercise price Equivalents Exercise price Outstanding December 31, 2019 - $ - - $ - Additions Granted 2,000,000 0.30 2,000,000.00 0.30 Expired Expired - -
-
Excercised Exercised - - - - Outstanding December 31, 2020 2,000,000 $ 0.30 2,000,000 $ 0.30 Additions Granted - - - Expired Expired - - - Excercised Exercised - - - - Outstanding June 30, 2021 2,000,000 $ 0.30 2,000,000 $ 0.30
The warrants contained a downround feature that were triggered during 2020, and
the result
NOTE 7 - INCOME TAXES
We currently have no current tax liability, as we have had no revenue and incurred losses since inception.
OnDecember 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the "Tax Act") was enacted. Among the significant changes to theU.S. Internal Revenue Code, the Tax Act lowers theU.S. federal corporate income tax rate ("Federal Tax Rate") from 35% to 21% effectiveJanuary 1, 2019 . The Company will compute its income tax expense for the year endedDecember 31, 2021 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. During the PeriodJanuary 1, 2020 toDecember 31, 2020 there were 1,250,000 shares issued to these individuals to recompense post-split roll back numbers issued for service compensation to the Company. As a result the company recognized a share based expense of$1,150,000 . This amount was eliminated from the net operating loss carry forward
As of
13
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However, due to the uncertainty of future events, we have booked valuation allowance of$(1,870,718) . 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. AtDecember 31, 2020 , the Company had not taken any tax positions that would require disclosure under FASB ASC 740.June 30 ,December 31, 2021 2020
Deferred Tax Asset
-
The Company is subject to tax in the U.S. federal and Washington jurisdictions.
These filings are subject to a three-year statute of limitations unless the
returns have not been filed at which point the statute of limitations becomes
indefinite. No filings are currently under examination. No adjustments have been
made to reduce the estimated income tax benefit at year end. Any valuations
relating to these income tax provisions will comply with U.S. generally Accepted
Accounting principles.
NOTE 8 - NOTES PAYABLE AND DERIVATIVE LIABILITIES
OnFebruary 2, 2018 , the company issued a 12-month Convertible Note for the sum of$200,000 toRB Capital at 12%. Convertible at$.004 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnMay 8, 2018 , the company issued a 12-month Convertible Note for the sum of$50,000 toRB Capital at 12%. Convertible at$.004 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnJune 28, 2018 , the company issued a 12-month Convertible Note for the sum of$10,000 toRB Capital at 12%. Convertible at$.004 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnDecember 7, 2018 , the company issued a 12-month Convertible Note for the sum of$25,000 toRB Capital at 12%. Convertible at$.004 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnOctober 25, 2019 , the company issued a 12-month Convertible Note for the sum of$15,000 toRB Capital at 12%. Convertible at$.01 . As a result we recognized a beneficial conversion cost of$45,000 . OnNovember 15, 2019 , the company issued a 12-month Convertible Note for the sum of$25,000 toRB Capital at 12%. Convertible at$.01 . As a result, we recognized a beneficial conversion cost of$7,500 . OnDecember 13, 2019 , the company issued a 12-month Convertible Note for the sum of$20,000 toRB Capital at 12%. Convertible at$.03 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnJanuary 13, 2020 , the company issued a 12-month Convertible Note for the sum of$20,000 toRB Capital at 10%. Convertible at$.10 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnFebruary 10, 2020 , the company issued a 12-month Convertible Note for the sum of$25,000 toRB Capital at 10%. Convertible at$.15 . No beneficial conversion was recognized as the conversion price was higher than the stock price. 14 Table of Contents OnApril 7, 2020 , the company issued a 12-month Convertible Note for the sum of$15,000 toRB Capital at 10%. Convertible at$.05 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnJune 5, 2020 , the company issued a 12-month Convertible Note for the sum of$20,000 toRB Capital at 10%. Convertible at$.10 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnJune 25, 2020 , the company issued a 12-month Convertible Note for the sum of$30,000 toShmeul Rotbard at 8%. Convertible at$.008 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnJuly 23, 2020 , the company issued a 12-month Convertible Note for the sum of$15,000 toRB Capital at 10%. Convertible at$.05 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnAugust 17, 2020 , the company issued a 12-month Convertible Note for the sum of$50,000 toRB Capital at 10%. Convertible at$.05 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnNovember 10, 2020 , the company issued a 12-month Convertible Note for the sum of$25,000 toRB Capital at 10%. Convertible at$.01 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnDecember 14, 2020 , the company issued a 12-month Convertible Note for the sum of$45,000 toRB Capital at 10%. Convertible at$.01 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnJanuary 29, 2021 , the company issued a 12-month Convertible Note for the sum of$35,000 toRB Capital at 10%. Convertible at$.01 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnMarch 16, 2021 , the company issued a 12-month Convertible Note for the sum of$50,000 toRB Capital at 10%. Convertible at$.01 . No beneficial conversion was recognized as the conversion price was higher than the stock price. OnMay 10, 2021 , the company issued a 12-month Convertible Note for the sum of$50,000 toRB Capital at 10%. Convertible at$.20 . No beneficial conversion was recognized as the conversion price was higher than the stock price. 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 212% and a
risk free discount rate of .09% The convertible notes have interest rates that range from 8% to 12% per annum and default rates that range from 12% to 24% per annum. The maturity dates range from six months to one year. The conversion rates range from 55% discount to the market to 62% discount to the market. As ofJune 30, 2021 , there were nineteen convertible notes outstanding, The remaining derivative liabilities valued using the level 3 inputs in the fair value hierarchy were: June 30, December 31, 2021 2020 Derivative Liabilities on Convertible Loans: Outstanding Balance 127,490 389,953 NOTE 9 - COMMITMENTS
The company maintains a month-to-month lease agreement on a 8,000 sq. ft.
facility located in outer Goldendale and monthly lease cost is
As ofJune 30, 2021 the company has not remitted all of the backup withholdings, which could result in material trust-fund penalties from the internal revenue service. NOTE 10 - SUBSEQUENT EVENTS In accordance with ASC 855, the Company has analyzed its operations subsequent toJune 30, 2021 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. 15 Table of Contents
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 endingJune 30, 2021 the Company had resumed its operations after a pause in its manufacturing operations due to COVID-19 constraints. The Company is in the complication stages of contracted 420 sq. ft. "Tiny Home" design which will be used for a time as a display unit on a local building site. This construction project has led to a further interest to build similar homes in another existing acreage of land within close proximity of the plant. There were no material operational changes from the last financials ofMarch 31, 2021 . Revenue for the six and three months endedJune 30, 2021 andMarch 31, 2021 was$0 and$0 respectively.
The three-month Quarter ending
Net cash used in operating activities was$149,522 for the six months endedJune 30, 2021 compared to net cash used in operating activity of$170,919 for the same period in 2020. Net cash used in investing activities was$0 in the six months endedJune 30, 2021 , compared to net cash used in investing activity of ($3,690 ) for the same period in 2020.
Net cash provided by financing activities was
We have had minimal operating activity since inception of the company in 2010.
Our 2021 short-term obligations are being covered by funding received from
convertible notes. with a total value of
As ofJune 30, 2021 , the Company had inadequate cash to operate its business at the current level for the next six months and to achieve its business goals. The success of our business plan during and beyond the next six months will be provided by additional loan financing of a minimum of$300,000 . 16 Table of Contents OverviewAuscrete 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 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.
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 , aWyoming public company was incorporated onDecember 31, 2009 and initially became effective with theSEC for an IPO onAugust 16, 2012 . The IPO was never exercised and expired.
Subsequently the company had an S-1 become Effective on
The company has been quoted on the OTCQB Bulletin Board under the symbol "ASCK"
since
Financial Statements in this document represent the full results of the company during the six-month period toJune 30, 2021 . 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 overseeAuscrete'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 theAuscrete 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. 17 Table of Contents 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 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. AlthoughAuscrete can economically deliver whole house panel sets as far away asNew Mexico orAlberta, 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 fromAuscrete 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. The Company has made further equipment purchases to support its machine shop which will allow it to build additional much needed casting tables amongst other production plant assets. 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 withAuscrete's overall model in concrete panel construction for housing and commercial structures.
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