Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2017

 

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from ______________ to _____________

 

Commission file number 333-177792

 

THE TEARDROPPERS, INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada	20-4168979
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

 

180 Newport Center Dr. Ste. 230

Newport Beach, Ca. 92660

(Address of principal executive offices)

 

949-751-2173

(Issuer’s telephone number)

 

_______________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

Check whether the issues (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

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). Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

	Large accelerated filer  o	Accelerated filer  o
	Non-accelerated filer  o	Smaller reporting company  x
	Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

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

 

There were 38,210,000 shares of the registrant’s common stock, $0.001 par value per share, outstanding on June 30, 2017.

 

 

 

 

 

THE TEARDROPPERS, INC.

TABLE OF CONTENTS

			Page
Part I – FINANCIAL INFORMATION			3
	Item 1.	Condensed Unaudited Financial Statements:	3
		Condensed Balance Sheets at June 30, 2017 (unaudited) and December 31, 2016 (unaudited)	4
		Condensed Statements of Operations for the six month period ended June 30, 2017 and 2016 (unaudited)	4
		Condensed Statements of Cash Flows for the six month period ended June 30, 2017 and June 30, 2016 (unaudited)	5
		Notes to Condensed Financial Statements (unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
	Item 4.	Controls and Procedures	14
Part II – OTHER INFORMATION			16
	Item 1.	Legal Proceedings	16
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
	Item 3.	Defaults Upon Senior Security	16
	Item 4.	Mine Safety Disclosures	16
	Item 5.	Other Information	16
	Item 6.	Exhibits	17
		Signatures	18

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. Condensed Unaudited Financial Statements

 

The Teardroppers, Inc.

CONDENSED BALANCE SHEETS

(UNAUDITED)

 

		June 30,				December 31,
		2017				2016
ASSETS
Current assets
Cash		$	60,071			$	48,636
Total current assets			60,071				48,636
Fixed assets :
Cost			89,000				5,000
Less accumulated depreciation			(7,708	)			(2,208	)
Fixed assets, net			81,292				2,792
Total Assets		$	141,363			$	51,428
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable		$	125,124			$	104,062
Accounts payable - related parties			230,000				177,500
Customer deposits			14,500				14,500
Loan payable			450,000				450,000
Lines of credit from related parties			167,260				125,560
Accrued interest			111,800				89,300
Accrued interest - related parties			12,957				8,431
Total current liabilities			1,111,641				969,353
Total Liabilities			1,111,641				969,353
Stockholders' (Deficit)
Preferred stock, par value $0.001, authorized 20,000,000 shares, issued shares 0, respectively
Common stock, par value $0.001, authorized 100,000,000 shares issued 38,210,000 and 37,750,000 shares, respectively			38,210				37,750
Additional paid in capital			120,068				36,528
Accumulated deficit			(1,128,556	)			(992,203	)
Total Stockholders' (Deficit)			(970,278	)			(917,925	)
Total Liabilities and Stockholders' (Deficit)		$	141,363			$	51,428

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

 

 

 

 

The Teardroppers, Inc.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		Three Months Ended								Six Months Ended
		June 30,				June 30,				June 30,				June 30,
		2017				2016				2017				2016
Revenues		$	–			$	6,010				–				6,010
Total revenue			–				6,010				–				6,010
Cost of sales			–				–				–				–
Gross margin			–				6,010				–				6,010
Operating expenses:
Consulting to related parties			25,000				28,000				52,500				55,500
General and administrative			27,566				10,903				39,223				23,537
Professional fees			14,991				17,734				17,604				20,728
			67,557				56,637				109,327				99,765
Operating income (loss)			(67,557	)			(50,627	)			(109,327	)			(93,755	)
Other income (expense):
Interest expense - related parties			(2,477	)			(1,241	)			(4,526	)			(2,049	)
Interest expense			(11,250	)			(10,942	)			(22,500	)			(22,531	)
			(13,727	)			(12,183	)			(27,026	)			(24,580	)
Net Income Before Taxes			(81,284	)			(62,810	)			(136,353	)			(118,335	)
Income Tax Provision			–				–				–				–
Net income (loss)		$	(81,284	)		$	(62,810	)			(136,353	)			(118,335	)
Net income (loss) per share (Basic and fully diluted)		$	(0.00	)*			(0.00	)*			(0.00	)*			(0.00	)*
Weighted average number of common shares outstanding			38,160,549				37,793,956				37,996,188				37,896,409

 

* denotes a loss of less than $(.01) per share.

 

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

 

 

 

The Teardroppers, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		Six Months Ended
		June 30,				June 30,
		2017				2016
Cash Flows From Operating Activities:
Net income (loss)		$	(136,353	)		$	(118,335	)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities
Depreciation			5,500				2,437
Changes in Operating Assets and Liabilities
Increase (decrease) in accounts payable			21,062				22,000
Increase (decrease) in accounts payable - related parties			52,500				55,000
Increase in accrued interest - related parties			4,526				2,049
Increase in accrued interest			22,500				22,531
Net cash used for operating activities			(30,265	)			(14,318	)
Cash Flows From Investing Activities:
Assets purchased			–				–
Cash Flows From Financing Activities:
Proceeds from line of credit to related party			134,700				140,225
Repayments on line of credit to related party			(93,000	)			(92,200	)
Net cash provided by financing activities			41,700				48,025
Net Increase (Decrease) In Cash			11,435				33,707
Cash At The Beginning Of The Period			48,636				46,899
Cash At The End Of The Period			60,071				80,606
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing and financing activities:
Assets acquired with accounts payable		$	–			$	5,859
Assets acquired in exchange for stock		$	84,000			$	–
Asset transferred for cancellation of shares		$	–			$	(33,107	)
Cash paid during the period for:
Interest		$	–			$	–
Franchise and income tax		$	–			$	–

 

The accompanying notes are an integral part of the unaudited condensed financial statements.

 

 

 

 

TEARDROPPERS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

For the Six Months Ended June 30, 2017 and 2016

 

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

On June 3, 2013, Teardroppers, Inc. (the “Company”), was incorporated under the laws of the state of Nevada.

 

We intend to enter the business of mobile billboard advertising by offering to provide billboard advertising space on custom designed "Teardrop Trailers". Teardrop Trailers, are usually designed for short-period accommodations for vacationers and travelers. Teardrop Trailers are designed to be towed behind small economy sized vehicles and pickup trucks.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Interim Financial Statements

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to form 10Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the final results that may be expected for the year ended December 31, 2017. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2016 filed with the SEC.

 

Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, useful lives of assets, and related depreciation and amortization methods applied.

 

Cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Fair value of financial instruments

 

The Company adopted the provisions of FASB Accounting Standards Codification (“ASC”) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements.

 

The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

 

 

 

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses, and deferred revenue approximate their fair value because of the short-term maturity of those instruments. The Company’s note payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at June 30, 2017 and December 31, 2016.

  

The Company had no assets or liabilities measured at fair value on a recurring basis for as of June 30, 2017 and December 31, 2016, respectively, using the market and income approaches.

 

Property and equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of three (3) years for equipment, five (5) years for automobile, and seven (7) years for furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

 

Revenue recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB ASC for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable and (iv) collectability is reasonably assured. In addition, the Company records allowances for accounts receivable that are estimated to not be collected.

 

The primary source of revenue is from the rental of advertising space on custom designed Teardrop Trailers. The length of the rental agreements varies from one to thirty days. Customers pay in advance and revenue is recognized based on the number of days of each contract that have expired. The Company recognized $6,010 of income from the rental of the trailers during the three months ended June 30, 2016.

 

Net income (loss) per share

 

The Company computes basic and diluted earnings per share amounts pursuant to ASC 260-10-45. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period.

 

The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity.

 

There were no potentially dilutive shares outstanding as of June 30, 2017 and December 31, 2016, respectively.

 

Subsequent events

 

The Company follows the guidance in ASC 855-10-50 for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.

 

Recently issued accounting pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

 

 

 

NOTE 3 – GOING CONCERN

 

The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company has a minimum cash balance available for payment of ongoing operating expenses. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.

 

NOTE 4 – LINE OF CREDIT FROM RELATED PARTY

 

On February 25, 2014, the Company entered into a line of credit with DEVCAP Partners, LLC, a California limited liability company, for an amount up to $450,000 with a maturity date of June 1, 2018, bearing interest of 10% per annum. DEVCAP Partners, LLC is a related party to the Company as it is the majority shareholder of the Company. As of June 30, 2017, and December 31, 2016, the balance of the line of credit was $142,260 and $100,560, respectively. The Company recorded accrued interest of $8,259 and $4,972 on the line of credit at June 30, 2017 and December 31, 2016, respectively.

 

On August 13, 2015, the company entered into a line of credit with General Pacific Partners, LLC, a California limited liability company, for an amount up to $450,000. The line of credit is a demand loan bearing interest of 10% per annum. General Pacific Partners, LLC is a related party to the Company as it is owned by a majority shareholder of the Company. As of June 30, 2017 and December 31, 2016 the balance of the line of credit was $25,000. The Company recorded accrued interest of $4,698 and $3,459 at June 30, 2017 and December 31, 2016, respectively.

 

NOTE 5 – OTHER RELATED PARTY TRANSACTIONS

 

Office space

 

We currently occupy approximately 1,500 square feet of office and garage space at 3500 75th Street West, Rosamond, California. We share this space with Matthew D. Jackson, our Chief Marketing Officer. Presently, we do not incur any expenses for the use of this facility.

 

Consulting expense to related party (DEVCAP Partners, LLC)

 

On January 1, 2014, the Company executed a three-year consulting agreement with DEVCAP Partners, LLC, (“DEVCAP”), whereby the Company agreed to pay $7,500 a month for consulting services to be provided to the Company such as marketing, architectural development, accounting, finance, corporate structure and tax planning. For the three months ended June 30, 2017 and 2016, the Company recorded consulting fee expense to DEVCAP of $22,500. For the six months ended June 30, 2017 and 2016, the Company recorded consulting fee expense to DEVCAP of $45,000. The amount due but unpaid is $187,500 and $142,500 at June 30, 2017 and 2016, respectively, and is included in accounts payable- related parties on the balance sheet.

 

 

 

 

Consulting expense to related party (Ray Gerrity)

 

On January 1, 2014, the Company entered into a verbal consulting agreement with its Chief Executive Officer, Ray Gerrity, whereby the Company agreed to pay $2,500 per quarter for consulting services related to his duties as Chief Executive Officer. For the three months ended June 30, 2017 and 2016, the Company recorded consulting fee expense of $2,500. For the six months ended June 30, 2017 and 2016, the Company recorded consulting fee expense of $5,000. The amount due but unpaid was $25,000 and $20,000 at June 30, 2017 and December 31, 2016, respectively, and was included on the balance sheet as accounts payable - related parties.

 

Consulting expense to related party (Robert Wilson)

 

On January 1, 2014, the Company entered into a verbal consulting agreement with its Chief Financial Officer, Robert Wilson, whereby the Company agreed to pay $2,500 per quarter for consulting services related to his duties as Chief Financial Officer. He resigned effective April 1, 2017. For the three and six months ended June 30, 2016, the Company recorded consulting fee expense of $2,500 and $5,000, respectively. The Company accrued $2,500 for the first quarter of 2017. Mr. Wilson resigned effective April 1, 2017. The amount due but unpaid was $17,500 and $15,000 at June 30, 2017 and December 31, 2016, respectively, and was included on the balance sheet as accounts payable - related parties.

 

Related party purchase of asset

 

On February 4, 2017, the Company purchased a 1971 Chevrolet Corvette for use in the business operations. The vehicle was acquired from the majority shareholder in exchange for 160,000 of stock valued at $.15 per share, for a total of $24,000.

 

On April 15, 2017, the Company purchased a 1995 Featherlite trailer for use in the business operations. The trailer was purchased from a shareholder in exchange for 300,000 shares valued at $.20 per share, for a total of $60,000.

 

NOTE 6 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

At the time of incorporation, the Company was authorized to issue 10,000 shares of common stock and 1,000 shares of preferred stock with a par value of $0.001.

 

The Company amended its articles of incorporation to increase its authorized shares to 100,000,000 shares of common stock and 20,000,000 shares of preferred stock, both $0.001 par value.

 

NOTE 7 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855 and has determined that no material subsequent events exist.

  

 

 

 

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Safe Harbor for Forward-Looking Statements

 

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual result may differ materially from those included within the forward-looking statements as a result of various factors.  Such factors are discussed under the “Item 2.  Management’s Discussion and Analysis of Financial Condition or Plan of Operations,” and also include general economic factors and conditions that may directly or indirectly impact the Company’s financial condition or results of operations.

 

Business of The Company

 

The Teardroppers, Inc., (the “Company”), is a Nevada corporation which was formed in June of 2013.

 

Mobile Billboard Advertising

 

We are engaged in the business of mobile billboard advertising by offering to provide billboard advertising space on custom designed "Teardrop Trailers". Teardrop Trailers, are usually designed for short-period accommodations for vacationers and travelers. Teardrop Trailers are designed to be towed behind small economy sized vehicles and pickup trucks. A Teardrop Trailer, also known as a "Teardrop Camper Trailer", is a streamlined, compact, lightweight travel trailer, which gets its name from its teardrop profile. We received and assembled one Teardrop Trailer from an independent partnership (the "Partnership"), based upon Teardrop Trailer designs provided by the Partnership and approved by us. This Teardrop Trailer was delivered on January 15, 2015. In addition, we ordered a "Kit" from the Partnership, along with a custom chassis from an independent supplier recommended by the Partnership, which enables us to assemble our first Teardrop Trailer. The Teardrop Trailer assembled from this Kit was assembled by an independent contractor and was delivered to us on December 31, 2014. Due to manufacturing limitations of the Partnership, we determined that it would be faster and more efficient to assemble a completed Teardrop Trailer from a Kit then to wait for delivery of a completed Teardrop Trailer from the Partnership. In the future, we intend to obtain additional Teardrop Trailers by using a Kit and independent contractors to assemble the Kit.

 

The Teardrop Trailer

 

Teardrop Trailers are designed to be towed behind small economy sized vehicles, pickup trucks and any qualified tow vehicles. A Teardrop Trailer, also known as a "Teardrop Camper Trailer", is a streamlined, compact, lightweight travel trailer, which gets its name from its teardrop profile. We have ordered the assembly of one Teardrop Mobile Trailer from the Partnership at a contract price of $5,000. The cost to assemble the Teardrop Trailer from the Kit is a total of $4,995 ($3,000 for the Kit, $495 for the chassis, and $1,500 for the services of the independent contractor to assemble the Kit on the chassis.)

 

Our Teardrop Trailers will be approximately 4 feet (1.2 m) in width and 10 feet (3.0 m) in length and 5 feet (1.5 m) in height Wheels and tires are outside the body and are covered by fenders. Our Teardrop Trailers will be covered with thin sheets of aluminum. Since Teardrop Trailers are relatively light, most vehicles can tow a Teardrop Trailer and have little effect on the vehicle's fuel consumption. We do not intend to lease our Teardrop Trailers for camping or recreational use. However, our first trailer will be configured in a camping trailer configuration so as to enhance the residual value of the trailer. We believe that some of our future rental customers, who will rent our trailers for longer periods, may use the interior space for their personnel's comfort or for storage.

 

 

 

 

Our trailers are assembled upon a chassis that has tail lights, wiring, fenders, wheels and a trailer hitch that is compliant with Federal and State regulations. We have no formal relationship with any trailer chassis manufacturer, but we believe that many manufacturers will continue to offer a chassis that we will utilize in our trailers. In the event that chassis become unavailable, our business would be adversely affected as we would then have to adjust our designs to fit chassis available from other sources.

 

In June of 2016, we acquired an enclosed twenty-six (26) foot tandem axle cargo trailer that will be used in our mobile advertising business along with our Teardrop Trailers. In December of 2016 we sold our 2016 twenty-six foot cargo trailer with the intention of acquiring a 2017 model with certain new model improvements.

 

In April of 2017, we acquired a 1995 Featherlite enclosed fifty-three (53) foot spread axle trailer that we intend to use in our mobile advertising business.

 

Marketing

 

We are currently marketing our advertising and design services through our website www.tdropmobile.com. We have hired an independent web-site developer to develop our website, which was completed on December 14, 2014. In addition, we offer our mobile billboard advertising services through traditional marketing channels, such as trade journals, trade catalogues, yellow pages advertising, and through the personal contacts of our Management. Marketing of our mobile billboard advertising has already commenced as we have made several proposals to motor sports events and advertisers to use our services. We also market our consulting services through personal contacts of our officers and majority shareholder.

 

We have chosen the unique shape and look of a Teardrop Trailer as our advertising platform as we believe its "eye appeal" will be attractive to a target audience's view and retention of the adverting images which will appear on the Teardrop Trailer.

 

In May of 2014, we acquired two fully restored "Classic" vehicles with the intention that these vehicles be used to tow our Teardrop trailers and to be used as marketing vehicles for our business. We acquired a 1959 Chevrolet Apache Fleetside pick-up truck (the "Apache") and a 1979 Ford Ranchero. On September 1, 2014, we returned the Apache to the seller and the consideration (333,333 of our shares valued at $50,000) was returned to us. The Ranchero vehicle will be available to be leased as a tow vehicle with our Teardrop trailers or it can be leased independently from the trailers. We believe that the use of this vehicle in conjunction with a Teardrop Trailer, will enhance the attractiveness of our advertising offerings to potential lessees.

 

In October of 2015, we acquired a 1966 Ford Mustang from DEVCAP Partners a related party for 250,000 shares of our restricted stock valued at the historical cost of $36,785 to DEVCAP. In June of 2016, the asset was sold back to DEVCAP Partners, LLC for the same valuation and the 250,000 shares were cancelled and returned to our treasury.

 

In February of 2017, we issued 160,000 shares of our restricted stock at a value of $24,000 to DEVCAP Partners, LLC a related party for the acquisition of a 1971 LS5 Corvette for use in our business and a promotional and tow vehicle.

 

In April of 2017, we issued 300,000 common shares valued at $60,000, to Rick Ware Racing, LLC for the acquisition of a 1995 Featherlite trailer for use in our business and a promotional trailer.

 

We currently offer advertising space on our trailers. Advertisement can be installed by applying decals, large vinyl sheets as decals or by fastening one large sheet of vinyl to the sides and top of the trailer. In addition, we will offer to provide our tow vehicle and a driver.

 

 

 

 

We believe that the mobile billboard outdoor advertising will offer to advertisers:

 

·

Event Marketing

·

New Product Launches

·

Retail Store Openings

·

Grand Openings

·

Tradeshow Advertising

·

Political Advertising and Campaigning

·

Publicity

·

Concerts

·

Sporting Events

·

Conventions

·

Trade Shows

·

Outdoor Festivals

·

Beach Cities and Events

·

Grand Openings

·

Holiday Events

·

Motion Picture Premiers

  

We believe that mobile billboard outdoor advertising offers certain advantages to advertisers, among which include:

 

·

Mobile trailers are flexible providing one with a wide variety of space and cost options, which can be used for anything from short sales promotions to being part of a long-term brand awareness campaign.

·

Instead of hoping people see an advertisement, the advertisements are brought to them.

·

They are more cost effective than other forms of advertising.

·

We can park the trailer in front of a business or a competitor's.

·

We can thoroughly saturate a specific area unlike regular billboards, radio, TV or direct mail.

·

We can provide specific demographic routes so that there are multiple exposures.

·

Mobile billboards create impact because of their movement, size and prominence on the road and can go where other advertising can’t. They merely have to be visible to attract attention.

·

We can provide advertisements in the middle of all the activity at a special event like a tournament, fair, tradeshow, sporting event et. al.

·

As they are eye-level with consumers, the message is communicated directly, increasing the impact of the product.

 

We also offer to work closely with our clients to fully understand the client's marketing objectives. We use our best efforts to identify the highest profile locations in our client's target market in order to provide the most efficient, high exposure, high impact and cost-effective mobile billboard advertising campaign.

 

At every stage of the process, our services can include design, branding and selection of graphics, to achieve maximum results. Audio, illumination, promotional sampling and other sensory elements can be added to further enhance an advertising message.

 

Our rates are negotiated at time of agreement with our client. Our rates are based upon the range of services, length of the advertising contract, number of vehicles used, miles traveled, length of campaign, ancillary costs and other variables. Generally, we anticipate our rates to be $995 for the design and application, and removal of graphics to a trailer; $295 per day for the use of the trailer; $175 per day for a tow vehicle and driver, based upon a 6 hour day. There will be a 3 day minimum for each trailer rental.

 

 

 

 

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

 

Revenues

 

The Company had no revenue during the three months ended June 30, 2017 compared to $6,010 in revenue for the same period ended June 30, 2016.

 

Operating Expenses

 

For the three months ended June 30, 2017 operating expenses were $67,557 compared to $56,637 for the same period in 2016 for an increase of $10,920. The increase was primarily a result of the increase in general and administrative expenses to $27,566 from $10,903 for the same period in 2016.

 

Interest and Financing Costs

 

Interest expense was $13,727 for the three months ended June 30, 2017 compared to $12,183 in the three months ended June 30, 2016.

 

Net (Loss)

 

The Company incurred losses of $81,284 in the three months ended June 30, 2017 compared to $62,810 during the three months ended June 30, 2016 due to the factors discussed above.

 

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

 

Revenues

 

The Company realized no revenue during the six months ended June 30, 2017 compared to the $6, 010 in revenue for the six months ended June 30, 2016.

 

Operating Expenses

 

For the six months ended June 30, 2017 operating expenses were $109,327 compared to $99,765 for the same period in 2016 for an increase of $9,562. The increase was a result of an increase in general and administrative expenses which increased to $39,223 from $23,537 for a difference of $15,686.

 

Interest and Financing Costs

 

Interest expense was $27,026 for the six months ended June 30, 2017 compared to $24,580 in the six months ended June 30, 2016.

 

Net (Loss)

 

The Company incurred losses of $136,353 in the six months ended June 30, 2017 compared to $118,335 during the six months ended June 30, 2016 due to the factors discussed above.

 

 

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company has a minimum cash balance available for payment of ongoing operating expenses and has incurred losses since inception and anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. . Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.

 

The Company had $60,071 in cash at June 30, 2017 with availability on our related party line of credit with DEVCAP Partners, LLC & General Pacific Partners, LLC of a total of $732,740.  As of June 30, 2017, we had a working capital deficit of $1,051,570.

 

Operating activities

 

During the six months ended June 30, 2017, we used $30,265 in operating activities compared to $14,318 during the six months ended June 30, 2016, an increase of $15,947. The increase in the period is primarily due to an increase in net loss for the period.

 

Investing activities

 

We neither generated nor used cash flow in investing activities during the six months ended June 30, 2017 and the same for the period in 2016.

 

Financing activities

 

During the six months ended June 30, 2017, we generated $41,700 from financing activities compared to $48,025 for the same period ended June 30, 2016.

 

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.

 

As a “smaller reporting company,” we are not required to provide the information under this Item 3.

 

ITEM 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures

 

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting identified below.

 

As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

 

 

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

 

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

 

This report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered independent public accounting firm.

 

Changes in Internal Control Over Financial Reporting

 

No changes in our internal control over financial reporting occurred during the year ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

ITEM 1. Legal Proceedings

 

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or material pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the six months ended June 30, 2017, the Company issued 160,000 shares of common stock to purchase a vehicle for use in operations.

 

During the six months ended June 30, 2017, we acquired a 1995 Featherlite enclosed fifty-three (53) foot spread axle trailer that we intend to use with our mobile advertising business. The company issued 300,000 shares of its common stock to purchase the trailer. The cost basis of the shares issued was $.20 twenty cents per share.

 

ITEM 3. Default Upon Senior Securities

 

During the six months ended June 30, 2017, the Company had no senior securities issued and outstanding.

 

ITEM 4. Mine Safety Disclosures

 

Not applicable to our Company.

 

ITEM 5. Other Information

 

None.

 

 

 

 

ITEM 6. Exhibits

 

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K

 

SEC Ref. No.		Title of Document
31.1*		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of the Principal Executive Officer pursuant to U.S.C. pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of the Principal Financial Officer pursuant to U.S.C. pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Label Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

*

Filed herewith.

 

 

 

 

 

 

 

 

 

 

SIGNATURES

  

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

THE TEARDROPPERS, INC.

 

August 16, 2017

 

By: /s/ Raymond Gerrity                                   

Raymond Gerrity

Chief Executive Officer