SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
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
(Exact name of registrant as specified in its charter)
(State of Incorporation)
(IRS Employer ID Number)
P.O. Box 847 Rufus, OR 97050
(Address of principal executive offices and Zip Code)
Registrant’s telephone number, including area code (541) 739-8298
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.
See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Emerging Growth Company
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. YES NO [X]
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company x
(Do not check if a smaller reporting company)
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 17, 2017 of the Issuer's Common Stock is 11,470,730.
September 30, 2017
TABLE OF CONTENTS
PART I - FINANCIAL STATEMENTS
Item 1 - Financial Statements
Balance Sheets as at September 30, 2017 (unaudited) and December 31, 2016 (audited)
Statements of Operations (unaudited) for the Three and Nine months ended September 30, 2017 and 2016 respectively
Statements of Cash Flows (unaudited) for the 9 months ended September 30, 2017 and 2016 respectively
Notes to Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3 - Quantitive and Qualitive Disclosures about Market Risk
Item 4 - Controls and Procedures
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
Item 3 - Defaults Upon Senior Securities
Item 4 - Mine Safety Disclosures
Item 5 - Other Information
Item 6 - Exhibits - Exhibit 31.1 and 32.1
September 30, 2017
December 31, 2016
TOTAL CURRENT ASSETS
Property, Plant and Equipment (net)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accrued Interest Payable
Notes Payable (net of discount)
Related Party Advances
TOTAL CURRENT LIABILITIES
Commitments and Contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, 0.0001 par value, authorized 20,000,000,000 shares (increased from 500,000,000)
11,470,670 and 3,702,351 shares issued and outstanding as of September 30, 2017 and December 31, 2016 respectively, restated to APIC below for the 100 for 1 reverse stock split.
Additional Pain In Capital
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
The accompanying notes are an integral part of these financial statements
STATEMENTS OF OPERATIONS
for the three and nine months ended September 30,
three months ended
nine months ended
Accounting and Legal
OTHER INCOME (EXPENSES)
Gain / (Loss) on Derivative
TOTAL OTHER INCOME (EXPENSES)
LOSS BEFORE TAXES
Provision for Income Taxes
NET LOSS PER COMMON SHARE - BASIC & DILUTED
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC & DILUTED
The accompanying notes are an integral part of these financial statements
STATEMENT OF CASH FLOWS
for the nine months ended September 30,
Net Income (Loss)
Conversion of Interest
Services for Stock
Change in Accounts Payable
Change in Related Party Advances
Change in Derivative
Change in Note discount
Change in Accrued Interest
Net Cash Used by Operating Activities
Purchase of Equipment
Net cash used by investing activities
Proceeds from notes payable
Net cash provided by financing activities
NET INCREASE (DECREASE) IN CASH
CASH AT BEGINNING OF PERIOD
CASH AT END OF PERIOD
Supplemental Cashflow Information
The accompanying notes are an integral part of these financial statements
UNAUDITED NOTES TO FINANCIAL STATEMENTS
September 30, 2017
NOTE 1 – 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 Company follows the accounting guidance outlined in the Financial Accounting Standards Board Codification guidelines. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted principles for interim financial information and with the instruction to Form 10-Q of Regulation S-K. They may not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended December 31, 2016 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, which unless otherwise disclosed herein, consisting primarily of normal recurring adjustments, have been made. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017
Auscrete Corporation ("the Company") was formed as an enterprise to take advantage of technologies developed for the construction of specialty Affordable and lightweight concrete based, thermally efficient and structurally superior housing. This "GREEN" product is the culmination of design and development since the early 1980's. Auscrete Corporation had its beginnings in 2005 when a private company that was owned by this company's President and Directors re-developed the 1980's technology to comply with, and exceed,
International Building Codes. The Auscrete Corporation Public Company that now exists was started to enable financing of the operations so the company can address an ongoing problem in the world's largest marketplace, AFFORDABLE HOUSING.
Recent Accounting Pronouncements
The company is reviewing the effects of the following recent updates. We do not have an expectation that the following will have a material effect on the financial statements
In April 2017, the FASB Update 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
In January 2017, the FASB Update 2017-01—Business Combinations (Topic 805): Clarifying the Definition of a Business. Public business entities should apply the amendments in this Update to annual periods beginning after December 15, 2017, including interim periods within those periods. All other entities should apply the amendments to annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.
In 2016, the FASB UPDATE 2016-15—STATEMENT OF CASH FLOWS (TOPIC 230): CLASSIFICATION OF CERTAIN CASH RECEIPTS AND CASH PAYMENTS (A CONSENSUS OF THE EMERGING ISSUES TASK FORCE. Stakeholders indicated that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice.
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.
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 $39,484 and $93 in cash equivalents as of September 30, 2017 and December 31, 2016 respectively.
Income taxes – The Company follows the guidance of the Financial Accounting Standards Board's Accounting Standards Codification Topic 740 related to Income Taxes. According to Topic 740, deferred income taxes are recorded to reflect the tax consequences in future years of temporary differences between the tax basis of the assets and liabilities and their financial amounts at year-end.
For federal income tax purposes, substantially all expenses incurred prior to the commencement of operations must be deferred and then they may be written off over a 180-month period. Tax deductible losses can be carried forward for 20 years until utilized for federal tax purposes. The Company will provide a valuation allowance in the full amount of the deferred tax assets since there is no assurance of future taxable income.
The Company utilizes the Financial Accounting Standards Board's Accounting Standards Codification Topic 740 related to Income Taxes to account for the uncertainty in income taxes. Topic 740 for Income Taxes clarifies the accounting for uncertainty in income taxes by prescribing rules for recognition, measurement and classification in financial statements of tax positions taken or expected to be in a tax return. Further, it prescribes a two-step process for the financial statement measurement and recognition of a tax position. The first step involves the determination of whether it is more likely than not (greater than 50 percent likelihood) that a tax position will be sustained upon examination, based on the technical merits of the position. The second step requires that any tax position that meets the more likely than not recognition threshold be measured and recognized in the financial statements at the largest amount of benefit that is a greater than 50 percent likelihood of being realized upon ultimate settlement. This topic also provides guidance on the accounting for related interest and penalties, financial statement classification and disclosure. The Company's policy is that any interest or penalties related to uncertain tax positions are recognized in income tax expense when incurred. The Company has no uncertain tax positions or related interest or penalties requiring accrual at December 31, 2016 and September 30, 2017.
Reclassification - Certain amounts in the prior period financial statements have been reclassified to conform with the current period presentation. These reclassifications had no effect on previously reported losses, total assets or stockholders’ equity.
NOTE 2 - GOING CONCERN AND PLAN OF OPERATION
The Company's financial statements have been presented on the basis that it will continue as a going concern. The Company has not generated significant revenues from operations to date. The Company has an accumulated deficit of $1,739,381 as of September 30, 2017.
To the extent that the Company's capital resources were insufficient to meet operating requirements, the Company has had extensive talks with European investors to obtain loan funding for its future needs. If the company is unsuccessful in this endeavor, they have obtained access to additional funds through a $2 million equity financing agreement with Kodiak Capital, which may have the effect of diluting the holdings of existing shareholders. These funds will be used to establish a manufacturing plant in Goldendale, WA. The Company does not anticipate that existing shareholders will provide any portion of the Company's future financing requirements.
No assurance can be given that the additional financing will be available when needed by the company as certain parts of the agreement for drawdowns rely on share sales volume. 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 raises substantial 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 - RELATED PARTY TRANSACTIONS
During the three months ended September 30, 2017, John Sprovieri an officer and director of the company, advanced $34,948 to the company. As of September 30, 2017, and December 31, 2016, the balance owed to John Sprovieri was $44,916 and $0 respectively.
NOTE 4 – INVENTORY
Inventory consists of Finished Product and Raw Materials that are valued at the lower of cost or market.
Finished product of $44,900 is a full set of insulated AAC cast panels for wall and roof of an approx. 1,600 sq. ft. house. Panel cost is actual size of all panels in sq. ft. of just under 7,000 sq. ft. calculated at $6.52 per cu. ft.
Raw materials consist of rebar, insulation, surfactant, powdered cement, threaded inserts and sundry items. The cost of $2,100 is based on the cost of purchase from a non-related supplier.
NOTE 5 - PROPERTY AND EQUIPMENT
Property and Equipment is as listed below in the depreciation table.
September 30, 2017
December 31, 2016
Property Plant and Equipment (Gross)
Property Plant and Equipment (net)
NOTE 6 - NOTES PAYABLE
Since the Company’s most recent 10-Q filing at June 30, 2017, the company has not issued any further Convertible Notes. In addition to the notes issued in 2016 as stated on the Company's most recent 10-K, A 12-month Convertible Note for $38,000 was issued January 25, 2017 to PowerUp Lending Group and on February 7, 2017 a $60,000 Convertible Note was issued to Auctus Fund, LLC.
These funds were used to continue company operations during organization of the projected company Factory Campus. The company had recently impaired a security deposit in the amount of $219,998 due to the uncertainty of its security and collectability of the total amount. The funds subject to this impairment placed considerable hardship on the company's funds availability.
As a result of these convertible notes, we recognized an embedded derivative liability. As of December 31, 2016 and September 30, 2017, our derivative liability was $117,759 and $362,482.
NOTE 7 - COMMON STOCK
During the three months ended September 30, 2017, the Company issued 244,968,671 shares to noteholders during conversion representing a total value of $ 55,129. During the year ended December 31, 2016, the Company had issued 271,300,160 shares and cancelled 2,000,000.
The Company had authorized capital of 20,000,000,000 common shares at $.0001 par value as of October 31, 2017. On June 6, 2017, the company increased the authorized capital to 20,000,000,000 shares.
The company also previously arranged an Equity Line of Credit in the amount of up to $2 million. The term is 3 years and the discount on the share price is 20%. The maximum amount available to be drawn in one tranche is $250,000 and the financier can only own 4.99% of the outstanding shares at any time. The company has not used this facility at the date of this submission.
NOTE 8 - INCOME TAXES
The Company has incurred net operating losses since inception. The Company has not reflected any benefit of such net operating loss carry forwards in the financial statements.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.
Based on the level of historical taxable losses and projections of future taxable income (losses) over the periods in which the deferred tax assets can be realized, management currently believes that it is more likely than not that the Company will not realize the benefits of these tax-deductible differences. Accordingly, the Company has provided a valuation allowance against the gross deferred tax assets as follows:
As of September 30, 2017, the Company had a net operating loss carry forward of approximately $1,739,381 and a deferred tax asset of approximately $711,407 using the statutory rate of 40.9%. 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 a full valuation allowance of $711,407. The Company may have experienced control changes under IRC 382, which has not been fully analyzed and could affect the NOL availability.
September 30, 2017
December 31, 2016
Deferred Tax Asset
Deferred Tax Asset (net)
Reconciliations between the provision for income taxes and the expected tax benefit using the federal statutory rate of 34% and the state statutory rate of 6.9% for a total effective rate of 40.9% for 2017 and 2016.
The Company adopted the uncertain tax position disclosure in accordance with ASC 740 and has not recognized any material increase in the liability for unrecognized income tax benefits as a result of the implementation. The Company estimates that the unrecognized tax benefit will change within the next twelve months. The Company will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in its statements of operations. The Company has incurred no interest or penalties as of September 30, 2017 and 2016.
The Company files income tax returns in the U.S. and Oregon federal 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 9 – SUBSEQUENT EVENTS
On July 22, 2017, the Company had FINRA perform a 100 for 1 Reverse Split. There were 615,203,831common shares issued and out at the date of the action and this reduced the number of shares issued and out to 6,152,052 including partial shares that were rounded up.
Additionally, the company had made an offer to the City of Goldendale, WA to purchase 10 acres of land on the City’s Industrial Estate. The company offered $100,000 ($20,000 per acre) for 5 acres and an option to purchase the remaining 5 acres for $125,000 ($25,000 per acre) within 2 years. On July 3, the City Council met and approved the offer. Subsequent to that, the City prepared a sales contract that is acceptable to the Company and was approved at a meeting of the Council on August 7. At the time of this report, both parties have just entered escrow.
On July 12, 2017, CrownBridge Capital converted $1,013 into 337,650 shares (post reverse split amt.) and on August 11, 2017, JSJ Investments converted $1,509 into 361,551 (post-split) shares. These issuances increased the Company’s Issued and Out shares to 6,851,239.
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
As at September 30, 2017, the Company had not commenced manufacturing operations. Therefore, there were no material operational changes from the last audited financials of December 31, 2016.
The company plans to establish its operating base in Goldendale, WA and is currently preparing for the construction of two manufacturing buildings. A contract has been prepared for an experienced commercial construction company to create and manage the complete construction of the new manufacturing buildings. Management has assembled a complete specification set for the manufacturing process and have alerted machinery suppliers of the company's needs and probable dates required.
During the Nine months ended September 30, 2017, the company was not operating and, with allowances for Derivative allowances, sustained losses of $586,159. These include regular expenses plus additional expenses and sub contract labor that were necessary as the company went ahead with Design Engineering and Fundraising activities.
Liquidity. For the Nine months ending September 30, 2017, the company received payments from convertible notes and loans of $98,000 that enabled a net loss of $586,159 to be covered. Even though there were considerable costs during the period in financing fees and interest, the company was able to end the period with cash on hand of $39,414.
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 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 $95-$100 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.
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. Subsequently the company had an S-1 become Effective on December 30, 2014. The company was established to finance and operate an expansion of a current pilot facility operated by the founders in Rufus, OR.
The company has been quoted on the OTCPink Bulletin Board under the symbol "ASCK" since February 2015 and is DTC registered.
In addition to ongoing negotiations with European Lenders, the company has arranged an equity line of credit with Kodiak Finance for up to $2 million that will enable the construction of a factory facility on Industrial Land and meet the commencement and ongoing financial needs of the company.
Financial Statements in this document represent the full results of the company during this 9-month period. There are no "off balance sheet" arrangements.
Use of Funds
As at September 30, 2017 the company had planned the acquisition of land on the Rufus Industrial Estate. However, in May, the Rufus initiative changed with many added costs related to undeveloped land so the management approached the City of Goldendale WA, some 16 miles away to explore setting up the company’s Flagship Manufacturing Plant in that city’s Industrial Estate. With positive results, the Company extricated itself from the previous commitments and work done with little cost.
Initially, the company will use $1.1 million and the Stage 1-All In costs are $100,000 to purchase 5 acres of already developed land. 2 buildings are to be constructed, 1 Production Building at 25,000 sq. ft. and 1 Support Building at 16,000 sq. ft. The cost of supply and erection of these buildings will be around $470,000. Plant & Production Line Equipment, which comprises level 1 Concrete Mixers and sand handling Equipment, Fork Lifts, casting tables and specialized equipment, will cost approximately $160,000 and Shop Equipment will be $90,000. The balance of of $280,000 will be used for working capital and expenses including wages and salaries, marketing, IR services and other working capital and reserves to commence production and revenues.
Principal marketing efforts will be initially aimed at leveraging specific contacts and relationships that have developed over the last 10 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 contracts and contacts.
At this point in time, the company has available contracts for the immediate supply of houses and other structures (apartment block etc.) valued at over $3 million but also has letters of intent from a developer and from a contractor to supply some 130 plus houses to their housing estates over the next few years. Delivery will be paced at the rate of sales but is expected to initially be in excess of 40 units per year. 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.
Using a conservative estimate at an average value per sale of $150,000, the company is projecting first year sales of $ 4-6 million range escalating from there, once the new campus is up and running. At that rate, there are already approximately 3+ years of sales at hand. The typical structure will be a home in the 1,100 - 3,000 sq. ft. range that will sell to the contractor or developer for around $80,000 to $200,000 with the average being $150,000. Obviously, the company will look to increase output to meet the demand and expects to do this through internal financing. The typical net margin is in excess of 25% and, once in production, the company does not expect to incur first year losses.
When the new Fabrication Building and Production Building have been completed at the industrial site, production will be commenced. 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.
Upon commencement of Auscrete's activity, under control of the President will be marketing, manufacturing operations, design architecture and engineering, administration and safety compliance. Additionally, there is a construction manager that will oversee Auscrete's own construction activities as well as liaise with contractors and developers.
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. Manufacturing will involve the use of initially 16 hydraulically operated casting tables with each table able to produce 5 panels per 2 weeks. This allows for the concrete to cure adequately enabling removal from the table. It is then taken to the finishing area where it is prepared for delivery and shipping.
A 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 oversee these operations.
Recently, the company had entered agreement with PN&N Enterprise, a Jamaican developer consortium, to set up a manufacturing plant in Jamaica to construct 1,500 houses, valued at around $135 million, over 7 years. Financing for this project does not form part of the Goldendale, WA initiative described herein. The agreement calls for financing to be acquired from other sources specifically for the venture.
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 that would not be available in other houses at such comparable pricing. By constructing with the Auscrete aerated concrete 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 will not be offered under the banner of such categories as 'pre-fabricated' or 'factory built' homes. They are just plain good value masonry homes built of a time proven product, concrete. The company is establishing its expanded operations and manufacturing facility in the Industrial Estate area of Goldendale, WA. Goldendale is a city of around 4,500 people about 110 miles east of Vancouver, WA.
Construction of phase 1 of the plant should take 5-6 months. The advantage of Goldendale is it is located very close to 2 main highways, I-84 east/west and I-97 north/south. The location will help considerably with the delivery of the pre-cast panels initially to the Northwest area and will also simplify the delivery of raw materials to the facility. It is anticipated that in the initial year the company will be able to produce enough panel sets for the construction of over 30 homes.
Auscrete can economically deliver whole house panel sets as far away as New Mexico or Alberta, Canada. However, with a planned future facility to be set up in San Antonio, Texas, further efficiencies will be achieved by servicing a fast-emerging market in this above average (for affordable housing) growth area. Additionally, a plant in Texas could quite easily address the Arizona and New Mexico market, now that the market recovery in those areas have taken effect. 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 crew to construct the house.
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 30, that our disclosure controls and procedures were 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 three months ended September 30th, 2017 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
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 not issued unregistered shares or received such proceeds during the nine months ended September 30, 2017
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
The exhibits listed in the Exhibit Index are furnished as part of this report. Exhibit 31.1 and 32.1
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.
Date: November 20, 2017
/s/ A John Sprovieri
A. John Sprovieri
(Chief Executive and Financial Officer)