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Teardroppers
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
8-K 2019-09-13 Accountant, Exhibits
8-K 2018-01-04 Accountant, Exhibits
RMP Rampart Studios 563
BLXX BLOX 43
ALPE Alpha-En 34
GTII Global Tech Industries Group 15
HLTY Nature's Best Brands 10
CLOW Cloudweb 2
ENRT Enertopia 1
SHRV Sharing Services 0
ADFK Admiral Financial 0
WUYI China Wuyi Mountain 0
TDRP 2019-06-30
Part I - Financial Information
Item 1. Condensed Unaudited Financial Statements
Note 1 - Organization and Description of Business
Note 2 - Summary of Significant Accounting Policies
Note 3 - Going Concern
Note 4 - Property & Equipment
Note 5 - Loan Payable
Note 6 - Line of Credit From Related Party
Note 7 - Long-Term Liabilities - Related Party
Note 8 - Other Related Party Transactions
Note 9 - Stockholders' Equity (Deficit)
Note 10 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative 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. Default Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 teardroppers_ex3101.htm
EX-31.2 teardroppers_ex3102.htm
EX-32.1 teardroppers_ex3201.htm
EX-32.2 teardroppers_ex3202.htm

Teardroppers Earnings 2019-06-30

TDRP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 teardroppers_10q-063019.htm FORM 10-Q

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, 2019

 

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.)

 

620 Newport Center Drive Suite 1100 PMB 488

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)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
None N/A N/A

 

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 every Interactive Data File required to be submitted 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 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, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

  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 45,920,000 shares of the registrant’s common stock, $0.001 par value per share, outstanding on August 15th, 2019.

 

 

 

 

   

 

 

THE TEARDROPPERS, INC.

TABLE OF CONTENTS

 

 

    Page
     
Part I – FINANCIAL INFORMATION  
   
Item 1. Condensed Unaudited Financial Statements: 3
     
  Condensed Balance Sheets at June 30, 2019 and December 31, 2018 (unaudited) 3
     
  Condensed Statements of Operations for the three and six month periods ended June 30, 2019 and 2018 (unaudited) 4
     
  Condensed Statements of Shareholder Equity at June 30, 2019 and June 30, 2018 (unaudited) 5
     
  Condensed Statements of Cash Flows for the six month period ended June 30, 2019 and June 30, 2018 (unaudited) 6
     
  Notes to Condensed Financial Statements (unaudited) 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
     
Item 4. Controls and Procedures 14
     
Part II – OTHER INFORMATION  
     
Item 1.  Legal Proceedings 15
     
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds 15
     
Item 3. Defaults Upon Senior Security 15
     
Item 4. Mine Safety Disclosures 15
     
Item 5. Other Information 15
     
Item 6. Exhibits 15
     
  Signatures 16

 

 

 

 

 i 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. Condensed Unaudited Financial Statements

 

The Teardroppers, Inc.

CONDENSED BALANCE SHEETS

(UNAUDITED)

 

   June 30,  December 31,
   2019  2018
ASSETS          
           
Current assets          
Cash  $60,357   $71,858 
Lease Receivable   425    —   
Prepaid expenses   4,158   $6,641 
Total current assets   64,940    78,499 
           
Property & Equipment:          
Cost   288,089    288,089 
Less accumulated depreciation   (99,934)   (71,125)
Property & Equipment, net   188,155    216,964 
           
Total Assets  $253,095   $295,463 
           
           
LIABILITIES & STOCKHOLDERS' DEFICIT          
           
Current liabilities          
Accounts payable  $225,287   $187,862 
Accounts payable - related parties   255,985    280,288 
Customer deposits   14,500    14,500 
Deferred revenue   16,000    16,000 
Current portion of long term debt - related party   27,397    28,299 
Current portion of lease payable - related party   3,310    3,202 
Accrued interest - unrelated parties   145,632    145,632 
Line of credit from related party   370,845    225,695 
Accrued interest -related parties   31,742    19,566 
Total current liabilities   1,090,698    921,044 
           
Long term liabilities (net of current portion) (related party)          
Notes payable  $102,742    115,567 
Lease payable   24,781    26,464 
    127,523    142,031 
           
Total Liabilities   1,218,221    1,063,075 
           
Stockholders' Deficit          
Preferred stock, par value $0.001, authorized 20,000,000 shares, issued shares 0, respectively          
Common stock, par value $0.001, authorized 200,000,000 shares issued 45,920,000   45,920    45,920 
Additional paid in capital   828,558    828,558 
Accumulated deficit   (1,839,604)   (1,642,090)
Total Stockholders' Deficit   (965,126)   (767,612)
           
Total Liabilities and Stockholders' Deficit  $253,095   $295,463 

 

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

 

 

 

 3 

 

 

The Teardroppers, Inc.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   Three Months Ended  Six Months Ended
   June 30,  June 30,  June 30,  June 30,
   2019  2018  2019  2018
             
Revenues  $13,275   $12,000   $26,550   $16,000 
Total revenue   13,275    12,000    26,550    16,000 
                     
Cost of sales   –      –      –      –   
Gross margin   13,275    12,000    26,550    16,000 
                     
Operating expenses:                    
Consulting from related parties   42,000    24,000    69,000    50,500 
Consulting fees - unrelated parties   26,471    43,300    52,957    48,300 
General and administrative   25,117    23,968    51,286    47,817 
Professional fees   27,400    20,257    29,525    23,520 
    120,988    111,525    202,768    170,137 
                     
Operating loss   (107,713)   (99,525)   (176,218)   (154,137)
                     
Other income (expense):                    
Interest expense - related parties   (10,996)   (5,001)   (21,296)   (5,468)
Interest expense - unrelated parties   –      –      –      (16,262)
    (10,996)   (5,001)   (21,296)   (21,730)
                     
Net Loss Before Taxes   (118,709)   (104,526)   (197,514)   (175,867)
                     
Income Tax Provision   –      –      –      –   
                     
Net loss  $(118,709)  $(104,526)  $(197,514)  $(175,867)
                     
Net loss per share                    
(Basic and fully diluted)  $(0.00)*  $(0.00)*  $(0.00)*  $(0.00)*
                     
Weighted average number of common shares outstanding   45,920,000    45,856,923    45,920,000    43,705,856 

 

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

 

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

 

 

 

 4 

 

 

The Teardroppers, Inc.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

 

   Common Stock     Additional            
       Amount     Paid in     Accumulated   Shareholders 
    Shares    ($.001 Par)    Capital    Deficit    Deficit 
                          
Balance December 31, 2017   41,550,000   $41,550   $283,728   $(1,262,880)  $(937,602)
                          
Assets acquired in exchange for stock   140,000    140    27,860        28,000 
                          
Assets sold for cancellation of stock   (160,000)   (160)   (18,640)       (18,800)
                          
Net loss for the period               (70,941)   (70,941)
                          
Balances March 31, 2018   41,530,000   $41,530   $292,948   $(1,333,821)  $(999,343)
                          
Conversion of debt to stock   4,375,000    4,375    520,625        525,000 
                          
Net loss for the period               (104,526)   (104,526)
                          
Balance June 30, 2018   45,905,000   $45,905   $813,573   $(1,438,747)  $(579,269)
                          
Balance December 31, 2018   45,920,000   $45,920   $828,558   $(1,642,090)  $(767,612)
                          
Net loss for the period               (78,805)   (78,805)
                          
Balances March 31, 2019   45,920,000   $45,920   $828,558   $(1,720,895)  $(846,417)
                          
Net loss for the period               (118,709)   (118,709)
                          
Balance June 30, 2019   45,920,000   $45,920   $828,558   $(1,839,604)  $(965,126)

 

 

 

 

 

 

 5 

 

 

The Teardroppers, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   Six Months Ended
   June 30,  June 30,
   2019  2018
       
Cash Flows From Operating Activities:          
Net loss  $(197,514)  $(175,867)
           
Adjustments to reconcile net loss to net cash used for operating activities          
Depreciation   28,809    25,417 
           
Changes in Operating Assets and Liabilities          
Increase in lease receivable   (425)   –   
Decrease (Increase) in prepaid expenses   2,483    (1,211)
Increase in accounts payable - unrelated parties   37,425    39,862 
Increase (Decrease) in accounts payable – related parties   (24,303)   24,130 
Increase in accrued interest - unrelated parties   –      6,382 
Increase in accrued interest – related parties   12,176    2,741 
Increase in deferred revenue   –      8,000 
           
Net cash used for operating activities   (141,349)   (70,546)
           
Cash Flows From Investing Activities:   –      –   
           
Cash Flows From Financing Activities:          
Proceeds from line of credit unrelated party   –      75,000 
Principal payments on long term debt   (13,727)   (8,202)
Principal payments on lease payable   (1,575)   –   
Proceeds from line of credit related party   269,800    123,850 
Repayments on line of credit related party   (124,650)   (104,830)
           
Net cash provided by financing activities   129,848    85,818 
           
Net Increase (Decrease) In Cash   (11,501)   15,272 
           
Cash At The Beginning Of The Period   71,858    40,027 
           
Cash At The End Of The Period  $60,357   $55,299 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          
           
Non-cash investing and financing activities:          
Assets acquired in exchange for stock  $–    $28,000 
Debt converted to stock  $–    $525,000 
Assets sold for cancellation of stock  $–    $(18,800)
           
Cash paid during the period for:          
Interest  $8,821   $12,607 
Franchise and income tax  $–     $–   

 

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

 

 

 

 6 

 

 

TEARDROPPERS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)

For the Three and Six Months Ended June 30, 2019 and 2018

 

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 are in the business of mobile billboard advertising, providing billboard advertising space on custom designed "Teardrop Trailers" and various sizes of cargo type trailers. Teardrop Trailers, are usually designed for short-period accommodations for vacationers and travelers. Teardrop Trailers are designed to be towed behind new and vintage vehicles and pickup trucks.

 

In addition, we own cargo trailers with flat non rivet panel siding that can be used for hauling and transportation. These trailers range in size from 15 feet to 53 feet. We lease these trailers for transportation of goods and for advertising of their respective business or the businesses of lessee clients.

 

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 10-Q 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 three and six months ended June 30, 2019 are not necessarily indicative of the final results that may be expected for the year ended December 31, 2019. 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, 2018 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.

  

 

 

 7 

 

 

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, 2019 and December 31, 2018.

  

The Company had no assets or liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, 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

 

On January 1, 2018, the Company adopted the provisions of ASC 606 Revenue from Contracts with Customers, and related Accounting Standards Updates.  This new revenue recognition standard has a five step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures.

 

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. For the three and six months ended June 30, 2019 and 2018 the Company recognized no income from the rental of the trailers.

 

In March 2018, the Company entered into a four-year agreement to lease an asset to a related party. As of June 30, 2019, and 2018, recognized lease income was $24,000 and $16,000, respectively.

 

In January 2019, the Company entered into a two-year agreement to lease a vehicle to an unrelated third party. As of June 30, 2019, recognized lease income was $2,550.

 

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.

 

 

 

 8 

 

 

There were no potentially dilutive shares outstanding as of June 30, 2019 and 2018, 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 the financial statements were issued.

 

Recently issued accounting pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and applicable to the Company. 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 – PROPERTY & EQUIPMENT

 

Property and equipment consists of the following at June 30, 2019 and December 31, 2018:

 

   June 30, 2019  December 31, 2018
Property and equipment, purchased  $258,000   $258,000 
Property and equipment, leased   30,089    30,089 
    288,089    288,089 
Less: accumulated depreciation   (99,934)   (71,125)
Property and equipment, net  $188,155   $216,964 

 

Depreciation expense for the three and six months ended June 30, 2019 and 2018 were $14,405 and $28,809 respectively and $12,250 and $25,417, respectively.

 

On December 22, 2018, the Company acquired a Ford F-150 truck for use in the business operations from the majority shareholder. The agreement was in the form of a long-term lease and was recorded at $30,089, the net present value of the lease payments. See Note 7 for additional details.

 

 

 

 9 

 

 

NOTE 5 – LOAN PAYABLE

 

During 2014, the Company entered into a loan agreement with Gemini Southern, LLC whereby the monies paid to the Company by Gemini Southern, LLC pursuant to the consulting agreement dated September 20, 2013. On April 1, 2018, the balance of the debt, $525,000, was converted into 4,375,000 of common stock. As of June 30, 2019, and December 31, 2018, the loan amount was $0. The Company recorded accrued interest on this loan of $145,632 as of June 30, 2019 and $145,632 as of December 31, 2018, respectively. The accrued interest was not part of the conversion agreement and continues to be reflected as a liability. Effective April 1, 2018, the line of credit is considered related party debt. See Note 6 for details of the transactions.

 

NOTE 6 – 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, 2020, 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, 2019, and December 31, 2018, the balance of the line of credit was $70,845 and $695, respectively. The Company recorded accrued interest of $10,345 and $9,820 on the line of credit at June 30, 2019 and December 31, 2018, 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, 2019, and December 31, 2018 the balance of the line of credit was $0. The Company recorded accrued interest of $4,732 at June 30, 2019 and December 31, 2018, respectively.

 

During 2014, the Company entered into a line of credit agreement with Gemini Southern, LLC. On April 1, 2018, the Company converted $525,000 of debt owed to Gemini Southern, LLC into 4,375,000 shares of stock. Gemini Southern, LLC will be treated as a related party for all activity from the date of the conversion forward. The line of credit is a demand loan with a maximum of $450,000 bearing interest at 10%, maturing December 2019. At June 30, 2019, and December 31, 2018, the balance due on the line was $300,000 and $225,000, respectively. The Company recorded accrued interest of $16,665 and $5,014 as of June 30, 2019 and December 31, 2018, respectively.

 

NOTE 7 – LONG-TERM LIABILITIES – RELATED PARTY

 

On October 1, 2017, the Company acquired from Gemini Southern, LLC a 2006 Ultra-Comp 53” NASCAR type vehicle transport hauler (the “Hauler”) to be used for promotional / advertising services. The purchase price of the Hauler was $165,000. The Company paid for the Hauler with a promissory note (the “Hauler Note”). The Hauler Note bears interest at 12% per annum and is payable as follows: (i) interest only from October 1, 2017 through February 28, 2018; (ii) $ $3,670 per month from March 1, 2018 through February 28, 2022; and $45,000 on February 1, 2022. The trailer is collateral for the promissory note. The balance of the loan was $130,139 and $143,866 as of June 30, 2019 and December 31, 2018, respectively. Accrued interest was $0 at June 30, 2019 and December 31, 2018, respectively.

 

Principal payments for the next five years will be as follows:

 

2019   $28,299 
2020    31,888 
2021    35,932 
2022    47,747 
2023    –   
Total   $143,866 

 

On December 22, 2018, the Company leased a vehicle from the majority shareholder. The term of the lease is 84 months with payments of $423 per month. At the end of the lease the Company can purchase the vehicle for $2,500. As of June 30, 2019, it is reasonably expected that the Company will exercise the purchase option. The value of the asset and corresponding liability at the date of inception was $30,089, the net present value of the lease payments, including the purchase option, using an interest rate of 6.649% in accordance with the provisions of ASC 842. The balance of the lease liability at June 30, 2019 and December 31, 2018 was $28,091 and $29,666, respectively.

 

 

 

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Principal payments for the next five years will be as follows:

 

2019   $ 5,078  
2020     5,078  
2021     5,078  
2022     5,078  
2023     5,078  
Thereafter     12,233  
Total payments     37,623  
Less deferred interest     (9,532 )
Total   $ 28,089  

 

NOTE 8 – OTHER RELATED PARTY TRANSACTIONS

 

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 six months ended June 30, 2019 and 2018, the Company recorded consulting fee expense to DEVCAP of $45,000. The amount due but unpaid is $201,985 and $229,865 at June 30, 2019 and December 31, 2018, 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 six months ended June 30, 2019 and 2018, the Company recorded consulting fee expense of $0 and $2,500, respectively. The amount due but unpaid was $32,500 at June 30, 2019 and December 31, 2018, respectively, and was included on the balance sheet as accounts payable - related parties. Ray Gerrity resigned his position effective March 31, 2018.

 

Consulting expense to related party (Cody Ware)

 

On January 1, 2019, the Company entered into a verbal consulting agreement with its Chief Executive Officer, Cody Ware, whereby the Company agreed to pay $1,500 per month for consulting services related to his duties as Chief Executive Officer. For the six months ended June 30, 2019, the Company recorded consulting fee expense of $9,000. All fees were paid as of June 30, 2019.

 

NOTE 9 – 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 200,000,000 shares of common stock and 20,000,000 shares of preferred stock, both $0.001 par value.

 

NOTE 10 – SUBSEQUENT EVENTS

 

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

 

 

 

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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.

 

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

 

Revenues

 

The Company had $13,275 in revenue during the three months ended June 30, 2019 compared to $12,000 in revenue during the three months ended June 30, 2018. This increase is the result of a four-year trailer lease agreement entered into during March 2018 and a new truck lease entered into in January of 2019.

 

Operating Expenses

 

For the three months ended June 30, 2019 operating expenses were $120,988 compared to $111,525 for the same period in 2018 for a increase of $9,463 . The increase was primarily a result of the increase in consulting fees to unrelated parties to $42,000 from $24,000 and an increase in professional fees to $27,400 from $20,257 for the same period in 2018.

 

Interest and Financing Costs

 

Interest expense was $10,996 for the three months ended June 30, 2019 compared to $5,001 for the three months ended June 30, 2018. The increase was due to a increase in the indebtedness of the company.

 

Net Loss

 

The Company incurred losses of $118,709 for the three months ended June 30, 2019 compared to $104,526 during the three months ended June 30, 2018 due to the factors discussed above.

 

Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

 

Revenues

 

The Company had $26,550 in revenue during the six months ended June 30, 2019 compared to $16,000 in revenue during the six months ended June 30, 2018. This increase is the result of a four-year trailer lease agreement entered into during March 2018.

 

 

 

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Operating Expenses

 

For the six months ended June 30, 2019 operating expenses were $202,768 compared to $170,137 for the same period in 2018 for an increase of $32,631 . The increase was primarily a result of the increase in consulting fees to related parties to $69,000 from $50,500, an increase in consulting fees to unrelated parties to $52,957 from $48,300, and an increase in general and administrative fees to $51,286 compared to $47,817 for the same period in 2018.

 

Interest and Financing Costs

 

Interest expense was $21,296 for the six months ended June 30, 2019 compared to $21,730 for the six months ended June 30, 2018. The decrease was nominal over the period.

 

Net Loss

 

The Company incurred losses of $197,514 for the six months ended June 30, 2019 compared to $175,867 during the six months ended June 30, 2018 due to the factors discussed above.

 

Operating activities

 

During the six months ended June 30, 2019, we had ($141,349) used for operating activities compared to ($70,546) during the six months ended June 30, 2018, an increase in cash outflows of $70,803. The increase between the periods was largely due to a $9,435 decrease in cash used and a $3,694 increase in prepaid expenses.

 

Investing activities

 

We neither generated nor used cash flow in investing activities during the six months ended June 30, 2019 and the same for the period in 2018.

 

Financing activities

 

During the six months ended June 30, 2019, we generated $129,848 from financing activities compared to $85,818 for the same period ended June 30, 2018. The increase was primarily due to proceeds received from a related party line of credit.

 

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 $60,357 in cash at June 30, 2019 with availability on our related party lines of credit with DEVCAP Partners, LLC and General Pacific Partners of $829,155. As at June 30, 2019 we had a working capital deficit of $1,025,758.

 

 

 

 

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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 period ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

 

 

 

 

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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, 2019, the Company had no unregistered sales of equity securities and use of proceeds.

 

ITEM 3. Default Upon Senior Securities

 

During the six months ended June 30, 2019, 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.

 

 

 

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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 19, 2019

 

By: /s/ Cody Ware

Cody Ware

Chief Executive Officer (Principal Executive Officer)

Chief Financial Officer (Principal Financial Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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