UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
[QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
]For the quarterly period ended
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
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Securities registered pursuant to Section 12(b) of the Act: None
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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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 for 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).
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
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Emerging growth company |
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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 to Section 7(a)(2)(B) of the Securities Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Indicate the number of share outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of August 19, 2021, there were
TABLE OF CONTENTS
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
Item 3.Quantitative and Qualitative Disclosures About Market Risk | 23 |
Item 4.Controls and Procedures | 23 |
PART II- OTHER INFORMATION | |
Item 1.Legal Proceedings | 24 |
Item 1A.Risk Factors | 24 |
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
Item 3.Defaults Upon Senior Securities | 24 |
Item 4.Mine Safety Disclosure | 24 |
Item 5.Other Information | 24 |
Item 6.Exhibits | 25 |
Signatures | 26 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
STRATUS CAPITAL CORP.
CONDENSED UNAUDITED BALANCE SHEETS
JUNE 30, |
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ASSETS | ||||||||
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Current Assets | ||||||||
Cash and Cash Equivalents |
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Prepaid Expenses |
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Total Current Assets |
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Total Assets |
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LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
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Current Liabilities | ||||||||
Accounts Payable |
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Accruals - Related Parties |
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Notes Payable - Related Party |
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Total Current Liabilities |
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Total Liabilities |
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Commitments and Contingencies (Note 7) | ||||||||
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Shareholders' Deficit | ||||||||
Preferred Stock, $ |
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Series A Preferred Stock, $ |
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Series B Preferred 10% Cumulative Convertible Stock, $ |
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Common Stock, $ |
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Additional Paid In Capital |
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Accumulated Deficit |
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Total Shareholders' Deficit |
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Total Liabilities and Shareholders' Deficit |
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$ |
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The accompanying notes are an integral part of these condensed unaudited financial statements
STRATUS CAPITAL CORP.
CONDENSED UNAUDITED STATEMENTS OF OPERATIONS
FOR THE |
FOR THE | |||||||||||||||
THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, | |||||||||||||||
2021 |
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REVENUE |
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EXPENSES | ||||||||||||||||
General and administrative expenses |
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Total Expenses |
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OPERATING LOSS |
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OTHER (INCOME) EXPENSE | ||||||||||||||||
Interest - related party |
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INCOME (LOSS) BEFORE TAXES |
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TAXES |
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NET INCOME (LOSS) |
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Net Income (Loss) per Common Share: Basic and Diluted |
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Weighted Average Common Shares Outstanding: Basic and Diluted |
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The accompanying notes are an integral part of these condensed unaudited financial statements
STRATUS CAPITAL CORP.
CONDENSED UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
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Preferred Shares |
Common Shares |
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Capital |
Deficit |
Total | ||||||||||||||||||||||
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Balance at December 31, 2019 |
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Net loss for the quarter |
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Balance at March 31, 2020 |
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Net loss for the quarter |
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Balance at June 30, 2020 |
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Balance at December 31, 2020 |
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Net loss for the quarter |
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Balance at March 31, 2021 |
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Net loss for the quarter |
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Balance at June 30, 2021 |
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The accompanying notes are an integral part of these condensed unaudited financial statements
STRATUS CAPITAL CORP.
CONDENSED UNAUDITED STATEMENTS OF CASH FLOWS
FOR THE | ||||||||
SIX MONTHS ENDED JUNE 30, | ||||||||
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Cash Flows from Operating Activities: | ||||||||
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Net Income (Loss) |
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Adjustments to reconcile net income (loss) to net cash from operating activities |
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Changes in working capital items: | ||||||||
Prepaid expenses |
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Accruals - related parties |
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Net Cash Flows Used in Operating Activities |
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Net Cash Flows from Financing Activities | ||||||||
Advances under notes payable - related party |
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Net Cash Flows Provided by Financing Activities |
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Net Change in Cash: |
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Beginning Cash: |
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Ending Cash: |
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Supplemental Disclosures of Cash Flow Information: | ||||||||
Cash paid for interest |
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Cash paid for tax |
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The accompanying notes are an integral part of these condensed unaudited financial statements
STRATUS CAPITAL CORP
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
NOTE 1. NATURE OF OPERATIONS
Nature of Business
Stratus Capital Corporation, a Delaware corporation, (“Stratus Capital,” “the Company,” “We," "Us," or “Our”) is a publicly quoted real estate development company seeking to develop or redevelop residential, commercial or mixed-use properties.
History
Stratus Capital was incorporated in Delaware on April 13, 2018. Effective June 28, 2018 (the Company’s deemed date of inception), following a corporate reorganization pursuant to a reverse recapitalization, Stratus Capital became the reorganized successor to Ashcroft Homes Corporation, a publicly-quoted real estate company that ceased trading in 2004.
On June 1, 2021, Stratus Capital on behalf of itself, its respective heirs, executors, administrators, agents, and assignees ,Stratus Summit Trail, LLC, (referred to as “Summit”), the Richard and Reagan Dean Family Partnership, LLLP (referred to as “RRDFPLLLP”) and Denver Digital Hub, LLC (referred to as “DDH”) (collectively referred to herein as the “Party” or “Parties.”) entered into a Purchase Agreement (“Purchase Agreement”).
RRDFPLLLP and DDH respectively own seventy-five percent (
Stratus Capital has agreed to acquire the Interest owned by RRDFPLLLP and DDH of Summit of which Summit owns a total of 21 buildings lots as identified as Exhibit A to the Purchase Agreement within Grand County, town of Fraser, Colorado (“Subject Property”). Stratus Capital agreed that the continuing engineering, architectural or entitlement improvements are to be assigned to Summit if Stratus Capital does not fully pay the Promissory Note (‘the Note’) issued in respect of this transaction as per its terms and provisions as described below.
The purchase price is equal to $
Stratus Capital will fully pay the Note on or before October 31, 2021, or as agreed by the Parties. As denoted within the Deed of Trust of the Note, RRDFPLLLP and DDH will retain a security interest within the Subject Property until the Note is fully paid per its terms and provisions.
The Closing date shall be 30 days from the date of the Purchase Agreement (unless extended by mutual agreement), title will be provided free and clear with exception of debt assumption and the Note and a special warranty deed is agreed upon by the Parties. Closing of the transaction is formally pending audit of Summit, but Stratus Capital is actively managing the project under a management agreement. The Closing date has subsequently been extended to September 30, 2021, by mutual consent.
Simultaneously with the execution of the Purchase Agreement, Stratus Capital executed and issued a Promissory Note (“Note”) with personal guarantee of Peter Gonzalez, our CEO, (“Gonzalez”) to RRDFPLLLP and DDH as consideration for the Purchase Agreement. The Note is for the principal sum of One Million Two Hundred Sixty Thousand Dollars and No/100ths Dollars ($
The Parties also agree that as consideration for services provided within the normal course of business since 2019 or initial acquisition of the Subject Property by Summit, a development fee is due and payable to Willamette Group Trust (“WGT”) equal to $
Impact of COVID-19
We have not commenced substantial operations as yet and consequently have not been directly impacted by the Covid-19 outbreak at this time. However, the detrimental effect of the Covid-19 outbreak on the economy as a whole may have a detrimental impact on our ability to raise funding and commence full scale operations for the foreseeable future
NOTE 2. GOING CONCERN
Our financial statements are prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern, which contemplate the realization of assets and the liquidation of liabilities in the normal course of business. We have no ongoing business or income and for the six-month period ended June 30, 2021, incurred a loss of $
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform to GAAP and have been consistently applied. The Company has selected December 31 as its financial year end. The Company has not earned any revenue to date.
Interim Financial Statements
The accompanying unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2021 and for the related periods presented, have been included. The results for the three- and six-month periods ended June 30, 2021 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto for the year ended December 31, 2020 filed in our Form 10-K on March 31, 2021.
Use of Estimates
The preparation of financial statements in conformity with 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. Actual results could differ from those estimates.
Cash and Cash Equivalents:
We maintain cash balances in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. As of June 30, 2021 and December 31, 2020, our cash balances were $
Fair Value Measurements:
ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.
Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
Our financial instruments consist of our cash, prepaid expenses, accounts payable, accrued expenses - related parties and notes payable – related party. The carrying amount of our prepaid expenses, accounts payable, accrued expenses- related parties and notes payable – related party approximates their fair values because of the short-term maturities of these instruments
Related Party Transactions:
A related party is generally defined as (i) any person that holds 10% or more of our membership interests including such person's immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Notes 5, 6 and 8 below for details of related party transactions in the period presented.
Leases:
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the balance sheet.
ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases doesn’t provide an implicit rate. We generally use the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating ROU asset also includes any lease payments made and exclude lease incentives. Lease expense for lease payment is recognized on a straight-line basis over the lease term.
Since June 28, 2018 (Inception), the only lease arrangement we have entered into is a month-to-month lease for a storage unit. This lease has a term of less than 12 months, we have elected to adopt the exemption for short-term leases and have not accounted for it as described above. Effective January 2021 we are no longer renting a storage unit.
Income Taxes:
The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Uncertain Tax Positions:
We evaluate tax positions in a two-step process. We first determine whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We classify gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as long-term liabilities in the financial statements.
Revenue Recognition:
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
Service revenues are recognized as the services are performed in proportion to the transfer of control to the customer and real estate revenues are recognized at the time of sale when consideration has been exchanged and title has been conveyed to the buyer.
During the three- and six-month periods ended June 30, 2021 and 2020, we did not recognize any revenue.
Advertising Costs:
We expense advertising costs when advertisements occur. No advertising costs were incurred during the three- and six-month periods ended June 30, 2021 and 2020.
Stock-Based Compensation:
The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the equity instruments issued in accordance with ASC 718, “Compensation - Stock Compensation.” Measurement date for non-employees is the grant date of the stock-based compensation. The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued.
Net Loss per Share Calculation:
Basic earnings (loss) per common share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
No potentially dilutive debt or equity instruments were issued or outstanding during the three- and six-month periods ended June 30, 2021 and 2020.
Recently Accounting Pronouncements:
We have reviewed all the recently issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements will have a material impact on our financial statements.
NOTE 4. PREPAID EXPENSES
As of June 30, 2021 and December 31, 2020, the balance of prepayments and deposits was $
NOTE 5. ACCRUED EXPENSES – RELATED PARTIES
As of June 30, 2021 and December 31, 2020, balances of $
In addition, as of June 30, 2021 and December 31, 2020, balances of $
NOTE 6. NOTES PAYABLE – RELATED PARTIES
During the six months ended June 30, 2021, a partnership controlled by one of our directors, who was a former officer of the Company and the former principal shareholder, advanced to us $
Effective October 28, 2020, our CEO/CFO entered into a personal guarantee for this loan which initially became due on March 31, 2020 and was subsequently amended to mature June 30, 2021 and then to September 30, 2021.
The promissory note bears interest at
As of June 30, 2021 and December 31, 2020, the balance outstanding under the promissory note was $
During the six months ended June 30, 2021, a trust controlled by one of our directors, our current officer and principal shareholder advanced to us $
The promissory note bears interest at 8% per annum and is unsecured and dues on demand.
As of June 30, 2021, interest of $
As of June 30, 2021, the balance outstanding under this promissory note was $
NOTE 7. COMMITMENTS & CONTINGENCIES
Legal Proceedings
We were not subject to any legal proceedings during the six-month periods ended June 30, 2020 or 2019, and, to the best of our knowledge, no legal proceedings are pending or threatened.
Contractual Obligations
Lease Agreement
During the year ended December 31, 2020, we rented a storage unit under a month-to-month agreement. The rent was initially $
Employment Agreements
Effective October 1, 2018, we entered into three-year employment agreements with two of our directors and officers. Each individual was entitled to a salary of $
Placement Agent Fee Agreement
On February 23, 2021, we entered into a Placement Agent Fee Agreement with CIM Securities, LLC, a Colorado Limited Liability Company (“CIM”) for the Regulation A Offering. We agreed to pay CIM a commission equal to seven percent (
We shall pay a three percent (
In addition, contingent upon its success in raising funds, CIM Securities will be issued warrants to purchase Preferred shares at sale price of $
NOTE 8. SHAREHOLDERS’ DEFICIT
Preferred Stock
We are authorized to issue
Series A Preferred Stock
The shares of Series A Preferred Stock carry super majority voting rights such that they can vote the equivalent of
As of June 30, 2021 and December 31, 2020,
Series B Preferred 10% Cumulative Dividend Convertible Stock
On December 15, 2020, we designated
No shares of Series B Convertible Preferred Stock have been issued to date.
Liquidation Rights
The Series B Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Series A Preferred Stock, and of an amount equal to $10.00 per share.
Conversion Rights
The conversion price for the Series B Preferred Stock shall be 75% of the ten (10) day average market closing price of common stock, for the previous ten business days, divided into $10.00. ($10.00 / by average market closing price previous ten trading days x 75%) = number of common shares.
At any time on or after eighteen months after issuance (18 months), immediately upon the listing of our Common Stock on an Approved Stock Exchange pursuant to an effective registration statement under the Securities Act of 1933, and a Form 10/12b Registration, as amended all outstanding shares of the Series B Preferred Stock shall automatically be converted into shares of the Common Stock, at the “Preferred Conversion Rate,” which shall be post reverse-split of the Common Stock as may be necessary for any Exchange listing, and (2) such shares of Series B may not be reissued by us. A condition of this conversion is that a Registration Statement for the conversion shares shall be effective.
Dividends
The Series B Preferred Stock shall bear dividends, at ten percent (10%) annually, cumulative, based upon a purchase price of $10.00 per share, computed as (10% x $10.00 = $1.00 per share dividend per annum), payable in cash, on or about December 31 of each year, from the date of issue. Payment in cash shall be made on or before January 31 following, at the discretion of the Board.
We shall pay a Project Participation Dividend to the Series B Preferred Stock record holders (pro rata to the holder’s ownership of the Series B Preferred Stock) in cash computed based upon 3% of the net sales of our real estate projects, computed annually by March 1 of the following year for the previous year, for so long as the Series B Preferred Stock is outstanding. In the event that the Series B Preferred Stock is redeemed or converted during a calendar year, the dividend above shall be pro-rated for the year up to redemption date or conversion date and paid in following year by March 1.
Voting Rights
Each holder of shares of the Series B Preferred Stock shall be entitled to the number of votes equal to the number of shares of the Common Stock into which such shares of the Series B Preferred Stock are then convertible.
We will have the right, at our option, to redeem all or any portion of the shares of Series B Preferred Stock. On the date fixed for redemption we shall make payment of the Optional Redemption Amount as calculated below.
Redemption Period |
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Common Stock
We are authorized to issue
No shares of common stock were issued during the three- and six-month periods ended June 30, 2021 and 2020.
In both our Form 10-Q for the three and nine months ended September 30, 2020, filed on November 16, 2020 and our Form 8-K filed on December 4, 2020, we disclosed our intention to issue certain shares of common stock to directors, officers and staff. No such shares have been issued at this time and any such issuances are unlikely to be finalized before Q4 2021.
As of June 30, 2021 and December 31, 2020,
Stock Options
We have an incentive stock option plan, which provides for the granting by the Board of Directors of stock options to directors and officers for the purchase of authorized but unissued common shares. No stock options have been granted under this plan since its inception.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated subsequent events after June 30, 2021, in accordance with FASB ASC 855 Subsequent Events, through the date of the issuance of these financial statements and has determined there have been no subsequent events for which disclosure is required other than as set out below:
Effective July 17, 2021, we filed an amendment to our Form 1-A previously filed on January 15, 2021.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements and Associated Risks.
This Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue,” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial statements, as of June 30, 2021, we had an accumulated deficit totaling $407,106. This raises substantial doubts about our ability to continue as a going concern.
Plan of Operation
We intend to be engaged in the real estate and land development business in the United States.
Summit Trail, LLC, (referred to as “Summit”), the Richard and Reagan Dean Family Partnership, LLLP (referred to as “RRDFPLLLP”) and Denver Digital Hub, LLC (referred to as “DDH”) (collectively referred to herein as the “Party” or “Parties.”) entered into a Purchase Agreement (“Purchase Agreement”).
RRDFPLLLP and DDH respectively own seventy-five percent (75%) and twenty-five percent (25%) of the membership interest of Summit (“Interest”) and both of these parties sold their entire Interest or a total of one hundred percent (100%) of the Interest of Summit to Stratus Capital.
Stratus Capital has agreed to acquire the Interest owned by RRDFPLLLP and DDH of Summit of which Summit owns a total of 21 buildings lots as identified as Exhibit A to the Purchase Agreement within Grand County, town of Fraser, Colorado (“Subject Property”). Stratus Capital agreed that the continuing engineering, architectural or entitlement improvements are to be assigned to Summit if Stratus Capital does not fully pay the Promissory Note (‘the Note’) issued in respect of this transaction as per its terms and provisions as described below.
The purchase price is equal to $60,000 per lot, or 21 lots equal to $1,260,000 adjusted for any site or infrastructure costs as agreed upon by the Parties.
Stratus Capital will fully pay the Note on or before October 31, 2021, or as agreed by the Parties. As denoted within the Deed of Trust of the Note, RRDFPLLLP and DDH will retain a security interest within the Subject Property until the Note is fully paid per its terms and provisions.
The Closing date shall be 30 days from the date of the Purchase Agreement (unless extended by mutual agreement), title will be provided free and clear with exception of debt assumption and the Note and a special warranty deed is agreed upon by the Parties. Closing of the transaction is formally pending audit of Summit, but Stratus Capital is actively managing the project under a management agreement. The Closing date has subsequently been extended to September 30, 2021, by mutual consent.
Simultaneously with the execution of the Purchase Agreement, Stratus Capital executed and issued a Promissory Note (“Note”) with personal guarantee of Peter Gonzalez, our CEO, (“Gonzalez”) to RRDFPLLLP and DDH as consideration for the Purchase Agreement. The Note is for the principal sum of One Million Two Hundred Sixty Thousand Dollars and No/100ths Dollars ($1,260,000.00), together with interest on the unpaid principal balance from the date hereof, until paid, at the rate of six percent (6%) per annum.
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The Parties also agree that as consideration for services provided within the normal course of business since 2019 or initial acquisition of the Subject Property by Summit, a development fee is due and payable to Willamette Group Trust (“WGT”) equal to $12,500 per lot or $262,500 which is excluded from proceeds due to Seller pursuant to 1(d) of the Purchase Agreement. WGT is a related party, controlled by Stratus Capital principal Gonzalez and WGT agrees that all fees due to itself shall be waived if Stratus Capital does not perform on the terms and provisions of the Note.
We intend to develop a portfolio of development opportunities in various stages along with opportunistic acquisitions and partnerships in our core-markets. We operate solely under Stratus Capital Corp. We have historical presence and management experience in the mid-west and south-east regions. We plan to organize our business into the following operating segments:
Organizational Structure
Stratus Capital Corporation | |||||||
Organizational Structure | |||||||
LAND DEVELOPMENT | COMMERCIAL, RESIDENTIAL & MIXED-USE DEVELOPMENT | JOINT-VENTURES, PARTNERSHIPS AND LENDING | |||||
ENTITLEMENT | SINGLE & MULTI FAMILY PRODUCT | INFILL JOINT-VENTURES | |||||
ASSET REPOSITIONING | SENIOR HOUSING | STRATEGIC PARTNERSHIPS | |||||
DEVELOPMENT | CONSTRUCTION SERVICES | STRATEGIC LENDING |
Current Projects
NOTE: We reserve the right to add or delete real estate projects or substitute projects in the event that the economics, timing or financing of one or more of the projects, proves to be infeasible under the circumstances. Management will have sole discretion in making those judgments.
Our procedure for contracting for projects:
The identified projects are sought and generated by Peter Gonzalez, our CEO, through his experience and network within in each market. He generally takes an option or purchase contract personally or through an entity he controls, for a period of time during which he performs due diligence on the market, zoning, potential costs, the market absorption projections, local subcontractors and any environmentally issues. If the Company is able to achieve funding sufficient to buy and build any project or projects, Mr. Gonzalez will assign the option or contract positions to the Company, in full, and at no additional consideration or markup so there is no additional cost to the Company. The Company, as it exists with its current funding, is unable to participate in any project until funding under an Offering has been achieved. At this time, there are no pending contracts or agreements due to the uncertainty of funding.
Accordingly, there are no contracts for real estate or development under which the Company is obligated in any way to participate or incur any costs, at this time. Mr. Gonzalez has committed, under our conflicts policy, to first offer all projects that meet the consideration criteria, to the Company on the terms that can be negotiated with the sellers and with no markups, and no additional consideration to Mr. Gonzalez.
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Project Criteria:
The Company cannot predict or project any profits on any project as it has no history of development. Our project consideration criteria involve three primary elements:
1. Market projections during construction and product marketing period for the project locale.
2. Targeted yield of 24+% on cash cost-there is no assurance that this can be attained-it is a project qualification criteria.
3. Timely availability of financing for the project costs-equity, bank funding, or a combination, in many instances.
Of course, there are many other subordinate considerations such as zoning, utilities, product selection and design, environmental, marketing strategies, that are somewhat variable to individual projects, and cannot be uniformly predicted, or estimated.
We are seeking funding through a Regulation A offering currently filed with the SEC on Form 1-A through CIM Securities. The offering is not yet qualified under Regulation A.
Summary of current development projects under consideration:
Wood Dove Avenue Townhomes, Washington Park Townhomes, Magnolia Park Condos, Grande Oaks Preserve Condos, Miller Street Station Townhomes and Perry Park Townhomes. All projects are located in the Gulf Coast of Florida and Denver, CO markets which are experiencing continuing expansion in employment, residential and commercial development, population growth and resulting housing demand.
Business Strategy
Our long-term strategy:
• Pursuing opportunities within our core markets;
• Developing high-quality relationships with our asset partners;
• Maintaining a cost-efficient culture; and
• Appropriately balancing risk and opportunity.
We are committed to improving the communities we work within and enhancing the lifestyle of our neighborhoods. Delivering on this involves thoughtful planning to accommodate the needs of our various customers, homeowners and the surrounding community. We engage unaffiliated civil and architectural firms to develop and augment existing plans in order to ensure that our developments reflect current market updates to complement our surrounding communities.
We intend to acquire our assets in core locations where we can target maximizing long-term shareholder value and operate our business to capitalize on market appreciation and mitigate risks from economic downturns as we recognize the cyclical nature of the national real estate market. We intend to regularly assess our capital allocation strategy to drive shareholder return. We also take advantage of joint venture opportunities, partnerships and lending opportunities as they arise in order to secure asset allocations to share risk and maximize returns.
We intend to execute this strategy by:
• Increasing our existing land supply through expanding market presence;
• Combining land acquisition and development expertise with development operations;
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• Maintaining an efficient capital structure;
• Selectively investing in joint-ventures, partnerships and lending opportunities; and
• Employing and retaining a highly experienced management team with a strong operating track record.
Land and Development Strategies
Community development includes the acquisition and development of communities, which may include obtaining significant planning and entitlement approvals and completing construction of off-site and on-site utilities and infrastructure. We intend to generally operate as small community developers, but in some communities, we operate solely as merchant builders, in which case, we acquire fully planned and entitled lots and may construct on-site improvements or in-fill opportunities.
In order to maximize our expected risk-adjusted return, the allocation of capital for land investment is performed in the discretion of our management (2 persons) at the corporate level with a disciplined approach to overall portfolio management. Macro and micro indices, including but not limited to employment, housing starts, new home sales, re-sales and foreclosures, along with market related shifts in competition, land availability and consumer preferences, are carefully analyzed to determine our land and homebuilding strategy. Our long-term plan is compared on an ongoing basis to current conditions in the marketplace as they evolve and is adjusted to the extent necessary.
Community Integration
We intend to complement each community or neighborhood and governing municipality we interact with, beginning with an overall community master plan and then determining the specific asset opportunity to maximize returns for our shareholders and the stakeholders of the area. After necessary governmental and other approvals have been obtained, we intend to improve the assets as planned.
The life cycle of an asset generally ranges from two to five years, commencing with the acquisition or investment in the asset and continuing through the development phase, concluding with the sale, construction or delivery of product types. The actual life cycle will vary based on the asset type, the development cycle and the general market conditions.
Sources and Availability of Raw Materials
When we commence our business plan of development, based on local market practices, we either directly, or indirectly through our subcontractors, intend to purchase drywall, cement, steel, lumber, insulation and the other building materials necessary to construct the various residential product asset classes we develop. While these materials are generally widely available from a variety of sources, from time to time we may experience material shortages on a localized basis which can substantially increase the price for such materials and our construction process can be slowed. We have multiple sources for the materials we intend to purchase, which will decrease the likelihood that we would experience significant delays due to unavailability of necessary materials.
Trades and Labor
Our construction, land and purchasing teams will coordinate subcontracting services and supervise all aspects of construction work and quality control. We intend to act as a general contractor for residential projects.
Subcontractors perform construction and land development scopes of work, generally under fixed-price contracts. The availability of labor, specifically as it relates to qualified tradespeople, at reasonable prices can be challenging in some markets as the supply chain responds to uneven industry growth and other economic factors that affect the number of people in the workforce.
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Procurement and Construction
We plan to have a comprehensive procurement program that leverages our size and regional presence to achieve efficiencies and cost savings. Our procurement objective is to maximize cost and process efficiencies to ensure consistent utilization of established contractual arrangements.
Sales and Marketing
Our marketing program will be built out utilizing a balanced approach of corporate support and local expertise to attract potential lot buyers or homebuyers in a focused, efficient and cost-effective manner. Our sales and marketing teams will provide a generalized marketing framework across our regional operations. We hope to maintain product and price level differentiation through market and customer research to meet the need of our homebuilders and homebuyers.
The central element of our marketing platform is our web presence at www.StratusCap.com. The main purpose of this website is to connect with potential customers.
Competition
The land development and homebuilding business is highly competitive and fragmented. We compete with numerous national and local competitors of varying sizes, most of which have greater sales and financial resources than us. We compete primarily on the basis of location, lot availability, product design, quality, service, price and reputation.
In order to maximize our sales volumes, profitability and product strategy, we strive to understand our competition and their pricing, product and sales volume strategies and results. Competition among residential land developers and homebuilders of all sizes is based on a number of interrelated factors, including location, lot sizes, reputation, amenities, floor plans, design, quality and price.
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2020
We are a publicly quoted real estate development company seeking to develop or redevelop residential, commercial or mixed-use properties
Revenue
We recognized no revenue during the three-month periods ended June 30, 2021 and 2020 as we had no revenue generating activities during these periods.
General and Administrative Expenses
During the three months ended June 30, 2021, we incurred general and administrative expenses of $47,062 compared to $33,399 during the same period ended June 30, 2010, an increase of $13,663. The increase was primarily due to the fact that during the three months ended June 30, 2021, we incurred $16,500 in fees relating to our proposed fund-raising activities and $8,400 in in architectural design fees that we did not incur during the three months ended June 30, 2020. These increases were partially offset by a $9,000 reduction in officer compensation following the resignation in one of our officers effective September 30, 2020 and a $2,237 reduction in other professional fees.
Operating Loss
During the three months ended June 30, 2021, we incurred an operating loss of $47,062 compared to an operating loss of $33,399 during the three months ended June 30, 2020 due to the factors described above.
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Interest and Other Income (Expenses)
During the three months ended June 30, 2021, we incurred $3,895 in related party interest expense compared to $2,366 for the same period ended June 30, 2020, an increase of $1,529. The increase arose due to the increase in the balance of the loans outstanding with the related party from $135,048 as of June 30, 2020 to $205,442 as of June 30, 2021.
Loss before Income Tax
During the three months ended June 30, 2021, we incurred a net loss before income taxes of $50,957 compared to $35,765 for the three months ended June 30, 2020 due to the factors discussed above.
Provision for Income Tax
No provision for income taxes was recorded during the three months ended June 30, 2021 or 2020 as we incurred taxable losses in both periods.
Net Loss
During the three months ended June 30, 2021, we incurred a net loss of $50,957 compared to a net loss of $35,765 in 2020 due to the factors discussed above.
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2020
We are a publicly quoted real estate development company seeking to develop or redevelop residential, commercial or mixed-use properties
Revenue
We recognized no revenue during the six-month periods ended June 30, 2021 and 2020 as we had no revenue generating activities during these periods.
General and Administrative Expenses
During the six months ended June 30, 2021, we incurred general and administrative expenses of $80,718 compared to $68,168 during the same period ended June 30, 2020, an increase of $12,550. The increase was primarily due to the fact that during the six months ended June 30, 2021, we incurred $24,000 in fees relating to our proposed fund-raising activities and $8,400 in architectural design fees that we did not incur during the six months ended June 30, 2020. These increases were partially offset by a $8,000 reduction in officer compensation following the resignation in one of our officers effective September 30, 2020 and a $1,850 reduction in other professional fees.
Operating Loss
During the six months ended June 30, 2021, we incurred an operating loss of $80,718 compared to an operating loss of $68,168 during the six months ended June 30, 2020 due to the factors described above.
Interest and Other Income (Expenses)
During the six months ended June 30, 2021, we incurred $7,326 in related party interest expense compared to $4,420 for the same period ended June 30, 2020, an increase of $2,906. The increase arose due to the increase in the balance of the loans outstanding with the related party from $135,048 as of June 30, 2020 to $205,442 as of June 30, 2021.
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Loss before Income Tax
During the six months ended June 30, 2021, we incurred a net loss before income taxes of $88,044 compared to $72,588 for the six months ended June 30, 2020 due to the factors discussed above.
Provision for Income Tax
No provision for income taxes was recorded during the six months ended June 30, 2021 or 2020 as we incurred taxable losses in both periods.
Net Loss
During the six months ended June 30, 2021, we incurred a net loss of $88,044 compared to a net loss of $72,588 in 2020 due to the factors discussed above.
CASH FLOW
At June 30, 2021, we did not have any revenue generating activities or other sources of income and we had negative working capital of $414,032 and an accumulated deficit of $407,106.
Six Months Ended | Six Months Ended | |||||||
June 30, 2021 | June 30, 2020 | |||||||
Net Cash Used in Operating Activities | $ | (45,235 | ) | $ | (39,271 | ) | ||
Net Cash Flows from Investing Activities | — | — | ||||||
Net Cash Flows from Financing Activities | 45,568 | 39,071 | ||||||
Net Movement in Cash and Cash Equivalents | $ | 333 | $ | (200 | ) |
Operating Activities
During the six months ended June 30, 2021, we incurred a net loss of $88,044 which after adjustments for a decrease in prepaid expenses of $3,250 an increase in accounts payable of $11,733 and an increase in accrued expenses – related parties of $27,826 resulted in net cash of $45,235 being used in operations.
By comparison, during the six months ended June 30, 2020, we incurred a net loss of ($72,588 which after adjustments for an increase in prepaid expenses of $6,500, a decrease in accounts payable of $604 and an increase in accrued expenses – related parties of $40,421 resulted in net cash of $39,271 being used in operations.
.
Investing Activities
During the six months period ended June 30, 2021 and 2020, we had no investing activities.
Financing Activities
During the six months ended June 30, 2021, we received a total of $45,568 by way of promissory notes from two related parties to finance our working capital requirements. We received $28,268 by way of a promissory note from a partnership controlled by one of our directors, who was a former officer of the company and the former principal shareholder and a further $17,300 by way of a promissory from a trust controlled by another of our directors, our current officer and principal shareholder
By comparison during the six months ended June 30, 2020, we received $39,071 by way of loan from one of our directors, who was formerly an officer of the company and the former principal shareholder.
.
We are dependent upon the receipt of capital investment or other financing to fund our ongoing operations and to execute our business plan to become a profitable real estate development company seeking to develop or redevelop residential, commercial or mixed used properties. In addition, we are dependent upon our controlling shareholder to provide continued funding and
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capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations.
CRITICAL ACCOUNTING POLICIES
All companies are required to include a discussion of critical accounting policies and estimates used in the preparation of their financial statements. On an on-going basis, we evaluate our critical accounting policies and estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in Note 3 of our Financial Statements on page 9. These policies were selected because they represent the more significant accounting policies and methods that are broadly applied in the preparation of our financial statements.
Inflation
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future.
Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
Off-Balance Sheet Arrangements
Per SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. As of June 30, 2021, we have no off-balance sheet arrangements.
Recently Issued Accounting Pronouncements
We have reviewed all the recently issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements will have a material impact on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer/principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
Management has carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures and determined that they are ineffective. Due to the lack of personnel and outside directors, management acknowledges that there are deficiencies in these controls and procedures. The Company anticipates that with further resources,
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the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficient disclosure controls and procedures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We were not subject to any legal proceedings
during the six-month periods ended June 30, 2021 or 2020, and, to the best of our knowledge, no legal proceedings are pending or threatened.
Item 1a. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item
Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
32.1 | Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File (formatted as an Inline XBRL document and included in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STRATUS CAPITAL CORP. | ||
(Registrant) | ||
Dated: August 20, 2021 | By: | /s/ Pedro C. Gonzalez |
Pedro C. Gonzalez | ||
Chief Executive Officer, Principal Executive Officer | ||
and | ||
Chief Financial Officer, Principal Accounting Officer | ||
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EXHIBIT 31.1
CERTIFICATION OF PERIODIC REPORT
I, Pedro C. Gonzalez, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stratus Capital Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s 4th quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 20, 2021
/s/ Pedro C. Gonzalez | |
Pedro C. Gonzalez | |
(Chief Executive Officer and Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF PERIODIC REPORT
I, Pedro C. Gonzalez, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Stratus Capital Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s 4th quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 20, 2021
/s/ Pedro C. Gonzalez | |
Pedro C. Gonzalez | |
(Chief Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF DISCLOSURE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Stratus Capital Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Pedro C. Gonzalez, Chief Executive Officer and Principal Executive Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 20, 2021
/s/ Pedro C. Gonzalez | |
Pedro C. Gonzalez | |
(Chief Executive Officer and Principal Executive Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 32.2
CERTIFICATION OF DISCLOSURE PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Stratus Capital Corp. (the “Company”) on Form 10-Q for the period ending June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”) I, Pedro C. Gonzalez, Chief Financial Officer and Principal Accounting Officer of the Company, certify, pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 20, 2021
/s/ Pedro C. Gonzalez | |
Pedro C. Gonzalez | |
(Chief Financial Officer and Principal Accounting Officer) |
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
CONDENSED UNAUDITED BALANCE SHEETS - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Current Assets | ||
Cash and Cash Equivalents | $ 372 | $ 39 |
Prepaid Expenses | 3,250 | |
Total Current Assets | 372 | 3,289 |
Total Assets | 372 | 3,289 |
Current Liabilities | ||
Accounts Payable | 16,506 | 4,773 |
Accruals - Related Parties | 193,456 | 165,630 |
Notes Payable - Related Party | 204,442 | 158,874 |
Total Current Liabilities | 414,404 | 329,277 |
Total Liabilities | 414,404 | 329,277 |
Commitments and Contingencies (Note 7) | ||
Shareholders' Deficit | ||
Preferred Stock | ||
Common Stock, $0.0001 par value, 25,000,000 shares authorized, 21,525,481 issued and outstanding | 2,153 | 2,153 |
Additional Paid In Capital | (9,179) | (9,179) |
Accumulated Deficit | (407,106) | (319,062) |
Total Shareholders' Deficit | (414,032) | (325,988) |
Total Liabilities and Shareholders' Deficit | 372 | 3,289 |
Series A Preferred Stock [Member] | ||
Shareholders' Deficit | ||
Preferred Stock | 100 | 100 |
Series B Preferred Stock [Member] | ||
Shareholders' Deficit | ||
Preferred Stock |
CONDENSED UNAUDITED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock Authorized | 4,000,000 | 4,000,000 |
Preferred Stock Issued | 0 | 0 |
Preferred Stock Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock Authorized | 25,000,000 | 25,000,000 |
Common Stock Issued | 21,525,481 | 21,525,481 |
Common Stock Outstanding | 21,525,481 | 21,525,481 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock Authorized | 1,000,000 | 1,000,000 |
Preferred Stock Issued | 1,000,000 | 1,000,000 |
Preferred Stock Outstanding | 1,000,000 | 1,000,000 |
Series B Preferred Stock [Member] | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock Authorized | 5,000,000 | 5,000,000 |
Preferred Stock Issued | 0 | 0 |
Preferred Stock Outstanding | 0 | 0 |
CONDENSED UNAUDITED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Income Statement [Abstract] | ||||
REVENUE | ||||
EXPENSES | ||||
General and administrative expenses | 47,062 | 33,399 | 80,718 | 68,168 |
Total Expenses | 47,062 | 33,399 | 80,718 | 68,168 |
OPERATING LOSS | (47,062) | (33,399) | (80,718) | (68,168) |
OTHER (INCOME) EXPENSE | ||||
Interest - related party | (3,895) | (2,366) | (7,326) | (4,420) |
INCOME (LOSS) BEFORE TAXES | (50,957) | (35,765) | (88,044) | (72,588) |
TAXES | ||||
NET INCOME (LOSS) | $ (50,957) | $ (35,765) | $ (88,044) | $ (72,588) |
Net Income (Loss) per Common Share: Basic and Diluted | $ (0.00) | $ (0.00) | $ (0.00) | $ (0.00) |
Weighted Average Common Shares Outstanding: Basic and Diluted | 21,525,481 | 21,525,481 | 21,525,481 | 21,525,481 |
CONDENSED UNAUDITED STATEMENTS OF CASH FLOWS - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
Cash Flows from Operating Activities: | ||
Net Income (Loss) | $ (88,044) | $ (72,588) |
Changes in working capital items: | ||
Prepaid expenses | 3,250 | (6,500) |
Accounts payable | 11,733 | (604) |
Accruals - related parties | 27,826 | 40,421 |
Net Cash Flows Used in Operating Activities | (45,235) | (39,271) |
Net Cash Flows from Financing Activities | ||
Advances under notes payable - related party | 45,568 | 39,071 |
Net Cash Flows Provided by Financing Activities | 45,568 | 39,071 |
Net Change in Cash: | 333 | (200) |
Beginning Cash: | 39 | 244 |
Ending Cash: | 372 | 44 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | ||
Cash paid for tax |
NATURE OF OPERATIONS |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS |
NOTE 1. NATURE OF OPERATIONS Nature of Business Stratus Capital Corporation, a Delaware corporation, (“Stratus Capital,” “the Company,” “We," "Us," or “Our”) is a publicly quoted real estate development company seeking to develop or redevelop residential, commercial or mixed-use properties. History Stratus Capital was incorporated in Delaware on April 13, 2018. Effective June 28, 2018 (the Company’s deemed date of inception), following a corporate reorganization pursuant to a reverse recapitalization, Stratus Capital became the reorganized successor to Ashcroft Homes Corporation, a publicly-quoted real estate company that ceased trading in 2004. On June 1, 2021, Stratus Capital on behalf of itself, its respective heirs, executors, administrators, agents, and assignees ,Stratus Summit Trail, LLC, (referred to as “Summit”), the Richard and Reagan Dean Family Partnership, LLLP (referred to as “RRDFPLLLP”) and Denver Digital Hub, LLC (referred to as “DDH”) (collectively referred to herein as the “Party” or “Parties.”) entered into a Purchase Agreement (“Purchase Agreement”). RRDFPLLLP and DDH respectively own seventy-five percent (75%) and twenty-five percent (25%) of the membership interest of Summit (“Interest”) and both of these parties sold their entire Interest or a total of one hundred percent (100%) of the Interest of Summit to Stratus Capital. Stratus Capital has agreed to acquire the Interest owned by RRDFPLLLP and DDH of Summit of which Summit owns a total of 21 buildings lots as identified as Exhibit A to the Purchase Agreement within Grand County, town of Fraser, Colorado (“Subject Property”). Stratus Capital agreed that the continuing engineering, architectural or entitlement improvements are to be assigned to Summit if Stratus Capital does not fully pay the Promissory Note (‘the Note’) issued in respect of this transaction as per its terms and provisions as described below. The purchase price is equal to $60,000 per lot, or 21 lots equal to $1,260,000 adjusted for any site or infrastructure costs as agreed upon by the Parties. Stratus Capital will fully pay the Note on or before October 31, 2021, or as agreed by the Parties. As denoted within the Deed of Trust of the Note, RRDFPLLLP and DDH will retain a security interest within the Subject Property until the Note is fully paid per its terms and provisions. The Closing date shall be 30 days from the date of the Purchase Agreement (unless extended by mutual agreement), title will be provided free and clear with exception of debt assumption and the Note and a special warranty deed is agreed upon by the Parties. Closing of the transaction is formally pending audit of Summit, but Stratus Capital is actively managing the project under a management agreement. The Closing date has subsequently been extended to September 30, 2021, by mutual consent. Simultaneously with the execution of the Purchase Agreement, Stratus Capital executed and issued a Promissory Note (“Note”) with personal guarantee of Peter Gonzalez, our CEO, (“Gonzalez”) to RRDFPLLLP and DDH as consideration for the Purchase Agreement. The Note is for the principal sum of One Million Two Hundred Sixty Thousand Dollars and No/100ths Dollars ($1,260,000.00), together with interest on the unpaid principal balance from the date hereof, until paid, at the rate of six percent (6%) per annum. The Parties also agree that as consideration for services provided within the normal course of business since 2019 or initial acquisition of the Subject Property by Summit, a development fee is due and payable to Willamette Group Trust (“WGT”) equal to $12,500 per lot or $262,500 which is excluded from proceeds due to Seller pursuant to 1(d) of the Purchase Agreement. WGT is a related party, controlled by Stratus Capital principal Gonzalez and WGT agrees that all fees due to itself shall be waived if Stratus Capital does not perform on the terms and provisions of the Note. Impact of COVID-19 We have not commenced substantial operations as yet and consequently have not been directly impacted by the Covid-19 outbreak at this time. However, the detrimental effect of the Covid-19 outbreak on the economy as a whole may have a detrimental impact on our ability to raise funding and commence full scale operations for the foreseeable future |
GOING CONCERN |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Disclosure of Going Concern [Abstract] | |
GOING CONCERN |
NOTE 2. GOING CONCERN Our financial statements are prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern, which contemplate the realization of assets and the liquidation of liabilities in the normal course of business. We have no ongoing business or income and for the six-month period ended June 30, 2021, incurred a loss of $88,044 and had an accumulated deficit of $407,106 as of June 30, 2021. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. Our ability to continue as a going concern is dependent upon our ability to raise additional debt or equity funding to meet our ongoing operating expenses and ultimately in merging with another entity with experienced management and profitable operations. No assurances can be given that we will be successful in achieving these objectives. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform to GAAP and have been consistently applied. The Company has selected December 31 as its financial year end. The Company has not earned any revenue to date. Interim Financial Statements The accompanying unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2021 and for the related periods presented, have been included. The results for the three- and six-month periods ended June 30, 2021 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto for the year ended December 31, 2020 filed in our Form 10-K on March 31, 2021. Use of Estimates The preparation of financial statements in conformity with 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. Actual results could differ from those estimates. Cash and Cash Equivalents: We maintain cash balances in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. As of June 30, 2021 and December 31, 2020, our cash balances were $372 and $39, respectively. Fair Value Measurements: ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of our cash, prepaid expenses, accounts payable, accrued expenses - related parties and notes payable – related party. The carrying amount of our prepaid expenses, accounts payable, accrued expenses- related parties and notes payable – related party approximates their fair values because of the short-term maturities of these instruments Related Party Transactions: A related party is generally defined as (i) any person that holds 10% or more of our membership interests including such person's immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Notes 5, 6 and 8 below for details of related party transactions in the period presented. Leases: We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the balance sheet. ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases doesn’t provide an implicit rate. We generally use the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating ROU asset also includes any lease payments made and exclude lease incentives. Lease expense for lease payment is recognized on a straight-line basis over the lease term. Since June 28, 2018 (Inception), the only lease arrangement we have entered into is a month-to-month lease for a storage unit. This lease has a term of less than 12 months, we have elected to adopt the exemption for short-term leases and have not accounted for it as described above. Effective January 2021 we are no longer renting a storage unit. Income Taxes: The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. Uncertain Tax Positions: We evaluate tax positions in a two-step process. We first determine whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We classify gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as long-term liabilities in the financial statements. Revenue Recognition: Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: Step 1: Identify the contract(s) with customers Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to performance obligations Step 5: Recognize revenue when the entity satisfies a performance obligation Service revenues are recognized as the services are performed in proportion to the transfer of control to the customer and real estate revenues are recognized at the time of sale when consideration has been exchanged and title has been conveyed to the buyer. During the three- and six-month periods ended June 30, 2021 and 2020, we did not recognize any revenue. Advertising Costs: We expense advertising costs when advertisements occur. No advertising costs were incurred during the three- and six-month periods ended June 30, 2021 and 2020. Stock-Based Compensation: The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the equity instruments issued in accordance with ASC 718, “Compensation - Stock Compensation.” Measurement date for non-employees is the grant date of the stock-based compensation. The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued. Net Loss per Share Calculation: Basic earnings (loss) per common share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. No potentially dilutive debt or equity instruments were issued or outstanding during the three- and six-month periods ended June 30, 2021 and 2020. Recently Accounting Pronouncements: We have reviewed all the recently issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements will have a material impact on our financial statements. |
PREPAID EXPENSES |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Prepaid Expense, Current [Abstract] | |
PREPAID EXPENSES |
NOTE 4. PREPAID EXPENSES As of June 30, 2021 and December 31, 2020, the balance of prepayments and deposits was $0 and $3,250, respectively, which related to the annual disclosure and news service subscription for OTC Markets which will be amortized monthly over the course of the year commencing July 1, 2020. |
ACCRUED EXPENSES - RELATED PARTIES |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES - RELATED PARTIES |
NOTE 5. ACCRUED EXPENSES – RELATED PARTIES As of June 30, 2021 and December 31, 2020, balances of $173,500 and $153,000, respectively, were due to our current and former officers and directors with respect to accrued compensation. In addition, as of June 30, 2021 and December 31, 2020, balances of $19,956 and $12,630 in accrued interest was due on loans made to us by a partnership controlled by one of our directors, who was a former officer of the company and the former principal shareholder and by a trust controlled by our current director, officer and principal shareholder. |
NOTES PAYABLE - RELATED PARTIES |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE - RELATED PARTIES |
NOTE 6. NOTES PAYABLE – RELATED PARTIES During the six months ended June 30, 2021, a partnership controlled by one of our directors, who was a former officer of the Company and the former principal shareholder, advanced to us $28,268 (2020 - $39,071) by way of a promissory note to finance our working capital requirements. Effective October 28, 2020, our CEO/CFO entered into a personal guarantee for this loan which initially became due on March 31, 2020 and was subsequently amended to mature June 30, 2021 and then to September 30, 2021. The promissory note bears interest at 8% per annum and as of June 30, 2021 and December 31, 2020 interest of $19,664 and $12,630, respectively, was accrued with respect to this loan. As of June 30, 2021 and December 31, 2020, the balance outstanding under the promissory note was $187,142 and $158,874 respectively. During the six months ended June 30, 2021, a trust controlled by one of our directors, our current officer and principal shareholder advanced to us $17,300 by way of a promissory note to finance our working capital requirements. The promissory note bears interest at 8% per annum and is unsecured and dues on demand. As of June 30, 2021, interest of $292 was accrued with respect to this loan. As of June 30, 2021, the balance outstanding under this promissory note was $17,300. |
COMMITMENTS & CONTINGENCIES |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS & CONTINGENCIES |
NOTE 7. COMMITMENTS & CONTINGENCIES Legal Proceedings We were not subject to any legal proceedings during the six-month periods ended June 30, 2020 or 2019, and, to the best of our knowledge, no legal proceedings are pending or threatened. Contractual Obligations Lease Agreement During the year ended December 31, 2020, we rented a storage unit under a month-to-month agreement. The rent was initially $120 a month and was reduced to $87 per month in April 2020 when we moved to a smaller unit. Effective January 2021 we are no longer renting a storage unit. Employment Agreements Effective October 1, 2018, we entered into three-year employment agreements with two of our directors and officers. Each individual was entitled to a salary of $36,000 per year and bonuses and stock options to be determined and issued at a later date. The employment agreement for one of one of our officers was terminated by mutual agreement effective September 30, 2020. Placement Agent Fee Agreement On February 23, 2021, we entered into a Placement Agent Fee Agreement with CIM Securities, LLC, a Colorado Limited Liability Company (“CIM”) for the Regulation A Offering. We agreed to pay CIM a commission equal to seven percent (7%) in cash on the subscriptions completed, whether through an investor or referrals from CIM’s investors through May 23, 2021. We shall pay a three percent (3%) in non-accountable expenses for the anti-money laundering, due diligence, and legal costs required by the regulations applicable, from the proceeds at the closing of the subscriptions. In addition, contingent upon its success in raising funds, CIM Securities will be issued warrants to purchase Preferred shares at sale price of $10.00 for a period of three years after offering closes. The warrants will be able to be exercised cashless and have piggy-back registration rights for common stock upon conversion. The warrants will be for an amount equal to 7% of the shares sold in the Offering and shall be assignable. The common stock conversion rights shall be those as the Series B provides in the Certificate of Designation. |
SHAREHOLDERS' DEFICIT |
6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||
Equity [Abstract] | |||||||||||
SHAREHOLDERS' DEFICIT |
NOTE 8. SHAREHOLDERS’ DEFICIT Preferred Stock We are authorized to issue 4,000,000 shares of preferred stock with a par value of $0.0001. 1,000,000 shares of Series A Preferred Stock were designated and issued effective January 17, 2019. 5,000,000 shares of Series B 10% Cumulative Dividend Convertible Preferred Stock were designated effective December 15, 2020. No other series of preferred stock had been designated or issued of June 30, 2021 or December 31, 2020. Series A Preferred Stock The shares of Series A Preferred Stock carry super majority voting rights such that they can vote the equivalent of 60% of common stock at all times. As of June 30, 2021 and December 31, 2020, 1,000,000 shares of Series A Preferred Stock were issued and outstanding. Series B Preferred 10% Cumulative Dividend Convertible Stock On December 15, 2020, we designated 5,000,000 shares of Preferred Stock as Series B Convertible Preferred Stock, with a par value of $0.0001. No shares of Series B Convertible Preferred Stock have been issued to date. Liquidation Rights The Series B Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Series A Preferred Stock, and of an amount equal to $10.00 per share. Conversion Rights The conversion price for the Series B Preferred Stock shall be 75% of the ten (10) day average market closing price of common stock, for the previous ten business days, divided into $10.00. ($10.00 / by average market closing price previous ten trading days x 75%) = number of common shares. At any time on or after eighteen months after issuance (18 months), immediately upon the listing of our Common Stock on an Approved Stock Exchange pursuant to an effective registration statement under the Securities Act of 1933, and a Form 10/12b Registration, as amended all outstanding shares of the Series B Preferred Stock shall automatically be converted into shares of the Common Stock, at the “Preferred Conversion Rate,” which shall be post reverse-split of the Common Stock as may be necessary for any Exchange listing, and (2) such shares of Series B may not be reissued by us. A condition of this conversion is that a Registration Statement for the conversion shares shall be effective. Dividends The Series B Preferred Stock shall bear dividends, at ten percent (10%) annually, cumulative, based upon a purchase price of $10.00 per share, computed as (10% x $10.00 = $1.00 per share dividend per annum), payable in cash, on or about December 31 of each year, from the date of issue. Payment in cash shall be made on or before January 31 following, at the discretion of the Board. We shall pay a Project Participation Dividend to the Series B Preferred Stock record holders (pro rata to the holder’s ownership of the Series B Preferred Stock) in cash computed based upon 3% of the net sales of our real estate projects, computed annually by March 1 of the following year for the previous year, for so long as the Series B Preferred Stock is outstanding. In the event that the Series B Preferred Stock is redeemed or converted during a calendar year, the dividend above shall be pro-rated for the year up to redemption date or conversion date and paid in following year by March 1. Voting Rights Each holder of shares of the Series B Preferred Stock shall be entitled to the number of votes equal to the number of shares of the Common Stock into which such shares of the Series B Preferred Stock are then convertible. We will have the right, at our option, to redeem all or any portion of the shares of Series B Preferred Stock. On the date fixed for redemption we shall make payment of the Optional Redemption Amount as calculated below.
Common Stock We are authorized to issue 25,000,000 shares of common stock with a par value of $0.0001. No shares of common stock were issued during the three- and six-month periods ended June 30, 2021 and 2020. In both our Form 10-Q for the three and nine months ended September 30, 2020, filed on November 16, 2020 and our Form 8-K filed on December 4, 2020, we disclosed our intention to issue certain shares of common stock to directors, officers and staff. No such shares have been issued at this time and any such issuances are unlikely to be finalized before Q4 2021. As of June 30, 2021 and December 31, 2020, 21,525,481 shares of common stock were issued and outstanding. Stock Options We have an incentive stock option plan, which provides for the granting by the Board of Directors of stock options to directors and officers for the purchase of authorized but unissued common shares. No stock options have been granted under this plan since its inception. |
SUBSEQUENT EVENTS |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS |
NOTE 9. SUBSEQUENT EVENTS The Company evaluated subsequent events after June 30, 2021, in accordance with FASB ASC 855 Subsequent Events, through the date of the issuance of these financial statements and has determined there have been no subsequent events for which disclosure is required other than as set out below: Effective July 17, 2021, we filed an amendment to our Form 1-A previously filed on January 15, 2021. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation |
Basis of Presentation The summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform to GAAP and have been consistently applied. The Company has selected December 31 as its financial year end. The Company has not earned any revenue to date. |
Interim Financial Statements |
Interim Financial Statements The accompanying unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying condensed financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2021 and for the related periods presented, have been included. The results for the three- and six-month periods ended June 30, 2021 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto for the year ended December 31, 2020 filed in our Form 10-K on March 31, 2021. |
Use of Estimates |
Use of Estimates The preparation of financial statements in conformity with 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. Actual results could differ from those estimates. |
Cash and Cash Equivalents |
Cash and Cash Equivalents: We maintain cash balances in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. As of June 30, 2021 and December 31, 2020, our cash balances were $372 and $39, respectively. |
Fair Value Measurements |
Fair Value Measurements: ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of our cash, prepaid expenses, accounts payable, accrued expenses - related parties and notes payable – related party. The carrying amount of our prepaid expenses, accounts payable, accrued expenses- related parties and notes payable – related party approximates their fair values because of the short-term maturities of these instruments |
Related Party Transactions |
Related Party Transactions: A related party is generally defined as (i) any person that holds 10% or more of our membership interests including such person's immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Notes 5, 6 and 8 below for details of related party transactions in the period presented. |
Leases |
Leases: We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the balance sheet. ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases doesn’t provide an implicit rate. We generally use the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating ROU asset also includes any lease payments made and exclude lease incentives. Lease expense for lease payment is recognized on a straight-line basis over the lease term. Since June 28, 2018 (Inception), the only lease arrangement we have entered into is a month-to-month lease for a storage unit. This lease has a term of less than 12 months, we have elected to adopt the exemption for short-term leases and have not accounted for it as described above. Effective January 2021 we are no longer renting a storage unit. |
Income Taxes |
Income Taxes: The provision for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. |
Uncertain Tax Positions |
Uncertain Tax Positions: We evaluate tax positions in a two-step process. We first determine whether it is more likely than not that a tax position will be sustained upon examination, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. We classify gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as long-term liabilities in the financial statements. |
Revenue Recognition |
Revenue Recognition: Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: Step 1: Identify the contract(s) with customers Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to performance obligations Step 5: Recognize revenue when the entity satisfies a performance obligation Service revenues are recognized as the services are performed in proportion to the transfer of control to the customer and real estate revenues are recognized at the time of sale when consideration has been exchanged and title has been conveyed to the buyer. During the three- and six-month periods ended June 30, 2021 and 2020, we did not recognize any revenue. |
Advertising Costs |
Advertising Costs: We expense advertising costs when advertisements occur. No advertising costs were incurred during the three- and six-month periods ended June 30, 2021 and 2020. |
Stock-Based Compensation |
Stock-Based Compensation: The cost of equity instruments issued to non-employees in return for goods and services is measured by the fair value of the equity instruments issued in accordance with ASC 718, “Compensation - Stock Compensation.” Measurement date for non-employees is the grant date of the stock-based compensation. The cost of employee services received in exchange for equity instruments is based on the grant date fair value of the equity instruments issued. |
Net Loss per Share Calculation |
Net Loss per Share Calculation: Basic earnings (loss) per common share ("EPS") is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. No potentially dilutive debt or equity instruments were issued or outstanding during the three- and six-month periods ended June 30, 2021 and 2020. |
Recently Accounting Pronouncements |
Recently Accounting Pronouncements: We have reviewed all the recently issued, but not yet effective, accounting pronouncements and do not believe any of these pronouncements will have a material impact on our financial statements. |
SHAREHOLDERS' DEFICIT (Tables) |
6 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | |||||||||||
Equity [Abstract] | |||||||||||
Schedule of Optional Redemption |
We will have the right, at our option, to redeem all or any portion of the shares of Series B Preferred Stock. On the date fixed for redemption we shall make payment of the Optional Redemption Amount as calculated below.
|
NATURE OF OPERATIONS (Details) |
6 Months Ended |
---|---|
Jun. 30, 2021
USD ($)
| |
Willamette Group Trust [Member] | |
Development fee payable | $ 262,500 |
Promissory Note [Member] | RRDFPLLLP and DDH [Member] | |
Notes payable | $ 1,260,000 |
Interest rate on notes payable | 6.00% |
Per Lot [Member] | |
Purchase price of ownership | $ 60,000 |
Per Lot [Member] | Willamette Group Trust [Member] | |
Development fee payable | 12,500 |
21 Lots [Member] | |
Purchase price of ownership | $ 1,260,000 |
RRDFPLLLP [Member] | |
Ownership percentage | 75.00% |
DDH [Member] | |
Ownership percentage | 25.00% |
Summit [Member] | |
Ownership percentage sold | 100.00% |
GOING CONCERN (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
Disclosure of Going Concern [Abstract] | |||||||
Net Income (Loss) | $ 50,957 | $ 37,087 | $ 35,765 | $ 36,823 | $ 88,044 | $ 72,588 | |
Accumulated Deficit | $ 407,106 | $ 407,106 | $ 319,062 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and Cash Equivalents | $ 372 | $ 39 | $ 44 | $ 244 |
PREPAID EXPENSES (Details) - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Prepaid Expense, Current [Abstract] | ||
Prepayments and deposits | $ 3,250 |
ACCRUED EXPENSES - RELATED PARTIES (Details) - Officers and Directors [Member] - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Accrued compensation | $ 173,500 | $ 153,000 |
Accrued interest | $ 19,956 | $ 12,630 |
NOTES PAYABLE - RELATED PARTIES (Details) - Promissory Note [Member] - USD ($) |
Jun. 30, 2021 |
Dec. 31, 2020 |
Jun. 30, 2020 |
---|---|---|---|
Directors and Officers [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument face amount | $ 28,268 | $ 39,071 | |
Debt instrument bears interest rate | 8.00% | ||
Accrued interest | $ 19,664 | $ 12,630 | |
Debt instrument outstanding balance | 187,142 | $ 158,874 | |
Directors and Officers One [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument face amount | 17,300 | ||
Accrued interest | 292 | ||
Debt instrument outstanding balance | $ 17,300 |
COMMITMENTS & CONTINGENCIES (Details) - USD ($) |
1 Months Ended | 6 Months Ended | |
---|---|---|---|
Apr. 30, 2020 |
Jun. 30, 2021 |
Feb. 23, 2021 |
|
Rent paid per month | $ 120 | ||
Commission fee | 7.00% | ||
Non-Accountable Expenses | 3.00% | ||
Share price | $ 10.00 | ||
Minimum [Member] | |||
Rent paid per month | $ 87 | ||
Directors and Officers [Member] | |||
Employment agreement term | 3 years | ||
Amount of Salary per year | $ 36,000 |
SHAREHOLDERS' DEFICIT (Schedule of Optional Redemption) (Details) |
6 Months Ended |
---|---|
Jun. 30, 2021 | |
Redemption Period One [Member] | |
Class of Stock [Line Items] | |
Redemption Period | The period beginning on the date of the issuance of shares of Series B Preferred Stock (the “Issuance Date”) and ending on the date which is one (1) year following the Issuance Date. |
Redemption Percentage | 130.00% |
Redemption Period Two [Member] | |
Class of Stock [Line Items] | |
Redemption Period | The period beginning on the date which is one (1) year and one day following the Issuance Date and ending on the date which is two (2) years following the Issuance Date. |
Redemption Percentage | 120.00% |
Redemption Period Three [Member] | |
Class of Stock [Line Items] | |
Redemption Period | The period beginning on the date which is two (2) years and one day following the Issuance Date and ending on the date which is three (3) years following the Issuance Date. |
Redemption Percentage | 110.00% |
Redemption Period Four [Member] | |
Class of Stock [Line Items] | |
Redemption Period | The period beginning on the date that is three (3) years and one day from the Issuance Date and ending ten (10) years following the Issuance Date. |
Redemption Percentage | 100.00% |
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