10-Q 1 f10q20170430.htm 10Q20170430 043016 AMGTI 10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended April 30, 2017

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 000-54546


AMERI METRO, INC.

(Exact name of registrant as specified in its charter)



Delaware

 

45-1877342

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.) 

 

 

 

2575 Eastern Blvd. Suite 211

York, Pennsylvania

 


17402

(Address of principal

executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code: (717) 701-7726

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No  ¨

 

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

 

Large accelerated filer  ¨

Accelerated filer  ¨

Non-accelerated filer    ¨

(Do not check if a smaller reporting company)

Smaller reporting company  þ

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       

Yes ¨  No þ

 

1


At June 8, 2017, there were 1,800,000 shares of the issuer’s preferred stock and 1,085,638,587 shares of the issuer’s common stock outstanding:



Class

Outstanding at June 8, 2017

 

 

Preferred Stock, par value $0.00001

1,800,000 shares

Class A Common Stock, par value $0.000001

1,600,000 shares

Class B Common Stock, par value $0.000001

988,038,587 shares

Class C Common Stock, par value $0.000001

48,000,000 shares

Class D Common Stock, par value $0.000001

48,000,000 shares


 

2



AMERI METRO, INC.


TABLE OF CONTENTS

 

April 30, 2017

 

INDEX

 

 

Page

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1.

Consolidated Financial Statements (unaudited)

 

 

 

 

 

Consolidated Balance Sheets as of April 30, 2017 and July 31, 2016 (unaudited)

F-1

 

 

 

 

Consolidated Statements of Operations for the Three and Nine Months ended April 30, 2017 and 2016 (unaudited)


F-2

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months ended April 30, 2017 and 2016 (unaudited)


F-3

 

 

 

 

Notes to Consolidated Financial Statements

F-4

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

 

 

 

Item 4.

Controls and Procedures

27

 

 

 

PART II – OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

28

 

 

 

Item 1A.

Risk Factors

28

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

 

 

 

Item 3.

Defaults Upon Senior Securities

28

 

 

 

Item 4.

Mine Safety Disclosures

28

 

 

 

Item 5.

Other Information

28

 

 

 

Item 6.

Exhibits

29

 

 

 

Signatures

 

31



3



AMERI METRO, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

April 30,
2017

July 31,
2016

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

 $ 371 

 $ 27,160 

Prepaid expenses

  8,678 

Other receivable

  6,000 

 

 

 

Total current assets

  6,371 

  35,838 

 

 

 

Office equipment, net

  1,851 

  2,245 

Prepaid expenses and deposits

  2,940 

  2,940 

 

 

 

Total Assets

 $ 11,162 

 $ 41,023 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

Liabilities

 

 

Current liabilities

 

 

    Accounts payable

 $ 1,059,755 

 $ 1,069,608 

    Accrued expenses

  20,706,681 

  14,320,245 

    Due to related parties

  1,050 

  1,050 

    Loans payable – related parties

  517,086 

  960,967 

    Loans payable

  3,403 

  3,403 

 

 

 

Total Current Liabilities

  22,287,975 

  16,355,273 

 

 

 

Loans payable – related parties

  542,095 

 

 

 

Total Liabilities

  22,830,070 

  16,355,273 

 

 

 

Stockholders’ Deficit

 

 

Preferred stock, par value $.000001, 200,000,000 shares authorized,
1,800,000 shares issued and outstanding (1,800,000 – July 31, 2016)

  2 

  2 

Common stock class A, par value $.000001, 7,000,000 shares authorized, 1,600,000 shares issued and outstanding (1,600,000 – July 31, 2016)

  1 

  1 

Common stock class B, par value $.000001, 4,000,000,000 shares authorized, 988,038,587 shares issued and outstanding (987,934,483 – July 31, 2016)

  988 

  988 

Common stock class C, par value $.000001, 4,000,000,000 shares authorized, 48,000,000 shares issued and outstanding (4,800,000 – July 31, 2016)

  48 

  5 

Common stock class D, par value $.000001, 4,000,000,000 shares authorized, 48,000,000 shares outstanding (48,000,000 – July 31, 2016)

  48 

  48 

Additional paid in capital

  5,593,486 

  5,581,929 

Stock subscriptions receivable

  (47,000)

  (47,000)

Accumulated deficit

  (28,366,481)

  (21,850,223)

 

 

 

Total Stockholders’ Deficit

  (22,818,908)

  (16,314,250)

 

 

 

Total Liabilities and Stockholders’ Deficit

 $ 11,162 

 $ 41,023 





The accompanying notes are an integral part of these unaudited consolidated financial statements.


F-1

 



AMERI METRO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)




 

Three months

ended

April 30, 2017

Three months

ended

April 30, 2016

Nine

 months

ended

April 30, 2017

Nine

months

ended

April 30, 2016

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

Professional fees

$ 8,700 

$ 29,850 

$ 36,600 

$ 833,118 

Directors fees

 450,040 

 450,000 

 1,350,383 

 1,500,750 

Audit committee fees

 90,000 

 180,000 

Depreciation

 131 

 96 

 394 

 256 

General & administrative

 156,528 

 146,060 

 491,510 

 459,219 

Officer payroll

 1,685,870 

 1,169,074 

 4,442,467 

 3,448,241 

 

 

 

 

 

TOTAL OPERATING EXPENSES

 2,391,269 

 1,795,080 

 6,501,354 

 6,241,584 

 

 

 

 

 

LOSS FROM OPERATIONS

 (2,391,269)

 (1,795,080)

 (6,501,354)

 (6,241,584)

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

Interest expense

 (4,946)

 (1,192)

 (14,904)

 (2,001)

Termination fee

 (5)

 

 

 

 

 

TOTAL OTHER INCOME (EXPENSE)

 (4,946)

 (1,192)

 (14,904)

 (2,006)

 

 

 

 

 

NET LOSS

$ (2,396,215)

$ (1,796,272)

$ (6,516,258)

$ (6,243,590)

 

 

 

 

 

LOSS PER SHARE (BASIC AND DILUTED)

$ (0.00)

$ (0.00)

$ (0.01)

$ (0.01)

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (BASIC AND DILUTED)

 1,042,923,980 

 1,042,334,483 

 1,042,595,303 

 1,066,077,332 



The accompanying notes are an integral part of these unaudited consolidated financial statements.


F-2

 



AMERI METRO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



 

Nine months

ended

April 30,

2017

Nine months

ended

April 30,

2016

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

Net loss

 $ (6,516,258)

 $ (6,243,590)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

   Issuance of stock for services

  750 

   Issuance of stock for termination fees

  5 

   Depreciation expense

  394 

  256 

   Stock-based compensation

  11,600 

  324 

   Cancellation of stock issued for services

  (15,220)

 

 

 

Change in operating assets and liabilities:

 

 

Prepaid expense and deposits

  8,678 

  (13,757)

Other receivable

  (6,000)

   Accounts payable

  (9,853)

  773,409 

   Accrued expenses

  6,386,436 

  5,332,867 

 

 

 

Cash flows used in operating activities

  (125,003)

  (164,956)

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

Purchase of property and equipment

  (1,006)

 

 

 

Cash flows used in investing activities

  (1,006)

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

Bank indebtedness

  (528)

Proceeds from related party loans

  98,214 

  252,914 

Repayment of related party loans

  (32,619)

Due to related parties

  800 

 

 

 

Cash flows provided by financing activities

  98,214 

  220,567 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

  (26,789)

  54,605 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

  27,160 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 $ 371 

 $ 54,605 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

Interest paid

$                    –

$                   –

Income taxes paid

$                    –

$                   –

 

 

 




The accompanying notes are an integral part of these unaudited consolidated financial statements.


F-3




AMERI METRO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2017

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Ameri Metro, Inc. (“Ameri Metro” and the “Company”) was formed to engage primarily in high-speed rail for passenger and freight transportation and related transportation projects.  The Company initially intends to develop a Midwest high-speed rail system for passengers and freight.  Currently the Company is engaged in raising capital and entering into relationships in furtherance of its planned activities.

The Company’s activities are subject to significant risks and uncertainties including failure to secure additional funding to properly execute the company’s business plan.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s financial statements filed with the SEC on Form 10K.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the consolidated financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2016 as reported in Form 10K, have been omitted.

Principles of Consolidation

The consolidated financial statements present the financial position, results of operations and cash flows for Ameri Metro, Inc. (“AMI”) and its wholly-owned subsidiary, Global Transportation & Infrastructure, Inc. (“GTI”). Intercompany transactions and balances have been eliminated in consolidation.

The financial position, results of operations and cash flows as of, and for the period reported include only the results of operations for AMI as GTI was not formed until December 1, 2010, and was inactive for the period from December 1, 2010 to April 30, 2017.

NOTE 2 – GOING CONCERN

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated any revenues since inception and is unlikely to generate earnings in the immediate or foreseeable future. As at April 30, 2017, the Company has a working capital deficiency of $22,281,604 and has accumulated losses of $28,366,481 since inception. The ability of Ameri Metro to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations.

Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and on-going operations; however, there can be no assurance the Company will be successful in these efforts. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – DUE TO RELATED PARTIES

At April 30, 2017, the Company is indebted to three directors of the Company for $1,050 (July 31, 2016 - $1,050) for expenditures incurred on behalf of the Company.  The amount is unsecured, non-interest bearing and due on demand.

NOTE 4 – LOANS PAYABLE – RELATED PARTIES

As of April 30, 2017, $1,059,181 (July 31, 2016 - $960,967) is due to the majority shareholder, of which $509,486 is unsecured, non-interest bearing and due on demand, and $7,600 is past due with an interest rate of 2% per annum.  On March 17, 2017, the majority shareholder consolidated six loans and the consolidated loan of $542,095 is due on October 31, 2018 and bears interest at 3.50% per annum.   At April 30, 2017, accrued interest on these loans is $28,896 (July 31, 2016 - $14,068).



F-4

NOTE 5 – LOAN PAYABLE

On January 30, 2014, the Company entered into a short-term loan of $6,000 with an interest rate of 3% per annum and a maturity date of April 30, 2015.  The Company has repaid $2,597 as of April 30, 2017. At April 30, 2017, accrued interest on these loans is $353 (July 31, 2016 - $277). At April 30, 2017, this loan is past due.  

NOTE 6 – CAPITAL STOCK

Preferred Shares: 200,000,000 par value $0.000001 per share. There are 1,800,000 shares of preferred stock outstanding at April 30, 2017.

On November 3, 2014, the Company effected a 4:1 forward stock split of its issued and outstanding shares of common stock.  As of April 30, 2017, 99.71% of the shareholders participated and therefore the statements are retroactively adjusted to reflect a 3.99:1 forward split. Due to the 3.99:1 forward split, the shares increased to 938,192,724, and the shares issuable to effect a 4:1 split is 2,736,000 shares.  As a result, all share amounts have been retroactively adjusted for all periods presented for a 3.99:1 forward split.  Subsequent to April 30, 2017, the Company issued the remaining 2,736,000 shares of common stock.  

On August 4, 2016, the Company issued 104,104 Class B common shares to correct the amount of shares issued to a shareholder as a result of the forward stock split.

On April 30, 2017, the Company issued 43,200,000 shares of Class C common stock at a fair value of $10,800 to the Company’s Founder pursuant to the Employment agreement as described in Note 8.

NOTE 7 – STOCK OPTIONS

On March 8, 2016, the Company adopted a stock option plan named 2016 Equity Incentive Plan, the purpose of which is to help the Company secure and retain the services of employees, directors and consultants, provide incentives to exert maximum efforts for the success of the Company and any affiliate and provide a means by which the eligible recipients may benefit from increases in value of the common stock.  

On March 8, 2016, the Company granted 8,000,000 stock options to 4 officers and directors of the Company, exercisable at $42 per share and expire on March 8, 2026.  The 8,000,000 options vest according to the following schedule: 3,200,000 options vest immediately and 800,000 vest annually for the next 6 years.  The weighted average grant date fair value of stock options granted during the year ended July 31, 2016 was $0.00009 per share.  During the nine months ended April 30, 2017, the Company recorded stock-based compensation of $125 (2016 - $324), as officer payroll on the consolidated statement of operations

On November 1, 2016, the Company granted 14,000,000 stock options to 7 officers and directors of the Company, exercisable at $42 per share and expire on November 1, 2026.  The 14,000,000 options vest according to the following schedule: 5,600,000 options vest immediately and 1,400,000 vest annually for the next 6 years.  The weighted average grant date fair value of stock options granted during the nine months ended April 30, 2017 was $0.00009 per share. During the nine months ended April 30, 2017, the Company recorded stock-based compensation of $675 (2016 - $ nil), as officer payroll on the consolidated statement of operations.

A summary of the Company’s stock option activity is as follow:


 

Number of Options

Weighted Average Exercise Price

$

Weighted Average Remaining

Contractual Term

Aggregate Intrinsic Value

$

Outstanding, July 31, 2015

 

 

 

 

 

 

 

Granted

8,000,000

42.00

 

 

 

 

 

 

 

Outstanding, July 31, 2016

8,000,000

42.00

 

 

 

 

 

 

 

Granted

14,000,000

42.00

 

 

 

 

 

 

 

Outstanding, April 30, 2017

22,000,000

42.00

9.28


F-5




NOTE 7 – STOCK OPTIONS (CONTINUED)

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

 

Nine Months

Ended

April 30,

2017

Nine Months

Ended

April 30,

2016

 

 

 

Expected dividend yield

0%

0%

Expected volatility

150%

150%

Expected life (in years)

10

10

Risk-free interest rate

1.83%

1.83%

A summary of the status of the Company’s non-vested stock options as of April 30, 2017, and changes during the period ended April 30, 2017 and July 31, 2016, is presented below:

Non-vested options:

Number of Options

Weighted Average

Grant Date

Fair Value

$

 

 

 

Non-vested at July 31, 2015

 

 

 

Granted

8,000,000

0.00009

Vested

(3,200,000)

0.00009

 

 

 

Non-vested at July 31, 2016

4,800,000

0.00009

 

 

 

Granted

14,000,000

0.00009

Vested

(6,400,000)

0.00009

 

 

 

Non-vested at April 30, 2017

12,400,000

0.00009

At April 30, 2017, there was $869 of unrecognized compensation costs related to non-vested stock-based compensation arrangements granted under the Plan.  There was $nil intrinsic value associated with the outstanding stock options at April 30, 2017.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Employee Agreements

The Company has entered into an employment agreement with the Chief Executive Officer (“CEO”) Debra Mathias with an effective date of April 21, 2014. The term of the employment agreements is 3 years, with an annual base salary of $1,200,000.  On April 21, 2017, the agreement was extended to April 21, 2021.

The Company has signed an employment agreement for the Head of Mergers and Acquisitions and Business Development, and as non-board member President, Mr. Shah Mathias (Company Founder), with an effective date of October 2, 2014. The term of the employment agreement is 20 years, with an annual base salary of $1,200,000 and ten percent (10%) of any revenue producing contract entered into by the Company while the Company Founder is in office, while holding any position under any title, and five percent (5%) of any such revenue producing contract afterward, for the benefit of the Company Founder or his estate, for a period of twenty (20) years. The Company Founder is also eligible to earn an annual bonus award of up to 100% of the annual base salary.  In addition, the Company Founder is entitled to receive shares of the Company’s common stock as follows: when the Company issue shares for the Initial Public Offering, the Company Founder is to be issued 10% of the said shares; and if shares are issued at such time to any other party the Company Founder is to be issued an equal amount of shares.

The Company has entered into an employment agreement with the Chief Engineer with an effective date of December 3, 2014.  The term of the employment agreement is 3 years, with an annual base salary of $175,000.  The Chief Engineer is also entitled to 1,000,000 post-split shares of Class “B” common stock as a signing bonus.  On December 30, 2014, the Company issued 1,000,000 post-split shares of Class “B” common stock to the Chief Engineer.

 

F-6


 


NOTE 8 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

The Company has entered into a directorship agreement with a Director of the Company with an effective date of June 30, 2015.  The initial term of the directorship agreement is one year, with an annual base salary of $150,000.  The director is also entitled to 1,000,000 post-split shares of Class B common stock. On July 24, 2015, the Company issued 1,000,000 post-split shares of Class B common stock to the director.  On March 17, 2016, the term of the agreement was extended to July 31, 2021.

The Company entered into an employment agreement with the Chief Financial Officer (the “CFO”) with an effective date of August 4, 2015.  The term of the employment agreement is 3 years, with an annual base salary of $350,000.  On March 17, 2016, the term of the agreement was extended to July 31, 2021.  Effective November 1, 2016, the annual base salary was increased to $500,000.

The Company entered into an employment agreement with the Chief Operating Officer (the “COO”) with an effective date of August 4, 2015.  The term of the employment agreement is 3 years, with an annual base salary of $375,000.  On March 17, 2016, the term of the agreement was extended to July 31, 2021.  Effective November 1, 2016, the annual base salary was increased to $500,000.

The Company entered into an employment agreement with the Chief General Counsel with an effective date of August 4, 2015.  The term of the employment agreement is 3 years, with an annual base salary of $500,000.  On March 17, 2016, the term of the agreement was extended to July 31, 2021.

The Company entered into eleven directorship agreements with eleven Directors of the Company.  The initial term of the directorship agreements is one year, with an annual base salary of $150,000.  Each of the eleven directors is also entitled to 1,000,000 shares of Class B common stock. On March 17, 2016, the term of the agreements was extended to July 31, 2021.

On October 19, 2016, the Company appointed three individuals as Directors of the Company and the Audit Committee.   Effective November 1, 2016, the annual compensation for each of the individuals is $120,000.

The Company has entered into an employment agreement with the President of the Company with an effective date of November 1, 2016.  The term of the employment agreement is 3 years, with an annual base salary of $650,000.

The Company has entered into an employment agreement with the Chief Risk Officer of the Company with an effective date of November 1, 2016.  The term of the employment agreement is 3 years, with an annual base salary of $500,000.

The Company has entered into an employment agreement with the Vice CEO of the Company with an effective date of November 1, 2016.  The term of the employment agreement is 3 years, with an annual base salary of $750,000.

The Company has entered into an employment agreement with the Treasurer of the Company with an effective date of November 1, 2016.  The term of the employment agreement is 3 years, with an annual base salary of $600,000.

The Company has entered into an employment agreement with the Non-Executive General Manager of the Company with an effective date of November 1, 2016.  The term of the employment agreement is 3 years, with an annual base salary of $160,000.

Operating Lease

On April 30, 2014, the Company terminated its existing office space lease, and entered into a new month to month rent agreement for office space. The new agreement which commenced on November 1, 2015, calls for monthly rent payments of $1,440. The terminated lease agreement has not been resolved as to payment of existing amounts due in cash or stock, or as to any early termination fees.  As of April 30, 2017, no stock has been issued in payment of rent.

Master Consulting Agreement

On March 20, 2016, the Company entered into a Master Consulting Agreement with Global Infrastructure Finance & Development Authority, Inc. (“GIF&DA”), a division of Hi Speed Rail Facilities, Inc.  Hi Speed Rail Facilities, Inc. is a non-profit entity organized and established by the Founder of the Company.  GIF&DA has or is about to secure all necessary approvals by certain Joint Resolutions enacted by the federal and state(s) governmental agencies Legislature for the construction of a project consisting of financing, construction and operation of Hi Speed Rail Passenger, Freight, Air, Sea, Ground, Other Transportation Projects and other Parallel and Ancillary Infrastructure Projects.


F-7


 

NOTE 8 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Pursuant to the Agreement, the Company was appointed as the agent and representative of GIF&DA to facilitate GIF&DA in securing the first and future phases of financing the project and the construction of the project.  The Company shall receive 1.5% the face amount of each master trust indenture (bond indenture) in consideration for arranging financing and developing the sponsorship mechanism of the project.  The term of the Agreement shall continue until the completion of the project.  At April 30, 2017, the Company has not secured any financing for GIF&DA.  

Agreement for Construction and Agreement of Sale and or Assignment of Assets in Phase One

On August 8, 2016, Company entered into a Construction Agreement with Port De Claudius, Inc. (“PDC”). Pursuant to the Construction Agreement, the Company shall perform all tasks and actions required to develop and construct the Port Trajan Pa. commercial properties (the “Project”) and to secure the first and future phases of the financing applicable to the design, planning, engineering, and related soft and hard costs of the construction of the Project.

The Project consists of two phases, phase one closing to take place on or before October 14, 2016 (“Phase One”) and phase two to take place on or before August 31, 2017. Due to delays in obtaining funding, the August 31, 2017 Phase Two closing date has been pushed back to a yet-to-be-determined future date. Phase One consists of land purchase and onsite /off site improvement and its estimated cost, for both phases, is $2,000,000,000.  PDC agreed to pay the Company 40% of the cost (i.e $800,000,000), plus 2% over the adjustment for the increase in inflation regardless of the cost to the Company to perform the required services.  A mobilization fee of $2,729,514 shall be due and payable by PDC to the Company upon the closing of Bond funding for Phase One. The bond proceeds from the first tranche are expected to be $950,000,000.  

On September 11, 2016, in relation to the August 8, 2016 Construction agreement, the Company, Jewel’s Real-Estate 10-86 Master LLLP (“Jewel”), Global Infrastructure Finance & Development Authority, Inc. (“GIF&DA”), Port De Claudius, Inc., and HSRF Statutory Trust (“HSRF”) entered into an Agreement of Sale and or Assignment of Assets in Phase One pursuant to which the Company agreed to assign and Jewel agreed to sell all rights, title and interest in and to any contractual agreements entered among Ameri Metro, Jewel and other related parties to PDC on completion of Phase One as governed by the Construction Agreement.  The cost of Phase One is $950,000,000. The net Phase One revenue to the Company is expected to be $66,719,514 which includes $33,740,000 from the assignment of the Land Purchase Agreement the Company entered into with Jewel on November 26, 2013, $14,250,000 in consulting fee in relation to the Master Consulting Agreement, $2,729,514 of mobilization fee and $16,000,000 of onsite / offsite improvement fee.  The $66,719,514 revenue will be paid from the proceeds from $950,000,000 bond issuance.  At April 30, 2017, the $950,000,000 bond has not been issued and the land has not been transferred from Jewel to PDC.  

NOTE 9 – INCOME TAXES

For the period ended April 30, 2017, the Company has net losses in addition to prior years’ net taxable losses, the result is a net taxable loss carry-forward, and therefore the Company has no tax liability.  The net deferred tax asset generated by the loss carry-forward has been fully reserved. For the periods ended April 30, 2017 and July 31, 2016, the cumulative net operating loss carry-forward from operations is approximately $7,593,000 and $7,265,000; respectively, and will expire beginning in the year 2030.

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

 

April 30,

2017

July 31,

2016

Net loss before income taxes per financial statements

$      (6,516,258)

$  (4,447,318)

 

 

 

Income tax recovery

2,215,500

2,649,200

Timing difference and other

(2,104,100)

(2,317,600)

Change in valuation allowance

(111,400)

(331,600)

Provision for income taxes


 

 

 

 

April 30,

2017

July 31,

2016

 

 

 

  Net operating loss carryover

$       2,581,500

$       2,470,200

  Valuation allowance

(2,581,500)

(2,470,200)

      Net deferred tax asset

$                     –

$                    –


Due to the change in ownership provisions of the Tax Reform Act of 1986, the net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.

 

F-8



NOTE 9 – INCOME TAXES

For the period ended April 30, 2017, the Company has net losses in addition to prior years’ net taxable losses, the result is a net taxable loss carry-forward, and therefore the Company has no tax liability.  The net deferred tax asset generated by the loss carry-forward has been fully reserved. For the periods ended April 30, 2017 and July 31, 2016, the cumulative net operating loss carry-forward from operations is approximately $7,593,000 and $7,265,000; respectively, and will expire beginning in the year 2030.

The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:


 

April 30,

2017

July 31,

2016

Net loss before income taxes per financial statements

$      (6,516,258)

$  (4,447,318)

 

 

 

Income tax recovery

2,215,500

2,649,200

Timing difference and other

(2,104,100)

(2,317,600)

Change in valuation allowance

(111,400)

(331,600)

Provision for income taxes


 

 

 

 

April 30,

2017

July 31,

2016

 

 

 

  Net operating loss carryover

$       2,581,500

$       2,470,200

  Valuation allowance

(2,581,500)

(2,470,200)

      Net deferred tax asset

$                     –

$                    –


Due to the change in ownership provisions of the Tax Reform Act of 1986, the net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations.

NOTE 10 – SUBSEQUENT EVENT

Subsequent to April 30, 2017, the Company issued an additional 2,736,000 of Class B common stock in connection with the November 3, 2014 stock split.

F-9



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


Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the accompanying unaudited consolidated financial statements and provides additional information on the Company’s businesses, current developments, financial condition, cash flows and results of operations. The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with our Annual Report on Form 10-K for the fiscal year ended July 31, 2016.


Forward-Looking Statements


Except for the historical information contained herein, this Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve risks and uncertainties, including, among other things, statements concerning: our business strategy; liquidity and capital expenditures; future sources of revenues and anticipated costs and expenses; and trends in industry activity generally. Such forward-looking statements include, among others, those statements including the words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or similar language or by discussions of our outlook, plans, goals, strategy or intentions.


Our actual results may differ significantly from those projected in the forward-looking statements. These statements are only predictions and involve known and unknown risks, and uncertainties, that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, we cannot guarantee future results, levels of activity, performance or achievements.


The forward-looking statements we make in this Quarterly Report are based on management’s current views and assumptions regarding future events and speak only as of the date of this report. We assume no obligation to update any of these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements, except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission.

 

14


BUSINESS

 The Business


Since its incorporation, the Company has developed its business plan, appointed officers and directors, engaged initial project consultants and entered into negotiations and contracts for related and ancillary business. The Company is in the process of developing proposals for high-speed rail service.


The Company was incorporated in the State of Delaware and merged with Ameri Metro 2010 on June 12, 2012.  References to the financial condition and performance of the Company below in this section “Management’s Discussions and Analysis of Financial Condition and Results of Operation” are to financial statements of the Company.


The Company, and its wholly owned subsidiary Global Transportation and Infrastructure, Inc., plan to use Private Public Partnerships (“PPP”) for funding of infrastructure projects and transportation projects. The Company is a conduit to provide general contracting services for infrastructure projects and transportation projects. As a conduit we identify infrastructure projects for both private and public end users. The Company will bring together private and public entities, the end users, including the affiliate entities to organize the revenue bond offering, which will be the private debt vehicle to build the infrastructure project for the end user. The Companies ultimate role is providing general contracting services and construction management services for the private and public entities.


As the U.S. and World populations are rapidly increasing and global infrastructure is being surpassed in its ability to safely and adequately provide the effective transportation for sustainable economics, infrastructure is becoming inadequate and dilapidated. Governing authorities’ ability to keep up with preventative maintenance and replacement lacks funding. Studies have consistently shown that the development of infrastructure permeates economic growth. Lack of funding due to global financial crises have sent governments into restructuring their budgets and bail outs have further reduced the possibility for governmental funding.  The Company’s management team has recognized the need for a solution to curb the financial burden on the governments and taxpayer alike.  The Company plans to make use of Private Public Partnerships for these type of projects.


Due to scale and complexity of infrastructure finance much thought has been given by the Company to overall financial requirements, and the functionality of financial structure of the Company’s operations.  The Company’s Founder, Shah Mathias, has organized and established three nonprofit corporations and was an independent consultant of a forth nonprofit (ATFI) for the purpose of facilitating the development of the transportation systems

 

15


1.

Alabama Toll Facilities, Inc. (ATFI)

2.

Hi Speed Rail Facilities, Inc. (HSRF)

3.

Hi Speed Rail Facilities Provider, Inc. (HSFP)

4.

Global Infrastructure Finance & Development Authority (GIF&DA)

Alabama Toll Facilities Inc., High-Speed Rail Facilities, Inc., High-Speed Rail Facilities Provider, Inc. and Global Infrastructure Finance & Development Authority take a comprehensive, intermodal approach to resolving the nation’s transportation crisis, and they propose doing so without the necessity of increasing taxes at any level, or in any manner. In short, they replace pubic financing with private funding.


High-Speed Rail Facilities, Inc., High-Speed Rail Facilities Provider, Inc. and Global Infrastructure Finance & Development Authority are prepared to assume a much larger role with the Company. Having brought together the necessary technical and industrial components to begin work immediately, the Company need not engage in costly, time-consuming pilot programs. Our team of experts is prepared to move expeditiously forward on the widest variety of fronts, from site selection, to trainset construction, to building cooperative ventures with ancillary components of the transportation and accommodation industries nationwide. The Company takes an intermodal approach to providing seamless service with a scale of economy. Specifically, the Company’s paradigm anticipates a fundamental change in the manner in which passenger rail service will be provided. The high-speed rail plan will utilize existing rail rights-of-way to connect several metropolitan areas and states serving expanding populations. The major elements of the plan would include:


·

Use of existing rail rights-of-way to connect rural, small urban and major metropolitan areas;

·

Operation of a "hub-and-spoke" passenger rail system providing service to and through one or more major hubs to locations throughout the United States;

·

Introduction of modern rail equipment operating at speeds exceeding 250 mph;

·

Provision of multi-modal connections to improve system access;

·

Improvement in reliability and on-time performance;

·

Development or expansion of a feeder bus system linking outlying areas to railroad stations;



16



·

Acquiring new train equipment including train sets, including spares;

·

Communications Systems, and grade-crossing improvements;

These three entities play a vital role in financing. The non-profits statues provide a vehicle to issue bonds and help secure infrastructure projects. The non-profit entities have the discretion to turn over the infrastructure projects to the state or the governing body having jurisdiction after it has successfully developed and paid for the projects.  However, in order to support the functionality of financial structure and manage the development of specific projects, sixteen for profit entities have been developed under the Company’s umbrella, The Company will interface with each entity in three separate stages: Stage 1 interface - as consultant for fee, Stage 2 interface – as provider for construction services for fee and Stage 3 interface – as a 25% shareholder (post construction operations revenue). The below entities have no operations, no assets, and no revenues recognized as of April 30, 2017, and a substantial amount of capital needs to be raised for potential future projects that the Company and these entities hope to develop. The sixteen for profit entities are:

1.

HSR Freight Line, Inc.

2.

HSR Passenger Services, Inc.

3.

HSR Technologies, Inc.

4.

HSR Logistics, Inc.

5.

KSJM International Airport, Inc.

6.

Port of Ostia, Inc.

7.

Port of De Claudius, Inc.

8.

Ameri Cement, Inc.

9.

Lord Chauffeurs LTD.

10.

Atlantic Energy & Utility Products, Inc.

11.

Penn Insurance Services LLC

12.

Cape Horn Abstracting

13.

Eastern Development & Design, Inc.

14.

Slater & West, Inc.

15.

Malibu Homes, Inc.

16.

HSRF Trust

1) HSR Freight line, Inc. This company will handle all services for use of track time and train sets for freight and provide freight forwarding services, for fee. For example HSR Freight Line, Inc. intends to offer high speed rail, freight forwarding and parcel handling services to existing national and global carriers. Carriers will be able to lease train sets with their trade logos and slogans in their own color schemes for fee schedule that varies depending on am, mid-day and pm time frames, in addition to toll fees for track time, similar to carriers paying tolls on turnpikes, for the faction of the cost as opposed to independently developing a freight corridor.

2) HSR Passenger Services, Inc. This company will handle all ticketing, booking, reservations, food & beverage services, hotel booking and car rental booking services. HSR Passenger Service Inc. will offer concession space at the travel plazas, technology parks and develop motels, hotels, fast food restaurant establishments and convenience stores.

 

3) HSR Technologies, Inc.  This company will handle all build to suit manufacturing facilities for train sets and centralized signalization services along the rail road tracks and train stations. Within the technology parks HSR Technologies, Inc. will be to sole provider of all fiber optics, telecommunication and all related technologies services including equipment maintenance.



17




A.

Maintenance for train engines, rail cars and rail track through a maintenance agreement with equipment lease holders.

B.

Total maintenance for all Industrial sites for assembly plants, train stations, train terminals, manufacturing plants, parts distribution centers, rail roads, rail crossings, rail yards, cargo terminals, parking lot, parking garages, hotel, motels, food and beverage vending machines, all retail shopping centers, office complexes and all on/off site improvements.

C.

The airline industry is congested throughout existing terminal space. The proposed KSJM International Airport in Alabama will offer services to eliminate burden on existing terminal space for airline carriers. Federal Aviation Administration (FAA) certified inspection stations to service the airline industry. Also providing marine services, oil platforms and petro chemical industry services due to proximity to the Gulf of Mexico. Also Federal Rail Administration (FRA) and America Public Transportation Association (APTA) structural safety specification inspection services for rail industry.


4) HSR Logistics, Inc. This company will handle coordination, delivery and movement of all machinery equipment, material goods and will operate all warehousing facilities at:

1) HSR Freight Line, Inc.

2) HSR Passenger Services, Inc.

3) HSR Technologies, Inc.

4) HSR Logistics, Inc.

5) KSJM International Airport, Inc.

6) Port of Ostia, Inc.

7) Port of De Claudius, Inc.

8) Ameri Cement, Inc.

9) Lord Chauffeurs LTD.

10) Atlantic Energy & Utility Products, Inc.

5) KSJM International Airport, Inc. This company will be a master airport facility, and will provide four types of airport terminals and one international airline inspection service terminals operated by HSR Technologies Inc.:

a)

Passenger Terminals, operated by HSR Passenger Services Inc.

b)

Air Cargo Terminals, operated by Port of Ostia, Inc.

c)

Corporate Jet Center Terminal, operated by Lord Chauffeurs LTD

d)

International Airline, FAA inspections maintenance service terminals, operated by KSJM International Airport, Inc.

e)

Domestic Airline FAA inspection maintenance service terminals, operated by HSR Technologies Inc.



18



6) Port Of Ostia, Inc. This company will handle all international and domestic Air Cargo and supporting ground services such as freight forwarding services are provided by HSR Freight line, Inc. and air and ground logistics are provided by HSR Logistics, Inc.


7) Port of De Claudius, Inc. This company will handle all international and domestic inbound outbound sea container inland port operation and warehouse distribution center.


8) Ameri Cement, Inc. This company will handle all cement needs for building (357 miles four lane) Alabama Toll Road "ATFl” and others future projects.


9) Lord Chauffeurs LID. This company will operate all passenger ground transportation car service limo and taxi, as well as the corporate jet center.


10) Atlantic Energy & Utility Products, Inc. This company will provide to all of above entities, electric, gas, water, sanitary sewer service, trash removal, cable TV, Dish network and internet services. Petroleum products and services will also be provided during and after construction, along with fuel services on the toll road, all industrial and technology parks, including the airport, inland ports and incoming and outgoing vessels.


11) Penn Insurance Services LLC. This company will provide all insurance services to all entities and risk management services for all entities, but not limited to the entities.


12) Cape Horn Abstracting. This company will provide all-land title examination services for all entities to insure against any pre closing and post-closing claims of ownership or deed restriction.


13) Eastern Development & Design, Inc. This company will provide all civil engineering and architectural services, with very strong cost control measures in place eliminating engineering and architectural cost over runs.


14) Slater & West, Inc. This company will provide contract administration services and handles all work force human resource matters, providing background checks, loss prevention services, vendor invoice verification against goods and services provided, to clear invoice for payment.


15) Malibu Homes, Inc. This company will provide residential home building services.


16) HSRF Trust. This company is a statutory trust administrator of private and public funds and safeguards the bondholder's interest. No money moves to any parties without trust authorization.


The major elements of the infrastructure projects nationally would include:


Trade and Transportation Corridors

·

Development of container ports for Class C, D and E ships

·

Development of inland transportation corridors including new greenfield highways and railroads

·

Building of inland ports and multimodal transportation centers

·

Development of new urban centers along the new infrastructure

·

Development of ancillary facilities including airport (express service), distribution centers, and logistics centers.


High Speed Rail

·

Development of modern rail equipment operating at speeds exceeding 250 mph



19



·

Use of existing rail rights-of-way to connect rural, small urban and major metropolitan areas

·

Track improvement, including replacement and upgrades, additional sidings, signal and communications systems, and grade-crossing improvements

·

Building of new greenfield routes

·

Construction or improvement of railroad grade crossings and passenger stations

·

Acquiring new train equipment including train sets and spares


Transportation Infrastructure

Development of new road systems to accommodate driverless cars and trucks, including electric cars and infrastructure to support the highway and rail systems that will be used in Trade and Transportation Corridors and the High Speed Rail Systems.


Supporting Ancillary Development

·

Development or expansion of a feeder bus system linking outlying areas to railroad stations

·

Operation of a "hub-and-spoke" passenger rail system providing service to and through one or more major hubs to locations throughout the United States

·

Provision of multi-modal connections to improve system access, hotels, retail, parking garages, sorting facilities / distribution facilities


Supporting Transportation Systems

·

Ancillary development opportunities, airports, inland ports, sea ports, toll roads and technology parks


The following discussion outlines the steps that the Company anticipates that will occur in regard to the adoption and implementation of Trade and Transportation and a high-speed rail system by a regional or local municipality.  To date, the Company has not developed any rail systems. 


The Company plans that it will prepare the feasibility and Investment Grade studies and locate contractors and manufacturers to complete work and provide cost estimates. Trade and Transportation corridors use technology well known to US contractors, however, because high-speed rail travel is already in-place in much of Europe and Asia, the Company anticipates working with European companies to furnish the high-speed equipment, such as locomotives and passenger cars.

 

The Company will put proposed contracts together with the supporting feasibility study, appraisals, cost/benefit analysis, TEMS study, transportation history and other data to create a complete regional project proposal.  The Company will then present such project proposals to the municipalities (state or local) as a complete and finished project. The local or regional municipality will then independently analyze and discuss the Company's proposal.  If accepted, the Company anticipates that, upon approval, the local municipality will effectuate a bond offering for the funding of the different projects.  The Company anticipates that the projects will be financed by bonds or indentures offered by sponsored or affiliated non-profit organizations of the applicable local or municipal government or agency.  Such non-profit entities may also be affiliates or companies related to the Company.


Once a proposed Trade and Transportation or high-speed rail project is accepted and a financing bond issue is effected by the municipality, the Company will act as the project manager and oversee the entire project including not only the development of the project but its continued operations as well. The Company will also serve as the main central point for coordination of and between the municipalities, contractors, and operators of the project and once established, the rail system.

 

20


Hi Speed Rail Facilities, Inc.  

In 2010, the Company entered into an agreement with HSRF (one of the Company's related nonprofit companies) The Company per agreement will be responsible for construction of projects while the nonprofit will be responsible for financing construction and operation of various high speed rail and related projects across the United States. HSRF is designed to focus on the building of train tracks and stations.  Pursuant to the agreement between the Company and HSRF, the Company will act as the agent and representative of HSRF to perform all required tasks and actions to develop and construct such projects. The Company anticipates that having this agreement in place and by having HSRF already organized will expedite the process of commencing a project once the Company designs and develops and secures or raises funds to commence a project upon approval of this registration Statement.


Hi Speed Rail Facilities Provider, Inc.

In 2010, the Company entered into a written agreement with HSRFP (one of the Company's related nonprofit companies). The Company per agreement will be responsible for construction of projects while the nonprofit will be responsible for financing construction and operation of various high speed rail and related projects across the United States. Pursuant to such agreement between the Company and HSRFP, the Company was appointed as the agent and representative of HSRFP to perform all required tasks and actions to develop and construct such projects. HSRFP was organized to provide a vehicle to issue bonds and help secure infrastructure projects for the Company, focusing on facilities ancillary to the high speed rail, such as rail yards, rail assembly plants maintenance facilities. The Company anticipates that having this agreement in place and by having HSRF already organized will expedite the process of commencing a project once the Company secures approval of this registration Statement.


ING Investment Management

Each of the nonprofits has entered into an investment management agreement with ING Investment Management to manage any funds raised in bond offerings and to provide its investment advisory services.  This non-binding agreement would only take effect upon the raising of revenue bonds, which to date has not occurred.  ING Investment Management would serve to invest, reinvest and supervise the management of any such funds raised, for any project in the future, while such funds were held in an investment account and until use for the intended funds are needed for project purposes. The Company has not yet commenced raising funds through any bond offerings.


Supporting Information

To support the Company’s business plan, the United States Census Bureau predicts that the American population will reach 420 million by 2050, a trend that will overwhelm our nation’s transportation infrastructure.


Current estimates suggest that overall freight demand will double over the next 40 years from 15 billion tons today to 30 billion tons. The number of trucks on the road is also expected to double. Already under unsustainable strain, the nation’s freight transportation infrastructure and highways will face even greater challenges as the total volume of freight increases.


Extensive infrastructure expansion, such as new ports, trade corridors and high-speed rail (HSR), is critical if rail and road transportation is to help mitigate problems associated with rising fuel costs, crowded highways, and greenhouse gas emissions. Population growth and development in the U.S. have made our nation increasingly reliant on rail and highway infrastructure to transport people and freight.

Clearly, a strong, efficient freight transportation system is vital to the nation’s economy. Our already-strained and outdated railways must be upgraded to handle the projected increases in freight shipping to relieve congestion on our highways. New trade corridors are needed to support the changes in marine shipping that will need new ports and infrastructure. Equally, new high speed rail routes are needed to increase connectivity between US cities and support the emerging new economy, and reduce auto emissions.

 

21

 

Company Focus

The Company recognizes the $57 Trillion Dollar Infrastructure Market as identified in McKinsey’s report, the need and demand for alternative transportation such as, high speed rail, sea ports, intermodal ports and toll roads. The Boeing reports and Society of Civil Engineers reports identify the need for more efficient port operations and infrastructure projects to be completed to satisfy the demands and growth of the United States. It is increasingly important as the United States adopts policies to attempt to reduce its dependency on fossil fuels and to improve its infrastructure and transportation systems for global competiveness. The Company’s intention is to profit from such opportunities and has structured itself to be the leading provider of such services in the United States and globally.

The Company is focusing on the following means to create efficient freight transportation:

?

Increase port capacity to increase our nation’s ability to distribute goods, making us more competitive in the global economy.

?

Develop larger, rail-served, inland distribution centers that will encourage more efficient movement of goods and create more capacity at ports.

?

Permit increased volume and speed of inland heavy freight, allowing inland distribution points to expand into larger, national service hubs and promote economic growth.

?

Develop profitable high speed rail for the fast movement of people and goods.

Management believes that development of the Trade and Transport Corridors and High Speed Rail Corridors will result in significant franchise operations. These include –


Ø

Fuel: The Company will franchise fuel and energy for vehicles moving in the corridors it develops.

Ø

Corridor Centers for Food/Restaurants/Hotels: Food/restaurants and hotels at major intersections and terminal areas associated with its Trade, Toll and Rail corridors.

Ø

Logistic Technology Applications: The Company will develop advanced High Speed operations for Truck and Rail freight and passenger operations. High Speed Truck Lanes, truck trains and automatic truck operations will be included in the Company’s Toll Roads. High Speed Rail Freight and Passenger operations with train speeds exceeding 250 mph will be developed.

Ø

Pipelines: Pipeline operations will be developed where appropriate to facilitate crude oil movements to coastal refineries from inland oil fields and facilities.

Ø

Cable: Cable will be laid along the Company corridors to increase capacity for phone line operators.

Ø

Parking: Parking facilities will be developed at critical network locations and at network nodes.

Ø

Advertising: Advertising facilities will be developed as appropriate along the project corridors and key locations at Terminals and Facilities.



22



Ø

Franchise Zones: The Company has developed a nationwide franchise Zone System that it will use with both projects and products. The franchise zone system allows the Company to recognize regional differences in pricing and franchising its market products.

Franchise Zones


[f10q20170430002.gif]


ZONE 1: CA, NV, OR, WA
ZONE 2: FL, GA, NC, SC
ZONE 3: ME, NH, MA, RI, CT, VT
ZONE 4: DC, DE, MD, NJ
ZONE 5: NY, OH, PA, VA, WV
ZONE 6: AL, KY, MS, TN
ZONE 7: AR, IL, IN, LA, MO
ZONE 8: OK, TX
ZONE 9: IA, MI, MN, WI
ZONE 10: NE, MT, ND, SD
ZONE 11: CO, KS, NM, WY
ZONE 12: AZ, ID, UT

Entry of the Company into the Market


The Company anticipates that it can offer a comprehensive, innovative approach to resolving the nation’s transportation crisis. And it proposes doing so without the necessity of the government increasing taxes at any level, or in any manner. In short, the Company suggests replacing public financing with private funding.


The primary competitive barrier most companies face in attempting to impact the nation’s infrastructure crisis is that they approach the overall problem in disparate segments. For example, one provider proposes building railroad cars, while another proposes laying tracks. A third is interested in depots, while a fourth focuses on accommodations. None bring a comprehensive plan for full-funding to the mix. On the other hand, the Company takes an intermodal approach to providing seamless service with a scale of economy. For example the high-speed rail plan will utilize existing rail rights-of-way to connect several metropolitan areas and states serving expanding populations.




23



The Company through related parties also foresees pursuing joint ventures with other industries related to the transportation industry. For example, HSR Technologies it is currently finalizing an arrangement with a major manufacturer of certain materials used in the construction of highways and other transportation systems. The discussions contemplate a two-fold transaction by which the Company would initially buy the manufacturing plant and then subsequently purchase the remaining non-cash assets of the Company.


Competition


The Company may face significant competition from other companies that may be developing competing transportation systems.  The Company will, however, face competition in the allocation of monetary resources from governmental agencies, at the local, regional, state and federal levels. The Company believes that government agencies will strongly endorse its proposed plan for high-speed regional rail systems, but believes that, given the economic environment, there may be few or no funds available for such development.


Nevertheless, as an example, traditionally significant competition generally exists in the industry, from government agencies and entities. Due to the federal budgetary constraints, henceforth any completion would come from private or public entities. On the heels of the Department of Transportation’s recent request for high-speed rail proposals, its Federal Railroad Administration received 132 applications from 32 states totaling $8.8 billion. That was more than three times the $2.4 billion available. During the first round of awards in the fall of 2009, applicants submitted more than $55 billion in project proposals. That was nearly six times the initial $8 billion available from the American Recovery and Reinvestment Act. Unfortunately, due to federal budgetary setbacks, as of early 2017, very little of this has come to fruition.


Trading Market


While there currently is no market for the shares, the Company as obtained the trading symbol “ARMT” from FINRA.


Employees


In addition to the Chief Executive Officer, the Company has been accruing salaries for employees and twenty six other persons who are working on behalf of the Company to assist in the development of its initial high-speed rail project. None of the twenty six people currently receive salaries or other compensation. The Company has also issued stock to individuals, for their consulting and professional services. At the time the Company launches its planned IPO, the Company will pay the accrued salaries to the employees.


Subsidiaries


The Company has one subsidiary, Global Transportation & Infrastructure Inc. (“GTI”) incorporated in the state of Delaware. GTI is a wholly owned subsidiary of the Company.  The Company owns 25% of each of the companies listed in the section “Related Companies”.  


Reports to Security Holders


The Company is a reporting company pursuant to the Securities Exchange Act of 1934 and files with the Securities and Exchange Commission quarterly, annual, periodic and other reports.  The Company intends to deliver a copy of its annual report to its security holders, and will voluntarily send a copy of the annual report, including audited financial statements, to any registered shareholder who requests.  The Company’s documents filed with the Securities and Exchange Commission may be inspected at the Commission’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The Securities and Exchange Commission also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. All of the Company’s filings may be located under the CIK number 0001534155.

 

24

 

Results of Operations


Comparison of the Three Months Ended April 30, 2017 and 2016.

 

The Company has no source of continuing revenues and received no revenues for the three months ending April 30, 2017 and 2016.   For the three months ended April 30, 2017 and 2016, the Company had total operating expenses of $2,391,269 and $1,795,080, respectively and net losses of $2,396,215 and $1,796,272, respectively. The increase in operating expenses and net loss resulted primarily from increases in officer payroll and audit committee fees.


Comparison of the Nine Months Ended April 30, 2017 and 2016.

 

The Company has no source of continuing revenues and received no revenues for the nine months ending April 30, 2017 and 2016.   For the nine months ended April 30, 2017 and 2016, the Company had total operating expenses of $6,501,354 and $6,241,584, respectively and net losses of $6,516,258 and $6,243,590, respectively. The increase in operating expenses and net loss resulted primarily from reductions in professional fees and director’s fees, offset by increases in audit committee fees and officer payroll.


Liquidity and Capital Resources


Our cash, current assets, total assets, current liabilities and total liabilities as of April 30, 2017 and July 31, 2016 were as follows:


  

April 30, 2017

July 31, 2016

Cash

 $ 371

$    27,160

Total current assets

  6,371

35,838

Total assets

  11,162

 41,023

Total current liabilities

  22,287,975

 16,355,273

Total liabilities

  22,830,070

 16,355,273


Cash Requirements


We had $371 in cash and cash equivalents as of April 30, 2017.  Our cash used in operations for the nine months ended April 30, 2017 was $125,003. We had a net loss for the nine months ended April 30, 2017 of $6,516,258. We had an accumulated deficit of $28,366,481 at April 30, 2017. Our cash on hand is not sufficient to cover our monthly expenses and we continue to seek financing in the form of debt or stock sales to finance our operations. There can be no assurance the Company will be successful in these efforts.


Sources and Uses of Cash


Operations

For the nine months ended April 30, 2017, our net cash used in operating activities was $125,003, which consisted primarily of our net loss of $6,516,258, offset primarily by increases in accrued expenses of $6,386,436. For the nine months ended April 30, 2016, our net cash used in operating activities was $164,956 which consisted primarily of our net loss of $6,243,590 offset by an increase in accrued expenses of $5,332,867 and an increase in accounts payable of $773,409.

 

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Financing

For the nine months ended April 30, 2017, our net cash provided by financing activities was $98,214, which consisted of proceeds from related party loans. For the nine months ended April 30, 2016 our net cash provided by financing activities was $220,567, which consisted primarily of proceeds from related party loans of $252,914 less repayments of related party loans of $32,619.


Related Party Transactions

At April 30, 2017, the Company is indebted to three directors of the Company for $1,050 (July 31, 2016 - $1,050) for expenditures incurred on behalf of the Company.  The amount is unsecured, non-interest bearing and due on demand.

As of April 30, 2017, $1,059,181 (July 31, 2016 - $960,907) is due to the majority shareholder, of which $509,486 is unsecured, non-interest bearing and due on demand, and $7,600 is past due with an interest rate of 2% per annum, On March 17, 2017, the majority shareholder consolidated six loans and the consolidated loan of $542,095 is due on October 31, 2018 and bears interest at 3.50% per annum.   At April 30, 2017, accrued interest on these loans is $28,896 (July 31, 2016 - $14,068).


Going Concern


The Company has negative working capital, has incurred losses since inception, and has not yet received significant revenues from sales of products or services. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.


The ability of Ameri Metro to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and on-going operations; however, there can be no assurance the Company will be successful in these efforts.  The Company has recently had meetings with certain groups and municipalities regarding proposed transportation infrastructure projects, and it has also met with potential investors for these projects; in addition, it recently filed a stock registration statement (Form S-1) so stock can be issued to raise $60,000,000 of funding (the registration statement has not yet gone effective).


Critical Accounting Policies


The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of 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.


The Company believes that the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its financial statements:




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Use of Estimates


The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.


Share-based payments


The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.  The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.


The Company follows ASC Topic 505-50, formerly EITF 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services, for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the

option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.


Recent Accounting Pronouncements


For the three month period ended April 30, 2017, there were no accounting standards or interpretations issued that are expected to have a material impact on our financial position, operations or cash flows.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a smaller reporting company, we are not required to provide the information required by this Item.


Item 4. Controls and Procedures.

We conducted an evaluation, with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of April 30, 2017, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate

to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of April 30, 2017, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K. However management is focused on putting in place effective controls.



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Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report, the three month period ended April 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are currently no pending, threatened or actual legal proceedings in which the Company or any of its directors are a party.


Item 1A. Risk Factors.

 

As a smaller reporting company, we are not required to provide the information required by 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 Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Not applicable.


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Item 6.  Exhibits.

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.   

 

Exhibit Index


3.1

Articles of Incorporation (filed with the Form 10 November 9, 2011)

3.2

Amended by-laws (filed as part of the Form 8-K/A filed January 18, 2013)

3.3

Cert. of Amendment Cert. of Incorporation of Ameri Metro

5.0

Opinion of Counsel on legality of securities being registered (filed with the Registration Statement on Form S-1 filed June 13, 2013)

10.1

Master Indenture Agreement of Alabama Toll Facilities, Inc. (filed with the Form 8-K January 18, 2013)

10.2

Master Indenture Agreement of Hi Speed Rail Facilities, Inc. (filed with the Form 8-K January 18, 2013)

10.3

Master Indenture Agreement of Hi Speed Rail Facilities Provider, Inc. (filed with the Form 8-K January 18, 2013)

10.4

June 12, 2012 Agreement and Plan of Reorganization (filed as part of the Form 8-K/A filed January 18, 2013)

10.5

TEMS engagement (filed as part of the Form 8-K/A filed January 18, 2013)

10.6

Alabama Indenture Agreement (filed as part of the Form 8-K/A filed January 18, 2013)

10.7

High Speed Rail Indenture Agreement (filed as part of the Form 8-K/A filed January 18, 2013)

10.8

Damar Agreement (filed as part of the Form 8-K/A filed January 18, 2013)

10.9

Alabama Legislative Act 506 (filed as part of the Form 8-K/A filed January 18, 2013)

10.10

Form of subscription agreement for sale of the shares (filed with the Registration Statement on Form S-1 filed June 13, 2013)

10.11

Letter of Intent for Port Trajan property (filed with the Registration Statement on Form S-1 filed June 13, 2013)

10.12

Intended use of Master Trust Indentures (filed with the Form 8-K May 12, 2016)

10.13

Economic Impact Surface Transportation (filed with the Form 8-K May 12, 2016)

10.13

Alabama House Joint Resolution H. J. R. 459 & H. J. R. 456 (filed with the Form 8-K May 12, 2016)

10.14

Government Resolutions (filed with the Form 8-K May 12, 2016)

10.15

Market Conditions for Bond Portfolio (filed with the Form 8-K May 12, 2016)

10.16

Ameri Metro Inc. Pipeline TEMS Report (filed with the Form 8-K May 12, 2016)

10.17

Appalachian Regional Commission Corridor Documents (filed with the Form 8-K May 12, 2016)

10.18

HSR Passenger Services Inc. for Florida-Alabama TPO Indenture (filed with the Form 8-K May 12, 2016)

10.19

ATFI 2016 Documents (filed with the Form 8-K May 12, 2016)

10.20

Mobil Trade Corridor (filed with the Form 8-K May 12, 2016)

10.21

Atlantic Energy and Utilities Documents (filed with the Form 8-K May 12, 2016)

10.22

High Speed Rail Facilities Inc. Master Trust Indenture Documents (filed with the Form 8-K May 12, 2016)

10.23

HSR Freight and Passenger for Port Freeport Brazoria Texas Documents (filed with the Form 8-K May 12, 2016)

10.24

High Speed Rail Facilities Provider Inc. Master Trust Indenture Documents (filed with the Form 8-K May 12, 2016)

10.25

Port Ostia Air Cargo Documents (filed with the Form 8-K May 12, 2016)

10.26

Portus De Jewel Mexico Documents (filed with the Form 8-K May 12, 2016)

10.27

KSJM International Airport Documents (filed with the Form 8-K May 12, 2016)

10.28

HSR Freight Line Inc Phil. Regional Port Authority Documents (filed with the Form 8-K May 12, 2016)

10.29

HSR Freight Line Inc. Documents (filed with the Form 8-K May 12, 2016)



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10.30

HSR Passenger Services, Inc. Documents (filed with the Form 8-K May 12, 2016)

10.31

HSR Technologies Documents (filed with the Form 8-K May 12, 2016)

10.32

Malibu Homes Inc. Documents (filed with the Form 8-K May 12, 2016)

10.33

Platinum Media Inc Documents (filed with the Form 8-K May 12, 2016)

10.34

Port of De Claudius Inc Documents (filed with the Form 8-K May 12, 2016)

10.35

Lord Chauffeurs LTD Documents (filed with the Form 8-K May 12, 2016)

10.36

Michigan COAST-TO-COAST PASSENGER RAIL Documents (filed with the Form 8-K/A May 12, 2016)

10.37

New York Washington HS Rail Corridor Documents (filed with the Form 8-K/A May 12, 2016)

10.38

Port of Ostia Inc. Ann Charles International Cargo Airport Brazoria Tx Indentures Documents (filed with the Form 8-K/A May 12, 2016)

10.39

Texas International Trade Corridor Documents (filed with the Form 8-K/A May 12, 2016)

10.40

Ameri Metro AMGTI Overview Report (filed with the Form 8-K/A May 12, 2016)

10.41

Land Purchase Agreement (filed with the Form 8-K/A May 12, 2016)

10.42

Master Consulting Agreement (filed with the Form 8-K/A May 12, 2016)

10.43

Master Trustee Agreement (filed with the Form 8-K/A May 12, 2016)

10.44

Virginia Crescent Line (filed with the Form 8-K/A May 12, 2016)

31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

32.2

CERTIFICATION OF PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002


____________________

* Filed herewith

** To be filed

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.


June 14, 2017

/s/ Debra Mathias

Title: Chief Executive Officer

 (Principal executive officer)



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