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, 2018
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________to _____________
Commission file number: 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.) |
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2575 Eastern Blvd. Suite 211 York, Pennsylvania |
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17402 |
(Address of principal executive offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (717) 434-0668
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 [ X ] No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
[ ] Yes [ X ] No
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", "non-accelerated filer", "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ X ] | Smaller reporting company [X] |
Emerging growth company [ ] | |
1
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [ X ] No
Indicate the number of shares outstanding of each of the registrant's classes of preferred stock and common stock as of the latest practicable date.
Class | Outstanding at December 27, 2019 |
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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 | 1,062,522,134 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 |
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AMERI METRO, INC.
TABLE OF CONTENTS
April 30, 2018
INDEX
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PART I – FINANCIAL INFORMATION |
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Item 1. | Condensed Consolidated Financial Statements |
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| Condensed Consolidated Balance Sheets as of April 30, 2018 (unaudited) and July 31, 2017 | F-1 |
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| Condensed Consolidated Statements of Operations for the Three Months and Nine Months ended April 30, 2018 and 2017 (unaudited) |
F-2 |
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| Condensed Consolidated Statements of Stockholders’ Deficit for the Nine Months ended April 30, 2018 and 2017 (unaudited) |
F-3 |
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| Condensed Consolidated Statements of Cash Flows for the Nine Months ended April 30, 2018 and 2017 (unaudited) |
F-5 |
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| Notes to Condensed Consolidated Financial Statements (unaudited) | F-6 |
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 4 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 6 |
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Item 4. | Controls and Procedures | 7 |
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PART II – OTHER INFORMATION | ||
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Item 1. | Legal Proceedings | 7 |
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Item 1A. | Risk Factors | 7 |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 7 |
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Item 3. | Defaults Upon Senior Securities | 7 |
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Item 4. | Mine Safety Disclosures | 7 |
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Item 5. | Other Information | 7 |
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Item 6. | Exhibits | 8 |
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Signatures |
| 10 |
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PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
AMERI METRO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| April 30, | July 31, |
ASSETS | (Unaudited) |
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Current assets |
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Cash and cash equivalents | $ 541 | $ – |
Prepaid expenses and deposits | 2,940 | 2,940 |
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Total Current Assets | 3,481 | 2,940 |
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Office equipment, net | 1,325 | 1,720 |
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Total Assets | $ 4,806 | $ 4,660 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Liabilities |
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Current liabilities |
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Accounts payable and accrued expenses | $ 1,154,828 | $ 286,749 |
Accrued expenses – related party | 966,412 | 18,741 |
Accrued compensation expenses – related parties | 29,633,785 | 23,220,245 |
Loans payable – related parties | 972,165 | 521,539 |
Stock payable | 13,281 | 13,281 |
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Total Current Liabilities | 32,740,471 | 24,060,555 |
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Loans payable – related parties | – | 373,695 |
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Total Liabilities | 32,740,471 | 24,434,250 |
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Commitments and contingencies (Note 7) |
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Stockholders’ Deficit |
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Preferred stock, par value $.000001, 200,000,000 shares authorized, | 2 | 2 |
Common stock class A, par value $.000001, 7,000,000 shares authorized, 1,600,000 shares issued and outstanding | 2 | 2 |
Common stock class B, par value $.000001, 4,000,000,000 shares authorized, 990,890,659 shares issued and outstanding | 991 | 991 |
Common stock class C, par value $.000001, 4,000,000,000 shares authorized, 48,000,000 shares issued and outstanding | 48 | 48 |
Common stock class D, par value $.000001, 4,000,000,000 shares authorized, 48,000,000 shares outstanding | 48 | 48 |
Additional paid in capital | 5,593,844 | 5,593,594 |
Stock subscriptions receivable | (47,000) | (47,000) |
Accumulated deficit | (38,283,600) | (29,977,275) |
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Total Stockholders’ Deficit | (32,735,665) | (24,429,590) |
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Total Liabilities and Stockholders’ Deficit | $ 4,806 | $ 4,660 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-1
AMERI METRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended April 30, 2018 | Three months ended April 30, 2017 | Nine months ended April 30, 2018 | Nine months ended April 30, 2017 |
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OPERATING EXPENSES |
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General and administrative | $ 2,510,048 | $ 2,380,471 | $ 8,271,407 | $ 6,490,556 |
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TOTAL OPERATING EXPENSES | 2,510,048 | 2,380,471 | 8,271,407 | 6,490,556 |
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LOSS FROM OPERATIONS | (2,510,048) | (2,380,471) | (8,271,407) | (6,490,556) |
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OTHER INCOME (EXPENSE) |
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Interest expense | (11,707) | (4,946) | (34,918) | (14,904) |
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TOTAL OTHER INCOME (EXPENSE) | (11,707) | (4,946) | (34,918) | (14,904) |
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NET LOSS | $ (2,521,755) | $ (2,385,417) | $ (8,306,325) | $ (6,505,460) |
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LOSS PER SHARE (BASIC AND DILUTED) | $ (0.00) | $ (0.00) | $ (0.01) | $ (0.01) |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (BASIC AND DILUTED) | 1,088,490,659 | 1,042,923,980 | 1,088,490,659 | 1,042,595,303 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
AMERI METRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED APRIL 30, 2018
(Unaudited)
| Preferred Stock | Common Stock | Common Stock | Common Stock | Common Stock | Additional Paid-in | Stock Subscription | Accumulated |
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| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Deficit | Total |
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Balance, August 1, 2017 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,890,659 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,593,594 | $ (47,000) | $ (29,977,275) | $ (24,429,590) |
Stock-based compensation | – | – | – | – | – | – | – | – | – | – | 106 | – | – | 106 |
Net loss | – | – | – | – | – | – | – | – | – | – | – | – | (3,292,716) | (3,292,716) |
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| – | – | – | – |
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Balance, October 31, 2017 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,890,659 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,593,700 | $ (47,000) | $ (33,269,991) | $ (27,722,200) |
Stock-based compensation | – | – | – | – | – | – | – | – | – | – | 75 | – | – | 75 |
Net loss | – | – | – | – | – | – | – | – | – | – | – | – | (2,491,854) | (2,491,854) |
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| – | – | – | – |
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Balance, January 31, 2018 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,890,659 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,593,775 | $ (47,000) | $ (35,761,845) | $ (30,213,979) |
Stock-based compensation | – | – | – | – | – | – | – | – | – | – | 69 | – | – | 69 |
Net loss | – | – | – | – | – | – | – | – | – | – | – | – | (2,521,755) | (2,521,755) |
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Balance, April 30, 2018 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,890,659 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,593,844 | $ (47,000) | $ (38,283,600) | $ (32,735,665) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
AMERI METRO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED APRIL 30, 2017
(Unaudited)
| Preferred Stock | Common Stock | Common Stock | Common Stock | Common Stock | Additional Paid-in | Stock Subscription | Accumulated |
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| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Deficit | Total |
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Balance, August 1, 2016 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,670,483 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,592,682 | $ (47,000) | $ (21,125,156) | $ (15,578,383) |
Adjustment to shares as result of prior stock split | – | – | – | – | 104,104 | – | – | – | – | – | – | – | – | – |
Stock-based compensation | – | – | – | – | – | – | – | – | – | – | 47 | – | – | 47 |
Net loss | – | – | – | – | – | – | – | – | – | – | – | – | (1,698,055) | (1,698,055) |
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Balance, October 31, 2016 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,774,587 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,592,729 | $ (47,000) | $ (22,823,211) | $ (17,276,391) |
Stock-based compensation | – | – | – | – | – | – | – | – | – | – | 645 | – | – | 645 |
Net loss | – | – | – | – | – | – | – | – | – | – | – | – | (2,421,988) | (2,421,988) |
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Balance, January 31, 2017 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,890,659 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,593,374 | $ (47,000) | $ (25,245,199) | $ (19,697,734) |
Stock-based compensation | – | – | – | – | – | – | – | – | – | – | 110 | – | – | 110 |
Net loss | – | – | – | – | – | – | – | – | – | – | – | – | (2,385,417) | (2,385,417) |
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Balance, April 30, 2017 | 1,800,000 | $ 2 | 1,600,000 | $ 2 | 990,890,659 | $ 991 | 48,000,000 | $ 48 | 48,000,000 | $ 48 | $ 5,593,484 | $ (47,000) | $ (27,630,616) | $ (22,083,041) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
AMERI METRO, INC.
CONDENSED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine months ended April 30, 2018 | Nine months ended April 30, 2017 |
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss | $ (8,306,325) | $ (6,505,460) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation expense | 395 | 394 |
Stock-based compensation | 250 | 802 |
Changes in operating assets and liabilities: |
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Prepaid expense and deposits | – | 8,678 |
Other receivable | – | (6,000) |
Accounts payable and accrued expenses | 868,079 | (9,853) |
Accrued expenses – related parties | 947,671 | 8,096 |
Accrued compensation expenses – related parties | 6,413,540 | 6,378,340 |
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Cash flows used in operating activities | (76,390) | (125,003) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from related party loans | 76,931 | 98,214 |
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Cash flows provided by financing activities | 76,931 | 98,214 |
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NET INCREASE (DECREASE) IN CASH | 541 | (26,789) |
CASH, BEGINNING OF PERIOD | – | 27,160 |
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CASH, END OF PERIOD | $ 541 | $ 371 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Interest paid | $ – | $ – |
Income taxes paid | $ – | $ – |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
AMERI METRO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2018
(Unaudited)
NOTE 1 – NATURE OF BUSINESS AND 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 condensed consolidated financial statements of the Company. have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 8 of Regulation S-X, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s financial statements filed with the Securities and Exchange Commission (“SEC”) on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for the unaudited interim condensed 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. The unaudited interim condensed consolidated statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year 2017 as reported in Form 10-K, have been omitted.
Principles of Consolidation
The consolidated financial statements present the financial position, results of operations and cash flows for Ameri Metro 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 Ameri Metro as GTI was inactive for the period from December 1, 2010 to April 30, 2018.
Participating Profits Interest
As at April 30, 2018, the Company has a 25% participating profits interest in sixteen related entities. The remaining 75% participating profits interest (and 100% voting control) is owned by the Company’s majority shareholder. These entities have had no operations, assets, or liabilities, and as of April 30, 2018, the Company’s participating profits interest in these companies was $0.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Due to loss for the period ended April 30, 2018 and 2017, the outstanding options are anti-dilutive. As a result, the computations of net loss per common shares is the same for both basic and fully diluted common stock. Potentially dilutive securities, which include 22,000,000 stock options as at April 30, 2018, and 2017, have been excluded from the computation of diluted net loss per share because the effect of their inclusion would have been antidilutive.
F-6
Reclassifications
Certain amounts in the prior-period financial statements have been reclassified for comparative purposes to conform with the presentation in the current period statements. These reclassifications had no effect on the reported results of operations.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which, among other things, requires lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases. The new standard also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The amendments in this update should be applied under a modified retrospective approach. The new standard is effective for annual reporting periods beginning after December 15, 2018. Early adoption is permitted. Management does not plan to early adopt this guidance. The Company’s only lease as at January 1, 2019 is a month-to-month rent agreement for office space. The month-to-month rent agreement is considered a lease with a term of 12 months or less. As the leases standard does not require lessees to apply the guidance to arrangements with a lease term of 12 months or less, the Company expects the new standard to have no material impact on its consolidated financial statements.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 2 – GOING CONCERN
These unaudited condensed 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, 2018, the Company has a working capital deficiency of $32,736,990 and has accumulated losses of $38,283,600 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 – LOANS PAYABLE – RELATED PARTIES
As of April 30, 2018 and July 31, 2017, $971,115 and $894,184, respectively, is due to the majority shareholder and his companies as they paid expenses on behalf of the Company, of which $518,479 and $512,889, respectively is unsecured, non-interest bearing and due on demand, $445,036 (July 31, 2017 - $373,695) is due on October 31, 2018, with an interest rate of 3.50% per annum, and $7,600 (July 31, 2017 - $7,600) is due on demand with an interest rate of 2% per annum. At April 30, 2018 and July 31, 2017, accrued interest on these loans is $29,657 and $18,742, respectively, which is included in accrued expenses – related parties. Effective August 1, 2018 the loans were consolidated with the repayment term extended to April 30, 2021 at an interest rate of 3% per annum.
At April 30, 2018, and July 31, 2017 the Company is indebted to three directors of the Company for an aggregate of $1,050 for expenditures incurred on behalf of the Company. The amount is unsecured, non-interest bearing and due on demand.
NOTE 4 – STOCK PAYABLE
Effective October 2, 2014, the Company entered into an employment agreement with Mr. Shah Mathias (the Company’s founder and a majority shareholder) for the Head of Mergers and Acquisitions and Business Development, and as non-board member President (See Note 7). According to the agreement, the Company agreed to issue stock options of 1.2% of all authorized stock capitalization to Mr. Shah Mathias at the time of appointment. In addition, the Company agreed to issue shares of common stock equal to 10% of any shares issued under a public offering pursuant to a Form S-1 registration statement; and if shares are issued at such time to any other party Mr. Shah Mathias is to be issued an equal amount of shares. As of October 31, 2017, the Company has not completed its public offering pursuant to a Form S-1 registration statement. On April 3, 2015, the Company amended the employment agreement to eliminate the requirement to issue stock options of 1.2% of all authorized stock capitalization and, instead, agreed to issue Mr. Shah Mathias a total of 1.2% of Class A and Class B shares of common stock, and 1% of Class C and D shares of common stock at the time of the amendment. As of April 30, 2018, the Company has issued 48,000,000 shares of class D common stock and 43,200,000 shares of class C common stock pursuant to the employment agreement, and recorded $13,281 stock payable for unissued stock consisting of 84,000 unissued Class A common stock, 4,800,000 unissued Class B common stock, and 48,000,000 unissued Class D Stock.
F-7
NOTE 5 – CAPITAL 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.
There were no common stock transactions during the nine months ended April 30, 2018.
NOTE 6 – STOCK OPTIONS
On March 8, 2016, the Company adopted a stock option plan named 2015 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 was $0.00009 per share. During the nine months ended April 30, 2018, and 2017, the Company recorded stock-based compensation of $75 and $125, respectively, on the unaudited condensed 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 was $0.00009 per share. During the nine months ended April 30, 2018, and 2017, the Company recorded stock-based compensation of $175 and $675, respectively, on the unaudited condensed consolidated statement of operations.
A summary of the Company’s stock option activity is as follows:
| Number of Options | Weighted Average Exercise Price $ | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value $ |
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Outstanding, August 1, 2017 | 22,000,000 | 42.00 |
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Granted | – | – |
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Outstanding, April 30, 2018 | 22,000,000 | 42.00 | 8.28 | – |
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, 2018 | Nine months Ended April 30, 2017 |
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Expected dividend yield | 0% | 0% |
Expected volatility | 150% | 150% |
Expected life (in years) | 10 | 10 |
Risk-free interest rate | 1.83% | 1.83% |
At April 30, 2018, there was $513 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, 2018.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Related and Non-related Party Agreements
The Company has entered into agreements with related and non-related parties for identified projects. As of April 30, 2018 and through December 30, 2019, the Company has no commitments or obligations under these agreements due to lack of financing and the need for a feasibility study before each project is begun. The Company will be committed to perform agreed upon services once feasibility study is complete and financing is available.
F-8
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 with Mr. Shah Mathias (Company Founder) for the Head of Mergers and Acquisitions and Business Development, and as non-board member President, 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 (See Note 4).
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 shares of Class “B” common stock as a signing bonus. On December 30, 2014, the Company issued 1,000,000 shares of Class “B” common stock to the Chief Engineer.
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 shares of Class B common stock. On July 24, 2015, the Company issued 1,000,000 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 General Counsel with an effective date of August 4, 2015. The term of the employment agreement is 3 years, with an annual base of $500,000. On March 17, 2016, the term of the agreement was extended to July 31, 2021.
The Company entered into thirteen directorship agreements with thirteen 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 thirteen 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.
As of April 30, 2018, and July 31, 2017, total accrued compensation expenses to related parties related to the above employment agreements were $29,633,785 and $23,220,245, respectively. At April 30, 2018, the Company has accrued payroll taxes of $843,438 related to the accrued compensation expenses.
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 or as to any early termination fees. According to the lease agreement, the Company’s unpaid rental balance shall bear interest until paid at a rate equal to the prime rate of interest charged by the M&T Bank, plus 2 percent. Late payment charge is $25 per day beginning with the first day following the due date. As of April 30, 2018, and July 31, 2017, the Company recorded unpaid rent expense of $27,753 and $27,753, respectively, and accrued interest and late fee of $123,512 and $110,170, respectively.
F-9
Legal Proceedings
On September 14, 2017, the Company received a letter from Zimmerman & Associates, on behalf of J. Harold Hatchett, III and Ronald Silberstein, claiming breach of contract, wrongful termination, and wrongful violations of the Business Corporations Act, and knowingly inaccurate SEC Reporting against the Company and the board of directors. The Company plans to work amicably to come to a settlement. As of April 30, 2018, the Company has accrued $1,263,870 and $1,295,120 in salaries for J. Harold Hatchett III and Ronald Silberstein, respectively.
The Company received lawsuit on June 13, 2017 by Estate of Robert A. Berry Esq. (decedent, Oct 22, 2015), plaintiff (the “Plaintiff Estate”). The Plaintiff Estate asserted a claim for $50,000 and 11,000 common class “B” shares of the Company relating to shares and accrued stipend beginning 2015. The Company, in 2015, had previously booked the liability of $50,000 without interest accruing and issued the 11,000 shares of common class “B” stock of the Company to decedent Robert A. Berry Esq. Company anticipates paying the $50,000 when the Company raises capital.
NOTE 8 – INCOME TAXES
At April 30, 2018 and July 31, 2017, the Company’s deferred tax assets consisted of principally net operating loss carry forwards. The material reconciling items between the tax benefit computed at the statutory rate and the actual benefit recognized in the financial statements consisted of accrued expenses and the change in the valuation allowance during the applicable period. The Company has recorded a 100% valuation allowance as management is uncertain that the Company will realize the deferred tax assets.
The Company has not filed its federal and state tax returns for the years ended July 31, 2018 and 2017. The Net operating losses (“NOLs”) for these years will not be available to reduce future taxable income until the returns are filed. Assuming these returns are filed, as of April 30, 2018, the Company had approximately $7.6 million of federal and state net operating losses that may be available to offset future taxable income. The net operating loss carryforwards will begin to expire in 2030 unless utilized.
The tax years 2017 and 2018 remain open to examination by the major taxing jurisdictions to which the Company is subject.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the 2017 Tax Cuts and Jobs Act ("2017 Tax Reform"). The 2017 Tax Reform significantly revised the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. The Company has reasonably estimated the effects of the 2017 Tax Reform and recorded provisional amounts in the consolidated financial statements. This amount is primarily comprised of the re-measurement of federal net deferred tax assets resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21%, from 34%. A blended rate of 26.4% is utilized for the period. The Company will continue to monitor additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, so we may make adjustments to the provisional amounts (if any). However, management's opinion is that future adjustments due to the 2017 Tax Reform should not have a material impact on the Company's provision for income taxes. The Company has a full allowance against the deferred tax asset and as a result there was no impact to income tax expense for the periods ended April 30, 2018.
NOTE 9 – SUBSEQUENT EVENTS
The Company has evaluated all transactions through the financial statement issuance date for subsequent event disclosure consideration.
On August 20, 2018, the Company reserved 100,000,000 Class B shares of common stock in the name of the Ameri Metro, Inc. 2015 Equity Incentive Plan. The shares are being administered by HSRF Statutory Trust on behalf of the Company. Upon exercise of stock options granted pursuant to the 2015 Equity Incentive Plan, HSRF Statutory Trust will issue the relevant employee, director or consultant shares from trust.
On August 20, 2018, the Company reserved 100,000,000 Class B shares of common stock in the name of the Ameri Metro, Inc. 2018 Equity Incentive Plan. The shares are being administered by HSRF Statutory Trust on behalf of the Company. Upon exercise of stock options granted pursuant to the 2018 Equity Incentive Plan, HSRF Statutory Trust will issue the relevant employee, director or consultant shares from trust.
The Company has entered into an employment agreement with the Chief Operations Officer of the Company with an effective date of August 30, 2018. The term of the employment agreement is three years, with an annual base salary of $425,000.
The Company has entered into an employment agreement with the Chief Financial Officer of the Company with an effective date of August 30, 2018. The term of the employment agreement is three years, with an annual base salary of $375,000.
F-10
On September 18, 2018, the Company reserved 150,000,000 Class B shares of common stock in the name of the Ameri Metro, Inc. Trust, for the purpose of any future purchases of commodities, supplies, equipment and other tangible items for current and future projects. The shares are being administered by the HSRF Statutory Trust on behalf of the Company and will be issued out of trust when the Company deems it appropriate to issue Class B shares of common stock for these purchases.
On September 30, 2018, the Company entered into a memorandum of understanding (“MOU”) to purchase 100% of Air Cyprus Aviation Limited (ACA) in exchange for £9,500,000. An amendment to the MOU was signed to cause the MOU to become binding which is subject to government regulatory approval.
On October 1, 2018, the Company reserved 18,000,000 each of Class C and Class D shares of common stock in the name of the Ameri Metro, Inc. Trust. The shares are being administered by HSRF Statutory Trust and reserved on behalf of the shareholders for future dividend disbursement. On October 23, 2018, Shah Mathias transferred 200,000,000 of his personal Class B Ameri Metro shares to the HSRF Statutory Trust. The transfer would permit the possible future purchase of equipment and services from designated vendors and suppliers. The transferred shares remain in Mr. Mathias’ control.
On August 30, 2018, the Company granted a total of 4,000,000 stock options to two officers and directors of the Company, exercisable at $357 per share and expire on August 30, 2024. The 4,000,000 options vest according to the following schedule: 1,600,000 options vest immediately, and 400,000 vest annually for the next 6 years. On October 12, 2018, the Company issued 1,600,000 shares of Class B common stock to two officers and directors of the Company pursuant to the exercise of stock options granted on August 30, 2018. The shares were issued from Equity Incentive Plan reserved shares.
On August 30, 2018, the Company granted 100,000 stock options to a consultant of the Company, exercisable at a price to be set by the Company, and expire on August 30, 2024. The 100,000 options vest according to the following schedule: 40,000 options vest immediately, and 10,000 vest annually for the next 6 years. The Company issued 10,000 of the shares on October 11, 2018 exercisable at a price of $460/share. The shares were issued from Equity Incentive Plan reserved shares.
On October 12, 2018, the Company issued 3,600,000 shares of Class B common stock to 3 officers and directors of the Company pursuant to the exercise of stock options granted on March 3, 2015. The shares were issued from Equity Incentive Plan reserved shares.
On October 12, 2018, the Company issued 7,200,000 shares of Class B common stock to 6 officers and directors of the Company pursuant to the exercise of stock options granted on November 1, 2016. The shares were issued from Equity Incentive Plan reserved shares.
On October 12, 2018, the Company issued 2,000,000 shares of Class B common stock to a consultant of the Company pursuant to subscription agreement entered on February 7, 2018. The shares were issued from Equity Incentive Plan reserved shares.
On November 5, 2018, the Company issued 2,000,000 shares of Class B common stock to two officers and directors of the Company for services pursuant to directorship agreements dated August 30, 2018.On June 12, 2019, the Company amended Equity Incentive Plans, Subscription Agreements and Equity Agreements so that options issued after June 12, 2019 would have a strike price equal to the market price at that grant date. In addition, the Company amended the exercise price of certain stock options granted a consultant from $460 per share, with a maximum sell price of $560, to $515 per share, with a maximum sell price of $715 per share.
On January 10, 2019, the Company issued 25,000 Class B common shares from the 2015 Equity Incentive Plan reserved shares and 25,000 Class B common shares from the 2018 Equity Incentive Plan reserved shares for services rendered.
On January 10, 2019, the Company issued 40,000 Class B common shares from the 2015 Equity Incentive Plan reserved shares to a Director for shares he should have received during a prior 4:1 stock split.
On January 10, 2019, the Company issued 10,000,000 Class B common shares from the 2015 Equity Incentive Plan reserved shares to the Ameri Metro North American Pension/HSRF Statutory Trust for future employee benefit programs.
On January 10, 2019, the Company issued 10,000,000 Class B common shares from the 2015 Equity Incentive Plan reserved shares to the Ameri Metro Universal Pension/HSRF Statutory Trust for future employee benefit programs.
On January 10, 2019, the Company issued 10,000,000 Class B common shares from the 2018 Equity Incentive Plan reserved shares to the Ameri Metro North American Pension/HSRF Statutory Trust for future employee benefit programs.
F-11
On January 10, 2019, the Company issued 10,000,000 Class B common shares from the 2018 Equity Incentive Plan reserved shares to the Ameri Metro Universal Pension/HSRF Statutory Trust for future employee benefit programs.
On January 10, 2019, the Company issued 10,000,000 Class B common shares from the Ameri Metro Inc. Trust reserved shares to the Ameri Metro North American Pension/HSRF Statutory Trust for future employee benefit programs.
On January 10, 2019, the Company issued 10,000,000 Class B common shares from the Ameri Metro Inc. Trust reserved shares to the Ameri Metro Universal Pension/HSRF Statutory Trust for future employee benefit programs.
On June 17, 2019, the Company issued 1,200,000 Class B common shares from the 2015 Equity Incentive Plan reserved shares to a Director per November 1, 2016 Equity Agreement.
On June 20, 2019, the Company issued an additional 200,000,000 Class B shares of common stock in the name of Ameri Metro, Inc. 2015 Equity Incentive Plan. The shares are being administered by HSRF Statutory Trust on behalf of the Company. Upon exercise of stock options granted pursuant to the 2015 Equity Incentive Plan, HSRF Statutory Trust will issue the relevant employee, director or consultant shares from trust.
On June 29, 2019, the Company issued a total of 53,931,475 Class B common shares from the 2015 Equity Incentive Plan reserved shares held by HSRF Statutory Trust to (1) the sixteen related entities discussed in Note 3 to obtain a 25% ownership interest with no voting rights in each of the sixteen related entities and (2) to a project in order to obtain a 10% participating profits interest in the project. The Company’s majority shareholder obtains the remaining 90% participating profits interest in that project.
F-12
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 condensed 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 condensed 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, 2017.
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.
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.
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
4
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 has 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.
Results of Operations
Comparison of the Three Months Ended April 30, 2018 and 2017.
The Company has no source of continuing revenues and received no revenues for the three months ended April 30, 2018 and 2017. For the three months ended April 30, 2018 and 2017, the Company had total operating expenses of $2,510,048 and $2,380,471, respectively and net losses of $2,521,755 and $2,385,417, respectively. The decrease in operating expenses and net loss resulted primarily from decreases in officer payroll.
Comparison of the Nine Months Ended April 30, 2018 and 2017.
The Company has no source of continuing revenues and received no revenues for the nine months ended April 30, 2018 and 2017. For the nine months ended April 30, 2018 and 2017, the Company had total operating expenses of $8,271,407 and $6,490,556, respectively and net losses of $8,306,325 and $6,505,460, respectively. The increase in operating expenses and net loss resulted primarily from increases in officer payroll, director’s fees and audit committee fees.
Liquidity and Capital Resources
Our cash, current assets, total assets, current liabilities and total liabilities as of April 30, 2018 and July 31, 2017 were as follows:
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| April 30, 2018 | July 31, 2017 |
Cash | $541 | $ – |
Total current assets | 3,481 | 2,940 |
Total assets | 4,806 | 4,660 |
Total current liabilities | 32,740,471 | 24,060,555 |
Total liabilities | 32,740,471 | 24,434,250 |
Cash Requirements
We had $541 in cash as of April 30, 2018. Our cash used in operations for the nine months ended April 30, 2018 was $76,390. We had a net loss for the nine months ended April 30, 2018 of $8,306,325. We had an accumulated deficit of $38,283,600 at April 30, 2018. 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, 2018, our net cash used in operating activities was $76,390, which consisted primarily of our net loss of $8,368,775, offset primarily by increases in accrued compensation expenses of $6,413,540 and increases in accounts payable and accrued expenses of $1,815,750. 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 $6,505,460 offset by an increase in accrued compensation expenses of $6,378,340.
Financing
For the nine months ended April 30, 2018, our net cash provided by financing activities was $76,931, which consisted of proceeds from related party loans. 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.
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, 2018, the Company has a working capital deficiency of $32,736,990 and has accumulated losses of $38,283,600 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.
Critical Accounting Policies
Our critical accounting policies have not changed from the information reported on our Annual Report on Form 10-K for the year ended July 31, 2017.
Recent Accounting Pronouncements
See Note 1 to the accompanying financial statements for recent accounting pronouncements we have not yet adopted.
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.
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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, 2018, 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, 2018, 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.
Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the quarter ended April 30, 2018, 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.
On September 14, 2017, the Company received a letter from Zimmerman & Associates, on behalf of J. Harold Hatchett, III and Ronald Silberstein, claiming breach of contract, wrongful termination, and wrongful violations of the Business Corporations Act, and knowingly inaccurate SEC Reporting against the Company and the board of directors. The Company plans to work amicably to come to a settlement. As of October 31, 2017, the Company has accrued $1,263,870 and $1,295,120 in salaries for J. Harold Hatchett III and Ronald Silberstein, respectively.
The Company received lawsuit on June 13, 2017 by Estate of Robert A. Berry Esq. (decedent, Oct 22, 2015), plaintiff (the “Plaintiff Estate”). The Plaintiff Estate asserted a claim for $50,000 and 11,000 common class “B” shares of the Company relating to shares and accrued stipend beginning 2015. The Company, in 2015, had previously booked the liability of $50,000 without interest accruing and issued the 11,000 shares of common class “B” stock of the Company to decedent Robert A. Berry Esq. Company anticipates paying the $50,000 when the Company raises capital.
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
3.1Articles of Incorporation (filed with the Form 10 November 9, 2011)
3.2Amended by-laws (filed as part of the Form 8-K/A filed January 18, 2013)
3.3Cert. of Amendment Cert. of Incorporation of Ameri Metro
5.1Opinion of Counsel on legality of securities being registered
10.2Master Indenture Agreement of Hi Speed Rail Facilities, Inc. (filed with the Form 8-K January 18, 2013)
10.4TEMS engagement (filed as part of the Form 8-K/A filed January 18, 2013)
10.5Alabama Indenture Agreement (filed as part of the Form 8-K/A filed January 18, 2013)
10.6High Speed Rail Indenture Agreement (filed as part of the Form 8-K/A filed January 18, 2013)
10.7Damar Agreement (filed as part of the Form 8-K/A filed January 18, 2013)
10.8Agreement For Construction (filed as part of the Form 10-K/A filed November 6, 2019)
10.9Assignment Agreement For Construction (filed as part of the Form 10-K/A filed November 6, 2019)
10.10Payment Agreement to Penndel Land Co (filed as part of the Form 10-K/A filed November 6, 2019)
10.12HSR Tech LOI Tech Use Agreement (filed as part of the Form 10-K/A filed November 6, 2019)
10.16Consulting Agreement HSRFP Inc. (filed as part of the Form 10-K/A filed November 6, 2019)
10.17Consulting Agreement HSRF Inc. (filed as part of the Form 10-K/A filed November 6, 2019)
10.18Company Founder Emp. Agreement (filed as part of the Form 10-K/A filed November 6, 2019)
10.19Directorship Agreement (filed as part of the Form 10-K/A filed November 6, 2019)
10.21Port De Ostia Inc. Agreement GTI (filed as part of the Form 10-K/A filed November 6, 2019)
10.22C-Bar Marshall Rebar Agreement (filed as part of the Form 10-K/A filed November 6, 2019)
10.23Ameri Metro & Jewell LOI (filed as part of the Form 10-K/A filed November 6, 2019)
10.24Master Consulting Agreement (filed as part of the Form 10-K/A filed November 6, 2019)
10.25Master Trustee Agreement (filed as part of the Form 10-K/A filed November 6, 2019)
10.31TEMS consent form letter (filed as part of the Form 10-K/A filed November 6, 2019)
23.2Consent of Counsel (included in Exhibit 5.1)
31.1CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002*
31.2CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 *
99.4Alabama Legislative Act 506 (filed as part of the Form 8-K/A filed January 18, 2013)
99.7Florida Alabama TPO Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.8Alabama Toll Road Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.10 Atlantic Energy & Utilities Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.15Portus De Jewel Mexico Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.18HSR Freight Line Inc. Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.20HSR Technologies Inc. Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.21Malibu Homes Inc. Bond Indenture (filed as part of the Form 10-K/A filed November 6, 2019)
99.22Platinum Media Inc. Bond Indenture (filed as part of the Form 10-Q filed December 30, 2019)
____________________
* 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.
Date: December 30, 2019By:/s/ Robert Choiniere
Robert Choiniere
Chief Financial Officer
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Exhibit 31.1
OFFICER'S CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT
I Debra Mathias, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended April 30, 2018 of Ameri Metro, Inc.
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 issuer as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are 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) and 15d-15(f)) for the issuer 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 fourth fiscal 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; and
5. The registrant’s other certifying officer(s) and 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 small business 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.
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Date: December 30, 2019 |
| By: /s/ Debra Mathias |
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| Debra Mathias |
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| Chief Executive Officer (Principal Executive Officer)
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Exhibit 31.2
OFFICER'S CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT
I, Robert Choiniere, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended April 30, 2018 of Ameri Metro, Inc.
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 issuer as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are 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) and 15d-15(f)) for the issuer 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 fourth fiscal 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; and
5. The registrant’s other certifying officer(s) and 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 small business 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.
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Date: December 30, 2019 |
| By: /s/ Robert Choiniere |
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| Robert Choiniere |
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| Chief Financial Officer
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EXHIBIT 32.1
CERTIFICATION 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 Ameri Metro, Inc. (the "Company") on Form 10-Q for the quarter ended April 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
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 operation of the Company.
3. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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Date: December 30, 2019 |
| By: /s/ Debra Mathias |
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| Debra Mathias |
` |
| Chief Executive Officer
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EXHIBIT 32.2
CERTIFICATION 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 Ameri Metro, Inc. (the "Company") on Form 10-Q for the quarter ended April 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
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 operation of the Company.
3. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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Date: December 30, 2019 |
| By: /s/ Robert Choiniere |
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| Robert Choiniere |
` |
| Chief Financial Officer
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