NOTE 1 - CONDENSED INTERIM FINANCIAL STATEMENTS
The accompanying financial statements
have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of operations and cash flows at November 30, 2018 and
for all periods presented have been made.
Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's May 31, 2018 audited financial statements. The results of
operations for the period ended November 30, 2018 are not necessarily indicative of the operating results for the full year.
Basis of Presentation
In the opinion of management, the accompanying
interim balance sheets and related interim statements of income and cash flows include all adjustments, consisting only of normal
recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United
States of America ("U.S. GAAP"). Preparing financial statements requires management to make estimates and assumptions
the affect the reported amounts of assets, liabilities, revenue and expenses. Actual results and outcomes may differ from management's
estimates and assumptions.
NOTE 2 - GOING CONCERN
These condensed interim financial statements
have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates
the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of November
30, 2018, the Company has accumulated operating losses of $1,322,892 since inception. The Company's ability to continue as a going
concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain
profitable operations.
Management plans to raise equity capital
to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company's
products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working
capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any
such activity will generate funds that will be available for operations.
These conditions raise substantial doubt
about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might
arise from this uncertainty.
7
AMERITEK VENTURES
Notes to the Unaudited Condensed Interim
Financial Statements
November 30, 2018
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities 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.
Recent Accounting Pronouncements
The Company's management has evaluated
all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that
any of these pronouncements will have a material impact on the Company's financial position and results of operations.
NOTE 4 - STOCKHOLDERS' EQUITY AND CONTRIBUTED CAPITAL
Series B Preferred Stock
The Company is authorized to issue 5,000,000
shares of $0.001 par value Series B Preferred Stock. Series B Preferred Stock has liquidation and first position ownership rights
on any assets owned by the Company. The Series B Preferred Stock has no voting rights and are not entitled to receive dividends.
The holders of Series B Preferred Stock shall be entitled to interest payments on monies paid or loaned to the corporation for
their Series B Preferred Shares and a first position in a security interest on any assets of the Company upon default of a loan
to the Company, liquidation or dissolution of the Company. Further, the Company may call these shares at any time provided the
holders of the Series B Preferred Stock are paid the amount of monies they paid for their Series B Preferred Stock along with any
interest due. Upon the payment of principal and interest to the Series B Preferred Stock shareholders, the shares must be returned
to the Company.
As of November 30, 2018, there is no
Series B Preferred Stock outstanding.
Series A Preferred Stock
The Company is authorized to issue 5,000,000
shares of $0.001 par value Series A Preferred Stock. Series A Preferred Stock have no liquidation rights. Series A Preferred Stock
shall not be entitled to receive any dividends nor are they entitled to any voting rights with respect to the Series A Preferred
Stock. At any time and from time-to-time after the issuance of the Series A Preferred Stock, any holder may convert any or all
of the shares of Series A Preferred Stock held by such holder at the ratio of one hundred (100) shares of Common Stock for every
one (1) share of Series A Preferred Stock. However, the beneficial owner of such Series A Preferred Stock cannot convert their
Series A Preferred stock where they will beneficially own in excess of 4.9% of the shares of the Common Stock.
8
AMERITEK VENTURES
Notes to the Unaudited Condensed Interim
Financial Statements
November 30, 2018
During the six-month period ended November 30, 2018, there
were no issuances of Series A Preferred Stock.
As of November 30, 2018, there were 51,627 shares of Series
A Preferred Stock issued and outstanding.
Series C Preferred Stock
The Company is authorized to issue 5,000,000
shares of $0.001 par value Series C Preferred Stock, of which no shares are issued and outstanding as of November 30, 2018. The
designation of these shares has yet to be determined by the Board of Directors.
Common Stock
The Company is authorized to issue 185,000,000
shares of its $0.001 par value common stock, of which 34,999,883 shares are issued and outstanding as of November 30, 2018.
On July 5, 2018, one of the holders of the Company’s
convertible promissory notes converted $28,300 of principal and $11,337 of accrued interest into 499,838 shares of the Company’s
common stock.
On September 10, 2018, one of the holders of the Company’s
Series A preferred stock converted 1,300 preferred shares to 130,000 shares of common stock.
On October 12, 2018, one of the holders of the Company’s
convertible promissory notes converted $8,000 of principal into 655,738 shares of the Company’s common stock.
NOTE 5 - RELATED PARTY TRANSACTIONS
Advances
As needed, the Company has received
numerous advances from the Company’s current majority shareholder, Chief Executive Officer, Principal Executive Officer as
well as previous advances from two of the Company’s former Director and Principal Executive officers. The advances as of
May 31, 2018 was $52,023. During the six-month period ended November 30, 2018, the Company repaid $9,700 of such advances as well
as received $27,310 of such advances. These advances are payable on demand and bears no interest. The total balance owed to related
parties at November 30, 2018 was $69,633.
NOTE 6 - NOTE PAYABLE
On July 31, 2017, the Company entered
into a convertible note agreement in which the Company received $65,000 of proceeds and the Company is required to make a balloon
payment of principal and accrued interest of $70,200 on the maturity date of April 31, 2018. This note accumulates interest at
a rate of 8% from the original issue date through the maturity date. At any time while there is an outstanding balance, the note
may be converted at a conversion price for the principal and interest in connection with voluntary conversions by the holder shall
be 75% multiplied by the market price, representing a discount rate of 25%. The note also provides for warrants of up to 208,000
shares of common stock which may be exercised any time from the issuance date of July 31, 2017 (initial exercise date) until July
31, 2022
9
AMERITEK VENTURES
Notes to the Unaudited Condensed Interim
Financial Statements
November 30, 2018
(termination date). The exercise price
of this warrant is $1.35. Further, if at any time after the initial exercise date, there is no effective registration statement
registering the warrant shares, or no current prospectus available for the resale of the warrant shares by the holder, then the
warrant may be exercised at the holder’s election, in whole or in part, at such times by means of a cashless exercise in
which the holder shall be entitled to receive a number of warrant shares equal to the quotient obtained by dividing [(A-B)(X)]
by (A), where (A) equals the VWAP on the trading day immediately preceding the date on which the holder elects to exercise the
warrant; (B) equals the exerci5se price of the warrant; and (X) equals the number of warrant shares that would be issuable upon
exercise of the warrant if such exercise were by means of a cash exercise rather than a cashless exercise. Regardless, on the termination
date if there is no effective Registration Statement registering the warrant shares, or no current prospectus available for the
resale of the warrant shares by the holder, then the warrant shall be automatically exercised via cashless exercise. Failure of
the Company to issue shares in a timely manner will result in a late issuance penalty of $10 per trading day, increasing to $20
per trading day after the fifth trading day, for each $1,000 of exercise price of the warrant shares.
In the event of default, the outstanding
amount due on the note will be adjusted to the mandatory default amount which is the sum of (a) the greater of (i) the outstanding
principal amount of this Note divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if
demand or notice is required to create an Event of Default), (B) otherwise due, or (C) paid in full, whichever is lowest, multiplied
by the VWAP on the date the Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full, whichever is highest,
or (ii) 120% of the outstanding principal amount of this Note plus (b) all other amounts, costs, expenses and liquidated damages
due in respect of this note. Also as a result of default, interest on this note shall accrue at an interest rate equal to the lesser
of 24% per annum or the maximum rate permitted under applicable law.
During the year ended May 31, 2018,
the Company was in default with the convertible note agreement and certain adjustments have been recorded by the Company to factor
in the default remedies. The adjustment included an increase in interest to 24% per annum as well as an increase in the total principal
amount due by $14,040. The total amount of principal due under the convertible promissory note at November 30, 2018 and May 31,
2018 was $55,940 and 84,240, respectively.
On July 5, 2018, the convertible note agreement holder converted
$28,300 of principal and $11,337 of accrued interest into 499,838 shares of the Company’s common stock.
On August 25, 2017, the Company entered
into a convertible note agreement in which the Company received $64,000 of proceeds and the Company is required to make a balloon
payment of principal and accrued interest of $69,120 on the maturity date of August 25, 2018. This note accumulates interest at
a rate of 8% from the original issue date through the maturity date. At any time while there is an outstanding balance, the note
may be converted at a conversion price for the principal and interest in connection with voluntary conversions by the holder shall
be 75% multiplied by the market price, representing a discount rate of 25%. The note also provides for warrants of up to 204,800
shares of
10
AMERITEK VENTURES
Notes to the Unaudited Condensed Interim
Financial Statements
November 30, 2018
common stock which may be exercised
any time from the issuance date of August 25, 2017 (initial exercise date) until August 25, 2022 (termination date). The exercise
price of this warrant is $1.35. Further, if at any time after the initial exercise date, there is no effective registration statement
registering the warrant shares, or no current prospectus available for the resale of the warrant shares by the holder, then the
warrant may be exercised at the holder’s election, in whole or in part, at such times by means of a cashless exercise in
which the holder shall be entitled to receive a number of warrant shares equal to the quotient obtained by dividing [(A-B)(X)]
by (A), where (A) equals the VWAP on the trading day immediately preceding the date on which the holder elects to exercise the
warrant; (B) equals the exercise price of the warrant; and (X) equals the number of warrant shares that would be issuable upon
exercise of the warrant if such exercise were by means of a cash exercise rather than a cashless exercise. Regardless, on the termination
date if there is no effective Registration Statement registering the warrant shares, or no current prospectus available for the
resale of the warrant shares by the holder, then the warrant shall be automatically exercised via cashless exercise. Failure of
the Company to issue shares in a timely manner will result in a late issuance penalty of $10 per trading day, increasing to $20
per trading day after the fifth trading day, for each $1,000 of exercise price of the warrant shares.
In the event of default, the outstanding
amount due on the note will be adjusted to the mandatory default amount which is the sum of (a) the greater of (i) the outstanding
principal amount of this Note divided by the Conversion Price on the date the Mandatory Default Amount is either (A) demanded (if
demand or notice is required to create an Event of Default), (B) otherwise due, or (C) paid in full, whichever is lowest, multiplied
by the VWAP on the date the Mandatory Default Amount is either (x) demanded, (y) due, or (z) paid in full, whichever is highest,
or (ii) 120% of the outstanding principal amount of this Note plus (b) all other amounts, costs, expenses and liquidated damages
due in respect of this note. Also as a result of default, interest on this note shall accrue at an interest rate equal to the lesser
of 24% per annum or the maximum rate permitted under applicable law.
During the year ended May 31, 2018,
the Company was in default with the convertible note agreement and certain adjustments have been recorded by the Company to factor
in the default remedies. The adjustment included an increase in interest to 24% per annum as well as an increase in the total principal
amount due by $13,824. The total amount of principal due under the convertible promissory note at November 30, 2018 and May 31,
2018 was $82,944, respectively.
On March 12, 2018 the Company entered
into a convertible note agreement in which the Company received $103,000 of proceeds and the Company is required to make a balloon
payment of principal and accrued interest of $115,360 on the maturity date of March 12, 2019. This note accumulates interest at
a rate of 12% from the original issue date through the maturity date or in the event of default the note will accumulate interest
at a rate of 22%. From time to time, and at any time during the period beginning on the date which is one hundred eighty (180)
days following the date of the Note and ending on the later of: (i) the Maturity Date and (ii) the date of the payment of the Default
Amount, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding
and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such
11
AMERITEK VENTURES
Notes to the Unaudited Condensed Interim
Financial Statements
November 30, 2018
common stock exists on the issue Date,
or any shares of capital stock or other securities of the borrower into which such Common stock shall hereafter be changed or reclassified
at the conversion price determined as provided. The Conversion Price shall equal the Variable Conversion Price (subject to equitable
adjustments by the Borrower relating to the Borrower’s securities). The Variable Conversion Price shall mean 61% multiplied
by the Market Price, representing a 39% discount rate. Market Price means the lowest Trading Price for the Common Stock during
the fifteen (15) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. Trading Price means,
for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable
trading market (the “OTC”). The Borrower is required at all times to have authorized and reserved eight times the number
of shares that would be issuable upon full conversion of the Note in effect from time to time, initially 2,214,458 (the “Reserved
Amount”).
On October 12, 2018, the convertible note agreement holder
converted $8,000 of principal into 655,738 shares of the Company’s common stock.
During the quarter ended November 30,
2018, the Company was in default with the convertible note agreement and certain adjustments have been recorded by the Company
to factor in the default remedies. The adjustment included an increase in interest to 22% per annum as well as an increase in the
total principal amount due by $51,500. The total amount of principal due under the convertible promissory note at November 30,
2018 and May 31, 2018 was $146,500 and $103,000, respectively.
On April 27, 2018 the Company entered
into a convertible note agreement in which the Company received $68,000 of proceeds and the Company is required to make a balloon
payment of principal and accrued interest of $76,160 on the maturity date of April 27, 2019. This note accumulates interest at
a rate of 12% from the original issue date through the maturity date or in the event of default the note will accumulate interest
at a rate of 22%. From time to time, and at any time during the period beginning on the date which is one hundred eighty (180)
days following the date of the Note and ending on the later of: (i) the Maturity Date and (ii) the date of the payment of the Default
Amount, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding
and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such common stock exists
on the issue Date, or any shares of capital stock or other securities of the borrower into which such Common stock shall hereafter
be changed or reclassified at the conversion price determined as provided. The Conversion Price shall equal the Variable Conversion
Price (subject to equitable adjustments by the Borrower relating to the Borrower’s securities). The Variable Conversion Price
shall mean 61% multiplied by the Market Price, representing a 39% discount rate. Market Price means the lowest Trading Price for
the Common Stock during the fifteen (15) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.
Trading Price means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation
system or applicable trading market (the “OTC”). The Borrower is required at all times to have authorized and reserved
eight times the number of shares that would be issuable upon full conversion of the Note in effect from time to time, initially
1,350,820 (the “Reserved Amount”).
During the quarter ended November 30,
2018, the Company was in default with the convertible note agreement. The adjustment included an increase in interest to 22% per
annum as well as an increase in the total principal amount due by $34,000. The total amount of principal due under the convertible
promissory note at November 30, 2018 and May 31, 2018 was $102,000 and $68,000, respectively.
12
AMERITEK VENTURES
Notes to the Unaudited Condensed Interim
Financial Statements
November 30, 2018
On May 10, 2018 the Company entered
into a convertible note agreement in which the Company received $160,000 of proceeds and the Company is required to make a balloon
payment of principal and accrued interest of $181,500 on the maturity date of May 10, 2019. This note accumulates interest at a
rate of 10% from the original issue date through the maturity date. The Holder of this Note is entitled, at its option, at any
time after 6 months and full cash payment, to convert all or any amount of the principal face amount of this Note then outstanding
into shares of the company’s common stock at a Conversion Price for each share of Common Stock equal to 57% of the lowest
trading price of the Common Stock as reported on the National Quotations Bureau OTC market exchange which the Company’s shares
are traded or any exchange upon which the Common Stock may be traded in the future, for the 20 prior trading days including the
day upon which a Notice of Conversion is received by the Company. The Company shall reserve 1,536,000 shares of its Common Stock
for conversions under this Note, (the “Share Reserve”). This note was secured by the pledge of the $165,000 10% convertible
promissory note issued to the Company by the lender. The Company may exchange this collateral for other collateral with an appraised
value of at least $160,000, by providing 3 days prior written notice to the lender.
The total amount of principal due under
the convertible promissory note at November 30, 2018 and May 31, 2018 was $165,000, respectively.
NOTE 8 – INCOME TAXES
The Company accounts for income taxes
under FASB Accounting Standard Codification ASC 740 "Income Taxes". ASC 740 provides that deferred tax assets and liabilities
are recorded based on the differences between the tax basis of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined
using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities
are expected to be settled or realized.
As of November 30, 2018, the Company
did not have any eligible net operating loss carry forwards as the Company has not filed the appropriate federal and state income
tax returns so any accumulated net operating losses could be subject to the respective tax agency disallowance. Any actual net
operating losses would be limited by a valuation allowance, as their realization, as determined by management, is determined to
be not likely to occur and accordingly, the Company would have recorded a valuation allowance for the deferred tax asset relating
to the tax potential net operating loss carry-forwards. Additionally, actual net operating losses carry-forwards and the related
deferred tax assets would also be limited due to the various changes in control that has occurred during prior reporting periods.
NOTE 9 - SUBSEQUENT EVENTS
On December 4, 2018, one of the holders of the Company’s
convertible promissory notes converted $13,000 of principal and $741 of accrued interest into 964,268 shares of the Company’s
common stock.
On January 14, 2019, one of the holders of the Company’s
convertible promissory notes converted $7,000 of principal and $7,099 of accrued interest into 1,712,085 shares of the Company’s
common stock.
On January 14, 2019, one of the holders of the Company’s
convertible promissory notes converted $12,000 of principal into 1,705,455 shares of the Company’s common stock.
The Company has evaluated subsequent
events through the date the financial statements were available to be issued.
13
Item 2. - Management's Discussion
and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
This Quarterly Report on Form 10-Q contains
forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "anticipate," "believe,"
"estimate," "will," "plan," "seeks," "intend," and "expect" and similar
expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in
any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results,
performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements
contained in this Quarterly Report on Form 10-Q. Important factors that could cause actual results to differ materially from our
forward-looking statements are set forth in this Quarterly Report on Form 10-Q All forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly
Report on Form 10-Q. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement,
whether as a result of new information, future events, or otherwise.
Critical Accounting Policies
There have been no material changes
to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations", included in our Annual report on Form 10-K for the fiscal year ended May
31, 2018.
Business of the Issuer
We were incorporated on December 27,
2010 as ATVROCKN, a Nevada corporation. On June 20, 2017, our corporate name was changed to Ameritek Ventures. We consider ourselves
to be a smaller reporting company under applicable federal securities laws and will be subject to reduced public company reporting
requirements. Under our original business plan, it was our intention to
market a "housing
molding" product to place audio equipment and lighting on 4-wheel drive vehicles
such as
All Terrain Vehicles (“ATV”) and Utility Terrain Vehicles (“UTV”). We did not manufacture
any units as we utilized the services of a contract manufacturer to make the unit for us. We had no material agreement with our
contract manufacturer other than we paid them to produce product for us based on our needs. As we were undercapitalized, we were
unable to produce the required housing molding(s) we believe would best sell in the ATV/UTV aftermarket.
In August 2017, the Company completed
its move into a new production and design facility in Roanoke, Virginia. On August 30, 2017, the Company acquired fiber optic assets
from its largest shareholder and director. In this facility the Company will be finalizing design work for its first 5 million
km/year VAD/OVD (Vapor Axial Deposition/Outside Vapor Deposition) optical fiber preform production line, slated for assembly, testing
and production in 2020. This process makes optical fiber preforms that are the mainstay for fiber optic cable that is used in the
telecommunications industry to transmit large amounts of data to and from communication towers for the internet, cable television
and telephone industries. This new VAD/OVD production line represents the first phase of a planned 20 million km/year preform manufacturing
facility. Ameritek Ventures’ brand-new design and technology hub will help execute the
14
Company's sustained growth and emergence
strategy as a provider of high-quality optical fiber preforms for the rapidly expanding Fiber Optic Cable worldwide market that
in the past has been dominated by firms like Corning Incorporated, Shin-Etsu Chemical Co. Ltd., Prysmian SpA, Jiangsu Fasten Co.
Ltd and Fujikura Ltd.
Implications of Being an “Smaller
Reporting Company”
Certain reduced reporting requirements
and exemptions are available to us due to the fact that we qualify as a “smaller reporting company” under SEC rules.
For instance, smaller reporting companies are not required to obtain an auditor attestation report regarding management’s
assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are
not required to a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements
and related MD&A disclosure.
Investors should be aware that we will
be subject to the "Penny Stock" rules adopted by the Securities and Exchange Commission, which regulate broker-dealer
practices in connection with transactions in Penny Stocks. These regulations may have the effect of reducing the level of trading
activity, if any, in the secondary market for our stock, and investors in our common stock may find it difficult to sell their
shares.
Market Size
The current market value of the optical
fiber industry is $3 billion US dollars and is projected to grow to over $5 billion US dollars by 2021. An increase of almost 10,000
tons of perform is projected in the next five years, which is equivalent to more than 300 million kilometers per year of performs.
Competition
We will be involved in intense competition
with other business entities, many of which will have a competitive edge over us by virtue of their more substantial financial
resources and prior experience in business. Some examples include firms like Corning Incorporated, Shin-Etsu Chemical Co. Ltd.,
Prysmian SpA, Jiangsu Fasten Co. Ltd and Fujikura Ltd. We also face numerous other smaller companies at the same stage of development
as we are.
Patents, Trademarks Licenses and
Other Intellectual Property
On August 30, 2017, the Company acquired
fiber optic assets, in the form of intellectual property from its largest shareholder and director. These assets consist of proven
designs that in the future may be used to fabricate and assemble machines incorporating knowledge from the manufacture of completed
equipment for a new PCVD (Plasma Chemical Vapor Deposition) technology that is used in the manufacturing of specialty optical fiber
preforms, which is the basis for specialized optical fiber production to satisfy a variety of fiber optic cable applications. Prior
to building any PCVD machines, the Company will be using this intellectual property in finalizing design work for its first 5 million
km/year VAD/OVD (Vapor Axial Deposition/Outside Vapor Deposition) optical fiber preform production line, slated for assembly, testing
and production in 2020. This process makes optical fiber preforms that are the mainstay for fiber
15
optic cable that is used in the telecommunications
industry to transmit large amounts of data to and from communication towers for the Internet, cable television and telephone industries.
This new VAD/OVD production line represents the first phase of a planned 20 million km/year preform manufacturing facility. Ameritek
Ventures’ brand-new design and technology hub will help execute the Company's sustained growth and emergence strategy as
a provider of high-quality optical fiber preforms for the rapidly expanding Fiber Optic Cable worldwide market.
Properties
The Company's corporate headquarters
are located at: 1980 Festival Plaza Drive, Suite 530, Las Vegas, Nevada 89135. The Company does not own any real property, however
rents warehouse space for its production facility in Roanoke, Virginia at a cost of $2,812.50 per month. This lease had a one year
term, and will thereafter renews month to month.
RESULTS OF OPERATIONS
For the three and six month periods
ending November 30, 2018, the Company recognized no revenues.
For the three month period ending November
30, 2018, the Company incurred total operating losses of $37,702. This compares to the same period ending November 30, 2017 where
the Company incurred total operating losses of $37,175. The net loss applicable to common shareholders was $140,202 for the three
months ending November 30, 2018 or $(0.00) per common share basic and diluted for the period ending as compared to a net loss applicable
to common shareholders of $39,819 or $(0.00) per common share for the same period last year.
For the six month period ending November
30, 2018, the Company incurred total operating losses of $103,504. This compares to the same period ending November 30, 2017 where
the Company incurred total operating losses of $122,366. The net loss applicable to common shareholders was $245,237 for the six
months ending November 30, 2018 or $(0.01) per common share basic and diluted for the period ending as compared to a net loss applicable
to common shareholders of $125,984 or $(0.01) per common share for the same period last year.
Going Concern
Our ability to continue as a going concern
is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable
operations.
Therefore, management plans to raise
equity capital to finance the operating and capital requirements of the Company. While the Company is devoting its best efforts
to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to continue as a going concern.
Summary of product research and development
that we will perform for the term of our plan of operation.
We have no plans to perform any product
research and development at this time.
16
Expected purchase or sale of plant
and significant equipment
Management is currently identifying
equipment needed in order to begin manufacturing.
Significant changes in the number
of employees
We currently have a total of five employees,
two of which serve as our officers, one employee who serves as the Company controller and two employees who work in the engineering
and design facility. We are dependent upon our officers for our future business development. As our operations expand we anticipate
the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.
Liquidity and Capital Resources
As of November 30, 2018, Ameritek Ventures
had $0 in cash and cash equivalents, $12,385 of cash held in escrow and deposits of $521 for total current assets of $12,906. As
of November 30, 2018, Ameritek Ventures had total current liabilities of $805,782.
The Company has limited financial resources
available, which has had an adverse impact on the Company's liquidity, activities and operations. These limitations have adversely
affected the Company's ability to obtain certain projects and pursue additional business. Without realization of additional capital,
it would be unlikely for the Company to continue as a going concern. Management intends to raise additional debt or equity financing
to fund ongoing operations and necessary working capital. However, there is no assurance that such financing plans will be successful
or be obtained in amounts sufficient to meet the Company’s needs.
Notwithstanding, Ameritek Ventures anticipates
generating losses and therefore may be unable to continue operations in the future. Ameritek Ventures anticipates it will require
additional capital in order to develop its business. Ameritek Ventures may use a combination of equity and/or debt instruments
to funds its growth strategy or enter into a strategic arrangement with a third party.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to
investors.
Critical Accounting Policies and Estimates
Revenue Recognition: The Company recognizes
revenue related to product sales when (i) persuasive evidence of the arrangement exists, (ii) shipment has occurred, (iii) the
fee is fixed or determinable, and (iv) collectability is reasonably assured.
Recent Pronouncements
The Company's management has evaluated
all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that
any of these pronouncements will have a material impact on the Company's financial position and results of operations.
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Item 4T. Controls and Procedures
Evaluation of Disclosure Controls
and Procedures
Our disclosure controls and procedures,
as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information
is accumulated and communicated to management, including the Chief Executive Officer and the Chief Accounting Officer, to allow
timely decisions regarding required disclosures.
Management, with the participation of
the Chief Executive Officer, Chief Accounting Officer, and Company Controller, who are all members of our Board of Directors, have
evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q. Based
on such evaluation, the Board of Directors concluded that, as of November 30, 2018, our disclosure controls and procedures were
not effective. Our disclosure controls and procedures were not effective because of the "material weaknesses" described
below under "Management's annual report on internal control over financial reporting," which are in the process of being
remediated as described below under "Management Plan to Remediate Material Weaknesses."
Management's Report on Internal Control
over Financial Reporting
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as defined in rules
promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief
Accounting Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Internal control over financial reporting includes those policies and procedures that:
·
pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our assets;
·
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and our Board of Directors; and
·
provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements
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Because of its inherent limitations,
a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives
of the control system are met and may not prevent or detect misstatements. Internal control over financial reporting is a process
that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.
Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations,
there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial
reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design
into the process safeguards to reduce, though not eliminate, this risk. Further, over time control may become inadequate because
of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness
of our internal control over financial reporting as of November 30, 2018. In making its assessment, management used the criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO"). Based on its assessment, management has concluded that we had certain control deficiencies described below
that constituted material weaknesses in our internal controls over financial reporting. As a result, our internal controls over
financial reporting was not effective as of November 30, 2018.
A "material weakness" is defined
under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there
is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented
or detected on a timely basis by the company's internal controls. As a result of management's review of the investigation issues
and results, and other internal reviews and evaluations that were completed after the end of the quarter ending November 30, 2018,
related to the preparation of management's report on internal controls over financial reporting required for this quarterly report
on Form 10-Q, management concluded that we had material weaknesses in our control environment and financial reporting process consisting
of the following:
1) lack
of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors
on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls
and procedures; and
2) insufficient
written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP
and SEC disclosure requirements.
We do not believe the material weaknesses
described above caused any meaningful or significant misreporting of our financial condition and results of operations for the
period ended November 30, 2018. However, management believes that the lack of a functioning audit committee and the lack of a majority
of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required
internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
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Management Plan to Remediate Material
Weaknesses
Management is pursuing the implementation
of corrective measures to address the material weaknesses described below. In an effort to remediate the identified material weaknesses
and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
We plan to appoint one or more outside
directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing
and approving estimates and assumptions made by management when funds are available to us. Additionally, we will create written
policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and
SEC disclosure requirements
We believe the remediation measures
described above will remediate the material weaknesses we have identified and strengthen our internal control over financial reporting.
We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review
our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial
reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate
circumstances not to complete, certain of the remediation measures described above.
Changes in Internal Control over
Financial Reporting
There were no changes in our internal
control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most
recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
In May 2013, COSO released an updated
version of its Internal Control - Integrated Framework ("2013 Framework"). Initially issued in 1992, the original framework
("1992 Framework") provided guidance to organizations to design, implement and evaluate the effectiveness of internal
control concepts and simplify their use and application. The 2013 Framework is intended to improve upon systems of internal control
over external financial reporting by formalizing the principles embedded in the 1992 Framework, incorporating business and operating
environment changes and increasing the framework’s ease of use and application. The 1992 Framework remained available until
December 15, 2014, after which it was superseded by the 2013 Framework. As of November 30, 2018, the Company has transitioned to
the 2013 Framework. The Company did not experience significant changes to its internal control over financial reporting as a result
from the transition to the 2013 Framework.
This report does not include an attestation
report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report
was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit
the Company to provide only the management's report in this report.
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