UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

 

(Mark one)
   
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 31, 2018

OR

 
   
o 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: 000-54739

 

 
   
     

AMERITEK VENTURES

( Exact name of registrant as specified in its charter )

_________________

Nevada   82-2380777  
(State or Other Jurisdiction   (I.R.S. Employer  
  of Incorporation or Organization)   Identification No.)
             

 

1980 Festival Plaza Drive, Suite 530, Las Vegas, NV       89135  
(Address of principal executive offices)   (Zip Code)
           

877-571-1776
(Registrant’s telephone number, including area code)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes o No þ

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

 

 

 

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

 

Large accelerated filer o Accelerated filer o  
  Non-accelerated filer o Smaller Reporting Company þ

(Do not check if a smaller reporting company)

Emerging growth company o

     
               

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

 

The aggregate market value of the Company's common shares of voting stock held by non-affiliates of the Company at November 30, 2017, based on the closing sales price of the common shares of $3.40 per-share price as quoted on the Pink Sheets, was $22,368,777.

 

There were 34,214,145 shares of Common Stock issued and outstanding as of October 10, 2018.

 

 

 

 
 

 

Table of Contents

 

     PART I  
TITLE

Page

Number

   
ITEM 1.  BUSINESS  4
   
ITEM1A. RISK FACTORS 6

 

ITEM1B. UNRESOLVED STAFF COMMENTS

 

ITEM 2. PROPERTIES

 

15

 

15

 

ITEM 3. LEGAL PROCEEDINGS

 

15

 

ITEM 4. MINE SAFETY DISCLOSURES

 

15

   
PART II  

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

16

   
ITEM 6. SELECTED FINANCIAL DATA 17

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  

 

17

   
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 19
   
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 20

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

21

ITEM 9A. CONTROLS AND PROCEDURES

 

ITEM 9B. OTHER INFORMATION

 

21

 

23

   
PART III  

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

24

 

ITEM 11. EXECUTIVE COMPENSATION

 

28

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

29

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

31

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

31

   
PART IV  

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 
   32
 SIGNATURES

 

34

 

2

 

 

 
 


FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains forward-looking statements. When used in this Annual Report on Form 10-K, the words "may," "could," "estimate," "intend," "continue," "believe," "expect" or "anticipate" 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 Annual Report on Form 10-K. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Annual Report on Form 10-K. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. 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 Annual Report on Form 10-K. 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.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

· inability to raise additional financing for working capital;

· inability to identify new customers;

· deterioration in general or regional economic, market and political conditions;

· the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

· changes in accounting principles generally accepted in the United States of America (“U.S. GAAP”) or in the legal, regulatory and legislative environments in the markets in which we operate;

· inability to efficiently manage our operations;

· inability to achieve future operating results;

· our ability to recruit and hire key employees;

· the inability of management to effectively implement our strategies and business plans; and

· the other risks and uncertainties detailed in this report.

 

In this form 10-K references to "Ameritek Ventures", "the Company", "we," "us," and "our" refer to Ameritek Ventures.

 

AVAILABLE INFORMATION

 

We file annual, quarterly and special reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt of a written request to us at Ameritek Ventures, 1980 Festival Plaza Drive, Suite 530, Las Vegas, Nevada 89135.

 

3

 
 

 

PART I

 

Item 1. Business

 

History and Organization

 

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. (See “Implications of Being an ‘Emerging Growth Company’ ” below in this Section. 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 2019. 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 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.

 

4

 
 

 

Business of Issuer

 

In August 2017, the Company completed its move into a new production and design facility in Roanoke, Virginia. 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 2019. 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 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.

 

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 2019. 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 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.

 

 

5

 
 

 

Employees

 

Ameritek Ventures currently has five employees, its Project Manager, Controller, Head of Technology, and its two officers. Ameritek Ventures plans to utilize independent contractors on a part-time/as needed basis to assist in its development activities, marketing, and financial and accounting support.

 

Need for Government Approval

 

With the exception of a business license, we are not required to apply for or have any government approval for our services.

 

In the future we may be subject to additional laws, regulations, policies, approvals and the like of federal, state, local, municipal, and other bodies.

 

Item 1A. Risk Factors

 

 

RISK FACTORS RELATING TO OUR FINANCIAL CONDITION

 

1. WE HAVE NO OPERATING HISTORY AND LIMITED HISTORICAL FINANCIAL INFORMATION UPON WHICH YOU MAY EVALUATE OUR PERFORMANCE.

 

We have no operating history and we are subject to all risks inherent in a developing business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered developing a business enterprise and the competitive environment in which we operate. You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages of research and business development. We may not be able to successfully address these risks and uncertainties or successfully implement our operating and acquisition strategies. If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our preferred and common stock to the point that the investors may lose their entire investment. Even if we accomplish these objectives, we may not be able to generate positive cash flows or profits that we anticipate in the future.

 

 

2. Our auditors have made reference to the substantial doubt as to our ability to continue as a going concern, THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.

 

Our financial statements included with this Annual Report for the year ended May 31, 2018 have been prepared assuming that we will continue as a going concern. Our auditors have made reference to the substantial doubt as to our ability to continue as a going concern in their audit report on our audited financial statements for the year ended May 31, 2018. Because the Company has been issued an opinion by our auditors that substantial doubt exists as to whether the Company can continue as a going concern, it may be more difficult for the Company to attract investors. Since our auditors have raised a substantial doubt about our ability to continue as a going concern, this typically results greater difficulty to obtain loans than businesses that do not have a qualified auditors opinion. Additionally, any loans we might obtain may be on less advantageous terms. Our future is dependent upon our ability to obtain financing and upon future profitable operations from our business. We plan to seek additional funds through private placements of our

 

 

6

 
 

 

preferred and common stock. You may be investing in a company that will not have the funds necessary to continue to deploy its business strategies. If we are not able to achieve sufficient revenues or find financing to cover our expenses, then we likely will be forced to cease operations and investors will likely lose their entire investment.

 

 

3. WE MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE.

 

Our ability to continue to operate as a going concern is fully dependent upon the Company obtaining sufficient financing to continue its development and operational activities. The ability to achieve profitable operations is in direct correlation to our ability to generate revenues or raise sufficient financing. It is important to note that even if the appropriate financing is received, there is no guarantee that we will ever be able to operate profitably or derive any significant revenues from its operation. If we are unable to obtain additional funding, we may be forced to cease operations.

 

 

COMPANY RISK FACTORS

 

4. We are in a highly competitive market WITH a small number of business opportunities. there is a risk that we would be an insignificant participant among other companies with larger financial resources.

 

The Company is and will continue to be an insignificant participant in the business of seeking mergers with, joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed entities, including venture capital firms, are active in mergers and acquisitions of companies that may be desirable target candidates for us.

 

Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do and, consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover, we will also compete in seeking merger or acquisition candidates with numerous other small public companies

 

 

5. We will depend on third-party delivery services to deliver our product to our future customers on a timely and consistent basis, and any deterioration in our relationship with any one of these third parties or increases in the fees that they charge could harm our reputation and adversely affect our business and financial condition.

 

We will rely on third parties for the shipment of our product and we cannot be sure that these relationships will continue on terms favorable to us, or at all. Shipping costs have increased from time-to-time, and may continue to increase, which could harm our business, prospects, financial condition and results of operations by increasing our costs of doing business and resulting in reduced gross margins. In addition, if our relationships with these third parties are terminated or impaired, or if these third parties are unable to deliver products for us, whether due to labor shortage, slow down or stoppage, deteriorating financial or business condition, responses to terrorist attacks or for any other reason, we would be required to use alternative carriers for the shipment of products to our customers. Changing carriers could have a negative effect on our business and operating results due to reduced visibility of order status and package tracking and delays in order processing and product delivery, and we may be unable to engage alternative carriers on a timely basis, upon terms favorable to us, or at all.

 

7

 
 

 

 

 

6. THERE MAY BE A POSSIBLE INABILITY TO FIND SUITABLE EMPLOYEES.

 

In order to implement our business plan, management recognizes that additional staff will be required. No assurances can be given that we will be able to find suitable employees that can support our needs or that these employees can be hired on favorable terms. We do not plan to hire any additional employees until our cash flows can justify the expense.

 

 

7. We face intense competition and operate in an industry with SIGNIFICANT barriers to entry, and most all of our competitors may have greater resources than us.

 

Our industry is competitive, with products distributed through multi-tiered and overlapping channels. Barriers to entry are significant, and current and new competitors can offer a similar product that we offer at a relatively low cost. Many of our current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing, technical, management and other resources than we do. In addition, some of our competitors have used and may continue to use aggressive pricing tactics and devote substantially more financial resources to website and system development than we do. Increased competition may result in reduced sales, lower operating margins, reduced profitability, loss of market share and diminished brand recognition. Increased competition from any supplier capable of maintaining high sales volumes and acquiring products at lower prices than us could significantly reduce our market share and adversely impact our financial results.

 

 

8. FINANCIAL DIFFICULTIES OR BANKRUPTCY OF ONE OR MORE OF OUR MAJOR CLIENTS COULD ADVERSELY AFFECT OUR RESULTS.

 

Future revenues and our ability to collect accounts receivable depend, in part, on the financial strength of clients. We initially plan to market our product to the major distributors in the U.S. In the event these distributors experience financial difficulty, and particularly if bankruptcy results, profitability is further impacted by our failure to collect accounts receivable in excess of the estimated allowance. Additionally, our future revenues would be reduced by the loss of these distributors.

 

 

9. NATURAL DISASTERS OR ACTS OF TERRORISM COULD DISRUPT SERVICES.

 

Storms, earthquakes, drought, floods or other natural disasters or acts of terrorism may result in reduced revenues or property damage. Disasters may also cause economic dislocations throughout the country. In addition, natural disasters or acts of terrorism may increase the volatility of financial results, either due to increased costs caused by the disaster with partial or no corresponding compensation from clients.

 

Other issues and uncertainties may include:

 

  • New accounting pronouncements or changes in accounting policies;

 

  • Labor shortages that adversely affect our ability to employ entry level personnel;

 

 

8

 
 

 

 

  • Legislation or other governmental action that detrimentally impacts expenses or reduces revenues by adversely affecting our clients; and

 

  • The resignation, termination, death or disability of one or more key executives that adversely affects client retention or day-to-day management.

 

 

10. If we fail to offer a broad selection of products at competitive prices to meet our customers’ demands, our revenue could decline.

 

In order to expand our business, we must successfully offer, products that meet the needs of our future customers. Currently, we have only developed one product that we are offering for sale. Management believes to be successful any new product offerings must be broad and deep in scope, competitively priced, well-made, innovative and attractive to a wide range of consumers. We cannot predict with certainty that we will be successful in offering products that meet all of these requirements. If our product offerings fail to satisfy our customers’ requirements or respond to changes in customer preferences, this would have an adverse effect on any future results for our Company.

 

 

11. OUR LARGEST SHAREHOLDER OWNS APPROXIMATELY 58% OF THE CONTROLLING INTEREST IN OUR VOTING STOCK AND INVESTORS WILL NOT HAVE ANY VOICE IN OUR MANAGEMENT, WHICH COULD RESULT IN DECISIONS ADVERSE TO OUR GENERAL SHAREHOLDERS.

 

Our largest shareholder, Clinton L. Stokes, beneficially has the right to vote approximately 58% of our outstanding common stock. As a result, this shareholder will have the ability to control substantially all matters submitted to our stockholders for approval including:

 

a. election of our board of directors;

 

b. removal of any of our directors;

 

c. amendment of our Articles of Incorporation or bylaws; and

 

d. adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

 

As a result of his ownership and position as officer/director in the Company, Clinton L. Stokes has the ability to influence all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. In addition, the future prospect of sales of significant amounts of shares held by our director and executive officer could affect the market price of our common stock if the marketplace does not orderly adjust to the increase in shares in the market and the value of your investment in the company may decrease. Management's stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

 

 

9

 

 
 

 

12. WE WILL INCUR INCREMENTAL COSTS AS A RESULT OF OPERATING AS A PUBLIC COMPANY.

 

Since we are a full reporting company with the U. S. Securities and Exchange Commission, we will incur additional legal, accounting and other expenses. Moreover, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently implemented by the SEC, have imposed various new requirements on public companies, including requiring changes in corporate governance practices. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We project that the total incremental operating expenses of being a public company will be approximately $100,000 for 2019. The incremental costs are estimates, and actual incremental expenses could be materially different from these estimates. Unless we can generate sufficient revenues and profits, we may not be able to absorb the costs of being a public company.

 

 

13. As a result of operating as a public company our management will be required to devote substantial time to new compliance initiatives.

 

As a public company, we will incur significant legal, accounting and other expenses that we would not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Act of 2010, and rules subsequently implemented and yet to be implemented by the U. S. Securities and Exchange Commission have imposed and will impose various new requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. For example, we expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage.

 

In addition, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management, as required by Section 404 of the Sarbanes-Oxley Act. Compliance will require us to increase our general and administrative expense in order to pay added compliance personnel, outside legal counsel and consultants to assist us in, among other things, external reporting, instituting and monitoring a more comprehensive compliance function and board governance function, establishing and maintaining internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, and preparing and distributing periodic public reports in compliance with our obligations under the U.S. federal securities laws. We currently do not have an internal audit group, and we will evaluate the need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, the market price of our stock could decline.

 

 

14. WE DO NOT HAVE INSURANCE AND, THEREFORE, LIABILITY WE INCUR COULD HAVE SUBSTANTIAL IMPACT ON OUR ABILITY TO CONTINUE AS A GOING CONCERN.

 

We have limited capital and, therefore, we do not currently have a policy of insurance against liabilities arising out of the negligence of our officer and director and/or arising from deficiencies in any of our business operations. Even assuming we obtained insurance, there is no assurance that such insurance coverage would be adequate to satisfy any potential claims made against us, our officers and directors, or

 

10

 

 
 

 

our business operations or assets. Any such liability which might arise could be substantial and would likely exceed our total assets. However, our Articles of Incorporation and Bylaws provide for indemnification of officers and directors to the fullest extent permitted under Nevada law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officer and controlling persons, it is the opinion of the U. S. Securities and Exchange Commission that such indemnification is against public policy, as expressed in the Act, and is therefore, unenforceable.

 

 

15. WE ARE CURRENTLY REPORTING AS A NON-SHELL REGISTRANT AS DEFINED IN RULE 12B-2 OF THE SECURITIES AND EXCHANGE ACT DESPITE HAVING LIMITED REVENUE SINCE INCEPTION.

 

The Company received a favorable legal opinion supporting our position as a non-shell company from outside legal counsel and continue to believe we qualify as a non-shell company as defined through the Jumpstart our Business Startup Act of 2012. However, since we have generated limited revenue since inception and no revenue since the fiscal year ending May 31, 2012, the Securities and Exchange Commission may challenge our non-shell status at some point in the future. We can provide no assurance as to a favorable outcome upon a regulatory review or the potential impact on certain shareholders’ ability to freely trade their common stock and the effect it may have on our stock price.

 

 

RISK FACTORS RELATING TO OUR PREFERRED AND COMMON STOCK.

 

16. OUR PREFERRED STOCK DOES NOT PAY ANY DIVIDENDS AND CAN BE CONSIDERED ILLIQUID.

 

We have one Series of Preferred Shares issued and outstanding as of May 31, 2018. Our registered preferred stock, par value $0.001, shall not be entitled to receive any dividends, shall not have any liquidation rights and shall not be entitled to (a) any voting rights or (b) notice of any meeting of the shareholders of the corporation. The registered preferred stock can be converted at the ratio of one hundred (100) shares of Common Stock for every one (1) share of the registered preferred stock converted; however, the conversion is limited whereby the beneficial owner cannot beneficially own in excess of 4.9% of the shares of the Common Stock outstanding immediately after giving effect to such conversion or exercise.

 

Management has no intention to apply to have any Series of the Company’s preferred stock listed or quoted on any exchange or inter-dealer quotation system. This will make ownership of our preferred shares very illiquid.

 

 

17. We have authorized and unissued shares Series A, B and C Preferred stock that may be issued in the future, which would dilute your ownership in the Company.

 

We have 5,000,000 preferred shares authorized for each of our Series A, B and C preferred stock. We currently have 52,927 shares of the registered Series A preferred stock issued and outstanding; no Series B preferred stock issued and outstanding and no Series C stock issued and outstanding. The Series C stock is undesignated at this time. Therefore, if each Series has 5,000,000 authorized, this gives the Board of Directors a great deal of discretion, in the future, to issue more shares in each Series, without shareholder approval. The issuance of more shares of any Series would dilute your ownership in the Company, which would mean your percent of ownership in the Company would decrease.

 

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18. WE HAVE WARRANTS AND CONVERTIBLE DEBT THAT MAY BE CONVERTED INTO SHARES ISSUED IN THE FUTURE, WHICH WOULD DILUTE YOUR OWNERSHIP IN THE COMPANY.

 

On July 31, 2017, the Company entered into a convertible note agreement in which 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 (termination date).

 

On August 25, 2017, the Company entered into a convertible note agreement in which 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 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).

 

On March 12, 2018, the Company entered into a convertible note agreement in which 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 the note to convert all or any part of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock. The conversion price shall be 61% multiplied by the market price, representing a 39% discount rate. The Company 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 shares of common stock.

 

On April 27, 2018, the Company entered into a convertible note agreement in which 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 the note to convert all or any part of the outstanding and unpaid principal amount of the note into fully paid and non-assessable shares of common stock. The conversion price shall be 61% multiplied by the market price, representing a 39% discount rate. The Company 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 shares of common stock.

 

On May 10, 2018 the Company entered into a convertible note agreement in which the holder of the 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 the note then outstanding into shares of the Company’s common stock. The conversion price shall be 57% multiplied by the market price, representing a 43% discount rate. The Company is required to reserve 1,536,000 shares of common stock.

 

 

12

 

 

 
 

 

19. WE HAVE NEVER DECLARED DIVIDENDS ON OUR COMMON STOCK AND DO NOT PLAN TO DO SO IN THE FORESEEABLE FUTURE.

 

We intend to retain any future earnings to finance the operation and expansion of its business and do not anticipate paying any cash dividends in the foreseeable future. As a result, stockholders will need to sell shares of common stock in order to realize a return on their investment, if any. You should not rely on an investment in our Company if you require dividend income. The only possibility of any income to investors would come from any rise in the market price of your stock, which is uncertain and unpredictable.

 

A holder of common stock will be entitled to receive dividends only when, as, and if declared by the Board of Directors out of funds legally available therefore. We have never issued dividends on our common stock. Our Board of Directors will determine future dividend policy based upon our results of operations, financial condition, capital requirements, and other circumstances.

 

 

20. HOLDERS OF OUR PREFERRED AND COMMON STOCK HAVE A RISK OF POTENTIAL DILUTION IF WE ISSUE ADDITIONAL SHARES OF PREFERRED AND/OR COMMON STOCK IN THE FUTURE.

 

Although our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing stockholders in connection with any future issuance of our common stock, the future issuance of additional shares of our preferred and common stock would cause immediate, and potentially substantial, dilution to the net tangible book value of those shares of preferred and common stock that are issued and outstanding immediately prior to such transaction. Any future decrease in the net tangible book value of our issued and outstanding shares could have a material effect on the market value of the shares.

 

 

21. IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD AND AS A RESULT, INVESTORS MAY BE MISLED AND LOSE CONFIDENCE IN OUR FINANCIAL REPORTING AND DISCLOSURES, AND THE PRICE OF OUR PREFERRED AND COMMON STOCK MAY BE NEGATIVELY AFFECTED.

 

The Sarbanes-Oxley Act of 2002 requires that we report annually on the effectiveness of our internal control over financial reporting. A "significant deficiency" means a deficiency or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the Company's financial reporting. A "material weakness" is 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 the annual or interim financial statements will not be prevented or detected on a timely basis.

 

As of May 31, 2018 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (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) inadequate segregation of duties consistent with control objectives.

 

13

 

 
 

 

In addition, in connection with our on-going assessment of the effectiveness of our internal control over financial reporting, we may discover "material weaknesses" in our internal controls as defined in standards established by the Public Company Accounting Oversight Board, or the PCAOB. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

Failure to provide effective internal controls may cause investors to lose confidence in our financial reporting and may negatively affect the price of our preferred and common stock. Moreover, effective internal controls are necessary to produce accurate, reliable financial reports and to prevent fraud. If we have deficiencies in our internal controls over financial reporting, these deficiencies may negatively impact our business and operations.

 

 

22. LOW-PRICED STOCKS MAY AFFECT THE RESALE OF OUR SHARES.

 

Penny Stock Regulation Broker-dealer practices in connection with transactions in "Penny Stocks" are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock; the broker-dealer must make a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that is subject to the penny stock rules.

 

 

23. THE MARKET PRICE OF OUR COMMON STOCK MAY BE HIGHLY VOLATILE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

 

The trading price of our common stock is likely to be volatile. This volatility may prevent you from being able to sell your shares at or above the price you paid for your shares. Our stock price could be subject to wide fluctuations in response to a variety of factors, which include:

 

· actual or anticipated fluctuations in our quarterly or annual financial results;
· additional needs for financing;
· announcements by us or our competitors of significant acquisitions, strategic partners, joint ventures or capital commitments;
· sales of our common stock or other securities in the open market;
· additions or departures of key personnel;
· failure of any of our initiatives;
· regulatory or political developments;
· changes in accounting principles or methodologies;
· litigation or governmental investigations;

 

14

 

· negative publicity about us in the media and online;
· general financial market conditions or events; and
· other events or factors, many of which are beyond our control.

 

Additionally, in recent years the stock market in general, and the penny stock markets in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price, regardless of our operating performance. In the past, class action litigation often has been brought against companies following periods of volatility in the market price of those companies’ common stock. If we become involved in this type of litigation in the future, it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on shareholders’ investments in our stock.

 

 

Item 1B. Unresolved Staff Comments.

 

None.

 

 

Item 2. Properties.

 

The Company's corporate headquarters are located at: 1980 Festival Plaza Drive, Suite 530, Las Vegas, NV 89135. The Company does not own any real property. The administrative office is being provided at no cost by an Officer of the Company. The Officer will not seek reimbursement for providing this administrative space. On August 1, 2017, the Company began leasing warehouse space for its production facility in Roanoke, Virginia at a cost of $2,812.50 per month. On July 31, 2018 the Company’s lease on the premises expired and the Company is now continuing the lease on a month-to-month basis under the same rate and terms. The Company is required to give the Landlord 60 days’ notice when it intends to vacate the premises.

 

 

Item 3. Legal Proceedings.

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

 

Item 4. Mine Safety Disclosures.

 

Not Applicable.

 

 

15

 

 

 
 

 

PART II

 

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

(a) Market Information

 

Ameritek Ventures Common Stock, $0.001 par value, was cleared for quotation on the OTC-Bulletin Board on November 20, 2012, under the symbol: ATVK.

 

There have been a limited amount of trades of the Company’s stock since it was listed on the OTC-BB, there are no assurances that a market will ever develop for the Company's stock.

 

The following table sets forth the high and low sales prices for our common stock, which has been listed on the OTC-BB for all periods presented.

 

Year ended May 31, 2018

  High     Low  
First Quarter   $ 3.00     $ 0.945  
Second Quarter   $ 3.60     $ 1.50  
Third Quarter   $ 3.40     $ 0.75  
Fourth Quarter   $ 1.615     $ 0.202  
         

Year ended May 31, 2017

  High     Low  
First Quarter   $ 0.24     $ 0.24  
Second Quarter   $ 0.24     $ 0.15  
Third Quarter   $ 0.22     $ 0.15  
Fourth Quarter   $ 1.75     $ 0.245  
         

(b) Holders of Common Stock

 

As of October 3, 2018, there are approximately 708 holders of record of our Common Stock and five holders of our Preferred Stock.

 

(c) Dividends

 

In the future we intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be the sole discretion of board of directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

 

(d) Securities Authorized for Issuance under Equity Compensation Plans

 

There are no outstanding grants or rights or any equity compensation plan in place.

 

 

16

 

 
 

 

(e) Recent Sales of Unregistered Securities 

None.

 

(f) Issuer Purchases of Equity Securities

 

We did not repurchase any of our equity securities during the years ending May 31, 2018 and May 31, 2017.

 

Item 6. Selected Financial Data.

 

Not applicable.

 

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview of Current Operations

 

In August 2017, the Company completed its move into a new production and design facility in Roanoke, Virginia. 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 2019. 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 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.

 

 

RESULTS OF OPERATIONS

 

For the fiscal years ended May 31, 2018 and May 31, 2017, the Company recognized no revenues.

 

For the fiscal year ended May 31, 2018, the Company incurred total operating expenses of $432,612, which consisted of $432,612 in general and administrative expenses. This compares to the fiscal year ended May 31, 2017, where the Company incurred total operating expenses of $12,935, which consisted of $12,935 in general and administrative expenses.

 

For the fiscal year ended May 31, 2018, the Company had other income (expense) of $(173,894), which consisted of an interest expense of $(73,894) and a valuation adjustment on our fiber optic assets of $(100,000), as compared to the prior fiscal year when the Company had other income (expense) of $0.

 

For the fiscal year ended May 31, 2018, the Company had a loss applicable to common shareholders of $(606,506) or $(0.02) per common share basic and diluted, as compared to a loss applicable to common shareholders of $(12,935) or $(0.00) per common share for the year ended May 31, 2017.

 

 

17

 

 
 

 

During the year ended May 31, 2018, the Company used net cash of $(367,966) in operations, $(108,477) was used in investing activities and $504,115 was provided by financing activities. During the year ended May 31, 2017, the Company used net cash of $(20,000) in operations, $20,000 was provided by investing activities and no cash was provided by or used in financing activities.

 

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 any product research and development that we will perform for the term of our plan of operation.

 

At this time, the Company has no product research, nor development taking place, pending funding. As such, research is not required at this time.

 

Expected purchase or sale of plant and significant equipment

 

On August 1, 2017, the Company began leasing warehouse space for its production facility in Roanoke, Virginia. Management is currently in the process of identifying costs associated with equipment for manufacturing. The Company’s lease on the warehouse space expired on July 31, 2018 and the Company is continuing to lease the space on a month-to-month basis at the same rate and terms.

 

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 May 31, 2018, the Company had cash and cash equivalents of $39,057, which includes cash held in escrow of $12,385. At the same date, the Company had total current liabilities of $635,854.

 

Management intends to raise additional debt or equity financing to fund ongoing operations and for 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.

 

 

18

 

 
 

 

Notwithstanding, the Company anticipates generating losses and therefore may be unable to continue operations in the future. The Company anticipates it will require additional capital in order to develop its business. The Company may use a combination of equity and/or debt instruments or enter into a strategic arrangement with a third party. Management has yet to find a solution to its funding requirements.

 

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 current financial position and results of operations.

 

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

 

Not applicable.

 

 

 

 

 

 

 

 

 

 

 

 

19

Item 8. Financial Statements and Supplementary Data.

 

Index to Financial Statements

 

Ameritek Ventures

Financial Statements

 

 

INDEX TO FINANCIAL STATEMENTS

       
Financial Statements:    
       
    Report of Independent Registered Public Accounting Firm F-1
       
    Balance Sheets as of May 31, 2018 and 2017 F-2
       
    Statements of Operations for the Years Ended May 31, 2018 and May 31, 2017 F-3
       
    Statements of Stockholders’ Equity (Deficit) for the Years Ended May 31, 2018 and May 31, 2017

 

F-4 

       
    Statements of Cash Flows for the Years Ended May 31, 2018 and May 31, 2017 F-5
       
    Notes to the Financial Statements   F-6  
       
       
             

 

 

 

20

 

 
 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of

AMERITEK VENTURES

Las Vegas, Nevada

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of AMERITEK VENTURES (“the Company”) as of May 31, 2018 and 2017, the related statement of operations, stockholders’ equity (deficit), and cash flows for the years then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company May 31, 2018 and 2017, and the results of their operations and their cash flows for the years ended May 31, 2018 and 2017, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Going Concern Uncertainty

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has earned no revenues in the year ended May 31, 2018, has negative working capital at May 31, 2018, has incurred recurring losses and recurring negative cash flow from operating activities, and has an accumulated deficit. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We have served as the Company's auditor since 2014.

 

/s/ SOMERSET CPAS, P.C.

 

Indianapolis, Indiana

October 10, 2018

 

 

F-1

 

 
 

 

 

AMERITEK VENTURES

Balance Sheets

 

 

        May 31, 2018   May 31, 2017
    ASSETS        
Current assets:        
  Cash and cash equivalents   $                27,672   $                       -
  Cash held in escrow   12,385   -
   Deposits   521                           -
    Total current assets   40,578   -

 

Long-term assets:

       
   Fiber optic assets   -                           -
    Total long-term assets   -   -

 

TOTAL ASSETS

  $               40,578   $                       -
   

 

 

       
    LIABILITIES AND STOCKHOLDERS' DEFICIT        
Current liabilities:        
  Accounts payable   $                52,191   $             23,270
  Other accrued expenses   -   10,000
  Convertible notes payable   503,184   -
  Accrued interest   28,456   -
  Due to related party   52,023   60,500
    Total current liabilities   635,854   93,770
             
Stockholders' deficit:        
  Preferred stock Series B, $0.001 par value, 5,000,000 shares   -   -
    authorized, none issued and outstanding as of        
    5/31/2018 and 5/31/2017, respectively        
  Convertible preferred stock Series A, $0.001 par   53   119
    value, 5,000,000 shares authorized, 52,927        
    and 119,200 issued and outstanding as of        
    5/31/2018 and 5/31/2017, respectively        
  Preferred stock Series C, $0.001 par value, 5,000,000 shares   -   -
    authorized, none issued and outstanding as of        
    5/31/2018 and 5/31/2017, respectively        
  Common stock, $0.001 par value, 185,000,000 shares   33,714   7,230
    authorized, 33,714,307 and 7,230,004 issued and        
    outstanding as of 5/31/2018 and 5/31/2017,        
    Respectively        
  Additional paid-in capital     448,612   370,030
  Accumulated deficit   (1,077,655)   (471,149)
    Total stockholders' deficit   (595,276)   (93,770)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $                40,578   $                      -

 

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

F-2

 

 
 

 

 

AMERITEK VENTURES

Statements of Operations

 

      For the Year Ended May 31, 2018   For the Year Ended May 31, 2017  
Revenue $                         -   $                         -  
Cost of goods sold -   -  
Gross profit -   -  
             
Expenses:        
  General & administrative expenses 432,612   12,935  
    Total expenses 432,612   12,935  
             
Operating loss  (432,612)          (12,935)  
             
Other Income (Expenses):        
  Interest income (expense) (73,894)   -  
  Valuation adjustment on fiber optic assets (100,000)   -  
    Total other income (expenses) (173,894)   -  
             
Net loss applicable to        
  common shareholders $          (606,506)   $              (12,935)  
             
Net loss per share - basic and diluted $                (0.02)   $                    (0.00)  
             
Weighted average shares outstanding – basic 25,571,134   6,906,333  
             
Weighted average shares outstanding – diluted 35,415,902   19,150,004  

 

 

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

 

F-3

 

 

 

 

 
 

 

 

 

AMERITEK VENTURES

Statements of Stockholders’ Equity (Deficit)

 

    Series B   Series A Convertible             Additional       Total
    Preferred Stock   Preferred Stock     Common Stock   Paid-In   Accumulated   Stockholders'
    Shares   Amount   Shares   Amount     Shares   Amount   Capital   Deficit   Equity (Deficit)
                                       
Balance, May 31, 2016   -      $ -  

 

122,500

 

 

$123

   

 

6,900,004

 

 

$6,900

 

 

$370,356

    $(458,214)      $(80,835)

 

Conversion of Preferred Stock

  -       -  

 

(3,300)

 

 

(4)

   

 

330,000

 

 

330

 

 

(326)

     -      -
                                       
Net loss   -   -   -   -     -   -   -   (12,935)   (12,935)
                                       
Balance, May 31, 2017   -       -  

 

119,200

 

 

1119

   

 

7,230,004

 

 

7,230

 

 

$ 370,030

    (471,149)    (93,770)

 

Conversions of Preferred Stock

  -       -  

 

(66,273)

 

 

(66)

   

 

6,627,300

 

 

6,627

 

 

(6,571)

     -      -

 

Issuance of Common Stock for Cash

  -       -  

 

-

 

 

-

   

 

71,429

 

 

71

 

 

99,929

     -      100,000
                                       
Conversion of Accrued Interest for Common Stock   -       -  

 

-

 

 

-

   

 

40,578

 

 

41

 

 

4,959

     -      5,000
                                       

 

Issuance of Common Stock for Fiber Optic Assets

  -       -  

 

-

 

 

-

   

 

19,770,000

 

 

19,770

 

 

(19,770)

     -      -

 

Retirement of Unallocated Common Stock

  -       -  

 

-

 

 

-

   

 

(25,004)

 

 

(25)

 

 

25

     -      -
                                       
Net loss   -   -   -   -     -   -   -   (606,506)   (606,506)
                                       
Balance, May 31, 2018   -   $    -  

 

52,927

 

 

$53

   

 

33,714,307

 

 

$34,214

 

 

$ 448,612

  $(1,077,655)   $  (595,276)

 

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

 

F-4

 

 

 

 

 
 

 

 

AMERITEK VENTURES

Statements of Cash Flows

 

      For the year ended May 31, 2018   For the year ended May 31, 2017
       
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss $              (606,506)   $           (12,935)
 

Adjustments to reconcile net loss to net cash used

in operating activities:

     
    Valuation adjustment on fiber optic assets 100,000   -
  Changes in operating assets and liabilities:      
    Deposits (521)   -
    Accounts payable 18,921   435
    Accrued expenses 120,140   (7,500)
Net cash used in operating activities (367,966)   (20,000)

 

CASH FLOWS FROM INVESTING ACTIVITIES

     
    Advances (repayments) of advances from shareholders $                    (8,477)   20,000
    Cash paid for purchase of fiber optic assets (100,000)   -
Net cash provided by (used in) investing activities (108,477)   20,000

 

CASH FLOWS FROM FINANCING ACTIVITIES

     
   Proceeds for issuance of common stock $                 100,000   $                     -
    Proceeds from short term convertible debt 404,115   -
Net cash provided by financing activities 504,115   -

 

NET INCREASE IN CASH

27,672   -
CASH - BEGINNING OF THE PERIOD -   -
CASH - END OF THE PERIOD $                  27,672   $                       -
       

 

 

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

 

F-5

 

 
 

 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

 

The Company was organized on December 27, 2010 under the laws of the State of Nevada, as ATVROCKN. On June 20, 2017, the Company changed its corporate name to Ameritek Ventures.

 

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

The financial statements and accompanying notes are prepared under accrual of accounting in accordance with generally accepted accounting principles of the United States of America ("US GAAP").

 

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. The Company also has cash held in escrow in the amount of $12,385 at May 31, 2018. This money was held back in escrow by a convertible note holder to be disbursed for accounting and legal services relative to an S1 filing of the Company, should that occur.

 

Noncash financing activities include the conversion of $5,000 of accrued interest on a convertible note payable in exchange for issuance of 40,578 shares of the Company’s common stock during the year ended May 31, 2018.

 

Noncash financing activities include the conversion of accrued interest and other financing related costs on certain convertible notes payable into principal in the amount of $33,456 during the year-ended August 31, 2018.

 

Earnings per Share

The basic earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the weighted average number of common shares issued and outstanding during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first year for any potentially dilutive debt or equity.

 

The Company has not issued any options or similar securities since inception, however the Company has issued warrants to purchase common stock of the Company that are associated with the Company’s convertible notes payable. There were 208,000 Warrant Shares issued to Emunah Funding, LLC on 7/31/2017 and 204,800 Warrant Shares issued to Emunah Funding, LLC on 8/25/2017. These Warrant Shares may be exercised now at the discretion of the Note Holder.

 

F-6

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.

 

Income Taxes

The Company utilizes the asset and liability method of accounting for deferred income taxes as prescribed by the FASB Accounting Standard Codification, ("ASC"), 740 (Income Taxes). This method requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the tax return and financial statement reporting basis of certain assets and liabilities.

 

As required by ASC 740-10, "Income Taxes", the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Management does not believe that there are any uncertain tax positions which would have a material impact on the financial statements. The Company has elected to include interest and penalties related to uncertain tax positions as a component of income tax expense. To date, the Company has not recorded any interest or penalties related to uncertain tax positions.

 

Long-lived Assets

The Company reviews the carrying value of property, plant, and equipment (including its fiber optic assets) for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends, and prospects, as well as the effects of obsolescence, demand, competition, and other economic factors.

Year-end

The Company has selected May 31 as its year-end.

 

Advertising

Advertising is expensed when incurred. There have been no advertising costs incurred during the current period.

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

F-7

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

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 current financial position and results of operations.

 

 

NOTE 3 - GOING CONCERN

 

These 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 May 31, 2018, the Company has accumulated operating losses of $1,077,655 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.

 

 

NOTE 4 – FIBER OPTIC ASSETS

 

On August 30, 2017, the Company entered into an Asset Purchase Agreement with Clinton L. Stokes, the Company’s current majority shareholder, Chief Executive Officer and Principal Executive Officer , whereby 19,770,000 unregistered restricted common shares of stock were approved for issuance by the Board of Directors, along with payment of $100,000, in exchange for fiber optic assets. The terms of this agreement were fulfilled on September 15, 2017 and the Company has not placed the fiber optic assets into service as of May 31, 2018. The fiber optic assets consisted of schematic diagrams of the VAD & OVD equipment, vendors and associated parts used in the manufacturing of equipment, proprietary computer programming, process control software, intellectual property associated with preform chemical composition, and future rights to patent development of the technologies.

 

During the quarter ended May 31, 2018, the Company determined that, based on uncertainty of the estimated future cash flows associated with the acquired fiber optic assets, the carrying amount of the fiber optic assets exceeds its fair value by $100,000; accordingly, an impairment loss of that amount was recognized and is included in net income. The Company still has plans to utilize the fiber optic assets once funding has been secured to implement the Company’s future business development plans.

 

F-8

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

NOTE 5 - 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 May 31, 2018 and May 31, 2017, 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.

During the year ended May 31, 2017, Arden A. Johnson, who was the beneficial owner of the Company’s Series A Convertible Preferred Stock, entered into an agreement whereby he sold his ownership in Legal Beagle Services to J. Chad Guidry who is now currently the beneficial owner of the Company’s Series A Convertible Preferred Stock.

 

Also during the year ended May 31, 2017, Legal Beagle Services exercised the conversion feature of 3,300 shares owned by them of the Series A Preferred Stock. These shares converted into 330,000 shares of registered Common Stock.

 

During the year ended May 31, 2018, there were numerous conversions of the Company’s Series A Preferred Stock in Common Stock. The total amount of conversions were 66,273 of Series A Preferred Stock that was converted into 6,627,300 shares of Common Stock. See additional Series A Preferred Stock conversions described below.

 

 

F-9

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

During the year ended May 31, 2018, there were no issuances of Series A Preferred Stock.

 

As of May 31, 2018 and May 31, 2017, there were 52,927 and 119,200 shares of Series A Preferred Stock issued and outstanding, respectively.

 

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 May 31, 2018 and May 31, 2017, respectively. The designation of these shares have 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 33,714,307 and 7,230,004 shares are issued and outstanding as of May 31, 2018 and May 31, 2017, respectively.

 

On September 14, 2016, the Company underwent a change of control of ownership. Hal Heyer, former CEO of the Company, entered into an agreement on September 23, 2016 whereby he sold his ownership of 5,100,000 control block shares to Mark Cole. Mark Cole paid cash consideration of ten thousand ($10,000) for the 5,100,000 control block shares. The terms of this agreement were fulfilled on September 20, 2016. 

 

During the year ended May 31, 2017, a shareholder who owned 3,300 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 330,000 registered common shares.

 

On August 30, 2017, the Company entered into an Asset Purchase Agreement with Clinton L. Stokes, the Company’s Chief Executive Officer, whereby 19,770,000 unregistered restricted common shares of stock were approved for issuance by the Board of Directors, along with payment of $100,000, in exchange for fiber optic assets. The terms of this agreement were fulfilled on September 15, 2017.

 

On August 30, 2017, the Company sold 71,429 shares of its common stock to Meridian Pacific Holdings, LLC, in exchange for $100,000. These shares were subsequently issued on October 3, 2017. The aforementioned shares were sold with an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

 

On August 30, 2017, a shareholder who owned 170 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 17,000 registered common shares.

 

 

F-10

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

On September 1, 2017, a shareholder who owned 1,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 100,000 registered common shares.

 

On October 3, 2017, a shareholder who owned 1,500 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 150,000 registered common shares.

 

On October 5, 2017, a shareholder who owned 500 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 50,000 registered common shares.

 

On October 16, 2017, a shareholder who owned 1,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 100,000 registered common shares.

 

On October 23, 2017, a shareholder who owned 280 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 28,000 registered common shares.

 

On October 27, 2017, a shareholder who owned 5,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 500,000 registered common shares.

 

On October 31, 2017, a shareholder who owned 5,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 500,000 registered common shares.

 

On November 1, 2017, a shareholder who owned 5,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 500,000 registered common shares.

 

On November 7, 2017, a shareholder who owned 1,450 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 145,000 registered common shares.

 

On November 10, 2017, a shareholder who owned 655 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 65,500 registered common shares.

 

 

F-11

 

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

On November 13, 2017, a shareholder who owned 10,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 1,000,000 registered common shares.

 

On November 13, 2017, a shareholder who owned 5,500 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 550,000 registered common shares.

 

On November 14, 2017, a shareholder who owned 50 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 5,000 registered common shares.

 

On November 27, 2017, a shareholder who owned 480 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 48,000 registered common shares.

 

On November 29, 2017, a shareholder who owned 8 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 800 registered common shares.

 

On December 6, 2017, a shareholder who owned 200 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 20,000 registered common shares.

 

On December 6, 2017, a shareholder who owned 700 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 70,000 registered common shares.

 

On December 19, 2017, a shareholder who owned 2,980 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 298,000 registered common shares.

 

On January 17, 2018, a shareholder who owned 9,500 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 950,000 registered common shares.

 

On March 6, 2018, a shareholder who owned 5,500 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 550,000 registered common shares.

 

 

F-12

 

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

On April 6, 2018, a shareholder who owned 900 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 90,000 registered common shares.

 

On April 26, 2018, a shareholder who owned 8,000 registered shares of the Series A Preferred Stock, exercised the conversion feature of the Preferred Stock and they converted their shares into common stock and received 800,000 registered common shares.

 

  

NOTE 6 - RELATED PARTY TRANSACTIONS

 

Advances

During the year ended May 31, 2018, the Principal Financial Officer of the Company advanced $67,793 to the Company for operating expenses. Total outstanding advances from the Company’s Principal Financial Officer amounted to $0 at May 31, 2018 and 2017, respectively. During the year ended May 31, 2018, the Company’s current majority shareholder, Chief Executive Officer and Principal Executive Officer advanced $9,723 to the Company for operating expenses. Total outstanding advances from the Company’s current majority shareholder and Principal Executive Officer amounted to $1,523 and $0 at May 31, 2018 and 2017, respectively. Total advances from two of the Company’s former Director and Principal Executive officers amounted to $50,500 and 60,500 at May 31, 2018 and 2017, respectively. These advances are payable on demand and bears no interest. The total balances owed to related parties at May 31, 2018 and 2017 was $52,023 and $60,500, respectively.

 

Contributed Capital

On November 19, 2014, Hal Heyer, M.D., former President, Chief Executive Officer and Chairman of the Board of Directors personally loaned $250,000 to VoCare, Inc., an Indiana company. The $250,000 Promissory Note pays 12% interest per annum with a maturity date of December 31, 2017. On December 10, 2014, Hal Heyer, M.D., assigned this Promissory Note to the Company. On June 2, 2015, VoCare, Inc. repaid a portion of the Promissory Note in the amount of $120,000 directly to Hal Heyer, M.D., the payment was recorded as a reduction of the Promissory Note as well as a non-cash distribution and related reduction in paid-in-capital in the quarter-ended August 31, 2015.

 

During the quarter ended November 30, 2015, the Company recorded a valuation adjustment for the outstanding interest that had accrued per the terms of the original terms of the promissory note. On March 20, 2017, the Company reassigned the remaining note receivable amount of $130,000 to Hal Heyer.

 

Fiber Optic Asset Purchase

On August 30, 2017, the Company entered into an Asset Purchase Agreement with Clinton L. Stokes, the Company’s current majority shareholder, Chief Executive Officer and Principal Executive Officer , whereby 19,770,000 unregistered restricted common shares of stock were approved for issuance by the Board of Directors, along with payment of $100,000, in exchange for fiber optic assets. The terms of this agreement were fulfilled on September 15, 2017 and the Company has not placed the fiber optic assets into service as of May 31, 2018. See Note 4.

 

 

F-13

 

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

NOTE 7 - 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 (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 $14,040. The total amount due under the convertible promissory note at May 31, 2018 was $84,240.

 

On May 22, 2018, the convertible note agreement holder converted $5,000 of interest that had accrued on the convertible note into 40,578 shares of the Company’s common stock.

 

 

F-14

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

Subsequent to May 31, 2018, 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. See Note 9.

 

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 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 due under the convertible promissory note at May 31, 2018 was $82,944.

 

 

F-15

 

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

 

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 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”).

 

Subsequent to the year ended May 31, 2018, the Company was in default with the convertible note agreement. The total amount due under the convertible promissory note at May 31, 2018 was $103,000.

 

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”).

 

F-16

 

 
 

 

AMERITEK VENTURES

Notes to the Financial Statements

May 31, 2018

 

Subsequent to the year ended May 31, 2018, the Company was in default with the convertible note agreement. The total amount due under the convertible promissory note at May 31, 2018 was $68,000.

 

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 due under the convertible promissory note at May 31, 2018 was $165,000.

 

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 May 31, 2018 and May 31, 2017, 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

 

The Company has evaluated subsequent events through the date the financial statements were available to be issued.

 

Subsequent to May 31, 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.

 

F-17

 

 

 
 

 

 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

None.

 

 

Item 9A. 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 Financial Officer, to allow timely decisions regarding required disclosures.

 

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, who is also the sole member of our Board of Directors, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Form 10-K. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of May 31, 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 Financial 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

 

 

21

 

 
 

 

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 May 31, 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 were not effective as of May 31, 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 that were completed related to the preparation of management's report on internal controls over financial reporting required for this annual report on Form 10-K, 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 fiscal year ended May 31, 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.

 

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:

 

 

22

 

 
 

 

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, the Committee of Sponsoring Organizations of the Treadway Commission ("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 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 May 31, 2018, the Company 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 annual report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this report.

 

 

Item 9B. Other Information

 

None.

 

 

 

 

23

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

(a) Identification of Directors and Executive Officers.

 

The following table sets forth certain information regarding our current directors and executive officers. Our executive officers serve one-year terms.

 

Name Age Positions and Offices Held

 

Clinton L. Stokes III 44 President, Chief Executive Officer and Chairman

Appointed: June 19, 2017

 

Kenneth P. Mayeaux 68 Vice President of Operations, Secretary and Treasurer

Appointed: July 10, 2017

 

Jamie Mayeaux 59 Director, Controller

Appointed: March 12, 2018

 

 

B. Work Experience

 

Clinton L. Stokes III, President, Chief Executive Officer and Chairman

 

Clinton L. Stokes III honed his management experience in the Mortgage industry where he started from the ground up to management of over 60 Sales and Operations personnel in multiple locations consistently generating over $400 million in monthly production, including working many years with Prospect, a mortgage loan company, which was ultimately acquired by a private equity group.  Realizing that there was more opportunity in working for himself, in 2010 he began his career as a Serial Entrepreneur and widened his business endeavors to include Hard Money Lending, Residential and Commercial Real Estate Investments, Credit Card Processing and Food Service businesses. Management believes this skill set is a good fit for the Company.

 

Kenneth P. Mayeaux, Vice President of Operations, Secretary and Treasurer

 

Kenneth P. Mayeaux holds a Bachelor of Science in Analytical Management from the U.S. Naval Academy at Annapolis, MD and served as a U.S. Naval Officer in engineering, operations and logistics positions for over six years.  Following his naval service, Mr. Mayeaux completed advanced business training at Louisiana State University and attended various Sales and Consulting training courses throughout his career. 

 

Educational background and professional experience have culminated in Mr. Mayeaux, a results-oriented business executive, who brings over 25 years of highly successful multi-manufacturing plant operations, project management, financial management, and consulting experience in privately held building materials and chemical manufacturing, foreign owned, and Fortune 100 companies to Ameritek Ventures.

 

 

24

 

 
 

 

In his capacity as the VP of Operations for Ameritek Ventures, Mr. Mayeaux brings his extensive plant operations, financial expertise, and management expertise to the company management team.  Further, Mr. Mayeaux brings his specialized skills in the areas of project oversight, supply chain management, plant manufacturing operations, plant financial operations, compliance and legal oversight, to facilitate the planned, strategic, and rapid expansion of Ameritek Ventures in the global, optical fiber marketplace.

 

 

Jamie Mayeaux, Director, Controller

 

Jamie Mayeaux, age 59, holds a Bachelor of Arts from the University of South Florida in accounting and finance. Throughout her business career, Jamie has owned and managed several successful privately held businesses, including real estate brokerages, an equipment leasing company, a multi-specialty health clinic and a financial consulting business. Jamie is adept at identifying and structuring complex domestic and international financial transactions and sourcing and creating investment opportunities using her extensive financial resources.

 

Jamie has come to Ameritek Ventures as its Controller, utilizing her financial and management abilities to oversee all administrative functions of the Company. She has the ability to develop intricate financial forecasts, evaluate new opportunities, prioritize company expenditures and develop solid relationships with vendors and external financial service providers. She is adept in keeping management abreast of the financial health of the company and keeping all regulatory reporting current.

 

 

(b) Involvement in Certain Legal Proceedings.

 

Our director, executive officer and control person has not been involved in any of the following events during the past ten years and which is material to an evaluation of the ability or the integrity of our directors or executive officers:

 

1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

 

3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;

 

4. being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

5. any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity;

 

6. Any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions; and

 

7. Any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 

25

 
 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of the date of this report they were not current in their 16(a) reports.

 

Board of Directors

 

Our board of directors currently consists of three members. Our directors serve one-year terms.

 

Audit Committee

 

The company does not presently have an Audit Committee. No qualified financial expert has been hired because the company is too small to afford such expense.

 

 

Committees and Procedures

 

1. The registrant has no standing audit, nominating and compensation committees of the Board of Directors, or committees performing similar functions. The Board acts itself in lieu of committees due to its small size.

 

2. The view of the board of directors is that it is appropriate for the registrant not to have such a committee because its directors participate in the consideration of director nominees and the board and the company are so small.

 

3. The members of the Board who acts as nominating committee is not independent, pursuant to the definition of independence of a national securities exchange registered pursuant to section 6(a) of the Act (15 U.S.C. 78f(a).

 

4. The nominating committee has no policy with regard to the consideration of any director candidates recommended by security holders, but the committee will consider director candidates recommended by security holders.

 

5. The basis for the view of the board of directors that it is appropriate for the registrant not to have such a policy is that there is no need to adopt a policy for a small company.

 

6. The nominating committee will consider candidates recommended by security holders, and by security holders in submitting such recommendations.

 

7. There are no specific, minimum qualifications that the nominating committee believes must be met by a nominee recommended by security holders except to find anyone willing to serve with a clean background.

 

 

26

 

 
 

 

8. The nominating committee's process for identifying and evaluation of nominees for director, including nominees recommended by security holders, is to find qualified persons willing to serve with a clean backgrounds. There are no differences in the manner in which the nominating committee evaluates nominees for director based on whether the nominee is recommended by a security holder, or found by the board.

 

 

Code of Ethics

 

We have not adopted a Code of Ethics for the Board and any salaried employees.

 

 

Limitation of Liability of Directors

 

Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director's liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.

 

 

Nevada Anti-Takeover Law and Charter and By-law Provisions

 

The anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada Corporation Law apply to Ameritek Ventures. Section 78.438 of the Nevada law prohibits the Company from merging with or selling more than 5% of our assets or stock to any shareholder who owns or owned more than 10% of any stock or any entity related to a 10% shareholder for three years after the date on which the shareholder acquired the Ameritek Ventures shares, unless the transaction is approved by Ameritek Ventures' Board of Directors. The provisions also prohibit the Company from completing any of the transactions described in the preceding sentence with a 10% shareholder who has held the shares more than three years and its related entities unless the transaction is approved by our Board of Directors or a majority of our shares, other than shares owned by that 10% shareholder or any related entity. These provisions could delay, defer or prevent a change in control of Ameritek Ventures.

 

 

 

27

 

 

 
 

 

Item 11. Executive Compensation.

 

Compensation

 

The following table sets forth summary executive compensation information for the fiscal years ended May 31, 2018 and May 31, 2017.

 

Summary Compensation Table

 

 

 

      Fiscal Year Salary Bonus Awards

Compen-

sation

Total
Name Principal Position

Ending

May 31

($) ($) ($) ($) ($)

 

Clinton L. Stokes III CEO/Director 2018 0 0 0 0 0
Appointed:  6/19/2017   2017       0 0 0 0 0

  

Kenneth P. Mayeaux V.P., Sec., 2018 0 0 0 0 0
Appointed:  7/10/2017  Trea., Dir. 2017       0 0 0 0 0

 

Jamie Mayeaux Controller, 2018 0 0 0 0 0
Appointed:  3/12/2018 Director 2017       0 0 0 0 0

 

Hal B. Heyer, M.D. Former CEO/ 2018 0 0 0 0 0
Appointed:  1/27/2014 Director 2017       0 0 0 0 0

 

Frank William Rycraft, Jr. Former CEO/ 2018 0 0 0 0 0
Appointed:  3/21/2017 Director 2017       0 0 0 0 0

 

We do not maintain key-man life insurance for our executive officer/director. We do not have any long-term compensation plans or stock option plans.

 

As of the date hereof, there have been no grants of stock options to purchase our Common Stock made to the executive officers named in the Summary Compensation Table.

 

Stock Option Grants

 

We did not grant any stock options to the executive officers or directors from inception through the fiscal year end May 31, 2018.

 

Outstanding Equity Awards

 

We did not have any outstanding equity awards to the executive officers or directors from inception through fiscal year end May 31, 2018.

 

 

28

 

 
 

 

Option Exercises

 

There were no options exercised by our executive officers or directors from inception through fiscal year end May 31, 2018.

 

Potential Payments upon Termination or Change in Control

 

We have not entered into any compensatory plans or arrangements with respect to our named executive officer, which would in any way result in payments to such officer because of his resignation, retirement, or other termination of employment with us or our subsidiaries, or any change in control of, or a change in his responsibilities following a change in control.

 

Director Compensation

 

We did not pay our directors any compensation during fiscal years ended May 31, 2018 or May 31, 2017.

 

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

 

The following table presents information, to the best of our knowledge, about the ownership of our common stock on September 13, 2018 relating to those persons known to beneficially own more than 5% of our capital stock and by our named executive officer and sole director.

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes shares of common stock that the stockholder has a right to acquire within 60 days after September 13, 2018 pursuant to options, warrants, conversion privileges or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of Ameritek Ventures' common stock.

 

 

 

29

 

 
 

 

The following table sets forth certain information regarding the beneficial ownership of all shares of the Company’s common stock owned on the Record Date for (i) each person who owns beneficially more than five percent of the outstanding shares of common stock, (ii) each of our directors and named executive officers, and (iii) all directors and officers in a group:

 

TITLE OF CLASS NAME OF BENEFICIAL OWNER AND POSITION AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT OF CLASS BEFORE CONVERSION(1) PERCENT OF CLASS AFTER CONVERSION(2)
Common Stock Clinton L. Stokes (3) 19,770,000 57.78% 50.04%
         
Common Stock Mark Cole (4) 5,100,000 14.90% 12.91%
         
         
Ownership upon conversion of Shareholders'      
preferred stock        
         
Common Stock Lion Den, LLC (5) 2,450,000 0.0% 6.20%
Preferred Stock Lion Den, LLC (5)(7) 24,500  46.07%   0.0% 
         
Common Stock Legal Beagle Services (6) 2,005,000 0.0% 5.08%
Preferred Stock Legal Beagle Services(6)(7) 20,050  37.70%   0.0% 

 

 

 

       
DIRECTORS AND OFFICERS AS A GROUP      
  (1 person) 19,770,000  73.03% 50.04%

 

(1)   Percent of Class based on 34,214,145 shares before conversion of registered preferred stock.

(2)   Percent of Class based on 39,506,845 shares after conversion of the 52,927 shares of registered preferred stock.

(3)  Clinton L. Stokes, 1980 Festival Plaza Dr., Suite 530, Las Vegas, NV 89135 , is the beneficial owner of these shares.

(4)  Mark Cole, 9788 Gilespie St., Unit 400, Las Vegas, NV 89113, is the beneficial owner of these shares.

(5) Lion Den, LLC, 18375 Ventura Blvd., #281, Tarzana, CA 91356. Constantina Frial is the beneficial owner who exercised the sole voting and dispositive powers with respect to the shares owned and has the ultimate voting control over the shares held by this entity.

(6)   Legal Beagle Services, 1825 Imperial Cup Drive, Las Vegas, Nevada 89117. J. Chad Guidry is the beneficial

owner who exercised the sole voting and dispositive powers with respect to the shares owned and has the ultimate

voting control over the shares held by this entity.

(7)   At any time and from time-to-time any holder of the Preferred Convertible shares may convert any or all of the

shares of Series A Convertible 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 Convertible Preferred Stock. However, the beneficial owner of

such Series A Convertible Preferred Stock cannot not convert their Series A Convertible Preferred stock where

they will beneficially own in excess of 4.9% of the shares of the Common Stock.

 

We believe that all persons named have full voting and investment power with respect to the shares indicated, unless otherwise noted in the table. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.

 

30

 
 

 

 

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

  

The Company's Director has contributed office space for our use for all periods presented. There is no charge to us for the space, and the director will not seek compensation for the use of this space.

 

Our officer and director, Mr. Clinton L. Stokes III can be considered a promoter of Ameritek Ventures in consideration of his participation and managing of the business of the company.

 

Item 14. Principal Accountant Fees and Services.

 

Somerset CPAs, P.C. served as our principal independent public accountant for reporting fiscal years ending May 31, 2018 and May 31, 2017. The following table shows the fees that we paid or accrued for the audit and other services provided by Somerset CPAs, P.C.

 

    For the Year Ended May 31,   For the Year Ended May 31,  
    2018   2017  
  Audit Fees – Somerset CPAs, P.C.  $17,500   $17,500  
  Audit-Related Fees -   -  
  Tax Fees  -   -  
  All Other Fees -   -  
  Total $17,500   $17,500  

  

Audit Fees - includes fees billed and expected to be billed for services performed to comply with Generally Accepted Auditing Standards (GAAS), including the recurring audit of the Company's financial statements for such period included in this Annual Report on Form 10-K and for the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.

 

Audit-Related Fees - this category consists of fees for assurance and related services by our principal independent registered public accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees”. The services for the fees disclosed under this category include consultations concerning financial accounting and reporting standards.

 

Tax Fees - this category consists of fees for professional services rendered by our principal independent registered public accountant for tax compliance, tax advice, and tax planning.

 

All Other Fees - this category consists of fees for services provided by our principal independent registered public accountant other than the services described above. The Board of Directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant’s independence. 

 

31

 

 

 
 

 

Audit Committee Policies and Procedures

 

We do not have an audit committee; therefore our three directors pre-approve all services to be provided to us by our independent auditor. This process involves obtaining (i) a written description of the proposed services, (ii) the confirmation of our Principal Accounting Officer that the services are compatible with maintaining specific principles relating to independence, and (iii) confirmation from our securities counsel that the services are not among those that our independent auditors have been prohibited from performing under SEC rules. In fiscal year ending May 31, 2018, all fees paid to Somerset CPAs, P.C. were unanimously pre-approved in accordance with this policy.

 

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

The following information required under this item is filed as part of this report:

 

 

(a) 1. Financial Statements

 

  Page
   
   
Management's Report on Internal Control Over Financial Reporting 21

 

Report of Independent Registered Public Accounting Firm

 

F-1

Balance Sheets

 

F-2

 

Statements of Operations

 

F-3

 

Statements of Stockholders' Equity (Deficit)

 

F-4

 

Statements of Cash Flows

 

F-5

 

 

 

(b) 2. Financial Statement Schedules

 

None.

 

 

32

 
 

 

 

Item 6 – Exhibits

 

The following exhibits are filed as part of this registration statement:

        Incorporated by reference
  Exhibit Exhibit Description Filed herewith Form Period Ending Exhibit Filing Date
  3.1 Articles of Incorporation, as currently in effect   S-1    3.1 09/19/2011
  3.2 Bylaws, as currently in effect   S-1    3.2 09/19/2011
  3.3 Certificate of Amendment X        
               
  10.1 Promissory Note between Ameritek Ventures and Dan Berger dated May 23, 2011   S-1 Aug. 31, 2011 10.1 11/08/2011
  10.2 Addendum to Promissory Note for Callable and Convertible Preferred Shares Secured by Ownership Rights in Tooling Mold dated April 13, 2012   S-1 Feb. 29, 2012 10.2 04/26/2012
  10.3 Asset Purchase Agreement   8-K Aug. 30, 2017 10.3 09/06/2017
  31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. X        
  31.2 Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. X        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 
 

 

 

 

 

 

SIGNATURES

 

 

Ameritek Ventures

Registrant

 
     
     
Date:  October 10, 2018        /s/ Clinton L. Stokes III  
  Name: Clinton L. Stokes III  
   

Title: Chief Executive Officer

Principal Executive Officer

 

     
Date:  October 10, 2018         /s/ Kenneth P. Mayeaux  
  Name:  Kenneth P. Mayeaux  
   

Title: Chief Accounting Officer

Principal Accounting Officer

 

         

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.

 

Signature   Title   Date
         

/s/ Clinton L. Stokes III

(Clinton L. Stokes III)

 

Chief Executive Officer

Principal Executive Officer

  October 10, 2018
         

/s/ Kenneth P. Mayeaux

(Kenneth P. Mayeaux)

 

Corporate Secretary and

Chief Accounting Officer

  October 10, 2018

 

 

34

 

 

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