UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
for quarterly period ended September 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE OF 1934
for the transition period from _____________ to _________________________
Commission File No. 33-55254-18
AFFORDABLE HOMES OF AMERICA, INC.
(exact name of Registrant as Specified in its charter)
NEVADA 86-0853511
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4505 W. Hacienda Ave. Unit I-1
Las Vegas, Nevada 89118
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (702) 579-4888
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. (X) yes ( ) no
Indicate the number of shares of outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding as of September, 1999
- ------------------------------------ --------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 63,138,419
$.001 PAR VALUE CLASS A CONVERTIBLE PREFERRED STOCK 657,144
$.001 PAR VALUE CLASS B CONVERTIBLE PREFERRED STOCK 100,000
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BASIS OF REPRESENTATION
General
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore,
do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows and
stockholders equity inconformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a
normal recurring nature. Operating results for the quarter ended September
30, 1999, are not necessarily indicative of the results that can be
expected for the year ending June 30, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Affordable Homes of America, Inc. is a real estate development company in
the development stage focusing on building homes for low-income and first-
time home buyers. There are 5,000,000 families in the United States that
spend 50% of their income on rent. This does not leave them sufficient
funds for buying the basic family needs of medicine, education, decent
transportation and the like. Because of Affordable Homes' specialized
construction techniques i.e. in-line framing, foam panelized construction
and Z Mix construction, the Company believes it will bring the ability to
purchase a home within the reach of this 5,000,000 family market and other
potential home buyers whose financial resources would not otherwise enable
them to purchase a home.
Affordable Homes' has also designed a "World Home" which is a smaller
building, for marketing abroad. Preliminary discussions in South America,
Europe and the Philippines have indicated widespread acceptance of the
World Home in those areas.
In order to finance the marketing of the World Home and also to implement
Affordable Homes' low income and first time home buyer program nationwide,
Affordable Homes has made certain acquisitions for near term cash
requirements.
The first acquisition to be developed is the Heartland Homes Estates real
estate development project of 136 homes. Bank financing has been arranged
for this project which means that when all permits are received by
Affordable Homes, construction can begin. In addition, Affordable Homes
has applied for a five year loan in the amount of $15,000,000 from Euro
Federal NV which is located in Amsterdam.
<PAGE>
All of the due diligence and closing procedures required by Euro Federal
Bank NV have been completed. The loan is secured by 45,000,000 restricted
shares of the Company's common stock. If the loan proceeds for any reason
are not received by the Company, the 45,000,000 restricted shares of the
Company's common stock will be cancelled. This would reduce the number of
outstanding shares of common stock of the Company from 63,138,419 to
18,138,419. The loan is also secured by a Financial Guarantee Bond in the
amount of $15,000,000 issued by American Home Assurance Company, a member
of American International Group of Companies. In any case, when the loan
is completely paid back, the aforesaid 45,000,000 common stock shares will
be cancelled.
While the proceeds of the loan are not necessary for the implementation of
Affordable Homes building program, the receipt of such funds would greatly
accelerate the program.
There can be no assurance that the Company will receive the proceeds of
this loan nor can there be any assurance that the Company will be able to
complete construction the of the homes and the Ramada Inn on the other
properties it acquired.
Item 5. Other Information
The Company issued its common stock pursuant to S-8 Registration Statement
dated July 16, 1999 and August 27, 1999 as follows:
<TABLE>
S-8 Registration Statement dated July 16, 1999
500,000 shares of common stock
Date Issued Name of Recipient Number of Shares
<S> <C> <C>
July 21, 1999 First Equity Capital
Corp 100,000
July 21, 1999 Merle Ferguson 50,000
July 21, 1999 James E. Pratt 50,000
July 21, 1999 William Fielding &
Associates 300,000
TOTAL 500,000
</TABLE>
<TABLE>
S-8 Registration Statement dated August 27, 1999
500,000 shares of common stock
Date Issued Name of Recipient Number of Shares
<S> <C> <C>
Sept. 2, 1999 First Equity Capital
Corp 250,000
Sept. 2, 1999 Merle Ferguson 100,000
Sept. 2, 1999 James E. Pratt 150,000
TOTAL 500,000
</TABLE>
<PAGE>
The shares Mr. Pratt received were for legal services rendered and to be
rendered and for disbursements necessarily incurred on behalf of the
Company during the rendering of the aforesaid legal services.
Frank C. Calmes is a consultant who performs his services through First
Equity Capital Corp. of which he is the President. The aforesaid shares
were issued to First Equity Capital Corp. for consulting services performed
and to be performed.
Merle Ferguson is the President and CEO of Affordable Homes of America,
Inc. He takes no salary. The aforesaid shares were issued to Mr. Ferguson
in lieu of salary.
The shares issued to William E. Fielding & Associates were in payment of a
premium on a performance bond issued by American Home Assurance Company
to guaranty the payment by Affordable Homes of America, Inc. of a
$15,000,000 loan. The loan has not yet closed and in the event it does not
close, the 300,000 shares will be returned to the company and cancelled.
<PAGE>
<TABLE>
AFFORDABLE HOMES OF AMERICA, INC.
(A Development Stage Company)
BALANCE SHEET
6/30/99
Unaudited
ASSETS
<S> <C>
ASSETS
Cash in Banks 192,398
Employee Advances 45,600
Other receivables 9,000
Advances 224,140
Investment joint venture 800,000
Land and land development costs 7,676,736
Capitalized interest expense 487,041
Machinery & equipment - at
Cost, less accumulated
Depreciation of $ -0- and
$47,466 as of June 30, 1998
and 1999 respectively 108,285
Patents - at cost, less
Accumulated amortization of
$-0- and $39,431 as of June
30,1998 and 1999 respectively 354,882
Goodwill 408,197
TOTAL ASSETS $10,306,279
</TABLE>
<PAGE>
<TABLE>
LIABILITIES & EQUITY
<S> <C>
LIABILITIES
Accounts Payable 42,676
Accrued payable 22,227
Accrued interest payable 206,667
Notes payable 2,217,937
Loans and advances from
Related parties 235,287
Land purchase options 3,415,000
TOTAL LIABILITIES 6,139,844
STOCKHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock classes A
and B ($.001 par value, 5,000,000
shares of each class authorized,
657,144 and 1000,000 of class A and B
issued and outstanding, respectively) 757
Additional paid-in capital 4,374,345
Common Stock ($.001) par value 100,000
shares authorized, 63,138,419 shares issued
and outstanding as of June 30, 1999
2,000,000 shares issued and outstanding
as of June 30, 1998) 17,549
Deficit accumulated during the development
Stage (226,216)
Total Stockholders' Equity (Deficit) 4,166,435
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $10,306,279
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
CUMULATIVE FROM INCEPTION TO JUNE 30,1999
<S> <C>
CASH FLOWS FROM OPERATIONS ACTIVITIVES (226,216)
ADJUSTMENT TO RECONCILE NET LOSS
FROM DEVELOPMENT STAGE OPERATIONS
TO CASH USED IN OPERATING ACTIVITIES
Depreciation and amortization 15,317
Stock issued for services 39,031
(Increase) (decrease) in liabilities:
Accrued expenses 22,277
Accrued interest payable 20,666
Total Adjustments 97,291
Net cash (used in) operations (128,925)
CASH FLOWS FROM FINANCING ACTIVITIES:
Equipment acquisitions (57,671)
Net cash (used in)
Investing activities (57,671)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to and capitalization of
Subsidiaries 388,994
Payments of land purchase option (10,000)
Net cash from financing activities 378,978
Net Increase in Cash in Banks 192,398
Cash in banks - Beginning of period -0-
Cash in banks - End of period 192,398
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION TO SEPTEMBER 30, 1999
For the three Cumulative
month from Inception
Ended June 30 to 9/30/99
1998 1999 1999
<S> <C> <C> <C>
Administrative expense 15,000 211,116
228,116
Cumulative (LOSS) (15,000) (228,116)
(211,116)
General and
Administrative expense 1,900 1,900
NET INCOME (LOSS) (15,000) (209,216) (226,216)
Net income (loss) per weighted
Average common shares .01 .04 .06
Weighted average number of
Common shares used to compute
Net income (loss) 2,000,000 5,165,202 3,582,601
</TABLE>
<PAGE>
<TABLE>
AFFORDABLE HOMES OF AMERICA, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Additiona
Pas Value $.001 l Retained
Paid in Deficit
Capital
Shares Amount
<S> <C> <C> <C> <C>
Balances at 3/7/86
(Date of Inception) 0 0 0 0
Issuance of common stock
(restricted) at $.02 per share
at 4/21/86 1,000,000 1,000 1,000
Net loss for period (1,950)
Balances at 12/31/86 1,000,000 1,000 1,000 (1,950)
Net loss for year (10)
Balances at 12/31/87 1,000,000 1,000 1,000 (1,960)
Net loss for year (10)
Balances at 12/31/88 1,000,000 1,000 1,000 (1,970)
Net loss for year (10)
Balances at 12/31/89 1,000,000 1,000 1,000 (1,980)
Net loss for year (10)
Balances at 12/31/90 1,000,000 1,000 1,000 (1,990)
Net loss for year (10)
Balances at 12/31/91 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/92 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/93 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/94 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/95 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/96 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/97 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/98 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 12/31/98 1,000,000 1,000 1,000 (2,000)
Net loss for year 0
Balances at 9/30/99 63,138419 63,138 4,374,345 (209,216)
Net loss for year 0
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized,
AFFORDABLE HOMES OF AMERICA, INC.
Dated: December 21, 1999 /s/ Merle Ferguson
-------------------------------
Merle Ferguson, President,
CEO and Director
Dated: December 21, 1999 /s/ James E. Pratt
-------------------------------
James E. Pratt, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,306,279
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 6,139,844
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,306,279
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (226,216)
<INCOME-TAX> (226,216)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (226,216)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
