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 March 31, 2000
( ) 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.
incorporation or organization) Employer 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 March 31, 2000
- ---------------------------- -----------------------------
$.001 PAR VALUE COMMON STOCK 34,238,419
$.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 March 31, 2000, 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 firsttime
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 $5,000,000 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 15,000,000 restricted shares
of the Company's common stock. If the loan proceeds for any reason are not
received by the Company, the 15,000,000 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 34,238,419 to 19,238,419. The loan
is also secured by a Financial Guarantee Bond in the amount of $5,000,000
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 15,000,000 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
the construction 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 February 18, 2000 and March 14, 2000 as follows:
S-8 Registration Statement dated February 18, 2000
500,000 shares of common stock
<TABLE>
Date Issued Name of Recipient Number of Shares
<S> <C> <C>
February 25, 2000 First Equity Capital 275,000
Corp.
February 25, 2000 CS&S Enterprises, Inc. 38,000
February 25, 2000 James E. Pratt 37,000
February 25, 2000 Dean Martin 50,000
February 25, 2000 Thomas B. Lief 50,000
February 25, 2000 Doug Heitmeier 25,000
February 25, 2000 Consulstar Corp. 25,000
Total 500,000
</TABLE>
<PAGE>
<TABLE>
S-8 Registration Statement dated March 14, 2000
400,000 shares of common stock
Date Issued Name of Recipient Number of Shares
<S> <C> <C>
March 21, 2000 Susan M. Donohue 100,000
March 21, 2000 CS&S Enterprises, Inc. 50,000
March 21, 2000 James E. Pratt 50,000
March 21, 2000 First Equity Capital 50,000
Corp.
March 21, 2000 Dean Martin 50,000
March 21, 2000 Thomas B. Lief 50,000
March 21, 2000 The James Group, Inc. 50,000
Total 400,000
</TABLE>
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.
The shares issued to Dean Martin, Thomas B. Lief, Doug Heitmeier, Consulstar
Corp. and The James Group, Inc. were for services rendered and to be rendered
by them.
Susan M. Donohue is an employee and officer of the Corporation. The shares
issued to her were for reimbursement of expenses and for dispursements
necessarily incurred on behalf of the Company.
Merle Ferguson is the President and CEO of the Corporation. The shares
issued to CS&S Enterprises, Inc. were issued for reimbursement of expenses
and for dispursements necessarily incurred on behalf of the Company.
<PAGE>
<TABLE>
AFFORDABLE HOMES OF AMERICA, INC.
(A Development Stage Company)
BALANCE SHEET
3/31/00
<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 March 31, 2000 108,285
Patents - at cost, less
Accumulated amortization of
March 31, 2000 354,882
Goodwill 408,197
-----------
TOTAL ASSETS $10,306,279
===========
</TABLE>
<TABLE>
LIABILITIES EQUITY
<S> <C>
LIABILITIES
Accounts Payable 42,676
Accrued payable 22,227
Accrued interest payable 206,667
Notes payable 2,217,937
Loans and advances from
Related parties 235,287
Land purchase options 3,415,000
TOTAL LIABILITIES 6,139,844
------------
STOCKHOLDERS' EQUITY (DEFICIT)
Convertible preferred stock classes A
and B ($.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 March 31, 2000
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 FLOW
CUMULATIVE FROM INCEPTION TO March 31, 2000
<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
Cash in banks - End of period 192,398
------------
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FROM INCEPTION TO March 31, 2000
For the three Cumulative
month from Inception
Ended June 30 to 3/31/00
1998 1999 2000
<S> <C> <C> <C>
Administrative expense 15,000 211,116
328,116
Cumulative (LOSS) (15,000) (328,116)
(211,116)
General and
Administrative expense 1,900 1,900
NET INCOME (LOSS) (15,000) (209,216) (326,216)
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 5,195,819
</TABLE>
<PAGE>
<TABLE>
AFFORDABLE HOMES OF AMERICA, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Additional
Pas Value $.001 Paid in Retained
Capital Deficit
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 63,138,419 63,138 4,374,345 (209,216)
Net loss for year 0
Balances at 3/31/2000 34,238,419 34,238 4,374,345 (326,216)
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: March 31, 2000 Isl Merle Ferguson
Merle Ferguson, President,
CEO and Director
Dated: March 31, 2000 Isl James E. Pratt
James E. Pratt, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 192,398
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,306,279
<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> (326,216)
<INCOME-TAX> (326,216)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (326,216)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
