Form 1-SA ERC Homebuilders 1, Inc. For: Jun 30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 1-SA

 

x SEMIANNUAL REPORT PURSUANT TO REGULATION A

or

¨ SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A

 

For the fiscal semiannual period ended: June 30, 2021

 

ERC COMMUNITIES 1, INC.

(Exact name of issuer as specified in its charter)

 

Delaware		83-2379196
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

 

2738 Falkenburg Road S. Riverview, Florida		33578
(Address of principal executive offices)		(Zip code)

 

(813) 621-5000

(Registrant’s telephone number, including area code)

 

Preferred Stock

(Title of each class of securities issued pursuant to Regulation A)

 

 

 

In this semi-annual report, the term “ ERC Communities,” “we,” “us” “our” or “the company” refers to ERC Communities 1, Inc., (f/k/a “ERC Homebuilders 1, Inc.) a Delaware corporation and its subsidiary ERC Zephyrhills, LLC (“ERC Zephyrhills”).

 

The following information contains certain forward-looking statements. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as “may,” “could,” “expect,” “estimate,” “anticipate,” “plan,” “predict,” “probable,” “possible,” “should,” “continue,” or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

 

Item 1. Management’s discussion and analysis of financial condition and results of operations

 

Overview

 

ERC Communities 1, Inc. is an early-stage company devoted to the development of residential real estate in the Florida area of the United States. The Company incorporated in 2018 in the state of Delaware.

 

In July 2020 the company formed a limited liability company – ERC Zephyrhills, LLC (“Zephyrhills”), a Florida limited liability company – which finalized an acquisition of land in Zephyrhills, Florida (a Tampa suburb) for the development of a 60-unit manufactured home rental community. The cost of the land was $750,000, and was paid through $500,000 of mortgage financing and $250,000 of funds provided by ERC Communities, Inc. and select shareholders of ERC Communities, Inc. Plans are underway for an approximate $10.8 million Zephyrhills development.

 

On January 27, 2021, the Company formalized the formation of ERC Wesley Chapel, LLC (“Wesley Chapel”), a Florida limited liability company. Wesley Chapel acquired land with a cost of $548,500 for the development of a 40-unit manufactured home development. The land was secured by a mortgage of $355,000. Plans are underway for an approximate $6 million Wesley Chapel development.

 

The company anticipates that its revenues will come from the following activities:

 

·

Sale of Build-For-Rent real estate

 

·

Rental of Build-For-Rent real estate

 

The company will collect revenue upon sale of a property and recognize the revenue when the sale is made. Operating expenses currently consist of advertising and marketing expenses and general administrative expenses.

 

Results of Operations

 

For the six-month period ended June 30, 2021 (“Interim 2021”) and the six-month period ended June 30, 2020 (“Interim 2020”), the company has had no revenues.

 

Total operating expenses for the Interim 2021 increased to $28,860 from $2,207 in Interim 2020. For Interim 2021, the company incurred $24,500 in professional fees compared to $0 in Interim 2020. In addition, the company incurred $3,865 in property and local taxes. The increase in professional fees was primarily related to an increase in management.

 

Total other expenses for Interim 2021 decreased to $158,146 from $316,717 in Interim 2020. The decrease in total other expenses was primarily due to the decreases in costs related to offerings such as the Regulation A offering that occurred during Interim 2020, which was partially offset by increase in interest expense of $40,650 related to the Zephyrhills Note and Wesley Chapel Note (both defined below).

 

As a result of the foregoing, the company generated a net loss for Interim 2021 and Interim 2020 of $187,006 from $318,924, respectively.

 

 

Liquidity and Capital Resources

 

As of June 30, 2021, the company’s cash and cash equivalents was $125.

 

Currently, the company is not generating a profit. Accordingly, since inception ERC Homebuilders 1 has relied upon the cash advances from its current shareholder, ERC Parent, and management; mortgages on the properties; as well as funds raised from its Regulation A offering.   The company plans to continue to try to raise additional capital through additional offerings. Absent additional capital, the company may be forced to significantly reduce expenses and could become insolvent.

 

Indebtedness

 

·

Since inception the company has relied upon the cash advances from its current shareholder, ERC Parent, and management. As of June 30, 2021 those advances totaled $397,457. The balance of these covered costs is recorded as a liability of the company. The company has formalized some of these borrowings but expects to repay all of these amounts whether a formal promissory note exists or not. As these agreements are between related parties, there is no guarantee that these rates or costs are commensurate with an arm’s length arrangement. The company plans to continue to try to raise additional capital through additional offerings and mortgage financing. Absent additional capital, the company may be forced to significantly reduce expenses and could become insolvent.

 

·

The property in Zephyrhills, Florida was mortgaged with Sierra Five Investments, LLC at a one-year mortgage at an interest rate of 12% (the “Zephyrhills Note”).  The outstanding principal of this mortgage as of June 30, 2021 was $500,000. The mortgage is guaranteed by the Chairman of ERC Parent. The note matures in September 2021.

 

·

In February 2021 the property in Wesley Chapel, Florida, was mortgaged with an interest rate of 12% (the “Wesley Chapel Note”). The outstanding principal of this mortgage as of June 30, 2021 was $355,000. The mortgage is guaranteed by Gerald D. Ellenburg and Ryan T. Koenig. The note matures in March 2022.

 

Trends

 

Due to the COVID-19 pandemic, the company has revised some of its business plans. The company is now planning to include the use of modular homes in its development plans, to both increase the volume of units that the company will be able to development as well as to lower the costs of eventual rents.

 

The company believes that COVID-19 has sharpened renters’ desire and demand for separate living.

 

During the next 6-12 months the company intends to take the following actions:

 

·

The company plans to continue to try to raise additional capital through additional offerings and mortgage financing.

 

·

The company intends to begin development in Zephyrhills, Florida during November 2021.

 

In addition, the company intends to pay the Zephyrhills Note on September 30, 2021, its maturity date.

 

Item 2.

Other Information

 

None.

 

Item 3.

Financial Statement

 

The accompanying semiannual consolidated financial statements are unaudited and have been prepared in accordance with the instructions to Form 1-SA. Therefore, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with accounting principles generally accepted in the United States of America. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the Company’s Annual Report on Form 1-K for the year ended December 31, 2020. 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 six months ended June 30, 2021 are not necessarily indicative of the results that can be expected for the year ending December 31, 2021.

 

 

ERC Communities 1, Inc.

and Subsidiaries

 

Consolidated Financial Statements

 

As of, and for the Six Months Ended June 30, 2021 and 2020

UNAUDITED - NO ASSURANCE GIVEN

 

 

 

 

ERC Communities 1, Inc.

and Subsidiaries

 

Consolidated Financial Statements

As of, and for the Six Months Ended June 30, 2021 and 2020

UNAUDITED - NO ASSURANCE GIVEN  

 

Table of Contents
Consolidated Balance Sheets			-1-
Consolidated Statement of Operations			-2-
Consolidated Statement of Changes in Shareholders' Equity			-3-
Consolidated Statement of Changes in Cash Flows			-4-
Notes and Additional Dislosures to the Consolidated Financial Statements			-5-
Consolidating Statements			-10-

 

 

ERC Communities 1, Inc. and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2021, December 31, 2020 and June 30, 2020

UNAUDITED - NO ASSURANCE GIVEN      

 

		June				December				June
		2021				2020				2020
ASSETS
Current assets
Cash and cash equivalents		$	125			$	4,682			$	3,945
Property, plant and equipment
Land			1,399,015				830,515				-
Other assets			-				16,000				-
TOTAL ASSETS		$	1,399,140			$	851,197			$	3,945
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Current liabilities
Notes payable, current portion		$	855,000			$	500,000			$	-
Non-current Liabilities
Notes payable, long-term portion			-				-				-
Advances from shareholders of ERC Communities, Inc. (parent company)			521,500				328,000				296,000
Advances from ERC Communities, Inc. (parent company)			876,351				672,394				515,270
Total non-current liabilities			1,397,851				1,000,394				811,270
TOTAL LIABILITIES			2,252,851				1,500,394				811,270
Shareholders' equity
Common stock, Class A:  134,000,000 shares authorized,
$0.00001 par, 0 shares issued and outstanding			-				-				-
Common stock, Class B:  16,000,000 shares authorized,
$0.00001 par, 16,000,000 shares issued and outstanding			160				160				160
Preferred stock, Class A:  8,333,333 shares authorized,
63,515 and 20,862 shares issued and outstanding, respectively			384,266				384,266				125,174
Preferred stock, other: 41,666,667 shares authorized,
no shares issued and outstanding			-				-				-
Retained deficit, net of distributions			(1,238,137	)			(1,033,623	)			(932,659	)
TOTAL STOCKHOLDERS' EQUITY			(853,711	)			(649,197	)			(807,325	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	1,399,140			$	851,197			$	3,945

  

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

 

 

ERC Communities 1, Inc. and Subsidiaries

Consolidated Statement of Operations

For the Six Months Ended June 30, 2021 and 2020

UNAUDITED - NO ASSURANCE GIVEN  

 

		2021				2020
Revenues		$	-			$	-
Cost of revenues			-				-
Gross profit			-				-
Operating expenses
Advertising and marketing			-				-
Salaries
Operational			-				-
Corporate			-				-
Property lease and affiliated costs			-				-
Equipment and repairs			-				-
Utilities and telephone			-				-
Insurance			-				-
Professional fees			24,500				-
Property and local taxes			3,865				-
Other selling, general and administrative			495				2,207
Total operating expenses			28,860				2,207
Operating loss			(28,860	)			(2,207	)
Other expenses
Reg A and Reg D share sale costs			117,496				316,717
Interest expense			40,650				-
Total other expenses			158,146				316,717
Net loss		$	(187,006	)		$	(318,924	)

  

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

 

 

ERC Communities 1, Inc. and Subsidiaries

Consolidated Statement of Stockholders' Equity (Deficit)

For the Six Months Ended June 30, 2021 and 2020

UNAUDITED - NO ASSURANCE GIVEN  

 

		Class A								Class B								Class A								Other
		Common Stock								Common Stock								Preferred Stock								Preferred Stock								Retained  Earnings,				Total Stockholders'
		Shares				Value				Shares				Value				Shares				Value				Shares				Value				Net of  Distributions				Equity (Deficit)
Balance as of December 31, 2019			-			$	-				16,000,000			$	160				-			$	-				-			$	-			$	(612,497	)		$	(612,337	)
Share issuance			-				-				-				-				20,862				125,174				-				-				-				125,174
Net loss			-				-				-				-				-				-				-				-				(318,924	)			(318,924	)
Dividends			-				-				-				-				-				-				-				-				(1,238	)			(1,238	)
Balance as of June 30, 2020			-				-				16,000,000				160				20,862				125,174				-				-				(932,659	)			(807,325	)
Share issuance			-				-				-				-				42,653				259,092				-				-				-				259,092
Net loss			-				-				-				-				-				-				-				-				(94,799	)			(94,799	)
Dividends			-				-				-				-				-				-				-				-				(6,165	)			(6,165	)
Balance as of December 31, 2020			-				-				16,000,000				160				63,515				384,266				-				-				(1,033,623	)			(649,197	)
Share issuance			-				-				-				-				-				-				-				-				-				-
Net loss			-				-				-				-				-				-				-				-				(187,006	)			(187,006	)
Dividends			-				-				-				-				-				-				-				-				(17,508	)			(17,508	)
Balance as of June 30, 2021			-			$	-				16,000,000			$	160				63,515			$	384,266				-			$	-			$	(1,238,137	)		$	(853,711	)

 

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

 

 

ERC Communities 1, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

For the Six Months Ended June 30, 2021 and 2020

UNAUDITED - NO ASSURANCE GIVEN  

 

		2021				2020
Cash Flows from Operating Activities
Net loss		$	(187,006	)		$	(318,924	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities
Other assets			16,000				-
Reg A and Reg D share sale costs			117,496				316,717
Net cash used in operating activities			(53,510	)			(2,207	)
Cash Flows from Investing Activities
Land acquisitions			(568,500	)			-
Cash Flows from Financing Activities
Proceeds from notes payable			355,000				-
Advances from shareholders of ERC Communities, Inc. (parent company)			193,500				-
Advances from ERC Communities, Inc. (parent company)			203,957				198,867
Issuance of preferred stock			-				125,174
Dividends			(17,508	)			(1,238	)
Reg A and Reg D share sale costs			(117,496	)			(316,717	)
Net cash provided by financing activities			617,453				6,086
Net Change In Cash and Cash Equivalents			(4,557	)			3,879
Cash and Cash Equivalents, Beginning of Period			4,682				66
Cash and Cash Equivalents, End of Period		$	125			$	3,945

 

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

 

 

ERC Communities 1, Inc.

Notes to Financial Statements

As of June 30, 2021

UNAUDITED – NO ASSURANCE GIVEN

 

NOTE 1 - NATURE OF OPERATIONS

 

ERC Communities 1, Inc. (which may be referred to as the “Company,” “we,” “us,” or “our”) is an early-stage company devoted to the development of residential real estate in the Florida area of the United States.

 

The Company incorporated in 2018 in the state of Delaware.

 

In July 2020 the Company formed a limited liability company – ERC Zephyrhills, LLC (“Zephyrhills”), a Florida limited liability company – which finalized an acquisition of land in Zephyrhills, Florida (a Tampa suburb) for the development of a 60-unit manufactured home rental community. The cost of the land was $750,000, and was paid through $500,000 of mortgage financing and $250,000 of funds provided by ERC Communities, Inc. and select shareholders of ERC Communities, Inc. Plans are underway for an approximate $9 million Zephyrhills development.

 

On January 27, 2021, the Company formalized the formation of ERC Wesley Chapel, LLC (“Wesley Chapel”), a Florida limited liability company. Wesley Chapel acquired land with a cost of $548,500 for the development of a 40-unit manufactured home development. The land was secured by a mortgage of $355,000. Plans are underway for an approximate $6 million Wesley Chapel development.

 

Since inception, the Company has relied on advances from affiliates to fund its operations. As of December 31, 2020, the Company had little working capital and will likely incur losses prior to generating positive working capital. These matters raise substantial concern about the Company’s ability to continue as a going concern (see Note below). During the next 12 months, the Company intends to fund its operations with funding from a securities offering campaign (see Note below) and funds from revenue producing activities, if and when such operations and offerings can be realized. If the Company cannot secure additional short-term capital, it may cease operations. These financial statements and related notes thereto do not include any adjustments that might result from these uncertainties.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ("GAAP"). The Company has adopted December 31 as the year end for reporting purposes.

 

Use of Estimates

 

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the footnotes thereto. Actual results could differ from those estimates. It is reasonably possible that changes in estimates will occur in the near term.

 

 

Risks and Uncertainties

 

The Company has a limited operating history. The Company's business and operations are sensitive to general business and economic conditions in the United States. A host of factors beyond the Company's control could cause fluctuations in these conditions. Adverse conditions may include: recession, downturn or otherwise, local competition or changes in consumer taste. These adverse conditions could affect the Company's financial condition and the results of its operations. As of June 30, 2021, the Company is operating as a going concern.

 

Cash and Cash Equivalents

 

The Company considers short-term, highly liquid investments with original maturities of three months or less, at the time of purchase, to be cash equivalents. Cash consists of currency held in the Company’s checking account. As of June 30, 2021 the Company had $125 in corporate checking accounts.

 

Receivables and Credit Policy

 

Trade receivables from customers are uncollateralized customer obligations due under normal trade terms, primarily requiring payment before services are rendered. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoice. The Company, by policy, routinely assesses the financial strength of its customer. As a result, the Company believes that its accounts receivable credit risk exposure is limited and it has not experienced significant write-downs in its accounts receivable balances. As of June 30, 2021, the Company did not have any outstanding accounts receivable.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for renewals and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed as incurred. When equipment is retired or sold, the cost and related accumulated depreciation are eliminated from the balance sheet accounts and the resultant gain or loss is reflected in income.

 

Depreciation is provided using the straight-line method, based on useful lives of the assets. As of June 30, 2021 and 2020, the Company had recorded no depreciation and had no depreciable assets.

 

The Company reviews the carrying value of property and equipment 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, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors. As of June 30, 2021, the Company’s only property is land held for development, including capitalized carrying costs.

 

Income Taxes

 

Income taxes are provided for the tax effects of transactions reporting in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of receivables, inventory, property and equipment, intangible assets, cryptocurrency valuation and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized.

 

 

The Company is taxed as a C Corporation for federal and state income tax purposes. As the Company has recently been formed, no material tax provision exists as of the balance sheet date.

 

The Company evaluates its tax positions that have been taken or are expected to be taken on income tax returns to determine if an accrual is necessary for uncertain tax positions. As of June 30, 2021 and 2020, the unrecognized tax benefits accrual was zero.

 

The Company is current with its foreign, US federal and state income tax filing obligations and is not currently under examination from any taxing authority.

 

Revenue Recognition

 

In 2019, the Company adopted ASC 606, Revenue from Contracts with Customers, as of inception. There was no transition adjustment recorded upon the adoption of ASC 606. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

 

To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

 

Since inception, the Company has not yet recognized any revenue.

 

Advertising Expenses

 

The Company expenses advertising costs as they are incurred.

 

Organizational Costs

 

In accordance with GAAP, organizational costs, including accounting fees, legal fees, and costs of incorporation, are expensed as incurred.

 

Concentration of Credit Risk

 

The Company maintains its cash with a major financial institution located in the United States of America, which it believes to be credit worthy. The Federal Deposit Insurance Corporation insures balances up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

 

 

Recent Accounting Pronouncements

 

In February 2016, FASB issued ASU No. 2016-02, Leases, that require organizations that lease assets, referred to as "lessees", to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than 12 months. ASU 2016-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, and early application is permitted. The Company implemented ASU No. 2016-02 for lease accounting for 2020.

 

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact our balance sheet.

 

NOTE 3 – INCOME TAX PROVISION

 

As described above, the Company was recently formed and has only incurred costs of its start-up operations and capital raising. As such, no material tax provision yet exists.

 

NOTE 4 – COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

The Company is not currently involved with and does not know of any pending or threatening litigation against the Company or founders.

 

NOTE 5 – EQUITY

 

The Company has issued 16,000,000 shares of Class B Common Stock to its parent company, at par, in exchange for $160.  The Company has authorized 134,000,000 shares of Class A common stock and 50,000,000 shares of preferred stock, of which 10,000,000 shares are designated as Class A preferred stock which is convertible into Class A common stock.  None of the Class A common stock has been issued. As of June 30, 2021, 63,515 shares of Class A preferred stock have been issued.  The company is currently offering to sell up to 8,333,333 shares of Class A preferred stock as part of a Regulation A offering (discussed more below).

 

Class A common stockholders are entitled to a single vote per share and have equal dividend and liquidation preferences as Class B common stockholders. Class B common stockholders have five votes per share and shares of Class B common stock can be converted into shares of Class A common stock at the option of the holder. Class A preferred stockholders are entitled to a single vote per share and to an 8 percent annual dividend, which will accrue if funds are not legally available to distribute, in addition to a liquidation preference. Shares of Class A preferred stock can be converted into shares of Class A common stock at the option of the holder and shares will be automatically converted in the event of a qualified public offering, as defined in the Amended and Restated Certificate of Incorporation.

 

 

NOTE 6 – NOTES PAYABLE

 

Notes payable at June 30, 2021 consists of the following debt instruments.

 

Zephyrhills - Note payable secured by a mortgage on land with an interest rate of 12%.  Interest only payments are due monthly.  The note matures in September 2021.		$	500,000
Wesley Chapel - Note payable secured by a mortgage on land with an interest rate of 12%.  Interest only payments are due monthly.  The note matures in March 2022.			355,000
Notes payable total		$	855,000

 

NOTE 7 – RELATED PARY TRANSACTIONS

 

The Company has received working capital; to cover expenses and costs while preparing for the securities offering, from ERC Communities, Inc. (the Company’s parent company) and various of its shareholders totaling $397,457 and $198,867 for the six months ended June 30, 2021 and 2020, respectively. The balance of these covered costs is recorded as a liability of the Company. The Company has formalized some of these borrowings, but expects to repay all of these amounts whether a formal promissory note exists or not.

 

As these are agreements between related parties, there is no guarantee that these rates or costs are commensurate with an arm’s-length arrangement.

 

NOTE 8 – GOING CONCERN

 

These financial statements are prepared on a going concern basis. The Company began operation in 2018 and has limited operating history. The Company’s ability to continue is dependent upon management’s plan to raise additional funds (see Notes 1 and 2) and achieve and sustain profitable operations. The financial statements do not include any adjustments that might be necessary if the Company is not able to continue as a going concern.

 

NOTE 9 – SUBSEQUENT EVENTS

 

Management’s Evaluation

 

Management has evaluated subsequent events through the date these financial statements were issued.  Based on this evaluation, no material subsequent events were identified which would require adjustment or disclosure in the financial statements of June 30, 2021.

 

 

ERC Communities 1, Inc. and Subsidiaries

Consolidating Balance Sheets

As of June 30, 2021, December 31, 2020 and June 30, 2020

UNAUDITED - NO ASSURANCE GIVEN  

 

																						Consolidated
		ERC Communities 1, Inc.				ERC  Zephyrhills, LLC				ERC  Wesley Chapel, LLC				Combined				Eliminations				June 2021				December 2020				June 2020
ASSETS
Current assets
Cash and cash equivalents		$	66			$	59			$	-			$	125			$	-			$	125			$	4,682			$	3,945
Property, plant and equipment
Land			-				830,515				568,500				1,399,015				-				1,399,015				830,515				-
Other assets
Other assets			-				-				-				-				-				-				16,000				-
Intercompany advances			587,911				-				-				587,911				(587,911	)			-				-				-
Total other assets			587,911				-				-				587,911				(587,911	)			-				16,000				-
TOTAL ASSETS		$	587,977			$	830,574			$	568,500			$	1,987,051			$	(587,911	)		$	1,399,140			$	851,197			$	3,945
LIABILITIES AND EQUITY
Liabilities
Current liabilities
Notes payable, current portion		$	-			$	500,000			$	355,000			$	855,000			$	-			$	855,000			$	500,000			$	-
Non-current Liabilities
Notes payable, long-term portion			-				-				-				-				-				-				-				-
Advances from shareholders of ERC Communities, Inc. (parent company)			521,500				-				-				521,500				-				521,500				328,000				296,000
Advances from ERC Communities, Inc. (parent company)			876,351												876,351								876,351				672,394				515,270
Intercompany advances			-				360,934				226,977				587,911				(587,911	)			-				-				-
Total non-current liabilities			1,397,851				360,934				226,977				1,985,762				(587,911	)			1,397,851				1,000,394				811,270
TOTAL LIABILITIES			1,397,851				860,934				581,977				2,840,762				(587,911	)			2,252,851				1,500,394				811,270
Equity
Member equity			-				(30,360	)			(13,477	)			(43,837	)			43,837				-				-				-
Common stock, Class A			-				-				-				-				-				-				-				-
Common stock, Class B			160				-				-				160				-				160				160				160
Preferred stock, Class A			384,266				-				-				384,266				-				384,266				384,266				125,174
Preferred stock, other			-				-				-				-				-				-				-				-
Retained earnings			(1,194,300	)			-				-				(1,194,300	)			(43,837	)			(1,238,137	)			(1,033,623	)			(932,659	)
TOTAL EQUITY			(809,874	)			(30,360	)			(13,477	)			(853,711	)			-				(853,711	)			(649,197	)			(807,325	)
TOTAL LIABILITIES AND EQUITY		$	587,977			$	830,574			$	568,500			$	1,987,051			$	(587,911	)		$	1,399,140			$	851,197			$	3,945

 

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

 

 

ERC Communities 1, Inc. and Subsidiaries

Consolidating Statement of Operations

For the Six Months Ended June 30, 2021 and 2020

UNAUDITED - NO ASSURANCE GIVEN

 

																						Consolidated
		ERC Communities 1, Inc.				ERC  Zephyrhills, LLC				ERC Wesley Chapel, LLC				Combined				Eliminations				June 2021				June 2020
Revenues		$	-			$	-			$	-			$	-			$	-			$	-			$	-
Cost of revenues			-				-				-				-				-				-				-
Gross profit			-				-				-				-				-				-				-
Operating expenses
Advertising and marketing			-				-				-				-				-				-				-
Salaries
Operational			-				-				-				-				-				-				-
Corporate			-				-				-				-				-				-				-
Property lease and affiliated costs			-				-				-				-				-				-				-
Equipment and repairs			-				-				-				-				-				-				-
Utilities and telephone			-				-				-				-				-				-				-
Insurance			-				-				-				-				-				-				-
Professional fees			24,500				-				-				24,500				-				24,500				-
Property and local taxes			1,038				-				2,827				3,865				-				3,865				-
Other selling, general and administrative			135				360				-				495				-				495				2,207
Total operating expenses			25,673				360				2,827				28,860				-				28,860				2,207
Operating loss			(25,673	)			(360	)			(2,827	)			(28,860	)			-				(28,860	)			(2,207	)
Other expenses
Reg A and Reg D share sale costs			117,496				-				-				117,496				-				117,496				316,717
Interest expense			-				30,000				10,650				40,650				-				40,650				-
Total other expenses			117,496				30,000				10,650				158,146				-				158,146				316,717
Net loss		$	(143,169	)		$	(30,360	)		$	(13,477	)		$	(187,006	)		$	-			$	(187,006	)		$	(318,924	)

 

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

 

 

Item 4. Exhibits

 

The documents listed in the Exhibit Index of this report are incorporated by reference or are filed with this report, in each case as indicated below.

 

 

SIGNATURE

 

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Riverview, State of Florida, on September 16, 2021.

 

ERC Communities 1, Inc.
/s/ Gerald Ellenburg
By Gerald Ellenburg
CEO of ERC Communities 1, Inc.

 

Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.

 

/s/ Gerald Ellenburg

 

Gerald Ellenburg, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer

Date: September 16, 2021

 

 

 

 

 

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Cruise Lines International Association (CLIA) Announces 2024 Hall of Fame Cruise Industry Award Winners
• X-energy Awarded $148.5 Million Investment Tax Credit for First-of-a-Kind TRISO-X Fuel Fabrication Facility
• Global Net Lease Announces Release Date for First Quarter 2024 Results