Evergreen Sustainable Enterprises, Inc. - Annual Report: 2016 (Form 10-K)

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

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.

State issuer's revenues for the most recent fiscal year:  $452,059.

 

 

 

HOME TREASURE FINDERS, INC.

 

FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2016

 

TABLE OF CONTENTS

 

PART I	Page
Item 1.    Description of Business	3
Item 2.    Description of Property	18
Item 3.    Legal Proceedings	18
Item 4.    Mine Safety Disclosure	18
PART II
Item 5.    Market for Common Equity and Related Stockholder Matters	18
Item 6.    Selected Financial Data	20
Item 7.    Management’s Discussion and Analysis or Plan of Operation	20
Item 8.    Financial Statements	25
Item 9.    Changes In And Disagreements With Accountants And Accounting And Financial Disclosure	26
Item 9A. Controls and Procedures	26
Item 9B.  Other Information	27
PART III
Item 10.  Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act	27
Item 11.  Executive Compensation	28
Item 12.  Security Ownership of Certain Beneficial Owners and Management And Related Stockholder Matters	30
Item 13.  Certain Relationships and Related Transactions	31
Item 14.  Principal Accountant Fees and Services	32
Item 15.  Exhibits	33

 

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ITEM 1. DESCRIPTION OF BUSINESS

We are a licensed and diversified, Colorado based real estate brokerage, property investor and landlord.. We presently generate revenue from three sources:

1.

Rental revenue from our "Cannabis Zoned" warehouse property.

2.

Commission revenue from the sale of third party owned real property.

3.

Management revenue from real property managed for third party owners.

To activate our business we borrowed money from our President, Corey Wiegand, completed several private placements as well as a management led IPO. Our shares are quoted on the OTCQB under the symbol "HMTF."

Company History

 

We organized under the laws of the State of Colorado on July 28, 2008.

History of Operations.  In March of 2010, we began providing real estate agents with buyer leads and thereby obtaining referral commissions from subsequent sales. Colorado law provides that we must hold a real estate license to be paid such commissions. On February 13, 2012 the State of Colorado granted our founder, Corey Wiegand an "Employing Broker" license which satisfies regulatory requirements. As of December 31, 2016, and the date of this report, commission revenue from real estate transactions form a significant part of our total revenue.

During 2013 we expanded our real estate activities to include property management and as of December 31, 2016 and the date of this report, we manage 96 rental units and generate net revenue from monthly management fees.

On March 3,  2014 we formed a wholly owned subsidiary, HMTF Cannabis Holdings, Inc. The purpose of our subsidiary is to acquire and generate income from real property suited to the legal cultivation of marijuana.

On September 15,  2014 we closed the purchase of our first property zoned for legal cannabis cultivation.  Our Denver warehouse building is comprised of three units.  As of December 31, 2016 and the date of this report, revenue generated from this commercial property represents a significant portion of our total revenue.

We purchased our warehouse with a 1% down payment with the balance carried by the seller. On November 5 and December 1, 2014 we leased space within the building to several unrelated licensed growers. One grower completed construction work on his two units and subsequently we amended his lease to include the third unit which had been abandoned by the original lessee. The City of Denver has issued our tenant an occupancy permit providing for legal marijuana cultivation at all three units which comprise the entire building.  Our tenant paid for improvements to bring the building into compliance with Building Codes of the City of Denver and rules promulgated by Colorado State Marijuana Enforcement Division. Further information regarding our cannabis warehouse venture and related financial performance and projections may be found on page 6 of this report and also in the MD&A section of this report.

As of December 31, 2016 and the date of this report, we are seeking to lease or acquire additional properties zoned for cannabis cultivation. We are also considering purchase or lease of properties which we believe may be converted to "Cannabis clubs" where the public may one day legally consume cannabis under legislation and rules promulgated by the State of Colorado as well as various cities.  For example, during November 2016 Denver voters passed Initiative 300. In connection with Initiative 300, Denver City Council will shortly finalize various rules under which clubs, bars or other similar entities open to the public may permit public consumption of cannabis on site. We believe this demonstrates that the laws of Colorado will continue to evolve rapidly in response to demand from Colorado residents who reside in rental units which often prohibit marijuana use on site. We believe there is also growing demand from out of state tourists who seek a safe legal place to socialize while consuming cannabis.

Finally, we continue to generate commission revenue by listing and selling real property. We also generate commissions on sales of property where we serve as 'buyer agent." We continue to expand the list of properties from which we generate management revenue.

We have recently entered discussions to expand operations by acquiring other real estate companies.

The address of our primary web site is  www.hometreasurefinders.com.  Additional web sites include:

www.HMTFrealty.com

www.HMTFmanagement.com

www.HMTFcannabisHoldings.com

 

 

 Principal Services and their Markets

 

 

 

 

 

 

Maintaining all licenses deemed necessary by governmental jurisdictions is expensive and time consuming. and could delay operations.  An unfavorable outcome in connection with future government regulations, licensing and other risks is possible, however we are aware of no compliance problems as of December 31, 2016 and the date of this report.

 

 

 

1.

Changes in residential real estate inventory

2.

Changes in buyer demand caused by the economy, holidays,  Fall "back to school" or other special events

3.

Unusual or severe weather

4.

The seasonal nature of major construction projects in Colorado

EMPLOYEES

 

 

RISK FACTORS

 

This investment has a high degree of risk.  Before you invest you should carefully consider the risks and uncertainties described below.  If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down. This means you could lose all or a part of your investment.

 

A footnote to our Auditor's report states that there is substantial doubt that we will be able to continue as a going concern.

 

We have had substantial losses since inception and as of December 31, 2016 and the date of this report we have minimal cash reserves. While we are beginning to generate increasing revenue and a  positive cash flow, our ability to build significant cash reserves and continue as a going concern over the long term remains unproven.  In the event that we are forced to reduce operations or seriously curtail our business, an investor will lose all money invested.

 

 

The business of our Cannabis Holdings Subsidiary is dependent on laws pertaining to the marijuana industry.

 

Continued development of the cannabis industry and a successful role in that industry for our Subsidiary, HMTF Cannabis Holdings, Inc.  is dependent upon continued legislative authorization at the state level. While there may be ample public support for legislative action that favors our industry, numerous factors impact the legislative process.

 

As of January 31, 2016 and the date of this report, 21 states and the District of Columbia allow their citizens to use medical marijuana. Additionally, voters in the states of Colorado, Washington, Oregon, Alaska, California, Nevada, Maine, Washington and the District of Columbia have approved ballot measures to legalize cannabis for "recreational" adult use.

During November of 2000 Colorado voters approved Amendment 20 to amend the State Constitution to provide for legalized use, possession and sale of medical marijuana.

 

During November 2012 Colorado voters approved Amendment 64 to the State Constitution to legalize the use, possession and sale of retail marijuana. Amendment 64 also provides for the Colorado General Assembly to enact an excise tax on wholesale marijuana sales, adopt further rules to govern cultivation, processing  retail sale and finally to give cities and counties the ability to locally opt out of retail marijuana.

These state laws are in conflict with the federal Controlled Substances Act, which makes marijuana  use and possession illegal on a national level.

The following links may be of use to understand the details of Colorado Laws.

 

Further, while we do not grow, harvest, distribute or sell cannabis, by leasing facilities to growers of cannabis, we could be deemed to be participating in marijuana cultivation, which remains illegal under federal law, and expose us to potential criminal liability, with additional risk that our properties could be subject to civil forfeiture proceedings.

 

Marijuana remains illegal under Federal Law

Marijuana is a schedule-1 controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal law. Since federal law criminalizing the use of marijuana preempts state laws that legalize its use, strict enforcement of federal law regarding marijuana would likely result in our inability to proceed with the cannabis properties portion of our business plan.

A revision or reversal of the Federal policies which presently allow Colorado and various other states to pursue legalized marijuana would likely cause widespread financial difficulties to the cannabis business nationally.

 

 

 

The Marijuana Industry faces strong opposition.

It is believed by many that large well-funded businesses may have a strong economic opposition to the cannabis industry.  We believe that the pharmaceutical industry clearly does not want to cede control of any product that could generate significant revenue. For example, we believe medical marijuana likely has adversely impacted the consumer market for the proposed "marijuana pill" which may sold by the mainstream pharmaceutical industry.  Legalization of marijuana could displace other drugs or encroach upon the pharmaceutical industry's products. The pharmaceutical industry is well funded with a strong and experienced lobby that eclipses the funding of the medical marijuana movement.   Inroads, if any, that the pharmaceutical industry makes toward halting the cannabis industry could have a detrimental impact on our proposed business.

 

Tenants of our Company owned Denver warehouse facility, and of any additional facilities of a similar nature which we may acquire in the future, may have difficulty accessing the services of banks which may make it difficult for them to operate.

A significant portion of our monthly cash flow derives from rental revenue which may prove uncollectable.

We carefully vett prospective tenants, and we obtain their personal guarantees as to payment and performance under the lease terms.

In the event the cultivation business of one or more grower tenants fails, or for any reason our tenant fails to pay rent in a timely fashion and we do not receive the rent payments as such payments become due under lease terms, thereafter, if satisfactory payment arrangements as acceptable to us are not made, we may be forced to evict.

Under terms of the leases now in effect, if we do not receive rent payments as such payments become due and payable under lease terms, we may first utilize the sums we hold as tenant security deposits to collect the late rent payments with penalty. Under the terms of the leases in place, tenants then are required, within five days, to replace such security deposit sums such that the full tenant security deposit is restored. There is no assurance that such replacements of deposit sums will actually occur.

 

In any event, if tenants do not comply with lease terms, and no workable arrangement can be achieved, we may be forced to evict one or more tenants. This has occurred in the past and could occur again. Unfavorable developments of this nature could contribute to or cause us to fall behind on our obligations to make monthly mortgage payments as such payments become due.

During the past we have experienced disagreements with our warehouse tenants.  One tenant abandoned his unit and was evicted. The other tenant ultimately amended his lease to include the abandoned space but only after considerable argument over various lease terms had been settled.  As of the date of this report, a single tenant is leasing our entire Garfield Street warehouse and that tenant has been current on lease payments for the past thirty months.  As of December 31, 2016 and the date of this report, we know of no further unresolved issues with our present tenant.  However, unfavorable developments as experienced in the past could repeat and could cause us to fall behind on our building mortgage payments.

 

 

If we pursue an action for eviction, one or more tenants might cause physical damage to our real estate and/or fight an action for eviction, and/or refuse to vacate or otherwise undertake to block and/or slow our efforts to regain proper possession of our warehouse or to locate a suitable alternative tenant to re-lease our warehouse.

We believe that we have acted legally and in good faith with respect to our tenants. We further believe that our real estate is adequately insured. We plan to defend our property and related contractual rights to the fullest extent of the law.  In the past we were assisted by counsel and with such assistance we acted to negotiate a suitable remedy to these various disputes.  There is no present way to predict the final outcome of these issues.

 

We have a limited operating history.

 

 

We may not be able to generate predictable and continuous revenue in the future. Further, there is no assurance that we will ever grow operations outside the Denver Metro area.  While we own a cannabis qualified warehouse and lease it to licensed growers who are presently current on rent payments, the cash flow generated is from  a new untested industry which is unique to Colorado and just a few other states and subject to rapid change.  Cash flow that our warehouse presently generates may become erratic or cease. 

We may incur significant operating losses in the future, due to the expansion of our operations or other factors. There is no assurance that we can expand under terms that permit profitable operations over the long term. Failure to generate sufficient revenue to pay expenses as they come due may make us unable to continue as a going concern and result in the failure of our company and the complete loss of any money invested to purchase our shares.

 

 

We may be unable to manage our growth or implement our expansion strategy. 

The loss of our current executive officer or key management personnel or inability to attract and retain the necessary personnel could have a material adverse effect upon our business, financial condition or results of operations

 

Our success is heavily dependent on the continued active participation of our current executive officer and sole director listed under "Management." Loss of the services of Corey Wiegand would have a material adverse effect upon our business, financial condition or results of operations. Further, our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical, professional, clerical, administrative and managerial personnel. Competition for qualified buyer agents among companies in the real estate industry is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled realtors required for the expansion of our activities, could have a materially adverse effect on our future financial performance.  Inability to attract and retain the necessary personnel, consultants and advisors could have a material adverse effect on our business, financial condition or results of operations.  

 

We are controlled by our current officer and director. 

Corey Wiegand, our sole director, who is our sole executive officer, beneficially owns approximately 50.7% of our outstanding shares of Common Stock. Mr. Wiegand consequently controls the election of our Board of Directors and the outcome of issues submitted to our stockholders.

 

Since we have only one director who serves as our president, chief executive officer, chief financial officer and secretary, decisions which affect the company will be made by only one individual.  It is likely that conflicts of interest will arise in the day-to- day operations of our business.  Such conflicts, if not properly resolved, could have a material negative impact on our business. 

In the past, the Company has issued shares for cash and services at prices which were solely determined by Corey Wiegand. At that time, Mr. Wiegand made a determination of both the value of services exchanged for our shares, and, as well, the price per share used as compensation.   Transactions of this nature were not made at arm's length and were made without input from a knowledgeable and non-interested third party.  Future transactions of a like nature could dilute the percentage ownership of the company owned by a given investor. While the company believes its past transactions were appropriate, and plans to act in good faith in the future, an investor in our shares will have no ability to alter such transactions as they may occur in the future and, further, will not be consulted by the company in advance of any such transactions. An investor who is unwilling to endure such potential dilution should not purchase our shares.

We have limited financial resources to take advantage of advertising opportunities as they may arise.  

         

The inability to pay for press releases, investor road shows or other events intended to expose our shares to institutional investors, could adversely affect our ability to generate investor support for our common shares.

Our operating results will be subject to fluctuations and our stock price may decline significantly. 

Our quarterly revenue and operating results from commissions, management fees and lease revenues, if any, will be difficult to predict from quarter to quarter. We derive relatively stable revenue from our property management operations. Nonetheless, it is possible that our net operating results in some quarters will fall below our expectations. Our quarterly operating results will be affected by a number of factors, including: 

If revenue for a particular quarter is lower than we expect, we likely will be unable to proportionately reduce our operating expenses for that quarter, which would harm our operating results for that quarter. If we fail to meet investor expectations or our own future guidance, even by a small amount, our stock price could decline, perhaps substantially.  

 

 

Existing real estate laws, regulations, land use codes and policies, the rules promulgated by the State of Colorado's Marijuana Enforcement authorities and changes to these regulations and policies may present technical, regulatory and economic barriers to potential buyers and to our tenants at the Company's Garfield Street warehouse. 

The market for homes and other real estate is influenced by U.S. federal, state and local government regulations and policies concerning the real estate industry, as well as policies promulgated by local real estate boards. These regulations and policies often relate to realtor compensation, and pricing. In the U.S. and in a number of other countries, these regulations and policies are being modified and may continue to be modified. Investment in the real estate could be deterred by these regulations and policies, which could result in a significant reduction in the potential demand for various types of real property and  for our services. For example, loss of favorable tax treatment, certain government buyer incentive programs, and or government subsidized or backed loan programs may result in loss of sales which would likely harm our financial performance.  

The reduction or elimination of government and economic incentives could cause our revenue to decline.   

Today, we believe consumer confidence is slowly recovering. However buyers are finding it very difficult to qualify for loans and the interest charged on mortgages is rising.   In the past federal, state and local government bodies in many states have provided incentives in the form of rebates, tax credits and other incentives to buyers that are willing to purchase real estate. For example, an eight thousand dollar first time home buyer tax credit was offered and thereafter the credit offering expired.  Future government economic incentives, if any, could be reduced or eliminated altogether. Such home buyer incentives expire, decline over time, are limited in total funding or require renewal of authority. Reductions in, or eliminations or expirations of governmental incentives could result in decreased demand for our services.

Changes in tax laws or fiscal policies may decrease the return on investment for customers of our business which could decrease demand for our services and harm our business. 

 

Problems with service quality or individual buyer agent performance may include agent error, agent negligence or problems within the mentoring services we plan to provide. The result would likely be fewer customers, reduced revenue, unexpected expenses and loss of market share. 

 

We are significantly reliant on the abilities and skills of Corey Wiegand and other agents and assistants that act on our behalf.  In the past, various clients who received services from our company or who lease our Garfield Street warehouse have filed complaints that allege poor performance, fraud or in some way challenge our performance.  While we believe that these allegations are without merit and we vigorously defend the legality and appropriateness of our past actions, we may fall victim to regulatory actions or court rulings in connection with alleged agent errors, omissions or other issues.  

 

 

The Realtors we plan to recruit may not deliver consistent and professional mentor and "buyer agent" services and thus our business plan may not gain market acceptance, which would prevent us from achieving sales and market share 

The development of a successful market for our mentor services and lead generation techniques  may be adversely affected by a number of factors: 

If the services and techniques we offer fail to gain market acceptance, we will be unable to achieve significant sales and market share.

 

The real estate industry is rapidly evolving and highly competitive. A variety of competing lead generation technologies are in use or under development now that could result in lower buyer agent costs or higher conversion rates than those lead generation technologies selected by us. These development efforts may render obsolete the lead generation services we have to offer. 

Existing telephone and web advertising regulations and changes to such regulations may present regulatory and economic barriers to our real estate lead generation activities. 

Lead generation activity is heavily influenced by federal, state and local government regulations and policies concerning the tech based marketing industry, as well as internal policies and regulations promulgated by "national do not call lists." These regulations and policies often relate to public privacy. In the United States these regulations and policies are being modified and may continue to be modified. We anticipate that our lead generation channels and activity will be subject to oversight and regulation in accordance with national and local ordinances relating to privacy protection, and related matters.  Any new government regulations or utility policies pertaining to our lead generation services may result in significant additional expenses to us and as a result, could cause a significant reduction in sales referrals and related commission revenue. 

·

success of alternative lead generation technologies such as web-casts, text messaging, email spamming;

·

fluctuations in economic and market conditions, such as decreases in available inventory, that impact the viability of real estate purchases;

·

increases or decreases in the costs associated with obtaining a residential home loan;

·

capital expenditures by customers, which tend to decrease when the domestic or foreign economies slow;

·

continued regulation of the real estate and lending industries; and

·

availability and effectiveness of government subsidies and incentives.

 

 

The reduction in home loan availability could prevent us from achieving sales and market share. 

The reduction or elimination of government lending incentives may adversely affect the growth of this market or result in increased price competition, which could prevent us from achieving sales and market share. 

 

Today, over 70% of home loans are insured by the federal housing administration (FHA loans). These loans are popular because they have lower down payment requirements and lower credit score requirements.  Should FHA raise their down payment or credit requirements the result could be reduced home purchases which would significantly harm our business.  

 

 

 

There are restrictions on the transferability of the securities. 

 

Until registered for resale, investors must bear the economic risk of an investment in the Shares for an indefinite period of time.  Rule 144 promulgated under the Securities Act ("Rule 144"), which provides for an exemption from the registration requirements under the Securities Act under certain conditions, requires, among other conditions, a six month holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under the Securities Act.  There can be no assurance that we will fulfill any reporting requirements in the future under the Exchange Act or disseminate to the public any current financial or other information concerning us. 

If the Company uses its stock in acquisitions of other entities there may be substantial dilution at the time of a transaction. 

 

The offering price of the common stock we sold under our prospectus, and more recently as a private placement of restricted shares of our common stock to raise working capital, was arbitrarily set. The price did not bear any relationship to our assets, book value, earnings or net worth and it is not an indication of actual value. You may also suffer additional dilution in the future from the sale of additional shares of common stock or other securities or if the Company's shares are issued to purchase other assets or to raise additional working capital. 

The laws which govern merger transactions provide that since our sole director and officer owns over 50% of our outstanding shares, we may enter into a share exchange, reverse merger or other similar transaction with a private company in an unrelated business without the prior approval of unaffiliated shareholders. 

 

The various securities laws applicable to our company provide that our management may elect to enter and consummate a transaction to enter new or additional businesses. In that event, our shareholders might receive only an information statement with certain disclosures as required by law and would likely not be in a position to approve or disapprove the transaction. Investors who are unwilling to accept the uncertainty of new management, a new business plan, likely dilution and all the numerous related uncertainties that may materialize in the event such a transaction is consummated should not purchase our shares. 

 

 

There is presently a very limited market for our common stock.  Failure to maintain a trading market could negatively effect the value of our shares and make it difficult or impossible for you to sell your shares.

 

 

Investors will find additional information on day-to-day trading activity of our common shares, updated in real time and including level two market information on the web site maintained by OTC Markets.  The web address is:  www.otcmarkets.com.  The trading symbol of our common shares is "HMTF."

Our common stock is still presently subject to the "Penny Stock" rules of the SEC.

 

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

 

 

ITEM 2. DESCRIPTION OF PROPERTY

 

DESCRIPTION OF PROPERTY

 

We own a 5,600 square foot warehouse located at 4430 Garfield Street, Denver, CO 80216.  The facility is leased to a licensed grower for cannabis cultivation.

 

ITEM 4.  MINE SAFETY DISCLOSURE

 Not applicable.

 

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

 

MARKET INFORMATION

 

As of December 31, 2016 and the date of this report our shares are quoted on the OTCBB/OTCQB under the symbol HMTF. In the future, should we meet stringent qualifications and pay the required fee,  we may seek to have our shares quoted on Capital Markets tier of NASDAQ, however here is no assurance that our shares will continue to be quoted on any market.

Since inception of a trading market in our shares activity have been unpredictable and highly volatile. Closing prices have ranged from $0.02 to $5.34. The closing price on June 30, 2016 was $0.027.

 

The following table contains data from OTC Markets, Inc. and summarizes our past share price:

 

		High		Low
Fiscal Year ended December 31, 2016
First quarter		0.4		0.02
Second quarter		0.27		0.25
Third quarter		0.25		0.25
Fourth quarter		0.43		0.05
Fiscal Year ended December 31, 2015
First quarter		0.2		0.07
Second quarter		0.24		0.05
Third quarter		0.15		0.08
Fourth quarter		0.14		0.03

 

SHAREHOLDERS

As of the date of this report, there were approximately 56 direct holders of our common stock certificates as shown on the list maintained by our transfer agent. Additional shareholders have recently purchased their shares on the OTCBB,  hold shares in street name and are not included in the tally maintained by our transfer agent.

  

DIVIDENDS

 

We have not declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

 

WARRANTS OR OPTIONS

 

We have no outstanding warrant to purchase shares of our common stock.

 

EQUITY COMPENSATION PLANS

 

We currently have no equity compensation plans.

 

 

RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED SECURITIES

 

None.

 

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

 

We made no purchases of our equity securities nor were any such purchases made by any purchaser affiliated with us.

 

OUR TRANSFER AGENT

 

We have retained Standard Registrar and Transfer Agency, Albuquerque, New Mexico, as transfer agent for our Common shares. Shareholders are responsible to contact Standard to update their address. This may be done by writing:

Standard Registrar and Transfer Agency

P.O. Box 14411

Albuquerque, NM 87191

Phone : 505-828-2839

Or by e-mail to:  mary@standardregistrarta.com

 

Standard is responsible for all record-keeping and administrative functions in connection with our common shares.

 

ITEM 6. SELECTED FINANCIAL DATA- NOT APPLICABLE

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with the financial statements of Home Treasure Finders, Inc. (the "Company"), which are included elsewhere in this Form 10-K. This Annual Report on Form 10-K contains forward-looking information. Forward-looking information includes statements relating to future actions, future performance, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other such matters of the Company. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information. Forward-looking information may be included in this Annual Report on Form 10-K or may be incorporated by reference from other documents filed with the Securities and Exchange Commission (the "SEC") by the Company. You can find many of these statements by looking for words including, for example, "believes", "expects", "anticipates", "estimates" or similar expressions in this Annual Report on Form 10-K or in documents incorporated by reference in this Annual Report on Form 10-K. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.

We have based the forward-looking statements relating to our operations on our management's current expectations, estimates and projections about our Company and the industry in which we operate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In particular, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Accordingly, our actual results may differ materially from those contemplated by these forward-looking statements. Any differences could result from a variety of factors, including, but not limited to general economic and business conditions, competition, and other factors. 

 

 

 

Limited Operating History

 

There is limited historical financial information about our Company upon which to base an evaluation of our future performance.  We cannot guarantee that we will be successful in our mainstream real estate business and furthermore we have recently entered a new and untested industry in Colorado. We are subject to risks inherent in a small company, including limited capital resources, delays and cost overruns due to price and cost increases. There is no assurance that future financing will be available to our company on acceptable terms. Additional equity financing could result in dilution to existing shareholders.

 

Company Description and Overview

Home Treasure Finders, Inc. was formed on July 28, 2008. The founder, sole director and officer of our company is Corey Wiegand.

 

Our web site is a key aspect of our business. As of the date of this report, our site is 100% functional. You may view the site at www.hometreasurefinders.com

 

Our website supports three divisions:

 

Real Estate Investment Seminars

 

 

Integrated Voice Response, Call Capture System, Signs and Website

 

We may place our IVR SIGN in the yards of the homes on which we have a signed listing.  We may, in the future, place similar IVR signs at additional properties as such placements are authorized by listing contract.  Our IVR signs may direct calls from potential buyers to our database, and to the mobile phone of our founder or an assigned buyer agent.

 

Each time a home buyer sees a FOR SALE sign and the Home Treasure Finder's IVR sign in front of it, the prospective buyer may choose to:

 

 

If they elect to call the third party listing agent directly, Home Treasure Finders will not acquire the lead.

  

Presently we operate our website, WWW.HMTFrealty.com under a short term contract with a third party service. This arrangement provides us a functional generic IVR service for a monthly fee. Ultimately, we plan to integrate our IVR system into our website. This will aid us in tracking the incoming leads and potentially save us annually, thousands of dollars in monthly fees.

 

In either case, our IVR system seamlessly transfers the lead to Mr. Wiegand or a designated Licensed Real Estate Agents buyer agent

 

As of the date of this report we are negotiating a supplier agreement to purchase additional signs. We believe additional signs can be purchased from a variety of sources without difficulty.  Our new sign inventory will be stored indoors at our business address, and as of the date of this report, we are planning to deploy our new signs on specific properties, as appropriate. 

PLAN OF OPERATIONS AND PROJECTIONS

 

 

Our Potential for Growth.

Rent		$	144,000			Note 1
Less Interest			(64,582	)		Note 2
Less Insurance			(2,032	)		Note 3
Less Taxes			(8,524	)		Note 4
Less Depreciation			(20,874	)		Note 5
Income		$	48,028			Note 6

 

 Results of Operations

 

		Year Ended December 31, 2016				Year Ended December 31, 2015
Revenues, net		$	452,059			$	390,741
Gross profit			452,059				390,741
Selling, general and administrative expenses			305,328				227,463
Commission expense			57,088				82,111
Professional fees			49,475				32,594
Total operating expenses			411,891				342,168
Profit from operations			40,168				48,573
Other Income (expense)			(59,175	)			(59,049	)
Loss from operations before income taxes			(19,007	)			(10,476	)
Net loss		$	(19,007	)		$	(10,476	)

ITEM 8. FINANCIAL STATEMENTS.

The financial statements and supplementary data required by this item are submitted on page 21 of this report.

 

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F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Home Treasure Finders, Inc. and Subsidiaries

Denver, Colorado

 

 

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December 31, 2016 and 2015

Home Treasure Finders, Inc. (the "Company") was initially incorporated on July 28, 2008 in the State of Colorado.  

 

The Company is in the business of operating a real estate business and operates in Colorado as a State Licensed "Employing Broker" number 1000021235 issued on February 13, 2012.

Effective April 1, 2013, all property management activities, revenues and expenses in connection with CW Properties, a property management company owned by the CEO, were transferred to a wholly owned subsidiary of Home Treasure Finders, Inc.  All net revenue earned by CW Properties has been booked as consolidated revenue of Home Treasure Finders, Inc.  

On March 3, 2014 the Company formed a wholly subsidiary, HMTF Cannabis Holdings, Inc. The purpose of the subsidiary is to purchase Colorado properties that qualify for legal cultivation of cannabis. The properties will then be improved and leased to licensed third party growers.

 

The Company generates income from its real estate holdings.  On September 15, 2014 the Company acquired a vacant warehouse property in Denver zoned for cannabis cultivation. On November 5 and December 1, 2014 the Company leased the warehouse to unrelated licensed grower. The Company's tenant invested cash to improve their respective leaseholds per lease terms utilizing architectural and engineering documents we procured and provided.

 

b. Accounting Method

The Company's financial statements are prepared using the accrual method of accounting.  The Company has elected a December 31 year-end.

c.  Estimates

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

d.  Income Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  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 of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

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d.  Income Taxes (Continued)

 

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e.  Loss per Common Share

 

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HOME TREASURE FINDERS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

 

NOTE 2 –PROPERTY AND EQUIPMENT

 

 

 

 

The note to seller is secured by the three warehouse units.

 

 

 

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HOME TREASURE FINDERS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

NOTE 3 – LONG-TERM DEBT (continued)

Year Ending December 31,
2017		$	10,790
2018			11,090
2019			789,774
		$	811,654

Years ending December 31,	Amount
2018		$	16,800
Thereafter			4,200
		$	21,000

 

 

 

 

 

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None.

ITEM 9A. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

 

Management's Report on Internal Control Over Financial Reporting

 

No Attestation Report by Independent Registered Accountant

 

 

 

 

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Changes in Internal Control Over Financial Reporting

 

 

 

 

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We have no director compensation policy. Directors may be reimbursed for their expenses incurred for attending each board of directors meeting and may be paid a fixed sum for attendance at each meeting of the directors or a stated salary as director. No policy or payment precludes any director from serving us in any other capacity and being compensated for the service. Members of special or standing committees may be allowed reimbursement and compensation for attending committee meetings. During the years ended December 31, 2016 and 2015 and the period from inception until December 31, 2015 and the date of this report, none of our directors were paid any fees to attend director meetings.

  

EXECUTIVE COMPENSATION

 

Beginning January 2012 we agreed to pay Mr. Wiegand a salary of $2,500 per month plus an additional override of 15% based on sales. However, during much of 2012, we experienced a cash shortage and were unable to pay salary to Mr. Wiegand as it became due.  Effective April 1, 2013 we increased Mr. Wiegand's salary to $5,500 per month plus an additional over-ride of 10% based upon commission revenue. Subsequently, we increased that amount by $500 per month and during December 31, 2015 we were paying Mr. Wiegand $6,000 per month.  Effective April 1, 2016, Mr. Wiegand's salary increased to $10,000 a month plus he receives the additional override of 10% based upon commission revenue.  As of December 31, 2016 Mr. Wiegand is owed accrued salary totaling $28,612. 

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The following table sets forth certain information concerning compensation paid our officer during years ended 2016, 2015, 2014 and 2013. Mr. Wiegand received no compensation prior. Going forward, Mr. Wiegand will receive a salary plus a commission based upon a percentage of gross sales, however, no written compensation agreement has been executed.

 

Name and principal position		Year		Salary and Commissions     ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Corey Wiegand, Officer and Sole Director		2016 2015 2014 2013			125,520 91,242 70,000 74,738				— — — —				— — — —				— — — —				— — — —				— — — —				— — — —				125,520 91,242 70,000 74,738

 

Aggregated Option Exercises in Last Fiscal Year and Year-End Option Values

 

No stock options were exercised or held for exercise.

 

Equity Compensation Plan Information

 

There is currently no stock option executive compensation plan in place.

 

Employment and Consulting Agreements

 

We presently pay Corey Wiegand a salary of $10,000 monthly plus an override of 10% based upon commission revenue. During periods when we did not have available cash, we have accrued unpaid salary and plan to pay these amounts at a future date when and if cash becomes available. We have not executed a written agreement in connections with this arrangement and we may change the arrangement at any time.

 

Board of Directors

Our Director is elected by the vote of a majority in interest of the holders of our voting stock and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.

 

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     Corey Wiegand has no relationship with any shareholder of the Company other than James Wiegand. 

 Other than as set forth above, none of the following parties has, during the last two years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:

 

 

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Audit-Related Fees

The aggregate fees billed during the fiscal years ended December 31, 2016 and 2015 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A was $0 and $0, respectively. 

Tax Fees

The aggregate fees billed during the fiscal years ended December 31, 2016 and 2015 for professional services rendered by our principal accountant tax compliance, tax advice and tax planning was $350 and $300, respectively.

All Other Fees

The aggregate fees billed during the fiscal years ended December 31, 2016 and 2015 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A was $0 and $0, respectively.

 

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In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.