Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒x        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,September 30, 2021

☐o        TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________________________ to ____________________________

Commission file number 333-177792333-197889

THE TEARDROPPERS, INC.

(Exact name of small business issuer as specified in its charter)

620 Newport Center DriveSuite 1100PMB 488

Newport Beach Ca. , CA92660

(Address of principal executive offices)

949-751-2173949-751-2173

(Issuer’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act

Securities registered pursuant to Section 12(g) of the Act: None

Check whether the issues (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ☒x   No ☐o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒x   No ☐o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ oNo ☒x

There were 45,920,000 shares of the registrant’s common stock, $0.001 par value per share, outstanding on May 12,November 8, 2021.

THE TEARDROPPERS, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1. Condensed Unaudited Financial Statements

The Teardroppers, Inc.

CONDENSED BALANCE SHEETS

 

		March 31, 2021				December 31, 2020
		(unaudited)
ASSETS
Current assets
Cash		$	46,206			$	49,473
Lease receivable			1,000				1,000
Lease receivable - related party (current portion)			48,478				46,816
Interest receivable			555				565
Prepaid expenses			3,659				4,072
Other receivables			2,000				–
Total current assets			101,898				101,926
Property and equipment:
Cost			324,202				288,089
Less accumulated depreciation			(200,511	)			(185,153	)
Property and equipment, net			123,691				102,936
Lease receivable - related party (net)			156,469				168,957
Total Assets		$	382,058			$	373,819
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable		$	345,369			$	319,455
Accounts payable - related parties			353,591				336,081
Customer deposits			14,500				14,500
Contract liability - related party			11,760				11,760
Current portion of notes payable			4,876				4,737
Current portion of notes payable - related party			75,095				35,932
Current portion of right of use asset lease payable - related party			4,016				3,656
Accrued interest - unrelated parties			555				566
Line of credit from related party			958,002				867,011
Accrued interest payable-related parties			292,327				272,338
Total current liabilities			2,060,091				1,866,036
Long-term liabilities:
Note payable			61,759				63,125
Note payable - related party			–				47,747
Right of use asset lease payable - related party			18,433				19,386
			80,192				130,258
Total Liabilities			2,140,283				1,996,294
Commitments and Contingencies (Note 11)
Stockholders' Deficit
Preferred stock, par value $0.001, authorized 20,000,000 shares, issued shares 0			–				–
Common stock, par value $0.001, authorized 200,000,000 shares issued 45,920,000			45,920				45,920
Additional paid in capital			828,558				828,558
Accumulated deficit			(2,632,703	)			(2,496,953	)
Total Stockholders' Deficit			(1,758,225	)			(1,622,475	)
Total Liabilities and Stockholders' Deficit		$	382,058			$	373,819

The accompanying condensed notes are an integral part of the condensedunaudited financial statements.

The Teardroppers, Inc.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)(UNAUDITED)

The accompanying condensed notes are an integral part of the unaudited condensed financial statements.

The Teardroppers, Inc.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

For the three months ended March 31,FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 andAND 2020

(Unaudited)(UNAUDITED)

The accompanying condensed notes are an integral part of the unaudited condensed financial statements.

The Teardroppers, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)(UNAUDITED)

The accompanying condensed notes are an integral part of the unaudited condensed financial statements.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(Unaudited)

March 31,For the Three and Nine Months Ended September 30, 2021 and 2020

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

On June 3, 2013, Teardroppers, Inc. (the “Company”), was incorporated under the laws of the state of Nevada.

We are in the business of mobile billboard advertising, providing billboard advertising space on custom designed "Teardrop Trailers" and various sizes of cargo type trailers. Teardrop Trailers, are usually designed for short-period accommodations for vacationers and travelers. Teardrop Trailers are designed to be towed behind new and vintage vehicles and pickup trucks.

In addition, we own cargo trailers with flat non rivet panel siding that can be used for hauling and transportation. These trailers range in size from 15 feet to 53 feet. We lease these trailers for transportation of goods and for advertising of their respective business or the businesses of lessee clients.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion the financial statements include all adjustments (consisting of normal recurring accruals) necessary in order to make the financial statements not misleading. Operating results for the threenine months ended March 31,September 30, 2021 isare not necessarily indicative of the final results that may be expected for the year ended December 31, 2021. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 filed with the SEC on April 14, 2021.SEC.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP 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. Accordingly, actual results could differ from those estimates. Such estimates include management’s assessments of the carrying value of certain assets, lease liabilities, useful lives of assets, and related depreciation and valuation of deferred tax assetsamortization methods applied.

Cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. At March 31,September 30, 2021 and December 31, 2020, the Company had no0 cash equivalents.

Fair value of financial instruments

The Company adopted the provisions of FASB Accounting Standards Codification (“ASC”) 820 (the “Fair Value Topic”) which defines fair value, establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended September 30, 2021 and 2020

The Fair Value Topic defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. It also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

The carrying amount of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses, and deferred revenuecontract liability approximate their fair value because of the shortshort-term maturity of those instruments. The Company’s loansnote payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at March 31,September 30, 2021 and December 31, 2020.

The Company had no0 assets and/or liabilities measured at fair value on a recurring basis as of March 31,September 30, 2021 and December 31, 2020, respectively, using the market and income approaches.

Property and equipment

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method over the assets estimated useful life of three (3)(3) years for equipment, five (5)(5) years for automobile, and seven (7)(7) years for furniture and fixtures. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

Revenue recognition

On January 1, 2018, the Company adopted the provisions of ASC 606 Revenue from Contracts with Customers, and related Accounting Standards Updates. This new revenue recognition standard has a five step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures.

TheOne of the primary sourcesources of revenue and performance obligation isrevenues are from the rental of advertising space on custom designed Teardrop Trailers. The lengthTrailers, Various types and sizes of the rental agreements variescargo trailers, lease revenue and consulting fees. Revenue from one to thirty days. Customers pay in advanceadvertising space and revenueleases is recognized based onover time as the number of days of each contract that have expired.performance obligations are met and consulting fees is recognized at a point in time when the performance obligation is met. For the three and nine months ended March 31,September 30, 2021 and 2020, the Company recognized no0 income from the rental of the trailers.

Subsequent to the adoption of amended accounting guidance for leasing transactions (the “new lease standard”), new leases are classified as sales-type leases, direct financing leases, or operating leases. Leases that commenced prior to the adoption of the new lease standard were not reassessed or restated pursuant to the practical expedients elected and will continue to be accounted for under previous lease accounting guidance.

When a contract includes lease and non-lease components, the Company allocates consideration under the contract to each component based on relative standalone selling price. Whenever the terms of the lease transfer control to the lessee, the contract is typically classified as a sales-type lease.

All other leases that do not meet the definition of a sales-type lease or direct financing lease are classified as operating leases. The underlying asset in an operating lease arrangement is carried at depreciated cost as “Equipment under operating leases” within Property, plant, and equipment, net on the balance sheets. Depreciation is calculated using the straight-line method over the term of the underlying lease contract and is recognized as Cost of net revenue. The depreciable basis is the original cost of the equipment less the estimated residual value of the equipment at the end of the lease term. The Company recognizes operating lease revenue on a straight-line basis over the lease term and expenses deferred initial direct costs on the same basis. Impairment of equipment under operating leases is assessed on the same basis as other long-lived assets.

The Company provides lessees with the option to extend the lease or purchase the underlying asset at the end of the lease term, which is considered when evaluating lease classification. In general, the Company’s lease arrangements do not have variable payment terms and are non-cancelable.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

In March 2018, the Company entered into a four-year agreement to lease equipment to an unrelated shareholder. In September 2018, the son of the shareholder became the Chief Financial Officer. At that point the shareholder iswill be considered a related party. For the three months ended March 31,September 30, 2021 and 2020, related party lease income was $12,000$0 and $12,000$12,000, respectively. For the nine months ended September 30, 2021 and 2020, related party lease income was $12,000 and $36,000, respectively. On April 2, 2021, the equipment was sold to the lessee and the lease terminated. See Note 9 for details.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended September 30, 2021 and 2020

In January 2019, the Company entered into a two-year agreement to lease a vehicle to an unrelated third party. For the three and nine months ended March 31,September 30, 2021 and 2020, the Company recognized operating lease income of $1,275 and $3,825, respectively. As of September 30, 2021 and December 31, 2020, the lease receivable was $1,275$1,000.

On February 1, 2020, the Company leased a truck and $1,275,trailer purchased November 2019 for $190,000 to a related party. The lease is classified as a direct financing lease. The cost of the vehicle and related accumulated depreciation has been reclassified to a lease receivable and is reflected on the condensed balance sheet as lease receivable – related party. Interest revenue is reflected on the condensed statement of operations. For the three months ended September ended September 30, 2021 and 2020, the Company recognized interest revenue of $4,610 and $6,031, respectively. For the nine months ended September 30, 2021 and 2020, the Company recognized interest revenue of $14,943 and $16,795, respectively. See Note 5 for details.

On September 1, 2020, the Company leased a vehicle for $69,000 to a related party. The lease is classified as a direct financing lease. The lease is reflected on the condensed balance sheet as lease receivable – related party. Interest revenue is reflected on the condensed statement of operations. For the three months ended September 30, 2021 and 2020, the Company recognized interest revenue of $1,614 and $575, respectively. For the nine months ended September 30, 2021 and 2020, the Company recognized interest revenue of $4,936 and $575, respectively. See Note 5 for details

In January 2015, the Company received $14,500 as a deposit for advertising space to be provided in the future. As of March 31,September 30, 2021 and December 31, 2020, the customer has not utilized the space and no revenue has been recognized as the performance obligations have not been satisfied. At the time the service is provided under the terms of the agreement, the Company will recognize the revenue.

Net income (loss) per share

The Company computes basic and diluted earnings per share amounts pursuant to ASC 260-10-45. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the periodperiod.

The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted as of the first day of the year for any potentially diluted debt or equity. Potentially dilutive securities are excluded from the computation if their effect is in anti-dilutive.

There were no0 potentially dilutive shares outstanding as of March 31,for the three and nine-month periods ended September 30, 2021 and December 31, 2020, respectively.

Recently Issued Accounting Pronouncementsissued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that mayapplicable to the Company. These pronouncements did not have any material impact itson the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued and not implemented that might have a material impact on its financial position or results of operations.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended September 30, 2021 and 2020

NOTE 3 – GOING CONCERN

The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has a minimum cash balance available for payment of ongoing operating expenses. As of March 31,September 30, 2021, the Company has an accumulated deficit of $2,632,703,$2,829,466 and negative working capital of $2,068,114. For the nine months ended September 30, 2021, the Company had a net loss of $332,513. and a net cash outflow from operating activities of $47,741, and a net loss for the current period of $135,750.$137,724. These conditionsmatters raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuanceissue date of this report. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available or will be available on terms acceptable to the Company.

NOTE 4. 4 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2021 and December 31, 2020: 

NOTE 5 – LEASE RECEIVABLE – RELATED PARTY

On November 12, 2019, the company purchased a truck and trailer from a related party for $190,000. On February 1, 2020, the Company leased the asset back to the same related party. The term of the lease is for 48 months with payments of $5,003$5,003 per month. At the end of the lease, the related party has the right to purchase the asset for $22,800.$22,800. The lease is classified as a financing lease under ASC 842. The present value of the lease payments, excluding the end of lease provisions, discounted at an interest rate of 10%10%, is $197,442.$197,442. The Company is using the net book value of $180,500$180,500 of the asset as the initial value of the lease in accordance with ASC 842-30-55-17A.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(Unaudited)

March 31,For the Three and Nine Months Ended September 30, 2021 and 2020

The undiscounted cash flow principal payments for the remaining term of the lease will be as follows:

Income from the lease is reflected on the statement of operations as interest income – related parties. For the three and nine months ended September 30, 2021 and 2020, interest income reported on the statements of operations was $4,610 and $6,031 and $14,943 and $17,370, respectively.

On August 1, 2020, the companyCompany purchased a vehicle for $69,000 from a related party and leased it to the same related party. The term of the lease is for 60 months with payments of $1,000$1,000 per month. At the end of the lease, the related party has the right to purchase the vehicle for $37,000.$37,000. The lease is classified as a financing lease under ASC 842. The present value of the lease payments, excluding the end of lease provisions, discounted at an interest rate of 10%10%, is $47,065.$47,065. The Company is using the net book value of $69,000$69,000 of the asset as the initial value of the lease in accordance with ASC 842-30-55-17A.

The undiscounted cash flow principal payments for the remaining term of the lease will be as follows:

Income from both leasesthe lease is reflected on the statement of operations as interest income – related parties. For the three and nine months ended March 31,September 30, 2021 and 2020, interest income was reported on the statements of $7,023operations of $1,614 and $4,410, respectively was reported.

NOTE 5 – PROPERTY & EQUIPMENT

Property$575 and equipment consists of the following at March 31, 2021$4,936 and December 31, 2020.

Depreciation expense for the three months ended March 31, 2021 and 2020 was $15,358 and $17,321$575, respectively.

On November 12, 2019, the Company acquired for $190,000 a 2008 Freightliner truck and a 2007 Featherlite trailer for use in the business operations.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(Unaudited)

March 31,For the Three and Nine Months Ended September 30, 2021 and 2020

 NOTE 6 – LOAN PAYABLE – RELATED PARTY

On February 1, 2020,

During 2014, the Company leasedentered into a truckloan agreement with Gemini Southern, LLC whereby the monies paid to the Company by Gemini Southern, LLC pursuant to the consulting agreement dated September 20, 2013. The balance will be paid back with interest commencing on January 1, 2015 at a rate of 10% per annum with a maturity date of December 12, 2018. On April 1, 2018, the balance of the debt, $525,000, was converted into 4,375,000 of common stock. The Company recorded accrued interest on this loan of $145,632 as of September 30, 2021 and trailer purchased November 2019 for $190,000December 31, 2020, respectively. The accrued interest was not part of the conversion agreement and continues to a related party. The lease is classifiedbe reflected as a financing lease. The costliability. Effective April 1, 2018, the line of credit is considered related party debt. See Note 7 for details of the vehicle and related accumulated depreciation has been reclassified to a lease receivable and is reflected on the balance sheet as lease receivable – related party. See Note 4 for details.transactions.

On February 4, 2021, the Company purchased for $36,113, a 1983 Toyota truck from a related party for use in the business operations.

NOTE 67 – LINE OF CREDIT FROM RELATED PARTY

On February 25, 2014, the Company entered into a line of credit with DEVCAP Partners, LLC, a California limited liability company (“DEVCAP”), for an amount up to $450,000$450,000 with an extendeda maturity date of December 31, 2023, bearing interest of 10%10% per annum. Effective July 1, 2019, the loan was assumed by FinTekk AP, LLC, a California limited liability company (“Fintekk”). The terms of the line of credit are unchanged. Both DEVCAP and FinTekk are solely owned by the majority shareholder of the Company and are related parties. As of March 31,September 30, 2021, and December 31, 2020, the balance of the line of credit was $257,385$320,629 and $226,385,$226,385, respectively. The Company recorded accrued interest of $32,507$44,078 and $27,374$27,374 on the line of credit at March 31,September 30, 2021 and December 31, 2020, respectively.

On August 13, 2015, the Company entered into a line of credit with General Pacific Partners, LLC, a California, limited liability company, for an amount up to $450,000.$450,000. The line of credit is a demand loan bearing interest of 10%10% per annum. General Pacific Partners, LLC is a related party to2021, and December 31, 2020 the Company as it is owned by a majority shareholder of the Company. On July 5, 2017, the balance of $25,000 was converted into 500,000 shares of stock valued at $.05 per share. The balance of the line of credit was $0 as of March 31, 2021 and December 31, 2020.$0. The Company owesrecorded accrued interest of $4,732 as of March 31,$4,732 at September 30, 2021 and December 31, 2020, respectively.

During 2014, the Company entered into a line of credit agreement with Gemini Southern, LLC. On April 1, 2018, the Company converted $525,000 of debt owed to Gemini Southern, LLC into 4,375,000 shares of stock. Gemini Southern, LLC will be treated as a related party.party for all activity from the date of the conversion forward. The line of credit is a demand loan with a maximum of $950,000$950,000 bearing interest at 10%10%, maturing December 2023. As of March 31,At September 30, 2021, and December 31, 2020, the balance due on the line was $700,617$756,949 and $640,626,$640,626, respectively. The Company recorded accrued interest of $109,332$149,448 and $94,600$94,600 as of March 31,September 30, 2021 and December 31, 2020, respectively respectively.

NOTE 78 – LONG-TERM LIABILITIES – RELATED PARTY

During 2014, the Company entered into a loan agreement with Gemini Southern, LLC, pursuant to which monies were to be paid to the Company by Gemini Southern, LLC, pursuant to the Consulting Agreement dated September 20, 2013. The balance was to be paid with interest commencing January 1, 2015 at a rate of 10% per annum, with a maturity date of December 12, 2018. On April 1, 2018, the balance of the debt, $525,000, was converted into 4,375,000 shares of common stock of the Company. The Company recorded accrued interest on this loan of $145,632 as of March 31, 2021 and December 31, 2020, respectively. The accrued interest was not part of the conversion agreement and continues to be reflected as a liability.

On October 1, 2017, the Company acquired from Gemini Southern, LLC a 2006 Ultra-Comp 53” NASCAR type vehicle transport hauler (the “Hauler”) to be used for promotional / advertising services. The purchase price of the Hauler was $165,000.$165,000. The Company paid for the Hauler with a promissory note (the “Hauler Note”). The Hauler Note bears interest at 12%12% per annum and is payable as follows: (i) interest only from October 1, 2017 through February 28, 2018; (ii) $ $3,670 per month from March 1, 2018 through February 28, 2022; and $45,000 on February 1, 2022. The trailer is collateral for the promissory note. The balance of the loan was $75,095 and $83,679$83,679 as of March 31, 2021 and December 31, 2020, respectively.2020. On April 2, 2021, the companyCompany sold the trailer to a related party Rick Ware Racing, LLCHauler for $75,095 and paid offGemini Southern the promissory notebalance of the loan. The book value of the Hauler was $49,500 resulting in the amounta gain of $75,095.$25,595.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(Unaudited)

March 31,For the Three and Nine Months Ended September 30, 2021 and 2020

Principal payments for the remaining term of the loan will be as follows:

On December 22, 2018, the Company leased a vehicle from the majority shareholder. The term of the lease is 84 months with payments of $423 per month. At the end of the lease the Company can purchase the vehicle for $2,500. As of March 31,September 30, 2021, it is reasonably expected that the Company will exercise the purchase option. The value of the right of use asset and corresponding liability at the date of inception was $30,089,$30,089, the net present value of the lease payments, including the purchase option, using an interest rate of 6.649%6.649% in accordance with the provisions of ASC 842. The rightbalance of use asset is included in propertythe lease liability at September 30, 2021 and equipment as a leased asset.December 31, 2020 was $21,850 and $23,042, respectively.

The undiscounted cash flow principalFuture lease payments for the next five years will be as follows:

On August 1, 2020,There are no commitments or contingencies related to the Company borrowed $69,000 from an unrelated party to purchase a 2020 Porsche Maranlong-term liabilities that was subsequently leased to a related party. See Note 4 for details of the lease agreement. The term of the loan is 60 months with payments of $912 per month with interest at 10%. A final payment of $42,434 is due in August 2025. The loan is secured by the vehicle.are not disclosed above.

Principal payments for the next five years will be as follows:

NOTE 89 – OTHER RELATED PARTY TRANSACTIONS and RELATED PARTIES ACCOUNTSPARTY ACOUNTS PAYABLE

Line of credit from related parties

The Company has two line of credit agreements with related parties. FinTekk AP, LLC is also the majority shareholder in the Company. DEVCAP Partners, LLC is owned by the same related party that owns Fintekk AP. See Note 6 for further disclosure.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

Consulting expense to related party (FinTekk AP,(DEVCAP Partners, LLC)

On January 1, 2014, the Company executed a three-year consulting agreement with DEVCAP Partners, LLC, (“DEVCAP”), whereby the Company agreed to pay approximately $7,500 a month for consulting services to be provided to the Company such as marketing, architectural development, accounting, finance, corporate structure and tax planning. Effective July 1, 2019, the agreement was transferred to FinTekk AP, LLC (“FinTekk”). All amounts due to DEVCAP and all future services will be assumed by FinTekk. For the three and nine months ended March 31,September 30, 2021 and 2020, the Company recorded consulting fee expense of $22,500,$22,500 and $67,500, respectively. The amount due but unpaid is $242,835 $265,335 and $243,825 $243,825 at March 31,September 30, 2021 and December 31, 2020, respectively, and is included in accounts payable related parties on the balance sheets.

Consulting expense to related party (Cody Ware)

On January 1, 2019, the Company entered into a verbal consulting agreement with its Chief Executive Officer, Cody Ware, whereby the Company agreed to pay $1,500 per month for consulting services related to his duties as Chief Executive Officer. Effective May 1, 2020, the consulting fee was increased to $4,500 per month. For the three and nine months ended September 30, 2021, the Company recorded consulting fee expense of $13,500 and $40,500, respectively. For the three and nine months ended September 30, 2020, the Company recorded consulting fee expense of $13,500 and $28,500, respectively. At September 30, 2021 and December 31, 2020, the amount due but unpaid was $36,000 and $3,000, respectively and reflected in accounts payable – related parties on the condensed balance sheets.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (Unaudited)

For the Three and Nine Months Ended September 30, 2021 and 2020

Consulting expense to related party (Robert Wilson)

On January 1, 2014, the Company entered into a verbal consulting agreement with its Chief Financial Officer, Robert Wilson, whereby the Company agreed to pay $2,500 per quarter for consulting services related to his duties as Chief Financial Officer. Mr. Wilson resigned effective April 1, 2017. The amount due but unpaid was $17,500 at September 30, 2021 and December 31, 2020, respectively, and was included on the balance sheets as accounts payable - related parties.

Consulting expense to related party (Ray Gerrity)

On January 1, 2014, the Company entered into a verbal consulting agreement with its Chief Executive Officer, Ray Gerrity, whereby the Company agreed to pay $2,500 per quarter for consulting services related to his duties as Chief Executive Officer. Mr. Gerrity resigned his position effective March 31, 2018. The amount due but unpaid was $32,500$32,500 at March 31,September 30, 2021 and December 31, 2020, respectively, and was included on the balance sheet as accounts payable - related parties. 

Consulting expense to related party (Robert Wilson)

On January 1, 2014, the Company entered into a verbal consulting agreement with its Chief Financial Officer, Robert Wilson, whereby the Company agreed to pay $2,500 per quarter for consulting services related to his duties as Chief Financial Officer. Mr. Wilson resigned effective April 1, 2017. The amount due but unpaid was $17,500 at March 31, 2021 and December 31, 2020, respectively, and was included on the balance sheetsheets as accounts payable - related parties.

Consulting expense to related party (Cody Ware)

On January 1, 2019, the Company entered into a consulting agreement with its Chief Executive Officer, Cody Ware, whereby the Company agreed to pay $1,500 per month for consulting services related to his duties as Chief Executive Officer. Effective July 2020, the amount was increased to $4,500 per month. For the three months ended March 31, 2021 and 2020, the Company recorded consulting fee expense of $13,500 and $4,500, respectively. As of March 31, 2021 and December 31, 2020, the amount due but unpaid was $16,500 and $3,000, respectively and is included in accounts payable – related parties on the balance sheet.

Expense reimbursements

The majority shareholder of the Company pays certain ongoing operating costs from personal funds and is periodically reimbursed. As of March 31,September 30, 2021, and December 31, 2020, the amountsamount due to the shareholder was $34,250$34,633 and $29,250 and$29,250, respectively is reflected in accounts payable – related parties on the balance sheet.sheets.

OtherSale of asset

In March 2018, the Company entered into a four-year agreement to lease equipment to a related party. On April 2, 2021 when the lease expired, the Company sold the asset to the related party transactions

On January 9, 2019, the Company leasedfor $75,095 and recognized a 2018 Ford F-150 truck for a termgain of two years at $425 per month.$25,595. The truck was acquired December 22, 2018 from the majority shareholdergain is reported on statement of operations as described in Note 10. The lessee is an outside consultant for the Company. Additionally, as of March 31, 2021 and December 31, 2020, there was an outstanding payable balance of $10,006 advances owed to related parties.other income.

On February 4, 2021, the Company purchased a 1983 Toyota truck from the majority shareholder for use in the business operations.

NOTE 910 – STOCKHOLDERS’ DEFICIT

At the time of incorporation, the Company was authorized to issue 10,000 shares of common stock and 1,000 shares of preferred stock with a par value of $0.001. The Company amended its articles of incorporation in April 2016 to increase itits authorized shares to 200,000,000 shares of common stock and 20,000,000 shares of preferred stock, both $0.001 $0.001 par value.

TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2021

NOTE 10 – OPERATING LEASES

Operating Leases - Lessee

On December 22, 2018, the Company leased a vehicle from the majority shareholder. See further details of this lease in Note 7.

Operating Leases – Lessor

The Company entered into an agreement with a principal vendor for the lease of a Company vehicle. The lease is classified as a lessor operating lease under ASC 842. The term of the lease is 24 months, effective January 2019 and expiring December 2020. Depreciation expense for the vehicle subject to the lease is provided on the straight-line method over the useful life of the vehicle in accordance with the Company’s normal depreciation policy. Estimated and actual residual values are reviewed on a regular basis to determine that depreciation amounts are appropriate. Depreciation expense related to the vehicle was $6,018 for the years ended December 31, 2020 and 2019.

Investments in operating leases are as follows at March 31, 2021 and December 31, 2020:

NOTE 11—CONTINGENCIES AND COMMITMENTS

The Company’s ability to collect on receivables and pay liabilities is connected to NASCAR race schedule. The 2020 NASCA schedule was severely disrupted by Covid, which caused delays in both collections and payments. Management believes the 2021 NASCAR schedule will not be disrupted. This will allow collections on receivables and payments on liabilities to be timely made. There are no other commitments or contingencies related to the assets and liabilities that are not disclosed above.

The COVID-19 outbreak in 2020 had a significant impact on business in general. The NASCAR race schedule was severely disrupted. The Company’s operations are directly connected to the NASCAR schedule. Due to the disruption in NASCAR events, collection of revenues and payment of expenses was delayed in some cases. Overall, revenues and expenses for 2020 were consistent with prior periods. The Company did not experience a significant detrimental change. Management believes the 2021 NASCAR race schedule will not be significantly impacted and should not have a material impact on future operations. Due to the level of risk this virus may have on the global economy, it is at least reasonably possible that it could have an impact on the operations of the Company in the near term that could materially impact the Company’s financials.

NOTE 12 – SUBSEQUENT EVENTS

On April 2, 2021, the Company sold its interest in the 2005 Ultra Comp trailer to Rick Ware Racing, LLC. The sale price of the trailer was $75,095.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor for Forward-Looking Statements

When used in this report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27a of the Securities Act of 1933 and Section 21e of the Securities Exchange Act of 1934 regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual result may differ materially from those included within the forward-looking statements as a result of various factors. Such factors are discussed under the “Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operations,” and also include general economic factors and conditions that may directly or indirectly impact the Company’s financial condition or results of operations.

Three Months Ended March 31,September 30, 2021 Compared to Three Months Ended March 31,September 30, 2020

Revenues

The Company had $13,275$1,275 in revenue during the three months ended March 31,September 30, 2021 compared to $13,275$19,275 in revenue during the three months ended March 31,September 30, 2020. The decrease in revenue for the quarter was due to delayed lease payments, which payments were received after September 30, 2021 by the company.

Operating Expenses

For the three months ended March 31,September 30, 2021 operating expenses were $131,790$83,554 compared to $167,948$89,464 for the same period in 2020 for a decrease of $36,158.$5,910. The decrease was primarily a result a decrease in consulting from related parties from $44,300 to $36,000 and a decrease in general and administrative expenses from $38,464 to $31,854. This was offset by an increase in consulting fees to unrelated parties from $5,000 to $10,000 and an increase in professional fees from $1,700 to $5,700.

Other Income (Expense)

Interest expense was $20,774 for the three months ended September 30, 2021 compared to $17,157 for the three months ended September 30, 2020. The interest expense increased due to an increase in the indebtedness of the Company.

Net Loss

The Company incurred losses of $103,053 for the three months ended September 30, 2021 compared to $87,346 during the three months ended September 30, 2020 due to the factors discussed above.

Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

Revenues

The Company had $15,825 in revenue during the nine months ended September 30, 2021 compared to $51,825 in revenue during the nine months ended September 30, 2020. The decrease was related to the sale of an asset prior in 2021 and to lease payments not yet received by the Company that were due in the quarter.

Operating Expenses

For the nine months ended September 30, 2021 operating expenses were $313,896 compared to $349,947 for the same period in 2020 for a decrease of $36,051. The decrease was primarily toa result of the decrease in general and administrative fees and professional fees.from $158,094 to $29,513.

Interest and Financing Costs

Interest expense was $24,258$79,916 for the threenine months ended March 31,September 30, 2021 compared to $20,211$65,426 for the threenine months ended March 31,September 30, 2020. The increase in interest expenses wasexpense increased for the period due to an increase in the amount of indebtedness offor the company.

Net Income (Loss)Loss

The Company incurred losses of $135,750$332,513 for the threenine months ended March 31,September 30, 2021 compared to losses of $170,474$346,178 during the threenine months ended March 31, 2020. The change wasSeptember 30, 2020 due primarily to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company’sCompany's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has a minimum cash balance available for payment of ongoing operating expenses and has incurred losses since inception and anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available or will be available on terms acceptable to the Company.

The Company had $46,206$73,943 in cash at March 31,September 30, 2021 with availability on our related party lines of credit with DEVCAP Partners,FinTekk AP, LLC of $129,371, General Pacific Partners, LLC of $450,000, and Gemini Southern, LLC of $958,002.$193,051. As at March 31,of September 30, 2021 we had a working capital deficit of $1,958,193.$2,068,114.

Operating activities

During the threenine months ended March 31,September 30, 2021, we had $137,724 cash used in operating activities of $47,741 as compared to $108,250$170,433 during the threenine months ended March 31,September 30, 2020, an increasea decrease in cash outflows of $60,509.$32,709. The decrease between the periodschange was largelyprimarily due to higher payments for consulting fees and audit feesa decrease in the three months ended March 31, 2020.accounts payable related parties of $49,887.

Investing activities

We usedhad $38,982 of cash flows inprovided by investing activities of $36,113 during the threenine months ended March 31,September 30, 2021 versus ($69,000) in 2020. The increase was due to the sale of a trailer asset.

Financing activities

During the nine months ended September 30, 2021, we generated $123,212 from financing activities compared to $0$254,131 for the same period ended September 30, 2020. The decrease was primarily due to decreased borrowing from our related party line of credit of $352,744 from $608,720 from the same period in 2020.

Financing activities

During the three months ended March 31, 2021, we generated $80,587 from financing activities compared to $99,116 for the same period ended March 31, 2020. The increase was primarily due to an increase in the amount received from a related party line of credit.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.

As a “smaller reporting company,” we are not required to provide the information under this Item 3.

ITEM 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Based upon an evaluation ofManagement evaluated the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of September 30, 2021, the end of the fiscal period covered by this report, our Chief Executive Officer concluded that our disclosureQuarterly Report on Form 10-Q. SEC rules define the term “disclosure controls and procedures have not been effective asprocedures” to mean a result of a weakness in the design of internal control over financial reporting identified below.

As used herein, “disclosure controls and procedures” meancompany’s controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we fileit files or submitsubmits under the Securities Exchange Act is recorded, processed, summarized and reported within the time periodsperiod specified in the Commission’sSEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by usa company in theits reports that we file or submitfiled under the Securities Exchange Act is accumulated and communicated to ourthe company’s management, including ourits principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management, is responsibleincluding the Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2021 to ensure that the information required to be disclosed in the reports filed or submitted by us under the Exchange Act was recorded, processed, summarized and reported within the requisite time periods and that such information was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for establishingtimely decisions regarding required disclosure. Management plans to address these deficiencies by undertaking various actions, such as implementing new internal controls and maintaining adequateprocedures and hiring additional accounting or internal audit staff. In this regard, we will need to continue to dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes, validate through testing that controls are functioning as such term is defined in Exchange Act Rule 13a-15(f). The Company’sdocumented and implement a continuous reporting and improvement process for internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

This quarterly report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered independent public accounting firm.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurred during the quarterperiod ended March 31,September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or material pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2021, the Company issued no shares of common stock.None

ITEM 3. Default Upon Senior Securities

During the threenine months ended March 31,September 30, 2021, the Company had no senior securities issued and outstanding.

ITEM 4. Mine Safety Disclosures

Not applicable to our Company.

ITEM 5. Other Information

During the three months ended March 31, 2021, the Company reported no other information.None

ITEM 6. Exhibits

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.S-K

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorizedauthorized.

Date: May 12, 2021