This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of
Our unaudited financial statements are stated in
Unless otherwise specified in this quarterly report, all dollar amounts are
expressed in
As used in this quarterly report, the terms "we", "us", "our" and "our company"
mean
COVID-19 RELATED RISKS
The outbreak of the coronavirus may negatively impact sourcing and manufacturing of the products that we sell as well as consumer spending, which could adversely affect our business, results of operations and financial condition.
In
The outbreak of the COVID-19 may adversely affect our supply chain.
The worldwide outbreak of Covid-19 us could adversely affect our business, results of operations and financial condition. The coronavirus outbreak may materially impact sourcing and manufacturing of our personal protection equipment products that are manufactured in other countries and materials for our products that are sourced in other countries by overseas manufacturers and in other affected regions. Travel within and into other overseas countries may be restricted, which may impact our manufacturers' ability to obtain necessary materials and inhibit travel of manufacturers and material suppliers. Additionally, there are potential factory closures, inability to obtain materials, disruptions in the supply chain and potential disruption of transportation of goods produced other countries adversely impacted by the coronavirus outbreak, or threat or perceived threat of such outbreak. As a result, we may be unable to obtain adequate inventory from sources from these regions, which could adversely affect our business, results of operations and financial condition.
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The outbreak of the COVID-19 may adversely affect our customers.
Further, such risks as described above could also adversely affect our customers' financial condition, resulting in reduced spending for the merchandise we sell. Risks related to an epidemic, pandemic, or other health crisis, such as COVID-19, could also lead to the complete or partial closure of one or more of our facilities or operations of our sourcing partners. The ultimate extent of the impact of any epidemic, pandemic or other health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic, or other health crisis, such as COVID-19, could therefore materially and adversely affect our business, financial condition, and results of operations.
The COVID-19 Pandemic poses threats to manufacturing capacity and temporary disruption of operations.
Some customers, distributors, and end users alike, are stockpiling product and placing orders to assure a continued supply of garments and personal protective equipment through the duration of the COVID-19 Pandemic. The ability of our industry to ramp up production to meet demand, and how long the pandemic lasts, will have a direct impact on the amount of inventory remaining in distribution channels once the pandemic subsides. This factor, coupled with the possibility of economic recession, could have a deleterious impact on sales for a significant period that could negatively impact our revenues and our third-party manufacturing efficiencies. Our ability to increase market penetration is predicated upon our continued ability to sub-manufacturer at a sufficient capacity, however, there can be no guarantees that the sub- manufacturing will not be negatively impacted by the pandemic or government responses to it. Additionally, there is a risk that government responses to thwart the spread of the virus, in the form of local or regional quarantine or shelter-in-place orders, could require temporary curtailment of manufacturing operations of our manufacturers, or prevent the export of our products from the country of origin. In such cases, our inability to deliver product would negatively impact sales.
Corporate History
We were incorporated in the
In 2014,
Current Business
Our operations have been restructured under our new name
21 Table of Contents
We operate the following infrastructure and medical platforms through e-commerce, platform sharing; and database-membership:
· Fiber optics and 5G installation · Utility management · Medical technology · PPE infrastructure products · Underground utility construction
Our operations are conducted through:
·Renavotio Infratech, Inc. ("RII"), aDelaware Corporation and its subsidiaries: ·Utility Management Corp ("Utility Management") and its two Subsidiaries,Utility Management & Construction, LLC andCross-Bo Construction, LLC
RII's sells personal protective equipment (medical gloves, face masks, face shields, medical gowns). RII has purchased these products from overseas manufacturers; however, due to price gouging and speculation pertaining to the Pandemic related market, RII seeks to develop relationships and agreements with manufacturers in the US to provide fixed price agreements to hospitals, medical distributors, and government agencies. There are no assurances that RII will be successful in securing agreements with US manufacturers.
Utility Management Corp
Utility Management offers thru its subsidiaries the following:
· Management and operation of water utility systems · Water and waste management technology · IoT · Underground infrastructure, construction, and installation · 5G technology solutions .
UMCCO is an engineering and smart utility management company that provides a
one-stop solution for rural communities to reduce the consumption of
electricity, natural gas, and water utilities for commercial, industrial, and
municipal end users. UMCCO's unique approach creates immediate bottom line
savings for clients, by providing the engineering, planning, permitting, and
installation through their second wholly-owned subsidiary,
UMCCO also provides consulting and operational services to small towns or county
CO-OPS that operate their own water and sewer systems to provide long-term
savings, utilizing smart-utility monitoring and dedicated engineering and
service personnel. These utility related platforms capture utility data from
handheld GPS devices or in-place sensors, with planned use of drones to identify
waste contamination, leak detection, and topographic underground utility
installation planning. As a community-based management company based in
22 Table of Contents
UMCCO provides geographic information system ("GIS") solutions, infrastructure
management and "smart city" infrastructure technology to construction,
environmental consulting, utility, and government clients in
· The Utility platforms enables local and distributed teams to do field data collection using mobile devices (iOS and Android) and manage all geospatial data using a web interface; and · The Utility Platforms are a collection of components and application program interfaces (APIs) that make it easy to create a full, custom mapping solution very quickly. These components enable extensive and intensive data analysis, routing, and dissemination of geospatial information.
UMCCO has licensed products that use of georeferenced imagery and vector datasets to obtain insights about that data. They can be used for field asset management, cadaster mapping, urban planning, the analysis of aerial and satellite imagery and other typical GIS use cases. These solutions are currently used across a variety of sectors, including utilities, intelligence, materials (mining), industrial (transportation), government (local, state, national and international) and others. In addition, UMCCO has been using this software user for more than three years, these solutions to help map and visualize the locations of subsurface as-built conditions. Going forward, UMCCO expects to expand its use of these solutions to locate and map underground telecoms infrastructure. We intend to invest in research and development to increase the functionality of this technology, including incorporating active IoT sensor monitoring and network-connected sensor products that can help create a comprehensive "smart infrastructure" solution for clients. We intend to pursue commercialization of these solutions through investment in product, sales, and business development, and to integrate these platforms into our Infrastructure Services business.
UMCCO's solutions leverage cloud technology and a mobile-first approach to data acquisition and geo-analytics. The solutions are a set of cloud-based tools to collect, visualize and analyze geographic information. With the UMCCO solutions, a field crew can collect and update data using iOS and Android smartphones and tablets working online or offline. The web interface enables its users to display, analyze and share data easily. Incorporating these solutions allows organizations to streamline mapping workflows and reduce repetitive mapping workflows. On occasions where the customer has a pre-existing GIS or computer-aided design (CAD) system, APIs and plug-ins enable easy integration with them.
Cross-Bo operates in
Additionally, Cross-Bo operates as a subsurface utility engineering (referred to in the industry as "SUE") location, inspection and maintenance company, and has developed methodologies, combined with the use of its equipment, to generate detailed records of subsurface "as-built conditions", such as the location of water, electrical, gas, fiber optic and other critical underground utility infrastructure assets. These services enable construction and maintenance activities to be conducted on a given physical site with the precision needed to limit damage to underground utility infrastructure and to avoid utility outages.
23 Table of Contents Our Future Plans
We plan to expand our business and service offerings, as follows:
· Expand our Infrastructure Services , developing relationships with municipalities, utilities, and construction companies. · Through Cross-Bo, should it be successful in is planned rollout of 5G mobile telecommunications services, develop and market those 5G services through an expanded geographic area, initially intoKansas andMissouri . · Capitalize on infrastructure expansion project inTulsa, Oklahoma . · Capitalize on ATT's 5G expansion in the Midwest to provide support Infrastructure Services. · Acquire private companies in the Infrastructure Services area. · Seek strategic partnerships and/or revenue sharing opportunities in the niche infrastructure technology solutions area.
Our acquisitions strategy intends to focus on post-transaction integration and business improvements, including through cross-selling opportunities and the leveraging of operational efficiencies through a central platform of finance, legal and human resources capabilities.
These solutions will enable our Infrastructure Services business to develop and commercialize new services and products. We intend to continue to invest in the development of additional platform capabilities, including capabilities relating to smart IoT sensors and to help create niche "smart infrastructure" solutions for clients.
The following discussion highlights our results of operations and the principal
factors that have affected our financial condition as well as our liquidity and
capital resources for the periods described and provides information that
management believes is relevant for an assessment and understanding of the
statements of financial condition and results of operations presented herein.
The following discussion and analysis are based on our unaudited financial
statements contained in this Form 10-Q, which we have prepared in accordance
with
Basis of Presentation
The audited financial statements for our fiscal years ended
Going Concern
The accompanying consolidated financial statements have been prepared assuming
we will continue as a going concern. During the years ended
Our ability to continue as a going concern is dependent upon our generating operating cash flow and raising capital sufficient to fund operations. We have discussed our strategy and plans relating to these matters elsewhere in this report although the consolidated financial statements included herein do not include any adjustments that might result from the outcome of these uncertainties. Our business strategy may not be successful in addressing these issues, however, and if we cannot continue as a going concern, our stockholders may lose their entire investment in us.
24 Table of Contents
Liquidity and Capital Resources
As of
As of
As of
As of
We have funded our operations to date through the issuance of notes payable and stock.
Our ability to successfully execute our business plan is contingent upon us obtaining additional financing and/or upon realizing revenues sufficient to fund our ongoing expenses. Until we are able to sustain our ongoing operations through sales revenue, we intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.
Recently Issued Accounting Pronouncements
Our management has considered all recent accounting pronouncements issued since the last audit of our financial statements. Our management believes that these recent pronouncements will not have a material effect on our financial statements.
Critical Accounting Policies
The
Basis of Presentation
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in
25 Table of Contents Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company has defined cash and cash
equivalents as all cash in banks and highly-liquid investments available for
current use with an initial maturity of three months or less to be cash
equivalents. The Company had no cash equivalents at
The Company maintains its cash balances at financial institutions that are
insured by the
Accounts Receivable
Some billed balances are not paid by customers pursuant to retainage provisions within their respective contracts. The balances billed but not paid by customer pursuant to retainage provisions in these contracts are generally due and paid upon completion of the contracts and acceptance by the customer. Based on contract terms and historical collections, the Company expects the retainage balances to be collected within 12 months of the balance sheet date.
The allowance for doubtful accounts is the Company's best estimate of the
probable amount of credit losses in the Company's existing accounts receivable.
A considerable amount of judgment is required in assessing the realization of
receivables. Relevant assessment factors include the creditworthiness of the
customer and prior collection history. Balances over 90 days past due are
reviewed individually for collectability. Account balances are charged off
against the allowance after all reasonable means of collection are exhausted and
the potential for recovery is considered remote. The allowance requirements are
based on the most current facts available and are re-evaluated and adjusted on a
regular basis and as additional information is received. During the three and
six months ended
26 Table of Contents Inventory
Inventory is composed of finished goods inventory, specifically personal protective equipment, valued using weighted average cost, and includes acquisition cost, product freight in, and packaging costs. Slow moving and obsolete inventories are written down based on a comparison of on-hand quantities to historical and projected usages. The Company utilizes a third-party service to manage and secure the Company's inventory.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to operations as incurred. Depreciation is based on the straight-line method over the estimated useful lives of the related assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in operations in the period realized.
Depreciation is computed on the straight-line method with useful lives as follows: Buildings and improvements 15-39 years Machinery and equipment 7 years Vehicles 5 years Office furniture and equipment 5 years Software 3 years
Recoverability of Long-Lived Assets
The Company reviews its long-lived assets on a periodic basis, whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment will be based primarily on the Company's ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when management assesses that it is probably that a liability has been incurred and the amount can be reasonable estimated.
Income Taxes
The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.
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The Company follows
Revenue Recognition
UMCCO recognizes consulting and operational management service revenues monthly and recognizes maintenance and repair revenues as services are performed.
Cross-Bo and UMCCO recognize construction revenues, which result from utility system installations, monthly as services are performed and materials are used.
The Company's contracts require monthly billings consisting of services
performed and materials used through the billing date. Accordingly, the Company
does not incur expenses which are not billed or bill customers for unearned
amounts. Performance obligations are satisfied as services are performed and
materials used for which control has been transferred to the customer upon
installation. At
Components of Results of Operations
Revenues
UMCCO recognizes consulting and operational management service revenues monthly and recognizes maintenance and repair revenues as services are performed.
Cross-Bo and UMCCO recognize construction revenues, which result from utility system installations, monthly as services are performed and materials are used.
28 Table of Contents Cost of Revenues
Our cost of revenues consists primarily of payroll for revenue generating operations, cost of materials, contract labor and rented equipment.
General and Administrative
Our general and administrative expenses consist primarily of payroll for our administrative employees, outside consulting, legal and accounting services, insurance, facilities, and other supporting overhead costs.
Results of Operations
The results of our consolidated operations are summarized as follows:
Three Months Ended June 30, 2021 2020 Revenues$ 2,209,052 $ - Cost of revenues 1,593,856 - Gross profit 615,196 - Expenses General and administrative 607,611 155,385 Depreciation 24,715 - Other (income) expense 128,683 - Provision for income taxes - - 761,009 155,385 Net loss$ (145,813 ) $ (155,385 ) Six Months Ended June 30, 2021 2020 Revenues$ 2,579,688 $ - Cost of revenues 1,818,842 - Gross profit 760,846 - Expenses General and administrative 1,118,623 254,659 Depreciation 183,733 - Other (income) expense (79,447 ) - Provision for income taxes - - 1,222,909 254,659 Net loss$ (462,063 ) $ (254,659 ) 29 Table of Contents Revenues
The following table summarizes our historical revenues:
Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Personal Protective Equipment$ 1,806,000 $ - $ 1,825,494 $ - Management 222,879 - 466,881 - Repair & Maintenance 180,173 - 287,313 -$ 2,209,052 $ - $ 2,579,688 $ - Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Personal Protective * * Equipment 81.8 % 70.8 % Management 10.1 % * 18.1 % * Repair & * * Maintenance 8.2 % 11.1 %
The shift and increase in revenues were due to the acquisition of
Cost of Revenues
Cost of revenues increased from 2020 to 2021 due to the acquisition of
General and Administrative
General and administrative expenses increased from 2020 to 2021 due to the
acquisition of
Depreciation
During the three and six months ended
30 Table of Contents Other Income
During the six months ended
Other Expense
During the three months ended
Off-Balance Sheet Arrangements
As of
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