Special Note Regarding Forward-Looking Statements
This Quarterly Report includes forward-looking statements based on management's
beliefs, assumptions and plans for the future, information currently available
to management and other statements that are not historical in nature.
Forward-looking statements include statements in which words such as "expect,"
"anticipate," "intend," "plan," "believe," estimate," "consider," or similar
expressions are used. These forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and assumptions, including
among others: the unprecedented impact of COVID-19 pandemic on our business,
customers, employees, subcontractors and supply chain, consultants, service
providers, stockholders, investors and other stakeholders; a general economic
downturn; a downturn in the securities markets; regulations that affect trading
in the securities of "penny stocks"; the enactment of United States or foreign
laws, rules and regulations that could have a materially adverse impact on
current and intended operations; and other risks and uncertainties. For
additional forward-looking statement information, see the heading
"Forward-Looking Statements" at the forepart of this Quarterly Report on page 4.
Our future results and stockholder values may differ materially from those
expressed in these forward-looking statements. Many of the factors that will
determine these results and values are beyond our ability to control or predict.
We may be required to update these forward-looking statements from time to time
as circumstances change.
References to "we," "our," "us," or the "Company" and words of similar import
under this heading refer to the TORtec Group Corporation, a Nevada corporation,
unless the context implies otherwise.
Past Plan of Operation
On June 13, 2012, we were formed as a wholly-owned subsidiary of Geo Point
Technologies, Inc., a Utah corporation ("Geo Point Utah"), and into which Geo
Point Utah simultaneously authorized the conveyance of the segment of its
business comprising all of its Environmental and Engineering Divisions' assets,
business, operations, rights or otherwise, along with its "Hydrocarbon
Identification Technology" ("HI Technology") License Agreement dated January 31,
2008 (the "License Agreement"), subject to the assumption by us of all related
liabilities and the indemnification of Geo Point Utah by us from any liabilities
relating to these assets and operations. Also, on June 13, 2012, the Board of
Directors of Geo Point Utah approved a stock dividend that resulted in a
spin-off of all of our shares of common stock to the Geo Point Utah
stockholders, pro rata, on a one share for one share basis, on the record date
(the "Spin-Off"). The Spin-Off had a record date of January 17, 2013; and
ex-dividend date of January 15, 2013; and a Spin-Off payment date of April 22,
2013. On the effective date of the Spin-Off, there were approximately 1,002,167
outstanding shares of our common stock. For additional information about the
Spin-Off, see our Prospectus dated January 7, 2013, and filed with the SEC on
January 8, 2013; and our Current Report on Form 8-K dated April 22, 2013, and
filed with the SEC on such date.
The Environmental and Engineering Divisions comprised the initial operations of
Geo Point Utah at its inception and were commenced as a "DBA" in 1997, by Geo
Point Utah's founder, William C. Lachmar, who then served as our President and
sole director, in the State of California. The Company operated this business
until February 2018 when Mr. Lachmar died. The Company had no plans to continue
this business following Mr. Lachmar's death.
Acquisition of TORtec Group
On November 22, 2017, the Company entered into a Share Exchange Agreement (the
"Agreement") with TORtec Group, a Wyoming corporation ("TORtec") and all of the
shareholders of TORtec, pursuant to which the Company acquired 100% of the
issued and outstanding shares of common stock of TORtec. The acquisition of
TORtec by the Company was successfully consummated on December 4, 2017.
Under the terms of the Agreement, a total of 90,000,000 shares of the Company's
restricted common stock were issued to the 17 TORtec shareholders as
consideration in exchange for all 10,000,000 issued and outstanding shares of
TORtec common stock being transferred to the Company, making TORtec a
wholly-owned subsidiary of the
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Company. As a result, the former TORtec shareholders collectively owned 90% of
our issued and outstanding shares of our common stock immediately following the
acquisition. New directors and officers of the Company were appointed in
connection with the acquisition.
Stephen Smoot was a former consultant and officer of Capital Vario CR S.A.
("Capital Vario"), which was the controlling shareholder of the Company prior to
the acquisition, but resigned from his affiliation with Capital Vario prior to a
$500,000 debt-to-equity conversion by Capital Vario with the Company. Mr. Smoot
became the President/CEO and Director of the Company on September 8, 2017.
As part of the closing of the acquisition, the Company's then sole director
(William C. Lachmar) elected Franc Smidt, Alex Schmidt, Maksim Goncharenko,
Jeffrey R. Brimhall, Stephen H. Smoot, and Irina Kochetkova to the Company's
Board of Directors before resigning as an officer and director of the Company.
The following persons were then elected as officers of the Company: Franc Smidt
- Chairman of the Board of Directors, Stephen H. Smoot - President and CEO, Alex
Schmidt - Vice President, and Irina Kochetkova - Secretary and Treasurer.
Jeffrey R. Brimhall resigned as an officer of the Company but has been
appointed to serve as a director. Maksim Goncharenko subsequently resigned as a
director on July 3, 2018.
Franc Smidt resigned from the Company's Board of Directors on October 18, 2020
and his resignation was accepted on October 21, 2020 by the Company.
On November 9, 2020, Mr. Smoot was appointed as President, Asael T. Sorensen Jr.
was appointed as Vice President and Secretary, and Irina Kochetkova was
appointed as Vice President and Treasurer.
For additional information concerning the acquisition of TORtec, see the
Company's Current Report on Form 8-K dated December 4, 2017 and filed with the
SEC on December 8, 2017, as amended in a Form 8-K/A dated June 22, 2018 and
filed with the SEC on June 22, 2018.
Plan of Operations
Now that the acquisition of TORtec is complete, we have become engaged, through
our subsidiary, in the business of harnessing the natural implosion forces of a
vortex (tornado) and employing resonating frequencies, to disintegrate soft to
ultra-hard materials into micron or nano-sized particles.
On September 9, 2017, TORtec entered into General Agreement No. US-17 on
cooperation and joint activities on commercialization of TOR-technologies,
introduction of new productions, products and services in the markets of North,
Central and South America (the "Exclusive License Agreement") with the parties
that invented the 'TOR-technology.' The Exclusive License Agreement grants to
TORtec an exclusive license to utilize the technology for certain purposes
throughout North, Central and South America. The 'TOR-technology' equipment is
best described as a cascaded adiabatic resonance vortex mill utilizing
compressed air as the energy in the system. This proprietary technology
includes the ability to size and classify material processed by elemental
composition and specific gravity. A more detailed description of the acquisition
is included in the Company's two Current Reports on Form 8-K: (a) dated November
22, 2017 and filed with the SEC on November 29, 2017; and (b) dated December 4,
2017 and filed with the SEC on December 8, 2017, as amended in a Form 8-K/A
dated June 22, 2018 and filed with the SEC on June 22, 2018; both of which are
incorporated herein by this reference.
On June 18, 2018, TORtec entered into License Agreement No. W-1/18 with
Forschunginstitut GmbH pursuant to which it was granted a license to use the
'TOR-technology' and the utility model "Tornado" documentation for certain
purposes, for which TORtec paid an initial royalty of 30,000 Euros, and agreed
to pay an annual royalty equal to 10% of any after tax profit received by TORtec
(and any subsidiaries) by the year's result. This License Agreement expanded
the licensed territory from North, Central and South America to the entire
world. A copy of this License Agreement is attached to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 2018 as Exhibit 10.1.
On September 9, 2017, TORtec entered into an agreement with MTM Center GmbH,
then a shareholder of TORtec, for the construction of a mobile machine that
utilizes the TORtec technology, referred to as the Tornado M. The total purchase
price was 394,000 Euros (US $474,159 as of September 9, 2017 date of the
agreement). On March 3,
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2018, the agreement was amended to the amount of 305,535 Euros or US $367,696
representing the original amount of 394,000 Euros or US $474,159 less the amount
of 88,465 Euros or US $106,463 originally allocated to the Kaeser
screw-compressor, plus the additional amount of 48,040 Euros or US $57,814 in
the form of prepayment for transportation and expenses of technical personnel to
come to the USA to commission the mobile "TORNADO M" unit and payment in advance
for an additional vortex chamber with resonating frequency rings for additional
applications for the mobile "TORNADO M" unit, including transportation &
insurance to Idaho.
The Company has paid the total amount of two payments totaling 354,600 euros or
US $425,510 plus an additional payment of 30,000 Euros or $35,947 for the
one-time License fee. The Company received the Tornado M machine in second
fiscal quarter of 2019. The Tornado M is currently being prepared to be used in
the Company's operations.
On February 19, 2019, TORtec entered into an agreement with TORtec
Forschungsinstitut GmbH, the successor-in-interest to Scientific Research
Institute of Technological Progress ("SRITP"), a Cyprus entity, controlled by
the same shareholder. A copy is attached to the Company's Quarterly Report on
Form 10-Q for the period ended December 31, 2019 as Exhibit 10.3. This license
enlarged the original license with TORtec Forschungsinstitut GmbH and SRITP and
granted exclusive worldwide rights to use the TOR-technology in the following
applications:
Mining industry and mineral processing, including: methods of disintegration of
mineral raw materials, methods and technologies of further enrichment of rocks,
minerals and processing of technogenic accumulations under the code name
"TOR-technology"; exploitation of specialized mineral processing "Tornado"
utility models and the subsequent recipience of the products by the
disintegration of mineral raw materials, mechanical activation, mechanochemical
activation and mechanosynthesis to receive a large range of finished products,
blends, composites and solutions; commercialization of licensor's technological
solutions and projects in the mining industry and in the processing of mineral
raw materials and technogenic accumulations to wit:
·
methods, techniques and technologies of disintegration of materials, minerals
and rocks, mining;
·
industrial waste with subsequent enrichment and/or with the recipience of the
product;
·
methods and technologies of mechanical activation, mechanochemical activation;
·
mechanosynthesis of mineral raw materials, obtaining materials with new
properties and new;
·
materials, composites, mixtures, solutions;
·
methods and technologies of deep processing and decontamination of contaminated
materials, waste, and water reclamation;
·
methods and technologies of restoration of the fertility of the land, obtaining
new classes of mineral and biomineral fertilizers and mixtures and mineral
protection of soil and plants; and
·
all or some know-how's, trademarks, design development and technical knowledge.
On April 12, 2019, TORtec entered into a general, exclusive, unlimited,
irrevocable and perpetual license with TORtec Forschungsinstitut GmbH. A copy is
attached to the Company's Quarterly Report on Form 10-Q for the period ended
December 31, 2019 as Exhibit 10.4. The license grants to the Company the right
to use the technology, know-how, development and technical knowledge for
industrial and commercial applications of the complex "TOR-technology" and
utility model "Tornado" in the project Titan+ materials science and production
of micro- and nano-structured micropowders for laser (3d-printing,
am-technology), powder and plasma metallurgy for the following applications:
·
Field of disintegration (micronization) of various non-mineral material;
·
Production of non-mineral micro- and nano-structured micro powders of metal
ceramics, carbides, metal oxides and their mixtures for powder, laser and plasma
metallurgy;
·
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Related documentation, development and production of unique installations of
resonant gas-dynamic grinding of different types of non-mineral materials,
united under a common understanding "tornado;"
·
The technologies for grinding non-mineral materials, including multi-component
and various-phase materials, their functionalization and modification, their
mechanical, mechanochemical activation and mechanosynthesis;
·
The production of dispersed new non-mineral materials and non-mineral materials
with new properties; and
·
All know-how's, trademarks, design development and technical knowledge relating
to the applications above.
The TORtec Technology Business
As described above, the Company s wholly-owned subsidiary, TORtec Group, entered
into an Exclusive License Agreement on cooperation and joint activities on
commercialization of TOR-technologies, introduction of new productions, products
and services in the markets of North, Central and South America with the parties
that invented the TOR-technology. The Exclusive License Agreement grants to
TORtec Group an exclusive license to utilize the technology for certain purposes
throughout North, Central and South America. The 'TOR-technology' equipment is
best described as a cascaded adiabatic resonance vortex mill utilizing
compressed air as the energy in the system. This proprietary technology includes
the ability to size and classify material processed by elemental composition and
specific gravity.
The TOR Technology
A new technology is being used inside the resonance "Tornado" mills, a
noncontact material grinding, where the grinding processes are performed by
means of an air vortex, artificially produced in an enclosed space within the
processing chamber.
As an energy carrier (fuel), the following may be used:
·
pressurized air (compressor or a turbine);
·
any inert gas supplied under pressure;
·
high-pressure steam (superheated steam);
·
the medium in the supercritical state (fluids), such as (CO2); and
·
cooling agents.
The resonant vortex "TORNADO" installation is a gas-dynamic mill in which the
technology of cascaded adiabatic resonance impact grinding is implemented,
impact velocities of which are close to a breakdown threshold. The installation
is designed in a way so that any particle of the input material gets literally
torn by the repeated crossing of the differential pressure zones in the
intervortex vacuum chamber, which produces ultrahigh gradient (pressure drops)
at the interface (up to hundreds of thousands atmospheres).
When the material is injected into such area of pressure differential, a rupture
of the material's structure and clusters occurs. Such mechanism can be compared
to the mechanism of material's sample destruction, which is done in order to
determine its strength characteristics at tensile test plants. That is, the
grinding occurs not due to the friction or any other mechanic force, but by
"air" and resonances, which provide a high and efficient performance, great flow
rate of raw material as well as inexpensive exploitation (no rubbing parts) with
low power consumption. The TOR technology can be used for: (1)
micropulverization; (2) blending of materials; and (3) concentrating of
materials.
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Initial Problems with the Tornado M Machine
As explained in the Company's Annual Report for the fiscal year ended March 31,
2020, the Company incurred significant problems when attempting to use the
Tornado M machine that was delivered to the Company. The air compressor
purchased for the unit and the required air volume as prescribed by the
manufacturer for the unit were inadequate and the initial air compressor had to
be replaced with two compressors. We also learned through independent material
handling and filter industry technicians and personnel that the unit was not
ready for production for other reasons. These reasons included the following:
(a) the material feed did not work properly; (b) two sets of bearings for
the unit's rotary feeder were worn out within hours of operation; and (c)
significant material "blow-back" occurred from the inlet to the unit. The
cyclone system for the unit did not properly capture or separate the material as
represented by MTM/Smidt or the manufacturer. The Donaldson filter provided with
the unit did not work due to the pulse jet controller being inoperable and
milled material could not be captured properly.
From May, 2019, it took about a year to get the unit working properly. The only
original piece of the unit after this development was the vortex mill (the
"mill"). All other components of the unit were replaced. Thus, as of April 30,
2020, due to the replacement parts and indicators that other potential parts
were non-operational for the intended purposes the Company recorded an
impairment of $389,000. In May 2020, several tons of material consisting of
minerals from both Hungary and Nevada together with zeolite from Preston, Idaho
were successfully processed through the unit. Unfortunately, it was determined
that the resonant frequency rings in the mill and the mill housing itself was
not made of Boron Carbide as contracted with MTM - but mild steel, and the mill
wore out after about seven tons being processed. We replaced the mild steel
rings with hardened steel to resolve the problem with the mill which is now in
working condition.
North American Territory to go to Nano. An agreement has been executed by the
Company and Nano. The Company then raised additional funds for ongoing
operations for legal, accounting and auditing in addition to funds needed to get
the unit working for the Nano joint venture.
For a detailed description of the formation of TORtec Nanosynthesis Corp. and
the sale of a 49.9% interest in that company, see the Company's Current Report
on Form 8-K for March 31, 2020 which was filed on April 8, 2020, and is
incorporated herein by this reference.
Principal Products or Services and their Markets
The Company has no present contracts to provide any products or services. The
Company has been in contact with companies that sell zeolites about the
possibility of using the 'TOR-technology' to break down or reduce the size of
zeolites to approximately three to five microns in size, which can then be used
for different commercial purposes. The Company tested the Tornado M machine on
zeolites. The technology was successful in pulverizing the zeolite; however, it
was determined that the cyclone and air filtration systems were inadequate to
handle the amount of air introduced into the vortex mill. Without the properly
sized air filtration system, the Company will not be able to process material
and comply with air quality industry standards. After the purchase and
installation of additional air handling and filtration equipment, the Company
may pursue a contract with third parties to generate revenues.
According to Explainthatstuff.com, "zeolites are hydrated aluminosilicate
minerals made from interlinked tetrahedra of alumina (AlO4) and silica (SiO4).
In simpler words, they're solids with a relatively open, three-dimensional
crystal structure built from the elements aluminum, oxygen, and silicon, with
alkali or alkaline-Earth metals (such as sodium, potassium, and magnesium) plus
water molecules trapped in the gaps between them. Zeolites form with many
different crystalline structures, which have large open pores (sometimes
referred to as cavities) in a very regular arrangement and roughly the same size
as small molecules. There are about 40 naturally occurring zeolites, forming in
both volcanic and sedimentary rocks; according to the US Geological Survey, the
most commonly mined forms include chabazite, clinoptilolite, and mordenite.
Dozens more artificial, synthetic zeolites (around 150) have been designed for
specific purposes, the best known of which are zeolite A (commonly used as a
laundry detergent), zeolites X and Y (two different types of faujasites, used
for catalytic cracking), and the petroleum catalyst ZSM-5 (a branded name for
pentasil-zeolite)."
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Results of Operations
Three Months Ended December 31, 2020 compared to the Three Months Ended December
31, 2019
We reported no sales for the three months ended December 31, 2020 and 2019 due
to the lack of revenue generating activities.
Research and development expenses during the three months ended December 31,
2020 were $1,786, compared to $48,175 during the three months ended December 31,
2019, a decrease of $46,389. The decrease was related to the decrease in
development of the Tornado M unit to which we are approaching a final workable
unit. We expect to incur additional costs until the Tornado M unit is ready for
production.
General and administrative expenses during the three months ended December 31,
2020 were $32,274, compared to $25,183, during the three months ended December
31, 2019, an increase of $7,091. The increase in general and administrative
expenses during the three months ended December 31, 2020 as compared to the
prior period, was directly related to additional professional costs and rent
related to a facility in which we commenced rental of in October 2019.
We incurred a net loss of $79,060, or $0.00 per share, in the three months ended
December 31, 2020, compared to a net loss of $66,500, or $0.00 per share,
incurred in the three months ended December 31, 2019. The increase in net loss
in the current period related to $45,000 recorded in connection with the
impairment of equipment for which was not being utilized, offset by a decrease
in research and development expenses incurred in the current period. We
incurred a non-controlling loss of $10,965 in the three months ended December
31, 2020, and we incurred no similar non-controlling loss in the three months
ended December 31, 2019.
Nine months Ended December 31, 2020 compared to the Nine months Ended December
31, 2019
We reported no sales for the nine months ended December 31, 2020 and 2019 due to
the lack of revenue generating activities.
Research and development expenses during the nine months ended December 31, 2020
were $45,968, compared to $60,307 during the nine months ended December 31,
2019, a decrease of $14,339. The decrease was related to the decrease in
development of the Tornado M unit to which we are approaching a final workable
unit. We expect to incur additional costs until the Tornado M unit is ready for
production.
General and administrative expenses during the nine months ended December 31,
2020 were $131,595, compared to $86,891, during the nine months ended December
31, 2019, an increase of $44,704. The increase in general and administrative
expenses during the nine months ended December 31, 2020 as compared to the prior
period, was directly related to additional professional costs and rent related
to a facility in which we commenced rental of in October 2019.
We incurred a net loss of $222,563, or $0.00 per share, in the nine months ended
December 31, 2020, compared to a net loss of $140,340, or $0.00 per share,
incurred in the nine months ended December 31, 2019. The increase in net loss in
the current period is primarily attributed to an increase in general and
administrative expenses incurred in the current period as well as $45,000
recorded in connection with the impairment of equipment for which was not being
utilized. We incurred a non-controlling loss of $48,640 in the nine months
ended December 31, 2020, and we incurred no similar non-controlling loss in the
nine months ended December 31, 2019.
Liquidity
Current assets at December 31, 2020, included cash of $6,811. At March 31, 2020
current assets consisted of cash of $1,043 and subscriptions receivable of
$165,000. At December 31, 2020, we had a negative working capital of $419,651,
as compared a negative working capital of $127,340 at March 31, 2020. The
decrease in working capital is mostly due to additional monies needed to fund
the Company's operations.
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Capital Resources
During the nine months ended December 31, 2020, operating activities used cash
of $169,524 compared to $176,937 net cash used in the nine months ended December
31, 2019, a decrease of $7,413. The decrease related to the payment of payables
offset by an increase in net loss during the current period.
During the nine months ended December 31, 2019, investing activities consisted
of $35,051 expended in connection with the Company obtaining a license for which
the term is perpetual. During the current period the Company purchased $114,748
of equipment in connection with the Tornado M, specifically, the Company made
significant improvements to the electrical infrastructure of their leased
facilities. In the nine months ended December 31, 2019, the Company made
purchase of $33,800 in equipment related to the Tornado M.
During the nine months ended December 31, 2020, we received cash from financing
activities of $290,040, which related to the collection of a subscription
receivable and short-term advances from related parties of $165,000 and net
short-term advances from related parties $125,040. During the nine months ended
December 31, 2019, we received cash from financing activities of $273,700 of
which $63,700 was from Capital Vario and $150,000 from the sale of common stock
to a third party and $60,000 to related parties. The proceeds were used to fund
operations.
As reflected in the condensed consolidated financial statements, the Company has
incurred significant current period losses, negative cash flows from operating
activities, has negative working capital, and an accumulated deficit. These
conditions, among others, raise substantial doubt about the Company's ability to
continue as a going concern. We intend to fund future operations for the next 12
months through cash on hand, through additional advances from related parties
and if needed from the sale of debt or equity securities. Currently, we cannot
provide assurance that such financing will be available to us on favorable
terms, or at all. If, after utilizing the existing sources of capital available
to us, further capital needs are identified and if we are not successful in
obtaining the required financing, we may be forced to curtail our existing or
planned future operations. We believe our plans will enable us to continue our
current operations for in excess of one year from the issuance date of this
Quarterly Report. However, those plans are dependent upon obtaining additional
capital until cash flows from operations generated are sufficient to fund
operations.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements during the three months ended December
31, 2020.
Item 3.
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TORTEC GROUP CORPORATION 
