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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2022

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

For the transition period from ______________ to _____________

Commission file number: 333-177792

THE TEARDROPPERS, INC.

(Name of registrant as specified in its charter)

Nevada	20-4168979
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

620 Newport Center Drive Suite 1100 PMB 488 Newport Beach, CA. 92660	92660
(Address of principal executive offices)	(Zip Code)

949-751-2173

(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:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 183,650 shares of the registrant’s common stock, $0.001 par value per share, outstanding on August 8, 2022.

THE TEARDROPPERS, INC.

TABLE OF CONTENTS

		Page

Part I – FINANCIAL INFORMATION

Item 1.	Condensed Unaudited Financial Statements:	3

	Condensed Balance Sheets at June 30, 2022 (unaudited) and December 31, 2021 (audited)	3

	Condensed Statements of Operations for the three and six months ended June 30, 2022 and 2021 (unaudited)	4

	Condensed Statements of Shareholders’ Deficit for the three and six months ended June 30, 2022 and June 30, 2021 (unaudited)	5

	Condensed Statements of Cash Flows for the six month ended June 30, 2022 and June 30, 2021 (unaudited)	6

	Notes to Condensed Financial Statements (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

Part II – OTHER INFORMATION

Item 1.	Legal Proceedings	18

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18

Item 3.	Defaults Upon Senior Security	18

Item 4.	Mine Safety Disclosures	18

Item 5.	Other Information	18

Item 6.	Exhibits	18

	Signatures	19

PART I – FINANCIAL INFORMATION

ITEM 1. Condensed Unaudited Financial Statements

The Teardroppers, Inc.

CONDENSED BALANCE SHEETS


	June 30,			December 31,
	2022			2021
		(Unaudited)
ASSETS

Current assets
Cash	$	35,122		$	29,158
Lease receivable – related parties (current portion)		62,150			54,309
Interest receivable – related parties		2,096			1,053
Total current assets		99,368			84,520

Property & Equipment:
Cost		129,114			129,114
Less accumulated depreciation		(99,499	)		(90,088	)
Property & Equipment, net		29,615			39,026

Lease receivable – related party (net)		86,871			116,178

Total Assets	$	215,854		$	239,724

LIABILITIES & STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable – unrelated parties	$	378,425		$	358,625
Accounts payable – related parties		515,370			453,176
Customer deposits		14,500			14,500
Current portion of notes payable		6,030			5,695
Accrued interest – unrelated parties		1,005			1,051
Line of credit from related party		1,174,551			1,104,060
Accrued interest payable – related parties		382,261			326,224
Total current liabilities		2,472,142			2,263,331

Long term liability
Note payable		54,466			57,516

Total Liabilities		2,526,608			2,320,847

Contingencies and Commitments (Note 10)

Stockholders' Deficit
Preferred stock, par value $0.001, authorized 20,000,000 shares, issued shares 0, respectively		–			–
Common stock, par value $0.001, authorized 200,000,000 shares issued 183,680		184			184
Additional paid in capital		874,294			874,294
Accumulated deficit		(3,185,232	)		(2,955,601	)
Total Stockholders' Deficit		(2,310,754	)		(2,081,123	)

Total Liabilities and Stockholders' Deficit	$	215,854		$	239,724

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

The Teardroppers, Inc.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2022			2021			2022			2021

Revenues
Lease revenue – unrelated parties	$	–		$	1,275		$	–		$	2,550
Lease revenue – related parties		–			–			–			12,000
Total revenue		–			1,275			–			14,550

Operating expenses:
Consulting from related parties		36,000			51,000			79,500			87,000
Consulting fees – unrelated parties		5,000			10,000			10,000			32,500
General and administrative		27,228			31,853			65,834			87,029
Professional fees		9,300			5,700			25,493			23,813
Total operating expenses		77,528			98,553			180,827			230,342

Operating loss		(77,528	)		(92,278	)		(180,827	)		(215,792	)

Other income (expense):
Interest expense – related parties		(28,478	)		(27,014	)		(56,037	)		(49,597	)
Interest expense – unrelated parties		(1,512	)		(1,645	)		(3,059	)		(3,321	)
Gain on sale of asset – related party		–			25,595			–			25,595
Interest income - related parties		4,920			6,632			10,292			13,655
Total other income (expense)		(25,070	)		3,568			(48,804	)		(13,668	)

Net Loss Before Taxes		(102,598	)		(93,710	)		(229,631	)		(229,460	)

Income Tax Provision		–			–			–			–

Net loss	$	(102,598	)	$	(93,710	)	$	(229,631	)	$	(229,460	)

Net loss per share
Basic^*	$	(0.56	)	$	(0.51	)	$	(1.25	)	$	(1.25	)
Fully diluted	$	(0.56	)	$	(0.51	)	$	(1.25	)	$	(1.25	)

Weighted average number of common shares outstanding - Basic		183,680			183,680			183,680			183,680
Weighted average number of common shares outstanding - Diluted		183,680			183,680			183,680			183,680

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

The Teardroppers, Inc.

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(UNAUDITED)


	Common Stock				Additional					Total
			Amount		Paid in		Accumulated			Stockholders’
	Shares		($.001 Par)		Capital		Deficit			Deficit

Balance December 31, 2021		183,680	$	184	$	874,294	$	(2,955,601	)	$	(2,081,123	)

Net loss for the period		–		–		–		(127,033	)		(127,033	)

Balance March 31, 2022		183,680		184		874,294		(3,082,634	)		(2,208,165	)

Net loss for the period		–		–		–		(102,598	)		(102,598	)

Balance June 30, 2022		183,680	$	184	$	874,294	$	(3,185,232	)	$	(2,310,754	)

Balance December 31, 2020	183,680	$	184	$	874,294	$	(2,496,953	)	$	(1,622,475	)

Net loss for the period	–		–		–		(135,750	)		(135,750	)

Balance March 31, 2021	183,680		184		874,294		(2,632,703	)		(1,758,225	)

Net loss for the period	–		–		–		(93,710	)		(93,710	)

Balance June 30, 2021	183,680	$	184	$	874,294	$	(2,726,413	)	$	(1,851,935	)

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

The Teardroppers, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended
	June 30,			June 30,
	2022			2021

Cash Flows From Operating Activities:
Net loss	$	(229,631	)	$	(229,460	)

Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		9,411			23,068
Gain on sale of asset		–			(25,595	)

Changes in Operating Assets and Liabilities
Increase in interest receivable – related parties		(1,043	)		(1,601	)
Decrease in prepaid expenses		–			4,072
Decrease in lease receivable – related party		21,466			18,662
Increase in other receivable		–			(2,000	)
Increase in accounts payable – unrelated parties		62,194			24,370
Increase in accounts payable – related parties		19,800			16,657
Increase in accrued interest – related parties		56,037			46,756
Decrease in accrued interest – unrelated party		(46	)		(21	)
Net cash used in operating activities		(61,812	)		(125,092	)

Cash Flows From Investing Activities:
Purchase of asset		–			(36,113	)
Sale of asset		–			75,095
Net cash provided by investing activities		–			38,982

Cash Flows From Financing Activities:
Repayments on notes payable – related party		–			(83,679	)
Repayments on note payable – unrelated party		(2,715	)		(2,484	)
Principal payments on lease payable		–			(1,192	)
Proceeds from lines of credit – related parties		110,500			258,744
Repayments on line of credit related party		(40,009	)		(126,168	)
Net cash provided by financing activities		67,776			45,221

Net Increase (Decrease) In Cash		5,964			(40,889	)

Cash At The Beginning Of The Period		29,158			49,473

Cash At The End Of The Period	$	35,122		$	8,584

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for:
Interest	$	3,105		$	6,182
Franchise and income tax	$	–		$	–

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

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

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.

On June 13, 2022, (the “Company”) filed with the Secretary of State of the State of Nevada a Certificate of Change, pursuant to Nevada Revised Statutes 78.209, to (i) effect a one-for-250 reverse stock split (the “Reverse Split”) of the Company’s issued and outstanding common stock, par value $0.001 per share, on July 6, 2022 at 8:00 A:M Eastern Time (the “Effective Time”). The total number of shares of common stock that the Company shall have the authority to issue will remain at 200,000,000. As a result of the one-for-250 reverse stock split (the “Reverse Stock Split”), at the Effective Time, each 250 shares of the Company’s common stock issued and outstanding immediately prior to the Effective Time was automatically combined into and become one share of Company common stock. Fractional shares resulting from the reverse stock split were settled by cash payments. As of July 6, 2022, the total amount of common shares outstanding of the Company was 183,680. All share and per-share data and amounts have been retroactively adjusted as of the earliest period presented in the financial statements to reflect the reverse stock split.

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”) 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 six months ended June 30, 2022 is not necessarily indicative of the final results that may be expected for the year ended December 31, 2022. 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, 2021 filed with the SEC on April 15, 2022.

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 assets.

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 June 30, 2022 and December 31, 2021, the Company had no 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.

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

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.

The carrying amount of the Company’s financial assets and liabilities, such as cash, lease receivable, accounts payable, and accrued expenses, approximate their fair value because of the short maturity of those instruments. The Company’s loans 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 June 30, 2022 and December 31, 2021.

The Company had no assets and/or liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, 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) years for equipment, five (5) years for automobile, and seven (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.

The primary source of revenue and performance obligation is from the rental of advertising space on custom designed Teardrop Trailers. The length of the rental agreements varies from one to thirty days. Customers pay in advance and revenue is recognized based on the number of days of each contract that have expired. For the three and six months ended June 30, 2022 and 2021, the Company recognized no income from the rental of the trailers.

In January 2019, the Company entered into a two-year agreement to lease a vehicle to an unrelated third party. For the six months ended June 30, 2022 and 2021, recognized operating lease income of $0 and $1,275, respectively. The vehicle was sold and the lease terminated October 8, 2021.

On February 1, 2020, the Company leased a truck and 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 June 30, 2022 and 2021, the Company recognized interest income of $3,400 and $5,079, respectively. For the six months ended June 30, 2022 and 2021, the Company recognized interest income of $7,219 and $10,332, respectively See Note 4 for details

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

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 June 30, 2022 and 2021, the Company recognized interest revenue of $1,520 and $1,553, respectively. For the six months ended June 30, 2021 and 2022, the Company recognized interest revenue of $3,074 and $3,323, respectively. See Note 4 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, 2022 and December 31, 2021, 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 period

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.

There were no potentially dilutive shares outstanding as of June 30, 2022 and December 31, 2021, respectively.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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 June 30, 2022, the Company has an accumulated deficit of $3,185,232, net cash outflow from operating activities of $61,812 and a net loss for the current period of $229,631 These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance 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.

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

NOTE 4 – 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 per month. At the end of the lease, the related party has the right to purchase the asset for $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%, is $197,442. The Company is using the net book value of $180,500 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:

Schedule of lease receivable payments
2022 (remainder of year)	$	35,021
2023		60,036
2024		5,003
Total		100,060
Less deferred interest		(11,856	)
Less current portion		(54,858	)
Long-term lease receivable	$	33,346

On August 1, 2020, the company 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 per month. At the end of the lease, the related party has the right to purchase the vehicle for $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%, is $47,065. The Company is using the net book value of $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:

Schedule of lease receivable payments
2022 (remainder of year)	$	8,000
2023		12,000
2024		12,000
2025		8,000
Purchase option		37,000
Total		77,000
Less deferred interest		(16,184	)
Less current portion		(7,291	)
Long-term lease receivable	$	53,525

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

Income from both leases is reflected on the statement of operations as interest income – related parties. For the three months ended June 30, 2022 and 2021 interest income of $4,920 and $6,632, respectively was reported. For the six months ended June 30, 2022 and 2021 interest income of $10,292 and $13,655, respectively was reported.

NOTE 5 – PROPERTY & EQUIPMENT

Property and equipment consists of the following at June 30, 2022 and December 31, 2021.

Schedule of property and equipment
	June 30, 2022			December 31, 2021
Property and equipment, purchased	$	129,114		$	129,114
Less: accumulated depreciation		(99,499	)		(90,088	)
Property and equipment, net	$	29,615		$	39,026

Depreciation expense for the three months ended June 30, 2022 and 2021 was $3,105 and $7,710, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $9,411 and $23,068, respectively.

On April 2, 2021, the Company sold a NASCAR hauler to a related party at a gain of $25,595.

NOTE 6 – 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 with an extended maturity date of December 31, 2023, bearing interest of 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 June 30, 2022 and December 31, 2021, the balance of the line of credit was $237,629 and $227,129, respectively. The Company recorded accrued interest of $16,791 and $6,307 on the line of credit at June 30, 2022 and December 31, 2021, 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. The line of credit is a demand loan bearing interest of 10% per annum. General Pacific Partners, LLC is a related party to 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 June 30, 2022 and December 31, 2021. The Company owes accrued interest of $4,732 as of June 30, 2022 and December 31, 2021, respectively.

During 2014, the Company entered into a line of credit agreement with Gemini Southern, LLC, a related party. The line of credit is a demand loan with a maximum of $950,000 bearing interest at 10%, maturing December 2023. As of June 30, 2022 and December 31, 2021, the balance due on the line was $936,922 and $876,931, respectively. The Company recorded accrued interest of $215,106 and $169,553 as of June 30, 2022 and December 31, 2021, respectively.

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

NOTE 7 – LONG-TERM LIABILITIES

On August 1, 2020, the Company borrowed $69,000 from an unrelated party to purchase a 2020 Porsche Maran 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 $41,227 is due in August 2025. The loan is secured by the vehicle.

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

Maturities of capital lease payments
2022 (remainder of year)	$	3,360
2023		5,477
2024		6,050
2025		45,609
Total		60,496
Less current portion		(6,030	)
Long-term liability	$	54,466

NOTE 8 – OTHER RELATED PARTY TRANSACTIONS and RELATED PARTIES ACCOUNTS PAYABLE

Note payable – Gemini Southern, LLC

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, valued at $0.12 per share. The Company recorded accrued interest on this loan of $145,632 as of June 30, 2022 and December 31, 2021, respectively. The accrued interest was not part of the conversion agreement and continues to be reflected as a liability.

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.

Consulting expense to related party (FinTekk AP, 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 months ended June 30, 2022 and 2021, the Company recorded consulting fee expense of $22,500 and $45,000, respectively. The amount due but unpaid is $332,835 and $287,835 at June 30, 2022 and December 31, 2021, respectively, and is included in accounts payable related parties on the balance sheets.

THE TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

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 at June 30, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021, respectively, and was included on the balance sheet 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 and six months ended June 30, 2022 and 2021, the Company recorded consulting fee expense of $13,500 and $27,000, respectively. As of June 30, 2022 and December 31, 2021, the amount due but unpaid was $67,500 and $43,500, 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 June 30, 2022 and December 31, 2021, the amounts due to the shareholder was $53,275 and $50,075, respectively and is reflected in accounts payable – related parties on the balance sheet.

Other related party transactions

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

NOTE 9 – 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 to increase it authorized shares to 200,000,000 shares of common stock and 20,000,000 shares of preferred stock, both $0.001 par value.

NOTE 10 – CONTINGENCIES AND COMMITMENTS

The Company’s ability to collect on receivables and pay liabilities is connected to NASCAR race schedule. The 2020 and 2021 NASCAR schedules were severely disrupted by Covid, which caused delays in both collections and payments. Management believes the 2022 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 TEARDROPPERS, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

For the Three and Six Months Ended June 30, 2022 and 2021

NOTE 11 – SUBSEQUENT EVENTS

On July 1, 2022, the Company borrowed $649,000 for 48 months amortized at (12%) twelve percent interest from Gemini Southern, LLC. Monthly loan payments are $17,091 per month. On July 5, 2022, the Company used the loan proceeds from the loan to acquire two (2) motorsport style haulers and two (2) over the road trucks for $649,000 to be used in our business.

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. Revenues declined significantly in 2021 versus 2020. Expenses for 2021 were consistent with prior periods. The Company did not experience a significant detrimental change. Management believes the 2022 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.

On July 5, 2022, the Company entered into a lease agreement with Rick Ware Racing, LLC, a current related party client. The lease agreement pertains to two (2) motorsports type haulers and two (2) over the road trucks. The lease payments are due monthly at $17,250 per month for forty eight (48) months. Rick Ware Racing is responsible for all insurance and maintenance of the equipment. There is no option for a term ending purchase by the lessee.

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 June 30, 2022 Compared to Three Months Ended June 30, 2021

Revenues

The Company had no revenue during the three months ended June 30, 2022 compared to $1,275 in revenue during the three months ended June 30, 2021. This decrease is the result of no consulting fees received and delayed lease revenue payments received from related parties.

Operating Expenses

For the three months ended June 30, 2022 operating expenses were $77,528 compared to $98,553 for the same period in 2021 for a decrease of $21,025. The decrease was primarily a result of the decrease in consulting fees to related parties to $36,000 from $51,000, accompanied by a decrease in general and administrative fees to $27,228 from $31,853, and a decrease in consulting fees to unrelated parties to $5,000 from $10,000.

Other income (expense) was $25,070 for the three months ended June 30, 2022 compared to $3,568 for the three months ended June 30, 2021. The decrease was due to a gain on sale of asset and the cessation of interest accruals on the asset for the three months ended June 30, 2021.

Net Loss

The Company incurred losses of $102,598 for the three months ended June 30, 2022 compared to $93,710 during the three months ended June 30, 2021 due to the factors discussed herein above.

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Revenues

The Company had no revenue during the six months ended June 30, 2022 compared to $14,550 in revenue during the six months ended June 30, 2021. This decrease is the result of no consulting fees received from related party and lease expiration.

Operating Expenses

For the six months ended June 30, 2022 operating expenses were $180,827 compared to $230,342 for the same period in 2021 for a decrease of $49,515. The decrease was primarily a result of the decrease in general and administrative fees to $65,834 from $87,029, a decrease in consulting to related parties to $79,500 from $87,000, and a decrease in consulting to unrelated parties to $10,000 from $32,500 for the same period in 2021.

Other income (expense) was $48,804 for the six months ended June 30, 2022 compared to $13,668 for the six months ended June 30, 2021. The decrease was due to the gain on sale of asset and the cessation of interest accruals on the asset.

Net Loss

The Company incurred losses of $229,631 for the six months ended June 30, 2022 compared to $229,460 during the six months ended June 30, 2021 due to the factors discussed herein above.

Operating activities

During the six months ended June 30, 2022, we had $61,812 cash used in operating activities compared to $125,092 during the six months ended June 30, 2021, a decrease in cash outflows of $63,280. The decrease in operating activities was due to a decrease to payables and accrued interest.

Investing activities

We generated no cash from investing activities during the six months ended June 30, 2022 and $38,982 during the six months ended June 30, 2021. The increase in cash generated by investing activities was due to the sale of an asset.

Financing activities

During the six months ended June 30, 2022, we generated $67,776 from financing activities compared to $45,221 for the same period ended June 30, 2021. The increase was primarily due to a reduction in repayments to related parties on lines of credit.

LIQUIDITY AND CAPITAL RESOURCES

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 $35,122 in cash at June 30, 2022 with availability on our related party lines of credit with FinTekk AP, LLC and General Pacific Partners of $662,371. At June 30, 2022 we had a working capital deficit of $2,372,774.

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 of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting identified below.

As used herein, “disclosure controls and procedures” mean 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 file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our 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 responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s 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 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 period ended June 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 six months ended June 30, 2022, the Company had no unregistered sales of equity securities.

ITEM 3. Default Upon Senior Securities

During the six months ended June 30, 2022, the Company had no senior securities issued and outstanding.

ITEM 4. Mine Safety Disclosures

Not applicable to our Company.

ITEM 5. Other Information

ITEM 6. Exhibits

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

SEC Ref. No.		Title of Document
31.1*		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of the Principal Executive Officer pursuant to U.S.C. pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of the Principal Financial Officer pursuant to U.S.C. pursuant to Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

__________

* Filed herewith.

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 authorized.

THE TEARDROPPERS, INC.

August 15, 2022

By: /s/ Rayna Austin

Rayna Austin

Chief Financial Officer (Principal Financial Officer)

Teardroppers, Inc. 10-Q