UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


(Mark One)


[X]
☒		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2022

☐
For the Fiscal Year Ended December 31, 2014
[   ]Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period from __________ to _______

Commission File Number: 000-52942

BLUE LINE PROTECTION GROUP, INC.

(Name of small business issuer in its charter)

Nevada20-5543728
For the Transition Period from __________ to
Commission File Number: 000-52942
BLUE LINE PROTECTION GROUP, INC.
(Name of small business issuer in its charter)
Nevada20-5543728

(State or other jurisdiction

of incorporation or organization)

(I.R.S. employer

identification number)

1350 Independence St.
Lakewood,

5765 Logan Street

Denver, CO

80215
80216
(Address of principal executive offices)(Zip code)

Registrant’s telephone number: (800)844-5576

Securities Registered Pursuant to Section 12(b) of the Act:

Issuer’s telephone number: (800) 844-5576
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
None
NoneNone
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
(Title of class)None



Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ]   ☐ No [X]

☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [   ]   ☐ No [X]


☒

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


☐

Indicated by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files) Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]


☒

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer ☐Accelerated filer ☐
Non-accelerated filer      (Do not check if a smaller reporting company) ☒Smaller reporting company☒
Emerging growth company ☐

If an emerging growth company, indicate by checkmark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☐ No ☒

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

Yes [   ]   ☐ No [X]

☒

The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter,2022 was approximately $58,718,685. Solely for purposes$1,018,000.

As of this disclosure,March 31, 2023 the registrant had 8,250,144 outstanding shares of common stock held by executive officers and directors of the registrant as of such date have been excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive determination for any other purposes.


The number of shares outstanding of each of the issuer's classes of common equity, as of April 15, 2015 was 123,994,032.

stock.

DOCUMENTS INCORPORATED BY REFERENCE


If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act").  The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).

None.


Transitional Small Business Disclosure Format (Check one): Yes [   ] No [X]

 

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BLUE LINE PROTECTION GROUP, INC.

FORM 10-K

For the year ended December 31, 2014


2022

TABLE OF CONTENTS


PART IPage
PART I
Item 1.Business4
Item 1A.1.Risk FactorsBusiness64
Item 1A.Risk Factors8
Item 1B.Unresolved Staff Comments108
Item 2.Properties108
Item 3.Legal Proceedings108
Item 4Mine Safety Disclosures8
PART II
PART II
Item 5.Market for Registrant'sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities119
Item 6.Selected Financial Data119
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations119
Item 7A.Quantitative and Qualitative Disclosures About Market Risk1311
Item 8.Financial Statements and Supplementary Data1311
Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure2811
Item 9A (T)Controls and Procedures2812
Item 9B.Other Information3013
PART III
Item 10.Directors, Executive Officers and Corporate Governance3114
Item 11.Executive Compensation3315
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters3517
Item 13.Certain Relationships and Related Transactions, and Director Independence3517
Item 14Principal Accounting Fees and Services3518
PART IV
Item 15.Exhibits, Financial Statement Schedules3618

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FORWARD LOOKING STATEMENTS


This Annual Report contains forward-looking statements about our business, financial condition and prospects that reflect our management’s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, our actual results may differ materially from those indicated by the forward-looking statements.


The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.


There may be other risks and circumstances that management may be unable to predict. When used in this report, words such as, "“believes,"  "expects," "intends,"  "plans,"  "anticipates,"  "estimates" ” “expects,” “intends,” “plans,” “anticipates,” “estimates” and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

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PART I


ITEM 1. DESCRIPTION OF BUSINESS

Business Development and Summary

ITEM 1.DESCRIPTION OF BUSINESS

We were originally incorporated in Nevada on September 11, 2006, under the name The Engraving Masters, Inc. (the “Company”).  On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation (“Blue Line Colorado”) formed in February 2014.  From February to March 2014, Blue Line Colorado had minimal operations and assets.


On May 2, 2014, the Companywe changed itsour name to Blue Line Protection Group, Inc.


On May 6, 2014, the Company effectedFebruary 8, 2021, our directors approved a forward100-for-1 reverse split of our common stock. The reverse stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held.  Additionally, the authorized number capital of the Company concurrently increased to 1,400,000,000 shares of $0.001 par value common stock due to the forward split.  All references to share and per share amountsbecame effective in the condensed consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.


Blue Line Protection Group, Inc. providespublic market in July 2021.

We provide armed protection financial solutions, logistics and transportation, banking, compliance and training services for businesses engaged in the legal cannabis industry. During the year ended December 31, 2022 approximately 51% of our revenue was derived from transportation services. The Company offers asset logisticremaining 49% of our revenue was derived from currency processing services such as armored transportation service; security services, including shipment protection, money escorts, security monitoring, asset vaulting, VIP and dignitary protection, and others; financial services, such as handling transportation and storage of currency; training;(47%) and compliance services.


services (2%).

Our base of operations isare in the Denver, Colorado and Phoenix, Arizona metropolitan area.areas. Our corporate headquarters isare located at 1350 Independence St., Lakewood, CO 80215.  We also own a building at 5765 Logan St.,Street, Denver, Colorado.


In March 2015, our wholly-owned Nevada subsidiary, BLPG, Inc., was granted licensesCO 80216.

Principal Services

Cultivation facilities are the producers of legal cannabis that eventually make its way to provide our suiteconsumers. Growers’ operations typically span a large geographic footprint, making them susceptible to theft, as are shipments from the growers to testing laboratories or to retail dispensaries. Additionally, due to current federal marijuana legislation and banking environment, growers are finding it increasingly difficult to secure their cash, purchase equipment and obtain financing for expansion.

Dispensaries are the retail face of protection, transportation and compliance services within the State of Nevada.


Our fiscal year end is December 31.

Business of Issuer

Principal Products and Principal Markets

BLPG is a provider of protection, compliance and financial services to the lawfullegal cannabis industry. All legal sales of cannabis products are transacted through dispensaries that are state-licensed. To maintain their licenses, dispensaries must comply with a variety of state-mandated reporting requirements, including reporting every gram of cannabis passing in and out of the store. Dispensaries also face financing and banking challenges similar to those that growers encounter.

We do not grow, test or dispense cannabis products.  We provide asset logistics, armed and armored escorts, security training and compliance verification.  In general, we primarily target businesses involved in the growing and dispensing of cannabis for both medical and recreational uses, in jurisdictions were such is legal.


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1.  Cultivation facilities:  Cultivation facilities are the producers of legal cannabis that eventually make its way to consumers.  Growers’ operations typically span a large geographic footprint, making them susceptible to theft, as are shipments from the growers to testing laboratories or to retail dispensaries.  Additionally, due to current federal marijuana legislation and banking environment, growers are finding it increasingly difficult to secure their cash, purchase equipment and obtain financing for expansion.

2.  Dispensaries:  Dispensaries are the retail faces of the legal cannabis industry.  All legal sales of cannabis products are transacted through dispensaries that are state-licensed.  To maintain their licenses, dispensaries must comply with a variety of state-mandated reporting requirements, including reporting every gram of cannabis passing in and out of the store.  Dispensaries also face financing and banking challenges similar to those that growers do.

We believe we are the only company to offer a complete, turnkey solution for legal cannabis businesses.  sell cannabis.

Our services cover the following categories:following:

Protection and Transportation

Fundamental to the legal cannabis industry is the protection of product and cash throughout the distribution channel. Growers ship product from their cultivation facilities to independent laboratories where it is tested for compliance with state-mandated parameters. From the labs, the product is then delivered to the retail dispensaries, where it is sold to the public.

Due to the current banking and regulatory environments, payments between each step in the distribution network are made in cash: from the customer back to the grower. Therefore, these businesses are forced into having to transport bags of money between growers and dispensaries and their own vaults or storage facilities.

The risk of theft of cash and product is present at every stage, even when they are not in transit. Accordingly, all cannabis businesses require security measures to prevent theft, mitigate risk to employees and maintain regulatory compliance.

We began our security and protection operations in Colorado in February 2014. Since that time, we have become the largest legal cannabis protection services company in the state. We offer a fully integrated approach to managing the movement of cannabis and cash from growers through dispensaries via armed and armored transport, money processing, vaulting and related credit. Money processing services generally include counting, sorting and wrapping currency.

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We currently supply asset protection via armored transportation to approximately 60% of all the licensees in Colorado. We are focused on encompassing all compliance needs on behalf of our clients, as mandated by the State and Federal authorities for the protection, transport and sale of cannabis.

Banking


The banking system in the U.S. is, in most states, federally mandated.regulated. Possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions. Currently, almost all payments for the sales of cannabis are made in cash, due the inability of sellers to obtain merchant processing accounts. As a result, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges, so they'vethey’ve refused to open accounts for marijuana-related businesses. 



Marijuana businesses that can'tcan’t use banks may have too much cash they can'tcan’t safely put away, leaving them vulnerable to criminals. Jurisdictions that allow cannabis sales want a channel to receive taxes.


In February 2014, Thethe Obama administration gave banks a road map for conducting transactions with cannabis sellers operating within state regulations so these companies can stash away savings,deposit cash, make payroll and pay taxes like a traditional place of business. The move was designed to let financial institutions serve such businesses while ensuring that they know their customers'customers’ legitimacy and remain obligated to report possible criminal activity.  However, there remains nothing expressly protecting banks that work with state-legal, state-licensed marijuana businesses from prosecution.  We are unaware of any bank, in any state, allowing bank accounts for cannabis-related businesses for fear of prosecution and losing their FDIC status and insurance.


We have created a means for the banks to validate compliance with the Federal Mandate.federal mandate mentioned above. Currently only a security company could match the compliance requirements as only we can vertically integrate the source of funds through the Federally required 12 steps, summarisedsummarized as from grow, to sale, (to those of approved age or license), to purchaser, to funds received, to where the funds were held, to vault, to third party validation, to tax, to profits, to access to the banking system etc. We are uniquely positioned, through a number of partnership and cooperation agreements, to provide banking solutions to our clients.


Compliance


Laws concerning business procedures and practices are changing across the nation. It’s hard to keep up with all the changes, and business owners have to balance their day-to-day operations with remaining compliant with and responsive to regulatory agencies. Blue Line Protection Group provides daily on-site compliance verification to ensure that local business owners are operating lawful and inspection-ready establishments. Our security experts, trained in crime prevention through environmental design (CPTED) techniques, can provide crucial advice about enhancing the interior and exterior security of your establishment.


Blue Line Protection Group communicates

We communicate regularly with local and national government representatives to ensure that we remain the top-tier security and protection group in the nation. Retail establishments aren’t the only ones who have to remain compliant with the pertinent laws - we do, as well.


We have agreed a joint venture with one of the largest PEO HR companies in America out of Phoenix Arizona.  They will handle all payments to employees of the companies we serve.  They will also handle background checks on all employees. BL will receive a percentage of every contract.

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With the addition of our compliance module clients can be confident they will not lose their license for some small or large error by their staff that might put their cannabis license in jeopardy. Their license being, in most instances, their most valuable asset. We are relieving them of several burdens they are ill suited to comply with. (Most licensees were formally acting outside the law prior to the recent legislation and have little to no compliance experience).


Protection

Fundamental to the legal cannabis industry is the protection of product and cash throughout the distribution channel.  Growers ship product from their cultivation facilities to independent laboratories where it is tested for compliance with state-mandated parameters.  From the labs, the product is then delivered to the retail dispensaries, where it is sold to the public.

Due to the current banking and regulatory environments, payments between each step in the distribution network are made in cash: from the customer back to the grower.  Therefore, these businesses are forced into having to transport bags of money between growers and dispensaries and their own vaults or storage facilities.

The risk of theft of cash and product is present at every stage, even when they are not in transit.  Accordingly, all cannabis businesses require security measures to prevent theft, mitigate risk to employees and maintain regulatory compliance.

We began our security and protection operations in the State of Colorado in February 2014.  In less than six months, we have become the largest legal cannabis protection services company in the state.  We offer a fully integrated approach to managing the movement of cannabis and cash from growers through dispensaries via armed and armored transport, money processing, vaulting and related credit.  Money processing services generally include counting, sorting and wrapping currency.

We currently supply guards, protection and armed and armored transportation to approximately 60% of all the licensees in Colorado. We are focused on encompassing all compliance needs on behalf of our clients, as mandated by the State and Federal authorities for the protection, transport and sale of cannabis.

Training


Over 90%

Many of our security personnel have established military or police background.backgrounds. We ensure our employees are prepared to offer clients, their staff and customers a safe and secure environment. All members of the Company'sour armored transportation team and security operators are required to undertake our mandatory, rigorous 40-hour introductory compliance and training curriculum created and supervised by both:


1.  The former Chief of Police for the City of Aurora, the second largest city in Colorado and

2.  A 26 years veteran of the Jefferson County, Colorado Sheriff's Office with 17 years on its SWAT (Special Weapons and Tactics) unit, seven of which were as team leader.

veteran law enforcement officers.

In addition to internal training, we also offer other businesses, houses of worship and the general public a wide variety of safety, security and personal defense courses and firearms training.


Accounting and Bookkeeping

The Company was originally established in an effort to physically safeguard cash and product for marijuana businesses.  During March 2015, the Company formed a wholly-owned subsidiary, Blue Line Advisory Services, Inc. (“BLAS”), to provide a complete accounting solution for the legal marijuana industry.

Accounting is a critical component of every business, from simply knowing how much money a business has to analyzing financial trends.  For legal marijuana companies, tracking cash from seed to bank is essential from both operational and regulatory compliance standpoints.  Through its staff and network of independent CPA's and professionals, BLAS offers, without limitation, the following services:

·  Bank activity reconciliation 
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Growth Strategy

·  Daily point-of-sale system validation 


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·  1.Payables and receivables organization and resolution 

·  Payroll and time sheet entry, correction and validation 

·  Federal and state payroll withholding and unemployment tax deposits and reporting 

·  Monthly sales tax deposits and quarterly sales tax returns and state franchise tax deposits 

·  Reconciliation of whole-chart accounts 

·  Periodic financial reporting
·  Federal and state tax preparation and audit defense

Growth Strategy

Blue Line Protection Group will use the following strategy in the implementation of its business plan:

1.  Expand into new markets to establish first-mover advantages.

2.  
2.Market ourselves through strategic alliances and affiliations.

3.  
3.Acquire or joint venture with guard and alarm businesses throughout the USA if they represent good value and a good fit with our expansion plans. Organic growth will not suffice for the rapid growth of this industry and our ability to provide service immediately requires variations of this strategy.

4.  
4.Increase our client base to the various labs in state. Offering our superior chain of control compliance and software.

5.  
5.Develop and offer value-added, complementary or supplementary services.

Marketing and Advertising

Virtually all of our sales, to date, have been generated without using paid media.  Our security personnel conduct the majority of our marketing and advertising efforts.  Nearly all of our guards are former police officers or military personnel and are the face of our company.  They interact with business owners, employees and customers on a daily basis.  As such, they generate significant brand awareness and word-of-mouth goodwill.  Complementary to this, our management actively engages with business owners directly to generate awareness of our company and the services we provide, as well as to identify the potential for sales or referrals.

In addition to a direct sales approach and word-of-mouth advertising, we have been featured in news articles and video documentaries by outlets such as the Wall Street Journal, USA Today, Fortune and CNBC, which have served to increase brand awareness nationwide.  We have also attended a variety of industry trade shows and been granted membership in industry groups.

Industry Background and Competition

The development of the legal markets for cannabis is a function of state legislation. As a result, while specific markets may not be currently available, we actively monitor the progress of legislation and know with some degree of certainty when new geographic markets will be coming on line. This allows us to target our limited sales and marketing resources to those new markets. In this way, we believe the current legislative environment works in our favor - if the whole country were currently a potential market our limited resources would result in an inability to effectively cover all potential market territories. With limited markets open we can better cover those available territories.


Many states permit only residents

Marketing

Virtually all of our sales, to own Cannabis businesses in each respective state.  This prevents a public company from rolling up or building out direct growing or selling of the product.  It does not prevent a public company from growing existing businesses or providing services thatdate, have been identifiedgenerated without using paid media. Our armed operators conduct the majority of our marketing and advertising efforts. Several of our operators are former police officers or military personnel and are the face of our company. They interact with business owners, employees, and customers on a daily basis. As such, they generate significant brand awareness and word-of-mouth goodwill. Complementary to this, our sales team and our management actively engage with business owners directly to generate awareness of our company and the services we provide, as fundamentalwell as to mostidentify the potential for sales or referrals.

In addition to a direct sales approach and word-of-mouth advertising, we have been featured in news articles and video documentaries by outlets such as the Wall Street Journal, USA Today, Fortune and CNBC, which have served to increase brand awareness nationwide. We have also attended a variety of the growers, medicinal or recreational retailers.


industry trade shows and have been granted membership in industry groups.

Industry Background

The total market for marijuana, legal or otherwise, is estimated to exceed the economic value of corn and wheat combined. Marijuana is widely considered the largest cash crop in the United States. Businesses have been positioning themselves for years, each trying to establish a leadership position in the legal marijuanacannabis industry, that management expectsprojected to be worth over $50reach as high as $37 billion in retail sales by the year 2020.  Marijuana sales reportedly averaged about $1,000,000 per day in the first five days of legalization in Colorado, and fiscal-year 2014 sales exceeded $700,000,000.  California and Colorado each expect to collect tax revenue of approximately $100,000,000 during their 2015 fiscal years.  The economic impact on employment, ancillary products, service providers, community improvements and real estate markets is enormous.


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2024.

Competition


We believe the primary factors in attracting and retaining customers are expertise, service quality, and price. Our competitive advantages include:


·  ●Brand name recognition;

·  Reputation;

·  ●Reputation;
●Expertise in regulatory and banking compliance;

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·  ●Operational excellence;

·  
●Cash processing, transportation and storage capabilities;

·  
●Security and logistics infrastructure;

·  
●Services beyond guardstransportation and transportation,banking services, where we become intimate to the businesses continuance and success through mandatory standards of compliance; and

·  
●Economies of scale as we increase the amount and number of items we securely transport.

Our cost structure is generally competitive, although certain competitors may have lower costs due to a variety of factors, including lower wages, lower initial and ongoing training requirements, less costly employee benefits, or less stringent security and service standards. We anticipate facing competitive pricing pressure in many markets; however, we plan to resist competing on price alone. We believe our high levels of service and security, as well as value-added solutions, differentiates us from competitors.


We compete with companies of all sizes in a variety of geographies that offer solutions that compete with single elements of our platform, such as regulatory compliance, armed security, armored transportation services and moneycash processing. The security services industry is a large and competitive market. More specifically, however, the market for security and storage solutions as it pertains to medical marijuana companies is a nascent market, resulting in a highly fragmented and fractured marketplace. Some of the companies we compete with are much larger than us, and such companies have significantly greater resources than us. None of the large security companies, such as Brinks, Argyle, Tyco or Torment, are currently competing in this market segment, although there can be no guarantee this trend will continue.


Significantly all of our current and potential traditional competitors have longer operating histories, larger customer or user bases, greater brand recognition and significantly greater financial, marketing and other resources than we do. Our competitors may be able to secure experienced employees, accommodate customers more efficiently and adopt more aggressive pricing policies than we can. Many of these current and potential competitors can devote substantially more resources to advertising, marketing and attracting experienced talent than we can. In addition, larger, more well-established and financed entities may acquire, invest in or form joint ventures with our competitors.


Need for

Government Approval of Principal Products


Regulation

In most jurisdictions we are required to obtain governmentalgovernment approval in connection with the ability to provide security and/or investigative services. We expect to make every effort to comply with all existing and pending regulatory conditions and licensing requirements in each state we currently or potentially operate in.


Continued development of the marijuana industry is dependent upon continued legislative authorization of marijuana at the state level. Any number of factors could slow or halt progress in this area. Further, progress, while encouraging, is not assured. While there may be ample public support for legislative action, numerous factors impact the legislative process. Any one of these factors could slow or halt use of marijuana, which would negatively impact our proposed business.



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Marijuana is a Schedule-I controlled substance and is illegal under federal law. Even in those states in which the use of marijuana has been legalized, its use remains a violation of federal laws. There are currently 2337 states and the District of Columbia allowing its citizens to use Medical Marijuana. Additionally, Alaska, Colorado, Oregon,18 states and Washington State, as well as Washington D.C., have voted to legalizelegalized cannabis for adult recreational use. The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The former Obama administration has effectively stated that it is not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana. However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of federal laws.  Additionally, any new Trump administration that follows could change this policy and decide to enforce the federal laws strongly. Active enforcement of the current federal regulatory position on cannabis may thus indirectly and adversely affect our revenues and profits. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us. While we do not intend to harvest, distribute or sell cannabis, we may be irreparably harmed by a change in enforcement by the Federal or state governments.

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Intellectual Property


We are developing a proprietary streamlined government-certified software capable of tracking all movements of cannabis products through to cash to taxes paid to deposits with the Federal Reserve Bank. The technology behind our software is being engineered and developed by subcontractors, and we consider it proprietary and confidential, and protected under trade secret laws. We have not sought to patent our aspect of this technology; however, we have not yet determined if we will seek to patent any aspect of the software in the future.


We plan to protect our proprietary and confidential information through a series of non-compete and non-disclosure contracts with our employees, contractors and other interested parties. The law of protection of confidential information effectively allows a perpetual monopoly in secret information, and it does not expire as would a patent. The lack of formal protection, however, means that a third party is not prevented from independently duplicating and using the secret information once it is discovered.


Number of total employees and number of full time employees


As of the date of this Annual Report,March 31, 2023, we have about 87 full-had approximately 32 full and part-time employees, 95%some of whomwhich are ex-militaryformer military or ex-police.


Reportslaw enforcement professionals.

Properties

We lease our offices in Denver, Colorado pursuant to Security Holders


1.  We will furnish shareholders with annual financial reports certified by our independent registered public accountants.

2.  We are a reporting issuer with the Securities and Exchange Commission.  We file periodic reports, which are required in accordance with Section 15(d) of the Securities Act of 1933, with the Securities and Exchange Commission to maintain the fully reporting status.

3.  The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20002.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  Our SEC filings will be available on the SEC Internet site, located at http://www.sec.gov.

a lease which expires on October 26, 2026. We have the option to extend the term of the lease for two additional five-year periods. The lease requires rental payments of approximately $10,612.00 per month which increases 2% annually.

We lease our offices in Phoenix, Arizona pursuant to a lease which expires on May 31, 2023. We have the option to extend the term of the lease for two additional five-year periods. The lease requires rental payments of approximately $4,113.56 per month which increases approximately 3% annually.

ITEM 1A. RISK FACTORS

Federal regulation and enforcement may adversely affect the implementation of medical marijuana laws and regulations may negatively impact our revenues and profits.

As of the date of this Annual Report, 23 states and the District of Columbia allow its citizens to use medical marijuana.  Additionally, voters in Alaska, Colorado, Oregon, Washington D.C. and Washington State have approved ballot measures to legalize cannabis for adult recreational use.  The state laws are in conflict with the federal Controlled Substances Act, which makes marijuana use and possession illegal on a national level. The Obama administration has effectively stated that it is not an efficient use of resources to direct law federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical marijuana.  However, there is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of federal laws.  Additionally, any new administration that follows could change this policy and decide to enforce the federal laws strongly.  Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us and its shareholders.  While we do not intend to harvest, distribute or sell cannabis, we may be irreparably harmed by a change in enforcement by the Federal or state governments.

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Marijuana remains illegal under federal law and we may be considered an accessory to the sale and distribution of it.

Marijuana remains illegal under federal law.  It is a schedule-I controlled substance.  Even in those jurisdictions in which the use of medical marijuana has been legalized at the state level, its prescription is a violation of federal law.  The United States Supreme Court has ruled in United States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize cannabis, even for medical purposes.  Therefore, federal law criminalizing the use of marijuana trumps state laws that legalize its use for medicinal purposes.  At present, the states are standing tall against the federal government, maintaining existing laws and passing new ones in this area.  This may be because the Obama administration has made a policy decision to allow states to implement these laws and not prosecute anyone operating in accordance with applicable state law.  However, we face another presidential election cycle in 2016, and a new administration could introduce a less favorable policy.  A change in the federal attitude towards enforcement could cripple the industry. While we are not insulated from economic risk if such a change were to occur, we believe that by virtue of the fact that we do not market, sell, or produce marijuana or marijuana related products, we and our investors should be insulated from federal prosecution or harassment.  However, the growers and sellers of medical marijuana are our primary customers, and if this industry were unable to operate, we would lose substantially all of our potential clients, which would have a negative impact on our business, operations and financial condition.

Laws and regulations affecting the medical marijuana industry are constantly changing, which could detrimentally affect our proposed operations.

Local, state and federal medical marijuana laws and regulations are broad in scope and subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or alter our business plan.  In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our operations.  In addition, it is possible that regulations may be enacted in the future that will be directly applicable to our proposed business.  We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.  

Any change in the unwillingness of FDIC-insured banks to accept deposits from customers could harm our proposed operations.

As discussed above, the sale and use of marijuana is illegal under federal law.  There is a compelling argument that banks cannot accept for deposit funds from the drug trade and therefore cannot do business with our clients that traffic in marijuana, and clinic operators often have trouble finding a bank willing to accept their business.  The inability of potential clients in our target market to open accounts and otherwise use the service of banks provides the distinct opportunity for our services to exist.  However, U.S. Rep. Jared Polis (D-CO) has stated he will seek an amendment to banking regulations and laws in order to allow banks to transact business with state-authorized medical marijuana businesses.  In the event his legislation is successful, that banks decide to do business with medical marijuana retailers, or that state and federal banking regulators remove current prohibitions on banks handling funds generated from an activity that is illegal under federal law, our operations could be adversely affected.

We have a limited operating history and may not succeed.

We have a limited operating history and may not succeed.  We are subject to all risks inherent in a developing business enterprise.  Our likelihood of continued success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with manufacturing specialty products and the competitive and regulatory environment in which we operate.  You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages.  For example, unanticipated expenses, problems, and technical difficulties may occur and they may result in material delays in the operation of our business, in particular with respect to our new products.  We may not successfully address these risks and uncertainties or successfully implement our operating strategies.  If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point investors may lose their entire investment.

The success of our new and existing services is uncertain and may not be adopted by the medical marijuana industry.

We expect to commit significant resources and capital to develop and market a relatively new service in the nascent and developing medical marijuana industry.  These services are untested, and we cannot assure you that we will achieve market acceptance for these services, or other new services that we may offer in the future.  Moreover, these and other new services may be subject to significant competition with offerings by new and existing competitors.  In addition, new services and enhancements may pose a variety of technical challenges and require us to attract additional qualified employees.  The failure to successfully develop and market these new services or enhancements could seriously harm our business, financial condition and results of operations.

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Pressures from competitors with more resources may limit our market share, profitability, and growth.

We face aggressive competition from numerous and varied competitors in all of our markets, making it difficult to maintain market share, remain profitable, and grow. Even if we are able to maintain or increase our market share for a particular service, revenue or profitability could decline due to pricing pressures or increased competition.

Our competitors may be able to more quickly develop or adapt to new or emerging technologies, better respond to changes in customer requirements or preferences, or devote greater resources to the development, promotion, and sale of their services.  In addition, we may face competition from solutions developed internally by our customers. To the extent we cannot compete effectively, our market share and, therefore, results of operations, could be materially adversely affected.

Because price and related terms are key considerations for many of our customers, we may have to accept less-favorable payment terms, lower the prices of our products and services, and/or reduce our cost structure in order to remain competitive. Certain of our competitors have become increasingly aggressive in their pricing strategy, particularly in markets where they are trying to establish a foothold. If we are forced to take these kinds of actions to maintain market share, our revenue and profitability may suffer or we may adversely impact our longer-term ability to execute or compete.

We may be subject to litigation in the ordinary course of business.

From time to time, we may be subject to various legal proceedings and claims, either asserted or unasserted.  Any such claims, whether with or without merit, could be time-consuming and expensive to defend and could divert management’s attention and resources.  While management believes we will have adequate insurance coverage and will accrue loss contingencies for all known matters that are probable and can be reasonably estimated, we cannot assure you that the outcome of future litigation, if any, will not have a material adverse effect our results of operations.

Investors may lose their entire investment if we fail to implement our business plan.

We only recently began operating as a medical marijuana security and storage company and have no demonstrable operations record on which you can evaluate our business and prospects.  Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development.  These risks include, without limitation, competition, the absence of ongoing revenue streams, inexperienced management and lack of brand recognition.  We cannot guarantee that we will be successful in executing our business. If we fail to implement and create a base of operations for our proposed business, we may be forced to cease operations, in which case investors may lose their entire investment.

ITEM 1A.RISK FACTORS

We may not be able to attain profitability without additional funding, which may be unavailable.


We have limited capital resources. To date, we have not earned a profit or generated cash from our operations. Unless we begin to generate sufficient revenues from our proposed business to finance operations as a going concern, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to go out of business if additional financing is not available. We have no intention of liquidating. In the event our cash resources are insufficient to continue operations, we intend to raise additional capital through offerings and sales of equity or debt securities. In the event we are unable to raise sufficient funds, we will be forced to go out of business and will be forced to liquidate. A possibility of such outcome presents a risk of complete loss of investment in our common stock.


Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and 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 generally accepted accounting principles, 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.  Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.  Investors relying upon this misinformation may make an uninformed investment decision.

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We are subject to federal legislation to protect investors against corporate fraud.

Federal legislation, such as the Sarbanes-Oxley Act of 2002 and the Dodd- Frank Act, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE, or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics.

We have not yet adopted any of these corporate governance measures such as an audit or other independent committees of our board of directors as we presently have one director. Additionally, since our securities are not yet listed on a national securities exchange or NASDAQ, we are not required to do so. If we expand our board membership in future periods to include independent directors, we may seek to establish an audit and other committees of our board of directors. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees are made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should consider our current lack of corporate governance measures in making their investment decisions, in addition to the fact that we currently have only one director.

We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.  As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million.”

Even if we no longer qualify as an “emerging growth company”, we may still be subject to reduced reporting requirements so long as we are considered a “Smaller Reporting Company.”

Many of the exemptions available for emerging growth companies are also available to smaller reporting companies like us that have less than $75 million of worldwide common equity held by non-affiliates.  So, although we may no longer qualify as an emerging growth company, we may still be subject to reduced reporting requirements.

Our auditors have substantial doubt about our ability to continue as a going concern.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our auditor’s report reflects that our ability to continue as a going concern is dependent upon our ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. If we are unable to continue as a going concern, our stockholders will lose their investment.  We will be required to seek additional capital to fund future growth and expansion. No assurance can be given that such financing will be available or, if available, that it will be on commercially favorable terms. Moreover, favorable financing may be dilutive to our stockholders.

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The price of our Common Stock may be volatile, which may lead to losses by investors.

The price of our Common Stock may fluctuate significantly in response to a number of factors, including:

·  Our quarterly operating results,

·  Changes in earnings estimates by analysts and whether our earnings meet or exceed such estimate,

·  Announcements of technological innovations by us or our competitors,

·  Additions or departures of key personnel, and

·  Other events or factors that may be beyond our control.

Volatility in the market price of our securities could lead to claims against us. Defending these claims could result in significant litigation costs and a diversion of our management’s attention and resources.

Our operating results may fluctuate significantly, and these fluctuations may cause our Common Stock price to fall.

Our quarterly operating results may fluctuate significantly in the future due to a variety of factors that could affect our revenues or our expenses in any particular quarter. You should not rely on quarter-to-quarter comparisons of our results of operations as an indication of future performance.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

1.  Deliver to the customer, and obtain a written receipt for, a disclosure document;

2.  Disclose certain price information about the stock;

3.  Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;

4.  Send monthly statements to customers with market and price information about the penny stock; and

5.  In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.
FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

ITEM 1B.UNRESOLVED STAFF COMMENTS

None.


ITEM 2. PROPERTIES

We lease office space at 1350 Independence St., Lakewood, CO 80215 at a rate of $1,442 per month. There are currently no proposed programs for the renovation, improvement or development of the facilities we use.

On July 15, 2014, we purchased a commercial building for a total purchase price of $750,000, for which we paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a rate of 5% per annum on the unpaid principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in the amount of $2,813 beginning August 31, 2014.  As of December 31, 2014, we have not yet placed the property into service.

Our management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income.  We do not presently hold any investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.

ITEM 2.PROPERTIES

See Item 1. Business.

ITEM 3. LEGAL PROCEEDINGS

No Director, officer, significant employee, or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.

No Director, officer, significant employee, or consultant has been permanently or temporarily enjoined, barred, suspended, or otherwise limited from involvement in any type of business, securities or banking activities.

No Director, officer, significant employee, or consultant has been convicted of violating a federal or state securities or commodities law.

We are not a party to any pending legal proceedings.

No director, officer, significant employee or consultant has had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

ITEM 3.LEGAL PROCEEDINGS

None.

ITEM 4.
ITEM 4.MINE SAFETY DISCLOSURES

None.

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None.



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PART II


ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND MARKET INFORMATION FOR COMMON STOCK

Market information

We have been approved for listing on the OTCBB under the symbol "BLPG."

Price Range of Common Stock

On May 6, 2014, we effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held.  Additionally, the number of authorized shares increased to 1,400,000,000 shares of $0.001 par value common stock.  All share and per share information has been retroactively adjusted to reflect the stock split.

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND MARKET INFORMATION FOR COMMON STOCK

The high and low closing prices of our common stock for the periods indicated are set forth below. These closing prices do not reflect retail mark-up, markdown or commissions.


Year ended December 31, 2014High Low
    
First QuarterN/A N/A
Second Quarter$           0.80 $           0.70
Third Quarter$           0.81 $           0.31
Fourth Quarter$           0.50 $           0.19
    
The shares quoted are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the Exchange Act”), commonly referred to as the “penny stock” rule. Section 15(g) sets forth certain requirements

Prices for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny2021 reflect a 100-for-1 reverse stock as that used in Rule 3a51-1 of the Exchange Act.


The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant’s net tangible assets; or exempted from the definition by the Commission.  Tradingsplit which became effective in the shares is subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse.

For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, the monthly statements must be sent disclosing recent price information for the penny stocks held in the account and information on the limitedpublic market in penny stocks.  Consequently, these rules may restrict the ability of broker dealers to trade and/or maintain a market in the company’s common stock and may affect the ability of shareholders to sell their shares.

Holders

July 2021.

Year ended December 31, 2022 High  Low 
       
First Quarter $0.50  $0.31 
Second Quarter $0.41  $0.12 
Third Quarter $0.45  $0.17 
Fourth Quarter $0.25  $0.15 

Year ended December 31, 2021 High  Low 
       
First Quarter $2.30  $0.13 
Second Quarter $2.15  $0.76 
Third Quarter $1.98  $0.54 
Fourth Quarter $2.95  $0.78 

As of the date of this filing,March 31, 2023 we had 123,994,0168,250,144 outstanding shares of $0.001 par value common stock issued and outstanding held by approximately 236216 shareholders of record. Our transfer agent is:is Pacific Stock Transfer Company, 4045 South Spencer Street, Suite 403, Las Vegas, NV 89119, phone (702) 361-3033.


Dividends

The payment of dividends is subject to the discretion of the Company’s Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We have not paid nor declared any dividends on our common stock since our inception and, by reason of our present financial status and our contemplated financial requirements, do not anticipate paying any dividends in the foreseeable future.

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We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared by our Board of Directors, based upon the Board’s assessment of:

·  Our financial condition;
·  Earnings;
·  Need for funds;
·  Capital requirements;
·  Prior claims of preferred stock to the extent issued and outstanding; and
·  Other factors, including any applicable laws.

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

Securities Authorized for Issuance under Equity Compensation Plans

We have reserved for issuance an aggregate of 15,000,000 shares of common stock under our 2014-2015 Stock Incentive Plan (“the Plan”) that was adopted in November 12, 2014.  The following table provides the following information as of December 31, 2014, for equity compensation plans previously approved by security holders, as well as those not previously approved by security holders:

1.  The number of securities to be issued upon the exercise of outstanding options, warrants and rights;

2.  The weighted-average exercise price of the outstanding options, warrants and rights; and

3.  Other than securities to be issued upon the exercise of the outstanding options, warrants and rights, the number of securities remaining available for future issuance under the plan.

Plan CategoryNumber of Securities to be issued upon exercise of outstanding options, warrants and rightsWeighted average exercise price of outstanding options, warrants and rightsNumber of securities remaining available for future issuance
 (a)(b)(c)
Equity compensation plans approved by security holders---
    
Equity compensation plans not approved by security holders900,000$0.2514,100,000
    
Total900,000$0.2514,100,000

Purposes of the Plan
The purposes of the Plan are (a) to enhance our ability to attract and retain the services of qualified employees, officers and directors, contractors and other service providers upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.
Stock Subject to the 2014-2015 Stock Incentive Plan
Shares that are eligible for grant under the Plan to participants include Incentive Stock Options, Non-Qualified Stock Options and Restricted Stock. “Incentive Options” are any options designated and qualified as an “incentive stock option” as defined in Section 422 of the Internal Revenue Code. “Non-Qualified Options” are any options that are not an Incentive Option. To the extent that any option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a ten percent stockholder or because it exceeds the annual limit, it shall to that extent constitute a Non-Qualified Option. “Restricted Stock” are shares of common stock issued pursuant to any restrictions and conditions as established in the Plan.

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Eligibility
Incentive Options. Only employees of the Company or of an affiliated company (including officers of the Company and members of the Board of Directors if they are employees of the Company or of an affiliated company) are eligible to receive Incentive Options under the Plan.
Non-Qualified Options and Restricted Stock. Employees of the Company or of an affiliated company, officers of the Company and members of the Board of Directors (whether or not employed by the Company or an affiliated company), and service providers are eligible to receive Non-Qualified Options or acquire Restricted Stock under the Plan.

Equity Compensation Plan Information
We maintain the Plan to allow the Company to compensate employees, directors, consultants and certain other individuals providing bona fide services to the Company or to compensate officers, directors and employees for accrual of salary through the award of common stock.
The Plan is intended to encourage directors, officers, employees and consultants to acquire ownership of common stock. The opportunity so provided is intended to foster in participants a strong incentive to put forth maximum effort for its continued success and growth, to aid in retaining individuals who put forth such effort, and to assist in attracting the best available individuals to the Company in the future.

Recent Sales of Unregistered Securities

As of December 31, 2013, we had 106,820,000 shares of common stock issued and outstanding.

On March 1, 2014, in connection with the employment of an officer and director, we issued options to purchase 4,806,900 shares of our common stock at an exercise price of $0.14 per share.  The options vest in three annual installments, with the first portion immediately vested.  The options carry a life of three years.  This transaction involved no general solicitation and was a private transaction between an issuer and an executive officer. Thus, we believe that the issuance of the stock options is exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.

Through March 27, 2014, we sold an aggregate of 13,068,034 shares of its common stock for gross cash proceeds of $1,213,462.  These sales of stock did not involve any public offering, general advertising or solicitation.  At the time of the issuance, the purchasers had fair access to and was in possession of all available material information about our company.  Additionally, the purchasers represented their intent to acquire securities for their own account and not with a view to further distribute the shares.  The shares bear a restrictive transfer legend.  On the basis of these facts, we claim that these issuances of stock qualifies for the exemption from registration contained in Rule 506, promulgated under Regulation D of the Securities Act of 1933, for sales of securities by an issuer to accredited investors, not involving a public offering.

On March 27, 2014, we purchased a vehicle from a non-affiliated entity with 323,078 shares of common stock in lieu of cash.  The value of this transaction was $30,000.  This sale of stock did not involve any public offering, general advertising or solicitation.  At the time of the issuance, the purchaser had fair access to and was in possession of all available material information about our company.  Additionally, the purchaser represented their intent to acquire securities for its own account and not with a view to further distribute the shares.  The shares bear a restrictive transfer legend.  On the basis of these facts, we claim that this issuance of stock qualifies for the exemption from registration contained in Rule 506, promulgated under Regulation D of the Securities Act of 1933, for sales of securities by an issuer to an accredited investor, not involving a public offering.

On April 8, 2014, we issued 1,076,923 shares of common stock for the conversion of a promissory note in the total amount of $100,000.

Also on April 8, 2014, we issued 269,231 shares of common stock for the conversion of a promissory note in the total amount of $25,000.

On June 11, 2014, we were obligated to issue 1,400,000 shares of our common stock to a non-affiliated entity pursuant to an investment banking agreement, with a fair market value of $938,000 on the date of the agreement.  Certificates representing the shares were never issued and were considered owed as a common stock payable.  On December 11, 2014, we cancelled our investment banking agreement and issued 280,000 shares of our common stock as a settlement amount and thereby rescinded $749,280 of the common stock payable and associated expenditure for the services.


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On September 15, 2014, the Company sold 1,562,500 shares of its common stock for $500,000. The Company received a total of $150,000 in payment of the shares and recorded subscriptions receivable for the remaining balance of $350,000.  As of October 17, 2014, the purchaser rescinded the remaining portion of the subscription payable and a total of 468,750 shares were issued to the subscriber.

On October 22, 2014, we issued 1,250,000 shares of our common stock to a non-affiliated entity pursuant to an investment banking agreement, with a fair market value of $475,000 as of the date of the agreement.

On December 24, 2014, we issued 38,000 shares of our common stock to 68 employees, paid as part of our Employee Stock Incentive Program.

Issuer Purchases of Equity Securities

The Company did not repurchase any of its equity securities during the year ended December 31, 2014.

ITEM 6. SELECTED FINANCIAL DATA

ITEM 6.SELECTED FINANCIAL DATA

Not applicable.


ITEM 7. MANAGEMENT’S DISCUSSION AND PLAN OF OPERATIONS

Forward-Looking Statements

The

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Certain statements contained in all partsset forth below under this caption constitute forward-looking statements. See “Forward-Looking Statements” preceding Item 1 of this document that are not historical facts are, or may be deemed to be, "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.  Such forward-looking statements include, but are not limited to, thoseAnnual Report on Form 10-K for additional factors relating to such statements.

You should read the following: the Company's ability to secure necessary financing; expected growth; future operating expenses; future margins; fluctuationsfollowing discussion and analysis of financial condition and results of operations in interest rates; ability to continue to grow and  implement growth, and regarding future growth, cash needs, operations, business plans and financial results and any other statements that are not historical facts.


When used in this document, the words "anticipate," "estimate," "expect," "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements.  Our results may differ significantly from the results discussed in the forward-looking statements.  Such statements involve risks and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to the Company’s dependence on its ability to attract and retain skilled managers and other personnel; intense competition; the uncertainty of the Company's ability to manage and continue its growth and implement its business strategy; its vulnerability to general economic conditions; accuracy of accounting and other estimates; the Company's future financial and operating results, cash needs and demand for services; and the Company's ability to maintain and comply with permits and licenses; as well as other risk factors described in this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

Background and Recent Developments

We were originally incorporated in Nevada on September 11, 2006, under the name The Engraving Masters, Inc.  On March 14, 2014, we acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014conjunction with the sole purpose to be a wholly-owned subsidiary of the Company.

On May 2, 2014 our directors, pursuant to Nevada revised Statute 92A.280, amended our Articles of Incorporation to change our name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc.  The amendment was filed with the Nevada Secretary of State on May 2, 2014.

On May 6, 2014 our directors approved 14-for-1 forward stock split of our issued and outstanding common stock.  Additionally, the authorized number capital of the Company concurrently increased to 1,400,000,000 shares of $0.001 par value common stock. All references to share and per share amounts in the condensed consolidated financial statements and accompanyingrelated notes thereto have been retroactively restated to reflect the forward stock split.

Management’s Discussion and Analysis

Due to the recent addition of new business operations and service lines, comparisons of operating results between the comparable periods ended December 31, 2014 and 2013 may not be materially reflective of our continuing and future operations.  Prior to March 14, 2014, the date we acquired Blue Line Colorado, our results of operations were immaterial.  As such, no comparison data will be presentedappearing elsewhere in this management’s discussion regarding the year ended December 31, 2013.

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Revenue and costsReport.

Results of revenue


We only recently began to generate sales from our wholly-owned Colorado subsidiary, Blue Line Colorado, a provider of protection, compliance and financial services to the lawful cannabis industry.  We do not grow, test or dispense cannabis products.  We provide banking compliance, asset logistics, armed and armored escorts, security training and license compliance verification.  In general, we primarily target businesses involved in the growing and dispensing of cannabis for both medical and recreational uses, in jurisdictions were such is legal.

In the normal course of our business, the bulk of our sales are paid and rendered either immediately or on a bi-weekly basis.  These sales are recognized as revenue at the time an invoice in generated and delivered to the client.  During the year ended December 31, 2014, we generated net revenue of $1,032,168 from our operations, all of which was attributable to our Blue Line Colorado subsidiary.  Revenue increased steadily quarter-over-quarter, which management attributes to exceptional customer service from our security and transport teams, word-of-mouth and increased brand awareness.

During the period, costs of sales totaled $778,777.  Costs of sales consist primarily of labor and fuel costs directly attributable to the provision of our services to clients.  As we continue to grow our core business, we expect labor and fuel costs to increase, at a minimum, proportionate to any increase we experience in revenues.  Over our relatively short history, cost of labor has fluctuated primarily due to turnover, levels of overtime and our ability to retain sufficient staffing levels to meet client demand.  Our ability to service current clients, as well as grow our core business, is dependent upon our ability to manage labor levels and costs, of which there can be no guarantee.

After accounting for costs of sales, we realized a gross profit of $253,391, during the year ended December 31, 2014.  Our profit margins have fluctuated significantly from quarter-to-quarter, and it is difficult for management to forecast with any certainty.

We are actively engaged in expanding our presence into new jurisdictions and growing our service portfolio.  Our financial compliance packages are structured to take advantage of our core competencies, while vertically integrating higher gross margin service lines.  Management expects realize increased revenues in fiscal year 2015 to due to the following factors:

1.  Expansion into new geographic regions;

2.  The addition of our new accounting and bookkeeping division - Blue Line Advisory Services; and

3.  Our cooperation and cross-promotion agreement with DigiPath, Inc.

However, there can be no assurance that we will continue to experience similar, if any, revenue growth in future periods, sustain current revenue levels or that we any of our growth and expansion efforts will come to fruition.

Costs and Operating Expenses

For the year ended December 31, 2014, the primary components of our operating expenses were, as follows:

Advertising.  During the year ended December 31, 2014, we recognized $189,536 in advertising expense, respectively, related primarily to public- and media-relations efforts.  Of the $189,536 we spent on advertising expense in the year ended December 31, 2014, $120,000 was paid with shares of our common stock in lieu of cash.  We are a small company and expect to continue to invest in advertising and marketing to increase brand awareness.

Depreciation.  Depreciation expense related to our furniture, equipment and armored vehicles were $27,172 during the year ended December 31, 2014.  Depreciation is directly correlated to capital expenditures.  As we seek to expand our geographic reach and service portfolio, we expect capital expenditures to increase, and, accordingly, expect depreciation expense to increase.

Executive Compensation.  Executive compensation paid to our corporate officers and directors was $104,892 during the year ended December 31, 2014.

General and Administrative. In the course of our operations, we incur general and administrative expenses, which are essentially the cost of doing business, and encompass, without limitation, the following: business and operating licenses; taxes; general office expenses and supplies, such as postage, supplies and printing; repairs and maintenance; bank charges; occupancy costs; and other miscellaneous expenditures not otherwise classified.  During the year ended December 31, 2014, general and administrative expenses were $657,633. We expect general and administrative expenses to increaseOperations

Material changes in line with growthitems in our operations.


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Professional Fees. During the year ended December 31, 2014, we incurred $916,766 in professional fees.  Approximately $662,600Statement of professional fees recognized is attributable to two investment banking agreements we entered into, for which the investment banks required us to issue them an aggregate of 1,530,000 shares of our common stock.  We also expect amounts paid for legal representation and consulting expenses to increase substantially as we expand our operations into additional jurisdictions.

Salaries and Wages. The bulk of our salaries and wages expense is attributable to administrative, management and other salaried personnel not directly involved in the servicing of our clientele.  Salaries and wages paid during the year ended December 31, 2014 was $502,032.  Our ability to grow is tied directly to our ability to attract, hire and retain quality employees.  We expect our staffing levels to fluctuate substantially from month-to-month; therefore, it is difficult to forecast changes in salaries and wages from period to period.

Stock-based Compensation.  During the year ended December 31, 2014, we issued incentive stock-based compensation to employees and contractors in the form of stock options.   Total stock-based compensation was $480,675, related solely to the expensing of stock options granted to executives and key employees during the year.

Other Income and Expenses

During the year ended December 31, 2014, we originated short-term, fully-collateralized loans to existing, recurring clients.  We realized interest income of $10,683 during the year ended December 31, 2014, attributable to our lending activities.  As of December 31, 2014, the remaining aggregate principal balance of notes receivable was $46,451.

In December 2014, our wholly-owned subsidiary, Blue Line Capital, sold a portion of securities held to maturity, in the amount of $200,000.  As a result of this sale, we recognized a $199,999 gain on the sale of securities.  We do not expect to sell additional securities held to maturity.

Net Loss

Our net loss for year ended December 31, 2014 was $2,425,941. We expect to continue to incur net losses for the foreseeable future and cannot assure you when we will be able to mitigate our losses or begin to achieve profitability. Our management believes that expansion of our operations are likely to continue to adversely affect our operating results and will lead to net losses for at least the next 12 months of operations.

Liquidity and Capital Resources

The following table provides summary financial information as of andOperations for the year ended December 31, 2014:2022 as compared to the same period last year, are discussed below:

Increase (I) or
ItemDecrease (D)Reason
RevenueDDecrease in services
Gross ProfitDDecrease in services and increase in expenses
General and Administrative ExpensesIExpansion of services
Interest expenseDDecrease in borrowings
Loss on derivate securitiesIReduced debt and lower stock price

9

  December 31, 2014 
Cash and equivalents $211,922 
Accounts and accrued receivables, net  116,891 
Notes receivable  46,451 
Prepaid assets  2,500 
Fixed assets, net  1,287,991 
     
Total assets $1,665,755 
     
Accounts payable and accrued liabilities  295,863 
Notes payable, aggregate  290,271 
Long-term debt, including current portion  695,515 
     
Total liabilities $1,281,649 

  Year ended 
  December 31, 2014 
Net cash used by operations $(443,425)
Net cash used by investing activities  (1,131,614)
Net cash provided by financing activities  1,784,117 
     
Net increase in cash  209,078 
Cash at the beginning of the period  2,844 
Cash as the end of the period $211,922 


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Operating Activities.  Net

Capital Resources and Liquidity

Our material sources and <uses> of cash used in operating activities was $443,425 forduring the yearyears ended December 31, 2014, the bulk of which was primarily attributable to expenditures related to our entry into the market for protection, compliance2022 and financial services catering2021 were:

  2022  2021 
  $  $ 
Cash provided by <used in> operations  369,471   903,374 
Purchase of property, plant and equipment  <33,725>   <66,002> 
Loan payments  <717,850>   <419,945> 
Loan proceeds  -   - 

General

See Notes 6 and 7 to the lawful cannabis industry.  Our management expects to continue to experience net cash outflows related to operating activitiesfinancial statements included as part of this report for at least the next fiscal quarter, related primarily to continuing operations, the introduction of new service offerings and expansion into new geographic markets.


Investing Activities.  During the year ended December 31, 2014, cash used in investing activities was $1,131,614.  We purchased $186,610 of furniture, equipment and armored vehicles for use ininformation concerning our operations.  We also provided an aggregate of $155,000 in short-term secured notes receivable, upon whichpayable.

Other than as disclosed above, we received $108,549 in repayments.  The sale of membership units held for investment purposes anddo not earmarked for resale generated cash in the amount of $200,000.  Additionally, during the year ended December 31, 2014 we purchased a commercial building for a total purchase price of $750,000, for which we paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  Through December 31, 2014, approximately $348,553 in capital improvements were made to the property.  The expansion into additional geographic territories is expected to require additional investment in equipment and vehicles, although the cost of such will vary materially and cannot be readily estimated by management.


Financing Activities.  To date, we have financed our operations through the issuance of stock and debt securities.  Net cash provided by financing activities for the year ended December 31, 2014 was $1,784,117.  We obtained financing in the form of loans totaling $166,008, of which $41,008 was repaid in cash and $125,000 was repaid using shares of our common stock in lieu of cash, leaving a balance due as of December 31, 2014 of $0.  Related parties provided $394,596 of financing, of which $106,325 was repaid during the period. In addition to issuing debt securities, we received total cash proceeds of $1,362,992 for sales of our common stock. We expect to use our cash to invest in our core businesses.

Changes in Cash. During the year ended December 31, 2013, we experienced a net increase in cash on hand of $209,078.  As of December 31, 2014, we had $211,922 of cash on hand.

Factors Affecting Future Growth

We are a small company with very little historical data upon which to evaluate our future prospects.  However, we are actively engaged in the expansion of our current revenue streams, as well as exploring entry into new and developing markets.  We are experiencing significant changes to our corporate and operational structures and have been expanding our base of employees.  We continue to expect the number of full- and part-time employees to fluctuate substantially, though we are unable to predict the amount of such fluctuations.

Since 2014, we have worked with banks and financial industry professionals to develop a proprietary means for the banking industry to validate compliance with Federal Mandate.  Our management believes that only a security company with the relationships and experience like Blue Line is able to ensure that clients we validate will remain fully compliant with all of the various Cole Memo, FinCEN, banking, Patriot Act and BSA guidelines.  We are able to vertically integrate the source of funds through the Federally required 12 steps, summarised as from grow, to sale, (to those of approved age or license), to purchaser, to funds received, to where the funds were held, to vault, to third party validation, to tax, to profits, to access to the banking system etc.

Beginning in 2015, we started to provide on-site compliance services to ensure that legal marijuana businesses are operating according to local, state and federal guidelines.  Blue Line investigative personnel, using our proprietary systems, produce compliance assessment reports to banks, based on on-site audits and investigations of the businesses, their operation procedures, and customer and product sales tracking methods. Our management expects these compliance services will provide us with a new revenue stream and, in combination with our traditional security and transport services, offer significant value to our clients and partners.

In March 2015, we formed Blue Line Advisory Services, a wholly-owned subsidiary, with the goal of providing accounting and bookkeeping services to the legal marijuana industry via our network of employees and independent professionals.  During the second quarter of 2015, we plan to establish BLAS offices in Colorado and Nevada.  Our goal is for BLAS to be accretive during the year ended December 31, 2015, although there can be no guarantee of such.

There can be no assurance that our continuing efforts will lead to profitability.


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We expect to require significant capital to continue to expand our operations and to complete the improvements to our office building, which will be a training and high-security vault facility, and the purchase of capital equipment.  Without sufficient cash flow from operations we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and workinganticipate any material capital requirements for the next 12 months.  The saletwelve months ending March 31, 2024.

Other than as disclosed elsewhere in this report, we do not know of additional equity securities will result in dilution to our stockholders.  The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business.  Financing may not be available in amounts or on terms acceptable to us, if at all.  Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.


There are no knownany trends, demands, commitments, events or uncertainties that have hadwill result in, or that are reasonably expectedreasonable likely to have aresult in, our liquidity increasing or decreasing in any material impact on our revenues from continuing operations.  However,way.

Other than as disclosed in this Item 7, we may not adequately encapsulate unforeseen economic or industry specific factors that may be beyond our control.  These external forces may restrict growth and advertising spending by our clients, which could, in turn, adversely affect our operations.


We currently rent an approximately 2,000 square foot office at a rate of approximately $1,400 per month.  This lease is currently on a month-to-month basis and is cancellable at any time with prior written notice by either party.

We currently do not ownknow of any significant plant or equipment that we would seek to sellchanges in the near future.

our expected sources and uses of cash.

We do not have any firm commitments or arrangements from any person to provide us with any equity capital. During the next 12 months, we anticipate that we will incur approximately $1,896,000 of general and administrative expenses in order to execute our current business plan. We also plan to incur sales, marketing, research and development expenses during the next 12 months. We may need to obtain additional capital.


financing to continue our operations. We may not be able to obtain additional funding on terms that are favorable to us or at all. We may not be able to obtain sufficient funding to continue our operations, or if we do receive funding, to generate adequate revenues in the future or to operate profitably in the future. These conditions raise substantial doubt about our ability to continue as a going concern.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements.

Critical Accounting Policies and Estimates


The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and related notes. Our significant accounting policies are described in Note 2 to our consolidated financial statements included in our Annual Report on Form 10- K for the year ended December 31, 2014.  Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.

Management considers the following policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.


Principles of consolidation.  For the years ended December 31, 2014 and 2013, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”).  All significant intercompany balances and transactions have been eliminated.   BLPG and its subsidiaries are collectively referred herein to as the “Company.”

Accounts receivable. Accounts receivable are stated at the amount we expect to collect from outstanding balances and do not bear interest. We provide for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.


Notes receivable.  Notes receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans.  Interest income on notes receivable is recognized using the interest method.  Interest income on impaired loans is recognized as cash is collected or on a cost-recovery basis.


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Property and equipment.  Property and equipment is recorded at cost and capitalized from the initial date of service.  Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred.  When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period.  Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes.  We use other depreciation methods (generally accelerated) for tax purposes where appropriate.  The estimated useful lives for significant property and equipment categories are as follows:

Automotive Vehicles5 years
Furniture and Equipment7 years
Buildings and Improvements15 years10

The Company reviews

Revenue recognition. As all of our Revenue is generated from services offerings, Revenue recognition is the carrying valuesame for each of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition.  In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets.  The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors.  Based on this assessment there was no impairment as December 31, 2014 and 2013.  Depreciation expense for the years ended December 31, 2014 and 2013 totaled $27,172 and $0, respectively.


Revenue recognition.  our revenue streams. We recognize revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of its fees is probable.

Sales related to long-term contracts for services (such as programming, website development and maintenance) extending over several years are accounted for under the percentage-of-completion method of accounting.  Sales and earnings under these contracts are recorded based on the ratio of actual costs incurred to total estimated costs expected to be incurred related to the contract under the cost-to-cost method based budgeted milestones or tasks as designated per each contract. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable.

For all other sales of product or services we recognize revenues based on the terms of the customer agreement.  The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the product or service being sold and the sales price.  If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized on the date of the customer agreement, invoice or purchase order.

Allowance for uncollectible accounts.  reasonably assured.

Stock-based compensation. The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. The allowance for doubtful customer and vendor receivables was $18,864 and $0 at December 31, 2014 and 2013, respectively.


Stock-based compensation.  We recordrecords stock based compensation in accordance with the guidance in ASC Topic 505 and 718, which requires usthe Company to recognize expenses related to the fair value of our employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. We recognize the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
We account

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.


Contingencies.  The Company

Significant Accounting Policies

See Note 2 to the financial statements included as part of this report for a description of our significant accounting policies.

Recent Accounting Pronouncements

From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not currentlyexpected to have a partymaterial impact on our consolidated financial statements upon adoption.

To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included as part of this Report.

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are contained later in this report beginning on page F-1.

ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None

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ITEM 9ACONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. We evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. As a result of this evaluation, management concluded that our disclosure controls and procedures were not effective as of December 31, 2022 for the same reasons that our internal control over financial reporting was not effective:

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

1.Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
2.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
3.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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any pendingevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or threatened legal proceedings.  The company has one potential contingent liability.  A shareholderthat the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and employee asserts he has loanedpresentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

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As of December 31, 2022, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013) and SEC guidance on conducting such assessments. Based on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not effective due to the following material weakness identified:

●Lack of controls over related party transactions. The Company did not establish a formal written policy for the approval, identification, and authorization of related party transactions.
●Lack of appropriate segregation of duties,

●Lack of control procedures that include multiple levels of supervision and review, and
●There is an overreliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material, nonstandard transactions.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company cashto provide only the management’s report in this annual report.

Implemented or Planned Remedial Actions in response to the Material Weaknesses

We will continue to strive to correct the above noted weakness in internal control once we have adequate funds to do so. We believe appointing a director who qualifies as a financial expert will improve the overall performance of our control over our financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company’s management, including the chief executive officer and paid for various expenses on behalfprincipal financial officer, do not expect that its disclosure controls or internal controls will prevent all errors or all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the Companycontrol system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

ITEM 9B.OTHER INFORMATION

None.

13

PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our directors are elected by the stockholders to a term of one year and serve until their successors are elected and qualified. The officers are appointed by our Board of Directors to a term of one year and serve until his/her successor is duly elected and qualified, or until he/she is removed from office.

The names and ages of our directors and executive officers and their positions are as follows:

NameAgePosition
Daniel Allen71Chief Executive, Financial and Accounting Officer and a Director
Doyle Knudson71Director
Andrew Berman63Director

Daniel Allen was elected an officer and director July 28, 2015. Mr. Allen resigned as an Officer on March 13, 2020. Mr. Allen provided us with consulting services in the aggregate amountareas of $447,896.  Thebanking and financing for four months in 2014. Between April 2013 and March 2014 Mr. Allen served as the Regional Vice President of Sunflower Bank in Longmont, Colorado. Between June 2001 and April 2013, Mr. Allen was the Chairman and Chief Executive Officer of Mile High Banks in Longmont, Colorado. Mr. Allen holds a Bachelor of Science in Management and Finance from the University of Utah. On March 13th, 2020, Daniel Allen resigned from his position as CEO. Dan remains an active member of our Board.

Doyle Knudson was elected as one of our directors on July 28, 2015. Between 1975 and 2002 Mr. Knudson held various positions with C.H. Robinson Company, is disputing its needa large multimodal transportation service provider. In 1975 he started in the corporate marketing center responsible for information services for carrier capacity, carrier insurance verification and research at the ICC in Washington, DC for common carrier authority. In 1976 Mr. Knudson was transferred to pay this claimRoss Truck, a division of C.H. Robinson – customer support for publication logistics for Target stores and RR Donnelly. In 1978 Mr. Knudson was transferred to Lake Wales, FL as a Transportation Salesman responsible for customer development with agri business customers. In 1982 Mr. Knudson was promoted and transferred as Transportation Manager when he opened a new branch office in Houston, TX. In 1987 Mr. Knudson was promoted to General Manager at a new branch office in El Paso, TX, developing and providing logistics services for Coca Cola; Phelps, Dodge, Dell Computers and Phillips Electronics.

Andrew Berman was elected as one of our directors on February 28, 2023. Berman has a B.A. from the University of Michigan and a J.D. from the University of Miami School of Law.  His work experience includes practicing law, Business Affairs at America Online, C-level roles in technology businesses, private investing, and extensive cannabis experience in 5 states since 2015.  This cannabis work includes Maui Wellness Group (HI), Ohio Grown Therapies (OH), CEO of Harborside Inc. (CA), which he took public on the grounds thatCSE in 2019, President of Greenfield Cannabis Co. (CA), a numbercultivator and manufacturer of itemspremier cannabis products located in Monterey County, and PRICH Biotech, Puerto Rico’s largest vertical operator.  Berman also has broad government relations experience, having been twice elected to the claim were unauthorizedCity Council for the City of Mill Valley, California, including two terms as Mayor. 

Audit Committee, Independent Directors and minimal, if any, supporting documentation was provided to substantiate the validity of the claim.  While the Company can reasonably estimate the liability, it is improbable that the Company will pay, due the Claimant’s (a) failure mutually agree upon the alleged amounts owed and (b) failure to validate the claims.


22


Off-Balance Sheet Arrangements

Financial Expert

We do not have any off-balance sheet arrangements.an Audit Committee; our board of directors currently acts as our Audit Committee. Doyle Knudson is an independent director, as that term is defined in the rules of the NYSE American. None of our directors is considered a “Financial Expert”.

Code of Ethics

We have not adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions since one person, Daniel Allen, serves in all the above capacities.

14

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 11.EXECUTIVE COMPENSATION

Overview of Compensation Program

Our Board of Directors acts as our Compensation Committee and has responsibility for establishing, implementing and continually monitoring adherence to our compensation philosophy. The Board of Directors ensures that the total compensation paid to our executives is fair, reasonable and competitive.

Compensation Philosophy and Objectives

The Board of Directors believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company and that aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. As a result of the size of the Company and only having two executive officers, the Board evaluates both performance and compensation on an informal basis. Upon hiring additional executives, the Board intends to evaluate the necessity of establishing a Compensation Committee to evaluate both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.

Role of Executive Officers in Compensation Decisions

Our Directors make all compensation decisions for, and approve recommendations regarding, equity awards to our Directors and employees.

Summary Compensation Table

The following documents (pages F-1table sets forth for the fiscal years ended December 31, 2022 and 2021 the compensation paid by the Company to F-12) form partthose years to its officers:

Summary Compensation Table (in $)
Name and
Principal Position		 Year  Salary (1)  Stock
Awards (2)		  Option
Awards (3)		  All Other
Compensation (4)		  Total 
Daniel Allen  2022  $80,769  $-  $94,711       -  $175,480 
Chief Executive Officer(5)                        
                             
Doyle Knudson  2022  $-  $-  $142,066   -  $142,066 
Board Member                        
                         
Evan DeVoe  2022  $172,083  $-  $-   -  $172,083 
Chief Executive Officer(5)  2021  $188,462  $-  $-   -  $188,462 

(1)The dollar value of base salary (cash and non-cash) earned during the year.
(2)The fair value of the shares of common stock issued during the periods covered by the table calculated on the grant date in accordance with ASC 718-10-30-3.
(3)The fair value of all stock options granted during the periods covered by the table calculated on the grant date in accordance with ACS 718-10-30-3.
(4)All other compensation received that we could not properly report in any other column of the table including the dollar value of any insurance premiums we paid for life insurance for the benefit of the named executive officer.
(5)Evan DeVoe resigned as our Chief Financial and Accounting Officer on July 29, 2022. On August 4, 2022 Daniel Allen became our new Chief Executive, Financial and Accounting Officer.

15

Equity Compensation Plan

Up to 15,000,000 shares of common stock are reserved for issuance under our 2014-2015 Stock Incentive Plan (“the Plan”).

The purposes of the report onPlan are to enhance our ability to attract and retain the Financial Statements


services of qualified employees, officers and directors, contractors and other service providers upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends, and to provide additional incentives to such persons or entities to devote their utmost effort and skill to our advancement and betterment by providing them an opportunity to participate in the ownership of our common stock and thereby have an interest in our success.

Shares that are eligible for grant under the Plan include Incentive Stock Options, Non-Qualified Stock Options and Restricted Stock. “Incentive Options” are any options designated and qualified as an “incentive stock option” as defined in Section 422 of the Internal Revenue Code. “Non-Qualified Options” are any options that are not an Incentive Option. To the extent that any option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, it will constitute a Non-Qualified Option. “Restricted Stock” are shares of common stock issued pursuant to any restrictions and conditions as established by the Plan.

Only our employees (including our officers and Directors if they are employees) are eligible to receive Incentive Options under the Plan.

Our employees, officers and Directors (whether or not employed by us), and service providers are eligible to receive Non-Qualified Options or acquire Restricted Stock under the Plan.

The following tables list the options granted, cancelled and exercised during the fiscal years ended December 31, 2022 and 2021 to our officers and directors pursuant to the Plan:

Options Granted

Name Grant Date Options Granted  Exercise Price  Expiration Date
Dan Allen 10/1/22  1,000,000  $0.21  9/30/2027
Doyle Knudson 10/1/22  1,500,000  $0.21  9/30/2027

Options Cancelled

EmployeeTotal OptionsWeighted Average
Exercise Price		Weighted Average
Remaining Contractual Term
(Years)
None---

Options Exercised

NameDate of ExerciseShares Acquired on ExerciseValue Realized
None---

16

The following shows certain information as of December 31, 2022 concerning the stock options and stock bonuses granted pursuant to the Plan. Each option represents the right to purchase one share of common stock.

Plan Name Number of Securities to be Issued Upon Exercise of Outstanding Options (a)  Weighted- Average Exercise Price of Outstanding Options  Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans, Excluding Securities Reflected in Column (a) 
               
Stock Incentive Plan  7,700,000  $0.21   4,287,000 

Directors’ Compensation

Our directors are not entitled to receive compensation for services rendered to us, or for each meeting attended except for reimbursement of out-of-pocket expenses. We have no formal or informal arrangements or agreements to compensate our director for services she provides as a director of our company.

ITEM 12.PAGESECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the beneficial ownership of the Company’s common stock as of March 31, 2023 by (i) each person whom the Company knows beneficially owns more than 5% of the outstanding shares of the Company’s common stock; (ii) each of the Company’s officers and directors; and (iii) all the officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment powers over his shares of common stock.

Name and Address of OwnerShares OwnedPercent of Class 
Daniel Allen8,366*
Doyle Knudson71,172*
Andrew Berman-*
All Directors and Officers as a group (3 persons)79,538*

*less than 1%.

Note: As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

See Note 7 to the Financial Statements included as a part of this report for information regarding notes payable to related parties.

17

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees billed to us by our independent auditors for the years ended 2022 and 2021 for (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.

SERVICES 2022  2021 
       
Audit- M&K CPA $56,850  $53,450 
Tax fees  -   - 
All other fees  -   - 

Audit fees and audit related fees represent amounts billed for professional services rendered for the audit of our annual financial statements and the review of our interim financial statements. Before our independent accountants were engaged by to render these services, their engagement was approved by our Directors.

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit NumberName and/or Identification of Exhibit
3Articles of Incorporation & By-Laws
(a) Articles of Incorporation (1)
(b) By-Laws (1)
31Rule 13a-14(a)/15d-14(a) Certifications
32Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
101Interactive Data Files (2)
(INS) Inline XBRL Instance Document
(SCH) Inline XBRL Taxonomy Extension Schema Document
(CAL) Inline XBRL Taxonomy Extension Calculation Linkbase Document
(DEF) Inline XBRL Taxonomy Extension Definition Linkbase Document
(LAB) Inline XBRL Taxonomy Extension Label Linkbase Document
(PRE) Inline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1)Incorporated by reference to the Registration Statement on Form 10-SB, previously filed with the SEC on November 28, 2007.
(2)XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

ITEM 16.FORM 10-K SUMMARY

None.

18

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, thereto duly authorized.

BLUE LINE PROTECTION GROUP, INC.
March 31, 2023By:/s/ Daniel Allen
Daniel Allen, Principal Executive Officer

In accordance with the requirements of the Securities Act of 1933, this Annual Report was signed by the following persons in the capacities and on the dates stated:

SignatureTitleDate
Principal Executive, Financial andMarch 31, 2023
Daniel AllenAccounting Officer and a Director
DirectorMarch 31, 2023
Doyle Knudson
DirectorMarch 31, 2023
Andrew Berman

19

Blue Line Protection Group, Inc.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm Seale and Beers, CPAs (PCAOB ID : 2738)F-1F-2
Consolidated Balance Sheets, as of December 31, 2022 and 2021F-2F-4
Consolidated Statements of Operations, Fiscal Years Ended December  31, 2022 and 2021F-3F-5
Consolidated Statement of Stockholders’ (Deficit)Deficit, Fiscal Years Ended December  31, 2022 and 2021F-4F-6
Consolidated Statements of Cash Flows, Fiscal Years Ended December  31, 2022 and 2021F-5F-7
Notes to Consolidated Financial StatementsF-6F-8

F-1



23
SEALE AND BEERS, CPAs
PCAOB Registered Auditors – www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and

Stockholders of

Blue Line ProductionProtection Group, Inc.


Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Blue Line ProductionProtection Group, Inc.asInc. (the Company) as of December 31, 2014, and 2013,2022, and the related consolidated statements of income,operations, stockholders’ equity (deficit),deficit, and cash flows for each of the years in the two-year period ended December 31, 2014. Blue Line Production Group, Inc.’s management is responsible for these2022, and the related notes (collectively referred to as the consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States)statements). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Blue Line Production Group, Inc.the Company as of December 31, 2014, and 2013,2022, and the related statementsresults of income, stockholders’ equity (deficit),its operations and its cash flows for each of the years in the two-year period ended December 31, 2014.

2022, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred recurringsuffered net losses and recurring negative cash flow from operating activities, andoperations for the year ended December 31, 2022, has an accumulated deficit and has a net capital deficiency as of December 31, 2022, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning theseregarding those matters are also describeddiscussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Derivative Liabilities

As discussed in Note 8, the Company borrows funds through the use of convertible notes payable that contain a conversion price that may be fixed or fluctuates with the stock price.

Auditing management’s estimates of the fair value of the derivative liability involves significant judgments and estimates given the embedded conversion features of the notes.

To evaluate the appropriateness of the fluctuation of the conversion price, the embedded conversion feature requires bifurcation from the host contract and is recorded as a liability subject to market adjustments as of each reporting period. Significant judgment is exercised by the Company in determining derivative liability values for these convertible note agreements, including the use of a specialist engaged by management.

We evaluated management’s conclusions regarding their derivative liability, reviewed support for the significant inputs used in the valuation model, and assessed the model for reasonableness. In addition, we evaluated the Company’s disclosure in relation to this matter included in Note 8 to the consolidated financial statements.

Capital Stock and Other Equity Accounts

As discussed in Note 9, the Company issues stock options as stock-based compensation to employees.

Auditing management’s calculation of the fair value of the options issued can be a significant judgment given the fact that the Company uses management estimates on various inputs to the calculations.

To test the valuation of the options, we evaluated management’s significant judgments and estimates. Significant judgements and estimates related to the valuation of the options include fair valuing of the options which involve significant estimates of volatility, grant terms, risk-free rates and the use of historical trading data.

We evaluated management’s conclusions regarding their fair values and reviewed support for the significant inputs used in the valuation model, as well as assessing the model for reasonableness. In addition, we evaluated the Company’s disclosure in relation to this matter included in Note 9 to the consolidated financial statements

M&K CPAS, PLLC
We have served as the Company’s auditor since 2020. Houston, TX
March 31, 2023

F-3

/s/ Seale and Beers, CPAs


Seale and Beers, CPAs
Las Vegas, Nevada
April 10, 2015


F-1

Blue Line Protection Group, Inc.
Consolidated Balance Sheets
 December 31, 
 2014 2013 
Assets     
      
Current assets:     
   Cash and equivalents$211,922 $2,844
   Accounts receivable, net 62,101  -
   Accrued receivables 54,790  -
   Notes receivable 46,451  -
   Prepaid expenses and deposits 2,500  -
      Total current assets 377,764  2,844
      
Fixed assets     
   Total fixed assets, net 189,438  -
   Property, plant and equipment 750,000  -
   Building improvements 348,553  -
      Total fixed assets 1,287,991  -
      
Total assets$1,665,755 $2,844
      
Liabilities and Stockholders’ (Deficit)     
      
Current liabilities:     
   Accounts payable$143,019 $2,300
   Accrued liabilities 152,844  -
   Notes payable 2,000  2,000
   Note payable – related parties 288,271  -
   Current portion of long-term debt 3,735  -
      Total current liabilities 589,869  4,300
      
Long-term liabilities     
   Long-term debt 691,780  -
      Total long-term liabilities 691,780  -
      
Total liabilities 1,281,649  -
      
Stockholders’ (deficit)     
   Preferred stock, $0.001 par value, 100,000,000 shares     
      authorized, no shares issued and outstanding -  -
   Common stock, $0.001 par value, 1,400,000,000 shares     
      authorized, 122,845,282 and 106,820,000 shares     
      issued and outstanding as of 12/31/14 and 12/31/13 122,845  106,820
   Common stock, owed but not issued, 748,750 shares and     
      0 shares as of 12/31/14 and 12/31/13 749  -
   Additional paid-in capital 2,788,934  (5,795)
  Accumulated deficit (2,528,422)  (102,481)
      Total stockholders’ (deficit) 384,106  (1,456)
      
Total liabilities and stockholders’ (deficit)$1,665,755 $2,844

BLUE LINE PROTECTION GROUP, INC.

CONSOLIDATED BALANCE SHEETS

  December 31,  December 31, 
  2022  2021 
       
Assets        
Current assets:        
Cash and equivalents $280,073  $662,177 
Accounts receivable  373,175   328,042 
Prepaid expenses and deposits  31,553   34,378 
Total current assets  684,801   1,024,597 
         
Long-term assets:        
Right to use assets  408,616   529,711 
Machinery and equipment, net et, net of accumulated depreciation of $704,433 and $586,130, respectively  254,227   284,776 
Fixed assets of discontinued operations  2,782   2,782 
Total long-term assets  665,625   817,269 
         
Security Deposit  31,920   28,958 
         
Total assets  1,382,346   1,870,824 
         
Liabilities and Stockholders’ Deficit        
Current liabilities:        
         
Accounts payable and accrued liabilities $555,445  $738,221 
Financed lease liabilities  31,719   29,301 
Notes payable - related parties  152,771   541,272 
Convertible notes payable - related parties, net of unamortized discount  604,256   575,000 
Current portion of operating lease obligation  112,250   125,266 
Derivative liabilities  451,119   712,784 
Total current liabilities  1,907,560   2,721,844 
         
Long-term liabilities:        
Financed lease liabilities - long term  37,568   16,402 
Notes payable - related parties  1,000,500   1,313,817 
Operating lease liability-long term  328,116   440,366 
Total long-term liabilities  1,366,184   1,770,585 
         
Total liabilities  3,273,744   4,492,429 
         
Stockholders’ deficit:        
Preferred Stock, $0.001 par value, 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively  20,000   20,000 
Common Stock, $0.001 par value, 14,000,000 shares authorized, 8,250,144 and 8,485,144 issued and outstanding as of December 31, 2022 and December 31, 2021, respectively  8,251   8,486 
Common Stock, owed but not issued, 129 shares and 129 shares as of December 31, 2022 and December 31, 2021, respectively  13   13 
Additional paid-in capital  10,046,096   9,021,126 
Accumulated deficit  (11,965,758)  (11,671,230)
Total stockholders’ deficit  (1,891,398)  (2,621,605)
         
Total liabilities and stockholders’ deficit $1,382,346  $1,870,824 

The accompanying notes are an integral part of these consolidated financial statements.

F-4


F-2

Blue Line Protection Group, Inc.
Consolidated Statements of Operations



  For the years ended 
  December 31, 
  2014  2013 
       
Revenue, net $1,032,168  $- 
Cost of revenue  (778,777)  - 
         
Gross profit  253,391   - 
         
Expenses:        
   Advertising  189,536   - 
   Depreciation  27,172   - 
   Executive compensation  104,892   - 
   General and administrative expenses  657,633   15,288 
   Professional fees  916,766   - 
   Salaries and wages  502,032   - 
   Stock-based compensation  480,675   - 
      Total expenses  2,878,706   15,288 
         
Operating loss  (2,625,315)  (15,288)
         
Other income:        
   Interest expense  (11,308)  - 
   Interest income  10,683   - 
   Gain on sale of securities  199,999   - 
      Total other income  199,374   - 
         
Loss before provision for income taxes  (2,425,941)  (15,288)
         
Provision for income taxes  -   - 
         
Net loss $(2,425,941) $(15,288)
         
Weighted average number of        
   common shares outstanding - basic  116,942,037   106,820,000 
Weighted average number of
   common shares outstanding – fully diluted
  122,184,808   106,820,000 
         
Net loss per share - basic $(0.02) $(0.00)
Net loss per share – fully diluted $(0.02) $(0.00)

BLUE LINE PROTECTION GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

  2022  2021 
  For the years ended 
  December 31, 
  2022  2021 
       
Revenue $3,876,227  $4,659,393 
Cost of revenue  (1,278,239)  (1,284,876)
Gross profit  2,597,988   3,374,517 
         
Operating expenses:        
General and administrative expenses  2,517,149   2,118,601 
Total expenses  2,517,149   2,118,601 
         
Operating Income  80,839   1,255,916 
         
Other income (expenses):       
Gain on settlement of accounts payable  -   533 
Interest expense  (194,643)  (583,149)
Income / (Loss) on derivative  (180,724)  1,077,289 
Total other income / (expenses)  (375,367)  494,673 
         
Net income / (loss) $(294,528) $1,750,589 
         
Net income per common share: Basic and Diluted $(0.04) $0.21 
Net Income / (loss) per common share: Diluted $(0.04) $0.14 
         
Weighted average number of        
common shares outstanding- Basic  8,398,062   8,457,364 
Weighted average number of common shares outstanding- Basic  8,398,062   8,457,364 
common shares outstanding- Diluted  8,398,062   12,314,864 
Weighted average number of common shares outstanding- Diluted  8,398,062   12,314,864 

The accompanying notes are an integral part of these consolidated financial statements.

F-5



F-3

Blue Line Protection Group, Inc.
Consolidated Statements of Stockholders’ (Deficit)


              Additional  Subscriptions     Total 
  Preferred Stock  Common Stock  Paid-in  Payable/  Accumulated  Stockholders’ 
  Shares  Amount  Shares  Amount  Capital  (Receivable)  (Deficit)  Equity 
                         
Beginning Balance                        
  January 1, 2013  -  $-   106,820,000  $106,820  $(21,045) $-  $(87,193) $(1,418)
                                 
Donated capital  -   -   -   -   15,250   -   -   15,250 
                                 
Net loss                                
  For the year ended                                
  December 31, 2013  -   -   -   -   -   -   (15,288)  (15,288)
                                 
Balance, December 31, 2013  -   -   106,820,000   106,820   (5,795)  -   (102,481)  7,106 
                                 
Donated capital  -   -   -   -   127,106   -   -   127,106 
                                 
March 27, 2014                                
  Issued for cash                                
  $0.09 per share  -   -   13,068,050   13,068   1,200,393   -   -   1,213,461 
                                 
March 27, 2014                                
  Issued for fixed asset                                
  $0.09 per share  -   -   323,078   323   29,677   -   -   30,000 
                                 
April 8, 2014                                
  Issued to retire notes payable                                
  $0.09 per share  -   -   1,346,154   1,346   123,654   -   -   125,000 
                                 
June 11, 2013                                
  Stock owed by not issued for services                                
  $0.67 per share  -   -   -   -   187,320   280   -   187,600 
                                 
September 15, 2014                                
  Issued for cash                                
  $0.32 per share  -   -   -   -   149,531   469   -   150,000 
                                 
October 1, 2014                                
  Issuance of nonqualified stock options  -   -   -   -   13,160   -   -   13,160 
                                 
October 22, 2014                                
  Issued for services                                
  $0.38 per share  -   -   1,250,000   1,250   473,750   -   -   475,000 
                                 
December 24, 2014                                
  Issued to employees for services                                
  $0.25 per share  -   -   38,000   38   9,462   -   -   9,500 
                                 
December 31, 2014                                
  Amortization of                                
  employee stock options  -   -   -   -   480,676   -   -   480,676 
                                 
Net loss                                
  For the year ended                                
  December 31, 2014  -   -   -   -   -   -   (2,425,941)  (2,425,941)
                                 
Balance, December 31, 2014  -  $-   122,845,282  $122,845  $2,788,934  $749  $(2,528,422) $384,106 

BLUE LINE PROTECTION GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

                                 
  Preferred Stock  Common Stock  

Additional

Paid-in

  Stock  Accumulated  Stockholders’ 
  Shares  Amount  Shares  Amount  Capital  Payable  Deficit  Deficit 
                         
Balance, December 31, 2020  20,000,000  $20,000   8,223,574  $8,224  $8,031,471   13  $(13,421,819) $(5,362,111)
                                 
Common stock issued for conversion of debt and accrued interest  -   -   260,000   260   9,750   -   -   10,010 
                                 
Rounding shares issued from reverse stock split  -   -   1,570   2   -   -   -   2 
                                 
Derivative resolution  -   -   -   -   457,572   -   -   457,572 
                                 
Gain on the forgiveness of accrued interest - related party  -   -   -   -   522,333   -   -   522,333 
                                 
Net income for the year ended December 31, 2021  -   -   -   -   -   -   1,750,589   1,750,589 
Balance, December 31, 2021  20,000,000  $20,000   8,485,144  $8,486  $9,021,126   13  $(11,671,230) $(2,621,605)
                                 
Balance, December 31, 2021  20,000,000  $20,000   8,485,144  $8,486  $9,021,126   13  $(11,671,230) $(2,621,605)
Balance, value  20,000,000  $20,000   8,485,144  $8,486  $9,021,126   13  $(11,671,230) $(2,621,605)
                                 
Cancellation of common stock  -   -   (260,000)  (260)  260   -   -   - 
                                 
Common stock issued for services  -   -   25,000   25   4,725   -   -   4,750 
                                 
Stock options expense  -   -   -   -   327,596   -   -   327,596 
                                 
Forgiveness of interest - related party  -   -   -   -   250,000   -   -   250,000 
                                 
Derivative resolution  -   -   -   -   442,389   -   -   442,389 
                                 
Net Income for the year ended December 31, 2022  -   -   -   -   -   -   (294,528)  (294,528)
Balance, December 31, 2022  20,000,000  $20,000   8,250,144  $8,251  $10,046,096   13  $(11,965,758) $(1,891,398)
Balance, value  20,000,000  $20,000   8,250,144  $8,251  $10,046,096   13  $(11,965,758) $(1,891,398)

The accompanying notes are an integral part of these consolidated financial statements.

F-6



F-4

Blue Line Protection Group, Inc.
Consolidated Statements of Cash Flows

  For the years ended 
  December 31, 
  2014  2013 
       
Operating activities      
Net loss $(2,425,941) $(15,288)
Adjustments to reconcile net loss to        
   net cash used by operating activities:        
      Depreciation  27,172   - 
      Gain on sale of investments  (200,000)  - 
      Stock-based compensation expense  490,176   - 
      Shares issued for services  662,600   - 
      Shares issued for prepaid expenses  133,161   - 
Changes in operating assets and liabilities:        
   (Increase) in accounts receivable  (116,892)  - 
   (Increase) in deposits and prepaid expenses  (2,500)  - 
   Increase in accounts payable  297,298   2,300 
   Increase in long-term liabilities  691,781   - 
Net cash used by operating activities  (443,145)  (12,988)
         
Investing activities        
   Issuance of notes receivable  (155,000)  - 
   Receipt of payments from notes receivable  108,549   - 
   Sale of investments held to maturity  200,000     
   Purchase of fixed assets  (186,610)  - 
   Purchase of plant, property and equipment  (1,098,553)  - 
Net cash used by investing activities  (1,131,614)  - 
         
Financing activities        
   Donated capital  7,106   15,250 
   Repayment of notes payable  (41,008)  - 
   Proceeds from notes payable  166,008   - 
   Repayment of notes payable – related party  (106,325)  - 
   Proceeds from notes payable – related party  394,596   - 
   Common stock payable  748   - 
   Issuances of common stock  1,362,992   - 
Net cash provided by financing activities  1,784,117   15,250 
         
Net increase (decrease) in cash  209,078   2,262 
Cash – beginning of the year  2,844   582 
Cash – end of the year $211,922  $2,844 
         
Supplemental disclosures:        
   Interest paid  -   - 
   Income taxes paid  -   - 
         
Non-cash transactions:        
   Shares issued for fixed assets $30,000  $- 
   Number of shares issued for fixed assets  323,078   - 
   Stock-based compensation $3,067,525  $- 
   Number of stock options issued for stock-based compensation  11,736,900   - 
   Shares issued for prepaid services $120,000  $- 
   Number of shares issued for prepaid services  200,000   - 
   Shares issued for services $662,600  $- 
   Number of shares issued for services  1,330,000   - 

BLUE LINE PROTECTION GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

  2022  2021 
  For the years ended 
  December 31, 
  2022  2021 
Operating activities        
Net income $(294,528) $1,750,589 
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  133,146   134,371 
Amortization of right to use lease asset  121,095   107,257 
Common stock issued for services  4,750   - 
Stock Option expense  327,596   - 
Change in fair value of derivative liabilities  180,724   (1,077,289)
Changes in operating assets and liabilities:        
(Increase) in accounts receivable  (45,133)  (5,444)
(Increase) / decrease in deposits and prepaid expenses  (137)  1,038 
Increase (decrease) in accounts payable and accrued liabilities  67,224   100,094 
Increase (decrease) in lease obligations  (125,266)  (107,242)
Net cash provided by operating activities  369,471   903,374 
         
Cash flows from investing activities        
Purchase of fixed assets  (33,725)  (66,002)
Net cash provided by/(used in) investing activities  (33,725)  (66,002)
         
Financing activities        
Repayments on convertible notes payable - related party  -   (175,097)
Repayments on convertible notes payable  (313,318)  (146,011)
Repayments from notes payable - related party  (359,244)  (20,000)
Payments on notes payable  (45,288)  (78,837)
Net cash used in financing activities  (717,850)  (419,945)
         
Net increase in cash  (382,104)  417,427 
Cash - beginning  662,177   244,750 
Cash - ending $280,073  $662,177 
         
Supplemental disclosures of cash flow information:        
Interest paid $56,204  $400,256 
Income taxes paid $-  $- 
         
Non-cash investing and financing activities:        
Capitalized leased fixed assets $68,872  $56,735 
Common stock issued for conversion of debt and interest $-  $10,010 
Derivative resolution $442,389  $457,572 
Cancellation of common stock $260  $- 
Gain on the forgiveness of accrued interest - related party $250,000  $522,334 

The accompanying notes are an integral part of these consolidated financial statements.


F-7
F-5

Blue Line Protection Group, Inc.

Notes to Consolidated Financial Statements

(Audited)

Note 1 – History and organization of the company


The Company was originally organized on September 11, 2006 (Date of Inception) under the laws of the State of Nevada, as The Engraving Masters, Inc. The Company was authorized to issue up to 100,000,000 shares of its common stock and 100,000,000 shares of preferred stock, each with a par value of $0.001$0.001 per share.


On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 (“Blue Line Colorado”), as a wholly-owned subsidiary of the Company. Blue Line Colorado provides protection, compliance, and financial services to the lawful cannabis industry.


On March 15, 2014, the Company agreed to acquire all of the issued and outstanding membership interests in Blue Line Protection Group, LLC, a Colorado limited liability company (“Blue Line LLC”).  The closing of the acquisition is to take place once the Company is provided with financial statements, audited as necessary and in proper form, which would be satisfactory for filing in an 8-K report with the Securities and Exchange Commission.  If the acquisition of Blue Line LLC does not occur by July 31, 2014, the agreement pertaining to the acquisition of Blue Line LLC will terminate.  As of July 31, 2014, the terms and conditions of the agreement were not satisfied and was resultantly been terminated.

On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. (“BLPG”)


On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held.held. Additionally, the authorized number capital of the Company concurrently increased to 1,400,000,000 shares of $0.001 par value common stock. All references to share and per share amounts in the condensed consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.


Blue Line Protection Group, Inc.

On July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of 1-for-100, the authorized capital of the Company concurrently decreased to 14,000,000 shares of common stock. All references to share and per share amounts in the consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.

The Company provides armed protection, financial solutions, logistics, and compliance services for businesses engaged in the legal cannabis industry. The Company offers asset logistic services, such as armoredarmed transportation service; security services, including shipment protection, money escorts, security monitoring, asset vaulting, VIP and dignitary protection, and others; financial services, such as handling transportation and storage of currency; training; and compliance services.


Note 2 – Accounting policies and procedures


Principles of consolidation

For the years ended December 31, 20142022 and 2013,2021, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the “Company.”


Basis of Presentation

presentation

The consolidated financial statements present the balance sheets, statements of operations, stockholder’sstockholders’ equity (deficit) and cash flows of the Company. The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.


Year end

The Company has adopted December 31 as its fiscal year end.

F-8



F-6


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

Note 2 – Accounting policies and procedures (continued)

Use of estimates

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


Cash and cash equivalents

Cash and cash equivalents

The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. As of December 31, 2022 the Company has cash in excess of FDIC insured limits of $30,073. There were no cash equivalents as of December 31, 2014 and 2013.


2022 or December 31, 2021.

Accounts receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.


Notes receivable
Notes receivable are measured

Allowance for uncollectible accounts

The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. There was no allowance for doubtful customer receivables at historical costDecember 31, 2022 and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans.  Interest income on notes receivable is recognized using the interest method.  Interest income on impaired loans is recognized as cash is collected or on a cost-recovery basis.


December 31, 2021.

Property and equipment

Property and equipment is recorded at cost and capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

Schedule of Estimated useful Lives of Property and Equipment

Automotive Vehicles5 years
Furniture and Equipment75 years
Buildings and Improvements15 yearsthe lesser of the life of the lease or the estimated useful life of the lease

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as December 31, 20142022 and 2013.December 31, 2021. Depreciation expense for the years ended December 31, 20142022 and, 2013 totaled $27,1722021 were $133,146 and $0,$134,371 respectively.

F-9



F-7


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

Note 2 – Accounting policies and procedures (continued)

Long-lived

Impairment of long-lived assets

The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value or disposable value. As of December 31, 20142022 and 2013,December 31, 2021, the Company determined that none of its long-termlong-lived assets were impaired.


Concentration of business and credit risk

The Company has no significant off-balance sheet riskrisks such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company’s financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts, which may at times, exceed federally insured limits.


The Company had one major customer which generated 16% of total revenue in the year ended December 31, 2022 and one customer comprised 22% of the account receivable balance at December 31, 2022.

The Company had one major customer which generated 22% of total revenue in the year ended December 31, 2021 and one customer comprised 35% of the account receivable balance at December 31, 2021.

Related party transactions

FASB ASC 850, “Related Party Disclosures” requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer.

Fair value of financial instruments

The carrying amounts reflected in the balance sheets for cash, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.


As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.


The three levels of the fair value hierarchy are described below:


Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3:

Level 1:Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2:Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3:Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

F-10

The following table presents the derivative financial instruments, the Company’s only financial liabilities, measured and recorded at fair value on the Company’s consolidated balance sheet on a recurring basis, and their level within the fair value measurementhierarchy as of December 31, 2022 and unobservable (supported by little or no market activity).




F-8


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

December 31, 2021:

December 31, 2022

Schedule of Fair Value of Liabilities Measured on Recurring Basis

  Amount  Level 1  Level 2  Level 3 
Embedded conversion derivative liability $451,119  $-  $-  $451,119 
Warrant derivative liabilities $-  $      -  $     -  $- 
Total $451,119  $-  $-  $451,119 

December 31, 2021

  Amount  Level 1  Level 2  Level 3 
Embedded conversion derivative liability $712,784  $-  $-  $712,784 
Warrant derivative liabilities $-  $      -  $      -  $- 
Total $712,784  $-  $-  $712,784 

The embedded conversion feature in the convertible debt instruments that the Company issued that became convertible qualified them as derivative instruments since the number of shares issuable under the notes are indeterminate based on guidance in FASB ASC 815, Derivatives and Hedging. These convertible notes tainted all other equity linked instruments including outstanding warrants and fixed rate convertible debt on the date that the instrument became convertible. The valuation of the derivative liability of the warrants was determined through the use of Black Scholes option-pricing model (See Note 2 – Accounting policies and procedures (continued)


8).

Revenue recognition

Recognition

The Company recognizes revenue when alldelivery of the following conditions are satisfied: (1) therepromised goods or services is persuasive evidence oftransferred to its customers in an arrangement; (2)amount that reflects the service has been provided toconsideration that the customer; (3) the amount of feesCompany expects to be paid byentitled to in exchange for those goods or services. We determine revenue recognition through the customer is fixedfollowing five steps:

●Identify the contract with the customer;
●Identify the performance obligations in the contract;
●Determine the transaction price;
●Allocate the transaction price to the performance obligations in the contract; and
●Recognize revenue when, or as, the performance obligations are satisfied.

We generate substantially all our revenue from providing services to customers. The Company records revenue when the 5 steps above have been completed.

Effective January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. The updated guidance states that an entity should recognize revenue to depict the transfer of promised goods or determinable; and (4)services to customers in an amount that reflects the collection of its fees is probable.


Sales relatedconsideration to long-term contracts for services (such as programming, website development and maintenance) extending over several years are accounted for underwhich the percentage-of-completion method of accounting.  Sales and earnings under these contracts are recorded based on the ratio of actual costs incurred to total estimated costs expectedentity expects to be incurred related to the contract under the cost-to-cost method based budgeted milestonesentitled in exchange for those goods or tasks as designated per each contract. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable.

For all other sales of product or services the Company recognizes revenues based on the terms of the customer agreement.services. The customer agreement takes the form of either a contract or a customer purchase order and eachguidance also provides informationfor additional disclosures with respect to revenues and cash flows arising from contracts with customers. The Company adopted the product or service being sold andstandard using the sales price.  If the customer agreement doesmodified retrospective approach effective January 1, 2018. The adoption of these standards did not have specific delivery or customer acceptance terms, revenue is recognizedan impact on the dateCompany’s Statements of Operations for the customer agreement, invoice or purchase order.

Allowance for uncollectible accounts
The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. The allowance for doubtful customer and vendor receivables was $18,864 and $0 atyear ended December 31, 2014 and 2013, respectively.2018.

F-11

Cost of Sales
The Company’s cost of revenue primarily consists of items purchased by the Company specifically purposed for the benefit of

In general, the Company’s client.


business segmentation is aligned according to the nature and economic characteristics. Revenue is characterized by several lines of services and typically the pricing is fixed.

Schedule of Revenue by Major Customers by Reporting Segments

Revenue Breakdown by Streams 2022  2021 
Year ended December 31,
Revenue Breakdown by Streams 2022  2021 
Service: Transportation $1,589,435  $1,775,594 
Service: Currency Processing $2,223,404  $2,800,377 
Service: Compliance $63,388  $83,422 
Total $3,876,227  $4,659,393 

Advertising costs

The Company expenses all costs of advertising as incurred. There were $189,536 and $0 in advertising costsAdvertising expense for the years ended December 31, 20142022 and 2013,December 31, 2021 amounted to $9,808 and $4,298, respectively.


General and administrative expenses

The significant components of general and administrative expenses consist solelymainly of legalrent and professional fees.


Stock-basedcompensation.

Share-Based Compensation

Share-based compensation

The Company recognizes revenue when all expense is recorded as a result of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of its fees is probable.

Sales related to long-term contractsstock options granted in return for services (such as programming, website development and maintenance) extending over several years arerendered. Previously, the share-based payment arrangements with employees were accounted for under ASC 718. On June 20, 2018, the percentage-of-completion methodFASB issued ASU 2018-07, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of accounting.  Salesthe guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company has adopted the new standard and earnings under these contracts are recorded basedhas made some adjustment with regard to the share-based compensation costs. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments is generally fixed on the ratio of actual costs incurred to total estimated costs expected to be incurredgrant date and the options are no longer revalued on each reporting date. The expenses related to the contract under the cost-to-cost method based budgeted milestones or tasks as designated per each contract. Anticipated losses on contractsshare-based compensation are recognized in full inon each reporting date. The amount is calculated as the period in which losses become probable and estimable.

For all other sales of product or services the Company recognizes revenues based on the terms of the customer agreement.  The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the product or service being solddifference between total expenses incurred and the sales price.  If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized on the date of the customer agreement, invoice or purchase order.



F-9


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

Note 2 – Accounting policies and procedures (continued)

total expenses already recognized.

Cost of Revenue

The Company’s cost of revenue primarily consists of labor, fuel costs and items purchased by the Company specifically purposed for the benefit of the Company’s client.


Lossclients.

Basic and Diluted Earnings per share

Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

For the years ended December 31, 2022 and 2011 all common stock equivalents of 3,022,000 and 0, respectively were excluded from the calculation of diluted loss per share as their effect would be anti-dilutive.


F-12
 Dividends

The following is a reconciliation of the numerator and denominator used in the basic and diluted earnings per share (“EPS”) calculations for the years ended December 31, 2022 and 2021.

Schedule of Basic and Diluted Earnings Per Share (“EPS”)

  

Year Ended

December 31, 2022

  

Year Ended

December 31, 2021

 
       
Numerator:        
Net income / (loss) $(294,528) $1,750,589 
         
Denominator:        
Weighted-average shares of common stock  8,398,062   8,457,364 
Dilutive effect of warrants  -   - 
Dilutive effect of convertible instruments  -   3,875,500 
Diluted weighted-average of common stock  8,398,062   12,314,864 
         
Net income per common share from:        
Basic $(0.04) $0.21 
Diluted $(0.04) $0.14 

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception.


Income Taxes

The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.


Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.


Contingencies

Recent Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases, which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is not currently a party to any pending or threatened legal proceedings.  The company has one potential contingent liability.  A shareholder and employee asserts he has loanedelected the practical expedient under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company cash and paidto apply the transition provision for various expenses on behalfTopic 842 at the Company’s adoption date instead of at the earliest comparative period presented in the financial statements. Therefore, the Company inrecognized and measured leases existing at January 1, 2019 but without retrospective application. Therefore, there was no impact recorded to beginning retained earnings or the aggregate amountstatement of $447,896.  The Company is disputing its need to pay this claim on the grounds that a number of items in the claim were unauthorized and minimal, if any, supporting documentation was provided to substantiate the validity of the claim.  While the Company can reasonably estimate the liability, it is improbable that the Company will pay, due the Claimant’s (a) failure mutually agree upon the alleged amounts owed and (b) failure to validate the claims.operations

F-13

Recent pronouncements

The Company evaluated all other recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company.





F-10


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

Note 3 - – Going concern


The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has a net loss, of ($2,425,941)accumulated deficit and had a working capital deficit as of December 31, 2014, and had net sales of $1,032,168 during2022. These conditions raise substantial doubt about the year ended December 31, 2014.


Company’s ability to continue as a going concern.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing. The Company is currently conducting a private placement of its common stock to raise proceeds to finance its plan of operation.  There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.


The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might arise from this uncertainty.


Note 4 – Deposits


Commitments and contingencies

Contingencies

On May 20, 2014,November 6, 2015, Daniel Sullivan sent a wage claim demand to the Company. Mr. Sullivan purports to have had an Independent Contractor Agreement with the Company which provides he is entitled to certain compensation and to be reimbursed for Company expenses. The demand claims unpaid compensation in the amount of $8,055 and unreimbursed expenses in the amount of $154,409. The Company denies the agreement was ever signed. If litigation is commenced the Company will defend any claims by Mr. Sullivan.

Mile High Real Estate Group, an entity owned by Mr. Sullivan, sent correspondence to the Company stating the Mr. Sullivan and/or Mile High Real Estate loaned the Company either directly or directly to contractors, material suppliers or utilities for operating and building remodeling in the amount of $98,150. Counsel for Mr. Sullivan stated that he was still compiling information. The Company is investigating whether Mr. Sullivan and/or Mile High Real Estate Group ever made the alleged loans. The Company will defend any claims of Mile High Real Estate Group.

On April 14, 2016, the Company entered into a Security Deposit Agreementan agreement with a third-party fuel credit provider, wherebythird party to provide the Company was obligatedwith investor relations services. Upon signing the agreement, the Company paid the investor relations consultant $75,000 and agreed to issue the consultant 1,500,000 shares of its restricted common stock. The agreement required the Company to pay the consultant an initial security depositadditional $75,000 prior to June 14, 2016. The Company cancelled the agreement and is of the opinion that the shares are not owed to the consultant. As of December 31, 2022 and December 31, 2021 there was a payable recorded of $34,346.

Finance leases

On March 1, 2019, the Company recorded finance lease obligation for a leased a vehicle for $64,354. The Company made a down payment of $30,000 which included delivery fees, taxes and its first month payment and agreed to make 36 monthly payments of $1,129.76, including sales tax. The Company recognized this arrangement as a finance lease based on the determination that the lease exceeded 75% of the economic life of the underlying assets.

On June 2, 2021, the Company recorded finance lease obligation for a leased a vehicle for $56,733. The Company made a down payment of $3,510 which included delivery fees, taxes and its first month payment and agreed to make 24 monthly payments of $2,765.19, including sales tax. The Company recognized this arrangement as a finance lease based on the determination that the lease exceeded 75% of the economic life of the underlying assets

F-14

On June 17, 2022, the Company recorded finance lease obligation for a leased vehicle for $69,255. The Company made a down payment of $2,882 which included delivery fees, taxes and its first month payment and agreed to make 36 monthly payments of $2,338, including sales tax. The Company recognized this arrangement as a finance lease based on the determination that the lease exceeded 75% of the economic life of the underlying assets

Schedule of Future Minimum Lease Payments

Future minimum lease payments as December 31, 2022   
    
2023 $31,719 
2024  37,568 
Total minimum lease payments $69,287 

Operating Leases

On October 27, 2016 the Company sold its building located at 5765 Logan Street Denver, Colorado to an unrelated third party for $1,400,000. The Company repaid the mortgage on the building in the amount of $2,500.  The balance$677,681. After the sale, the Company leased the building from the purchaser of the Deposit, asproperty. The lease is for an initial term of December 31, 2014, was $2,500.


Note 5 – Notes receivable

ten years, with the Company having the option to extend the term of the lease for two additional five-year periods. The lease requires rental payments of $10,000 per month which will increase 2% annually. The Company provides short-term, secured financingpaid a $30,000 deposit at the inception of the lease

On May 29, 2018 the Company leased a building located at 4328 E. Magnolia Street, Phoenix, Arizona. The lease is for an initial term of one year, with the Company having the option to clients, represented as notes receivable.extend the term of the lease for additional four year periods. The lease requires rental payments of $3,880 per month which will increase 2% annually. The Company paid a $4,369 deposit at the inception of the lease.

On January 22, 2019 the Company leased a building located at 7490 Bridgewater Road, Huber Heights, Ohio. The lease is for an initial term of 63 months. The lease requires rental payments of $3,200 per month and will increase to $3,400 between months 28 through 63. The Company paid a $3,200 deposit at the inception of the lease. During the year ended December 31, 2014,2020 the Company loanedterminated the lease agreement. The Company paid a total$35,760 cancellation fee included in rent expense and recorded a gain of $105,000$8,800 on the termination of the lease.

The Company adopted ASC 842 and recorded right of use asset and operating lease liability of $1,082,241 The Company used 12% as incremental borrowing rate as is the average interest rate of the Company’s outstanding third party note. The lease agreement gives the Company the option to a non-affiliated entityrenew it for two additional 5 year terms but the Company did not consider it likely to exercise that option. Therefore, the Company did not include such amounts in its computations of the present value of remaining lease payment on a revolving basisthe adoption date.

Supplemental balance sheet information related to leases is as follows:

Schedule of Operating Leases

December 31, 2022

Operating Leases Classification December 31, 2022 
Right-of-use assets Operating right of use assets $408,616 
Total   $408,616 
Current lease liabilities Current operating lease liabilities $112,250 
Non-current lease liabilities Long-term operating lease liabilities $328,116 
Total   $440,366 

F-15

Lease term and discount rate were as follows:

Summary of Operating Lease Liabilities

December 31, 2022
Weighted average remaining lease term (years)2.50
Weighted average discount rate12%

The following summarizes lease expenses for the year ended December 31, 2022:

Finance lease expenses:

Summary of Lease Expenses

     
Depreciation/amortization expense $121,095 
Interest on lease liabilities  6,673 
Finance lease expense $127,768 

Supplemental disclosures of cash flow information related to leases were as follows:

Schedule of Cash Flow Information Related to Lease

  December 31, 2022 
Cash paid for operating lease liabilities $125,266 
Operating right of use assets obtained in exchange for operating lease liabilities $- 

Maturities of lease liabilities were as follows as of December 31, 2022:

Schedule of Maturities of Lease Liabilities

  

Operating

Leases

 
    
2023 $158,298 
2024 $138,532 
2025 $141,302 
2026 $107,558 
Total $545,690 
Less: Imputed interest $(105,324)
Present value of lease liabilities $440,366 

December 31, 2021

Operating Leases Classification December 31, 2021 
Right-of-use assets Operating right of use assets $529,711 
Total   $529,711 
Current lease liabilities Current operating lease liabilities $125,266 
Non-current lease liabilities Long-term operating lease liabilities $440,366 
Total   $565,632 

Lease term and discount rate were as follows:

December 31, 2021
Weighted average remaining lease term (years)3.50
Weighted average discount rate12%

The following summarizes lease expenses for the year ended December 31, 2021:

Finance lease expenses:

     
Depreciation/amortization expense $107,257 
Interest on lease liabilities  77,121 
Finance lease expense $184,378 

F-16

Supplemental disclosures of cash flow information related to leases were as follows:

  December 31, 2021 
Cash paid for operating lease liabilities $107,242 
Operating right of use assets obtained in exchange for operating lease liabilities $- 

Note 5 – Fixed assets

Machinery and equipment consisted of the following at:

Schedule of Machinery and Equipment

  December 31, 2022  December 31, 2021 
       
Automotive vehicles $565,695  $485,701 
Furniture and equipment $108,265  $108,265 
Machinery and Equipment $135,706  $135,706 
Leasehold improvements $148,994  $141,234 
Fixed assets, total $958,660  $870,906 
Total: accumulated depreciation $(704,433) $(586,130)
Fixed assets, net $254,227  $284,776 

During the years ended December 31, 2022 and December 31, 2021 the Company had $2,782 of fixed assets associated with discontinued operations.

Depreciation expense for the years ended December 31, 2022 and December 31, 2021 were $133,146 and $134,371 respectively.

Note 6 – Notes payable

Convertible notes payable to non-related parties

On October 18, 2017, the Company borrowed $150,000 from an unrelated third party. The Company paid $15,250 of fees associated with the loan, which was recorded as discount and to be amortized over the term of the debt and was fully amortized as of December 31, 2018. The loan bears interest at a rate of 18% per annum10% (default interest 24%) and due within one year from thehas a maturity date of issuance.July 16, 2018. The Holder has the option to convert the outstanding principal and accrued interest into common stock of the Company. The conversion price is the lesser of (1) lowest trading price during the previous 25 days prior to the note agreement or (2) 50% lowest trading price during the 25 days prior to conversion. Covenants: The Borrower shall not, without the Holder’s consent, sell, lease or dispose of any significant portion of its assets outside the ordinary course of business. During the year ended December 31, 2018 the Company paid $150,000 to extend the maturity date until May 11, 2019. During the year ended December 31, 2019, the Company paid $75,000 in extension fees. The note was discounted for a derivative (see note 8 for details) and the discount of $134,750 is being amortized over the life of the note using the effective interest method which was fully amortized as of December 31, 2018. During the year ended December 31, 2019 the holder converted $39,478 of accrued interest into 2,178,825 shares of common stock resulting in a loss of $61,624. As of December 31, 2021 and December 31, 2020 the balance outstanding on the loan is $0 and $150,000, respectively. On May 28, 2021 the Company entered into a settlement and release agreement with the borrower repaidand agreed to pay them discuss additional amount bounded to interest expense for the entire $105,000 balancesettlement $400,000. The first payment of $200,000 was due upon signing and Company agreed to make additional $100,000 payments on the 30th and 60th day after signing. The additional $250,000 settlement was record as interest accrued thereupon during the year ended December 31, 2014.2021. As of December 31, 20142022 and December 31, 2021 accrued interest and the principalnote balance had been repaid.

F-17

On March 21, 2018, the Company borrowed $45,000 from an unrelated third party. The Company paid $4,500 of fees associated with the loan and had amortized $3,514 of the loancosts as of December 31, 2018. The note bears an interest rate: 12% (default interest lesser of 15% or maximum permitted by law) and matures on March 21, 2019. The conversion Feature Convertible immediately after the issuance, the Holder has the option to convert the outstanding principal and accrued interest into common stock of the Company. The Conversion price is $055% of the lowest trading price during the 25 Trading Day periods prior to the Conversion. Covenants: The Borrower shall not, without the Holder’s consent, sell, lease or dispose of any significant portion of its assets outside the ordinary course of business. The note was discounted for a derivative (see note 8 for details) and the discount of $40,500 has been fully amortized over the life of the note using the effective interest income recognized was $121.


On May 15, 2014, the Company loaned $50,000 to a non-affiliated entity on a revolving basis at a rate of 18% per annum and due within one year from the date of issuance.method. As of December 31, 2014, the principal balance of the loan is $46,451 and accrued interest thereupon was $834.

Note 6 – Fixed assets

Fixed assets consisted of the following at:

  December 31, 2014  December 31, 2013
      
Automotive vehicles$173,926 $-
Furniture and equipment 44,204  -
      
Fixed assets, total 218,130  -
Less: accumulated depreciation (28,692)  -
Fixed assets, net $189,438  $-
Depreciation expenses for the years ended December 31, 2014 and 2013 were $27,127 and $0, respectively.

On July 15, 2014, the Company purchased a commercial building for a total purchase price of $750,000, for which the Company paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a rate of 5% per annum on the unpaid principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in2021 the amount of $2,813 beginning August 31, 2014.  Through December 31, 2014, approximately $348,553 in capital improvements havehad been made to the property.fully amortized. As of December 31, 2014,2022 and December 31, 2021 accrued interest and the Company has not yet placed the property into service and, accordingly, no depreciation expense hasnote balance had been recorded.

F-11


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

repaid.

Note 7 – Notes payable


Through – related parties

Long-term liabilities: Notes payable - related parties

As of December 31, 2014, a non-affiliated third-party loaned2021 the Company an aggregateowed MKM Capital Advisors and two related entities $128,600 plus accrued interest of $2,000$70,088. The amount owed to the MKM entities was represented by three Promissory Notes dated between February 6, 2015 and July 7, 2016. In March 2022 the MKM entities agreed to (i) consolidate the Promissory Notes into a new note in cash.the principal amount of $128,600 and (ii) forgive the accrued interest of $70,088. The note bears no interest and is due upon demand.


On February 21, 2014, the Company issued anew Promissory Note to one non-affiliated person in the amount of $100,000.  The loan wasis due and payable on demandDecember 27, 2026 and bore no interest. In April 2014,bears an interest (from December 27, 2021 to the lender agreeddate of payment) of 5% per year. During the year ended December 31, 2022, the Company repaid $30,673 of principal and accrued interest as of December 31, 2022, amounted to convert the entire principal balance of $100,000, into 1,076,923 shares of common stock.$0. As of December 31, 2014,2022 the principal balance owed on thisthe loan is $0.  See Note 10 – Stockholders’ Equity for additional information.

On February 21, 2014,$97,926.

As of December 31, 2021 the Company issuedowed CGDK, LLC $1,185,217, plus accrued interest of $452,246. The amount owed to CGDK was represented by seven Promissory Notes dated between July 9, 2015 and August 6, 2018. In March 2022, CGDK agreed to (i) consolidate the Promissory Notes into a new note in the principal amount of $1,185,217 and (ii) forgive the accrued interest of $452,246. The new Promissory Note to one non-affiliated entity in the amount of $25,000.  The loan wasis due and payable on demandDecember 31, 2026 and bore no interest. In April 2014,bears an interest (from January 1, 2022 to the lender agreed to convertdate of payment) of 5% per year. During the entireyear ended December 31, 2022, the loan was assumed by Doyle Knudson a related party and the Company repaid $282,643 of principal balanceand accrued interest as of $25,000, into 269,231 shares of common stock.December 31, 2022. As of December 31, 2014,2022, the principal balance owed on thisthe loan is $0.  See Note 10 – Stockholders’ Equity for additional information.


On March 26, 2014, the Company issued a Promissory Note to one non-affiliated person in the amount of $25,000 for cash paid to purchase a vehicle on behalf of the Company.  The loan was due and payable on demand and bore no interest.  The loan was repaid in full.  As of December 31, 2014, the principal balance owed on this loan was $0.

During April 2014, the Company borrowed $16,008 from a non-affiliated person.  The loan was due and payable on demand and bore no interest.  The loan was repaid in full.  As of December 31, 2014, the principal balance owed on this loan was $0.

Note 8 –$902,574.

Current liabilities: Notes payable – Related Party


related parties

On July 31, 2014, the Company borrowed $98,150$98,150 from an entity materially controlled by ana former officer and shareholder of the Company. The loan is due and payable on demand and bears no interest. As of December 31, 2014,2022 and December 31, 2021, the principal balance owed on this loan is $98,150.


Through$98,150 and $98,150, respectively.

As of December 31, 2014, an officer and shareholdera related party loaned the Company an aggregate of $286,446,$180,121, in the form of cash and expenses paid on behalf of the Company. The loan is due and payable on demand and bears no interest. The Company has repaid $106,325$125,500 towards this note during 2015 and as of December 31, 2014,2022 and December 31, 2021 the principal balance owed on this loan is $180,121.was $54,621 and $54,621, respectively.

F-18

On November 25, 2014, the Company borrowed $10,000 from an entity materially controlled by a shareholder of the Company.  The loan is due and

Current Liabilities: Convertible notes payable on demand and bears no interest.  to related parties

As of December 31, 2014,2021 the Company owed Hypur Inc. $688,500 plus accrued interest. The amounts owed to Hypur were represented by eight Promissory Notes dated between September 20, 2016 and September 3, 2019. By an agreement effective January 31, 2022 the Company and Hypur agreed to the following:

●On March 3, 2022 the Company paid Hypur $137,500, which was applied to principal of the notes.
●On or before each date shown below, the Company paid Hypur $12,500, which applied to principal of the notes.

Schedule of Related Parties Debt Maturity

Date Amount 
    
March 31, 2022 $12,500 
     
April 30, 2022 $12,500 
     
May 31, 2022 $12,500 
     
June 30, 2022 $12,500 

●On or before July 31, 2022 the Company will pay Hypur $137,500, which will apply to principal of the notes.
●All principal amounts owed to Hypur under the Promissory Notes will bear interest at 7.5% per year between January 31, 2022 and July 31, 2022 as long as the Company is not in default under the terms of its agreement with Hypur.
●If by July 31, 2022 all payments required by the Company’s agreement with Hypur have been made in a timely fashion, Hypur will forgive $250,000 of accrued interest owed by the Company under the Promissory Notes.
●After July 31, 2022 future payment plans will be negotiated, provided however that any principal amounts owed to Hypur under the Promissory Notes after July 31, 2022 will not bear interest in excess of 7.5% per year with a default rate of 12% per year.
●Hypur will waive any default rights between January 31, 2022 and August 31, 2022 on a month-to-month basis so long as all payments required by the Company’s agreement with Hypur have been made.

During the year ended December 31, 2022 the Company repaid a total of $359,244. The amount due as of December 31, 2022 is $329,256. Hypur forgave $250,000 of accrued interest owed by the Company under the Promissory Notes, which was recognized as additional paid in capital.

On September 1, 2016, the Company entered into, a convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the “Hypur Ventures”) which is a related party, pursuant to which the Company borrowed $75,000. The loan was due 180 days from the date of issuance and bears interest at 10% per annum. The note is convertible into common stock at a price of $.05 per share. The note is mandatory redeemable into common stock if the price per share is over $.50 per share during a 10 day period. The principal balance owed on this loan is $10,000.


Note 9 – Long Term Notes Payable

On July 15, 2014,at September 30, 2022, and December 31, 2021 was $75,000 and $75,000, respectively. Upon default, the Company purchased a commercial building for a total purchase price of $750,000, for which the Company paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a default rate of 5%interest of 15% per annum, onand if the unpaiddefault has not been remedied within 30 days, the redemption price would be 150% of the principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in the amount of $2,813 beginning August 31, 2014.amount. As of December 31, 2014,2022 and December 31, 2021, Hyper has waived the default provision until further notice.

On October 14, 2016, the Company entered into a convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the “Hypur Ventures”) and a related party, pursuant to which the Company borrowed $100,000. The loan was due 180 days from the date of issuance and bears interest at 10% per annum. The note is convertible into common stock at a price of $.05 per share. The note is mandatory redeemable into common stock if the price per share is over $.50 per share during a 10 day period. The principal balance owed on this loan at September 30, 2022 and December 31, 2021 was $100,000 and $100,000, respectively. Upon default, the note bears a default rate of interest of 15% per annum, and if the default has not been remedied within 30 days, the redemption price would be 150% of the principal balance is $675,000 and a total of $11,250 in interest payments have been made.


On November 21, 2014, the Company purchased a vehicle for a purchase price of $20,827, net of discounts.  The Company financed the entire amount of $20,827 at an interest rate of 2.42% for five years, with a maturity date of December 5, 2019.amount. As of December 31, 2014,2022 and December 31, 2021, Hyper has waived the totaldefault provision until further notice.

On March 7, 2017, the Company borrowed $100,000 from Hypur Ventures, L.P., a related party. The loan is due 180 days from March 7, 2017 and bears interest at 10% per annum. The loan is convertible into shares of the Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the Company’s common stock if the price of the Company’s common stock is over $.50 per share during any ten-day period. The principal balance owed on this loan December 31, 2022 and December 31, 2021 was $100,000 and $100,000 respectively. Upon default, the note bears a default rate of interest of 15% per annum, and if the default has not been remedied within 30 days, the redemption price would be 150% of the noteprincipal amount. As of December 31, 2022, and December 31, 2021, Hyper has waived the default provision until further notice.

F-19

The Company re-measured the fair value of derivative liabilities on December 31, 2022 and December 31, 2021. See Note 8.

Note 8 – Derivative Liability

The Company analyzed the conversion options for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that an instrument should be classified as a liability when a conversion option becomes effective.

The derivative liability in connection with the conversion feature of the convertible debt is $20,769,measured using level 3 inputs.

The change in the fair value of which $17,034derivative liabilities is considered a long-termas follows:

Schedule of Derivative Liabilities at Fair Value

Balance – December 31, 2020 $2,247,645 
Settlement of derivatives upon conversion $(457,572)
Gain on change in fair value of the derivative $(1,077,289)
Balance – December 31, 2021 $712,784 
Settlement of derivatives upon conversion $(442,389)
Gain on change in fair value of the derivative $180,724 
Balance – December 31, 2022 $451,119 

The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability and the current portionat each measurement date:

Schedule of $3,735 is considered a current liability.




F-12


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

Derivative Instruments, Black-Scholes Option-pricing Model Inputs Used

Year ended December 31, 2022Year ended December 31, 2021
Expected term0.25 – 1.09 years0.25 – 1.09 years
Expected average volatility229.64% – 260.80%138.34% – 162.05%
Expected dividend yield--
Risk-free interest rate4.12 % – 4.76%0.06 % – 0.39%

Note 10 - 9 – Stockholders’ equity


deficit

The Company was originally authorized to issue 100,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock. On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. Additionally, the number of authorized shares increased to 1,400,000,000 shares of $0.001 par value common stock. All references to share and per share amounts in the condensedconsolidated financial statements and these notes thereto have been retroactively restated to reflect the forward stock split.

On July 6, 2021, the Company effected a reverse stock split and a pro-rata decrease in its authorized common stock on a basis of 1-for-100, the authorized capital of the Company concurrently decreased to 14,000,000 shares of common stock. All references to share and per share amounts in the consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.


On October 5, 2006, the The Company issued 84,000,000a total of 1,570 shares of its common stock due to its founding shareholder for cash inrounding on the amount of $10,000.reverse stock split.

F-20

On October 10, 2007,

Common stock

During the Company issued 22,820,000year ended December 31, 2022, 260,000 shares of its common stock in a private offering for gross net cash proceeds of $32,100, after deducting $500 in offering costs.


From March 24 through March 27, 2014,were returned to the Company sold an aggregate of 13,068,050 shares of its common stock for gross cash proceeds of $1,213,501.

On March 27, 2014, the Company purchased a vehicle from a non-affiliated entity with 323,078 shares of its common stock in lieu of cash.  The value of this transaction was $30,000.

On April 8, 2014,treasury.

During October 2022 the Company issued a total of 1,076,92325,000 shares of common stock forvalued at $4,750 ($0.19 per share) to an employee, the conversionfair market value on the date of a promissory note in the total amount of $100,000.


issuance.

Preferred stock

On April 8, 2014, the Company issued a total of 269,231 shares of common stock for the conversion of a promissory note in the total amount of $25,000.


On June 11, 2014,May 3, 2016, the Company entered into, an investment banking agreement forwith Hypur Ventures, L.P., a Delaware limited partnership (the “Hypur Ventures”) which it was obligatedis a related party pursuant to issue 280,000which the Company sold to Hypur Ventures, in a private placement, 10,000,000 shares of itsthe Company’s preferred stock and 5,000,000 common stock warrants with a fair market valuefive year term and an exercise price of $187,600.$0.10, at a purchase price of $0.05 per share for gross proceeds of $500,000. The stock was subscribed for; however, the certificates representing the shares were not issued as of December 31, 2014 and, resultantly, are considered owed as a common stock payable of $280.

On September 15, 2014, the Company received a subscription for 468,750 shares of its commonpreferred stock for $150,000. The stock was subscribed for; however, the certificates representing the shares were not issued as of December 31, 2014 and, resultantly, are considered owed as a common stock payable of $469.

On October 22, 2014, the Company enteredconvertible into an investment banking agreement, for which it issued 1,250,000 shares of itsthe Company’s common stock. The preferred stock shall have such other rights, preferences and privileges to be set forth in a certificate of designation to be filed with the Nevada Secretary of State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it contained a fair market value of $475,000.

On December 24, 2014, the Company issued 38,000 shares of its common stock to various employees under its employee stock incentive program.beneficial conversion feature. The fairintrinsic value of the beneficial conversion feature was determined to be $114,229. The beneficial conversion feature was fully amortized and recorded as a deemed dividend.

Between July and August of 2016 Hypur Ventures purchased an additional 10,000,000shares onof the dateCompany’s preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of issuance$0.10, at a purchase price of $0.05 per share for net proceeds of $445,000, net of legal fees of $55,000. The shares of preferred stock are convertible into shares of the Company’s common stock. The preferred stock shall have such other rights, preferences and privileges to be set forth in a certificate of designation to be filed with the Nevada Secretary of State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it does not contain a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was $9,500.


Asdetermined to be $0. The preferred stock is convertible at any time at the election of December 31, 2014, there have been no other issuancesHypur Ventures. The preferred stock shall automatically convert to common stock if the closing price of the Company’s common stock equals or exceeds $0.50 per share over any consecutive twenty day trading period. The preferred stock terms include a one-time purchase price preference. No preferential dividends apply to the preferred stock. The preferred stock attributes include weighted average anti-dilution protection, rights to appoint one director, pre-emptive rights to purchase future offerings of securities by the Company, demand and piggy-back registration rights.

The preferred stock is convertible at any time at the election of Hypur Ventures. The preferred stock shall automatically convert to common stock if the closing price of the Company’s common stock equals or exceeds $0.50 per share over any consecutive twenty day trading period. The preferred stock terms include a one-time purchase price preference. No preferential dividends apply to the preferred stock. The preferred stock attributes include weighted average anti-dilution protection, rights to appoint one director, pre-emptive rights to purchase future offerings of securities by the Company, demand and piggy-back registration rights.

The Company has reserved thirty million shares of common stock.





F-13


Blue Line Protection Group, Inc.
Notesstock that may be issued upon the conversion and/or exercise of the preferred stock and the warrants. The preferred stock sold to Consolidated Financial Statements
(Audited)

Hypur Ventures will be subject to the terms and conditions of the Certificate of Designation, as well as further documentation to be drafted in accordance with the terms and conditions agreed upon between the Company and Hypur Ventures.

Note 1110 – WarrantsOptions and options


warrants

Options

All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-ScholesBlack-Scholes-Merton option valuation model. The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model. Volatility is an estimate based on the calculated historical volatility of similar entities in industry, in size and in financial leverage, whose share prices are publicly available. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term equal to the expected life of the award.

F-21

As of December 31, 2013, there were no warrants or options outstanding to acquire any additional shares of common stock.

On March 1, 2014, the Company issued stock options to an officer of the Company to purchase 4,806,900 shares of the Company’s common stock at an exercise price of $0.14 per share.  The options vest in three annual installments, with the first portion immediately vested.  The options carry a life of three years.

On April 1, 2014, the Company issued stock options to an employee of the Company to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.71 per share.  The options vest in three annual installments, with the first portion immediately vested.  The options carry a life of three years.

On August 1, 2014, the Company issued stock options to an officer of the Company to purchase 4,500,000 shares of the Company’s common stock at an exercise price of $0.39 per share.  The options vest in three annual installments, with the first portion immediately vested.  The options carry a life of three years.

On August 1, 2014, the Company issued stock options to an officer of the Company to purchase 1,200,000 shares of the Company’s common stock at an exercise price of $0.39 per share.  The options vest in three annual installments, with the first portion immediately vested.  The options carry a life of three years.

On October 1, 2014, the Company issued non-employee stock options to a third-party consultant purchase up to 30,000 shares of the Company’s common stock.  The options have a fair market value of $13,160, all of which was recognized as professional fees during the year ended December 31, 2014.

On December 10, 2014, the Company issued stock options to its employees under an incentive plan. The employees were granted options to purchase up to an aggregate of 900,000 shares of the Company’s common stock at an exercise price of $0.25 per share and carry a life of three years.




F-14


Blue Line Protection Group, Inc.
Notes to Consolidated Financial Statements
(Audited)

Note 11 – Warrants and options (continued)

The following is a summary of the Company’s stock option activity:


 
Number
Of Shares
 
Weighted-Average
Exercise Price
Outstanding at December 31, 20120 $ 0.00
Granted0 $ 0.00
Exercised0 $ 0.00
Vested0 $ 0.00
Cancelled0 $ 0.00
Outstanding at December 31, 20130 $ 0.00
Granted10,836,900 $ 0.29
Exercised0 $ 0.00
Vested2,204,417 $ 0.58
Cancelled0 $ 0.00
Outstanding at December 31, 201410,836,900 $ 0.29
Options exercisable at December 31, 20130 $ 0.00
Options exercisable at December 31, 20142,204,417 $ 0.58

activity for the year ended December 31, 2022:

Summary of Stock Option Activity

  Number Of
Options		  

Weighted-Average

Exercise Price

 
       
Outstanding at December 31, 2021  -  $- 
Granted  3,114,500  $0.21 
Expired  -  $- 
Cancelled  (92,500) $0.21 
Outstanding at December 31, 2022  3,022,000  $0.21 
Options exercisable at December 31, 2022  1,541,000  $0.21 

The following tables summarize information about stock options outstanding and exercisable at December 31, 2014:


  OPTIONS OUTSTANDING AND EXERCISABLE
 
 
Range of
Exercise Prices
 
 
 
Number of
Options
Outstanding
 
 
Weighted-Average
Remaining
Contractual
Life in Years
 
 
Weighted-
Average
Exercise Price
 
 
 
 
Number Exercisable
 
 
Weighted-
Average
Exercise Price
$ 0.14 - 0.71 10,836,900 2.39 $ 0.29 2,204,417 $ 0.58
  10,836,900 2.39 $ 0.29 2,204,417 $ 0.58

2022 and December 31, 2020:

Schedule of Stock Options Outstanding and Exercisable Exercise Price Range

OPTIONS OUTSTANDING AND EXERCISABLE AT DECEMBER 31, 2022 
Range of
Exercise Prices		  Number of
Options
Outstanding		  Weighted-
Average
Remaining
Contractual
Life in Years		  Weighted-
Average
Exercise Price		  Number
Exercisable		  Weighted-
Average
Exercise Price		 
$0.21   3,022,000   4.75  $0.21   1,541,000  $0.21 

Total stock-based compensation expense in connection with options granted to employeesand modified awards recognized in the consolidated statement of operations for the years ended December 31, 20142022 and 20132021 was $480,676$327,596 and $0,$0 respectively.


Note 1211 – Income taxes


On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”) that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carry backs, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); modifying or repealing many business deductions and credits, including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as “orphan drugs”; and repeal of the federal Alternative Minimum Tax (“AMT”).

The staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. In connection with the initial analysis of the impact of the TCJA, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company’s deferred tax assets and liabilities was offset by a change in the valuation allowance.

For the yearsyear ended December 31, 2014 and 2013,2022 the Company incurredcompany had an operating profit but had a net operating lossesloss as of December 31, 2021 that exceeded the profit and accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 20142022 and 2013,2021, the Company had approximately $2,528,422$8,928,421 and $102,481$8,780,500 of federal and state net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2026.2029. The provision for income taxes consisted of the following components for the years ended December 31:


Components of net deferred tax assets, including a valuation allowance, are as follows at December 31:

Schedule of Components of Deferred Tax Assets

  2022  2021 
  December 31 
  2022  2021 
Deferred tax assets:        
Net operating loss carry forwards $(1,874,970) $(1,843,905)
Valuation allowance $(1,874,970)  (1,843,905)
Total deferred tax assets $-  $- 

F-22

  December 31 
  2014  2013 
Deferred tax assets:      
  Net operating loss carry forwards $884,948  $35,868 
  Valuation allowance  (884,948)  (35,868)
    Total deferred tax assets $-  $- 



F-15


Blue Line Protection Group, Inc.
Notes

FASB ASC 740, Income Taxes, requires a valuation allowance to Consolidated Financial Statements

(Audited)

Note 12 –reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, management has determined that a full valuation allowance of $1,874,970 and $1,843,905 against its net deferred taxes is necessary as of December 31, 2022 and December 31, 2021, respectively. The change in valuation allowance for the years ended December 31, 2022 and 2021 is $(31,065) and $(202,258) respectively.

At December 31, 2022 and December 31, 2021, respectively, the Company had $8,928,427 and $8,780,500, respectively, of U.S. net operating loss carryforwards remaining.

As a result of certain ownership changes, the Company may be subject to an annual limitation on the utilization of its U.S. net operating loss carryforwards pursuant to Section 382 of the Internal Revenue Code. A study to determine the effect, if any, of this change, has not been undertaken.

Tax returns for the years ended December 31, 2022, 2021, 2020, 2019, and 2018 are subject to examination by the Internal Revenue Service.

A reconciliation of the Company’s income taxes to amounts calculated at the federal statutory rate is as follows for the years ended December 31:

Schedule of Effective Income taxes (continued)


Tax Rate Reconciliation

  2022  2021 
       
Federal statutory taxes  (21.00)%  (21.00)%
Change in tax rate estimate  —   — 
Change in valuation allowance  21.00%  21.00%
   —%  —%

The valuation allowance for deferred tax assets as of December 31, 20142022 and 20132021 was $884,948$1,874,970 and $35,868,$1,843,905 respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of December 31, 20142022 and 201321 and recorded a full valuation allowance.


Reconciliation between the statutory rate and the effective tax rate is as follows at December 31:

  2022  2021 
Federal statutory tax Reconciliation rate  (21.0)%  (21.0)%
Permanent difference and other  21.0%  21.0%

  2014 & 2013

Federal statutory tax rate                                                   (35.0) %
Permanent difference and other                                          35.0 %

Note 1312 – Related party transactions


During the years ended December 31, 2014 and 2013, officers ofSubsequent events

On March 14, 2023, the Company donated cash in the amountentered into a lease extension for 4328 E. Magnolia Street location. The lease expires on May 31, 2028, with payments as follows:

Schedule of $127,106 and $15,250, respectively.  All donated cash is considered to be additional paid-in capital.


On July 31, 2014, the Company borrowed $98,150 from an entity materially controlled by an officer and shareholder of the Company.  The loan is due and payable on demand and bears no interest.  As of December 31, 2014, the principal balance owed on this loan is $98,150.

On October 10, 2014, the Company acquired all of the outstanding stock of Blue Line Capital, Inc. from a shareholder, for $100 in cash.  At the time of the purchase, BL Capital had no material assets or liabilities and conducted no operations.  BL Capital’s sole asset is 2,000,000 ownership units of Integrated Compliance Solutions, LLC, a Nevada limited liability company formerly known as Blue Line Financial Services, LLC.

Through December 31, 2014, an officer and shareholder loaned the Company an aggregate of $286,446, in the form of cash and expenses paid on behalf of the Company.  The loan is due and payable on demand and bears no interest.  Lease Expiration Payments

Months 1-12:  $6,379.20 
Months 13-24:  $6,591.84 
Months 25-36:  $6,804.48 
Months 37-48:  $7,017.12 
Months 49-60:  $7,229.76 

The Company has repaid $106,325 and as of December 31, 2014,evaluated all other subsequent events from the principal balance owed on this loan is $180,121.


On November 25, 2014, the Company borrowed $10,000 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  As of December 31, 2014, the principal balance owed on this loan is $10,000.

Note 14 – Subsequent Events

The Company’s management has reviewed all material eventssheet date through the date of this report in accordance with ASC 855-10,the financial statements were issued and believeshas determined there are no further material subsequentadditional events to report.





F-16

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms.  Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.  We evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. As a result of this evaluation, management concluded that our disclosure controls and procedures were effective for the period ended December 31, 2014, with the exception of the following:

Lack of Functioning Audit Committee:  We do not have an Audit Committee; our board of directors currently acts as our Audit Committee.  We do not have an independent director and out current director is not considered a “Financial Expert,” within the meaning of Section 407 of the Sarbanes-Oxley Act.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

disclosed.

1.  Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;F-23

2.  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

3.  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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of December 31, 2014, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments.  Based on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below:


24


Lack of Functioning Audit Committee:  We do not have an Audit Committee; our board of directors currently acts as our Audit Committee.  We do not have an independent director and out current director is not considered a “Financial Expert,” within the meaning of Section 407 of the Sarbanes-Oxley Act.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this annual report.

Implemented or Planned Remedial Actions in response to the Material Weaknesses

Our management believes the lack of a functioning Audit Committee has not had a material effect on our financial results.  Our present management will continue to address our need for additional financial personnel and other independent members for our Board of Directors and identify an “expert” for the Audit Committee to advise other members with regard to accounting and reporting procedures.

We will continue to strive to correct the above noted weakness in internal control once we have adequate funds to do so. When funds become are available, we will be able to appoint a qualified independent director.  Appointing a financial expert to serve on our Audit Committee will improve the overall performance of Company’s controls over our financial reporting.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

The following changes in our internal control over financial reporting occurred during the year ended December 31, 2014, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

During the year ended December 31, 2014, we added personnel to our administrative and accounting staffs.

The Company’s management, including the chief executive officer and principal financial officer, do not expect that its disclosure controls or internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

ITEM 9B. OTHER INFORMATION

None.


25

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our directors are elected by the stockholders to a term of one year and serve until their successors are elected and qualified.  The officers are appointed by our Board of Directors to a term of one year and serve until his/her successor is duly elected and qualified, or until he/she is removed from office.

The names and ages of our directors and executive officers and their positions are as follows:

NameAgePosition
Sean Campbell49Chief Executive Officer
Ricky G. Bennett58Vice President of Operations and Compliance
Patrick Deparini40Chief Financial Officer

Notes:

All directors hold office until the next annual meeting of the stockholders, which shall be held in September of 2015, and until successors have been elected and qualified.  Executive officers are appointed by the Board of Directors and hold office until they resign or are removed from office.

Background of Directors, Executive Officers, Promoters and Control Persons

Sean Campbell has, since 2008, been Co-Portfolio Manager and Managing Director of MKM Capital Advisors LLC where he is responsible for evaluation of companies for potential investment and assisting companies preparing for public listings in assembling their management teams. Mr. Campbell has also been a consultant to numerous development stage companies considering and engaging in public listings.

Ricky G. Bennett was, between October 2013 and March 2014, an independent consultant to Convercent, Inc., a Denver, Colorado-based corporation which develops and markets computer software which firms use to comply with human resource regulations and conduct employee training.  Between 2011 and October 2013 Mr. Bennett was Vice President of Professional Services and Director of Training for Convercent.  Between 2008 and 2010 Mr. Bennett was an Interstate Compact and Youth Offender Officer for the Colorado Department of Corrections.  In this position, Mr. Bennett used a variety of strategies and services to instill pro-social behaviors in offenders transitioning into the community.  Mr. Bennett joined the Aurora, Colorado Police Department in 1980, served as the Aurora Chief of Police between 2002 and 2005, and retired as a commander in 2007.

Patrick Deparini received a Bachelor of Science degree in Finance, with an emphasis on Managerial Finance, from the University of Nevada, Las Vegas.  In the past 13 years, he has served as officer and/or director of numerous privately- and publicly-held corporations.  

Family Relationships

There are no family relationships among any of our officers or directors.

Liability and Indemnification of Officers and Directors

Under our Articles of Incorporation, our directors are not liable for monetary damages for breach of fiduciary duty, except in connection with:

·  A breach of a director’s duty of loyalty to us or our stockholders;
·  Acts or omissions not in good faith or which involve intentional misconduct, fraud or a knowing violation of law;
·  A transaction from which a director received an improper benefit; or
·  An act or omission for which the liability of a director is expressly provided under Nevada law.


26


Our Articles of Incorporation and Bylaws require us to indemnify our officers and directors and other persons against expenses, judgments, fines and amounts incurred or paid in settlement in connection with civil or criminal claims, actions, suits or proceedings against such persons by reason of serving or having served as officers, directors, or in other capacities, if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to our best interests and, in a criminal action or proceeding, if he had no reasonable cause to believe that his/her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no contest or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to our best interests or that he or she had reasonable cause to believe his or her conduct was unlawful.  Indemnification as provided in our Bylaws will be made only as authorized in a specific case and upon a determination that the person met the applicable standards of conduct.  Insofar as the limitation of, or indemnification for, liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, or persons controlling us pursuant to the foregoing, or otherwise, we have been advised that, in the opinion of the SEC, such limitation or indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Involvement on Certain Material Legal Proceedings During the Last Five Years

No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.

No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.

No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.

No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.

Audit Committee and Financial Expert

We do not have an Audit Committee. Our directors perform some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.

We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.

Code of Ethics

We have not adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions in that our sole officer and director serves in all the above capacities.

Corporate Governance

Nominating Committee

We do not have a Nominating Committee or Nominating Committee Charter. Our directors perform the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are a development stage company.

Director Nomination Procedures

Nominees for Directors are identified and suggested by the members of the Board or management using their business networks. The Board has not retained any executive search firms or other third parties to identify or evaluate director candidates and does not intend to in the near future. In selecting a nominee for director, the Board or management considers the following criteria:

27


1.  Whether the nominee has the personal attributes for successful service on the Board, such as demonstrated character and integrity; experience at a strategy/policy setting level; managerial experience dealing with complex problems; an ability to work effectively with others; and sufficient time to devote to our affairs;

2.  Whether the nominee has been the chief executive officer or senior executive of a public company or a leader of a similar organization, including industry groups, universities or governmental organizations;

3.  Whether the nominee, by virtue of particular experience, technical expertise or specialized skills or contacts relevant to our current or future business, will add specific value as a Board member; and

4.  Whether there are any other factors related to the ability and willingness of a new nominee to serve, or an existing Board member to continue his service.

The Board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for Board membership. Rather, the Board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the Board’s current expectations with respect to each such criterion and make a determination regarding whether a candidate should be recommended to the stockholders for election as a Director. During 2014, we received no recommendation for Directors from our stockholders.

We will consider for inclusion in our nominations of new Board of Directors nominees proposed by stockholders who have held at least 1% of our outstanding voting securities for at least one year. Board candidates referred by such stockholders will be considered on the same basis as Board candidates referred from other sources. Any stockholder who wishes to recommend for our consideration a prospective nominee to serve on the Board of Directors may do so by giving the candidate’s name and qualifications in writing to our Secretary at the following address: 1350 Independence St., Lakewood, CO 80215.

ITEM 11. EXECUTIVE COMPENSATION

Overview of Compensation Program

We currently have not appointed members to serve on the Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Board of Directors ensures that the total compensation paid to the executives is fair, reasonable and competitive.

Compensation Philosophy and Objectives

The Board of Directors believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company and that aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. As a result of the size of the Company and only having two executive officers, the Board evaluates both performance and compensation on an informal basis. Upon hiring additional executives, the Board intends to evaluate the necessity of establishing a Compensation Committee to evaluate both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.

Role of Executive Officers in Compensation Decisions

The Board of Directors makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and Directors of the Company. Decisions regarding the non-equity compensation of other employees of the Company are made by management.

Summary Compensation Table

The following table sets forth, for the last completed fiscal years ended December 31, 2014 and 2013 the cash compensation paid by the Company, as well as certain other compensation paid with respect to those years to our officers:

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Summary Compensation Table
 
Name and
Principal Position
YearSalary ($)Bonus ($)Stock Awards ($)Option Awards ($)Non-Equity Incentive Plan Compen-sation ($)Non-qualified Deferred Compen-sation Earnings ($)All Other Compen-sation ($)
Total
($)
          
David Uddman (1)201400000000
Former President201300000000
          
Jolene Uddman (1)201400000000
Former Treasurer201300000000
          
Sean Campbell (2)201446,15400423,090000469,244
CEO         
          
Ricky G. Bennett (3)201459,46900203,941000263,410
VP of Operations         
          
Ted Daniels (4)201423,0770000012,52035,597
VP of Sales         
          
Dan Sullivan (5)201445,231001,749,6200037,1941,821,485
VP of Marketing         
          
Patrick Deparini (6)2014000466,564000466,564
CFO         

(1)  Mr. and Mrs. Uddman resigned as our officers and directors on February 19, 2014.
(2)  Mr. Campbell was appointed as CEO on March 1, 2014.  Mr. Campbell was granted 4,806,900 stock options, vesting over three annual installments and exercisable at $0.14 per share.
(3)  Mr. Bennett was appointed as an officer on March 24, 2014.  Mr. Bennett was granted 300,000 stock options, vesting over three annual installments and exercisable at $0.71 per share.
(4)  Mr. Daniels was appointed as VP of Sales on March 14, 2014 and was terminated on December 12, 2014.
(5)  Mr. Sullivan was appointed as VP of Marketing on March 14, 2014 and was terminated in February 2015.  Mr. Sullivan was granted 4,500,000 stock options, vesting over three annual installments and exercisable at $0.39 per share.
(6)  Mr. Deparini was appointed as CFO on August 4, 2014.  Mr. Deparini was granted 1,200,000 stock options, vesting over three annual installments and exercisable at $0.39 per share.

 Directors' Compensation

Our directors are not entitled to receive compensation for services rendered to us, or for each meeting attended except for reimbursement of out-of-pocket expenses.  We have no formal or informal arrangements or agreements to compensate our director for services she provides as a director of our company.


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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

The following table shows the beneficial ownership of the Company’s common stock as of December 31, 2014 by (i) each person whom the Company knows beneficially owns more than 5% of the outstanding shares of the Company’s common stock; (ii) each of the Company’s officers and directors; and (iii) all the officers and directors as a group.  Unless otherwise indicated, each owner has sole voting and investment powers over his shares of common stock.
Title Of Class Name, Title and Address of Beneficial Owner of Shares Amount of Beneficial Ownership Percent of Class
       
Common Sean Campbell, CEO 14,772,688 12.0%
Common Ricky G. Bennett, VP of Operations and Compliance 668,000 0.5%
Common Patrick Deparini, CFO 42,000 0.0%
       
  All Directors and Officers as a group (3 persons) 15,482,688 12.5%
       
Common NSG Group, Inc. 6,280,390 5.1%
Common Dan Sullivan, Former VP of Marketing (1) 26,754,755 21.7%

Note: As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).

(1)  Includes 4,000,000 shares of the Company’s common stock held by Arapahoe Foundation, 10,904,455 shares held by Emerald Enterprises and 11,850,300 held in the name of Daniel Sullivan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

On July 31, 2014, we borrowed $98,150 from an entity materially controlled by an officer and shareholder.  The loan is due and payable on demand and bears no interest.  As of December 31, 2014, the principal balance owed on this loan is $98,150.

On October 10, 2014, we acquired all of the outstanding stock of Blue Line Capital, Inc. from Daniel Sullivan, a shareholder, for $100 in cash.  At the time of the purchase, BL Capital had no material assets or liabilities and conducted no operations.  BL Capital’s sole asset is 2,000,000 ownership units of Integrated Compliance Solutions, LLC, a Nevada limited liability company formerly known as Blue Line Financial Services, LLC.

Through December 31, 2014, an officer and shareholder loaned us an aggregate of $286,446, in the form of cash and expenses paid on behalf of the Company.  The loan is due and payable on demand and bears no interest.  We repaid $106,325 and as of December 31, 2014, the principal balance owed on this loan is $180,121.

On November 25, 2014, we borrowed $10,000 from an entity materially controlled by a shareholder.  The loan is due and payable on demand and bears no interest.  As of December 31, 2014, the principal balance owed on this loan is $10,000.

Director Independence

We currently do not have any independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide. Since the Over the Counter Bulletin Board (“OTCBB”) does not have rules regarding director independence, the Board makes its determination as to director independence based on the definition of “independence” as defined under the rules of the New York Stock Exchange (“NYSE”) and American Stock Exchange (“Amex”).


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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees billed to us by our independent auditors for the years ended 2014 and 2013 for (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.

SERVICES2014 2013
    
Audit fees$     20,814 $     10,575
Audit-related fees- -
Tax fees- -
All other fees- -
    
Total fees$     20,814 $     10,575

Audit fees and audit related fees represent amounts billed for professional services rendered for the audit of our annual financial statements and the review of our interim financial statements.  Before our independent accountants were engaged by to render these services, their engagement was approved by our Directors.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit NumberName and/or Identification of Exhibit
3Articles of Incorporation & By-Laws
(a) Articles of Incorporation (1)
(b) By-Laws (1)
31Rule 13a-14(a)/15d-14(a) Certifications
32Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
101
Interactive Data Files (2)
(INS) XBRL Instance Document
(SCH) XBRL Taxonomy Extension Schema Document
(CAL) XBRL Taxonomy Extension Calculation Linkbase Document
(DEF) XBRL Taxonomy Extension Definition Linkbase Document
(LAB) XBRL Taxonomy Extension Label Linkbase Document
(PRE) XBRL Taxonomy Extension Presenation Linkbase Document
(1)  Incorporated by reference to the Registration Statement on Form 10-SB, previously filed with the SEC on November 28, 2007.
(2)  XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


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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, thereto duly authorized.

BLUE LINE PROTECTION GROUP, INC.
(Registrant)
By: /s/ Sean Campbell
Sean Campbell, Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, this Annual Report was signed by the following persons in the capacities and on the dates stated:

SignatureTitleDate
/s/ Sean CampbellChief Executive OfficerApril 15, 2015
Sean Campbell
/s/ Patrick DepariniChief Financial OfficerApril 15, 2015
Patrick Deparini
/s/ Patrick DepariniChief Accounting OfficerApril 15, 2015
Patrick Deparini



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