UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q+~~ 10-Q

[ ] X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2018~~ March 31, 2019

[ ~~] TRANSITION~~]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: ~~001-35902~~ 000-52942

BLUE LINE PROTECTION GROUP, INC. ~~------------------------------------------ (Exact~~

(Exact name of registrant as specified in its charter) Nevada 20-5543728 ---------------------------------- --------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 5765 Logan St. Denver, CO 80216 ---------------------------------- --------------------------------- (Address of principal executive (Zip Code) offices) (800) 844-5576 ---------------------------------------------------------- (Registrant's telephone number, including area code) N/A --------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report)

Nevada		20-5543728
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

5765 Logan St. Denver, CO		80216
(Address of principal executive offices)		(Zip Code)

(800) 844-5576

(Registrant’s telephone number, including area code)

N/A

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

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 ? [ ]

Indicate by a checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ~~(ss.~~(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ?[ ] No ? [X]

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 definitions of ~~"large~~“large accelerated filer,~~" "accelerated filer"~~” “accelerated filer”, ~~"smaller~~“smaller reporting ~~company"~~company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller reporting company [X] Emerging growth company [ ]

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[ ]

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

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

As of ~~November 19, 2018,~~May 17, 2019, the registrant had ~~334,191,700~~514,474,972 outstanding shares of common stock. 1

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

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

FORWARD-LOOKING STATEMENTS

The information in this report contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, ("(“the Exchange ~~Act"~~Act”), which are subject to the ~~"safe harbor"~~“safe harbor” created by those sections. The words ~~"anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "should," "could," "predicts," "potential," "continue," "would"~~“anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement. 2

BLUE LINE PROTECTION GROUP, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, 2018 2017 ------------ ------------ Assets Current assets: Cash and equivalents $ - $ 37,771 Accounts receivable, net 159,044 196,030 Accrued receivables 56,922 10,378 Prepaid expenses and deposits 77,496 24,628 ---------- ---------- Total current assets 293,462 268,807 ---------- ---------- Fixed assets: Machinery and equipment, net 275,818 114,677 Security Deposit 38,958 32,850 Fixed assets of discontinued operations 2,782 2,782 ---------- ---------- Total fixed assets 317,558 150,309 ========== ========== Total assets 611,020 419,116 ========== ========== Liabilities and Stockholders' Deficit Current liabilities: Cash overdraft $ 50,479 $ - Accounts payable and accrued liabilities 699,325 642,059 Notes payable 85,000 110,225 Notes payable - related parties 412,846 419,846 Convertible notes payable, net of unamortized discount 1,436,915 359,953 Convertible notes payable - related parties, net of unamortized discount 327,583 1,057,726 Current portion of long-term debt 4,310 2,121 Current liabilities of discontinued operations - 1,335 Derivative liabilities 577,680 1,879,930 ---------- ---------- Total current liabilities 3,594,138 4,473,195 ---------- ---------- Long-term liabilities: Long-term debt 2,564 6,518 ---------- ---------- Total current liabilities 2,564 6,518 ---------- ---------- Total liabilities 3,596,702 4,479,713 ---------- ---------- Stockholders' deficit: Preferred Stock, $0.001 par value, 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively 20,000 20,000 Common Stock, $0.001 par value, 1,400,000,000 shares authorized, 202,040,148 and 128,348,026 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively 202,041 128,348 Common Stock, owed but not issued, 12,923 shares and 12,923 shares as of September 30, 2018 and December 31, 2017, respectively 13 13 Additional paid-in capital 6,837,620 5,417,266 Accumulated deficit (10,045,356) (9,626,224) ---------- ---------- Total stockholders' deficit (2,985,682) (4,060,597) ---------- ---------- Total liabilities and stockholders' deficit $ 611,020 $ 419,116 =========== ==========

(unaudited)

	March 31, 2019			December 31, 2018
Assets
Current assets:
Cash and equivalents	$	48,319		$	15,862
Accounts receivable, net		315,613			300,188
Prepaid expenses and deposits		18,137			21,831
Total current assets		382,069			337,881

Fixed assets:
Right to use assets		636,429			-
Machinery and equipment, net		483,163			393,289
Security Deposit		42,158			38,958
Fixed assets of discontinued operations		2,782			2,782
Total fixed assets		1,164,532			435,029

Total assets		1,546,601		$	772,910

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued liabilities	$	815,837		$	813,683
Operating lease liability-short-term		50,336
Notes payable		160,000			85,054
Notes payable - related parties		692,846			707,847
Convertible notes payable, net of unamortized discount		195,000			248,952
Convertible notes payable - related parties, net of unamortized discount		1,821,507			1,475,068
Current portion of long-term debt		3,651			4,310
Current portion of finance lease obligation		45,459			34,505
Current liabilities of discontinued operations		1,334			1,334
Derivative liabilities		813,988			727,332
Total current liabilities		4,599,958			4,098,085

Long-term liabilities:
Operating lease liability-long term		610,302			-
Long-term portion of finance lease obligations		71,268			57,534
Long-term debt		-			368
Total current liabilities		681,570			57,902

Total liabilities		5,281,528			4,155,987
Stockholders’ deficit:
Preferred Stock, $0.001 par value, 100,000,000 shares authorized, 20,000,000 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		20,000			20,000
Common Stock, $0.001 par value, 1,400,000,000 shares authorized, 467,367,574 and 368,468,701 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		467,368			368,469
Common Stock, owed but not issued, 12,923 shares and 12,923 sharesas of March 31, 2019 and December 31, 2018, respectively		13			13
Additional paid-in capital		7,225,487			7,107,400
Accumulated deficit		(11,447,795	)		(10,878,959	)
Total stockholders’ deficit		(3,734,927	)		(3,383,077	)

Total liabilities and stockholders’ deficit	$	1,546,601		$	772,910

The accompanying notes are an integral part of these unaudited consolidated financial statements. 3

BLUE LINE PROTECTION GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS ~~(UNAUDITED)~~ For the three months ended For the Nine Months Ended September 30, September 30, ----------------------------------- ---------------------------------- 2018 2017 2018 2017 ----------------- ---------------- ------------------- ------------- Revenue $ 955,142 $ 1,007,687 $ 3,152,157 $ 2,830,789 Cost of revenue (750,525) (763,117) (2,175,410) (2,165,374) -------------- ------------- ------------- ------------ Gross profit 204,617 244,570 976,747 665,415 Operating expenses: Advertising 3,011 2,663 7,598 7,209 Depreciation 17,433 11,801 44,793 35,779 General and administrative expenses 593,877 511,206 1,578,945 1,442,065 Loss of disposal of assets - - -------------- ------------- ------------- ------------ Total expenses 614,321 525,670 1,631,336 1,485,053 -------------- ------------- ------------- ------------ Operating loss (409,704) (281,100) (654,589) (819,638) Other income (expenses): Other income - - 72,890 Disposition of Fixed Assets (3,420) - (3,420) - Interest expense (347,640) (135,533) (1,023,839) (236,059) Interest income - 195 - - Gain/(loss) on fair value of derivative securities 174,398 - 1,262,716 - -------------- ------------- ------------- ------------ Total other income (expenses) (176,662) (135,533) 235,457 (163,169) -------------- ------------- ------------- ------------ Net loss $ (586,366) $ (416,633) $ (419,132) $ (982,807) ============== ============= ============= ============ Net loss per common share: Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.01) ============== ============= ============= ============ Weighted average number of common shares outstanding- Basic and Diluted 146,343,516 128,011,069 164,684,835 127,571,469 ============== ============= ============= ============

~~(UNAUDITED)~~

For the Three Months Ended
March 31,
2019 2018
Revenue $ 928,609 $ 1,041,306
Cost of revenue (530,117 ) (771,171 )
Gross profit 398,492 270,135

Operating expenses:
Advertising 3,770 2,309
Depreciation 31,082 13,236
General and administrative expenses 559,432 456,600
Total expenses 594,284 472,145

Operating loss (195,792 ) (202,010 )

Other income (expenses):
Other income -
Interest expense (518,950 ) (312,398 )
Income / (Loss) on derivative 145,906 (1,603,706 )
Total other expenses (373,044 ) (1,916,104 )

Net income / (loss) $ (568,836 ) $ (2,118,114 )

Net loss per common share: Basic and Diluted $ (0.00 ) $ (0.02 )

Weighted average number ofcommon shares outstanding- Basic and Diluted 415,378,581 132,921,561
The accompanying notes are an integral part of these unaudited consolidated financial statements. 4
BLUE LINE PROTECTION GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Nine Months Ended September 30, ----------------------------- 2018 2017 ----------- --------- Operating activities Net loss $(419,132) $ (982,807) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 44,793 35,779 Amortization of stock options 52,437 77,025 Amortization of discounts on notes payable 809,309 68,358 Common stock issued for services 31,917 Penalty interest - 38,750 Convertible note for expenses paid on behalf of company 30,217 - Gain on change in fair value of derivative liabilities (1,262,716) - Changes in operating assets and liabilities: Increase in accounts receivable (9,558) (70,993) (Increase) / decrease in deposits and prepaid expenses (58,976) 24,717 Increase in accounts payable and accrued liabilities 79,274 127,428 Discontinued operations accounts payable and accrued liabilities (1,335) (1,335) ---------- --------- Net cash used in operating activities (703,770) (683,078) ---------- --------- Cash flows from investing activities Purchase of fixed assets (205,934) (1,590) ---------- --------- Net cash used in investing activities (205,934) (1,590) ---------- --------- Financing activities Cash overdraft 50,479 76,678 Proceeds from notes payable - related party 127,000 332,764 Repayments from notes payable - related party (134,000) (332,764) Proceeds from notes payable - 113,700 Proceeds from convertible note - related party, net of original issue discount 430,000 460,000 Repayment of notes payable (35,782) (164,278) Repayment of convertible note - (125,000) Penalty payment - (38,750) Payments on auto loan (1,764) (3,182) Proceeds from convertible notes payable, net of original discount costs 436,000 365,500 ---------- --------- Net cash provided by financing activities 871,933 684,668 ---------- --------- Net decrease in cash (37,771) - Cash - beginning 37,771 - ---------- --------- Cash - ending $ - $ - ========== ========= Supplemental disclosures of cash flow information: Interest paid $ 3,432 $ 54,477 ========== ========= Income taxes paid $ - $ - ========== ========= Debt discount due to derivative liability $ - $ - ========== ========= Non-cash investing and financing activities: Debt discount due to derivative liability $ 777,149 $ - Debt discount due to beneficial conversion feature $ - $ 71,400 Common stock issued for conversion of debt and interest $ 593,010 $ - Derivative resolution $ 816,683 $ -
(unaudited)
For the three months ended
March 31,
2019 2018
Operating activities
Net income / (loss) $ (568,836 ) $ (2,118,114 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 31,082 13,236
Loss on disposal of fixed assets
Amortization of Options - 18,091
Amortization of discounts on notes payable 437,913 267,963
Noncash lease expense 13,723 -
Common stock issued for services - 31,917
(Gain) /loss on fair value of derivative liabilities (145,906 ) 1,603,706
Changes in operating assets and liabilities:
(Increase) in accounts receivable (15,425 ) (48,617 )
(Increase) / decrease in deposits and prepaid expenses 494 3,694
Increase in accounts payable and accrued liabilities 28,236 (105,337 )
Increase in lease obligation
(11,475
)
(Decrease) in long-term liabilities - (1,335 )
Net cash used in operating activities (230,194 ) (334,796 )

Cash flows from investing activities
Purchase of fixed assets (56,602 ) -
Net cash provided by/(used in) investing activities (56,602 ) -

Financing activities
Cash overdraft - 62,027
Payment of lease obligations
(39,720
)
-

Proceeds from notes payable
75,000 -
Proceeds from notes payable - related party 15,000 55,000
Repayments from notes payable - related party (30,000 ) (89,000 )
Repayment of notes payable - (25,798 )
Proceeds from convertible notes payable - related party 300,000 -
Payments on auto loan (1,027 ) (704 )
Proceeds from convertible notes payable, net of original discount costs - 295,500
Net cash provided by financing activities 319,253 297,025

Net decrease in cash 32,457 (37,771 )
Cash - beginning 15,862 -
Cash - ending $ 48,319 $ (37,771 )

Supplemental disclosures of cash flow information:
Interest paid $ - $ 3,432
Income taxes paid $ - $ -

Non-cash investing and financing activities:
Debt discount due to derivative liability $ 371,172 $ 205,000
Common stock issued for conversion of debt and interest $ 78,376 $ 190,840
Derivative resolution $ 138,610 $ 321,590
Right of use assets and operating lease obligations recognized $ 650,152 $ -
Financed lease assets $ 64,354 $
The accompanying notes are an integral part of these unaudited consolidated financial statements. 5
BLUE LINE PROTECTION GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018
(unaudited)
Preferred Stock Common Stock Additional
Paid-in Stock Accumulated
Stockholders’
Equity

Shares Amount Shares Amount Capital Payable Deficit (Deficit)
Balance, December 31, 2017 20,000,000 $ 20,000 $ 128,348,026 $ 128,348 $ 5,417,266 $ 13 $ (9,626,224 ) $ (4,060,597 )

Common stock issued for services - - 1,000,000 1,000 30,917 - - 31,917

Derivative resolution - - - - 321,590 - - 321,590

Amortization of employee stock options - - - - 18,091 - - 18,091

Common stock issued for conversion of debt and accrued interest - - 7,901,259 7,901 182,939 - - 190,840

Net loss for the three months ended March 31, 2018 - - - - - - (2,118,114 ) (2,118,114 )
Balance, March 31, 2018 20,000,000 $ 20,000 $ 137,249,285 $ 137,249 $ 5,970,803 $ 13 $ (11,744,338 ) $ (5,616,273 )
Preferred Stock Common Stock Additional
Paid-in Stock Accumulated Stockholders’
Equity
Shares Amount Shares Amount Capital Payable Deficit (Deficit)
Balance, December 31, 2018 20,000,000 $ 20,000 $ 368,468,701 $ 368,469 $ 7,107,400 $ 13 $ (10,878,959 ) $ (3,383,077 )

Derivative resolution - - - 138,610 138,610

Amortization of employee stock options - - - -

Common stock issued for conversion of debt and accrued interest - - 98,898,873 98,899 (20,523 ) 78,376

Net loss for the three months ended March 31, 2019 - - - - - - (568,836 ) (568,836 )
Balance, March 31, 2019 20,000,000 $ 20,000 467,367,574 $ 467,368 $ 7,225,487 $ 13 $ (11,447,795 ) $ (3,734,927 )
The accompanying notes are an integral part of unaudited these consolidated financial statements.
Blue Line Protection Group, Inc.
Notes to Unaudited Consolidated Financial Statements ~~(Unaudited)~~
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 per share.
On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 ("(“Blue Line ~~Colorado"~~Colorado”), as a wholly-owned subsidiary of the Company. Blue Line Colorado provides protection, compliance and financial services to the lawful cannabis industry.
On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. ~~("BLPG"~~(“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. Additionally, the authorized capital of the Company concurrently increased to 1,400,000,000 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, logistics, and compliance services for businesses engaged in the legal cannabis industry. The Company offers asset logistic services, such as armored transportation service; security services, including shipment protection, money escorts, security monitoring, asset vaulting, VIP and dignitary protection, financial services, such as handling transportation and storage of currency; training; and compliance services.
Note 2 -– Accounting policies and procedures
Interim financial statements
The unaudited interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and ExchangeCommission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
In the opinion of management, these statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2017 and notes thereto included in the ~~Company's~~Company’s annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
Principles of consolidation ~~The~~
For the years ended December 31, 2018 and 2017, 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"~~“BLAS”), Blue Line Capital, Inc. (a Colorado corporation; ~~"Blue~~“Blue Line ~~Capital"~~Capital”), Blue Line Protection Group (California), Inc. (a California corporation; ~~"Blue~~“Blue Line ~~California"~~California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; ~~"Blue~~“Blue Line ~~Illinois"~~Illinois”), BLPG, Inc. (a Nevada corporation; ~~"Blue~~“Blue Line ~~Nevada"~~Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; ~~"Blue~~“Blue Line ~~Washington"~~Washington”). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the ~~"Company." 6~~ “Company.”
7
Basis of presentation
The financial statements present the balance sheets, statements of operations, ~~stockholder's~~stockholder’s equity (deficit) and cash flows of the Company. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.
The Company has adopted December 31 as its fiscal year end.
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 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
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. There were no cash equivalents as of ~~September 30,~~March 31, 2019 and December 31, 2018.
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~~Company’s best estimate of the amount of probable credit losses in the ~~Company's~~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.
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 ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~ 2018.
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: ~~Automotive Vehicles 5 years Furniture and Equipment 7 years Buildings and improvements 15 years~~
Automotive Vehicles 5 years
Furniture and Equipment 7 years
Buildings and Improvements 15 years
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 7 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 ~~of September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018. Depreciation expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 totaled $31,082 and ~~2017 totaled $17,433, $44,793, and $11,801 and $35,779,~~$13,236, respectively.
Impairment of long-lived assets
The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, ~~"Accounting~~“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~~asset’s carrying value and its fair value or disposable value. As of ~~September 30,~~March 31, 2018 and December 31, ~~2017,~~2018, the Company determined that none of its long-term assets were impaired.
Concentration of business and credit risk
The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The ~~Company's~~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 customers which generated approximately 18% of total revenue in the three months ended March 31, 2019.
The Company had three major customers which generated approximately ~~50% (22%~~55% (27%, ~~17%~~14% and ~~11%~~14%) of total revenue in the ~~nine~~three months ended ~~September 30, 2018 The Company had 5 major customers which generated approximately 64% (25%, 14%, 9%, 8% and 8%) of total revenue in the nine months ended September 30, 2017.~~ March 31, 2018.
Related party transactions
FASB ASC 850, ~~"Related~~“Related Party ~~Disclosures"~~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: 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). 8
The following table presents the derivative financial instruments, the ~~Company's~~Company’s only financial liabilities measured and recorded at fair value on the ~~Company's~~Company’s consolidated balance sheet on a recurring basis, and their level within the fair value hierarchy as of ~~September 30, 2018~~March 31, 2019 and December 31, 2017: September 30, 2018 Amount Level 1 Level 2 Level 3 ----------------------------------------- Embedded conversion derivative liability $ 543,763 $ $ - $ 543,763 Warrant derivative liabilities $ 33,917 $ $ - $ 33,917 --------- --------- --------- --------- Total $ 577,680 $ - $ - $ 577,680 ========= ========= ========= ========= 2018:
March 31, 2019
Amount Level 1 Level 2 Level 3
Embedded conversion derivative liability $ 809,070 $ - $ - $ 809,070
Warrant derivative liabilities $ 4,918 $ - $ - $ 4,918
Total $ 813,988 $ - $ - $ 813,988
December 31, 2017 Amount Level 1 Level 2 Level 3 ----------------------------------------- Embedded conversion derivative liability $1,580,51 $ $ - $1,580,51 Warrant derivative liabilities $ 299,413 $ $ - $ 299,413 --------- --------- --------- --------- Total $1,879,93 $ - $ - $1,879,93 ========= ========= ========= ========= 2018
Amount Level 1 Level 2 Level 3
Embedded conversion derivative liability $ 716,080 $ - $ - $ 716,080
Warrant derivative liabilities $ 11,252 $ - $ - $ 11,252
Total $ 727,332 $ - $ - $ 727,332
The embedded conversion feature in the convertible debt instruments that the Company issued, that became convertible ~~during the period September 30, 2018 and the year ended December 31, 2017,~~ 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 8).
Revenue Recognition
The Company recognizes revenue when delivery of the promised goods or services is transferred to its customers, in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. We determine revenue recognition ~~In May 2014,~~through the ~~FASB issued~~following 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 recorded revenue with the 5 steps above have been completed.
Effective January 1, 2018, the Company adopted ASU ~~No.~~ 2014-09, ~~"Revenue~~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 605, "Revenue Recognition." This ASU is based on the principle~~Codification. The updated guidance states that an entity should recognize revenue ~~is recognized~~ to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ~~ASU~~guidance also ~~requires~~provides for additional ~~disclosure about the nature, amount, timing and uncertainty of revenue~~disclosures with respect to revenues and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606-10-55-89 explains that the extent to which an entity's revenue is disaggregated depends on the facts and circumstances that pertain to the entity's contracts with ~~customers and that some entities may need to use more than one type of category to meet~~customers. The Company adopted the ~~objective for disaggregating revenue. In August 2015,~~standard using the FASB issued ASU No. 2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date. There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance. The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017. This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective ~~transition method.~~ approach effective January 1, 2018.
The Company adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on the ~~Company's Condensed~~Company’s Statements of Operations in for the ~~nine months~~year ended ~~September 30,~~December 31, 2018. ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606-10-55-89 explains that the extent to which an entity's revenue is disaggregated depends on the facts and circumstances that pertain to the entity's contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. 9
In general, the ~~Company's~~Company’s 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. Three months ended Nine months ended September 30, September, 30 ------------------- -------------------- Revenue Breakdown By Streams 2018 2017 2018 2017 ---- ---- ---- ---- Services - Guards $457,115 $700,258 $1,805,223 $2,125,396 Services: Currency Processing 246,806 128,410 653,926 226,384 Services: Transport 229,251 168,928 614,047 350,400 Services: Compliance 21,180 7,745 74,568 34,707 Services: Consulting -- -- -- 76,531 Other 790 2,346 4,393 7,371 -------- -------- ---------- ---------- Total $955,124 $1,007,687 $3,152,157 $2,830,789 ======== ========== ========== ==========
Three months ended
March 31,
Revenue Breakdown By Streams 2019 2018
Service- Guards $ 267,734 $ 664,825
Services: Transport 292,865 175,875
Services: Currency Processing 355,237 168,903
Services: Compliance 12,248 31,221
Other 525 1,292
Total $ 928,609 $ 1,041,306
Advertising costs
The Company expenses all costs of advertising as incurred. There were ~~$3,011, $7,598~~$3,770 and ~~$2,663, and $7,209~~$2,309 in advertising costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.
General and administrative expenses
The significant components of general and administrative expenses consist mainly of ~~legal~~rent and ~~professional fees and~~ compensation.
Stock-based compensation
The Company records stock-based compensation in accordance with FASB ASC Topic 718, ~~"Compensation -~~“Compensation – Stock Compensation."” FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the ~~employee's~~employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 505-50, ~~"Equity-Based~~“Equity-Based Payments to ~~Non-Employees"~~Non-Employees”, which requires that such equity instruments are recorded at their fair value on the measurement date, with the measurement of such compensation being subject to periodic adjustment as the underlying equity instruments vest.
Cost of Revenue
The ~~Company's~~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~~Company’s client.
Basic and Diluted Earnings per share
Net loss per share is provided in accordance with FASB ASC 260-10, ~~"Earnings~~“Earnings per ~~Share"~~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. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 all ~~common stock equivalents~~convertible instruments were excluded from the calculation of diluted loss per ~~share as their effect would be anti-dilutive.~~ share.
Dividends
The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception. 10
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.
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~~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~~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 ~~will be~~was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company ~~is currently reviewing~~elected the ~~provisions~~practical expedient under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of ~~this ASU~~at the earliest comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at January 1, 2019 but without retrospective application. Therefore, there was no impact recorded to ~~determine if there will be any impact on our results of operations, cash flows~~beginning retained earnings or financial condition. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company adopted this standard as of December 31, 2016. The adoption of this standard had no effect on our results of operation, cash flows, other than presentation, or financial condition. In April 2016, the FASB issued ASU 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. Topic 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with Topic 606. The Company adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on the Company's Condensed Statements of Operations in for the three and nine months ended September 30, 2018. operations
In April 2016, the FASB issued ASU No. 2016-15, ~~"Classification~~“Classification of Certain Cash Receipts and Cash ~~Payments"~~Payments” ASU 2016 - provides guidance regarding the classification of certain items within the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, with early adoption ~~permitted. The Company does not believe this ASU will have an impact on our results of operation, cash flows, other than presentation, or financial condition.~~ permitted
On November 17, 2016, the FASB issued ASU No. 2016-18, ~~"Statement~~“Statement of Cash Flows (Topic 230): Restricted ~~Cash"~~Cash”, a consensus of the ~~FASB's~~FASB’s Emerging Issues Task Force (the ~~"Task Force"~~“Task Force”). The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash 11 equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU No. 2016-18 is effective for public business entities for fiscal years beginning after December 15, 2017. ~~The Company does not believe this~~This ASU will not have an impact on our results of operation, cash flows, other than presentation, or financial condition.
The Company evaluated all 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.
Note 3 -– Going concern
The accompanying ~~unaudited consolidated~~ financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has ana net loss for the three months ended March 31, 2019, accumulated deficit and had a working capital deficit as of ~~September 30, 2018.~~March 31, 2019. These conditions raise substantial doubt about the ~~Company's~~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. 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 financial statements do not include any adjustments that might arise from this uncertainty.
Note 4 -– Commitments and contingencies
Contingencies Contingencies On December 28, 2015 Patrick Deparini, the Company's former CFO resigned. Mr. Deparini purports his resignation was made pursuant to a termination clause for other than cause if he is required to undertake other responsibilities other then set forth in his employment agreement. Mr., Deparini claims through the date of his resignation he is owed a total of $154,000 in unreimbursed compensation, $575 in accrued authorized expenses and the remaining balance of his base salary as defined in the employment agreement in the amount of $179,000. As of December 31, 2017 and 2016 the Company has accrued a total of $125,575 contingent liabilities On February 6, 2017, The Company received a Notification of Wage Claim from the State of Nevada Department of Business & Industry Office of the Labor Commissioner stating that Patrick Deparini had filed a claim for unpaid wages with the Office of the Labor Commissioner (the "Commissioner"). The notification states that Mr. Deparini maintains he was not paid for all hours worked between February 3, 3015 and December 28, 2015 for a total amount owed of $99,000. The Company disputed Mr. Deparini's claim with the Commissioner and responded by explaining to the Commissioner that Mr. Deparini improperly categorized his dispute with the Company as a wage claim, which it is not. If litigation is commenced the Company will attempt a reasonable out-of-court settlement and if such efforts are not successful, will defend the litigation. The Labor Commission informed the Company on August 24, 2017 that the claim was closed.
On November 6, 2015 Daniel Sullivan sent a wage claim demand. 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. As of ~~September 30,~~December 31, 2018 and December 31, 2017 the Company accrued a total of $88,968 contingent liabilities. If litigation is commenced the Company will attempt a reasonable out-of-court settlement and if such efforts are not successful, will defend the litigation.
Mile High Real Estate Group, an entity owned by Mr. Sullivan, sent correspondence 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. If the alleged loan was actually made, the Company will seek an out-of-court settlement. As of ~~September 30,~~December 31, 2018 and December 31, 2017 the Company accrued a total of $98,150. 12
On April 14, 2016, the Company entered into an agreement with an unrelated third party to provide the Company with 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 requires the Company to pay the consultant an additional $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 ~~September 30,~~December 31, 2018 and December 31, 2017 there was no payable recorded. ~~Leases~~
On February 22, 2019 the Company entered into a settlement agreement with a former employee and agreed to pay $15,000 for past due wages.
Finance leases
On April 25, 2018, the Company recorded finance lease obligation for a leased a vehicle for ~~$39,595.~~$38,388. The Company made a down payment of $7,500 and agreed to make 36 monthly payment of $1,015.78 including sales tax. ~~As of September 30, 2018~~The Company recognized this arrangement as a finance lease based on the ~~Company has not taken position~~determination that the lease exceeded 75% of the ~~vehicle and~~economic life of the ~~early termination fee is nominal.~~ underlying assets
On August 16, 2018, the Company recorded finance lease obligation for a leased a ~~vehicle.~~vehicle for $58,476. The Company made a down payment of ~~$30,000~~$20,000 and an additional $10,000 for delivery fees, taxes and its first month payment and agreed to make 36 monthly payments of $1,265.30, 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 August 16, 2018, the Company recorded finance lease obligation for a leased a ~~vehicle.~~vehicle for $58,476. The Company made a down payment of ~~$30,000~~$20,000 and an additional $10,000 for delivery fees, taxes and its first month payment and agreed to make 36 monthly payments of $1,265.30, 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 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 for 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
Future minimum lease payments:
2019 $ 47,116
2020 62,822
2021 39,476
2022 and thereafter 4,291
Total minimum lease payments $ 156,705
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 $677,681. After the sale, the Company leased the building from the purchaser of the property. The lease is for an initial term of 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 and will increase 2% annually. The Companypaid a $30,000 deposit at the inception of the ~~lease. Future minimum~~lease
The Company adopted ASC 842 and recorded right of use asset and operating lease payments: 2018 $68,293 2019 453,018 2020 155,519 2021 151,080 2022 268,075 2023liability of $650,152. 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 renew it for two additional 5 years 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 adoption date.
Supplemental balance sheet information related to leases was as follows:
Operating Leases Classification March 31, 2019
Right-of-use assets Operating right of use assets $ 636,429

Current lease liabilities Current operating lease liabilities 50,336
Non-current lease liabilities Long-term operating lease liabilities 610,302
Total lease liabilities $ 660,638
Lease term and ~~thereafter 386,454 ---------- Total minimum~~discount rate were as follows:
March 31, 2019
Weighted average remaining lease term (years) 7.4
Weighted average discount rate 12 %
The following summarizes lease ~~payments $1,482,439 ==========~~ expenses for the three months ended March 31, 2019:
Finance lease expenses:
Depreciation/amortization expense $ 31,218
Interest on lease liabilities 2,422
Finance lease expense $ 33,640
Supplemental disclosures of cash flow information related to leases were as follows:
March 31, 2019
Cash paid for operating lease liabilities $ 11,475
Operating right of use assets obtained in exchange for operating lease liabilities $ 650,152
Maturities of lease liabilities were as follows as of March 31, 2019:
Operating
Leases

Remainder of 2019 $ 93,844
2020 127,556
2021 130,105
2022 132,713
2023 135,369
2024 138,074
2025
140,838

2026

107,889

Total
1,006,058

Less: Imputed interest (345,420 )
Present value of lease liabilities $ 660,638
Note 5 -– Fixed assets
Machinery and equipment consisted of the following at: September 30, December 31, 2018 2017 ------------ ----------- Automotive vehicles $ 162,149 $ 194,882 Furniture and equipment 200,769 85,437 Leasehold improvements 69,485 Fixed assets, total 432,403 280,319 Total : accumulated depreciation (156,585) (165,642) --------- --------- Fixed assets, net $ 275,818 $ 114,677 ========= =========
March 31, 2019 December 31, 2018

Automotive vehicles $ 381,844 $ 317,489
Furniture and equipment 85,435 85,435
Machinery and Equipment 135,706 115,335
Leasehold improvements 105,714 69,484
Fixed assets, total 708,699 587,743
Total : accumulated depreciation (225,536 ) (194,454 )
Fixed assets, net $ 483,163 $ 393,289
Total depreciation expenses for the three ~~and six~~ month ended ~~June 30,~~March 31, 2019 and 2018 were $31,082 and ~~2017 were $17,433, $44,793 $11,801 and $35,779~~$13,236, respectively.
Note 6 -– Notes payable
Notes payable to non-related parties
The note matures on November 1, 2019. $75,000 of which had been received by the Company prior the March 31, 2019.
During February 2015, the Company borrowed $50,000 from a non-affiliated person. The loan is due and payable on demand with interest at 10% per annum. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the principal balance owed on this loan was $50,000 and $50,000, respectively. 13
During April 2015, the Company borrowed $25,000 from a non-affiliated person. The loan is due and payable May 1, 2015 with interest at 6% per year and has a 5% per month penalty upon default. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the principal balance owed on this loan was $25,000 and $25,000, respectively. The note is currently past due.
On January 5, 2016, the Company borrowed $10,000 from a non-affiliated person. The loan was due and payable on January 5, 2017 and bore interest at 5% per ~~annum.~~annum and has a 5% per month penalty upon default. The principal balance owed on this loan at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $10,000 and $10,000, respectively. The note is currently past due.
On August 24, 2017 the Company signed a Merchant Agreement with a lender. Under the agreement the Company received $50,000 in exchange for rights to all customer receipts until the lender is paid $69,000 which is collected at the rate of $410.71 per day with 15% interest per year. The Company recorded a debt discount of $19,000, ~~and recorded $8,444 amortization expense for the year ended December 31, 2017 and $10,556 for the nine months ended September 30, 2018. As of September 30, 2018 the unamortized discount~~which was ~~$0 and outstanding loan amount was $0. As~~fully amortized as of December 31, ~~2017 the unamortized discount was $10,556 and outstanding loan amount was $35,782. The Company repaid a total of $35,782 during the nine months ended September 30,~~ 2018. The ~~payments~~note was fully repaid as of December 31, 2018.
On May 15, 2019 the Company entered in a 12% promissory loan with Helix Funding, LLC for the Principle amount of $100,000. The note matures on November 1, 2019 and funds of $75,000 were ~~secured~~received by ~~second position rights~~the Company prior to ~~all customer receipts until the loan has been paid in full.~~ March 31, 2019.
Convertible notes payable to non-related party
On July 18, 2017 the Company borrowed $125,000 from an unrelated third party. The loan has a maturity date of April 30, 2018 and bears interest at the rate of 8% per year. The Company paid $3,000 of fees associated with the loan, during the year ended December 31, 2017. The Company had amortized $1,741 of the discount and the remaining discount of $1,259 was amortized during the ~~six months~~year ended ~~June 30,~~December 31, 2018. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after January 14, 2018, (180 days from date of the note) to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the ~~Company's~~Company’s common stock at a price per share equal to 58% of the average of the three lowest trading prices for the 10 trading days immediately preceding the conversion date. ~~The note was not convertible as of December 31, 2017, therefore no derivatives were recorded.~~ On January 14, 2018 the note became convertible note was discounted for a derivative (see note 8 for details) and the discount of $122,000 was being amortized over the life of the note using the effective interest method resulting in ~~128,000~~122,000 of interest expense for the ~~nine months~~year ended ~~September 30, 2018. The balance outstanding on the note at~~ December 31, ~~2017 was $125,000.~~2018. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, the principal of $125,000 and accrued interest of $5,000 were converted into a total of 4,558,402 shares of common stock.
On August 24, 2017 the Company borrowed $58,500 from an unrelated third party. The Company paid $3,500 of fees associated with the loan, which was recorded as discount and to be amortized over the term of the debt the Company amortized $1,618 as of December 31, 2017. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the remaining discount of $1,822 was fully amortized. The loan has a maturity date of May 30, 2018 and bears interest at the rate of 8% per year. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after February 20, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the Company's common stock at a price per share equal to 58% of the average of the three lowest trading prices for the 25 trading days immediately preceding the conversion date. The note was not convertible as of December 31, 2017, therefore no derivatives were recorded. On February 20, 2018 the note became convertible note was discounted for a derivative (see note 8 for details) and the discount of $55,000 was being amortized over the life of the note using the effective interest method resulting in ~~55,000~~$55,000 of interest expense for the ~~nine months~~year ended ~~September 30, 2018. The balance outstanding on the note at~~ December 31, ~~2017 was $58,500.~~2018. As during the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the principal of $58,500 and accrued interest of $2,340 were converted into a total of 3,342,857 shares of common stock.
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 ~~had~~was fully amortized ~~$4,164 of the costs~~ as of December 31, ~~2017.~~2018. The loan bears interest at a rate of 10% (default interest 24%) and has a maturity date of July 16, ~~2018, the loan is not in default as a result of extended the conversion date to October 11,~~ 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~~Holder’s consent, sell, lease or dispose of any significant portion of its assets outside the 14 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 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 resulting in $36,795 of interest expense for the year ended December 31, 2017. During the nine months ended September 30, 2018 the Company recorded an additional interest expense of $109,041. On April 11, 2018 the Company paid the holder $75,000 in additional interest to forgo converting the note till October 11, 2018, the fee paid is accounted forwhich was fully amortized as ~~interest expense. As~~ of December 31, ~~2017 the unamortized discount amounted to $11,086. During the nine months ended September 30,~~ 2018 ~~the Company amortized the remaining $11,086 of the discount.~~
On October 19, 2017 the Company borrowed $73,000 from an unrelated third party. The Company paid $3,000 of fees associated with the loan, which was recorded as discount ~~and to be~~which was fully amortized ~~over the term of the debt the Company amortized $771~~ as of December 31, ~~2017, during~~2018. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, the Company ~~amortized all remaining discount on~~paid $150,000 to extend the ~~note.~~maturity date until May 11, 2019. The loan has a maturity date of July 30, 2018 and bears interest at the rate of 8% per year. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after April 17, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the ~~Company's~~Company’s common stock at a price per share equal to 58% of the average of the three lowest trading prices for the 10 trading days immediately preceding the conversion date. ~~during~~During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, the principal of $73,000 and accrued interest of $2,920 converted into a total of 3,836,781 shares of common stock.
On November 24, 2017, the Company borrowed $75,000 from an unrelated third party. The Company paid $7,000 of fees associated with the loan ~~and had~~which was fully amortized ~~$717 of the costs~~ as of December 31, ~~2017.~~2018. The note bears an interest ~~rate:~~rate of 12% (default interest lesser of 15% or maximum permitted by law) and matures on November 20, 2018. 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 55% of the lowest trading price during the 25 Trading Day periods prior to the Conversion. In addition there is an additional 10% discount for the DWAC unavailability: In the event that shares of the Borrower's Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 55% assuming no other adjustments are triggered hereunder).There is also an additional 15% discount that can be triggered as well: (a) DTC; Market Loss. If the Borrower fails to maintain its status as "DTC Eligible" for any reason, or, if at any time while this Note is outstanding the Conversion Price is equal to or lower than $0.01, then an additional fifteen percent (15%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 60%, assuming no other adjustments are triggered hereunder). 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 $68,000 ~~is being~~was fully amortized ~~over the life~~as of ~~the note using the effective interest method resulting in $6,970 of interest expense for~~December 31, 2018. During the year ended December 31, 2017. For the nine months ended September 30, 2018, the Company recorded an additional interest expense $56,174 including $51,423 on debt discount from derivative and $4,751 for original issue discount for the nine months ended September 30, 2018. As during the nine months ended September 30, 2018, principal of ~~$73,600~~$75,000 and fees of ~~$4,000~~$4,500 were converted into a total of ~~16,100,000~~28,252,481 shares of common stock. The Conversion price is 55% of the lowest trading price during the 25 Trading Day periods prior to the Conversion. In addition there is an additional 10% discount for the DWAC unavailability: In the event that shares of the Borrower's Common Stock are not deliverable via DWAC following the conversion of any amount hereunder, an additional ten percent (10%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 55% assuming no other adjustments are triggered hereunder).There is also an additional 15% discount that can be triggered as well: (a) DTC; Market Loss. If the Borrower fails to maintain its status as "DTC Eligible" for any reason, or, if at any time while this Note is outstanding the Conversion Price is equal to or lower than $0.01, then an additional fifteen percent (15%) discount shall be factored into the Variable Conversion Price until this Note is no longer outstanding (resulting in a discount rate of 60%, assuming no other adjustments are triggered hereunder).
On December 15, 2017, the Company borrowed $63,000 from an unrelated third party. The Company paid $3,000 of fees associated with the loan, ~~the Company~~which was fully amortized ~~$771~~ as of December 31, ~~2017, during the nine months ended September 30 2018 the Company amortized an additional $2,825.~~2018. The loan has a maturity date of September 15, 2018 and bears interest at the rate of 8% per year. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after June 13, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest 15 into shares of the ~~Company's~~Company’s common stock at a price per share equal to 58% of the average of the lowest 3 trading prices during the 10 days prior to conversion date. On June 13, 2018, the Company recorded a discount of $60,000 and recorded day one loss due to derivative of ~~$9,528, during~~$9,528. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the discount was fully amortized. ~~As during~~During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the principal of $63,000 and accrued interest of $2,520 converted into a total of 4,682,540 shares of common stock.
On January 2, 2018 the Company borrowed $30,000 from an unrelated third party. The Company paid $2,000 of fees associated with the loan and the Company amortized ~~$1,485~~$1,989 as of ~~September 30,~~December 31, 2018. The loan has a maturity date of January 2, 2019 and bears interest at the rate of 12% (default interest lesser of 15% or maximum permitted by law). 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 55% 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 $28,000 is being amortized over the life of the note using the effective interest method resulting in ~~$20,942~~$27,847 of interest expense for the ~~nine~~year ended December 31, 2018. On February 24, 2019 the remaining balance was of notes payable in the amount of $9,373, fees of $500 and accrued interest of $2,625 into were converted into 18,380,000 shares of common stock. During the three months ended ~~September 30, 2018.~~ March 31, 2019 the Company recorded amortization expense of $164.
On January 25, 2018 the Company borrowed $150,000 from an unrelated third party. The Company paid $7,500 of fees associated with the loan, which was recorded as discount and to be amortized over the term of the debt the Company amortized ~~$5,096~~$6,986 as of ~~September 30,~~December 31, 2018. The loan has a maturity date of January ~~28,~~25, 2019 and bears interest at the rate of 12% per year. If the loan is not paid when due, any unpaid amount will bear interest at 18% per year. The Lender is entitled, at its option, at any time after July 24, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the ~~Company's~~Company’s common stock at a price per share equal to 55% of the average of the lowest trading price for the 20 trading days immediately preceding the conversion date. On July 24, 2018, the Company recorded a discount of $142,500 and recorded day one loss due to derivative of $74,900 As during the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the principal of ~~$50,000~~$85,149 converted into a total of ~~10,938,314~~33,375,972 shares of common stock. The Company also recorded amortization of debt discount (from derivative) of ~~$96,822~~$132,740 during ~~nine~~the year ended December 31, 2018. During the three months ended ~~September 30, 2018.~~ March 31, 2019 the Company recorded amortization expense of $9,863.
On February 13, 2018 the Company borrowed $128,000 from an unrelated third party. The Company paid $3,000 of fees associated with the loan, which was recorded as discount and to be amortized over the term of the debt the Company amortized $3,000 as of ~~September 30,~~December 31, 2018. The loan has a maturity date of November 30, 2018 and bears interest at the rate of 8% per year. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after August 12, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the ~~Company's~~Company’s common stock at a price per share equal to 58% of the average of the three lowest trading prices for the 10 trading days immediately preceding the conversion date. On August 12, 2018, the Company recorded a ~~day one loss~~debt discount due to the derivative of ~~$107,711, during~~$107,711. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the discount of $107,711 was fully amortized. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the principal of $128,000 and accrued interest of ~~$5,150~~$5,120 converted into a total of 26,673,229 shares of common stock.
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 ~~$3,341of~~$3,514 of the costs as of ~~September 30~~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 55% of the lowest trading price during the 25 Trading Day periods prior to the Conversion. Covenants: The Borrower shall not, without the ~~Holder's~~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 is being amortized over the life of the note using the effective interest method resulting in ~~$30,292~~$31,623 of interest expense for the ~~nine~~year ended December 31, 2018. During the three months ended ~~September 30, 2018.~~ March 31, 2019 the Company recorded amortization expense of $9,863.
On April 11, 2018 the Company borrowed $103,000 from an unrelated third party. The Company paid $3,000 of fees associated with the loan, which was recorded as discount and to be amortized over the term of the debt the Company amortized ~~$2,531~~$3,000 as of ~~September 30,~~December 31, 2018. The loan has a maturity date of January 30, 2019 and bears interest at the rate of 8% per year. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after October 8, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the ~~Company's~~Company’s common stock at a price per share equal to 58% of the average of 16 the three lowest trading prices for the 10 trading days immediately preceding the conversion date. As during the year ended December 31, 2018, the principal of $103,000 and accrued interest of $4,120 converted into a total of 79,061,412 shares of common stock. The ~~note is not convertible as~~Company also recorded amortization of ~~September 30, 2018, therefore no derivatives were recorded. The balance outstanding on~~debt discount (from derivative) of $87,642 during the ~~note at September 30, 2018 is $103,000.~~year ended December 31, 2018. Between January 25, 2019 and March 22, 2019 the remaining notes payable in the amount of $64,882 principal and $996 interest into 80,518,873 shares of common stock. During the ~~nine~~three months ended ~~September 30,~~March 31, 2019 the Company recorded amortization expense of $10,274.
During the three months ended March 31, 2019, the Company recognized amortization expense of $1,511_ from deferred financing cost and amortization expense of $18,790 of discount from derivative liabilities.
During the three months ended March 31, 2018, the Company recognized amortization expense of ~~$728,343 for the~~$12,317 from deferred financing cost and amortization expense of $245,454 of discount from derivative liabilities.
Note 7 -– Notes payable -– related parties
On July 31, 2014, the Company borrowed $98,150 from an entity controlled by an officer and shareholder of the Company. The loan is due and payable on demand and bears no interest. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the principal balance owed on this loan is $98,150 and $98,150, respectively.
As of December 31, 2014, a related party loaned the Company $10,000, 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. During the year ended December 31, 2015 the Company borrowed an additional $20,000. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the principal balance owed on this loan was $30,000 and $30,000, respectively.
As of December 31, 2014, a related party loaned the Company $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 repaid $125,500 towards this note during 2015 and as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017;~~2018; the principal balance owed on this loan was $54,621 and $54,621, respectively.
During 2015, the Company borrowed $43,575 from its former CFO and repaid $43,000 of the loan. The note is non-interest bearing, and due on demand. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the principal amount owed on this loan was $575.
During October 2015, the Company borrowed $30,000 from an entity controlled by an officer of the Company. The loan is due and payable on demand and is non-interest bearing. During the year ended December 31, 2017, the Company repaid $251,363 and borrowed an additional $265,363 from the same related party.
During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the Company repaid ~~$114,000~~$121,500 and borrowed an additional ~~$127,000~~$184,500 from the same related party. During the three months ended March 31, 2019 the Company borrowed an additional $15,000 and repaid a total of $30,000. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the principal balance owed on this loan was ~~$57,000~~$92,000 and ~~$44,000,~~$107,000, respectively.
On July 7, 2016, the Company borrowed $73,000 from a related party. The loan was due and payable on July 7, 2017 and bore interest at 5% per annum. The principal balance owed on this loan at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $73,000 and $73,000, respectively. The holder of the note has agreed to extend the default date of the note to September 30, 2018. As of and March 31, 2019 and December 31, 2018 the note is currently in default.
On August 8, 2016, the Company entered into ana promissory note with Hypur Inc., a Nevada Corporation which is a related party pursuant to which the Company to borrow $52,000. If an Event of Default remains uncured after 30 days Holder has the option to convert the outstanding principal balance and any accrued but unpaid interest, into unrestricted $0.001 par value common stock of the Borrower The loan was due and payable on August 10, 2017 and bore interest at 18% per annum. The principal balance owed on this loan at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $52,000 and $52,000, respectively. The Note is currently in default at bears a default rate of interest of 24% per annum as part of the default terms of this note. ~~The lender waived the conversion option through October 1, 2017.~~ On October 1, 2017, it was determined this note had derivative. Upon default, if the default has not been remedied within 30 days, the redemption price would be 150% of the principal amount. The notes are in default as of March 31, 2019, but the holder has agreed to waive the 150% redemption price default term.
On September 20, 2016, the Company borrowed $47,500 from Hypur Inc., which is a related party. The loan is due and payable on December 20, 2016 and bears interest at 18% per annum. If an Event of Default remains uncured after 30 days Holder has the option to convert the outstanding principal balance and any accrued but unpaid interest, into unrestricted $0.001 par value common stock of the Borrower. The principal balance owed on this loan at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $47,500 and $47,500, respectively. The loan is currently past due and in default. The Note is currently in default at bears a default rate of interest of 24% per annum as part of the default terms of this note. ~~The lender waived the conversion option through October 1, 2017.~~ On October 1, 2017 it was determined this note had derivative. 17 ~~During 2017,~~Upon default, and if the default has not been remedied within 30 days, the redemption price would be 150% of the principal amount. The notes are in default as of March 31, 2019, but the holder has agreed to waive the 150% redemption price default term.
On October 29, 2018, the Company borrowed ~~$47,880~~$100,000 from ~~its Vice President~~Hypur Inc., which is a related party. The loan is due and payable on January 28, 2019 and bears interest at 18% per annum. If an Event of ~~Operations~~Default remains uncured after 30 days Holder has the option to convert the outstanding principal balance and ~~repaid $27,880~~any accrued but unpaid interest, into unrestricted $0.001 par value common stock of the ~~loan.~~Borrower. Upon default the note bears a default rate of interest of 24% per annum as part of the default terms of this note. The ~~note is non-interest bearing, and due on demand. During the six months ended June 30, 2018 the Company repaid the remaining $20,000. As of September 30, 2018 and December 31, 2017 the~~ principal ~~amount~~balance owed on this loan at March 31, 2019 and December 31, 2018 was $0$100,000 and ~~$20,000,~~$100,000, respectively. The note was discounted for a derivative (see note 8 for details) and the discount of $89,350 is being amortized over the life of the note using the effective interest method resulting in $89,350 of interest expense for the three months ended March 31, 2019. As of March 31, 2019 the note is currently in default.
On November 21, 2018, the Company borrowed $70,000 from Hypur Inc., which is a related party. The loan is due and payable on February 19, 2019 and bears interest at 18% per annum. If an Event of Default remains uncured after 30 days Holder has the option to convert the outstanding principal balance and any accrued but unpaid interest, into unrestricted $0.001 par value common stock of the Borrower. Upon default the note bears a default rate of interest of 24% per annum as part of the default terms of this note. The principal balance owed on this loan at March 31m 2019 and December 31, 2018 was $70,000 and $70,000, respectively. The note was discounted for a derivative (see note 8 for details) and the discount of $55,830 is being amortized over the life of the note using the effective interest method resulting in $55,830 of interest expense for the three months ended March 31, 2019. As of March 31, 2019 the note is currently in default.
On November 26, 2018, the Company borrowed $75,000 from Hypur Inc., which is a related party. The loan is due and payable on February 24, 2019 and bears interest at 18% per annum. If an Event of Default remains uncured after 30 days Holder has the option to convert the outstanding principal balance and any accrued but unpaid interest, into unrestricted $0.001 par value common stock of the Borrower. Upon default the note bears a default rate of interest of 24% per annum as part of the default terms of this note. The principal balance owed on this loan at March 31, 2019 and December 31, 2018 was $75,000 and $75.000, respectively. The note was discounted for a derivative (see note 8 for details) and the discount of $58,913 is being amortized over the life of the note using the effective interest method resulting in $58,913 of interest expense for the three months ended March 31, 2019. As of March 31, 2019 the Note is currently in default.
Convertible notes payable to related party
In November 2015, the Company entered into an arrangement with a related party, whereby the Company borrowed $25,000 in Convertible Notes. The Convertible Note bears interest at a rate of 5% per annum and payable quarterly in arrears and matures twelve months from the date of issuance, and is convertible into shares of the ~~Company's~~Company’s common stock at a per share conversion price equal to ~~$0.025 the~~$0.025. The note was due on November 4, 2016. In December 2015 the lender loaned the Company an additional $20,000 with same terms except that it is payable upon demand. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company owed a total of $45,000 and $45,000, respectively. The holder of the note has agreed to extend the default date of the note to September 30, 2018. As of March 31, 2019 the note is currently in default.
In July 2015, the Company entered into an arrangement with a related party, whereby the Company could borrow up to $500,000 in Convertible Notes. The Convertible Note bears interest at a rate of 5% per annum and payable quarterly in arrears and matures twelve months from the date of issuance, and is convertible into shares of the ~~Company's~~Company’s common stock at a per share conversion price equal to $0.025. Upon the occurrence and during the continuation of an event of default, the holder may require the Company to redeem all or any portion of this Note in cash at a price equal to 150% of the principal amount. During the year ended December 31, 2017, the Company borrowed an additional $110,000. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, the Company owed a total of $500,000 and ~~$390,000, respectively. As of September 30, 2018 and December 31, 2017 there is a total of~~ $500,000, ~~and $390,000 of the notes are past due,~~ respectively. Since the debt holder has not elect the right to require the Company to redeem the note at a price equal to 150% of the principal amount, the terms stated prior to maturity are still in effect. The holder has waived the default term and the note is not considered to be in default as of ~~September 30, 2018.~~ March 31, 2019.
On September 1, 2016, the Company entered into, an convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the ~~"Hypur Ventures"~~“Hypur Ventures”) which is a related party pursuant to which the Company to borrow $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 at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $75,000 and $75,000, 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 amount. ~~The holder~~As of March 31, 2019, Hyper has waived the default ~~term and agreed to extend the default date to March 31, 2018 and further extended to September 30, 2018.~~ provision.
On October 14, 2016, the Company entered into, an convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the ~~"Hypur Ventures"~~“Hypur Ventures”) which is a related party pursuant to which the Company to borrow $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, 2018~~March 31, 2019 and December 31, ~~2017~~2018 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 amount. ~~The holder~~As of March 31, 2019, Hyper has waived the default ~~term and agreed to extend the default date to March 31, 2018 and further extended to September 30, 2018.~~ provision.
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~~Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.50 per share during any ten-day period. The principal balance owed on this loan at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 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 amount. ~~The holder~~As of March 31, 2019, Hyper has waived the default ~~term and agreed to extend the default date to March 31, 2018 and further extended to September 30, 2018. 18~~ provision.
On May 26, 2017, the Company borrowed $100,000 from CGDK, a related party. The loan is due 360 days from May 26, 2017 and bears interest at 5% per annum. The loan is convertible into shares of the ~~Company's~~Company’s common stock at a price of $.025 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.25 per share during any ten-day period. The principal balance owed on this loan at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $100,000 and $100,000, respectively. As of March 31, 2019 and December 31, 2018 the note is currently in default.
On July 13, 2017, the Company borrowed $150,000 from CGDK, a related party. The loan is due 360 days from July 13, 2017, and bears interest at 5% per annum. The loan is convertible into shares of the ~~Company's~~Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.25 per share during any ten-day period. The principal balance owed on this loan at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 was $150,000. The ~~holder~~conversion feature has ~~waived the default term~~been waved through October 15, 2019. As of March 31, 2019 and December 31, 2018, the note is ~~not considered to be~~currently in ~~default as of June 30, 2018.~~ default.
On April 13, 2018, the Company borrowed $130,000 from CGDK, a related party. The loan is due 360 days from April 13, 2018, bears interest at 12% per annum. The loan is convertible into shares of the ~~Company's~~Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.25 per share during any ten-day period. The Company recorded a discount of $101,272 ~~and derivative liability, there was no day one loss~~ due to ~~derivative on this note.~~derivative. The ~~company~~Company amortized ~~$47,186~~$72,694 in debt discounts during the ~~nine~~year ended December 31, 2018. The Company amortized $27,560 in debt discounts during the three months ended ~~September 30, 2018.~~March 31, 2019. The principal balance owed on this loan at ~~September 30,~~March 31, 2019 and December 31, 2018 is ~~$130,000.~~ $130,000 and $130,000, respectively.
On June 14, 2018, the Company issued a $30,217 to CGDK, a related party, for previous expenses paid on behalf of the Company. The loan is due 360 days from June 18, 2018, bears interest at 12% per annum. The loan is convertible into shares of the ~~Company's~~Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.25 per share during any ten-day period. The Company recorded a debt discount of $10,292 ~~there was no day one loss~~ due to ~~derivative on this note.~~derivative. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the Company amortized ~~$3,045~~$5,639 of the ~~discount~~discount. The Company amortized $3,697 in debt discounts during the three months ended March 31, 2019. The principal balance owed on this loan at ~~September 30,~~March 31, 2019 and December 31, 2018 is ~~$30,217.~~ $30,217 and $30,217, respectively.
On July 2, 2018, the Company borrowed $150,000 from CGDK, a related party. The loan is due July 2, 2019 and bears interest at 12% per annum. The loan is convertible into shares of the ~~Company's~~Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.10 per share during any ten-day period or the trading volume of the ~~Company's~~Company’s common stock during these ten trading days was at least 2,500,000 shares. The Company recorded a debt discount of $19,779 ~~there was no day one loss~~ due to ~~derivative on this note.~~derivative. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the Company amortized ~~$4,877~~$9,862 of the discount. The Company amortized $7,390 in debt discounts during the three months ended March 31, 2019. The principal balance owed on this loan at ~~September 30,~~March 31, 2019 and December 31, 2018 is ~~$150,000.~~ $150,000 and $150,000, respectively.
On August 6, 2018, the Company borrowed $150,000 from CGDK, a related party. The loan is due July 2, 2019 and bears interest at 12% per annum. The loan is convertible into shares of the ~~Company's~~Company’s common stock at a price of $.05 per share. The loan will automatically convert into shares of the ~~Company's~~Company’s common stock if the price of the ~~Company's~~Company’s common stock is over $.10 per share during any ten-day period or the trading volume of the ~~Company's~~Company’s common stock during these ten trading days was at least 2,500,000 shares. . The Company recorded a debt discount of $20,095 ~~there was no day one loss~~ due to ~~derivative on this note.~~derivative. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the Company amortized ~~$3,028~~$8,093 of the discount. The Company amortized $7,793 in debt discounts during the three months ended March 31, 2019. The principal balance owed on this loan at ~~September 30,~~March 31, 2019 and December 31, 2018 is ~~$150,000.~~ $150,000 and $150,000, respectively.
On January 18, 2019, the Company entered into, an 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 to borrow $250,000. The loan was due 10 days from the date of issuance and bears interest at 18% per annum. The note is convertible into common stock at a price at the lower of $.0002 per share or 60% of the closing price of the common stock prior to conversion. Upon default, the note bears a default rate of interest of 24% per annum. The note was discounted for a derivative (see note 8 for details) and the discount of $167,079 is being amortized over the life of the note using the effective interest method resulting in $167,079 of interest expense for the three months ended March 31, 2019. As of March 31, 2019 the note is currently in default.
On March 5, 2019, the Company entered into, an 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 to borrow $50,000. The loan was due 10 days from the date of issuance and bears interest at 18% per annum. The note is convertible into common stock at a price at the lower of $.0002 per share or 60% of the closing price of the common stock prior to conversion. Upon default, the note bears a default rate of interest of 24% per annum. As of March 31, 2019 the note is currently in default.
The carrying amount of the convertible note, net of the unamortized debt discount, at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 is ~~$1,436,915~~$1,812,798 and ~~$1,057,726,~~$1,419,919, respectively. Total unamortized at ~~September 30,~~March 31, 2019 and December 31, 2018 is ~~$58,135.~~ $8,710 and $55,149, respectively.
On October 1, 2017, these notes were tainted by the variable conversion price notes and remained tainted as of ~~September 30, 2018.~~March 31, 2019. The Company ~~remeasured~~re-measured the fair value of derivative liabilities on ~~September 30, 2018.~~March 31, 2019. See Note 8. ~~Note~~
NOTE 8 -– Derivative Liability
The Company analyzed the conversion options for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability when the conversion option becomes effective.
The derivative liability in connection with the conversion feature of the convertible debt is measured using, level 3 inputs.
The change in the fair value of derivative liabilities is as follows: Balance - December 31, 2017 $$1,879,930 Addition of new derivative as derivative loss 448,579 Resolution of derivatives upon conversion (816,683) Debt discount from derivative liability 777,149 Loss on change in fair value of the derivative (1,711,295) ----------- Balance - September 30, 2018 $ 557,680 ===========
Balance - December 31, 2017 $ 1,879,930
Addition of new derivative as a derivative loss 448,579
Resolution of derivatives upon conversion (1,076,702 )
Debt discount from derivative liability 864,791
Loss on change in fair value of the derivative (1,389,266 )
Balance - December 31, 2018 $ 727,332

Debt discount from derivative liability 371,172
Resolution of derivatives upon conversion (138,610 )
Loss on change in fair value of the derivative (145,906 )
Balance – March 31, 2019 $ 813,988
The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at each measurement date: For the Nine Months Year ended Ended September 30, 2018 December 31, 2017 ------------------------ ----------------- Expected term 0.14 - 2.94 years 0.02 - 3.65 years Expected average volatility 57.63% -321.03% 108.61% -584.8% Expected dividend yield -- -- Risk-free interest rate 2.19% - 2.88% 1.53% - 1.98%
For the Three
Months Ended
March 31, 2019 Year ended
December 31, 2018
Expected term 0.03 – 2.44 years 0.02 – 2.69 years
Expected average volatility 126.41% – 237.82 % 144.96% – 446.59 %
Expected dividend yield - -
Risk-free interest rate 2.27% – 2.57 % 2.25% – 2.66 %
Note 9 -– Long term notes payable
On November 21, 2014, the Company purchased a vehicle for $20,827, net of discounts. The Company financed the $20,827 at an interest rate of 2.42% for five years, with a maturity date of December 5, 2019. As of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018 the total principal balance of the note is ~~$6,874~~$3,651 and ~~$8,639,~~$4,678, respectively, of which ~~$2,564~~$0 and ~~$6,518~~$368 is considered a long-term liability and ~~$4,310~~$3,651 and ~~$2,121~~$4,310 is considered a current liability.
Note 10 ~~- Stockholders'~~– Stockholders’ equity
The Company was originally authorized to issue 100,000,000 shares of common stock and 100,000,000 shares of preferred stock. On May 6, 2014, the Company ~~affected~~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 common stock. All references to share and per share amounts in the consolidated financial statements and these notes thereto have been retroactively restated to reflect the forward stock split.
Common stock
During the year ended December 31, 2017, the Company entered into a consulting agreement for business advisory services. The Company issued a total of 2,000,000 shares of common stock to the consultant for business advisory services valued at $46,583 the fair value measurement on the common stock, which was at service completion date. The certificate for 1,000,000 of these shares was issued during the year ended December 31, 2017. During the ~~nine months~~year ended ~~September 30,~~December 31, 2018 the Company issued the remaining 1,000,000 shares and remeasured the fair value of those shares on the service completion date and recorded the remaining expense of $31,917.
During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, the Company issued a total of ~~72,692,123~~239,120,675 shares of common stock for the conversion of ~~$593,010~~$769,199 of convertibles loans, accrued interest, and fees.
During the three months ended March 31, 2019 the Company issued a total of 98,898,873 shares of common stock for the conversion of $78,376 of convertibles loans, accrued interest, and fees.
Preferred stock
On May 3, 2016, the Company entered into, an agreement with Hypur Ventures, L.P., a Delaware limited partnership (the ~~"Hypur Ventures"~~“Hypur Ventures”) which is a related party pursuant to which the Company sold to Hypur Ventures, in a private placement, 10,000,000 shares of the ~~Company's~~Company’s preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of $0.10, at a purchase price of $0.05 per share for gross proceeds of $500,000. The shares of preferred stock are convertible into shares of the ~~Company's~~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 Secretary of 20 State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it contained a beneficial conversion feature. The intrinsic 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 10,000,000 shares of the ~~Company's~~Company’s preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of $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~~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 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 determined to be ~~$0.The~~$0. 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~~Company’s common stock equals or exceeds $.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~~Company’s common stock equals or exceeds $.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 that may be issued upon the conversion and/or exercise of the preferred stock and the warrants. The preferred stock sold to 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 11 -– Options and 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-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.
On December 28, 2016, the Company issued stock options to various offices and employees of the Company to purchase 7,950,000 shares of the ~~Company's~~Company’s common stock at an exercise price of $0.05 per share. The options vest immediately. The options carry a life of three years. 21
During the year ended December 31, 2018 a total of 466,667 stock options were forfeited by various employees of the Company.
The following is a summary of the ~~Company's~~Company’s stock option activity for the ~~nine~~three months ended September 30, 2018: Number Weighted of Average Shares Exercise Price ------- -------------- Outstanding atMarch 31, 2019 and the year ended December 31, 2017 24,478,405 $ 0.11 Granted - $ - Expired (466,667) $ 0.11 Cancelled - $ - ---------- ------ Outstanding at September 30, 2018 24,011,738 $ 0.11 ---------- ------ Options exercisable at December 31, 2017 24,471,738 $ 0.11 Options exercisable at September 30, 2018 24,011,738 $ 0.11 ========== ====== 2018:
Number Of Shares Weighted-Average Exercise Price

Outstanding at December 31, 2017 24,478,405 $         0.11
Granted - $ -
Expired (466,667 ) $ 0.11
Cancelled -

$ -
Outstanding at December 31, 2018 24,011,738 $ 0.11
Granted - $ -
Expired - $ -
Cancelled - $
Outstanding at March 31, 2019 24,011,738 $ 0.11
Options exercisable at December 31, 2018 24,011,738 $ 0.11
Options exercisable at March 31, 2019 24,011,738 $ 0.11
The following tables summarize information about stock options outstanding and exercisable at ~~September 30,~~March 31, 2019 and December 31, 2018: OPTIONS OUTSTANDING AND EXERCISABLE AT SEPTMBER 30, 2018 ------------------------------------------------------------------------------- Weighted- Average Weighted- Weighted- Range of Number of Remaining Average Average Exercise Options Contractual Exercise Number Exercise Prices Outstanding Life in Years Price Exercisable Price -------- ----------- ------------- --------- ----------- --------- $0.035 - 24,011,738 1.54 $0.11 24,011,738 $0.11 1.00 ========= ========= ==== ===== ========= =====
OPTIONS OUTSTANDING AND EXERCISABLE AT March 31, 2019
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
$ 0.034 – 1.00 24,011,738       1.05 $ 0.11 24,011,738 $ 0.11
OPTIONS OUTSTANDING AND EXERCISABLE AT DECEMBER 31, 2018
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
$ 0.034 – 1.00 24,011,738 1.3 $ 0.11 24,011,738 $ 0.11
Total stock-based compensation expense in connection with options and modified awards recognized in the consolidated statement of operations for ~~the nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 was $0 and ~~September 30, 2017 was $52,437 and $38,069,~~$18,091, respectively.
26
Warrants
The following is a summary of the ~~Company's~~Company’s warrant activity for the ~~nine months~~years ended September 30, 2018: Number Weighted Of Average Shares Exercise Price ------- -------------- Outstanding at December 31, 2017 10,000,000 $0.10 Granted - $ - Exercised - $ - Cancelled - $ - Outstanding at September 30, 2018 ~~10,000,000 $0.10 Warrants exercisable at September 30, 2018 10,000,000 $0.10 ========== =====~~ and December 31, 2017:

Number Of
Shares
Weighted-Average Exercise Price
Outstanding at December 31, 2017 10,000,000 $      0.10
Granted - $ -
Exercised - $ -
Cancelled - $ -
Outstanding at December 31, 2018 10,000,000 $ 0.10
Granted - $ -
Exercised - $ -
Cancelled - $ -
Outstanding at March 31, 2019 10,000,000 $ 0.10
Warrants exercisable at December 31, 2018 10,000,000 $ 0.10
Warrants exercisable at March 31, 2019 10,000,000 $ 0.10
The following tables summarize information about warrants outstanding and exercisable at ~~September 30,~~March 31, 2019 and December 31, 2018: WARRANTS OUTSTANDING AND EXERCISABLE AT SEPTMBER 30, 2018 ------------------------------------------------------------------------------- Weighted- Average Weighted- Weighted- Range of Number of Remaining Average Average Exercise Warrants Contractual Exercise Number Exercise Prices Outstanding Life in Years Price Exercisable Price -------- ----------- ------------- --------- ----------- --------- $0.10 10,000,000 2.99 $0.10 10,000,000 $0.10 $0.10 10,000,000 4.24 $0.10 10,000,000 $0.10 22
WARRANTS OUTSTANDING AND EXERCISABLE AT MARCH 31, 2019
Range of Exercise Prices Number of Warrants Outstanding Weighted-Average Remaining Contractual Life in Years Weighted- Average Exercise Price Number Exercisable Weighted- Average Exercise Price
$ 0.10 10,000,000 2.27 $ 0.10 10,000,000 $ 0.10
WARRANTS OUTSTANDING AND EXERCISABLE AT DECEMBER 31, 2018
Range of Exercise Prices Number of Warrants Outstanding Weighted-Average Remaining Contractual Life in Years Weighted- Average Exercise Price Number Exercisable Weighted- Average Exercise Price
$ 0.10 10,000,000 2.52 $ 0.10 10,000,000 $ 0.10
Note 12 --– Subsequent Events
On ~~October 10, 2018,~~April 16, 2019 Crown Bridge Partners converted accrued interest in the ~~Company borrowed $100,000 from Hypur Ventures, L.P., a related party. The loan is due 180 days from January 28, 2019~~amount of $921, and ~~bears interest at 10% per annum. The loan is convertible~~fees of $500 into 2,960,250 shares of common stock.
On April 16, 2019 Crown Bridge Partners converted notes payable in the ~~Company's common stock at a price~~amount of ~~$.05 per share. The loan will automatically convert~~$9,244, and fees of $500 into 20,300,000 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. Between October 1, 2018 and October 31, 2018 JSM~~stock.
On May 2, 2019 JSJ Investments, Inc. converted notes payable in the amount of ~~$34,118 and fees of $1,000~~$15,805 principal into ~~22,797,659~~23,947,149 shares of common stock. ~~Between October 1, 2018 and November 8, 2018 Power-Up Lending LTD. converted notes payable~~
On May 15, 2019 the Company entered in a 12% promissory loan with Helix Funding, LLC. for the Principle amount of ~~$103,000~~$100,000. The note matures on November 1, 2019 and ~~interest~~funds of ~~$4,120 into 79,061,411 shares of common stock. Between October 1, 2018 and November 12, 2018 Crown Bridge Partners, LLC converted notes payable in~~$75,000 were received by the amount of $5,188, accrued interest of $3,550 and fees of $1,000 into 25,392,481 shares of common stock. On October 18, 2018 Actus Fund, LLC. converted notes payable in the amount of $3,550, and fees of $500 into 5,000,000 shares of common stock. Company prior to March 31, 2019.
PART I
ITEM 2. ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
You should read the following discussion and analysis of financial condition and results of operations in conjunction with the consolidated financial statements and related notes appearing elsewhere in this Report.
We were originally incorporated in Nevada on September 11, 2006, under the name The Engraving Masters, Inc. (the ~~"Company"~~“Company”).
On May 2, 2014, we changed our name to Blue Line Protection Group, Inc.
We provide armed protection and transportation, banking, compliance and training services for businesses engaged in the legal cannabis industry. During the ~~nine~~three months ended ~~September 30, 2018, a majority~~March 31, 2019, approximately 60% of our revenue was derived fromarmed protection and transportation services.
It is estimated that the total market for marijuana, legal or otherwise, will 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 marijuana industry.
Cultivation facilities are the producers of legal cannabis that eventually make its way to consumers. ~~Growers'~~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 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 encounter.
In March 2015, our wholly-owned Nevada subsidiary, BLPG, Inc., was granted licenses to provide our services in Nevada.
We do not grow, test, transport or sell marijuana. 23
Armed 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 then, 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 ~~__%~~29% 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.
We also offer security monitoring, asset vaulting, and VIP and dignitary protection.
Results of Operations
Material changes in line items in our Statement of Operations for the three months ended ~~September 30, 2018~~March 31, 2019 as compared to the same period last year, are discussed below: Increase (I) or Item Decrease Reason (D) ----------------------------- --------- ---------------------------------- Revenue D Fewer contracts for our armed guard services Gross profit, as a % of D Higher salaries revenue General and administrative I Began operations in Arizona expenses Interest expense I Increase in interest rates Gain on change of fair value I Decrease in the price of our of derivative securities common stock Material changes in line items in our Statement of Operations for the nine months ended September 30, 2018 as compared to the same period last year, are discussed below: Increase (I) or Item Decrease Reason (D) ----------------------------- --------- ---------------------------------- Revenue I Increase in transaction and currency currency processing services Gross profit, as a % of I Higher revenue resulted in better revenue economies of scale. General and administrative I Began operations in Arizona administrative expenses Interest expense I Increase in interest rates 24 ~~Gain on change of fair value I Decrease in the price of our of derivative securities common stock.~~
Increase (I) or
Item Decrease (D) Reason
Revenue D Fewer contracts for our armed guard services
Gross profit, as a % of revenue I Decreased salaries
General and administrative expenses I Began operations in Arizona and Ohio
Interest expense I Increase in interest rates
Gain on change of fair value of derivative securities
I Decrease in the price of our common stock
Capital Resources and Liquidity
Our material sources and ~~(uses)~~<uses> of cash during the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ were: 2018 2017 ---- ---- Cash provided by (used in) operations $ (703,770) $(683,078) Purchase of fixed assets (205,934) (1,590) Cash overdraft 50,479 76,678 Loan proceeds 993,000 1,271,964 Loan payments (171,546) (663,974)
2019 2018

Cash provided by (used in) operations $ (230,194 ) $ (334,796 )
Purchase of fixed assets (56,602 ) -
Cash overdraft - 62,027
Loan proceeds
390,000
412,557
Loan payments (70,747 ) (115,502 )
As of ~~September 30, 2018~~March 31, 2019 we did not have any material capital commitments other than loan payments.
Other than as disclosed above, we do not anticipate any material capital requirements for the twelve months ending June 30, 2019.
Other than as disclosed above, we do not know of any: o trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way; or o any significant changes in our expected sources and uses of cash.
● trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way; or
● any significant changes in our expected sources and uses of cash.
We do not have any commitments or arrangements from any person to provide us with any equity capital.
During the next twelve months, we anticipate that we will incur approximately $2,400,000 of general and administrative expenses in order to execute our current business plan. We also plan to incur significant sales, marketing, research and development expenses during the next 12 months. We must obtain additional 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
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.
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 our 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. 25
Revenue ~~recognition.~~recognition. In May 2014, the FASB issued ASU No. 2014-09, ~~"Revenue~~“Revenue from Contracts with Customers (Topic 606),"” which supersedes the revenue recognition requirements in Accounting Standards Codification 605, ~~"Revenue~~“Revenue Recognition."” This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASC 606-10-50-5 requires that entities disclose disaggregated revenue information in categories (such as type of good or service, geography, market, type of contract, etc.) that depict how the nature, amount, timing, and uncertainty of revenue and cash flow are affected by economic factors. ASC 606-10-55-89 explains that the extent to which an ~~entity's~~entity’s revenue is disaggregated depends on the facts and circumstances that pertain to the ~~entity's~~entity’s contracts with customers and that some entities may need to use more than one type of category to meet the objective for disaggregating revenue. In August 2015, the FASB issued ASU No. 2015-14, which deferred the effective date of the new revenue standard by one year, and allowed entities the option to early adopt the new revenue standard as of the original effective date. There have been multiple standards updates amending this guidance or providing corrections or improvements on issues in the guidance. The requirements for these standards relating to Topic 606 are effective for interim and annual periods beginning after December 15, 2017. This standard permitted adoption using one of two transition methods, either the retrospective or modified retrospective transition method.
We adopted these standards at the beginning of the first quarter of fiscal 2018 using the modified retrospective method. The adoption of these standards did not have an impact on our Statements of Operations for the ~~nine~~three months ended ~~September 30, 2018.~~ March 31, 2019.
Stock-based compensation.We record stock based compensation in accordance with the guidance in ASC Topic 505 and 718, which requires us 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 for equity instruments issued in exchange for the receipt of goods or services from non-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 measureable. 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.
30
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of our management, including our Principal Financial Officer and Principal Executive Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report on Form 10-Q. Disclosure controls and procedures are procedures designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this Form 10-Q, is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange ~~Commission's~~Commission’s rules and forms, and that such information is accumulated and is communicated to our management, including our Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our management concluded that, as of ~~September 30, 2018~~March 31, 2019 our disclosure controls and procedures were not effective due to the material weaknesses identified during the audit of our financial statements for the year ended December 31, ~~2017.~~ 2018.
Change in Internal Control over Financial Reporting
Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. 26
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
31
PART II
ITEM 6. EXHIBITS Exhibit N . Description of Exhibit ---------- ------------------------------------------------------------------- 31.1 Rule 13a-14(a) Certifications 31.2 Rule 13a-14(a) Certifications 32 Section 1350 Certifications 27
Exhibit No. Description of Exhibit
31.1 Rule 13a-14(a) Certifications
31.2 Rule 13a-14(a) Certifications
32 Section 1350 Certifications
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized. BLUE LINE PROTECTION GROUP, INC. November 19, 2018 By:/s/ Daniel Allen --------------------------------- Daniel Allen, Principal Executive, Financial and Accounting Officer 28

	BLUE LINE PROTECTION GROUP, INC.

May 20, 2019	By:	/s/ Daniel Allen
		Daniel Allen, Principal Executive, Financial and
		Accounting Officer

	For the Three Months Ended
	March 31,
	2019			2018
Revenue	$	928,609		$	1,041,306
Cost of revenue		(530,117	)		(771,171	)
Gross profit		398,492			270,135

Operating expenses:
Advertising		3,770			2,309
Depreciation		31,082			13,236
General and administrative expenses		559,432			456,600
Total expenses		594,284			472,145

Operating loss		(195,792	)		(202,010	)

Other income (expenses):
Other income		-
Interest expense		(518,950	)		(312,398	)
Income / (Loss) on derivative		145,906			(1,603,706	)
Total other expenses		(373,044	)		(1,916,104	)

Net income / (loss)	$	(568,836	)	$	(2,118,114	)

Net loss per common share: Basic and Diluted	$	(0.00	)	$	(0.02	)

Weighted average number ofcommon shares outstanding- Basic and Diluted		415,378,581			132,921,561

	Preferred Stock				Common Stock				Additional Paid-in		Stock		Accumulated			Stockholders’ Equity
	Shares		Amount		Shares		Amount		Capital		Payable		Deficit			(Deficit)
Balance, December 31, 2017		20,000,000	$	20,000	$	128,348,026	$	128,348	$	5,417,266	$	13	$	(9,626,224	)	$	(4,060,597	)

Common stock issued for services		-		-		1,000,000		1,000		30,917		-		-			31,917

Derivative resolution		-		-		-		-		321,590		-		-			321,590

Amortization of employee stock options		-		-		-		-		18,091		-		-			18,091

Common stock issued for conversion of debt and accrued interest		-		-		7,901,259		7,901		182,939		-		-			190,840

Net loss for the three months ended March 31, 2018		-		-		-		-		-		-		(2,118,114	)		(2,118,114	)
Balance, March 31, 2018		20,000,000	$	20,000	$	137,249,285	$	137,249	$	5,970,803	$	13	$	(11,744,338	)	$	(5,616,273	)

Automotive Vehicles	5 years
Furniture and Equipment	7 years
Buildings and Improvements	15 years

	Amount		Level 1		Level 2		Level 3
Embedded conversion derivative liability	$	809,070	$	-	$	-	$	809,070
Warrant derivative liabilities	$	4,918	$	-	$	-	$	4,918
Total	$	813,988	$	-	$	-	$	813,988

	●	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.

	Three months ended March 31,
Revenue Breakdown By Streams	2019		2018
Service- Guards	$	267,734	$	664,825
Services: Transport		292,865		175,875
Services: Currency Processing		355,237		168,903
Services: Compliance		12,248		31,221
Other		525		1,292
Total	$	928,609	$	1,041,306

Future minimum lease payments:
2019	$	47,116
2020		62,822
2021		39,476
2022 and thereafter		4,291
Total minimum lease payments	$	156,705

Operating Leases	Classification	March 31, 2019
Right-of-use assets	Operating right of use assets	$	636,429

Current lease liabilities	Current operating lease liabilities		50,336
Non-current lease liabilities	Long-term operating lease liabilities		610,302
Total lease liabilities		$	660,638

	March 31, 2019
Weighted average remaining lease term (years)		7.4
Weighted average discount rate		12	%

Finance lease expenses:
Depreciation/amortization expense	$	31,218
Interest on lease liabilities		2,422
Finance lease expense	$	33,640

	March 31, 2019
Cash paid for operating lease liabilities	$	11,475
Operating right of use assets obtained in exchange for operating lease liabilities	$	650,152

	Operating
	Leases

Remainder of 2019	$	93,844
2020		127,556
2021		130,105
2022		132,713
2023		135,369
2024		138,074
2025		140,838
2026		107,889
Total		1,006,058
Less: Imputed interest		(345,420	)
Present value of lease liabilities	$	660,638

Balance - December 31, 2017	$	1,879,930
Addition of new derivative as a derivative loss		448,579
Resolution of derivatives upon conversion		(1,076,702	)
Debt discount from derivative liability		864,791
Loss on change in fair value of the derivative		(1,389,266	)
Balance - December 31, 2018	$	727,332

Debt discount from derivative liability		371,172
Resolution of derivatives upon conversion		(138,610	)
Loss on change in fair value of the derivative		(145,906	)
Balance – March 31, 2019	$	813,988

	For the Three Months Ended March 31, 2019		Year ended December 31, 2018
Expected term	0.03 – 2.44 years		0.02 – 2.69 years
Expected average volatility	126.41% – 237.82	%	144.96% – 446.59	%
Expected dividend yield	-		-
Risk-free interest rate	2.27% – 2.57	%	2.25% – 2.66	%

	Number Of Shares			Weighted-Average Exercise Price

Outstanding at December 31, 2017		24,478,405		$	0.11
Granted		-		$	-
Expired		(466,667	)	$	0.11
Cancelled		-		$	-
Outstanding at December 31, 2018		24,011,738		$	0.11
Granted		-		$	-
Expired		-		$	-
Cancelled		-		$
Outstanding at March 31, 2019		24,011,738		$	0.11
Options exercisable at December 31, 2018		24,011,738		$	0.11
Options exercisable at March 31, 2019		24,011,738		$	0.11

OPTIONS OUTSTANDING AND EXERCISABLE AT DECEMBER 31, 2018
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
$	0.034 – 1.00		24,011,738		1.3	$	0.11		24,011,738	$	0.11

	Number Of Shares		Weighted-Average Exercise Price
Outstanding at December 31, 2017		10,000,000	$	0.10
Granted		-	$	-
Exercised		-	$	-
Cancelled		-	$	-
Outstanding at December 31, 2018		10,000,000	$	0.10
Granted		-	$	-
Exercised		-	$	-
Cancelled		-	$	-
Outstanding at March 31, 2019		10,000,000	$	0.10
Warrants exercisable at December 31, 2018		10,000,000	$	0.10
Warrants exercisable at March 31, 2019		10,000,000	$	0.10

WARRANTS OUTSTANDING AND EXERCISABLE AT MARCH 31, 2019
Range of Exercise Prices		Number of Warrants Outstanding		Weighted-Average Remaining Contractual Life in Years		Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$	0.10		10,000,000		2.27	$	0.10		10,000,000	$	0.10

	Increase (I) or
Item	Decrease (D)	Reason

Revenue	D	Fewer contracts for our armed guard services
Gross profit, as a % of revenue	I	Decreased salaries
General and administrative expenses	I	Began operations in Arizona and Ohio
Interest expense	I	Increase in interest rates
Gain on change of fair value of derivative securities	I	Decrease in the price of our common stock

	2019			2018

Cash provided by (used in) operations	$	(230,194	)	$	(334,796	)
Purchase of fixed assets		(56,602	)		-
Cash overdraft		-			62,027
Loan proceeds		390,000			412,557
Loan payments		(70,747	)		(115,502	)

	●	trends, demands, commitments, events or uncertainties that will result in, or that are reasonable likely to result in, our liquidity increasing or decreasing in any material way; or

	●	any significant changes in our expected sources and uses of cash.

Exhibit No.		Description of Exhibit

31.1		Rule 13a-14(a) Certifications
31.2		Rule 13a-14(a) Certifications
32		Section 1350 Certifications