ABCO Energy, Inc. was organized on July 29, 2004 and operated until July 1, 2011 as Energy Conservation Technologies, Inc. (ENYC).  On July 1, 2011 ENYC entered into a share exchange agreement (SEA) with ABCO Energy and acquired all of the assets of ABCO.  ENYC changed its name to ABCO Energy, Inc. on October 31, 2011.  The Company is in the Photovoltaic (PV) solar systems industry and is an energy efficient lighting and electrical product and services supplier.  

ABCO Solar, Inc. is an Arizona corporation and a wholly owned subsidiary of ABCO Energy.Energy, Inc.  ABCO Solar is the wholly owned operating subsidiary of the company and does the sales and installation of all of its contracting business.  ABCO Solar also sells and installs commercial lighting and energy conservation equipment like generators and energy efficient air conditioning for commercial and residential customers.

AEFC is a wholly owned subsidiary of ABCO Energy.  AEFC provides financing for solar systems for customers and finances its company owned systems from its own cash.  Long term leases recorded on the consolidated financial statements were $11,689$11,451 and $11,984 at JuneSeptember 30, 2017 and December 31, 2016 respectively.

On July 26, 2017, AEFC filed a Regulation D offering with the Securities and Exchange Commission to begin the sale of shares for investor participationparticipations in a newly formed Limited Liability Company Alternative Energy Solar Fund #1, LLC (AESF).  AESF is an Arizona LLC and the Fund has filed Blue Sky registrations in Arizona, Nevada, California and Colorado and intends to file in several other states.

The Company prepared these financial statements according to the instructions for Form 10-Q. Therefore, the financial statements do not include all disclosures required by generally accepted accounting principles in the United States. However, the Company has recorded all transactions and adjustments necessary to fairly present the financial statements included in this Form 10-Q. The adjustments made are normal and recurring. The following notes describe only the material changes in accounting policies, account details or financial statement notes during the first six Monthsnine months of 2017. Therefore, please read these financial statements and notes to the financial statements together with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2016.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Significant estimates include, but are not limited to the estimated useful lives of equipment for purposes of depreciation and the valuation of common shares issued for services, equipment and the liquidation of liabilities.

  

Basic earnings per share amounts are calculated based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstanding for the periods, including dilutive effects of stock options, warrants granted and convertible preferred stock. Dilutive options and warrants that are issued during a period or that expire or are canceled during a period are reflected in the computations for the time they were outstanding during the periods being reported. Since ABCO Energy has incurred losses for all periods except the current period, the impact of the common stock equivalents would be anti-dilutive and therefore are not included in the calculation.  In addition, there are no common stock equivalents outstanding at the time of this report.

The Company has reviewed all recently issued accounting pronouncements noting that they do not affect the financial statements.

 

The Company measures assets and liabilities at fair value based on expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale date of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value:

 

Level 1:  Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2:  Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

Level 3:  Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.    

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable and accrued expenses, approximate their fair values because of the current nature of these instruments. Debt approximates fair value based on interest rates available for similar financial arrangements. Derivative liabilities which have been bifurcated from host convertible debt agreements are presented at fair value.

 

 

Fair value accounting requires bifurcation of embedded derivative instruments such as convertible features in convertible debts or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the binomial option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.  

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments, such as warrants, are also valued using the binomial option-pricing model.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. As a result, the Company incurred accumulated net losses from inception through the period ended JuneSeptember 30, 2017 of $(3,881,915)$(4,260,988), which raises substantial doubt about the Company’s ability to continue as a going concern.

 

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

Inventory of construction supplies not yet charged to specific projects was $43,914$43,137 and $46,701 as of JuneSeptember 30, 2017 and December 31, 2016, respectively. The Company values items of inventory at the lower of cost or market and uses the first in first out method to charge costs to jobs.

Related party loans are demand notes totaling $179,100$182,363 and $177,347, respectively, as of JuneSeptember 30, 2017 and December 31, 2016.  These notes provide for interest at 12% per annum and are unsecured.  Other related party notes totaled $61,399$61,311 at JuneSeptember 30, 2017 for loans from a person who is neither an officer or director.

The first note in the amount of $60,000 provides for interest at 12% per annum and is unsecured.  This note has an accrued and unpaid interest charge of $23,472$25,287 and $19,876 at JuneSeptember 30, 2017 and December 31, 2016, respectively. 

The second note was increased by another loan in February 2017 in the amount of $4,200. The note is an unsecured demand note and bears interest at 12% per annum. This note has an accrued and unpaid interest charge of $9,143$10,888 and $5,812 at JuneSeptember 30, 2017 and December 31, 2016, respectively. 

. 

The third note is from a related party and has a current balance of $61,399$61,311 as of JuneSeptember 30, 2017 which changes with credit card transactions during each period.  The note is an unsecured demand note and bears interest at 12% per annum. This note has an accrued and unpaid interest charge of $8,997$10,852 and $5,254 at JuneSeptember 30, 2017 and December 31, 2016 respectively. 

(1) On February 1, 2016, the Company financed operations with a loan in the amount of $150,000 from WebBank.  The note is an open credit line with interest rate of 23% maturing in March of 2017.  A portion of the loan was used to pay off a credit loan from Orchard Street Funding in the amount of $44,061.  On August 22, 2016, the Company ceased making payments on this loan and at JuneSeptember 30, 2017 the Company owed $80,632approximately $71,782 in principal and accrued interest. This loan is personally guaranteed by an Officer of the Company.  On March 20, 2017, the Company and WebBank agreed to a monthly payment schedule with payment of $2,508 per month until June 20, 2017, paid biweekly. No arrangements have been madeSee Note 4 below for the final payment schedule onfurther information regarding this loan beyond that date.  No default notice has been received by the Company on the loan as of June 30, 2017. Payments on this account have been made for the past few months but most of the sums have been applied to interest.Note.

(2) On June 28, 2016, the Company financed operations with a loan in the amount of $43,500 from Quarterspot, a lending institution. The note is an open line with interest rate of approximately 31% maturing in September of 2017. On August 22, 2016, the Company ceased making payments on this loan.  As of JuneSeptember 30, 2017, the Company owed $32,760$26,484 in principal and accrued interest.  This loan is not personally guaranteed by an Officer of the Company. On November 30, 2016, the Company and Quarterspot agreed to a monthly payment schedule with payment of $1,500 per month until January 31, 2017. On March 27, 2017, the Company agreed to begin payments of $3,010 per month for twelve months until paid in full. No arrangements have been madeSee Note 4 below for the final payment schedule onfurther information regarding this loan beyond that date.  No default notice has been received by the Company on the loan as of June 30, 2017. Payments on this account have been made for the past few months but most of the sums have been applied to interest.Note.

(3) On July 12, 2016, the Company financed operations with a loan in the amount of $45,000 from Premier Capital Funding, LLC, a lending institution. TheThis note is an open line with interest rate of approximately 29% maturing in November 28, 2016. On August 22, 2016, the Company ceased making payments on this loan.  On October 17, 2016, the Company agreed to pay Premier $4,000 per month for ten months to pay this loan in full. The Company had a total balance of $23,460 as of June 30, 2017.  This loan is personally guaranteed by an Officer of the Company.  No default notice has been received by the Company on the loan as of June 30, 2017.  Payments on this account have been made for the past few months but most of the sums have been applied to interest. This loan was paid in full at July 31,November 2, 2017.

(4) The Company has been negotiating more favorable payment and payoff arrangements for these debts.  ABCO stopped payments on the WebBank note on July 19, 2017 after signing an agreement with Veritas Legal Plan Inc. to renegotiate and service this debt and the Quarterspot debt listed above. Payments on the Quarterspot Note were stopped on July 28, 2017. Under the VeritasLegal Plan, the Company would pay for the legal services incurred to negotiate a reduced pay-off amount or a reduced balance on these notes payable over a period of two to three years.  The Company had paid Veritas $12,116.18, of which a portion were for fees for services rendered, to apply towards the settlement of and legal fees for   negotiating settlements favorable to ABCO and to defend ABCO positions in court if necessary.  The current payment arrangements are for ABCO to pay Veritas $1,052.87 per month towards these arrangements.  If the Company is not successful in this process the note holders may take legal action to collect their respective debtdebts against the Company and/or its officers.

The following is the major category of liabilities measured at fair value on a recurring basis as of JuneSeptember 30, 2017, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

From October 7, 2016 through December 31, 2016, the Company issued an aggregate of 19,872,739 shares of its common stock upon conversions of sixnine different convertible notes at conversion prices ranging from $0.0015 to $0.0047 per share. All share figures contained in this filing have been adjusted to reflect Post Reverse Stock Split numbers. As a result of such issuances, all six [6] of the notes have paid in full as of that date.  The Company recorded $424,878 for the equity infusion provided by these notes.

During the six-monthnine-month period ended JuneSeptember 30, 2017 the Company sold an aggregate of 33,143,25068,212,295 shares of common stock and received or credited gross proceeds of $280,871. Of such  shares, 26,362,000 were not issued because  of the lack of a sufficient  number of authorized shares. The Company’s Articles of Incorporation were amended on August 17, 2017 to  increase the authorized  shares  from 50,000,000 shares to 1,000,000,000 shares after the Company Shareholders  authorized such  Amendment  at a Special Meeting held on August 17, 2017.$546,278.  Expenses of this offering totaled $162,855.$227,792. The net proceeds of $118,016$220,766 were used for working capital, corporate expenses, legal fees and public company expenses. The unissued shares with equity valuation of $178,169 will be issued after the special meeting.

 

The Board of Directors of the Company approved a reverse stock split of its common stock, at a ratio of 1-for-10 (the “Reverse Stock Split”) in November of 2016.  The Reverse Stock Split became effective with FINRA (the Financial Industry Regulatory Authority) and in the marketplace on January 13, 2017 (the “Effective Date”), whereupon the shares of common stock began trading on a split adjusted basis.  On the Effective Date, the Company’s trading symbol was changed to “ABCED” for a period of 20 business days, after which the “D” was removed from the Company’s trading symbol, and it reverted to the original symbol of “ABCE”.  In connection with the Reverse Stock Split, the Company’s CUSIP number changed to 00287V204.  On the Effective Date, the total number of shares of the Company’s Common Stock held by each stockholder was converted automatically into the number of whole shares of Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by such stockholder immediately prior to the Reverse Stock Split, divided by (ii) 10.  No fractional shares were issued, and no cash or other consideration was paid.  The Company issued one whole share of the post-Reverse Stock Split Common Stock to all stockholders who otherwise would have received a fractional share because of the Reverse Stock Split.

As a result of the Reverse Stock Split the number of authorized shares of common stock was reduced to 50,000,000 from 500,000,000 shares.  At a Special Meeting of Stockholders held on August 17, 2017, , Company shareholders authorized an amendment to the Articles of Incorporation to increase the authorized capital to 1,000,000,000 common shares and 100,000,000 preferred shares. The Amendment was filed with the Nevada Secretary of State on August 17, 2017.

Legal fees relating to financing activities, blue sky registrations with states and other fund raising expenses were charged to additional paid in capital in the amount $11,900$28,211 for the sixnine months ended JuneSeptember 30, 2017 and $126,315 during the year ended December 31, 2016.

During the fiscal year ended December 31, 2016 the Company sold 2,486,382 shares in Regulation S offerings to non-US investors. The total proceeds from the offering was $767,234.  Commission and expense reimbursements totaled $441,170. The Company recorded net proceeds totaling $326,064. 

  

Stock subscriptions executed under an earlier offering included a provision whereby ABCO agrees to pay a dividend (defined as interest) of from 6% to 12% of the total amount invested for a period of one year from receipt of the invested funds. This dividend (defined as interest) is allocated between the broker and the investor with amounts paid to the broker treated as a cost of the offering and netted against additional paid in capital and amounts paid to the investor treated as interest expense. The balance of accrued interest at JuneSeptember 30, 2017 and December 31, 2016 amounted to $49,290 and no payments have been made during the current period.

ABCO has evaluated these agreements under ASC 480-10: Certain Financial Instruments with Characteristics of Both Liabilities and Equity and determined that the capital contributions made under these subscription agreement more closely resemble equity than liabilities as they can only be settled through the issuance of shares and although they have a stated cost associated with them which accrues in the same manner as interest, the cost is only incurred in the first twelve months after placement as is more closely associated with a cost of raising funds than interest expense.

During November, 2016, the Company issued an aggregate of 1,449,649 shares to financial consulting entities for services relating to fund raising activities. The total issuance was valued at $103,400 for fair market value as negotiated and that amount is charged to additional paid in capital. 

 

Effective JuneSeptember 30, 2016, the Company entered into a Consulting Agreement (“CA”) with Joshua Tyrell (“Tyrell”) which provided for Tyrell to assist in various business development activities on behalf of the Company, including but not limited to realizing new business opportunities.  In consideration for rendering such services, Tyrell was issued 150,000 free trading shares of Company common stock.  The CA had a sixnine month term expiring on JuneSeptember 30, 2017.  On November 7, 2016 and on November 30, 2016, the CA was amended to provide for the payment of an additional 630,000 and an additional 500,000 free-trading shares, respectively to Tyrell for services rendered due to the huge trading volume of the derivative conversions and to extend the term of the CA to twelve (12) months ending November 7, 2017.  The consultant received a total of 1,430,000 shares of free trading and restricted common stock valued at $91,600.

On March 13, 2017, the Company and Blackbridge Growth Fund, Inc. [“Blackbridge”], entered into an Agreement, effective as of March 1, 2017, terminating the SPA.Securities Purchase Agreement dated as of November 2, 2016 [“SPA”] whereby Blackbridge has agreed to purchase up to $5,000,000 worth of shares of the Company’s common stock. (See the Company’s Form 8-K filed on November 29, 2016).  The Registration Statement on Form S-1 [“Form S-1”] filed by the Company pursuant to the SPA could not be processed because of technical issues raised by the SEC and was withdrawn on February 28, 2017.  In addition, the Blackbridge NoteThe convertible promissory note issued by the Company under the SPA in the amount of $100,000 to Blackbridge for its $100,000 advance to cover the expenses of the preparation and filing of the Form S-1 and related matters remains in full force and effect.

Further, the Company and Blackbridge agreed that the convertible promissory note in the amount of $150,000 issued to Blackbridge as a commitment fee, remains, by its express terms, in full force and effect notwithstandingwould be deemed to be terminated as of March 1, 2017, the effective date of the termination of the SPA as doesSPA.  This action resulted in reduction of the Expenses Note.prepaid expense account on the balance sheet.

The company has net operating loss carryforwards as of JuneSeptember 30, 2017 totaling approximately $3,877,821.$4,139,652.  A deferred tax benefit of approximately $1,318,459$1,407,482 has been offset by a valuation allowance of the same amount as its realization is not assured.

During the period JulyOctober 1, 2017 through August 17,November 13, 2017 the Company sold 20,803,57011,901,833 shares of restricted common stock for gross proceeds of $160,852$ 63,053 and net proceeds of $61,797. These shares will be$22,137. 

On October 13, 2017, the Company issued in the near future  as the authorized number of shares was increaseda nine (9) month $58,000 convertible promissory note to one billion  sharesPower Up Lending Group, Ltd., (“Power Up”), which bears interest at the August 17, 2017 special  meeting. Seerate of 8% per annum on the principal sum of the outstanding (“Power Up Note”).  The Company received net proceeds of $55,000 after deductions for expenses from the Power Up Note.  The Power Up Note 9 above relating to such increase. As discussed inis convertible at any time after the six (6) month anniversary of the Note 9,  the Company sold  an additional 33,143,250 restrictedinto shares of common stock between January 1, 2017 and June 30, 2017. as a conversion price equal to 58% of the lowest two (2) trade prices in the 15 trading days before the conversion date.

 

Our discussion of operating results for the Threethree months ended JuneSeptember 30, 2017 and JuneSeptember 30, 2016 are presented below with major category details of revenue and expense including the components of operating expenses.

 

Sales consist of photovoltaic products, electrical services and LED lighting products and installation during both periods for the three months ended JuneSeptember 30, 2017 and for the three months ended JuneSeptember 30, 2016.

Sales for the nine months ended September 30, 2017 were $1,168,650 as compared to $512,075 for the same nine months in 2016.  This is an increase of $656,605 or 128 % above the 2016 sales. The Solar sales revenue in 2017 and 2016 reflected seasonal and changing market conditions in the financing of solar installations and competition from the public utilities in the Arizona markets.  When the utilities in Arizona cancelled or substantially reduced the rebate programs, the financing or leasing companies were able to reduce the financial requirements by accepting the rebates as partial payments were no longer able to make loans or lease that required no money down or longer terms for their finance products.  This severally reduced the opportunities for sales and reduced gross margins substantially.  Without available financing, the sales of solar products became even more difficult.  The prices of solar products were reduced in 2017 and 2016 to offset the reduction or elimination of rebates and the market has recovered from this time. The advent of the federal legislation on possible tariffs for imported panels has influenced the sales and profits for the third quarter because of drastic price corrections and availability of products.  ABCO has worked diligently to overcome these changes by focusing on commercial applications and the increased interest of business and government in the LED lighting contracts.

Cost of sales was 42%74% of revenues in 2017 and 85%121% of revenues in 2016.   Gross margins were 58%26% of revenue in 2017 and 15% of revenuenegative for the threenine months of 2016.  During 2017 and 2016 we have been offering new products and have found our entry market prices for steel parking structures have added gross margins higher than usual because we use outside contractors for the entire projects.  Our gross profit reflects this decision.  We feel that we have made progress in entering the parking shade markets and that our gross margins will stabilize as growth lowers these margins in the future.

Total selling, general and administrative expenses were 23%52% of revenues in 2017 and 80%110% of revenues for the same period in 2016.  Net incomeloss for the three-monthnine-month period ended JuneSeptember 30, 2017 was $197,848$(320,761) as compared to the net loss of $(842,402)$(1,108,974) for the same three- monthnine-month period ended JuneSeptember 30, 2016.  Our operating expenses for thisthe 2017 period were lowerhigher as a percentage of revenue and lowerhigher by $27,299$40,247 than the comparative period in 2016. The interest expense from operations during the period ended JuneSeptember 30, 2017 was lower by $1,168$2,150 than in the period ended JuneSeptember 30, 2016 due mostly to the working capital provision of merchant loans and convertible debt.  Interest on derivative liabilities of convertible debentures decreased by $63,094$85,386 during the current period as compared to the prior year. This combination of factors increased the operating income for the period ending JuneSeptember 30, 2017 by $1,040,250 compared to June 30, 2016, due almost entirely by the change in derivative valuation and finance fees.  This change amounted to $443,435 for the three month period.  Since our year to date revenues are higher than the previous year, this resulted in lower operating expenses as a percentage of total revenue.

As noted in previous paragraphs discussing market conditions, ABCO could not finish its backlog of work and expand into the markets of LED lights and commercial solar markets without maintaining staff, facilities and sales expenses.  When sales revenues fall, and expenses are not reduced in equal amounts or percentages, the result is an increase of the percentage of operating expenses to sales revenue.  Operating expenses for the two periods increasedwas approximately the same to accommodate our expansion of sales programs, but not in the same ratio as the reduction in sales. ABCO chose to maintain a level of expenses that would not cripple the Company’s future.

During the sixnine months ended JuneSeptember 30, 2017 our net cash used by operating activities was $(280,925)$(303,479) and comparatively the net cash used by operating activities in the sixnine months ended JuneSeptember 30, 2016 was $(491,970)$(251,012).  Net cash used by operating activities in the period ended JuneSeptember 30, 2017 consisted primarily of net incomeloss from operations of $58,312$(320,761) for 2017 as compared to $(1,122,375)$(1,108,974) for 2016.  Depreciation adjustments were of non-cash expenses were $4,390$6,117 and $6,675$9,886 for each period respectively. Derivative portion of convertible debt accounted for charges to income for future changes in value of the underlying stock in the amount of $(121,956)$(163,683) net for the period ended JuneSeptember 30, 2017.2017 and $416,286 net for the same period in 2016.  None of this expense will be realized if this debt is retired before maturity.  The Company experienced a decreasean increase in accounts payable of $45,347$23,282 and a decrease of $44,901$17,922 for each period respectively.  This is primarily due to the Company's ability apply cash receipts from investors and operations to pay past and current creditors during each period. Accounts receivable increaseddecreased by $175,789,$35,877, net of adjustments for contracts in process, during the period ended JuneSeptember 30, 2017 due to rapid increases in contracts at the end of the period.2017.

Our primary liquidity and capital requirements have been for carrying cost of accounts receivable after completion of contracts.  The industry habitually requires the solar contractor to wait for the utility approval in order to be paid for the contracts. This process can easily exceed 90 days and sometimes requires the contractor to pay all or most of the cost of the project without assistance from suppliers. Our working capital at JuneSeptember 30, 2017 was $(744,810)$(909,794) and it was $(932,939) at December 31, 2016.  This decrease of $188,129$23,145 was primarily due to incomesales from operations during the period ended JuneSeptember 30, 2017 and adjustments for possible future losses on derivative conversions.  Bank financing has not been available to the Company, but we have been able to increase our credit lines with our suppliers because of good credit.  There are no material covenants on our credit lines, normally due in 30 days, since they are standard in the industry and the balances vary on a daily basis.daily. Most are personally guaranteed by the Officer of the Company.

 

 

During the threenine months period ended JuneSeptember 30, 2017 or the last fiscal year ended December 31, 2016 there were no transactions, or proposed transactions, which have materially affected or will materially affect the Company in which any director, executive officer or beneficial holder of more than 5% of the outstanding common, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. We have no policy regarding entering into transactions with affiliated parties.

Based on our current financial position, we cannot anticipate whether we will have sufficient working capital to sustain operations for the next year if we do not raise additional capital.  We will not, however, be able to reach our goals and projections for multistate expansion without a cash infusion.   We have been able to raise sufficient capital through the sale of our common shares and we have incurred substantial increases in debt from our trade creditors in the normal course of business.   Management will not expand the business until adequate working capital is provided.  Our ability to maintain sufficient liquidity is dependent on our ability to attain profitable operations or to raise additional capital. We have no anticipated timeline for obtaining neither additional financing nor the expansion of our business.  We will continue to keep our expenses as low as possible and keep our operations in line with available working capital as long as possible.  There is no guarantee that the Company will be able to obtain adequate capital from any sources, or at all.

Off Balance Sheet Arrangements:  There are no off balance sheet arrangements with any Directors, Officers or related parties.

 

 

Not Applicable to Smaller Reporting Companies.

 

 

As of the end of the reporting period, JuneSeptember 30, 2017, we carried out an evaluation, under the supervision and with the participation of our management, including the Company’s Chairman and Chief Executive Officer/Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified by the SEC’s rules and forms. Based upon that evaluation, the Chairman/CEO and the Chief Financial Officer concluded that our disclosure controls and procedures are not currently effective in timely alerting them to material information relating to the Company required to be included in the Company’s period SEC filings. The Company is attempting to expand such controls and procedures, however, due to a limited number of resources the complete segregation of duties is not currently in place.

 

Subsequent to the date of such evaluation as described in subparagraph (a) above, there were no changes in our internal controls or other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.

 

 

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. However, we believe that our disclosure controls and procedures are designed to provide reasonable assurance of achieving this objective. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, consolidated financial condition, or operating results.

 

 

Not Applicable.

 

 

During the six-monthnine-month period ended JuneSeptember 30, 2017 the Company sold an aggregate of 33,143,25068,212,295 shares of common stock and received or credited gross proceeds of $280,871.$546,278.  Expenses of this offering totaled $162,855.$227,792. The net proceeds of $118,016$220,766 were used for working capital, corporate expenses, legal fees and public company expenses. Of such  shares, 26,362,000 were not issued because of the lack of a sufficient  number of authorized shares. The Company’s Articles of Incorporation were amended on August 17, 2017 to  increase the authorized  shares  from 50,000,000 shares to 1,000,000,000 shares after the Company Shareholders  authorized such  Amendment  at a Special Meeting held on August 17, 2017. The unissued shares will be issued after the special meeting.

  

 

None

 

 

Not Applicable

 

 

Not Applicable