ITEM 1.~~FINANCIAL STATEMENTS~~The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report on Form 10-Q for the fiscal year ended December 31, 2018, which we filed with the Securities and Exchange Commission (“SEC”) on April 16, 2019. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

GEOSPATIAL CORPORATION ~~INDEX~~

~~Page~~INDEX

~~FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016~~

Consolidated Balance Sheets (Unaudited)4

Geospatial Corporation and Subsidiaries
Consolidated Balance Sheets

	June 30,	December 31,
	2019	2018
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$ 29,795	$ 7,117
Accounts receivable	21,300	115,913
Prepaid expenses and other current assets	64,936	80,664

Total current assets	116,031	203,694

Property and equipment:
Field equipment	357,070	357,070
Field vehicles	43,285	43,285

Total property and equipment	400,355	400,355
Less: accumulated depreciation	(400,006)	(398,063)

Net property and equipment	349	2,292

Total assets	$ 116,380	$ 205,986

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable	$ 181,253	$ 198,716
Accrued expenses	1,211,197	1,323,586
Notes payable to related party	1,958,612	1,758,424
Notes payable	51,484	284,248
Accrued registration payment arrangement	76,067	76,337

Total current liabilities	3,478,613	3,641,311

Stockholders' deficit:
Preferred stock: Undesignated, $0.001 par value; 20,000,000 shares authorized at June 30, 2019 and December 31, 2018; no shares issued and outstanding at June 30, 2019 and December 31, 2018	-	-
Series B Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized at June 30, 2019 and December 31, 2018; no shares issued and outstanding at June 30, 2019 and December 31, 2018	-	-
Series C Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized at June 30, 2019 and December 31, 2018; 3,644,578 shares issued and outstanding at June 30, 2019 and December 31, 2018	3,645	3,645
Common stock, $0.001 par value; 750,000,000 shares authorized at June 30, 2019 and December 31, 2018; 365,911,784 and 325,077,118 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	365,912	325,077
Additional paid-in capital	41,035,578	40,438,183
Additional paid-in capital, warrants	126,163	122,963
Accumulated deficit	(44,893,531)	(44,325,193)

Total stockholders' deficit	(3,362,233)	(3,435,325)

Total liabilities and stockholders' deficit	$ 116,380	$ 205,986

Consolidated Statements

The accompanying notes are an integral part of ~~Operations (Unaudited)~~5these consolidated financial statements.

Consolidated Statements

Geospatial Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

	For the Three Months Ended		For the Six Months Ended
	June 30,		June 30,
	2019	2018	2019	2018

Sales	$ 76,900	$ 262,753	$ 143,000	$ 440,567
Cost of sales	23,400	55,941	44,309	98,580

Gross profit	53,500	206,812	98,691	341,987

Selling, general and administrative expenses	254,244	387,979	593,370	851,124

Net loss from operations	(200,744)	(181,167)	(494,679)	(509,137)

Other income (expense):
Interest expense	(71,206)	(103,529)	(151,831)	(214,278)
Gain on extinguishment of debt	78,121	-	78,121	-
Other income	-	-	-	1,711
Loss on disposal of property and equipment	-	(1,856)	-	(1,856)
Gain on foreign currency exchange	-	-	51	-

Total other income (expense)	6,915	(105,385)	(73,659)	(214,423)

Net loss before income taxes	(193,829)	(286,552)	(568,338)	(723,560)

Provision for income taxes	-	-	-	-

Net loss	$ (193,829)	$ (286,552)	$ (568,338)	$ (723,560)

Basic and fully-diluted net loss per share of common stock	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)

The accompanying notes are an integral part of ~~Changes in Stockholders’ Deficit (Unaudited)~~6these consolidated financial statements.

Consolidated Statements

Geospatial Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Deficit
For the Six Months Ended June 30, 2019
(Unaudited)

							Additional
						Additional	Paid-In
	Preferred Stock		Common Stock			Paid-In	Capital,	Accumulated
	Shares	Amount	Shares		Amount	Capital	Warrants	Deficit	Total

Balance, December 31, 2018	3,644,578	$ 3,645	325,077,118		$ 325,077	$ 40,438,183	$ 122,963	$ (44,325,193)	$ (3,435,325)

Sale of common stock, net of issuance costs	-	-	21,666,667		21,667	300,133	3,200	-	325,000

Issuance of common stock for services	-	-	4,350,000		4,350	60,900	-	-	65,250

Issuance of common stock for registration penalty	-	-	18,000		18	252	-	-	270

Issuance of common stock in settlement of liabilities	-	-	14,799,999		14,800	207,200	-	-	222,000

Issuance of convertible securities with beneficial conversion features	-	-	-	��	-	28,910	-	-	28,910

Net loss for the six months ended June 30, 2019	-	-	-		-	-	-	(568,338)	(568,338)

Balance, June 30, 2019	3,644,578	$ 3,645	365,911,784		$ 365,912	$ 41,035,578	$ 126,163	$ (44,893,531)	$ (3,362,233)

The accompanying notes are an integral part of ~~Cash Flows (Unaudited)~~7these consolidated financial statements.

Notes to Unaudited Consolidated Financial Statements8

Geospatial Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

	For the Six Months Ended
	June 30,
	2019	2018
Cash flows from operating activities:
Net loss	$ (568,338)	$ (723,560)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,943	5,330
Loss on disposal of property and equipment	-	1,856
Amortization of deferred debt issue costs	-	100,630
Amortization of discount on notes payable	28,910	21,663
Gain on extinguishment of debt	(78,121)	-
Accrued interest payable	122,071	90,804
Issuance of common stock for services	65,250	62,700
Changes in operating assets and liablities:
Accounts receivable	94,613	(104,368)
Prepaid expenses and other current assets	15,728	18,741
Accounts payable	(17,463)	(55,972)
Accrued expenses	(34,668)	190,469

Net cash used in operating activities	(370,075)	(391,707)

Cash flows from financing activities:
Proceeds from issuance of notes payable	-	200,000
Proceeds from issuance of notes payable to related parties	100,000	-
Principal payments on notes payable	(13,847)	(54,292)
Principal payments on notes payable to related parties	(18,400)	-
Proceeds from sale of common stock, net of offering costs	325,000	145,000
Proceeds from exercise of warrants to purchase common stock	-	100,000

Net cash provided by financing activities	392,753	390,708

Net change in cash and cash equivalents	22,678	(999)

Cash and cash equivalents at beginning of period	7,117	8,357

Cash and cash equivalents at end of period	$ 29,795	$ 7,358

Supplemental disclosures:
Cash paid during period for interest	$ 850	$ 1,339
Cash paid during period for income taxes	-	-
Non-cash transactions:
Issuance of common stock for services	65,250	62,700
Issuance of common stock for registration penalty	270	-
Issuance of convertible securities with beneficial conversion features	28,910	21,663
Liabilities settled by issuance of notes payable	222,000	175,653
Issuance of warrants to purchase common stock pursuant to issuance of notes payable	-	25,800

3

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

Geospatial Corporation and Subsidiaries

~~Consolidated Balance Sheets~~Notes to Unaudited Financial Statements

September 30,

December 31,

2017

2016

(Unaudited)

ASSETS

Current assets:

   Cash and cash equivalents
$ 5,662

$ 66,992
   Accounts receivable
192,011

65,800
   Prepaid expenses and other current assets
100,261

140,105

       Total current assets
297,934

272,897

Property and equipment:

   Field equipment
359,591

357,070
   Field vehicles
43,285

43,285

       Total property and equipment
402,876

400,355
       Less: accumulated depreciation
(386,948)

(355,616)

       Net property and equipment
15,928

44,739

Total assets
$ 313,862

$ 317,636

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:

   Accounts payable
$ 305,936

$ 274,319
   Accrued expenses
1,098,945

813,197
   Capital lease liability to related party
603

3,278
   Notes payable, net of deferred debt issue costs
1,396,015

1,365,738
   Accrued registration payment arrangement
76,337

522,115

       Total current liabilities
2,877,836

2,978,647

Stockholders' deficit:

   Preferred stock:
     Undesignated, $0.001 par value; 10,000,000 shares authorized at September 30, 2017
       and December 31, 2016; no shares issued and outstanding at September 30, 2017
       and December 31, 2016
-

-
     Series B Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized
       at September 30, 2017 and December 31, 2016; no shares issued and outstanding at
       September 30, 2017 and December 31, 2016
-

-
     Series C Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized
       at September 30, 2017 and December 31, 2016; 3,644,578 and 4,543,654 shares
       issued and outstanding at September 30, 2017 and December 31, 2016, respectively
3,645

4,544
   Common stock, $0.001 par value; 750,000,000 shares authorized at September 30, 2017
       and December 31, 2016;   279,080,452 and 226,211,740 shares issued and outstanding
       at September 30, 2017 and December 31, 2016, respectively
279,080

226,212
   Additional paid-in capital
39,714,321

38,905,332
   Additional paid-in capital, warrants
170,000

20,626
   Accumulated deficit
(42,731,020)

(41,817,725)

       Total stockholders' deficit
(2,563,974)

(2,661,011)

Total liabilities and stockholders' deficit
$ 313,862

$ 317,636

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

4June 30, 2019

~~Geospatial Corporation and Subsidiaries~~

~~Consolidated Statements of Operations~~

~~(Unaudited)~~

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

Sales
$ 230,330

$ 132,371

$ 521,465

$ 572,371
Cost of sales
89,636

54,838

175,722

185,374

   Gross profit
140,694

77,533

345,743

386,997

Selling, general and administrative expenses
431,480

463,657

1,469,427

1,240,381

Net loss from operations
(290,786)

(386,124)

(1,123,684)

(853,384)

Other income (expense):

   Interest expense
(89,583)

(47,334)

(235,882)

(180,106)
   Gain on extinguishment of debt
-

58,603

13,693

192,124
   Registration payment arrangements
-

(482,863)

432,578

9,720

       Total other income (expense)
(89,583)

(471,594)

210,389

21,738

Net income (loss) before income taxes
(380,369)

(857,718)

(913,295)

(831,646)

Provision for income taxes
-

-

-

-

Net loss
$ (380,369)

$ (857,718)

$ (913,295)

$ (831,646)

Basic and fully-diluted net loss per share of common stock
$ (0.00)

$ (0.01)

$ (0.00)

$ (0.01)

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

5

~~Geospatial Corporation and Subsidiaries~~

~~Consolidated Statements of Changes in Stockholders' Deficit~~

~~For the Nine Months Months Ended September 30, 2017~~

~~(Unaudited)~~

Additional

Additional

Paid-In

Preferred Stock

Common Stock

Paid-In

Capital,

Accumulated

Shares

Amount

Shares

Amount

Capital

Warrants

Deficit

Total

Balance, December 31, 2016
4,543,654

$ 4,544

226,211,740

$ 226,212

$ 38,905,332

$ 20,626

$ (41,817,725)

$ (2,661,011)

Sale of common stock, net of issuance
costs
-

-

23,333,335

23,333

526,667

-

-

550,000

Conversion of Series C Convertible
Preferred Stock to common stock
(899,076)

(899)

17,981,520

17,981

(17,082)

-

-

-

Issuance of common stock for
registration penalty
-

-

132,000

132

13,068

-

-

13,200

Exercise of warrants to purchase
common stock
-

-

4,421,857

4,422

54,204

(20,626)

-

38,000

Issuance of common stock for services
-

-

7,000,000

7,000

193,000

-

-

200,000

Issuance of convertible securities with
beneficial conversion features
-

-

-

-

39,132

-

-

39,132

Issuance of warrants to purchase
common stock for loan concessions
-

-

-

-

-

170,000

-

170,000

Net loss for the nine months ended
   September 30, 2017
-

-

-

-

-

-

(913,295)

(913,295)

Balance, September 30, 2017
3,644,578

$ 3,645

279,080,452

$ 279,080

$ 39,714,321

$ 170,000

$ (42,731,020)

$ (2,563,974)

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

6

~~Geospatial Corporation and Subsidiaries~~

~~Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

For the Nine Months Ended

September 30,

2017

2016
Cash flows from operating activities:

Net income (loss)
$ (913,295)

$ (831,646)
Adjustments to reconcile net income (loss) to net cash used in operating activities:

   Depreciation
31,332

82,670
   Amortization of discount on notes payable
54,949

62,500
   Amortization of deferred debt issue costs
18,613

-
   Gain on extinguishment of debt
(13,693)

(192,124)
   Accrued registration payment arrangement
(432,578)

(9,720)
   Accrued interest payable
156,866

95,586  ��
   Issuance of common stock for services
200,000

-
   Changes in operating assets and liabilities:

       Accounts receivable
(126,210)

(23,871)
       Prepaid expenses and other current assets
39,844

22,971
       Accounts payable
54,869

(10,832)
       Accrued expenses
327,322

74,127
       Due to related parties
-

(504)

   Net cash used in operating activities
(601,981)

(730,843)

Cash flows from investing activities:

Purchase of property and equipment
(2,521)

(15,202)

   Net cash used in investing activities
(2,521)

(15,202)

Cash flows from financing activities:

Proceeds from issuance of notes payable
-

250,000
Principal payments on notes payable
(42,153)

(156,881)
Principal payments on capital lease liabilities
(2,675)

(2,599)
Proceeds from sale of common stock, net of offering costs
550,000

100,000
Proceeds from exercise of warrants to purchase common stock
38,000

110,000
Proceeds from sale of Series C Convertible Preferred Stock, net of offering costs
-

543,373

   Net cash provided by financing activities
543,172

843,893

Net change in cash and cash equivalents
(61,330)

97,848

Cash and cash equivalents at beginning of period
66,992

16,962

Cash and cash equivalents at end of period
$ 5,662

$ 114,810

Supplemental disclosures:

Cash paid during period for interest
$ 5,454

$ 22,020
Cash paid during period for income taxes
-

-
Non-cash transactions:

   Issuance of common stock for registration penalty
13,200

1,080
   Liabilities settled by issuance of notes payable
51,227

33,416
   Issuance of convertible securities with beneficial conversion features
39,132

-
   Issuance of common stock in settlement of liabilities
-

1,201,176
   Issuance of Series C Convertible Preferred Stock in settlement of liabilities
-

358,731
   Issuance of warrants to purchase common stock in settlement of liabilities
-

54,278
   Issuance of common stock for services
200,000

-
   Issuance of warrants to purchase common stock for loan concessions
170,000

-

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

7

Note 1 – Basis of Presentation

The Unaudited Consolidated Financial Statements included herein have been prepared by Geospatial Corporation (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and regulations issued pursuant to the Securities Exchange Act of 1934, as amended. Accordingly, the accompanying Unaudited Consolidated Financial Statements do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying Unaudited Consolidated Financial Statements as of and for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 should be read in conjunction with the Company’s Financial Statements as of and for the year ended December 31, ~~2016.~~2018. In the opinion of the Company’s management, all adjustments considered necessary for a fair ~~statement~~presentation of the accompanying Unaudited Consolidated Financial Statements have been included, and all adjustments, unless otherwise discussed in the Notes to the Unaudited Consolidated Financial Statements, are of a normal and recurring nature. Operating results for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2019 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017,~~2019, or any other interim periods, or any future year or period.

The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, Geospatial Mapping Systems, Inc. and Utility Services and Consulting Corporation, which ceased operations in 2011. All intercompany accounts and transactions have been eliminated.

On June 12, 2019, the Company’s board of directors appointed David M. Truitt as the Company’s chief executive officer, director, and chairman of the Company’s board of directors. Accordingly, notes payable by the Company to Mr. Truitt that were presented as notes payable in the Company’s financial statements as of and for the year ended December 31, 2018 have been reclassified to notes payable to related party.

Note 2 – Accrued Expenses

Accrued expenses consisted of the following:

September 30,

December 31,

2017

2016

Payroll and taxes
$ 904,508

$ 632,678

Accounting
76,976

62,792

Contractors and subcontractors
10,227

10,227

Interest
2,243

2,150

Other
104,991

105,350

Accrued expenses
$ 1,098,945

$ 813,197

8

	June 30,	December 31,
	2019	2018

Payroll and taxes	$ 1,153,854	$ 1,170,091
Accounting	43,270	47,504
Contractors and subcontractors	6,755	5,300
Interest	3,318	2,918
Other	4,000	97,773

Accrued expenses	$ 1,211,197	$ 1,323,586

Note 3 – Related-Party Transactions

The Company ~~leases~~leased its headquarters building from Mark A. Smith, who was the Company’s ~~Chairman~~chairman and ~~Chief Executive Officer.~~chief executive officer through June 6, 2019. The building has approximately 3,200 square feet of office space, and iswas used by the Company’s corporate, technical, and operations staff. Mr. Smith ~~has~~ agreed to suspend collection of rent effective April 1, 2016. No rent ~~will accrue~~accrued during the suspension. The lease ~~is cancellable by either party upon~~was cancelled effective June 30, ~~days’ notice.~~2019. The Company incurred no lease expense during the ~~three and nine~~six months ended ~~September~~June 30, ~~2017,~~2019 and ~~$0 and $19,500 of lease expense during the three and nine months ended September 30, 2016, respectively.~~2018.

~~On November 9, 2012,~~David M. Truitt is the Company’s chairman and chief executive officer. The Company ~~and~~has outstanding notes payable due to Mr. Smith entered into a Lease Agreement, pursuant to which the Company leases a field vehicle from Mr. Smith. The lease is for 60 months, and is for substantially the same terms for which Mr. Smith leases the vehicle from the manufacturer. Interest on the lease amounted to $9 and $34 for the three months ended September 30, 2017 and 2016, respectively, and $46 and $122 for the nine months ended September 30, 2017 and 2016, respectively. The lease is recordedTruitt as a capital lease. At September 30, 2017, gross assets recorded under the lease and associated accumulated depreciation were $16,870 and $16,448, respectively. Future minimum payments under the capital lease are as follows as of September 30, 2017:follows:

~~Balance of 2017~~		~~$ 605~~
~~Thereafter~~		-
~~Total minimum payments~~		~~605~~
~~Less: minimum interest payments~~		~~(2)~~
~~Minimum principal payments~~		~~$ 603~~

	June 30, 2019	December 31, 2018
Secured Promissory Note, bearing interest at 20% per annum, net of discount and deferred issuance costs. The note is convertible to common stock at the higher of 75% of the 10 day average bid price or $0.02 per share, and is secured by substantially all the assets of the Company. The note is overdue, and the Company is in default	$ 1,874,063	$ 1,758,424
Secured Promissory Note, bearing interest at 10% per annum, and is secured by substantially all the assets of the Company	84,549	-
Notes payable to related party	$ 1,958,612	$ 1,758,424

9Geospatial Corporation and Subsidiaries

Notes to Unaudited Financial Statements

June 30, 2019

Note 4 – Notes Payable

~~Current notes~~Notes payable consisted of the following:

September 30, 2017

December 31, 2016

Secured Promissory Note, net of deferred debt issue costs, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount. On August 31, 2017, the due date was amended to June 1, 2018. From January 31, 2017 to August 31, 2017, the note bore interest at 20%. After August 31, 2017, the note bears interest at 15%. The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company
$ 1,353,877

$ 1,332,920

Note payable under settlement agreement with vendor, payable monthly over 10 months, with no interest
2,560

-

Notes payable under settlement agreements with former employees, payable monthly with terms of up to 16 months, with interest rates ranging from 0% to 20%
39,578

32,818

Current notes payable
$ 1,396,015

$ 1,365,738

	June 30, 2019	December 31, 2018
Unsecured Convertible Promissory Notes, payable to two individuals, bearing interest at 15% per annum, net of deferred issuance costs. The notes are convertible at the holder’s option to common stock at $0.015 per share	`$-`	`$218,917`
Settlement agreements with vendors, bearing no interest.	`-`	`13,847`
Notes payable under settlement agreements with former employees, payable monthly with terms of up to twelve months, bearing no interest	`51,484`	`51,484`
Notes payable	`$51,484`	`$284,248`

10Geospatial Corporation and Subsidiaries

Notes to Unaudited Financial Statements

June 30, 2019

Note 5 – Income Taxes

The Company’s provision for (benefit from) income taxes is summarized below:

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016

Current:

   Federal
$ -

$ -

$ -

$ -

   State
-

-

-

-

-

-

-

-

Deferred:

   Federal
(113,240)

(116,029)

(279,482)

(261,352)

   State
(35,949)

(36,834)

(88,725)

(82,969)

(149,189)

(152,863)

(368,207)

(344,321)

Total income taxes
(149,189)

(152,863)

(368,207)

(344,321)

Less: valuation allowance
149,189

152,863

368,207

344,321

Net income taxes
$ -

$ -

$ -

$ -

	Three Months Ended June 30, 2019	Three Months Ended June 30, 2018	Six Months Ended June 30, 2019	Six Months Ended June 30, 2018

Current:
Federal	`$-`	`$-`	`$-`	`$-`
State	`-`	`-`	`-`	`-`
	`-`	`-`	`-`	`-`
Deferred:
Federal	`(36,386)`	`(53,443)`	`(127,083)`	`(135,655)`
State	`(19,252)`	`(28,277)`	`(56,658)`	`(71,775)`
	`(55,638)`	`(81,720)`	`(183,741)`	`(207,430)`
Total income taxes	`(55,638)`	`(81,720)`	`(183,741)`	`(207,430)`

Less: valuation allowance	`55,638`	`81,720`	`183,741`	`207,430`

Net income taxes	`$-`	`$-`	`$-`	`$-`

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016
Federal statutory rate
35.0 %

35.0 %

35.0 %

35.0 %
State income taxes (net of federal benefit)
6.5

6.5

6.5

6.5
Valuation allowance
(41.5)

(41.5)

(41.5)

(41.5)

Effective rate
0.0 %

0.0 %

0.0 %

0.0 %

11

~~Note 5 – Income Taxes (continued)~~

	Six months Ended June 30, 2019	Six months Ended June 30, 2018
Federal statutory rate	21.0 %	21.0 %
State income taxes (net of federal benefit)	7.9	7.9
Valuation allowance	(28.9)	(28.9)

Effective rate	0.0 %	0.0 %

Significant components of the Company’s deferred tax assets and liabilities are summarized below. A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.

September 30, 2017

December 31, 2016

Start-up costs
$ 20,283

$ 35,033

Depreciation
(41,128)

(37,423)

Accrued expenses
305,809

745,103

Net operating loss carryforward
16,934,258

15,714,795

   Deferred income taxes
17,219,223

16,457,508

   Less: valuation allowance
(17,219,223)

(16,457,508)

Net deferred income taxes
$ -

$ -

	June 30, 2019	December 31, 2018
Start-up costs	`$2,141`	`$5,565`
Depreciation	`(41,995)`	`(40,499)`
Accrued expenses	`265,807`	`274,885`
Net operating loss carryforward	`12,517,172`	`12,182,800`

Deferred income taxes	`12,743,125`	`12,422,751`
Less: valuation allowance	`(12,743,125)`	`(12,422,751)`

Net deferred income taxes	`$-`	`$-`

Geospatial Corporation and Subsidiaries

~~At September~~Notes to Unaudited Financial Statements

June 30, 2017, the Company had federal and state net operating loss carryforwards of approximately $40,805,000. The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively. The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law.

122019

Note 6 – Net Income (Loss) Per Share of Common Stock

Basic net income (loss) per share of common stock are computed by dividing earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share reflects per share amounts that would have resulted if dilutive potential common stock had been converted to common stock. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities.

The following reconciles amounts reported in the financial statements:

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016
Net loss
$ (380,369)

$ (857,718)

$ (913,295)

$ (831,646)

Weighted average number of shares of common stock outstanding
274,660,162

149,451,206

257,745,741

146,393,639
Dilutive potential shares of common stock
274,660,162

149,451,206

257,745,741

146,393,639

Net loss per share of common stock:

   Basic
$ (0.00)

$ (0.01)

$ (0.00)

$ (0.01)
   Diluted
$ (0.00)

$ (0.01)

$ (0.00)

$ (0.01)

13

~~Note 6 – Net Income (Loss) Per Share of Common Stock (continued)~~
Three Months
Ended
June 30, 2019
Three Months
Ended
June 30, 2018
Six Months
Ended
June 30, 2019
Six Months
Ended
June 30, 2018
Net income (loss)
$(193,829)
$(286,552)
$(568,338)
$(723,560)
Weighted average number of shares of common stock outstanding
355,643,425
306,144,225
342,226,017
299,524,117
Dilutive potential shares of common stock
355,643,425
306,144,225
342,226,017
299,524,117
Net income (loss) per share of common stock:
Basic
$(0.00)
$(0.00)
$(0.00)
$(0.00)
Diluted
$(0.00)
$(0.00)
$(0.00)
$(0.00)

The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:

Three Months
Ended
June 30, 2019

Three Months
Ended
June 30, 2018

Six Months
Ended
June 30, 2019

Six Months
Ended
June 30, 2018








Series C Convertible Preferred Stock
72,891,560

72,891,560

72,891,560

72,891,560
Options and warrants to purchase common stock
6,274,526

10,638,462

6,274,526

10,638,462
Secured Promissory Note
92,249,650

80,713,700

90,812,175

63,562,954
Unsecured Promissory Notes
7,547,233

-

7,297,233

-

Total
178,962,969

164,243,722

177,275,494

147,092,976

Three Months Ended
September 30, 2017

Three Months Ended
September 30, 2016

Nine Months Ended
September 30, 2017

Nine Months Ended
September 30, 2016
Series C Convertible Preferred Stock
72,891,560

77,503,160

75,526,216

53,222,914
Options and warrants to purchase common stock
16,018,393

71,378,151

29,147,461

68,205,580
Secured Promissory Note
56,315,086

6,732,841

34,593,939

15,097,294

Total
145,225,039

150,579,542

139,267,616

136,525,788

14Geospatial Corporation and Subsidiaries
Notes to Unaudited Financial Statements
June 30, 2019
Note 7 – Stock-Based Payments

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, the Company granted warrants to purchase ~~1,833,334~~2,833,332 shares of the Company’s common stock to investors in connection with investments in the Company’s common stock. ~~The~~
During the six months ended June 30, 2019, the Company ~~issued warrants to purchase 20,000,000~~granted 4,350,000 shares of the Company’s common stock to the holder of the Secured Promissory Note pursuant to an amendment of the Secured Promissory Note. The Company recorded deferred debt issue costs of $170,000, the fair value of the warrants. The Company also issued 7,000,000 shares of common stock to vendorsconsultants in consideration for ~~services.~~services rendered. The Company recorded expense of ~~$200,000,~~$65,250, the fair value of the services received.
During the six months ended June 30, 2019, the Company granted stock appreciation rights on 1,100,000 shares of common stock to eligible employees pursuant to the 2013 Equity Incentive Plan.

Note 8 – Gains on Extinguishment of Debt

Due to significant cash flow problems, the Company has negotiated concessions on the amounts of certain liabilities and extensions of payment terms. The Company accounts for such concessions in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 470-60, Troubled Debt Restructurings by Debtors,, and ASC 405-20, Extinguishment of Liabilities,, and recognizes gains to the extent that the carrying value of the liability exceeds the fair value of the restructured payment plan. Such gains are included as “Gains on extinguishment of debt” in “Other income and expenses” on the Company’s Consolidated Statement of Operations. In addition, the Company has accounts payable that have aged or are expected to age beyond the statute of limitations. The Company is amortizing those liabilities over the remaining term of the statute of limitations. No ~~gain or loss on extinguishment was recorded during~~During the ~~three~~six months ended ~~September~~June 30, ~~2017. Gains~~2019, the Company recorded gains on extinguishment of ~~$58,603~~debt of $78,121. No gains on extinguishment of debt were recorded during the ~~three~~six months ended ~~September~~June 30, ~~2016, and gains of $13,693 and $192,124 were recorded during the nine months ended September 30, 2017 and 2016, respectively.~~2018.

Note 9 – Registration Payment Arrangements

The Company is contractually obligated to issue shares of its common stock to certain investors for failure to register shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”). The Company has recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued. The Company measures fair value by the price of its common stock at its most recent sale. The Company reviews its estimate of the number of shares to be issued and the fair value of the stock to be issued quarterly. The liability is included on the Consolidated Balance Sheet under the heading “accrued registration payment arrangement,” and amounted to $76,067 and $76,337 ~~and $522,115~~ at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively. Gains or losses resulting from changes in the carrying amount of the liability are included in the Consolidated Statement of Operations in other income and expense under the heading “registration payment arrangements”. The Company had no gain or loss from registration payment arrangements of during the ~~three~~six months ended ~~September~~June 30, ~~2017. The Company had losses from registration payment arrangements of $482,863 during the three months ended September 30, 2016. The Company had gains of $432,578~~2019 and ~~$9,720 during the nine months ended September 30, 2017 and 2016, respectively.~~2018.

15

ITEM 2:MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) together with our financial statements and notes thereto as of and for the year ended December 31, ~~2016,~~2018, filed with our Annual Report on Form 10-K on April ~~14, 2017,~~16, 2019, and our financial statements and notes thereto as of and for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017,~~2019, which appear elsewhere in this Quarterly Report on Form 10-Q. The financial statements as of and for the years ended December 31, 2018 and 2017 include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the consolidated results of operations for such periods have been included in these audited consolidated financial statements. All such adjustments are of a normal recurring nature.

We provide cloud-based geospatial solutions to accurately locate and digitally map underground pipelines and other infrastructure in three dimensions. Our professional staff offers the expertise, ability, and technologies required to design and execute solutions that are delivered in a cloud-based GIS (geographic information system) platform.

We believe that the market for aggregating and maintaining positional data for underground assets is maturing, and that business and governmental entities are beginning to understand the value of such data. We believe that this developing market presents us with an opportunity to deliver long-term value to our shareholders. In order to realize that value, our primary challenge is to raise working capital sufficient to operate our business, and investment capital to hire employees, acquire assets, and expand our business. Management is currently focused on raising capital, and planning to position our business to capitalize on the maturing market for positional data once such capital is in place, including identifying new technologies for aggregating positional data, developing our GeoUnderground software, and planning the strategies and processes for our upcoming marketing campaigns. We use financial and non-financial performance indicators to assess our business, including liquidity measures, revenues, gross margins, operating revenue, and backlog.

Results of Operations
The following discussion should be read in conjunction with our financial statements for the periods ended June 30, 2019 and 2018 and the related notes thereto.
Results of Operations for the Three and Six Months ended June 30, 2019 and 2018
We had sales of $76,900 and $143,000 during the three and six months, respectively, ended June 30, 2019. Cost of sales was $23,400 and $44,309 for the three and six months, respectively, ended June 30, 2019. Sales were $262,753 and $440,567 during the three and six months, respectively, ended June 30, 2018. Cost of sales was $55,941 and $98,580 for the three and six months, respectively, ended June 30, 2018. Our sales have fluctuated throughout 2019 and 2018 as our ability to market and perform jobs was hampered by our financial condition. We expect sales and cost of sales to continue to fluctuate as our business continues to mature.
Selling, general, and administrative (“SG&A”) expenses were $254,244 and $593,370 for the three and six months, respectively, ended June 30, 2019. SG&A expenses were $387,979 and $851,124 for the three and six months, respectively, ended June 30, 2018. The decreases in SG&A costs for the three and six months ended June 30, 2019 compared to the three and six months ended June 30, 2018 were due to decreases in payroll costs due to the resignation of our chief executive officer and reductions in sales and technical headcount, and insurance costs due to reduction in insurance.
Other income and expense for the three and six months ended June 30, 2019 was net income of $6,915 for the three months ended June 30, 2019, which included interest expense of $71,206, and gain on extinguishment of debt of $78,121, and net expense of $73,659 for the six months ended June 30, 2019, which included interest expense of $151,831, gain on extinguishment of debt of $78,121, and gain on foreign currency exchange of $51. Other income and expense for the three and six months ended June 30, 2018 was net expense of $105,385 for the three months ended June 30, 2018, which included interest expense of $103,529, and loss on disposal of equipment of $1,856, and net expense of $214,560 for the six months ended June 30, 2018, which included interest expense of $214,278, other income of $1,711, and loss on disposal of equipment of $1,856. The decrease in interest expense in 2019 was due to amortization of deferred debt issuance costs on the Truitt Notes that were fully amortized in 2018. The Company had no such amortization expense in 2019. The gain on extinguishment of debt in 2019 was due to forgiveness of debt by our former chief executive officer due to his resignation.
Gains or expense related to registration payment arrangements result from a series of Stock Subscription Agreements we entered into in 2009 and 2010 (the “Stock Subscription Agreements”). We were required to register the shares of common stock sold pursuant to the Stock Subscription Agreements under the Securities Act. Our failure to timely register the shares of common stock under the Securities Act timely resulted in our obligation to issue additional shares (“Penalty Shares”) to investors who purchased shares pursuant to the Stock Subscription Agreements. We recorded a liability on our books for the value of the estimated number of shares to be issued. We incur losses on our registration payment arrangements when the estimated number of Penalty Shares to be issued increases, or when the value of our common stock increases. We record gains on our registration payment arrangements when the estimated number of Penalty Shares to be issued decreases, or when the value of our common stock decreases. We had no gains or losses related to registration payment arrangements during the three and six months ended June 30, 2019 and 2018. We expect that income or expense related to registration payment arrangements will fluctuate as the price of our common stock and the estimate of the number of Penalty Shares to be issued fluctuate.
We had no benefit from income taxes during the three and six months ended June 30, 2019 and 2018, as our deferred tax benefit was completely offset by a valuation allowance due to the uncertainty of realization of the benefit.
Liquidity and Capital Resources

At ~~September~~June 30, ~~2017,~~2019, we had current assets of ~~$297,934,~~$116,031, and current liabilities of ~~$2,877,836.~~
$3,478,613. Our Company has incurred net losses since inception. Our operations and capital requirements have been funded by sales of our common and preferred stock, advances from our chief executive officer, and issuance of notes

payable. At ~~September~~June 30, ~~2017,~~2019, current liabilities exceeded current assets by ~~$2,579,902,~~$3,362,582, and total liabilities exceeded total assets by ~~$2,563,974.~~$3,362,233. Those factors raise doubts about our ability to continue as a going concern.
On April 2, 2015, we entered into a Note and Warrant Purchase Agreement with David M. Truitt, pursuant to which Mr. Truitt loaned us $1,000,000 pursuant to a Secured Note Payable (as amended, the “Truitt Note”) that is secured by substantially all of the Company’s assets, and is convertible at the holder’s option to shares of the Company’s common stock at a discount to our trading value. Mr. Truitt was appointed as the Company’s chief executive officer and chairman of the board of directors on June 12, 2019. The Truitt Note was originally due on October 2, 2015. On January 26, 2016, we entered into an Agreement and Amendment with Mr. Truitt (the “January 2016 Amendment”), pursuant to which Mr. Truitt loaned us an additional $250,000, and extended the due date of the Truitt Note to July 31, 2016. We also issued Mr. Truitt warrants to purchase 25.0 million shares of our common stock in connection with the January 2016 Amendment. On August 12, 2016, we entered into an Agreement and Amendment with Mr. Truitt (the “August 2016 Amendment”), pursuant to which Mr. Truitt agreed to extend the maturity date of the Truitt Note to January 31, 2017, in consideration for the Company issuing to Mr. Truitt warrants to purchase 12.0 million shares of the Company’s common stock. On November 9, 2016, we made a payment of $200,000 of the balance of the Truitt Note. On December 14, 2016, we entered into a Note and Warrant Purchase Agreement (together with the Truitt Note, as amended, the “Truitt Notes”) with Mr. Truitt, pursuant to which Mr. Truitt loaned the Company an additional $100,000 subject to the terms of the Truitt Note, and the Company issued to Mr. Truitt warrants to purchase 100,000 shares of the Company’s common stock. On August 31, 2017, we entered into an Agreement and Amendment with Mr. Truitt (the “August 2017 Amendment”) pursuant to which (i) the maturity date of the Truitt Notes were extended to June 1, 2018; (ii) the price at which the Truitt Notes are convertible to shares of the Company’s common stock was amended to institute a floor of $0.02 per share; (iii) the interest rate on the Truitt Notes were amended to 15% per annum effective upon the execution of the August 2017 Amendment; (iv) the events of default under the Truitt Notes were waived; and (v) the Company delivered to Mr. Truitt a warrant to purchase 20.0 million shares of the Company’s common stock at a price of $0.01 per share.   On June 15, 2018, we entered into an Agreement to Amend Notes and Security Agreements with Mr. Truitt, pursuant to which (i) the due dates on the Truitt Notes were extended to September 15, 2018; (ii) the event of default of June 1, 2018 was waived; (iii) the Company agreed to use a portion of newly-raised capital to repay a portion of the Truitt Notes; (iv) the governing law, jurisdiction, and venue of the Truitt Notes was changed to Fairfax County, Virginia; and (v) increase the interest rate to 20% effective June 1, 2018. We currently do not have the ability to pay the Truitt Notes.
On March 16, 2016, we designated 10.0 million shares of preferred stock as Series C Convertible Preferred Stock (“Series C Stock”). Series C Stock is convertible to common stock at a conversion ratio of 20 shares of common stock for each share of Series C Stock, subject to adjustment for stock dividends, splits, and similar events. Series C Stock has a liquidation preference equal to its original issue price, and has voting rights equal to five times the number of shares of common stock into which the Series C Stock is convertible.
During ~~2016,~~2018, we sold ~~1.5 million shares of Series C Stock to Mr. Truitt for $300,000, and 1.3 million shares of Series C Stock to other investors. We converted notes payable totaling~~ approximately $197,000 to shares of Series C Stock, and we converted a note payable of approximately $54,000 to warrants to purchase common stock. We also converted approximately $1.3 million of our officers’ accrued salaries to shares of common stock, and approximately $162,000 of other liabilities to our officers to shares of Series C Stock. We sold 1.422.1 million shares of common stock for ~~$100,000. We~~a net consideration of $326,000, and received ~~$472,000 from~~$100,000 for the exercise of warrants to purchase ~~47.2~~10.0 million shares of common stock. WeIn addition, we issued ~~1.0~~approximately 7.2 million shares of ~~common~~ stock ~~in consideration~~ for services with a fair value of ~~$100,000,~~$107,700, and converted approximately ~~$88,000~~$176,000 of liabilities to ~~2.8 million shares~~notes payable. We also issued $200,000 of ~~common stock.~~ unsecured convertible promissory notes.
~~In 2017,~~
From January 1, 2019 through August 9, 2019, we sold ~~23.3~~approximately 21.7 million shares of common stock for ~~$550,000. We received $38,000 for exercises~~a net consideration of ~~warrants to purchase~~approximately $325,000, and issued approximately 4.4 million shares of common stock ~~and we issued 7.0 million shares of common stock in consideration~~ for services with a fair value of ~~$200,000.~~approximately $65,000. In addition, we converted liabilities with a fair value of approximately $222,000 to approximately 14.8 million shares of common stock. We also issued promissory notes totaling $150,000 to Mr. Truitt for cash (the “2019 Truitt Notes”). The 2019 Truitt Notes require us to remit 50% of our collections on accounts receivable to Mr. Truitt until the 2019 Truitt Note and accrued interest are paid in full, and thereafter requires us to remit 25% of our collections on accounts receivable until the Truitt Notes are paid in full.

16

Management is continuing its efforts to secure funding sufficient for the Company’s operating and capital requirements through private sales of ~~Series C Stock~~common stock and ~~common stock,~~issuance of notes payable, and to negotiate settlements or extensions of existing liabilities. The proceeds of such sales of stock or issuances of notes payable, if any, will be used to repay the Truitt Notes and to fund general working capital needs.
We changed the focus of our company to position us to generate revenue from both data acquisition and data management. We expanded our service offerings to provide data acquisition services utilizing ~~twelve different~~several technologies. We ~~developed~~are developing a new, cloud-based mapping software to be marketed under our existing name GeoUndergound that replaces our previous version of GeoUnderground. We currently utilize GeoUnderground to deliver data to customers. We began to offer GeoUnderground to customers on a test basis during 2018, and intend to begin to offer GeoUnderground as a subscription-based stand-alone ~~product.~~product in 2019. We believe that our changes to our operating focus will enable us to begin to generate significant revenue from operations.
We believe that our actions and planned actions will enable us to finance our operations beyond the next twelve months.
We do not believe that inflation and changing prices will have a material impact on our net sales and revenues, or on income from continuing operations.
~~Results of Operations~~
We had sales of $230,330 and $521,465 during the three and nine months, respectively, ended September 30, 2017. Cost of sales were $89,636 and $175,722 for the three and nine months, respectively, ended September 30, 2017. Sales were $132,371 and $572,371 during the three and nine months, respectively, ended September 30, 2016. Cost of sales were $54,838 and $185,374 during the three and nine months, respectively, ended September 30, 2016. Our sales have fluctuated throughout 2017 and 2016 as our ability to market and perform jobs was hampered by our financial condition. We expect sales and cost of sales to continue to fluctuate as our business continues to mature.
Selling, general, and administrative (“SG&A”) expenses were $431,480 and $1,469,427 for the three and nine months, respectively, ended September 30, 2017. SG&A expenses were $463,657 and $1,240,381 for the three and nine months, respectively, ended September 30, 2016. The decrease in SG&A costs for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 was due to a decrease in sales and marketing expenses due to budget constraints, and decreases in taxes and licenses due to a decrease in estimated franchise tax liabilities. The increase in SG&A expenses for the nine months ended September 30, 2017 compared to September 30, 2016 is due to increased payroll cost related to an increase in staffing, and professional fees due to investor relations and investment banking expenses incurred in 2017. The increases in payroll cost and professional fees were partially offset by a decrease in rent expense due to a suspension of rent effective April 1, 2016.
Other income and expense for the three and nine months, respectively, ended September 30, 2017 were net expense of $89,583 and net income of $210,389. Other expense for the three months ended September 30, 2017 consisted entirely of interest expense. Net other income for the nine months ended September 30, 2017 included interest expense of $235,882, gains on extinguishment of debt of $13,693, and gains related to registration payment arrangements of $432,578. Other income and expense for the three and nine months, respectively, ended September 30, 2016 were net expense of $471,594 and net income of $21,738. Included in other income and expense for the three and nine months, respectively, ended September 30, 2016 was interest expense of $58,603 and $192,124, respectively, gains on extinguishment of debt of $58,603 and $192,124, respectively, and gains (losses) related to registration payment arrangements of ($482,683) and $9,720, respectively.
The increase in interest expense in 2017 was due to interest on the Truitt Note, which increased due to a higher outstanding balance, a higher interest rate incurred after the due date of January 31, 2017, and amortization of deferred debt issue costs incurred after August 31, 2017.
Gains or expense related to registration payment arrangements result from a series of Stock Subscription Agreements we entered into in 2009 and 2010 (the “Stock Subscription Agreements”). We were required to register the shares of common stock sold pursuant to the Stock Subscription Agreements under the Securities Act. Our failure to timely register the shares of common stock under the Securities Act timely resulted in our obligation to issue additional shares (“Penalty Shares”) to investors who purchased shares pursuant to the Stock Subscription Agreements. We recorded a liability on our books for the value of the estimated number of shares to be issued. We incur losses on our registration payment arrangements when the estimated number of Penalty Shares to be issued increases, or when the value of our common stock increases. We record gains on our registration payment arrangements when the estimated number of Penalty Shares to be issued decreases, or when the value of our common stock decreases.
We had no gain or loss related to registration payment arrangements during the three months ended September 30, 2017. During the nine months ended September 30, 2017, we had gains related to registration payment arrangements of $432,578 due to a decrease in the value of our common stock. During the three months ended September 30, 2016, we had losses from registration payment arrangements of $482,863 due to an increase in the value of our common stock. We had gains related to registration payment arrangements of $9,720 during the nine months ended September 30, 2016 due to a decrease in the estimated number of Penalty Shares to be issued. We expect that income or expense related to registration payment arrangements will fluctuate as the price of our common stock and the estimate of the number of Penalty Shares to be issued fluctuate.
We had no benefit from income taxes during the three and nine months ended September 30, 2017 and 2016, as our deferred tax benefit was completely offset by a valuation allowance due to the uncertainty of realization of the benefit.

17

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements as of ~~September~~June 30, ~~2017.~~2019.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Application of Critical Accounting Policies

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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. Estimates and assumptions which, in our opinion, are significant to the underlying amounts included in the financial statements and for which it would be reasonably possible that future events or information could change those estimates include:

Registration Payment Arrangements. We are contractually obligated to issue shares of our common stock to certain investors for failure to timely register their shares of our common stock under the Securities Act. We have recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued. We review on a quarterly basis our estimate of the number of shares to be issued and the fair value of the stock to be issued.

Realization of Deferred Income Tax Assets. We provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between financial reporting and tax accounting methods and any available operating loss or tax credit carryovers. At ~~September~~ June

30, ~~2017,~~2019, we had a deferred tax asset resulting principally from our net operating loss deduction carryforward available for tax purposes in future years. This deferred tax asset is completely offset by a valuation allowance due to the uncertainty of realization. We evaluate the necessity of the valuation allowance quarterly.

~~Estimated Costs to Complete Fixed-Price Contracts.~~ We record revenues for fixed-price contracts under the percentage-of-completion method of accounting, whereby revenues are recognized ratably as those contracts are completed. This rate is based primarily on the proportion of contract costs incurred to date to total contract costs projected to be incurred for the entire project, or the proportion of measurable output completed to date to total output anticipated for the entire project. We review our estimates of costs to complete each contract quarterly, and make adjustments if necessary. At September 30, 2017, we had no open contracts.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~Interest Rate Risk—Interest rate risk refers~~We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to ~~fluctuations in~~provide the value of a security resulting from changes in the general level of interest rates. We do not have significant short-term investments. Accordingly, we believe that we do not have a material interest rate exposure.information under this item.

Foreign Currency Risk—Our functional currency is the United States dollar. We do not currently have any assets or liabilities denominated in foreign currencies. Consequently, we have no direct exposure to foreign currency risk.
~~Commodity Price Risk—Based on the nature of our business, we have no direct exposure to commodity price risk.~~
ITEM 4.CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the United States Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of Company management, including the Chief Executive Officer (Principal Executive Officer) and the Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(e) and 15d-15(e). Based upon, and as of the date of this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three ~~and nine~~ months ended ~~September~~June 30, ~~2017~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
18

PART II - OTHER INFORMATION
ITEM 1.   LEGAL PROCEEDINGS

We are not currently involved in any pending or threatened material litigation or other material legal proceedings, nor have we been made aware of any pending or threatened regulatory audits.
ITEM 1A.   RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 2.   RECENT SALES OF UNREGISTERED EQUITY SECURITIES

~~Between July 17, 2017 and August 22, 2017,~~On April 1, 2019, the Company sold ~~10,000,001~~3,333,333 shares of its common stock at a price of $0.015 per share and issued warrants to purchase ~~1,000,001~~333,333 shares of common stock at an exercise price of $0.04, to an investor ~~at a price of $0.015 per share,~~ for an aggregate sales price of ~~$150,000.~~$50,000. The sale took place in a series of private placement transactions pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) of the Securities Act and/or Regulation D. The purchasers are accredited investors, and the Company conducted the private placements without any general solicitation or advertisement, and with a restriction on resale.
On August 31, 2017, the Company issued to an investor warrants to purchase 20,000,000 shares of its common stock at a price of $0.01 per share, which are exercisable through August 31, 2022. The issuance took place in a private placement transaction pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) of the Securities Act and/or Regulation D. The ~~investor~~purchaser is an accredited investor, and the Company conducted the private placement without any general solicitation or advertisement, and with a restriction on resale.

Between April 3, 2019 and June 4, 2019, the Company issued 3,600,000 shares of its common stock to two consultants in exchange for services with a fair value of $54,000. Such shares were issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) and/or Section 3(a)(9) of the Securities Act and/or Regulation D. The purchasers are accredited investors, and the Company issued the shares without any general solicitation or advertisement, and with a restriction on resale.
Between May 3, 2019 and June 5, 2019, the Company issued 14,799,999 shares of its common stock at a price of $0.015 per share to two investors in settlement of a notes payable to the investors with a principal and accrued interest balance of $222,000. Such shares were issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) and/or Section 3(a)(9) of the Securities Act and/or Regulation D. The purchasers are accredited investors, and the Company issued the shares without any general solicitation or advertisement, and with a restriction on resale.
On May 23, 2019, the Company issued 18,000 shares of its common stock to an investor to settle contractual liabilities. Such shares were issued pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) and/or Section 3(a)(9) of the Securities Act and/or Regulation D. The purchasers are accredited investors, and the Company issued the shares without any general solicitation or advertisement, and with a restriction on resale.
The recipients of the securities in each of ~~these~~the transactions described above represented their intentions to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us.
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
The Company’s Secured Promissory Notes, with an aggregate outstanding balance of approximately $1,958,612 at June 30, 2019, were due on September 15, 2018. The Company failed to repay principal and interest due under the notes as required, and consequently incurred an Event of Default.
ITEM 4.   MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5.   OTHER INFORMATION
None.

19

ITEM 6.EXHIBITS

20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

~~Date: November 20, 2017~~

2118

~~NEVADA~~Nevada	~~870554463~~87-0554463
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

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

TOPIC	Page

FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018	3
Condensed Consolidated Balance Sheets (Unaudited)	4
Condensed Consolidated Statements of Operations (Unaudited)	5
Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)	6
Condensed Consolidated Statements of Cash Flows (Unaudited)	7
Notes to the Condensed Consolidated Financial Statements (Unaudited)	8

Exhibit		Description

10.1		Termination of Employment Agreement and Waiver of Rights among Geospatial Corporation, Mark Smith, and David Truitt dated June 6, 2019
10.2		Termination of Employment Agreement between Geospatial Corporation and Thomas Oxenreiter dated July 18, 2019
31.1		Rule 13a-14(a) Certification of ~~Mark A. Smith~~David M. Truitt
31.2		Rule 13a-14(a) Certification of Thomas R. Oxenreiter
32.1		Section 1350 Certification of Chief Executive Officer
32.2		Section 1350 Certification of Chief Financial Officer
~~101.INS~~	~~XBRL Instance Document~~
~~101.SCH~~101 INS*		XBRL ~~Extension Schema~~Instance Document
~~101.LAB~~101 SCH*		XBRL ~~Labels Linkbase~~Taxonomy Schema
~~101.DEF~~101 CAL*		XBRL ~~Definitions~~Taxonomy Extension Calculation Linkbase
~~101.CAL~~101 DEF*		XBRL ~~Calculations~~Taxonomy Extension Definition Linkbase
~~101.PRE~~101 LAB*		XBRL Taxonomy Extension Label Linkbase
101 PRE*		XBRL Taxonomy Extension Presentation Linkbase

Date: August 19, 2019	Geospatial Corporation (Registrant)
	By:	/S/ DAVID M. TRUITT
	Name: Title:	David M. Truitt Chief Executive Officer

~~By:~~		~~/S/ MARK A. SMITH~~
~~Name: Title:~~		~~Mark A. Smith Chief Executive Officer~~
By:	/S/		THOMAS R. OXENREITER
~~Name: Title:~~	Name: Title:	Thomas R. Oxenreiter Chief Financial Officer

TOPIC	Page

`PART I FINANCIAL INFORMATION`	3
ITEM 1. FINANCIAL STATEMENTS	3
ITEM 2: MANAGEMENT’S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 4. CONTROLS AND PROCEDURES	15

PART II OTHER INFORMATION	16
ITEM 1. LEGAL PROCEEDINGS	16
ITEM 1A. RISK FACTORS	16
ITEM 2. SALES OF UNREGISTERED EQUITY SECURITIES	16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	16
ITEM 4. MINE SAFETY DISCLOSURES	16
ITEM 5. OTHER INFORMATION	16
ITEM 6. EXHIBITS	17

SIGNATURES	18

	September 30,	December 31,
	2017	2016
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$ 5,662	$ 66,992
Accounts receivable	192,011	65,800
Prepaid expenses and other current assets	100,261	140,105

Total current assets	297,934	272,897

Property and equipment:
Field equipment	359,591	357,070
Field vehicles	43,285	43,285

Total property and equipment	402,876	400,355
Less: accumulated depreciation	(386,948)	(355,616)

Net property and equipment	15,928	44,739

Total assets	$ 313,862	$ 317,636

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$ 305,936	$ 274,319
Accrued expenses	1,098,945	813,197
Capital lease liability to related party	603	3,278
Notes payable, net of deferred debt issue costs	1,396,015	1,365,738
Accrued registration payment arrangement	76,337	522,115

Total current liabilities	2,877,836	2,978,647

Stockholders' deficit:
Preferred stock: Undesignated, $0.001 par value; 10,000,000 shares authorized at September 30, 2017 and December 31, 2016; no shares issued and outstanding at September 30, 2017 and December 31, 2016	-	-
Series B Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized at September 30, 2017 and December 31, 2016; no shares issued and outstanding at September 30, 2017 and December 31, 2016	-	-
Series C Convertible Preferred Stock, $0.001 par value; 10,000,000 shares authorized at September 30, 2017 and December 31, 2016; 3,644,578 and 4,543,654 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	3,645	4,544
Common stock, $0.001 par value; 750,000,000 shares authorized at September 30, 2017 and December 31, 2016; 279,080,452 and 226,211,740 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	279,080	226,212
Additional paid-in capital	39,714,321	38,905,332
Additional paid-in capital, warrants	170,000	20,626
Accumulated deficit	(42,731,020)	(41,817,725)

Total stockholders' deficit	(2,563,974)	(2,661,011)

Total liabilities and stockholders' deficit	$ 313,862	$ 317,636

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

	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2017	2016	2017	2016

Sales	$ 230,330	$ 132,371	$ 521,465	$ 572,371
Cost of sales	89,636	54,838	175,722	185,374

Gross profit	140,694	77,533	345,743	386,997

Selling, general and administrative expenses	431,480	463,657	1,469,427	1,240,381

Net loss from operations	(290,786)	(386,124)	(1,123,684)	(853,384)

Other income (expense):
Interest expense	(89,583)	(47,334)	(235,882)	(180,106)
Gain on extinguishment of debt	-	58,603	13,693	192,124
Registration payment arrangements	-	(482,863)	432,578	9,720

Total other income (expense)	(89,583)	(471,594)	210,389	21,738

Net income (loss) before income taxes	(380,369)	(857,718)	(913,295)	(831,646)

Provision for income taxes	-	-	-	-

Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)

Basic and fully-diluted net loss per share of common stock	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)

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

	September 30, 2017	December 31, 2016
Secured Promissory Note, net of deferred debt issue costs, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount. On August 31, 2017, the due date was amended to June 1, 2018. From January 31, 2017 to August 31, 2017, the note bore interest at 20%. After August 31, 2017, the note bears interest at 15%. The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company	$ 1,353,877	$ 1,332,920
Note payable under settlement agreement with vendor, payable monthly over 10 months, with no interest	2,560	-
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 16 months, with interest rates ranging from 0% to 20%	39,578	32,818
Current notes payable	$ 1,396,015	$ 1,365,738

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016

Current:
Federal	$ -	$ -	$ -	$ -
State	-	-	-	-
	-	-	-	-
Deferred:
Federal	(113,240)	(116,029)	(279,482)	(261,352)
State	(35,949)	(36,834)	(88,725)	(82,969)
	(149,189)	(152,863)	(368,207)	(344,321)
Total income taxes	(149,189)	(152,863)	(368,207)	(344,321)

Less: valuation allowance	149,189	152,863	368,207	344,321

Net income taxes	$ -	$ -	$ -	$ -