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

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.0001

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

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

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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company:

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

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

This Quarterly Report contains certain forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995, including or related to our future results, events and performance (including certain projections, business trends and assumptions on future financings), and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as “may,” “should,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” “believe,” “expect” or “anticipate” or the negative of these terms or other similar expressions. These forward-looking statements generally relate to our plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends. In evaluating these statements, you should specifically consider the risks that the anticipated outcome is subject to, including the factors discussed under “~~Risk Factors~~” in previous filings and elsewhere. These factors may cause our actual results to differ materially from any forward-looking statement. Actual results may differ from projected results due, but not limited to, unforeseen developments, including those relating to the following:

You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from what we expect. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, future financings, performance, or achievements. Moreover, we do not assume any responsibility for accuracy and completeness of such statements in the future. We do not plan to update any of the forward-looking statements after the date of this Quarterly Report to conform such statements to actual results.

We qualify as an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act by the Jumpstart Our Business Startups Act (the “JOBS Act”). An issuer qualifies as an “emerging growth company” if it has total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year, and will continue to be deemed an emerging growth company until the earliest of:

As an emerging growth company, we are exempt from various reporting requirements. Specifically, we are exempt from the following provisions:

Under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies.

We are subject to the reporting requirements of Section 13 of the Exchange Act, and subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.” That designation will relieve us of some of the informational requirements of Regulation S-K.

Except for the limitations excluded by the JOBS Act discussed under the preceding heading “Emerging Growth Company,” we are also subject to the Sarbanes-Oxley Act of 2002. The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work of public companies’ auditors; management assessment of our internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the Sarbanes/Oxley Act will substantially increase our legal and accounting costs.

Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act like we are to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in Regulation 14A. Matters submitted to shareholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our shareholders with the information outlined in Schedules 14A (where proxies are solicited) or 14C (where consents in writing to the action have already been received or anticipated to be received) of Regulation 14, as applicable; and preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies of this information are forwarded to our shareholders. We are also required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC on a regular basis, and will be required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a Current Report on Form 8-K.

You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports that we have filed electronically with the SEC at their Internet site www.sec.gov.

Q2Earth, Inc. (hereinafter the “Company”), incorporated in Delaware on August 26, 2004, is currently engaged in the business of managing compost and soil manufacturing facilities, and is pursuing a plan of strategic acquisitions and investments in this ~~sector.~~sector through an unconsolidated investee called Earth Property Holdings LLC, a Delaware limited liability company (“EPH”). Through EPH, the Company completed one acquisition in November 2018 and a second in January 2019. The Company owns a 18.5% equity interest in EPH and manages all of its operations pursuant to an eight-year management contract. The Company previously owned and licensed technology that converts waste fuels and heat to power, ~~technology~~which it sold to a licensee in August 2017. Formerly, the Company’s name was Q2Power Technologies, Inc., and before that, Anpath Group, Inc. (“Anpath”).

Q2Power Corp. (the “Subsidiary” or “Q2P”) operated as ~~a renewable power~~an R&D company focused on the conversion of waste to energy and other valuable “reuse” products since July 2014. The operations of the Company have from ~~the time of the Merger (described below)~~2014 until ~~recently~~early 2017 been essentially those of the Subsidiary. ~~In 2017, the Company shifted its focus from technology R&D to the acquisition and operation of facilities that manufacture compost and sustainable soils from waste resources.~~

In May 2016, the Company began exploring other synergistic business lines such as compost and soil manufacturing from wastewater biosolids and other waste ~~water biosolids. The~~feedstocks. In 2017, the Company ~~began to phase out~~formally shifted its focus from waste-to-energy technology R&D, ~~activities in mid 2016, and~~including selling its technology to a license in August 2017, ~~sold its waste-to-power technology~~ to ~~a licensee. The Company’s current focus is entirely on~~facilitating the ~~business~~acquisition of, investment in, and operation of facilities that manufacture compost and ~~engineered~~sustainable soils ~~manufacturing and sales.~~

On August 28, 2017, the Company signed a definitive Membership Purchase Agreement (the “Purchase Agreement”) with Environmental Turnkey Solutions LLC (“ETS”) of Naples, Florida, and its three members to acquire 100% of the membership interests of ETS, and all subsidiaries wholly-owned by ETS. Consideration under the Purchase Agreement includes $2.5 million cash subject to adjustment based on net accounts receivable at closing, $3.5 million in sellers’ notes which are payable to the sellers within nine months of closing, and $4.5 million in Company common stock valued at $0.15 per share. ETS also has a $1.5 million earnout payable in common stock if ETS achieves greater than $2.5 million in annual run rate adjusted EBITDA over a six-month period within 12 months after closing.from waste resources. The Company ~~will assume approximately $2.5 million in commercial equipment loans~~is also exploring other technology and $1.5 million in a real property loan. Closing is conditioned on several factors including the Company securing financing required to close the transaction. The Company has paid ETS $150,000 to secure exclusivity under the Purchase Agreement, which is reflected as transaction costsbusiness lines in the ~~condensed consolidated statements of operations for~~broader biosciences sector to either add to its soil health line, or transfer into over the three and nine months ended September 30, 2017, and loaned to ETS an additional $100,000 in the third quarter of 2017 which the Company forgave in the fourth quarter to extend the exclusivity term until January 15, 2018.following year.

~~The unaudited condensed consolidated financial statements include all accounts of~~For the Company. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial information. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The December 31, 2016 condensed consolidated balance sheet information contained herein was derived from the audited consolidated financial statements as of that date included in the Annual Report on Form 10-K filed on May 25, 2017.

~~The Company has incurred a net loss of $1,437,777 for the nine~~three months ended ~~September 30, 2017 and~~March 31, 2020, the Company used cash in operating activities of ~~$884,290.~~$147,486 and incurred a loss of $437,402. The accumulated deficit since inception is ~~$8,689,549,~~$11,486,612, which iswas comprised of operating losses and other expenses. Additionally, certain of the Company’s debentures totaling $165,000 and redeemable convertible preferred stock matured on July 1, 2019 and are currently in default. Management is in discussions with the holders to either extend the maturity dates or find an alternate settlement solution.

As of March 31, 2020, $2,771,908 of convertible bridge notes plus accrued and capitalized interest of $1,180,526, will begin to mature through October 2020 with an additional $34,032 in principal and accrued interest maturing in 2021; provided however, all bridge note that were due to mature on March 31, 2020 have been extended by agreement with the holders until June 15, 2020.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. There is no guarantee whether the Company will be able to generate ~~sufficient~~ revenue and/or raise capital sufficient to support its operations. The ability of the Company to continue as a going concern is dependent on management’s plans which include implementation of its business model to ~~acquire~~facilitate the acquisition of and investment in cash-flowing businesses, grow revenue and earnings of those companies which may result in added management fees for the Company, and continue to raise funds for the Company through debt or equity offerings.

~~On March 31, 2017,~~ Alternatively, the Company ~~completed the first $1,050,000 tranche~~would need to find another line of a $1,500,000 convertible bridge note offering (the “Bridge Offering”). As of September 30, 2017, the Company closed an additional $600,000 of follow-on investments in the Bridge Offering. The proceeds from this offering are expected to provide working capital for the Company through at least the first quarter of 2018.

business if such current activities cannot support ongoing operations, which may become likely.

The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company has concluded that EPH is an equity method investment. The primary investor, and not the Company, has ultimate control over major decisions affecting EPH and the greatest economic risk.

~~U.S. Generally Accepted Accounting Principles (“GAAP”) requires~~On March 31, 2017, the Company ~~to make judgments, estimates~~completed the first $1,050,000 tranche of a convertible bridge note offering (the “Bridge Offering”). Through the end of 2017, the Company closed an additional $600,000 of follow-on investments in the Bridge Offering. In 2018 and ~~assumptions that affect~~2019, the ~~reported amounts~~Company raised an additional $980,000 and $30,000, respectively, in convertible notes on substantially same terms as the Bridge Offering with three accredited investors and one institutional investor (the “Follow-On Bridge Offering”). As of ~~assets~~March 31, 2020, a total principal amount of $2,801,908 and ~~liabilities and disclosure~~approximately $1,183,429 of ~~contingent assets and liabilities at~~accrued interest remains due on the ~~date~~Bridge Offering notes.

In July 2018, the Company signed a Stock Purchase Agreement for the purchase of all of the outstanding capital stock of George B. Wittmer Associates Inc. (“GBWA”) of Callahan, Florida, from its sole shareholder. On November 9, 2018, the Company transferred the agreement to acquire GBWA to EPH, and through EPH, consummated the GBWA acquisition. Concurrently with the GBWA closing: (i) the Company signed an eight-year Management Agreement (the “Management Agreement”) with EPH to oversee all of the operations of EPH and its acquired subsidiaries for an initial annual fee of $200,000 (which was subsequently increased by amendment to $700,000, $300,000 of which is provided for the management of GBWA); (ii) appointed the Company’s CEO and President to serve as President and Secretary, respectively, of EPH; and (iii) pursuant to the terms of EPH’s Limited Liability Company Agreement (the “LLC Agreement”) acquired 124,999 Class B Membership Units of EPH, equal to 19.9% of the voting interests of EPH, for $50,000. To complete the GBWA acquisition, EPH raised $4.4 million from one institutional investor for 500,000 Class A Membership Units, equal to 80.1% of the voting interest of EPH.

On January 18, 2019, EPH completed its second acquisition of Employee Owned Nursery Enterprises Ltd., a Texas limited partnership d/b/a Organics “by Gosh” (“OBG”). Concurrently with the OBG acquisition, the Company: (i) acquired an additional 53,970 Class B Membership Units in EPH for $21,588 through a subscription payable which is included in accounts payable and accrued expenses on the consolidated ~~financial statements,~~balance sheets; and (ii) received an additional annual management fee of $500,000 plus expenses in connection with the ~~reported amounts~~transaction.

In May 2019, the Company signed a services agreement with Community Eco Power, LLC (“CECO”) to assist that company complete an acquisition of ~~revenues~~two waste-to-power facilities in New England, and to assist management transition operations over the following six months. The acquisition closed on May 15, 2019. Two of the Company’s officers and directors each own minority equity stakes in CECO. The fee for the Company’s services was $250,000, all of which was recognized as revenue in 2019.

The Company’s net loss resulted largely from the funding of activities related to the execution of the Company’s business strategy of facilitating the acquisition of and investment in and managing compost manufacturing businesses, including conducting due diligence and incurring consulting and professional expenses ~~cash flows~~and hiring additional employees to support these operations, as well as ongoing general and administrative expenses.

Management is aware of the Company’s liquidity and going concern issues and is taking steps to improve its negative cashflow. Management may be able to facilitate additional acquisitions through EPH in 2020, and upon the completion of such transactions, may receive additional management fees to oversee the operations of EPH and its subsidiaries. However, this agreement can be terminated at-will by EPH. Further, management is pursuing other revenue producing contracts and opportunities for the Company including licensing or developing soil science and product brands that can generate revenue through sublicenses and soil sales either from EPH or other companies, looking at synergistic business lines in agricultural technology and the ~~related footnote disclosures during~~broader biosciences sector, and also utilizing its experience in completing acquisitions to help facilitate non-competitive transactions for third parties for a fee.

In the ~~period. On an on-going basis,~~second quarter of 2019, the Company ~~reviews~~licensed soil technology called ABS from Agrarian Technologies, Inc., for which the Company is currently pursuing sales and ~~evaluates its estimates and assumptions, including,~~distributorship agreements but has not yet been able to generate any material revenue from these activities. The Company pays a minimum royalty under this license agreement to the licensor of $7,500 per quarter, $22,500 of which has been accrued but not ~~limited to, those that relate~~paid as of March 31, 2020; and then pays royalties on the sales of the ABS product based on volume sold to the ~~realizable value of identifiable intangible assets~~extent such volume royalties exceed the minimum royalties. Management may also seek to raise additional capital through equity and ~~other long-lived assets, derivative liabilities, convertible bridge notes, income taxes and contingencies. Actual results could differ from these estimates.~~debt offerings.

The ~~condensed~~ consolidated financial statements include the accounts of the Company and its Subsidiary. All significant inter-company transactions and balances have been eliminated in consolidation. References herein to the Company include the Company and its Subsidiary, unless the context otherwise requires.

The Company considers ~~all unrestricted~~ cash, short-term deposits, and other investments with original maturities of no more than ninety days when acquired to be cash and cash equivalents for the purposes of the statement of cash flows. The Company maintains cash balances at two financial institutions and has experienced no losses with respect to amounts on deposit. The Company held no cash equivalents as of March 31, 2020 and 2019.

The Company recognizes revenue in accordance with ASC Topic 606, “Revenue from Contracts with Customers (“ASC 606”) and all the related amendments.

The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than previously required under U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

Revenue for services ~~from the Company’s compost~~in 2020 and ~~soil business includes~~2019 included contracts where the Company iswas paid ~~to do feasibility studies, site assessment studies and other similar services in connection~~for management of related entities. In its review, management identifies that a contract exists with a ~~third party soil or compost manufacturing business. Revenue from such services is recognized at~~customer, identifies the ~~date of delivery of deliverables~~performance obligations in the contract, determines the transaction price, allocates the transaction price to ~~customers~~the performance obligations in the contract, and then recognizes revenue when ~~a formal arrangement exists, the price is fixed or determinable, the delivery or milestone deliverable is completed, no other significant obligations of~~ the Company ~~exist and collectability is reasonably assured.~~satisfies a specific performance obligation. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as ~~deferred revenue.~~contract liabilities.

~~Revenue from~~The management services to be provided to the Company’s ~~prior waste-to-power operations was~~related parties are performance obligations satisfied evenly over a period of time. Therefore, revenue from these management service agreements are recognized aton a straight-line basis over the date of shipment of engines and systems, engine prototypes, engine designs or other deliverables to customers when a formal arrangement exists, the price is fixed or determinable, the delivery or milestone deliverable is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied was recorded as deferred revenue. The Company did not allow its customers to return prototype products.

~~Research and development activities for product development are expensed as incurred and are primarily comprised of salaries. Costs for~~During the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019, revenues generated by the Company were ~~$0 and $43,154, respectively. Costs for~~from one customer which is related to the ~~nine months ended September 30, 2017 and 2016 were $0 and $355,884, respectively.~~Company.

The Company applies the fair value method of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, “Share Based Payment”, in accounting for its ~~stock based~~stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values ~~stock based~~stock-based compensation at the market price for the Company’s common stock and other pertinent factors at the grant date.

The Black-Scholes option pricing valuation method is used to determine fair value of stock options consistent with ASC 718, “Share Based Payment”. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the awards and risk-free interest rates.

The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instruments exchanged, in accordance with ASC 505-50, “Equity Based payments to Non-employees”. The Company measures the fair value of the equity instruments issued based on the ~~market price~~fair value of the Company’s stock ~~at the time services or goods are provided.~~on contract execution.

~~The Black-Scholes option pricing valuation method is used to determine fair value of these options consistent with ASC 718, “~~~~Share Based Payment”.~~ ~~Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the awards and risk-free interest rates.~~

~~Derivatives are recognized initially at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes are therein generally recognized in profit or loss.~~

~~Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows:~~

~~Expenditures for maintenance and repairs are charged to operations as incurred.~~

The Company ~~continually evaluates~~measures fair value in accordance with a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The Company’s convertible Bridge Notes are valued by using Monte Carlo Simulation methods and discounted future cash flow models. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility and correlations of such inputs. These convertible Bridge Notes do not trade in liquid markets, and as such, model inputs cannot generally be verified and do involve significant management judgment. Such instruments are typically classified within Level 3 of the fair value hierarchy.

Investments in partnerships, joint ventures and less-than majority-owned subsidiaries in which the Company has significant influence are accounted for under the equity method. The Company’s consolidated net loss includes the Company’s proportionate share of the net income or loss of the Company’s equity method investee. The Company’s proportionate share of net income from its equity method investee, increases income (loss) — net in the consolidated statements of operations and the carrying value in that investment. Conversely, the Company’s proportionate share of intangible assets and other long lived assets to determine whether there are any impairment losses. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairmenta net loss ~~would be charged to expense~~from its equity method investee, decreases income (loss) — net in the ~~period identified. To date,~~consolidated statements of income and the ~~Company has not recognized~~carrying value in that investment. The Company’s proportionate share of the net income or loss of any ~~impairment charges.~~equity method investees includes significant operating and nonoperating items recorded by the Company’s equity method investee. These items can have a significant impact on the amount of income (loss) — net in the consolidated statements of operations and the carrying value in those investments.

Income taxes are accounted for under the asset and liability method as stipulated by FASB ASC 740, ~~“Income Taxes”~~“Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not (50%) that such deferred tax will not be utilized.

In the event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of ~~September 30, 2017,~~March 31, 2020, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing ~~authorities.~~authorities; however, federal returns have not been filed since the Company’s inception in 2014. Such delinquencies are being resolved by management and a retained tax expert. Interest and penalties related to any unrecognized tax benefits is recognized in the ~~condensed~~ consolidated financial statements as a component of income taxes.

Net loss per share is computed by dividing the net loss ~~less preferred dividends~~attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss ~~less preferred dividends~~attributable to common stockholders by the weighted average number of common shares outstanding during the period plus any potentially dilutive shares related to the issuance of stock options, shares from the issuance of stock warrants, shares issued from the conversion of redeemable convertible preferred stock and shares issued for the conversion of convertible debt. ~~There were no potentially dilutive shares as of September 30, 2017 and 2016.~~

A~~t September 30, 2017,~~At March 31, 2020, there were the following potentially dilutive securities that were excluded from diluted net loss per share because their effect would be anti-dilutive: ~~6,915,480~~11,715,480 shares from common stock options, ~~3,568,845~~3,153,845 shares from common stock warrants, ~~1,100,000~~1,650,000 shares from the conversion of debentures, ~~(not inclusive of~~50,314,284 shares that may be converted from ~~the~~ Bridge ~~Round, as the valuation and corresponding share~~Notes (based upon an assumed conversion price ~~will not be determined until the closing~~at March 31, 2020 of ~~the next financing by the Company in an amount of at least $5,000,000 or December 31, 2017, whichever is sooner)~~$0.079 per share), and ~~4,000,000~~7,569,210 shares from the conversion of redeemable convertible preferred ~~stock.~~stock (not inclusive of cumulative dividends which may be converted to shares of common stock under certain conditions). At ~~September 30, 2016,~~March 31, 2019, there were the following potentially dilutive securities that were excluded from diluted net loss per share because their effect would be anti-dilutive: ~~5,315,480~~8,515,480 shares from common stock options, ~~1,568,845~~5,337,345 shares from common stock warrants, ~~785,714~~1,650,000 shares f~~rom~~from the conversion of debentures, 41,984,478 shares that may be converted from Bridge Notes (based upon an assumed conversion price at March 31, 2019 of $0.082 per share), and ~~2,857,142~~6,000,000 shares from the conversion of redeemable convertible preferred ~~stock.~~stock (not inclusive of cumulative dividends which may be converted to shares of common stock under certain conditions).

U.S. Generally Accepted Accounting Principles (“GAAP”) requires the ~~number~~Company to make judgments, estimates and assumptions that affect the reported amounts of ~~shares issued~~assets and ~~outstanding was adjusted by 32,760 shares to align~~liabilities and disclosure of contingent assets and liabilities at the ~~Company’s records with its independent transfer agent. The shares previously reported in~~date of the ~~consolidated balance sheet at December 31, 2016 were 29,651,431 and are now reported at 29,684,191. The impact to the condensed~~ consolidated financial statements, the reported amounts of ~~this adjustment was~~revenues and expenses, cash flows and the related footnote disclosures during the period. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not ~~material.~~limited to, those that relate to the fair value of stock based compensation, the fair value of convertible bridge notes, and the assessment and recognition of income taxes and contingencies. Actual results could differ from these estimates.

In ~~May 2014,~~August 2018, the FASB issued ~~Accounting Standards Update (“ASU”), No. 2014-09, “~~~~Revenue from Contracts with Customers~~”,guidance that amends fair value disclosure requirements. The guidance removes disclosure requirements on the transfers between Level 1 and Level 2 of the fair value hierarchy in addition to ~~replace the existing revenue recognition criteria for contracts with customers and to establish~~ the disclosure requirements on the policy for ~~revenue from contracts with customers.~~timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ~~ASU is effective~~guidance clarifies the measurement uncertainty disclosure and adds disclosure requirements for ~~interim~~Level 3 unrealized gains and ~~annual periods beginning after December 15, 2017. Adoption of the ASU is either retrospective~~losses and significant unobservable inputs used to ~~each prior period presented or retrospective with a cumulative adjustment to retained earnings or accumulated deficit as of the adoption date.~~develop Level 3 fair value measurements. The Company has completed a preliminary assessment of the historical and future impact of the ASU on its consolidated financial statements, and at this time does not believe adoption of ASC 606 will have a material effect on either past or currently anticipated future operations. However, the Company has retained an expert to asset management in assessing the impact of ASC 606 and prepare for implementation as of January 1, 2018, which will include the method of adoption and evaluation of additional disclosure that will be required in 2018.

~~In January 2016, the FASB issued ASU No. 2016-01, “~~~~Recognition and Measurement of Financial Assets and Financial Liabilities~~~~”, requiring management to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU~~guidance is effective for fiscal years beginning after December 15, ~~2017, including interim periods within those fiscal years.~~2019. Entities are permitted to early adopt any removed or modified disclosures upon issuance and delay adoption of the additional disclosures until the effective date. The Company ~~is currently assessing~~adopted this guidance effective January 1, 2020 and the adoption did not have a material impact of the ASU on its financial position, results of operations and cash flows, and has retained an expert to assist in this regard, including implementation if management determines that such action is required.

~~In February 2016, the FASB issued ASU No. 2016-02, “~~~~Leases (Topic 842) (the Update)~~~~”, requiring management to recognize any right-to-use-asset and lease liability~~ on the ~~statement of~~condensed consolidated financial position for those leases previously classified as operating leases. The criteria used to determine such classification is essentially the same as under the previous guidance, but it is more subjective. The lessee would classify the lease as a finance lease if certain criteria at lease commencement are met. This ASU is effective for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact of the ASU on its financial position, results of operationsstatements and ~~cash flows.~~disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments. This standard amends and adjusts how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and will require adoption on a retrospective basis unless impracticable. If impracticable the Company would be required to apply the amendments prospectively as of the earliest date possible. The Company is currently evaluating the impact that ASU 2016-15 will have on its financial position, results of operations and cash flows, and has retained an expert to assist in this regard, including implementation if management determines that such action is required.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The adoption of ASU 2017-09 will become effective for annual periods beginning after December 15, 2017; andthe Company is currently evaluating the impact that it will have on its financial position, results of operations and cash flows and has retained an expert to assist in this regard, including implementation if management determines that such action is required.

~~In July 2017, the FASB issued ASU 2017-11,~~~~Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815).~~ The amendment changes the classification of certain equity-linked financial instruments (or embedded features) with down round features. The amendments also clarify existing disclosure requirements for equity-classified instruments.When determining whether certain financial instruments (or embedded features) should be classified as liabilities or equity instruments, under ASU 2017-11, a down round feature no longer precludes equity classification when assessing whether the instrument (or embedded feature) is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value solely as a result of the existence of a down round feature. The adoption of ASU 2017-11 is effective for annual periods beginning after December 15, 2018. The Company has early adopted this standard for this interim period, applying the standard retrospectively by means of a cumulative-effect adjustment to the opening balance of accumulated deficit in the amount of $388,667 as of January 1, 2017 (see Note 8).

The Company ~~does not have any off-balance sheet concentrations of credit risk. The Company~~ expects cash ~~and accounts receivable~~ to be the ~~two assets~~asset most likely to subject the Company to concentrations of credit risk. The Company’s bank deposits may at times exceed federally insured limits. The Company’s policy is to maintain its cash with high credit quality financial institutions to limit its risk of loss exposure.

~~The Company historically purchased much~~All of the Company’s revenue for the three months ended March 31, 2020 and 2019 was from fees earned from its ~~machined parts through Precision CNC,~~equity method investment, EPH, under a ~~related party company~~management agreement. This is currently the Company’s primary source of on-going revenue, and that ~~sublet office space to Q2P through June 27, 2016, and owns a non-controlling interest in the Company.~~agreement is terminable at will by EPH. See Note 6.4.

~~Property~~During November 2018, the Company invested $50,000 for a 19.9% Class B limited liability membership interest in EPH and ~~equipment, net consists~~recorded this transaction as an equity method investment due to the Company’s ability to exercise significant influence over EPH. The carrying value of the ~~following:~~

~~Depreciation expense~~investment in EPH was reduced to zero after recording the proportionate share of the investee’s net loss for the ~~three months ended September 30, 2017 and 2016 was $209 and $493, respectively, and for~~2018 fiscal year. In January 2019, the ~~nine months ended September 30, 2017 and 2016 was $1,196 and $27,026, respectively.~~

~~The~~ Company ~~disposed of $4,927 of net property and equipment as part of the transfer of its licensing rights with Cyclone during the nine months ended September 30, 2017 (see Note 5).~~

~~In 2014, Q2P purchased for $175,000 certain licensing rights to use Cyclone Power Technologies’ (“Cyclone”) patented technology on~~committed an additional $21,588 through a ~~worldwide, exclusive basis for 20 years with two 10-year renewal terms for Q2P’s waste heat and waste-to-power business. This agreement contained a royalty provision equal to 5% of gross sales~~subscription payable to ~~Cyclone~~maintain its 19.9% Class B limited liability interests in EPH, after additional Class A units were sold to investors. The Class B units only receive value after all Class A unit holders receive a full return on sales of engines derived from technology licensed from Cyclone. Also, as part of a separation agreement with Cyclone, Q2P assumed a license agreement between Cyclone and Phoenix Power Group (“Phoenix”), which included deferred revenue of $250,000 from payments previously made to Cyclone for undelivered products.their investment plus an 8% annual PIK dividend. The ~~net balances as of September 30, 2017~~$21,588 remains due at March 31, 2020 and December 31, ~~2016 for the Cyclone licensing rights were $0~~2019 and ~~$69,271, respectively;~~is included in accounts payable and ~~the net balances as of September 30, 2017 and December 31, 2016 for the Phoenix deferred revenue were $0 and $250,000, respectively, which are included as a component of deferred revenue~~accrued expenses on the condensed consolidated balance sheets. The licensing rights were amortized over its estimated useful life of 4 years. Amortization expense for the three months ended September 30, 2017 and 2016 was $0 and $10,938, respectively, and for the nine months ended September 30, 2017 and 2016 was $21,875 and $32,813 respectively.

On January 9, 2017, the Company transferred and assigned to Phoenix its Technology Sales Agreement with MagneGas Corporation (the “MagneGas Agreement”) to deliver a waste-to-power system to this customer. Under the MagneGas Agreement, the Company had been paid $90,000 ascarrying value of the ~~date of transfer,~~investment remains at zero at March 31, 2020 and ~~$68,000 was still~~December 31, 2019 due ~~from the customer based~~to continued losses incurred by EPH. The loss in equity investment has been presented on milestones set forth in the MagneGas Agreement. Phoenix assumed the MagneGas Agreement with all rights to receive the future payments thereunder, and responsibility to perform the services and provide the products to the customer. The Company has no further responsibility under the MagneGas Agreement. In consideration for this transfer, Phoenix agreed that the Company had completed and satisfied all financial obligations associated with all past agreements between Phoenix and the Company, specifically: (1) $150,000 previously paid by Phoenix for durability testing of the Q2P engine, and (2) delivery by the Company of the first ten (10) Q2P engines at the rate of $10,000 per delivered Engine for $100,000 in total. This deferred revenue in the total amount of $250,000 was recorded as gain from the extinguishment of liabilities in the condensed consolidated statement of operations for the ~~nine months~~three-month periods ended ~~September 30, 2017.~~

O~~n August 14, 2017, the Company closed a Technology Transfer~~March 31, 2020 and Assignment Agreement (the “Transfer Agreement”) with Phoenix to transfer to Phoenix all of the Company’s technology and materials associated with Q2P’s external combustion engine, controls and auxiliary systems (the “Q2P Technology”), developed both in conjunction with its license agreement with Cyclone and such other Q2P Technology developed independently2019. There were no distributions received from the license agreement. Pursuant to a consent from Cyclone, the Company also transferred and assigned the license agreement to Phoenix. In consideration for the transfer and assignment, which included net property and equipment of $4,927, unamortized license fees to Cyclone of $47,396 and a payment to Cyclone of $15,000 to consent to the license transfer, Phoenix satisfied and provided releases for $162,500equity method investment in past liabilities of Q2P associated with the development of the Q2P Technology, made certain other payments to the Company’s prior engine manufacturer, and provided full releases from liability from both Phoenix and Cyclone. The Company recorded a net gain from the extinguishment of liabilities of $95,178 in the condensed consolidated statement of operations for the three and nine months ended September 30, 2017.2020 or 2019.

In ~~connection with~~2019, EPH issued an additional 70,057 Class A Units in consideration for $616,500 additional investments. The Company did not purchase additional Class B Units during this time, and as a result, its equity stake in EPH was diluted to 18.5%. Management expects this equity percentage to be significantly diluted in the ~~separation agreement with Cyclone,~~following reporting periods as EPH raises additional capital to further its acquisition strategy. While the Company ~~also assumed a contract~~can invest alongside these new investments, management does not anticipate the Company will have the funds to do so.

For the quarter ended March 31, 2020, EPH generated unaudited revenue of $2,673,880 and recorded an unaudited net loss of $563,626.

See Note 5 for transactions with ~~Clean Carbon of Australia~~our equity method investment during the three-month periods ended March 31, 2020 and a corresponding $10,064 prepayment for services or other value to be provided in the future. This deposit has been presented as deferred revenue on the September 30, 2017 and December 31, 2016 condensed consolidated balance sheets.2019.

Through June 2016, the Company sublet approximately 2,500 square feet of assembly, warehouse and office space within the Precision CNC facility located at 1858 Cedar Hill Road in Lancaster, Ohio. The sublease provided for the Company to pay rent monthly in the amount of $2,500, which covered space and some utilities. Occupancy costs for the three months ended September 30, 2017 and 2016 were $0 and $0, respectively, and for the nine months ended September 30, 2017 and 2016 were $0 and $15,000, respectively. The sublease was terminated as of June 27, 2016.

The Company also purchased much of its machined parts through Precision CNC up until June 2016. Precision CNC owns a non-controlling interest in the Company. For the three months ended September 30, 2017 and 2016, the amounts invoiced from Precision CNC totaled $0 and $0, respectively, and for the nine months ended September 30, 2017 and 2016, the amounts invoiced totaled $0 and $17,119, respectively, and consisted of rent and research and development expenses for machined parts.

On June 27, 2016, the Company and Precision CNC entered into an agreement to eliminate $49,299 in payables owed to Precision CNC in return for the transfer of certain net assets of the Company with a remaining book value of $70,495, which included office furniture, software and computer systems, and 50,000 shares of restricted common stock valued at $10,500. The Company recorded a loss on this transaction in the amount of $31,696. There were no accounts payable and accrued expenses at September 30, 2017 and December 31, 2016 to Precision CNC.

~~The Company also~~currently maintains an executive office in Florida, which is leased by ~~GreenBlock Capital LLC,~~ an investment firm ~~that~~in which the Company’s President ~~serves~~previously served as ~~a Managing Director,~~an officer but ~~holds no~~never held any equity or voting rights. The Company has no formal agreement for this space and pays no rent.

InDuring the three months ended March ~~2017, all outstanding Director accounts~~31, 2020 and 2019, the Company recognized $174,999 and $173,810 as revenues based on management services provided to the Company’s equity method investee (see Note 4) which have been presented as revenues – related party on the condensed consolidated statement of operations.

During the year ended December 31, 2019, the Company received $788,500 from EPH under multiple demand notes payable ~~accrued expenses and notes~~with interest payable at 6% annually. This has been presented as note payable – related ~~parties~~party on the condensed consolidated balance sheets. During the three months ended March 31, 2020, the Company received an additional $147,672 from EPH as a note payable with ~~an aggregate amount~~interest payable at 6% annually. As of ~~$156,368 were converted into~~March 31, 2020 and December 31, 2019, accrued interest on these notes payable was $28,507 and $15,426 as presented on the condensed consolidated balance sheets.

During the three months ended March 31, 2020 and 2019, the Company incurred approximately $27,104 and $0, in legal fees with a law firm in which the Company’s ~~Bridge Offering (see Note 7).~~audit committee chair is an employee. As of March 31, 2020 and December 31, 2019, accounts payable and accrued expenses include $37,679 and $10,575, respectively, for legal fees due to the law firm for services.

In ~~April 2017,~~May 2019, the Company signed a worldwide, exclusive license agreement with Agrarian Technologies LLC and its affiliates (“Agrarian”) to sell Agrarian’s proprietary bio-stimulant. The license also provides the Company with the exclusive rights to market soil and mulch products under the Wild Earth® and Mulch Masters® federally registered trademarks. As part of the transaction, the Company hired the principal owner of Agrarian and inventor of its technology to serve as the Company’s ~~President forgave $112,797~~vice president of ~~deferred salary. This amount was reclassified from~~product development (“VP”). The license agreement provides the Company exclusivity for the Agrarian technology for the longer of two years or the term of the VP with the Company plus an additional two years; provided however, if VP is terminated without cause, such exclusivity would concurrently terminate. The license agreement requires quarterly licensing fees based on a percentage of sales and a minimum fee of $30,000 per year paid quarterly. As of March 31, 2020 and December 31, 2019, $22,500 and $15,000 of license fees have been accrued and included in accounts payable and accrued expenses ~~to additional paid in capital during~~on the ~~nine months ended September 30, 2017.~~condensed consolidated balance sheets.

~~In March 2017, the~~The Company ~~entered into a Modification and Extension Agreement with two holders of its~~has Original Issue Discount Senior Secured Convertible Debentures (the “Debentures”) to extend the maturity date to July 31, 2017, reset the conversion price from $0.21 to $0.15, and waive any defaults under the Debentures from the expiration of the maturity date or otherwise. The exercise price of the Warrants that were issued with ~~the Debentures’ exercise price, which had been reset to $0.50 per verbal agreement of the parties~~two holders in the ~~third quarter~~aggregate amount of ~~2016, was formally documented under this~~$165,000 as of March ~~2017 modification agreement.The Debentures do not bear interest, but contained an Original Issue Discount of $20,750.~~31, 2020 and December 31, 2019, and which currently are convertible at $0.10 per share and were due July 1, 2019. All assets of the Company are secured under the Debentures, including our Subsidiary and its assets. The Debentures ~~and warrants~~ contain certain anti-dilutive protection provisions in the instance that the Company issues stock at a price below the stated conversion price of the Debentures, as well as other standard protections for the holder. ~~As of September 30, 2017 and December 31, 2016, the aggregate outstanding principal amount of the two~~ The Debentures ~~was $165,000. As of the date of this Quarterly Report, the Debentures were~~are currently in default ~~based on~~and the ~~July 31, 2017 maturity date. The~~ Company ~~has been~~is in ~~discussions~~negotiations with the holders to ~~extend~~reach a new modification agreement or other resolution. If a resolution cannot be reached, the ~~maturity date or amend the terms of the Debentures.~~

~~On March 15, 2016, the Company entered into a 120-day term loan agreement with one accredited investor in the principal amount of $150,000. The loan bears 20% interest with interest~~holder can accelerate all payments due, ~~monthly. The Company incurred loan issuance costs of 100,000 shares of common stock valued at $26,000, $3,000 cash and provided a second security~~demand default interest, inforeclose on the assets of the Company, or pursue other legal remedies available to the holders. The issuance costs were fully expensed in 2016. As of September 30, 2017, the loan balance was $150,000, and accrued interest related to the loan was $2,500. This loan matured on July 15, 2016, and a 10% late penalty was assessed on July 15, 2016.it.

On March 22, 2017, the Company and the term loan holder entered into an Addendum to the loan agreement which extended the maturity date to December 31, 2017, allowed for conversion of the principal amount and accrued interest at the discretion of the holder to common stock at a price of $0.15 per share, and waived all defaults in return for payment of $30,000 which included a $15,000 late penalty and $15,000 of accrued but unpaid interest. This payment was made in April 2017 and the loan is now current. The Company determined that the new conversion feature has no intrinsic value and that the amended terms did not result in a significantly different instrument, and, accordingly, accounted for the addendum as a modification of debt.

On March 31, 2017, the Company closed the initial $1,050,000 tranche in a ~~Convertible Promissory Note~~convertible promissory note (the ~~Bridge Offering)~~“Bridge Notes”) offering (collectively, the “Bridge Offering”). In addition, as part of that initial closing, three of the Company’s directors converted $156,368 and one shareholder converted ~~$168,152~~$11,784 of prior notes and cash advances, including interest thereon, into the Bridge Offering. As of ~~September 30,~~the end of 2017, an additional $600,000 was raised under the Bridge Offering and $23,756 of additional prior notes were converted into this round. In 2018, the Company raised an additional $980,000 in Follow-On Bridge Offering notes on substantially same terms as the Bridge Offering (but with a two-year maturity) with three accredited investors, one being our Chief Executive Officer and another a Director who each entered into a $12,500 Bridge Note, and one institutional investor. In 2019, one of these investors provided an additional $30,000 in Bridge Notes. In June 2018, one of the original Bridge Notes for $50,000 plus $7,664 accrued interest was converted by its holder into 613,451 shares of common stock.

The ~~Convertible Promissory~~Bridge Notes ~~(the “Notes”)~~ from the Bridge Offering and the Follow-On Bridge Offering conducted in 2018 and 2019 convert at a 50% discount to the post-funding valuation of the Company at the closing of its next offering in the minimum amount of $5,000,000 (the “Equity Offering”). The conversion valuation has a ceiling of $12,000,000, and a “floor” company value of $6,000,000 in the event there is no Equity Offering before the Bridge Notes are able to be converted. As of the date of filing, the Company has not completed an Equity Offering defined in the Bridge Notes.

Pursuant to ASC 825-10-25-1, Fair Value Option, the Company made an irrevocable election at the time of issuance to report thethe Bridge Notes at fair value, with changes in fair value recorded through the Company’s condensed consolidated statements of operations as other income (expense) in each reporting period. The estimated fair value ~~recorded~~of the Bridge Notes as of ~~September 30, 2017~~March 31, 2020 and December 31, 2019 was ~~$2,360,000~~$2,574,000 and $2,473,000 (see Note 8)7) and the principal amount due was ~~$1,841,908.~~$2,801,908. The change in fair value resulted in ~~income and~~ a ~~(charge) to earnings in~~gain for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and 2019 of ~~$205,793~~$31,357 and ~~($419,484), respectively.~~$250,188, respectively, which is presented as change in fair value of convertible bridge notes on the condensed consolidated statements of operations.

The Bridge Notes ~~convert~~are currently convertible into common stock, or preferred stock if received by investors in the Equity Offering, ~~commencing on the earliest of the Equity Offering closing or December 31, 2017,~~ at the discretion of each ~~holder.~~holder based on the conversion formula provided in the Bridge Notes. Maturity is 36 months from issuance (24 for the subsequently issued Follow-On Bridge Notes) with 15% annual interest which will be capitalized each year into the principal of the Bridge Notes and paid in kind. ~~There are no warrants issued in connection with the Offering.~~

As of March 31, 2020, approximately 23 of the Bridge Notes with a principal balance of $1,743,256 were due to mature. The Company received extensions from the holders of the maturity date until June 15, 2020. No additional consideration was paid to the holders for their agreement to extend the maturity date.

The Company measures fair value in accordance with a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

As disclosed in Note 6, the ~~Company~~Bridge Notes are reported ~~as derivative liabilities on~~at fair value, with changes in fair value recorded through the Company’s condensed consolidated ~~balance sheets and are adjusted to their fair value at~~statements of operations as a component of other income (expense) in each reporting ~~date. Unrealized gains and losses on derivative instruments are included in change in value of derivative liabilities on the condensed consolidated statement of operations.~~period.

The following tables set forth the Company’s ~~condensed~~ consolidated financial assets and liabilities measured at fair value by level within the fair value hierarchy at ~~September 30, 2017 and~~ December 31, ~~2016.~~2019 and 2018. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

~~There were no transfers between levels during the nine months ended September 30, 2017. However, in accordance with ASU 2017-11~~~~Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815),~~the financial instruments previously classified and fair valued as derivative liabilities due to down round features, have been retrospectively adjusted by means of a cumulative-effect to the condensed consolidated balance sheet as January 1, 2017. The cumulative change effect of $388,667 is recognized as an adjustment of the opening balance of accumulated deficit for the year.

On March 31, 2017, the Company issued $1,218,152 of Convertible Promissory Notes (the “Notes”), closed an additional $423,756 of Notes by May 31, 2017, and closed another $200,000 in follow-on Notes as of August 28, 2017. The Notes convert at a 50% discount to the post-funding valuation of the Company at the closing of its next offering in the minimum amount of $5,000,000 (the “Equity Offering”). The conversion valuation has a ceiling of $12,000,000, and a “floor” company value of $6,000,000 in the event there is no Equity Offering before the Notes are able to be converted. The fair value of the Bridge Notes was determined using various Monte Carlo simulations.

The following ~~table presents~~tables present a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that use significant unobservable inputs (Level 3) and the related realized and unrealized gains (losses) recorded in the ~~condensed~~ consolidated statement of operations during the ~~period. The table also shows the cumulative change effect of the derivative liabilities that were recorded as an adjustment of the opening balance of accumulated deficit for the year:~~periods.

	Three Months Ended March 31, 2019
Fair value, December 31, 2018	$	2,960,000
Accrued interest		138,938
Amortization of debt issuance costs		1,250
Net unrealized gain on convertible bridge notes		(250,188	)
Fair value, March 31, 2019	$	2,850,000

The Company’s convertible ~~bridge notes~~Bridge Notes are valued by using Monte Carlo Simulation methods and discounted future cash flow models. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility and correlations of such inputs. These convertible ~~bridge notes~~Bridge Notes do not trade in liquid markets, and as such, model inputs cannot generally be verified and do involve significant management judgment. Such instruments are typically classified within Level 3 of the fair value hierarchy. The following assumptions were used to value the Company’s convertible ~~bridge notes~~Bridge Notes at ~~September 30, 2017:~~March 31, 2020: dividend yield of -0-%, volatility of ~~90 – 95%~~158.1%, risk free rate of ~~1.55%~~0.09% and an expected term of ~~2.5~~.25 years. The fair value of the Bridge Note was estimated based on the present value expected future cash flows using a discount rate of 20%. The following assumptions were used to value the Company’s convertible Bridge Notes at March 31, 2019: dividend yield of -0-%, volatility of 135%, risk free rate of 2.43% and an expected term of 1 year. The fair value of the Bridge Note was estimated based on the present value expected future cash flows using a discount rate of 23%.

~~During~~On February 7, 2020, the ~~nine months ended September 30, 2017,~~Company’s stockholders approved an increase in the Company’s authorized common shares from 100,000,000 to 300,000,000.

The Company issued ~~18,738,195~~5,000,000 shares of common stock in the first quarter of 2020 in connection with a services contract valued at ~~$470,279. Details~~$50,000, which is being expensed over the six-month service term of ~~these issuances are provided below.~~

~~On February 27, 2017,~~the contract. During the three months ended March 31, 2020, the Company ~~issued an aggregate~~recognized $20,833 of ~~15,000,000 shares~~stock-based compensation which is included in professional fees on the condensed consolidated statement of ~~restricted~~operations. The Company measured the fair value of the common stock ~~subject to forfeiture to its CEO and President. The expense of these shares is not recorded until~~issued based on the ~~terms of forfeiture have been satisfied~~market price on contract execution date as no specific performance by the ~~respective employees. Those terms of~~grantee is required to retain the ~~stock issuances and forfeitures are materially as follows:~~

To fully earn 10,000,000 shares, the Company’s CEO must continue to serve with the Company for a period of at least 12 months, during which 12 month or extended period: (1) the Company must complete at least $3 million in funding and (2) complete its first strategic acquisition. To fully earn 5,000,000 shares, the Company’s President must continue to serve the Company as a senior executive on a full-time basis for a period of at least 18 months from December 2016, during which 18 month or extended period: (1) the Company must complete at least $3 million in funding and (2) complete its first strategic acquisition. If these conditions are not met, the executives may forfeit all of their shares at the discretion of the Board.issued shares.

~~In April 2017,~~During the three months March 31, 2019, the Company ~~issued 1,738,195 shares~~recognized $115,714 of ~~common stock valued at $260,679 as consideration for~~stock-based compensation in connection with a six-month service contract which is included in professional fees on the ~~payment~~condensed consolidated statement of ~~accounts payable and accrued expenses to former employees and vendors.~~

~~On May 1, 2017, the Company issued 2,000,000 shares of common stock valued at $209,600 to a consultant for investor relations services.~~operations.

The Company has 600 shares of Preferred Stock issued and outstanding, which currently are convertible at ~~$0.15~~$0.10 per share of the Company’s common stock (the “Conversion Price”), as per the terms of ~~the~~a March ~~2017~~2018 Modification and Extension ~~Agreement.~~Agreement (the “2018 Modification”). The Preferred Stock bears a 6% dividend per annum, calculable and payable per quarter in cash or additional shares of common stock as determined in the Certificate of Designation. The Preferred Stock has no voting rights until converted to common stock and has a liquidation preference equal to the ~~Purchase Price. On the second anniversary~~aggregate purchase price of ~~the Original Issue Dates (the “Two Year Redemption Date”), which occur in~~$600,000 plus accrued dividends. In December 2017 and January 2018, the Company iswas obligated to redeem all of the then outstanding Preferred Stock, for an amount in cash equal to the Two Year Redemption Amount (such redemption, the “Two Year Redemption”). The Company extended the redemption date to July 1, 2019 pursuant to a new modification agreement signed in March 2019. The Preferred Stock is currently in default, and the Company is negotiating a modification with the holders. If a resolution cannot be reached, the holder can accelerate the redemption due, foreclose on the assets of the Company, or pursue other legal remedies available to it. Each share of Preferred Stock received warrants (the “Warrants”) equal to one-half of the Purchase Price to purchase common stock in the Company exercisable for five ~~(5)~~ years following closing, currently exercisable at a price of $0.50 per share.

The Preferred Stock has price protection provisions in the case that the Company issues any shares of stock not pursuant to an “Exempt Issuance” at a price below the Conversion Price. Exempt Issuances include: (i) shares of Common Stock or common stock equivalents issued pursuant to the ~~Merger~~original merger of the company or any funding contemplated by ~~the Merger;~~that transaction; (ii) any common stock or convertible securities outstanding as of the date of closing; (iii) common stock or common stock equivalents issued in connection with strategic acquisitions; (iv) shares of common stock or equivalents issued to employees, directors or consultants pursuant to a plan, subject to limitations in amount and price; and (v) other similar transactions. The Certificate of Designation contains restrictive covenants not to incur certain debt, repurchase shares of common stock, pay dividends or enter into certain transactions with affiliates without consent of holders of 67% of the Preferred Stock. The ~~unconverted shares~~holders of the Preferred Stock ~~must be redeemed in two years from issuance.~~consented to the Bridge Offering.

Management has determined that the Preferred Stock is more akin to a debt security than equity primarily because it contains a mandatory 2-year redemption at the option of the holder, which only occurs if the Preferred Stock is not converted to common stock. Therefore, management has presented the Preferred Stock outside of permanent equity as mezzanine equity, which does not factor ~~in to~~into the totals of either liabilities or equity. In 2016, the proceeds were allocated between the three features of the stock offering: the embedded conversion feature in the Preferred Stock, the warrants, and the Preferred Stock itself. The fair values of the embedded conversion feature and warrants were recorded as a discount against the stated value of the Preferred Stock on the date of issuance. This discount was amortized to interest expense over the term of the redemption period (2 years), which would result in the accretion of the Preferred Stock to its full redemption value. Unamortized discount as of September 30, 2017 and December 31, 2016 was $22,232 and $126,217, respectively. Interest expense related to the preferred stock discount for the nine months ended September 30, 2017 and 2016 was $103,985 and $102,923, respectively.

In accordance with ASU 2017-11, the embedded conversion feature of the Preferred Stock previously classified and fair valued as a derivative liability has been retrospectively adjusted by means of a cumulative-effect to the consolidated balance sheet as January 1, 2017. The cumulative change effect of $42,925 is recognized as an adjustment of the opening balance of accumulated deficit for the year. The agreement setting forth the terms of the common stock warrants issued to the holders of the Preferred Stock also includes an anti-dilution provision that requires a reduction in the warrant’s exercise price, currently $0.50, should the conversion ratio of the Preferred Stock be adjusted due to anti-dilution provisions. In accordance with ASU 2017-11, these warrants previously classified and fair valued as a derivative liability have been retrospectively adjusted by means of a cumulative-effect to the consolidated balance sheet as January 1, 2017. The cumulative change effect of $69,957 is recognized as an adjustment of the opening balance of accumulated deficit for the year.

The Preferred Stock ~~also~~ carries a 6% per annum dividend calculated on the stated value of the stock and is cumulative and payable quarterly beginning July 1, 2016. These dividends are accrued at each reporting period. They add to the redemption value of the stock; however, as the Company shows an accumulated deficit, the charge has been recognized in additional paid-in capital.

During the three months ended March 31, 2020, the Company did not issue any warrants nor did any warrants expire. The following is a summary of all outstanding common stock warrants as of ~~September 30, 2017:~~March 31, 2020:

During the year ended December 31, 2018, we committed to issuing warrants to purchase 150,000 shares of common stock at $.04 per share and expiring in five years, to one of our consultants prior to the consummation of any merger or equity financing of more than $1,000,000. These warrants are provisional and are not considered outstanding or granted as of March 31, 2020.

On July 31, 2014, the Board of Directors of Q2P approved the Founders Stock Option Plan (“Founders Plan”) and the 2014 Employee Stock Option Plan (the “2014 Plan”), collectively the “Option Plans”. The Option Plans were developed to provide a means whereby directors and selected employees, officers, consultants, and advisors of the Company may be granted incentive or non-qualified stock options to purchase restricted common stock of the Company. On February 25, 2016, to accommodate the appointment of new Board members and additional incentive stock options and stock grants to key employees of the Company, the Board approved the 2016 Omnibus Equity Incentive Plan (“2016 Plan”), which allowed for an additional 4four million shares of common stock, stock options, stock rights (restricted stock units), or stock appreciation rights to be granted by the Board in its discretion.

~~In May 2017, the Company issued 400,000 common stock options under~~ This authorized amount was increased to 10 million shares by Board resolution and amendment to the 2016 Plan in 2017. The 2016 Plan, as amended, was approved by the Company’s shareholders in January 2020.

The Company issued 3,200,000 stock options in the first three months of 2020, one million each to two of the Company’s independent directors, 500,000 each to one other independent director and one Board observer, and 200,000 to a new ~~Board member and 400,000 common stock options under the 2016 Plan to one new Board of Advisor Member.~~director. The options issued to the current directors and Board obverse were fully vested upon issuance, are exercisable at a price of $0.02 per share, and expire ten years after issuance. The 200,000 options to the new director vest ~~one-half immediately~~half in 12 months and the balance in 624 months, ~~with a 10-year term~~expire in five years, and are exercisable at ~~$0.21~~$0.02 per share. The options were valued at ~~$96,800~~$18,023 (pursuant to the Black Scholes valuation model ~~and as shown in the table detailing the calculation of fair value~~see below), based on an exercise price of ~~$0.21~~$0.02 per share and ~~with a maturity life~~estimated expected term of ~~5.25~~5.0 years. The Company did not issue any stock options in the first three months of 2019.

On January 6, 2020, the ~~nine months ended September 30, 2017,~~compensation committee of the Company’s Board of Directors, approved a one-time stock option repricing program (the “Option Repricing”) to permit the Company to reprice certain options to purchase the Company’s Common Stock held by its current directors, officers and employees (the “Eligible Options”), which actions became effective on January 6, 2020. Under the Option Repricing, Eligible Options with an exercise price at or above $0.10 per share (representing an aggregate of 6,311,000 options, or 54% of the total outstanding) were amended to reduce such exercise price to $0.02.

The impact of the Option Repricing was a one-time incremental non-cash charge toof $6,304, which was recorded as stock option expense in the first quarter of 2020 which is included in general and administrative expenses on the condensed consolidated statement of ~~operations~~operations.

Total stock-based compensation for stock options issued and the one-time incremental charge for the ~~amortization of~~Option Repricing for the three months ended March 31, 2020 was $24,327. There was no stock-based compensation recognized in 2019 related to stock ~~option grants awarded under the Option Plans and 2016 Plan was $248,187.~~options.

A summary of the common stock options issued under the Option Plans and the 2016 Plan for the period ~~from December~~March 31, ~~2016 through September 30, 2017~~2020 is as follows:

The fair value of new stock options granted and repriced stock options using the Black-Scholes option pricing model was calculated using the following ~~assumptions:~~

Expected volatility is based on historical volatility of a group of 4 comparable companies, due to the low trading volume of the Company’s own ~~common~~ stock. Short Term U.S. Treasury rates were utilized as the ~~risk free~~risk-free interest rate. The expected term of the options was calculated using the alternative simplified method codified as ASC 718 “Accounting for Stock Based Compensation,” which ~~defined~~defines the expected life as the average of the contractual term of the options and the weighted average vesting period for all issuances.

When the Company sold the ESI subsidiary to three former shareholders following the 2015 Merger, that company had a judgment against it from a litigation brought in the Superior Court of the County of Iredell, North Carolina, seeking payment of wages of approximately $25,000, together with vacation pay, the value of health insurance benefits and medical expenses. On April 1,10, 2015, the Court entered judgment against ESI in favor of the plaintiff. Claims made by the plaintiff against AnPath (the Company at that time) and certain of the officers and directors of Anpath at that time were dismissed by the Court. The Company does not believe it has any liability in this matter, and that the judgment was properly retained by ESI in the sale; however, the judgment is to the knowledge of management still outstanding and management cannot guaranty that it will not be brought back into the litigation or collection efforts in the future.

In April 2017, the Company entered into two ~~new~~ Employment Agreements, the first with its Chairman and, as of July 2017, CEO; and the second with its previous CEO and, as of July 2017, President and General Counsel. The ~~Chairman receives a $12,500 per month fee starting April 1~~annual salaries under these Employment Agreements are $350,000 and ~~continuing until the Company raises its next round of funding in the minimum amount of $5,000,000, at which time, his base salary will be increased to $350,000 per year. The President~~$220,000, respectively, and General Counsel receives a $10,000 per month fee starting on April 1, and at such time that the Company raises its next round of funding in the minimum amount of $5,000,000, he will receive a base salary of $220,000 per year. Both agreements have provisions for ~~a 12-month severance~~severances in the instance either executive is terminated without cause or after a change in ~~control.~~control (24 months for the CEO and 12 months for the President).

Pursuant to a services agreement signed in 2018, an additional 150,000 warrants with a five-year term and exercisable at $0.04 per share are issuable to the provider but have not formally been issued as of March 31, 2020 and are not considered outstanding.

As disclosed in Note 5, in May 2019, the Company signed a worldwide, exclusive license agreement with Agrarian Technologies LLC and its affiliates (“Agrarian”) to sell Agrarian’s proprietary ABS bio-stimulant, an organic, natural compound designed to enhance root formation, increase vascular strength and promote overall plant health through the entire growth cycle. The license also provides the Company with the exclusive rights to market soil and mulch products under the Wild Earth® and Mulch Masters® federally registered trademarks. The agreement is 10-years with renewal terms, and provides Agrarian royalties based on the sale of the ABS formula including minimum annual guarantees of $30,000 paid quarterly.

In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The Company is monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and business is uncertain. Accordingly, while the Company does not anticipate an impact on its operations, the Company cannot estimate the duration of the pandemic and potential impact on its business. In addition, a severe or prolonged economic downturn could result in a variety of risks to the business, including a possible delay in the Company’s ability to raise money. At this time, the Company is unable to estimate the impact of this event on its operations.

On ~~October 30, 2017,~~April 20, 2020, the Company ~~extended~~established QSAM Therapeutics Inc. (“QSAM”), as a wholly-owned subsidiary incorporated in the ~~termination~~state of Texas. On the same date, QSAM executed a Patent and Technology License Agreement and Trademark Assignment (the “License Agreement”) with IGL Pharma, Inc. (“IGL”).

The License Agreement provides QSAM with exclusive, worldwide and sub-licensable rights to all of IGL’s patents, product data and knowhow with respect to Samaium-153 DOTMP (the “Technology”), a clinical stage novel radiopharmaceutical meant to treat different types of bone cancer and related diseases. The Technology was developed by ISO Therapeutics Group, LLC (“ISO”) and previously transferred to IGL, a company majority owned by the founders of ISO. The License Agreement also transfers to QSAM the rights to the product name CycloSam for the Technology, and provides QSAM a first right of refusal to license other IGL/ISO technologies in the future.

The License Agreement is for 20 years or until the expiration of the multiple patents covered under the license, and requires multiple milestone based payments including: $60,000 and other expense reimbursements within 60 days of signing, up to $150,000 as the Technology advances through multiple stages of clinical trials, and $1.5 million upon commercialization. IGL will also receive equity in QSAM equal to 5% of the company to be issued within 60 days of signing. Upon commercialization, IGL will receive an on-going royalty equal to 4.5% of Net Sales, as defined in the License Agreement, and up to 50% of any Sublicense Consideration received by QSAM, as defined in the License Agreement. QSAM will also pay for ongoing patent filing and maintenance fees, and has certain requirements to defend the patents against infringement claims. The parties have agreed to mutual indemnification.

Either party may terminate the License Agreement 30 days after notice in the event of an uncured breach, or immediately in the case of bankruptcy or insolvency of the other party. QSAM may terminate for any reason upon 30 days’ notice. In the case IGL terminates due to an uncured QSAM breach, IGL will repay to QSAM 25% of its ~~Membership Interest Purchase~~direct clinical costs to assume ownership of data and other information gained in that process.

In connection with the License Agreement, QSAM signed a two-year Consulting and Confidentiality Agreement (the ~~“Purchase~~“Consulting Agreement”) with ~~Environmental Turnkey Solutions LLC (“ETS”) until January 2018 by cancelling $100,000~~IGL, which provides IGL with payments of $8,500 per month starting 60 days after signing. The Consulting Agreement is to provide QSAM with additional consulting and advisory services from the Technology’s founders to assist in ~~notes receivable from ETS (See Note 1)~~the clinical development of the Technology.

Douglas Baum, a Director of the Company, has been named President and CEO of the subsidiary QSAM, with authority to start building a team to oversee clinical trials and other operations for the development and commercialization of the Technology.

Item 2:MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS

~~The following discussion~~This Quarterly Report on Form 10-Q contains certain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, including or related to our future results, events and performance (including certain projections, business trends and assumptions on future financings), and our expected future operations and actions. In some cases, you can identify forward-looking statements by the use of words such as “may,” “should,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” “believe,” “expect” or “anticipate” or the negative of these terms or other similar expressions. These forward-looking statements generally relate to our plans and objectives for future operations and are based upon management’s reasonable estimates of future results or trends. In evaluating these statements, you should specifically consider the risks that ~~reflect~~ the ~~Company’s plans, estimates~~anticipated outcome is subject to, including the factors discussed under “Risk Factors” in previous filings and ~~beliefs, and~~elsewhere. These factors may cause our actual results ~~could~~to differ materially from any forward-looking statement. Actual results may differ from projected results due, but not limited to, unforeseen developments, including those relating to the following:

You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from what we expect. Although we believe that the expectations reflected in the forward-looking ~~statements. Factors that could cause~~statements are reasonable, we cannot guarantee future results, levels of activity, future financings, performance, or ~~contribute~~achievements. Moreover, we do not assume any responsibility for accuracy and completeness of such statements in the future. We do not plan to ~~these differences include those discussed below and elsewhere in~~update any of the forward-looking statements after the date of this Quarterly ~~Report.~~Report to conform such statements to actual results.

~~The Company’s operating subsidiary, Q2P, was originally formed in April 2010~~A. Plan of Operation

Our primary business is acquiring and overseeing the acquisition of companies in the ~~state~~compost and soil health sector. Through an affiliated company, Earth Property Holdings LLC (“EPH”) we have completed two acquisitions of compost facilities in Austin, Texas and Jacksonville, Florida, asand currently manage all the operations of those entities through a ~~limited liability company called “Cyclone-WHE LLC.” The purpose of the Company at such time was essentially the same as it was through most of 2016:~~long-term Management Agreement. Prior to ~~complete research and development on its~~our current operations, we were developing waste-to-power technology with the goal of pursuing business opportunities in the ~~renewable power~~clean energy sector. ~~The Company re-domiciled~~In 2017 we raised funding through our Bridge Offering (discussed below) to ~~Delaware~~transition into the soil health sector, and sold our waste-to-power technology to a licensee.

EPH is an unconsolidated investee entity in which we currently own an 18.2% Class B equity stake. Class A equity holders comprised of one primary institutional investor and two follow-on investors who have collectively provided approximately $7 million to EPH, own the other 81.8% of the company. We believe that the percentage of EPH ownership represented by our Class B units will be significantly diluted in the following periods as ~~a corporation in April 2014, formally split from~~EPH seeks additional equity capital to continue its ~~former parent in July 2014, and changed its name~~acquisition strategy. While we have the right to ~~“Q2Power Corp.” in February 2015. It is licensed~~invest alongside new capital to maintain our equity stake, we do not expect to have the funds to do ~~business~~so.

We have an eight-year Management Agreement to run EPH, which provides us $700,000 in ~~Florida, where it maintains an office.~~annual fees, and pursuant to which we oversee all daily operations, financial and legal matters including environmental and permitting. We are also in negotiations with several other composting facilities to acquire in 2020 through EPH. We can make no guaranty that these additional acquisitions will close due to many factors including failure to raise required funding, failure to reach definitive agreements, and findings of items in the diligence process that would make closing not in the best interests of EPH’s members or our shareholders. Furthermore, if such acquisitions are completed, our equity stake in EPH will likely be significantly diluted. Also, we have no assurances that our Management Agreement will be continued in future periods, as EPH has the right to terminate that agreement at will with the payment of a one-year severance fee.

~~On November 12, 2015, Q2P consummated~~In addition to our acquisition and management role on behalf of EPH, during 2019 we secured other potential revenue and value creation opportunities for the Company. In May 2019, we signed a worldwide, exclusive license agreement with Agrarian Technologies LLC and its ~~Agreement~~affiliates (“Agrarian”) to sell Agrarian’s proprietary ABS bio-stimulant, an organic, natural compound designed to enhance root formation, increase vascular strength and ~~Plan~~promote overall plant health through the entire growth cycle. The license agreement covers all ABS formulations, applications and improvements, including a proprietary process to utilize ABS to boost the nutrient and commercial value of ~~Merger (the “Merger Agreement”)~~compost, engineered soils and wood mulch. The license also provides the Company with the exclusive rights to market soil and mulch products under the Wild Earth® and Mulch Masters® federally registered trademarks. The agreement is 10-years with renewal terms, and provides Agrarian royalties based on the sale of the ABS formula including minimum annual guarantees.

As part of the transaction, we also hired the principal owner of Agrarian and inventor of its technology, Richard Stewart, to serve as our Vice President of Product Development. Our license agreement provides us exclusivity for the Agrarian technology for the longer of two years or the term of Mr. Stewart’s employment with the Company ~~(then called Anpath Group, Inc.)~~plus an additional two years; provided however, if Mr. Stewart is terminated without cause, such exclusivity would concurrently terminate.

ABS, a product of over 50 years of university and private research, meets USDA standards for an organic system plan. Management believes that the license with Agrarian will not only support compost production and sales at the Company’s ~~newly formed and wholly-owned subsidiary, AnPath Acquisition Sub, Inc., a Delaware corporation (“Merger Subsidiary”), resulting~~affiliated EPH but will also provide the Company with an independent business line in the ~~Merger Subsidiary merging with~~soil health sector. We have commenced marketing of ABS both as a stand-alone product and ~~into Q2P. As~~as a ~~result, Q2P was~~soil and mulch enhancement, although these operations are still in their start-up phase and no material revenue has been generated through these activities.

In January 2020, our Board of Directors authorized a strategic plan for 2020 which is comprised of: (1) securing new technologies and business opportunities in the ~~surviving company~~broader biosciences sector, including both human and ~~a wholly-owned subsidiary of AnPath (the “Merger”). As a result~~soil health; and (2) significantly reducing debt and liabilities of the ~~Merger, all outstanding shares~~Company and eliminating under-performing assets and agreements. The successful results of ~~Q2P were exchanged~~these actions are intended to attract new capital to fund long term growth opportunities for ~~24,034,475~~the Company; however, there is no guaranty that we will be successful in implementing this plan.

To advance these plans, in January 2020, we appointed Douglas R. Baum to our Board of Directors. Mr. Baum has over 28 years of experience in the bioscience and biotech industries, including development, commercialization and marketing of multiple drugs and medical devices. Over his senior executive tenure, including as CEO of Xeris Pharmaceuticals, he has overseen 15 product approvals through the FDA and raised over $80 million in capital to fund breakthrough technologies. Mr. Baum was granted a 5-year option to purchase 200,000 shares of the Company’s ~~common~~commons stock ~~representing approximately 93%~~exercisable at $0.02 per share. The options vest one-half in 12 months and the balance in 24 months.

After his appointment to the Board, Mr. Baum secured for the Company an Exclusive Dealing Option Agreement to provide us a 90-day period to negotiate with IGL Pharma Inc. (“IGL”) for a license to the radiopharmaceutical Samarium-153 DOTMP (“Sm-153 DOTMP”). Sm-153 DOTMP is a promising drug with initial indications for pediatric osteosarcoma, a devastating form of bone cancer afflicting children, as well as a broader market in bone marrow ablation and other metastasized bone cancers. IGL is an affiliated entity of ISO Therapeutics Group LLC, whose founders created Quadramet® (Samarium-153-EDTMP) one of the ~~total issued~~first effective commercial radiopharmaceuticals. Since signing the option agreement for the licensing of Sm-153-DOTMP, we have provided IGL with $50,000 of advanced support fees to fund a single patient test for the drug, which has been approved by the FDA to treat a patient in a bone marrow ablation procedure.

On April 20, 2020, we exercised our option and ~~outstanding common stock~~executed a Patent and Technology License Agreement and Trademark Assignment (the “License Agreement”) with IGL, through a newly created, wholly-owned subsidiary called QSAM Therapeutics Inc. (“QSAM”). The License Agreement provides our subsidiary QSAM with exclusive, worldwide and sub-licensable rights to all of IGL’s patents, product data and knowhow with respect to Sm-153 DOTMP. The License Agreement also transfers to QSAM the rights to the product name CycloSam for the technology, and provides QSAM a first right of refusal to license other IGL/ISO technologies in the future.

The License Agreement is for 20 years or until the expiration of the ~~Company, excluding stock options, warrants~~multiple patents covered under the license, and ~~convertible notes outstanding at such time. In addition, the Company assumed both the Q2P 2014 Founders Stock Option Plan~~requires multiple milestone based payments including: $60,000 and ~~the 2014 Employees Stock Option Plan (the “Option Plans”)~~other expense reimbursements within 60 days of signing (such expenses have been paid), up to $150,000 as Sm-153 DOTMP advances through multiple stages of clinical trials, and ~~1,095,480 options outstanding thereunder. As~~$1.5 million upon commercialization. IGL will also receive equity in QSAM equal to 5% of the ~~date~~company to be issued within 60 days of signing. Upon commercialization, IGL will receive an on-going royalty equal to 4.5% of Net Sales, as defined in the License Agreement, and up to 50% of any Sublicense Consideration received by QSAM, as defined in the License Agreement. QSAM will also pay for ongoing patent filing and maintenance fees, and has certain requirements to defend the patents against infringement claims. The parties have agreed to mutual indemnification.

Either party may terminate the License Agreement 30 days after notice in the event of an uncured breach, or immediately in the case of bankruptcy or insolvency of the ~~Merger,~~other party. QSAM may terminate for any reason upon 30 days’ notice. In the ~~officers~~case IGL terminates due to an uncured QSAM breach, IGL will repay to QSAM 25% of its direct clinical costs to assume ownership of data and ~~directors of Q2P took over the management and Board of Directors of the Company.~~other information gained in that process.

In connection with the ~~Merger,~~License Agreement, QSAM signed a two-year Consulting and Confidentiality Agreement (the “Consulting Agreement”) with IGL, which provides IGL with payments of $8,500 per month starting 60 days after signing. The Consulting Agreement is to provide QSAM with additional consulting and advisory services from the ~~Company sold~~technology’s founders to assist in the ~~former operating entity~~clinical development of ~~Anpath, ESI, to three former officers and shareholders of Anpath in exchange for the return of 470,560 shares of common stock~~Sm-153 DOTMP.

Mr. Baum, a Director of the Company, has been named President and ~~ESI retaining all~~CEO of the ~~old liabilities~~subsidiary QSAM, with authority to start building a team to oversee clinical trials and other operations for the development and commercialization of ~~ESI including a litigation judgment. In December 2015,~~the Technology.

Management believes that the opportunity presented to the Company ~~officially changed its name~~with the licensing of Sm-153 DOTMP must be viewed in connection with our broader strategic plan for 2020. Specifically, it is critical for the Company to ~~Q2Power Technologies, Inc.~~take decisive action to ~~reflect~~reduce our debt burden, which has started to mature including some significant obligations which are currently in default or will be in default in the ~~new~~coming periods. We believe there is a path forward that includes transferring the ABS licensed technology we control related to our compost and soil business ~~direction~~to EPH in return for a forgiveness of approximately $1 million in loans as of the ~~Company – that~~end of Q2P – after the Merger. In February 2016, the Company changed its fiscal year end from March 31 to December 31 to reflect the year-end of its operating Subsidiary, and up-listed its common stock to the OTCQB. The financial statements and footnotes to the financial statements reflect this change of fiscal year end. On August 18, 2017, the Company changed its name to Q2Earth, Inc.

~~Since May 2016, the Company began to pursue opportunities in business of manufacturing of compost and soils from biosolids and other waste streams. In~~ the second quarter of ~~2017, the Company received~~2020, as well as redemption and ~~fulfilled its first paid services contract to provide a feasibility study~~retirement in full of approximately $4 million of Bridge Notes principal and interest. It is expected that EPH would receive in consideration for the ~~manufacturing of soils from~~funds required to complete this Bridge Note repayment a ~~large-scale development project; signed two letters of intent providing for an exclusivity period~~preferred stock equity that is structured to ~~acquire two separate compost manufacturing companies in the southeastern United States, and executed a definitive purchase agreement with one of those companies (described below).~~

~~Purchase Agreement.~~ On August 28, 2017, the Company signed a definitive Membership Purchase Agreement (the “Purchase Agreement”) with Environmental Turnkey Solutions LLC (“ETS”) of Naples, Florida, and its three memberslimit dilution to ~~acquire 100% of the membership interests of ETS, and all subsidiaries wholly-owned by ETS.~~

ETS is a compost and soil manufacturing company founded in 2011 that operates in an area from the Florida Keys to Sarasota, Florida. ETS is currently generating approximately $8 million revenue and $1.8 million EBITDA on an annualized basis, not including forecasted growth from recently signed contracts and a facility acquisition that could substantially increase their operating revenue and earnings over the following 12 months. The company’s assets include land and improvements, equipment, proprietary know-how and tradenames, long-term contracts and extensive customer lists. ETS’ principals have collectively over 90 years experience in waste management, organics recycling, compost manufacturing, and logistics. ETS’ CEO, Anthony Cialone, will become Executive Vice President of the Company upon closing, under a two-year agreement with renewal options.our common stockholders.

~~Consideration under~~While the ~~Purchase Agreement includes $2.5 million cash subject to adjustment based on net accounts receivable at closing, $3.5 million~~details of this strategic plan have not been finalized, we are in sellers’ notes which are payable to the sellers within nine months of closing, and $4.5 million in Q2Earth common stock valued at $0.15 per share, which is at or above current market prices. ETS also has a $1.5 million earnout payable in common stock if ETS achieves greater than $2.5 million in annual run rate adjusted EBITDA over a six-month period within 12 months after closing. Approximately $725,000 of the purchase price will be held in escrow to assure performance under certain representations and warranties in the Purchase Agreement, in addition to other indemnification obligations of the sellers. The Company will assume approximately $2.5 million in commercial equipment loans and $1.5 million in a real property loan.

~~Closing is conditioned on delivery of the purchase price to the sellers, signing of two-year Employment Agreements and 18-month stock Lock-Up Agreements~~discussions with ETS’ principal manager, completion of ETS’ two-year audited financial statements and September 30 financial GAAP review, consents from ETS’ lenders and landlord to the change in control, and the Company securing financing required to close the transaction.

The Purchase Agreement contains standard representations and warranties from both parties, as well as pre-closing covenants including three-year non-compete agreements with all the principals. Indemnification is subject to a $100,000 basket and a $2.4 million cap, except for certain specified indemnities. There were no brokers involved with the transaction. The parties anticipate closing the Purchase Agreement in the fourth quarter of 2017.

S~~ale of Engine Technology.~~~~On August 14, 2017, the Company closed a Technology Transfer and Assignment Agreement (the “Transfer Agreement”) with Phoenix Power Group LLC (“Phoenix”) to transfer to Phoenix~~ all of the Company’s technology and materials associated with Q2P’s external combustion engine, controls and auxiliary systems (the “Q2P Technology”), developed both in conjunction with its license agreement with Cyclone Power Technologies, Inc. (“Cyclone”) and such other Q2P Technology developed independently from the license agreement. Pursuantstakeholders required to a consent from Cyclone, the Company also transferred and assigned the license agreement to Phoenix. In consideration for the transfer and assignment, which included net property and equipment of $4,927, unamortized license fees to Cyclone of $47,396 and a payment to Cyclone of $15,000 to consent to the transfer, Phoenix satisfied and provided releases for $162,500 in past liabilities of Q2P associated with the developmentaccomplish it. The results of the ~~Q2P Technology, made certain other payments~~successful completion of this plan, for which there is no guaranty, could mean a stronger balance sheet and the infusion of new capital to ~~the Company’s prior engine manufacturer, and provided full releases~~pursue this novel pharmaceutical opportunity. While a transition into this new business line is a departure from liability from both Phoenix and Cyclone. The Company recorded a net gain from the extinguishment of liabilities of $95,178 in the condensed consolidated statement of operations for the three and nine months ended September 30, 2017.

~~Moving forward, the Company intends focus entirely on the business of~~our current compost and ~~engineered soils manufacturing and sales.~~

~~Bridge Offering~~.In May 2017, the Company completed its Convertible Promissory Note “Bridge” offering (the “Bridge Offering”) with $1,450,000 of new cash raised and an additional $191,908 in old debt converted into the round. The Company raised an additional $200,000 in a follow-on Bridge Offering on the same terms in September 2017. Discussion of the Bridge Offering is provided in “Financial Condition, Liquidity and Capital Resources”. Funds from the Bridge Offeringsoil operations, which are ~~sufficient to provide for operations~~not financially sustainable for the Company ~~through~~in its current condition and would be continued by EPH if the ~~first quarter of 2018, including advancing its strategy to acquire cash-flowing composting businesses.~~

In the second half of 2016, the Company announced that it had taken several important steps to expand its business model into the commercial composting and sustainable soils sector. This included starting an alliance with a leading company in this space based in Georgia, and adding a key advisor with over 40 years of experience in this industry to our team. Two of the Company’s independent Directors also have significant experience and contacts in waste water, biosolids, wasteplan is completed, management ~~and other areas that are synergistic and overlapping with composting.~~

In 2016, the Company, ERTH Products LLC and Exceptional Products Inc. (the “ERTH Companies”), entered into a letter of intent (the “LOI”) contemplating the acquisition of the ERTH Companies by the Company. The ERTH Companies, based in Georgia, manufacture agricultural compost and engineered soils for the construction industry from waste water biosolids. The Company also added Wayne King Sr., the founder of the ERTH Companies, to the Company’s Board of Advisors. The exclusivity period of this LOI has been extended from September 30, 2017 until September 30, 2018 by agreement of the parties.

In August 2017, the Company and ETS signed a definitive Purchase Agreement to acquire all of the membership interests in ETS. Consideration under the Purchase Agreement includes $2.5 million cash subject to adjustment based on net accounts receivable at closing, $3.5 million in sellers’ notes which are payable to the sellers within nine months of closing, $4.5 million in Q2Earth common stock valued at $0.15 per share, and a $1.5 million stock earnout. The Company will assume approximately $2.5 million in commercial equipment loans and $1.5 million in a real property loan. A more detail description of this transaction is provided above in~~Overview – Purchase Agreement~~.

~~During the second half of 2017, the Company expects to advance its plans to consolidate companies in the compost and soil manufacturing business by completing these or other acquisitions. Management~~ believes these plans have a greater likelihood of success since the completion of its Bridge Offering earlier in the year, as the Company now has funding to staff diligence operations and advance contract negotiations, and to set up at least one of these acquisitions for a possible closing in the fourth quarter of 2017.

~~The Company’s strategy in composting and sustainable soils is supported by a Research & Markets report published May 2016 stating~~ that the ~~global market for~~path to creating shareholder value is more visible and probable if we can complete these products — specifically engineered soils, of which composting is a major component — is projected to reach $7.8 billion by 2021, at a CAGR of 6.7% from 2016 to 2021. The growth of this market is being driven by soil productivity, water conservation and pollution concernscorporate actions in the United States and worldwide. According to these and other reports, 99 million acres (28% of all cropland) in the U.S. are eroding above soil tolerance rates, meaning the long-term productivity of the soil cannot be maintained and new soil is not adequately replacing the lost soil. This erosion reduces the ability of the soil to support plant growth and hold water, adding significant pressure on this critical depleting resource. Further, soils produced with compost are being used with more frequency in construction, infrastructure and land reclamation projects to reduce costs, accelerate permitting, and create more sustainable landscapes. Management sees an opportunity in the composting and engineered soils markets to build a strong, cash flowing company, while also benefitting the environment.

In connection with these new plans the Company began to phase out its R&D overhead in 2016, including scaling back all of its engineering and technical personnel in order to dedicate more resources to pursuing partnerships and acquisitions in the compost industry.

In January 2017, the Company transferred its sales agreement with MagneGas to Phoenix Power Group (“Phoenix”), a licensee of the Company’s technology. Under this agreement, Phoenix assumed all responsibility and liabilities associated with delivering a waste-to-power system to the customer utilizing the Company’s technology, and will receive any additional fees paid by the customer for successful performance. Phoenix released the Company of approximately $250,000 in deferred revenue liabilities in connection with this contract assignment, and agreed to certain royalty fees payable to the Company for sales of the engine and system. This release from performance was recorded as a component of gain from extinguishment of liabilities in the nine months ended September 30, 2017.

In August 2017, the Company closed its Transfer Agreement which transferred to Phoenix all of the Company’s technology and materials associated with the old Q2P Technology, including transferring and assigning its License Agreement with Cyclone to Phoenix. In consideration for the transfer and assignment, which included net property and equipment of $4,927, unamortized license fees to Cyclone of $47,396 and a payment to Cyclone of $15,000 to consent to the transfer, Phoenix satisfied and provided releases for $162,500 in past liabilities of Q2P associated with the development of the Q2P Technology, made certain other payments to the Company’s prior engine manufacturer, and provided full releases from liability from both Phoenix and Cyclone. The Company recorded a net gain from the extinguishment of liabilities of $95,178 in the condensed consolidated statement of operations for the three and nine months ended September 30, 2017. Management reviewed the accounting treatment for discontinued operations in connection with this transaction and determined that such treatment would not be appropriate due to the Company’s gradual re-focusing of its business away from technology development over an 18 month period, which resulted in a minimal financial impact on the Company’s operations and financial results upon the consummation of this transaction.

From October 1 through December 31, 2017, management expects to spend approximately $250,000 on operations, not including funds required to close the previously discussed or future acquisitions, which may require as much as $10 million in capital to complete if all potential targets are included. Our average monthly burn-rate through the end of the year, not including acquisition costs, is approximately $75,000 per month. Additional amounts will be spent on signing LOI’s containing exclusivity periods with potential acquisition targets.

In May 2017, the Company completed its Bridge Offering with $1,450,000 of new cash raised and an additional $191,908 in old debt converted into the round. In September 2017, the Company raised an additional $200,000 in a follow-on Bridge Offering on the same terms. Discussion of the Bridge Offering is provided in “Financial Condition, Liquidity and Capital Resources”. Funds from the Bridge Offering are sufficient to provide for operations for the Company through the first quarter of 2018, which includes advancing its strategy to acquire cash-flowing composting businesses, but not enough for closing the ETS acquisition expected to be closed in Q4 2017. Consummation of these acquisitions would require up to $10 million in additional capital, which management is in the process of securing.

B.~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~Statement of Operations for the three months ended September 30, 2017 vs. 2016~~

During the quarter ended September 30, 2017, the Company recorded revenue of $17,953 from the completion of a service agreement in the soil business. The Company had no revenue in the quarter ended September 30, 2016.

The Company recorded loss from operations of $331,822 in the quarter ended September 30, 2017, a decrease of $34,487 (9%) from our loss from operations of $366,309 in the same period in 2016. Additionally, the Company recognized additional interest expense in the 2017 period, which was offset by a gain on the change in fair value of the convertible bridge notes of $205,793 and a gain on extinguishment of liabilities of $98,575, that resulted in a net loss of $286,674 for the three months ended September 30, 2017, a decrease of $100,935 (26%) from our net loss of $387,609 for the same period in 2016. Some of the principal factors behind these results included, higher professional fees, higher interest as well as the change in fair value of the convertible bridge notes.

As noted above, included in the expenses for the quarter ended September 30, 2017 and 2016 were the following material items: professional fees increased to $217,352 in 2017, from $176,771 in the prior year period (23%) due to the Company’s acquisition strategy and the fact that its CEO and President received their pay in the form of consulting fees in 2017; and research and development decreased to $0 in 2017 from $43,154 in the previous year period (100%) due to the termination of R&D activities at the end of 2016.

~~Statement of Operations for the nine months ended September 30, 2017 vs. 2016~~

During the nine months ended September 30, 2017, the Company recorded $55,933 in revenue from the completion of a service agreement in the soil business. The Company recorded $40,000 in revenue in the same period in 2016.

The Company recorded loss from operations of $1,079,234 in the nine months ended September 30, 2017, a decrease of $615,291 (36%) from our loss from operations of $1,694,525 in the same period in 2016. Additionally, the Company recognized additional interest expense in the 2017 period, and a net loss on the change in fair value of the convertible bridge notes of $419,484, which were offset by a gain on extinguishment of liabilities of $456,720, that resulted in a net loss of $1,437,777 for the nine months ended September 30, 2017, an increase of $254,546 (22%) from our net loss of $1,183,231 for the same period in 2016. Some of the principal factors behind these results included, lower payroll, higher professional fees and no R&D expenses, as well as the settlement of liabilities and change in fair value of the convertible bridge notes in 2017.

As noted above, included in the expenses for the nine months ended September 30, 2017 and 2016 were the following material items: payroll decreased to $187,117 in 2017 from $512,561 in the prior year (63%), which was principally due to the reduction of staff and management in 2017. Professional fees increased to $770,480 in 2017, from $692,416 in the prior year period (11%) due primarily to the Company’s increased investment and acquisition related activities in the 2017 period; and research and development decreased to $0 in 2017 from $355,884 in the previous year period (100%) due to the termination of R&D activities at the end of 2016.

~~Material changes in the Company’s balance sheet at September 30, 2017 over December 31, 2016 included: closing of $1,650,000 in the Company’s~~ Bridge Offering ~~through in September 2017 (not inclusive of an additional conversion of $191,908 in previously recorded notes, advances~~ and ~~payables from three board members and three investors for~~Follow-On Funding.To fund our transition into the compost space, we issued a total ~~issuance~~ of ~~Bridge Offering debentures of $1,841,908); a decrease of $731,243~~$2,821,908 in accounts payable and accrued expenses (including the sale of the Q2P Technology in exchange for a release on $162,500 in liabilities) which includes settlements and conversions of accounts payable and accrued expenses with property and equipment, licensing rights in Cyclone and common stock, ; a decrease of $300,000 in deferred revenue from the transfer of the MagneGas Agreement and release from the Phoenix agreement; and $100,000 in loans to ETS, not including an additional $150,000 in deposits paid under the Purchase Agreement. Total liabilities as of September 30, 2017 were $2,752,265, as compared to $1,778,703 as of December 31, 2016.

Primarily as a result of the $1,437,777 net loss for the nine months ended September 30, 2017, accumulated deficit was $8,689,549, at September 30, 2017, resulting in total stockholders’ deficit at the period end of $2,624,748.

Between July 2014 and mid-2016, the Company through Q2P primarily devoted its efforts to commercializing the Q2P engine and CHP system, developing its waste-to-power business model, and recruiting executive management and key employees. Starting in the second half of 2016, the Company began to phase out its R&D operations, and in August 2017, sold its old engine technology. The Company is now entirely focused on promoting its compost manufacturing business model, including providing soil management services to one customer and acquiring other compost manufacturing companies. As a new entity, the Company has limited current business operations and nominal assets. The Company currently operates at a loss with minimal to no revenue.

Since the change in business direction to focus on strategic partnerships and acquisitions in the compost and soil manufacturing space, the Company has reduced its operating expenses from approximately $150,000 per month to approximately $75,000 per month by laying-off engineering employees and terminating our R&D budget, which is off-set in part by added expenses in connection with our acquisition plans. As of the date of this Report, our CEO and President are receiving fees as consultants, even though they spend virtually all of their time on Company operations. We also have one additional financial consultant, who serves as the Principal Accounting Officer. Other expenses include legal and accounting, payment of fees for exclusivity and LOIs with acquisition targets, and other general expenses. We have also used equity, including common stock and stock options, to pay some expenses over the last year; and we reduced $423,179 in payables with settlements of stock and assets over the past year.

The net loss for the nine months ended September 30, 2017 of $1,434,777 was off-set primarily by non-cash operating expenses of: $248,187 in stock option grants and related amortization expense, $419,484 from the net change in fair value of the bridge subscriptions, $456,720 in gain from extinguishment of liabilities, $209,600 in restricted shares used for outside services, $23,060 of depreciation and amortization, and a $5,361 net decrease in accounts payable and accrued expenses. As a result, net cash used in operating activities amounted to $884,289 in the first three quarters of 2017.

With respect to our technology, in January 2017, the Company transferred its sales agreement with MagneGas to Phoenix Power Group, a licensee of the Company’s technology. Under this agreement, Phoenix assumed all responsibility and liabilities associated with delivering a waste-to-power system to the customer, and will receive any additional fees paid by the customer for successful performance. Phoenix released the Company of approximately $250,000 in deferred revenue liabilities in connection with this contract assignment, and agreed to certain royalty fees payable to the Company for sales of the engine and system. In August 2017, the Company closed its Transfer Agreement which transferred to Phoenix all of the Company’s technology and materials associated with the old Q2P Technology, including transferring and assigning its License Agreement with Cyclone to Phoenix.

The Company believes its funds as of the date of this filing are sufficient to support operations through at least the first quarter of 2018, and possibly into the second quarter of 2018. However, the Company will need to raise additional capital to close its initial acquisitions and support operations through the end of 2018; therefore, management believes there is currently substantial doubt about its ability to operate as a going concern. See “Note 2 – Basis of Presentation and Going Concern” in the Company’s condensed consolidated financial statements.

Since July 2014, Q2P has raised in excess of $6 million in capital over several financings, inclusive of cash invested and some debt and payables converted to stock. With these funds, the Company has been able to complete the prototype stage of its original technology, place our first operating pilot unit in the field, recruit a solid engineering and business team, and secure strong Directors with significant industry experience. Specifically with the closing of our Bridge Offering, described below, we have also been able to pivot our business model to the compost and soil manufacturing business, and secure letters of intent to acquire operating compost companies.

~~Bridge Financing.~~In May 2017, the Company completed its Bridge Offering with $1,450,000 of new cash raised and an additional $191,908 in old debt converted into the round. In September 2017, the Company completed an additional $200,000 follow-up Bridge Offering on the same terms.

~~The~~ Convertible Promissory Notes (the ~~“Notes”~~“Bridge Notes”) during 2017 and 2018 (the “Bridge Offering”) and $30,000 in 2019. Proceeds from the Bridge Notes were used to complete due diligence, negotiate and secure the initial compost acquisitions, as well as for operational expenses and legacy debt repayment. The Bridge Notes convert at a 50% discount to the post-funding valuation of the Company at the closing of its next offering in the minimum amount of $5,000,000 (the “Equity Offering”). The conversion valuation has a ceiling of $12,000,000, and a “floor” company value of $6,000,000 in the event there is no Equity Offering before the Bridge Notes are able to be converted.

The Bridge Notes convert into common stock, or preferred stock if received by investors in the Equity Offering, commencing on the ~~earliest~~soonest of the Equity Offering closing or December 31, 2017, at the discretion of the holder. In 2018, one Bridge Note in the principal amount of $50,000 was converted into shares of common stock. Maturity is 36 months from issuance (except for certain Bridge Notes issued in 2018 and 2019, which have a 24-month term) with 15% annual interest which is capitalized each year into the principal of the Notes and paid in kind.

As of March 31, 2020, approximately $1,068,152 of the original issuance principal amount of the Bridge Notes matured. The Company has received extensions of the maturity date from all of these holders until June 15, 2020 for no additional consideration. Management is working on a plan to repay or convert into equity these and the other Bridge Notes by their respective maturity dates, as discussed above. Any equity conversion would be highly dilutive to our current shareholders. If we cannot repay these obligations or otherwise come to agreement with the holders, our ability to operate will be materially adversely affected, if not completely shut down and the Company may be forced to seek bankruptcy protection.

To continue operations in 2020, we will need to raise additional capital for the Company. We have a verbal commitment with the primary investor of EPH that they will continue to provide funding to the Company either as Bridge Notes, other Q2 securities, or advances on management fees, to maintain our operations through at least the end of the second quarter of 2020; however, we do not have any formal written agreement and there can be no guarantee that this investor will continue to fund our operations in the future. While we are cautiously optimistic that we will have funding to maintain our current operations and advance our business plan, management cannot guarantee that additional financing can be completed on terms acceptable to the Company, if at all.

Without additional funding, specifically equity funding, we will continue to face significant challenges pursuing our current business strategy and developing it to a state where we are self-sustaining or profitable. We anticipate that our equity ownership in EPH will be diluted in future periods as that company raises additional equity capital with liquidation preferences ahead of ours. We may never experience a return on our investment in EPH. Further, since our Management Agreement with EPH can be cancelled at will by EPH, we have no assurances that this revenue stream will continue in the future. Management recognizes these uncertainties, and is seeking options to allow us to reduce our significant debt load from the Bridge Notes, convertible notes and preferred stock, and debt owed to EPH; and also allow us to develop business lines that generate revenue which can support our ongoing operations and eventually lead to profitability. If we are unable to raise additional capital or develop profitable business lines, we may need to reduce materially our overhead, including laying-off employees and officers.

B.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Between July 2014 and mid-2016, through Q2P we primarily devoted our efforts to commercializing the Q2P engine and CHP system, developing our waste-to-power business model, and recruiting executive management and key employees. In August 2017, sold our engine technology and are now focused on promoting our compost manufacturing business model, including providing soil management services and facilitating the acquisition of or investing in other compost manufacturing companies. We have also recently licensed a promising radiopharmaceutical for the treatment of bone cancer; and have established a subsidiary headed by one of our directors to pursue this opportunity into the broader biosciences sector. As a new entity, we have limited current business operations and nominal assets. We currently operate at a loss with minimal to no revenue. We currently have five full time employees, including our CEO, President, two Vice Presidents, and controller.

In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. We are monitoring this closely, and although operations have not been materially affected by the COVID-19 outbreak to date, the ultimate duration and severity of the outbreak and its impact on the economic environment and our business is uncertain. Accordingly, while we do not anticipate an impact on our operations, we cannot estimate the duration of the pandemic and potential impact on our business. In addition, a severe or prolonged economic downturn could result in a variety of risks to our business, including a possible delay in our ability to raise money. At this time, the Company is unable to estimate the impact of this event on its operations.

For the three months ended March 31, 2020, we recorded $174,999 in revenue from a related entity pursuant to a management service agreement, an increase of $1,189 over revenue recorded in the same period in 2019.

For the three months ended March 31, 2020, we recorded a net loss of $437,402, a decrease of $68,086 (13%) from our net loss of $505,488 for the same period in 2019. Basic and diluted net loss per share was $0.01 for both the periods ended March 31, 2020 and 2019. The primary underlying reasons for the decrease in the net loss for the current period over 2019 were a decrease of $268,453 in operating expenses offset by a decrease in the gain recognized due to the change in the fair value of the convertible bridge notes of $218,831.

The majority of the $268,453 decrease in operating expenses was due to a decrease in payroll and related expenses of $250,403 (44%) to $314,670 for the three months ended March 31, 2020 from $565,073 for the same period in 2019, primarily due to a $200,000 bonus approved by the Board to be paid to two of the Company’s executives.

We recorded $174,999 of revenue related to management fees from our equity method investment EPH which is considered to be a related party during the three months ended March 31, 2020 compared to the same period in 2019 which reflected $173,810 from the same contract.

For three months ended March 31, 2020, cash increased by $186. This increase was primarily the result of the increase in revenue from our management agreement with EPH of $1,189 when compared year over year.

Net cash used by operating activities was $147,486 for the three months ended March 31, 2020, which reflected our net loss during the period of $437,402, offset by the non-cash adjustments of $159,242 and the net increase in operating assets and liabilities of $130,674. The majority of non-cash adjustments consists of $131,107 accrued interest on the Bridge Notes and $45,160 of stock based compensation.

Our net loss resulted largely from our funding of activities related to the execution of our business strategy of facilitating the acquisition of and investment in and managing compost manufacturing businesses, including conducting due diligence and incurring consulting and professional expenses and hiring additional employees to support these operations, as well as ongoing general and administrative expenses. Net loss also consisted of fees and expenses paid to IGL to secure our license agreement for Sm-153 DOTMP.

Net cash used in investing activities during three months ended March 31, 2020 consisted of $0.

Net cash provided by financing activities during the three months ended March 31, 2020 consisted of $147,674 due to additional proceeds received from a related party pursuant to notes payable agreements.

At March 31, 2020, our cash totaled $664. Our cash is currently held at large U.S. banks.

Based on our current strategy and operating plan, we need to raise additional capital to support operations; therefore, there is substantial doubt about our ability to operate as a going concern. See “Note 2 – Basis of Presentation and Going Concern” in our consolidated financial statements.

Bridge Financing.In 2017, 2018, and 2019, we completed our Bridge Offering with $2,660,092 of new cash raised plus an additional $191,908 in old debt converted into the round. In 2018, one Bridge Note in the principal amount of $50,000 was converted into shares of common stock. The Bridge Notes convert at a 50% discount to the post-funding valuation of the Company at the closing of our next offering in the minimum amount of $5,000,000 (the “Equity Offering”). The conversion valuation has a ceiling of $12,000,000, and a “floor” company value of $6,000,000 in the event there is no Equity Offering before the Bridge Notes are able to be converted.

The Bridge Notes are currently convertible into our common stock, or preferred stock if received by investors in the Equity Offering, at the discretion of the individual holders. Maturity is 36 months (24 months for Bridge Notes issued in 2018) from issuance with 15% annual interest which will be capitalized each year into the principal of the Bridge Notes and paid in kind. ~~There are~~

As of March 31, 2020, approximately $1,068,152 of the original issuance principal amount of the Bridge Notes matured. The Company has received extensions of the maturity date from all of these holders until June 15, 2020 for no ~~warrants issued in connection~~additional consideration. Management is working on a plan to repay or convert into equity these and the other Bridge Notes by their respective maturity dates. Any equity conversion would be highly dilutive to our current shareholders. If we cannot repay these obligations or otherwise come to agreement with the ~~Bridge Offering.~~

holders, our ability to operate will be materially adversely affected, if not completely shut down and the Company may be forced to seek bankruptcy protection.

Funds from the Bridge Offering will be used to secure acquisitions of compost and soil companies with closings expected to occur concurrently with the closing of the Equity Offering, and operating capital through the first quarter of 2018. A limited portion of the funds have also been used to eliminate liabilities on the Company’s balance sheet.

TheThe Bridge Offering was led by two accredited investors and joined by approximately 25 additional accredited investors which included our Directors. The Bridge Notes issued in 2018 were mainly to one accredited investor that also led the ~~Company’s Directors.~~equity funding for EPH. Management conducted the Bridge Offering and no broker fees were paid in connection with the initial closing. All securities issued in the Bridge Offering and debt settlements were issued pursuant to an exemption from registration under Section 4(a)(2) under the Securities Act of 1933.

Funds from the Bridge Offering were used to secure our acquisitions of or investments in compost and soil companies, retire old debt, and pay operating expenses in 2017 and 2018.

S~~ubsequent~~Subsequent to ~~the Merger~~our 2015 merger into the public ~~company, the Company~~vehicle, we raised $600,000 in ~~its~~our Series A 6% Convertible Preferred Stock (the “Preferred Stock”) from two separate accredited investors in November 2015 and January 2016, respectively. The Preferred Stock bears a 6% dividend per annum, calculable and payable per quarter in cash or additional shares of common stock as determined in the Certificate of Designation. The Preferred Stock was originally convertible at $0.26 per share at the discretion of the holders and contains price protection provisions in the instance that ~~the Company issues~~we issue shares at a lower price, subject to certain exemptions. As a result of the July 2016 common stock offering described below, the conversation price for these Preferred Shares automatically reduced to $0.21 per share, and as a result of the Bridge Offering, the conversion price was reset to $0.15 per share. Pursuant to the 2018 Modification, the conversion price is currently $0.10 per share. Preferred Stock holders also received other rights and protections including piggy-back registration rights, rights of first refusal to invest in subsequent offerings, security over ~~the Company’s~~our assets (secondary to ~~the Company’s~~our debt holders), and certain negative covenant guaranties that ~~the Company~~we will not incur non-ordinary debt, enter into variable pricing security sales, redeem or repurchase stock or make distributions, and other similar warranties. The Preferred Stock is redeemable ~~after two years if not converted,~~on July 1, 2019 per a March 2019 modification and has no voting rights until converted to common stock. The Preferred ~~Stock holders~~Stockholders also received 50% warrant coverage at an exercise price of $0.50, with a five-year term and similar price protections as in the Preferred Stock. Pursuant to agreements with the warrant holders, this conversion price remains at $0.50 as of ~~September 30, 2017.~~

On January 11, 2016, the Company issued 100 shares of Preferred Stock to an accredited investor (the “Preferred Stock”) for $100,000. The Preferred Stock is currently convertible at $0.15 per share of the Company’s common stock (the “Conversion Price”). In total, we have 600 shares of Preferred Stock outstanding to two investors. The Preferred Stock bears a 6% dividend per annum, calculable and payable per quarter in cash or additional shares of common stock as determined in the Certificate of Designation. The Preferred Stock has no voting rights until converted to common stock, and has a liquidation preference equal to the Purchase Price.March 31, 2020.

On March 15, 2016, ~~the Company~~we entered into a 120-day term loan agreement with one accredited investor in the principal amount of $150,000. The loan ~~bears~~bore 20% interest with interest payments due monthly. The holders of the term loan received ~~loan issuance costs~~100,000 shares of ~~a 100,000 share equity kicker~~common stock valued at $26,000, $3,000 cash and a second security interest in ~~the~~our assets of in exchange for arranging the ~~Company.~~financing. This loan matured on July 15, 2016, and a 10% late penalty was assessed on July 15, 2016. On March 22, 2017, ~~the Company and the lenders~~we entered into an ~~Addendum~~addendum to the loan agreement with the lenders which extended the maturity date to December 31, 2017, allowed for conversion at the discretion of the holders to common stock, ~~at a price of $0.15 per share,~~ and waived all defaults in return for payment of $30,000 which included the late fee and accrued but unpaid interest. These fees and interest payments were paid in April 2017, and the loan ~~is now current.~~was repaid in full in December 2017.

On April 29, 2016, ~~the Company’s~~our three independent Directors loaned ~~to the Company~~us a total of $60,200 pursuant to three ~~Convertible Notes which are automatically~~ convertible into the equity securities issued in the Company’s next financing of at least $1,000,000 at the same price and same terms. The Convertible Notes bear 8% interest and have a 10% Original Issuance Discount.notes. The total principal amount of all three ~~Notes~~notes was $66,000. The ~~Notes mature~~notes were converted into the Bridge Offering in ~~six months, and can be converted to common stock at $0.26 per share if a qualified financing event has not occurred by such time.~~March 2017. In June 2016, three other shareholders ~~of the Company~~ provided an additional $30,000 ~~to the Company~~us on the same loan ~~terms.~~terms, which were also subsequently converted into the Bridge Offering.

In July and August 2016, ~~the Company~~we received subscription agreements from six accredited investors (four of whom were previous shareholders) to purchase 750,000 shares of restricted common at a price of ~~$.21~~$0.21 per share for an aggregate of $157,500, less $610 in financing costs.

In September 2016, ~~the Company’s~~our three independent Board members advanced ~~the Company~~us $3,000 for payment of insurance premiums. In the fourth quarter of 2016 and first quarter of 2017, the three Board members advanced an additional $29,500 to cover expenses. All of these advances were converted into ~~the Company’s recent~~our Bridge Offering.

All promissory notes and shares in these offerings were sold pursuant to an exemption from the registration requirements of the Securities Exchange Commission under Regulation D to accredited or sophisticated investors who completed questionnaires confirming their status. Unless otherwise described in this ~~Current~~Quarterly Report, reference to “restricted” common stock means that the shares have not been registered and are restricted from resale pursuant to Rule 144 of the Securities Act of 1933, as amended.

On July 28, 2014, Q2P (which at such time was called WHE Generation Corp., and renamed Q2Power Corp. on January 26, 2015) commenced operations as an independent company after receiving its initial round of seed funding and signing a formal separation agreement (the “Separation Agreement”) from Cyclone. The Separation Agreement between Q2P and Cyclone provided for a formal division of certain assets, liabilities and contracts related to Q2P’s business, as well as establishing procedures for exchange of information, indemnification of liability, and releases and waivers for the principals moving forward. As part of the separation from Cyclone, Q2P also purchased for $175,000 certain licensing rights to use Cyclone’s patented technology on a worldwide, exclusive basis for 20 years with two 10-year renewal terms for Q2P’s waste heat and waste-to-power business (the “License Agreement”). The License Agreement contains a royalty provision equal to 5% of gross sales payable to Cyclone on sales of engines derived from technology licensed from Cyclone.

Also, as part of the separation from Cyclone, Q2P assumed a license agreement between Cyclone and Phoenix Power Group, which included deferred revenue of $250,000 from payments previously made to Cyclone for undelivered products. The net balances as of September 30, 2017 and December 31, 2016 for the Cyclone licensing rights were $0 and $69,271, respectively. The licensing rights were amortized over its estimated useful life of 4 years.

Accumulated amortization for the periods ended September 30, 2017 and December 31, 2016 was $127,604 and $105,729, respectively. The net balances as of September 30, 2017 and December 31, 2016 for the Phoenix deferred revenue were $0 and $250,000, respectively, due to the release of this contract liability item with the transfer of the Magnegas contract to Phoenix in January 2017.

The Company also assumed a contract with Clean Carbon of Australia and a corresponding $10,064 prepayment for services or other value to be provided in the future. This deposit has been presented as deferred revenue on the September 30, 2017 and December 31, 2016 condensed consolidated balance sheets.

We have incurred negative cash flows from operations since ~~inception.~~inception on an annual basis. As of ~~September 30, 2017, the Company~~March 31, 2020, we had an accumulated deficit of ~~$8,689,549. Details~~$11,486,612 and negative working capital of ~~this are discussed above in the Balance Sheet disclosure.~~

Our financial statements are prepared in conformity with U.S. generally accepted accounting principles (GAAP). Disclosures regarding our Critical Accounting Policies are provided in Note 3 – Summary of Significant Accounting Policies of the footnotes to our condensed consolidated financial statements.

The Company did not engage in any “off-balance sheet arrangements” (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of ~~September 30, 2017.~~March 31, 2020.

In connection with the preparation of this Quarterly Report, management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief ~~Financial~~Accounting Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Management concluded that, as of ~~September 30, 2017,~~March 31, 2020, the Company’s disclosure controls and procedure were not effective based on the criteria inInternal Control – Integrated Framework issued by the COSO, version 2013.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the Chief Executive Officer ~~the President~~ and the ~~Principal~~Chief Accounting Officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles in the United States (GAAP). Internal control over financial reporting includes those policies and procedures that:

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

~~The Company’s management~~Management conducted an assessment of the effectiveness of ~~the Company’s~~our internal control over financial reporting as of ~~September 30, 2017,~~March 31, 2020, based on criteria established inInternal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (“COSO”). As a result of this assessment, management identified certain material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of ~~the Company’s~~our annual or interim financial statements will not be prevented or detected on a timely basis. The identified material ~~weakness is~~weaknesses are disclosed below:

As a result of the material weakness in internal control over financial reporting described above, management concluded that, as of ~~September 30, 2017, the Company’s~~March 31, 2020 , our internal control over financial reporting was not effective based on the criteria inInternal Control – Integrated Framework issued by the COSO.

The Company is in the process of addressing and correcting ~~this~~these material ~~weakness.~~weaknesses, including drafting, formalizing and implementing greater internal controls to assure proper financial reporting. As the Company retained but then lost its interim CFO in 2020, and its Principal Accounting Officer and new acting-CFO have not had the resources to implement proper controls, these weaknesses still exist. Management will be diligent in its efforts to continue to improve the reporting processes of the Company, including the addition of accounting resources and the continued development of proper accounting policies and procedures.

This quarterly report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

There were no changes in our internal control over financial reporting ~~other than described below,~~ in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In July 2017, the Company created an Audit Committee by resolution of the full Board of Directors and implemented an Audit Committee Charter to provide written guidance for the Committee. Joel Mayersohn was named Chairman of the Audit Committee. Messrs. Scott Whitney and Tristan Peitz were named Committee members. All of these individuals are independent Board members. Management believes that the establishment of this independent Audit Committee will help strengthen our internal control over financial reporting in future periods.

We are not a party to any pending legal proceeding and, to the knowledge of our management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer, affiliate of ours, or owner of record or beneficially of more than five percent of our common stock is a party adverse to the Company or has a material interest adverse to us in any proceeding.

When the Company sold the ESI subsidiary to three former shareholders following the Merger, that company had a judgment against it from a litigation brought in the Superior Court of the County of Iredell, North Carolina, seeking payment of wages of approximately $25,000, together with vacation pay, the value of health insurance benefits and medical expenses. On April 10, 2015, the Court entered judgment against ESI in favor of the plaintiff. Claims made by the plaintiff against AnPath (the Company at that time) and certain of the officers and directors of Anpath at that time were dismissed by the Court. ~~The Company does~~We do not believe ~~it has~~we have any liability in this matter, and that the judgment was properly retained by ESI in the sale; however, to management’s knowledge the judgment is still outstanding and management cannot ~~guaranty~~guarantee that it will not be brought back into the litigation or collection efforts in the future.

~~There were no~~The following table sets forth the sales of unregistered securities by the Company in the ~~third fiscal~~first quarter of ~~2017~~2020 and up to the date of filing that ~~have~~were not ~~been~~ previously ~~reported.~~reported in Form 10-Q or 8-K filings.

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

	~~Pag~~
~~PART I FINANCIAL INFORMATION~~

~~FORWARD LOOKING STATEMENTS~~	3
	Page
JUMPSTART OUR BUSINESS ~~STARTUS~~STARTUPS ACT DISCLOSURE	3

PART I – FINANCIAL STATEMENTS	54

ITEM 1. FINANCIAL STATEMENTS	54

Condensed Consolidated Balance Sheets at ~~September 30, 2017 (Unaudited)~~March 31, 2020 and December 31, ~~2016~~2019 (unaudited)	54

Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (unaudited)	5

Condensed Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2020 and 2019 (unaudited)	6

Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 (unaudited)	7

Notes to Condensed Consolidated Financial Statements (unaudited)	8

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS	2021

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2728

ITEM 4. CONTROLS AND PROCEDURES	28

PART II – OTHER INFORMATION	2730

ITEM 1. LEGAL PROCEEDINGS	2930

ITEM 1A. RISK FACTORS	2930

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2930

ITEM 3. DEFAULTS UPON SENIOR SECURITIES	2930

ITEM 4. MINE SAFETY DISCLOSURES	30

ITEM 5. OTHER INFORMATION	2930

ITEM 6. EXHIBITS	3031

SIGNATURES	3132

	●	~~We fail to raise capital;~~
	●	~~We fail to implement our business plan;~~
	●	~~We fail to complete acquisitions or fail to integrate acquired companies successfully;~~
	●	~~We fail to compete at producing cost effective products;~~
	●	~~Market demand does not materialize for compost and manufactured soils;~~
	●	~~The availability of additional capital at reasonable terms to support our business plan;~~
	●	~~Economic, competitive, demographic, business and other conditions in our markets;~~
	●	~~Changes or developments in laws, regulations or taxes;~~
	●	~~Actions taken or not taken by third-parties, including our suppliers and competitors;~~
	●	~~The failure to acquire or the loss of any license or patent;~~
	●	~~The failure to obtain or loss of a permit or operating license;~~
	●	~~Changes in our business strategy or development plans;~~
	●	~~The availability and adequacy of our cash flow to meet our requirements; and~~
	●	~~Other factors discussed under the section entitled “RISK FACTORS” in previous filings or elsewhere herein.~~

	●	the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1.0 billion or more;

	●	the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement;

	●	the date on which the issuer has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or

	●	the date on which the issuer is deemed to be a “large accelerated filer,” as defined in Section 240.12b-2 of the Exchange Act.

	●	Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires evaluations and reporting related to an issuer’s internal controls;

	●	Section 14A(a) of the Exchange Act, which requires an issuer to seek shareholder approval of the compensation of its executives not less frequently than once every three years; and

	●	Section 14A(b) of the Exchange Act, which requires an issuer to seek shareholder approval of its so-called “golden parachute” compensation, or compensation upon termination of an employee’s employment.

	September 30,			December 31,			March 31,			December 31,
	2017			2016			2020			2019
	(unaudited)
ASSETS

CURRENT ASSETS
Cash	$	671,540		$	3,330		$	664		$	478
Notes receivable		100,000			-
Prepaid expenses		-			8,753
Prepaid expenses and other assets								3,416			7,665
TOTAL CURRENT ASSETS		771,540			12,083			4,080			8,143

PROPERTY AND EQUIPMENT, NET		620			6,732

OTHER ASSETS
Licensing rights in Cyclone, net		-			69,271
Total other assets		-			69,271

TOTAL ASSETS	$	772,160		$	88,086		$	4,080		$	8,143

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	67,201		$	798,444		$	290,608		$	240,948
Accrued payroll and related expenses								76,765			-
Accrued bonus								150,000			150,000
Notes payable - related party								936,173			788,500
Accrued interest - related party								28,507			15,426
Debentures		165,000			165,000			165,000			165,000
Derivative liabilities		-			213,042
Notes payable		150,000			183,000
Notes payable - related party		-			107,567
Capitalized lease obligations		-			1,586
Deferred revenue and license deposits		10,064			310,064
Convertible bridge notes, at fair value								2,539,968			2,440,090
TOTAL CURRENT LIABILITIES		392,265			1,778,703			4,187,021			3,799,964

Convertible bridge notes, at fair value		2,360,000			-			34,032			32,910

TOTAL LIABILITIES		2,752,265			1,778,703			4,221,053			3,832,874

Redeemable convertible preferred stock - Series A; $0.0001 par value, 1,500 designated Series A, 600 shares issued and outstanding (liquidation preference of $666,871)		644,639			513,729
Redeemable convertible preferred stock - Series A; $0.0001 par value, 1,500 designated Series A, 600 shares issued and outstanding (liquidation preference of $756,921)								756,921			748,604

Commitments and Contingencies (Note 10)

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value; 5,000,000 shares authorized, no shares issued and outstanding		-			-			-			-
Common stock, $0.0001 par value, 100,000,000 shares authorized, 48,422,386 and 29,684,191 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		4,842			2,968
Common stock, $0.0001 par value, 300,000,000 shares authorized, 56,997,460 and 51,997,460 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively								5,699			5,199
Additional paid-in capital		6,063,747			4,659,575			6,536,186			6,470,676
Subscription receivable		(3,787	)		(3,787	)
Deferred stock-based compensation								(29,167	)		-
Accumulated deficit		(8,689,549	)		(6,863,102	)		(11,486,612	)		(11,049,210	)
TOTAL STOCKHOLDERS’ DEFICIT		(2,624,748	)		(2,204,346	)		(4,973,894	)		(4,573,335	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	772,160		$	88,086		$	4,080		$	8,143

	For the three months ended						For the nine months ended						For the three months ended March 31,
	September 30,						September 30,						2020			2019
	2017			2016			2017			2016

REVENUES	$	17,953		$	-		$	55,933		$	40,000
COST OF REVENUES		20,187			-			48,269			7,172
Gross profit (loss)		(2,234	)		-			7,664			32,828
REVENUES-RELATED PARTY													$	174,999		$	173,810

EXPENSES
Payroll		72,355			70,393			187,117			512,561
Payroll and related expenses														314,670			565,073
Professional fees		217,352			176,771			770,480			692,416			98,223			140,029
Research and development		-			43,154			-			355,884
General and administrative		39,881			75,991			129,301			166,492			85,426			61,670
Total Expenses		329,588			366,309			1,086,898			1,727,353			498,319			766,772

LOSS FROM OPERATIONS		(331,822	)		(366,309	)		(1,079,234	)		(1,694,525	)		(323,320	)		(592,962	)

OTHER INCOME (EXPENSE)
Financing costs, including interest		(109,220	)		(69,172	)		(245,779	)		(181,425	)
Gain (loss) on extinguishment of liabilities		98,575			-			456,720			(31,696	)
Financing costs including interest														(145,439	)		(141,126	)
Change in fair value of convertible bridge notes		205,793			-			(419,484	)		-			31,357			250,188
Change in fair value of derivative liabilities		-			47,872			-			724,415
ETS transaction costs		(150,000	)		-			(150,000	)		-
Loss on equity method investment														-			(21,588	)
Total Other Income (Expense)		45,148			(21,300	)		(358,543	)		511,294			(114,082	)		87,474

LOSS BEFORE INCOME TAXES		(286,674	)		(387,609	)		(1,437,777	)		(1,183,231	)		(437,402	)		(505,488	)

INCOME TAXES		-			-			-			-			-			-

NET LOSS		(286,674	)		(387,609	)		(1,437,777	)		(1,183,231	)		(437,402	)		(505,488	)

PREFERRED STOCK
Series A convertible contractual dividends		(9,074	)		(9,074	)		(26,926	)		(26,844	)		(8,317	)		(8,877	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(295,748	)	$	(396,683	)	$	(1,464,703	)	$	(1,210,075	)	$	(445,719	)	$	(514,365	)

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS:
BASIC AND DILUTED	$	(0.00	)	$	(0.01	)	$	(0.03	)	$	(0.04	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED													$	(0.01	)	$	(0.01	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
BASIC AND DILUTED		48,422,386			29,105,669			43,793,353			28,028,380
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED														56,108,571			51,997,460

									Additional			Deferred						Total
	Preferred Stock				Common Stock				Paid In			Stock-based			Accumulated			Stockholders’
	Shares		Value		Shares		Value		Capital			Compensation			Deficit			Deficit

Balance, December 31, 2018		-		-		51,997,460	$	5,199	$	6,390,961		$	-		$	(10,367,231	)	$	(3,971,071	)

Stock-based compensation for services		-		-		-		-		115,714			-			-			115,714

Series A, preferred stock contractual dividends		-		-		-		-		(8,876	)		-			-			(8,876	)

Net loss period ended March 31, 2019		-		-		-		-		-			-			(505,488	)		(505,488	)

Balance, March 31, 2019		-		-		51,997,460	$	5,199	$	6,497,799		$	-		$	(10,872,719	)	$	(4,369,721	)

Balance, December 31, 2019		-		-		51,997,460	$	5,199	$	6,470,676		$	-		$	(11,049,210	)	$	(4,573,335	)

Stock-based compensation for services		-		-		5,000,000		500		49,500			(29,167	)		-			20,833

Stock-based compensation expense and stock option modification		-		-		-		-		24,327			-			-			24,327

Series A, preferred stock contractual dividends		-		-		-		-		(8,317	)		-			-			(8,317	)

Net loss period ended March 31, 2020		-		-		-		-		-			-			(437,402	)		(437,402	)

Balance, March 31, 2020		-		-		56,997,460	$	5,699	$	6,536,186		$	(29,167	)	$	(11,486,612	)	$	(4,973,893	)

	For the three months ended March 31
	2020			2019

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(437,402	)	$	(505,488	)
Adjustments to reconcile net loss to net cash provided by (used in) operations:
Depreciation		-			133
Loss on equity investment		-			21,588
Stock-based compensation for services		20,833			115,714
Stock-based compensation and stock option modification		24,327			-
Change in fair value of convertible bridge notes		(31,357	)		(250,188	)
Amortization of debt issuance costs		1,250			1,250
Paid-in-kind interest - convertible bridge notes		131,107			138,938
Accrued interest - related party		13,082			-
Changes in operating assets and liabilities
Decrease (increase) in prepaid expenses and other current assets		4,249			(3,387	)
Increase in accounts payable and accrued expenses		49,660			149,075
Increase in accrued payroll and related expenses		76,765			-
Increase in contract liabilities - related party		-			375,190
Net cash provided by (used in) operating activities		(147,486	)		42,825

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable - related party		147,672			62,500
Net cash provided by financing activities		147,672			62,500

NET INCREASE IN CASH		186			105,325

CASH - Beginning of period		478			160,035

CASH - End of period	$	664		$	265,360

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Payment of interest in cash	$	-		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Investment in unconsolidated investee	$	-		$	21,588
Accrual of contractual dividends on Series A convertible preferred stock	$	8,317		$	8,876

	September 30, 2017			December 31, 2016
Furniture and Computers	$	1,328		$	1,328
Shop Equipment		-			9,540
Total		1,328			10,868
Accumulated depreciation		(708	)		(4,136	)
Net property and equipment	$	620		$	6,732

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

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

	Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

	Fair value at
	September 30, 2017		Level 1		Level 2		Level 3
Convertible bridge notes	$	2,360,000	$	-	$	-	$	2,360,000
Total	$	2,360,000	$	-	$	-	$	2,360,000

	Fair value at
	March 31, 2020		Level 1		Level 2		Level 3
Convertible Bridge Notes	$	2,574,000	$	-	$	-	$	2,574,000
Total	$	2,574,000	$	-	$	-	$	2,574,000

	Fair value at
	December 31, 2019		Level 1		Level 2		Level 3
Convertible Bridge Notes	$	2,473,000	$	-	$	-	$	2,473,000
Total	$	2,473,000	$	-	$	-	$	2,473,000

	Preferred stock embedded conversion feature			Anti-dilution provision in common stock warrants included with preferred stock			Debenture embedded conversion feature			Anti-dilution provision in common stock warrants included with debentures			Convertible Bridge Notes			Total
Fair value, December 31, 2016	$	123,266		$	52,904		$	25,884		$	10,988		$	-		$	213,042
Reclassification of derivatives to equity upon adoption of ASU 2017-11		(123,266	)		(52,904	)		(25,884	)		(10,988	)		-			(213,042	)
Issuances of debt		-			-			-			-			1,841,908			1,841,908
Accrued interest		-			-			-			-			111,108			111,108
Unamortized debt issuance costs		-			-			-			-			(12,500	)		(12,500	)
Net unrealized loss on convertible bridge notes		-			-			-			-			419,484			419,484
Fair value, September 30, 2017	$	—		$	—		$	—		$	—		$	2,360,000		$	2,360,000

	~~Years~~
~~Furniture and equipment~~		7
~~Computers~~		5

	Three Months Ended March 31, 2020
Fair value, December 31, 2019	$	2,473,000
Accrued interest		131,107
Amortization of debt issuance costs		1,250
Net unrealized gain on convertible bridge notes		(31,357	)
Fair value, March 31, 2020	$	2,574,000

	Number of Warrants		Exercise price per share		Average remaining term in years
Warrants issued in connection with issuance of Preferred Stock		1,153,845	$	0.50		0.85
Warrants issued in connection with a services contract		1,000,000	$	0.20		0.23
Warrants issued in connection with a services contract		1,000,000	$	0.35		0.23

	Number Outstanding		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (Years)
Balance, December 31, 2016		6,115,480	$	0.21		6.1
Options issued		800,000	$	0.21		9.4
Options exercised		—		—		—
Options cancelled		—		—		—
Balance, September 30, 2017		6,915,480	$	0.21		5.9

	Number Outstanding		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (Years)
Balance, December 31, 2019		8,515,480	$	0.12		4.5
Options issued		3,200,000		0.02		9.8
Balance, March 31, 2020		11,715,480		0.07		6.5

		Exercisable/ Vested Options Outstanding				Weighted Avg. Exercise Price				Weighted Avg. Remaining Contractual Life (Years)
Balance, September 30, 2017			5,985,480			$	0.21				5.7

	Nine Months Ended September 30, 2017
Risk free interest rate		1.09	%
Expected volatility		101.2	%
Expected dividend yield		0	%
Expected term in years		5.25
Average value per options	$	0.12

	Three Months Ended March 31, 2020
Risk free interest rate		1.610	%
Expected volatility		149.67	%
Expected dividend yield		-	%
Expected term in years		5.0

	●	We fail to raise capital;
	●	We fail to implement our business plan;
	●	We fail to complete acquisitions or fail to integrate acquired companies successfully;
	●	We fail to compete at producing cost effective products;
	●	Market demand does not materialize for compost and manufactured soils;
	●	The availability of additional capital at reasonable terms to support our business plan;
	●	Economic, competitive, demographic, business and other conditions in our markets;
	●	Changes or developments in laws, regulations or taxes;
	●	Actions taken or not taken by third-parties, including our suppliers and competitors;
	●	The failure to acquire or the loss of any license or patent;
	●	The failure to obtain or loss of a permit or operating license;
	●	Changes in our business strategy or development plans;
	●	The availability and adequacy of our cash flow to meet our requirements;
	●	Economic and other conditions caused by the Covid-19 or other pandemics; and
	●	Other factors discussed under the section entitled “RISK FACTORS” in previous filings or elsewhere herein.

●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;

●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

●	~~Management is understaffed~~Due to ~~perform~~ the ~~necessary period-end~~size of the Company and available resources, there are limited personnel to assist with the accounting and financial reporting ~~including preparation of the required financial statements and related disclosures,~~function, which results in a ~~timely manner.~~lack of segregation of duties.

●	The Company has experienced significant turnover in the role that oversees the day-to-day accounting and financial reporting functions, which increases the risk of a material misstatement in the financial statements.

●	The Company lacks knowledge and expertise with accounting for stock -based compensation arrangements.

To whom		Date		Number of shares				Consideration
Service Provider		1/17/2020			5,000,000			$	50,000

	(a)	There was no information required to be disclosed in a report on Form 8-K during the period that the Company failed to report.

	(b)	None, not applicable.

Exhibit
Number		Description

31.1		302 Certification of Kevin M. Bolin, CEO

31.2		302 Certification of ~~Peter Dunleavy, Principal~~Kevin M. Bolin, Chief Accounting Officer

32		906 Certification

			Q2EARTH INC.

Date:	~~11/14/17~~ 5/20/20	By:	/s/ Kevin M. Bolin
		Kevin M. Bolin
		Chief Executive Officer and Chairman

Date: 5/20/20	By:	/s/ Kevin M. Bolin
		Kevin M. Bolin
			Chief ~~Executive Officer and Chairman~~

~~Date:~~	~~11/14/17~~	~~By:~~	~~/s/ Peter Dunleavy~~
			~~Peter Dunleavy~~
			~~Principal~~ Accounting Officer