During 2017, the Company sold one and purchased two Racecars for stock. See Note 7.

Depreciation expense was $3,051 and $834 for the three months ended June 30, 2018 and 2017, respectively. Depreciation expense was $5,551 and $10,834 for the six months ended June 30, 2018 and 2017, respectively.

NOTE 5. LINES OF CREDIT

On October 15, 2012, the Company entered into a revolving line of credit agreement with TVP Investments, LLC, a Georgia Limited Liability Company in the amount up to $500,000. The line of credit is unsecured, bears interest of 10% and has a maturity date of December 31, 2019. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the balance of the line of credit was $75,000. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the Company had accrued interest on this line of credit in the amounts of $28,043$33,668 and $22,418,$29,918, respectively.

The Company also has a business line of credit up to $3,000 with WellsWell Fargo bank. The line of credit is unsecured with a variable interest rate of approximately 18.0%. The balance owed as of September 30, 2017 and December 31, 2016 was zero.No amounts have been drawn on this line.

NOTE 5.6. STOCKHOLDERS’ EQUITY

There are 10,000,000 shares of preferred stock authorized with a $.001 par value, none of which no shares are outstanding.

There are 190,000,000 shares of common stock authorized with a par value of $.0001$0.001 per share.

There were no issuancesshare, of preferred or common stock during the three months ended Marchwhich 13,929,581 shares are issued and outstanding at June 30, 2018 and December 31, 2017.

During

In January 2017, the Company entered into a 36-month warehouse lease with Rick Ware Leasing, LLC, payable in 1,200,000 shares of the Company’s common stock (400,000 shares annually),. As of December 31, 2017, 400,000 of which wereshares had been issued in July, 2017.under this agreement. See Note 67 for equity transactions with related parties.

There were no issuances of preferred or common stock during the six months ended June 30, 2018.

NOTE 6.7. RELATED PARTY TRANSACTIONS

Consulting expense to related parties

On January 1, 2015, the Company extended for three years a previous consulting agreement with General Pacific Partners, LLC a company owned and operated by the CEO and majority shareholder to provide consulting services in the motor sports marketing industry. The consulting agreement requires a $5,000 monthly fee and can be terminated by either party pursuant to a 60 day60-day notice. On July 3,During the three months ended June 30, 2018 and 2017, $210,000the Company incurred related party consulting expense of $15,000, respectively. During the accrued fees were converted into 2,100,000 sharessix months ended June 30, 2018 and 2017, the Company incurred related party consulting expense of stock at a value of $.10 per share.$30,000, respectively. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the Company had an accrued payable balance due to this related party of $15,000$60,000 and $180,000, respectively. During the three and nine months ended September 30, 2017 and 2016, the Company incurred related party consulting expense of $15,000 and $45,000$30,000, respectively.

Other related party transactions

On March 25, 2017, the Company transferred a Ford Mustang to the shareholder from whom it was previously purchased from in exchange for 833,333 shares of common stock, which were cancelled.

On May 25, 2017, the Company purchased two race cars from the same shareholder in exchange for 333,333 shares of common stock. The race cars were valued at $50,000.

On July 1, 2017, the Company issued 400,000 shares of common stock to Rick Ware Leasing, LLC under the terms of a lease agreement for warehouse space.

On April 25, 2017, the Company entered into a sponsorship agreement with Dashub, Inc., a company for whom the majority shareholder serves on the board of directors. The agreement was for $81,000, of which $6,000 was paid at signing. The remaining $75,000 receivable was converted to a note bearing interest at 8% maturing in October 2018. The note can be converted into 75,000 shares of Dashub, Inc. any time prior to the maturity date. As part of the agreement, the Company received warrants to purchase 24,999 shares of Dashub, Inc. at $1.00 per share. The warrants expired April 30, 2018.

Due to related parties

On October 1, 2009, the Company entered into a line of credit agreement for up to $600,000 with a related party owned and operated by the CEO and majority shareholder that also provides motor sports marketing industry consulting services to the Company as needed. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. The loan bears interest at eight percent (8%)8% per annum. On July 3, 2017, $200,000 of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the Company owed $108,164$131,164 and $183,164,$122,164, respectively, in operating advances fromto this related party. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the Company had accrued interest on this line of credit in the amounts of $26,816$31,046 and $18,354,$28,026, respectively.

On August 5, 2013, the Company entered into a line of credit agreement for up to $500,000 with a related party owned and operated by the CEO and majority shareholder. On January 1, 2017 the line of credit was extended to $600,000. Under the agreement, the Company receives operating fund advances and reimbursement for expenses incurred on behalf of the Company. On July 3, 2017, $200,000The line bears interest at 8% per annum and has a maturity date of the balance due was converted into 2,000,000 shares of stock at a value of $.10 per share.August 1, 2020. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the Company owed $50,680 and $49,647, and $332,647, respectively, in operating advances to this related party. As of SeptemberJune 30, 2017,2018, and December 31, 2016,2017, the Company had accrued interest on this line of credit in the amounts of $78,707$81,790 and $67,040,$79,708, respectively.

Due from related parties

In April 2017, the Company entered into a sponsorship agreement with a client, a privately owned company. The majority shareholder of the Company is the chairman of the board of directors of the client. The Company recognized $81,000 income in the current period. Of this amount, $6,000 was paid in cash and $75,000 was converted to a note receivable bearing interest at 8% maturing October 2018. The principal balance of the receivable, plus accrued interest, may be converted into shares of common stock of the client at the price of $1.00 per share. The option is exercisable no later than the maturity date of the note. In addition to the note, the Company received warrants to purchase up to 24,999 shares of common stock of the client at $1.00 per share. The warrants expire April 30, 2018.

Other related party transactions

On March 25, 2017, the Company transferred a Ford Mustang to the shareholder from whom it was purchased in exchange for 833,333 shares of common stock, which were cancelled.

On May 25, 2017, the Company purchased two racecars from the same shareholder in exchange for 333,333 shares of common stock. The racecars were valued at $50,000.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSManagement’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENT NOTICE

This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

Overview

This section contains forward-looking statements that involve risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The following discussion should be read in conjunction with the financial statements and notes thereto included herein.

We are a small auto competition and event management business that has participated primarily in NASCAR and IMSA sanctioned events. We utilize our racecars to provide marketing and branding services to client advertisers desiring to use our racecars to market their product or service by having our vehicles carry their corporate brand. We have conducted limited operations to date.

Election under JOBS Act of 2012

The Company has chosen to opt-in and make use of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act of 2012. This election is irrevocable. If we choose to adopt any accounting standard on the public company time frame we would be required to adopt all subsequent accounting standards on the public company time frame.

Jumpstart Our Business Startups Act

In April, 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things:

Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;

Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934;

Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;

Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.

In general, under the JOBS Act a company is an emerging growth company if its initial public offering ("IPO") of common equity securities was affected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of

The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.

Financial Disclosure.The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:

However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.

The JOBS Act also exempts the Company's independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment, except as otherwise required by SEC rule.

The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company's accounting firm or for a supplemental auditor report about the audit.

Internal Control Attestation.The JOBS Act also provides an exemption from the requirement of the Company's independent registered public accounting firm to file a report on the Company's internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company's internal control over financial reporting.

Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.

Other Items of the JOBS Act.The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO.

Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.

Election to optOpt Out of Transition Period.Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.

The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period and will “opt-in” and make use of the transitional period.

Off-balance sheet arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Significant Accounting Policies

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 of the Notes to condensedConsolidated Financial Statements describes the significant accounting policies used in the preparation of the condensedconsolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations. We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:

Use of Estimates– These financial statements have been prepared in accordance with accounting principles generally accepted in the United States and, accordingly, require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, our management has estimated the expected economic life and value of our licensed technology, our net operating loss for tax purposes and our stock, option and warrant expenses related to compensation to employees and directors, consultants and investment banks. Actual results could differ from those estimates.

Cash and Equivalents– We maintain our cash in bank deposit accounts, which at times, may exceed federally insured limits. We have not experienced any losses in such account.

Revenue Recognition– In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers, effective for public business entities with annual reporting periods beginning after December 15, 2017. This new revenue recognition standard (new guidance) has a five step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The Company follows paragraph 605-10-S99-1impact of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizableCompany’s initial application of ASC 606 did not have a material impact on its financial statements and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.disclosures.

MuchThe majority of revenues are from consulting services provided at events which range from one day to one week in length. The revenues from these events are recognized upon completion of the contracted services. In the event that the Company’s revenues are for services provided under contracts greater than one month in length, the contracts will be billed in total at the onset of the contact period, and to the extent that billings exceed revenue earned, the Company will record such amount as deferred revenue until the revenue is earned. We recognize revenue on these contracts in the period the services are provided under the contract. Expenses associated with providing the services are recognized in the period the services are provided which coincides with when the revenue is earned.

Our revenues, to date, havehas been derived from advertising, and from race purses. Revenue is recognized on an accrual basis as earned under contract terms. The $101,000 earned in related party revenue was part of business development, race event sponsorship and administrative services provided by the company and Mr. O’Connell.

Property and equipment–Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company uses a 5-year5 year life for racecars and equipment, 7 years for furniture and fixtures.

Intangible and Long-Lived Assets–We follow FASB ASC 360-10-35 which has established a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-livedlong lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell. During the periodsperiod ended December 31, 2016 and September 30, 2017 no impairment losses were recognized.

Stock Based Compensation–We recognize expenses for stock-based compensation arrangements in accordance with provisions of Accounting Standards Codification 714.718. Accordingly, compensation cost is recognized for the excess of the estimated fair value of the stock at the grant date over the exercise price, if any.instrument issued . For equity instruments issued to non-employees, the estimated fair value of the equity instrument is recorded on the earlier of the performance commitment date or the date the services required are completed.

Plan of Operations

RC-1, Inc. (the “Company”), was incorporated in the State of Nevada on May 14, 2009. The Company is a motorsports marketing business focused primary in road racing events in North America utilizing NASCAR type competition equipment. The Company is currently considered to be in the development stage, and has generated only limited revenues from its activities in the racing business.

We will continue to focus in “Road Racing” motorsports events organized by several motorsports sanctioning bodies such as The National Association for Stock Car Auto Racing ("NASCAR"), and The International Motorsports Association ("IMSA") and the Sports Car Vintage Racing Association (SVRA).

In addition, we intend to continue to compete in other regional NASCAR type modelthe Toyota Southwest Superlate Model Series, in both SVRA and the GAAS series in an effort to promote our business and brand in the western United States.

Going Concern

As of June 30, 2018, RC-1, Inc. had an accumulated deficit of $3,265,764, and a working capital deficiency of $280,758. These factors raise substantial doubt about our ability to continue as a going concern.

Management expects to raise $300,000 in capital through the issuance of debt and equity and believes it will be able to raise sufficient capital over the next twelve months to finance operations. However, there can be no assurances that the Company will be successful in this regard or will be able to eliminate its operating losses. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.

Management estimates the cost of operating the business through June 30, 2019 will require additional capital of up to Three Hundred Thousand dollars ($300,000) consisting of: $20,000 for registration and licenses required for entry in sanctioned racing events; $20,000 for travel and lodging; $20,000 for marketing and branding; $30,000 for legal and accounting; $15,000 for engineers and consultants; $15,000 for parts, $90,000 for engine and transmission leases. $50,000 for fuels and tires; $10,000 for racecar transporter travel; $20,000 for debt service of all Company notes payable; and $10,000 in airfare and rental cars.

The Company intends to hold discussions with existing shareholders, new prospective shareholders and various lenders in pursuing the capital we need for the upcoming twelve months of operations. Additionally, the Company may elect to draw down additional proceeds from its line of credit with General Pacific Partners, LLC and TVP Investments, LLC, Inc. There can be no assurance that we will be able to raise any additional equity or debt capital.

The Company’s capital requirements consist of general working capital needs, scheduled principal and interest payments on debt when required, obligations, and capital expenditures. The Company’s capital resources consist primarily of cash generated from proceeds through the issuances of common stock. At June 30, 2018, the company had cash of approximately $45,200.

Result of Operations

Three Months Ended SeptemberJune 30, 20172018 Compared to Three Months Ended SeptemberJune 30, 20162017

Revenues

The Company had $20,000 in related partyrecognized no revenue during the three months ended SeptemberJune 30, 2017 compared to no2018 and $81,000 revenue for the same period ended September 30, 2016.in 2017. The Company did not recognize any racing event related revenue due to the fact that most of the racing events scheduled for 2018 occur after June of 2018.

Operating Expenses

For the three months ended SeptemberJune 30, 20172018 operating expenses were $82,917$41,851 compared to $65,435$75,034 in 2017 for the same perioda decrease of $33,183. The decrease is due to a decrease in 2016consulting to related parties to $15,000 from $45,500 for an increasea difference of $17,482. The increase was primarily$30,500 and a resultdecrease in professional fees to $8,800 from $13,040 for a difference of the increase in race expenses to $39,564 from $15,003 for the same period in 2016.$4,240.

Interest and Financing Costs

Interest expense, net of interest income, was $2,367$3,097 for the three months ended SeptemberJune 30, 20172018 compared to $10,888$9,644 in the three months ended SeptemberJune 30, 2016. Interest2017. The reduction in the interest expense was reduced forrelated directly to a reduction in the quarter due tooverall debt of the reduction of our long term notes payable, which were settled via issuances of our common stock.

Net Income (Loss)

The Company incurred losses of $65,284 for the three months ended September 30, 2017 compared to $76,323 during the three months ended September 30, 2016 due to the factors discussed above.company.

NineNet Loss

The Company incurred losses of $44,948 in the three months ended June 30, 2018 compared to $3,678 during the three months ended June 30, 2017, due to the factors discussed above.

Result of Operations

Six Months Ended SeptemberJune 30, 20172018 Compared to NineSix Months Ended SeptemberJune 30, 20162017

Revenues

The Company realized $155,000 inrecognized no revenue during the ninesix months ended SeptemberJune 30, 2017 compared to no2018 and $135,000 revenue for the nine months ended September 30, 2016.same period in 2017. The Company did not recognize any racing event related revenue due to the fact that most of the racing events scheduled for 2018 occur after June of 2018.

Operating Expenses

For the ninesix months ended SeptemberJune 30, 20172018 operating expenses were $209,980$110,621 compared to $143,475$127,064 in 2017 for the same perioda decrease of $16,443. The decrease is due to a decrease in 2016 for an increase of $66,505.  The increase was a result of an increase in race expenses, which increased to $40,178 from $15,003 for an increase of $25,175, consulting to related parties which increased to $77,250$36,533 from $45,000$60,500 for an increasea difference of 32,250,$23,967 and a decrease in general and administrative which increasedfees to $59,524$35,551 from $33,095$40,909 for an increasea difference of $26,429.$5,358.

Interest and Financing Costs

Interest expense, net of interest income, was $23,142$5,835 for the ninesix months ended SeptemberJune 30, 20172018 compared to $31,343$20,775 in the ninesix months ended SeptemberJune 30, 2016. Interest2017. The reduction in the interest expense was reduced forrelated directly to a reduction in the quarter due tooverall debt of the reduction of our long-term notes payable, which were settled via issuances of our common stock.company.

Net Income (Loss)Loss

The Company incurred losses of $78,122 for$116,456 in the ninesix months ended SeptemberJune 30, 20172018 compared to $174,818$12,839 during the ninesix months ended SeptemberJune 30, 20162017, due to the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustment relating to recoverability and classification of recorded amounts of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company has a minimum cash balance available for payment of ongoing operating expenses and has incurred losses since inception and anticipates future losses in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Its continued existence is dependent upon its ability to continue to execute its operating plan and to obtain additional debt or equity financing. There can be no assurance the necessary debt or equity financing will be available, or will be available on terms acceptable to the Company.

The Companycompany had $52,918$45,192 in cash at September 30, 2017June 2018, with availability on our related party lines of credit with General Pacific Partners, LLC and DEVCAP Partners, LLC of $491,836 and $450,353, respectively, and our business line of credit with Wells Fargo Bank of $3,000. We had a working capital deficit of $284,903 at September$280,758. As of December 31, 2017, the Company had cash of $60,342 with a working capital deficit of $189,873.

Cash Flows for the Six Months Ended June 30, 2018 Compared to the Six Months Ended June 30, 2017.

Operating activities

During the ninesix months ended SeptemberJune 30, 2017,2018, we used $38,982$25,183 in operating activities compared to $44,460$2,592 during the ninesix months ended SeptemberJune 30, 2016, a difference2017, an increase of $5,478.$22,591. The decreaseincrease between the two periods was largely due to a lower net loss.decrease in revenue during the period.

Investing activities

We neither generated nor used cash flow in investing activities during the six months ended June 30, 2018 or 2017.

Financing activities with Related Parties

During the six months ended June 30, 2018, we generated $10,033 from financing activities compared to $7,250 used during the six months ended June 30, 2017, an increase of $17,283. During the six months ended June 30, 2018, we repaid $66,000 of advances from a related party, compared to $120,000 repaid during the six months ended June 30, 2017.

Investing activities

We neither generated nor used cash flow in investing activities during the nine months ended September 30, 2017 and the same for the period in 2016.

Financing activities

During the nine months ended September 30, 2017, we generated $42,000 from financing activities compared to $40,800 for the same period ended September 30, 2016, an increase of $1,200.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.

As a “smaller reporting company,” we are not required to provide the information under this Item 3.

ITEM 4. Controls and Procedures

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

We recognize 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 and procedures may deteriorate.

Management of the Company conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2017, based on the framework in Internal Control –Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO II Framework”). Based on management’s assessment in accordance with the criteria in the COSO II Framework, our management concluded that our internal control over financial reporting was not effective as of September 30, 2017.

Management is aware of the following material weaknesses (a material weakness is a 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 annual or interim financial statements will not be prevented or detected and corrected on a timely basis) in the Company’s internal control over financial reporting:

Control Environment

Inadequate Policies and Procedures: Based on management’s review of key accounting policies and procedures, our management determined that such policies and procedures were inadequate as of September 30, 2017. Management identified certain policies and procedures as inadequate regarding the design of the control and formal written documentation.

Segregation of Duties: We did not maintain adequate segregation of duties related to job responsibilities for initiating, authorizing, and recording of certain transactions as September 30, 2017 due to the small size of our accounting teams. We do not have sufficient personnel to provide adequate risk assessment functions.

An effective audit committee working closely with the executive management team mitigates the risks that significant transactions are entered into without approval by those charged with governance. We currently have not established an audit committee.

Control Activities

Testing of Internal Controls: The Company’s accounting staff is relatively small and the Company does not have all the required infrastructure for meeting the demands of being a U.S. publically reporting company. As a result we have identified deficiencies in our internal controls within our key business processes, particularly with respect to the design of quarterly accounting, financial statements close, consolidation, and external financial reporting procedures. Management believes there are entity level controls that are effective within our key business processes. However, certain of these processes could not be formally tested because of lack of documentation and/or process design details.

Information and Communication

Monitoring

Internal Control Monitoring: As a result of our limited financial personnel and ineffective controls (both preventative and detective) management’s ability to monitor the design and operating effectiveness of our internal controls is limited. Accordingly, management’s ability to timely detect, prevent and remediate deficiencies and potential fraud risks is inadequate.

These material weaknesses impede the ability of management to adequately oversee our internal control over financial reporting on a timely basis. Management intends to continue focusing its remediation efforts in the near term on providing best practices training to our audit committee. In addition, we will endeavor to design revised accounting and financial reporting policies and procedures that will help ensure that adequate internal controls over financial reporting are met. Additionally, these revised procedures will be formally documented and procedures will focus on transaction processing, period-end account analyses and additional review and monitoring procedures. We plan to periodically assess the need for additional accounting resources as business develops and resources permit. Management also is committed to taking further action by implementing enhancements or improvements as resources permit.  Notwithstanding the material weaknesses discussed above, our management has concluded that the financial statements included in this Report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented in conformity with generally accepted accounting principles.

Evaluation of disclosure controls and procedures procedures

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting identified below.

As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

This quarterly report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered independent public accounting firm.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurred during the ninesix months ended SeptemberJune 30, 20172018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or material pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

In MayDuring the six months ended June 30, 2018, there were no sale of 2017, the Company acquired a 2003 Laughlin Road Race car formerly used in the NASCAR Busch series and a 2006 Hutch Pagan Super Speedway Truck formerly used in the NASCAR Craftsman Truck Series. Both assets were $25,000 in cash respectively, in which the seller converted the proceeds into the common stock in our Company at .15 cents per share for a total of 333,333 shares issued to the counter party.  

In July of 2017, the board agreed to convert $200,000 in related party long term notes payable from General Pacific Partners, LLC into 2,000,000 shares of the Company's common stock at a cost basis of .10 per share.stock.

In July of 2017, the board agreed to convert $200,000 in related party long term notes payable from DEVCAP Partners, LLC into 2,000,000 shares of common stock at a cost basis of .10 per share.

In July of 2017, the board agreed to convert $210,000 in a related party payable from General Pacific Partners, LLC into 2,100,000 shares of common stock at a cost basis of ..10 per share.

ITEM 3. Default Upon Senior Securities

During the ninesix months ended SeptemberJune 30, 2017,2018, the Company had no senior securities issued and outstanding.

ITEM 4. Mine Safety Disclosures

Not applicable to our Company.

ITEM 5. Other Information None.

None.

ITEM 6. Exhibits

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K

* Filed herewith.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RC-1, Inc.

NovemberAugust 14, 20172018

By:/s/ Kevin O'Connell

Kevin O'Connell

Chief Executive Officer