UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
☒[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2017
or
☐[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number000-55177
000-55177LIBERATED SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 27-4715504 | |
| (State or other jurisdiction | (I.R.S. Employer | |
| of incorporation or organization) | Identification No.) |
| 64055 | ||
| (Address of principal executive offices) | (Zip Code) |
(845) 610-3817
(Registrant'sRegistrant’s telephone number including area code)
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. ☒days [X] Yes ☐ [ ] No
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). ☒ [X] Yes ☐[ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer” and "smaller“smaller reporting company"company” in Rule 12b-2 of the Exchange Act.
| Large | Accelerated | ||
| Non-accelerated | |||
| Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o [ ] No ☒
Indicate the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of the latest practicable date: 21,070,3941,674,635,888 shares of common stock issued and outstanding as of February 9, 2017.
TABLE OF CONTENTS
| Item # | Description | Page Numbers | ||
| 3 | ||||
| 13 | ||||
| 15 | ||||
| 15 | ||||
| 16 | ||||
| 16 | ||||
| ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 16 | ||
| 3 | 16 | |||
| 4 | 16 | |||
| 5 | 16 | |||
| 6 | 16 | |||
| 17 | ||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission ("SEC"(“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as "may," "expect," "believe," "anticipate," "estimate," "project,"“may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or "continue"“continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
| 2 |
2
BALANCE SHEETS
(Unaudited)
| December 31, | September 30, | |||||||
| 2017 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 33,148 | $ | 67,353 | ||||
| Total current assets | 33,148 | 67,353 | ||||||
| Total assets | $ | 33,148 | $ | 67,353 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 154,123 | $ | 133,970 | ||||
| Note payable- JV | 25,000 | |||||||
| Convertible notes payable | 965,276 | 973,086 | ||||||
| Total liabilities | 1,144,398 | 1,107,056 | ||||||
| Stockholders' deficit | ||||||||
| Preferred shares, par value $0.001. 100,000,000 authorized; 10,000,000 issued and outstanding | 10,000 | 10,000 | ||||||
| Common stock, par value $0.001, authorized 2,000,000,000, issued and outstanding 18,711,869 and 14,468,303 as of December 31, 2017 and September 30, 2017, respectively | 18,712 | 14.468 | ||||||
| Additional paid-in capital | 1,814,805 | 1,801,619 | ||||||
| Accumulated deficit | (2,954,768 | ) | (2,865,790 | ) | ||||
| Total stockholders' deficit | (1,111,250 | ) | (1,039,702 | ) | ||||
| Total liabilities and stockholders' (deficit) | $ | 33,148 | $ | 67,353 | ||||
| December 31, 2018 | September 30, 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 44 | $ | 17,978 | ||||
| Total current assets | 44 | 17,978 | ||||||
| Total assets | $ | 44 | $ | 17,978 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | 91,435 | $ | 105,166 | |||||
| Note payable- JV | ||||||||
| Convertible notes payable | 570,355 | 639,795 | ||||||
| Deferred revenue | 5,000 | 5,000 | ||||||
| Total current liabilities | 666,790 | 749,961 | ||||||
| Stockholders’ deficit | ||||||||
| Preferred shares, par value $0.001. 100,000,000 authorized; 10,000,000 issued and outstanding | 10,000 | 10,000 | ||||||
| Common stock, par value $0.001, authorized 2,000,000,000, issued and outstanding 1,598,052,555 and 630,989,121 as of December 31, 2018 and September 30, 2018, respectively | 1,598,051 | 630,988 | ||||||
| Additional paid-in capital | 1,680,334 | 2,513,957 | ||||||
| Accumulated deficit | (3,955,130 | ) | (3,886,928 | ) | ||||
| Total stockholders’ deficit | (666,743 | ) | (731,983 | ) | ||||
| Total liabilities and stockholders’ (deficit) | $ | 44 | $ | 17,978 | ||||
The accompanying notes are an integral part of the unaudited financial statements.
| 3 |
3LIBERATED SOLUTIONS, INC
(f/k/a THE GO ECO GROUP,
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(UNAUDITED)
| Three Months | ||||||||
| 2017 | 2016 | |||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | 68,825 | 362,124 | ||||||
| Loss from operations | (68,825 | ) | (362,124 | ) | ||||
| Other Income(expense) | ||||||||
| Other income | -- | 3 | ||||||
| Note discount fees | -- | (57,800 | ) | |||||
| Interest expense | (20,153 | ) | (41,585 | ) | ||||
| Total other income (expense) | (20,153 | ) | (99,382 | ) | ||||
| Net loss | $ | (88,918 | ) | $ | (461,506 | ) | ||
| Net loss per common share basic and diluted | $ | (0.00 | ) | $ | (0.21 | ) | ||
| Weighted average number of common shares outstanding | 15,296,068 | 2,109,821 | ||||||
| Three Months | ||||||||
| 2018 | 2017 | |||||||
| Operating expenses: | ||||||||
| Selling, general and administrative expenses | $ | 56,934 | $ | 68,825 | ||||
| Loss from operations | (56,934 | ) | (68,825 | ) | ||||
| Other (expense) | ||||||||
| Interest expense | (11,268 | ) | (20,153 | ) | ||||
| Total other (expense) | (11,268 | ) | (20,153 | ) | ||||
| Net loss | $ | (68,202 | ) | $ | (88,978 | ) | ||
| Net loss per common share basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding | 1,125,989,482 | 15,296,068 | ||||||
The accompanying notes are an integral part of the unaudited financial statements.
| 4 |
4LIBERATED SOLUTIONS, INC.
(f/k/a THE GO ECO GROUP,
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(Unaudited)
| 2017 | 2016 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (88,978 | ) | $ | (461,506 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | 4,620 | 275,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | 20,153 | 41,585 | ||||||
| Net cash used in operating activities | (64,205 | ) | (144,421 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Loan to Eco Cab | -- | (182,520 | ) | |||||
| Net cash used in investing activities | -- | (182,520 | ) | |||||
| Cash Flows From Financing Activities: | ||||||||
| Debt issued to JV for funds | 25,000 | -- | ||||||
| Proceeds from issuance of convertible debt | 5,000 | 412,800 | ||||||
| Net cash provided by financing activities | 30,000 | 412,800 | ||||||
| Net change in cash | (34,205 | ) | 85,859 | |||||
| Cash at beginning of period | 67,353 | 1,804 | ||||||
| Cash at end of period | $ | 33,148 | $ | 87,633 | ||||
| Non-Cash Financing Activities: | ||||||||
| Common stock issued for convertible debt conversion | $ | 12,810 | $ | 2,676 | ||||
| 2018 | 2017 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | (68,202 | ) | $ | (88,978 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | — | 4,620 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | (13,732 | ) | 20,153 | |||||
| Net cash used in operating activities | (81,934 | ) | (64,205 | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Debt issued to JV for funds | — | 25,000 | ||||||
| Proceeds from JV termination | 25,000 | — | ||||||
| Proceeds from issuance of convertible debt | 39,000 | 5,000 | ||||||
| Net cash provided by financing activities | 64,000 | 30,000 | ||||||
| Net change in cash | (17,934 | ) | (34,205 | ) | ||||
| Cash at beginning of period | 17,988 | 67,353 | ||||||
| Cash at end of period | 44 | 33,148 | ||||||
| Non-Cash Financing Activities: | ||||||||
| Common stock issued for accrued interest | $ | — | $ | — | ||||
| Common stock issued for convertible debt conversion | $ | 108,440 | $ | 12,810 | ||||
The accompanying notes are an integral part of the unaudited financial statements.
| 5 |
5LIBERATED SOLUTIONS, INC.
(f/k/a THE GO ECO GROUP,
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASISOF PRESENTATION AND ORGANIZATION
The Go Eco Group (formally Liberated Energy), Inc. (the "Company"“Company”), formerly known as Mega World Food Holdings Company is a Nevada corporation formed on September 14, 2010.
On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately held corporation formed under the laws of the State of Delaware on July 1, 2010, acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power Corporation returned to treasury its 24,500,000 shares it acquired from the Company'sCompany’s shareholders. As a result of this transaction, the Company had on January 19, 2013, 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and underwent a 24 for 1 stock split, whereby the Company'sCompany’s outstanding shares increased from 3,000,000 to 72,000,000.
On January 19, 2013, the Company disposed of its wholly-owned subsidiary, Mega World Food Limited (HK). Mega World Food Limited (HK) was incorporated on June 24, 2010 and was in the business of selling frozen vegetables in all areas of the world except China. From inception, Mega World Food Limited (HK) only incurred setting up, formation or organization activities. Upon disposal, the Company ceased these operations and accordingly, the Company'sCompany’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as "discontinued“discontinued operations."
Effective January 19, 2013, the Company'sCompany’s business is the sale of alternative energy products and services.
On February 4, 2015 the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized common shares from 250,000,000 to 900,000,000.
On July 6, 2016, the Company adopted a 1-for-3,500 reverse split of the Company'sCompany’s common stock.
On September 14, 2016, the Company entered into an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company will acquire all outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding shares of the Company with the first closing of the agreement. The foregoing agreement was amended on October 11, 2016 and the Company also entered into an Addendum to the amended agreement. The foregoing agreement and transaction described therein has not been completed as of the date of this report and there is no assurance that the transaction will ever be completed and the Company is contemplating rescinding the agreement and initiating suit against Knori.
On January 27, 2017, the Company reduced the authorized shares of common stock from 10,000,000,000 to 2,000,000,000 and changed the name from Liberated Energy, Inc to The Go Eco Group.
On March 6, 2017, the Company terminated the agreements with Ron Knori and EcoCab based upon breach of contract, fraud, fraudulent inducement, fraud in the factum, negligent misrepresentation, misrepresentation, contractual interference, breach of fiduciary duty, negligence, and conversion, all of which were perpetrated by Ron Knori, individually, and in his capacity as manager of EcoCab.
On December 31, 2017 the Company entered into a joint venture agreement to sell products produced by the Company. The Company will hold a 65% common membership interest for $100 in consideration.
| 6 |
On December 26, 2018 the Company filed an amendment with the Secretary of State of Nevada increasing the authorized shares to 6,000,000,000 from 2,000,000,000 shares of common stock with a par value of $0.001. The authorized shares of preferred shares remained at 10,000,000 with a par value of $0.001
Basis of Presentation
The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months periods ended December 31, 20172018 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2017.2019. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company's 2016Company’s 2017 Annual Report filed with the SEC for yearendyear-end September 30, 2016.
NOTE 2 - GOING CONCERN
As shown in the accompanying financial statements, the Company has a negative working capital of $1,111,250$666,746 and an accumulated deficit of $2,954,768$3,955,130 as of December 31, 2017.2018. The Company'sCompany’s ability to generate net income and positive cash flows is dependent on the ability to grow its operating entity as well as the ability to raise additional capital. Management is following strategic plans to accomplish these objectives, but success is not guaranteed. These factors raise substantial doubt about the Company'sCompany’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The Company maintains its books and records on the accrual basis of accounting. The accompanying financial statements have been prepared on that basis, in which revenues and gains are recognized when earned and expenses and losses are recognized when incurred.
Use of Estimates
The presentation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
7
For the purpose of the statement of cash flows, cash and cash equivalents include all cash balances, which are not subject to withdrawal restrictions or penalties, and highly liquid investments and debt instruments with a maturity of three months or less from the date of purchase.
Fair Value of Financial Instruments
Our short-term financial instruments, including cash, other assets and accounts payable and accrued expenses consist primarily of instruments without extended maturities, the fair value of which, based on management'smanagement’s estimates, reasonably approximate their book value. The fair value of our notes and advances payable is based on management estimates and reasonably approximates their book value based on their current maturity.
| 7 |
Net Loss per Common Share
The Company computes per share amounts in accordance with Statement of Financial Accounting Standards (SFAS) ASC 260, Earnings per Share (EPS). ASC 260 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.
Stock-Based Compensation
The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation ("(“ASC 718-10"718-10”), which requires a fair value measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including restricted stock awards. We estimate the fair value of stock using the stock price on date of the approval of the award. The fair value is then expensed over the requisite service periods of the awards, which is generally the date at which the counterparty'scounterparty’s performance is complete and the related amount recognized in our statements of operations.
Revenue and Cost Recognition
The Company did not generate revenue during the three months periodperiods ended December 31, 20172018 and 20162017 periods. It is the Company'sCompany’s policy that revenue from product sales or services will be recognized in accordance with ASC 605 "Revenue Recognition"“Revenue Recognition”. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management'smanagement’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
Income Taxes
The Company utilizes ASC 740 "Income Taxes"“Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes primarily relate to the recognition of debt costs and stock based compensation expense. The adoption of ASC 740-10 did not have a material impact on the Company'sCompany’s results of operations or financial condition.
NOTE 4 – FAIR VALUE MEASUREMENTS
As defined in (Financial Accounting Standards Board ASC 820), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs 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 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The Company'sCompany’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
| 8 |
Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:
Level 1— Quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level 2— quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.
Level 3— Inputs reflecting management'smanagement’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.
A financial instrument'sinstrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
9NOTE 5- EQUITY
Common
During the three months ended December 31, 2017, the Company issued 3,543,586 shares of common stock with a value of $12,810 for convertible debt.
During the three months ended December 31, 2017, the Company issued 700,000 shares of common stock with a value of $4,620 for service.
During the three months ended December 31, 2018 the Company issued 967,063,434 shares of common stock with a value of $108,440 for convertible debt and accrued interest.
Preferred
On February 2, 2015, the Company issued 10,000,000 shares of Series A Preferred Stock to an officer and director of the Company. Each share of series A preferred has 10,000 votes for all shareholder matters compared to 1 vote for each share of common stock.
On August 15, 2017 the Company’s Board of Directors adopted a resolution authorizing 10,000,000 shares of Series B, no-par value, preferred stock. The Company has not amended its articles of incorporation to reflect this resolution and none of the Series B preferred shares have been issued.
NOTE 6– CONVERTIBLE DEBT
CarebournLG Capital Funding
On November 5,July 13, 2015, the Company issued a Convertible Note to CarebournLG CAPITAL FUNDING, LLC (“LG Capital”), to replace the $41,400 convertible note issued to Eastmore Capital The note matures on July 13, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s stock for the 15 days prior to the conversion
On August 11, 2015, LG Capital’s lawsuit claims the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC (“LG Capital”) for a principle amount of $27,500 with an interest rate of 8% per annum. The note matures on August 11, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s stock for the 15 days prior to the conversion. Per the Company the note was not funded but the Company has accrued the note and interest, totaling $31,843.
| 9 |
On September 8, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC (“LG Capital”) for a principle amount of $27,000 with an interest rate of 8% per annum. The note matures on September 8, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s stock for the 15 days prior to the conversion.
On March 14, 2016, the Company issued a Convertible Note to LG Capital Funding, LP for a principle amount of $28,000$18,000 with an interest rate of 12% per annum. The note matures on August 5, 2016.March 14, 2017. The note is convertible by the holder at a discount of 45% of the lowest trading price of the Company’s stock for the 20 days prior to the conversion.
On May 26, 2016, the Company issued a Convertible Note to LG Capital Funding, LP for a principle amount of $17,000 with an interest rate of 12% per annum. The note matures on March 14, 2017. The note is convertible by the holder at a discount of 50% of the lowest trading price of the Company'sCompany’s stock for the 20 days prior to the conversion.
On September 15, 2017, LG Capital, LLC filed a lawsuit against the Company. The filing alleges that the Company has defaulted on several unpaid loans from LG Capital to the Company with an interest ratethe total claim against the Company of 12% per annum.$297,160 The note matures on September 16, 2016. The noteCompany negotiated in good faith with LG Capital to settle the debt but to no avail. After reviewing the claim filed by LG Capital, it is convertible by the holder at a discountopinion of 50%Company Management that the Company’s outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the lowest trading price of the Company's stock for the 20 days prior to the conversion.
Carebourn Capital LP for a principle amount of $18,000 with net proceeds of $15,000 and with an interest rate of 12% per annum. The note matures on December 11, 2016. The note is convertible by the holder at a discount of 50% of the lowest trading price of the Company's stock for the 20 days prior to the conversion.
On September 7, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principleprincipal amount of $197,363,70 less legal fees of $8,000 with an interest rate of 12% per annum. The note matureswas scheduled to mature on September 7, 20172017.2017 but was extended in 2018 at a principal amount of $172,671. The note is convertible by the holder at a discount of 50% of the average of the lowest three trading priceprices of the Company'sCompany’s stock for the 20 days prior to the conversion.
On October 13,3, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principleprincipal amount of $237,475 less an original discount of $30,975 plus transaction fees of $6,500 for a net advanced of $200,000. The note bears an interest rate of 12% per annum. The note matureswas scheduled to mature on October 3, 2017. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading priceprices of the Company'sCompany’s stock for the 20 days prior to the conversion. On September 15, 2016 $85,000 was returned to Carebourn reducing the principal balance to $115,114.
On December 13, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principleprincipal amount of $98,325 less an original discount of $12,825 for a net advanced of $80,000. The note bears an interest rate of 12% per annum. The note matures on December 13, 2018. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading priceprices of the Company'sCompany’s stock for the 2015 days prior to the conversion.
Due to the default status of the Carebourn Capital notes payable, interest was accrued at an annual interest rate of 22%. The total principal balance owed on the notes at December 31, 2017, the Company owed Carebourn capital $522,510 in principal and2018 is $146,676 plus accrued interest of $94,437 for a total of $616,947.$24,456.
| 10 |
Power Up Lending
On December 13, 2016,January 4, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principleprincipal amount of $77,000 less legal fees of $2,000$35,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on September 28, 2017.October 15, 2018. The note is convertible by the holder at a discount of 48%50% of the average of the lowest three trading priceprices of the Company'sCompany’s stock for the 10 days prior to the conversion.
On August 21, 2017,February 15, 2018, the Company issued a Convertible Note to Crown Bridge PartnersPower Up Lending Group Ltd for a principleprincipal amount of $33,000$38,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on November 30, 2018. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On March 9, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible by the holder at a discount of 42% of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On March 22, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On May 14, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on February 28, 2019. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On November 19, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $25,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on August 30, 2019. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
As of December 31, 2018, the Company owed Power Up lending $82,810 in principal and $7,407 of accrued interest.
Crown Bridge Partners
On August 21, 2017, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on August 21, 2018. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
On January 5, 2017.2018 the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $20,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on January 5, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
On February 16, 2018, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $20,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on February 16, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
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On April 2, 2018, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on April 2, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
The above notes are subject to an additional discounts as follows: (a) 10% discount if the conversion price is equal to or less than $0.025 per share (b) 10% discount if the shares are not deliverable via DWAC (c) 10% discount if the conversion price is equal to or less than $0.01.
As of December 31, 2018, the Company owed Crown Bridge Partners $49,778 in principal and approximately $4,634 in accrued interest.
More Capital
On January 15, 2018, the Company issued a Convertible Note to More Capital, LLC for a principal amount of $18,975 with an interest rate of 10% per annum. The note matures on July 15, 2018. The note is convertible by the holder at a discount of 50% of the average of lowest three trading price of the Company’s stock for the 20 days prior to the conversion. As of December 31, 2018, the Company owed More Capital principal of $18,975 plus interest of $1,893.25.
Redstart Holdings Corp.
On December 20,2018, the Company issued a Convertible Note to Redstart Holdings Corp for a principal amount of $14,000 with an interest rate of 8% per annum with a default rate of 22%. The note matures on October 30, 2019. The note is convertible by the holder at a discount of 48% of the average of lowest three trading price of the Company'sCompany’s stock for the 10 days prior to the conversion
Management has reviewed the terms of the convertible instruments to determine their fair value. After reviewing the characteristic and the value of the conversion, Managementmanagement has determined based on note conversion history that the conversion value is equal or less than par value of the shares used for conversion thus determining that the fair value of the notes is equal to their face value.
Note 7 - LITIGATION
On September 15, 2016, LG Capital, LLC filed a lawsuit against the Company.Company in the County of Kings, in the Supreme Court of the State of New York (index number 516298/2016). The filing alleges that the Company has defaulted on several unpaid loans from LG Capital to the Company with the total claimowing and due including principal and interest of $297,160. The Company has not counter claimed but believes that LG Capital unlawfully attempted to convert some of the loans to common stock of the Company has filed an injunction against the Company of $279,730.56. Thetransfer agent to block LG Capital from such a conversion. In addition, the Company negotiated in good faith with LG Capital to settle the debt but to no avail. After reviewing the claim filedmade by LG Capital, it is the opinion of Company Managementmanagement that the Company's outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company.
On December 21, 2017August 28, 2018, the Trustee for the bankruptcy of EcoCab Portland, LLC (Case No. 17-31000-tmb7) received a judgment against the Company entered into a joint venture agreement to develop, marketfor $179,496 plus interest at $0.0244% per annum. The judgement was filed in the US Bankruptcy Court for the District of Oregon. The Trustee claims the Company unilaterally repaid its note and sell products, services and technology based on a web-enabled light guard system.is claim preference by the Company over other creditors of the same class for the payments. The Company grantedagreed to settle the joint venture an irrevocable royalty free non-exclusive license to use allclaim with a one-time payment of $40,000 which is awaiting a decision by the trustee and confirmation of the Company's direct and/or licensed intellectual property necessary for the joint venture to develop and sell the system. Under the termsbankruptcy court of the agreement the Company will hold a 65% common membership interest for an initial capital contribution of $100. The joint venture partner contributed $25,000 plus software developed to enhance the Company's product at a cost of $65,000 to the Joint Venture.
NOTE 8 –8– SUBSEQUENT EVENTS
On January 201817, 2019 the Company issued 2,358,50576,583,333 shares of common stock for the conversion of $5,065debt with a value of convertible debt to equity.$4,595.
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ITEM 2:MANAGEMENT'S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING INFORMATION
This section and other parts of this Form 10-Q quarterly report includes "forward-looking statements"“forward-looking statements”, that involves risks and uncertainties. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential,"“may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or "continue,"“continue,” or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.
Overview
Go Eco Group, (formally Liberated Energy,Energy), Inc.) is a Nevada corporation formed on September 14, 2011. We were incorporated as Mega World Food Holding Company for the purpose of selling frozen vegetable products in all areas of the world except China.
On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately held corporation formed under the laws of the State of Delaware on July 1, 2010, acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power Corporation returned to treasury its 24,500,000 shares it acquired from the Company'sCompany’s shareholders. As a result of this transaction, the Company had on January 19, 2013, 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and underwent a 24 for 1 stock split, whereby the Company'sCompany’s outstanding shares increased from 3,000,000 to 72,000,000.
On February 4, 2015 the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized common shares from 250,000,000 to 900,000,000.
On July 6, 2016, the Company affected a 1-for-3,500 reverse split of the Company'sCompany’s common stock.
On September 14, 2016, the Company entered into an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company will required all outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding shares of the Company with the first closing of the agreement. The foregoing agreement was amended on October 11, 2016 and the Company also entered into an Addendum to the amended agreement. The foregoing agreement and transaction described therein has not been completed as of the date of this report and there is no assurance that the transaction will ever be completed and the Company is contemplating rescinding the agreement and initiating suit against Knori.
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On January 27, 2017, the Company reduced the authorized shares of common stock from 10,000,000,000 to 2,000,000,000 and changed the name from Liberated Energy, Inc to The Go Eco Group.
The Company has advanced Eco Cab $197,520 as part of the agreement. As the closing, has not incurred, due to the failure of EcoCab meeting the agreement requirements, the Company has treated the advances as receivables due the Company with a balance due to the Company as of December 31, 2017 of $43,324.
On December 26, 2018 the Company filed an amendment with the Secretary of State of Nevada increasing the authorized shares to 6,000,000,000 from 2,000,000,000 shares of common stock with a par value of $0.001. The authorized shares of preferred shares remained at 10,000,000 with a par value of $0.001
Results of Operations
Revenue
During the three months periods ended December 31, 20172018 and 20162017 the Company had no revenues.
Operation and Administrative Expenses
During the three monthmonths periods ended December 31, 2017 and 2016.
Other Income (Expense)
During the three months periods ended December 31, 20172018 the Company incurred other expense of $20,153for the $ 11,268 compared to $99,382other expense of $20,153 in the same periodperiods in 2016.2017. The decrease of $79,229higher amounts in 2017 is attributable to $57,800 of note discount fees incurred in 2016 that were not incurredhigher interest in 2017 and a decrease of interest expense incurred of $20,153over the same periods in 2017 versus $41,585 in 2016.
Net Loss
The net loss for the three monthsperiods ended December 31, 20172018 was $88,918$68,202 compared to $461,506$88,978 for the same periodsperiod in 2016,2017, respectively. The decrease in loss is attributable to the factors discussedhigher interest expense and general and administrative expenses in the preceding two paragraphs.
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The Company has current assets of $33,148$44 and current liabilities of $1,144,398$666,790 resulting in negative working capital of $1,111,250.$666,746. This compares to negative working capital of $1,039,703$731,983 for the period ended September 30, 2017.2018. The increasedecrease in negative working capital toas of December 31, 20172018 is attributed to continued lossesconversion of convertible debt in 2017 and 2016.
Funds used in operating activities was $64,205$81,934 for the three months period ended December 31, 20172018 compared to funds used of $144,421$64,205 for the same period in 2016.2017. The decreaseeffect of the change in generalaccounts payable and administrativeaccrued expenses contributedattributed to the majority ofchange between the lower use of funds in 2017 over 2016.
Funds provided by financing activities for the three months period ended December 31, 20172018 was $30,000$64,000 compared to $412,800$30,000 for the same period in 2016.2017. The Company issued convertible debt of for its financing activity in 20162018 for $ 412,800$39,000 and $5,000 in 2017. The Company received $25,000 in 20172018 as a loan from the newly formed joint venture.
Off-Balance Sheet Arrangements
The Company does not have any relationships with un entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements.
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Market risk is the risk of loss from adverse changes in market prices and rates. The Company'sCompany’s market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that have greater resources, including but not limited to, more money, and greater ability to expand their markets also cut into our potential customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have.
Evaluation of Disclosure Controls and Procedures
Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the "Exchange Act"“Exchange Act”), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material
Changes in Internal Control over Financial Reporting
Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our nine months period ended December 31, 20172018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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None
During the three months ended December 31, 20162018 the Company issued 1,650,000 shares of commons stock with a value of $275,500 to four entities for services.
These securities were issued pursuant to an exemption from the three months ended December 31, 2017,registration requirements of the Company issued 3,543,586 sharesSecurities Act of common stock with1933, as amended pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereundersince, among other things, the transactions did not involve a value of $12,810 for convertible debt.
None
Not Applicable.
None
ITEM 6. EXHIBITS – THIS SHOULD INCLUDE ALL DOCUMENTS THAT ARE MATERIAL AND OPERATION – ARTICLES OF INCORPORATION, BYLAWS, CONTRACTS, ETC.
EXHIBIT INDEX
| Incorporated by | ||||||
| Reference | ||||||
| Filing Date/ | ||||||
| Exhibit | Period End | |||||
| Number | Exhibit Description | Form | Date | |||
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. | |||||
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | |||||
| 101.INS* | XBRL Instance Document | |||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||||
* Pursuant to Rule 406T of Regulation S-T, these interactive date files are deemed not filed or part of the registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.
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| Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Filing Date | Number | Filed herewith | |||||
| Articles of Incorporation as filed with the Nevada Secretary of State dated September 14, 2010 | S-1 | 12/08/10 | 3.1 | |||||||
| Amended Articles of Incorporation as filed with the Nevada Secretary of State dated February 6, 2013 | 8-K | 02/07/13 | 3.1 | |||||||
| Certificate of Change as filed with the Nevada Secretary of State dated February 6, 2013 | 8-K | 02/07/13 | 3.2 | |||||||
| By-laws | S-1 | 12/08/10 | 3.2 | |||||||
| Amended Articles of Incorporation dated March 17, 2014 as filed with the Secretary of State in Nevada on March 17, 2014 | 8-K | 03/17/14 | 3.1 | |||||||
| Amended Articles of Incorporation dated January 17, 2017 | 8-K | 01/30/17 | 3.6 | |||||||
| Patent Acquisition Agreement dated January 23, 2013 | 8-K | 01/24/13 | 10.1 | |||||||
| Stock Exchange Agreement to acquire EcoCab LLC | 8-K | 09/21/16 | 10.1 | |||||||
| Promissory Note dated September 7, 2016 – Carebourn Capital, L.P. | 8-K | 09/21/16 | 10.2 | |||||||
| Promissory Note dated September 16, 2016 – Carebourn Capital, L.P. | 8-K | 09/21/16 | 10.3 | |||||||
| Addendum #1 to Amended and Restated Stock Exchange Agreement | 8-K/A-1 | 10/17/16 | 10.5 | |||||||
| Assignment of LLC Membership Interest | 8-K/A-2 | 11/17/16 | 10.6 | |||||||
| Certification of Chief Executive and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. | X | |||||||||
| Certification of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | X | |||||||||
| 101.INS | XBRL Instance Document | X | ||||||||
| 101.SCH | XBRL Taxonomy Extension Schema | X | ||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | ||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | ||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase | X | ||||||||
| 101.PRE | Taxonomy Extension Presentation Linkbase | X | ||||||||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: February | ||
| By: | ||
| Brian Conway | ||
President, Director, Chief Financial Officer & Chief Executive Officer (Principal Executive Officer) (Principal Financial Officer and Principal Accounting Officer | ||
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