CPSM, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

The accompanying Notes are an integral part of the condensed consolidated financial statements

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CPSM, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

The accompanying Notes are an integral part of the condensed consolidated financial statements

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CPSM, Inc. and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

For the Nine Months Ended September 30, 2017

(Unaudited)

The accompanying Notes are an integral part of the condensed consolidated financial statements

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CPSM, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flow

(Unaudited)

The accompanying Notes are an integral part of the condensed consolidated financial statements

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CPSM, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Unaudited

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Allowance for uncollectible receivables

Management evaluates credit quality by evaluating the exposure to individual counterparties, and, where warranted, management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized in income in the

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NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The impact of the adoption of ASU 2014-09 on the Company’s consolidated financial statement presentation and disclosures is not considered material.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information.  The ASU requires equity investments to be measured at fair value with changes in fair values recognized in net earnings, simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and eliminates the requirement to disclose fair values, the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost.  The ASU also clarifies that the Company should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale debt securities in combination with the Company's other deferred tax assets.  These amendments are effective for the Company beginning January 1, 2018.  The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842) which will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with term of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.  The new ASU will require both types of leases to be recognized on the balance sheet.  The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional

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NOTE 11 – LONG TERM LOANS

At September 30, 2017 and December 31, 2016, the Company has a Promissory Note from a stockholder for $89,378 which was incurred with the acquisition of the common stock of CPSM, Inc. The term of the Promissory Note is 5 years and the note has an interest rate set at the 5 Year Treasury Note rate, currently set at 1.72% and which resets annually on June 3. The principal is due on the final maturity of June 3, 2019. The Company has accrued interest expense of $4,937 and $8,145 as of September 30, 2017 and December 31, 2016, respectively. The Company repaid a portion of the principal of the Note with part of the proceeds

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

Overview

The Company is a full service pool maintenance, resurfacing and repair company whose main service area is the Martin, Palm Beach, St. Lucie, Indian River and Brevard counties of Florida.  The Company earns revenue by charging service fees in the pool service business and by payments under contracts in the pool resurfacing business.  The Company manages its operating margins of the businesses by reviewing personnel costs, chemical and material purchases and other service costs such as motor vehicle and insurance costs.  Personnel are critical to the business since customers choose those companies who have the most experience and perform the service in a timely and professional manner.

The Company competes in its markets on the basis of price and the quality of the service.  There are many pool service companies in the market and throughout Florida.  However, this also presents an opportunity for the Company since many of its competitors are smaller and lack the infrastructure and depth of the Company.  This allows the Company to compete through offering a larger range of services with a lower cost structure and to pursue growth opportunities either through internal growth or through opportunistic acquisitions. Most recently, the Company contracted with an additional supplier of pool resurfacing products which target a higher price segment of the resurfacing market and for which the Company expects to augment its sales and presence in its markets.

Custom Pool & Spa Mechanics, Inc. has had pool resurfacing as part of its service offerings. The resurfacing work had been subcontracted to other pool resurfacing companies. In March 2015, the Company formed Custom Pool Plastering Inc. (“CPP”) to provide its own pool resurfacing services.

Plan of Operations

Management will expand the business as adequate working capital is provided through revenues.  Our ability to maintain sufficient liquidity is dependent on our ability to maintain profitable operations or to raise additional capital. We have no anticipated timeline for obtaining additional financing or the expansion of our business.  We will continue to keep our expenses as low as possible and keep our operations in line with available working capital.  

Recent Developments

Hurricane Irma, which struck South Florida from September 10 through 12, 2017, did affect CPSM’s business negatively. Although Martin County was not seriously damaged, there still remained much hurricane debris that required removal, including large amounts of debris in pools. Further, the pool renovation business was reassigned to the maintenance division during the period after the hurricane. Although clean-up of pools did maintain the pool service business, the renovation business has higher margins and affected CPSM’s financial results for the period under review.  The renovation business has resumed and no contracted work was lost.

Results of Operations

Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016

For the three months ended September 30, 2017 and 2016, we had revenues of $1,224,700 and $1,231,601 respectively, a decrease of $6,901. The small decline is due to fluctuations in the customers served, some of which is the result of the impact from Hurricane Irma. Pool service contract pricing and pool resurfacing contract pricing have remained at the same level from period to period.

The cost of services and products sold of $949,468 and $951,043 respectively, for the three months ended September 30, 2017 and 2016, a decrease of $1,575. The slight decrease is due to the slight decrease in revenue from small fluctuations in customers served.

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Revenues, less purchases and service costs was $275,232 and $280,558 for the three months ended September 30, 2017 and 2016, respectively and produced a margin of 22% and 23%, respectively. The small decline in margin is largely due to the decline in revenue from small fluctuations in customers served.

For the three months ended September 30, 2017 and 2016, we had sales and marketing expenses of $8,498 and $13,885, respectively. This was a decrease of $5,387 or 39% and is due largely to increased advertising and other marketing to support the move from the Palm City location to the Stuart location and for the grand opening of the new headquarters in 2016. Depending on the market and the Company’s expansion plans, marketing expenses most likely will increase in the future.

General and administrative expenses for the three months ended September 30, 2017 and 2016 were $208,323 and $220,526 respectively, a decrease of $12,204 or 6%. The small decline is largely due to a decrease in professional fees as well as a decline in stock option expense.

Depreciation and amortization expense was $35,452 and $2,581 respectively, for the three months ended September 30, 2017 and 2016, an increase of $32,871. This is due to the purchase of additional motor vehicles and replacing older vehicles.

Interest expense was $7,914 and $13,504 for the three months ended September 30, 2017 and 2016, respectively, a decrease of $5,590 or 41%. This is due to the repayment of the SBA loan, pay down of the Promissory Note – Stockholder from the proceeds of the sale of the office building in Palm City. As well, the Stockholder Advance Payable was repaid in the three months ended September 30, 2017.  Other income was $6 and $2,490 for the three months ended September 30, 2017 and 2016.

Income tax expense for the three months ended September 30, 2017 was $2,258, an effective tax rate of 15%, versus income tax expense for the three months ended September 30, 2016 of $19,524, an effective tax rate of 21.6%.

There was net income available to common stockholders of $10,293 versus net income available to common stockholders of $68,409 for the three months ended September 30, 2017 and 2016, respectively. The decline in net income is due largely to due to a one time gain on the sale of the Palm City building of $57,881, which occurred during the three months ended September 30, 2016.

Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016

For the nine months ended September 30, 2017 and 2016, we had revenues of $3,802,571 and $3,705,891 respectively, an increase of $96,680 or 3%. The slight increase is due to an increase in new pool service customers, as well as an increase in new pool plastering and resurfacing contracts. Pool service contract pricing and pool resurfacing contract pricing has remained at the same level from period to period.  

The cost of services and products sold of $2,809,519 and $2,789,397 respectively, for the nine months ended September 30, 2017 and 2016, an increase of $20,122. The slight increase is in line with the sales increase for the nine months ended September 2017.

Revenue, less purchases and service costs was $993,052 and $916,494 for the nine months ended September 30, 2017 and 2016, respectively and produced a margin of 26% and 25%, respectively.  The slight increase in margin is largely due to increase in sales for the nine months ended September 30, 2017 offset somewhat by purchasing products that were expensed before sales invoicing.

For the nine months ended September 30, 2017 and 2016, we had sales and marketing expenses of $23,796 and $51,295 respectively. This was a decrease of $27,499 or 54% and is due largely to increased advertising and other marketing to support the move from the Palm City location to the Stuart location and for the grand opening of the new headquarters in 2016. Depending on the market and the Company’s expansion plans, marketing expenses most likely will increase in the future.

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General and administrative expenses for the nine months ended September 30, 2017 and 2016 were $666,190 and $617,119 respectively, an increase of $49,071 or 8%. The increase is composed of increases in salaries and other compensation expenses.

Depreciation and amortization expense was $106,935 and $66,130 respectively, for the nine months ended September 30, 2017 and 2016, an increase of $40,805 or 62%. This is due to the purchase of additional motor vehicles, and replacing older vehicles.

Interest expense was $29,078 and $39,318 for the nine months ended September 30, 2017 and 2016, respectively, a decrease of $10,240 or 26%. This is due to the repayment of the SBA loan and pay down of the Promissory Note – Stockholder from the proceeds of the sale of the office building in Palm City. Further, the Stockholder Advance Payable of $54,981 was repaid on September 26, 2017.  Other income was $17,585 and $8,845 for the nine months ended September 30, 2017 and 2016.

Income tax expense for the nine months ended September 30, 2017 was $59,776, an effective tax rate of 32.4% versus income tax expense for the nine months ended September 30, 2016 of $67,070, an effective tax rate of 32.0%. The decrease in income tax expense is largely due to the smaller pre-tax income, which was affected in 2016 with the gain on the sale of the Palm City building of $57,881.

We had a net income available to common stockholders of $117,362 and $134,788 for the nine months ended September 30, 2017 and 2016, respectively. The decrease in net income is due the gain on the sale of the Palm City building of $57,881 in 2016 offset somewhat by increases in general and administrative compensation costs and depreciation and amortization.

Capital Resources and Liquidity

We are currently profitable and finance our business through operations. Debt financing was used to start the business, for purchases of motor vehicles and a commercial building that is our new headquarters. Equity financing, using both preferred and common stock, has been used for public company and other registration costs as well as for future acquisitions. Currently, we are not in any negotiations to acquire other businesses.

Over the next twelve months, our cash requirement for operations is expected to be in excess of $3,500,000. This requirement is expected to be funded through cash generated from operations and bank debt financing.

We have existing bank relationships and have had discussions with potential equity investors, however, there can be no assurance that we will be able to raise capital, if at all, upon terms acceptable to us.

We maintain a $50,000 revolving line of credit with a regional bank. The line of credit has a ten-year maturity, but is due upon demand by the bank. The interest rate is currently 6.25%, and it is a floating rate, 2.0% over the Wall Street Journal Prime Rate Index. The outstanding balance as of September 30, 2017 and December 31, 2016, respectively, is $16,457 and $25,892. We are currently in compliance with the terms of the line of credit.

At September 30, 2017 and December 31, 2016, we had a promissory note from a stockholder for $89,378. The term of the promissory note is five years and the promissory note has an interest rate set at the 5 Year Treasury Note rate, currently set at 1.72% and which resets annually on June 3. The principal is due on the final maturity of June 3, 2019. We have not paid interest, but has accrued interest expense of $4,937 and $8,145 as of September 30, 2017 and December 31, 2016, respectively. We are in compliance with the provisions of this promissory note.

In December 2015, the Company authorized 50,000,000 shares of Series A Preferred Stock, with a $0.0001 par value. The Series A Preferred has an 8% dividend paid quarterly, and is convertible into common stock at $0.08 per common share. The Series A Preferred is senior to the common stock as to dividends, and any

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liquidation, dissolution or winding up of the Company. The Series A Preferred also has certain voting and registration rights.

In January 2016, the Company issued 1,562,500 shares of the Series A Preferred Stock to Lawrence and Loreen Calarco, officers and directors of the Company for $125,000 in consideration. The Company has accrued $17,500 and $10,000 in dividends on the Series A Preferred at September 30, 2017 and December 31, 2016, respectively.

September 30, 2017 compared to September 30, 2016

For the nine months ended September 30, 2017, we had a net income of $124,862. We had the following adjustments to reconcile net income to cash flows from operating activities: an increase of $106,935 due to depreciation and amortization and an increase of $8,547 due to stock option compensation.

We had the following changes in operating assets and liabilities: an increase of $98,023 in accounts receivable, an increase of $7,537 in amounts due from related party, an increase of $31,314 due to inventory, an increase of $29,888 in accounts payable and accrued expenses and an increase in customer deposits of $14,060.

As a result, we had net cash provided by operating activities of $147,418 for the nine months ended September 30, 2017 consistent with the increase in pool servicing and pool plastering and resurfacing business.

For the nine months ended September 30, 2016, we had a net income of $142,288. We had the following adjustments to reconcile net income to cash flows from operating activities: an increase of $66,130 due to depreciation and amortization, an increase of $22,949 due to stock option compensation and a decrease of $57,881 due to the gain on the sale of the Palm City, Fl. building.

We had the following changes in operating assets and liabilities: an increase of $96,032 in accounts receivable, an increase of $2,361 in amounts due from related party, an increase of $52,494 due to inventory, an increase in prepaid expenses of $49,000, an increase of $120,360 in accounts payable and accrued expenses and an increase in customer deposits of $66,596.

As a result, we had net cash provided by operating activities of $160,553 for the nine months ended September 30, 2016 consistent with the increase in pool servicing and pool plastering and resurfacing business and the acquisition of Sundook.

For the nine months ended September 30, 2017, we purchased $10,688 of property and equipment with cash. The net cash used in investing activities was $10,688.  

For the nine months ended September 30, 2016, we purchased $50,014 of property and equipment.  We received net proceeds of $277,116 from the sale of the Palm City, Fl. building. We also made an additional deposit into escrow for the Sundook acquisition of $22,000. Additionally, we sold purchased assets of $17,500 and had a purchase price refund of $15,000.  As a result, we had net cash provided by investing activities of $237,602 for the nine months ended September 30, 2016.

For the nine months ended September 30, 2017, we paid a preferred stock dividend of $7,500.  We made payments on the bank line of credit of $9,435.  Additionally, we made payments on notes payable of $80,443 and repaid the stockholder advance payable of $54,981.  As a result, we had net cash used in financing activities of $152,359 for the nine months ended September 30, 2017.

For the nine months ended September 30, 2016, we paid a preferred stock dividend of $7,500 and received proceeds from the issuance of preferred stock of $125,000.  We received proceeds from the bank line of credit of $9,564.  Additionally, we made payments on notes payable of $42,314, converted into preferred stock and paid, $116,326 on the stockholder advance payable, made payments on and as of September 12, 2016 paid off the SBA loan of $192,290. We also paid down the Promissory Note – Stockholder by

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$120,622.  As a result, we had net cash used in financing activities of $344,488 for the nine months ended September 30, 2016.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of its Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.  On an on- going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets and contingencies.  We believe our estimates and assumptions to be reasonable under the circumstances.  However, actual results could differ from those estimates under different assumptions or conditions. Our financial statements are based on the assumption that we will continue as a going concern.  If we are unable to continue as a going concern, we would experience additional losses from the write-down of assets.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, the (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. ASU 2014-09 also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the impact the adoption of ASU 2014-09 on our consolidated financial statement presentation and disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information.  The ASU requires equity investments to be measured at fair value with changes in fair values recognized in net earnings, simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and eliminates the requirement to disclose fair values, the methods and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost.  The ASU also clarifies that the Company should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale debt securities in combination with the Company's other deferred tax assets.  These amendments are effective for the Company beginning January 1, 2018.  The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-2, Leases (Topic 842) which will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with term of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.  The new ASU will require both types of leases to be recognized on the balance sheet.  The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. The ASU is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. The Company is in the

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process of determining the effect of the ASU on its consolidated balance sheets and consolidated statements of income. Early application will be permitted for all organizations.

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update change existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the potential impact of the adoption of this standard.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”.  The amendments in this Update affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), which we are required to apply for annual periods beginning after December 15, 2017. Although management is still evaluating the potential impact of the adoption of this standard, its preliminary analysis is that the new guidelines currently will not substantially impact our revenue presentation.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update provide a more robust framework to use in determining when a set of assets and activities is a business. Because the current definition of a business is interpreted broadly and can be difficult to apply, stakeholders indicated that analyzing transactions is inefficient and costly and that the definition does not permit the use of reasonable judgment. The amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. The Company is currently evaluating the impact of adopting the new guidance on the Consolidated Financial Statements, but it is not expected to have a material impact.

In May 2017, the FASB issued ASU 2017-09, “Scope of Modification Accounting”, to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to change to the terms or conditions of a share-based payment award.  The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; (3) the  classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this update.  For public business entities, the amendments in this update become effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. An entity should apply the amendments in this update prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact of adopting the new guidance on the Consolidated Financial Statements, but it is not expected to have a material impact.

Off - Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of September 30, 2017.

Contractual Obligations

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The registrant has no material contractual obligations.

The long term debt repayments as of September 30, 2017, are as follows:

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable for smaller reporting companies.

Item 4.  Controls and Procedures

During the three months ended September 30, 2017, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of September 30, 2017.  Based on this evaluation, our chief executive officer and principal financial officers have concluded such controls and procedures to be effective as of September 30, 2017, to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the 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.

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PART II – OTHER INFORMATION

Item 1.   Legal Proceedings

None

Item 1A.  Risk Factors  

Not applicable for smaller reporting companies

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

None

Item 3.   Defaults Upon Senior Securities.

None

Item 4.   Mine Safety Disclosures

Not Applicable

Item 5.   Other Information

None

Item 6.   Exhibits

Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications 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

*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: November 14, 2017

CPSM, INC.

By:  /s/Lawrence Calarco

Lawrence Calarco

Chief Executive Officer

By:  /s/Charles Dargan II

Charles Dargan II

Chief Financial Officer

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