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EX-32.1 - Liberated Solutions, Inc.ex32-1.htm
EX-31.1 - Liberated Solutions, Inc.ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended September 30, 2018

Commissions file number 000-55177

 

LIBERATED SOLUTIONS, INC

(Formally The Go Eco Group.)

(Exact name of registrant as specified in its charter)

 

Nevada   27-4715504

(State or other jurisdiction of

incorporation or organization)

 

I.R.S. Employer

Identification No.

 

17701 E 36th Street CT S

Independence, MO

  64055
(Address of principal executive offices)   (Zip Code)

 

Issuer’s telephone number: (845) 610-3817

 

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

 

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

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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. Yes [X] 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). Yes [X] No [  ]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

 

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 accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer [  ] Accelerated filer [  ]
       
Non-accelerated filer [  ] Smaller reporting company [X]
(Do not check if a smaller reporting company)    

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes [  ] No [X]

 

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

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second quarter. $201,265.

 

As of January 8, 2019 the registrant had 1,535,552,555 shares of common stock outstanding.

 

 

 

   
 

 

LIBERATED SLOUTIONS, INC.

(formally The Go Eco Group, Inc.

TABLE OF CONTENTS

 

Item #   Description   Page Numbers
         
    PART I   3
         
ITEM 1   BUSINESS   3
         
ITEM 1A   RISK FACTORS   5
         
ITEM 1B   UNRESOLVED STAFF COMMENTS   5
         
ITEM 2   PROPERTIES   5
         
ITEM 3   LEGAL PROCEEDINGS   5
         
ITEM 4   MINE SAFETY DISCLOSURES   6
         
    PART II   6
         
ITEM 5   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES   6
         
ITEM 6   SELECTED FINANCIAL DATA   7
         
ITEM 7   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   7
         
ITEM 7A   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   13
         
ITEM 8   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA   13
         
ITEM 9   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE   13
         
ITEM 9A   CONTROLS AND PROCEDURES   14
         
ITEM 9B   OTHER INFORMATION   15
         
    PART III   15
         
ITEM 10   DIRECTORS, EXECUTIVE OFFICERS, CORPORATE GOVERNANCE   15
         
ITEM 11   EXECUTIVE COMPENSATION   16
         
ITEM 12   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   17
         
ITEM 13   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   18
         
ITEM 14   PRINCIPAL ACCOUNTANT FEES AND SERVICES   18
         
    PART IV  
         
ITEM 15   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES   19
         
    SIGNATURES   20
         
EXHIBIT 31.1   SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICER    
         
EXHIBIT 32.1   SECTION 906 CERTIFICATION OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICER    
         

 

 2 
 

 

PART I

 

ITEM 1 - BUSINESS

 

History

 

Liberated Solutions, 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.

 

GUARDLITE

 

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’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 The Go Eco Group, Inc. and underwent a 24 for 1 stock split, whereby the Company’s outstanding shares increased from 3,000,000 to 72,000,000.

 

Services and Products

 

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’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as “discontinued operations.”

 

On January 23, 2013, we acquired from Perpetual Wind Power Corporation the rights to their wind and solar powered turbine technology for which it has a patent pending with the United States Patent and Trademark office, U.S. Patent Application Serial No. 61/257,578 as submitted on November 3, 2009.

 

In November 2013, we built and successfully tested an alternative energy LED lighting and security system that is now available to the market. The Guard Lite™ security lighting system is designed to deter trespassers from homes and/or properties without electricity costs. The Company has moved towards patent protection of this new device. It is anticipated that the Guard Lite™ security lighting system will only require a portion of the energy it generates so the excess energy will be able to be used for other applications.

 

On July 6, 2016, the Company adopted a 1-for-3,500 reverse split of the Company’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 was to 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. 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.

 

 3 
 

 

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 The Go Eco Group, Inc to The Go Eco Group.

 

On August 15, 2017, we entered into an agreement (the “Agreement”) with Medsite Services, Inc., a Nevada corporation (“MDST”) wherein we agreed to acquire from MDST, all of MDST’s right, title and interest in and to Integro Health Systems, Inc., a Nevada corporation (“Integro”). MDST has represented to us that it owns 100% of the outstanding securities of Integro and Integro is a wholly owned subsidiary corporation of MDST. We closed this transaction on August 28, 2017 and accordingly, Integro became wholly owned by us. In consideration of the foregoing, we issued 1,170,005 restricted shares of our Series B Preferred Stock to certain shareholders of MDST as disclosed in the Agreement. As part of the consideration for the foregoing transaction, we and our president, Brian Conway cancelled 9,000,000 shares of our Series A Preferred Stock owned by Mr. Conway and amend the Series A Preferred Stock designation to reflect each share of Series A Preferred Stock has 10,000 votes per share and votes with the common on certain matters. The amended designation of the Series A Preferred Stock has been filed with the Nevada Secretary of State. Likewise, the designation for the Series B Preferred Stock has been filed with the Nevada Secretary of State.

 

On December 21, 2017 the company formed a joint venture with Bravatek Solutions, Inc a Colorado corporation. Under the terms of the agreement the Company will own 65% of the joint venture and contribute $100 plus a nonexclusive license of the intellectual property necessary to develop the Light Guard System with Bravatek contributing $25,000 plus the sale of software to the JV for $65,000. The joint venture was terminated and the $25,000 was treated as paid in capital upon the termination.

 

On January 23, 2018, the Company created a wholly owned subsidiary, BitWhisper, LLC, in the state of Nevada. The purpose of the subsidiary is to be a special purpose vehicle for exploring operations in crypto-currency mining. The Company has no intentions of offering crypto-currencies, whether as security tokens or utility tokens, to the public.

 

On February 5, 2018, Go Eco Group, a Nevada corporation (the “Company”) entered into a Mutual Rescission and Release with Medsites Services, LLC whereby the parties agreed to mutually rescind the Stock Exchange Agreement between the parties and releasing each party from any liabilities for damages, claims or causes of action arising from the Stock Exchange Agreement. Per the terms of the Mutual Release and Rescission, Medsites Services, LLC agreed to pay a “break-off” fee of $40,000.00 to be paid in payments over sixty (60) days from the execution of the Mutual Release and Rescission.

 

On February 28, 2018 the Company changed its name to Liberated Solutions, Inc.

 

On August 23, 2018, the Company entered into a stock purchase agreement (the “Agreement”) with Peppermint Jim, LLC (“Peppermint Jim”) whereby the Company shall acquire 51 units (representing 51% of Peppermint Jim) in exchange for the issuance of $250,000 worth of Series B preferred stock of the Company (the “Series B Preferred Shares”). Under the terms of the Agreement the closing of the transaction shall occur on or before August 31, 2018, where the Series B Preferred Shares shall be issued in exchange for the 51 units of Peppermint Jim.

 

 4 
 

 

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

 

On October 17, 2018, the Company and Peppermint Jim, LLC (“Peppermint Jim”) mutually agreed to terminate and rescind the stock purchase agreement entered into on August 23, 2018 (the “Agreement”) by and between the Company and Peppermint Jim. Any shares transferred under the Agreement shall revert back to the respective parties.

 

Additional Information

 

We are a public company and file annual, quarterly, and special reports and other information with the SEC. We are not required to, and do not intend to, deliver an annual report to security holders. You may read and copy any document we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our filings are also available, at no charge, to the public at http://www.sec.gov.

 

ITEM 1A - RISK FACTORS

 

We are a smaller reporting Company and are not required to include disclosures under this item.

 

ITEM 1B - UNRESOLVED STAFF COMMENTS

 

We are a smaller reporting company and are not required to include disclosure under this item.

 

ITEM 2 - PROPERTIES.

 

Our principal executive offices are located at 17701 E 36th Street CT S, Independence, MO 64055. The office space is provided to us by our Chief Executive Officer free of charge.

 

ITEM 3 - LEGAL PROCEEDINGS

 

On September 15, 2016, LG Capital, LLC filed a lawsuit against the 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 a number of unpaid loans from LG Capital to the Company with the total owing and due including principal and interest of $279,730.56. 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 transfer 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.

 

On August 28, 2018, the Trustee for the bankruptcy of EcoCab Portland, LLC (Case No. 17-31000-tmb7) received a judgment against the Company for $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 is claim preference by the Company over other creditors of the same class for the payments. The Company agreed to settle the claim with a onetime payment of $40,000 which is awaiting a decision by the trustee and confirmation of the bankruptcy court of any settlement.

 

 5 
 

 

Item 4 - MINE SAFETY DISCLOSURES.

 

Not Applicable

 

PART II

 

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

(a) Market Information.

 

Our common stock is quoted on the OTC Markets- Pink Sheet. We obtained our trading symbol which is LIBE.OB on February 15, 2013. For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.

 

   HIGH   LOW 
         
FISCAL YEAR ENDED SEPTEMBER 30, 2017          
           
First Quarter  $0.177   $0.044 
Second Quarter  $0.1800   $0.0358 
Third Quarter  $0.0389   $0.0159 
Fourth Quarter  $0.0647   $0.0247 

 

   HIGH   LOW 
         
FISCAL YEAR ENDED SEPTEMBER 30, 2018          
           
First Quarter  $0.00655   $0.0214 
Second Quarter  $0.0086   $0.0386 
Third Quarter  $0.0023   $0.0126 
Fourth Quarter  $0.0004   $0.0044 

 

(b) Holders.

 

As of September 30, 2018 there were approximately 46 record holders of shares of the Company’s common stock.

 

(c) Dividend Policy.

 

We have not declared or paid any cash dividends on our common stock and we do not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of our Board of Directors and will depend on our earnings, if any, our capital requirements and financial condition and such other factors as our Board of Directors may consider.

 

(d) Securities Authorized for Issuance Under Equity Compensation Plans.

 

We do not have equity compensation plans.

 

(e) Recent Sales of Unregistered Securities.

 

None

 

 6 
 

 

ITEM 6 - SELECTED FINANCIAL DATA.

 

Not Applicable

 

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

This annual report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These forwarding-looking statements include without limitation statements regarding our expectations and beliefs about the market and industry, our goals, plans, and expectations regarding our results, our intentions and strategies regarding future operations and transactions, our beliefs regarding the future success of our business, our expectations and beliefs regarding competition, competitors, the basis of competition and our ability to compete, our beliefs and expectations regarding our ability to hire and retain personnel, our ability to expand into new geographic markets and music genres, our ability to acquire other operators and venues, our beliefs regarding period to period results of operations, our expectations regarding revenues, our expectations regarding future growth and financial performance, our beliefs and expectations regarding the adequacy of our facilities, and our beliefs and expectations regarding our financial position, ability to finance operations and growth and the amount of financing necessary to support operations. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially. See “Item 1A. Risk Factors” for a discussion of certain risks. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this annual report on Form 10-K.

 

As used in this annual report on Form 10-K, unless the context otherwise requires, the terms “we,” “us,” “the Company,” and “Liberated” refer to Liberated Solutions, a Nevada Corporation.

 

ORGANIZTION AND BASIS OF PRESENTATION

 

The following discussion and analysis is based on the audited financial statements for the years ended September 30, 2018 and 2017 of Liberated Solutions, Inc., a Nevada corporation (“Liberated” the “Company,” “our,” or “we”). All significant inter-company amounts have been eliminated. In the opinion of management, the audited financial statements presented herein reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair presentation. Interim results are not necessary indicative of results to be expected for the entire year.

 

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP), which require that management make estimates and assumptions that affect reported amounts. Actual results could differ from these estimates.

 

Certain of the statements contained below are forward-looking statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

 

CRITICAL ACCOUNTING POLICIES & ESTIMATES

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. The amounts of assets and liabilities reported in our balance sheet, and the amounts of revenues and expenses reported for each of our fiscal periods, are affected by estimates and assumptions which are used for, but not limited to, the accounting for allowance for doubtful accounts, goodwill and intangible asset impairments, restructurings, inventory, and income taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of our consolidated financial statements.

 

 7 
 

 

Use of Estimates

 

It is important to note that when preparing the financial statements in conformity with U.S. generally accepted accounting principles, management is required to make certain estimates and assumptions that affect the amounts reported and disclosed in the financial statements and related notes. Actual results could differ if those estimates and assumptions approve to be incorrect.

 

On an ongoing basis, we evaluate our estimates, including those related to estimated customer life, used to determine the appropriate amortization period for deferred revenue and deferred costs associated with licensing fees, the useful lives of property and equipment and our estimates of the value of common stock for the purpose of determining stock-based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

 

Revenue Recognition Policies

 

The Company recognizes revenues in accordance with the Securities and Exchange Commission Staff Accounting Bulletin (SAB) number 104, “Revenue Recognition.” SAB 104 clarifies application of U. S. generally accepted accounting principles to revenue transactions. As of the year ended September 30, 2018, there was no deferred revenue. The Company derives its primary revenue from the sources described below, which includes sale of alternative energy devices.

 

Off- Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of 90 days or less to be cash equivalents to the extent the funds are not being held for investment purposes.

 

Results of Operations

 

Year Ended September 30, 2018 Compared to Year Ended September 30, 2017

 

Revenue and Cost of Sales

 

Our revenues were zero and $48,00, respectively, for the years ended September 30, 2018 and 2017, respectively. For the year ended September 30, 2018 and 2017 we had zero and $14,000 of cost of sales, respectively.

 

 8 
 

 

General and Administrative Expenses

 

General and administrative costs for the year ended September 30, 2018 was $858,697 compared to $1,348,106 for the year ended September 30, 2017. The lower cost in 2018 was attributed mostly to $357,225 in stock based compensation in 2018 versus $844,164 in 2017.

 

Other Income (Expense)

 

Other expense was $162,441 for the year ended September 30, 2018 compared to $151,006 for the year ended September30, 2017. The higher amount in 2018 is directly attributed to higher interest expense due to an increase in the interest rate from 12% to 22% on notes owed to the Company’s largest lender.

 

Net Loss

 

The Company incurred a net loss of $1,021,138 for the year ended September 30, 2018 compared to a net loss of $1,464,122 for the year ended September 30, 2017. Higher general and administrative expense attributed to the higher loss in 2017 over 2018.

 

Financial Condition

 

Cash, Cash Flows, and Working Capital

 

The Company had a cash balance of $17,978 and a working capital deficit of $731,983 at September 30. 2018 as compared to a net cash balance of $67,353 and a working capital deficit of $1,039,703 at September 30, 2017. The change in working capital is primarily attributable to a decrease in current liabilities in accounts payable and accrued expenses from $133,970 in 2017 to $105,166 in 2018 and a reduction of convertible debt from $973,086 in 2017 to $639,795 in 2018 off set by deferred revenue of $5,000 in 2018 verses zero in in 2017.

 

Operations used $384, 375 of cash during 2018 as compared to $446,127 used during 2017. The change in operating cash flows during 2018 was principally attributable to decreased losses in 2018 over 2017 somewhat offset by smaller stock based compensation in 2018 versus 2017.

 

Cash used in investing activity during the year ended September 30, 2017 was $43,324 which consisted of loans to Eco Cab of $197,520 offset by repayments of $ 154,196 versus none in 2018. As of September 30, 2017, the Company impaired the balance of $43,324 as it is uncollectible.

 

Cash flows provided by financing activities was $335,000 during 2018 compared to $555,000 during 2017, derived from the issuance of convertible notes.

 

Liquidity and Capital Resources

 

Our principal requirements for capital are to fund our day-to-day operations and to satisfy our contractual obligations, primarily for the repayment of debt.

 

We believe that we will be required to either achieve profitability and generate operating cash flows or borrow additional funds or otherwise secure additional financing, or both, to support our operations going forward. We do not presently have any commitments to provide financing, if needed, to support our operations.

 

 9 
 

 

Equity

 

Common

 

During the year ended September 30, 2017 the Company issued 5,880,000 shares of commons stock with a value of $844,165 for services.

 

During the year ended September 30, 2017 the Company issued 6,699,471 shares of common stock with a value of $145,619 for convertible debt.

 

During the year ended September 30, 2018 the Company issued 34,920,000 shares of commons stock with a value of $357,255 for services.

 

During the year ended September 30, 2018 the Company issued 546,633,241 shares of common stock with a value of $911,559 for convertible debt.

 

During the year ended September 30, 2018 the Company issued 34,967,577 shares of common stock with a value of $40,074 for the conversion of warrants to common stock.

 

Preferred – No activity in the years ended September 30, 2018 and 2017

 

Convertible Notes

 

LG Capital Funding

 

On July 13, 2015, the Company issued a Convertible Note to LG 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.

 

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 $18,000 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 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’s stock for the 20 days prior to the conversion. Net proceeds to the Company are $15,000 after deduction of legal fees of $2,000. As of September 30, 2018, the outstanding balance of the note was $17,000 in principal plus interest of $428 for a total of $17,428.

 

 10 
 

 

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 the total claim against the Company of $297,160 The Company 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 the opinion of Company Management that the Company’s outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company. (See Note 9- Legal).

 

Carebourn Capital

 

On September 7, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $197,363,70 less legal fees of $8,000 with an interest rate of 12% per annum. The note was scheduled to mature on September 7, 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 prices of the Company’s stock for the 20 days prior to the conversion.

 

On October 3, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal 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 was 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 prices of the Company’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 as of that date, however, the note was extended on April 17, 2018 at a principal amount of $230,790. An additional 10% discount applies if the common stock is only eligible for X clearing deposit.

 

On December 13, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal 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 prices of the Company’s stock for the 15 days prior to the conversion. The note was extended on April 17, 2018 at a principal amount of $116,888. Additional discounts of up to 15% apply if the common stock is not deliverable via DWAC and if only eligible for X clearing deposit.

 

Due to default status the notes payable were accrued at an annual interest rate of 22%.

 

Power Up Lending

 

On January 4, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $35,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on October 15, 2018. The note is convertible by the holder at a discount of 50% 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 February 15, 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 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.

 

 11 
 

 

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.

 

As of September 30, 2018, the Company owed Power Up lending $155,090 in principal and $5,676 in 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, 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.

 

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.

 

On January 5, 2018, February 14, 2018 and March 31, 2018 the Company issued three warrants totaling 4,160,000 warrants to Crown Bridge Partners as part of the $80,000 of the loans advanced in January, February and March of 2018 as noted above. The warrants are exercisable by the holder within five years of the issuance date at $0.25 per warrant for the January and February 2018 warrants and at $0.01 for the March 2018 warrant. The warrants may be converted by the holder as a cashless warrant. The warrants and the convertible notes were fair valued on date of issuance using the Black Scholes valuation method.

 

 12 
 

 

The following assumptions were used in estimating the value of the warrants issued in January, February and March 2018

 

Risk free interest rate   .10%
Expected life in years   5 years 
Dividend yield   0%
Expected volatility   399-401%

 

The fair value of the warrants determined to be 25% of the total value of the warrants and convertible debt. Based on the valuation $20,000 of the convertible debt was deducted from the note value and allocated to paid in capital.

 

During the year ended September 30, 2018 the cashless warrants were converted into 34,967,577 shares of common stock with a value of $40,074.

 

As of September 30, 2018, the Company owed Crown Bridge Partners $53,754 in principal and approximately $3,639 in accrued interest.

 

More Capital

 

More Capital purchased an outstanding note of the Company from Carbourn Capital. During the period from January 18, 2018 through March 19,2018 the note was converted to 5,688,175 shares of common stock with a value of $21,219 for principal and interest. As of September 30, 2018 the balance on the note is zero.

 

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 September 30, 2018, Moore Capital LLC the Company owes principal of $18,975 plus interest of $1,419 for a total of $20,394.

 

Management has reviewed the terms of the convertible instruments to determine their fair value. After reviewing the characteristic and the value of the conversion, management 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.

 

ITEM 7A. QUANTITIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting Company and are not required to include disclosures under this item

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Our financial statements are audited and appear immediately after the signature page of this report. See “Index to Financial Statements” on page F-1 of this report.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUTING AND FINANCIAL DISCLOSURE

 

None

 

 13 
 

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and the participation of our management, including our principal executive officer who also serves as our principal financial officer, we conducted an evaluation as of September 30, 2018, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2018.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as that term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with generally accepted accounting principles (“GAAP”). 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 our transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

In order to evaluate the effectiveness of our internal control over financial reporting as of September 30, 2018, as required by Section 404 of the Sarbanes-Oxley Act of 2002, our management conducted an assessment, including testing, based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected.

 

Based on the evaluation performed, management concluded that our internal control over financial reporting was not effective as of September 30, 2018. In arriving at that conclusion, management identified as materials weaknesses in our internal control over financial reporting: (1) the lack of accounting proficiency of our chief executive officer who is our sole officer and our principal accounting officer which has resulted in a reliance on part-time outside consultants to perform substantially all of our accounting functions, (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function, and (3) lack of control procedures that include multiple levels of review, also arising from our chief executive officer’s lack of accounting training and service in multiple roles as well as our limited financial resources to support hiring of personnel and implementation of accounting systems.

 

 14 
 

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit smaller reporting companies to provide only management’s report in this annual report.

 

Changes in Internal Control over Financial Reporting

 

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fourth quarter of fiscal 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

 

PART III

 

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The following table sets forth the names and ages of our current directors, executive officers and key consultants as well as the principal offices and positions held by each person. We are managed by our Board of Directors. Currently, the Board has two members. Our executive officers serve at the discretion of the Board of Directors. There are no family relationships between any of the directors and executive officers. In addition, there was no arrangement or understanding between any executive officer and any other person pursuant to which any person was selected an executive officer.

 

Name   Age   Position with Liberated   Year First Became a Director
Brian Conway (1)   48   Chief Executive Offices, Chief Financial Officer and Director   2014
Jay Silverstein (2)   66   Director   2014
Kim O’Brien (3)   61   Director   2014

 

(1) Chief Executive Officer, Chief Financial Officer and Director effective October 1, 2014, Mr. Conway was paid $13,400 per month as a consultant.

(2) Director as of October 1, 2014

(3) Director as of October 1, 2014

 

 15 
 

 

Biographies

 

Brian P. Conway, the Chief Executive Officer, Chief Financial Officer, and Chairman of the Board brings 20 years of proven success in marketing and business development for both private and publicly traded companies. Starting off in database management and sales for Venture Direct on Madison Avenue, he crossed over to Wall Street first as a co-founder of Waypoint Capital Partners. During this time, he has overseen national sales, marketing, business and product development, national account customers, and new business relations with international and US companies while creating awareness for public companies with many of the nation’s top public relations firms. Mr. Conway has been involved with The Go Eco Group for the past year and is responsible for its current joint ventures and for bringing its flagship product the Guard Lite to the marketplace. His relationships with investment bankers, non-dilutive financing, and public relations will be instrumental in moving The Go Eco Group forward in the upcoming months.

 

Jay Silverman, our Director, has more than 35 years of experience in the professional services industry. The positions that he has held included Mid-Continent Operations Manager of a worldwide seismic service company, Vice President of Operations for a privately held environmental drilling service company, then Vice President of Field Operations for a NYSE listed oil service firm where he founded a new wholly owned subsidiary, the first onshore 3D seismic data acquisition company in the world, which he eventually took public in a successful IPO as its President, CEO, and Director. Mr. Silverman also co-founded iSafe Imaging in 2002, a paper to digital knowledge preservation and information management company for which he was CEO until it was sold in 2010.

 

Kim Thorne O’Brien, our Director, graduated from Ursinis College in 1980 with a B.S. in Health and Physical Education, minor in Biology, graduated from Temple University with an M.S. Ed in Exercise Physiology in 1981 and completed all Ph.D. work except dissertation in Cardiovascular Physiology, a University Fellow. From 1986 to 1995, Ms. O’Brien was Division Manager at Genentech, Inc. From October 1995 to 2001, she was Regional Business Director, Northeast Region of MedImmune, Inc. From 2001 to 2004, she was Vice President, Business Development & Marketing of AdvancedTraces, a company engaged in the development of supersensitive detection of biowarfare agents. Since 2004, Ms. O’Brien has been President of Independence, Inc., a firm engaged in providing consulting services to start-up biotechnology companies (Diasome, Get Better Health, LifeCell Dx).

 

Code of Ethics

 

We do not currently have a Code of Ethics.

 

Compliance with Section 16(a) of the Exchange Act

 

None of the officers, directors or owners own 10% or more of our common stock have filed reports required by section 16(a) of the Securities and Exchange Act of 1934, as amended.

 

ITEM 11. EXECUTIVE COMPENSATION

 

EXECUTIVE COMPENSATION

 

The following table provides summary information for the years ended September 30, 2015, 2017, and 2018 concerning cash and non-cash compensation paid or accrued by us to or on behalf of our officers and directors.

 

 16 
 

 

DIRECTORS AND OFFICERS COMPENSATION

 

      Annual compensation   Long-term compensation     
                  Awards   Payouts         

Name and

Principal

Position

  Year 

Salary

($)

  

Bonus

($)

  

Other

annual

compen- sation

($)

  

Restricted

stock

award(s)

($)

  

Securities

underlying

options/

SARs

(#)

   LTIP payouts ($)  

All other

compen-

sation

($) (1)

  

Total Compen-

sation

 
Brian Conway  2018   147,900                            147,900 
Executive  2017   111,500                            111,500 
Officer (1)   2016   118.696                            118,696 
Jay  2018                                
Silverman,   2017                                
Director (2)   2016                                
Kim  2018                                
O’Brien,   2017                                
Director (3)   2016                                

 

(1) Chief Executive Officer, Chief Financial Officer and Director effective October 1, 2014, Mr. Conway is to be paid $111,500 in 2017 as a consultant and received 12,000,000 shares of common stock and 10,000,000 preferred shares in 2016.

(2) Director as of October 1, 2014

(3) Director as of October 1, 2014

 

COMPENSATION AGREEMENTS

 

We have no compensation arrangements (such as fees for retainer, committee service, service as chairman of the board or a committee, and meeting attendance) with directors.

 

DIRECTOR COMPENSATION

 

Members of our Board of Directors do not normally receive cash compensation for their services as Directors, although some Directors are reimbursed for reasonable expenses incurred in attending Board or committee meetings. All corporate actions are conducted by unanimous written consent of the Board of Directors.

 

STOCK OPTION PLAN

 

The Company has no outstanding stock option.

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of January 13, 2018 certain information concerning the beneficial ownership of our common stock, by (i) each person known by us to own beneficially five per cent (5%) or more of the outstanding shares of each class, (ii) each of our directors and executive officers, and (iii) all of our executive officers and directors as a group.

 

 17 
 

 

The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities and Exchange Commission, or SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and any shares that the individual or entity has the right to acquire within 60 days after September 30, 2018 through the exercise of any stock option, warrant or other right, or the conversion of any security. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

 

Name and Address (1) 

Shares of Common Stock

Beneficially Owned

 

Percent of

Common Stock

Brian Conway   1,429    0.00 
Jay Silverman   714    0.00 
Kim O’ Brien   714    0.00 
All directors and officers as a group   2,857    0.00 

 

(1) Denotes officer or director.

 

PREFERRED STOCK

 

Our board of directors is authorized to issue 10,000,000 shares of Preferred Stock, with a par value of $0.001. On February 2, 2016, 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.

 

RELATED PARTY TRANACTIONS

 

On February 4, 2015, the Company issued to an officer and director of the Company 10,000,000 shares with a value of $10,000 of series A preferred stock for service. Each share has 10 votes on all matters of the Company in which the shareholders can vote.

 

During the year ended September 30, 2018 the Company paid the CEO $147,900 in consulting fees along with expenses.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

Director Independence

 

Our board of directors has determined that we do not have a board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Aggregate fees billed by the Company’s principal accountants, Enterprise CPA, for audit services related to the most recent two fiscal years, and for other professional services billed in the most recent two fiscal years, were as follows:

 

   FISCAL YEAR 2018  FISCAL YEAR 2017
Audit Fees (1)  $22,000   $17,000 
Tax Fees (2)  $None   $None 
All Other Fees   None    None 

 

 18 
 

 

Item 15. EXHIBITS

 

EXHIBIT INDEX

 

        Incorporated by Reference
Exhibit Number   Exhibit Description   Form   Filing Date/ Period End Date
             
31.1*   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.        
             
32.1*   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.        
             
101.INS*   XBRL Instance Document        
             
101.SCH*   XBRL Taxonomy Extension Schema        
             
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase        
             
101.DEF*   XBRL Taxonomy Extension Definition Linkbase        
             
101.LAB*   XBRL Taxonomy Extension Label Linkbase        
             
101.PRE*   Taxonomy Extension Presentation Linkbase        

 

* Filed with this Form 10-K

 

 19 
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  LIBERATED SOLUTIONS, INC.
Date: January 10, 2019    
  By: /s/ BRIAN CONWAY
    Brian Conway
   

President, Director, Chief Financial Officer & Chief Executive Officer

    (Principal Executive Officer)
   

(Principal Financial Officer and Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Signature   Title   Date
         
/s/ Brian Conway  

President, Director, Secretary, Chief Financial Officer and

Chief Executive Officer

  Date: January 10, 2019
Brian Conway   (Principal Executive Officer)    
    (Principal Financial Officer and Principal Accounting Officer)    
         
/s/ Jay Silverman       Date: January 10, 2019
Jay Silverman   Director    
         
/s/ Kim O’Brien       Date: January 10, 2019
Kim O’Brien   Director    

 

 20 
 

 

TABLE OF CONTENTS

 

Report of Independent Registered Public Accounting Firm F-2
   
Balance Sheets F-3
   
Statement of Operations F-4
   
Statement of Shareholders’ Equity F-5
   
Statement of Cash Flows F-6
   
Notes to Financial Statements F-7

 

 F-1 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the shareholders and the Board of Directors of Liberated Solutions, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheets of Liberated Solutions, Inc. (the “Company”) as of September 30, 2018 and 2017 and the related statements of operations, shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2018, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s ability to raise additional capital through debt and/or equity financing to fund its operating costs is unknown, which raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

De Leon & Company, P.A.

 
   
We have served as the Company’s auditor since 2017.  
Pembroke Pines, Florida  
January 10, 2019  

 

 F-2 

 

 

LIBERATED SOLUTIONS, INC

(formally The Go Eco Group, Inc.)

BALANCE SHEETS

 

   September 30, 
   2018   2017 
ASSETS          
           
CURRENT ASSETS:          
Cash and Cash Equivalents  $17,978   $67,353 
           
Total Current Assets   17,978    67,353 
           
TOTAL ASSETS  $17,978   $67,353 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
CURRENT LIABILITIES          
Accounts payable and accrued expenses  $105,166   $133,970 
Convertible notes payable   639,795    973,086 
Deferred revenue   5,000     
Total Current Liabilities   749,961    1,107,056 
           
TOTAL LIABILITIES  $749,961   $1,107,056 
           
STOCKHOLDERS’ EQUITY (DEFICIT)          
Preferred Stock:          
Series A preferred: 10,000,000 shares authorized par value $0.001 per share; 10,000,000 and 10,000,000 issued and outstanding, respectively   10,000    10,000 
Common Stock:          
6,000,000,000 shares authorized par value $0.001 per share; issued and outstanding, 630,989,121 at September 30, 2018 and 14,468,303 at September 30, 2017   630,988    14,468 
Additional paid-in-capital   2,513,957    1,801,619 
Accumulated deficit   (3,886,928)   (2,865,790)
TOTAL STOCKHOLDERS’ DEFICIT  $(731,983)  $(1,039,702)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $17,978   $67,353 

 

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

 

 F-3 

 

 

LIBERATED SOLUTIONS, INC

(formally The Go Eco Group, Inc.)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED SEPTEMBER 30,

 

   2018   2017 
Sales          
Sales  $   $48,000 
Cost of sales       14,000 
Gross profit       34,990 
           
Operating Expenses          
General and Administrative Expenses   858,697   $1,348,106 
           
Operating loss   (858,697)   (1,313,116)
           
Other Income (Expense):          
           
Interest income       4 
Interest expenses   (162,441)   (151,010)
           
Total other expense   (162,441)   (151,006)
           
Net loss  $(1,021,138)  $(1,464,122)
           
Loss per Share, Basic & Dilutive  $(0.01)  $(0.36)
           
Weighted Average Shares Outstanding   206,106,808    4,089,611 

 

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

 

 F-4 

 

 

LIBERATED SOLUTIONS, INC

(formally The Go Eco Group, Inc.)

STATEMENT OF SHAREHOLDERS’ DEFICIT

FOR YEARS ENDED SEPTEMBER 30, 2018 AND 2017

 

   Common Stock   Preferred Stock  

Additional

Paid-In 

   Accumulated  

Total

Stockholders’

 
   Shares   Amount   Shares   Amount   Capital   Deficit   Deficit 
Balance at September, 2016   1,888,832   $1,889    10,000,000   $10,000   $824,414   $(1,401,668)  $(565,365)
Common stock issued for debt   6,699,471    6,699            138,920        145,619 
Common stock issued for service   5,880,000    5,880             838,285        844,165 
                             
Net loss                       (1,464,122)   (1,464,122)
                             
Balance at September 30, 2017   14,468,303   $14,468    10,000,000   $10,000   $1,801,619   $(2,865,790)   (1,039,703)
Common stock issued for debt   546,633,241    546,632            364,928        911,560 
Common stock issued for service   34,920,000    34,920            322,304        357,224 
Common stock issued for warrant conversion   34,967,577    34,960            5,106        40.074 
Warrant valuation allocated to paid in capital                   20,000        20,000 
                                    
Net loss                        (1,021,138)   (1,021,138)
                                    
Balance at September 30, 2018   630,989,121   $630,988    10,000,000   $10,000   $2,513,957   $(3,886,928)   (731,983)

 

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

 

 F-5 

 

 

LIBERATED SOLUTIONS, INC

(formally The Go Eco Group, Inc.)

STATEMENTS OF CASH FLOWS

FOR YEARS ENDED SEPTEMBER 30,

 

   2018   2017 
OPERATING ACTIVITIES:          
Net Loss  $(1,021,138)  $(1,464,122)
Adjustments to reconcile net loss to net cash used in operating activities          
Stock issued for service expense   357,225    844,164 
Debt settlement   130,405     
Stock issued for cashless warrants   40,074     
Impairment of assets       43,324 
Amortization of debt discount and finance charges       45,970 
Changes in operating assets and liabilities          
Deferred revenue   5,000     
Accounts payable and accrued expense   104,059    84,537 
Net cash used in operating activities   (384,375)   (446,127)
           
INVESTING ACTIVITIES:          
Loans to Eco Cab       (197,520)
Repayment from Eco Cab       154,196 
Net cash used in investing activities       (43,324)
           
FINANCING ACTIVITIES:          
Proceeds from issuance of convertible notes   335,000    555,000 
Net cash provided by financing activities -   335,000    555,000 
           
Net increase (decrease) in cash and cash equivalents   (49,375)   65,549 
Cash and cash equivalents at Beginning of the Period   67,353    1,804 
Cash and cash equivalents at End of Period  $17,978   $67,353 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
           
Stock issued for convertible debt  $911,559   $145,620 

 

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

 

 F-6 

 

 

LIBERATED SOLUTIONS, INC

(formally The Go Eco Group, Inc.)

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

 

Note 1 – Nature of Operations

 

Organization

 

The Go Eco Group, Inc. (formally Liberated Energy, Inc) (the “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’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 The Go Eco Group, Inc. and underwent a 24 for 1 stock split, whereby the Company’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’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as “discontinued operations.”

 

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 December 31, 2015, the Company amended the preferred shares voting rights increasing the voting of each preferred share from 100 to 10,000 votes on any action voted on by the common stock holders

 

On July 6, 2016, the Company adopted a 1-for-3,500 reverse split of the Company’s common stock that as of June 30, 2016, was not yet effective.

 

On September 14, 2016, the Company entered into an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company was to 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. 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.

 

 F-7 

 

 

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 The Go Eco Group, Inc to The Go Eco Group.

 

On August 15, 2017, we entered into an agreement (the “Agreement”) with Medsite Services, Inc., a Nevada corporation (“MDST”) wherein we agreed to acquire from MDST, all of MDST’s right, title and interest in and to Integro Health Systems, Inc., a Nevada corporation (“Integro”). MDST has represented to us that it owns 100% of the outstanding securities of Integro and Integro is a wholly owned subsidiary corporation of MDST. We closed this transaction on August 28, 2017 and accordingly, Integro became wholly owned by us. In consideration of the foregoing, we issued 1,170,005 restricted shares of our Series B Preferred Stock to certain shareholders of MDST as disclosed in the Agreement. As part of the consideration for the foregoing transaction, we and our president, Brian Conway cancelled 9,000,000 shares of our Series A Preferred Stock owned by Mr. Conway and amend the Series A Preferred Stock designation to reflect each share of Series A Preferred Stock has 10,000 votes per share and votes with the common on certain matters. The amended designation of the Series A Preferred Stock has been filed with the Nevada Secretary of State. Likewise, the designation for the Series B Preferred Stock has been filed with the Nevada Secretary of State.

 

On December 21, 2017 the company formed a joint venture with Bravatek Solutions, Inc a Colorado corporation. Under the terms of the agreement the Company will own 65% of the joint venture and contribute $100 plus a nonexclusive license of the intellectual property necessary to develop the Light Guard System with Bravatek contributing $25,000 plus the sale of software to the JV for $65,000.

 

On January 23, 2018, the Company created a wholly owned subsidiary, BitWhisper, LLC, in the state of Nevada. The purpose of the subsidiary is to be a special purpose vehicle for exploring operations in crypto-currency mining. The Company has no intentions of offering crypto-currencies, whether as security tokens or utility tokens, to the public.

 

On February 5, 2018, Go Eco Group, a Nevada corporation (the “Company”) entered into a Mutual Rescission and Release with Medsites Services, LLC whereby the parties agreed to mutually rescind the Stock Exchange Agreement between the parties and releasing each party from any liabilities for damages, claims or causes of action arising from the Stock Exchange Agreement. Per the terms of the Mutual Release and Rescission, Medsites Services, LLC agreed to pay a “break-off” fee of $40,000.00 to be paid in payments over sixty (60) days from the execution of the Mutual Release and Rescission.

 

On February 28, 2018 the Company changed its name to Liberated Solutions, Inc.

 

On August 23, 2018, the Company entered into a stock purchase agreement (the “Agreement”) with Peppermint Jim, LLC (“Peppermint Jim”) whereby the Company shall acquire 51 units (representing 51% of Peppermint Jim) in exchange for the issuance of $250,000 worth of Series B preferred stock of the Company (the “Series B Preferred Shares”). Under the terms of the Agreement the closing of the transaction shall occur on or before August 31, 2018, where the Series B Preferred Shares shall be issued in exchange for the 51 units of Peppermint Jim.

 

On September 26, 2018 the Company increased their authorized shares to 6,000,000,000 shares of common stock with a par value of $0.0001 per share.

 

Subsequent to September 30, 2018 all of the open agreements referred to above were terminated.

 

 F-8 

 

 

Note 2 – 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.

 

Cash and Cash Equivalents

 

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’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.

 

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.

 

Property, Equipment, and Intangible Assets

 

Property and equipment are carried at cost, less accumulated depreciation. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Intangible assets consist of acquired customer and vendor databases and are carried at cost, less accumulated amortization.

 

Depreciation and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation to employees and non-employees in accordance with ASC 718 requiring employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of share-based payments using the Black-Scholes option-pricing model for common stock options and the closing price of the company’s common stock for common share issuances.

 

 F-9 

 

 

Revenue and Cost Recognition

 

It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 605 “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’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” 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’s results of operations or financial condition.

 

RECLASSIFICATION OF PRIOR YEAR BALANCES

 

Certain items from the year ended September 30, 2017 have been reclassified to conform with the current year financial statement presentation.

 

Note 3 – Going Concern Matters

 

As shown in the accompanying financial statements, the Company has a net loss of $1,021,128 for the year ended September 30, 2018. As of September 30, 2018, the Company reported an accumulated deficit of $3,886,928. The Company’s ability to generate continued 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’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.

 

 F-10 

 

 

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 three levels of the fair value hierarchy are as follows:

 

Level 1 Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.
     
Level 2 Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.
     
Level 3 Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
     
    Management 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 5 – RELATED PARTY TRANSACTIONS

 

On February 4, 2015, the Company issued to an officer and director of the Company 10,000,000 shares with a value of $10,000 of series A preferred stock for service. Each share has 10 votes on all matters of the Company in which the shareholders can vote.

 

During the year ended September 30, 2018 the Company paid the CEO $147,900 and reimbursed certain expenses.

 

 F-11 

 

 

NOTE 6 – EQUITY

 

Common

 

During the year ended September 30, 2017 the Company issued 5,880,000 shares of commons stock with a value of $844,165 for services.

 

During the year ended September 30, 2017 the Company issued 6,699,471 shares of common stock with a value of $145,619 for convertible debt.

 

During the year ended September 30, 2018 the Company issued 34,920,000 shares of commons stock with a value of $357,255 for services.

 

During the year ended September 30, 2018 the Company issued 546,633,241 shares of common stock with a value of $911,559 for convertible debt.

 

During the year ended September 30, 2018 the Company issued 34,967,577 shares of common stock with a value of $40,074 for the conversion of warrants to common stock.

 

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 7 – CONVERTIBLE NOTES

 

LG Capital Funding

 

On July 13, 2015, the Company issued a Convertible Note to LG 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.

 

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 $18,000 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 45% of the lowest trading price of the Company’s stock for the 20 days prior to the conversion.

 

 F-12 

 

 

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’s stock for the 20 days prior to the conversion. Net proceeds to the Company are $15,000 after deduction of legal fees of $2,000. As of September 30, 2018, the outstanding balance of the note was $17,000 in principal plus interest of $428 for a total of $17,428.

 

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 the total claim against the Company of $297,160 The Company 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 the opinion of Company Management that the Company’s outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company. (See Note 9- Legal).

 

Carebourn Capital

 

On September 7, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $197,363,70 less legal fees of $8,000 with an interest rate of 12% per annum. The note was scheduled to mature on September 7, 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 prices of the Company’s stock for the 20 days prior to the conversion.

 

On October 3, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal 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 was 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 prices of the Company’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 as of that date, however, the note was extended on April 17, 2018 at a principal amount of $230,790. An additional 10% discount applies if the common stock is only eligible for X clearing deposit.

 

On December 13, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal 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 prices of the Company’s stock for the 15 days prior to the conversion. The note was extended on April 17, 2018 at a principal amount of $116,888. Additional discounts of up to 15% apply if the common stock is not deliverable via DWAC and if only eligible for X clearing deposit.

 

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 September 30, 2018 is $153,860 plus accrued interest of $16,389.

 

Power Up Lending

 

On January 4, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $35,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on October 15, 2018. The note is convertible by the holder at a discount of 50% 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.

 

 F-13 

 

 

On February 15, 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 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.

 

As of September 30, 2018, the Company owed Power Up lending $155,090 in principal and $5,676 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, 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.

 

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.

 

 F-14 

 

 

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.

 

On January 5, 2018, February 14, 2018 and March 31, 2018 the Company issued three warrants totaling 4,160,000 warrants to Crown Bridge Partners as part of the $80,000 of the loans advanced in January, February and March of 2018 as noted above. The warrants are exercisable by the holder within five years of the issuance date at $0.25 per warrant for the January and February 2018 warrants and at $0.01 for the March 2018 warrant. The warrants may be converted by the holder as a cashless warrant. The warrants and the convertible notes were fair valued on date of issuance using the Black Scholes valuation method.

 

The following assumptions were used in estimating the value of the warrants issued in January, February and March 2018

 

Risk free interest rate   .10%
Expected life in years   5 years 
Dividend yield   0%
Expected volatility   399-401%

 

The fair value of the warrants determined to be 25% of the total value of the warrants and convertible debt. Based on the valuation $20,000 of the convertible debt was deducted from the note value and allocated to paid in capital.

 

During the year ended September 30, 2018 the cashless warrants were converted into 34,967,577 shares of common stock with a value of $40,074.

 

As of September 30, 2018, the Company owed Crown Bridge Partners $53,754 in principal and approximately $3,639 in accrued interest.

 

More Capital

 

More Capital purchased an outstanding note of the Company from Carbourn Capital. During the period from January 18, 2018 through March 19,2018 the note was converted to 5,688,175 shares of common stock with a value of $21,219 for principal and interest. As of September 30, 2018 the balance on the note is zero.

 

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 September 30, 2018, Moore Capital LLC the Company owes principal of $18,975 plus interest of $1,419 for a total of $20,394.

 

Management has reviewed the terms of the convertible instruments to determine their fair value. After reviewing the characteristic and the value of the conversion, management 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.

 

 F-15 

 

 

Note 8 – Income Taxes

 

The Company follows Accounting Standards Codification 740, Accounting for Income Taxes.

 

The Company had a net loss of $1,021,138 for the year ended September 30, 2018 and $1,464,122 for the same period in 2017. As of September 30, 2018, the Company’s net operating loss carry forward was approximately $2,119,728 that will begin to expire in the year 2035.

 

The Company’s deferred tax assets consisted of the following as of September 30, 2018, and 2017:

 

   2018   2017 
Total deferred tax asset   445,143    214,439 
Less: Valuation allowance   (445,143)   (214,439)
Net deferred tax asset  $-   $- 

 

In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of September 30, 2018.

 

A reconciliation of income taxes at the federal statutory rate to amounts provided for the years ended September 30, 2018 and 2017 is as follows:

 

   2018   2017 
U.S. federal statutory rate   21%   21%
Net operating loss   (21)%   (21)%

 

Based on the recent change in corporation tax rates the Company calculated the deferred tax asset for the year ended September 30, 2018 and 2017 at 21%.

 

NOTE 9 – LEGAL

 

On September 15, 2016, LG Capital, LLC filed a lawsuit against the 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 owing 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 transfer 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 made by LG Capital, is the opinion of management that the outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company. (See Note 7-Convertible Notes).

 

On August 28, 2018, the Trustee for the bankruptcy of EcoCab Portland, LLC (Case No. 17-31000-tmb7) received a judgment against the Company for $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 is claim preference by the Company over other creditors of the same class for the payments. The Company agreed to settle the claim with a one-time payment of $40,000 which is awaiting a decision by the trustee and confirmation of the bankruptcy court of any settlement.

 

 F-16 

 

 

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

On October 11, 2016, the Company completed an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company would have been required to acquire all of the outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding shares of the Company with the first closing of the agreement.

 

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. (See Note 8: Litigation)

 

NOTE 11 – IMPAIRMENT OF ASSET

 

The Company had advanced Eco Cab $197,520 as part of the acquisition agreement dated October 11, 2016. As the closing has not occurred, due to the failure of EcoCab meeting the agreement requirements, the Company has treated the advances as receivables due the Company.

 

During year ended September 30, 2017 the Company received payments of $ 154,196 leaving a balance due the Company as of June 30, 2017 of $43,324. As of September 30, 2017 the Company determined the receivable was uncollectible and impaired the asset. (See Note 9: Litigation)

 

NOTE 12 – JOINT VENTURE AGREEMENT

 

On December 21, 2017 the Company entered into a joint venture agreement to develop, market and sell products, services and technology based on a web-enabled light guard system. The Company granted the joint venture an irrevocable royalty free non-exclusive license to use all of the Company’s direct and/or licensed intellectual property necessary for the joint venture to develop and sell the system. Under the terms of the agreement the Company would 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. The Joint Venture was terminated subsequent to September 30, 2018.

 

NOTE 13 – SUBSEQUENT EVENTS

 

On October 17, 2018, the Company and Peppermint Jim, LLC (“Peppermint Jim”) mutually agreed to terminate and rescind the stock purchase agreement entered into on August 23, 2018 (the “Agreement”) by and between the Company and Peppermint Jim. Any shares transferred under the Agreement shall revert back to the respective parties.

 

Based on the termination of the Joint Venture agreement referred to in Note 12 the Company reclassified the liability deposit for the $25,000 in the JV to paid in capital.

 

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.

 

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

 

During the period from October 1, 2018 through January 8, 2019 the Company issued 904,563,434 shares of common stock with a value of $102,434 for convertible debt and accrued interest.

 

 F-17