NOTES
TO FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 - BASIS
OF PRESENTATION AND ORGANIZATION
The
Go Eco Group (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 Liberated Energy, 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.”
Effective
January 19, 2013, the Company’s business is the sale of alternative energy products and services.
On
February 4, 2015 the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized
common shares from 250,000,000 to 900,000,000.
On
July 6, 2016, the Company adopted a 1-for-3,500 reverse split of the Company’s common stock.
On
September 14, 2016, the Company entered into an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company
will acquire all outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding shares of the Company
with the first closing of the agreement. The foregoing agreement was amended on October 11, 2016 and the Company also entered
into an Addendum to the amended agreement. The foregoing agreement and transaction described therein has not been completed as
of the date of this report and there is no assurance that the transaction will ever be completed and the Company is contemplating
rescinding the agreement and initiating suit against Knori.
On
January 27, 2017, the Company reduced the authorized shares of common stock from 10,000,000,000 to 2,000,000,000 and changed the
name from Liberated Energy, Inc to The Go Eco Group.
On
March 6, 2017, the Company terminated the agreements with Ron Knori and EcoCab based upon breach of contract, fraud, fraudulent
inducement, fraud in the factum, negligent misrepresentation, misrepresentation, contractual interference, breach of fiduciary
duty, negligence, and conversion, all of which were perpetrated by Ron Knori, individually, and in his capacity as manager of
EcoCab.
On
December 31, 2017 the Company entered into a joint venture agreement to sell products produced by the Company. The Company will
hold a 65% common membership interest for $100 in consideration.
On
December 26, 2018 the Company filed an amendment with the Secretary of State of Nevada increasing the authorized shares to 6,000,000,000
from 2,000,000,000 shares of common stock with a par value of $0.001. The authorized shares of preferred shares remained at 10,000,000
with a par value of $0.001
Basis
of Presentation
The
accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the
information required to be included in a complete set of financial statements in accordance with accounting principles generally
accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating results for the three and nine months periods ended
December 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30,
2019. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related
notes included in the Company’s 2017 Annual Report filed with the SEC for year-end September 30, 2018.
NOTE
2 - GOING CONCERN
As
shown in the accompanying financial statements, the Company has a negative working capital of $666,746 and an accumulated deficit
of $3,955,130 as of December 31, 2018. The Company’s ability to generate net income and positive cash flows is dependent
on the ability to grow its operating entity as well as the ability to raise additional capital. Management is following strategic
plans to accomplish these objectives, but success is not guaranteed. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from
the outcome of this uncertainty.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Accounting
The
Company maintains its books and records on the accrual basis of accounting. The accompanying financial statements have been prepared
on that basis, in which revenues and gains are recognized when earned and expenses and losses are recognized when incurred.
Use
of Estimates
The
presentation of financial statements in conformity with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
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.
Stock-Based
Compensation
The
Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation
(“ASC 718-10”), which requires a fair value measurement and recognition of compensation expense for all share-based
payment awards made to our employees and directors, including restricted stock awards. We estimate the fair value of stock using
the stock price on date of the approval of the award. The fair value is then expensed over the requisite service periods of the
awards, which is generally the date at which the counterparty’s performance is complete and the related amount recognized
in our statements of operations.
Revenue
and Cost Recognition
The
Company did not generate revenue during the three months periods ended December 31, 2018 and 2017 periods. 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.
NOTE
4 – FAIR VALUE MEASUREMENTS
As
defined in (Financial Accounting Standards Board ASC 820), fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company
utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the
asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs
can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on
the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The
Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder
loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest
rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Financial
assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value
hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:
Level
1— Quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level
2— quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and
liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.
Level
3— Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing
assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the
instruments.
A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement.
NOTE
5- EQUITY
Common
During
the three months ended December 31, 2017, the Company issued 3,543,586 shares of common stock with a value of $12,810 for convertible
debt.
During
the three months ended December 31, 2017, the Company issued 700,000 shares of common stock with a value of $4,620 for service.
During
the three months ended December 31, 2018 the Company issued 967,063,434 shares of common stock with a value of $108,440 for convertible
debt and accrued interest.
Preferred
On
February 2, 2015, the Company issued 10,000,000 shares of Series A Preferred Stock to an officer and director of the Company.
Each share of series A preferred has 10,000 votes for all shareholder matters compared to 1 vote for each share of common stock.
On
August 15, 2017 the Company’s Board of Directors adopted a resolution authorizing 10,000,000 shares of Series B, no-par
value, preferred stock. The Company has not amended its articles of incorporation to reflect this resolution and none of the Series
B preferred shares have been issued.
NOTE
6– CONVERTIBLE DEBT
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.
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 December 31, 2018 is $146,676 plus accrued interest of $24,456.
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.
On
March 22, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an
interest rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible
by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days
prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
On
May 14, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on February 28, 2019. The note is convertible by the
holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior
to the conversion. The note is convertible to common stock 180 days following the date of the note.
On
November 19, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $25,000 with
an interest rate of 8% per annum with a default interest rate of 22%. The note matures on August 30, 2019. The note is convertible
by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days
prior to the conversion. The note is convertible to common stock 180 days following the date of the note.
As
of December 31, 2018, the Company owed Power Up lending $82,810 in principal and $7,407 of accrued interest.
Crown
Bridge Partners
On
August 21, 2017, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest
rate of 8% per annum with a default interest rate of 22%. The note matures on August 21, 2018. The note is convertible by the
holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.
On
January 5, 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.
As
of December 31, 2018, the Company owed Crown Bridge Partners $49,778 in principal and approximately $4,634 in accrued interest.
More
Capital
On
January 15, 2018, the Company issued a Convertible Note to More Capital, LLC for a principal amount of $18,975 with an interest
rate of 10% per annum. The note matures on July 15, 2018. The note is convertible by the holder at a discount of 50% of the average
of lowest three trading price of the Company’s stock for the 20 days prior to the conversion. As of December 31, 2018, the
Company owed More Capital principal of $18,975 plus interest of $1,893.25.
Redstart
Holdings Corp.
On
December 20,2018, the Company issued a Convertible Note to Redstart Holdings Corp for a principal amount of $14,000 with an interest
rate of 8% per annum with a default rate of 22%. The note matures on October 30, 2019. The note is convertible by the holder at
a discount of 48% of the average of lowest three trading price of the Company’s stock for the 10 days prior to the conversion.
As of December 31, 2018, the Company owes the note holder $14,000.
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.
Note
7 - LITIGATION
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.
NOTE
8– SUBSEQUENT EVENTS
On
January 17, 2019 the Company issued 76,583,333 shares of common stock for the conversion of debt with a value of $4,595.