Quarterly Report (10-q)

Date : 05/13/2019 @ 10:21AM
Source : Edgar (US Regulatory)
Stock : Liberated Energy, Inc. (PC) (LIBE)
Quote : 0.0004  -0.00005 (-11.11%) @ 8:59PM

Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______.

 

Commission file number 000-55177

 

LIBERATED SOLUTIONS, INC.

 

(Exact name of registrant as specified in its charter)

 

Nevada   27-4715504
(State or other jurisdiction   (I.R.S. Employer
 of incorporation or organization)   Identification No.)

 

17701 E 36 th Street CTS    
Independence, MO   64055
(Address of principal executive offices)   (Zip Code)

 

(845) 610-3817
(Registrant’s telephone number including area code)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days [X] Yes [  ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) [X] Yes [  ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 3,095,405,374 shares of common stock issued and outstanding as of May 10, 2019.

 

 

 

 
 

 

TABLE OF CONTENTS

 

Item #   Description   Page Numbers
         
    PART I   3
         
ITEM 1   FINANCIAL STATEMENTS   3
         
ITEM 2   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   13
         
ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   15
         
ITEM 4   CONTROLS AND PROCEDURES   15
         
    PART II   15
         
ITEM 1   LEGAL PROCEEDINGS   15
         
ITEM 1A   RISK FACTORS   15
         
ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   15
         
ITEM 3   DEFAULTS UPON SENIOR SECURITIES   16
         
ITEM 4   MINE SAFETY DISCLOSURES   16
         
ITEM 5   OTHER INFORMATION   16
         
ITEM 6   EXHIBITS   16
         
    SIGNATURES   17

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

 

  2  

 

 

PART I: FINANCIAL INFORMATION

 

ITEM 1: FINANCIAL STATEMENTS

LIBERATED SOLUTIONS, INC

BALANCE SHEETS

(Unaudited)

 

    March 31, 2019     September 30, 2018  
ASSETS                
                 
Current assets                
Cash   $ 24,851     $ 17,978  
                 
Total current assets             17,978  
                 
Total assets   $ 24,851     $ 17,978  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
                 
Current liabilities                
Accounts payable and accrued expenses   $ 105,963     $ 105,166  
Convertible notes payable     587,893       639,795  
Deferred revenue     5,000       5,000  
Total current liabilities     698,856       749,961  
                 
Stockholders’ deficit                
Preferred shares, par value $0.001. 100,000,000 authorized; 10,000,000 issued and outstanding     10,000       10,000  
Common stock, par value $0.001, authorized 6,000,000,000, issued and outstanding 2,948,738,707 and 630,989,121 as of March 31, 2019 and September 30, 2018, respectively     2,948,737       630,988  
Additional paid-in capital     409,860       2,513,957  
Accumulated deficit     (4,042,602 )     (3,886,928 )
Total stockholders’ deficit     (674,005 )     (731,983 )
                 
Total liabilities and stockholders’ (deficit)   $ 24,851     $ 17,978  

 

The accompanying notes are an integral part of the unaudited financial statements.

 

  3  

 

 

LIBERATED SOLUTIONS, INC

STATEMENTS OF OPERATIONS

FOR THE THREEAND SIX MONTHS ENDED MARCH 31,

(UNAUDITED)

 

    Three Months     Six Months  
    2019     2018     2019     2018  
                         
Operating expenses:                                
Selling, general and administrative expenses   $ 72,943     $ 421,193     $

129,876

    $

490,017

 
Loss from operations     (72,943 )     (421,193 )     (129,876     (490,017 )
                                 
Other Income(expense)                                
Interest expense     (14,529 )     (4,762 )     (25,798 )     (24,915 )
Total other income (expense)     (14,529 )    

(4,762

    (25,798 )     (24,915 )
                                 
Net loss   $ (87,472 )   $ (425,955 )   $ (155,674 )   $ (514,932 )
                                 
Net loss per common share basic and diluted   $ (0.00 )   $ (0.01 )   $ (0.00 )   $ (0.02 )
                                 
Weighted average number of common shares outstanding     1,598,052,555       51,365,743       1,596,722,229       34,074,709  

 

 

The accompanying notes are an integral part of the unaudited financial statements.

 

  4  

 

 

LIBERATED SOLUTIONS, INC

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED MARCH 31,

(Unaudited)

 

    2019     2018  
Cash Flows From Operating Activities:                
Net loss   $ (155,674 )   $ (514,932 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock based compensation           345,224  
Changes in operating assets and liabilities:                
Deferred revenue           5,000  
Accounts payable and accrued expenses     797       17,597  
Net cash used in operating activities     (154,877 )     (147,111 )
                 
Cash Flows From Financing Activities:                
Debt issued to JV for funds           25,000  
Proceeds from JV termination     25,000        
Proceeds from issuance of convertible debt     136,750       218,975  
Net cash provided by financing activities     161,750       243,975  
                 
Net change in cash     6,873       96,864  
Cash at beginning of period     17,987       67,353  
Cash at end of period   24,851     164,217  
                 
Non-Cash Financing Activities:                
Common stock issued for accrued interest   $     $ 9,413  
Common stock issued for convertible debt conversion   $ 188,652     $ 331,549  

 

The accompanying notes are an integral part of the unaudited financial statements.

 

  5  

 

 

LIBERATED SOLUTIONS, INC

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. The joint venture was terminated.

 

  6  

 

 

On December 26, 2018 the Company filed an amendment with the Secretary of State of Nevada increasing the authorized shares to 6,000,000,000 from 2,000,000,000 shares of common stock with a par value of $0.001. The authorized shares of preferred shares remained at 10,000,000 with a par value of $0.001

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months periods ended March 31, , 2019 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 2018 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 $674,006 and an accumulated deficit of $4,042,602 as of March 31, 2019. 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.

 

  7  

 

 

Net Loss per Common Share

 

The Company computes per share amounts in accordance with Statement of Financial Accounting Standards (SFAS) ASC 260, Earnings per Share (EPS). ASC 260 requires presentation of basic and diluted EPS. Basic EPS is computed by dividing the income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.

 

Stock-Based Compensation

 

The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”), 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 and six months periods ended March 31, 2019 and 2018 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.

 

  8  

 

 

Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

 

Level 1— Quoted market prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2— quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

 

Level 3— Inputs reflecting management’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 six months ended March 31, 2018, the Company issued 103,141,535 shares of common stock with a value of $340,962 for convertible debt and accrued interest.

 

During the six months ended March 31, 2018, the Company issued 22,920,000 shares of common stock with a value of $345,224 for services.

 

During the six months ended March 31, 2019 the Company issued 2,317,749,586 shares of common stock with a value of $188,652 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.

 

  9  

 

 

On September 8, 2015, the Company issued a Convertible Note to LG CAPITAL FUNDING, LLC (“LG Capital”) for a principle amount of $27,000 with an interest rate of 8% per annum. The note matures on September 8, 2016. The note is convertible by the holder at a discount of 55% of the lowest trading price of the Company’s stock for the 15 days prior to the conversion.

 

On March 14, 2016, the Company issued a Convertible Note to LG Capital Funding, LP for a principle amount of $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 7 – Litigation)

 

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 matured 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 March 31, 2019 is $121,802 plus accrued interest of $32,523.

 

  10  

 

 

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 March 31, 2019, the Company owed Power Up lending $40,540 in principal and $10,456 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.

 

  11  

 

 

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 March 31, 2019, the Company owed Crown Bridge Partners $47,036 in principal and approximately $5,879 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.

 

On February 6, 2019, the Company issued a Convertible Note to More Capital, LLC for a principal amount of $97,750, net to the Company of $75,000, with an interest rate of 10% per annum with a penalty interest rate of 22%. The note matures on August 9, 2019. 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 March 31, 2019, the Company owed More Capital principal of $plus interest of $1,893.25. As of March 31, 2019, the Company owed More Capital principal of $106,409 plus interest of $3,781.

 

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 March 31, 2018, the Company owes the note holder $14,000 plus interest of $280.

 

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– COMMITMENTS AND CONTINGENCIES

 

On March 1, 2019 the Company signed a stock purchase agreement with CigaWatt, a Nevada corporation in which the company will purchase from certain shareholders of CigaWatt 100% of the shares of CigaWatt. with a value of $200,000. The closing per this agreement shall be on or before May 15, 2019 and is subject to certain covenants and conditions including the completion of an audit of CigaWatt prior to closing.

 

NOTE 9- SUBSEQUENT EVENT

 

On April 26, 2019 the Company issued 146,666,667 shares of common stock with a value of $8,800 for the conversion of debt.

 

  12  

 

 

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

 

FORWARD LOOKING INFORMATION

 

This section and other parts of this Form 10-Q quarterly report includes “forward-looking statements”, that involves risks and uncertainties. All statements other than statements of historical facts, included in this Form 10-Q that address activities, events, or developments that we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters, and other such matters are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors that we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties, and other factors, many of which are beyond our control.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.

 

Overview

 

Go Eco Group, (formally Liberated Energy), Inc. is a Nevada corporation formed on September 14, 2011. We were incorporated as Mega World Food Holding Company for the purpose of selling frozen vegetable products in all areas of the world except China.

 

On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately held corporation formed under the laws of the State of Delaware on July 1, 2010, acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power Corporation returned to treasury its 24,500,000 shares it acquired from the Company’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 February 4, 2015 the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized common shares from 250,000,000 to 900,000,000.

 

On July 6, 2016, the Company affected a 1-for-3,500 reverse split of the Company’s common stock.

 

On September 14, 2016, the Company entered into an agreement with Ron Knori (Kroni) Owner of EcoCab Portland, LLC by which the Company will required all outstanding ECGLLC membership interest for a 20% non-dilutive interest of the outstanding shares of the Company with the first closing of the agreement. The foregoing agreement was amended on October 11, 2016 and the Company also entered into an Addendum to the amended agreement. The foregoing agreement and transaction described therein has not been completed as of the date of this report and there is no assurance that the transaction will ever be completed and the Company is contemplating rescinding the agreement and initiating suit against Knori.

 

  13  

 

 

On January 27, 2017, the Company reduced the authorized shares of common stock from 10,000,000,000 to 2,000,000,000 and changed the name from Liberated Energy, Inc to The Go Eco Group.

 

The Company has advanced Eco Cab $197,520 as part of the agreement. As the closing, has not incurred, due to the failure of EcoCab meeting the agreement requirements, the Company has treated the advances as receivables due the Company with a balance due to the Company as of December 31, 2017 of $43,324.

 

On December 26, 2018 the Company filed an amendment with the Secretary of State of Nevada increasing the authorized shares to 6,000,000,000 from 2,000,000,000 shares of common stock with a par value of $0.001. The authorized shares of preferred shares remained at 10,000,000 with a par value of $0.001

 

Results of Operations

 

Revenue

 

During the three and six months periods ended March 31, 2019 and 2018 the Company had no revenue.

 

Operation and Administrative Expenses

 

During the three and six months periods ended March 31, 2019 the Company incurred general and administrative expense of $72,943 and $129,876 compared to $421,193 and $490,017 in the same period in 2018. Lower quarter costs in the period ending March31, 2019 over the same period in 2017 was attributed to a zero stock based compensation in 2019 compared to $345,224in 2018.

 

Other Income (Expense)

 

During the three and six months periods ended March 31, 2019 the Company incurred other expense for the $ 14,529 and $25,798 compared to other income of $4,762 and other expense of $24,915 in the same periods in 2018. The higher amounts in 2019 is attributable to higher interest in 2019 over the same periods in 2018.

 

Net Loss

 

The net loss for the three and six months periods ended March 31, 2019 was $87,472 and $155,674 compared to $425,955 and $514,932 for the same period in 2018, respectively. The increase in loss is attributable to stock based compensation in 2018 of $345,224 compared to no stock based compensation in 2019.

 

Liquidity and Capital Resources

 

The Company has current assets of $24,851 and current liabilities of $698,857 resulting in negative working capital of $674,006. This compares to negative working capital of $731,983 for the period ended September 30, 2018. The decrease in negative working capital to March 31, 2019 is attributed to conversion of convertible debt in 2019.

 

Funds used in operating activities was $154,877 for the six months period ended March 31, 2019 compared to funds used of $147,111 for the same period in 2018. The effect of the change in accounts payable, stock based compensation and accrued expenses attributed to the change between the two periods.

 

Funds provided by financing activities for the six months period ended March 31, 2019 was $161,750 compared to $243,975 for the same period in 2019. The Company issued convertible debt of for its financing activity in 2018 for $218,975 and $136,750 in 2019. The Company received $25,000 in 2017 as a loan from the newly formed joint venture. The joint venture was terminated and the amount was recorded and recorded against paid in capital in 2019.

 

  14  

 

 

Off-Balance Sheet Arrangements

 

The Company does not have any relationships with un entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet financial arrangements.

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises primarily from the fact that the area in which we do business is highly competitive and constantly evolving. The market in which we do business is highly competitive and constantly evolving. We face competition from the larger and more established companies, from companies that have greater resources, including but not limited to, more money, and greater ability to expand their markets also cut into our potential customers. Many of our competitors have longer operating histories, significantly greater financial strength, nationwide advertising coverage and other resources that we do not have.

 

ITEM 4: CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Based on their evaluation of our disclosure controls and procedures(as defined in Rule 13a-15e under the Securities Exchange Act of 1934 the “Exchange Act”), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective due to the lack of segregation of duties and lack of a formal review process that includes multiple levels of review to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms because of the identification of a material weakness in our internal control over financial reporting which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the lack of segregation of duties in financial reporting, as our financial reporting and all accounting functions are performed by an external consultant with no oversight by a professional with accounting expertise. Our CEO /CFO do not possess accounting expertise and our company does not have an audit committee. This weakness is due to the company’s lack of working capital to hire additional staff. To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.

 

Changes in Internal Control over Financial Reporting

 

Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our six months period ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS

 

None

 

ITEM 1A: RISK FACTORS

 

There have been no material changes to the risk factors as previously disclosed in our most recent Form 10-K filing.

 

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the six months ended March 31, 2019 the Company issued 2,317,749,586 shares of common stock with a value of $188,652 for convertible debt and accrued interest.

 

These securities were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

 

  15  

 

 

ITEM 3: DEFAULT UPON SENIOR SECURITIES

 

None

 

ITEM 4: MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5: OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS – THIS SHOULD INCLUDE ALL DOCUMENTS THAT ARE MATERIAL AND OPERATION – ARTICLES OF INCORPORATION, BYLAWS, CONTRACTS, ETC.

 

EXHIBIT INDEX

 

        Incorporated by Reference
            Filing Date/
Exhibit           Period End
Number   Exhibit Description   Form   Date
             
31.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.        
             
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.        
             
101.INS*   XBRL Instance Document        
             
101.SCH*   XBRL Taxonomy Extension Schema Document        
             
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase Document        
             
101.DEF*   XBRL Taxonomy Extension Definition Linkbase Document        
             
101.LAB*   XBRL Taxonomy Extension Label Linkbase Document        
             
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase Document        

 

* Pursuant to Rule 406T of Regulation S-T, these interactive date files are deemed not filed or part of the registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933 or Section 18 of the Securities Act of 1934 and otherwise are not subject to liability.

 

  16  

 

 

SIGNATURES

 

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

 

  LIBERATEED SOLUTIONS, INC
Date: May 13, 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

 

  17  

 

 

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