As filed with the Securities and Exchange Commission on April
15, 2021
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 December 31, 2020
Commission File Number 000-55235
ABCO ENERGY, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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20-1914514
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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2505 N. Alvernon Way
Tucson, Arizona
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85712
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(520) 777-0511
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(Address of principal executive office)
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(Zip Code)
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(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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COMMON STOCK
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ABCE
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OTC PINK MARKET
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Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, par value $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined by Rule 405 of the Securities Act. Yes ☐ No
☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
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 such files). Yes ☐ No ☒
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of the
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.
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Large Accelerated ☐
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Accelerated filer ☐
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Non-Accelerated Filer ☐
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Smaller reporting company ☒
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(Do not check if a smaller reporting company)
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Emerging growth company ☒
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If an emerging growth company, indicate by check mark if 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. ☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined by Rule 12b-2 of the Act.) Yes ☐ No ☒
As of April 13, 2021, the aggregate market value of common stock
held by non-affiliates was approximately $1,785,814 using the
closing price on that day of $0.055.
As of April 13, 2021 there were 32,469,331 shares of registrant’s
common stock outstanding.
Table of
Contents
PART I
FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K (including the section regarding
Management’s Discussion and Analysis of Financial Condition and
Results of Operations) contains forward-looking statements
regarding our business, financial condition, results of operations
and prospects. Words such as “expects,” “anticipates,” “intends,”
“plans,” “believes,” “seeks,” “estimates” and similar expressions
or variations of such words are intended to identify
forward-looking statements, but are not deemed to represent an all-
inclusive means of identifying forward-looking statements as
denoted in this Annual Report on Form 10-K. Additionally,
statements concerning future matters are forward-looking
statements.
Although forward-looking statements in this Annual Report on Form
10-K reflect the good faith judgment of our Management, such
statements can only be based on facts and factors currently known
by us. Consequently, forward-looking statements are inherently
subject to risks and uncertainties and actual results and outcomes
may differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Factors that could
cause or contribute to such differences in results and outcomes
include, without limitation, those specifically addressed under the
heading “Risks Factors” below, as well as those discussed elsewhere
in this Annual Report on Form 10-K. Readers are urged not to place
undue reliance on these forward- looking statements, which speak
only as of the date of this Annual Report on Form 10-K. We file
reports with the Securities and Exchange Commission (“SEC”). You
can read and copy any materials we file with the SEC at the SEC’s
Public Reference Room at 100 F Street, NE, Washington, DC 20549.
You can obtain additional information about the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains an Internet site (www.sec.gov) that
contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
SEC, including us.
A 170 to 1 Reverse Stock Split became effective with the Financial
Industry Regulatory Authority (“Finra”) on January 4, 2021 where
upon our common stock began to trade on a reverse split adjusted
basis. All per share numbers and share prices included herein have
been adjusted to reflect this Reverse Stock Split, including the
audited financial statements.
We undertake no obligation to revise or update any forward-looking
statements to reflect any event or circumstance that may arise
after the date of this Annual Report on Form 10-K. Readers are
urged to carefully review and consider the various disclosures made
throughout the entirety of this Annual Report, which attempt to
advise interested parties of the risks and factors that may affect
our business, financial condition, results of operations and
prospects.
This Annual Report on Form 10-K includes the accounts of ABCO
Energy, Inc. (“Company”) and its wholly-owned subsidiaries, as
follows, collectively referred to as “we”, “us” or the “Company”.
Wholly owned subsidiaries include:
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ABCO Solar, Inc. An Arizona C Corporation
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Alternative Energy Finance Corporation, (AEFC) a Wyoming
Company
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(provides funding for leases of photovoltaic systems)
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Alternative Energy Finance Corp. An Arizona
“C” Corporation
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Alternative Energy Solar Fund #1, an Arizona Limited Liability
Corporation
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ABCO Air Conditioning Services, Inc., an Arizona C corporation
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ITEM 1.
BUSINESS.
OVERALL STRATEGIC DIRECTION
The Company is in the Photo Voltaic (PV) solar systems industry,
the LED and energy efficient lighting business, is a dealer for a
solar powered air conditioning system (HVAC) and is an electrical
product and services supplier. The Company plans to build out a
network of operations, through internal growth and acquisitions, in
major cities in the USA to establish a national base of PV
suppliers, lighting suppliers, HVAC and electrical service
operations centers. This combination of services, solar PV, solar
AC Systems, lighting and electric, provides the Company with a
solid base in the electrical services business and a solid base in
the growth markets of solar PV industry and the LED lighting
industry.
OVERVIEW
As of December 31, 2020, we operated in Tucson and Phoenix,
Arizona. The Company’s plan is to expand to more locations in North
America in the next year as funding becomes available. We believe
that the solar and energy efficiency business functions better if
the employees are local individuals working and selling in their
own community. Our customers have indicated a preference for
dealing with local firms and we will continue our focus on
company-owned integrated product and services offices. Once a local
firm is established, growth tends to come from experience, quality
and name recognition. We remain committed to high quality
operations.
Our audited statements for the years ended December 31, 2020 and
2019 are presented below with major category details of revenue and
expense including the components of operating expenses.
DESCRIPTION OF PRODUCTS
ABCO sells and installs Solar Photovoltaic electric systems that
allow the customer to produce their own power on their residence or
business property. These products are installed by our crews and
are purchased from both USA and offshore manufacturers. We have
available and utilize many suppliers of US manufactured solar
products from such companies as Peimar, Mia Soleil, Canadian Solar,
Boviet, Westinghouse Solar and various Korean, German, Italian and
Chinese suppliers. In addition, we purchase from several local and
regional distributors whose products are readily available and
selected for markets and price. ABCO offers solar leasing and long
term financing programs from Service Finance Corporation, Green
Sky, AEFC and others that are offered to ABCO customers and other
marketing and installation organizations.
ABCO also sells and installs energy efficient lighting products,
solar powered street lights and lighting accessories. ABCO
contracts directly with manufacturers to purchase its lighting
products which are sold to residential and commercial
customers.
ABCO has Arizona statewide approval as a registered electrical
services and solar products installer and as an air conditioning
and refrigeration installer. Our license is ROC 258378 electrical
and ROC 323162 HVAC and we are fully licensed to offer commercial
and residential electrical services, HVAC and solar.
The ABCO subsidiary, Alternative Energy Finance Corporation, (AEFC)
a Wyoming Company provides funding for leases of photovoltaic
systems. AEFC financed its owned leases from its own cash and now
arranges financing with funds provided by other lessors.
ABCO Solar offers solar systems “Operations and Maintenance
Services” to residential and commercial customers that have solar
systems built by ABCO or other solar installers. Many installers
have gone out of business and ABCO’s service enables these
customer’s system to continue to operate. ABCO’s service enables
customers to maintain their warranties, remove and replace their
systems for roof maintenance and to maintain peak efficiency. ABCO
now operates and maintains systems in many cities in Arizona and
intends to continue to expand this operation and maintenance
segment of its business.
COMPETITION
The solar power market itself is intensely competitive and rapidly
evolving. Price and available financing are the principal methods
of competition in the industry. Based upon these two criteria, our
position in the industry is relatively small. There is no
competitive data available to us in our competitive position within
the industry. Our competitors have established market positions
more prominent than ours, and if we fail to attract and retain
customers and establish a successful distribution network, we may
be unable to achieve sales and market share. There are several
major multi-national corporations that produce solar power
products, including, Suntech, Sunpower, First Solar, Kyocera,
Sharp, GE, Mitsubishi, Solar World AG and Sanyo. Also, established
integrators are growing and consolidating, including GoSolar,
Sunwize and Sunenergy and we expect that future competition will
include new entrants to the solar power market. Further, many of
our competitors are developing and are currently producing products
based on new solar power technologies that may have costs similar
to, or lower than, our projected costs.
COMPETITIVE ADVANTAGES
The Company believes that its key competitive advantages are:
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The ability to make decisions and use management’s many years
of business experience to make the right decisions.
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Experience with National expansion programs by
management.
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Experience with management of employee operated facilities
from a central management office.
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Experience with multi-media promotional program for name
recognition and product awareness.
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Alternative energy is a fast growing and popular industry
that relates well to customers and current or future shareholders
that recognize the market, products and business focus.
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ADVANTAGES OF COMPETITORS OVER US
The Company believes the following are advantages of Competitors
over us.
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Larger competitors have more capital.
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Larger companies have more experience in the market.
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Larger companies will get the larger contracts because of the
level of experience.
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We have the same products but must pay more because of
volume. This will be a price consideration in bidding
competition
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We are a small company that may not be able to compete
because we do not have experience or working capital adequate to
compete with other companies.
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CURRENT BUSINESS FOCUS
We have developed very good promotional material and advertising
products. We have developed the key messages and promotional pieces
that are relevant to our business and inexpensive to produce. We
have built an informative and interactive web site that will allow
people to assess their requirements and partially build and price a
system, much like the automobile dealers utilize. Additional sales
promotion will increase when we have secured outside financing or
increased sales through direct sales efforts. Readers should review
our websites at www.abcosolar.com and www.abcoac.com.
We have established a direct sales force to sell to Government
agencies including State, Local and Federal resources and a
separate division to call on the many American Indian governments
in the US. This allows us to quote with our specifications,
products and services on Requests for Proposals (RFP’s) that are
issued by the Government Services Agency (GSA), Bureau of Indian
Affairs (BIA) and other agencies. We have found that many projects
are not known to the general public and most contractors because
governmental agencies do not widely advertise their projects. By
departmentalizing this opportunity, we get more information on
projects than is available in the normal course of business.
ABCO does not manufacture its solar voltaic (PV) products. We will
continue to be a sales and installation contractor with plans to
enter the markets of major US and international cities. We will
sell and use commercial off the shelf components. Initially this
will include the solar panels and LED lighting products purchased
to our specification. A strong alliance with a well-respected
distributor will be the most conservative decision for the company
at this time.
ABCO will contract directly with manufacturers for its Solar Street
Light and other lighting products and will sell, install and
maintain these products.
Our business and the industry are reliant upon several state and
federal programs to assist our customers in the acquisition of our
products and services. Such programs are the utility rebates paid
directly to customers for wattage installations and the state and
federal tax credit programs that allow a percentage of the actual
cost of installations to be refunded in the form of tax credits.
Many states have mandated the utilities to collect funds from their
customers for the payment of rebates. All of these programs are
listed on the website www.dsireusa.org.
Most of these programs are slated for expiration at differing times
in the future. The federal tax credit of 30% of installation cost
expired at the end of 2019 but will continue at reduced rates
through 2024. The 2020 and 2021 rate is 26%. The customers benefit
from the federal and state tax credits which pass through to the
owners of the solar systems. Investors often require the ownership
to remain in their hands so that the tax credits can be passed
through to them. This results in a lesser amount to finance and a
benefit to the lessee because it lowers the lease payments. To the
extent known, the curtailment or reduction of this tax credit will
make a material change in our business and will very likely lower
our sales prices and gross margins. Extension of the program or
small reductions will probably not have a material effect on sales
or gross margins because the suppliers will adjust to the new norm.
We again emphasize, we cannot predict any of the future or the
outcome of unknowns. State rebate mandates and state tax credits
are variable by state. All of these programs provide incentives for
our customers that result in reduced cost. The price of solar
products has also been reduced drastically in the past few years
which is helping to balance the reduction of the subsidies.
The State of Arizona subsidized incentives are not material to our
programs at this time. Since the State of Arizona offers $1,000 tax
credit per residential installation and no utility rebates for
residential or commercial installations of solar systems, this
amount of credit is not likely to negatively impact our business
because it will not materially affect the price of the
installation. This amount currently represents less than 5% of the
price of an average residential installation.
CUSTOMER BASE
Referrals are important in any market and time in business makes
the customer base grow. No customer represented a significant
percentage of the Company’s total revenue in the fiscal years ended
December 31, 2020 or 2019. The company believes that the knowledge,
relationships, reputation and successful track record of its
management will help it to build and maintain its customer
base.
EXPERIENCED MANAGEMENT
The Company believes that it has experienced management. ABCO’s
president, David Shorey, has 12 years of experience in the sales
and installation of solar products and more than 40 years of
business experience. Mr. Shorey has the ability and experience to
attract and hire experienced and talented individuals to help
manage the company.
Mr. Wayne Marx has been a member of the ABCO Board of Directors for
ten years. He also has over 40 years of self-employed business
experience The Company believes that long term business experience
is our most valuable management tool.
ABCO has several experienced and long term employees on staff with
a number of years of experience in provision of electrical services
including lighting, HVAC and solar installations. The Company
believes that the knowledge, relationships, reputation and
successful track record of its management will help it to build and
maintain its customer base.
FINANCIAL RESOURCES
ABCO’s development activities since inception have been financially
sustained through the sale of equity and capital contribution from
shareholders. We will continue to source capital from the equity
and debt markets in order to fund our plans for expansion if we are
unable to produce adequate capital from operations. There is no
guarantee that the Company will be able to obtain adequate capital
from these sources, or at all.
EMPLOYEES
The Company presently has 10 full-time employees with four (3) in
management, and two (2) in sales and the balance are in various
labor crew positions. The Company anticipates that it will need to
hire additional employees as the business grows. In addition, the
Company may expand the size of our Board of Directors in the
future. Mr. Shorey devotes full time (40 plus hours) to the affairs
of the Company. No employees are represented by a union and there
have not been any work stoppages.
IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY
We are an “emerging growth company”, as defined in the Jumpstart
Our Business Startups Act of 2012 (“JOBS Act”). For as long as we
are an “emerging growth company,” we may take advantage of certain
exemptions from various reporting requirements that are applicable
to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with
the auditor attestation requirements of Section 40(t) of the
Sarbanes-Oxley Act (“SOX”) and reduced disclosure obligations
regarding executive compensation in our periodic reports.
Under the JOBS Act, we will remain an “emerging growth company”
until the earliest of:
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the last day of the fiscal year during which we have total annual
gross revenues of $1 Billion dollars;
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the last day of the fiscal year following the fifth anniversary of
completion of our first offering;
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the date on which we have, during the previous three-year period,
issued more than $1 billion in non-convertible debt; and
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The date on which we are deemed to be “large accelerated
filer” under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). We will qualify as a “large accelerated
filer” as of the first day of the first fiscal year after we
have (i) more than $700 million in accelerated common equity held
by our non-affiliated shareholders and (ii) been public for at
least 12 months.
The value of our outstanding common equity will be measured
each year on the last day of our second fiscal quarter.
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The JOBS Act also provides that an “emerging growth company” can
utilize the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933, as amended (the
“Securities Act”), for complying with new or revisited accounting
standards. However, we are choosing to “opt out” of such extended
transition period, and, as a result, we will comply with new or
revised accounting standards on the relevant dates on which
adoption of such standards is required for companies that are not
“emerging growth companies.” Section 107 of the JOBS Act provides
that our decision to opt out of the extended transition period for
complying with new or revised accounting standards is
irrevocable.
We are an “emerging growth company,” as defined in the JOBS Act.
For as long as we continue to be an “emerging growth company,” we
may take advantage of exemptions from various reporting
requirements that are applicable to either public companies that
are not “emerging growth companies,” including not being required
to comply with the auditor attestation requirements of Section 404
of SOX. As an “emerging growth company” we are required to report
fewer years of selected historical financial data than that
reported by other public companies. We may take advantage of these
exemptions until we are no longer an “emerging growth company.” We
could be an “emerging growth company” for up to five years,
although circumstances could cause us to lose that status earlier,
including if the market value of our ordinary shares held by
non-affiliates exceeds $700 million as of any June 30 (the end of
our second fiscal quarter) in which case we would no longer be an
“emerging growth company” as of the following December 31 (our
fiscal year end). We cannot predict if investors will find our
shares less attractive because we may rely on these exemptions. If
some investors find our shares less attractive as a result, there
may be less active trading market for our shares and the price of
our shares may be more volatile.
ITEM 1A. RISK
FACTORS
See below. Otherwise, not required under Regulation S-K for
“smaller reporting companies.”
COVID-19 DISCLOSURE
COVID-19 is currently impacting countries, communities, businesses,
and markets, as well as global financial condition and results of
operations for 2020 and 2021. We believe that it could have a
bearing on our ability to follow through with our business plan for
the next 12 months, including our ability to obtain necessary
financing.
While acknowledging that the impact of COVID-19 is evolving rapidly
and involves uncertainties, the SEC encourages companies to provide
disclosures that allow investors to evaluate the current and
expected impact of COVID-19 through the eyes of management. The SEC
also encourages companies to proactively update disclosures as
facts and circumstances change. To that end, we have endeavored to
address, where applicable, how COVID-19 has impacted our financial
conditions in the MD&A. We do not know how COVID-19 will impact
future operating results and our long term financial condition. We
have indicated what our overall liquidity position is now, but we
cannot predict the long term outlook. COVID-19 has had a negative
effect on fund raising and may have a negative effect on our
ability to service our debt on a timely basis. We do not currently
anticipate any material impairment including increases in
allowances for bad debt, restructuring charges or other changes
which could have a material impact on our financial statements.
COVID-19 had a negative effect on our financial reporting
systems and on our ability to file our financial statements on a
timely basis. We do not expect to experience any significant
challenges to implementing our business continuity plans nor do we
expect COVID-19 to materially affect the demand for our services
nor do we see any material change in the relationship between cost
and services.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
PROPERTIES.
The Company purchased land and buildings for its operations on
December 31, 2019 and moved into the property in October 2020. The
property consists of 4800 square foot of office and warehouse space
and approximately one-half acre of land. The entire cost of the
property was $325,000 plus closing costs. The property was finance
by a $25,000 loan from Green Capital (GCSG) and a mortgage from the
seller for the balance. The purchase price was allocated between
Building $125,000 and Land $200,000. The previously occupied space
was abandoned at the end of its lease and the Company wrote off the
cost of abandoned leasehold improvements in 2020. The Company
considers these facilities adequate for current operations level
and for substantial growth in the future.
There is no lease on the Williams, Arizona property because this
office is located in the office of a Director and no lease has been
established. Additional space is available in the current locations
if needed. The company currently rents small warehouse space in
Phoenix Arizona to support it operations.
ITEM 3. LEGAL
PROCEEDINGS.
From time to time, we may become involved in various lawsuits and
legal proceedings which arise in the ordinary course of business.
However, litigation is subject to inherent uncertainties, and an
adverse result in these or other matters may arise from time to
time that may harm our business. We are currently not aware of any
such legal proceedings or claims that we believe will have,
individually or in the aggregate, a material adverse effect on our
business, consolidated financial condition, or operating
results.
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 VERY LIMITED MARKET FOR OUR SHARES
Effective January 4, 2021, our shares were listed on the OTC Market
under the symbol ABCED after giving effect to a 1 for 170 reverse
stock split which became effective on that date. On December 31,
2019, the shares were de-listed from OTCQB to the OTC Pink market
for failure to meet the pricing requirements of OTCQB. At December
31, 2020, there were approximately 1,200 record holders of Company
shares according to recent NOBO lists.
The OTC Bulletin Board® is maintained by the National Association
of Securities Dealers (the NASD, now known as the Financial
Industry Regulatory Authority (FINRA)). The securities traded on
the Bulletin Board are not listed or traded on the floor of an
organized national or regional stock exchange. Instead, these
securities transactions are conducted through a telephone and
computer network connecting dealers in stocks. Over-the-counter
stocks are traditionally smaller companies that do not meet the
financial and other listing requirements of a regional or national
stock exchange.
Even if our shares are quoted on the OTC Bulletin Board®, a
purchaser of our shares may not be able to resell the shares.
Broker- dealers may be discouraged from effecting transactions in
our shares because they will be considered penny stocks and will be
subject to the penny stock rules. Upon becoming a reporting
company, Rules 15g-1 through 15g-9 promulgated under the Securities
Exchange Act of 1934, as amended, impose sales practice and
disclosure requirements on FINRA brokers-dealers who make a market
in a “penny stock.” A penny stock generally includes any non-NASDAQ
equity security that has a market price of less than $5.00 per
share. Under the penny stock regulations, a broker-dealer selling
penny stock to anyone other than an established customer or
“accredited investor” (generally, an individual with net worth in
excess of $1,000,000 or an annual income exceeding $200,000, or
$300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the
purchaser’s written consent to the transaction prior to sale,
unless the broker-dealer or the transaction is otherwise exempt. In
addition, the penny stock regulations require the broker-dealer to
deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Commission relating to the
penny stock market, unless the broker-dealer or the transaction is
otherwise exempt. A broker-dealer is also required to disclose
commissions payable to the broker-dealer and the registered
representative and current quotations for the securities. Finally,
a broker-dealer is required to send monthly statements disclosing
recent price information with respect to the penny stock held in a
customer’s account and information with respect to the limited
market in penny stocks. The additional sales practice and
disclosure requirements imposed upon broker-dealers may discourage
broker-dealers from effecting transactions in our shares, which
could severely limit the market liquidity of the shares and impede
the sale of our shares in the secondary market, assuming one
develops.
In addition to the “penny stock” rules described above, FINRA has
adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer’s financial
status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is
a high probability that speculative low priced securities will not
be suitable for at least some customers. The FINRA requirements
make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy
and sell our stock and have an adverse effect on the market for our
shares.
MARKET INFORMATION HOLDERS
As of April 1, 2021, we had approximately 1,200 shareholders of
record of our common stock. The number of record holders was
determined from the records of our transfer agent and from other
sources including NOBO listing of beneficial owners of common stock
whose shares are held in the names of various security brokers,
dealers, and registered clearing agencies. The transfer agent of
our common stock is VStock Transfer LLC, 18 Lafayette Place,
Woodmere, New York, 17598.
DIVIDENDS
We have never paid any cash dividends on our capital stock and do
not anticipate paying any cash dividends on our common stock in the
foreseeable future. We intend to retain future earnings to fund
ongoing operations and future capital requirements of our business.
Any future determination to pay cash dividends will be at the
discretion of the Board and will be dependent upon our consolidated
financial condition, results of operations, capital requirements,
and such other factors as the Board deems relevant.
ITEM 6. SELECTED
FINANCIAL DATA.
Not required under Regulation S-K for “smaller reporting
companies.”
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward Looking Statements
This Management’s Discussion and Analysis of Financial
Condition and Results of Operations include several forward-looking
statements that reflect management’s current views with
respect to future events and financial performance. You can
identify these statements by forward-looking words such as
“may,” “will,” “expect,” “anticipate,”
“believe,” “estimate” and “continue,”
or similar words. Those statements include statements regarding
the intent, belief or current expectations of us and the management
team as well as the assumptions on which such statements are based.
Prospective investors are cautioned that any such forward- looking
statements are not guarantees of future performance and involve
risk and uncertainties, and that actual results may differ
materially from those contemplated by such forward-looking
statements.
Readers are urged to carefully review and consider the various
disclosures made by us in this report and in our other reports
filed with the Securities and Exchange Commission. Important
factors not currently known to management could cause actual
results to differ materially from those in forward-looking
statements. We undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes in the future
operating results over time. We believe that our assumptions are
based upon reasonable data derived from and business and operations
of the Company. No assurances are made that actual results of
operations or the results of our future activities will not differ
materially from our assumptions. Factors that could cause
differences include, but are not limited to, expected market demand
for our products, fluctuations in pricing for materials, and
competition.
RESULTS OF OPERATION
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED
DECEMBER 31, 2020 AND 2019
The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our
consolidated financial statements and related notes. This
discussion and analysis contain certain statements that are not
historical facts, including, among others, those relating to our
anticipated financial performance for fiscal 2020 and 2019, cash
requirements, and our expansion plans. Only statements which are
not historical facts are forward-looking and speak only as of the
date on which they are made. Information included in this
discussion and analysis includes commentary on company-owned
offices and sales volumes. Management believes such sales
information is an important measure of our performance and is
useful in assessing consumer acceptance of the ABCO Energy Business
Model and the overall health of the Company. All our financial
information is reported in accordance with U.S. Generally Accepted
Accounting Principles (GAAP). Such financial information should not
be considered in isolation or as a substitute for other measures of
performance prepared in accordance with GAAP.
OVERVIEW
As of December 31, 2020, we operated in Tucson and Phoenix,
Arizona. The Company’s plan is to expand to more locations in North
America in the next year. We believe that the solar and energy
efficiency business functions better if the employees are local
individuals working and selling in their own community. Our
customers have indicated a preference for dealing with local firms
and we will continue our focus on company-owned integrated product
and services offices. Once a local firm is established, growth
tends to come from experience, quality and name recognition. This
will result in larger contracting jobs, statewide expansion and
growth in revenue. We remain committed to high quality
operations.
Our operating results for the years ended December 31, 2020 and
2019 are presented below with major category details of revenue and
expense including the components of operating expenses. Footnotes
to the financial statements discloses the related party
transactions of Officer, Directors and other related parties.
FISCAL YEAR ENDED DECEMBER 31, 2020 COMPARED TO FISCAL YEAR
ENDED DECEMBER 31, 2019
Sales decreased to $1,161,106 in 2020, a decrease of $1,191,061 or
51% under 2019 sales of $2,352,167. The Covid 19 Pandemic, Lack of
funds and available staff has reduced our ability to maintain our
sales momentum. Our experience has shown us that there is going to
be such pressure on our market, and we are changing to prevent the
decreases in sales in the future. We have added new products and
new sales personnel and intend to find merger and acquisition
funding and acquisition or merger candidates during the current
year. There is no assurance that ABCO will be able to accomplish
these goals in the coming year.
Cost of sales decreased by $916,623, or 54% to $784,730 in 2020
from $1,701,353 in 2019 due primarily to the decrease in sales. The
Company also changed its focus from residential installs to a
commercial focus in order to meet changes in the market. Gross
margin as a percentage of total sales was at 32% in 2020 from 28%
in 2019, primarily due to higher margins associated with commercial
jobs and better management of costs on the larger commercial jobs
in 2019. We hope to bid these contracts more favorably in the
future to prevent negative cost of sales numbers. We hope that more
efficient production and a sales mix shift to the higher profit
commercial market emphasis will improve these numbers.
General and administrative expenses decreased by $266,758 to
$846,640 in 2020 from $1,113,398 in 2019 due primarily to increases
in professional fees and derivative expenses for the period and the
2020 reduction of administration staff. In order to control
operating expenses and to closely administering public company
expenses in 2020, we reduced our staff. The 51% decrease in sales
revenue is the main reason administrative expenses needed to
decrease in 2020.
Net loss from operations increased by $7,680 to $(470,264) for the
year ended December 31, 2020 as compared to a loss from operations
of $(462,584) for the year ended December 31, 2019. This increase
is attributable to expenses from financing. We had similar margins
in 2020 as in 2019 due to the emphasis on commercial projects.
Total Net loss for the twelve months ended December 31, 2020 was
$(524,759) and $(1,381,077) for the year ended December 31, 2019.
This decrease is attributable to expenses from financing and
professional fee charges in 2019 that did not occur in 2020.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity and capital requirements have been for
carrying cost of accounts receivable and inventory during and after
completion of contracts. This process can easily exceed 90 days and
requires the contractor to pay all or most of the cost of the
project without assistance from suppliers. Our working capital at
December 31, 2020 was $(1,509,716) and it was $(1,558,101) at
December 31, 2019. This decrease of $46,385 was primarily funded by
our private equity offerings. Bank financing has not been available
to the Company.
ABCO Energy has increased its loan obligations or long term debt in
2020. Our long-term debt net of current portion totaled $472,293 at
December 31, 2020 and $300,000 at December 31, 2019 due mainly to
the SBA loans and equipment purchase loans obtained by the Company.
The Company owed Officers and Directors $311,340 and $248,558
respectively on demand notes, an increase of $62,782 as an
additional loan from the President of ABCO.
STATEMENTS OF CASH FLOWS
During the years ended December 31, 2020 and 2019 our net cash used
in operating activities was $(66,859) and $(664,840) respectively.
Net cash provided by operating activities in the period ended
December 31, 2020 and 2019 consisted primarily of net loss from
operations adjusted for non-cash expenses and a decrease in
accounts payable and accrued expenses and mainly the changes in the
results of operations.
Net cash provided by (used in) investing activities for the years
ended December 31, 2020 and 2019 was $(47,094) and $(24,737)
respectively. This is primarily due to the purchase of autos for
operations. Net cash provided by financing activities for the years
ended December 31, 2020 and 2019 was $155,601 and $634,490
respectively. Net cash provided by financing activities for 2020
and 2019, resulted primarily from the issuance of common stock and
the conversion of convertible debt into common stock.
Since our inception on August 8, 2008 through December 31, 2020 we
have incurred net losses of $(7,086,267), including the effects of
derivatives on convertible debt totaling $2,288,555. Our cash and
cash equivalent balances were $54,268 and $12,620 as of December
31, 2020 and 2019 respectively. At December 31, 2020, we had total
liabilities of $2,398,499 as opposed to $2,234,383 at December 31,
2019, an increase of $164,116. Most of the increase occurred
because of the SBA long term loan and the auto purchases.
We plan to satisfy our future cash requirements – primarily the
working capital required for the marketing of our products and
services by additional financing and more operations income. This
will likely be in the form of future debt or equity financing.
Based on our current operating plan, we have sufficient working
capital to sustain operations for the short term if we do not
expand our business. We will not however, be able to reach our
goals and projections for multistate expansion without a cash
infusion. We expect that our revenue will increase at a steady pace
and that this volume of business will result in profitable
operations in the future.
OFF BALANCE SHEET TRANSACTIONS
The Company has no off balance sheet transactions during the years
ended December 31, 2020 and 2019.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required under Regulation S-K for “smaller reporting
companies.”
ITEM 8. FINANCIAL
STATEMENTS.
ABCO ENERGY, INC.
FOR CONSOLIDATED FINANCIAL STATEMENTS
| |
Page
|
|
Report of Independent Registered Public Accounting Firm
|
15
|
|
Consolidated Balance Sheets as of December 31, 2021 and 2020
|
16
|
|
Consolidated Statements of Operations for the years ended December
31, 2021 and 2020
|
17
|
|
Consolidated Statements of Stockholders’ Deficit for the years
ended December 31, 2021 and 2020
|
18
|
|
Consolidated Statements of Cash Flows for the years ended December
31, 2021 and 2020
|
19
|
|
Notes to Consolidated Financial Statements
|
20
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of ABCO Energy, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
ABCO Energy, Inc. (“the Company”) as of December 31, 2020 and 2019,
and the related consolidated statements of operations, changes in
stockholders’ equity, and cash flows for the two 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 December 31, 2020 and 2019, and the results of its
operations and its cash flows for each of the two years ended
December 31, 2020 and 2019, respectively, in conformity with
accounting principles generally accepted in the United States of
America.
Consideration of the Company’s Ability to Continue as a
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 has a loss from
operations and an accumulated deficit. It also intends to fund
operations through future financing, of which no assurance can be
given that the Company will be successful in raising such capital.
These factors raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans 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. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, but not
for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
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.
Slack & Company CPAs LLC
|
We have served as the Company’s auditor since 2020
|
Dated: April 15, 2021
|
ABCO ENERGY,
INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2020, and 2019
|
|
|
December 31
2020
|
|
|
December 31
2019
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
54,268 |
|
|
$ |
12,620 |
|
|
Accounts receivable on completed projects
|
|
|
43,221 |
|
|
|
30,408 |
|
|
Costs and estimated earnings on contracts in progress
|
|
|
319,001 |
|
|
|
243,693 |
|
|
Amortizable original issue discount
|
|
|
- |
|
|
|
89,561 |
|
|
Total Current Assets
|
|
$ |
416,490 |
|
|
$ |
376,282 |
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
|
Fixed assets – net of accumulated depreciation
|
|
|
393,887 |
|
|
|
354,938 |
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Investment in long term leases
|
|
|
3,995 |
|
|
|
4,136 |
|
|
Security deposits
|
|
|
- |
|
|
|
5,200 |
|
|
Total Other Assets
|
|
|
3,995 |
|
|
|
9,336 |
|
|
Total Assets
|
|
$ |
814,372 |
|
|
$ |
740,556 |
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$ |
526,981 |
|
|
$ |
583,700 |
|
|
Short term notes payable
|
|
|
347,459 |
|
|
|
436,267 |
|
|
Excess billing on contracts in progress
|
|
|
558,907 |
|
|
|
76,052 |
|
|
Derivative liability on convertible debentures
|
|
|
- |
|
|
|
97,974 |
|
|
Notes payable from officers
|
|
|
311,340 |
|
|
|
248,558 |
|
|
Convertible debentures – net of discount
|
|
|
153,817 |
|
|
|
472,971 |
|
|
Current portion of long term debt
|
|
|
27,702 |
|
|
|
18,860 |
|
|
Total Current Liabilities
|
|
|
1,926,206 |
|
|
|
1,934,382 |
|
| |
|
|
|
|
|
|
|
|
|
Long term debt, net of current portion
|
|
|
472,293 |
|
|
|
300,000 |
|
| |
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
2,398,499 |
|
|
|
2,234,382 |
|
|
Commitments and contingencies
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit:
|
|
|
|
|
|
|
|
|
|
Preferred stock, 100,000,000 shares authorized, $0.001 par value,
and 30,000,000 shares issued and outstanding at December 31, 2020
and at December 31, 2019
|
|
|
30,000 |
|
|
|
30,000 |
|
|
Common stock, 2,000,000,000 shares authorized, $0.001 par value,
15,702,037 and 885,829, issued and outstanding at December 31, 2020
and December 31, 2019, respectively
|
|
|
15,702 |
|
|
|
886 |
|
|
Additional paid-in capital
|
|
|
5,456,438 |
|
|
|
5,036,796 |
|
|
Accumulated deficit
|
|
|
(7,086,267 |
)
|
|
|
(6,561,508 |
)
|
|
Total Stockholders’ Deficit
|
|
|
(1,584,127 |
)
|
|
|
(1,493,826 |
)
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$ |
814,372 |
|
|
$ |
740,556 |
|
See accompanying notes to the consolidated financial
statements.
ABCO ENERGY,
INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
|
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Revenues, net
|
|
$ |
1,161,106 |
|
|
$ |
2,352,167 |
|
|
Cost of Sales
|
|
|
784,730 |
|
|
|
1,701,353 |
|
|
Gross Profit
|
|
|
376,376 |
|
|
|
650,814 |
|
| |
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
Payroll
|
|
|
218,339 |
|
|
|
321,497 |
|
|
Payroll Taxes
|
|
|
43,667 |
|
|
|
62,820 |
|
|
Consulting expense
|
|
|
81,028 |
|
|
|
48,459 |
|
|
Insurance
|
|
|
60,239 |
|
|
|
62,193 |
|
|
Professional fees
|
|
|
106,624 |
|
|
|
264,649 |
|
|
Rent
|
|
|
31,580 |
|
|
|
34,724 |
|
|
Other selling and administrative expense
|
|
|
305,163 |
|
|
|
319,056 |
|
|
Total operating expense
|
|
|
846,640 |
|
|
|
1,113,398 |
|
| |
|
|
|
|
|
|
|
|
|
Net (Loss) from operations
|
|
|
(470,264 |
)
|
|
|
(462,584 |
)
|
| |
|
|
|
|
|
|
|
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(37,657 |
)
|
|
|
(306,356 |
)
|
|
Loss on note issuance
|
|
|
|
|
|
|
- |
|
|
Change in derivative liability (Gain) Loss
|
|
|
(13,629 |
)
|
|
|
(48,453 |
)
|
|
Finance Fees – derivatives
|
|
|
(3,209 |
)
|
|
|
(318,972 |
)
|
|
(Loss) on extinguishment of debt
|
|
|
- |
|
|
|
(244,712 |
)
|
|
Total other expenses
|
|
|
(54,495 |
)
|
|
|
(918,493 |
)
|
| |
|
|
|
|
|
|
|
|
|
Net (Loss) before provision for income taxes
|
|
|
(524,759 |
)
|
|
|
(1,381,077 |
)
|
| |
|
|
|
|
|
|
|
|
|
Provision for income tax
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$ |
(524,759 |
)
|
|
$ |
(1,381,077 |
)
|
| |
|
|
|
|
|
|
|
|
|
Net (loss) Per Share (Basic and Fully Diluted)
|
|
$ |
(0.01 |
)
|
|
$ |
(0.01 |
)
|
| |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares used in the
calculation
|
|
|
8,293,933 |
|
|
|
539,257 |
|
See accompanying notes to the consolidated financial
statements.
ABCO ENERGY,
INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares are recast in 2019 and 2018 for 170 for 1 reverse of common
stock
|
|
Shares
|
|
|
Amount
$0.001
Par
|
|
|
Preferred
Stock
|
|
|
Additional
Paid in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Deficit
|
|
|
Balance at December 31, 2018
|
|
|
192,684 |
|
|
$ |
193 |
|
|
$ |
30,000 |
|
|
$ |
4,412,356 |
|
|
$ |
(5,180,431 |
)
|
|
$ |
(737,882 |
)
|
|
Common shares issued under private placement offering - net of
expenses
|
|
|
27,883 |
|
|
|
28 |
|
|
|
|
|
|
|
80,228 |
|
|
|
|
|
|
|
80,256 |
|
|
Common shares issued for conversion of convertible debenture notes
- net of expenses
|
|
|
665,263 |
|
|
|
665 |
|
|
|
|
|
|
|
142,562 |
|
|
|
|
|
|
|
143,227 |
|
|
Reclass derivative liability from conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401,650 |
|
|
|
|
|
|
|
401,650 |
|
|
Net (loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,381,077 |
)
|
|
|
(1,381,077 |
)
|
|
Balance - December 31, 2019
|
|
|
885,829 |
|
|
$ |
886 |
|
|
$ |
30,000 |
|
|
$ |
5,036,796 |
|
|
$ |
(6,561,508 |
)
|
|
$ |
(1,493,826 |
)
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for conversion of convertible debenture notes
- net of expenses
|
|
|
9,107,296 |
|
|
|
9,107 |
|
|
|
|
|
|
|
220,658 |
|
|
|
|
|
|
|
229,765 |
|
|
Common shares issued for warrants net of expenses
|
|
|
5,708,912 |
|
|
|
5,709 |
|
|
|
|
|
|
|
198,984 |
|
|
|
|
|
|
|
204,693 |
|
|
Net (loss) for the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(524,759 |
)
|
|
|
(524,759 |
)
|
|
Balance - December 31, 2020
|
|
|
15,702,037 |
|
|
$ |
15,702 |
|
|
$ |
30,000 |
|
|
$ |
5,456,438 |
|
|
$ |
(7,086,267 |
)
|
|
$ |
(1,584,127 |
)
|
See accompanying notes to the consolidated financial
statements.
ABCO ENERGY,
INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019
|
|
|
December 31
|
|
|
December 31
|
|
|
|
|
2020
|
|
|
2019
|
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(524,759 |
)
|
|
$ |
(1,381,077 |
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13,486 |
|
|
|
10,213 |
|
|
Change in amortizable debt discount on convertible debt
|
|
|
89,561 |
|
|
|
- |
|
|
Shares issued to officers and consultants
|
|
|
|
|
|
|
- |
|
|
Inventory write down
|
|
|
|
|
|
|
53,950 |
|
|
Loss on note issuance
|
|
|
|
|
|
|
- |
|
|
Derivative liability (Gain) Loss
|
|
|
13,629 |
|
|
|
48,453 |
|
|
Finance fees on derivatives
|
|
|
3,209 |
|
|
|
318,972 |
|
|
Gain (loss) on extinguishment of debt
|
|
|
- |
|
|
|
244,712 |
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Changes in Accounts receivable
|
|
|
(12,813 |
)
|
|
|
74,779 |
|
|
Change in accounts receivable on incomplete contracts
|
|
|
(75,308 |
)
|
|
|
(59,207 |
)
|
|
Billings in excess of costs on incomplete projects
|
|
|
482,855 |
|
|
|
(9,725 |
)
|
|
Accounts payable and accrued expenses
|
|
|
(56,719 |
)
|
|
|
34,090 |
|
|
Net cash used in operating activities
|
|
|
(66,859 |
)
|
|
|
(664,840 |
)
|
| |
|
|
|
|
|
|
|
|
|
Cash Flows used in Investing Activities:
|
|
|
|
|
|
|
|
|
|
Cash paid for land and building
|
|
|
- |
|
|
|
(26,400 |
)
|
|
Purchase of equipment
|
|
|
(52,435 |
)
|
|
|
(2,213 |
)
|
|
Proceeds from investments in long term leases
|
|
|
141 |
|
|
|
6,376 |
|
|
Increase in lease deposits
|
|
|
5,200 |
|
|
|
(2,500 |
)
|
|
Net cash used in investing activities
|
|
|
(47,094 |
)
|
|
|
(24,737 |
)
|
| |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock net of expenses
|
|
|
495,394 |
|
|
|
240,368 |
|
|
Proceeds from convertible debenture
|
|
|
(319,154 |
)
|
|
|
290,300 |
|
|
Payments of and conversions of convertible debentures
|
|
|
(84,602 |
)
|
|
|
(94,757 |
)
|
|
Proceeds from merchant loans
|
|
|
6,828 |
|
|
|
260,342 |
|
|
Payments on merchant loans
|
|
|
(65,470 |
)
|
|
|
(151,043 |
)
|
|
Proceeds (Payments) on related party notes payable
|
|
|
123,834 |
|
|
|
63,201 |
|
|
Increase in loans from material lenders
|
|
|
(208,390 |
)
|
|
|
239,852 |
|
|
Change in derivative liability
|
|
|
(97,974 |
) |
|
|
(202,541 |
)
|
|
Proceeds (Payment) on long term debt
|
|
|
181,136 |
|
|
|
(11,232 |
)
|
|
Proceeds from SBA PPE loan payroll
|
|
|
123,999 |
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
155,601 |
|
|
|
634,490 |
|
|
Net increase (decrease) in cash
|
|
|
41,648 |
|
|
|
(55,087 |
)
|
|
Cash, beginning of period
|
|
|
12,620 |
|
|
|
67,707 |
|
|
Cash, end of period
|
|
$ |
54,268 |
|
|
$ |
12,620 |
|
|
Supplemental disclosures of cash flow
information: |
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
37,657 |
|
|
$ |
151,965 |
|
|
Income taxes paid or accrued
|
|
|
- |
|
|
|
- |
|
|
Proceeds from mortgage on Equipment, land and buildings
|
|
|
48,280 |
|
|
|
300,000 |
|
|
Proceeds from SBA loan 30 years
|
|
|
150,000 |
|
|
|
- |
|
|
Proceeds from SBA payroll loan EIDL
|
|
|
123,999 |
|
|
|
- |
|
|
Supplemental Disclosure of Non-cash investing and financing
activities: |
|
|
|
|
|
|
|
|
|
Shares issued or to be issued for services
|
|
$ |
14,500 |
|
|
|
- |
|
|
Convertible loans for prepaid expenses resulting in non-cash
proceeds – Oasis notes
|
|
|
- |
|
|
|
276,509 |
|
|
Changes in derivative liabilities charged to operations and cash
flow from operations - net
|
|
|
- |
|
|
|
612,137 |
|
See accompanying notes to the consolidated financial
statements.
ABCO ENERGY,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Note 1 – Overview and Description of the Company
ABCO Energy, Inc. was organized on July 29, 2004 and operated until
July 1, 2011 as Energy Conservation Technologies, Inc.
(ENYC). On July 1, 2011 ENYC entered into a share
exchange agreement (SEA) with ABCO Energy, Inc. (“Company”) and
acquired all the assets of ABCO. ENYC changed its name
to ABCO Energy, Inc. on October 31, 2011. As a result of
the SEA, the outstanding shares of ENYC as of June 30, 2011 were
restated in a one for twenty three (1 for 23) reverse stock split
prior to the exchange to approximately 9% of the post-exchange
outstanding common shares of the Company.
On January 13, 2017, the Board of Directors of the Company approved
a reverse stock split of its common stock, at a ratio of 1-for-10
(the “Reverse Stock Split”). The Reverse Stock Split became
effective with FINRA (the Financial Industry Regulatory Authority)
and in the marketplace on January 13, 2017 (the “Effective Date”),
whereupon the shares of common stock began trading on a split
adjusted basis. As a result of the Reverse Stock Split
the number of authorized shares of common stock was reduced to
50,000,000 from 500,000,000 shares. The Company held a
Special Meeting of Stockholders in May 2017 which authorized an
amendment to the Articles of Incorporation to increase the
authorized common share capital to 2,000,000,000 common shares and
100,000,000 preferred shares. Thereafter, on September 27,
2017, by written consent the holders of a majority of the
outstanding shares voted to authorize an additional amendment to
increase the authorized common shares to 2,000,000,000 shares.
On December 13, 2020, the Board of Directors of the Company
approved a reverse stock split of its common stock, at a ratio of
1-for-170 (the “Reverse Stock Split”). The Reverse Stock
Split became effective with FINRA (the Financial Industry
Regulatory Authority) and in the marketplace on January 4, 2021
(the “Effective Date”), whereupon the shares of common stock began
trading on a split adjusted basis.
On December 23, 2018, the Board of Directors of the Company
approved a reverse stock split of its common stock, at a ratio of
1-for 20 (the “Reverse Stock Split”). The Reverse Stock Split
became effective with FINRA (the Financial Industry Regulatory
Authority) and in the marketplace on December 23, 2018 (the
“Effective Date”), whereupon the shares of common stock began
trading on a split adjusted basis.
On November 8, 2018, by written consent the holders of a majority
of the outstanding shares voted to authorize an additional
amendment to increase the authorized common shares to 5,000,000,000
shares. All share numbers through-out these financial statements
and notes thereto have been adjusted to reflect this reverse
split.
The Company is in the Photo Voltaic (PV) solar systems industry,
the LED and energy efficient commercial lighting business and is an
electrical product and services supplier. In 2018 ABCO entered the
HVAC business with the acquisition of a small company’s assets and
qualifying license. The Company plans to build out a network of
operations in major cities in the USA to establish a national base
of PV, HVAC, lighting and electrical service operations centers.
This combination of services, solar and electric, provides the
Company with a solid base in the standard electrical services
business and a solid base in the growth markets of solar systems
industry.
DESCRIPTION OF PRODUCTS
ABCO sells and installs Solar Photovoltaic electric systems that
allow the customer to produce their own power on their residence or
business property. These products are installed by our crews and
are purchased from both USA and offshore manufacturers. We have
available and utilize many suppliers of US manufactured solar
products from such companies as Mia Soleil, Canadian Solar,
Westinghouse Solar and various Italian, Korean, German and Chinese
suppliers. In addition, we purchase from several local and regional
distributors whose products are readily available and selected for
markets and price. ABCO offers solar leasing and long term
financing programs from Service Finance Corporation, Green Sky,
AEFC and others that are offered to ABCO customers and other
marketing and installation organizations.
ABCO also sells and installs energy efficient lighting products,
solar powered street lights and lighting accessories. ABCO
contracts directly with manufacturers to purchase its lighting
products which are sold to residential and commercial
customers.
ABCO has Arizona statewide approval as a registered electrical
services and solar products installer and as an air conditioning
and refrigeration installer. Our license is ROC 258378 Electrical
and ROC 323162 HVAC and we are fully licensed to offer commercial
and residential electrical services, HVAC and Solar Electric.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
ABCO has Three subsidiaries, ABCO Solar, Inc. an Arizona
Corporation which provides solar and electric services and
products, Alternative Energy Finance Corporation, (AEFC) a Wyoming
Company which provides funding for leases of photovoltaic systems,
and ABCO Air Conditioning Services, Inc., an Arizona Corporation
which sells residential and commercial air conditioning equipment
and services in Arizona. In addition, AEFC has two subsidiaries,
Alternative Energy Solar Fund, LLC, and Arizona limited liability
Company that was formed to invest in solar projects and Alternative
Energy Finance Corporation, LLC, an Arizona limited liability
company formed so AEFC could do business in Arizona.
ABCO Solar offers solar systems “Operations and Maintenance
Services” to residential and commercial customers that have solar
systems built by ABCO or other solar installers. Many installers
have gone out of business and ABCO’s service enables these
customer’s system to continue to operate. ABCO’s service enables
customers to maintain their warranties, remove and replace their
systems for roof maintenance and to maintain peak efficiency. ABCO
now operates and maintains systems in many cities in Arizona and
intends to continue to expand this operation and maintenance
segment of its business.
Note 2 – Summary of significant accounting
policies.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results
of operations are based on our financial statements, which have
been prepared in accordance with U.S. generally accepted accounting
principles, or “GAAP.” The preparation of these financial
statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenue and expenses.
Intercompany transactions and balances have been eliminated. We
base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions. We have identified the following to be critical
accounting policies whose application have a material impact on our
reported results of operations, and which involve a higher degree
of complexity, as they require us to make judgments and estimates
about matters that are inherently uncertain.
Cash and Cash Equivalents
There are only cash accounts included in our cash equivalents in
these statements. For purposes of the statement of cash flows, the
Company considers all short-term securities with a maturity of
three months or less to be cash equivalents. There are no short
term cash equivalents reported in these financial statements.
Fixed Assets
Property and equipment are to be stated at cost less accumulated
depreciation. Depreciation is recorded on the straight-line basis
according to IRS guidelines over the estimated useful lives of the
assets, which range from three to ten years. Maintenance and
repairs are charged to operations as incurred.
Revenue Recognition
The Company generates revenue from sales of solar products, LED
lighting, installation services and leasing fees. During the last
two fiscal years, the company had product sales as follows:
|
Sales Product and Services Description
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
Solar PV residential and commercial sales
|
|
$ |
938,633 |
|
|
|
81 |
%
|
|
$ |
2,352,794 |
|
|
|
96 |
%
|
|
Air conditioning sales and service
|
|
|
28,800 |
|
|
|
2 |
%
|
|
|
|
|
|
|
|
|
|
Energy efficient lighting & other income
|
|
|
193,333 |
|
|
|
16 |
%
|
|
|
98,759 |
|
|
|
3 |
%
|
|
Interest Income
|
|
|
340 |
|
|
|
1 |
%
|
|
|
614 |
|
|
|
1 |
%
|
|
Total revenue
|
|
$ |
1,161,106 |
|
|
|
100 |
%
|
|
$ |
2,352,167 |
|
|
|
100 |
%
|
The Company recognizes product revenue, net of sales discounts,
returns and allowances. These statements establish that
revenue can be recognized when persuasive evidence of an
arrangement exists, delivery has occurred, and all significant
contractual obligations have been satisfied, the fee is fixed or
determinable, and collection is considered probable.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Our revenue recognition is recorded on the percentage of completion
method for sales and installation revenue and on the accrual basis
for fees and interest income. We recognize and record
income when the customer has a legal obligation to
pay. All our revenue streams are acknowledged by written
contracts for any of the revenue we record. There are no
differences between major classes of customers or customized
orders. We record discounts, product returns, rebates
and other related accounting issues in the normal business manner
and experience very small number of adjustments to our written
contractual sales. There are no post-delivery
obligations because warranties are maintained by our suppliers. Our
lease fees are earned by providing services to contractors for
financing of solar systems. Normally we will acquire the
promissory note (lease) on a leased system that will provide cash
flow for up to 20 years. Interest is recorded on the
books when earned on amortized leases.
Accounts Receivable and work-in-progress
The Company recognizes revenue upon delivery of product to
customers and does not make bill-and-hold sales. Contracts
spanning reporting periods are recorded on the percentage of
completion method, based on the ratio of total costs to total
estimated costs by project, for recognition of revenue and
expenses. Accounts receivable includes fully completed
and partially completed projects and partially billed statements
for completed work and product delivery. The Company records
a reserve for bad debts in the amount of 2% of earned accounts
receivable. When the Company determines that an account is
uncollectible, the account is written off against the reserve and
the balance to expense. If the reserve is deemed to be
inadequate after annual reviews, the reserve will be increased to
an adequate level.
Inventory
The Company records inventory of construction supplies at cost
using the first in first out method. After review of the
inventory on an annual basis, the Company discounts all obsolete
items to fair market value and has established a valuation reserve
of 10% of the inventory at total cost to account for obsolescence.
As of December 31, 2019 all inventory was written off resulting in
balances at December 31, 2020 of $0 and at December 31, 2019 of
$0.
Income Taxes
The Company has net operating loss carryforwards as of December 31,
2020 totaling approximately $4,659,812 net of accrued derivative
liabilities and stock-based compensation, which are assumed to be
non-tax events. A deferred 21% tax benefit of approximately
$978,561 has been offset by a valuation allowance of the same
amount as its realization is not assured. The full realization of
the tax benefit associated with the carry-forward depends
predominately upon the Company’s ability to generate taxable income
during future periods, which is not assured.
The Company files in the US only and is not subject to taxation in
any foreign country. There are three open years for which the
Internal Revenue Service can examine our tax returns so 2017, 2018
and 2019 are still open years and 2020 will replace 2017 when the
tax return is filed.
Fair Values of Financial Instruments
ASC 825 requires the Corporation to disclose estimated fair value
for its financial instruments. Fair value estimates, methods,
and assumptions are set forth as follows for the Corporation’s
financial instruments. The carrying amounts of cash,
receivables, other current assets, payables, accrued expenses and
notes payable are reported at cost but approximate fair value
because of the short maturity of those instruments. The Company
evaluates derivatives based on level 3 indicators.
ASC 825 requires the Corporation to disclose estimated fair value
for its financial instruments. Fair value estimates, methods,
and assumptions are set forth as follows for the Corporation’s
financial instruments. The carrying amounts of cash,
receivables, other current assets, payables, accrued expenses and
notes payable are reported at cost but approximate fair value
because of the short maturity of those instruments.
The Company measures assets and liabilities at fair value based on
expected exit price as defined by the authoritative guidance on
fair value measurements, which represents the amount that would be
received on the sale date of an asset or paid to transfer a
liability, as the case may be, in an orderly transaction between
market participants. As such, fair value may be based on
assumptions that market participants would use in pricing an asset
or liability. The authoritative guidance on fair value measurements
establishes a consistent framework for measuring fair value on
either a recurring or nonrecurring basis whereby inputs, used in
valuation techniques, are assigned a hierarchical level.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
The following are the hierarchical levels of inputs to measure fair
value:
Level 1: Observable inputs that reflect quoted prices
(unadjusted) for identical assets or liabilities in active
markets.
Level 2: Inputs reflect quoted prices for identical assets or
liabilities in markets that are not active; quoted prices for
similar assets or liabilities in active markets; inputs other than
quoted prices that are observable for the assets or liabilities; or
inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
Level 3: Unobservable inputs reflecting the Company’s
assumptions incorporated in valuation techniques used to determine
fair value. These assumptions are required to be consistent with
market participant assumptions that are reasonably
available.
The carrying amounts of the Company’s financial assets and
liabilities, such as cash, accounts payable and accrued expenses,
approximate their fair values because of the current nature of
these instruments. Debt approximates fair value based on interest
rates available for similar financial arrangements. Derivative
liabilities which have been bifurcated from host convertible debt
agreements are presented at fair value. See note 11 for complete
derivative and convertible debt disclosure.
Derivative Financial Instruments
Fair value accounting requires bifurcation of embedded derivative
instruments such as convertible features in convertible debts or
equity instruments, and measurement of their fair value for
accounting purposes. In determining the appropriate fair value, the
Company uses the binomial option-pricing model. In assessing the
convertible debt instruments, management determines if the
convertible debt host instrument is conventional convertible debt
and further if there is a beneficial conversion feature requiring
measurement. If the instrument is not considered conventional
convertible debt, the Company will continue its evaluation process
of these instruments as derivative financial
instruments.
Once determined, derivative liabilities are adjusted to reflect
fair value at each reporting period end with any increase or
decrease in the fair value being recorded in results of operations
as an adjustment to fair value of derivatives. In addition, the
fair value of freestanding derivative instruments, such as
warrants, are also valued using the binomial option-pricing
model.
Stock-Based Compensation
The Company accounts for employee and non-employee stock awards
under ASC 718, whereby equity instruments issued to employees for
services are recorded based on the fair value of the instrument
issued and those issued to non-employees are recorded based on the
fair value of the consideration received or the fair value of the
equity instrument, whichever is more reliably
measurable.
Effects of Recently Issued Accounting
Pronouncements
The Company has reviewed all recently issued accounting
pronouncements and have determined the following have
an effect on our financial statements:
Stock-Based Compensation
The Company accounts for employee and non-employee stock awards
under ASC 505 and ASC 718, whereby equity instruments issued to
employees for services are recorded based on the fair value of the
instrument issued and those issued to non-employees are recorded
based on the fair value of the consideration received or the fair
value of the equity instrument, whichever is more reliably
measurable. For employees, the Company recognizes compensation
expense for share-based awards based on the estimated fair value of
the award on the date of grant and the probable attainment of a
specified performance condition or over a service period.
Per Share Computations
Basic net earnings per share are computed using the
weighted-average number of common shares outstanding. Diluted
earnings per share is computed by dividing net income by the
weighted-average number of common shares and the dilutive potential
common shares outstanding during the period. All shares were
considered anti-dilutive at December 31, 2020 and 2019. Potentially
dilutive share issues are: 1) all unissued common shares sold, 2)
all convertible debentures have a possibility of a large number of
shares being issued and would result in a larger number of shares
issued if the price remains low, 3) the preferred stock of the
company held by insiders is convertible into common shares and the
preferred stock is voted on a 20 to 1 basis, 4) all options issued.
All of the above are potential dilutive items.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Note 3 – Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern, which
contemplates the recoverability of assets and the satisfaction of
liabilities in the normal course of business. Since its inception,
the Company has been engaged substantially in financing activities
and developing its business plan and marketing. The Company
incurred a net loss of $(524,759), the net cash flow used in
operations was $(66,859) and its accumulated net losses from
inception through the period ended December 31, 2020 is
$(7,086,267), which raises substantial doubt about the Company’s
ability to continue as a going concern. In addition, the Company’s
development activities since inception have been financially
sustained through capital contributions from shareholders.
The ability of the Company to continue as a going concern is
dependent upon its ability to raise additional capital from the
sale of common stock or through debt financing and, ultimately, the
achievement of significant operating revenues. These financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and
classification of liabilities that might result from this
uncertainty.
Note 4 – Accounts Receivable
Accounts receivable as of December 31, 2020 and 2019, consists of
the following:
|
Description
|
|
December 31, 2020
|
|
|
December 31, 2019
|
|
|
Accounts receivable on completed contracts
|
|
$ |
43,221 |
|
|
$ |
30,408 |
|
|
Costs and estimated earnings on contracts in progress
|
|
|
319,001 |
|
|
|
243,693 |
|
|
Total
|
|
$ |
362,222 |
|
|
$ |
274,101 |
|
Costs and Estimated Earnings on projects are recognized on the
percentage of completion method for work performed on contracts in
progress at December 31, 2020 and December 31, 2019.
The Company records contracts for future payments based on
contractual agreements entered into at the inception of
construction contracts. Amounts are payable from customers based on
milestones established in each contract. Larger contracts are
billed and recorded in advance and unearned profits are netted
against the billed amounts such that accounts receivable reflect
current amounts due from customers on completed projects and
amounts earned on projects in process are reflected in the balance
sheet as costs and estimated earnings in excess of billings on
contracts in progress. Excess billings on contracts in process are
recorded as liabilities and were $558,907 at December 31, 2020 and
$76,052 at December 31, 2019.
Note 5 – Inventory
Inventory of construction supplies not yet charged to specific
projects was $0.00 at December 31, 2020, and $ 0 as of December 31,
2019. The Company values items of inventory at the lower of cost or
net realizable value and uses the first in first out method to
charge costs to jobs. The Company wrote off all of its inventory
during 2018.
Note 6 – Security deposits and Long Term
Commitments
During October 2020, the Company moved into its own building that
was purchased in December 2019 and abandoned the Wilmot Avenue
rental space. It now occupies 4,800 square foot of office and
warehouse space and one-half acre of land. There are no security
deposits.
Note 7 – Investment in long term leases
Long term leases recorded on the consolidated financial statements
were $3,995 at December 31, 2020 and $4,136 at December 31,
2019 respectively. During the year ended December 31, 2020 one of
the leases owned by AEFC was paid in full by the customer.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Note 8 – Fixed Assets
The Company has acquired all its office and field work equipment
with cash payments and financial institution loans. The total fixed
assets consist of land and building, vehicles, office furniture,
tools and various equipment items and the totals are as
follows:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
Asset
|
|
2020
|
|
|
2019
|
|
|
Land and Building
|
|
$ |
326,400 |
|
|
$ |
326,400 |
|
|
Equipment
|
|
|
173,991 |
|
|
|
121,556 |
|
|
Accumulated depreciation
|
|
|
(106,504 |
)
|
|
|
(93,018 |
)
|
|
Fixed Assets, net of accumulated depreciation
|
|
$ |
393,887 |
|
|
$ |
354,938 |
|
Depreciation expenses for the years ended December 31, 2020 and
2019 was $13,486 and $10,213 respectively.
On December 31, 2019 the Company purchased a building at 2505 N
Alvernon consisting of 4,800 SF building and approximately ½ acre
of land. The property was financed by a $25,000 loan from Green
Capital (GCSG) and a mortgage from the seller for the $300,000
balance. The purchase price was $325,000 plus closing costs of
$1,400.
Note 9 – Notes Payable to Officers
Notes payable as of December 31, 2020 and December 31, 2019
consists of the following:
|
Description
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Notes payable – Director bearing interest at 12% per annum,
unsecured, demand notes.
|
|
$ |
60,000 |
|
|
$ |
60,000 |
|
|
Note payable – President bearing interest at 12% per annum,
unsecured, demand note.
|
|
|
251,340 |
|
|
|
127,506 |
|
|
Total
|
|
$ |
311,340 |
|
|
$ |
187,506 |
|
The first note in the amount of $60,000 provides for interest at
12% per annum and is unsecured. This note resulted in an interest
charge of $43,263 accrued and unpaid at December 31, 2020 and
$36,061 at December 31, 2019.
The second note has a current balance of $251,340 as of December
31, 2020. The note is an unsecured demand note and bears interest
at 12% per annum. This note resulted in an interest charge of
$53,117 accrued and unpaid at December 31, 2020 and $28,555 at
December 31, 2019. The Note was converted to a secured note on
April 1, 2021 covering all assets of the Company. See Note 16
below.
The combined total funds due to Officers and related parties
totaled $407,720 with principal and interest at December 31,
2020.
Note 10 – Short Term Notes Payable
|
Description
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Bill’d Exchange, LLC, an equipment capital lender, initial
financing August 2, 2019, finances equipment for commercial
contracted customers in varying amounts
|
|
$ |
31,462 |
|
|
$ |
239,852 |
|
|
Merchant loan – Knight Capital Funding, LLC
|
|
|
33,694 |
|
|
|
61,747 |
|
|
Merchant loan – Pearl lending
|
|
|
51,750 |
|
|
|
65,664 |
|
|
Merchant loan – Green Capital
|
|
|
11,748 |
|
|
|
35,250 |
|
|
Private money loan from Perfectly Green Corporation
|
|
|
33,754 |
|
|
|
33,754 |
|
|
Private money loan from prior officer of ABCO
|
|
|
61,052 |
|
|
|
|
|
|
SBA loan for Payroll - forgiven
|
|
|
123,999 |
|
|
|
|
|
|
Total
|
|
$ |
347,459 |
|
|
$ |
436,267 |
|
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Bill’d Exchange, LLC, a customer equipment capital lender, made
their initial financing on August 2, 2019. They finance equipment
for commercial contracted customers in varying amounts. These loans
bear interest at varying rates and are paid weekly for the amount
of interest due on the account at each date. Each loan is secured
by the accounts receivable from the customer and by personal
guarantee of an affiliated officer of ABCO Solar, Inc. On March 2,
2021 the Company made an agreement to pay $20,000 to settle this
note in 5 payment of $4,000.
On January 30, 2019 the Company borrowed $153,092 including
principal and interest from Knight Capital Funding, LLC, and
[“KCF”] bearing interest at 23% per annum, unsecured. This
loan was refinanced on August 10, 2019 and replaced with a new loan
of $144,900 from KCF. The balance and accrued interest at December
31, 2019 was $61,747. On February 18, 2020 ABCO defaulted on this
loan due to the reduction in business from Covid-19. On March 29,
2021 the Company made a settlement payment on this note for
$22,000.
On December 6, 2019 the Company borrowed $52,174 from Pearl Delta
Funding that contained a repayment in the amount of $72,000 in 160
payments of $450. This unsecured note bears interest at the
imputed rate of approximately 36% per annum. The unpaid balance of
principle and interest at December 31, 2019 was $65,664. On
February 18, 2020 ABCO defaulted on this loan due to the reduction
in business from Covid-19 when the balance of the note was $51,750.
On March 29, 2021 the company made a settlement payment in the
amount of $36,998.
On December 31, 2019 ABCO borrowed $25,000 from Green Capital
Funding, LLC. The proceeds from this loan were used to
acquire the real estate purchased on the date of the loan.
This unsecured loan bears interest at approximately 36%
and has a repayment obligation in the amount of $35,250
in 76 payments. The unpaid balance of principle and interest at
December 31, 2020 was $11,748 after several months of daily payment
and a default on February 18, 2020 due to the reduction in business
from Covid-19. As of the date of filing this report, no
arrangements for resuming payments had been accomplished however
the Company has been paying $1,000 per month for several months. As
of December 31, 2020, the Company has reduced the balance to
$11,748.
On January 22, 2018 the Company borrowed $60,000 from Perfectly
Green Corporation, a Texas corporation. The Company has paid
$26,246 leaving a balance of $33,754 at September 30, 2020 and
December 31, 2019. The note bears interest at 3% per annum and is
payable upon demand after 60 days’ notice which can be requested at
any time after May 31, 2018.
Mr. Charles O’Dowd, former President and Director of ABCO Energy
resigned from all positions with the Company on October 7, 2019.
Prior to his resignation, Mr. O’Dowd had loaned the Company $61,052
at the time, and he currently holds a promissory note that is
unsecured that also has unpaid interest accrual at 12-31-20 in the
amount of $34,694. The note bears interest at the rate of 12% per
annum. Mr. O’Dowd has filed legal action against the company for
collection of the amounts due for principal and interest but has
not completed the judgement he sought and has received no
payments.
The Company was able to borrow $123,999 from Bank of America and
the SBA guaranteed the loan under the EIDL program because of
Covid-19 pandemic. This loan was forgiven in March of 2021 and the
Company has no further obligation to the SBA or the Bank of America
under this note.
Note 11 – Convertible debentures -net of
discounts
During the year ended December 31, 2020, the Company funded
operations with borrowing on new convertible promissory notes. This
table presents the positions on the notes as of December 31,
2020.
|
Holder
|
|
Date
of Loan
|
|
|
Loan
amount
|
|
|
OID and
discounts
and fees
|
|
|
Interest
rate
|
|
|
Balance
December 31, 2019
|
|
|
Balance
December 31, 2020
|
|
|
Power Up Lending Group Ltd
|
|
|
5-13-19 |
|
|
$ |
96,300 |
|
|
$ |
13,300 |
|
|
|
8 |
%
|
|
$ |
4,300 |
|
|
$ |
0 |
|
|
Power Up Lending Group Ltd
|
|
|
8-14-19 |
|
|
|
68,000 |
|
|
|
13,000 |
|
|
|
8 |
%
|
|
|
68,000 |
|
|
|
0 |
|
|
Power Up Lending Group Ltd
|
|
|
9-11-19 |
|
|
|
76,000 |
|
|
|
13,000 |
|
|
|
8 |
%
|
|
|
76,000 |
|
|
|
0 |
|
|
Crown Bridge Tranche 1
|
|
|
8-8-19 |
|
|
|
50,000 |
|
|
|
5,000 |
|
|
|
8 |
%
|
|
|
50,000 |
|
|
|
0 |
|
|
Oasis Capital
|
|
|
9-1-18 |
|
|
|
150,000 |
|
|
|
124,671 |
|
|
|
|
|
|
|
274,671 |
|
|
|
153,817 |
|
|
Totals and balances at 12-31-20
|
|
|
|
|
|
$ |
442,300 |
|
|
$ |
164,471 |
|
|
|
|
|
|
$ |
472,971 |
|
|
$ |
153,817 |
|
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
The Financial Accounting Standard ASC 815 Accounting for
Derivative Instruments and Hedging Activities require that
instruments with embedded derivative features be valued at their
market values. The Black Scholes model was used to value the
derivative liability for the fiscal year ending December 31, 2020
and December 31, 2019. The initial valuation of the derivative
liability on the non-converted common shares totaled $0 at December
31, 2020. This value includes the fair value of the shares that may
be issued according to the contracts of the holders and valued
according to our common share price at the time of
acquisition.
The Company issued to Power Up Lending Group, Inc. a $96,300
Convertible Promissory Note dated May 13, 2019 which contains an
original issue discount of $10,000 (OID) and expenses of $3,300
[“Note”]. The Note is convertible into Company common stock
beginning six months after the date of the Note with a stated
discount rate of 19% as set forth in the Note. There is no trigger
of derivative liability from conversion features until six months
after initial borrowing date. Without the OID, the effective
discount would have been 35%. The net proceeds from this Note were
used for working capital. $92,000 of this note was converted in
2019 and 2020. The balance of $4,300 was converted during the year
ended December 31, 2020.
The Company issued to Power Up a $68,000 Convertible Promissory
Note dated August 14, 2019 [“Note”] which contains an original
issue discount of $10,000.00 (OID) and expenses of $3,000.00
[“Note”]. The Note is convertible into Company common stock
beginning six months after the date of the Note with an effective
discount rate of approximately 19% upon conversion. There is no
trigger of derivative liability from conversion features until six
months after initial borrowing date. Without the OID, the
effective discount rate would be 35% as set forth in the Note. The
net proceeds from the Note, was used for working capital. $68,000
of this note was converted during the year ended December 31,
2020.
The Company issued to Power Up a $76,000 Convertible Promissory
Note dated September 11, 2019 [“Note”] which contains an original
issue discount of $10,000.00 (OID) and expenses of $3,000.00
[“Note”]. The Note is convertible into Company common stock
beginning six months after the date of the Note with an effective
discount rate of approximately 19 % upon conversion. There is no
trigger of derivative liability from conversion features until six
months after initial borrowing date. Without the OID, the
effective discount rate would be 35% as set forth in the Note. The
net proceeds from the Note, was used for working capital. $18,550
of this note was fully converted during the year ended December 31,
2020.
On August 8, 2019 the Company issued to Crown Bridge Partners, LLC
a Convertible Promissory Note which contained an original issue
discount of $15,000 and expenses of $6,000 [“Note”]. ABCO has
borrowed the first tranche of $50,000 and paid the expenses of
$5,000 of this agreement. The note was divided into 3 tranches with
the 1st being executed on August 8, 2019 and the remaining 2
tranches to be issued at the Company’s discretion. The note was
convertible into Company common stock beginning six months after
the date of the effective date of each tranche with a stated
discount rate of 36%. There is no trigger of derivative liability
from conversion features until six months after initial borrowing
date. At the time of the Buyer’s funding of each tranche under the
Note, the Company shall issue to Buyer as a commitment fee, a
common stock purchase warrant to purchase an amount of shares of
its common stock equal to 150% of the face value of each respective
tranche divided by $0.05 (for illustrative purposes, the First
Tranche face value is equal to $50,000, which resulted in the
issuance of a warrant to purchase 1,500,000 shares of the Company’s
common stock) pursuant to the terms provided therein (all warrants
issuable hereunder, including now and in the future, shall be
referred to, in the aggregate, as the “Warrant”) (all warrants
issuable hereunder shall be in the same form as the Warrant issued
in connection with the First Tranche). The net proceeds from this
Note were used for working capital. A conversion feature is
associated with this note and prorated from August 8, 2019 to
September 30, 2019 in the amount of $4,314. Management does not
intend to exercise the last two options to borrow on this note.
$23,540 of this note was converted during the year ended December
31, 2020.
As of February 16, 2019, the Company issued to Power Up, a
$55,000.00 of shares of the Series C Preferred Stock agreement
(Note) net of an original issue discount of $10,000.00 (OID) and
expenses of $3,000.00 [“Note”]. The Note was convertible into
Company common stock beginning six months after the Effective Date
with an effective discount rate of approximately 20%. The OID on
this issue that is paid out of proceeds allows a lower purchase
price if the Company purchases this liability. The Company redeemed
this note for $106,145 before Power up converted it to common
stock, so no dilution took place.
As of March 19, 2019, the Company issued to Power Up, a $55,000.00
of shares of the Series C Preferred Stock agreement net of an
original issue discount of $10,000.00 (OID) and expenses of
$3,000.00 [“Note”]. The Note is convertible into Company common
stock beginning six months after the Effective Date with an
effective discount rate of approximately 20%. The OID on this issue
that is paid out of proceeds allows a lower purchase price if the
Company purchases this liability.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
As of September 1, 2018, the Company entered into an Equity
Purchase Agreement with Oasis Capital, LLC, a Puerto Rico limited
liability company (“Investor”) pursuant to which Investor agreed to
purchase up to $5,000,000 of the Company’s common stock at a price
equal to 85% of the market price at the time of purchase (“Put
Shares”). The Company agreed to file a new registration statement
to register for resale the Put Shares. The Registration Statement
must be effective with the SEC before Investor is obligated to
purchase any Put Shares. In addition, the Company [i] issued to
Investor a one year $150,000 note which is convertible at a fixed
price of $.01 per share as a commitment fee for its purchase of Put
Shares and [ii] delivered to Investor a Registration Rights
Agreement pursuant to which the Company agreed to register all Put
Shares acquired under the Equity Purchase Agreement. During 2020,
Investor converted $59,692 of principal of the Note and received
930,165,889 shares of common stock. At December 31, 2020, the Note
balance was $211,883. The penalties and interest accruals on this
note was $274,671 and was written off to expense in 2019. The
liability for this note was not recorded in 2018 because the note
had not yet matured.
As of January 21, 2020 (“Effective Date”), the Company issued to
Oasis a $208,000 Promissory Note, net of a prorated original issue
discount of $16,000 (“1/21/20 Note”). The Company received $34,000
(“First Tranche”) with four additional Tranches through December
31, 2020 totaling $85,000. There were three Tranches for the period
of January 1, 2021 to February 19, 2020, totaling $70,000. Each
Tranche matures nine months from the effective date of each such
payment. The Company issued Warrants with each Tranche totaling
[2,100,000] shares. Each Warrant expires five years from the date
of issuance and is exercisable at a conversion price of 120% of the
closing price on the trading day prior to the funding date of the
respective Tranche. The Company also agreed to issue to Oasis
5,000,000 shares of common stock as an incentive/commitment fee in
connection with the transactions. The Company valued these shares
at $14,500. The 1/21/20 Note is convertible into common stock at a
35% discount to market. The balance of the Note at December 31,
2020 $137,350, including all penalties and interest.
The January 21, 2020 Note was amended on February 18, 2021 to
increase the principle to $222,130.62, of which, $13,000.00 went to
principal and $1,130.62 as an original issue discount.
Note 12 – Fair Value Measurements
The Company complies with the provisions of FASB ASC
No. 820, Fair Value Measurements and
Disclosures (“ASC 820”), in measuring fair value and in
disclosing fair value measurements at the measurement date. ASC 820
defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements
required under other accounting pronouncements. FASB ASC
No. 820-10-35, Fair Value Measurements and Disclosures-
Subsequent Measurement (“ASC 820-10-35”), clarifies that fair value
is an exit price, representing the amount 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.
ASC 820-10-35-3 also requires that a fair value measurement reflect
the assumptions market participants would use in pricing an asset
or liability based on the best information available. Assumptions
include the risks inherent in a particular valuation technique
(such as a pricing model) and/or the risks inherent in the inputs
to the model.
The following table shows the change in the fair value of the
derivative liabilities on all outstanding convertible debt at
December 31, 2020 and at December 31, 2019:
|
Description
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Purchase price of the convertible debenture - net of
discount
|
|
$ |
0 |
|
|
$ |
442,300 |
|
|
Valuation reduction during the period
|
|
|
, |
|
|
|
(344,326 |
)
|
|
Balance of derivative liability net of discount on the notes (See
Consolidated Balance sheet liabilities)
|
|
$ |
0 |
|
|
$ |
97,974 |
|
| |
|
|
|
|
|
|
|
|
|
Derivative calculations and presentations on the Statement of
Operations
|
|
|
|
|
|
|
|
|
|
Loss on note issuance
|
|
$ |
- |
|
|
$ |
- |
|
|
Change in Derivative (Gain) Loss
|
|
|
(13,629 |
)
|
|
|
(48,453 |
)
|
|
Derivative Finance fees
|
|
|
(3,209 |
)
|
|
|
(318,972 |
)
|
|
Gain (loss) on extinguishment of debt
|
|
|
- |
|
|
|
(244,712 |
)
|
|
Derivative expense charged to operations in 2020 and 2019 (See
Consolidated Statement of Operations)
|
|
$ |
(16,838 |
)
|
|
$ |
( 612,137 |
)
|
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Note 13 – Long term debt
|
Holder
|
|
Date issued
|
|
|
Interest rate
|
|
|
Amount due
December 31,
2020
|
|
|
Amount due
December 31,
2019
|
|
|
Real Estate Note Allen-Neisen Family trust – Et. Al.
|
|
|
12-31-19 |
|
|
|
5.00 |
%
|
|
$ |
290,271 |
|
|
$ |
300,000 |
|
|
US Treasury SBA guaranteed loan
|
|
|
7-21-20 |
|
|
|
3.75 |
%
|
|
|
150,000 |
|
|
|
- |
|
|
Ascentium Capital
|
|
|
10-1-18 |
|
|
|
13.00 |
%
|
|
|
6,998 |
|
|
|
11,192 |
|
|
Fredrick Donze
|
|
|
9-2-18 |
|
|
|
6.00 |
%
|
|
|
2,274 |
|
|
|
4,043 |
|
|
Charles O’Dowd (officer)
|
|
|
8-9-18 |
|
|
|
6.00 |
%
|
|
|
2,560 |
|
|
|
3,625 |
|
|
GMAC Chev truck
|
|
|
|
|
|
|
5.99 |
% |
|
|
23,574 |
|
|
|
- |
|
|
Mechanics bank – Chev Truck
|
|
|
|
|
|
|
8.99 |
% |
|
|
24,318 |
|
|
|
- |
|
|
Total long-term debt
|
|
|
|
|
|
|
|
|
|
|
499,995 |
|
|
|
318,860 |
|
|
Less Current portion
|
|
|
|
|
|
|
|
|
|
|
27,702 |
|
|
|
18,860 |
|
|
Total long-term debt
|
|
|
|
|
|
|
|
|
|
$ |
472,293 |
|
|
$ |
300,000 |
|
On December 31, 2019 ABCO completed negotiations, financial
arrangements and closed on the purchase of a 4,800 square foot
office and warehouse building located on one/half acre of paved
land on one of Tucson’s busiest streets. This property will be more
than adequate to house both the Solar business and our HVAC
expansion. The land and outbuildings will accommodate all of our
equipment. The property acquisition was priced at $325,000 the
company paid $25,000 down payment and the seller financed $300,000
mortgage based on a twenty-year amortization and a 5% interest rate
with a balloon payment at the end of five (5) years. The monthly
payment is $1,980.
On May 3, 2020, Company entered into a promissory note evidencing
an unsecured loan in the amount of $123,999.00 made to the Company
under the Paycheck Protection Program (the “Loan”). The
Paycheck Protection Program (or “PPP”) was established under the
Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”), and is administered by the U.S. Small Business
Administration. The Loan to the Company is being made through
Bank of America, N.A., a national banking association (the
“Lender”). The interest rate on the Loan will not exceed
1.00%. The promissory note evidencing the Loan contains
customary events of default relating to, among other things,
payment defaults, making materially false and misleading
representations to the SBA or Lender, or breaching the terms of the
Loan documents. The occurrence of an event of default may
result in the repayment of all amounts outstanding, collection of
all amounts owing from the Company, or filing suit and obtaining
judgment against the Company. Under the terms of the CARES Act, PPP
loan recipients can apply for and be granted forgiveness for all or
a portion of loan granted under the PPP. Such forgiveness
will be determined, subject to limitations, based on the use of
loan proceeds for payment of payroll costs and any payments of
mortgage interest, rent, and utilities. No assurance is
provided that the Company will obtain forgiveness of the Loan in
whole or in part. If the SBA does not confirm forgiveness of
the Loan or only partly confirms forgiveness of the Loan, including
principal and interest (“Loan Balance”); then, in either such case,
the Lender will establish the terms of repayment of the Loan
Balance via a separate letter to the Company, containing the amount
of each monthly payment, the interest rate, etc. On March
9, 2021, the SBA and Bank of America notified the Company
that the entire balance of this note has been forgiven by the
Government.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
On July 21, 2020 the Company received an SBA loan from Bank of
America in the amount of $150,000 that is guaranteed by the US
Treasury Department. Installment payments, including principal
and interest, of $731.00 monthly, will begin Twelve (12) months
from the date of the promissory Note. The balance of principal and
interest will be payable Thirty (30) years from the date of the
promissory Note. Interest will accrue at the rate of 3.75% per
annum and will accrue only on funds actually advanced from the
date(s) of each advance. Each payment will be applied first to
interest accrued to the date of receipt of each payment, and the
balance, if any, will be applied to principal. For loan amounts of
greater than $25,000, Borrower hereby grants to SBA, the secured
party hereunder, a continuing security interest in and to any and
all “Collateral” as described herein to secure payment and
performance of all debts, liabilities and obligations of Borrower
to SBA hereunder without limitation, including but not limited to
all interest, other fees and expenses (all hereinafter called
“Obligations”). The Collateral includes the following property
that Borrower now owns or shall acquire or create immediately upon
the acquisition or creation thereof: all tangible and intangible
personal property, including, but not limited to: (a) inventory,
(b) equipment, (c) instruments, including promissory notes (d)
chattel paper, including tangible chattel paper and electronic
chattel paper, (e) documents, (f) letter of credit rights, (g)
accounts, including health-care insurance receivables and credit
card receivables, (h) deposit accounts, (i) commercial tort claims,
(j) general intangibles, including payment intangibles and software
and (k) as-extracted collateral as such terms may from time to time
be defined in the Uniform Commercial Code. The security interest
Borrower grants includes all accessions, attachments,
accessories, parts, supplies and replacements for the Collateral,
all products, proceeds and collections thereof and all records and
data relating thereto. During the year ended December 31, 2020 the
Company recorded $2,812 in unpaid interest on this loan.
ABCO acquired the assets of Dr. Fred Air Conditioning services on
September 2, 2018 for the total price of $22,000. The allocation of
the purchase price was to truck and equipment at $15,000 and the
balance was allocated to inventory and the license for period of
five or more years. The truck and equipment were financed by
Ascentium Capital. The payments on the Ascentium capital note are
$435 and the payments on the Donze note are $212 each per month
The Company purchased an automobile from its then President,
Charles O’Dowd, with a promissory note in the amount of $6,575
dated August 9, 2018 and the note bears interest at 6% per annum
for the three-year payment plan. Mr. O’Dowd is no longer an officer
or employee of the Company. The balance at December 31, 2020 was
$2,560.
Note 14 – Stockholder’s Deficit
Common Stock
During the year ended December 31, 2019 the Company sold 4,740,000
shares of restricted common shares in Regulation S offerings to
non-US investors. The total proceeds from the offering was
$160,305. Commission and expense reimbursements totaled $80,049.
The Company recorded net proceeds totaling $80,256. No sales were
made for the year ended December 31, 2020.
In addition, debenture holders converted debt into 14,816,208
shares which were issued upon conversion of $434,458 of the notes
referred to in Note 10 above for the year ended December 31,
2020.
During the year ended December 31, 2020 the following shares were
converted from debt.
|
Capital Company
|
|
Shares converted
|
|
|
Dollars converted
|
|
|
Crown Bridge Partners
|
|
|
2,300,000 |
|
|
$ |
46,540 |
|
|
Power Up
|
|
|
1,633,968 |
|
|
|
57,450 |
|
|
Oasis Capital
|
|
|
5,173,328 |
|
|
|
125,775 |
|
|
Total
|
|
|
9,107,296 |
|
|
$ |
229,765 |
|
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Preferred Stock
On September 15, 2017 and on September 15, 2018, the Board of
Directors authorized on each such date the issuance of 15,000,000
preferred shares for an aggregate of 30,000,000 shares of Class B
Convertible Preferred Stock [“Series B”] to both Directors of the
Company and to two Consultants, of which, David Shorey, President
of the Company, is the beneficial owner thereof, a total of
30,000,000 shares of Series B. The Company assigned a value of
$15,000 for the shares for 2017 and 2018. Of the Series B,
12,000,000 shares were issued to Charles O’Dowd and 2,000,000 to
Wayne Marx, the Directors. Each Consultant received 8,000,000
shares. See the Company’s Schedule 14C filed with the Commission on
September 28, 2018. Upon his resignation, Mr. O’ Dowd’s shares were
cancelled and reissued to two Consultants. These shares have no
market pricing and management assigned an aggregate value of
$30,000 to the stock issued based on the par value of $0.001. The
30,000,000 shares of Preferred Stock, each has 200 votes for each
Preferred share held by of record. The holders of the Preferred are
also entitled to an additional 8,823,930 common shares upon
conversion of the Preferred Stock. As a result of owning of these
shares of Common and Preferred Stock, the Control Shareholders will
have voting control the Company.
Earnings (loss) per share calculation
Basic net loss per share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding
during the period. Diluted net loss per share is computed by
dividing net loss by the weighted average number of shares of
common stock and potentially outstanding shares of common stock
during each period
The computation of basic and diluted loss per share at December 31,
2020 excludes the common stock equivalents from convertible debt of
the following potentially dilutive securities because their
inclusion would be anti-dilutive, and the share issue number is not
calculable until conversion takes place.
Stock subscriptions executed under an earlier offering included a
provision whereby ABCO agrees to pay a dividend (defined as
interest) of from 6% to 12% of the total amount invested for a
period of one year from receipt of the invested funds. This
dividend (defined as interest) is allocated between the broker and
the investor with amounts paid to the broker treated as a cost of
the offering and netted against additional paid in capital and
amounts paid to the investor treated as interest expense. Total
amounts paid or accrued under this agreement and charged to
additional paid-in capital for the years ended December 31, 2020
and 2019, amounted to $0 and $0, respectively. Total amounts paid
under this agreement and charged to interest expense for the years
ended December 31, 2020 and 2019, amounted to $0 and $0,
respectively. The accrued balance due on this obligation to
shareholders totals $49,290 at December 31, 2020 and 2019.
ABCO has evaluated these agreements under ASC 480-10: Certain
Financial Instruments with Characteristics of Both Liabilities and
Equity and determined that the capital contributions made under
these subscription agreement more closely resemble equity than
liabilities as they can only be settled through the issuance of
shares and although they have a stated cost associated with them
which accrues in the same manner as interest, the cost is only
incurred in the first twelve months after placement as is more
closely associated with a cost of raising funds than interest
expense.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
Note 15 – Equity Awards
The following table sets forth information on outstanding option
and stock awards held by the named executive officers of the
Company at December 31, 2020 and December 31, 2019, including the
number of shares underlying both exercisable and un-exercisable
portions of each stock option as well as the exercise price and the
expiration date of each outstanding option. See Note to Notes to
Consolidated Financial Statements.
|
Outstanding Equity Awards After Fiscal Year-End (1)
|
|
Name
|
|
Number of securities underlying unexercised
options exercisable (1)
|
|
|
|
Number of securities underlying unexercised
options un-exercisable (2)
|
|
|
Option Exercise Price ($)
|
|
|
Option Grant Date
|
|
|
Option Expiration Date
|
|
Charles O’Dowd
|
|
|
1,852
|
|
(3)
|
|
|
0
|
|
|
$
|
.001
|
|
|
01/01/2017
|
|
|
01/01/2021
|
|
Wayne Marx
|
|
|
1,852
|
|
|
|
|
0
|
|
|
$
|
.001
|
|
|
01/01/2017
|
|
|
01/01/2021
|
|
Mikael Mildebrandt
|
|
|
3,704
|
|
(4)(5)
|
|
|
8
|
|
|
$
|
.001
|
|
|
11/01/2019
|
|
|
11/01/2023
|
|
Adrian Balinski
|
|
|
3,704
|
|
(4)(5)
|
|
|
8
|
|
|
$
|
.001
|
|
|
11/01/2019
|
|
|
11/01/2023
|
| |
(1)
|
7,408 shares were issued for Equity Awards during the year ended
December 31, 2020.
|
| |
(2)
|
All options vest 20% per year beginning on the first anniversary of
their grant date.
|
| |
(3)
|
This option was terminated when Mr. O’Dowd resigned from the
Company in October 2019.
|
| |
(4)
|
Messrs. Mildebrandt and Balinski were each awarded 3,704 shares of
restricted common stock as of October 31, 2020, for being officers
and directors of the Company.
|
| |
(5)
|
Messers. Mildebrandt and Balinski have resigned as officers
and directors.
|
An aggregate of 12,471 stock awards are outstanding under the
Equity Incentive Plan (“EIP”) as of December 31, 2020. An
aggregate of 5,000,000 stock awards were issued in 2021, of which,
3,500,000 were held by Consultants controlled by Mr. Shorey,
500,000 were held by Mr. Marx and 1,000,000 which are held by an
unrelated consultant.
Note 16 – Subsequent Events
In March and April 2021, Oasis Capital LLC. (“Oasis”) , converted
an aggregate of $77,617 of principal of the
August 6,2018 Note into an aggregate of 4,215,974 share . At April
9,2021, the principal amount of the Note $148,043.
From January12, 2021 through March 18,2021, Oasis
converted an aggregate of $76,224 of principal of the January
20, 2020 convertible note and received 6,319,930 shares. The
remaining balance on this Note was $289,590 after these
conversions.
On March 29, 2021, the Board of Directors of the Corporation deem
it in the best interests of the Corporation to enter into the
Securities Purchase Agreement dated March 29, 2021 (the
“Agreement”) with Power Up Lending Group Ltd. (“PowerUp”), in
connection with the issuance of: (i) a promissory note of the
Corporation, in the form attached hereto as Exhibit A, in the
aggregate principal amount of $80,000.00 (including $7,500.00 of
Original Issue Discount) (the “Note”), (ii) Three Hundred Seventy
Three Thousand Three Hundred Thirty Three (373,333) restricted
common shares of the Corporation (“Commitment Shares”) to be
delivered to PowerUp in book entry with the Corporation’s transfer
agent prior to the Closing Date, (iii) Seventy Hundred Forty Six
Thousand Six Hundred Sixty Seven (746,667) restricted common shares
of the Corporation (“Security Shares” and together with the Note
and the Commitment Shares, collectively, the “Securities”) to be
delivered to PowerUp in book entry with the Corporation’s transfer
agent prior to the Closing Date; and in connection therewith to
enter into an irrevocable letter agreement with Vstock Transfer
LLC, the Corporation’s transfer agent, with respect to the reserve
of shares of common stock of the Corporation to be issued upon any
conversion of the Note (only upon default); the issuance of such
shares of common stock in connection with a conversion of the Note
(the “Letter Agreement”). The proceeds of this note was
specifically slated for payment of the settlement of the Knight
Capital Merchant Loan for $22,000 and the final payment of the
Pearl Capital merchant note for $36,998. These discounted payoffs
of these notes saved the company $26,446 plus future interest.
ABCO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
DECEMBER 31, 2019
The shareholders on January 11, 2021, authorized an increase in the
Authorized Common Shares to 2,000,000,000 from 29,411,765. Our
board of directors believes that it is desirable to have additional
authorized shares of common stock available for possible future
financings, acquisition transactions, joint ventures and other
general corporate purposes. Our board of directors believes that
having such additional authorized shares of common stock available
for issuance in the future will give us greater flexibility and may
allow such shares to be issued without the expense and delay of a
special shareholders’ meeting unless such approval is expressly
required by applicable law. Although such issuance of additional
shares with respect to future financings and acquisitions would
dilute existing shareholders, management believes that such
transactions would increase the overall value of the Company to its
shareholders.
Effective March 3, 2021, the Company issued an aggregate of
5,000,000 restricted common shares for services rendered, of which
500,000 were awarded to Wayne Marx, an officer and Director,
3,5000,000 shares to an LLC controlled by David Shorey, President,
CEO and CFO, and 1,000,000 shares to an outside consultant.
On February 24, 2021, the Company executed an promissory note
evidencing and unsecured loan (“Loan”) for $128,232
under the Paycheck Protection Plan (“PPP”) , The terms of the
Loan are almost identical to those relating to the PPP loan
received by the Company in May 2020 in the amount of $123,999 which
is described above in Note 13 on page 29 (“Old Loan
Terms’).This new Loan is forgivable but no assurance can be
given that the Company will receive forgiveness of this Loan.
See the Old Loan Provisions above in Note 13. The Loan is
from the Bank of America and is guaranteed by the SBA under
the PPP program resulting from the COVID-19 pandemic.
On April 1, 2021, the promissory note payable to the President in
the amount of $311,896, , was converted into a secured note
covering all assets of the Company. The Note bears interest at the
rate 12% per annum and is due on demand. Financing statement s are
expected to be filed in Pima County, AZ and in Las Vegas County, NV
covering the assets which are securing this Note. See Exhibit 99.2
for a form of the Note.
ITEM 9. CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS
AND PROCEDURES
| |
(a)
|
Evaluation of Disclosure Controls and Procedures.
|
As of the end of the reporting period, December 31, 2020, we
carried out an evaluation, under the supervision and with the
participation of our management, including the Company’s Chairman
and Chief Executive Officer/Principal Accounting Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Rule 13a-15(e) of the
Securities Exchange Act of 1934 (the “Exchange Act”), which
disclosure controls and procedures are designed to insure that
information required to be disclosed by a company in the reports
that it files under the Exchange Act is recorded, processed,
summarized and reported within required time periods specified by
the SEC’s rules and forms. Based upon that evaluation, the
Chairman/CEO and the Chief Financial Officer concluded that our
disclosure controls and procedures are not effective in timely
alerting them to material information relating to the Company
required to be included in the Company’s period SEC filings. The
Company is attempting to expand such controls and procedures,
however, due to a limited number of resources the complete
segregation of duties is not currently in place.
| |
(b)
|
Report of Management on Internal Control over Financial
Reporting
|
We are responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) and 15d-15(f) of
the Exchange Act. Under the supervision and with the participation
of our management including the chief executive officer and the
principal financial officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting
based on the 2013 framework in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission, or COSO.
Based on our evaluation under the Internal Control-Integrated
Framework, our chief executive officer and chief financial officer
concluded that our internal control over financial reporting was
not effective as of December 31, 2019. Management believes that
this conclusion results in a large part from [i] maintaining some
segregation of duties within the Company due to its reliance on
individuals to fill multiple roles and responsibilities and [ii]
the Company having limited personnel to prepare its financial
statements. During the year ended December 31, 2019, the Company
continued its reliance on the Internal Control – Integrated
Framework in the same manner as in prior periods due to the same
limitations of personnel.
| |
(c)
|
Changes in Internal Control.
|
Subsequent to the date of such evaluations as described in
subparagraphs (a) and (b) above, there were no changes in our
internal controls or other factors that could significantly affect
these controls, including any corrective action with regard to
significant deficiencies and material weaknesses.
Our management, including our Principal Executive Officer and
Principal Financial Officer, does not expect that our disclosure
controls or internal controls over financial reporting will prevent
all errors or all instances of fraud. However, we believe that our
disclosure controls and procedures are designed to provide
reasonable assurance of achieving this objective. A control system,
no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s
objectives will be met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within our company
have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Controls
can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the
controls. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and
any design may not succeed in achieving its stated goals under all
potential future conditions. Over time, controls may become
inadequate because of changes in conditions or deterioration in the
degree of compliance with policies or procedures. Because of the
inherent limitation of a cost-effective control system,
misstatements due to error or fraud may occur and not be
detected.
ITEM 9B. OTHER
INFORMATION
None.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The following table sets forth the name and age of officers and
director as of December 31, 2020. Our Executive officers are
elected annually by our board of directors. Our executive officers
hold their offices until they resign, are removed by the Board, or
his successor is elected and qualified. Mr. Marx was a member of
the Board and Officers prior to the SEA acquisition of Energy
Conservation Technologies, Inc. and afterward he was reappointed to
the Board on the effective day July 1, 2011.
David Shorey, President, CEO and Chief Financial Officer, Wayne
Marx, a Vice President, Secretary and Director, are each a
“Promoter” within the meaning of Rule 405 of Regulation C in that
he was instrumental in founding and organizing ABCO Energy,
Inc.
|
Officer’s Name
|
|
Directors Name
|
|
Age
|
|
Officer’s Position
|
|
Appointment date
|
|
David Shorey
|
|
David Shorey
|
|
78
|
|
President, CEO, CFO and Director
|
|
July 1, 2011
|
| |
|
|
|
|
|
|
|
|
|
Wayne Marx
|
|
Wayne Marx
|
|
72
|
|
Vice President, Secretary and Director
|
|
July 1, 2011
|
The Board of Directors consists of two individuals, David Shorey,
President, CEO, CFO and Director and Mr. Wayne Marx, VP, Secretary
and Director. The date of appointment above for Mr. Marx coincides
with the date of the SEA with ENYC on July 1, 2011. Mr. Shorey and.
Mr. Marx also served as Directors and Officers of the predecessor
companies. Biographies of the Executive Officers and Members of the
Board of Directors are set forth below:
David Shorey, President, CFO and Director
Mr. Shorey is a Veteran of the US Navy and has a Bachelor’s degree
in Business Administration and Accounting from the University of
Oregon. He has been in the solar business for 14 years, was the
Founder of ABCO and has been an Executive with ABCO Energy for 12
years. Mr. Shorey practiced as a certified public accountant for
over 30 years. He is also an experienced manufacturer of electric
components and has audit certification in ISO-9000 quality
inspection and training. He has previously been a real estate
business broker and owned and operated an electronic manufacturing
firm for nine years and a metal building construction company for
over ten years.
Wayne Marx, VP, Secretary and Director
Mr. Marx was the founder and owner of “Precision Outdoor Power”,
power equipment retail and service provider in Tucson and Williams,
Arizona. Wayne has more than 40 years of business experience,
mostly in retail and government services a self-employed individual
and has been a provider of equipment to residential commercial and
government users throughout his business career. He has limited
experience in the solar industry. Mr. Marx presently brings a
representation to our company for fire and emergency service
organizations that he presently serves and has worked with for many
years. Mr. Marx is Fire Chief for the Sherwood Forest Estates Fire
District and Regional Fire Resource Coordinator for Coconino County
Fire Department. Mr. Marx joined the Fire District as Fire chief in
2003 and is still employed at this position full time. Mr. Marx
does not draw a salary or work as an employee for ABCO Energy at
this time and serves as a Vice President without any
compensation.
The Directors will hold office until the next annual meeting of the
security holders following their election and until their
successors have been elected and qualified. The Board of Directors
appoints Officers. Officers hold office until the next annual
meeting of our Board of Directors following their appointment and
until successors have been appointed and qualified.
Family Relationships
There are no family relationships between any of our directors,
executive officers or directors.
Code of Ethics
We have a Code of Ethics in place for the Company. The Company
seeks advice and counsel from outside experts such as our lawyers
and accountants on matters relating to corporate governance and
financial reporting.
AUDIT COMMITTEE
The Audit Committee for the Company currently consists of the two
members of the Board which acts in such capacity and will do so for
the immediate future due to the limited size of the Board. The
Company intends to increase the size of its Board in the future, at
which time it may appoint a separate Audit Committee.
The Audit Committee will be empowered to make such examinations as
are necessary to monitor the corporate financial reporting and the
external audits of the Company, to provide to the Board of
Directors (the “Board”) the results of its examinations and
recommendations derived there from, to outline to the Board
improvements made, or to be made, in internal control, to nominate
independent auditors, and to provide to the Board such additional
information and materials as it may deem necessary to make the
Board aware of significant financial matters that require Board
attention.
COMPENSATION COMMITTEE
The Company does not presently have a Compensation Committee and
the Board acts in such capacity and will do so for the immediate
future due to the limited size of the Board. The Company intends to
increase the size of its Board in the future, at which time it may
appoint a Compensation Committee.
The Compensation Committee will be authorized to review and make
recommendations to the Board regarding all forms of compensation to
be provided to the executive officers and directors of the Company,
including salary, stock compensation and bonus compensation to all
employees.
NOMINATING COMMITTEE
The Company Board acts as the Nominating Committee.
Independence
We are not required to have any independent members of the Board of
Directors. The board of directors has determined that each of the
Directors has a relationship which, in the opinion of the board of
directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director and
each is not an “independent director” as defined in the Marketplace
Rules of The NASDAQ Stock Market.
Involvement in Certain Legal Proceedings
Our Directors and Executive Officers have not been involved in any
of the following events during the past ten years:
|
1.
|
any bankruptcy petition filed by or against such person or any
business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years
prior to that time;
|
|
2.
|
any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
3.
|
being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any type of business,
securities or banking activities or to be associated with any
person practicing in banking or securities activities;
|
|
4.
|
being found by a court of competent jurisdiction in a civil action,
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities
or commodities law, and the judgment has not been reversed,
suspended, or vacated;
|
|
5.
|
being subject of, or a party to, any federal or state judicial or
administrative order, judgment decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of
any federal or state securities or commodities law or
regulation, any law or regulation respecting financial
institutions or insurance companies, or any law or regulation
prohibiting mail or wire fraud or fraud in connection with any
business entity; or
|
|
6.
|
being subject of or party to any sanction or order, not
subsequently reversed, suspended, or vacated, of any
self-regulatory organization, any registered entity or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with
a member.
|
Section 16(a) Beneficial Owner Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors, executive officers and holders of more than
10% of our common stock to file with the SEC reports regarding
their ownership and changes in ownership of our securities We
believe that, during fiscal 2020, our directors, executive officers
and 10% stockholders have complied with all Section 16(a) filing
requirements.
ITEM 11. EXECUTIVE
COMPENSATION
REMUNERATION OF DIRECTORS AND OFFICERS
Summary Compensation Table
The following table sets forth certain summary information
concerning the cash and non-cash compensation awarded to, earned
by, or paid to Michael Mildebrandt, our past President and Chief
Executive Officer, for David Shorey as current President and CEO
and for Wayne Marx our Vice President and Secretary for the fiscal
years ended December 31, 2020 and 2019. These Messers Shorey and
Marx are referred to as the “named executive officers” in this
Report.
|
Name and Principal Position (1)
|
|
Year
|
|
|
Compensation Salary ($)
|
|
|
Bonus ($)
|
|
|
Share Awards ($)
|
|
|
All Other
Compensation ($)
|
|
|
Total
Compensation ($)
|
|
|
David Shorey
|
|
2020
|
|
|
$ |
60,000 |
|
|
|
0 |
|
|
|
3,500,000 |
(1) |
|
|
3,500 |
|
|
$ |
15,407 |
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne Marx
|
|
2020
|
|
|
|
-0- |
|
|
|
0 |
|
|
|
500,000 |
(2) |
|
|
500 |
|
|
|
-0- |
|
|
VP, Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-0- |
|
| |
(1)
|
Mr. Shorey receives a contractual compensation of $60,000 per year.
$37,000 was accrued and unpaid in 2020. In addition, Mr. Shorey
received 3,500,000 shares as a bonus on March 3, 2021.
|
| |
(2)
|
Mr. Marx received 500,000 of post-split common shares as a bonus on
March 3, 2021.
|
There is no family relationship between any of the current officers
or directors of the Company.
The Company is a Nevada corporation with principal offices located
at 2505 N Alvernon Way, Tucson, AZ 85712. On December 31, 2019 the
Company purchased an office and warehouse building and land at 2505
North Alvernon, Tucson Arizona. On October 1, 2020, the Company
moved all Tucson operations to this location.
On January 15, 2017, the Company’s Board of Directors, after
careful consideration, approved our 2017 Stock Option and Incentive
Stock Plan (the “Plan”), pursuant to which the Company has reserved
200,000,000 shares for issuance thereunder.
The Plan enables the Board to provide equity-based incentives
through grants of Awards to the Company’s present and future
employees, directors, consultants and other third-party service
providers. Shares issued under the Plan through the settlement,
assumption or substitution of outstanding Awards or obligations to
grant future Awards as a condition of acquiring another entity will
not reduce the maximum number of shares of Common Stock reserved
for issuance under the Plan. In addition, the number of shares of
Common Stock subject to the Plan, any number of shares subject to
any numerical limit in the Equity Incentive Plan, and the number of
shares and terms of any incentive award may be adjusted in the
event of any change in our outstanding Common Stock by reason of
any stock dividend, spin-off, split-up, stock split, reverse stock
split, recapitalization, reclassification, merger, consolidation,
liquidation, business combination or exchange of shares or similar
transaction.
Outstanding Equity Awards at Fiscal Year End
An aggregate of 0 stock awards are outstanding under the Equity
Incentive Plan as of December 31, 2020.
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
The following tables set forth certain information regarding
beneficial ownership of our securities by (i) each person who is
known by us to own beneficially more than five percent (5%) of the
outstanding shares of each class of our voting securities, (ii)
each of our directors and executive officers, and (iii) all of our
directors and executive officers as a group. We believe that each
individual or entity named has sole investment and voting power
with respect to the securities indicated as beneficially owned by
them, subject to community property laws, where applicable, except
where otherwise noted.
|
Name and Address of Owner (1)
|
|
Title of Securities
|
|
Amount and nature of
common stock
|
|
|
Percent of class (3)
|
|
|
Amount and nature of preferred
stock (2) (4)
|
|
|
Percentage of class (5)
|
|
|
David Shorey
|
|
Common
|
|
|
9,427 |
(6) |
|
|
1 |
%
|
|
|
28,000,000 |
|
|
|
93 |
%
|
|
Wayne Marx
|
|
Common
|
|
|
619 |
|
|
|
- |
%
|
|
|
2,000,000 |
|
|
|
7 |
%
|
|
All Officers, Directors and 5% Shareholders - As a Group
|
|
Common
|
|
|
10,046 |
|
|
|
Less than 1 |
%
|
|
|
30,000,000 |
|
|
|
100 |
%
|
| |
(1)
|
The address is c/o ABCO Energy, Inc., 2505 N. Alvernon Way, Tucson,
AZ 85712
|
| |
(2)
|
Beneficial Ownership is determined in accordance with the rules of
the SEC and generally includes voting or investment power with
respect to securities. Shares of common stock subject to options or
warrants currently exercisable or convertible, or exercisable or
convertible within 60 days of March 31, 2019 (none are eligible)
are deemed outstanding for computing the percentage of the person
holding such option or warrant but are not deemed outstanding for
computing the percentage of any other person.
|
| |
(3)
|
Based upon 15,702,037 shares outstanding on December 31, 2020.
|
| |
(4)
|
These shares are convertible into 60,000,000 shares of common stock
at an exercise price of $.001 per share.
|
| |
(5)
|
Based upon 30,000,000 shares of Preferred Stock, outstanding as
December 31, 2020.
|
| |
(6)
|
These shares are held of record by an LLC entity owned by
David Shorey.
|
The Company issued 1,350,000 restricted common shares to management
for services with a fair market value of $27,000 during the Year
ended December 31, 2018 and 700,000 restricted shares to management
for services with a fair market value of $81,400 during 2017. Of
these awards, Charles O’Dowd received 900,000 shares and Wayne Marx
received 100,000 shares. The balance was awarded to consultants to
the Company.
The aggregate of 0 stock awards were outstanding under the Equity
Incentive Plan as of December 31, 2020.
On September 15, 2017, and on August 30, 2018, the Board of
Directors authorized the issuance of an aggregate of 30,000,000
shares of Class B Convertible Preferred Stock [“Series B”] to Mr.
O’Dowd and to Wayne Marx of the Company and to two Consultants
owned by David Shorey, President, CEO, CFO and Director. Of the
Series B, 12,000,000 shares were issued to Charles O’Dowd and
2,000,000 to Wayne Marx, the Directors. Each Consultant received
8,000,000 shares. See the Company’s Schedule 14C filed with the
Commission on September 28, 2018. Upon his resignation Mr. O’Dowd’s
preferred shares were cancelled and issued to the two consultants.
These preferred shares have no market pricing and management
assigned the value of $15,000 to the stock issue based on the par
value of the preferred stock of $0.001. The 30,000,000 shares of
Preferred Stock have 200 votes for each share of record. The
holders of the Preferred are also entitled to be issued additional
60,000,000 common shares upon conversion of the Preferred Stock.
The Series B have anti-dilution provisions. Accordingly, as a
result of owning these shares of Common and Preferred Stock, the
Control Shareholders will have voting control the Company.
The shareholders on January 11, 2021, authorized an increase in
authorized common shares to 2,000,000,000 from 29,411,765
shares. Our board of directors believes that it is desirable
to have additional authorized shares of common stock available for
possible future financings, acquisition transactions, joint
ventures and other general corporate purposes. Our board of
directors believes that having such additional authorized shares of
common stock available for issuance in the future will give us
greater flexibility and may allow such shares to be issued without
the expense and delay of a special shareholders’ meeting unless
such approval is expressly required by applicable law. Although
such issuance of additional shares with respect to future
financings and acquisitions would dilute existing shareholders,
management believes that such transactions would increase the
overall value of the Company to its shareholders.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Other than as disclosed below, during the last two fiscal years,
there have been no transactions, or proposed transactions, which
have materially affected or will materially affect us in which any
director, executive officer or beneficial holder of more than 5% of
the outstanding common, or any of their respective relatives,
spouses, associates or affiliates, has had or will have any direct
or material indirect interest. We have no policy regarding entering
into transactions with affiliated parties.
Other than as disclosed below, during the last two fiscal years,
there have been no transactions, or proposed transactions, which
have materially affected or will materially affect us in which any
director, executive officer or beneficial holder of more than 5% of
the outstanding common, or any of their respective relatives,
spouses, associates or affiliates, has had or will have any direct
or material indirect interest. We have no policy regarding entering
into transactions with affiliated parties.
Any future material transactions and loans will be made or entered
into on terms that are no less favorable to the Company that those
that can be obtained from unaffiliated third parties. Any
forgiveness of loans must be approved by a majority of the
Company’s independent directors who do not have an interest in the
transactions and who have access, at the Company’s expense, to
Company’s or independent counsel. Until the Company has more than
two directors, this policy will not be in effect.
Officers and director’s loans are demand notes totaling $311,340 as
of December 31, 2020 and $248,558 as of December 31, 2019. The
total consists of two notes from Officer/Directors in 2020 and
three in 2019.
The following table indicates the balances due on demand notes and
the accrued interest on these notes. Related party notes payable as
of December 31, 2019 and December 31, 2018 consists of the
following:
|
Description
|
|
December 31,
2020
|
|
|
December 31,
2019
|
|
|
Notes payable – Director bearing interest at 12% per annum,
unsecured, demand notes.
|
|
$ |
60,000 |
|
|
$ |
60,000 |
|
|
Note payable – Former Officer bearing interest at
12% per annum, unsecured, demand note.
|
|
|
|
|
|
|
61,052 |
|
|
Note payable – President bearing interest at 12% per annum,
unsecured, demand note.
|
|
|
251,340 |
|
|
|
127,506 |
|
|
Total
|
|
$ |
311,340 |
|
|
$ |
248,558 |
|
The first note in the amount of $60,000 provides for interest at
12% per annum and is unsecured. This note resulted in an interest
charge of $43,263 accrued and unpaid at December 31, 2020 and
$36,061 at December 31, 2019.
The second note has a current balance of $251,340 as of December
31, 2020. The note is an unsecured demand note and bears interest
at 12% per annum. This note resulted in an interest charge of
$53,117 accrued and unpaid at December 31, 2020 and $28,555 at
December 31, 2019.
The combined total funds due to Officers and related parties
totaled $407,720 with principal and interest at December 31,
2020.
Any future material transactions and loans will be made or entered
into on terms that are no less favorable to the Company that those
that can be obtained from unaffiliated third parties. Any
forgiveness of loans must be approved by a majority of the
Company’s independent directors who do not have an interest in the
transactions and who have access, at the Company’s expense, to
Company’s or independent counsel. Until the Company has more than
two directors, this policy will not be in effect.
Charles O’Dowd, former Director of the Company, David Shorey,
President, CEO, CFO and Director and Wayne Marx, Vice President and
Director of the Company are each “Promoters” as defined in Rule 405
of Regulation C. In 2009 Mr. O’Dowd received his 400,000 shares of
Company stock in exchange for services rendered which were valued
at $4,000 and Mr. Marx purchased his 100,000 shares for $50,000
cash in 2010.
ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES.
Audit Fees
The aggregate fees contracted by our auditors, for professional
services rendered for the audit of our annual consolidated
financial statements during the years ended December 31, 2020 and
2019, and for the reviews of the consolidated financial statements
included in our Quarterly Reports on Form 10-Q during the fiscal
years.
During 2019 and 2020, the Company paid KSP group for the audit for
the fiscal year ended December 31, 2018 a total amount of
$30,000 as of the date of this Report. The Company paid Slack
& Company CPA, LLC $10,000 for the audit for the fiscal
year ended December 31, 2020.
Audit-Related Fees
Our independent registered public accounting firms did not bill us
during the years ended December 31, 2020 and 2019 for non- audit
related services.
Tax Fees
Our independent registered public accounting firms did not bill us
during fiscal years ended December 31, 2020, and 2019 for tax
related services.
All Other Fees
Our independent registered public accounting firms did not bill us
during the years ended December 31, 2020 and 2019 for other
services.
The Board of Directors has considered whether the provision of
non-audit services is compatible with maintaining the principal
accountant’s independence.
PART IV
ITEM 15. EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.
|
Exhibit No.
|
|
Description of Exhibit
|
| |
|
|
|
3(i)
|
|
Articles of Incorporation, as
amended (1)
|
|
3(ii)
|
|
By-Laws (1)
|
|
10(b)
|
|
12% $40,000 Convertible Note dated
March 16, 2016 (4)
|
|
10(c)
|
|
8% $25,000 Convertible Note dated
March 23, 2016 (4)
|
|
10(d)
|
|
10% $55,000 Convertible Note dated
April 1, 2016 (5)
|
|
10(e)
|
|
5% $42,000 Convertible Note dated
April 5, 2016 (5)
|
|
10(f)
|
|
10% $40,000 Convertible Note dated
May 3, 2016 (5)
|
|
10(g)
|
|
8% $30,000 Convertible Note dated May
6, 2016 (5)
|
|
21
|
|
Subsidiaries of Registrant
(1)
|
|
31.01
|
|
Certification of Chief Executive Officer
pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002. (2)
|
|
31.02
|
|
Certification of Chief Financial Officer
pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. (2)
|
|
32.01
|
|
Certifications 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. (2)
|
|
99.1
|
|
Engagement Agreement between Adams
Fund LLC and ABCO Energy, Inc., dated September 15, 2015
(3)
|
| 99.2 |
|
Secured Promissory
Note dated April 1, 2021 in favor of an affiliate of the
Registrant’s President (2) |
| 99.3 |
|
SBA Letter of
Forgiveness of the 7/21/2020 SBA Guaranteed Note to The Bank of
America (2) |
|
101 INS
|
|
XBRL Instance Document
|
|
101 SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
101 CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
|
101 DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101 LAB
|
|
XBRL Taxonomy Labels Linkbase Document
|
|
101 PRE
|
|
XBRL Taxonomy Labels Linkbase Document
|
|
(1)
|
|
Previously filed with the Company’s Form 10-12G, SEC File No.
000-55235 filed on July 1, 2014, and incorporated herein by this
reference as an exhibit to this Form 10-K.
|
|
(2)
|
|
Attached.
|
|
(3)
|
|
Previously filed with the Company’s Form 8-K filed on
September 17, 2015, and incorporated herein by this reference
as an exhibit to this Form 10-K.
|
|
(4)
|
|
Previously filed with the Company’s Form 10-K, File No. 000-55235,
filed with the Commission on April 11, 2016 and incorporated herein
by this reference.
|
|
(5)
|
|
Previously filed with the Company’s Form 10-Q, File No. 000-55235,
filed with the Commission on May 20, 2016 and incorporate herein by
this reference.
|
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
| |
ABCO ENERGY, INC.
|
| |
|
|
Date: April 15, 2021
|
By: /s/ DAVID SHOREY
|
| |
David Shorey
|
| |
Chief Executive Officer
|
| |
|
|
Date: April 15, 2021
|
By: /s/ DAVID SHOREY
|
| |
David Shorey
|
| |
Chief Financial Officer
|
Pursuant to the requirements of the Securities Exchange 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.
|
Date
|
|
Position
|
|
Name
|
| |
|
|
|
|
|
April 15, 2021
|
|
Chief Executive Officer, President and Director
|
|
/s/ DAVID SHOREY
|
| |
|
|
|
David Shorey
|
| |
|
|
|
|
|
April 15, 2021
|
|
Secretary and Director
|
|
/s/Wayne Marx
|
| |
|
|
|
Wayne Marx
|
| |
|
|
|
|
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