UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

(Mark One)

Form 10-Q

or

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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐ No ☒

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes ☒ No ☐

 As of August 17, 2015, the Registrant has 6,890,773 shares of common stock issued and outstanding.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  These forward-looking statements include, among others, the following:

Forward-looking statements are typically identified by use of terms such as “may”, “could”, “should”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target” or “continue”, the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently.  The forward-looking statements contained in this report are largely based on our expectations, which reflect estimates and assumptions made by our management.  These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors.  Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control.  In addition, management’s assumptions about future events may prove to be inaccurate.  Management cautions all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur.  Actual results may differ materially from those anticipated or implied in the forward-looking statements.   You should consider the areas of risk described in connection with any forward-looking statements that may be made herein.  You should also consider carefully the statements under Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2014 which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2014.  Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.  These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Atomic Paintball,” "we"", "our", the "Company" and similar terms refer to Atomic Paintball, Inc., a Texas corporation.  In addition, when used herein and unless specifically set forth to the contrary, “Second Quarter 2015” refers to the six months ended June 30, 2015, “Second Quarter 2014” refers to the six months ended June 30, 2014, and “2014” refers to the year ended December 31, 2014. 

ATOMIC PAINTBALL, INC.

BALANCE SHEETS

(Unaudited)

See accompanying Notes to Financial Statements.

ATOMIC PAINTBALL, INC.

STATEMENTS OF OPERATIONS 

(UNAUDITED)

See accompanying Notes to Financial Statements.

ATOMIC PAINTBALL, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

See accompanying Notes to Financial Statements.

ATOMIC PAINTBALL, INC.

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2015

(Unaudited)

The following discussion of our financial condition and results of operations for the three and six months ended June 30, 2015 and 2014 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors and Cautionary Notice Regarding Forward-Looking Statements and Business sections of our Annual Report on Form 10-K for the year ended December 31, 2014.  We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

We are a start-up company formed in 2001. Prior to January 1, 2014, our business model was to own and operate paintball facilities and to provide services and products in connection with paintball sport activities at our facilities and through a website. Not gaining any traction or success within that industry and in an effort to increase shareholder value, in July 2014, the Board of Directors resolved to change the Company’s business to a Digital Out Of Home (DOOH) media company.  After several months of due diligence evaluating the business and market opportunity, as well as the competitive landscape of such industry, the Board of Directors believed this was a valuable opportunity of which the Company could take advantage.

Kriz Purchase Agreement

On October 31, 2014, we entered into an Asset Purchase Agreement (“Kriz Purchase Agreement”) with Carey Kriz, pursuant to which we agreed to issue Kriz 250,000 shares of our to be created Series B Convertible Preferred Stock in exchange for Kriz's various source code, software programs and applications, compilations of code, software routines, subroutines and the like, patent applications, copyrights, trade secrets, know-how and other intellectual property which forms a proprietary information system designed to perform functions including but not limited to increasing the ability of retailers and manufacturers to connect with their end customers and to decrease the costs of sales/customers access, which, after we acquire related intellectual property from other parties, of which there can be no guarantee, we will develop and market. Pursuant to the agreement, Kriz also assigned us all of the related trademarks. The transaction closed on November 10, 2014.

Sallah Purchase Agreement

On November 20, 2014, we entered into an Asset Purchase Agreement (“Sallah Purchase Agreement”) with James D. Sallah, Esq. as Receiver ("Sallah" or"Receiver"). Sallah is the duly appointed receiver in Securities and Exchange Commission v. JCS Enterprises Inc., d/b/a JCS Enterprises Services Inc., et al. in the United States District Court for the Southern District of Florida (the "Court"). Solely in his capacity as receiver for JCS Enterprises Inc. d/b/a JCS Enterprises Services Inc., T.B.T.I., Inc. and My Gee Bo, Inc. (which are collectively referred to herein as the “Receivership Entities” or “Receivership Estate”), we submitted a bid to purchase from the Receiver certain Assets (as defined below) of the Receivership Estate for a purchase price of $1,536,971.75 (the "Purchase Price"), $25,000 of which was remitted by JH Brech on January 21, 2015 on our behalf and was recorded as a revolver advance and $75,000 of which we shall deposit as additional Earnest Money, which shall be returned to us if the sale is not consummated for reasons other than our default under the terms of the agreement (the entire transaction being referred to as the "Sale"). To the extent the Receiver is unable to deliver items of tangible personal property that total more than $37,500, the Purchase Price shall be reduced accordingly. The Sale is subject to Court approval, and the Receiver has determined that the Sale shall be accomplished via an auction procedure, which is subject to overbid and therefore we may not be the final purchaser of the Assets. On November 24, 2014, the Receiver started the process of obtaining Court approval by filing a Motion to approve the sale procedures and approve the sale.

The Assets consist of intellectual property, assumed contracts, equipment and inventory of the Receivership Entities to the extent of the Receiver's right, title and interest in such property, which property is described on Exhibit A to the Sallah Purchase Agreement, filed as Exhibit 10.1 to our Current Report on Form 8-K filed on November 26, 2014 (collectively, the "Assets"). To the extent the Receivership Estate acquires, after November 20, 2014, interests in tangible or intangible property which pertain strictly to (a) the Assets and/or the business operations of JCS Enterprises Inc. and My Gee Bo, Inc., and (b) Assets listed on Exhibit A to the Sallah Purchase Agreement which are not currently assets of the Receivership Estate, the Receiver will deliver that property to us. In connection with the purchase of the Assets, we are assuming certain liabilities, listed on Exhibit B to the Sallah Purchase Agreement, under various contracts and agreements contained on Exhibit A to the Sallah Purchase Agreement.

The companies comprising the Receivership Entities were involved in various capacities with, among other things, deploying virtual concierge machines (“VCMS”) at hotels, airports, stadiums and other locations. VCMS were free-standing or wall-mounted machines, similar to automated teller machines, which allowed users to purchase products and view advertisements; advertising revenue was thereby generated. In addition, one or more of such companies obtained rights to use a mobile device platform marketed to purchase products and services from a wireless device such a smart phone. A downloaded computer application was programmed to act as a secure online vault that maintained a customer’s credit card account information so that the customer could make a purchase without using a physical credit card or entering credit card information. These assets will allow us, upon completion of the Sale, to deploy VCMS into the market immediately. In addition, there are several prior customer relationships that we believe will seek to reengage the Company to provide services if we are successful in our bid. A significant portion of the operational software was created by or under the supervision of Carey Kriz, an individual unrelated to any of the companies comprising the Receivership Entities or their principals.

The Court entered into a Sale Order on January 5, 2015. On February 18, 2015, we received a letter from Sallah claiming that we are in material default under the Sallah Purchase Agreement because we did not deposit the second earnest money of $75,000 upon the Court’s entry of the Sale Procedures Order. Sallah may claim that he is entitled to retain the first earnest money of $25,000 as partial payment of the Receiver’s damages under the Sallah Purchase Agreement and may pursue and preserve all of his rights under the agreement due to the alleged default, but Sallah has not terminated the agreement. The Sallah Purchase Agreement does not contain default provisions and because the Sale Procedures Order was not entered until after December 31, 2014, we may have defenses to any claim for the earnest money. In addition, questions arose regarding one of the assets subject to the Sallah Purchase Agreement. Accordingly we are working towards an amicable resolution with Sallah.

Although we originally anticipated closing in the second quarter of 2015, due to our cash position, we cannot be sure when we will close, if ever. As soon as sufficient funds are available, we intend to use them towards the payment of purchase price under the Agreement if the Receiver has not previously terminated the Agreement.

As described later in this section, our ability to fully implement our business plan is dependent on raising sufficient capital to fund the further development of our company. Going forward, we expect that our efforts will be focused on achieving this goal. While we have raised funds in private offerings, there are no assurances, however, that we will be able to raise all of the necessary capital and without access to funding we will be unable to pursue other aspects of our business development and may have to cease operations completely.

Going Concern

During the three and six months ended June 30, 2015, we reported a net loss of $444,206 and 918,052, respectively and a net loss attributable to common stockholders of $475,456 and 980,552, respectively. As of June 30, 2015 we have an accumulated deficit of $3,475,898. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2014 contained an explanatory paragraph regarding our ability to continue as a going concern based upon our operating losses and need to raise additional capital.  These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.  There are no assurances we will be successful in our efforts to increase our revenues and report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our Company.

Plan of Operations

To date, we have funded our activities through debt and equity financing, as well as through working capital advances from a related party. In order to fully organize our company and implement the first phase of our business model, we will need to raise approximately $3,500,000. Given the nature of our company and the current status of the capital markets, there are no assurances we will be able to raise the necessary capital, of which there can be no guarantee. Even if we are ultimately able to raise the capital, there are no assurances that our business model will be successful or that we will ever develop any revenue generating operations. However, assuming we are able to raise the capital, we expect to begin the launch of phase one of operating plans within six to nine months of receiving the capital.

As a result of the Asset Purchase Agreement we entered into with Carey Kriz on October 31, 2014 (filed as Exhibit 10.1 to our Current Report on Form 8-K on November 4, 2014), we have now launched phase I of our business strategy. Through this acquisition, we now own a suite of technologies that allows the Company to begin negotiating with potential customers. At this time we have limited operations and do not have any agreements or understandings with any customers, but we will continue to seek out DOOH media business opportunities to improve earnings and shareholder value. There can be no assurance that we will be successful in identifying and evaluating suitable business opportunities or in concluding any future business combinations. There is no assurance that we will be able to negotiate future business combinations on terms favorable to the Company, if at all. (See Note 3 for additional information related to the Asset Purchase Agreement with Carey Kriz.)

Results of Operations

Three months ended June 30, 2015 compared to the Three months ended June 30, 2014

During the three month periods ended June 30, 2015 and 2014, we did not recognize any revenue from our operations.

We recognized office expenses of $1,314 during the three month period ended June 30, 2015 as compared to none in the comparable period in 2014. We agreed to lease office space in Maryland to house computer programmers that were working on our digital out of home software that will integrate with our purchased proprietary software. The lease expires in November 2015.

We recognized professional fees of $197,579 during the three month period ended June 30, 2015 as compared to $39,494 in the comparable period in 2014. The increase was primarily attributable to increase in professional development fees as we engaged a consulting firms to assist us with execution of our business plan.

Officers and directors expenses were $65,600 for the three month period ended June 30, 2015 compared to none in 2014. Darren Dunckel, our chief executive officer and director was hired in August 2014 and is entitled to receive $5,000 per month and 20,000 shares of common stock for his services. Brett Lyons, a director of the Company received 10,000 shares per quarter for his services. We did not pay any officer or director compensation in the three month period ended June 30, 2014.

We incurred $3,867 in travel and entertainment expenses during the three month period ended June 30, 2015 as we paid for travel and meals for our CEO and consultants to discuss business opportunities. We did not incur any travel and entertainment expenses in the comparable period in 2014.

Investor relations expenses were $123,081 during the three month period ended June 30, 2015 as compared to none in the comparable period in 2014. We engaged Christopher Roberts IR to provide an effective investor outreach and communications strategy. For each month that the agreement is in effect, Mr. Roberts receives $10,000 per month plus shares equal to $20,000 divided by the trading price of the stock on the first day of the month. The shares are considered earned on the last day of the month. During the three month period ended June 30, 2015, Mr. Roberts earned 106,666 shares of common stock valued at approximately $85,898. 

Investor relations expense- related party were $32,919 during the three month period ended June 30, 2015 as compared to $80 in the comparable period in 2014. In April 2015, we engaged INTREorg Systems, Inc. (“IORG”) to provide stock transfer analytics services for a period of three months. The agreement is renewable on a monthly basis and provides for a monthly fee of $3,000 per month. Concurrently, the Company entered into a professional services agreement with IORG to provide consulting services. In exchange for the consulting services, IORG earns restricted common share of our stock. The number of shares awarded is determined based on the 20 day moving average daily closing price of divided by $10,000, prorated for partial months. Under the terms of agreements, the Company recorded an expense of $8,100 payable in cash and $24,819 payable in 32,207 shares of our restricted common stock. Due to common ownership, the Company considers IORG to be a related party.

Other general and administrative expenses increased to $4,039 during the three month period ended June 30, 2015 as compared to $53 in the comparable period in 2014. The increase was attributable increased activities to support our new business activities.

Interest expense- related parties was $15,807 during the three month period ended June 30, 2015 as compared to $5,544 in the comparable period in 2014. The increase of $10,263 or 185% was primarily attributable to an increase in overall borrowings.

Interest expense-related parties represents interest on a note payable in the principal amount of $11,846 due to a former officer which is presently past due, as well as interest on a related party convertible note payable in the principal amount of $143,733 which matured in March 2012, and interest on the related party revolving line of credit.

Six months ended June 30, 2015 compared to the six months ended June 30, 2014

During the six month period ended June 30, 2015 and 2014, we did not recognize any revenue from our operations

During the six month period ended June 30, 2015 we incurred $69,589 in salaries expenses relating to our hiring of programming staff to work on our digital out of home software that will integrate with our purchased proprietary software. We terminated all staff in March 2015.

We recognized office expenses of $10,579 during the six month period ended June 30, 2015 as compared to none in the comparable period in 2014. We agreed to lease office space in Maryland to house computer programmers that were working on our digital out of home software that will integrate with our purchased proprietary software. The lease expires in November 2015.

We recognized professional fees of $296,309 during the six month period ended June 30, 2015 as compared to $49,494 in the comparable period in 2014. The increase was primarily attributable to increase in accounting and legal fees as we brought out filings current and professional development fees as we engaged a consulting firms to assist us with execution of our business plan.

Officers and directors expenses were $196,168 for the six month period ended June 30, 2015 compared to none in 2014. Darren Dunckel, our chief executive officer and director was hired in August 2014 and is entitled to receive $5,000 per month and 20,000 shares of common stock for his services. Brett Lyons, a director of the Company received a stock grant of 60,000 valued at approximately $36,000 plus 10,000 shares per quarter for his services. The 2015 period also includes $21,768 compensation for Robert Dragotta, our former president who was terminated on April 3, 2015. We did not pay any officer or director compensation in the three month period ended June 30, 2015.

We incurred $11,719 in travel and entertainment expenses during the six month period ended June 30, 2015 as we paid for travel and meals for our CEO and consultants to discuss business opportunities. We did not incur any travel and entertainment expenses in the comparable period in 2014.

Investor relations expenses were $237,341 during the six month period ended June 30, 2015 as compared to $230 in the comparable period in 2014. We engaged Christopher Roberts IR to provide an effective investor outreach and communications strategy. For each month that the agreement is in effect, Mr. Roberts receives $10,000 per month plus shares equal to $20,000 divided by the trading price of the stock on the first day of the month. The shares are considered earned on the last day of the month. During the six month period ended June 30, 2015, Mr. Roberts earned 200,017 shares of common stock valued at approximately $141,144.

Investor relations expense- related party were $32,919 during the six month period ended June 30, 2015 as compared to none in the comparable period in 2014. In April 2015, we engaged INTREorg Systems, Inc. (“IORG”) to provide stock transfer analytics services for a period of three months. The agreement is renewable on a monthly basis and provides for a monthly fee of $3,000 per month. Concurrently, the Company entered into a professional services agreement with IORG to provide consulting services. In exchange for the consulting services, IORG earns restricted common share of our stock. The number of shares awarded is determined based on the 20 day moving average daily closing price of divided by $10,000, prorated for partial months. Under the terms of agreements, the Company recorded an expense of $8,100 payable in cash and $24,819 payable in 32,207 shares of our restricted common stock. Due to common ownership, the Company considers IORG to be a related party.

Other general and administrative expenses increased to $8,341 during the six month period ended June 30, 2015 as compared to $87 in the comparable period in 2014. The increase was attributable increased activities to support our new business activities.

Interest expense- related parties was $29,896 during the six month period ended June 30, 2015 as compared to $10,325 in the comparable period in 2014. The increase of $19,571 or 190% was primarily attributable to an increase in overall borrowings.

Interest expense-related parties represents interest on a note payable in the principal amount of $11,846 due to a former officer which is presently past due, as well as interest on a related party convertible note payable in the principal amount of $143,733 which matured in March 2012, and interest on the related party revolving line of credit.

Loss on settlement of liabilities- During the six month period ended June 30, 2015, the Company recognized a loss of $25,191 on the settlement of certain legal bills for restricted common stock. On March 19, 2015, the Company converted $94,809 of legal invoices that were included in accounts payable to 200,000 shares of common stock. The fair value of the common stock approximated $120,000.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash.  As of June 30, 2015, we had a working capital deficit of $1,104,889 as compared to a working capital deficit of $855,049 as of December 31, 2014.  Our total liabilities increased approximately 31% as of June 30, 2015 from December 31, 2014 primarily related to increases in accrued interest and accrued payroll expenses.  Accounts payable increased $88,055 or 38% primarily due to payments to vendors which were funded by increases in a line of credit to a related party and a conversion of certain liabilities for common stock.

Net cash used by operating activities in the six months ended June 30, 2015 was $280,814 as compared to net cash used by operating activities of $54,037 during the six months ended June 30, 2014.  During the six months ended June 30, 2015, net cash used in operating activities included an increase in accounts payable and accrued expenses of $182,864 (excluding the noncash settlement of certain liabilities for stock), an increase in accounts payable – related party of $8,100, and an increase in accrued payroll and interest of $64,121 (excluding the settlement of $44,610 in accrued interest for restricted common stock). During the six months ended June 30, 2014, net cash used in operating activities included a decrease in accounts payable and accrued liabilities of $4,225 and an increase in accrued interest of $10,324.   We did not generate or use any cash from investing activities in either the six months ended June 30, 2015 or the same period in 2014.  During the six month period ended June 30, 2015, we received advances of $255,948 under a line of credit to a related party and we received $25,000 in cash proceeds from sales of restricted common stock.  During the six month period ended June 30, 2014, we received advances of $53,950 under a line of credit to a related party.

We do not currently have any revenue producing operations and we are dependent upon availability under a $500,000 revolving line of credit extended to us by J.H. Brech LLC, a related party, in July 2011 to provide funds for our ongoing general and administrative expenses and satisfy our current obligations.    This credit line is not sufficient for the development of our operations.  We need to initially raise an additional $500,000 to fund the initial launch of our business plan.  We do not have any agreements or understanding with any third party to provide this financing.  Until we can raise the necessary funds, we will be unable to further implement our business plan.  Given the nature of our company and the thinly traded nature of the public market for our common stock and our status as a shell company under Federal securities laws, there are no assurances we will be able to raise the necessary capital.  If we are unable to raise capital as necessary, our ability to continue as a going concern is in jeopardy and investors could lose their entire investment in our company.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

A summary of significant accounting policies is included in Note 1 to the financial statements included in this report.  Our management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition.

Evaluation of Disclosure Controls and Procedures

As of the end of our last fiscal year ended December 31, 2014 and the quarter ended June 30, 2015, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon those evaluations, management concluded that our disclosure controls and procedures were not effective as of December 31, 2014 or June 30, 2015, to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Going forward from this filing, the Company intends to re-establish and maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, 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, 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. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

During the quarter covered by this Report, there were not any changes in our internal control over financial reporting identified in connection with the evaluation management performed at the end of the quarter ended June 30, 2015 or the end of the fiscal year ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

PART II - OTHER INFORMATION

We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances.  We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.

Not applicable for a smaller reporting company.

Information on any and all equity securities we have sold during the period covered by this Report that were not registered under the Securities Act of 1933, as amended is set forth below:

On May 1, 2015, J.H. Brech LLC converted $96,640 of the outstanding principle of 8% revolving line of credit outstanding revolver and $44,610 of the accrued and unpaid interest into 565,000 common shares.

On June 30, 2015, Mr. Brett Lyons. A director earned 10,000 restricted commons shares valued at approximately $6,000 pursuant to the terms of our agreement with him.

Pursuant to the terms of his consulting agreement, Christopher Roberts IR earned 106,666 shares of common stock valued at approximately $85,898 during the three month period ended June 30, 2015.

Under the terms of his consulting agreement, Darren Dunckel earned 60,000 shares of common stock valued at $44,600 for the three months ended June 30, 2015 and 120,000 shares of common stock valued at $102,400 for the six months ended June 30, 2015.

Under the terms of their consulting agreement, INTREorg Systems, Inc., a related party, earned 32,207 shares valued at $24,819 during the three month period ended June 30, 2015.

Unless otherwise noted, all of the transactions listed above were made pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended, provided by Section 4(a)(2) of the Securities Act for sales not involving a public offering or Rule 506(b).  None of the securities issued have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements

None.

None.

* filed herewith

SIGNATURES

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

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