ENIGMA-BULWARK, LTD - FORM 10-K

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EX-31 - EX 31.1 SEC 302 CERT-CEO - ENIGMA-BULWARK, LTD	ex311section302certification.htm
EX-32 - EX 32.2 SEC 906 CERT-CFO - ENIGMA-BULWARK, LTD	ex322section906certification.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

Commission file number 333-139045

[f20151231ptss10kfinalclea001.jpg]

PEARTRACK SECURITY SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Nevada	26-1875304
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1327 Ocean Avenue, Suite B, Santa Monica, California	90401
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:	310-899-3900

Securities registered pursuant to Section 12(b) of the Act:


N/A	N/A
Title of Each Class	Name of Each Exchange On Which Registered

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

N/A

(Title of class)




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

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

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 last 90 days.					Yes þ 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 registration statement was required to submit and post such files).					Yes þ 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 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.					Yes ¨ No þ

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer	¨	Accelerated filer	¨
	Non-accelerated filer	¨	Smaller reporting company	þ

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

The aggregate market value of Common Stock held by non-affiliates of the Registrant as of June 30, 2015 was $3,990,072 based on a closing price of $0.30 for Common Stock on June 30, 2015, the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this computation, all executive officers and directors have been deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the registrant’s

classes of common stock as of the latest practicable date.

69,516,089 Common Shares issued and outstanding as of April 15, 2016.


TABLE OF CONTENTS

ITEM 1.	BUSINESS	2

ITEM 1A.	RISK FACTORS	12

ITEM 2.	PROPERTIES	12

ITEM 3.	LEGAL PROCEEDINGS	12

ITEM 4.	MINE SAFETY STANDARDS	12

ITEM 5 .	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	13

ITEM 6.	SELECTED FINANCIAL DATA	14

ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	22

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	23

ITEM 9A.	CONTROLS AND PROCEDURES	23

ITEM 9B.	OTHER INFORMATION	24

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	25

ITEM 11.	EXECUTIVE COMPENSATION	28

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	30

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	30

ITEM 14.	PRINCIPAL ACCOUNTANTS FEES AND SERVICES	31

ITEM 15.	EXHIBITS, FINANCIAL STATEMENTS SCHEDULES	32

PART I


ITEM 1.	BUSINESS

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The Company’s financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in the Company’s capital stock.

As used in this annual report, the terms "we", "us", "our," “the Company” and "PearTrack" mean PearTrack Security Systems, Inc., and its wholly-owned subsidiaries, PearTrack Systems Group, Ltd., Ecologic Car Rentals, Inc. and Ecologic Products, Inc., unless otherwise indicated.

Corporate Overview

The Company’s principal executive office is located at 1327 Ocean Avenue, Suite B, Santa Monica, California, 90401. The Company’s telephone number is 310-899-3900. The Company’s wholly owned subsidiary, PearTrack Systems Group, Ltd. is headquartered in the San Francisco Bay area of California, with offices in Manchester, England.

The Company’s website is www.peartrack.com.

The Company’s common stock is quoted on the OTC Bulletin Board and the OTCQB under the symbol “PTSS”.

Corporate History

PearTrack Security Systems, Inc. (the “Company” or “PearTrack”), incorporated in Nevada on September 30, 2005, is a security and logistics company headquartered in Santa Monica, CA. The Company is currently structured with three wholly owned subsidiaries: PearTrack Systems Group, Ltd., Ecologic Products, Inc., and Ecologic Car Rentals, Inc., all Nevada corporations. PearTrack Systems Group, Ltd. (“PTSG”), is headquartered in the San Francisco Bay area of California, with offices in Manchester, England. The Company’s current business activities are diversified into two specific markets: remote/mobile asset tracking and environmental transportation and products.

The Company’s primary focus is on the development and commercialization of its proprietary battery system in conjunction with its GPS tracking and management technologies. The Company’s vertically integrated activities, spanning from hardware design, software development, marketing and sales, to project implementation and system operations, aim to make logistics chains more secure and increase operational efficiency. The Company continues to pursue wholesale distribution opportunities for the Ecologic Shine^® product, including product placement into major retail automotive chains. The Company is also developing a business plan for the retail distribution of the Ecologic Shine^® product line in anticipation of spinning the operating subsidiary out to Shareholders.

On October 17, 2014, pursuant to the Agreement and Plan of Merger dated October 9, 2014, PearTrack Acquisition Corp., a Nevada corporation (“PTAC”), the Company’s wholly owned subsidiary, merged with PTSG, with PTSG as the surviving entity (the “Merger”). As a result, PTSG became the Company’s wholly owned subsidiary. As part of the agreement, the Company issued an aggregate of 51,358,555 restricted shares of the Company’s common stock to the former PTSG shareholders on a 5.13586 for 1 basis. The issuance, representing approximately 90% of the Company’s issued and outstanding shares of common stock, increased the total issued and outstanding common shares from 5,706,506 shares to 57,065,061 shares. In addition, the Company changed its name to PearTrack Security Systems, Inc. and its trading symbol to OTCQB.PTSS.

In connection with the Merger, effective October 17, 2014, Mr. William B. Nesbitt resigned as President and CEO, and Mr. Edward W. Withrow Jr., the President of PTSG and a member of the Company’s Board of Directors (the “Board”), was appointed Mr. Nesbitt’s successor. Mr. Nesbitt remains a member of the Board, as well as President and CEO the Company’s subsidiaries, Ecologic Car Rentals, Inc. and Ecologic Products, Inc. In addition, Mr. Arran de Moubray, Mr. Paul B. Burke and Mr. John D. Macey, formerly directors of PTSG, were appointed to the Board.

On January 21, 2015, the Company executed an Assignment and Licensed Rights Agreement (the “Agreement”) with PearLoxx Limited (“PearLoxx”) dated December 19, 2014, for the exclusive license in perpetuity of certain patented intellectual property (the “Licensed Property”), as defined in the section “Intellectual Property” below. As consideration, the Company shall pay PearLoxx a percentage of gross receipts generated from the sale of the Licensed Property. On March 9, 2015, the Company amended the License Agreement to include, among other things, as part of the consideration for the Licensed Product, the right for PearLoxx to purchase 5,706,506 shares of the Company’s common stock, valued at $1,711,952, for cash in the amount of $5,707.

On February 20, 2015, Mr. Philip J. Woolas was appointed as a Board member, to serve until the next annual meeting of the shareholders and/or until his successor is duly appointed.

On October 22, 2015, the Company accepted the resignation of Mr. Paul Bernhard Burke as a member of the board of directors. This resignation did not involve any disagreement with the Company.

On November 5, 2015, Mr. Edward W. Withrow III resigned as Chairman and member of the board of directors. This resignation did not involve any disagreement with the Company. Mr. E. William Withrow Jr., currently President and Chief Executive Officer and a board member, succeeded him to serve as Interim Executive Chairman until the next annual meeting of the shareholders and/or until his successor is duly appointed.

On November 5, 2015, the Company accepted the resignation of Mr. Arran de Moubray as a member of the board of directors. This resignation did not involve any disagreement with the Company.

Current Business

The Company is currently structured with three wholly owned subsidiaries: PearTrack Systems Group, Ltd., Ecologic Car Rentals, Inc. and Ecologic Products, Inc., all Nevada corporations. The Company’s current business activities are diversified into two specific markets: remote/mobile asset tracking and environmental transportation and products.

Through its wholly owned subsidiary, PearTrack Systems Group, Ltd., the Company intends to provide a suite of products in the M2M telematics and remote/mobile asset tracking and management industry, including a GPS tracking system and tracking devices with a proprietary long-life battery system for non-powered assets.

Through its wholly owned subsidiaries, Ecologic Car Rentals, Inc. and Ecologic Products, Inc., the Company continues its pursuits for viable environmental rental car opportunities, and its marketing and distribution endeavors for its environmental products. The Company anticipates that it will spin-out Ecologic Car Rentals and Ecologic Products, Inc. to its shareholders prior to the end of 2016.

Remote/Mobile Asset Tracking

PearTrack Systems Group, Ltd.

Through its wholly owned subsidiary, PearTrack Systems Group, Ltd., the Company’s focus is primarily on the development and commercialization of its proprietary battery system in conjunction with its global positioning system (“GPS”) tracking and management technologies. The Company is geared to offer market-leading proprietary solutions in the mobile to mobile (“M2M”) telematics and remote/mobile asset tracking and management industries.

Key components of the PearTrack Tracking Products:

Battery Powered GPS Asset Tracking and Monitoring Systems with up to 10-year battery life for just about any remote asset, regardless of power supply.

Asset monitoring and alarm units ranging from a Personal Tracking device with a 30-day rechargeable battery, to a Container Security and Tracking Unit with a 10-year battery.

PT-700 or PT-1000: self-contained, wireless, concealable and easily fitted GPS enabled Asset Monitoring and Alert Systems with unique covert antenna kit, providing international GPS tracking (via GSM networks), temperature monitoring and door opening alerts sent directly to cell phone and/or email account.

PT Tracking Unit: a powerful Fault Monitoring and Service Management Tool that monitors Generators, Chillers, Reefers, Irrigation Pumps, and Heavy Plant operating conditions, providing automatic alerts for critical events such as Low Oil Pressure, Engine Over-Temperature, Grid Failure, Low Output Flow, Low Fuel Level, Battery Failure, and Out of Temperature Range.

PearTrack TeleAsset: a remote Asset Management, GPS Tracking and Monitoring System providing critical real-time event-driven GPS enhanced Event Alerts and Usage information, and enables superior remote asset management through a single web-based portal.

PearTrack TeleAsset Platform: provides an end-to-end solution including:

GPS enabled M2M interface hardware fitted discretely to each asset that monitors alarms, gathers data, and communicates information to the PearTrack web portal using GPRS via the GSM mobile networks.

Centrally managed asset data software to process alarms and alerts.

Web portal internet-based user interface accessible using a standard web browser from any Internet enabled PC or handheld device.

Customization, hosting and system integration to provide tailored solutions to meet specific customer needs.

The Company is currently enhancing its tracking products to integrate the PearLoxx locking mechanism within its tracking units. The PearLoxx unit integrates patented locking technology with GPS tracking and reporting capabilities. The Company anticipates delivery of the PearLoxx prototype units in June 2016.

Key components of the PearLoxx Locking and Tracking Units:

Electronically operated secure locking system using patented design.

Remotely controlled secure unlocking via the password protected PearTrack system.

Tamper and drill resistant design.

Local 5-digit code emergency access, and emergency power options.

GPS global tracking with GSM 2G/3G communications, and Iridium Satellite (optional).

Automatic notification of lock operation and unlocking/ locking events.

Sensors of movement, unit internal temperature, and low battery alarm options.

Local user one-touch re-locking.

Can be removed and refitted in less than 1 minute.

Up to 10 year operating life from primary battery pack (subject to frequency of report).

The Company is assessing the areas of growth, with particular emphasis on the intermodal container market. PearTrack’s vertically integrated activities, spanning from hardware design, software development, marketing and sales, to project implementation and system operations, aim to make logistics chains more secure and increase operational efficiency.

Business Strategy

The board of directors of the Company (the “Board”) has approved the authorization of a capital raise of between three million ($3,000,000) dollars and five million ($5,000,000) dollars that will be used to grow the PearTrack business with the goal of generating shareholder value.

The Company’s intended strategy will be a multi-pronged approach:

Enhance and expand the existing product line;

Expand intellectual property through licensing;

Identify potential business acquisitions; and

Develop new facilities for the manufacturing and distribution of the PearTrack portfolio on a global scale.

Trailer and cargo container tracking is often a part of a fleet management solution that includes both the truck and trailer, and is a natural subset of asset tracking. With this in mind, the Board approved the establishment of PearTrack Container Group (“PearTrack Container Group”) in the 4th quarter of 2015, and has developed a strategic plan that encompasses intermodal container tracking, reporting and security, providing a real-time tracking solution that incorporates data logging, satellite positioning and data communication to a back office application.

Table of Contents

The PearTrack product portfolio is specifically designed for tracking commercial assets utilizing market leading wire-free autonomous technology. The extensive PearTrack product range, combined with proprietary enterprise management software, enables the business to engage with existing telematics markets while simultaneously establishing a strategic plan to target the maritime security market with its PT-Tracker Smart Container System.

The execution of the Company’s business strategy will be contingent upon and require significant financing. There can be no assurance that such financing will become available or, if it does, that it will be offered to the Company on favorable terms. The Company’s ultimate goal is to achieve an international presence in the M2M and remote/mobile asset tracking market.

Products and Technology

Overview

The PearTrack product line supplies battery powered GPS asset tracking and monitoring systems with up to 10-year battery life for just about any remote asset, regardless of whether it has a power supply or has no power at all. PearTrack’s asset monitoring and alarm units, the PT Trackers, range from a personal tracking device with a 30-day rechargeable battery, to a cargo container security and tracking unit with a battery life up to 10-years.

The PT Tracker GPS enabled asset monitoring and alert units are very easy to fit. In their basic form they are fully self-contained with no external wires or connections, and can be fitted in minutes to any trailer, or concealed within the contents of a pallet. Alternatively, with a unique covert antenna kit, the PT-700 or PT-1000 can be concealed within a shipping container to provide international GPS tracking (via GSM networks), temperature monitoring and door opening alerts sent directly to a cell phone and/or email account.

When a PT Tracker is connected to mobile/remote engineering equipment, the unit becomes a powerful fault-monitoring and service management system. Generators, chillers, reefers, irrigation pumps, and heavy plant operating conditions can all be monitored, providing automatic alerts to warn asset managers of critical events such as low oil pressure, engine over-temperature, grid failure, low output flow, low fuel level, battery failure, and out of temperature range, thereby allowing preventative maintenance to be carried out and the fault corrected, often preventing costly repairs and downtime.

There are currently two PL Tracker tracking units containing the patented PearLoxx secure locking technology, along with PearTrack’s unique and proven long life battery solutions. The PearLoxx secure locking technology (www.pearloxx.com), has a built-in GPS tracking system that enables a shipping container to be both sealed securely and tracked using the same device.

The PearTrack TeleAsset is a remote asset management, GPS tracking and monitoring system that enables organizations to better manage their remote assets. These TeleAsset systems can provide critical time sensitive information such as GPS enhanced event alerts and usage information, allowing the user to effectively manage all its assets from a single web-based portal. This information assists users in making informed management decisions based on up to the minute event-driven alerts and information regarding its PearTrack equipped assets.

The PearTrack TeleAsset platform provides an end-to-end solution comprising:

Hardware GPS enabled M2M interface fitted discretely to each asset that monitors alarms, gathers data, and communicates this information to the PearTrack web portal using GPRS via the GSM mobile networks.

Software centrally manages asset data, processes alarms and alerts authorized users of critical information regarding their assets.

Web Portal internet based user interface which can be accessed using a standard web browser from any Internet enabled PC or handheld device.

Services include customization, hosting and system integration services to provide tailored solutions to meet specific customer needs.

PT-Trackers

With the Company’s PT Trackers, PearTrack has a full range of GPS, GSM battery powered units ranging from 30-day rechargeable to up to 10 years without a battery replacement, all containing tracking and reporting capabilities, thus providing a wide variety of vertical markets.

The PearTrack product portfolio is comprised of several battery options powering GSM/GPS based asset location and monitoring devices. The product range consists mainly of non-rechargeable units, with operating durations of up to 3, 5, 7, and 10 years, in various sizes and footprints. In addition to these, a number of miniaturized rechargeable devices are due to be launched in the coming months, and will be specifically targeted at short-term hire and consignment applications.

The three, five, seven and ten year devices have multiple alarm input capability, and can interface with additional modules including temperature, movement, door opening, and angle sensors, which makes them applicable to both standard tracking and specialist reporting applications.

PearLoxx Secure Locking Technology

As part of its strategy, the Company licensed in perpetuity a patented container locking technology from PearLoxx Ltd., a United Kingdom company. The PearLoxx secure locking technology (www.pearloxx.com), has a built-in GPS tracking system that enables a shipping container to be both sealed securely and tracked using the same device. The PearLoxx unit can be fitted in less than a minute with no drilling, which provides significant value to the PearLoxx proposition. PearLoxx will operate as a unit of PearTrack Container Group.

The PL Tracker, the Company’s next-generation GPS cargo tracking system and solution, with intermodal real-time container and rail car transport security tracking, will provide a proprietary end-to-end supply chain security and tracking solution. PearLoxx locking systems integrate elements from the Sweloxx patented physical container locking system, which provide a proprietary electronic control and deadlock system, with the PearTrack tracking and communication system. The PearLoxx unit and system will provide an electronically operated shipping container security lock that can signal operation and location updates via the PearTrack system. Principal generic features of the PL Tracker include:

Electronically operated secure locking system using patented mechanical design.

Tamper and drill resistant design

Local 5-digit code emergency access, and emergency power options.

GPS global tracking with GSM 2G/3G communication using PearTrack tracking unit.

Automatic notification of lock operation and unlocking / locking events.

Local user one-touch re-locking

90 day rechargeable or up to 10-year primary battery versions based

There are currently two PL Trackers:

PL-1000: With up to a 10-year battery life, will give 4 positions a day.

PL-90: 3-month battery life, rechargeable unit has all the features of the PT-1000. The PL-90 will last many times longer than any rechargeable GPS tracking unit currently on the market.

There is also a third unit, the PL-1100, that the Company is planning to develop, similar to the PL-1000, that would be designed to be fitted into the shipping container, becoming an integral and permanent part of the container.

Software

The PearTrack software enables the end-user to configure and monitor their tracking units, utilizing mapping, geo fencing, lock-down, and switching tools to provide the basis for powerful asset management and security functions. The PearTrack back-office system is dedicated to its own hardware solutions, and is designed totally in-house. This ensures complete compatibility with all hardware with a fully optimized turnkey solution. PearTrack’s philosophy is ‘Quality by Design’ and, as such, designs aviation-class software, which is constructed to be self-monitoring and does not require reboot. With the PearTrack cloud-based upgradeable firmware, the Company is able to add new features and upgrades without unnecessary cost or inconvenience to the end user.

Battery Management

A number of factors can affect battery life, e.g. ambient temperature, GPS availability, communication method (and availability), reporting frequency, external monitoring, and the period over which the units are actually operating (longer operating periods will result in greater quiescent power usage, and be impacted by losses within the battery chemistry). In order to standardize performance figures, the PearTrack products have quoted expected battery life based on normal conditions and reporting 4 events per day at typical room temperature. The PearTrack back-office system records the number of reporting events accumulated for each device, which enables the monitoring of actual battery performance. The Company is able to provide end users with suggestions to maximize battery life, if indications arise that a particular installation is not performing at optimal operating conditions.

Web Portal

In addition to the standard tracking and reporting functions, PearTrack’s end-user software provides leading enterprise management solutions of all tracking devices, including geo-fencing. The PearTrack tracking portal utilizes multiple mapping data and GIS engines. By default, the web portal currently interfaces with the Microsoft Virtual Earth map engine, which provides road, aerial and birds-eye views over almost the entire globe.

The PearTrack web portal enables the full administration and functionality of all tracking units within a completely user-friendly environment. Further, with centralized monitoring capabilities, PearTrack is able to easily extend the initial contract terms by way of an “extension” or ‘unlocking’ of existing units (subject to available battery performance data) or the ‘activation’ of additional installed units. In addition, performance monitoring is administered through the web portal, which provides functionality parameters for each tracked unit.

Target Market

The PearTrack business focuses on security and remote/mobile asset tracking, its management and communication. The history of fleet management solutions goes back several decades while tracking and monitoring of shipping containers came in focus after 9/11. Today, mobile and satellite networks can provide ubiquitous online connectivity at a reasonable cost, and mobile computing and sensor technologies that deliver high performance and excellent usability. All of these components combined enable the delivery of supply chain management, security management and operations management applications linking trailers, containers, cargo and enterprise IT systems.

The Company’s target market includes the transportation of high value assets, remote locations, and the utilization of intermodal containers, from shipper origin to customer delivery and pickup. The Company provides an important service to its customers that involves not only the protection of their assets, but of their brands; and in the case of intermodal container border security, PearTrack’s technology platform and services may protect against threats of terrorism, theft of goods and/or theft and replacement of goods with counterfeit goods.

The Company’s primary target market, intermodal shipping containers, offers a unique opportunity that it is positioned to exploit. The Company is targeting markets that have both early adoption combined with enormous need, and increasing adoption driven by fundamental market factors. The container tracking and security market is projected to grow at an annual rate of 35 percent. The container tracking market drivers are:

Supply chain efficiency and container utilization;

Cargo Theft: Worldwide cargo thefts account for $30-$50 billion in losses annually;

Counterfeit goods: Pharmaceutical, technology products, petroleum products;

Terrorism: The threat of terrorist using containers to breach security and cause destruction of property and lives; and

Human Cargo: Traffickers use containers to transport people for forced labor, sex trade, etc.

The PearTrack business model, specifically its container initiative, includes organic sales growth and proprietary research and development, as well as acquisitions of companies and/or intellectual property deemed strategic to its business, in an effort to differentiate PearTrack amongst its competitors.

As part of PearTrack’s globally integrated supply chain security and monitoring system, the PT3 System, its next-generation container transport tracking solution, will provide end-to-end real-time intermodal container and rail car cargo transport access, intrusion tracking and market- leading battery life enhancement using its proprietary container security tracking technologies.

Target Market Drivers

Improved Supply Chain Management resulting in increased ROI and operational efficiencies;

Reduced theft and asset loss;

Reduced Insurance and liability risks;

Reduced exposure to counterfeit products being delivered as opposed to genuine articles. Counterfeit products cost over $30 billion annually in lost revenue;

Reduced harm to humans who use counterfeit drugs with over one million people become sick with a large population dying from use of counterfeit drugs; and

Reduced threat of terrorist attacks that can be launched by having a “dirty bomb” or nuclear bomb hidden inside an Intermodal Container.

Table of Contents

Intellectual Property

On October 17, 2014, pursuant to the Merger, the Company acquired the PearTrack technology and intellectual property portfolio, consisting of an extensive range of proprietary electronic, software, firmware, and mechanical designs, along with detailed specifications, protocols, and process information, details of which can be found in the PearTrack IP Register, in summary:

Firmware: Embedded firmware for version 1 non-rechargeable products (current manufacture), and Gen2 hardware platforms (rechargeable and non-rechargeable products).

Hardware: Electronic and schematic designs; and manufacturing data for version 1 products (current manufacture); and Gen2 hardware platforms, along with a range of secondary interfaces and accessories.

Mechanical: Mechanical designs and production tooling relating to version 1 non-rechargeable products (current manufacture), and in the case of the PT-90 and PT-30 design, transferrable to the Gen2 hardware variants.

Software: Software includes but is not limited to: software applications, interfaces, and tools (i.e. web portal tracking platform), back-office services, and hardware programming tools. Software may be in the form of pre or post-complied code. System architecture, designs, and source code as used to construct and deploy the PearTrack tracking portal and associated services, including but not limited to: user interface, security controls, data access layer, communications, geo-parsing, database management, web services, reporting and administration.

Specifications: Detailed product and system specifications, approaches, communication protocols, and manuals relating to version 1 and Gen2 products, and supporting systems.

Patents

On June 30, 2014, the Company entered into a non-exclusive License Agreement, in perpetuity, with AudioEye Communications, Inc., a communications and technology company that owns a family of patents in the area of audio technology. Proprietary materials consist of the following licensor-produced intellectual property used in the development of the technology and implementation of product:


US Patent	Description
8,046,229	Method and apparatus for website navigation by the visually impaired. Abstract: The system involves creating an audible website corresponding to an original website by utilizing voice talent to read and describe web content.
8,296,150	System and method for audio content navigation. Abstract: A system and method for communicating one or more audio files through a network.
7,966,184	System and method for audio content navigation. Abstract: Systems and methods for an audio-based content management, navigation and retrieval system are provided.
8,260,616	System and method for audio content generation. Abstract: A system and method for generating audio content. Content is automatically retrieved from an original website according to a predetermined schedule to generate retrieved content.
8,589,169	System and method for creating audio files. Abstract: A system and method for creating one or more audio files.

US Patent Pending	Description
13/483,758	System and method for audio content generation.
113/280,184 US12/61,620 WO2013063066	Includes numerous international filings. System and method for audio content management.
14/055,366	System and method for communicating audio files.

The Company is developing a proprietary system of secure and encrypted communication that will allow the reporting PearTrack systems to be delivered through the web portal in an audio format with multiple linguistic capabilities. In addition, PearTrack has plans to develop an audio technology in conjunction with AudioEye, Inc., that will allow the end user to interact with the security and tracking device vocally, and will enable the end user to ask specific questions aloud, in sequential or non-sequential order, and accelerate the gathering and assimilation of information and collection of data.

On March 9, 2015 the Company completed the acquisition, through assignment of an exclusive License in perpetuity, of the PearLoxx, Ltd. system that has USPTO and EP Patent with a priority date of March 13, 2006.

US Patent

Description

US 8,245,546

EP 1 845 225 B1

Container Lock and Method for Locking of Container Door.

The EP Patent describes the PearLoxx system as follows: The invention relates to a container lock, a method for locking a container with at least one door, and a container provided with a lock, said door having a first frame edge portion, and said container having a second frame edge portion positioned adjacent to said first frame edge portion in a closed position of the door, wherein said container lock comprises: an interior blocking portion, having a body adapted to extend over said first and second frame edge portions, and an engaging abutment and an extension portion extending out from said body so that, when said interior portion is arranged on the inside of said second frame edge portion, said engaging abutment and extension portion provide interacting engagement of opposite side surfaces of said second frame edge portion, and said extension portion extends from the interior of the container to the exterior of the container, and an exterior blocking means for lockable interaction with said extension portion.

PearLoxx Product Overview

The PearLoxx locking systems (the “PearLoxx Product”) integrate elements from the Sweloxx patents physical container locking system, with proprietary electronic control and deadlock system, and the PearTrack tracking and communication system. The system provides an electronically operated security lock for shipping containers that signals operation and location updates via the PearTrack system.

The Company has developed a system that integrates the patented locking system with the PearTrack technology and is at the final stages of development of the new products. Principal generic features of the PearLoxx Product include:

Electronically operated secure locking system using patented mechanical design.

Tamper and drill resistant design

Local 5-digit code emergency access and emergency power options.

GPS global tracking with GSM 2G/3G communication using PearTrack tracking unit.

Automatic notification of lock operation and unlocking / locking events.

Local user one-touch re-locking

Approximate 90-day rechargeable (PL-90) or up to 10-year primary battery (PL-1000) versions based

CodeLoxx

The PearLoxx lock assembly (“CodeLoxx”) is operated by a microcontroller based lock control circuit. This electronic circuit is able to accept either remote open commands via the PearTrack system or a 5-digit local code, which is input via a single button and LED combination. The deadlock bolt is operated using a motor driven gear/rack, and once the deadbolt is retracted a user can manually operate the lock. Lock open status is signaled via the PearTrack tracking unit, and re-locking is automatically inhibited while the lock bolt is open to prevent jamming.

PL-90

The PL-90 is the rechargeable battery version with a predicted operating life of up to 3 months. It operates from a single Lithium Polymer battery, which is used to power the PearTrack GPS/GSM tracking unit and operate the CodeLoxx lock control circuit. The battery is charged using power derived from an external USB connector and controlled by the GPS/GSM tracking unit. The total assembly is designed to be resistant up to IP67.

PL-1000

The PL-1000 is the fixed battery version with a predicted operating life of up to 10 years. It operates from an eight ‘D’ cell primary power pack, which is used to power the PearTrack GPS/GSM tracking unit, and provides charge power for a small lithium polymer battery which is used to operate the CodeLoxx lock control circuit. The total assembly is designed to be resistant up to IP67.

Future IP Strategy

The Company’s plan for new product is based on a combination of internally developed product and service offerings, modification, enhancement or new indication of existing proprietary technologies and the licensing and or acquisition of technologies and or companies that fit into the overall thesis of the PearTrack and can be integrated into its strategic plan.

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Competition

Telematics Industry Players

Following is an analysis of select companies offering similar products:


Company	Positioning	Penetration	Customer Added Value	GSM	CDMA	Satellite/ Iridium	Locking Feature	Battery Life
PearTrack	Provides leading battery life and extensive data services with GPS tracking through GSM, CDMA and Iridium Networks	Over 30 industry segments	· leading battery life in the industry · multimode communication technology · container security equipment optional (Pearloxx) · fitted and convert options	X	X	X	X	30 days To 10 years
Kirsen Global Technology	Provides multi-modal container monitoring systems (CMS), monitoring the position and security of cargo containers with a global network that tracks and responds to incidents	Freight forwarders, 3PLs, shipping lines, shippers, insurances, packaging companies, terminal operators, and government entities	· offers a range of products to meet certain customer needs, from purely tracking containers to tracking with all sensors and capabilities	X				1 year
Honeywell Global Tracking	Offers commercial satellite-based asset tracking and monitoring provided by Inmarsat as well as fully integrated search and rescue solutions backed by international certifications that are Cospas-Sarsat compliant	Transportation, maritime, oil and gas industries, as well as logistics operations for military, governmental and NGO's around the world.	· use of Inmarsat satellites. · offers solutions for situations when GPS and GSM communications are not available, such as custom mapping data	X				1 year To 10 years
SKyBitz/ Telular	Provides remote asset tracking and information management services, specializing in real‐time decision-making tools for companies with unpowered assets.	Trucking and logistics, oil and gas, intermodal	· launched DARPA‐funded technology into private, government and international markets	X				"Multiyears," Otherwise Not specified
Globe Tracker	Provider of data sharing, data analytics, and global asset tracking and monitoring services	Not provided	· provides lifetime guarantee. · partnership with Vodafone for global GSM connectivity	X				5 years + External Power Option
Starcom Systems	Provides real-time GPS fleet management and vehicle security applications, personal tracking, merchandise tracking, containers tracking and management and an online application.	Parented by Triton Container International Limited, exposure to Intermodal Leasing industry	· offers multi-lingual applications · magnet installation · low power mode · Triton container leasing services	X	X			Not specified
OnAsset Intelligence	Specializes in the air cargo industry and is the first FAA compliant and operator approved real-time tracking device with automatic "airplane mode." Provides freight protection, chain of custody supervision and supply chain security	Emirates Sky Cargo, Virgin Atlantic Cargo, Cathay Pacific, American Airlines Cargo, AT&T, Envirotainer	· offers different mounting options as well as iridium coverage · color coded data	X	X	X		30 days To 75 days
CSB Technology	Provides a plug and play solution targeting container security issues with the use of solar power	Kuhne + Nagel, Bosch Sicherheitssysteme, DSV Air and Sea, Bavaria Egypt, Bayer Healthcare, EPSa GmbH	· solar power available	X
Global Tracking Technologies, LLC	Provides high performance and ease of use GPS tracking device featuring real-time tracking, and supply chain monitoring across land, sea and air	PBS&J an Atkins Company, DeepWaterWind, Fred.Olsen Marine Service AS, Pepsico, Shiseido, WWF	· offers temperature monitoring function	X				1 week To 7 years
Loksys Solutions	Focuses on freight security and container tracking in the container logistics market, designed specifically for intermodal transportation.	Not specified	· efficient installation with different set-up options that provide both physical and electronic security	X			X	Not specified
Track4C	Provides tracking and monitoring functions already fixed in the containers.	New company, currently establishing network	· customization in reporting sensors with a long battery life, pricing solutions tailored to customer needs (pay-as-you-use model) · link easily to existing ERP platforms	X				18 months To 24 months
CallPass M2M Solutions	Provides affordable Internet-based tracking and monitoring assets, container, fleet and trailer.	New company, currently establishing network	· affordable and a wide variety of products for both individuals and businesses	X	X			Not specified
Traklok International	Provides robust physical security, multi-sensor alarm, and GPS tracking.	Chemical, electronics, pharma, food and beverage, government, tobacco	· durable lock · tracking and security functions in one device	X			X	1 month To 3 months
Envotech	Manufactures mechanical security seals and RFID E-seals	New market entrant looking to penetrate airline, intermodal shipping, banking, transportation, chemical, manufacturing, pharmaceutical, and healthcare industries	· leading RFID Seals and Services, the SLM-i product offers Iridium failover features	X		X		3 months To 9 months

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Government Regulations

The Company’s operations will be subject to various federal, state and local laws, regulations, and controls. The Company believes it is in compliance with any such regulations affecting the Company’s business.

PearTrack’s management believes that the container and tracking market has the potential to be influenced by legislation from various authorities worldwide, as well as the outcome of discussions around mutual recognition of C-PAT and AEO, the results of full container scanning trials and the announced Container Security Device requirements from the US Department of Homeland Security (“DHS”).

Safe Port Act of 2006

SAFE Port Act was introduced as a bill on March 14, 2006, under the 109th US Congress, 2005–2006. The bill calls for 100% of US-bound ocean containers to be scanned at the foreign port of origin. The bill was enacted and signed by former President George W Bush on Oct 13, 2006. The bill became the law numbered Pub.L. 109-347.

The DHS has delayed until 2016 the implementation of key sections of the SAFE Port Act of 2006.

Container Security Initiative

The Container Security Initiative (the “CSI”) was launched in 2002 by the U.S. Bureau of Customs and Border Protection (“CBP”), an agency of the DHS. Its purpose was to increase security for container cargo shipped to the United States. The CSI allows Customs and Border protection (CBP”), working with host government Customs Services, to examine high-risk maritime containerized cargo at foreign seaports, before they are loaded on board vessels destined for the United States.

The CSI consists of four core elements:

Using intelligence and automated information, identify and target containers that pose a risk for terrorism.

Pre-screen containers that pose a risk at the port of departure before they arrive at U.S. ports.

Using detection technology, such as gamma ray detectors, quickly pre-screen containers that pose a risk.

Use smarter, tamper-evident containers.

The initial CSI program has focused on implementation at the top 20 ports that ship approximately two-thirds of the container volume to the United States. Smaller ports, however, have been added to the program at their instigation and participation is open to any port meeting certain volume, equipment, procedural, and information-sharing requirements. Future plans include expansion to additional ports based on volume, location, and strategic concerns.

Sales, Marketing, and Advertising

The Company’s primary marketing objective is to convey to its customers and to consumers in general that its product is of superior quality, and provides a proprietary long-life battery that surpasses any in the global asset tracking market. The Company is seeking to appeal to customers by emphasizing the interrelated security and economic benefits of the Company’s tracking units, in conjunction with the Company’s online control portal infrastructure.

The Company intends to:

exploit the differentiation of PearTrack from other asset tracking company brands.

use direct sales and education to the US Military, Department of Homeland Defense, the US Coast Guard, and state and municipal government agencies, and corporations committed to anti-terrorism threats.

employ strategic use of electronic and internet distribution, employing state of the art technology to target customers seeking intermodal container security.

Other than as disclosed above, the Company’s current sales, marketing, and advertising efforts are minimal due to the Company’s size and limited financial resources.

Manufacturing

The Company currently works with independent tier 2 UK manufacturing companies to source the components and build assemblies, and then performs the systems integration and final assembly of the PearTrack product line. The Company has entered into discussions with a large outsource manufacturer that will handle all of the manufacturing of its products as the Company commences the commercialization of its products and services.

Current Suppliers for the PT Tracker and PL Tracker Units

VC Electronics (UK CEM)

United EMS (UK CEM)

Centirion (Germany) - GSM for Gen2 products

uBlox (Switzerland) - GPS chipset for Gen2 products

San Jose Navigation (Taiwan) - GPS antenna & Receiver for PT-xxx

Toaglas (USA, Taiwan, and UK) – GPS antenna supplier for Gen2 products

Tekfun (Taiwan) - GSM antenna (all models)

Eve Battery Co (China) - PT-xxx battery packs

EEMB (China) - PT-30 & PT-90 battery

HK Salt (Hong Kong) - CPU's for both product groups

Shenzhen Shanghai Technology Ltd (China) - PT-xxx GSM module

Fibox (EU) - PT 700 & PT-1000 enclosures

Pheonix Mechano (EU) - PT-500 enclosure

Facilities

The Company’s principal executive office is located at 1327 Ocean Avenue, Suite B, Santa Monica, California, 90401. The Company’s telephone number is 310-899-3900, and fax number (888) 899-1433.

The Company’s wholly owned subsidiary, PearTrack Systems Group, Ltd. is headquartered in Alameda, California, with offices in Manchester, England.

The Company’s website is www.peartrack.com.

Employees

As of December 31, 2015, the Company had two employees, excluding the Company’s directors and executive officers. The Company currently has two employees, excluding the Company’s directors and executive officers. The majority of those working with the Company are engaged as consultants under Consulting Agreements.

Research and Development

During the last two years, the Company has spent $53,884 and $48,600, respectively, on research and development of its product line.

Environmental Transportation and Products

Ecologic Car Rentals, Inc.

Through its wholly owned subsidiary, Ecologic Car Rentals, Inc., the Company continues to focus on the development of an environmental car rental operation. The Company believes that the growth in demand for environmentally friendly cars, and the increase in major automakers’ production of new eco-friendly car models, has created a unique opportunity for an environmentally-friendly transportation company. The comprehensive business strategy, which capitalizes on this unique opportunity, and the business model supports growth, while holding true to its planet-friendly mission.

The strategy is to identify and acquire existing profitable independent car rental operations on a multi-regional basis, and convert their operations to an Ecologic platform. By initially co-branding with acquired companies for a limited period of time, the rebranding transition to “green” outlets as “Ecologic Car Rentals” can ultimately be completed.

Ecologic Products, Inc.

Through its wholly owned subsidiary, Ecologic Products, Inc., the Company continues its development of ecologically friendly products. Initially, the Company’s product line will be focused on transportation and its ancillary markets. The Company has developed Ecologic Shine^®, a device and system for near-waterless car washing that delivers cleaning comparable to normal washing without the use of any harmful chemicals. The Ecologic Shine^® products and services are:


·	Good for the environment
·	Good for the vehicle
·	Good for the customer
·	Good for the bottom line

The Company continues to pursue wholesale distribution opportunities for the Ecologic Shine^® product, including the product placement into major retail automotive chains. The Company is also developing a business plan for the retail distribution of the Ecologic Shine^® product line in anticipation of spinning the operating subsidiary out to Shareholders.

Planned Spin Offs

Although the Company continues to develop its environmental transportation business through Ecologic Car Rentals, Inc. and Ecologic Products, Inc., the Company and its board of directors believes the subsidiaries will be able to operate more effectively independently, with the goal of attracting new capital and exploiting their existing business, and will have the flexibility to establish new relationships in order to achieve their respective goals of generating shareholder value.

The Company anticipates that it will spin-out Ecologic Car Rentals and Ecologic Products, Inc. to its shareholders prior to the end of 2016. Subsequent to the spin-offs, Ecologic Car Rentals, Inc. and Ecologic Products, Inc. will operate as entities independent of the Company, under the leadership of Mr. William B. Nesbitt as President and CEO of the companies.

Reports to Security Holders

The Company is not required to deliver an annual report to its stockholders, but will voluntarily send an annual report, together with the Company’s annual consolidated audited financial statements upon request. The Company is required to file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission. The Company’s Securities and Exchange Commission filings are available to the public over the Internet at the SEC's website at http://www.sec.gov.

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The public may read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company is an electronic filer. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address of the site is http://www.sec.gov.


ITEM 1A.	RISK FACTORS

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.


ITEM 2.	PROPERTIES

The Company’s corporate headquarters are located at 1327 Ocean Avenue Suite B, Santa Monica, California 90401. The Company also leases its office space located in the San Francisco Bay area on a month-to-month basis for $647 per month.

The Company believes its current premises are adequate for the Company’s current operations and the Company does not anticipate that it will require any additional premises in the foreseeable future. When and if the Company requires additional space, the Company intends to move at that time. The Company does not foresee any significant difficulties in obtaining any required facilities. The Company currently does not rent or own any real property.


ITEM 3.	LEGAL PROCEEDINGS

The Company knows of no material existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company.


ITEM 4.	MINE SAFETY STANDARDS

Not applicable.

PART II


ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

In the United States, the Company’s common shares are traded on the OTC Quotation Board “OTCQB – U.S. Registered” under the symbol “PTSS.” The following table sets forth the high and low bid prices for its common stock per quarter as reported by the OTCQB. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

The high and low prices of the Company’s common shares for the periods indicated below are as follows:


Quarter Ended ^{(1) (2)}	High	Low
December 31, 2015	$0.08	$0.08
September 30, 2015	$0.12	$0.12
June 30, 2015	$0.30	$0.30
March 31, 2015	$0.25	$0.25
December 31, 2014	$0.23	$0.23
September 30, 2014	$0.75	$0.50
June 30, 2014	$0.37	$0.37
March 31, 2014	$0.35	$0.35
⁽¹⁾ As of October 17, 2014, the Company’s trading symbol changed to PTSS. There has been intermittent trading of shares of the Company’s common stock since the Company was approved for quotation.
⁽²⁾ As adjusted for 10-to-1 reverse stock split effected 10/17/2014.

The Company’s common stock is subject to rules adopted by the Commission regulating broker dealer practices in connection with transactions in “penny stocks.” Those disclosure rules applicable to “penny stocks” require a broker dealer, prior to a transaction in a “penny stock” not otherwise exempt from the rules, to deliver a standardized list disclosure document prepared by the Securities and Exchange Commission. That disclosure document advises an investor that investment in “penny stocks” can be very risky and that the investor’s salesperson or broker is not an impartial advisor but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in “penny stocks,” to independently investigate the security, as well as the salesperson with whom the investor is working and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the “penny stock” is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.

Record Holders

The Company’s common shares are issued in registered form. Island Stock Transfer, 100 Second Avenue South, Suite 705S, St. Petersburg, FL, 33701 (Telephone 727-289-0010, Facsimile 727-289-0069) is the registrar and transfer agent for the Company’s common shares.

On, December 31, 2015, the shareholders' list of the Company’s common shares pursuant to Island Stock Transfer showed 107 registered shareholders and 67,821,405 shares outstanding. The total number of shares outstanding stated in the Island Stock Transfer list of 67,821,405 includes 27 shares issued due to rounding, and does not include 1,694,711 shares issued to various consultants for services provided in 2015.

Dividends

The Company has not declared any dividends on its common stock since the Company’s inception on December 16, 2008. There is no restriction in the Company’s Articles of Incorporation and Bylaws that will limit the Company’s ability to pay dividends on its common stock. However, the Company does not anticipate declaring and paying dividends to its shareholders in the near future.

Equity Compensation Plan Information

During the years ended December 31, 2015 and 2014, respectively, the Company expensed a total of $0 and $60,000 in stock option compensation. There remained $0 in deferred stock option compensation at December 31, 2015 and 2014, respectively.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

The Company did not purchase any of its shares of common stock or other securities during the year ended December 31, 2015.

Recent Sales of Unregistered Securities

The following represents all unregistered securities issued by the registrant during the current period, including sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities:

On January 5, 2015, in connection with a certain consulting agreement, the Company granted a consultant the right to purchase 250,000 shares of its restricted common stock at $0.001 per share. The shares, valued at $57,500, were purchased for cash in the amount of $250. As a result, $57,250 has been recorded to deferred compensation, to be amortized over a twelve (12) month period.

On March 9, 2015, in connection with a certain Assignment and License Agreement, the Company granted 5,706,506 shares of restricted common stock to be purchased at $0.001 per share. The shares, valued at $1,711,952, were purchased for cash in the amount of $5,707. As a result, $1,706,245 has been recorded to additional paid in capital.

On March 15, 2015, in connection with a certain stock purchase agreement, 1,883,147 shares of the Company’s restricted common stock were purchased at $0.02 per share, for cash in the amount of $37,663. As a result, $35,780 has been recorded to additional paid in capital.

On May 1, 2015, in connection with a certain stock purchase agreement, 1,000,000 shares of the Company’s restricted common stock were purchased at $0.25 per share, for cash in the amount of $250,000. As a result, $249,000 has been recorded to additional paid in capital.

On May 1, 2015, in connection with a certain stock purchase agreement, 150,000 shares of the Company’s restricted common stock were purchased at $0.001 per share, for cash in the amount of $150. As a result, $150 has been recorded to additional paid in capital.

On May 8, 2015, in connection with a certain stock purchase agreement, 500,000 shares of the Company’s restricted common stock were purchased at $0.25 per share, for cash in the amount of $125,000. As a result, $124,500 has been recorded to additional paid in capital.

On December 31, 2015 in connection with a certain Notice to Convert received from a non-related party, $61,375 in debt was converted at a price of $1.00 per share into 61,375 restricted shares of the Company’s common stock.

Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder, or Regulation S for offers and sales of securities outside the U.S.


ITEM 6.	SELECTED FINANCIAL DATA

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.


ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This annual report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, forward-looking statements can be identified by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause the Company’s or the Company’s industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The Company’s consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with the Company’s consolidated audited financial statements and the related notes for the years ended December 31, 2015 and 2014 that appear elsewhere in this annual report.

Corporate History

PearTrack Security Systems, Inc., incorporated in Nevada on September 30, 2005, is a security and logistics company headquartered in Santa Monica, CA. The Company is currently structured with three wholly owned subsidiaries: PearTrack Systems Group, Ltd., Ecologic Products, Inc., and Ecologic Car Rentals, Inc., all Nevada corporations. PearTrack Systems Group, Ltd. (“PTSG”), is headquartered in the San Francisco Bay area of California, with offices in Manchester, England. The Company’s current business activities are diversified into two specific markets: remote/mobile asset tracking and environmental transportation and products.

On January 21, 2015, the "Company executed an Assignment and Licensed Rights Agreement (the “Agreement”) with PearLoxx Limited (“PearLoxx”) dated December 19, 2014, for the exclusive license in perpetuity of certain patented intellectual property (the “Licensed Property”). As consideration, the Company shall pay PearLoxx a percentage of gross receipts generated from the sale of the Licensed Property. On March 9, 2015, the Company amended the License Agreement to include, among other things, as part of the consideration for the Licensed Product, the right for Pearloxx to purchase 5,706,506 shares of the Company’s common stock, valued at $1,711,952, for cash in the amount of $5,707.

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On February 20, 2015, Mr. Philip J. Woolas was appointed as a Board member, to serve until the next annual meeting of the shareholders and/or until his successor is duly appointed.

On October 22, 2015, the Company accepted the resignation of Paul Bernhard Burke as a member of the board of directors. This resignation did not involve any disagreement with the Company.

On November 5, 2015, the Company accepted the resignation of Arran de Moubray as a member of the board of directors. This resignation did not involve any disagreement with the Company.

Current Business