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EX-32.1 - Liberated Solutions, Inc.ex32-1.htm
EX-31.1 - Liberated Solutions, Inc.ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

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

THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2018

 

or

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

THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _______.

 

Commission file number 000-55177

 

Liberated Solutions, Inc.

(Exact name of registrant as specified in its charter)

 

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

 

2 Coleman Court    
Southampton, New Jersey   08088
(Address of principal executive offices)   (Zip Code)

 

(845) 610-3817

 

(Registrant’s telephone number including area code)

 

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

 

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

 

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

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 472,666,908 shares of common stock issued and outstanding as of August 14, 2018.

 

 

 

   
 

 

TABLE OF CONTENTS

 

Item #   Description  

Page

Numbers

         
    PART I  
         
ITEM 1   FINANCIAL STATEMENTS   3
         
ITEM 2   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   12
         
ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   14
         
ITEM 4   CONTROLS AND PROCEDURES   14
         
    PART II   14
         
ITEM 1   LEGAL PROCEEDINGS   14
         
ITEM 1A   RISK FACTORS  
         
ITEM 2   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   15
         
ITEM 3   DEFAULTS UPON SENIOR SECURITIES   15
         
ITEM 4   MINE SAFETY DISCLOSURES   15
         
ITEM 5   OTHER INFORMATION   15
         
ITEM 6   EXHIBITS   15
         
    SIGNATURES   16

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

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

 

2
 

 

PART I: FINANCIAL INFORMATION

 

ITEM 1: FINANCIAL STATEMENTS

Liberated Solutions, Inc.

(f/k/a THE GO ECO GROUP)

BALANCE SHEETS

(Unaudited)

 

       
   June 30, 2018  

September 30, 2017

 
ASSETS

 

        
           
Current assets          
Cash  $120,398   $67,353 
Total current assets   120,398    67,353 
           
Total assets  $120,398   $67,353 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current liabilities          
Accounts payable and accrued expenses  $65,151   $133,970 
Note payable- JV   25,000     
Convertible notes payable   685,030    973,086 
Deferred revenue   5,000     
Total current liabilities   780,181    1,107,056 
           
Stockholders’ deficit          
Preferred shares, par value $0.001. 100,000,000 authorized; 10,000,000 issued and outstanding   10,000    10,000 
Common stock, par value $0.001, authorized 2,000,000,000, issued and outstanding 398,236,556 and 14,468,303 as of June 30, 2018 and September 30, 2017, respectively   398,236    14.468 
Additional paid-in capital   2,728,910    1,801,619 
Accumulated deficit   (3,796,929)   (2,865,790)
Total stockholders’ deficit   (679,783)   (1,039,702)
           
Total liabilities and stockholders’ (deficit)  $120,398   $67,353 

 

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

 

3
 

 

Liberated Solutions, Inc.

(f/k/a THE GO ECO GROUP)

STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED JUNE 30,

(UNAUDITED)

 

   Three Months   Nine Months 
   2018   2017   2018   2017 
Revenue  $   $48,990   $   $48,990 
Cost of goods       14,000        14,000 
Gross margin       34,990        34,990 
                     
Operating expenses:                    
Selling, general and administrative expenses  $199,555   $41,535   $711,998   $629,513 
Loss from operations   (199,555)   (6,545)   (711,998)   (594,523)
                     
Other Income(expense)                    
Other income   2,000        22,000    4 
Note discount fees   (4,000)       (4,000)   (57,800)
Interest expense   (205,236)   (20,237)   (230,151)   (79,940)
Tax   (5,416)       (6,990)    
Total other income (expense)   (212,652)   (20,237)   (219,141)   (108,233)
                     
Net loss  $(412,207)  $(26,782)   (931,139)  $(702,756)
                     
Net loss per common share basic and diluted  $(0.00)  $(0.01)  $(0.01)  $(0.24)
                     
Weighted average number of common shares outstanding   253,186,906    3,202,667    107,141,009    2,893,426 

 

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

 

4
 

 

Liberated Solutions, Inc.

(f/k/a THE GO ECO GROUP)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JUNE 30,

(Unaudited)

 

   2018   2017 
Cash Flows From Operating Activities:          
Net loss  $(931,139)  $(702,756)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock based compensation   357,225    291,544 
Issuance of stock for cashless warrants   154,502     
Loss on adjustment of debt   81,413     
Changes in operating assets and liabilities:          
Accounts receivable       (48,990)
Accounts payable and accrued expenses   64,044    90,939 
Deferred revenue   5,000     
Net cash used in operating activities   (268,955)   (369,263)
           
Cash Flows From Investing Activities          
Loan to Eco Cab       (197,520)
Cancellation of funds designated for acquisition of EcoCab       154,196 
Net cash used in investing activities       (43,324)
           
Cash Flows From Financing Activities:          
Debt issued to JV for funds   25,000     
Proceeds from issuance of convertible debt   297,000    416,298 
Net cash provided by financing activities   322,000    416,298 
           
Net change in cash   53,045    3,711 
Cash at beginning of period   67,353    1,804 
Cash at end of period  $120,398   $5,515 
           
Non-Cash Financing Activities:          
Common stock issued for accrued interest  $132,8633   $ 
Common stock issued for convertible debt conversion  $646,469   $18,700 
Reduction of debt for valuation of warrants issued  $20,000   $ 

 

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

 

5
 

 

Liberated Solutions, Inc.

(f/k/a THE GO ECO GROUP)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 - BASIS OF PRESENTATION AND ORGANIZATION

 

The Go Eco Group (formally Liberated Energy), Inc. (the “Company”), formerly known as Mega World Food Holdings Company is a Nevada corporation formed on September 14, 2010.

 

On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately held corporation formed under the laws of the State of Delaware on July 1, 2010, acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power Corporation returned to treasury its 24,500,000 shares it acquired from the Company’s shareholders. As a result of this transaction, the Company had on January 19, 2013, 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and underwent a 24 for 1 stock split, whereby the Company’s outstanding shares increased from 3,000,000 to 72,000,000.

 

On January 19, 2013, the Company disposed of its wholly-owned subsidiary, Mega World Food Limited (HK). Mega World Food Limited (HK) was incorporated on June 24, 2010 and was in the business of selling frozen vegetables in all areas of the world except China. From inception, Mega World Food Limited (HK) only incurred setting up, formation or organization activities. Upon disposal, the Company ceased these operations and accordingly, the Company’s financial statements have been prepared with the net assets, results of operations, and cash flows of this business displayed separately as “discontinued operations.”

 

Effective January 19, 2013, the Company’s business is the sale of alternative energy products and services.

 

On February 4, 2015 the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized common shares from 250,000,000 to 900,000,000.

 

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

 

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

 

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

 

On March 6, 2017, the Company terminated the agreements with Ron Knori and EcoCab based upon breach of contract, fraud, fraudulent inducement, fraud in the factum, negligent misrepresentation, misrepresentation, contractual interference, breach of fiduciary duty, negligence, and conversion, all of which were perpetrated by Ron Knori, individually, and in his capacity as manager of EcoCab.

 

On December 31, 2017 the Company entered into a joint venture agreement to sell products produced by the Company. The Company will hold a 65% common membership interest for $100 in consideration.

 

6
 

 

Basis of Presentation

 

The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine months periods ended June 30, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2018. The accompanying unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2017 Annual Report filed with the SEC for year-end September 30, 2017.

 

NOTE 2 - GOING CONCERN

 

As shown in the accompanying financial statements, the Company has a negative working capital of $659,783and an accumulated deficit of $3,796,929 as of June 30, 2018. The Company’s ability to generate net income and positive cash flows is dependent on the ability to grow its operating entity as well as the ability to raise additional capital. Management is following strategic plans to accomplish these objectives, but success is not guaranteed. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Accounting

 

The Company maintains its books and records on the accrual basis of accounting. The accompanying financial statements have been prepared on that basis, in which revenues and gains are recognized when earned and expenses and losses are recognized when incurred.

 

Use of Estimates

 

The presentation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

For the purpose of the statement of cash flows, cash and cash equivalents include all cash balances, which are not subject to withdrawal restrictions or penalties, and highly liquid investments and debt instruments with a maturity of three months or less from the date of purchase.

 

Fair Value of Financial Instruments

 

Our short-term financial instruments, including cash, other assets and accounts payable and accrued expenses consist primarily of instruments without extended maturities, the fair value of which, based on management’s estimates, reasonably approximate their book value. The fair value of our notes and advances payable is based on management estimates and reasonably approximates their book value based on their current maturity.

 

Net Loss per Common Share

 

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

 

7
 

 

Stock-Based Compensation

 

The Company accounts for its stock based awards in accordance with Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”), which requires a fair value measurement and recognition of compensation expense for all share-based payment awards made to our employees and directors, including restricted stock awards. We estimate the fair value of stock using the stock price on date of the approval of the award. The fair value is then expensed over the requisite service periods of the awards, which is generally the date at which the counterparty’s performance is complete and the related amount recognized in our statements of operations.

 

Revenue and Cost Recognition

 

The Company did not generate revenue during the three and nine months periods ended June 30, 2018 and 2017 periods. It is the Company’s policy that revenue from product sales or services will be recognized in accordance with ASC 605 “Revenue Recognition”. Four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product was not delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

 

Income Taxes

 

The Company utilizes ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes primarily relate to the recognition of debt costs and stock based compensation expense. The adoption of ASC 740-10 did not have a material impact on the Company’s results of operations or financial condition.

 

NOTE 4 – FAIR VALUE MEASUREMENTS

 

As defined in (Financial Accounting Standards Board ASC 820), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

 

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

 

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

 

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

 

Level 3— Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

 

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

NOTE 5- EQUITY

 

During the nine months ended June 30, 2018, the Company issued 313,880,676 shares of common stock with a value of $779,333 for convertible debt and accrued interest.

 

During the nine months ended June 30, 2018, the Company issued 34,920,000 shares of common stock with a value of $357,225 for services.

 

During the nine months ended June 30, 2018 the Company issued 34,967,557 shares of common stock with a value of $154,502 for the conversion of cashless warrants.

 

NOTE 6– CONVERTIBLE DEBT

 

Carebourn Capital

 

On September 7, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $197,363,70 less legal fees of $8,000 with an interest rate of 12% per annum. The note was scheduled to mature on September 7, 2017 but was extended in 2018 at a principal amount of $172,671. The note is convertible by the holder at a discount of 50% of the average of the lowest three trading prices of the Company’s stock for the 20 days prior to the conversion.

 

On October 3, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $237,475 less an original discount of $30,975 plus transaction fees of $6,500 for a net advanced of $200,000. The note bears an interest rate of 12% per annum. The note was scheduled to mature on October 3, 2017. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading prices of the Company’s stock for the 20 days prior to the conversion. On September 15, 2016 $85,000 was returned to Carebourn reducing the principal balance to $115,114 as of that date, however, the note was extended on April 17, 2018 at a principal amount of $230,790. An additional 10% discount applies if the common stock is only eligible for X clearing deposit.

 

On December 13, 2016, the Company issued a Convertible Note to Carebourn Capital, LP for a principal amount of $98,325 less an original discount of $12,825 for a net advanced of $80,000. The note bears an interest rate of 12% per annum. The note matures on December 13, 2018. The note is convertible by the holder at a discount of 45% of the average of the lowest three trading prices of the Company’s stock for the 15 days prior to the conversion. The note was extended on April 17, 2018 at a principal amount of $116,888. Additional discounts of up to 15% apply if the common stock is not deliverable via DWAC and if only eligible for X clearing deposit.

 

As of June 30, 2018, the Company owed Carebourn capital $149,915 in principal.

 

9
 

 

Power Up Lending

 

On January 4, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $35,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on October 15, 2018. The note is convertible by the holder at a discount of 50% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

 

On February 15, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on November 30, 2018. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

 

On March 9, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible by the holder at a discount of 42% of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

 

On March 22, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $38,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on December 30, 2018. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

 

On May 14, 2018, the Company issued a Convertible Note to Power Up Lending Group Ltd for a principal amount of $53,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on February 28, 2019. The note is convertible by the holder at a discount of 42% of the average of the lowest three trading prices of the Company’s stock for the 10 days prior to the conversion. The note is convertible to common stock 180 days following the date of the note.

 

As of June 30, 2018, the Company owed Power Up lending $217,000 in principal and $9,968 in interest for a total of $226,968.

 

Crown Bridge Partners

 

On August 21, 2017, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on August 21, 2018. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.

 

On January 5, 2018 the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $20,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on January 5, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.

 

On February 16, 2018, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $20,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on February 16, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.

 

On April 2, 2018, the Company issued a Convertible Note to Crown Bridge Partners for a principal amount of $40,000 with an interest rate of 8% per annum with a default interest rate of 22%. The note matures on April 2, 2019. The note is convertible by the holder at a discount of 45% of the lowest one trading price of the Company’s stock for the 20 days prior to the conversion.

 

10
 

 

The above notes are subject to an additional discounts as follows: (a) 10% discount if the conversion price is equal to or less than $0.025 per share (b) 10% discount if the shares are not deliverable via DWAC (c) 10% discount if the conversion price is equal to or less than $0.01.

 

On January 5, 2018, February 14, 2018 and March 31, 2018 the Company issued three warrants totaling 4,160,000 warrants to Crown Bridge Partners as part of the $80,000 of the loans advanced in January, February and March of 2018 as noted above. The warrants are exercisable by the holder within five years of the issuance date at $0.25 per warrant for the January and February 2018 warrants and at $0.01 for the March 2018 warrant. The warrants are subject to anti-dilutive provisions that are likely to result in an actual exercise price that is substantially less than the stated exercise price. The warrants may be converted by the holder as a cashless warrant. The warrants and the convertible notes were fair valued on date of issuance using the Black Scholes valuation method.

 

The following assumptions were used in estimating the value of the warrants issued in January, February and March 2018

 

Risk free interest rate .10%
Expected life in years 5 years
Dividend yield 0%
Expected volatility 399-401%

 

The fair value of the warrants determined to be 25% of the total value of the warrants and convertible debt. Based on the valuation $20,000 of the convertible debt was deducted from the note value and allocated to paid in capital.

 

As of June 30, 2018, the Company owed Crown Bridge Partners $80,000 in principal and $2,139 in interest for a total of $82,139.

 

More Capital

 

On January 15, 2018, the Company issued a Convertible Note to More Capital, LLC for a principal amount of $18,975 with an interest rate of 10% per annum. The note matures on July 15, 2018. The note is convertible by the holder at a discount of 50% of the average of lowest three trading price of the Company’s stock for the 20 days prior to the conversion.

 

As of June 30, 2018, Moore Capital LLC had converted the all the note to common stock leaving a balance due of zero.

 

Management has reviewed the terms of the convertible instruments to determine their fair value. After reviewing the characteristic and the value of the conversion, management has determined based on note conversion history that the conversion value is equal or less than par value of the shares used for conversion thus determining that the fair value of the notes is equal to their face value.

 

Note 7 - LITIGATION

 

On September 15, 2016, LG Capital, LLC filed a lawsuit against the Company. The filing alleges that the Company has defaulted on several unpaid loans from LG Capital to the Company with the total claim against the Company of $279,730.56. The Company negotiated in good faith with LG Capital to settle the debt but to no avail. After reviewing the claim filed by LG Capital, it is the opinion of Company Management that the Company’s outstanding liability to LG Capital has been fully recognized and accounted for in the financial statements of the Company

 

NOTE 8 – JOINT VENTRUE AGREEEMNT

 

On December 21, 2017 the Company entered into a joint venture agreement to develop, market and sell products, services and technology based on a web-enabled light guard system. The Company granted the joint venture an irrevocable royalty free non-exclusive license to use all of the Company’s direct and/or licensed intellectual property necessary for the joint venture to develop and sell the system. Under the terms of the agreement the Company will hold a 65% common membership interest for an initial capital contribution of $100. The joint venture partner contributed $25,000 plus software developed to enhance the Company’s product at a cost of $65,000 to the Joint Venture.

 

NOTE 9 – SUBSEQUENT EVENTS

 

From July 1, 2018 to August 17, 2018 the Company issued 74,430,352 shares of common stock for the conversion of $58,887 of debt.

 

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

 

FORWARD LOOKING INFORMATION

 

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

 

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

 

Overview

 

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

 

On January 19, 2013, pursuant to a Common Stock Purchase Agreement, dated January 7, 2013, Perpetual Wind Power Corporation, a privately held corporation formed under the laws of the State of Delaware on July 1, 2010, acquired 24,500,000 non-registered shares of the Company from its shareholders, thereby owning 24,500,000 out of a total of 25,000,000 issued and outstanding shares of the Company. Thereafter, the Company acquired from Perpetual Wind Power Corporation its patented wind and solar powered turbine technology for 2,500,000 newly issued shares of the Company which were distributed in a dividend to its shareholders and Perpetual Wind Power Corporation returned to treasury its 24,500,000 shares it acquired from the Company’s shareholders. As a result of this transaction, the Company had on January 19, 2013, 3,000,000 shares issued and outstanding. On February 14, 2013, the Company changed its name from Mega World Food Holding Company to Liberated Energy, Inc. and underwent a 24 for 1 stock split, whereby the Company’s outstanding shares increased from 3,000,000 to 72,000,000.

 

On February 4, 2015 the Company increased their number of authorized preferred shares from 10,000,000 to 100,000,000 and authorized common shares from 250,000,000 to 900,000,000.

 

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

 

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

 

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

 

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

 

Results of Operations

 

Revenue

 

During the three and nine months periods ended June 30, 2018 had no revenue and $48,990 for both periods in 2017.

 

Cost of Sales

 

The Company did not incur cost of sales for the three months and nine periods ended June 30, 2018 with $14,000 incurred on both periods in 2017.

 

Operation and Administrative Expenses

 

During the three and nine months periods ended June 30, 2018 the Company incurred general and administrative expense of $199,555 and $711,998 compared to $41,535 and $629,513 in the same period in 2017, respectively. Higher quarter costs in the period ending June 30, 2018 over the same period in 2017 was attributed to an increase in stock base compensation in 2018 and expense related to the change in debt expensed .

 

Other Income (Expense)

 

During the three and nine months periods ended June 30, 2018 the Company incurred other expense for the three and nine months of $212,652 and $219,141 compared to other expense of $20,237 and $108,233 in the same periods in 2017. The higher amounts in 2018 is attributable to higher interest in 2018 over the same periods in 2017.

 

Net Loss

 

The net loss for the three and nine months periods ended June 30, 2018 was $412,207 and $931,139 compared to $26,782 and $702,756 for the same periods in 2017, respectively. The increase in loss is attributable to higher interest in 2018 over 2017.

 

Liquidity and Capital Resources

 

The Company has current assets of $120,398 and current liabilities of $780,181 resulting in negative working capital of $659,783. This compares to negative working capital of $1,039,703 for the period ended September 30, 2017. The decrease in negative working capital to June 30, 2018 is attributed to conversion of convertible debt in 2018.

 

Funds used in operating activities was $268,955 for the nine months ended June 30, 2018 compared to funds used of $369,263 for the same period in 2017. The effect of stock based compensation, issuance of stock for cashless warrants benefit 2018 over 2017

 

Funds used in investing activities in 2017 were $43,324 representing loans made to EcoCab Inc. No funds were used in investing activities in 2018.

 

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Funds provided by financing activities for the nine months period ended June 30, 2018 was $322,000 compared to $416,298 for the same period in 2017. The Company issued convertible debt of for its financing activity in 2017 for $ 416,298 and $297,000 in 2018. The Company received $25,000 in 2017 as a loan from the newly formed joint venture.

 

Off-Balance Sheet Arrangements

 

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

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

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

 

ITEM 4: CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

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

 

Changes in Internal Control over Financial Reporting

 

Except as noted above, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our nine months period ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS

 

None

 

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

 

During the nine months ended June 30, 2018, the Company issued 313,880,676 shares of common stock with a value of $779,333 for convertible debt and accrued interest.

 

During the nine months ended June 30, 2018, the Company issued 34,920,000 shares of common stock with a value of $357,225 for services.

 

During the nine months ended June 30, 2018 the Company issued 34,967,557 shares of common stock with a value of $154,502 for the conversion of cashless warrants.

 

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

 

ITEM 3: DEFAULT UPON SENIOR SECURITIES

 

None

 

ITEM 4: MINE SAFETY DISCLOSURES

 

Not Applicable.

 

ITEM 5: OTHER INFORMATION

 

None

 

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

 

EXHIBIT INDEX

 

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

 

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

 

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SIGNATURES

 

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

 

 

Liberated Solutions, Inc.

(f/k/a THE GO ECO GROUP)

Date: August 20, 2018    
  By:  /s/ Brian Conway
    Brian Conway
   

President, Director, Chief Financial Officer & Chief Executive Officer

(Principal Executive Officer)

(Principal Financial Officer and Principal Accounting Officer

 

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