As Filed with the Securities and Exchange Commission on November 21, 2018Aug 19, 2019
File No: 000-55235
UNITED STATESUnited States
SECURITIES AND EXCHANGE COMMISSIONSecurities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q/A10-Q
(Mark One)
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDING SEPTEMBERJUNE 30, 201830, 2019
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to_____
Commission file number: 000-55235
ABCO ENERGY, INC.
(Name of registrant as specified in its Charter)
Nevada |
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(State of Incorporation) | (IRS Employer Identification No.) |
2100 North Wilmot #211, Tucson, AZ | 85712 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: | 520-777-0511 |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
COMMON STOCK | ABCE | OTCQB |
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 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes. Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definition of “law accelerated filed,” “accelerated filed,” “Smaller reporting company,” and “emerging growth company” in Rule 12b of the Exchange Act.
Large accelerated filer ☐ |
| Accelerated filer ☐ |
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Non-accelerated filer ☐ |
| Smaller Reporting Company |
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Emerging growth company ☒ |
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If an emerging growth company, indicate by check mark (if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS
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 subsequent to the distribution of securities under a plan confirmed by the court. Yes ☐ No ☐ N/A
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of NovemberAugust 19, 2018,2019, we had 499,854,23963,392,630 shares of common stock issued and outstanding.
TABLE TABLE OF CONTENTSCONTENTS
PART I – FINANCIAL INFORMATION |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk |
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PART II. OTHER INFORMATION |
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Item 2. Unregistered Sale of Equity Securities and Use of Proceeds |
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PART 1 – FINANCIAL INFORMATION
ABCO ENERGY, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINESIX MONTHS ENDED
SEPTEMBERJUNE 30, 20182019
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ABCO ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS | September 30, 2018 Unaudited | December 31, 2017 |
| June 30, 2019 Unaudited |
| December 31, 2018 Audited |
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Current Assets |
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Cash and cash equivalents | $ | 43,770 | $ | 5,046 | ||||||||||||
Cash |
| $ | 55,625 |
| $ | 67,707 |
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Accounts receivable on completed projects | 207,146 | 46,985 |
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| 140,811 |
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| 105,187 |
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Accounts receivable on incomplete projects | 1,191,356 | - | ||||||||||||||
Inventory, net | 45,195 | 38,127 | ||||||||||||||
Costs and estimated earnings on contracts in progress |
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| 52,829 |
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| 184,212 |
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Inventory |
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| 61,997 |
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| 53,950 |
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Prepaid expenses and discounts on debt |
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| 32,445 |
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Total Current Assets | 1,487,467 | 90,158 |
| $ | 343,707 |
| $ | 411,056 |
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Fixed Assets |
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Vehicles, office furniture & equipment – net of accumulated depreciation | 39,840 | 21,941 |
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| 32,172 |
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| 36,538 |
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Other Assets |
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Investment in long term leases | 10,710 | 11,281 |
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| 4,234 |
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| 10,512 |
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Security deposits | 2,700 | 2,700 |
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| 2,700 |
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| 2,700 |
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Total Other Assets | 13,410 | 13,981 |
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| 6,934 |
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| 13,212 |
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Total Assets | $ | 1,540,717 | $ | 126,080 |
| $ | 382,813 |
| $ | 460,806 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable and accrued expenses | $ | 705,857 | $ | 496,991 |
| $ | 376,558 |
| $ | 549,611 |
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Excess billings on contracts in progress | 1,015,795 | 83,813 | ||||||||||||||
Convertible debentures – net of debt discount | - | 187,236 | ||||||||||||||
Excess billing on contracts in progress |
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| 303,317 |
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| 85,777 |
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Convertible note payable, net |
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| 196,817 |
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| 189,680 |
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Derivative liability on convertible debentures | - | 178,013 |
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| 74,848 |
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Notes payable – merchant loans | 3,734 | 96,338 |
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| 48,711 |
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| 53,362 |
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Note payable – non-affiliate |
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| 40,301 |
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| 49,563 |
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Notes payable – related parties | 176,136 | 187,826 |
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| 188,054 |
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| 169,549 |
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Note payable – non-affiliate | 50,000 | - | ||||||||||||||
Series C preferred stock investment considered a liability | 219,000 | - | ||||||||||||||
Current portion of long term debt | 8,433 | - |
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| 7,582 |
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| 7,628 |
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Total Current Liabilities | 2,178,955 | 1,230,217 |
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| 1,161,340 |
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| 1,180,018 |
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Long term debt, net of current portion | 19,807 | - |
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| 15,066 |
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| 18,670 |
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Total Liabilities | 2,198,762 | 1,230,217 |
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| 1,176,406 |
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| 1,198,688 |
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Commitments and contingencies | 0 | 0 |
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| 0 |
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| 0 |
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Stockholders’ Deficit: |
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Preferred stock, Series B 100,000,000 shares authorized, $0.001 par value, and 30,000,000 shares issued and outstanding at September 30, 2018 and 15,000,000 at December 31, 2017 | 30,000 | 15,000 | ||||||||||||||
Common stock, 2,000,000,000 shares authorized, $0.001 value, 353,963,157 and 126,998,171 issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 353,963 | 126,998 | ||||||||||||||
Common shares sold not issued 137,191,082 at September 30, 2018 and 35,140,224 at December 31, 2017 | 137,191 | 35,140 | ||||||||||||||
Preferred stock, 100,000,000 shares authorized, $0.001 par value, and 30,000,000 shares issued and outstanding at June 30, 2019 and 30,000,000 at December 31, 2018. |
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| 30,000 |
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| 30,000 |
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Common stock 5,000,000,000 shares authorized, $0.001 value, and 63,392,630 Issued and outstanding at June 30, 2019 and 32,756,289 outstanding at December 31, 2018, respectively. |
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| 63,393 |
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| 31,886 |
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Common shares sold not issued -0- at June 30, 2019 and 870,000 at December 31, 2018 |
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| 870 |
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Additional paid-in capital | 3,626,527 | 3,258,888 |
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| 4,889,205 |
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| 4,379,793 |
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Accumulated deficit | (4,805,726 | ) | (4,540,163 | ) |
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| (5,776,191 | ) |
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| (5,180,431 |
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Total Stockholders’ Deficit | (658,045 | ) | (1,104,137 | ) |
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| (793,593 | ) |
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| (737,882 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 1,540,717 | $ | 126,080 |
| $ | 382,813 |
| $ | 460,806 |
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See accompanying notes to the unaudited condensed consolidated financial statements.
ABCO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(UNAUDITED)
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
Revenues | $ | 1,106,898 | $ | 265,856 | $ | 2,187,919 | $ | 1,168,680 | ||||||||
Cost of Sales | 783,529 | 379,326 | 1,529,789 | 861,446 | ||||||||||||
Gross Profit (Loss) | 323,369 | (113,470 | ) | 658,130 | 307,234 | |||||||||||
Operating Expenses: | ||||||||||||||||
Administrative payroll expense for the period | 77,485 | 105,549 | 221,195 | 289,899 | ||||||||||||
Shares based compensation | 102,000 | 102,000 | ||||||||||||||
Selling, General & administrative expense | 183,092 | 179,909 | 454,261 | 312,554 | ||||||||||||
Total selling and administrative expense | 362,577 | 285,458 | 777,456 | 602,453 | ||||||||||||
Income (Loss) from operations | (39,208 | ) | (398,928 | ) | (119,326 | ) | (295,219 | ) | ||||||||
Other expenses | ||||||||||||||||
Interest on notes payable - operations | (3,869 | ) | (105,575 | ) | (40,615 | ) | (50,974 | ) | ||||||||
Interest expense on derivatives | (8,203 | ) | (47,156 | ) | (95,904 | ) | ||||||||||
Loss on note issuance derivatives | (109,889 | ) | (36,230 | ) | (109,889 | ) | ||||||||||
Derivative valuation gain or loss | 102,582 | 63,793 | 224,538 | |||||||||||||
Derivative finance fees | (125,384 | ) | (126,050 | ) | ||||||||||||
Gain on extinguishment of debt | 132,737 | 39,355 | 132,737 | |||||||||||||
Total Other (Expenses) Income | (12,072 | ) | 19,855 | (146,237 | ) | (25,542 | ) | |||||||||
Net income (loss) before provision for income taxes | (51,280 | ) | (379,073 | ) | (265,563 | ) | (320,761 | ) | ||||||||
Provision for income taxes | - | - | - | - | ||||||||||||
Net income (loss) | $ | (51,280 | ) | $ | (379,073 | ) | $ | (265,563 | ) | $ | (320,761 | ) | ||||
Net income (loss) per share (basic and fully diluted) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
Weighted average number of common shares used in the calculation including shares to be issued (basic and diluted) | 424,122,762 | 87,611,195 | 326,646,320 | 78,052,471 |
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| For the Six Months Ended |
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| JUNE 30, 2019 |
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| JUNE 30, 2018 |
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| JUNE 30, 2019 |
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| JUNE 30, 2018 |
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Revenues |
| $ | 459,616 |
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| $ | 558,726 |
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| $ | 1,113,626 |
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| $ | 1,081,021 |
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Cost of Sales |
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| 268,662 |
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| 417,882 |
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| 678,886 |
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| 746,260 |
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Gross Profit |
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| 190,954 |
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| 140,844 |
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| 434,740 |
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| 334,761 |
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Operating Expenses: |
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Payroll |
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| 133,272 |
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| 73,023 |
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| 213,589 |
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| 143,710 |
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Payroll taxes |
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| 14,652 |
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| 35,671 |
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| 34,188 |
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| 37,076 |
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Consulting |
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| 12,413 |
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| 31,231 |
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| 24,537 |
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| 33,699 |
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Professional fees |
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| 44,315 |
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| 46,765 |
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| 75,432 |
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| 52,945 |
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Rent |
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| 9,194 |
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| 9,833 |
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| 17,775 |
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| 18,945 |
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Insurance |
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| 19,111 |
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| 8,839 |
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| 36,888 |
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| 16,824 |
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Other selling and administrative expenses |
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| 7,848 |
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| 49,581 |
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| 99,457 |
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| 111,680 |
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Total operating expense |
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| 240,805 |
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| 254,943 |
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| 501,866 |
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| 414,879 |
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Net income (Loss) from operations |
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| (49,851 | ) |
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| (114,099 | ) |
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| (67,126 | ) |
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| (80,118 | ) |
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Other expenses |
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Interest on notes payable |
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| (27,074 | ) |
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| (28,272 | ) |
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| (105,988 | ) |
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| (36,746 | ) |
Loss on note issuance derivatives |
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| (36,230 | ) |
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| (36,230 | ) |
Change in Derivative Gain (Loss) |
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| - |
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| 74,905 |
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| (177,934 | ) |
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| 63,793 |
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Finance Fees – derivatives |
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| (118,577 | ) |
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| (125,384 | ) |
Derivative amortization - interest expense |
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| (38,953 | ) |
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| (38,953 | ) |
Gain (Loss) on extinguishment of debt |
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| (244,712 | ) |
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| 39,355 |
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Total other expenses |
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| (27,074 | ) |
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| (147,127 | ) |
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| (528,634 | ) |
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| (134,165 | ) |
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Net income (Loss) before provision for income taxes |
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| (76,925 | ) |
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| (261,226 | ) |
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| (595,760 | ) |
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| (214,283 | ) |
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Provision for income tax |
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| - |
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| - |
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| - |
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| - |
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Net income (loss) |
| $ | (76,925 | ) |
| $ | (261,226 | ) |
| $ | (595,760 | ) |
| $ | (214,283 | ) |
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Net income (loss) Per Share (Basic and Fully Diluted) |
| $ | (.00 | ) |
| $ | (.01 | ) |
| $ | (.01 | ) |
| $ | (.01 | ) |
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Weighted average number of common shares used in the calculation |
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| 47,817,667 |
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| 27,852,317 |
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| 48,074,460 |
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| 25,961,483 |
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See accompanying notes to the unaudited condensed consolidated financial statements.
ABCO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTSSTATEMENT OF CASH FLOWSSHAREHOLDERS EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2019
AND FOR THE YEAR ENDED DECEMBER 31, 2018
(UNAUDITED)
Shares | Par amount | Preferred stock | APIC | Acc. Deficit | Total stockholders' deficit | |||||||||||||||||||
Balance as of December 31, 2017 | 6,349,909 | 6,350 | 15,000 | 3,379,536 | (4,540,163 | ) | (1,139,277 | ) | ||||||||||||||||
Shares issued under Regulation S – net of expenses | 7,080,100 | 7,080 | 441,919 | 448,999 | ||||||||||||||||||||
Net loss for period ended June 30, 2018 | (214,283 | ) | (214,283 | ) | ||||||||||||||||||||
Balance as of June 30, 2018 | 13,430,009 | 13,430 | 15,000 | 3,821,455 | (4,754,446 | ) | (904,561 | ) |
For the Nine Months Ended | ||||||||
September 30, | September 30, | |||||||
2018 | 2017 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | (265,563 | ) | $ | (320,761 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 8,120 | 6,117 | ||||||
Shares issued for services | 112,000 | 101,400 | ||||||
Change in derivative liability on convertible debt net of discount | - | 58,524 | ||||||
Changes in operating assets and liabilities | ||||||||
Accrual of interest expense on derivative valuations | - | (222,207 | ) | |||||
Accounts receivable on completed projects | (160,161 | ) | (37,956 | ) | ||||
Accounts receivable on incomplete projects | (1,191,356 | ) | 2,079 | |||||
Prepaid costs | - | 151,846 | ||||||
Inventory | (68 | ) | 3,564 | |||||
Billings in excess of costs | 931,982 | 32,033 | ||||||
Accounts payable and accrued expenses | 208,866 | 23,282 | ||||||
Net cash used in operating activities | (356,180 | ) | (202,079 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Purchase of equipment | (19,444 | ) | - | |||||
Proceeds from investments in long term leases | 571 | 533 | ||||||
Net cash provided by (used for) investing activities | (18,873 | ) | 533 | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of preferred stock- Series B | - | 15,000 | ||||||
Proceeds from sale of common stock – net of expenses | 234,406 | 220,916 | ||||||
Proceeds (payments) from directors and other related parties notes payable | (12,025 | ) | 5,016 | |||||
(Payments on) Loans from financial institutions | (92,604 | ) | (45,379 | ) | ||||
Proceeds (payments on) from long term debt | 15,000 | (4,400 | ) | |||||
Proceeds from unrelated party loans | 50,000 | - | ||||||
Proceeds from the sales of preferred stock – Series C | 219,000 | - | ||||||
Net cash provided by financing activities | 413,777 | 191,153 | ||||||
Net increase (decrease) in cash | 38,724 | (10,393 | ) | |||||
Cash and cash equivalents, beginning of period | 5,046 | 12,534 | ||||||
Cash and cash equivalents, end of period | $ | 43,770 | $ | 2,141 |
Supplemental disclosures of cash flow information:
Cash paid for interest | $ | 85,465 | $ | 146,878 | ||||
Note conversion to common shares | 187,236 | |||||||
Restricted common stock issued to officers, directors and others as compensation | 37,000 | 101,400 | ||||||
Preferred stock issued to officers, directors and others as compensation | 75,000 | 15,000 | ||||||
Purchase of equipment and inventory with debt | 13,575 | |||||||
Derivative liability recorded to additional paid in capital upon conversion | 178,013 | |||||||
Income taxes paid or accrued | $ | - | $ | - |
Shares | Par amount | Preferred stock | APIC | Acc. Deficit | Total stockholders' deficit | |||||||||||||||||||
Balance as of December 31, 2018 | 32,756,289 | 32,756 | 30,000 | 4,379,793 | (5,180,431 | ) | (737,882 | ) | ||||||||||||||||
Shares issued under Regulation S – Net of expenses | 4,740,000 | 4,740 | 43,493 | 48,233 | ||||||||||||||||||||
Shares issued for CNP-Preferred series C | 20,451,633 | 20,452 | 28,228 | 48,680 | ||||||||||||||||||||
Derivative liability converted | 405,591 | 405,591 | ||||||||||||||||||||||
Shares issued | 4,444,708 | 4,445 | 28,000 | 32,445 | ||||||||||||||||||||
Shares issued | 1,000,000 | 1,000 | 4,100 | 5,100 | ||||||||||||||||||||
Net loss for period ended June 30, 2019 | (595,760 | ) | (595,760 | ) | ||||||||||||||||||||
Balance as of June 30, 2019 | 63,392,630 | 63,393 | 30,000 | 4,889,205 | (5,776,191 | ) | (793,593 | ) |
See accompanying notes to the unaudited condensed consolidated financial statements.
ABCO ENERGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(UNAUDITED)
June 30, | June 30, | |||||||
2019 | 2018 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | (595,760 | ) | $ | (214,283 | ) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation | 5,290 | 8,120 | ||||||
Inventory change | (8,046 | ) | (577 | ) | ||||
Change in amortizable debt discount | 28,706 | 38,953 | ||||||
Gain on derivative conversion | 36,230 | |||||||
Change in derivative liability | 177,934 | |||||||
Gain or loss on extinguishment of debt | 244,712 | (39,355 | ) | |||||
Change in convertible debentures | (61,590 | ) | ||||||
Changes in Accounts receivable | 95,759 | (461,328 | ) | |||||
Billings in excess of costs on incomplete projects | 217,540 | 448,246 | ||||||
Accounts payable and accrued expenses | (264,958 | ) | (67,032 | ) | ||||
Net cash used in operating activities | (98,823 | ) | (312,616 | ) | ||||
Cash flows from investing activities | ||||||||
Equipment purchased | (924 | ) | (2,436 | ) | ||||
Proceeds from investments in long term leases | 6,278 | 245 | ||||||
Net cash provided by (used for) investing activities | 5,354 | (2,191 | ) | |||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from sale of common stock – net of expenses | 53,335 | 282,110 | ||||||
Proceeds of related party notes payable | 18,505 | (11,439 | ) | |||||
Proceeds from financial institution loans | 110,000 | |||||||
Payments on long term debt | (142,601 | ) | (63,350 | ) | ||||
Payments on merchant notes | (4,652 | ) | ||||||
Payments on preferred stock Series C | (141,000 | ) | ||||||
Proceeds from convertible note payable | 193,300 | |||||||
Proceeds from loans non-affiliate | 104,500 | |||||||
Net cash provided by financing activities | 81,387 | 317,321 | ||||||
Net increase (decrease) in cash | (12,082 | ) | 2,514 | |||||
Cash, beginning of period | 67,707 | 5,046 | ||||||
Cash, end of period | $ | 55,625 | $ | 7,560 |
Supplemental disclosures of cash flow information:
Cash paid for interest | $ | 105,988 | $ | 15,281 | ||||
Income taxes paid or accrued | $ | - | $ | - |
See accompanying notes to the consolidated financial statements.
ABCO ENERGY, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINESIX MO MONTHSNTHS ENDED SEPTEMBER JUNE 3030,, 2019 AND DECEMBER 31, 2018
(UNAUDITED)
Note 1 – Overview and Description of the Company
ABCO Energy, Inc. (ABCO) was organized on July 29, 2004 and operated until July 1, 2011 as Energy Conservation Technologies, Inc. (ENYC). On July 1, 2011 ENYC entered into a share exchange agreement (SEA) with ABCO Energy, Inc. (“Company”) and acquired all the assets of ABCO. ENYC changed its name to ABCO Energy, Inc. on October 31, 2011. As a result of the SEA, the outstanding shares of ENYC as of June 30, 2011 were restated in a one for twenty three (1 for 23) reverse stock split prior to the exchange to approximately 9% of the post-exchange outstanding common shares of the Company.
On January 13, 2017, the Board of Directors of the Company approved a reverse stock split of its common stock, at a ratio of 1-for-10 (the “Reverse Stock Split”). The Reverse Stock Split became effective with FINRA (the Financial Industry Regulatory Authority) and in the marketplace on January 13, 2017 (the “Effective Date”), whereupon the shares of common stock began trading on a split adjusted basis. As a result of the Reverse Stock Split the number of authorized shares of common stock was reduced to 50,000,000 from 500,000,000 shares. The Company held a Special Meeting of Stockholders in May 2017 which authorized an amendment to the Articles of Incorporation to increase the authorized common share capital to 2,000,000,000 common shares and 100,000,000 preferred shares. Thereafter, on September 27, 2017, by written consent the holders of a majority of the outstanding shares voted to authorize an additional amendment to increase the authorized common shares to 2,000,000,000 shares.
On December 23, 2018 the Board of Directors of the Company approved a reverse stock split of its common stock, at a ratio of 1-for-20 (the “Reverse Stock Split”). The Reverse Stock Split became effective with FINRA (the Financial Industry Regulatory Authority) and in the marketplace on December 23, 2018 (the “Effective Date”), whereupon the shares of common stock began trading on a split adjusted basis. On November 8, 2018, by written consent the holders of a majority of the outstanding shares voted to authorize an additional amendment to increase the authorized common shares to 5,000,000,000 shares.
OVERALL STRATEGIC DIRECTION
All share numbers through-out these financial statements and notes thereto have been adjusted to reflect this reverse split.
The Company is in the Photo Voltaic (PV) solar systems industry, air conditioner services industry, the energy efficient lighting industry and is an electrical product and services supplier. The Company plans to build out a network of operations in major cities in the USA to establish a national base of PV suppliers, lighting suppliers and electrical service operations centers. This combination of services, solar and electric, provides the Company with a solid base in the standard electrical services business and a solid base in the growth markets of solar systems industry.
OVERVIEW
As of the date of this report, ABCO Energy operated in Tucson and Phoenix, Arizona. The Company plan is to expand to more locations in North America in the next year as funding becomes available. We believe that the solar and energy efficiency business functions better if the employees are local individuals working and selling in their own community. Our customers have indicated a preference for dealing with local firms and we will continue our focus on company-owned integrated product and services offices. Once a local firm is established, growth tends to come from experience, quality and name recognition. We remain committed to high quality operations.
DESCRIPTION OF PRODUCTS
ABCO sells and installs Solar Photovoltaic electric systems that allow the customer to produce their own power on their residence or business property. These products, installed by our crews, are purchased from both USA and offshore manufacturers. We have available and utilize many suppliers of US manufactured solar products from such companies as Mia Soleil, Canadian Solar, Boviet, Westinghouse Solar and various Korean, German and Chinese suppliers. In addition, we purchase from several local and regional distributors whose products are readily available and selected for markets and price. ABCO offers solar leasing and long term financing programs from Service Finance Corporation, Green Sky, AEFC and others that are offered to ABCO customers and other marketing and installation organizations.
ABCO also sells and installs energy efficient lighting products, regular and solar powered air conditioning equipment, solar powered street lights and lighting accessories. ABCO contracts directly with manufacturers to purchase its lighting products which are sold to residential and commercial customers.
ABCO has Arizona statewide approval as a registered electrical services and solar products installer and as an air conditioning and refrigeration installer. Our license is ROC 258378 electrical and ROC 323162 HVAC and we are fully licensed to offer commercial and residential services, HVAC and solar.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordanceABCO subsidiary, Alternative Energy Finance Corporation (AEFC), a Wyoming company provides funding for leases of photovoltaic and HVAC systems. AEFC financed its owned leases from its own cash and now arranges financing with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10 Q and Article 10 of Regulation SX. Accordingly, they do not include all of the information and footnotes requiredfunds provided by GAAP for complete financial statements. The December 31, 2017 consolidated balance sheet included in this Quarterly Report was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2018 is not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K.other lessors.
Note 2 – Summary of Significant Accounting Policiessignificant accounting policies
Critical Accounting Policies and Use of estimatesEstimates
The preparation of
These financial statements consist of the consolidated financial positions and results of operations of both the parent, ABCO Energy, Inc. and the subsidiary companies. In the opinion of Management, all adjustments necessary for a fair statement of results for the fiscal years presented have been included. These financial statements have been prepared in conformityaccordance with generally accepted accounting principles (GAAP) generally accepted in the United States (“GAAP”)of America.
GAAP requires managementthe Company to make estimates and assumptionsjudgments that affect the reported amounts of assets. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets, income taxes, equity-based compensation, litigation and liabilitieswarranties. The Company bases its estimates on historical and disclosure of contingent assetsanticipated results and liabilities attrends and on various other assumptions that the date ofCompany believes are reasonable under the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.circumstances, including assumptions as to future events.
Significant estimates include but are not limited to the estimated useful lives of equipment for purposes of depreciation, percentage of completion and the valuation of common and preferred shares issued for services, equipment and the liquidation of liabilities.liabilities
The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates.
Cash and Cash Equivalents
There are only cash accounts included in our cash equivalents in these statements. For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of three months or less to be cash equivalents. There are no short term cash equivalents reported in these financial statements.
ReclassificationsProperty and Equipment
Certain balances have been reclassified in the accompanying condensed consolidated financial statementsProperty and equipment are to conform to the current period presentation. These reclassifications had no effectbe stated at cost less accumulated depreciation. Depreciation is recorded on the prior period’s net loss or accumulated deficit.straight-line basis according to IRS guidelines over the estimated useful lives of the assets, which range from three to ten years. Maintenance and repairs are charged to operations as incurred.
Revenue Recognition
The Company generates revenue from sales of solar electric production products, air conditioning sales and service, LED lighting, installation services and leasing fees. During the nine months ended September 30, 2018 and 2017last two fiscal years, the Companycompany had product sales as follows:
Sales Product and Services Description | 2018 | 2017 | ||||||||||||||
Solar PV residential and commercial sales | $ | 2,012,332 | 92 | % | $ | 1,047,950 | 90 | % | ||||||||
Energy efficient lighting and other income | 174,848 | 8 | % | 120,730 | 10 | % | ||||||||||
Interest income | 739 | 0 | % | 0 | % | |||||||||||
Total revenue | $ | 2,187,919 | 100 | % | $ | 1,168,680 | 100 | % |
Sales Product and Services Description | June 30, 2019 | June 30, 2018 | ||||||||||||||
Solar PV residential and commercial sales | $ | 1,086,010 | 98 | % | $ | 910,284 | 84 | % | ||||||||
Energy efficient lighting & other income | 27,168 | 2 | % | 169,701 | 15 | % | ||||||||||
Interest Income | 448 | - | % | 496 | 1 | % | ||||||||||
Total revenue | $ | 1,113,626 | 100 | % | $ | 1,081,021 | 100 | % |
The Company recognizes product revenue, net of sales discounts, and returns and allowances. ASC (606) accounting requiresThese statements establish that the company recognize revenue and profits on the percentage of completion method for long term projects. These contracts generally extend for a period in excess of one reporting period. The amount of revenue and profitscan be recognized in each period is determined by the ratio of costs incurred to the total of estimated costs. Costs included in construction in process consist of materials, direct labor and project related overhead. At September 30, 2018 ABCO had $1,950,646 in construction in progress and had earned $934,851 and $1,015,795 was not earned at the end of the period. Recognition standards requirewhen persuasive evidence of an arrangement exists, delivery has occurred, and all significant contractual obligations have been satisfied, the fee is fixed or services rendered, price fixed, collectability reasonably assured are now replaced with the following steps under ASC 606.determinable, and collection is considered probable.
1. Identify the contract with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract.
5. Recognize revenue when (or as) the entity satisfies a performance obligation
Our revenue recognition is recorded on the percentage of completion method for sales and installation revenue and on the accrual basis for fees and interest income. We recognize and record income when the customer has a legal obligation to pay. All our revenue streams are acknowledged by written contracts for any of the revenue we record. There are no differences between major classes of customers or customized orders. We record discounts, product returns, rebates and rebatesother related accounting issues in the normal business manner and experience a limitedvery small number of adjustments to our written contractual sales. There are no post-delivery obligations because warranties are maintained by our suppliers. Our lease fees are earned by providing services to contractors for financing of solar systems. Normally we will acquire the promissory note (lease) on a leased system that will provide cash flow for up to 20 years. Interest is recorded on the books when earned on amortized leases.
Income (Loss) per ShareAccounts Receivable and work-in-progress
Basic income (loss) per share amountsThe Company recognizes revenue upon delivery of product to customers and does not make bill-and-hold sales. Contracts spanning reporting periods are calculatedrecorded on the percentage of completion method, based on the weighted average numberratio of sharestotal costs to total estimated costs by project, for recognition of common stock outstanding during each period. Diluted earnings per share is based on the weighted average numbers of shares of common stock outstandingrevenue and expenses. Accounts receivable includes fully completed and partially completed projects and partially billed statements for the periods, including dilutive effects of stock options, warrants grantedcompleted work and convertible preferred stock. Dilutive options and warrants that are issued duringproduct delivery. The Company records a period or that expire or are canceled during a period are reflectedreserve for bad debts in the computations foramount of 2% of earned accounts receivable. When the time they were outstanding duringCompany determines that an account is uncollectible, the periods being reported. ABCO has incurred losses inaccount is written off against the current period butreserve and the impact of the common stock equivalents would be anti-dilutive and therefore are not included in the calculation. However, ABCO has issued 30,000,000 shares of Series B preferred stock with a conversion feature of 10 common shares for each share of Series B preferred stock. The Company has also issued 219,000 shares of Series C Preferred Shares (“Series C”) which are convertible at 65% of the average of the closing prices for the 15 trading days priorbalance to the date of conversion.expense. If the Series C was assumedreserve is deemed to be converted as of September 30,2018, approximately 675,000,000 potentially dilutive shares wouldinadequate after annual reviews, the reserve will be issuable. The Series B would add a maximum of 300,000,000 additional shares of common stock if conversion wereincreased to take place. In addition, there are no common stock equivalents outstanding at the time of this report. Since convertible preferred stock and convertible debt have unknown conversion ratios to common stock, no calculation for this contingency is included in earnings or losses per share.an adequate level.
EffectsInventory
The Company records inventory of Recently Issued Accounting Pronouncementsconstruction supplies at cost using the first in first out method. After review of the inventory on an annual basis, the Company discounts all obsolete items to fair market value and has established a valuation reserve of 10% of the inventory at total cost to account for obsolescence.
Income Taxes
The Company has reviewed all recently issued accounting pronouncements noting that they donet operating loss carryforwards as of December 31, 2018 totaling approximately $4,191,760. Accrued derivative liabilities and stock-based compensation are assumed to be non-tax events. A deferred 21% tax benefit of approximately $880,270 has been offset by a valuation allowance of the same amount as its realization is not haveassured.
Due to the current uncertainty of realizing the benefits of the tax NOL carry-forward, a material effect onvaluation allowance equal to the financial statements at September 30, 2018.tax benefits for the deferred taxes has not been established. The full realization of the tax benefit associated with the carry-forward depends predominately upon the Company’s ability to generate taxable income during future periods, which is not assured.
The Company files in the US only and is not subject to taxation in any foreign country. There are three open years for which the Internal Revenue Service can examine our tax returns so 2015, 2016 and 2017 are still open years and 2018 will replace 2015 when the tax return is filed.
Fair ValueValues of Financial Instruments
ASC 825 requires the Corporation to disclose estimated fair value for its financial instruments. Fair value estimates, methods, and assumptions are set forth as follows for the Corporation’s financial instruments. The carrying amounts of cash, receivables, other current assets, payables, accrued expenses and notes payable are reported at cost but approximate fair value because of the short maturity of those instruments. The Company evaluates derivatives based on level 3 indicators.
ASC 825 requires the Corporation to disclose estimated fair value for its financial instruments. Fair value estimates, methods, and assumptions are set forth as follows for the Corporation’s financial instruments. The carrying amounts of cash, receivables, other current assets, payables, accrued expenses and notes payable are reported at cost but approximate fair value because of the short maturity of those instruments.
The Company measures assets and liabilities at fair value based on expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale date of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical levels of inputs to measure fair value:
Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable and accrued expenses, approximate their fair values because of the current nature of these instruments. Debt approximates fair value based on interest rates available for similar financial arrangements. Derivative liabilities which have been bifurcated from host convertible debt agreements are presented at fair value.
Derivative Financial Instruments – Level 3
GAAPFair value accounting requires bifurcation of certain embedded derivative instruments such as conversionconvertible features in convertible debtdebts or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the binomial option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments, such as warrants, are also valued using the binomial option-pricing model.
Stock-Based Compensation
The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable.
Effects of Recently Issued Accounting Pronouncements
The Company has reviewed all recently issued accounting pronouncements noting that they do not affect the financial statements.
Per Share Computations
Basic net earnings per share are computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and the dilutive potential common shares outstanding during the period. All shares were considered anti-dilutive at December 31, 2018. Potentially dilutive share issues are: 1) all unissued common shares sold, the convertible debentures are dilutive, 2) all convertible debentures have a possibility of a large number of shares being issued and would result in a larger number of shares issued if the price remains low, 3) the preferred stock of the company held by insiders is convertible into common shares and the preferred stock is voted on a 20 to 1 basis. All of the above are potential dilutive items.
Reclassification
Certain reclassifications have been made to conform to prior periods’ data to the current presentation. These reclassifications had no effect on reported income.
Note 3 – Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. AsThe Company incurred a result,net loss of $(595,760), the Company incurrednet cash flow used in operations was $98,823 and its accumulated net losses from inception through the period ended SeptemberJune 30, 2018 of $(4,805,726),2019 is $5,776,191, which raises substantial doubt about the Company’s ability to continue as a going concern. In addition, the Company’s development activities since inception have been financially sustained through capital contributions from shareholders.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common or preferred stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Note 4 – Warranties of the Company
ABCO Energy provides a five and ten year workmanship warranties for installed systems that cover labor and installation matters only. All installed products are warranted by the manufacturer. In the last four years of operations, all claims on workmanship have been handled expeditiously and inexpensively by the company. Management does not consider the warranties as a significant or material risk and therefore there is no reserve.
Note 5 – Accounts Receivable and Work in Process
Accounts receivable as of June 30, 2019 and 2018, consists of the following:
Description | June 30, 2019 | December 31, 2018 | ||||||
Accounts receivable on completed contracts | $ | 140,811 | $ | 105,187 | ||||
Costs and estimated earnings on contracts in progress | 52,829 | 184,212 | ||||||
Total | $ | 193,640 | $ | 289,399 |
Work in process consists of costs recorded and revenue earned on projects recognized on the percentage of completion method for work performed on contracts in progress at June 30, 2019 and 2018. The company records contracts for future payments based on contractual agreements entered into at the inception of construction contracts. Amounts are payable from customers based on milestones established in each contract. Amounts are billed in advance and unearned profits are netted against the billed amounts such that accounts receivable reflect current amounts due from customers on completed projects and amounts earned on projects in process are reflected in the balance sheet as costs and estimated earnings in excess of billings on contracts in progress.
Billings in excess of costs and earnings were $303,317 at June 30, 2019 and $85,777 at December 31, 2018.
Note 6 – Inventory
Inventory of construction supplies not yet charged to specific projects was $45,195$61,996 at June 30, 2019 and $38,127$53,950 as of September 30, 2018 and December 31, 2017, respectively.2018. The Company values items of inventory at the lower of cost or market and uses the first in first out method to charge costs to jobs. The Company has established a valuation reserve of 10% of the value of inventory after write downs for obsolescence.
Note 5 Note Payable7 – Officers, DirectorsSecurity deposits and Related PartiesLong Term Commitments
Officer loans are demand notes totaling $176,136The Company has paid security deposits on the rented spaces it occupies for offices and $187,826, respectively, as of Septemberwarehouse which total $2,700 on June 30, 20182019 and December 31, 2017. These notes provide2018.
On May 1, 2014, the Company rented office and warehouse space at 2100 N. Wilmot #211, Tucson, Arizona 85712. This facility consists of 3,600 square feet. The Company now has a one year lease with monthly rent of $2,770 which was renewed on November 1, 2018 to a term of one year. ABCO has a forward commitment of $11,081.
Note 8 – Alternative Energy Finance Corporation (AEFC)
AEFC is a wholly owned subsidiary of ABCO Energy. AEFC provides funding for interestleases of photovoltaic systems and finances its own leases from its own cash. Long term leases recorded on the consolidated financial statements were $4,234 at 12% per annumJune 30, 2019 and are unsecured. Notes payable to$10,512 at December 31, 2018. During the Officers, Directors and Related Parties resultedquarter ended March 31, 2019 one of the leases paid in interest charges of $5,335 and $5,523 forfull as the quarters ended September 30, 2018 and September 30, 2017, respectively. The other related party note from a non-officer or director totaled $55,084 at September 30, 2018.owner’s property was sold.
Note 9 – Property and equipment
The Company has acquired all its office and field work equipment with cash payments and financial institution loans. The total fixed assets consist of vehicles, office furniture, tools and various equipment items and the totals are as follows:
Asset | June 30, 2019 | December 31, 2018 | ||||||
Equipment | $ | 120,267 | $ | 119,343 | ||||
Accumulated depreciation | (88,095 | ) | (82,805 | ) | ||||
Net Fixed Assets | $ | 32,172 | $ | 36,538 |
Depreciation expenses for the periods ended June 30, 2019 and June 30, 2018 was $5,290 and $8,120 respectively.
Note 10 – Notes Payable Officers and Related Party Transactions
Related party notes payable and accrued interest as of SeptemberJune 30, 20182019 and December 31, 20172018 consists of the following:
Description | Accrued interest due at September 30, 2018 | Note Balance September 30, 2018 | Note Balance December 31, 2017 | June 30, 2019 | December 31, 2018 | |||||||||||||||
Note payable - Director bearing interest at 12% per annum, unsecured, demand note | $ | 32,489 | $ | 60,000 | $ | 60,000 | ||||||||||||||
Notes payable – Director bearing interest at 12% per annum, unsecured, demand notes. | $ | 60,000 | $ | 60,000 | ||||||||||||||||
Note payable - Officer bearing interest at 12% per annum, unsecured, demand note | 18,215 | 61,052 | 61,052 | 61,052 | 61,052 | |||||||||||||||
Note payable – other bearing interest at 12% per annum, unsecured, demand note | 17,696 | 55,084 | 66,774 | |||||||||||||||||
Note payable – other bearing interest at 12% per annum, unsecured, demand note. | 67,002 | 48,497 | ||||||||||||||||||
Total | $ | 68,400 | $ | 176,136 | $ | 187,826 | $ | 188,054 | $ | 169,549 |
The first note in the amount of $60,000 provides for interest at 12% per annum and is unsecured. This note resulted in an interest charge of $32,450 accrued and unpaid at June 30, 2019.
The second note has a current balance of $61,052 as of June 30, 2019. The note is an unsecured demand note and bears interest at 12% per annum. This note resulted in an interest charge of $23,694 accrued and unpaid at June 30, 2019.
The third note is from a related party and has a current balance of $67,002 as of June 30, 2019. The note is an unsecured demand note and bears interest at 12% per annum. This note resulted in an accumulated interest charge of $22,663 accrued and unpaid at June 30, 2019.
Note 611 – Short Term Notes Payable
Description | September 30, 2018 | December 31, 2017 | ||||||
Demand note Perfectly Green Corp (1) | $ | 50,000 | $ | - | ||||
Merchant Note payable to Web Bank, borrowed 2-1-16, bearing interest at 23% per annum, unsecured. (2) Settled by negotiated payment in 2018 | - | 69,854 | ||||||
Merchant Note payable to Quarterspot Lending, borrowed 6-27-16, bearing interest at 31% per annum, unsecured. (3) Settled by negotiated payment in 2018 | - | 26,484 | ||||||
Veritas settlement of the Web Bank and Quarterspot notes | 3,734 | - | ||||||
Total | $ | 53,734 | $ | 96,338 |
Description | June 30, 2019 | December 31, 2018 | ||||||
Private money loan from Perfectly Green Corporation, borrowed 1-22-18, bearing interest at 3% per annum, unsecured (3) demand note-Original balance $60,000, current balance | $ | 40,301 | $ | 49,563 | ||||
Knight Capital Funding, LLC, borrowed 1-30-19, bearing interest at 23% per annum, unsecured | 48,711 | - | ||||||
Total | $ | 89,012 | $ | 49,563 |
(1) On January 22, 2018 the Company borrowed $60,000 from Perfectly Green Corporation, a Texas corporation. The Company repaid $10,000 during the quarter ended September$19,699 prior to June 30, 2018.2019. The note bears interest at 3% per annum and is payable upon demand after 60 days’ notice which can be requested at any time after May 31, 2018. Accrued interest on this note totaled $553 at September 30, 2018.
(2) On February 1, 2016,January 30, 2019 the Company financed operations with a loan in the amount of $150,000borrowed $153,092 including principal and interest from WebBank.Knight Capital Funding, LLC, [“KCF”] bearing interest at 23% per annum, unsecured. The note is an open credit line with interest rate of 23% maturing in March 2017. A portion of the loan was used to pay off a credit loan from Orchard Street Funding in the amount of $44,061. On August 22, 2016, the Company ceased making payments on this loanbalance and at December 31, 2017 the Company owed a settled negotiated amount of $69,854 in principal, accrued interest and settlement fees.at June 30, 2019 was $48,711. This loan was personally guaranteed by an Officer of the Company. The Company has negotiated a payment and payoff arrangements for this debt.
(3) On September 28, 2016, the Company financed operations with a loan in the amount of $43,500 from Quarterspot, a lending institution. The note is an open line with interest rate of approximately 31% maturing in September 2017. On August 22, 2016, the Company ceased making payments on this loan. As of December 31, 2017, the Company owed $26,484 in principal, accrued interest and settlement fees. This loan is not personally guaranteed by an Officer of the Company. Arrangements have been made for the final payment schedule on this loan. The negotiated settlement on the Quarterspot note was $8,650 plus fees. This note and the fees have been paid in full as of September 30, 2018.
The negotiated payment settlements on the loans described in (2) and (3) above resulted in a remaining obligation totaling $3,734 as of September 30, 2018 with respect to the WebBank loan, the Quarterspot loan and the Veritas settlement fees. The obligation requires ABCO to continue payments of $1,187 per week until the total paid reaches the sum of $3,734 with respect to the loans and fees. The Quarterspot loan was paid in full so these payments apply only to WebBankon August 10,2019 and Veritas. These notes will be considered paid in full at the endreplaced with a new loan of the negotiated settlement period if all such payments are made on a timely basis.$144,900 from KCF. See Note 14 below.
Note 7 Long Term Debt
Holder | Date issued | Interest rate | Amount due 9-30-18 | |||||||||
Ascentium Capital | 10-1-18 | 13 | % | $ | 15,000 | |||||||
Fredrick Donze | 9-2-18 | 6 | % | 7,000 | ||||||||
Charles O’Dowd (officer) | 8-9-18 | 6 | % | 6,240 | ||||||||
Total long term debt at 9-30-18 | 28,240 | |||||||||||
Less Current portion | 8 433 | |||||||||||
Total long-term debt | $ | 19,807 |
ABCO acquired the assets of Dr. Fred Air Conditioning services on September 2, 2018 for the total price of $22,000. The allocation of the purchase price was to truck and equipment at $15,000 and the balance was allocated to inventory. The truck and equipment was financed by Ascentium Capital. Mr. Fred Donze, the owner, received a three year promissory note for the balance of $7,000 at 6% interest and with monthly payments of $213.
The Company purchased an automobile from its president with a promissory note in the amount of $6,575 dated August 9, 2018 and bears interest at 6% per annum for the three year payment plan.
Note 8 Fair Value of Financial Instruments
The following is the major category of liabilities measured at fair value on a recurring basis as of September 30, 2018, and December 31, 2017 using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):
September 30, 2018 | December 31, 2017 | |||||||
Derivative Liabilities from Convertible Notes (Level 3) | $ | - | $ | 178,013 |
Note 9 Stockholder’s Equity
At September 30, 2018 and December 31, 2017, the Company had sold but have not yet issued 137,191,082 and 35,140,224 shares of common stock. The gross proceeds during the nine months ended September 30, 2018 totaled $496,622 and the expenses of offering totaled $259,330. The net proceeds of $237,292 were used for working capital, corporate expenses, legal fees and public company expenses. These shares are reflected in the balance sheet and included in total shares outstanding. Many shareholders have elected to wait for the issuance of restricted shares until the holding period under rule 144 has expired. The following table shows the issued and unissued shares at the end of the period.
Description of shares | September 30, 2018 Shares | Net Value of unissued shares | Par value of shares | December 31, 2017 Shares | Net value of unissued shares | Par Value of shares | ||||||||||||||||||
Common shares sold and issued | 353,963,157 | $ | 353,963 | 126,998,171 | $ | 126,998 | ||||||||||||||||||
Common shares sold and not yet issued | 137,191,082 | 237,292 | 137,191 | 35,140,224 | 59,643 | 35,140 | ||||||||||||||||||
Total common shares | 491,154,239 | $ | 237,292 | $ | 491,154 | 162,138,395 | $ | 59,643 | $ | 162,138 |
During May 2018, the Company authorized a Series C Preferred Stock and has sold three issuances for cash to Power Up Lending Group Ltd as shown in the table below. The Series C Preferred Stock has no voting rights and is subordinate to the Series B Preferred Stock. The Series C Preferred Stock is convertible into common stock after 6 months at the option of the Holder. The conversion into common stock shares is determined by the use of the lowest price of the trading common stock in a 20 day period prior to the elected date to convert. The price is determined by the discount rate of 35% of the lowest price to determine the number of shares. The Series C Preferred is classified as a liability on the Balance Sheet because it is mandatorily redeemable after its 15 month term if not fully converted by that date. The classification of this investment as a liability on the balance sheet will also require a calculation of a derivative liability on future statements.
Name of Holder | Date of issuance | Date of maturity | Amount of issuance |
| Date of issuance |
| Date of maturity |
| Amount of issuance |
| ||||||||||||||
Power Up Lending Group, LTD | 5-7-18 | 11-7-18 | $ | 78,000 |
| 5-7-18 |
| 11-7-18 |
| $ | 78,000 |
| ||||||||||||
Power Up Lending Group, LTD | 7-6-18 | 1-6-19 | $ | 68,000 |
| 7-6-18 |
| 1-6-19 |
| $ | 68,000 |
| ||||||||||||
Power Up Lending Group, LTD | 8-24-18 | 2-24-19 | $ | 73,000 |
| 8-24-18 |
| 2-24-19 |
| $ | 73,000 |
| ||||||||||||
Total amount sold | $ | 219,000 |
|
|
|
|
| $ | 219,000 |
| ||||||||||||||
Conversions during 2018 |
|
|
|
|
|
| 29,320 |
| ||||||||||||||||
Balance on Preferred Stock Series C liability at December 31, 2018 |
|
|
|
|
| $ | 189,680 |
|
Effective as of September 2, 2018 Redstart Holdings Corp. (“RHC”) acquired from Power Up Lending Group Ltd., all of the 219,000$219,000 Series C Preferred Stock of ABCO Energy, Inc. owned by Power-Up for a one year promissory note from RHC for the principal amount of $328,500 plus interest at 8% per annum pursuant to a Stock Purchase Agreement dated October 31, 2018 (“SPA”). The Company agreed to the transactions contemplated by the SPA.
On January 17, 2018During the debt holder Blackbridge Capital Growth Fund, LLC converted $14,375 of their convertible debentures into 12,500,000quarter ended March 31, 2019, the Company redeemed from Redstart 68,000 shares of common stock. This transaction resulted in an increase to paid in capital for derivative gains in the amount of $25,196 in addition to the reduction in the debt in the amount of $14,375. As of September 30, 2018, Blackbridge had sold their promissory note to L2 Capital, LLC in a private transaction. L2 Capital converted $87,707and 73,000 shares, respectively, of the note into 95,893,406 shares of common stock prior to September 30, 2018. The balanceSeries C Preferred and retired these shares. Redstart converted all of the convertible debenture was zero at September 30, 2018.
During the nine months ended September 30,78,000 Series C Preferred into common shares in 2018 Crown Bridge Partners, LLC converted $39,021 of the balance of their convertible debenture that was issued in 2017, into 48,959,039 shares of common stock. The balance of the Crown Bridge holding was zero at September 30, 2018.
On October 13, 2017, the Company issued a nine (9) month $58,000 convertible promissory note to Power Up Lending Group, Ltd., (“Power Up”), which bears interest at the rate of 8% per annum on the principal sum of the outstanding (“Power Up Note”). The Company received net proceeds of $55,000 after deductions for expenses. The Power Up Note is convertible at any time after the six (6) month anniversary of the Note into shares of common stock as a conversion price equal to 58% of the lowest
two (2) trade prices in the 15 trading days before the conversion date. The earliest conversion date was April 19, 2018. During the period ended September 30, 2018 Powerup Lending converted and sold $59,815 worth of debentures including $1,815 in interest for 51,130,560 shares of common stock.2019. The balance of this note at June 30, 2019 was zero$-0- and it was $48,680 at September 30, 2018.December 31, 2018 all of which was converted into common shares during January 2019.
Note 12 – Long term debt
Holder |
| Date issued |
|
| Interest rate |
|
| Amount due June 30, 2019 |
|
| Amount due December 31, 2018 |
| ||||
Ascentium Capital |
|
| 10-1-18 |
|
|
| 13 | % |
| $ | 12,778 |
|
| $ | 14,285 |
|
Fredrick Donze |
|
| 9-2-18 |
|
|
| 6 | % |
|
| 5,180 |
|
|
| 6,283 |
|
Charles O’Dowd (officer) |
|
| 8-9-18 |
|
|
| 6 | % |
|
| 4,690 |
|
|
| 5,731 |
|
Total long term debt |
|
|
|
|
|
|
|
|
|
| 22,648 |
|
|
| 26,298 |
|
Less Current portion |
|
|
|
|
|
|
|
|
|
| 7,582 |
|
|
| 7,628 |
|
Total long-term debt |
|
|
|
|
|
|
|
|
| $ | 15,066 |
|
| $ | 18,670 |
|
ABCO acquired the assets of Dr. Fred Air Conditioning services on September 2, 2018 for the total price of $22,000. The Board of Directorsallocation of the Company has approved a reverse stock split of its common stock,purchase price was to truck and equipment at a ratio of 1-for-20 (the “Reverse Stock Split”). Management expects$15,000 and the Reverse Stock Split will become effective with FINRA (the Financial Industry Regulatory Authority)balance was allocated to inventory. The truck and inequipment were financed by Ascentium Capital. Mr. Fred Donze, the marketplace on or about December 15, 2018 (the “Effective Date”), whereupon the shares of common stock will begin trading on a split adjusted basis. On the Effective Date, the Company’s trading symbol will be changed to “ABCED” for a period of 20 business days, after which the “D” will be removed from the Company’s trading symbol, which will revert to the original symbol of “ABCE”. In connection with the Reverse Stock Split, the Company’s CUSIP number will change to 00287V204. On the Effective Date, the total number of shares of the Company’s Common Stock held by each stockholder will be converted automatically into the number of whole shares of Common Stock equal to (i) the number of issued and outstanding shares of Common Stock held by such stockholder immediately prior to the Reverse Stock Split, divided by (ii) 20. No fractional shares will be issued, and no cash or other consideration will be paid. Instead, the Company will issue one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would haveowner, received a fractional share because of the Reverse Stock Split.
On September 15, 2017, the Board of Directors authorized the issuance of an aggregate of 15,000,000 shares of Class B Convertible Preferred Stock [“Series B”] to both Directors of the Company and to two unaffiliated consultants. Of the Series B, 6,000,000 shares were issued to Charles O’Dowd and 1,000,000 to Wayne Marx, the Directors. Each Consultant received 4,000,000 shares. See the Company’s Schedule 14C filed with the Commission on September 28, 2017. These shares have no market pricing and management assigned the value of $75,000 to the stock issue based on the market value of the underlying common shares on the date of approval of $0.0005. The 15,000,000 shares of Preferred Stock, each has 20 votes for each preferred share held by them at a record date. The holders of the Series B Preferred are also entitled to own additional 150,000,000 common shares upon conversion of the Series B Stock. As a result of owning these shares of Common and Preferred Series B Stock, the Control Shareholders will have voting control the Company.
By Written Consent in lieu of a Meeting of Shareholders executed September 26, 2017, the holders of a majority of the voting power common stock and preferred stock of the Company adopted a further Amendment to the Articles of Incorporation increasing the authorized common stock from 1 Billion shares to 2 Billion shares. The Certificate of amendment was filed with the Nevada Secretary of State on September 28, 2017.
On September 15, 2017 and on September 28, 2018, the Board of Directors authorized the issuance of an aggregate of 30,000,000 shares of Series B Convertible Preferred Stock (“Series B”) with 15,000,000 shares of Series B authorized on each such date. Each preferred share provides for 20 votes of each share of the Series B and provides that Series B holders are entitled to vote together with holders of common stock with respect to any matter upon which the holders of Common Stock have the right to vote on. The Series B is also convertible into 10 shares of Common Stock for each share of Series B. The Series B were issued to each director and to certain consultants (collectively “Control Shareholders” to the Company as follows:
|
| |||
| ||||
| ||||
| ||||
| ||||
|
The Series B were issued to allowthree year promissory note for the Company’s Management to continue to guide the Company forward in viewbalance of some business challenges facing the Company. On the date$7,000 at 6% interest and with monthly payments of this Form 10-Q, there were 499,854,239 shares of Common Stock outstanding. The Control Shareholders and the Series B holders, by written consent dated November 7, 2018 [i] adopted the Amendment to Increase Capital to increase the authorized number of Common Stock from 2,000,000,000 to 5,000,000,000 shares and [ii] approved the Reverse Split with a ratio of one (1) share for each twenty (20) shares of Common Stock outstanding as of the Record Date.$213.
On September 15, 2017, the Board of Directors of the Company authorized the issuance of 27,000,000 restricted shares of common stock, (“New Restricted Common Shares”) to the Control Shareholders and consultants. On September 28, 2018, the Company issued an additional 27,000,000 of New Restricted Common Shares to the Control Shareholders and consultants. The second issuance of New Restricted Common Shares were issued for services rendered to the Company and both issuances of New Restricted Common Shares, together with two issues of the Series B allows the Company Management to continue to guide the Company forward in view of some business challenges facing the Company. These Shares were issued upon an exemption from registration pursuant to Section 4(2) of the 1933 Act and Rule 506 of Regulation D under the 1933 Act. The following table gives effect to all New Restricted Common Shares as follows:
|
| |||
| ||||
| ||||
| ||||
| ||||
| ||||
|
On November 8, 2017, the Company entered into a Consulting Agreement (“CA”) with Eurasian Capital, LLC [“Consultant”] which will provide institutional funding services and shareholder and third party sponsorship services for a nine month term ending May 7, 2018. Consultant was to be paid a monthly retainer of $10,000 payable in ABCO restricted common stock based upon the 5 day average of the closing bid price commencing on the first day of each month during the effectiveness of the Consulting Agreement. The CA was terminated by the Company on March 29, 2018 for non-performance by Consultant. Consultant was issued 7,194,063 restricted shares for November and December 2017, of which 3,968,254 have been delivered to Consultant. No shares for January through the termination date were ever issued. A dispute has arisen with respect to the number of shares due Consultant as a result of the CA termination. The parties resolved this matter by the delivery of an aggregate of 7,391,976 shares to Consultant and the execution of releases.
The Company effective aspurchased an automobile from its President with a promissory note in the amount of September 1,$6,575 dated August 9, 2018 entered into an Equity Purchase Agreement with Oasis Capital, LLC, a Puerto Rico limited liability company (“Investor”) pursuant to which Investor agreed to purchase up to $5,000,000 ofand bears interest at 6% per annum for the Company’s common stock at a price equal to 85% of the market price at the time of purchase (“Put Shares”). The Company agreed to file a new registration statement to register for resale the Put Shares. The Registration Statement must be effective with the SEC before Investor is obligated to purchase any Put Shares. In addition, the Company [i] issued to Investor a onethree year $150,000 note which is convertible at a fixed price of $.01 per share as a commitment fee for its purchase of Put Shares and [ii] delivered to Investor a Registration Rights Agreement pursuant to which the Company agreed to register all Put Shares acquired under the Equity Purchase Agreement.payment plan.
Note 1013 – Convertible Debt and Derivative Valuation
In accordance with the Statement of Financial Accounting Standard ASC 820-10-35-37 Fair Value ofin Financial Instruments, and Statement of Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging of Activities require that instruments with embedded derivative features be valued at their market values. The Company hired a valuation consultant to value the Convertible Debentures for the derivative portion of the instruments. The Binomial model was used to value the derivative liability for the fiscal year ending December 31, 20172019 and the nine months ended September 30,December 31, 2018.
During the year ended December 31, 2017,2018, the Company funded operations with borrowing on 2 additionalnew convertible promissory notes and had another debentureother debentures due from 2016.2017. This table presents the positions on the notes at SeptemberJune 30, 20182019 and December 31, 2017.2018.
Holder |
| Date of Loan |
|
| Loan amount |
|
| OID and discounts and fees |
|
| Interest rate |
|
| Conversions to shares |
|
| Conversion Dollars |
|
| Balance September 30, 2018 |
|
| Balance December 31, 2017 |
| |||||||
L2 Capital – formerly Blackbridge Capital Growth Fund, LLC |
| 11-2-16 |
|
| $ | 100,000 |
|
| $ | 0 |
|
|
| 7 | % |
|
| 110,843,406 |
|
| $ | 110,097 |
|
| $ | - |
|
| $ | 92,525 |
|
Crown Bridge Partners, LLC |
| 1-11-17 |
|
| $ | 45,000 |
|
| $ | 5,000 |
|
|
| 5 | % |
|
| 58,499,039 |
|
| $ | 63,318 |
|
| $ | - |
|
| $ | 39,021 |
|
Power Up Lending Group, Ltd |
| 11-11-17 |
|
| $ | 58,000 |
|
| $ | 3,000 |
|
|
| 8 | % |
|
| 51,130,560 |
|
|
| 59,815 |
|
| $ | - |
|
| $ | 58,000 |
|
Total |
|
|
|
| $ | 203,000 |
|
| $ | 8,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | - |
|
| $ | 189,546 |
|
Debt discount on derivatives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
| 2,310 |
| |
Net total debentures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | - |
|
| $ | 187,236 |
|
Holder | Date of Loan | Loan amount | OID and discounts and fees | Interest rate | Maturity Dates | Balance June 30, 2019 | ||||||||||||||||||
Power Up Lending Group Ltd | 2-16-19 | $ | 68,000 | $ | 13,000 | 8 | % | 8-16-19 | 68,000 | |||||||||||||||
Power Up Lending Group Ltd | 3-18-19 | 68,000 | 13,300 | 8 | % | 9-18-19 | 68,000 | |||||||||||||||||
Power Up Lending Group Ltd - | 5-13-19 | 83,000 | 13,300 | 8 | % | 8-13-20 | 83,000 | |||||||||||||||||
219,000 | ||||||||||||||||||||||||
Less non-amortized discounts | 22,182 | |||||||||||||||||||||||
Totals and balances for 6-30-19 | $ | 219,000 | $ | 39,300 | $ | 196,818 |
The initial valuation of the derivative liability on the converted common shares totaled $-0- at June 30, 2019 and $74,848, net of discount, at December 31, 2018 as calculated by consultants for the Company when all notes were issued, but before any conversions. This value includes the fair value of the shares issued according to the contracts of the holders and valued according to our common share price at the time of acquisition.
Note 14 – Convertible Debt and Derivative Liabilities on Other Notes
The Company, effective as of September 1, 2018, entered into an Equity Purchase Agreement with Oasis Capital, LLC, a Puerto Rico limited liability company (“Investor”) pursuant to which Investor agreed to purchase up to $5,000,000 of the Company’s common stock at a price equal to 85% of the market price at the time of purchase (“Put Shares”). The Company agreed to file a new registration statement to register for resale the Put Shares. The Registration Statement must be effective with the SEC before Investor is obligated to purchase any Put Shares. In addition, the Company [i] issued to Investor a one year $150,000 note (“Commitment Note”) which is convertible at 57 ½ % of the lowest trading price for the 15 day trading period ending on the last trading date prior to the Conversion Date per share as a commitment fee for its purchase of Put Shares and [ii] delivered to Investor a Registration Rights Agreement pursuant to which the Company agreed to register all Put Shares acquired under the Equity Purchase Agreement. No transaction occurred on this matter through March 31, 2019 and no derivative was calculated on the note because it was not yet mature. The Company issued 4,444,708 common shares to Oasis and the price of the shares was classified as a prepaid expense. In addition, Oasis acquired 1,000,000 shares of common stock and paid ABCO $5,100 in May of 2019 under the Registration Statement referred to in the next sentence. This note is not recorded as a liability on the balance sheet until Oasis provides services by purchasing shares under the Registration Statement. See Note 17 below on page 18 with respect to the filing on April 26, 2019 and the effectiveness on May 7, 2019, of a Form S-1 Registration Statement filed for the Put Shares.
The Company had entered into Securities Purchase Agreement with Blackbridge Capital, LLC, a Delaware limited liability company [“SPA”], operating out of New York, New York (“Blackbridge”) on November 2, 2016 whereby Blackbridge has agreed to purchase up to $5,000,000 worth of shares of the Company’s common stock. The Company hadhas agreed to file a Registration Statement to register such shares for sale to Blackbridge. Blackbridge purchased a $100,000 convertible note for cash and designated that a portion of the note was to be used to cover the expenses to be incurred for the preparation and filing of the Registration statement and related matters (“Expenses Note”).
In addition, the Company has issued [i] a convertible promissory note to Blackbridge pursuant to the Securities Purchase Agreement equal to $150,000 as a commitment fee, that is currently charged to prepaid expenses until services are provided (the “Blackbridge Note”), [ii] and a $100,000 Convertible Note to cover the expenses to be incurred for the preparation and filing of the Registration Statement and related matters (“Expenses Note”). Blackbridge converted an additional $14,575 for 12,500,000 shares on January 17, 2018 bringing the total note balance to $78,150 as of the date the note was acquired by Oasis Capital, LLC.
On March 13, 2017, the Company and Blackbridge, entered into an Agreement, effective as of March 1, 2017, terminating the SPA. The Registration Statement on Form S-1 filed by the Company pursuant to the SPA could not be processed because of technical issues raised by the SEC and was withdrawn on February 28, 2017. In addition, the Blackbridge Note issued by the Company as a commitment fee was declared null and void by agreement, effectiveand was cancelled on March 1, 2017. The balance on the $150,000 Blackbridge note was $0 at September 30, 2018.
January 31, 2019, Company acquired through redemption from Redstart Holdings Corp, [“RHC”] 68,000 shares of the Series C Preferred Stock [“Redeemed Preferred Shares”] owned by RHC. The redemption price for the Redeemed Preferred Shares was $101,810.55 which was financed through a cash advance transaction of future receivables.
On May 15, 2017 Blackbridge converted $7,475Effective as of February 22, 2019, Company acquired through redemption from RHC 73,000 shares of the debtSeries C Preferred Stock [“Redeemed Preferred Shares”] owned by RHC. The redemption price for the Redeemed Preferred Shares was $106,145 which was financed through available cash and the promissory note referred to 2,500,000 shares. On January 17, 2018 Blackbridge converted $14,375 of their convertible debenturesin the next paragraph.
Effective August 8, 2019 the Company entered into 12,500,000 shares of common stock. These two transaction resulted in an increase to paid in capital for derivative gainsa Future Receivable Sale Agreement with Knight Capital Funding in the amount of $25,196$105,000 in additionorder to fund a redemption of the reduction in the debtRedstart Series C Preferred Stock. The agreement calls for 176 daily payments of $823.30 to retire this note in the amount of $21,850. As$144,900 representing principal and discount of September 30, 2018, Blackbridge had sold their promissorycollection of future receivables. The Company’s decision to redeem the Preferred shares was primarily to prevent the conversion of this note to L2 Capital, LLCfrom diluting the common shares in a private transaction. L2 Capital converted the principal of $78,150 and $10,098 of interest and penalties into 95,893,406 shares of common stock. The balance of the convertible note was $0 at September 30, 2018.2019.
On January 11, 2017, theThe Company issued a twelve (12) month $45,000 convertible promissory note to Crown Bridge Partners, LLC, (“Crown”), which bears interest at the rate of 5% per annum on the principal sum of the outstanding balance (“Crown Note”). The Company received net proceeds of $40,000 after deductions for expenses from the Crown Note which is convertible at any time after the six (6) month anniversary of the note into shares of common stock as a conversion price equal to 52% of the lowest one (1) trade price in the 20 trading days before the conversion date. During 2017, Crown converted $11,050 of their convertible debentures for 9,540,000 shares of common stock. During the period ended September 30, 2018, Crown Bridge converted $33,950 in principal and $18,317 of interest and penalties into 48,959,039 shares of common stock. The balance of the note was $0 as of September 30, 2018.
On October 13, 2017, the Company issued a nine (9) month $58,000 convertible promissory note to Power Up Lending Group, Ltd., (“Inc. [“Power Up”)], a $68,000 Convertible Promissory Note dated February 16, 2019 [“Note”] which bears interest at the ratecontains an original issue discount of 8% per annum on the principal sum$10,000.00 (OID) and expenses of the outstanding note.$3,000.00 [“Note”]. The Company received net proceeds of $55,000 after deductions for expenses from the Power Up Note. The Power Up Note is convertible at any timeinto Company common stock beginning six months after the nine (9) month anniversarydate of the Note with an effective discount rate of approximately 20 % upon conversion. Without the OID, the effective discount rate would be 35% as set forth in the Note. The net proceeds from the Note, combined with Company working capital in the amount of $51,145, was used to redeem the February 22, 2019 acquisition above in the amount of $106,145.
The Company issued to Power Up Lending Group, Inc. a $68,000 Convertible Promissory Note dated March 13, 2019 which contains an original issue discount of $10,000.00 (OID) and expenses of $3,000.00 [“Note”]. The Note is convertible into shares ofCompany common stock at a conversion price equal to 58%beginning six months after the date of the lowest two (2) trade pricesNote with a stated discount rate of 19% as set forth in the 15 trading days beforeNote. Without the conversion date.OID, the effective discount would have been 35%. The earliest conversionnet proceeds from this Note were used for working capital.
The Company issued to Power Up Lending Group, Inc. a $83,000 Convertible Promissory Note dated May 13, 2019 which contains an original issue discount of $10,000.00 (OID) and expenses of $3,000.00 [“Note”]. The Note is convertible into Company common stock beginning six months after the date was April 19, 2018. During the period ended September 30, 2018 Powerup Lending converted and sold $59,815 worth of debentures including $1,815 in interest for 51,130,560 shares of common stock. The balance of the Power Up Note was $0 at September 30, 2018with a stated discount rate of 19% as set forth in the Note. Without the OID, the effective discount would have been 35%. The net proceeds from this Note were used for working capital.
The Company determined that the conversion feature embedded within the above notes arePower Up Series C Preferred shares that reached maturity in 2018 in the amount of $78,000 is a financial derivative. The Generally Accepted Accounting Principles (GAAP) required that the Company’s embedded conversion option be accounted for at fair value. The following schedule shows the change in fair value of the derivative liabilities at Septemberon June 30, 20182019 and December 31, 2017:2018:
Description |
| September 30, 2018 |
|
| December 31, 2017 |
| ||
Purchase price of the convertible debentures |
| $ | - |
|
| $ | 203,000 |
|
Valuation premium on notes during 2018 and 2017 |
|
| - |
|
|
| (24,987 | ) |
Balance of derivative liability net of discount on the notes |
| $ | - |
|
| $ | 178,013 |
|
Description | June 30, 2019 | December 31, 2018 | ||||||
Purchase price of the convertible debenture -net of discount | $ | 74,848 | $ | 78,000 | ||||
Valuation reduction during the period | (74,848 | ) | 3,152 | |||||
Balance of derivative liability net of discount on the notes (See Consolidated Balance sheet liabilities) | $ | - | $ | 74,848 | ||||
Derivative calculations and presentations on the Statement of Operations | ||||||||
Loss on note issuance | $ | - | $ | (36,230 | ) | |||
Change in Derivative (Gain) Loss | (177,934 | ) | 61,251 | |||||
Derivative Finance fees | - | (33,018 | ) | |||||
Gain (loss) on extinguishment of debt | (244,712 | ) | (410,157 | ) | ||||
Derivative valuation and expense charged to operations in 2019 (See Consolidated Statement of Operations) | $ | (422,646 | ) | $ | (418,154 | ) |
The Company recorded finance fees and interest on notes and derivatives for the nine months ended September 30, 2018 and 2017
The Company measured and utilized quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (level 3) in applying valuation technology to derivative values for SeptemberJune 30, 20182019 and December 31, 20172018 and throughout the year.
Note 11 Income Taxes15 – Stockholder’s Equity
DueCommon Stock
During the six months ended June 30, 2019 the Company sold 4,740,000 shares of restricted common shares in Regulation S offerings to non-US investors. The total proceeds from the offering was $160,305. Commission and expense reimbursements totaled $79,927. The Company recorded net proceeds totaling $80,317.
Legal and other professional fees charged to additional paid in capital totaled $29,000 for the six months ended June 30, 2019.
During the fiscal year ended December 31, 2018 the Company sold 6,162,119 restricted common shares in Regulation S offerings to non-US investors. The total proceeds from the offering was $581,859. Commission and expense reimbursements totaled $292,042. The Company recorded net proceeds totaling $ 289,817.
Legal and other professional fees charged to additional paid in capital totaled $39,176 for the six months ended December 31, 2018.
In addition, debenture holders converted debt into 16,767,650 shares which were issued upon conversion of $256,742 of the notes referred to in Note 13 above.
During the year ended December 31, 2018 the Company issued 369,599 common restricted shares and recorded equity in the amount of $10,000 from vendors for services and issued 1,350,000 restricted common shares to management for services with a fair market value of $27,000.
Preferred Stock
On September 15, 2017 and on September 15, 2018, the Board of Directors authorized on each such date the issuance of 15,000,000 preferred shares for an aggregate of 30,000,000 shares of Class B Convertible Preferred Stock [“Series B”] to both Directors of the Company and to two unaffiliated Consultants or a total of 30,000,000 shares of Series B. The Company assigned a value of $15,000 for the shares for 2017 and 2018. Of the Series B, 12,000,000 shares were issued to Charles O’Dowd and 2,000,000 to Wayne Marx, the Directors. Each Consultant received 8,000,000 shares. See the Company’s Schedule 14C filed with the Commission on September 28, 2018. These shares have no market pricing and management assigned an aggregate value of $30,000 to the current uncertaintystock issued based on the par value of realizing$0.001. The 30,000,000 shares of preferred Stock, each with has 20 votes for each Preferred share held by them of record. The holders of the tax benefitsPreferred are also entitled to an additional 300,000,000 common shares upon conversion of the Preferred Stock. As a result of owning of these shares of Common and Preferred Stock, the Control Shareholders will have voting control the Company.
Earnings (loss) per share calculation
Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period
The computation of basic and diluted loss per share at December 31, 2018 excludes the common stock equivalents from convertible debt of the following potentially dilutive securities because their inclusion would be anti-dilutive, and the share issue number is not calculable until conversion takes place.
Note 16 – Other Matters
During the six months ended June 30, 2019 the Company sold 4,740,000 shares of restricted common shares in Regulation S offerings to non-US investors. The total proceeds from the offering was $160,305. Commission and expense reimbursements totaled $79,927. The Company recorded net proceeds totaling $80,317.
Legal and other professional fees charged to additional paid in capital totaled $29,000 for the six months ended June 30, 2019.
During the fiscal year ended December 31, 2018 the Company sold 6,162,119 restricted common shares in Regulation S offerings to non-US investors. The total proceeds from the offering was $581,859. Commission and expense reimbursements totaled $292,042. The Company recorded net proceeds totaling $ 289,817.
Legal and other professional fees charged to additional paid in capital totaled $39,176 for the six months ended December 31, 2018.
Stock subscriptions executed under an earlier offering included a provision whereby ABCO agrees to pay a dividend (defined as interest) of from 6% to 12% of the total amount invested for a period of one year from receipt of the invested funds. This dividend (defined as interest) is allocated between the broker and the investor with amounts paid to the broker treated as a cost of the offering and netted against additional paid in capital and amounts paid to the investor treated as interest expense. Total amounts paid or accrued under this agreement and charged to additional paid-in capital for the years ended December 31, 2018 and 2017, amounted to $0 and $0, respectively. Total amounts paid under this agreement and charged to interest expense for the years ended December 31, 2018 and 2017, amounted to $0 and $0, respectively. The accrued balance due on this obligation to shareholders totals $49,290 at June 30, 2019 and December 31, 2018.
ABCO has evaluated these agreements under ASC 480-10: Certain Financial Instruments with Characteristics of Both Liabilities and Equity and determined that the capital contributions made under these subscription agreement more closely resemble equity than liabilities as they can only be settled through the issuance of shares and although they have a stated cost associated with them which accrues in the same manner as interest, the cost is only incurred in the first twelve months after placement as is more closely associated with a cost of raising funds than interest expense.
On November 8, 2017, the Company entered into a Consulting Agreement (“CA”) with Eurasian Capital, LLC [“Consultant”] which was to provide institutional funding services and shareholder and third-party sponsorship services for a nine month term ending May 7, 2018. Consultant was to be paid a monthly retainer of $10,000 payable in ABCO restricted common stock based upon the 5 day average of the closing bid price commencing on the first day of each month during the effectiveness of the Consulting Agreement. The CA was terminated by the Company on March 29, 2018 for non-performance by Consultant. Consultant was issued 198,413 restricted shares for services in November 2017 which were delivered to Consultant in December 2017. The shares for services rendered in December of 2017 [208,308] and for January 2018 [161,271] were issued in January 2018 but were not delivered until early April 2018 when a dispute with respect to the CA termination was resolved with the execution of releases. A dispute has arisen with respect to the number of shares due Consultant as a result of the CA termination. The parties resolved this matter by the delivery of an aggregate of 369,599 shares to Consultant in 2018 and the execution of releases.
The Company, effective as of September 1, 2018, entered into an Equity Purchase Agreement with Oasis Capital, LLC, a Puerto Rico limited liability company (“Investor”) pursuant to which Investor agreed to purchase up to $5,000,000 of the Company’s net operating losses,common stock at a valuation allowanceprice equal to 85% of the tax benefitsmarket price at the time of purchase (“Put Shares”). The Company agreed to file a new registration statement to register for resale the Put Shares. The Registration Statement must be effective with the SEC before Investor is obligated to purchase any Put Shares. In addition, the Company [i] issued to Investor a one year $150,000 note (“Commitment Note”) which is convertible at 57 ½ % of the lowest trading price for the deferred taxes has been established.15 day trading period ending on the last trading date prior to the Conversion Date per share as a commitment fee for its purchase of Put Shares and [ii] delivered to Investor a Registration Rights Agreement pursuant to which the Company agreed to register all Put Shares acquired under the Equity Purchase Agreement. No transaction occurred on this matter through March 31, 2019 and no derivative was calculated on the note because it was not yet mature. The full realizationCompany issued 4,444,707 common shares to Oasis and the price of the tax benefit associated with the carry-forward depends predominately upon the Company’s ability to generate taxable income during future periods, whichshares was classified as a prepaid expense.. This note is not assured. The Company files tax returns inrecorded as a liability on the United Statesbalance sheet until Oasis provides services by purchasing shares under the Registration Statement. See Note 17 below on page 18 with respect to the filing on April 26, 2019 and the effectiveness on May 7, 2019, of America only and is not subject to taxation in any foreign country. There are three open yearsa Form S-1 Registration Statement filed for which the Internal Revenue Service can examine our tax returns. As such, 2015, 2016 and 2017 are still open years.Put Shares.
The company has net operating loss carryforwards asCompany issued 1,350,000 restricted common shares to management for services with a fair market value of September 30, 2018 totaling approximately $3,477,000.$27,000. during the Year Ended December 31, 2018. Of these awards, Charles O’Dowd received 45,000 shares and Wayne Marx received 50,000 shares. The table below showsbalance of 850,000 shares were awarded to consultants to the tax effect of these losses and the deferred tax liability remaining after deductions for derivative expenses and stock-based compensation from 2017 and 2018. A deferred 21% tax benefit of approximately $730,195 has been offset by a valuation allowance of the same amount as its realization is not assured.Company.
Note 1217 – Subsequent Events
During the period October 1, 2018 through November 19, 2018,Effective August 8, 2019 the Company sold 8,700,000 sharesentered into a Future Receivable Sale Agreement with Knight Capital Funding in the amount of restricted common stock using exemption under Regulation S for gross proceeds of $43,365 and net proceeds of $22,638.
Effective as of September 2, 2018 Redstart Holdings Corp. (“RHC”) acquired from Power Up Lending Group Ltd., all$105,000 in order to fund a redemption of the 219,000Redstart Series C Preferred StockStock. The agreement calls for 176 daily payments of ABCO Energy, Inc. owned by Power-Up for a one year promissory$823.30 to retire this note in the amount of $144,900 representing principal and discount of collection of future receivables. The Company’s decision to redeem the Preferred shares was primarily to prevent the conversion of this note from RHC fordiluting the principal amountcommon shares in 2019.
Equity Awards
The following table sets forth information on outstanding option and stock awards held by the named executive officers of $328,500 plus interestthe Company at 8% per annum pursuant to a Stock Purchase Agreement dated OctoberDecember 31, 2018, (“SPA”). The Company agreedincluding the number of shares underlying both exercisable and un-exercisable portions of each stock option as well as the exercise price and the expiration date of each outstanding option. See Note 16 to Notes to Consolidated Financial Statements.
Outstanding Equity Awards After Fiscal Year-End (1) |
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Name |
| Number of securities underlying unexercised options exercisable (1) |
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| Number of securities underlying unexercised options un-exercisable (2) |
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| Option Exercise Price ($) |
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| Option Grant Date |
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| Option Expiration Date |
| |||
Charles O’Dowd |
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| 500,000 |
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| 0 |
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| $ | .001 |
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| 01/01/2017 |
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| 01/01/2021 |
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Wayne Marx |
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| 500,000 |
|
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| 0 |
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| $ | .001 |
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| 01/012017 |
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| 01/01/2021 |
|
(1) No Equity Awards were issued during the transactions contemplated byyear ended December 31, 2018.
(2) All options vest 20% per year beginning on the SPA.first anniversary of their grant date.
An aggregate of 1,620,000 stock awards are outstanding under the Equity Incentive Plan as of December 31, 2018.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS – OVERVIEW
THREE MONTHS ENDED SEPTEMBERJUNE 30, 20182019 COMPARED TO THREE MONTHS ENDED SEPTEMBERJUNE 30, 2017.2018.
Our discussion of operating results for the Three months ended SeptemberJune 30, 20182019 and SeptemberJune 30, 20172018 are presented below with major category details of revenue and expense including the components of operating expenses.
Sales consist of photovoltaic products, electrical services and LED lighting products and installation during both periods for the three months ended SeptemberJune 30, 2018 and for the three months ended SeptemberJune 30, 2017.2018.
Sales for the three months ended SeptemberJune 30, 2018 were $1,106,898$459,616 as compared to $265,856$558,726 for the same three months in 2017.2018. This is an increasea decrease of $841,042$99,110 or 316%18% of the 20172018 sales. The Solar sales revenue in 20182019 and 20172018 reflected seasonal and changing market conditions in the financing of solar installations. ABCO has increased their efforts to sell into the commercial markets and increased focus on the financial requirements of nonprofit organization’s financing requirements during the 20182019 period. The results of these changes and efforts have begun to materialize and are shown in the results of operations.
Cost of sales was 71%58% of revenues in 20182019 and 143%75% of revenues in 2017.2018. Gross margins were 29%42% of revenue in 2018 and (43)75 % of revenue for the three months of 2017.2018. During 20182019 and 20172018 we have been offering new products and have found our entry market prices for steel parking structures have added gross margins higher than usual because we use outside contractors for the entire projects. Our gross profit reflects this decision. We feel that we have made progress in entering the parking shade markets and that our gross margins will stabilize as growth lowers these margins in the future.
Total selling, general and administrative expenses were 24%52% of revenues in 20182019 and 107%46% of revenues for the same period in 2017.2018. Net loss for the three-month period ended SeptemberJune 30, 2018 was $(51,280)$(48,143) as compared to the net loss $(379,073)$(261,226) for the same three-month period ended SeptemberJune 30, 2017.2018. Our operating expenses for this period were lower by $24,881$14,138 than the comparative period in 2017.2018. The interest expense during the period ended SeptemberJune 30, 20182019 was lower by $101,706$1,198 than in the period ended SeptemberJune 30, 20172018 due mostly to the working capital provision of merchant loans and convertible debt being reduced. Share based compensation of $102,000 was approved during the period ended September 30, 2018 and no such expense occurred in the same period of 2017. This combination of factors decreased the net loss by $327,793$213,083 during the three months ended SeptemberJune 30, 20182019 as compared to the three months ended SeptemberJune 30, 2017.2018. Since our year to date revenues are higherlower than the previous year, this resulted in lower operating expenses as a percentage of total revenue.
ABCO could not finish its backlog of work and expand into the markets of LED lights and commercial solar markets without maintaining staff, facilities and sales expenses. When sales revenues fall, and expenses are not reduced in equal amounts or percentages, the result is an increase of the percentage of operating expenses to sales revenue. ABCO chose to maintain a level of expenses that would not cripple the Company’s future.
NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20182019 COMPARED TO NINESIX MONTHS ENDED SEPTEMBER 30, 2017.JUNE 20, 2018.
Our discussion of operating results for the ninesix months ended SeptemberJune 30, 20182019 and SeptemberJune 30, 20172018 are presented below with major category details of revenue and expense including the components of operating expenses.
Sales consist of photovoltaic products, electrical services and LED lighting products and installation during both periods for the Ninesix months ended SeptemberJune 30, 20182019 and for the ninesix months ended SeptemberJune 30, 2017.2018.
Sales for the ninesix months ended SeptemberJune 30, 20182019 were $2,187,919$1,113,626 as compared to $1,168,680$1,018,021 for the same Ninethree months in 2017.2018. This is an increase of $1,019,23932,605 or 87% above3% of the 20172018 sales. The Solar sales revenue in 20182019 and 20172018 reflected seasonal and changing market conditions in the financing of solar installations which helped to increase sales.and competition from the public utilities in the Arizona markets. ABCO has increased their efforts to sell into the commercial markets and increasedbegun its focus on commercial sales in 2018 and has been able to grow every period since that decision. ABCO has worked diligently to overcome the financial requirementsutility changes by focusing on commercial applications and the increased interest of nonprofit organization’s financing requirements during the 2018 periods. The results of these changesbusiness and efforts have begun to materialize and are showngovernment in the resultsLED lighting contracts.
Cost of sales was $678,886 or 61% of revenues in 2019 and $746,260 or 70% of revenues in 2018 and 74% of revenues in 2017.2018. Gross margins were 39% of revenue in 2019 and 30% of revenue in 2018 and 26% for the ninesix months of 2017.2018. During 20182019 and 20172018 we have been offering new products and have found our entry market prices for steel parking structures have added gross margins higher than usual because we use outside contractors for the entire project.projects. Our gross profit reflects this decision. We feel that we have made progress in entering the parking shade markets and that our gross margins will stabilize as growth lowers these margins in the future.
Total selling, general and administrative expenses were 31%$501,866 or 50% of revenues in 20182019 and 52%$414,879 or 38% of revenues for the same period in 2017.2018. Net loss(loss) income from operations for the nine monththree-month period ended SeptemberJune 30, 20182019 was ($17,326)$(67,126) as compared to the net loss of $(295,219)$(80,118) for the same ninesix month period ended SeptemberJune 30, 2017 mainly due to the increase in sales.2018. Our operating expenses for this period were higher by $175,002$86,987 than the comparative period in 2017 mainly due to share based compensation and increases in advertising and sales personnel expenses.2018. The interest expense during the period ended SeptemberJune 30, 20182019 was lowerhigher by $10,359$69,242 than in the period ended SeptemberJune 30, 20172018 due mostly to the increase in working capital provision ofthrough new merchant loans and derivatives on convertible debt being reduced. Interest on derivativedebt. Derivative liabilities of convertible debentures decreasedincreased by $48,748$97,419 during the current period as compared to the prior year. This combination of factors decreased the net loss for the period ending SeptemberJune 30, 2019 to $(566,978) as compared to $(214,165) for the six months ended June 30, 2018, due almost entirely by ($55,198) lower than the September 30, 2017 net loss, due mostly to change in derivative valuationincome and finance fees and the loss from operations.expenses.
As noted in previous paragraphs discussing market conditions, ABCO could not finish its backlog of work and expand into the markets of LED lights and commercial solar markets without maintaining staff, facilities and sales expenses. When sales revenues fall, and expenses are not reduced in equal amounts or percentages, the result is an increase of the percentage of operating expenses to sales revenue. Operating expenses for the two periods increased to accommodate our expansion of sales programs, but not in the same ratio as the increase in sales. ABCO chose to maintain a level of expenses that would not cripple the Company’s future.
STATEMENTS OF CASH FLOWS FOR THE NINETHREE MONTHS ENDED SEPTEMBERJUNE 30, 20182019 AND 2017
2018
During the ninesix months ended SeptemberJune 30, 20182019 our net cash used byin operating activities was $(356,180)$(98,323) and comparatively the net cash used by operating activities in the ninesix months ended SeptemberJune 30, 20172018 was $(202,079)$(312,616). Net cash used by operating activities in the period ended SeptemberJune 30, 20182019 consisted primarily of net losslosses from operations of $(595,760) for the period of $(265,563) for 20182019 as compared to a net loss of $(320,761)$(214,238) for 2017.2018. Depreciation adjustments were of non-cash expenses were $8,120$5,290 and $6,117$8,120 for each period respectively. Derivative portion of convertible debt accounted for charges to income for future changes in value of the underlying stock in the amount of $(177,934) for the period ended June 30, 2019. None of this expense will be realized if this debt is retired before maturity. The Company experienced an increasea decrease in accounts payable of $(208,866)$(264,956) and an increase of $23,282$67,032 for each period respectively. This is primarily due to the Company’s ability to apply cash receipts from investors and operations to pay past and current creditors during each period and due to sizable increases in expenditures on the commercial backlog of work at September 30, 2018.period. Accounts receivable increasedincrease by $1,351,517, and$95,759, net of adjustments for contracts in process, increased by of $931,982, for a net increase of $419,935 during the period ended SeptemberJune 30, 20182019 due to rapid increases in contracts duringat the end of the period.
Net cash provided by (used for)used for investing activities for the periods ended SeptemberJune 30, 2019 and 2018 was $5,354 and 2017 was $(18,873) and $533$2,191 respectively due to receipt of principal on leases paid or terminated and equipment acquisitions.
Net cash provided by financing activities for the periods ended SeptemberJune 30, 2019 and 2018 was $81,387 and 2017 was $413,777 and $191,153$317,321 respectively. Net cash provided by financing activities for 20182019 and 20172018 resulted primarily from the sale of common and preferred stock, loans from a financial institution and loans from a Director, Officer and affiliates.
Cash provided by financing activities during the periods ended June 30, 2019 were primarily from the sale of common stock and loans from financial institutions. Any future conversions will increase the number of shares outstanding and the Stockholders Equity by the amount of the original investment. Management intends to retire some of these notes before maturity.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity and capital requirements have been for carrying cost of accounts receivable after completion of contracts. The industry habitually requires the solar contractor to wait for the utility approval in order to be paid for the contracts. This process can easily exceed 90 days and sometimes requires the Company as the contractor to pay all or most of the cost of the project without assistance from suppliers. Our working capital at SeptemberJune 30, 20182019 was $(691,488)$(817,634) and it was $(1,140,059)$(768,962) at December 31, 2017.30, 2018. This decrease of $448,571 in working capital deficit,$48,672 was primarily due to increases in contracts for constructions projects and losses from operations during the period ended SeptemberJune 30, 20182019 and adjustments for possible future losses on derivative conversions. Bank financing has not been available to the Company, but we have been able to increase our credit lines with our suppliers because of good credit. There are no material covenants on our credit lines, normally due in 30 days, since they are standard in the industry and the balances vary on a daily basis. Most are personally guaranteed by anthe Officer of the Company.
We have been able to borrow $50,000 from a non-affiliated party to increase working capital during the nine month period ended September 30, 2018. The total borrowed from Directors, Affiliates and officers totaled $176,136$188,054 plus accrued interest of $68,400$78,808 as of SeptemberJune 30, 2018.2019. There are no existing agreements or arrangement with any Director to provide additional funds to the Company.
During the ninesix months period ended SeptemberJune 30, 20182019 or the last fiscal year ended December 31, 20172018 there were no transactions, or proposed transactions, which have materially affected or will materially affect the Company in which any director, executive officer or beneficial holder of more than 5% of the outstanding common, stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest except for the effect of the issuance of preferred stock and common stock to these individuals. We refer the reader to the Form 14C filed in 2017 and 2018 concerning these issues and their effect on control of the company.interest. We have no policy regarding entering into transactions with affiliated parties.
PLAN OF OPERATIONS
We are anticipating that the company will attempt to make one or more acquisitions of operating companies in the next 12 months, if financing can be located. Growth by acquisition will increase our revenue and operating profit faster and more reliably than internal growth in this industry. Based on our current financial position, we cannot anticipate whether we will have sufficient working capital to sustain operations for the next year if we do not raise additional capital. We will not, however, be able to reach our goals and projections for multistate expansion without a cash infusion. We have been able to raise sufficient capital through the sale of our common shares and we have incurred substantial increases in debt from our trade creditors in the normal course of business. Management will not expand the business until adequate working capital is provided. Our ability to maintain sufficient liquidity is dependent on our ability to attain profitable operations or to raise additional capital. We have no anticipated timeline for obtaining neither additional financing nor the expansion of our business. We will continue to keep our expenses as low as possible and keep our operations in line with available working capital as long as possible. There is no guarantee that the Company will be able to obtain adequate capital from any sources, or at all.
There are no off balance sheet arrangements or transactions.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable to Smaller Reporting Companies.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
As of the end of the reporting period, SeptemberJune 30, 2018,, 2019, we carried out an evaluation, under the supervision and with the participation of our management, including the Company’s Chairman and Chief Executive Officer/Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified by the SEC’s rules and forms. Based upon that evaluation, the Chairman/CEO and the Chief Financial Officer concluded that our disclosure controls and procedures are not currently effective in timely alerting them to material information relating to the Company required to be included in the Company’s period SEC filings. The Company is attempting to expand such controls and procedures, however, due to a limited number of resources the complete segregation of duties is not currently in place.
(b) Changes in Internal Control.
Subsequent to the date of such evaluation as described in subparagraph (a) above, there were no changes in our internal controls or other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.
(c) Limitations.
Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. However, we believe that our disclosure controls and procedures are designed to provide reasonable assurance of achieving this objective. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II-OTHER INFORMATION
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, consolidated financial condition, or operating results.
Not Applicable.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
At SeptemberDuring the six months ended June 30, 2018 and December 31, 2017,2019 the Company had sold but have not yet issued 137,191,082 and 35,140,2244,740,000 shares of restricted common stock.shares in Regulation S offerings to non-US investors. The grosstotal proceeds duringfrom the nine months ended September 30, 2018offering was $160,305. Commission and expense reimbursements totaled $496,622 and the expenses of offering totaled $259,330.$79,927. The Company recorded net proceeds of $237,292 were usedtotaling $80,317.
Legal and other professional expenses for working capital, corporate expenses, legal feesthis offering and public company expenses. These shares are reflected in the balance sheet and included in total shares outstanding. Many shareholders have elected to wait for the issuance of restricted shares until the holding period has expired. The following table shows the issued and unissued shares at the end of the period.other matters totaled $ 29,000.
Item 3. Defaults upon Senior Securities
None
Item 4. Mine Safety Disclosures.
Not ApplicableApplicable.
Not ApplicableApplicable.
Exhibit No. | Description of Exhibit | ||
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3(i) | Articles of Incorporation, as amended (1) | ||
3(ii) | By-Laws (1) | ||
10(a) | Share Exchange Agreement dated July 15, 2011 (1) | ||
10(b) |
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10(c) | |||
10(d) | |||
10(e) | |||
10(f) | |||
10(g) | |||
10(h) |
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21 | Subsidiaries of Registrant (1) | ||
| 31.1 | ||
| 31.2 | ||
32.1 | |||
32.2 | |||
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101 INS | XBRL, Instance Document | ||
101 SCH | XBRL Taxonomy Extension Schema Document | ||
| XBRL Taxonomy Calculation Linkbase Document | ||
101 DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101 LAB | XBRL Taxonomy Labels Linkbase Document | ||
101 PRE | XBRL Taxonomy Labels Linkbase Document | ||
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(1) | Previously filed with the Company’s Form 10, SEC File No. 000-55235, filed on | ||
(2) | Attached. | ||
(3) |
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| Previously filed with the Company’s Form 10-K, File No. 000-55235, filed with the Commission on April 11, 2016 and incorporated herein by this reference. | ||
| (4) | Previously filed with the Company’s Form 10-Q, File No. 000-55235, filed with the Commission on May 20, 2016 and | |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report or amendment thereto to be signed on its behalf by the undersigned thereunto duly authorized.
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
November 21, 2018August 19, 2019
| ABCO ENERGY, INC | |
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| /s/ Charles O’Dowd |
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| Charles O’Dowd | |
| Title: President & | |
| Chief Executive Officer (CEO) | |
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| /s/ Charles O’Dowd |
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| Charles O’Dowd | |
| Chief Financial Officer (CFO) | |
| Principal Accounting Officer (PAO) |