Global Digital Solutions (GDSI) 10-Q/A 21 Feb 19 2016 Q3 Quarterly report (amended) Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Jun. 13, 2018
Document And Entity Information
Entity Registrant Name	GLOBAL DIGITAL SOLUTIONS INC
Entity Central Index Key	1,011,662
Document Type	10-Q/A
Document Period End Date	Sep. 30, 2016
Amendment Flag	true
Amendment Description	This Amendment No.1 of the fiscal year For the Quarterly Period Ended September 30, 2016, Form 10Q (this “Amendment”) for Global Digital Solutions Inc. is being submitted the incorporate errata to the financial statements that were incorrectly incorporated in the original filing. The Amendment speaks as of the filing date of the Form 10-Q (the filing date”), does not reflect events that may have occurred subsequent to the filing date and does not modify or update in any way disclosures made in the Form 10-Q filed as of June 13, 2018.
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	No
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		559,084,905
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current Assets
Cash	$ 0	$ 2,944
Accounts receivable	4,261	4,261
Prepaid expenses	22,597	99,111
Total current assets	26,858	106,316
Property and equipment, net of accumulated depreciation of $24,463 and $19,543	0	4,920
Deposits	2,415	2,415
Total assets	29,273	113,651
Current Liabilities
Accounts payable	510,695	357,198
Accrued expenses	56,579	197,300
Accrued interest	32,186	0
Convertible notes payable, net of discounts of $0 and $18,219, respectively	108,991	90,772
Due to factor, net of discount of $0 and $16,160, respectively	107,266	91,106
Financed insurance policy	11,187	64,847
Due to Officer	55,447	0
Derivative liability	266,294	270,080
Total current liabilities	1,148,645	1,071,303
Total liabilities	1,148,645	1,071,303
Commitments and Contingencies (Note 6)
Stockholders’ deficit
Preferred stock, $0.001 par value, 35,000,000 shares authorized, 1,000,000 and 0 issued and outstanding, respectively	1,000	0
Common stock, $0.001 par value, 650,000,000 and 650,000,000 shares authorized, 530,806,571 and 530,806,571 shares issued and outstanding	530,807	530,807
Additional paid-in capital	30,282,937	30,178,926
Accumulated deficit	(31,934,116)	(31,667,385)
Total stockholders’ deficit	(1,119,372)	(957,652)
Total liabilities and stockholders' deficit	$ 29,273	$ 113,651

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Property and equipment accumulated depreciation	$ 24,463	$ 19,543
Convertible notes payable discount	0	18,219
Due to factor discount	$ 0	$ 16,160
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	35,000,000	35,000,000
Preferred stock, shares issued	1,000,000	0
Preferred stock, shares outstanding	1,000,000	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	650,000,000	650,000,000
Common stock, shares issued	530,806,571	530,806,571
Common stock, shares outstanding	530,806,571	530,806,571

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue	$ 0	$ 254,587	$ 14,386	$ 633,810
Cost of revenue	0	76,751	0	215,942
Gross profit	0	177,836	14,386	417,868
Operating expenses
Selling, general and administrative expenses	99,579	423,660	234,161	1,614,170
Operating loss before other income (expense)	(99,579)	(245,824)	(219,775)	(1,196,302)
Other (income)/expense
Change in fair market value of derivatives	(68,565)	176,518	(3,786)	(280,363)
Other income	0	(600)	0	(375,199)
Loan fees	0	28,693	0	142,538
Loss on extinguishment of debt	0	0	0	22,170
Finance costs	0	163,735	0	1,294,793
Amortization of debt discount - convertible notes payable	0	0	18,219	0
Amortization of debt discount - factoring	0	0	16,160	0
Interest expense	5,454	44,901	16,362	128,292
Total other income (expense)	(63,111)	413,247	46,955	932,231
Loss before provision for income taxes	(36,468)	(659,071)	(266,730)	(2,128,533)
Provision for income taxes	0	0	0	0
Net loss	$ (36,468)	$ (659,071)	$ (266,730)	$ (2,128,533)
Income (loss) per common share - basic	$ 0	$ (0.01)	$ 0	$ (0.01)
Weighted average common shares outstanding - basic	530,806,571	286,852,247	530,806,571	286,852,247

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating Activities
Net loss	$ (266,730)	$ (2,128,533)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on extinguishment of debt	0	15,082
Depreciation and amortization	4,920	4,571
Stock- based compensation expense	(126,554)	645,946
Common stock and warrants issued in payment of services	0	66,218
Convertible debt discount amortization	34,379	0
Change in fair value of derivative liability	(3,786)	1,640,078
Beneficial conversion feature of debt and warrant	0	4,582
Debt discount accretion	0	1,541
Changes in operating assets and liabilities:
Accounts receivable	0	(6,441)
Inventory	0	(19,471)
Prepaid expenses	76,514	(47,342)
Accounts payable	249,858	(106,290)
Accrued expenses	26,668	83,561
Other Assets	0	(17,865)
Financed insurance policy	(53,660)	0
Due to officer	55,447	0
Contingent consideration payable	0	(648,614)
Net cash used in operating activities	(2,944)	(512,977)
Investing Activities
Capital expenditures	0	(1,890)
Net cash provided by (used in) investing activities	0	(1,890)
Financing Activities
Proceeds from notes payable	0	135,393
Payments on notes payable	0	(92,288)
Proceeds from convertible notes	0	0
Payment on convertible notes	0	(59,331)
Proceeds from factor	0	555,653
Repayments to factor	0	0
Payment on related party convertible notes	0	(69,000)
Net cash provided by financing activities	0	470,427
Net decrease in cash	(2,944)	(44,440)
Cash at beginning of period	2,944	160,102
Cash at end of period	0	115,662
Supplementary disclosure of cash flow information
Cash paid during the year for: Interest	0	4,518
Cash paid during the year for: Taxes	0	0
Supplementary disclosure of non-cash investing and financing activities
Issuances of common stock for conversions of notes payable and accrued interest $	$ 0	$ 175,560

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	9 Months Ended
	Sep. 30, 2016
Description Of Business
DESCRIPTION OF BUSINESS	We were incorporated in New Jersey as Creative Beauty Supply, Inc. (“Creative”) in August 1995. In March 2004, Creative acquired Global Digital Solutions, Inc., a Delaware corporation ("Global”). The merger was treated as a recapitalization of Global, and Creative changed its name to Global Digital Solutions, Inc.(“the Company”, “we”), Global provided structured cabling design, installation and maintenance for leading information technology companies, federal, state and local government, major businesses, educational institutions, and telecommunication companies. On May 1, 2012, we made the decision to wind down our operations in the telecommunications area and to refocus our efforts in the area of cyber arms technology and complementary security and technology solutions. From August 2012 through November 2013 we were actively involved in managing Airtronic USA, Inc., and effective as of September 16, 2014 we acquired North American Custom Specialty Vehicles (“NACSV”). In July 2014, we announced the formation of GDSI International (f/k/a Global Digital Solutions, LLC) to spearhead our efforts overseas. The Company had limited operations from the NACSV subsidiary from December 31, 2015 until May 13, 2016. During the interim, the Company was pursuing acquisition opportunities and responding to the litigation with the Securities and Exchange Commission. Subsequent to May 13, 2016, the Company has been seeking acquisitions and additional financing.

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
Summary Of Significant Accounting Policies
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Going Concern The accompanying financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We have sustained losses and experienced negative cash flows from operations since inception, and for the nine months ended September 30, 2016 we incurred a net loss of $266,730 and used net cash of $2,944 to fund operating activities. At September 30, 2016, we had no cash, an accumulated deficit of $31,934,116, a working capital deficit of $1,121,787 and stockholders’ deficit of $1,119,372. We have funded our activities to date almost exclusively from equity and debt financings. Our cash position is critically deficient, and payments essential to our ability to operate are not being made in the ordinary course. Failure to raise capital in the coming days to fund our operations and failure to generate positive cash flow to fund such operations in the future will have a material adverse effect on our financial condition. These factors raise substantial doubt about our ability to continue as a going concern. We are in default under the terms of our loan agreements, as more fully discussed in Note 5. We need to raise additional funds immediately and continue to raise funds until we begin to generate sufficient cash from operations, and we may not be able to obtain the necessary financing on acceptable terms, or at all. We will continue to require substantial funds to continue development of our core business. Management’s plans in order to meet our operating cash flow requirements include financing activities such as private placements of common stock, and issuances of debt and convertible debt instruments, and the establishment of strategic relationships which we expect will lead to the generation of additional revenue or acquisition opportunities. While we believe that we will be successful in obtaining the necessary financing to fund our operations, there are no assurances that such additional funding will be achieved or that we will succeed in our future operations. On December 22, 2017, the Company entered into a financing agreement with an accredited investor for $1.2 million (Note 9). Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully execute the plans to pursue acquisitions, and raise the funds necessary to complete such acquisitions. The outcome of these matters cannot be predicted at this time. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, NACSV, GDSI Florida, LLC and Global Digital Solutions, LLC, dba GDSI International. All intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The accompanying unaudited financial information as of and for the three and nine months ended September 30, 2016 and 2015 has been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the SEC on May 31, 2018. The condensed consolidated balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements. Revenue Recognition The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount to be paid by the customer is fixed or determinable; and (4) the collection of such amount is probable. The Company records revenue when it is realizable and earned upon shipment of the finished products or when the service has been provided Fair Value of Financial Instruments The carrying value of cash, accounts receivable, other receivables, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value. As defined in ASC 820, "Fair Value Measurement," fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. The three levels of the fair value hierarchy defined by ASC 820 are as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities ● Level 2 –Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly ● Level 3 – Significant unobservable inputs that cannot be corroborated by market data. Earnings (Loss) Per Share (“EPS”) Basic EPS is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and warrants and the assumed conversion of convertible notes. The following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares: Three Months Ended September 30, 2016 September 30, 2015 Convertible notes and accrued interest 139,707,296 766,666 Preferred stock 861,613,714 - Stock options 14,116,668 5,840,000 Warrants 2,500,000 4,250,000 Vested but unissued restricted stock awards -- 2,187,503 Restricted stock units - - Price protection - 1,854,838 Potentially dilutive securities 1,017,937,678 14,899,007 Nine Months Ended September 30, 2016 September 30, 2015 Convertible notes and accrued interest 139,707,293 766,666 Preferred stock 861,613,714 - Stock options 14,116,668 5,840,000 Warrants 2,500,000 4,250,000 Vested but unissued restricted stock awards - 2,187,503 Restricted stock units - - Price protection - 1,854,838 Potentially dilutive securities 1,017,937,678 14,899,007 Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the valuation of the derivative liability, deferred tax asset and valuation allowance, and assumptions used in Black-Scholes-Merton, or BSM, or other valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate. Inventory We did not have inventory at September 30, 2016 or December 31, 2015. We order inventory/components upon receipt of a signed purchase order from a customer. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers: Topic 606, In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, the FASB issued ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement . In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes . In February 2016, the FASB issued ASU No. 2016-02, Leases .

ACCRUED EXPENSES

ACCRUED EXPENSES	9 Months Ended
	Sep. 30, 2016
Accrued Expenses
ACCRUED EXPENSES	Accrued expenses consist of the following amounts: September 30, 2016 December 31, 2015 Accrued compensation to executive officers and employees $ 37,079 $ 151,565 Accrued professional fees 19,500 45,735 Total accrued expenses $ 56,579 $ 197,300

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2016
Fair Value Measurements
FAIR VALUE MEASUREMENTS	The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2016 and December 31, 2015. The Derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities during the nine months ended September 30, 2016: Derivative liability balance at December 31, 2015 $ 270,080 Change in fair value (3,786 ) Balance at September 30, 2016 $ 266,294 At September 30, 2016, the fair value of the derivative liabilities of convertible notes was estimated using the BSM pricing model with the following weighted-average inputs: risk free interest rate – 0.29%; term - .25 years; volatility – 347.1%; dividend rate – 0%.

NOTE PAYABLE

NOTE PAYABLE	9 Months Ended
	Sep. 30, 2016
Note Payable
NOTE PAYABLE	Convertible Notes Payable with Embedded Derivative Liabilities (Conversion Options) September 30, 2016 December 31, 2015 Convertible note payable for $78,750 to LG Capital Funding, LLC (“LG Capital”) dated January 16, 2015, due January 16, 2016, of which $38,829 was repaid by conversion as of December 31, 2015, bearing interest at the rate of 8% per annum. Note may be converted by LG Capital into shares of our common stock at a conversion price equal to a 40% discount of the lowest closing bid price for 20 prior trading days including the notice of conversion date. (1) (2) $ 39,921 $ 39,921 Convertible note payable for $250,000 to JMJ Financial (“JMJ”) of which $82,500 was deemed funded on January 28, 2015 and $27,500 was deemed funded on April 20, 2015, of which $40,930 was repaid by conversion as of December 31, 2015. The note was issued with an original issue discount of 10% of amounts funded. The principal amount matures 24 months from the date of each funding, had a one-time 12% interest charge as it was not repaid within 90 days of the effective date, and is convertible at any time at the option of JMJ into shares of our common stock at the lesser of $0.075 per share or 60% of the average of the trade price in the 25 trading days prior to conversion. JMJ has the option to finance additional amounts up to the balance of the $250,000 during the term of the note. (1) (2) 69,070 $ 69,070 Total convertible notes payable with embedded derivative liability 108,991 $ 108,991 (1) The embedded derivative liability associated with the conversion option of the note was bifurcated from the note and recorded at its fair value on the date of issuance and at each reporting date. (2) Note was due on January 16, 2016. We have not yet repaid this note and it is, therefore, in default. We have also not maintained the required number of shares of our common stock in reserve for this note as more fully discussed below. Under the terms of the two convertible promissory notes outstanding at September 30, 2016, we are required to maintain a minimum number of shares of our common stock in reserve for conversions. In the case of the note with JMJ, the reserve amount is set at 26,650,000 shares of our common stock. However, under the terms of the note with LG Capital we are required to maintain a minimum share reserve equal to four times the potential number of shares of our common stock issuable upon conversion, or 139,707,296 shares at September 30, 2016. As a result of declines in the fair value of our common stock, we did not have sufficient authorized shares to maintain this required four times share reserve at December 31, 2015. Accordingly, the note holder had the right to accelerate the payment due (approximately $43,033 of principal and interest was due at December 31, 2015). In addition, they have the right to require that additional shares and/or monies be paid in connection with this technical default. At September 30, 2016, and December 31, 2015, we have not accrued any penalties or penalty interest associated with this note, nor have we been notified by the lender of a technical default. Because the conversion prices vary with changes in the value of our common stock, the number of shares into which the outstanding notes payable and accrued interest are convertible will continue to vary, which may result in additional technical defaults if the price of our common stock decreases. As soon as we are able, we intend to request shareholder approval to increase the number of authorized shares of our common stock in order to satisfy our obligations to maintain sufficient authorized share reserves under the terms of our convertible notes. In addition, the two outstanding convertible notes also contain certain representations, warranties, covenants and other events of default, including in the case of one of the notes maintaining our common stock listing on the OTCQB exchange. Revenue Based Factoring Agreements During the year ended December 31, 2015, we entered into two revenue based factoring agreements with balances as of September 30, 2016 and December 31, 2015, as follows: September 30, 2016 December 31, 2015 Factoring agreement with Power Up Lending Group, Ltd. (“Power Up”) dated October 1, 2015, purchase price was $59,000. Company agreed to transfer all NACSV future receipts, accounts, contract rights, etc. arising from accounts receivable or other third party payors at the specified percentage of 24% until such time as $76,700 is paid in full. A daily repayment amount of $457 is required to be made and is credited against the specified percentage due. As of September 30, 2016 and December 31, 2015, we paid $21,458 of the daily specified repayments and we had not made $9,588 of payments that were due. At September 30, 2016, and December 31, 201, $12,748 of deferred interest expense related to this agreement is included in current assets. (1) (2) (3) $ 55,242 $ 55,242 Factoring agreement with Power Up dated October 23, 2015, purchase price was $50,000. Company agreed to transfer all NACSV future receipts, accounts, contract rights, etc. arising from accounts receivable or other third party payors at the specified percentage of 24% until such time as $69,000 is paid in full. A daily repayment amount of $548 is required to be made and is credited against the specified percentage due. As of September 30, 2016 and December 31, 2015, we paid $16,976 of the daily specified repayments and we had not made $10,952 of payments that were due. At September 30, 2016 and December 31, 2015, $14,326 of deferred interest expense related to this agreement is included in current assets. (2) (3) $ 52,024 $ 52,024 Total due to factor $ 107,266 $ 107,266 (1) We used the purchase price proceeds to satisfy in full the obligations under two convertible notes payable with embedded derivative liabilities. (2) The agreement contains certain protections against default, including prohibiting NACSV from changing its arrangement with its bank in any way that is adverse to Power Up and NACSV interrupting the operation of its business, among others. Events of default include: (i) the violation of any term or covenant under the agreement, (ii) the failure of NACSV to pay its debts when due and (iii) the transfer or sale of all or substantially all of NACSV’s asset, amount others. (3) We are currently in default under the terms of the two factoring agreements as we have not made the specified daily repayment amounts aggregating $20,540 and $107,266 as of December 31, 2015 and April 9, 2016, respectively, among other items. At September 30, 2016, we have not accrued any penalties or interest that might be due as a result of the defaults. Notes Payable Notes payable at March 31, 2016 and 2015 consist of the following: Collateral Interest Monthly Type (if any) Rate Payments Maturity March 31, 2016 December 31, 2015 Premium finance agreement None 5.10 % $ 10,507 June-2016 $ 8,150 $ 61,810 Premium finance agreement None 9.25 % $ 3,414 January-2016 $ 3,037 $ 3,037 Total notes payable $ 11,187 $ 64,847

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
Commitments And Contingencies
COMMITMENTS AND CONTINGENCIES	We may be involved in legal proceedings in the ordinary course of our business, and our management cannot predict the ultimate outcome of these legal proceedings with certainty. The Company is plaintiff or defendant in the following actions: Dekle, et. al. v. Global Digital Solutions, Inc. et. al. Brian A. Dekle and John Ramsay filed suit against the Company and its wholly owned subsidiary, North American Custom Specialty Vehicles, Inc. (“NACSV”), in the Circuit Court of Baldwin Alabama, on January 14, 2015, case no. 05-CV-2015-9000050.00, relating to our acquisition of NACSV (the ''Dekle Action"). Prior to instituting the Dekle Action, in June 2014, the Company had entered into an equity purchase agreement with Dekle and Ramsay to purchase their membership interest in North American Custom Specialty Vehicles, LLC. The Dekle Action originally sought payment for $300,000 in post-closing consideration Dekle and Ramsay allege they are owed pursuant to the equity purchase agreement. On February 9, 2015, t In response to the Company’s and NACSV's motion to dismiss, Dekle and Ramsay filed an amended complaint on March 2, 2015 seeking specific performance and alleging breach of contract, violations of Security and Exchange Commission (“SEC”) Rule 10b-5, and violations of the Alabama Securities Act. The amended complaint also names the Company’s Chairman, President, and CEO, Richard J. Sullivan (“Sullivan”), as a defendant. On March 17, 2015, the Company, NACSV and Sullivan filed a motion to dismiss the amended complaint seeking dismissal for failure to state valid causes of action, for lack of personal jurisdiction, or alternatively to transfer the case to the United States District Court in and for the Middle District of Florida. Dekle and Ramsay responded on March 31, 2015, and the Company filed its response thereto on April 7, 2015.   On June 2, 2015, Dekle passed away.  On June 5, 2015, the Court denied the Company’s motion to transfer the case to Florida.   On June 10, 2015, the Company filed a motion to reconsider the Court’s denial of its motion to transfer the case to Florida. On September 30, 2105, the Court granted the Company’s Renewed Motion to Transfer Venue. The case was transferred to the Middle District of Florida, where it is currently pending. On June 15, 2015, Ramsay filed a second amended complaint. On June 25, 2015, the Company filed a motion to dismiss the second amended complaint. The Company’s Motion to Dismiss was denied. On July 27, 2017, the Company and Dekle and Ramsay came to a Settlement Agreement. The Company and the plantiff came to the following agreements: i) Judgment is due to be entered against the Company in the amount of $300,000 if the sum of $20,000 as noted in iv is not paid. ii) The Company grants the plaintiffs vehicles and trailers in connection to this proceeding. iii) The Company will assist the plaintiffs in obtaining possession of the said vehicles. iv) The Company will pay the plaintiffs the sum of $20,000. The $20,000 settlement was paid in August 2017 PowerUp Lending Group, LTD., v. North American Custom Specialty Vehicle, Inc. et.al On September 13, 2017 Power Up received a default judgment against the Company in the amount of $109,302.00. The Company negotiated a settlement agreement on December 21, 2017 with Power Up to pay $90,000 in three installments of $30,000. As of May 15, 2018 the company has paid the entire amount. Jeff Hull, Individually and on Behalf of All Others Similarly Situated v. Global Digital Solutions, Inc., Richard J. Sullivan, David A. Loppert, William J. Delgado, Arthur F. Noterman and Stephanie C. Sullivan On August 24, 2016, Jeff Hull, Individually and on Behalf of All Others Similarly Situated (“Hull”) filed suit in the United States District Court for the District of New Jersey Securities and Exchange Commission v. Global Digital Solutions, Inc., Richard J. Sullivan and David A. Loppert On August 11, 2016, the Securities and Exchange Commission (“SEC”) filed suit in the United States District Court for the Southern District of Florida On October 12, 2016, Defendant GDSI filed its First Answer to the Complaint. On November 9, 2016, Defendant Sullivan filed a Letter with the Court denying all allegations regarding the case. On December 15, 2016, the SEC filed a Motion for Judgment and Notice of Filing of Consent of Defendant Loppert to entry of Final Judgment by the SEC. On December 19, 2016, the Court entered an order granting the SEC’s Motion for Judgment as to Defendant Loppert. On December 21, 2016, the SEC filed a Notice of Settlement as entered into by it and Defendants GDSI and Sullivan. On December 23, 2016, the Court entered an Order staying the case and directing the Clerk of the Court to close the case for statistical purposes per the December 21, 2016 Notice of Settlement. On March 7, 2017, the SEC moved for a Judgment of Permanent Injunction and Other Relief and Notice of Filing Consent of Defendant GDSI to Entry of Judgment by the SEC. On March 13, 2017, the Judge signed the Judgment as to Defendant GDSI and it was entered on the Court’s docket. On April 6, 2017, the SEC moved for a final Judgment of Permanent Injunction and Other Relief and Notice of Filing Consent of Defendant Sullivan. On April 10, 2017, the Judge signed the final Judgment as to Defendant Sullivan and it was entered on the Court’s docket. On December 21, 2017, the SEC moved for a final Judgment and Notice of Filing Consent of Defendant GDSI to Entry of Final Judgment. On January 2, 2018, the Judge signed the Final Judgment as to Defendant GDSI and it was entered on the Court’s docket. The amount of the judgement is One Hundred Thousand Dollars ($100,000.00) plus interest. Adrian Lopez, Derivatively and on behalf of Global Digital Solutions, Inc. v. William J. Delgado, Richard J. Sullivan, David A. Loppert, Jerome J. Gomolski, Stephanie C. Sullivan, Arthur F. Noterman, and Stephen L. Norris On September 19, 2016, Adrian Lopez, derivatively, and on behalf of Global Digital Solutions, Inc., filed an action in New Jersey Superior Court sitting Mercer County, General Equity Division. That action was administratively dismissed for failure to prosecute. Plaintiff Lopez, through his counsel, filed a motion to reinstate the matter on the general equity calendar on or about February 10, 2017. The Court granted the motion unopposed on or about April 16, 2017. On May 15, 2017, Defendant William Delgado (“Delgado”) filed a Notice of Removal of Case No. C-70-16 from the Mercer County Superior Court of New Jersey United States District Court for the District of New Jersey Mercer County Superior Court of New Jersey Adrian Lopez v. Global Digital Solutions, Inc. and William J. Delgado On September 28, 2017, Plaintiff Adrian Lopez (“Lopez”) brought an action against Global Digital Solutions, Inc. (“GDSI”) and William J. Delgado (“Delgado”) to compel a meeting of the stockholders of Global Digital Solutions, Inc. pursuant to Section 2.02 of GDSI’s Bylaws and New Jersey Revised Statute § 14A:5-2. On October 27, 2017, Defendants GDSI and Delgado filed a Motion to Stay the Proceeding. On November 24, 2017, Plaintiff filed an Objection to Defendants’ Motion to Stay the Proceeding. On January 19, 2018, Defendants’ Motion to Stay the Proceeding was denied. On February 2, 2018, Defendants filed a Motion to Dismiss the Complaint. On February 20, 2018, Plaintiff filed a Motion to Consolidate Cases. On March 21, 2018, Plaintiff filed an Opposition to Defendants’ Motion to Dismiss the Complaint. On March 23, 2018, Defendants filed a Brief in Reply to Plaintiff’s Opposition to Defendants’ Motion to Dismiss the Complaint. As of this date, the Court has not issued a decision and Order regarding Defendants’ Motion to Dismiss the Complaint.The Company believes the likelihood of an unfavorable outcome of the dispute is remote. In the Matter of GLOBAL DIGITAL SOLUTIONS, INC., ADMINISTRATIVE PROCEEDING File No. 3-18325 On December 26, 2017, the Securities and Exchange Commission instituted public administrative proceedings pursuant to Section 12(j) of the Securities Exchange Act of 1934 (“Exchange Act”) against the Respondent Global Digital Solutions, Inc. On January 8, 2018, Respondent Global Digital Solutions, Inc. (“GDSI”) filed its answer to the allegations contained in the Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12U) of the Exchange Act. A briefing schedule was entered into and on February 15, 2018, the Securities and Exchange Commission filed a motion for an order of summary disposition against Respondent GDSI on the grounds that there is no genuine issue with regard to any material fact, the Division was entitled as a matter of law to an order revoking each class of GDSI's securities registered pursuant to Section 12 of the Exchange Act. Respondent GDSI opposed the Securities and Exchange Commission’s motion on the grounds that there were material issues of fact. The Securities and Exchange Commission replied and a hearing was held on April 9, 2018. The Administrative Law Judge ordered supplemental evidence and briefing on the issues of material fact. The Company believes the likelihood of an unfavorable outcome of the dispute is reasonably possible, but is not able to reasonably estimate a range of potential loss, should the outcome be unfavorable. PMB HELIN DONOVAN, LLP vs. GLOBAL DIGITAL SOLUTIONS, INC. On October 31, 2017, PMB Helin Donovan, LLP filed an action for account stated in Palm Beach County. Global Digital Solutions, Inc. (“GDSI”) settled the matter for Forty Thousand Dollars ($40,000.00) of which the first payment of Ten Thousand Dollars ($10,000.00) has been paid. JENNIFER CARROLL, vs. GLOBAL DIGITAL SOLUTIONS, INC., NORTH AMERICAN CUSTOM SPECIALTY VEHICLES, INC. On October 27, 2017, Plaintiff Jennifer Carroll moved the court for a default judgment against Defendant Global Digital Solutions, Inc. (“GDSI”) and its subsidiary North American Custom Specialty Vehicles Inc. The amount of the judgement is Fifteen Thousand Dollars ($15,000.00) plus fees of Thirteen Thousand Three Hundred Fifty Three Dollars Forty Four Cents ($13,353.44) and costs of six hundred twenty four dollars thirty cents ($624.30).

STOCKHOLDERS_ EQUITY

STOCKHOLDERS’ EQUITY	9 Months Ended
	Sep. 30, 2016
Stockholders’ deficit
STOCKHOLDERS' EQUITY	Preferred Stock We are authorized to issue 35,000,000 shares of noncumulative, non-voting, nonconvertible preferred stock, $0.001 par value per share. At September 30, 2016 and 2015, 1,000,000 shares and 0 shares of preferred stock were outstanding. On August 15, 2016, William J. Delgado, our current Chief Executive Officer, agreed to convert $231,565 of indebtedness owed to him by the Company into 1,000,000 shares of convertible preferred stock (the “Preferred Stock”). The Preferred Stock has voting rights as to one (1) preferred share to four hundred (400) shares of the common stock of the Company. The Preferred Stock is convertible into common stock at any time after issuance into 37% of the outstanding common stock of the Company at the time of the conversion. The conversion to common can only take place when there are an adequate number of shares that are available and is subject to normal stock adjustments (i.e. stock splits etc.) that are executed by the Company in its normal course of business. Common Stock We are authorized to issue 650,000,000 shares of common stock, $0.001 par value per share. At September 30, 2016 and 2015, 530,806,571 and 530,806,571 shares were issued, outstanding, or vested but unissued under stock compensation plans, respectively. Common Stock Warrant We have issued warrants, which are fully vested and available for exercise, as follows: Class of Warrant Issued in connection with or for Number Outstanding Exercise Price Date of Issue Date Vest Date of Expiration A-2 Services 1,000,000 $0.15 May, 2013 May, 2014 May, 2018 A-3 Services 500,000 $0.50 June, 2013 June, 2014 June, 2018 A-4 Services 1,000,000 $1.00 October, 2013 October, 2013 October, 2016 All warrants are exercisable at any time through the date of expiration. All agreements provides for the number of shares to be adjusted in the event of a stock split, a reverse stock split, a share exchange or other conversion or exchange event in which case the number of warrants and the exercise price of the warrants shall be adjusted on a proportional basis. The following is a summary of outstanding and exercisable warrants at September 30, 2016: Outstanding Exercisable Range of Exercise Prices Weighted Average Number Outstanding at 9/30/16 Outstanding Remaining Contractual Life (in yrs.) Weighted Average Exercise Price Number Exercisable at 9/30/16 Weighted Average Exercise Price $ 0.15 1,000,000 1.3 $ 0.15 1,000,000 $ 0.15 $ 0.50 500,000 1.5 $ 0.50 500,000 $ 0.50 $ 0.15 to 0.50 1,500,000 1.40 $ 0.63 1,500,000 $ 0.63 The following is a summary of outstanding and exercisable warrants at December 31, 2015: Outstanding Exercisable Range of Exercise Prices Weighted Average Number Outstanding at 12/31/15 Outstanding Remaining Contractual Life (in yrs.) Weighted Average Exercise Price Number Exercisable at 12/31/15 Weighted Average Exercise Price $ 0.15 1,000,000 2.3 $ 0.15 1,000,000 $ 0.15 $ 0.50 500,000 2.5 $ 0.50 500,000 $ 0.50 $ 1.00 1,000,000 .8 $ 1.00 1,000,000 $ 1.00 $ 0.56 2,500,000 1.90 $ 0.37 2,500,000 $ 0.56 The intrinsic value of warrants outstanding at September 30, 2016 and 2015 was $0. Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the exercise price of the warrant multiplied by the number of warrants outstanding or exercisable. Stock Incentive Plans 2014 Global Digital Solutions Equity Incentive Plan On May 9, 2014 our shareholders approved the 2014 Global Digital Solutions Equity Incentive Plan (“Plan”) and reserved 20,000,000 shares of our common stock for issuance pursuant to awards thereunder, including options, stock appreciation right, restricted stock, restricted stock units, performance awards, dividend equivalents, or other stock-based awards. The Plan is intended as an incentive, to retain in the employ of the Company, our directors, officers, employees, consultants and advisors, and to attract new officers, employees, directors, consultants and advisors whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its subsidiaries. In accordance with the ACS 718, Compensation – Stock Compensation Stock-based compensation expense for the periods ended September 30, 2016 and 2015 is comprised as follows: Three Months Ended Nine Months Ended September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Fair value expense of stock option grants $ - 101,445 $ (74,807) 201,667 Fair value expense of restricted stock unit grants - - (51,747) - Fair value expense of restricted stock grants - - - 208,280 $ - 101,445 $ (126,554) 409,947 Awards Issued Under Stock Incentive Plans Stock Option Activity At September 30, 2016 we have outstanding 13,650,002 stock options which are fully-vested and at December 31, 2015, we have outstanding 15,100,000 stock options - 14,116,668 of which are fully-vested stock options that were granted to directors, officers and consultants and 1,983,332 of which are unvested stock options that were granted to directors, employees and consultants. The outstanding stock options are exercisable at prices ranging from $0.006 to $0.64 and expire between February 2024 and December 2025. During 2016 the 983,332 unvested stock options were either forfeited due to employees leaving the Company, or cancelled by the Board due to performance levels not being met. Issuances of Stock Options Effective as of April 10, 2015, David A. Loppert retired as our CFO and as an officer of the Company and we appointed Jerome J. Gomolski as our CFO. In connection with his appointment as our CFO, on April 1, 2015, Mr. Gomolski was granted stock options to acquire 500,000 shares of our common stock pursuant to the Plan. The options have an exercise price of $0.10 per share, vest one-third on each of October, 1 2015, April 1, 2016 and October 1, 2016, expire on April 1, 2025 and had an aggregate grant date fair value of $50,000, which will be recognized as compensation as the options vest. During 2016, the unvested stock options were cancelled, and no further stock compensation was recognized. On April 1, 2015, we granted stock options to acquire 300,000 shares of our common stock to each of two consultants. The options have an exercise price of $0.10 per share, vest one-third on each of October 1, 2015, April 1, 2016 and October 1, 2016 and expire on March 31, 2025. The options had an aggregate grant date fair value of $30,000 each, which will be recognized as compensation as the options vest. During 2016, the unvested stock options were cancelled, and no further stock compensation was recognized. On April 20, 2015 we granted options to acquire 500,000 shares of our common stock exercisable at $0.14 per share to each of William J. Delgado, executive officer and director, and Arthur F. Noterman and Stephanie C. Sullivan, directors. The options vest one-third on each of October 1, 2015, April 1, 2016 and October 1, 2016, are exercisable through March 31, 2025, and had an aggregate grant date fair value of $70,000 each which will be recognized as compensation as the options vest. During 2016, the unvested stock options were cancelled, and no further stock compensation was recognized. On May 8, 2015, we granted stock options to acquire an aggregate of 300,000 shares of our common stock to four employees. The options have an exercise price of $0.08 per share, vested ratably over a three-year period, expire ten years from the date of grant and had an aggregate grant date fair value of $24,000 which will be recognized as compensation as the options vest. During 2016, the unvested stock options were cancelled, and no further stock compensation was recognized. . On November 30, 2015, we granted to each of our executive officers, Jerome J. Gomolski and Gary A. Gray, and to an employee options to acquire 1,000,000 shares of our common stock exercisable at $0.006 per share. The options vested on the date of grant and expire on November 30, 2025 and had an aggregate grant date fair value of $50,000 each. On December 9, 2015, we granted to Vox Equity Partners LLC options to acquire 4,000,000 shares of our common stock exercisable at $0.006 per share. The 4,000,000 options vested on the date of grant, expire on December 8, 2025 and had a grant date fair value of $24,000. On December 15, 2015, we granted to each of William J. Delgado, executive officer and director, and Arthur F. Noterman and Stephanie C. Sullivan, directors options to acquire 750,000 shares of our common stock exercisable at $0.008 per share. The options vested on the date of grant and expire on December 14, 2025. The options had an aggregate grant date fair value of $6,000 each. A summary of the stock option activity for our stock options plans for years ended September 30, 2016 and the nine months then ended is as follows: Number of Options Exercise Price per Share Average Remaining Term in Years Aggregate Intrinsic Value at Date of Grant Outstanding December 31, 2015 15,100,000 $ 0.18 8.4 - Options granted - - - - Options exercised - - Forfeited in 2016 (1,449,998) $ 0.01 Outstanding September 30, 2016 13,650,002 0.03 - - Exercisable at September 30 2016 13,650,002 $ 0.03 8.4 - Unvested at September 30, 2016 - - During the three and nine months ended September 30, 2016 and 2015, we recorded stock-based compensation cost related to the outstanding stock options of $0 and $101,445 and ($74,807) and 201,667, respectively. At September 30, 2016 and 2015, respectively, the unamortized value of the outstanding stock options was $0 and $91,847. The intrinsic value of options outstanding at September 30, 2016 and 2015 was $0. Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the exercise price of the option multiplied by the number of options outstanding. During the nine months ended September 30, 2016, 983,332 stock options that had not yet vested were forfeited. Restricted Stock Units A summary of RSU’s outstanding as of September 30, 2016 and changes during the nine months then ended is presented below: Number Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested at December 31, 2015 1,000,000 ($0.10) - Issued -- - - Vested - - - Forfeited (1,000,000) - - Nonvested at September 30, 2016 -- - $0.00 We recorded stock-based compensation expense related to these RSU’s of $0 and ($51,747) and $0 and $0 for the three and nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and 2015, respectively, there was $0 and $35,317 of total unrecognized stock-based compensation expense related to 1 million unvested RSU’s that will be recognized on a straight-line basis over the performance periods of the award through December 2017. The 1 million unvested RSU’s were forfeited during the nine months ended September 30, 2016. The aggregate intrinsic value of nonvested RSU’s was $0 at September 30, 2016. Restricted Stock Grants On March 7, 2015, we granted 1,000,000 restricted shares of our common stock to Gary A. Gray, our Executive Vice President. The restricted stock vested on May 30, 2015 and had a grant date fair value of $40,000. On March 7, 2015, we granted 500,000 restricted shares of our common stock to an employee. The restricted stock vested on May 30, 2015 and had a grant date fair value of $20,000. Awards Not Issued Under Stock Incentive Plans Restricted Stock Grants Awarded to Advisors In order to align our senior advisors with the interest of the stakeholders of the Company, the Board of Directors of the Company has granted the advisors restricted stock awards valued at $0.17 to $0.364 per share which vest over a period of 12 – 24 months, subject to remaining an advisor for a minimum of twelve months, and which are forfeited if the advisor is terminated or is no longer an advisor on the anniversary of the advisory award, as follows: September 30, 2016 Name Date of Grant Number of Shares Vest from Vest To Vested Unvested Forfeited Mathew Kelley 4/17/13 1,250,000 4/30/13 3/31/14 1,250,000 - - 4/17/13 1,250,000 2/28/14 1/31/15 1,250,000 - - Richard J. Feldman 4/30/14 500,000 4/30/14 3/30/15 500,000 - - 500,000 4/30/15 3/30/16 375,000 - 125,000 Gary Gray 3/7/15 1,000,000 3/7/15 5/30/15 1,000,000 Ross Trevino 3/7/15 500,000 3/7/15 5/30/15 500,000 5,000,000 4,875,000 - 125,000 A summary of restricted stock grants outstanding as of September 30, 2016 and December 31, 2015, and the changes during the year then ended is presented below: Number Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested at December 31, 2015 125,000 0.40 $ 0.00 Granted - $ - Vested - ) - Forfeited (125,000) (0.40) - Nonvested at September 30, 2016 - $ - $ 0.00 We recorded stock-based compensation expense related to these restricted stock grants of $0 and $208,280 for the nine months ended June 30, 2016 and 2015, respectively.

RESTATEMENT

RESTATEMENT	9 Months Ended
	Sep. 30, 2016
Restatement
RESTATEMENT	The financial statements for the comparative periods in fiscal 2015 have been restated from those previously filed in the Quarterly Reports with the SEC, due to several errors discovered in the quarterly amounts during the December 31, 2015 audit of our financial statements. These changes included adjustments to a write down of inventory and accounts receivable, changes in the timing of recognition of some items, and certain reclassifications. The restated changes for the consolidated balance sheets for September 30, 2015 is presented below: September 30, 2015 September 30, 2015 September 30, 2015 As Originally Presented Changes Restated Assets Current Assets Cash $ 115,662 $ - $ 115,662 Accounts receivable 306,439 (299,999) 6,440 Inventory - 19,471 19,471 Debt isuannces fees, net 940 (940) - Prepaid expenses 147,174 (18,332) 128,842 Total current assets 570,215 (299,800) 270,415 Property and equipment, net of accumulated depreciation 6,359 - 6,359 Deposits 2,415 18,332 20,747 Total assets $ 578,989 $ (281,468) $ 297,521 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 141,598 $ 74 $ 141,672 Accrued expenses 171,107 (42) 171,065 Accrued Interest 76,473 - 76,473 Contingent liability 555,653 - 555,653 Convertible notes payable, net of discounts 312,071 (898) 311,173 Notes Payable 101,363 - 101,363 Total current liabilities 1,358,265 (866) 1,357,399 Derivative liability 600,327 161,149 761,476 Total Liabilities 1,958,592 160,283 2,118,875 Commitments and Contingencies (Note 6) Stockholders’ deficit Preferred stock $ - $ - $ - Common stock 286,852 2,190 289,042 Additional paid-in capital 29,844,051 (599,845) 29,244,206 Accumulated deficit (31,510,506) 155,904 (31,354,602) Total stockholders’ deficit (1,379,603) (441,751) (1,821,354) Total liabilities and stockholders' deficit $ 578,989 $ (281,468) $ 297,521 For the Three Months Ended September 30 2015 2015 2015 As Originally Presented Changes (Restated) Revenue $ 254,587 - 254,587 Cost of revenue 278,676 (201,926) 76,750 Gross profit (24,089) 201,926 177,837 Operating expenses Selling, general and administrative expenses 526,369 (102,709) 423,660 Operating loss before other income(expense) (550,458) 304,635 (245,823) Other (income)/expense Change in fair market value of derivatives (230,099) 406,617 176,518 Loss on conversions of notes payable and accrued interest 406,617 (406,617) - Other Income (600) - (600) Loan Fees - 28,693 28,693 Loss on extinguishment of debt - - - Finance Costs - 163,735 163,735 Amortization of debt discount - Convertible Notes Payable - - - Amortization of debt discount - Factoring - - - Interest expense 208,636 (163,735) 44,901 384,554 28,693 413,247 Loss before provision for income taxes (935,012) 275,942 (659,070) Provision for income taxes - - - Net loss $ (935,012) $ 275,942 $ (659,070) Loss per common share - basic and diluted $ (0.01) $ (0.01) $ (0.01) Weighted average common shares outstanding Basic and diluted 140,365,540 146,486,707 286,852,247 The restated changes for the statement of operations for the nine months ended September 30, 2015 is presented below: For the Nine Months Ended September 30 2015 2015 2015 As Originally Presented Changes (Restated) Revenue $ 633,810 - $ 633,810 Cost of revenue 535,517 (319,575) 215,942 Gross profit 98,293 319,575 417,868 Operating expenses Selling, general and administrative expenses 2,445,294 (831,124) 1,614,170 Operating loss before other income(expense) (2,347,001) 1,150,699 (1,196,302) Other (income)/expense Change in fair market value of derivatives (686,980) 406,617 (280,363) Loss on conversions of notes payable and accrued interest 406,617 (406,617) - (Gain)loss on extinguishment of debt 22,170 (22,170) - Reduction of contingent consideration for purchase price (280,461) 280,461 - Ot-her Income (190,840) (184,359) (375,199) Loan Fees - 142,538 142,538 Loss on extinguishment of debt - 22,170 22,170 Finance Costs - 1,294,793 1,294,793 Interest expense 1,377,436 (1,249,144) 128,292 647,942 284,289 932,231 Loss before provision for income taxes (2,994,943) 866,410 (2,128,533) Provision for income taxes - - - Net loss $ (2,994,943) $ 866,410 $ (2,128,533) Loss per common share - basic $ (0.03) $ (0.01) $ (0.01) Weighted average common shares outstanding Basic 119,425,067 167,427,180 286,852,247

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	We have completed an evaluation of all subsequent events after the balance sheet date of September 30, 2016 through the date this Quarterly Report on Form 10-Q was submitted to the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of September 30, 2016, and events which occurred subsequently but were not recognized in the financial statements. We have concluded that no subsequent events have occurred that require recognition or disclosure, except as disclosed within these financial statements and except as described below: On December 22, 2017, the Company entered into a financing agreement with an accredited investor for $1.2 million. Under the terms of the agreement, the Company is to receive milestone payments based on the progress of the Company’s lawsuit for damages against Grupo Rontan Metalurgica, S.A (the “Lawsuit”). Such milestone payments consist of (i) an initial purchase price payment of $300,000, which the Company received on December 22, 2017, (ii) $150,000 within 30 days of the Lawsuit surviving a motion to dismiss on the primary claims, (iii) $100,000 within 30 days of the close of all discovery in the Lawsuit and (iv) $650,000 within 30 days of the Lawsuit surviving a motion for summary judgment and challenges on the primary claims. As part of the agreement, the Company shall pay the investor an investment return of 100% of the litigation proceeds to recoup all money invested, plus 27.5% of the total litigation proceeds received by the Company. On December 26, 2017, the Company entered into a $485,000 Demand Promissory Note with RLT Consulting, Inc (the “Purchaser”.) As part of the agreement, the Purchaser may not demand payment prior to the date of the Resolution Funding Date. The Company also agreed to grant 5,000,000 shares within 90 days of the Resolution Progress Funding Date and 10,000,000 shares within 90 days of the Resolution Funding Date. From February 9, 2018 to March 13, 2018, the Company issued 28,653,334 shares of common stock as follows: Date Issued Recipient Number of Shares Purpose of Issuance Value of Shares Amount Received February 9, 2018 Accredited Investor 4,320,000 Purchase Agreement $ 0.012 $ 12,096 February 9, 2018 Consultant 333,334 Services $ 0.012 N/A February 21, 2018 Consultant 5,000,000 Services $ 0.012 N/A March 13, 2018 Consultant 5,000,000 Purchase Agreement $ 0.004 $ 20,000 March 13, 2018 Consultant 5,000,000 Services $ 0.012 N/A March 13, 2018 Consultant 9,000,000 Services $ 0.012 N/A On May 1, 2018 the Company entered into a $36,000 promissory note with an individual with $5,000 original issue discount for net proceeds of $31,000. On May 15, 2018, the Company entered into an Investment Return Purchase Agreement with an accredited investor (the “Purchaser”) for proceeds of $200,000 (the “Investment Agreement”). Under the terms of the Investment Agreement, the Company agreed to pay the Purchaser a 10% return, or $20,000 (the “Investment Return”) within three (3) months from the date of the Investment Agreement. Such Investment Return shall be paid earlier if the Company secures funding totaling $500,000 within 90 days from the date of the Investment Agreement. In addition, the Company agreed to issue to the Purchaser 2,000,000 warrants to purchase common stock of the Company at an exercise price of $0.01 per share, exercisable for a period of three (3) years. On June 1, 2018, the Company entered into a $300,000 non-convertible note with an accredited investor with $150,000 original issue discount for net proceeds of $150,000. As part of the note agreement, the Company also agreed to issue the investor 5,000,000 warrants at an exercise price of $0.01.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
Summary Of Significant Accounting Policies Policies Abstract
Going Concern	The accompanying financial statements have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. We have sustained losses and experienced negative cash flows from operations since inception, and for the nine months ended September 30, 2016 we incurred a net loss of $266,730 and used net cash of $2,944 to fund operating activities. At September 30, 2016, we had no cash, an accumulated deficit of $31,934,116, a working capital deficit of $1,121,787 and stockholders’ deficit of $1,119,372. We have funded our activities to date almost exclusively from equity and debt financings. Our cash position is critically deficient, and payments essential to our ability to operate are not being made in the ordinary course. Failure to raise capital in the coming days to fund our operations and failure to generate positive cash flow to fund such operations in the future will have a material adverse effect on our financial condition. These factors raise substantial doubt about our ability to continue as a going concern. We are in default under the terms of our loan agreements, as more fully discussed in Note 5. We need to raise additional funds immediately and continue to raise funds until we begin to generate sufficient cash from operations, and we may not be able to obtain the necessary financing on acceptable terms, or at all. We will continue to require substantial funds to continue development of our core business. Management’s plans in order to meet our operating cash flow requirements include financing activities such as private placements of common stock, and issuances of debt and convertible debt instruments, and the establishment of strategic relationships which we expect will lead to the generation of additional revenue or acquisition opportunities. While we believe that we will be successful in obtaining the necessary financing to fund our operations, there are no assurances that such additional funding will be achieved or that we will succeed in our future operations. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to successfully execute the plans to pursue acquisitions, and raise the funds necessary to complete such acquisitions. The outcome of these matters cannot be predicted at this time. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Principles of Consolidation	The accompanying consolidated financial statements include the accounts of the Company and our wholly owned subsidiaries, NACSV, GDSI Florida, LLC and Global Digital Solutions, LLC, dba GDSI International. All intercompany accounts and transactions have been eliminated in consolidation.
Basis of Presentation	The accompanying unaudited financial information as of and for the three and nine months ended September 30, 2016 and 2015 has been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments, unless otherwise indicated) considered necessary for a fair presentation of our financial position at such date and the operating results and cash flows for such periods. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K filed with the SEC on May 31, 2018. The condensed consolidated balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.
Revenue Recognition	The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the product or service has been provided to the customer; (3) the amount to be paid by the customer is fixed or determinable; and (4) the collection of such amount is probable. The Company records revenue when it is realizable and earned upon shipment of the finished products or when the service has been provided
Fair Value of Financial Instruments	The carrying value of cash, accounts receivable, other receivables, accounts payable and accrued expenses approximate their fair values based on the short-term maturity of these instruments. The carrying amounts of debt were also estimated to approximate fair value. As defined in ASC 820, "Fair Value Measurement," fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement). This fair value measurement framework applies at both initial and subsequent measurement. The three levels of the fair value hierarchy defined by ASC 820 are as follows: ● Level 1 – Quoted prices in active markets for identical assets or liabilities ● Level 2 –Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly ● Level 3 – Significant unobservable inputs that cannot be corroborated by market data.
Earnings (Loss) Per Share ("EPS")	Basic EPS is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted EPS includes the effect from potential issuance of common stock, such as stock issuable pursuant to the exercise of stock options and warrants and the assumed conversion of convertible notes. The following table summarizes the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive even though the exercise price could be less than the average market price of the common shares: Three Months Ended September 30, 2016 September 30, 2015 Convertible notes and accrued interest 139,707,296 766,666 Preferred stock 861,613,714 - Stock options 14,116,668 5,840,000 Warrants 2,500,000 4,250,000 Vested but unissued restricted stock awards -- 2,187,503 Restricted stock units - - Price protection - 1,854,838 Potentially dilutive securities 1,017,937,678 14,899,007 Nine Months Ended September 30, 2016 September 30, 2015 Convertible notes and accrued interest 139,707,293 766,666 Preferred stock 861,613,714 - Stock options 14,116,668 5,840,000 Warrants 2,500,000 4,250,000 Vested but unissued restricted stock awards - 2,187,503 Restricted stock units - - Price protection - 1,854,838 Potentially dilutive securities 1,017,937,678 14,899,007
Use of Estimates	The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity based transactions and disclosure of contingent liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the financial statements. Significant estimates include the valuation of the derivative liability, deferred tax asset and valuation allowance, and assumptions used in Black-Scholes-Merton, or BSM, or other valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.
Inventory	We did not have inventory at September 30, 2016 or December 31, 2015. We order inventory/components upon receipt of a signed purchase order from a customer.
Recent Accounting Pronouncements	In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers: Topic 606, In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, the FASB issued ASU No. 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement . In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes . In February 2016, the FASB issued ASU No. 2016-02, Leases .

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2016
Summary Of Significant Accounting Policies Tables Abstract
Securities excluded from the diluted per share calculation	Three Months Ended September 30, 2016 September 30, 2015 Convertible notes and accrued interest 139,707,296 766,666 Preferred stock 861,613,714 - Stock options 14,116,668 5,840,000 Warrants 2,500,000 4,250,000 Vested but unissued restricted stock awards -- 2,187,503 Restricted stock units - - Price protection - 1,854,838 Potentially dilutive securities 1,017,937,678 14,899,007 Nine Months Ended September 30, 2016 September 30, 2015 Convertible notes and accrued interest 139,707,293 766,666 Preferred stock 861,613,714 - Stock options 14,116,668 5,840,000 Warrants 2,500,000 4,250,000 Vested but unissued restricted stock awards - 2,187,503 Restricted stock units - - Price protection - 1,854,838 Potentially dilutive securities 1,017,937,678 14,899,007

ACCRUED EXPENSES (Tables)

ACCRUED EXPENSES (Tables)	9 Months Ended
	Sep. 30, 2016
Accrued Expenses Tables Abstract
Accrued expenses	September 30, 2016 December 31, 2015 Accrued compensation to executive officers and employees $ 37,079 $ 151,565 Accrued professional fees 19,500 45,735 Total accrued expenses $ 56,579 $ 197,300

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Measurements Tables Abstract
Activity of Level 3 liabilities	Derivative liability balance at December 31, 2015 $ 270,080 Change in fair value (3,786) Balance at September 30, 2016 $ 266,294

NOTE PAYABLE (Tables)

NOTE PAYABLE (Tables)	9 Months Ended
	Sep. 30, 2016
Note Payable Tables Abstract
Convertible notes payable	September 30, 2016 December 31, 2015 Convertible note payable for $78,750 to LG Capital Funding, LLC (“LG Capital”) dated January 16, 2015, due January 16, 2016, of which $38,829 was repaid by conversion as of December 31, 2015, bearing interest at the rate of 8% per annum. Note may be converted by LG Capital into shares of our common stock at a conversion price equal to a 40% discount of the lowest closing bid price for 20 prior trading days including the notice of conversion date. (1) (2) $ 39,921 $ 39,921 Convertible note payable for $250,000 to JMJ Financial (“JMJ”) of which $82,500 was deemed funded on January 28, 2015 and $27,500 was deemed funded on April 20, 2015, of which $40,930 was repaid by conversion as of December 31, 2015. The note was issued with an original issue discount of 10% of amounts funded. The principal amount matures 24 months from the date of each funding, had a one-time 12% interest charge as it was not repaid within 90 days of the effective date, and is convertible at any time at the option of JMJ into shares of our common stock at the lesser of $0.075 per share or 60% of the average of the trade price in the 25 trading days prior to conversion. JMJ has the option to finance additional amounts up to the balance of the $250,000 during the term of the note. (1) (2) 69,070 $ 69,070 Total convertible notes payable with embedded derivative liability 108,991 $ 108,991
Due to factor	September 30, 2016 December 31, 2015 Factoring agreement with Power Up Lending Group, Ltd. (“Power Up”) dated October 1, 2015, purchase price was $59,000. Company agreed to transfer all NACSV future receipts, accounts, contract rights, etc. arising from accounts receivable or other third party payors at the specified percentage of 24% until such time as $76,700 is paid in full. A daily repayment amount of $457 is required to be made and is credited against the specified percentage due. As of September 30, 2016 and December 31, 2015, we paid $21,458 of the daily specified repayments and we had not made $9,588 of payments that were due. At September 30, 2016, and December 31, 201, $12,748 of deferred interest expense related to this agreement is included in current assets. (1) (2) (3) $ 55,242 $ 55,242 Factoring agreement with Power Up dated October 23, 2015, purchase price was $50,000. Company agreed to transfer all NACSV future receipts, accounts, contract rights, etc. arising from accounts receivable or other third party payors at the specified percentage of 24% until such time as $69,000 is paid in full. A daily repayment amount of $548 is required to be made and is credited against the specified percentage due. As of September 30, 2016 and December 31, 2015, we paid $16,976 of the daily specified repayments and we had not made $10,952 of payments that were due. At September 30, 2016 and December 31, 2015, $14,326 of deferred interest expense related to this agreement is included in current assets. (2) (3) $ 52,024 $ 52,024 Total due to factor $ 107,266 $ 107,266
Notes payable	Collateral Interest Monthly Type (if any) Rate Payments Maturity March 31, 2016 December 31, 2015 Premium finance agreement None 5.10 % $ 10,507 June-2016 $ 8,150 $ 61,810 Premium finance agreement None 9.25 % $ 3,414 January-2016 $ 3,037 $ 3,037 Total notes payable $ 11,187 $ 64,847

STOCKHOLDERS_ EQUITY (Tables)

STOCKHOLDERS’ EQUITY (Tables)	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity Note [Abstract]
Issuance of warrants	Class of Warrant Issued in connection with or for Number Outstanding Exercise Price Date of Issue Date Vest Date of Expiration A-2 Services 1,000,000 $0.15 May, 2013 May, 2014 May, 2018 A-3 Services 500,000 $0.50 June, 2013 June, 2014 June, 2018 A-4 Services 1,000,000 $1.00 October, 2013 October, 2013 October, 2016
Outstanding and exercisable warrants	The following is a summary of outstanding and exercisable warrants at September 30, 2016: Outstanding Exercisable Range of Exercise Prices Weighted Average Number Outstanding at 9/30/16 Outstanding Remaining Contractual Life (in yrs.) Weighted Average Exercise Price Number Exercisable at 9/30/16 Weighted Average Exercise Price $ 0.15 1,000,000 1.3 $ 0.15 1,000,000 $ 0.15 $ 0.50 500,000 1.5 $ 0.50 500,000 $ 0.50 $ 0.15 to 0.50 1,500,000 1.40 $ 0.63 1,500,000 $ 0.63 The following is a summary of outstanding and exercisable warrants at December 31, 2015: Outstanding Exercisable Range of Exercise Prices Weighted Average Number Outstanding at 12/31/15 Outstanding Remaining Contractual Life (in yrs.) Weighted Average Exercise Price Number Exercisable at 12/31/15 Weighted Average Exercise Price $ 0.15 1,000,000 2.3 $ 0.15 1,000,000 $ 0.15 $ 0.50 500,000 2.5 $ 0.50 500,000 $ 0.50 $ 1.00 1,000,000 .8 $ 1.00 1,000,000 $ 1.00 $ 0.56 2,500,000 1.90 $ 0.37 2,500,000 $ 0.56
Stock-based compensation expense	Three Months Ended Nine Months Ended September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Fair value expense of stock option grants $ - 101,445 $ (74,807) 201,667 Fair value expense of restricted stock unit grants - - (51,747) - Fair value expense of restricted stock grants - - - 208,280 $ - 101,445 $ (126,554) 409,947
Stock option activity	Number of Options Exercise Price per Share Average Remaining Term in Years Aggregate Intrinsic Value at Date of Grant Outstanding December 31, 2015 15,100,000 $ 0.18 8.4 - Options granted - - - - Options exercised - - Forfeited in 2016 (1,449,998) $ 0.01 Outstanding September 30, 2016 13,650,002 0.03 - - Exercisable at September 30 2016 13,650,002 $ 0.03 8.4 - Unvested at September 30, 2016 - -
Unvested restricted stock units	Number Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested at December 31, 2015 1,000,000 ($0.10) - Issued -- - - Vested - - - Forfeited (1,000,000) - - Nonvested at September 30, 2016 -- - $0.00
Restricted stock grants awarded to advisors	September 30, 2016 Name Date of Grant Number of Shares Vest from Vest To Vested Unvested Forfeited Mathew Kelley 4/17/13 1,250,000 4/30/13 3/31/14 1,250,000 - - 4/17/13 1,250,000 2/28/14 1/31/15 1,250,000 - - Richard J. Feldman 4/30/14 500,000 4/30/14 3/30/15 500,000 - - 500,000 4/30/15 3/30/16 375,000 - 125,000 Gary Gray 3/7/15 1,000,000 3/7/15 5/30/15 1,000,000 Ross Trevino 3/7/15 500,000 3/7/15 5/30/15 500,000 5,000,000 4,875,000 - 125,000
Summary of restricted stock grants	Number Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Nonvested at December 31, 2015 125,000 0.40 $ 0.00 Granted - $ - Vested - ) - Forfeited (125,000) (0.40) - Nonvested at September 30, 2016 - $ - $ 0.00

RESTATEMENT (Tables)

RESTATEMENT (Tables)	9 Months Ended
	Sep. 30, 2016
Restatement Tables Abstract
Restatement	The restated changes for the consolidated balance sheets for September 30, 2015 is presented below: September 30, 2015 September 30, 2015 September 30, 2015 As Originally Presented Changes Restated Assets Current Assets Cash $ 115,662 $ - $ 115,662 Accounts receivable 306,439 (299,999) 6,440 Inventory - 19,471 19,471 Debt isuannces fees, net 940 (940) - Prepaid expenses 147,174 (18,332) 128,842 Total current assets 570,215 (299,800) 270,415 Property and equipment, net of accumulated depreciation 6,359 - 6,359 Deposits 2,415 18,332 20,747 Total assets $ 578,989 $ (281,468) $ 297,521 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 141,598 $ 74 $ 141,672 Accrued expenses 171,107 (42) 171,065 Accrued Interest 76,473 - 76,473 Contingent liability 555,653 - 555,653 Convertible notes payable, net of discounts 312,071 (898) 311,173 Notes Payable 101,363 - 101,363 Total current liabilities 1,358,265 (866) 1,357,399 Derivative liability 600,327 161,149 761,476 Total Liabilities 1,958,592 160,283 2,118,875 Commitments and Contingencies (Note 6) Stockholders’ deficit Preferred stock $ - $ - $ - Common stock 286,852 2,190 289,042 Additional paid-in capital 29,844,051 (599,845) 29,244,206 Accumulated deficit (31,510,506) 155,904 (31,354,602) Total stockholders’ deficit (1,379,603) (441,751) (1,821,354) Total liabilities and stockholders' deficit $ 578,989 $ (281,468) $ 297,521 For the Three Months Ended September 30 2015 2015 2015 As Originally Presented Changes (Restated) Revenue $ 254,587 - 254,587 Cost of revenue 278,676 (201,926) 76,750 Gross profit (24,089) 201,926 177,837 Operating expenses Selling, general and administrative expenses 526,369 (102,709) 423,660 Operating loss before other income(expense) (550,458) 304,635 (245,823) Other (income)/expense Change in fair market value of derivatives (230,099) 406,617 176,518 Loss on conversions of notes payable and accrued interest 406,617 (406,617) - Other Income (600) - (600) Loan Fees - 28,693 28,693 Loss on extinguishment of debt - - - Finance Costs - 163,735 163,735 Amortization of debt discount - Convertible Notes Payable - - - Amortization of debt discount - Factoring - - - Interest expense 208,636 (163,735) 44,901 384,554 28,693 413,247 Loss before provision for income taxes (935,012) 275,942 (659,070) Provision for income taxes - - - Net loss $ (935,012) $ 275,942 $ (659,070) Loss per common share - basic and diluted $ (0.01) $ (0.01) $ (0.01) Weighted average common shares outstanding Basic and diluted 140,365,540 146,486,707 286,852,247 The restated changes for the statement of operations for the nine months ended September 30, 2015 is presented below: For the Nine Months Ended September 30 2015 2015 2015 As Originally Presented Changes (Restated) Revenue $ 633,810 - $ 633,810 Cost of revenue 535,517 (319,575) 215,942 Gross profit 98,293 319,575 417,868 Operating expenses Selling, general and administrative expenses 2,445,294 (831,124) 1,614,170 Operating loss before other income(expense) (2,347,001) 1,150,699 (1,196,302) Other (income)/expense Change in fair market value of derivatives (686,980) 406,617 (280,363) Loss on conversions of notes payable and accrued interest 406,617 (406,617) - (Gain)loss on extinguishment of debt 22,170 (22,170) - Reduction of contingent consideration for purchase price (280,461) 280,461 - Ot-her Income (190,840) (184,359) (375,199) Loan Fees - 142,538 142,538 Loss on extinguishment of debt - 22,170 22,170 Finance Costs - 1,294,793 1,294,793 Interest expense 1,377,436 (1,249,144) 128,292 647,942 284,289 932,231 Loss before provision for income taxes (2,994,943) 866,410 (2,128,533) Provision for income taxes - - - Net loss $ (2,994,943) $ 866,410 $ (2,128,533) Loss per common share - basic $ (0.03) $ (0.01) $ (0.01) Weighted average common shares outstanding Basic 119,425,067 167,427,180 286,852,247

SUBSEQUENT EVENTS (Tables)

SUBSEQUENT EVENTS (Tables)	9 Months Ended
	Sep. 30, 2016
Subsequent Events
Issuance of common stock	Date Issued Recipient Number of Shares Purpose of Issuance Value of Shares Amount Received February 9, 2018 Accredited Investor 4,320,000 Purchase Agreement $ 0.012 $ 12,096 February 9, 2018 Consultant 333,334 Services $ 0.012 N/A February 21, 2018 Consultant 5,000,000 Services $ 0.012 N/A March 13, 2018 Consultant 5,000,000 Purchase Agreement $ 0.004 $ 20,000 March 13, 2018 Consultant 5,000,000 Services $ 0.012 N/A March 13, 2018 Consultant 9,000,000 Services $ 0.012 N/A

SUMMARY OF SIGNIFICANT ACCOUN_4

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Potentially dilutive securities	1,017,937,678	14,899,007	1,017,937,678	14,899,007
Convertible Notes and Accrued Interest
Potentially dilutive securities	139,707,296	766,666	139,707,293	766,666
Preferred Stock
Potentially dilutive securities	861,613,714	0	861,613,714	0
Stock Options
Potentially dilutive securities	14,116,668	5,840,000	14,116,668	5,840,000
Warrants
Potentially dilutive securities	2,500,000	4,250,000	2,500,000	4,250,000
Vested but Unissued Restricted Stock Awards
Potentially dilutive securities	0	2,187,503	0	2,187,503
Price Protection
Potentially dilutive securities	0	1,854,838	0	1,854,838

SUMMARY OF SIGNIFICANT ACCOUN_5

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014
Summary Of Significant Accounting Policies Details Narrative Abstract
Net loss	$ (266,730)	$ (2,128,533)
Net cash used in operating activities	(2,944)	(512,977)
Cash and cash equivalents	0	115,662	$ 2,944	$ 160,102
Accumulated deficit	(31,934,116)	31,354,602	(31,667,385)
Working capital deficit	(1,121,787)
Shareholders' deficiency	$ (1,119,372)	$ 1,821,354	$ (957,652)

ACCRUED EXPENSES (Details)

ACCRUED EXPENSES (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accrued Expenses Details Abstract
Accrued compensation to executive officers and employees	$ 37,079	$ 151,565
Accrued professional fees	19,500	45,735
Total accrued expenses	$ 56,579	$ 197,300

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - Level 3	9 Months Ended
	Sep. 30, 2016USD ($)
Beginning balance	$ 270,080
Change in fair value	(3,786)
Ending balance	$ 266,294

NOTE PAYABLE (Details)

NOTE PAYABLE (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Convertible notes payable with embedded derivative liability	$ 108,991	$ 108,991
Convertible Note 1
Convertible notes payable with embedded derivative liability	39,921	39,921
Convertible Note 2
Convertible notes payable with embedded derivative liability	$ 69,070	$ 69,070

NOTE PAYABLE (Details 1)

NOTE PAYABLE (Details 1) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Due to factor	$ 107,266	$ 107,266
Agreement 1
Due to factor	55,242	55,242
Agreement 2
Due to factor	$ 52,024	$ 52,024

NOTE PAYABLE (Details 2)

NOTE PAYABLE (Details 2) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Notes payable	$ 11,187	$ 64,847
Note Payable 1
Collateral	None
Interest rate	5.10%
Monthly payments	$ 10,507
Maturity	Jun. 30, 2016
Notes payable	$ 8,150	61,810
Note Payable 2
Collateral	None
Interest rate	9.25%
Monthly payments	$ 3,414
Maturity	Jan. 31, 2016
Notes payable	$ 3,037	$ 3,037

STOCKHOLDERS_ EQUITY (Details)

STOCKHOLDERS’ EQUITY (Details) - $ / shares	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Number outstanding	1,500,000	2,500,000
Exercise price	$ 0.63	$ 0.37
A2
Issued in connection with or for	Services
Number outstanding	1,000,000
Exercise price	$ 0.15
Date of issue	May, 2013
Date vest	May, 2014
Date of expiration	May, 2018
A3
Issued in connection with or for	Services
Number outstanding	500,000
Exercise price	$ 0.50
Date of issue	June, 2013
Date vest	June, 2014
Date of expiration	June, 2018
A4
Issued in connection with or for	Services
Number outstanding	1,000,000
Exercise price	$ 1
Date of issue	October, 2013
Date vest	October, 2013
Date of expiration	October, 2016

STOCKHOLDERS_ EQUITY (Details 1

STOCKHOLDERS’ EQUITY (Details 1) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Weighted average number outstanding	1,500,000	2,500,000
Outstanding remaining contractual life	1 year 4 months 24 days	1 year 10 months 24 days
Weighted average exercise price	$ 0.63	$ 0.37
Number exercisable	1,500,000	2,500,000
Weighted average exercise price	$ 0.63	$ 0.56
$ 0.15
Weighted average number outstanding	1,000,000	1,000,000
Outstanding remaining contractual life	1 year 3 months 18 days	2 years 3 months 18 days
Weighted average exercise price	$ 0.15	$ 0.15
Number exercisable	1,000,000	1,000,000
Weighted average exercise price	$ 0.15	$ 0.15
$ 0.50
Weighted average number outstanding	500,000	500,000
Outstanding remaining contractual life	1 year 6 months	2 years 6 months
Weighted average exercise price	$ 0.5	$ 0.5
Number exercisable	500,000	500,000
Weighted average exercise price	$ 0.5	$ 0.5
$ 1
Weighted average number outstanding		1,000,000
Outstanding remaining contractual life		9 months 18 days
Weighted average exercise price		$ 1
Number exercisable		1,000,000
Weighted average exercise price		$ 1

STOCKHOLDERS_ EQUITY (Details 2

STOCKHOLDERS’ EQUITY (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stockholders Equity
Fair value expense of stock option grants	$ 0	$ 101,445	$ (74,807)	$ 201,667
Fair value expense of restricted stock unit grants	0	0	(51,747)	0
Fair value expense of restricted stock grants	0	0	0	208,280
Stock-based compensation expense	$ 0	$ 101,445	$ (126,554)	$ 409,947

STOCKHOLDERS_ EQUITY (Details 3

STOCKHOLDERS’ EQUITY (Details 3)	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Number of Options
Outstanding at beginning of period | shares	15,100,000
Options granted | shares	0
Options exercised | shares	0
Forfeited in 2016 | shares	(1,449,998)
Outstanding at end of period | shares	13,650,002
Exercisable | shares	13,650,002
Unvested | shares	0
Weighted Average Exercise Price Per Share
Outstanding at beginning of period | $ / shares	$ 0.18
Options granted | $ / shares	0
Options exercised | $ / shares	0
Forfeited in 2016 | $ / shares	.01
Outstanding at end of period | $ / shares	0.03
Exercisable | $ / shares	0.03
Unvested | $ / shares	$ 0
Weighted Average Remaining Contractual Term
Outstanding at beginning of period	8 years 4 months 24 days
Exercisable	8 years 4 months 24 days

STOCKHOLDERS_ EQUITY (Details 4

STOCKHOLDERS’ EQUITY (Details 4) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Nonvested at beginning of period | shares	1,000,000
Issued | shares	0
Vested | shares	0
Forfeited | shares	(1,000,000)
Nonvested at end of period | shares	0
Weighted average grant date fair value, nonvested, beginning	$ (0.10)
Weighted average grant date fair value, issued	0
Weighted average grant date fair value, vested	0
Weighted average grant date fair value, forfeited	0
Weighted average grant date fair value, nonvested, ending	0
Aggregate intrinsic value, nonvested, beginning	0
Aggregate intrinsic value, issued	0
Aggregate intrinsic value, vested	0
Aggregate intrinsic value, forfeited	0
Aggregate intrinsic value, nonvested, ending	$ 1

STOCKHOLDERS_ EQUITY (Details 5

STOCKHOLDERS’ EQUITY (Details 5)	9 Months Ended
	Sep. 30, 2016shares
Number of Shares	5,000,000
Vested	4,875,000
Unvested	0
Forfeited	125,000
Mathew Kelley | Grant 1
Date of Grant	Apr. 17, 2013
Number of Shares	1,250,000
Vest from	Apr. 30, 2013
Vest To	Mar. 31, 2014
Vested	1,250,000
Unvested	0
Forfeited	0
Mathew Kelley | Grant 2
Date of Grant	Apr. 17, 2013
Number of Shares	1,250,000
Vest from	Feb. 28, 2014
Vest To	Jan. 31, 2015
Vested	1,250,000
Unvested	0
Forfeited	0
Richard J. Feldman | Grant 1
Date of Grant	Apr. 30, 2014
Number of Shares	500,000
Vest from	Apr. 30, 2014
Vest To	Mar. 30, 2015
Vested	500,000
Unvested	0
Forfeited	0
Richard J. Feldman | Grant 2
Date of Grant	Apr. 30, 2014
Number of Shares	500,000
Vest from	Apr. 30, 2015
Vest To	Mar. 30, 2016
Vested	375,000
Unvested	0
Forfeited	125,000
Gary Gray | Grant 1
Date of Grant	Mar. 7, 2015
Number of Shares	1,000,000
Vest from	Mar. 7, 2015
Vest To	May 30, 2015
Vested	1,000,000
Ross Trevino | Grant 1
Date of Grant	Mar. 7, 2015
Number of Shares	500,000
Vest from	Mar. 7, 2015
Vest To	May 30, 2015
Vested	500,000

STOCKHOLDERS_ EQUITY (Details 6

STOCKHOLDERS’ EQUITY (Details 6) - Restricted Stock Grants	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Nonvested at beginning of period | shares	125,000
Granted | shares	0
Vested | shares	0
Forfeited | shares	(125,000)
Nonvested at end of period | shares	0
Weighted average grant date fair value, nonvested, beginning	$ 0.40
Weighted average grant date fair value, granted	0
Weighted average grant date fair value, vested	0
Weighted average grant date fair value, forfeited	(0.40)
Weighted average grant date fair value, nonvested, ending	0
Aggregate intrinsic value, nonvested, beginning	0
Aggregate intrinsic value, forfeited	0
Aggregate intrinsic value, nonvested, ending	$ 0

STOCKHOLDERS_ EQUITY (Details N

STOCKHOLDERS’ EQUITY (Details Narrative) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Stockholders Equity Details Narrative Abstract
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	35,000,000	35,000,000
Preferred stock, shares issued	1,000,000	0
Preferred stock, shares outstanding	1,000,000	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	650,000,000	650,000,000
Common stock, shares issued	530,806,571	530,806,571
Common stock, shares outstanding	530,806,571	530,806,571

RESTATEMENT (Details)

RESTATEMENT (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Current Assets
Cash	$ 0	$ 2,944	$ 115,662	$ 160,102
Accounts receivable	4,261	4,261	6,440
Inventory			19,471
Debt isuannces fees, net			0
Prepaid expenses	22,597	99,111	128,842
Total current assets	26,858	106,316	270,415
Property and equipment, net of accumulated depreciation	0	4,920	6,359
Deposits	2,415	2,415	20,747
Total assets	29,273	113,651	297,521
Current Liabilities
Accounts payable	510,695	357,198	141,672
Accrued expenses	56,579	197,300	171,065
Accrued interest	32,186	0	76,473
Contingent liability			555,653
Convertible notes payable, net of disounts	108,991	90,772	311,173
Notes payable			101,363
Total current liabilities	1,148,645	1,071,303	1,357,399
Derivative liability			761,476
Total liabilities	1,148,645	1,071,303	2,118,875
Stockholders’ deficit
Preferred stock	1,000	0	0
Common stock	530,807	530,807	289,042
Additional paid-in capital	30,282,937	30,178,926	29,244,206
Accumulated deficit	(31,934,116)	(31,667,385)	31,354,602
Total stockholders’ deficit	(1,119,372)	(957,652)	1,821,354
Total liabilities and stockholders' deficit	$ 29,273	$ 113,651	297,521
As Originally Presented
Current Assets
Cash			115,662
Accounts receivable			306,439
Inventory			0
Debt isuannces fees, net			940
Prepaid expenses			147,174
Total current assets			570,215
Property and equipment, net of accumulated depreciation			6,359
Deposits			2,415
Total assets			578,989
Current Liabilities
Accounts payable			141,598
Accrued expenses			171,107
Accrued interest			76,473
Contingent liability			555,653
Convertible notes payable, net of disounts			312,071
Notes payable			101,363
Total current liabilities			1,358,265
Derivative liability			600,327
Total liabilities			1,958,592
Stockholders’ deficit
Preferred stock			0
Common stock			286,852
Additional paid-in capital			29,844,051
Accumulated deficit			31,510,506
Total stockholders’ deficit			1,379,603
Total liabilities and stockholders' deficit			578,989
Changes
Current Assets
Cash			0
Accounts receivable			299,999
Inventory			19,471
Debt isuannces fees, net			940
Prepaid expenses			18,332
Total current assets			299,800
Property and equipment, net of accumulated depreciation			0
Deposits			18,332
Total assets			281,468
Current Liabilities
Accounts payable			74
Accrued expenses			42
Accrued interest			0
Contingent liability			0
Convertible notes payable, net of disounts			898
Notes payable			0
Total current liabilities			866
Derivative liability			161,149
Total liabilities			160,283
Stockholders’ deficit
Preferred stock			0
Common stock			2,190
Additional paid-in capital			599,845
Accumulated deficit			155,904
Total stockholders’ deficit			441,751
Total liabilities and stockholders' deficit			$ 281,468

RESTATEMENT (Details 1)

RESTATEMENT (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenue	$ 0	$ 254,587	$ 14,386	$ 633,810
Cost of revenue	0	76,751	0	215,942
Gross profit	0	177,836	14,386	417,868
Operating expenses
Selling, general and administrative expenses	99,579	423,660	234,161	1,614,170
Operating loss before other income (expense)	(99,579)	(245,824)	(219,775)	(1,196,302)
Other (income)/expense
Change in fair market value of derivatives	(68,565)	176,518	(3,786)	(280,363)
Loss on conversions of notes payable and accrued interest		0		0
(Gain) loss on extinguishment of debt				0
Reduction of contingent consideration for purchase price				0
Other income		(600)		(375,199)
Loan fees		28,693		142,538
Loss on extinguishment of debt		0		22,170
Finance costs	0	163,735	0	1,294,793
Amortization of debt discount - convertible notes payable	0	0	18,219	0
Amortization of debt discount - factoring	0	0	16,160	0
Interest expense	5,454	44,901	16,362	128,292
Total other income (expense)	(63,111)	413,247	46,955	932,231
Loss before provision for income taxes	(36,468)	(659,071)	(266,730)	(2,128,533)
Provision for income taxes		0		0
Net loss	$ (36,468)	$ (659,071)	$ (266,730)	$ (2,128,533)
Income per common share - basic and diluted		$ 0.01
Weighted average common shares outstanding - basic and diluted		286,852,247
Income per common share - basic	$ 0	$ (0.01)	$ 0	$ (0.01)
Shares used in computing net income (loss) per share - basic	530,806,571	286,852,247	530,806,571	286,852,247
As Originally Presented
Revenue		$ 254,587		$ 633,810
Cost of revenue		278,676		535,517
Gross profit		(24,089)		98,293
Operating expenses
Selling, general and administrative expenses		526,369		2,445,294
Operating loss before other income (expense)		(550,458)		(2,347,001)
Other (income)/expense
Change in fair market value of derivatives		(230,099)		(686,980)
Loss on conversions of notes payable and accrued interest		406,617		406,617
(Gain) loss on extinguishment of debt				22,170
Reduction of contingent consideration for purchase price				(280,461)
Other income		(600)		(190,840)
Loan fees		0		0
Loss on extinguishment of debt		0		0
Finance costs		0		0
Amortization of debt discount - convertible notes payable		0
Amortization of debt discount - factoring		0
Interest expense		208,636		1,377,436
Total other income (expense)		384,554		647,942
Loss before provision for income taxes		(935,012)		(2,994,943)
Provision for income taxes		0		0
Net loss		$ (935,012)		$ (2,994,943)
Income per common share - basic and diluted		$ 0.01
Weighted average common shares outstanding - basic and diluted		140,365,540
Income per common share - basic				$ 0.03
Shares used in computing net income (loss) per share - basic				119,425,067
Changes
Revenue		$ 0		$ 0
Cost of revenue		(201,926)		319,575
Gross profit		201,926		319,575
Operating expenses
Selling, general and administrative expenses		(102,709)		831,124
Operating loss before other income (expense)		304,635		1,150,699
Other (income)/expense
Change in fair market value of derivatives		406,617		406,617
Loss on conversions of notes payable and accrued interest		(406,617)		(406,617)
(Gain) loss on extinguishment of debt				(22,170)
Reduction of contingent consideration for purchase price				280,461
Other income		0		(184,359)
Loan fees		28,693		142,538
Loss on extinguishment of debt		0		22,170
Finance costs		163,735		1,294,793
Amortization of debt discount - convertible notes payable		0
Amortization of debt discount - factoring		0
Interest expense		(163,735)		(1,249,144)
Total other income (expense)		28,693		284,289
Loss before provision for income taxes		275,942		866,410
Provision for income taxes		0		0
Net loss		$ 275,942		$ 866,410
Income per common share - basic and diluted		$ 0.01
Weighted average common shares outstanding - basic and diluted		146,486,707
Income per common share - basic				$ 0.01
Shares used in computing net income (loss) per share - basic				167,427,180

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015
Number of shares	530,806,571	530,806,571
Amount received	$ 530,807	$ 530,807	$ 289,042
Issuance 1
Date issued	Feb. 9, 2018
Recipient	Accredited Investor
Number of shares	4,320,000
Purpose of issuance	Purchase Agreement
Value of shares	$ 0.012
Amount received	$ 12,096
Issuance 2
Date issued	Feb. 9, 2018
Recipient	Consultant
Number of shares	333,334
Purpose of issuance	Services
Value of shares	$ 0.012
Issuance 3
Date issued	Feb. 21, 2018
Recipient	Consultant
Number of shares	5,000,000
Purpose of issuance	Services
Value of shares	$ 0.012
Issuance 4
Date issued	Mar. 13, 2018
Recipient	Consultant
Number of shares	5,000,000
Purpose of issuance	Purchase Agreement
Value of shares	$ 0.004
Amount received	$ 20,000
Issuance 5
Date issued	Mar. 13, 2018
Recipient	Consultant
Number of shares	5,000,000
Purpose of issuance	Services
Value of shares	$ 0.012
Issuance 6
Date issued	Mar. 13, 2018
Recipient	Consultant
Number of shares	9,000,000
Purpose of issuance	Services
Value of shares	$ 0.012