Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2017USD ($)shares | |
Document and Entity Information: | |
Entity Registrant Name | Blue Line Protection Group, Inc. |
Document Type | 10-Q |
Document Period End Date | Jun. 30, 2017 |
Trading Symbol | blpg |
Amendment Flag | true |
Amendment Description | Amendment 1 |
Entity Central Index Key | 1,416,697 |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | shares | 127,348,026 |
Entity Public Float | $ | $ 58,718,685 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and equivalents | $ 14,738 | |
Accounts receivable, net | 153,418 | $ 133,698 |
Prepaid expenses and deposits | 65,934 | 85,888 |
Total current assets | 234,090 | 219,586 |
Fixed assets: | ||
Machinery and equipment, net | 110,499 | 132,887 |
Fixed assets of discontinued operations | 2,782 | 2,782 |
Total fixed assets | 113,281 | 135,669 |
Total assets | 347,371 | 355,255 |
Current liabilities: | ||
Cash overdraft | 30,462 | |
Accounts payable and accrued liabilities | 497,313 | 416,573 |
Notes payable | 138,635 | 185,000 |
Notes payable - related parties | 385,846 | 385,846 |
Convertible notes payable, net of unamortized discount | 190,500 | |
Convertible notes payable - related parties, net of unamortized discount | 872,026 | 610,000 |
Current portion of long-term debt | 4,137 | |
Current liabilities of discontinued operations | 1,335 | |
Total current liabilities | 2,084,320 | 1,633,353 |
Long-term liabilities: | ||
Long-term debt | 6,518 | 8,664 |
Total long-term liabilities | 6,518 | 8,664 |
Total liabilities | 2,090,838 | 1,642,017 |
Stockholders' deficit: | ||
Preferred Stock | 20,000 | 20,000 |
Common Stock | 127,348 | 127,348 |
Common Stock owed but not issued | 13 | 13 |
Additional paid-in capital | 5,647,136 | 5,537,667 |
Accumulated deficit | (7,537,964) | (6,971,790) |
Total stockholders' deficit | (1,743,467) | (1,286,762) |
Total liabilities and stockholders' deficit | $ 347,371 | $ 355,255 |
Statement of Financial Position
Statement of Financial Position - Parenthetical - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Preferred Stock, Shares Issued | 20,000,000 | 0 |
Preferred Stock, Shares Outstanding | 20,000,000 | 0 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 1,400,000,000 | 1,400,000,000 |
Common Stock, Shares Issued | 127,348,026 | 127,348,026 |
Common Stock, Shares Outstanding | 127,348,026 | 127,348,026 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Income | ||||
Revenue, net | $ 983,995 | $ 718,950 | $ 1,823,102 | $ 1,370,781 |
Cost of revenue | (720,990) | (617,740) | (1,402,257) | (1,172,995) |
Gross profit | 263,005 | 101,210 | 420,845 | 197,786 |
Expenses: | ||||
Advertising | 1,580 | 460 | 4,546 | 7,223 |
Depreciation | 11,807 | 15,822 | 23,978 | 26,381 |
General and administrative expenses | 487,056 | 471,777 | 930,859 | 882,642 |
Total expenses | 500,443 | 488,059 | 959,383 | 916,246 |
Operating loss | (237,438) | (386,849) | (538,538) | (718,460) |
Other income (expenses): | ||||
Other income | 72,890 | 72,890 | ||
Interest expense | (57,196) | (143,993) | (100,526) | (212,761) |
Total other income (expenses) | 15,694 | (143,993) | (27,636) | (212,761) |
Net loss | (221,744) | (530,842) | (566,174) | (931,221) |
Deemed dividend on Series A convertible preferred stock | (114,229) | (114,229) | ||
Net loss from continuing operations attributable to common stockholders | $ (221,744) | $ (645,071) | $ (566,174) | $ (1,045,450) |
Net loss per share, basic and diluted | $ 0 | $ (0.01) | $ 0 | $ (0.01) |
Weighted average number of common shares outstanding, basic and diluted | 127,348,026 | 125,348,026 | 127,348,026 | 125,348,026 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities | ||
Net loss | $ (566,174) | $ (931,221) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 23,978 | 26,381 |
Stock-based compensation expense | 38,069 | 38,438 |
Amortization of discounts on note payable | 37,071 | 140,321 |
Changes in operating assets and liabilities: | ||
(Increase) in accounts receivable | (19,720) | (23,973) |
Decrease in deposits and prepaid expenses | 19,954 | 11,933 |
Increase in accounts payable and accrued liabilities | 80,740 | 211,183 |
Discontinued operations accounts payable and accrued liabilities | (1,335) | |
Net cash (used) in operating activities | (387,417) | (526,938) |
Cash flows from investing activities | ||
Purchase of fixed assets | (1,590) | (435,456) |
Net cash (used) in investing activities | (1,590) | (435,456) |
Financing activities | ||
Cash overdraft | (30,462) | |
Payments on auto debt | (2,068) | (2,054) |
Proceeds from notes payable - related party | 15,000 | 135,000 |
Repayments from notes payable - related party | (15,000) | (60,000) |
Proceeds from convertible notes payable, net of original discount costs | 185,000 | 157,750 |
Proceeds from note payables, net of deferred financing cost | 63,700 | 339,360 |
Repayment of notes payable | (122,425) | (123,311) |
Proceeds from convertible notes payable - related party | 310,000 | 20,000 |
Issuance of preferred stock | 500,000 | |
Net cash provided by financing activities | 403,745 | 966,745 |
Net increase in cash | 14,738 | 4,351 |
Cash - beginning | 16,211 | |
Cash - ending | 14,738 | 20,562 |
Supplemental disclosures: | ||
Interest paid | 11,077 | 45,210 |
Non-cash transactions: | ||
Debt discount due to beneficial conversion feature | $ 71,400 | 2,240 |
Interest capitalized as construction in progress | 16,735 | |
Deemed dividend on Series A convertible preferred stock | $ 114,229 |
Note 1 - History and Organizati
Note 1 - History and Organization of The Company | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 1 - History and Organization of The Company | Note 1 History and organization of the company The Company was originally organized on September 11, 2006 (Date of Inception) under the laws of the State of Nevada, as The Engraving Masters, Inc. The Company was authorized to issue up to 100,000,000 shares of its common stock and 100,000,000 shares of preferred stock, each with a par value of $0.001 per share. On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 ("Blue Line Colorado"), as a wholly-owned subsidiary of the Company. Blue Line Colorado provides protection, compliance and financial services to the lawful cannabis industry. On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. ("BLPG") On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. Additionally, the authorized capital of the Company concurrently increased to 1,400,000,000 shares of common stock. All references to share and per share amounts in the consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split. The Company provides armed protection, logistics, and compliance services for businesses engaged in the legal cannabis industry. The Company offers asset logistic services, such as armored transportation service; security services, including shipment protection, money escorts, security monitoring, asset vaulting, VIP and dignitary protection, financial services, such as handling transportation and storage of currency; training; and compliance services. |
Note 2 - Accounting Policies an
Note 2 - Accounting Policies and Procedures | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 2 - Accounting Policies and Procedures | Note 2 Accounting policies and procedures Interim financial statements The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, these statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company's annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim periods are not indicative of annual results. Reclassification Certain amounts from prior periods have been reclassified to conform to the current period presentation. Principles of consolidation For the years ended December 31, 2016 and 2015, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; "BLAS"), Blue Line Capital, Inc. (a Colorado corporation; "Blue Line Capital"), Blue Line Protection Group (California), Inc. (a California corporation; "Blue Line California"), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; "Blue Line Illinois"), BLPG, Inc. (a Nevada corporation; "Blue Line Nevada"), Blue Line Protection Group (Washington), Inc. (a Washington corporation; "Blue Line Washington"). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the "Company." Basis of presentation The financial statements present the balance sheets, statements of operations, stockholder's equity (deficit) and cash flows of the Company. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. The Company has adopted December 31 as its fiscal year end. 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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of June 30, 2017 and December 31, 2016. Accounts receivable Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote. Allowance for uncollectible accounts The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. There was no allowance for doubtful customer receivables at June 30, 2017 and December 31, 2016. Property and equipment Property and equipment is recorded at cost and capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows: Automotive Vehicles 5 years Furniture and Equipment 7 years Buildings and Improvements 15 years The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as June 30, 2017 and December 31, 2016. Impairment of long-lived assets The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, "Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and its fair value or disposable value. As of June 30, 2017 and December 31, 2016, the Company determined that none of its long-term assets were impaired. Concentration of business and credit risk The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company's financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts, which may at times, exceed federally insured limits. The Company had three major customers which generated approximately 49% (24%, 13% and 12%) of total revenue in the six months ended June 30, 2017. The Company had five major customers which generated approximately 64% (23%, 15%, 9%, 9% and 8%) of total revenue in the six months ended June 30, 2016. Related party transactions FASB ASC 850, "Related Party Disclosures" requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer. Fair value of financial instruments The carrying amounts reflected in the balance sheets for cash, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale. As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Revenue recognition The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of its fees is reasonably assured. Other Income The Company received a reimbursement of $72,890 from its insurance company for damages caused by a hail storm during the six months ended June 30, 2017. Advertising costs The Company expenses all costs of advertising as incurred. There were $4,546, $1,580 $7,223 and $460 in advertising costs for the six and three months ended June 30, 2017 and 2016, respectively. General and administrative expenses The significant components of general and administrative expenses consist mainly of legal and professional fees and compensation. Stock-based compensation The Company records stock-based compensation in accordance with FASB ASC Topic 718, "Compensation Stock Compensation." FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee's requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 505-50, "Equity-Based Payments to Non-Employees", which requires that such equity instruments are recorded at their fair value on the measurement date, with the measurement of such compensation being subject to periodic adjustment as the underlying equity instruments vest. Cost of Revenue The Company's cost of revenue primarily consists of labor, fuel costs and items purchased by the Company specifically purposed for the benefit of the Company's client. Basic and Diluted Earnings per share Net loss per share is provided in accordance with FASB ASC 260-10, "Earnings per Share". Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Dividends The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception. Income Taxes The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Recent Pronouncements The Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company. |
Note 3 - Going Concern
Note 3 - Going Concern | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 3 - Going Concern | Note 3 Going concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has a net loss of $566,174 for the six months ended June 30, 2017, accumulated deficit of $7,537,964 and had a working capital deficit of $1,850,230 as of June 30, 2017. These conditions raise substantial doubt about the Company's ability to continue as a going concern. In order to continue as a going concern, the Company will need, among other things, additional capital resources. The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments that might arise from this uncertainty. |
Note 4 - Commitments and Contin
Note 4 - Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 4 - Commitments and Contingencies | Note 4 Commitments and contingencies Contingencies On December 28, 2015 Patrick Deparini, the Company's former CFO resigned. Mr. Deparini purports his resignation was made pursuant to a termination clause for other than cause if he is required to undertake other responsibilities other then set forth in his employment agreement. Mr., Deparini claims through the date of his resignation he is owed a total of $154,000 in unreimbursed compensation, $575 in accrued authorized expenses and the remaining balance of his base salary as defined in the employment agreement in the amount of $179,000. As of December 31, 2016 and 2015 the Company has accrued a total of $125,575 contingent liabilities On February 6, 2017, The Company received a Notification of Wage Claim from the State of Nevada Department of Business & Industry Office of the Labor Commissioner stating that Patrick Deparini had filed a claim for unpaid wages with the Office of the Labor Commissioner (the "Commissioner"). The notification states that Mr. Deparini maintains he was not paid for all hours worked between February 3, 3015 and December 28, 2015 for a total amount owed of $99,000. The Company disputed Mr. Deparini's claim with the Commissioner and responded by explaining to the Commissioner that Mr. Deparini improperly categorized his dispute with the Company as a wage claim, which it is not. If litigation is commenced the Company will attempt a reasonable out-of-court settlement and if such efforts are not successful, will defend the litigation. On November 6, 2015 Daniel Sullivan sent a wage claim demand. Mr. Sullivan purports to have had an Independent Contractor Agreement with the Company which provides he is entitled to certain compensation and to be reimbursed for Company expenses. The demand claims unpaid compensation in the amount of $8,055 and unreimbursed expenses in the amount of $154,409. The Company denies the agreement was ever signed. As of June 30, 2017 and December 31, 2016 the Company accrued a total of $88,968 contingent liabilities. If litigation is commenced the Company will attempt a reasonable out-of-court settlement and if such efforts are not successful, will defend the litigation. Mile High Real Estate Group, an entity owned by Mr. Sullivan, sent correspondence stating the Mr. Sullivan and/or Mile High Real Estate loaned the Company either directly or directly to contractors, material suppliers or utilities for operating and building remodeling in the amount of $98,150. Counsel for Mr. Sullivan stated that he was still compiling information. The Company is investigating whether Mr. Sullivan and/or Mile High Real Estate Group ever made the alleged loans. If the alleged loan was actually made, the Company will seek an out-of-court settlement. As of June 30, 2017 and December 31, 2016 the Company accrued a total of $98,150. On April 14, 2016, the Company entered into an agreement with an unrelated third party to provide the Company with investor relations services. Upon signing the agreement, the Company paid the investor relations consultant $75,000 and agreed to issue the consultant 1,500,000 shares of its restricted common stock. The agreement requires the Company to pay the consultant an additional $75,000 prior to June 14, 2016. The Company cancelled the agreement and is of the opinion that the shares are not owed to the consultant. As of June 30, 2017 and December 31, 2016 there was no payable recorded. Leases On February 15, 2014 the Company entered into a sublease agreement for approximately 2,000 square feet of office space on a month to month basis contingent on the lessor's master lease for the premises. The lease amount adjusts yearly and the current lease is $1,614 per month. On October 27, 2016 the Company sold its building located at 5765 Logan Street, Denver, Colorado to an unrelated third party for $1,400,000. The Company repaid the mortgage on the building in the amount of $677,681. After the sale, the Company leased the building from the purchaser of the property. The lease is for an initial term of ten years, with the Company having the option to extend the term of the lease for two additional five year periods. The lease requires rental payments of $10,000 per month and will increase 2% annually. The Company paid a $30,000 deposit at the inception of the lease. Future minimum lease payments 2017 $ 60,100 2018 122,604 2019 125,056 2020 127,557 2021 130,108 2022 and thereafter 654,539 Total minimum lease payments $ 1,219,964 |
Note 5 - Fixed Assets and Const
Note 5 - Fixed Assets and Construction in Progress | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 5 - Fixed Assets and Construction in Progress | Note 5 Fixed assets and construction in progress Machinery and equipment consisted of the following at: June 30, 2017 December 31, 2016 Automotive vehicles $ 194,882 $ 194,882 Furniture and equipment 54,904 53,314 Fixed assets, total 249,786 248,196 Total : accumulated depreciation (139,287 ) (115,309 ) Fixed assets, net (Machinery and equipment, net) $ 110,499 $ 132,887 Depreciation expense for the three and six months ended June 30, 2017 and 2016 totaled $11,807, $23,978, $15,822 and $26,381, respectively. |
Note 6 - Notes Payable
Note 6 - Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 6 - Notes Payable | Note 6 Notes payable Notes payable to non-related parties During February 2015, the Company borrowed $50,000 from a non-affiliated person. The loan is due and payable on demand with interest at 10% per annum. As of June 30, 2017 and December 31, 2016, the principal balance owed on this loan was $50,000 and $50,000, respectively. During April 2015, the Company borrowed $25,000 from a non-affiliated person. The loan is due and payable on demand with interest at 6% per year and has a 5% per month penalty upon default. As of June 30, 2017 and December 31, 2016, the principal balance owed on this loan was $25,000 and $25,000, respectively. On January 5, 2016, the Company borrowed $10,000 from a non-affiliated person. The loan was due and payable on January 5, 2017 and bore interest at 5% per annum. The principal balance owed on this loan at June 30, 2017 and December 31, 2016 was $10,000 and $10,000, respectively. The note is currently past due. On September 21, 2016, the Company borrowed $100,000 from a non-affiliated person. The loan was due and payable on December 21, 2016 and bore interest at 60% per year. The lender extended the loan and waived the default fee of 120%. The loan was repaid on February 15, 2017. The Company paid $5,000 in fees in connection with this loan in 2016. As of June 30, 2017 and December 31, 2016, the principal balance owed on this loan was $0 and $100,000, respectively. On April 13, 2017 the Company signed a Merchant Agreement with a lender. Under the agreement the Company received $63,700 in exchange for rights to all customer receipts until the lender is paid $89,700, which is collected at the rate of $11,213 per month with 15% interest per year. The Company recorded a debt discount of $26,000 and recorded $8,145 amortization expense for the six months ended June 30, 2017. As of June 30, 2017 the unamortized discount was $17,855 and outstanding loan amount was $67,275. The Company repaid a total of $22,425 during the six months ended June 30, 2017, The payments were secured by second position rights to all customer receipts until the loan has been paid in full. Convertible notes payable to non-related party On January 4, 2017 the Company borrowed $125,000 from an unrelated third party. The loan has a maturity date of October 28, 2017 and bears interest at the rate of 8% per year. The Company paid $2,000 of fees associated with the loan, which was fully amortized during the three months ended March 31, 2017. If the loan is not paid when due, any unpaid amount will bear interest at 22% per year. The Lender is entitled, at its option, at any time after July 3, 2017, (180 days from date of the note) to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the Company's common stock at a price per share equal to 58% of the average of the five lowest trading prices for the 25 trading days immediately preceding the conversion date. The note is not convertible as of June 30, 2017, therefore no derivatives were recorded. On April 13, 2017 the Company borrowed $65,500 from an unrelated third party. The loan has a maturity date of January 25, 2018 and bears interest at the rate of 8% per year. The Company paid $3,500 of fees associate with the loan, which was fully amortized during the six months ended June 30, 2017. If the loan is not paid when due, any unpaid amount will bear interest at 21% per year. The Lender is entitled, at its option, at any time after January 25, 2018 to convert all or any part of the outstanding and unpaid principal and accrued interest into shares of the Company's common stock at a price per share equal to 58% of the average of the five lowest trading prices for the 25 trading days immediately preceding the conversion date. The note is not convertible as of June 30, 2017, therefore no derivatives were recorded. |
Note 7 - Notes Payable - Relate
Note 7 - Notes Payable - Related Parties | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 7 - Notes Payable - Related Parties | Note 7 Notes payable related parties On July 31, 2014, the Company borrowed $98,150 from an entity controlled by an officer and shareholder of the Company. The loan is due and payable on demand and bears no interest. As of June 30, 2017 and December 31, 2016, the principal balance owed on this loan is $98,150 and $98,150, respectively. As of December 31, 2014, a related party loaned the Company $10,000, in the form of cash and expenses paid on behalf of the Company. The loan is due and payable on demand and bears no interest. During the year ended December 31, 2015 the Company borrowed an additional $20,000. During the three months ended March 31, 2017 the Company borrowed and additional $15,000 and repaid $15,000. As of June 30, 2017 and December 31, 2016, the principal balance owed on this loan was $30,000 and $30,000, respectively. As of December 31, 2014, a related party loaned the Company $180,121, in the form of cash and expenses paid on behalf of the Company. The loan is due and payable on demand and bears no interest. The Company repaid $125,500 towards this note during 2015 and as of June 30, 2017 and December 31, 2016; the principal balance owed on this loan was $54,621 and $54,621, respectively. During 2015, the Company borrowed $43,575 from its former CFO and repaid $43,000 of the loan. The note is non-interest bearing, and due on demand. As of June 30, 2017 and December 31, 2016 the principal amount owed on this loan was $575. During October 2015, the Company borrowed $30,000 from an entity controlled by an officer of the Company. The loan is due and payable on demand and is non-interest bearing. During the year ended December 31, 2016, the Company repaid $135,000 and borrowed an additional $135,000 from the same related party. As of June 30, 2017 and December 31, 2016, the principal balance owed on this loan was $30,000 and $30,000, respectively. On July 7, 2016, the Company borrowed $73,000 from a related party. The loan was due and payable on July 7, 2017 and bore interest at 5% per annum. The principal balance owed on this loan at June 30, 2017 and December 31, 2016 was $73,000 and $73,000, respectively. On August 8, 2016, the Company entered into, an promissory note with Hypur Inc., a Nevada Corporation which is a related party pursuant to which the Company to borrow $52,000. The loan was due and payable on August 10, 2017 and bore interest at 18% per annum. The principal balance owed on this loan at June 30, 2017 and December 31, 2016 was $52,000 and $52,000, respectively. On September 20, 2016, the Company borrowed $47,500 from Hypur Inc., which is a related party. The loan is due and payable on December 20, 2016 and bears interest at 18% per annum. The principal balance owed on this loan at June 30, 2017 and December 31, 2016 was $47,500 and $47,500, respectively. The loan is currently past due and in default. Convertible notes payable to related party In November 2015, the Company entered into an arrangement with a related party, whereby the Company borrowed $25,000 in Convertible Notes. The Convertible Note bears interest at a rate of 5% per annum and payable quarterly in arrears and matures twelve months from the date of issuance, and is convertible into shares of the Company's common stock at a per share conversion price equal to $0.025 the note was due on November 4, 2016. In December 2015 the lender loaned the Company an additional $20,000 with same terms except that it is payable upon demand. As of June 30 2017 and December 31, 2016, the Company owed a total of $45,000 and $45,000, respectively In July 2015, the Company entered into an arrangement with a related party, whereby the Company could borrow up to $500,000 in Convertible Notes. The Convertible Note bears interest at a rate of 5% per annum and payable quarterly in arrears and matures twelve months from the date of issuance, and is convertible into shares of the Company's common stock at a per share conversion price equal to $0.025. Upon the occurrence and during the continuation of an event of default, the holder may require the Company to redeem all or any portion of this Note in cash at a price equal to 150% of the principal amount. During the three months ended March 31, 2017, the Company borrowed an additional $110,000. As of June 30, 2017 and December 31, 2016, the Company owed a total of $500,000 and $390,000, respectively. As of June 30, 2017 and December 31, 2016 there is a total of $390,000 and $390,000 of the notes are past due, respectively. Since the debt holder has not elect the right to require the Company to redeem the note at a price equal to 150% of the principal amount, the terms stated prior to maturity are still in effect. On September 1, 2016, the Company entered into, an convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the "Hypur Ventures") which is a related party pursuant to which the Company to borrow $75,000. The loan was due 180 days from the date of issuance and bears interest at 10% per annum. The note is convertible into common stock at a price of $.05 per share. The note is mandatory redeemable into common stock if the price per share is over $.50 per share during a 10 day period. The principal balance owed on this loan at June 30, 2017 and December 31, 2016 was $75,000 and $75,000, respectively. On October 14, 2016, the Company entered into, an convertible promissory note with Hypur Ventures, L.P., a Delaware limited partnership (the "Hypur Ventures") which is a related party pursuant to which the Company to borrow $100,000. The loan was due 180 days from the date of issuance and bears interest at 10% per annum. The note is convertible into common stock at a price of $.05 per share. The note is mandatory redeemable into common stock if the price per share is over $.50 per share during a 10 day period. The principal balance owed on this loan at June 30, 2017 and December 31, 2016 was $100,000 and $100,000, respectively. On March 7, 2017, the Company borrowed $100,000 from Hypur Ventures, L.P., a related party. The loan is due 180 days from March 7, 2017 and bears interest at 10% per annum. The loan is convertible into shares of the Company's common stock at a price of $.05 per share. The loan will automatically convert into shares of the Company's common stock if the price of the Company's common stock is over $.50 per share during any ten-day period. The principal balance owed on this loan at June 30, 2017 was $100,000. On May 26, 2017, the Company borrowed $100,000 from CGDK, a related party. The loan is due 360 days from May 26, 2017 and bears interest at 5% per annum. The loan is convertible into shares of the Company's common stock at a price of $.025 per share. The loan will automatically convert into shares of the Company's common stock if the price of the Company's common stock is over $.25 per share during any ten-day period. The principal balance owed on this loan at June 30, 2017 was $100,000. The Company evaluated the convertible note for possible embedded derivatives and concluded that none exist. However, the Company concluded a portion of the note should be allocated to additional paid-in capital as a beneficial conversion feature at the issuance date, since the conversion price on that date was lower than the fair market value of the underlying stock. Resultantly, a discount of $249,440, of which $71,400 was recorded during the six months ended June 30, 2017, was attributed to the beneficial conversion feature of the note, which amount is being amortized through the maturity date of the note. As of June 30, 2017 and 2016, a total of $23,426 and $46,700, respectively has been amortized and recorded as interest expense, leaving a balance of $47,974 and $96,666 in discounts related to the beneficial conversion feature of this note. The carrying amount of the convertible note, net of the unamortized debt discount, was $872,026 and $610,000 as of June 30, 2017 and December 31, 2016, respectively. |
Note 8 - Long Term Notes Payabl
Note 8 - Long Term Notes Payable | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 8 - Long Term Notes Payable | Note 8 Long term notes payable On November 21, 2014, the Company purchased a vehicle for $20,827, net of discounts. The Company financed the $20,827 at an interest rate of 2.42% for five years, with a maturity date of December 5, 2019. As of June 30, 2017 and December 31, 2016, the total principal balance of the note is $10,733 and $12,801, respectively, of which $6,518 and $8,664 is considered a long-term liability and $4,215 and $4,137 is considered a current liability. |
Note 9 - Stockholders' Equity
Note 9 - Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 9 - Stockholders' Equity | Note 9 Stockholders' equity The Company was originally authorized to issue 100,000,000 shares of common stock and 100,000,000 shares of preferred stock. On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held. Additionally, the number of authorized shares increased to 1,400,000,000 shares of common stock. All references to share and per share amounts in the consolidated financial statements and these notes thereto have been retroactively restated to reflect the forward stock split. Common stock During the year ended December 31, 2016, the Company entered two consulting agreements for business advisory services. During the year ended December 31, 2016 the Company issued a total of 2,000,000 shares of common stock to the consultant for business advisory services valued at $88,000. The certificate for these shares was issued subsequent to December 31, 2016. Preferred stock On May 3, 2016, the Company entered into, an agreement with Hypur Ventures, L.P., a Delaware limited partnership (the "Hypur Ventures") which is a related party pursuant to which the Company sold to Hypur Ventures, in a private placement, 10,000,000 shares of the Company's preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of $0.10, at a purchase price of $0.05 per share for gross proceeds of $500,000. The shares of preferred stock are convertible into shares of the Company's common stock. The preferred stock shall have such other rights, preferences and privileges to be set forth in a certificate of designation to be filed with the Secretary of State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it contained a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was determined to be $114,229. The beneficial conversion feature was fully amortized and recorded as a deemed dividend. Between July and August of 2016 Hypur Ventures purchased an additional 10,000,000 shares of the Company's preferred stock and 5,000,000 common stock warrants with a five year term and an exercise price of $0.10, at a purchase price of $0.05 per share for net proceeds of $445,000, net of legal fees of $55,000. The shares of preferred stock are convertible into shares of the Company's common stock. The preferred stock shall have such other rights, preferences and privileges to be set forth in a certificate of designation to be filed with the Secretary of State. The Company evaluated the convertible preferred stock under FASB ASC 470-20-30 and determined it does not contain a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was determined to be $0.The preferred stock is convertible at any time at the election of Hypur Ventures. The preferred stock shall automatically convert to common stock if the closing price of the Company's common stock equals or exceeds $.50 per share over any consecutive twenty day trading period. The preferred stock terms include a one-time purchase price preference. No preferential dividends apply to the preferred stock. The preferred stock attributes include weighted average anti-dilution protection, rights to appoint one director, pre-emptive rights to purchase future offerings of securities by the Company, demand and piggy-back registration rights. The preferred stock is convertible at any time at the election of Hypur Ventures. The preferred stock shall automatically convert to common stock if the closing price of the Company's common stock equals or exceeds $.50 per share over any consecutive twenty day trading period. The preferred stock terms include a one-time purchase price preference. No preferential dividends apply to the preferred stock. The preferred stock attributes include weighted average anti-dilution protection, rights to appoint one director, pre-emptive rights to purchase future offerings of securities by the Company, demand and piggy-back registration rights. The Company has reserved thirty million shares of common stock that may be issued upon the conversion and/or exercise of the preferred stock and the warrants. The preferred stock sold to Hypur Ventures will be subject to the terms and conditions of the Certificate of Designation, as well as further documentation to be drafted in accordance with the terms and conditions agreed upon between the Company and Hypur Ventures. |
Note 10 - Options and Warrants
Note 10 - Options and Warrants | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 10 - Options and Warrants | Note 10 Options and warrants Options All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-Scholes-Merton option valuation model. The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model. Volatility is an estimate based on the calculated historical volatility of similar entities in industry, in size and in financial leverage, whose share prices are publicly available. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award. The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term equal to the expected life of the award. During the six months ended June 30, 2017 a total of 20,000 stock options were forfeited by various employees of the Company. The following is a summary of the Company's stock option activity for the three months June 30, 2017: NumberOf Shares Weighted-Average Exercise Price Outstanding at December 31, 2016 24,753,405 $ 0.11 Granted - - Exercised - - Expired (133,333 ) $ 0.16 Forfeited (20,000 ) $ 0.12 Outstanding at June 30, 2017 24,600,072 $ 0.11 Options exercisable at December 31, 2016 20,000,484 $ 0.11 Options exercisable at June 30, 2017 23,168,542 $ 0.11 The following tables summarize information about stock options outstanding and exercisable at June 30, 2017: OPTIONS OUTSTANDING AND EXERCISABLE AT June 30, 2017 Range of Exercise Prices Number of Options Outstanding Weighted-Average Remaining Contractual Life in Years Weighted- Average Exercise Price Number Exercisable Weighted- Average Exercise Price 0.035 1.00 24,600,072 2.8 $ 0.11 23,168,542 $ 0.11 Total stock-based compensation expense in connection with options and modified awards recognized in the consolidated statement of operations for six months ended June 30, 2017 and 2016 was $38,069 and $38,438, respectively. The intrinsic value of stock options issued to related parties was $0 at June 30, 2017. Warrants The following is a summary of the Company's warrant activity for the period ended June 30, 2017: Number Of Shares Weighted-Average Exercise Price Outstanding at December 31, 2016 10,000,000 $ 0.10 Granted - $ - Exercised - $ - Cancelled - $ - Outstanding at June 30, 2017 10,000,000 $ 0.10 Options exercisable at June 30, 2017 10,000,000 $ 0.10 The following tables summarize information about warrants outstanding and exercisable at June 30, 2017 and December 31, 2016: WARRANTS OUTSTANDING AND EXERCISABLE AT JUNE 30, 2017 Range of Exercise Prices Number of Options Outstanding Weighted-Average Remaining Contractual Life in Years Weighted- Average Exercise Price Number Exercisable Weighted- Average Exercise Price $ 0.10 10,000,000 3.99 $ 0.10 10,000,000 $ 0.10 |
Note 11 - Subsequent Events
Note 11 - Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
Note 11 - Subsequent Events | Note 11 Subsequent Events In July The Company issued promissory note to Hypur Inc. in the amount of $150,000 the note bears and Interest rate: 18% (default interest 24%) and has a maturity date of July 17, 2017. In July The Company issued convertible promissory note to UTES 1970 LLC in the amount of $23,900 the note bears Interest at a rate: 18% (default interest 24%) and has a maturity date of July 30, 2017. The conversion feature: If an Event of Default remains uncured after 30 days the Holder has the option to convert the outstanding principal and accrued interest into common stock of the Company. Conversion Price: the lower of $0.015 and 60% of the closing price of the Company's common stock the day prior to the Conversion. The Company and Power Up Lending Group Ltd entered into a Securities Purchase Agreement for a convertible note of $125,000. Payment to the Company $122,000, net of $2,500 legal fees and $500 due diligence fee. The note bears an Interest rate: 8% (default interest 22%) and matures on April 30, 2018. The conversion Feature: Upon 180 days after the issuance, the Holder has the option to convert the outstanding principal and accrued interest into common stock of the Company. Conversion Price. The price: 58% of the average of the lowest 3 trading prices during the 10 Trading Day period prior to the Conversion. Covenants: The Borrower shall not, without the Holder's consent, sell, lease or dispose of any significant portion of its assets outside the ordinary course of business. |
Note 2 - Accounting Policies 17
Note 2 - Accounting Policies and Procedures: Interim Financial Statements (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Interim Financial Statements | Interim financial statements The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, these statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company's annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim periods are not indicative of annual results. |
Note 2 - Accounting Policies 18
Note 2 - Accounting Policies and Procedures: Reclassification (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Reclassification | Reclassification Certain amounts from prior periods have been reclassified to conform to the current period presentation. |
Note 2 - Accounting Policies 19
Note 2 - Accounting Policies and Procedures: Principles of Consolidation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Principles of Consolidation | Principles of consolidation For the years ended December 31, 2016 and 2015, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; "BLAS"), Blue Line Capital, Inc. (a Colorado corporation; "Blue Line Capital"), Blue Line Protection Group (California), Inc. (a California corporation; "Blue Line California"), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; "Blue Line Illinois"), BLPG, Inc. (a Nevada corporation; "Blue Line Nevada"), Blue Line Protection Group (Washington), Inc. (a Washington corporation; "Blue Line Washington"). All significant intercompany balances and transactions have been eliminated. BLPG and its subsidiaries are collectively referred herein to as the "Company." |
Note 2 - Accounting Policies 20
Note 2 - Accounting Policies and Procedures: Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Basis of Presentation | Basis of presentation The financial statements present the balance sheets, statements of operations, stockholder's equity (deficit) and cash flows of the Company. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. The Company has adopted December 31 as its fiscal year end. |
Note 2 - Accounting Policies 21
Note 2 - Accounting Policies and Procedures: Use of Estimates (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Use of Estimates | 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 and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Note 2 - Accounting Policies 22
Note 2 - Accounting Policies and Procedures: Cash and Cash Equivalents (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Cash and Cash Equivalents | Cash and cash equivalents The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of June 30, 2017 and December 31, 2016. |
Note 2 - Accounting Policies 23
Note 2 - Accounting Policies and Procedures: Accounts Receivable (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Accounts Receivable | Accounts receivable Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote. |
Note 2 - Accounting Policies 24
Note 2 - Accounting Policies and Procedures: Allowance For Uncollectible Accounts (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Allowance For Uncollectible Accounts | Allowance for uncollectible accounts The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. There was no allowance for doubtful customer receivables at June 30, 2017 and December 31, 2016. |
Note 2 - Accounting Policies 25
Note 2 - Accounting Policies and Procedures: Property and Equipment (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Property and Equipment | Property and equipment Property and equipment is recorded at cost and capitalized from the initial date of service. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows: Automotive Vehicles 5 years Furniture and Equipment 7 years Buildings and Improvements 15 years The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as June 30, 2017 and December 31, 2016. |
Note 2 - Accounting Policies 26
Note 2 - Accounting Policies and Procedures: Impairment of Long-lived Assets (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Impairment of Long-lived Assets | Impairment of long-lived assets The Company accounts for its long-lived assets in accordance with ASC Topic 360-10-05, "Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost or carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and its fair value or disposable value. As of June 30, 2017 and December 31, 2016, the Company determined that none of its long-term assets were impaired. |
Note 2 - Accounting Policies 27
Note 2 - Accounting Policies and Procedures: Concentration of Business and Credit Risk (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Concentration of Business and Credit Risk | Concentration of business and credit risk The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements. The Company's financial instruments that are exposed to concentration of credit risks consist primarily of cash. The Company maintains its cash in bank accounts, which may at times, exceed federally insured limits. The Company had three major customers which generated approximately 49% (24%, 13% and 12%) of total revenue in the six months ended June 30, 2017. The Company had five major customers which generated approximately 64% (23%, 15%, 9%, 9% and 8%) of total revenue in the six months ended June 30, 2016. |
Note 2 - Accounting Policies 28
Note 2 - Accounting Policies and Procedures: Related Party Transactions (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Related Party Transactions | Related party transactions FASB ASC 850, "Related Party Disclosures" requires companies to include in their financial statements disclosures of material related party transactions. The Company discloses all material related party transactions. Related parties are defined to include any principal owner, director or executive officer of the Company and any immediate family members of a principal owner, director or executive officer. |
Note 2 - Accounting Policies 29
Note 2 - Accounting Policies and Procedures: Fair Value of Financial Instruments (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Fair Value of Financial Instruments | Fair value of financial instruments The carrying amounts reflected in the balance sheets for cash, accounts payable and related party payables approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale. As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). |
Note 2 - Accounting Policies 30
Note 2 - Accounting Policies and Procedures: Revenue Recognition (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Revenue Recognition | Revenue recognition The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of its fees is reasonably assured. |
Note 2 - Accounting Policies 31
Note 2 - Accounting Policies and Procedures: Other Income (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Other Income | Other Income The Company received a reimbursement of $72,890 from its insurance company for damages caused by a hail storm during the six months ended June 30, 2017. |
Note 2 - Accounting Policies 32
Note 2 - Accounting Policies and Procedures: Advertising Costs (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Advertising Costs | Advertising costs The Company expenses all costs of advertising as incurred. There were $4,546, $1,580 $7,223 and $460 in advertising costs for the six and three months ended June 30, 2017 and 2016, respectively. |
Note 2 - Accounting Policies 33
Note 2 - Accounting Policies and Procedures: General and Administrative Expenses (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
General and Administrative Expenses | General and administrative expenses The significant components of general and administrative expenses consist mainly of legal and professional fees and compensation. |
Note 2 - Accounting Policies 34
Note 2 - Accounting Policies and Procedures: Stock-Based Compensation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Stock-Based Compensation | Stock-based compensation The Company records stock-based compensation in accordance with FASB ASC Topic 718, "Compensation Stock Compensation." FASB ASC Topic 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee's requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 505-50, "Equity-Based Payments to Non-Employees", which requires that such equity instruments are recorded at their fair value on the measurement date, with the measurement of such compensation being subject to periodic adjustment as the underlying equity instruments vest. |
Note 2 - Accounting Policies 35
Note 2 - Accounting Policies and Procedures: Cost of Revenue (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Cost of Revenue | Cost of Revenue The Company's cost of revenue primarily consists of labor, fuel costs and items purchased by the Company specifically purposed for the benefit of the Company's client. |
Note 2 - Accounting Policies 36
Note 2 - Accounting Policies and Procedures: Basic and Diluted Earnings Per Share (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Basic and Diluted Earnings Per Share | Basic and Diluted Earnings per share Net loss per share is provided in accordance with FASB ASC 260-10, "Earnings per Share". Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. |
Note 2 - Accounting Policies 37
Note 2 - Accounting Policies and Procedures: Dividends (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Dividends | Dividends The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid or declared since inception. |
Note 2 - Accounting Policies 38
Note 2 - Accounting Policies and Procedures: Income Taxes (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Income Taxes | Income Taxes The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. |
Note 2 - Accounting Policies 39
Note 2 - Accounting Policies and Procedures: Recent Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Recent Pronouncements | Recent Pronouncements The Company evaluated all recent accounting pronouncements issued and determined that the adoption of these pronouncements would not have a material effect on the financial position, results of operations or cash flows of the Company. |
Note 4 - Commitments and Cont40
Note 4 - Commitments and Contingencies: Contingencies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Contingencies | Contingencies On December 28, 2015 Patrick Deparini, the Company's former CFO resigned. Mr. Deparini purports his resignation was made pursuant to a termination clause for other than cause if he is required to undertake other responsibilities other then set forth in his employment agreement. Mr., Deparini claims through the date of his resignation he is owed a total of $154,000 in unreimbursed compensation, $575 in accrued authorized expenses and the remaining balance of his base salary as defined in the employment agreement in the amount of $179,000. As of December 31, 2016 and 2015 the Company has accrued a total of $125,575 contingent liabilities On February 6, 2017, The Company received a Notification of Wage Claim from the State of Nevada Department of Business & Industry Office of the Labor Commissioner stating that Patrick Deparini had filed a claim for unpaid wages with the Office of the Labor Commissioner (the "Commissioner"). The notification states that Mr. Deparini maintains he was not paid for all hours worked between February 3, 3015 and December 28, 2015 for a total amount owed of $99,000. The Company disputed Mr. Deparini's claim with the Commissioner and responded by explaining to the Commissioner that Mr. Deparini improperly categorized his dispute with the Company as a wage claim, which it is not. If litigation is commenced the Company will attempt a reasonable out-of-court settlement and if such efforts are not successful, will defend the litigation. On November 6, 2015 Daniel Sullivan sent a wage claim demand. Mr. Sullivan purports to have had an Independent Contractor Agreement with the Company which provides he is entitled to certain compensation and to be reimbursed for Company expenses. The demand claims unpaid compensation in the amount of $8,055 and unreimbursed expenses in the amount of $154,409. The Company denies the agreement was ever signed. As of June 30, 2017 and December 31, 2016 the Company accrued a total of $88,968 contingent liabilities. If litigation is commenced the Company will attempt a reasonable out-of-court settlement and if such efforts are not successful, will defend the litigation. Mile High Real Estate Group, an entity owned by Mr. Sullivan, sent correspondence stating the Mr. Sullivan and/or Mile High Real Estate loaned the Company either directly or directly to contractors, material suppliers or utilities for operating and building remodeling in the amount of $98,150. Counsel for Mr. Sullivan stated that he was still compiling information. The Company is investigating whether Mr. Sullivan and/or Mile High Real Estate Group ever made the alleged loans. If the alleged loan was actually made, the Company will seek an out-of-court settlement. As of June 30, 2017 and December 31, 2016 the Company accrued a total of $98,150. On April 14, 2016, the Company entered into an agreement with an unrelated third party to provide the Company with investor relations services. Upon signing the agreement, the Company paid the investor relations consultant $75,000 and agreed to issue the consultant 1,500,000 shares of its restricted common stock. The agreement requires the Company to pay the consultant an additional $75,000 prior to June 14, 2016. The Company cancelled the agreement and is of the opinion that the shares are not owed to the consultant. As of June 30, 2017 and December 31, 2016 there was no payable recorded. |
Note 4 - Commitments and Cont41
Note 4 - Commitments and Contingencies: Leases (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Leases | Leases On February 15, 2014 the Company entered into a sublease agreement for approximately 2,000 square feet of office space on a month to month basis contingent on the lessor's master lease for the premises. The lease amount adjusts yearly and the current lease is $1,614 per month. On October 27, 2016 the Company sold its building located at 5765 Logan Street, Denver, Colorado to an unrelated third party for $1,400,000. The Company repaid the mortgage on the building in the amount of $677,681. After the sale, the Company leased the building from the purchaser of the property. The lease is for an initial term of ten years, with the Company having the option to extend the term of the lease for two additional five year periods. The lease requires rental payments of $10,000 per month and will increase 2% annually. The Company paid a $30,000 deposit at the inception of the lease. Future minimum lease payments 2017 $ 60,100 2018 122,604 2019 125,056 2020 127,557 2021 130,108 2022 and thereafter 654,539 Total minimum lease payments $ 1,219,964 |
Note 4 - Commitments and Cont42
Note 4 - Commitments and Contingencies: Leases: Schedule of Future Minimum Lease Payments for Capital Leases (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments for Capital Leases | Future minimum lease payments 2017 $ 60,100 2018 122,604 2019 125,056 2020 127,557 2021 130,108 2022 and thereafter 654,539 Total minimum lease payments $ 1,219,964 |
Note 5 - Fixed Assets and Con43
Note 5 - Fixed Assets and Construction in Progress: Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Property, Plant and Equipment | June 30, 2017 December 31, 2016 Automotive vehicles $ 194,882 $ 194,882 Furniture and equipment 54,904 53,314 Fixed assets, total 249,786 248,196 Total : accumulated depreciation (139,287 ) (115,309 ) Fixed assets, net (Machinery and equipment, net) $ 110,499 $ 132,887 |
Note 10 - Options and Warrants_
Note 10 - Options and Warrants: Share-based Compensation, Stock Options, Activity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Share-based Compensation, Stock Options, Activity | NumberOf Shares Weighted-Average Exercise Price Outstanding at December 31, 2016 24,753,405 $ 0.11 Granted - - Exercised - - Expired (133,333 ) $ 0.16 Forfeited (20,000 ) $ 0.12 Outstanding at June 30, 2017 24,600,072 $ 0.11 Options exercisable at December 31, 2016 20,000,484 $ 0.11 Options exercisable at June 30, 2017 23,168,542 $ 0.11 |
Note 10 - Options and Warrant45
Note 10 - Options and Warrants: Share-based Compensation Arrangements by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding | OPTIONS OUTSTANDING AND EXERCISABLE AT June 30, 2017 Range of Exercise Prices Number of Options Outstanding Weighted-Average Remaining Contractual Life in Years Weighted- Average Exercise Price Number Exercisable Weighted- Average Exercise Price 0.035 1.00 24,600,072 2.8 $ 0.11 23,168,542 $ 0.11 |
Note 10 - Options and Warrant46
Note 10 - Options and Warrants: Schedule of Other Share-based Compensation, Activity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Other Share-based Compensation, Activity | Number Of Shares Weighted-Average Exercise Price Outstanding at December 31, 2016 10,000,000 $ 0.10 Granted - $ - Exercised - $ - Cancelled - $ - Outstanding at June 30, 2017 10,000,000 $ 0.10 Options exercisable at June 30, 2017 10,000,000 $ 0.10 |
Note 10 - Options and Warrant47
Note 10 - Options and Warrants: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants or Rights | WARRANTS OUTSTANDING AND EXERCISABLE AT JUNE 30, 2017 Range of Exercise Prices Number of Options Outstanding Weighted-Average Remaining Contractual Life in Years Weighted- Average Exercise Price Number Exercisable Weighted- Average Exercise Price $ 0.10 10,000,000 3.99 $ 0.10 10,000,000 $ 0.10 |
Note 1 - History and Organiza48
Note 1 - History and Organization of The Company (Details) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Preferred Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 1,400,000,000 | 1,400,000,000 |
Note 2 - Accounting Policies 49
Note 2 - Accounting Policies and Procedures: Other Income (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Details | |
Unusual or Infrequent Item, or Both, Insurance Proceeds | $ 72,890 |
Note 2 - Accounting Policies 50
Note 2 - Accounting Policies and Procedures: Advertising Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Advertising | $ 1,580 | $ 460 | $ 4,546 | $ 7,223 |
Note 3 - Going Concern (Details
Note 3 - Going Concern (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Details | |||||
Net loss | $ 221,744 | $ 530,842 | $ 566,174 | $ 931,221 | |
Accumulated deficit | 7,537,964 | 7,537,964 | $ 6,971,790 | ||
Capital | $ 1,850,230 | $ 1,850,230 |
Note 5 - Fixed Assets and Con52
Note 5 - Fixed Assets and Construction in Progress: Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Fixtures and Equipment, Gross | $ 194,882 | $ 194,882 |
Furniture and Fixtures, Gross | 54,904 | 53,314 |
Property, Plant and Equipment, Gross | 249,786 | 248,196 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (139,287) | (115,309) |
Machinery and equipment, net | $ 110,499 | $ 132,887 |
Note 5 - Fixed Assets and Con53
Note 5 - Fixed Assets and Construction in Progress (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Depreciation | $ 11,807 | $ 15,822 | $ 23,978 | $ 26,381 |
Note 7 - Notes Payable - Rela54
Note 7 - Notes Payable - Related Parties (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Convertible notes payable - related parties, net of unamortized discount | $ 872,026 | $ 610,000 |
Note 8 - Long Term Notes Paya55
Note 8 - Long Term Notes Payable (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Long-term debt | $ 6,518 | $ 8,664 |
Current portion of long-term debt | $ 4,137 |
Note 10 - Options and Warrants
Note 10 - Options and Warrants (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | 20,000 | |
Stock-based compensation expense | $ 38,069 | $ 38,438 |