SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2019

or

For the transition period from __ to ___

Commission File No. 000-56005

SKYWOLF WIND TURBINE CORP.

(Exact name of registrant as specified in its charter)

156 Court Street

Geneseo, NY 14454

(Address of principal executive offices) (zip code)

(585) 447-9135
(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 

Yes x    No ¨

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(1) of the Exchange Act. ¨

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

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

As of November 14, 2019, the Company had 83,318,490 shares of its common stock, par value $.001 per share, issued and outstanding.

UNITED CAPITAL CONSULTANTS INC.
TABLE OF CONTENTS

 SKYWOLF WIND TURBINE CORP.

Balance Sheets

September 30, 2019 and December 31, 2018

The accompanying notes are an integral part of these condensed financial statements.

SKYWOLF WIND TURBINE CORP.

Statements of Operations

(Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

SKYWOLF WIND TURBINE CORP.

Statements of Changes in Shareholders' (Deficit)

For the Three Months and Nine Months Ended September 30, 2019 (Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

SKYWOLF WIND TURBINE CORP.

Statements of Changes in Shareholders' (Deficit)

For the Three Months and Nine Months Ended September 30, 2018 (Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

SKYWOLF WIND TURBINE CORP.

Statements of Cash Flows

For the Nine Months Ended September 30, 2019 and 2018 (Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 1 – Description of Business and Basis of Presentation:

Skywolf Wind Turbine Corp. (the “Company” or “Skywolf”) is the designer, manufacturer and supplier of a patented Solar Hybrid Diffused Augmented Wind Turbine aka “The Hybrid,” which uses wind and solar energy sources combined in one unit.

Its products are used in generating electricity to power homes and businesses, as well as charge batteries, and are sold both directly and through independent sales representatives.

The Company was incorporated in New York State in 2010 and is located in Geneseo, New York. Its founder, Gerald E. Brock, serves as the sole director and president.

The information furnished herewith reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading.

The consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s latest annual report on Form 10-K for the year ended December 31, 2018 (“Annual Report”), filed on April 1, 2019. These interim financial statements are unaudited.

Our significant accounting policies are described in the notes to the financial statements in the Company’s Annual Report. It is important to understand that the application of generally accepted accounting principles in the United States of America involves certain assumptions, judgments and estimates that affect reported amounts of assets, liabilities, revenues and expenses. Thus, the application of these principles can have varying results from company to company.

Note 2 – Summary of Significant Accounting Policies:

Use of Estimates – The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash – For financial statement presentation purposes, the Company considers all short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents. There were no cash equivalents at September 30, 2019 or December 31, 2018. The Company maintains its cash in bank deposit accounts, which at times may exceed federally-insured limits. The Company believes it is not exposed to any significant credit risk as a result of any non-performance by the financial institution.

Accounts Receivable – Credit is granted to substantially all customers. The Company carries its accounts receivable at invoice amount less any allowance for doubtful accounts.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 2 – Summary of Significant Accounting Policies (Continued):

Allowance For Doubtful Accounts – As of September 30, 2019 and December 31, 2018 there are no anticipated bad debts. Therefore, an allowance for doubtful accounts was not recorded.

Inventory – Inventory consists of unassembled parts and is stated at the lower of cost or net realizable value. The Company capitalizes applicable direct and indirect costs incurred in inventory production. Obsolete inventory is reserved for and there was no reserve at September 30, 2019 or December 31, 2018.

Property and Equipment – Property and equipment consists of software and equipment. Depreciation is recorded on a straight-line basis over periods considered by management to be the assets' useful lives. Expenditures for repairs, minor items and maintenance are charged to operations as incurred. Any gain or loss upon sale or retirement due to obsolescence is recorded in operating results in the period it takes place. Software is being depreciated over three years and equipment is being depreciated over five years.

Impairment of Long-Lived Assets – Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net discounted cash flows expected to be generated by the asset, including its ultimate disposition. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of an asset exceeds the fair value of the asset. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the asset. There was no impairment considered necessary for the period ended September 30, 2019 or for the year ended December 31, 2018.

Fair Value of Financial Instruments – The carrying value of cash, prepaid expenses, accounts payable, loan payable and accrued expenses are reasonable estimates of their fair value due to their short maturity. The fair value of the loan from the principal shareholder is expected to be less than the carrying value due to the lack of interest being charged and uncertainty regarding timing of repayment. The fair value is further dependent on the Company’s ability to generate cash.

Revenue Recognition – Beginning January 1, 2018 the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 606. This guidance requires us to recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgements in measurements and recognition. The new guidance did not have an impact on the historical or current financial statements based on the lack of revenue. This new standard will be considered in the future as contracts are entered into.

Advertising Costs – Advertising costs are expensed when incurred. Advertising costs were $622 and $3,156 and $1,025 and $7,087 for the three and nine months ending September 30, 2019 and 2018, respectively.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 2 – Summary of Significant Accounting Policies (Continued):

Research and Development Costs – All costs of research and development are charged to operations as incurred. Research and development costs consist of expenses for inventing and testing turbine prototypes, including the materials and other direct costs of constructing prototype turbines, as well as related equipment employed in research and development activity.

Income Taxes – The Company accounts for income taxes in accordance with FASB ASC 740. Deferred taxes are provided using the “asset and liability approach." That requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. This method uses statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment. Deferred assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carryforwards. Deferred income tax expense/benefit for a year is the net change in that year's deferred tax asset and liability balances.

The Company has deferred tax assets of its net operating loss and tax credit carryforwards. However, due to the uncertainty of future profits to absorb the carryforwards, an offsetting valuation allowance was recorded to reduce all the deferred tax assets to zero.

Basic and Diluted Loss per Share – Basic earnings or loss per share reflect the weighted average of shares issued and outstanding during the period. Diluted earnings per share are computed including the additional shares that would have been outstanding if dilutive potential shares (option or warrant shares, for example) were issued. No dilutive potential shares exist.

Note 3 – Going Concern:

The Company has adopted Accounting Standards Update No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). As a result, management is required to evaluate whether there are relevant conditions and events that would indicate the probability of the Company’s inability to meet its obligations as they become due within one year of the date the financial statements are issued.

The financial statements have been prepared under the assumption that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the financial statements, the Company had an accumulated deficit of $4,510,259 as of September 30, 2019, a net loss of $649,033 and net cash used in operating activities of $311,672 for the nine months ended September 30, 2019. On July 22, 2019, Skywolf Wind Turbine Corporation and GR8 Seas Holdings, Inc. (Buyer) entered into a two year, $13,000,000 definitive sales and purchase agreement. The Company is continually looking to sell its products to generate additional revenue and operating cash flow.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 3 – Going Concern (Continued):

Through oral conveyance, management affirms that it is probable that it will meet its obligations through revenue from the sale of the Company’s wind turbines, advances from the Company’s Director and controlling shareholders, and through the sale of stock. However, since these have not been received or agreed to in writing as of the issuance of these financial statements, the conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date these financial statements are issued.

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 – Property and Equipment:

Property and equipment consists of the following at September 30, 2019 and December 31, 2018:

Depreciation expense for the three and nine months ended September 30, 2019 was $1,865 and $5,594, respectively. Depreciation expense for the three and nine months ended September 30, 2018 was $2,014 and $5,576, respectively. Depreciation is included in other general and administrative expenses on the statements of operations.

Note 5 – Shareholder Loans:

Unsecured loan balances from the founder and major shareholder as of September 30, 2019 was $782,350 and as of December 31, 2018 was $776,850. Net loans by the Company during the nine months ended September 30, 2019 were $5,500. The loans are non-interest bearing and have no repayment terms.

On January 7, 2019 the Company borrowed $20,000 from a shareholder. Payment is due by July 14, 2019. The payment was subsequently extended until October 14, 2019. The loan payback including accrued interest is $30,000. In addition, this shareholder received 195,000 shares of common stock and this was recorded as interest expense. The loan is outstanding as of the filing date.

On January 23, 2019 to the Company borrowed $25,000 from a shareholder. Payment is past due. The loan payback including accrued interest is $35,000. In addition, this shareholder received 50,000 shares of common stock valued at $10,000, and this was recorded as interest expense. This loan is outstanding as of the filing date.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 5 – Shareholder Loans (Continued):

On June 13, 2019 the Company borrowed $30,000 from a shareholder. The loan payback including interest is $39,000 plus late fees of $8,970. The loan was due August 13, 2019. The loan is outstanding as of the filing date.

Note 6 – Loans Payable:

Loans payable consists of the following loans from various financing companies. All loans are collateralized by business assets at September 30, 2019 and December 31, 2018 and are personally guaranteed by the majority shareholder.

On March 8, 2018 the Company obtained a $13,700 business use line of credit from a financing company. On February 12, 2019 an additional $2,900 was borrowed on this line of credit. The loan’s interest rate is 44.27% and will be paid back on a monthly basis of approximately $837. The loan’s final payment is due in March 2021. As of September 30, 2019, the outstanding balance on this loan is $10,979. The loan balance at December 31, 2018 was $11,266.

On September 14, 2018, the Company entered into a financing agreement resulting in proceeds of $56,400. The Company is required to repay $73,320. The loan is being paid back in daily installments of $333. The loan’s interest rate is 62%. The final payment was due in August 2019. As of September 30, 2019, the loan was paid in full. The loan balance at December 31, 2018 was $42,263.

On September 28, 2018, the Company entered into a financing agreement resulting in proceeds of $49,999. On April 25, 2019 this loan was refinanced in the amount of $30,000. The Company is required to repay $47,850. The loan is being paid back in weekly installments of $2,991. Based on these minimum payments the amount is expected to be repaid in August 2019. Based on these terms the discount given on the purchase was $17,850, representing an imputed interest of approximately 310%. As of September 30, 2019, the loan was paid in full. The balance at December 31, 2018 was $35,208.

On May 15, 2019, the Company entered into a financing agreement resulting in proceeds of $20,000. The Company is required to repay $29,980 from future revenue/receipts of the Company. The loan is being paid back in daily installments of $587. Based on these terms the discount given on the purchase was $9,980, representing an imputed interest of approximately 411%. As of September 30, 2019, the loan was paid in full. The loan balance at December 31, 2018 was $5,132 which was refinanced on May 15, 2019.

On October 29, 2018, the Company entered into a financing agreement resulting in proceeds of $15,000. On February 21, 2019 an additional $9,402 was borrowed to bring the outstanding balance to $15,000. The loan is being paid back in daily installments of $399. Based on these terms the discount given on the purchase was $6,945, representing an imputed interest of approximately 351%. This loan was paid off in 2019. The loan balance at December 31, 2018 was $8,747.

During the first quarter the Company paid off a financing agreement that had a loan balance of $3,335 as of December 31, 2018.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 6 – Loans Payable (Continued):

On May 15, 2019 the Company entered into a financing agreement resulting in proceeds of $15,000. The Company is required to repay $22,350. The loan is being paid back in daily installments of $499. The loan’s interest rate is 480%. The final payment is due in July 2019. As of September 30, 2019 this loan was paid in full.

On May 15, 2019 the Company entered into a financing agreement resulting in proceeds of $15,000. The Company is required to repay $22,350. The loan is being paid back in daily installments of $499. The loan’s interest rate is 480%. The final payment is due in July 2019. As of September 30, 2019, this loan was paid in full.

On May 15, 2019 the Company entered into a financing agreement resulting in proceeds of $10,000. The Company is required to repay $15,200. The loan is being paid back in daily installments of $190. The loan’s interest rate is 287%. The final payment is due in September of 2019. As of September 30, 2019 this loan was paid in full.

Note 7 – Shareholders’ Deficit:

During the nine months ended September 30, 2019, 2,541,000 shares of stock were issued in exchange for $317,500, 331,907 shares were issued to consultants for professional fees of $65,856 and 245,000 shares were issued to debt holders that are also shareholders for loan proceeds and these amounts have been recorded as interest expense of $49,000. In addition, 1,200,000 shares were issued to employees. For the employee shares issued compensation expense of $120,000 was recorded.

During the nine months ended September 30, 2018, 1,792,333 shares of stock were issued in exchange for $265,300 and 45,000 shares were issued for professional fees of $6,000.

SKYWOLF WIND TURBINE CORP.

Notes to Financial Statements

September 30, 2019

Note 8 – Leases:

The lease for the Company's facility in Geneseo, NY is month to month. The lease amount is $1,500 per month.

In February 2016, the FASB issued amended guidance for lease arrangements to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The new standard requires entities to recognize a liability for their lease obligations and a corresponding right-of-use asset, initially measured at the present value of the lease payments. Subsequent accounting depends on whether the agreement is deemed to be a financing or operating lease. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. The ASU requires that assets and liabilities be presented and disclosed separately, and the liabilities must be classified appropriately as current and noncurrent. The ASU further requires additional disclosure of certain qualitative and quantitative information related to lease agreements. The ASU was effective for the Company beginning on January 1, 2019, at which time we adopted the new standard using the modified retrospective approach as of the date of adoption. Upon adoption, we did not recognize a right-of-use asset or a lease liability related to the existing building lease as it is a month to month lease. However, on September 1, 2019 the Company leased a warehouse in Avon, NY for manufacturing and assembly operations. The lease commenced September 1, 2019 for a period of two years at a monthly lease cost of $4,500 per month. A summary of the impact to the Balance Sheet as of January 1, 2019 and the balances as of September 30, 2019 are as follows:

Note 9 – Related Party

The Company has a vendor that it contracts business with who is related to the majority shareholder. The vendor is also a shareholder of the Company. There were no amounts paid to this vendor for nine months ended September 30, 2019 and for the nine months ended June 30, 2018.

Note 10 – Subsequent Events:

The Company borrowed $10,000 from shareholders. A total of $12,000 was to be paid back by October 20, 2019 but still remains outstanding Per the agreement, interest accrues at 1% per day late. As of the filing date there is additional accrued interest of approximately $2,640.

In addition, the Company sold 52,500 shares of stock for $10,500 and issued 5,250 shares to agents.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our audited financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.

Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. This forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the Company’s industry, the success of our business development, marketing and sales activities, vigorous competition in the Company’s industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.

Overview

SkyWolf Wind Turbine Corp. (the “Company” or “SkyWolf”) was incorporated under the laws of the State of New York on August 3, 2010 and was formerly known as Brock Renewable Energy Research & Development Corporation. The Company is the designer, manufacturer, and supplier of a patented Solar Hybrid Diffused Augmented Wind Turbine aka “The Hybrid,” which uses wind and solar energy sources combined in one unit. The Company currently has four full-time employees, multiple consultants and several independent sales representatives. The Company plans to increase the size of its workforce significantly during the fourth quarter. The administrative offices are located in a single 5,000 sq. ft. building where products are developed, marketed and sold along with feasibility studies which are conducted to determine optimum site location. In September the Company leased an additional building located in Avon, NY. The Company will use this space for manufacturing and assembly.

The Company’s s headquarters and administrative offices are located at 156 Court Street, Geneseo, New York 14454. The Company’s manufacturing and production facility is located at 2979 Lakeville Road, Avon, NY 14414. The Company’s main phone number is (585) 447-9135. The Company’s fiscal year end is December 31. The Company has not filed for bankruptcy, receivership or any similar proceedings nor is in the process of filing for bankruptcy, receivership or any similar proceedings.

SkyWolf sells its patented Solar Hybrid Wind Turbine (HDAWT), which is designed to extract energy from both wind and sun simultaneously or individually depending on which energy source is available. In addition, the HDAWT only requires local building permits for installation. We believe that this technology would be useful to homeowners, farmers, municipalities, colleges, mini-grids, prisons, airports, commercial properties and in undeveloped countries, since wind and sun energy are bountiful resources available world-wide.

On July 22, 2019, Company and GR8 Seas Holdings, Inc. (“Buyer”) entered into a definitive sales and purchase agreement (the "Agreement"). Pursuant to the Agreement, the Buyer has agreed to purchase 500 of the Company's SkyWolf Model 35H-A Hybrid Diffused Augmented wind turbines at the price of $26,000 each or $13,000,000 total. The purchase price of the turbines is subject to increase if the cost to the Company of any components used in the manufacturing of the turbines increases as the result of any tariff. The turbines will be purchased by the Buyer pursuant to release orders to be issued by the Buyer over 24 months from the date of the Agreement. The initial release order for 150 turbines was issued by the Buyer simultaneously with the execution and delivery of the Agreement. The initial order of 150 turbines is expected to be delivered to the Buyer in three monthly installments of 50 turbines each. An initial deposit of 60% of the purchase price for the turbines covered in any release order is payable within 30 days after delivery of the release order. An additional 15% of the purchase price for the turbines covered in any release order is payable on the earlier of (i) 60 days after delivery of the release order or (ii) the Company's delivery of the first turbine covered by the release order. The remainder of the purchase price for the turbines covered in any release order is payable within 30 days after delivery of the turbines. As of the date of this report, the Company is still awaiting payment for the initial purchase order.

As of September 30, 2019, the Company had not generated significant, recurring revenues and had not shown a history of positive income or cash flows from operations since inception. For the nine months ended September 30, 2019, the Company had sustained a net loss of $649,033 and had an accumulated deficit of $4,510,259.

The Company has filed a registration statement on Form S-1 to register the direct sales of common stock shares by the Company. The registration statement was declared effective by the Securities and Exchange Commission in November 2018. To date, the Company had not sold any shares registered under the registration statement.

We believe that our current cash and cash equivalents, anticipated cash flow from operations and the proceeds from the sale of the maximum amount of shares being offered under the Company’s referenced registration statement on Form S-1 will only be sufficient to meet our anticipated cash needs for the next 18-24 months.

For the period ended December 31, 2018, the Company’s independent auditors issued a report raising substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon revenue from the sale of the Company’s wind turbines, financial support from its principal stockholders, its ability to obtain necessary debt and equity financing and through the sale of stock. 

Discussion of the Three Months ended September 30, 2019 as compared to the Three Months ended September 30, 2018

Net revenues during the three months ended September 30, 2019 and 2018 were $0.

During the three months ended September 30, 2019, the Company posted total operating expenses of $60,330, consisting of compensation and benefits of $14,150 and other general and administrative expenses of $46,180, as compared to total operating expenses of $157,731, consisting of compensation and benefits of $90,839 and other general and administrative expenses of $66,892 for the three months ended September 30, 2018. These decreases in operating costs resulted primarily from decreases in general and administrative expenses related to the operation of the Company’s business and a decrease in cash compensation taken by certain employees of the Company.

During the three months ended September 30, 2019, the Company posted interest expense of $50,368, as compared to interest expense of $22,711 for the three months ended September 30, 2018. This increase in interest expense is related to new financing arrangements.

During the three months ended September 30, 2019, the Company posted net loss of $110,698 as compared to net loss of $180,442 for the three months ended September 30, 2018. The decrease in net loss primarily resulted from decreases in operating expenses.

Discussion of the Nine Months ended September 30, 2019 as compared to the Nine Months ended September 30, 2018

Net revenues during the nine months ended September 30, 2019 and 2018 were $0.

During the nine months ended September 30, 2019, the Company posted total operating expenses of $450,885, consisting of compensation and benefits of $253,579 and other general and administrative expenses of $197,306, as compared to total operating expenses of $418,860, consisting of compensation and benefits of $263,409 and other general and administrative expenses of $155,451 for the nine months ended September 30, 2018. These increases in operating costs resulted primarily from increases in general and administrative expenses related to the expansion of the Company’s business and shares issued to employees offset by a decrease in cash compensation taken by certain employees of the Company.

During the nine months ended September 30, 2019, the Company posted interest expense of $198,148, as compared to interest expense of $28,144 for the nine months ended September 30, 2018. This increase in interest expense is related to new financing arrangements.

During the nine months ended September 30, 2019, the Company posted net loss of $649,033 as compared to net loss of $447,004 for the nine months ended September 30, 2018. The increase in net loss resulted primarily from an increase in interest expense.

For the nine months ended September 30, 2019, the Company used cash in operating activities of $311,672. During such period, the Company also used no cash in investing activities and generated cash from financing activities of $305,164. In comparison, for the nine months ended September 30, 2018, the Company used cash in operating activities of $418,508, used no cash in investing activities and generated cash from financing activities of $424,795. Our cash used in operating activities is primarily the result of our operating expenses exceeding our revenues.

Liquidity and Capital Resources

The Company had a cash balance of $0 as of September 30, 2019, as compared to $6,508 as of December 31, 2018. The decrease in cash primarily reflects expenditures related to the Company’s operating expenses being offset by proceeds from the sale of common stock and issuances of new debt.

Going Concern

The Company has adopted Accounting Standards Update No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). As a result, management is required to evaluate whether there are relevant conditions and events that would indicate the probability of the Company’s inability to meet its obligations as they become due within one year of the date the financial statements are issued.

The financial statements have been prepared under the assumption that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the financial statements, the Company had an accumulated deficit of $4,510,259 as of September 30, 2019, a net loss of $649,033 and net cash used in operating activities of $311,672 for the period ended September 30, 2019. The Company has gone public which has enhanced the Company’s ability to raise capital. The Company is continually looking to sell its products to generate revenue and operating cash flow. Until this happens, there can be no assurances to that effect and it is therefore not considered a mitigating factor in determining the probability that the Company will meet its operations.

Through oral conveyance, management affirms that it is probable that it will meet its obligations through the sale of the Company’s wind turbines, advances from the Company’s Director and controlling shareholders, and through the sale of stock. However, since advances from the Company’s principal stockholders have not been received or agreed to in writing as of the issuance of these financial statements and sales of the Company’s wind turbines have not been fully executed, these conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date these financial statements are issued.

The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. 

Contractual Obligations

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

Certain Financings 

We will continue to rely on equity sales of our common shares and debt proceeds in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Debt Financings

Unsecured loan balances from the founder and major shareholder as of September 30, 2019 was $782,350 and as of December 31, 2018 was $776,850. Net loans by the Company during the nine months ended September 30, 2019 were $5,500. The loans are non-interest bearing and have no repayment terms.

On January 7, 2019, the Company borrowed $20,000 from a shareholder. Payment is due by July 14, 2019. The payment was subsequently extended until October 14, 2019. The loan payback including accrued interest is $30,000. In addition, this shareholder received 195,000 shares of common stock and this was recorded as interest expense. The loan is outstanding as of the filing date.

On January 23, 2019, the Company borrowed $25,000 from a shareholder. Payment is past due. The loan payback including accrued interest is $35,000. In addition, this shareholder received 50,000 shares of common stock valued at $10,000, and this was recorded as interest expense. Subsequent to year end, this shareholder received 25,000 shares valued at $5,000, to extend the payment terms.

On June 13, 2019 the Company borrowed $30,000 from a shareholder. The loan payback including interest is $39,000 plus late fees of $8,970. This loan was due August 13, 2019. The loan is outstanding as of the filing date.

Loans payable consists of the following loans from various financing companies. All loans are collateralized by business assets at September 30, 2019 and December 31, 2018 and are personally guaranteed by the majority shareholder.

On March 8, 2018 the Company obtained a $13,700 business use line of credit from a financing company. On February 12, 2019 an additional $2,900 was borrowed on this line of credit. The loan's interest rate is 44.27% and will be paid back on a monthly basis of approximately $837. The loan's final payment is due in March 2021. As of September 30, 2019, the outstanding balance on this loan is $10,979. The loan balance at December 31, 2018 was $11,266.

On September 14, 2018, the Company entered into a financing agreement resulting in proceeds of $56,400. The Company is required to repay $73,320. The loan is being paid back in daily installments of $333. The loan's interest rate is 62%. The final payment was due in August 2019. As of September 30, 2019, the loan was paid in full. The loan balance at December 31, 2018 was $42,263.

On September 28, 2018, the Company entered into a financing agreement resulting in proceeds of $49,999. On April 25, 2019 this loan was refinanced in the amount of $30,000. The Company is required to repay $47,850. The loan is being paid back in weekly installments of $2,991. Based on these minimum payments the amount is expected to be repaid in August 2019. Based on these terms the discount given on the purchase was $17,850, representing an imputed interest of approximately 310%. As of September 30, 2019, the loan was paid in full. The balance at December 31, 2018 was $35,208.

On October 29, 2018, the Company entered into a financing agreement resulting in proceeds of $15,000. In February 21, 2019 an additional $9,402 was borrowed to bring the outstanding balance to $15,000. The loan is being paid back in daily installments of $399. Based on these terms the discount given on the purchase was $6,945, representing an imputed interest of approximately 351%. This loan was paid off in 2019. The loan balance at December 31, 2018 was $8,747.

On May 15, 2019 the Company entered into a financing agreement resulting in proceeds of $15,000. The Company is required to repay $22,350. The loan is being paid back in daily installments of $499. The loan's interest rate is 480%. The final payment is due in July 2019. As of September 30, 2019, this loan was paid in full.

On May 15, 2019 the Company entered into a financing agreement resulting in proceeds of $15,000. The Company is required to repay $22,350. The loan is being paid back in daily installments of $499. The loan's interest rate is 480%. The final payment is due in July 2019. As of September 30, 2019, this loan was paid in full. 

On May 15, 2019 the Company entered into a financing agreement resulting in proceeds of $10,000. The Company is required to repay $15,200. The loan is being paid back in daily installments of $190. The loan's interest rate is 287%. The final payment is due in September of 2019. As of September 30, 2019, this loan was paid in full.

Equity Sales

During the nine months ended September 30, 2019, 2,541,000 shares of stock were issued in exchange for $317,500, 331,907 shares were issued to consultants for professional fees of $65,856 and 245,000 shares were issued to debt holders that are also shareholders for loan proceeds and these amounts have been recorded as interest expense for $49,000. In addition, 1,200,000 shares were issued to employees. For the employee shares issued, compensation expense of $120,000 was recorded.

During the nine months ended September 30, 2018, 1,792,333 shares of stock were issued in exchange for $265,300 and 45,000 shares were issued for professional fees of $6,000.

Subsequent to September 30, 2019, the Company sold 25,000 shares of stock for $5,000 and issued 2,500 shares to agents.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires making estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The information furnished herewith reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the period. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to SEC rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading.

The Company has adopted Accounting Standards Update No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). As a result, management is required to evaluate whether there are relevant conditions and events that would indicate the probability of the Company’s inability to meet its obligations as they become due within one year of the date the financial statements are issued.

The financial statements have been prepared under the assumption that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

Revenue Recognition – Beginning January 1, 2018 the Company adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU 606. This guidance requires us to recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the new guidance requires enhanced disclosures, including revenue recognition policies to identify performance obligations to customers and significant judgements in measurements and recognition. The new guidance did not have an impact on the historical or current financial statements based on the lack of revenue. This new standard will be considered in the future as contracts are entered into.

Income Taxes – The Company accounts for income taxes in accordance with FASB ASC 740. Deferred taxes are provided using the “asset and liability approach." That requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. This method uses statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment. Deferred assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carryforwards. Deferred income tax expense/benefit for a year is the net change in that year's deferred tax asset and liability balances.

The Company has deferred tax assets related to its net operating loss and tax credit carryforwards. However, due to the uncertainty of future profits to absorb the carryforwards, an offsetting valuation allowance was recorded to reduce all the deferred tax assets to zero.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Information not required to be filed by a smaller reporting company.

ITEM 4. Controls and Procedures.

Disclosure Controls and Procedures

Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report by the Company's principal executive officer and principal financial officer in consultation with an outside accounting advisor.

Based upon that evaluation, the Company’s principal executive officer has concluded that the Company's disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company intends to engage outside accounting advisors to assist the Company in implementing effective disclosure controls and procedures.

Changes in Internal Controls

There was no change in the Company's internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II -- OTHER INFORMATION

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

During the nine months ended September 30, 2019, 2,541,000 shares of stock were issued in exchange for $317,500, 331,907 shares were issued to consultants for professional fees of $65,856 and 245,000 shares were issued to debt holders that are also shareholders for loan proceeds and these amounts have been recorded as interest expenses. In addition, 1,200,000 shares were issued to employees. For the employee shares issued, compensation expense of $120,000 was recorded. These shares were issued in reliance on the exemptions from registration under Section 4(a)(2) and Rule 506(b) of Regulation D.

Subsequent to September 30, 2019, the Company sold 52,500 shares of stock for $10,500 and issued 5,250 shares to agents. These shares were issued in reliance on the exemptions from registration under Section 4(a)(2) and Rule 506(b) of Regulation D.

Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon one or more of the following exemptions:

(a) The shares of Common Stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(a)(2) of the Securities Act of 1933, as amended, ("Securities Act"), based upon the following: (a) each of the persons to whom the shares of Common Stock were issued (each such person, an "Investor") confirmed to the Company that he or she is a sophisticated investor and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

(b) The shares of common stock referenced herein were issued pursuant to and in accordance with Regulation D Rule 506 and Section 4(a)(2) of the Securities Act. We made this determination in part based on the representations of Investors, which included, in pertinent part, that such Investors were an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the Investors that (a) the Investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the Investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the Investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the Investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment.  Our determination is made based further upon our action of (a) making written disclosure to each Investor prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in the Company’s affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and upon such inaction of  the Company of any general solicitation or advertising for securities herein issued in reliance upon Regulation D Rule 506 and Section 4(a)(2) of the Securities Act.

ITEM 5. OTHER INFORMATION

No Changes in Nomination Procedures

During the quarter covered by this Report, there were not any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.

ITEM 6. EXHIBITS

* Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 14, 2019.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 15, 2019.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons, constituting all of the members of the board of directors, in the capacities and on the dates indicated.