UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2016~~2017

Oror

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_______~~____________ to ~~_______~~____________.

Commission File Number: 000-55154

INTELLIGENT HIGHWAY SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Nevada		30-0680119
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

9516 Rossport Way

Elk Grove, CA 95624

(Address of principal executive offices (Zip Code)

720) 460-1390

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

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

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

Large accelerated filer [ ]	Accelerated filer [ ]

Non-accelerated filer [ ] (do not check if smaller reporting company)	Smaller reporting company [X]

Emerging Growth Company [ ]

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

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

As of ~~June~~ 30July 17, 2017, there is 5,143,545,346 shares of common stock, $0.00001 par value outstanding.

INTELLIGENT HIGHWAY SOLUTIONS, INC.

TABLE OF CONTENTS

FORM 10-Q REPORT

~~September~~March 3031, ~~2016~~2017

		Page
		Number
PART I - FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Interim Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1819
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2224
Item 4.	Controls and Procedures.	2325
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	2426
Item 1A.	Risk Factors.	2426
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2426
Item 3.	Defaults Upon Senior Securities.	2426
Item 4.	Mine Safety Disclosures.	2426
Item 5.	Other Information.	2426
Item 6.	Exhibits.	2426
SIGNATURES		2527

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements.

INTELLIGENT HIGHWAY SOLUTIONS

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2016			December 31, 2015
	March 31, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	~~298~~96,197		$	-1,002
Prepaid expenses		17,461			71,341
Contracts receivable, net		897,990			-
Deferred loan costs, current		-			15,219
Costs and estimated earnings in excess of billings on uncompleted contracts		14,981			-
Total current assets		171,~~759~~009,168			861,~~560~~002
Property and equipment, net of accumulated depreciation of $7,667 and $18,713		754			4,958
Property and equipment, net of accumulated depreciation of $8,422 and $8,101		102,524			320
Total assets	$	18,513		$	91,518
Intangible assets, net of accumulated amortization of $27,788 and $0		161,682			-
LIABILITIES AND STOCKHOLDERS' DEFICIT
Goodwill		1,474,907			-
Total assets	$	2,748,281		$	1,322
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Bank overdraft	$	-		$	2,981
Accounts payable	$	1,064,877			219,098
Accounts payable		215,648			176,694
Accrued expenses and other liabilities		1,735,270			1,661,776
Accrued expenses and other liabilities		1,594,669			1,367,110
Accrued interest		308,884			277,829
Notes payable, current portion, net of discounts of $1,599 and $3,934		233,770			154,066
Notes payable, current portion		589,359			258,609
Convertible notes payable, current portion, net of discounts of $2,211 and $177,863		969,803			799,976
Convertible notes payable, current portion, net of discounts of $965 and $1,581		975,287			986,163
Notes payable, related party, current portion		7,396			7,~~000~~396
Derivative liability		736,907			1,005,791
Credit line payable		631,855			-
Accrued interest		245,395			148,655
Derivative liability		2,196,937			11,855,072
Total current liabilities		47,~~003~~509,~~588~~865			315,~~662~~265,~~273~~943
Stockholders' deficit
Notes payable, net of current portion		1,146,555			-
Series A convertible preferred stock, $0.00001 par value; 10,000,000 shares authorized; 2,500,000 issued and outstanding at September 30, 2016 and December 31, 2015		25			25
Total liabilities		8,656,420			15,265,943
Common stock, $0.00001 par value; 10,000,000,000 shares authorized; 2,775,701,670 and 2,552,409,195 issued; 2,775,651,671 and 2,552,359,195 outstanding at September 30, 2016 and December 31, 2015		27,757			25,524
Stockholders’ deficit
Additional paid-in capital		6,997,178			6,974,608
Series A convertible preferred stock, $0.00001 par value; 10,000,000 shares authorized; 10,000,000 and 2,500,000 issued and outstanding at March 31, 2017 and December 31, 2016, respectively		100			25
Common stock, $0.00001 par value; 10,000,000,000 shares authorized; 3,375,701,670 and 2,915,701,670 issued; 3,375,651,670 and 2,915,651,670 outstanding at March 31, 2017 and December 31, 2016, respectively		33,757			29,157
Additional paid-in capital		7,207,302			7,009,783
Treasury stock, 50,000 shares at $.084 per share		(4,200	)		(4,200	)
Accumulated deficit		(1113,~~005~~128,~~835~~202	)		(1022,~~566~~299,~~712~~386	)
Total stockholders' deficit		(3,985,075	)		(3,570,755	)
Total Intelligent Highway Solutions stockholders’ deficit		(5,891,243	)		(15,264,621	)
Total liabilities and stockholders' deficit	$	18,513		$	91,518
Non-controlling interest in subsidiary		(16,896	)		-
Total liabilities and stockholders’ deficit	$	2,748,281		$	1,322

See accompanying notes to ~~unaudited~~ condensed ~~interim~~consolidated financial statements.

INTELLIGENT HIGHWAY SOLUTIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2016			2015			2016			2015
	2017			2016
Revenue	$	-633,468		$	~~44,182~~-		$	-		$	~~236,068~~
Cost of sales		-559,291			~~58,449~~-			-			~~207,453~~
Gross profit		-74,177			~~(14,267~~-	)		-			~~28,615~~
Operating expenses
Salaries and wages		41,443			~~374~~38,~~000~~179			~~121,064~~			~~456,369~~
General and administrative		87320,~~070~~929			~~203~~103,~~095~~463			~~277,057~~			~~841,297~~
Total operating expenses		~~128~~362,~~513~~372			~~577~~141,~~095~~642			~~398,121~~			~~1,297,666~~
Loss from operations		(~~128~~288,~~513~~195	)		(~~591~~141,~~362~~642	)		~~(398,121~~	)		~~(1,269,051~~	)
Other income (expense)
Gain (loss) on extinguishment of debt		-			(258,273	)		2,142			(256,607	)
Gain on extinguishment of debt		-			40
Gain on sale of fixed assets		2,800			-			16,550			-
Gain on derivative fair value adjustment		9,487,661			270,252
Gain (loss) on derivative fair value adjustment		131,728			(214,397	)		350,003			(702,507	)
Interest expense		(45,178	)		(199,701	)
Penalties and settlements		-			(127,171	)		-			(149,598	)
Total other income (expense)		9,442,483			70,591
Interest expense		(69,017	)		(479,839	)		(409,697	)		(1,070,835	)
Income (loss) before income taxes		9,154,288			(71,051	)
Total other expense		65,511			(1,079,680	)		(41,002	)		(2,179,547	)
Income tax expense		-			-
Loss before income taxes		(63,002	)		(1,671,042	)		(439,123	)		(3,448,598	)
Net income (loss) before non-controlling interest		9,154,288			(71,051	)
Income tax expense		-			-			-			-
Net loss attributable to non-controlling interest		(16,896	)		-
Net loss	$	(63,002	)	$	(1,671,042	)	$	(439,123	)	$	(3,448,598	)
Net income (loss) attributable to Intelligent Highway Solutions	$	9,171,184		$	(71,051	)
Basic and diluted loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.01	)
Basic income (loss) per common share	$	0.00		$	(0.00	)
Basic and diluted weighted average shares outstanding		2,775,651,670			631,352,227			2,759,729,929			238,546,849
Diluted income (loss) per common share	$	0.00		$	(0.00	)
Basic weighted average shares outstanding		3,055,651,670			2,727,711,483
Diluted weighted average shares outstanding		15,281,582,964			2,727,711,483

See accompanying notes to ~~unaudited~~ condensed ~~interim~~consolidated financial statements.

INTELLIGENT HIGHWAY SOLUTIONS

~~CONDENSED~~ STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2016			2015
	2017			2016
Cash flows from operating activities
Net loss	$	(439,123	)	$	(3,448,598	)
Net income (loss) before non-controlling interest	$	9,154,288		$	(71,051	)
Adjustments to reconcile net loss to net cash used in operating activities
Adjustments to reconcile net loss to net cash used in operating activities:
Preferred stock issued for services		-6,750			~~500~~-
Common stock issued for services		-			504,035
Depreciation		320			2,496
Common stock issued for penalties		-			21,415
Gain on derivative fair value adjustment		(9,487,661	)		(270,252	)
Common stock issued for settlement		-			19,900
Amortization of deferred loan costs		-			9,254
Increase in convertible notes payable for default penalties		-			106,466
Amortization of debt discount		616			121,090
Loss (gain) on forgiveness of debt		-			256,607
Amortization of prepaid expenses		-			19,146
Depreciation		4,204			7,486
Amortization of intangible assets		24,788			-
Loss on derivative fair value adjustment		(350,003	)		702,507
Expenses paid on behalf of company		137,515			-
Amortization of deferred loan costs		15,219			93,467
Excess derivative liability charged to interest		-			36,631
Amortization of debt discount		243,052			508,733
Amortization of prepaid expenses		53,880			55,854
Expenses paid on behalf of company		-			61,712
Excess derivative liability charged to interest		36,631			390,607
Changes in operating assets and liabilities
Contracts receivable		-(301,651	)		~~82,627~~-
Earnings in excess of billings		-			115,801
Accounts payable		290,468			32,509
Accounts payable		38,954			(9,087	)
Accrued interest		44,533			32,331
Accrued interest		96,740			59,043
Accrued expenses and other liabilities		61,763			42,184
Accrued expenses and other liabilities		227,559			176,990
Net cash used in operating activities		(65,271	)		(45,662	)
Net cash used in operating activities		(72,887	)		(293,935	)
Cash flows from investing activities
Cash flows from investing activities		-			-
Cash acquired in acquisition		160,466			-
Net cash used in investing activities		160,466			-
Cash flows from financing activities
(Repayments on) proceeds from bank overdraft		(2,981	)		-
Repayments on bank overdraft		-			(2,981	)
Proceeds from convertible notes payable		-			188,075
Proceeds from notes payable		-			53,955
Repayments of convertible notes payable		-			(10,000	)
Repayments of notes payable		-			(3,263	)
Proceeds from notes payable		75,770			70,000
Net proceeds from related party payables		-			396
Repayments of notes payable		-			(13,400	)
Net cash provided by financing activities		-			48,107
Repayment of related party notes payable		-			(6,000	)
Change in cash and cash equivalents		95,195			2,445
Net proceeds from related party payables		396			-
Cash at beginning of period		1,002			-
Net cash provided by financing activities		73,185			228,675
Cash at end of period	$	96,197		$	2,445
Change in cash and cash equivalents		298			(65,260	)
Cash at beginning of period		-			95,251
Cash at end of period	$	298		$	29,991
Supplemental disclosures of cash flow information
Cash paid for interest	$	-		$	~~9,000~~-
Cash paid for income taxes	$	-		$	-
Supplemental disclosure of non-cash financing activities:
Common stock issued for note conversion	$	511,~~825~~492		$	~~417~~5,~~009~~825
Common stock issued for accrued interest conversion	$	-13,478		$	~~4,160~~-
Debt discount on convertible notes	$	~~83,122~~-		$	~~322~~83,~~800~~122
Conversion of notes payable to convertible notes payable	$	-		$	160,000
Initial measurements of derivative liabilities	$	-		$	100,097
Conversion of accrued interest payable to convertible notes payable	$	-		$	11,050
Initial measurements of derivative liabilities	$	100,097		$	1,107,766

See accompanying notes to ~~unaudited~~ condensed ~~interim~~consolidated financial statements.

INTELLIGENT HIGHWAY SOLUTIONS, INC.

Notes to Unaudited Condensed Financial Statements

~~September~~March 3031, ~~2016~~2017

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization, Nature of Business and Trade Name

Intelligent Highway Solutions, Inc. (the “Company” or “IHS”) was formed on April 22, 2011. IHS is a technology based intelligent highway solutions contractor. Through June 30, 2013, the Company’s primary focus was in the California transportation market providing services that range from providing labor, materials, and related equipment for corrective service and maintenance services for the State’s transportation infrastructure. Since that time, the Company has devoted its time to electrical service contracts. Additionally, the Company intends to develop transportation technology services that enable vehicles, roads, traffic lights, message signs, and other elements to become “intelligent” by embedding them with microchips and sensors and by empowering them to communicate with each other via wireless technologies. The acceleration of data collection and communication will allow state governments to improve transportation system performance by reducing congestion and increasing both traveler safety and convenience.

~~NOTE~~On 2March –9, ~~UNAUDITED~~2017, ~~CONDENSED~~the ~~INTERIM~~Company, ~~FINANCIAL~~through ~~STATEMENTS~~a special purpose entity in which the Company has a controlling interest and 80% ownership, acquired the outstanding ownership interests in Cresent Construction Company, a full service general contracting firm. The Company will continue to perform general contracting services as it continues its development of transportation technologies.

~~The~~NOTE ~~accompanying~~2 ~~unaudited~~– ~~condensed~~UNAUDITED ~~interim~~CONDENSED ~~financial~~CONSOLDIATED ~~statements~~INTERIM ~~have~~FINANCIAL been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the period ended September 30, 2016 and for all periods presented herein, have been made.STATEMENTS

~~Certain~~The ~~information~~accompanying ~~and~~unaudited ~~footnote~~condensed ~~disclosures~~consolidated ~~normally~~interim ~~included in~~ financial statements ~~prepared~~have inbeen ~~accordance~~prepared ~~with~~by ~~accounting~~the ~~principles generally~~Company ~~accepted~~without inaudit. In the ~~United~~opinion ~~States~~ of ~~America~~management, ~~have~~all ~~been~~adjustments ~~condensed~~(which orinclude ~~omitted.~~only Itnormal isrecurring ~~suggested~~adjustments) ~~that~~necessary ~~these~~to ~~condensed~~present ~~financial statements~~fairly ~~be read in conjunction with~~ the financial ~~statements and notes thereto included in the Company’s December 31,~~ ~~2015~~position, ~~audited financial statements. The~~ results of operations, and cash flows for the period ended ~~September~~March 3031, ~~2016~~2017 ~~are~~and ~~not~~for ~~necessarily~~all ~~indicative of~~periods ~~the~~presented ~~operating~~herein, ~~results~~have been ~~for the full year~~made.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2016 audited financial statements. The results of operations for the period ended March 31, 2017 are not necessarily indicative of the operating results for the full year.

NOTE 3 – GOING CONCERN

The Company’s unaudited condensed consolidated interim financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. ~~The~~While the Company has ~~not~~recently ~~yet~~ established an ongoing source of revenues, we do not anticipate it to be sufficient to cover its operating ~~costs~~ costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying unaudited condensed interim financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in accounting principles generally accepted in the United States of America requires ~~management~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent ~~assets~~ assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. A change in managements’ estimates or assumptions could have a material impact on the Company’s financial condition and results of operations during the period in which such changes occurred.

Actual results could differ from those estimates. The Company’s condensed consolidated financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.

Cash

The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The company does not have cash equivalents as of ~~September~~March 3031, 2017 or December 31, 2016.

Property, Plant and Equipment

Property and equipment are carried at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.

Depreciation is computed over the estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:

		Estimated Useful Life
Furniture and fixtures		3 - 5 years
Machinery and equipment		5 years
Vehicles		5 years

For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. For financial statements purposes, depreciation is computed under the straight-line method. Balances of each asset class as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016 were:

	September 30, 2016			December 31, 2015
	March 31, 2017			December 31, 2016
Machinery and equipment	$	2,~~149~~676		$	2,149
Furniture and fixtures		614,~~273~~103			6,273
Vehicles		-			15,249
Leasehold improvements		37,270			-
Sub Total	$	8,422		$	23,671
Vehicles		56,897			-
Accumulated depreciation		(7,668	)		(18,713	)
Sub Total	$	110,946		$	8,422
Total	$	754		$	4,958
Accumulated depreciation		(8,422	)		(8,102	)
Total	$	102,524		$	320

Depreciation expense for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016 was $~~4,204~~320 and $72,~~486~~496, respectively.

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following at ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016:

	September 30, 2016		December 31, 2015
	March 31, 2017		December 31, 2016
Payroll tax liabilities		761,396	$	~~758~~761,~~773~~396
Other payroll accruals		~~134~~212,~~959~~642		45162,~~851~~765
Federal and state income taxes payable		128,741		128,741
Other		~~569~~632,~~483~~491		~~433~~608,~~745~~874
Total	$	1,~~594~~735,~~669~~270	$	1,~~367~~661,~~110~~776

Other accrued expenses mainly consist of accrued consulting fees due to management and other consulting firms. Of the $128,741 accrued for federal and state income taxes payable at March 31, 2017 and December 31, 2016, $127,141 relates to the federal income tax payable as discussed in Note 11 and $1,600 relates to state income taxes payable.

Revenues and Cost of Revenues

Revenues from fixed-price and cost-plus contracts are recognized on the percentage of completion method, whereby revenues on long-term contracts are recorded on the basis of the Company’s estimates of the percentage of completion of contracts based on the ratio of the actual cost incurred to total estimated costs. This cost-to-cost method is used because management considers it to be the best available measure of progress on these contracts. Revenues from cost-plus-fee contracts are recognized on the basis of costs incurred during the period plus the fee earned, measured on the cost-to-cost method.

Cost of revenues include all direct material, sub-contract, labor, and certain other direct costs, as well as those indirect costs related to contract performance, such as indirect labor and fringe benefits. Selling, general and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changed in job performance, job conditions and estimated profitability may result in revisions to cost and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period. Claims for additional contract revenue are recognized when realization of the claim in probable and the amount can be reasonably determined.

~~Cost of sales totaled $0 and $58,449 and $0 and $207,453 during the three and nine months ended September 30, 2016 and 2015, respectively.~~8

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Derivative Liabilities

The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. The debt discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion features. The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair market values of derivative liabilities over the life of the convertible notes.

Net Income (Loss) Per Share

Net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares during the specified period. For the three ~~and~~months ~~nine~~ended March 31, 2017, there was 12,225,931,294 such potentially dilutive shares included in the diluted weighted average shares outstanding. During the three months ended ~~September~~March 3031, 2016 ~~and 2015~~ potential common shares are not included in the diluted net loss per share calculation as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. There were 12,~~983~~837,~~948~~333,~~785~~612 such potentially dilutive shares excluded for the three ~~and nine~~ months ended ~~September~~March 3031, 2016. The potentially dilutive shares arise from the following instruments:

Reclassification of Prior Period Presentation

	2017		2016
Convertible notes payable and accrued interest		12,013,308,993		12,837,333,612
Series A convertible preferred stock		212,622,301		-
Total		12,225,931,294		12,837,333,612

Certain amounts have been reclassified on the December 31, 2015 balance sheet to conform to current period presentation. Specifically, long term prepaid expenses of $34,965 have been reclassified as current prepaid expenses and a $3,000 contra-liability for related party payables has been removed from current notes payable and is included in related party payables. These reclassifications have no impact on net loss.

Recent Accounting Pronouncements

In February 2015, the FASB issued ASC 2015-02, “Consolidation (Topic 810) - Amendments to the Consolidation Analysis.” This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The Company adopted has this standard and determined it does not have a significant impact on its consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805) – Simplifying the Accounting for Measurement-Period Adjustments.” This update eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new standard should be applied prospectively to measurement period adjustments that occur after the effective date. The new standard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. The Company has adopted this guidance and the adoption of this guidance did not have an impact on the Company’s results of operations, financial position, or cash flows for the three or six months ended March 31, 2017 or 2016.

In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted the new guidance on January 1, 2017. The primary impact of adoption was the recognition of excess tax benefits in our provision for income taxes rather than paid-in capital. However, as the Company has a full valuation allowance against its deferred tax asset, a corresponding adjustment was recorded to increase the valuation allowance.

In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment”. The amendments in this update simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. This update is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 31, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing after January 1, 2017. The Company notes that this guidance applies to its reporting requirements and will implement the new guidance accordingly in performing goodwill impairment testing; however, the Company does not believe this update will have a material impact on the consolidated financial statements.

Management believes recently issued accounting pronouncements will have no impact on the financial statements of the Company.

NOTE 5 -– DERIVATIVE LIABILITIES

OnAs discussed in Note 3, on a recurring basis, we measure certain financial assets and liabilities based upon the fair value hierarchy. The following table presents information about the Company’s liabilities measured at fair value as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016:

Level 1

Level 2

Level 3

Fair Value at ~~September~~March 3031, ~~2016~~2017

Liabilities

Derivative Liability

~~736~~2,~~907~~196,937

Level 1

Level 2

Level 3

Fair Value at December 31, ~~2015~~2016

Liabilities

Derivative Liability

111,~~005~~855,~~791~~072

As of ~~September~~March 3031, ~~2016~~2017, the Company had a $~~736~~2,~~907~~196,937 derivative liability balance on the balance sheet and recorded a gain from derivative liability fair value adjustment of $~~350~~9,~~003 during the nine months ended September 30~~487,661 ~~2016 and a gain from derivative liability fair value adjustment of $131,728~~ during the three months ended ~~September~~March 3031, ~~2016~~2017. The Company assessed its outstanding ~~convertible~~ convertible notes payable as summarized in Note 8 – Convertible Notes Payable and determined certain convertible notes payable with variable conversion features contain embedded derivatives and are therefore accounted for at fair value under ASC 920, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments.

Utilizing Level 2 Inputs, the Company recorded fair market value adjustments related to convertible notes payable for the ~~nine~~three months ended March ~~September 30~~31, ~~2016~~2017 and ~~2015~~2016 of $~~350~~9,~~003~~487,661 and $~~702~~270,~~507~~252, respectively. The fair market value adjustments were calculated utilizing the Black-Sholes method using the following assumptions: risk free ~~rate~~rates of 01.5903%, dividend yield of 0%, expected ~~life~~lives of 1 year, and volatility ofbetween 85325% and 327%.

A summary of the activity of the derivative liability is shown below:

Balance at December 31, 2015	$	1,005,791
Balance at December 31, 2016	$	11,855,072
Derivative liabilities recorded		~~100,097~~-
Change due to note conversion		(18170,~~978~~474	)
Fair value adjustment		(~~350~~9,~~003~~487,661	)
Balance at September 30, 2016	$	736,907
Balance at March 31, 2017	$	2,196,937

NOTE 6 – CONCENTRATIONS OF RISK

Our revenues during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2015~~2017 were generated completely from ~~two~~three clients. The loss of ~~either~~ any of these clients will have a material adverse impact on our business. There were no revenues earned during the three ~~or nine~~ months ended ~~September~~March 3031, 2016.

NOTE 7 – NOTES PAYABLE

The Company has entered into various debt agreements to fund operations. A summary of outstanding non-convertible notes payable is as follows:

	September 30, 2017			December 31, 2015
	March 31, 2017			December 31, 2016
Note payable to non-related party, unsecured, due on September 1, 2014, interest rate of 0%. Currently in default. Principal due on demand.	$	20,000		$	20,000
Note payable to non-related party, unsecured, due on December 31, 2014, interest rate of 0%. Currently in default. Principal due on demand.		5,000			5,000
Note payable to non-related party, secured by vehicles owned by the Company, due on October 22, 2016, interest rate of 15%. Principal and accrued interest due on demand.		100,000			100,000
Note payable to non-related party, secured by vehicles owned by the Company, due on October 22, 2016, interest rate of 15%. Currently in default. Principal and accrued interest due on demand.		100,000			100,000
Note payable to non-related party, unsecured, due on April 29, 2016, interest rate of 8%. Currently in default. Principal and accrued interest due on demand.		33,000			33,000
Note payable to non-related party, unsecured, due on June 22, 2016, interest rate of 8%. Currently in default. Principal and accrued interest due on demand.		5079,~~215~~755			-73,455
Sale of future receivable to non-related party, secured by future accounts receivable, due on December 31, 2016. Principal due as future accounts receivable are collected.		27,154			-27,154
Total principal outstanding		235,369			158,000
Seller’s note from acquisition of Cresent Construction Company, due on March 31, 2022, interest rate of 6%.		1,300,000			-
Less: debt discounts		(1,599	)		(3,934	)
Bonding note from acquisition of Cresent Construction Company, due on March 31, 2020, interest rate of 8%.		160,466
Total balance	$	233,770		$	154,066
Vehicle loans		10,539
Total principal outstanding		1,735,914			258,609
Less: debt discounts		-			-
Total balance	$	1,735,914		$	258,609

Required principal payments from ~~September~~March 3031, ~~2016~~2017 forward are as follows:

2016	$	235,369
2017	$	433,287
2017		-
2018		329,801
2018		-
2019		263,757
2019		-
2020		270,965
2020		-
2021		287,678
Total	$	235,369
2022		150,426
Total	$	1,735,914

There was $2240,~~221~~589 and $727,~~083~~377 of accrued interest payable on non-convertible notes payable as of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~ 2016.

NOTE 8 – CONVERTIBLE NOTES PAYABLE

The Company has entered into various convertible debt agreements to fund operations. A summary of outstanding convertible notes payable is as follows:

	September 30, 2017		December 31, 2015
	March 31, 2017		December 31, 2016
Convertible note payable to non-related party, unsecured, interest of 10%, due on February 13, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.	$	50,000	$	50,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on April 8, 2016. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		15,000		15,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on March 21, 2016. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		30,000		30,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on May 9, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		50,000		50,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on November 4, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		25,000		25,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on July 15, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		50,000		50,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on September 3, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		25,000		25,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on October 31, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		25,000		25,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on October 21, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		20,000		20,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on December 30, 2015. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		45,000		45,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on March 26, 2016. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		25,000		25,000
Convertible note payable to non-related party, unsecured, interest of 10%, due on April 26, 2013. Currently in default. May be converted at the option of the holder into common stock at a rate of $0.30 per share. Payable on demand.		30,000		30,000
Convertible note payable to non-related party, interest of 10%, unsecured, due on June 11, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the lowest trading price during the five days prior to conversion. The Company may not repay the convertible note in cash.		59,800		59,800
Convertible note payable to non-related party, interest rate of 10%, unsecured, due on December 12, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 40% discount from the lowest closing bid price during the fifteen days prior to conversion. The Company may not repay the convertible note in cash.		55,000		55,000
Convertible note payable to non-related party, interest rate of 10%, unsecured, due on July 7, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 40% discount from the lowest closing bid price during the fifteen days prior to conversion. The Company may not repay the convertible note in cash.		27,466		27,466
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on May 15, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days prior to conversion. The Company may not repay the convertible note in cash.		8,642		20,134

Convertible note payable to non-related party, interest rate of 10%, unsecured, due on December 12, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 40% discount from the lowest closing bid price during the fifteen days prior to conversion. The Company may not repay the convertible note in cash.		55,000			55,000
	March 31, 2017			December 31, 2016
Convertible note payable to non-related party, interest rate of 10%, unsecured, due on July 7, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 40% discount from the lowest closing bid price during the fifteen days prior to conversion. The Company may not repay the convertible note in cash.		27,466			27,466
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on May 15, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days prior to conversion. The Company may not repay the convertible note in cash.		20,904			21,564
Convertible note payable to non-related party, interest rate of 10%, unsecured, due on June 25, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days prior to conversion. The Company may not repay the convertible note in cash.		5,500			5,500
Convertible note payable to non-related party, interest rate of 8%, unsecured, due on July 7, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days prior to conversion. The Company may not repay the convertible note in cash.		77,947			77,947
Convertible note payable to non-related party, interest rate of 8%, unsecured, due on July 7, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days prior to conversion. The Company may not repay the convertible note in cash.		80,236			80,236
Convertible note payable to non-related party, interest rate of 10, unsecured, due on June 15, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 45% discount from the lowest intra-day trading price of the Company’s common stock during the twenty trading days prior to conversion. The Company may not repay the convertible note in cash.		11,500			11,500
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on May 19, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the average of the three lowest trading prices during days prior to conversion. The Company may not repay the convertible note in cash.		60,000			60,000
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on September 30, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the average of the three lowest trading prices during days prior to conversion. The Company may not repay the convertible note in cash.		47,000			47,000
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on August 19, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the average of the three lowest trading prices during days prior to conversion. The Company may not repay the convertible note in cash.		16,018			2116,~~183~~018
Convertible note payable to non-related party, interest rate of 22%, unsecured, due on October 12, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the lowest trading price during the twenty days prior to conversion. The Company may not repay the convertible note in cash.		58,941			58,941
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on August 30, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the lowest trading price during the twenty days prior to conversion. The Company may not repay the convertible note in cash.		36,000			36,000
Convertible note payable to non-related party, interest rate of 12%, unsecured, due on November 3, 2017. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the lowest trading price during the twenty days prior to conversion effective May 3, 2017. The Company may repay the note in cash through May 3, 2017 and not thereafter.		16,500			16,500
Convertible note payable to non-related party, interest rate of 15%, default interest rate of 22%, unsecured, due on September 11, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 60% discount from the average of the three lowest trading prices during the twenty five days prior to conversion. The Company may not repay the convertible note in cash		16,651			16,651
Convertible note payable to non-related party, interest rate of 22%, unsecured, due on October 28, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 60% discount from the average of the three lowest trading prices during the twenty five trading days prior to conversion. The Company may not repay the convertible note in cash.		9,050			9,050
Total principal outstanding		976,252			987,744
Less: debt discounts		(965	)		(1,581	)
Total balance	$	975,287		$	986,163

Convertible note payable to non-related party, interest rate of 12%, unsecured, due on August 30, 2016. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 50% discount from the lowest trading price during the twenty days prior to conversion. The Company may not repay the convertible note in cash.		36,000			36,000
Convertible note payable to non-related party, interest rate of 15%, default interest rate of 22%, unsecured, due on September 11, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 60% discount from the average of the three lowest trading prices during the twenty five days prior to conversion. The Company may not repay the convertible note in cash.		16,651			16,651
Convertible note payable to non-related party, interest rate of 22%, unsecured, due on October 28, 2015. Currently in default. May be converted at the option of the holder into common stock at a price equal to a 60% discount from the average of the three lowest trading prices during the twenty five trading days prior to conversion. The Company may not repay the convertible note in cash.		9,050			9,050
Total principal outstanding		972,014			977,839
Less: debt discounts		(2,211	)		(177,863	)
Total balance	$	969,803		$	799,976

Required principal payments from March 31, 2017 forward are as follows:

Required principal payments from September 30, 2016 forward are as follows:

2017	$	976,252
2018		-
2019		-
2020
2021		-
Total	$	976,252

2016	$	972,014
2017		-
2018		-
2019		-
2020		-
Total	$	972,014

There was $263,662 and $250,452 of accrued interest payable on convertible notes payable as of March 31, 2017 and December 31, 2016.

There was $223,174 and $141,572 of accrued interest payable on convertible notes payable as of September 30, 2016 and December 31, 2015.

The Company has recorded a derivative liability for each convertible note payable with a variable conversion rate. See Note 5 for further discussion.

NOTE 9 – RELATED PARTY TRANSACTIONS

WeDuring ~~have~~the ~~engaged~~year anended ~~entity~~December ~~controlled~~31, by2014, the ~~director~~Company ofreceived ~~the~~an ~~Company~~interest tofree ~~perform~~$8,000 ~~consulting~~loan ~~services~~from a related party to ~~the~~fund ~~development~~operations. ofThe ~~new~~loan ~~technologies.~~is ~~Payments~~unsecured, todue ~~this~~on ~~party~~demand ~~totaled~~and $0as ~~and~~such ~~$6,909~~is ~~during~~included ~~the~~in ~~nine~~current ~~months~~liabilities. ~~ended~~There ~~September~~was 30$5,000 ~~2016~~due as of March 31, 2017 and December ~~2015~~31, 2016, respectively.

During the year ended December 31, 2014, the Company received an interest free $82,000 loan from a related party to fund operations. The related party made additional advances of $396 during the year ended December 31, 2016. The loan is unsecured, due on demand and as such is included in current liabilities. There was $52,~~000~~396 due as of ~~September~~March 3031, ~~2016~~ 2017 and December 31, ~~2015~~2016, respectively.

During the year ended December 31, 2014, the Company received an interest free $2,000 loan from a related party to fund operations. The related party made additional advances of $396 during the nine months ended September 30, 2016. The loan is unsecured, due on demand and as such is included in current liabilities. There was $2,396 and $2,000 due as of September 30, 2016 and December 31, 2015, respectively.

NOTE 10 – STOCKHOLDERS’ DEFICIT

The Company is authorized to issue up to 10,000,000,000 shares of $0.00001 par value common stock and 50,000,000 shares of $0.0001 par value blank check preferred stock of which 10,000,000 has been designated as Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock may be converted to common stock at the option of the holder at the greater of one share of common for each share of Series A Convertible Preferred Stock or the par value of the stock divided by a 10% discount from the volume weighted average price of the common stock of the preceding ten trading days. During the nine months ended September 30, 2016, the Company issued a total of 223,292,475 shares of common stock for the conversion of $5,825 of outstanding principal on convertible notes payable. All conversions were performed under the contractual terms of the respective notes payable.

~~There~~During ~~were~~the 2three months ended March 31,~~775~~ 2017,~~701,670~~ ~~and~~the 2Company issued a total of 212,~~552~~465,~~409,195~~932 shares of common ~~shares~~stock ~~issued~~for ~~and~~the 2conversion of $11,~~775,651,671~~492 of outstanding principal and 2247,~~552~~534,~~359,195~~068 ~~outstanding~~shares atof ~~September~~common 30stock for the conversion of $13,478 ~~2016~~of outstanding interest ~~and~~on ~~December~~convertible ~~31,~~notes ~~2015,~~payable. ~~respectively~~All conversions were performed under the contractual terms of the respective notes payable.

During the three months ended March 31, 2017, the Company issued a total of 7,500,000 shares of Series A Convertible Preferred Stock for services rendered in connection with its acquisition of Cresent Construction Company. The shares of Series A Convertible Preferred Stock were valued on an as converted to common stock basis at $0.0009 per share resulting in a total value of $6,750.

There were 3,375,701,670 and 2,915,701,670 common shares issued and 3,375,651,670 and 2,915,651,670 outstanding at March 31, 2017 and December 31, 2016, respectively.

There were 10,000,000 and 2,500,000 series A convertible preferred shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

The Company could become a party to various legal actions arising in the ordinary course of business. Matters that are probable of unfavorable outcomes to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, the Company’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters.

As of the date of this report, except as described below, there are no material pending legal proceedings to which the Company is a party or of which any of their property is the subject, nor are there any such proceedings known to be contemplated by governmental authorities.

Payroll Tax Liabilities

As of ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016 the Company had accrued $761,396 ~~and 758,773,~~ in payroll tax liabilities. The payment of these liabilities has not been made due to our limited profitability. Due to the uncertainty regarding our future profitability, it is difficult to predict our ability to pay these liabilities. As a result, a federal tax lien has been levied that will have to be satisfied.

Federal Income Tax Liability

On January 29, 2015, we received a notification from the Internal Revenue Service (the “IRS”) regarding deficiencies in our tax return for the year ended December 31, 2011. The notice was the result of not filing our tax return for the year then ended and included the results of an IRS examination which yielded an income tax amount due of $92,804 plus penalties and interest totaling $34,337 for a total amount due of $127,141. While we believe we will be able to successfully reduce the tax liability and assessed penalties to zero or near zero due to our net loss sustained during the year ended December 31, 2011, the possibility exists we will be unsuccessful and could face an assessment for the full amount of $127,141. ~~There~~As detailed in Note 4, there is noan accrued liability of $127,141 for this potential payout as of ~~December~~March 31, ~~2015~~2017 orand ~~September~~December 3031, 2016 ~~given the inestimable nature of the outcome at this point~~.

NOTE 12 – STOCK OPTIONS

The following table summarizes all stock option activity for the ~~nine~~three month period ending ~~September~~March 3031, ~~2016~~2017:

	Shares			Weighted- Average Exercise Price Per Share
Outstanding, December 31, 2015		631,905		$	0.30
Outstanding, December 31, 2016		448,570		$	0.30
Granted		-			-
Exercised		-			-
Forfeited		-			-
Expired		~~(266,667~~-	)		~~0.30~~
Outstanding, September 30, 2016		365,238		$	0.30
Outstanding, March 31, 2017		448,570		$	0.30

The following table discloses information regarding outstanding and exercisable options at ~~September~~March 3031, ~~2016~~2017:

		Outstanding						Exercisable
Exercise Prices		Number of Option Shares		Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Number of Option Shares		Weighted Average Exercise Price
$	0.30		~~365~~448,~~238~~570	$	0.30		1.6414		~~365~~448,~~238~~570	$	0.30
			365,238	$	0.30		1.64		365,238	$	0.30
			448,570	$	0.30		1.14		448,570	$	0.30

In determining the compensation cost of the stock options granted, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used in these calculations are summarized as follows:

	September 30, 2016
	March 31, 2017
Expected term of options granted		2 - 5 years
Expected volatility range		394 - 408	%
Range of risk-free interest rates		1.70 – 1.73	%
Expected dividend yield		0	%

NOTE 13 – EQUITY LINE OF CREDIT

On August 6, 2015, the Company entered into line of credit whereby it has the right to sell to the investor up to $5,000,000 of common stock over a period of 24 months. The Company may sell up to $100,000 of common stock, but not less than $5,000, at any time at is sole discretion by issuing a put notice to the investor. The sales price of the stock will be equal to a 30% discount from the average of the lowest two closing bid prices in the preceding five trading days. There is a minimum of ten trading days between put notices. The agreement requires the Company to issue 3% of the total credit line, or $150,000, in common stock with an issue price equal to the average of the daily volume weighted average prices of the Company’s common stock during the five business days immediately preceding the due date of the issuance. The Company did not exercise its rights under the agreement during the period ended September 30, 2016.

NOTE 1413 – ~~SUBSEQUENT EVENTS~~ACQUISTION

On March 9, 2017, the Company, through a newly created special purpose entity, executed a share purchase agreement to acquire all outstanding ownership interests in Crescent Construction Company, Inc. a full service general contracting firm for total consideration of $1,800,000. The agreement required a cash payment of $500,000 at closing plus a note payable for $1,300,000. The note carries interest of 6%, matures on March 31, 2022 and requires equal quarterly payments of $152,693. Additionally, the Company entered into a separate note payable with the seller for cash proceeds of $160,466. Because this note was executed simultaneously with the purchase agreement, it was considered part of the acquisition price which brought the total consideration to $1,960,466.

The Company applied the acquisition method to the business combination and valued each of the assets acquired (cash, contracts receivable, equipment, non-compete agreements and contracts in progress) and liabilities assumed (accounts payable and accrued expenses and notes payable) at fair value as of the acquisition date. The cash, contracts receivable, accounts payable and accrued expenses and notes payable were deemed to be recorded at fair value as of the acquisition date. The Company determined the fair value of all equipment to be historical book value. The preliminary allocation of the purchase price was based on estimates of the fair value of the assets and liabilities assumed based on provisional amounts. The allocation of the excess purchase price is not final and the amounts allocated to intangible assets are subject to change pending the completion of final valuations of certain assets and liabilities. Under the purchase agreement, the Company paid cash of $500,000 and issued a total of $1,460,466 of promissory notes for total consideration of $1,960,466. The following table shows the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

ASSETS ACQUIRED
Cash	$	160,466
Contracts receivable		611,320
Equipment		102,524
Non-compete agreement		32,468
Contracts in progress		157,002
Goodwill		1,474,907
Total assets acquired	$	2,538,687

LIABILITIES ASSUMED
Accounts payable and accrued expenses	$	567,042
Notes payable		11,179
Total liabilities assumed		578,221

NET ASSETS ACQUIRED	$	1,960,466

In accordance with ASC 805-10-50, the Company is providing the following unaudited pro-forma condensed consolidated statements of operations to present a summary of the combined results of the Company’s condensed consolidated operations as if the acquisition had been completed as of the beginning of the reporting period. Adjustments were made to eliminate any inter-company transactions in the periods presented.

INTELLIGENT HIGHWAY SOLUTIONS

PRO-FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,
	2017			2016
Revenue	$	1,399,750		$	1,858,038
Cost of sales		1,426,641			1,638,598
Gross (loss) profit		(26,891	)		219,440

Operating expenses
Salaries and wages		66,824			59,100
General and administrative		172,484			133,457
Total operating expenses		239,308			192,557

Income (loss) from operations		(266,199	)		26,883

Other income (expense)
Gain on extinguishment of debt		-			40
Gain on derivative fair value adjustment		9,487,661			270,252
Interest expense		(32,349	)		(199,701	)
Total other income (expense), net		9,455,312			70,591

Income before income taxes		9,189,113			97,474

Income tax expense		-			-

Net income before non-controlling interest		9,189,113			97,474
Net (loss) income attributable to non-controlling interest		(9,931	)		33,705
Net income attributable to Intelligent Highway Solutions	$	9,199,044		$	63,769

NOTE 14 – EQUITY LINE OF CREDIT

NOTE 15 – LINE OF CREDIT

On March 9, 2017, the Company entered into a revolving line of credit to borrow up to $5,000,000 dollars of which $631,855 was drawn immediately. Of the amount drawn on March 9, 2017, $500,000 was paid to the seller of Cresent Construction Company as the cash component of the acquisition and $131,855 was drawn to pay seller and financer acquisition related costs. The credit line carries interest at 12% per annum. There was $631,855 and $0 of principal drawn as of March 31, 2017 and December 31, 2016, respectively. There was $4,634 and $0 of accrued interest due at March 31, 2017 and December 31, 2016, respectively.

NOTE 16 – SUBSEQUENT EVENTS

Common Stock Issuances

On various dates through ~~June~~July 3017, 2017, the Company issued a total of 1,~~791~~438,~~282~~816,~~420~~488 common shares for the conversion of a total of $8775,~~289~~028 of outstanding principal on convertible notes payable. All conversions were done under contractual terms within each respective convertible note payable.

On various dates through ~~June~~July 3017, 2017, the Company issued a total of ~~316~~69,~~611~~077,~~256~~188 common shares for the conversion of a total of $173,~~160~~682of of outstanding accrued interest on convertible notes payable. All conversions were done under contractual terms within each respective convertible note payable.

On various dates through ~~June~~July 3017, 2017, the Company issued a total of 260,000,000 common shares for services provided by consultants. The shares were valued using the closing price on the dates of issuance which was from $0.0001 to $0.0002 per share resulting in a total value of $42,000.

Convertible Notes Payable

On April 25, 2017, the Company executed a securities purchase agreement with an existing convertible noteholder to enter into an additional $21,230 of convertible notes payable with each carrying a 10% original issue discount resulting in net cash borrowings of $19,300 being available to the Company. The note is carries interest at 12% and each tranche of cash received is due nine months after receipt. The note is convertible into shares of the Company’s common stock at a rate equal to a 42% discount from the lowest intra-day trading price for the Company’s common stock during the twenty days prior to conversion. The Company has received all of the available cash borrowings under the convertible note payable resulting in $21,230 being outstanding as of ~~June~~July 3017, 2017.

On May 10, 2017, the Company executed a securities purchase agreement with an existing convertible noteholder to enter into an additional $11,250 of convertible notes payable with and original issue discount totaling $1,500 resulting in net cash borrowings of $9,750 being available to the Company. The note is carries interest at 12% and each tranche of cash received is due nine months after receipt. The note is convertible into shares of the Company’s common stock at a rate equal to a 42% discount from the lowest intra-day trading price for the Company’s common stock during the twenty days prior to conversion. The Company has received all of the available cash borrowings under the convertible note payable resulting in $11,250 being outstanding as of ~~June~~July 3017, 2017.

~~Acquisition and Financing~~18

As part of the transaction, the Company entered into a revolving credit facility to borrow up to $5,000,000 of which $1,500,000 as advanced to the Company upon closing. Of the $1,500,000 advanced to the Company, $631,855 was paid for the seller and financier’s closing costs resulting in net cash to the Company of $868,145. The credit line carries an interest rate of 12% per annum and requires repayment based on cash collected from clients which are required to be sent to a lockbox maintained by the financier of which the net receipts after required payments to the financier under the credit facility agreement will be provided to the Company. The Company also issued a total of 7,500,000 shares of series A convertible preferred stock to the financier as part of the transaction.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Notice Regarding Forward Looking Statements

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Overview

Intelligent Highway Solutions, Inc. (the “Company” or “IHS”) was formed in April 22, 2011; IHS is a technology based intelligent highway solutions contractor. The Company’s primarily focus is in the California transportation market providing services that range from providing labor, materials, and related equipment for corrective service and maintenance services for the state’s transportation infrastructure. Additionally, the Company intends to develop transportation technology services that enable vehicles, roads, traffic lights, message signs, and other elements to become “intelligent” by embedding them with microchips and sensors and by empowering them to communicate with each other via wireless technologies. The acceleration of data collection and communication will allow state governments to improve transportation system performance by reducing congestion and increasing both traveler safety and convenience. While the Company develops technologies related to transportation, it will accept general electrical contracting work as a revenue source.

Plan of Operations

On August 22, 2013, the Company entered into a distribution agreement (the “Distribution Agreement”) with SCS Lighting Solutions Inc. (“SCS”), whereby SCS appointed the Company as its exclusive distributer of SCS products in Sacramento, California and other locations, as determined by both parties in the future. The SCS products include standard lighting solutions, as well as custom lighting products for indoor and outdoor applications. The Distribution Agreement is no longer exclusive.

The Distribution Agreement’s term automatically renews for one (1) year increments, unless either party elects to terminate the Agreement by giving not less than sixty (60) days’ notice prior to the end of the current term.

On March 19, 2014, the Company announced it had received a significant purchase order from Honeywell International Inc. (“Honeywell”) for the installation of a temperature control system and associated sensors in a state owned office building in Alameda, California.

On July 1, 2014, the Company announced it had received a second purchase order from Honeywell. The purchase order is for additional work in office buildings owned by the State of California.

These purchase orders with Honeywell were the Company’s sole source of income in 2014. The Honeywell project was completed during the first quarter of 2015 and a new electrical contracting project started shortly thereafter. ~~We will continue to accept general electrical contracting projects while we develop technologies related to our planned business of intelligent transportation services.~~

On March 9, 2017, the Company, through a special purpose entity in which the Company has a controlling interest and 80% ownership, acquired the outstanding ownership interests in Cresent Construction Company, a full service general contracting firm. The Company will continue to perform general contracting services as it continues its development of transportation technologies.

Results of Operations

Revenue

WeAll ~~did not generate~~ revenue during the three ~~or nine~~ months ended ~~September~~March 3031, ~~2016.~~2017 ~~All~~were ~~revenue~~generated ~~during~~from ~~the~~general ~~three~~construction ~~and~~contracting ~~nine~~services ~~months~~performed by ~~ended~~Cresent ~~September~~Construction ~~30,~~Company. ~~2015~~We ~~was~~did ~~generated~~not ~~from~~generate ~~our~~revenue ~~agreements~~during inthe ~~place~~three ~~with~~months ~~Honeywell~~ended March 31, 2016.

Three months ended September 30, 2016 and 2015

	Three months ended September 30,
	2016		2015		Change
Revenue	$	-	$	44,182	$	(44,182	)

Revenues for the three months ended September 30, 2016 were $0 compared to $44,182 during the same period in 2015. The decrease in revenue was the result of the Company not engaging in any new projects during the current period.

Nine months ended September 30, 2016 and 2015

	Nine months ended September 30,
	2016		2015		Change
Revenue	$	-	$	236,068	$	(236,068	)

Revenues for the nine months ended September 30, 2016 were $0 compared to $236,068 during the same period in 2015. The decrease in revenue was the result of the Company not engaging in any new projects during the current period.

Cost of Goods Sold

Three months ended September 30, 2016 and 2015

	Three months ended September 30,
	2016		2015		Change
Labor	$	-	$	-	$	-
Fuel		-		404		(404	)
Vehicle Lease		-		5,251		(5,251	)
Other		-		52,794		(52,794	)
Total	$	-	$	58,449	$	(58,449	)

Cost of goods sold for the three months ended September 30, 2016 were $0 compared to $58,449 during the same period in 2015. The decrease was the result of the Company not engaging in any new projects during the current period.

Nine months ended September 30, 2016 and 2015

	Nine months ended September 30,
	2016		2015		Change
Labor	$	-	$	110,415	$	(110,415	)
Fuel		-		2,422		(2,422	)
Vehicle Lease		-		20,770		(20,770	)
Other		-		73,846		(73,846	)
Total	$	-	$	207,453	$	(207,453	)

Cost of goods sold for the nine months ended September 30, 2016 were $0 compared to $207,453 during the same period in 2015. The decrease was the result of the Company not engaging in any new projects during the current period.

~~Operating~~Three ~~Expenses~~months ended March 31, 2017 and 2016

Three months ended September 30, 2016 and 2015

	Three months ended March 31,
	2017		2016		Change
Revenue	$	633,468	$	-	$	633,468

	Three months ended September 30,
	2016		2015		Change
Salaries and wages	$	41,443	$	374,000	$	(332,557	)
Professional services		85,962		155,950		(69,988	)
Other		1,108		47,145		(46,037	)
Total	$	128,513	$	577,095	$	(448,582	)

Revenues for the three months ended March 31, 2017 were $633,468 compared to $0 during the same period in 2016. The increase in revenue was the result of the Company’s acquisition of Cresent Construction Company as all revenues generated during the three months ended March 31, 2017 were from services performed by Cresent.

~~Operating~~Cost ~~expenses for the three months ended September 30, 2016 were $128,513 compared to $577,095 for the three months ended September 30, 2015. The decrease~~ of ~~$448,582~~Goods or 78% is the result of the Company’s limited operations during the three month ended September 30, 2016 when compared to the same period in the prior year. Specifically, the decrease in salaries and wages of $332,557 from 2015 to 2016 was the result of one time stock awards to management that occurred during the three months ended September 30, 2015 that was not present in the current period. The decrease in other operating expenses is the result of the Company not renewing its building lease in January 2016 and not incurring rent and utility costs in 2016 that were present in 2015.Sold

~~Nine~~Cost ~~months~~of ~~ended~~revenues ~~September~~include 30all direct material, ~~2016~~sub-contract, labor, and ~~2015~~certain other direct costs, as well as those indirect costs related to contract performance, such as indirect labor and fringe benefits. Additionally, the amortization of intangibles assets resulting from the acquisition of Cresent Contraction Company are recorded as costs of goods sold.

	Nine months ended September 30,
	2016		2015		Change
Salaries and wages	$	121,064	$	456,369	$	(335,305	)
Professional services		265,625		590,444		(324,819	)
Other		11,432		250,853		(239,421	)
Total	$	398,121	$	1,297,666	$	(899,545	)

Three months ended March 31, 2017 and 2016

Operating expenses for the nine months ended September 30, 2016 were $398,121 compared to $1,297,666 for the nine months ended September 30, 2015. The decrease of $899,545 or 69% is the result of the Company’s limited operations during the nine month ended September 30, 2016 when compared to the same period in the prior year. Specifically, professional services decreased by $324,819 in 2016 when compared to 2015 as the result of stock awards granted to consultants during 2015 that did not exist in 2016. The decrease in other operating expense of $239,421 is driven by bad debt expense of $139,483 during the nine months ended September 30, 2015 compared to $0 during the nine months ended September 30, 2016. The decrease of $335,305 in salaries and wages during 2016 when compared to 2015 is the result of one time stock awards issued to management in 2015 that did not exist in 2016.

	Three months ended March 31,
	2017		2016		Change
Labor	$	517,930	$	-	$	517,930
Amortization of intangible assets		27,888		-		27,888
Other		13,573		-		13,573
Total	$	559,291	$	-	$	559,291

Cost of goods sold for the three months ended March 31, 2017 were $559,291 compared to $0 during the same period in 2016. The increase in cost of revenue was the result of the Company’s acquisition of Cresent Construction Company as all costs of revenues generated during the three months ended March 31, 2017 were from services performed by Cresent.

~~Other~~Operating ~~Income and~~ Expenses

Three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016

	Three months ended September 30,
	Three months ended March 31,
	2016			2015			Change
	2017			2016			Change
Interest expense, net	$	(69,017	)	$	(479,839	)	$	410,822
Salaries and wages	$	41,443		$	38,179		$	3,264
Loss on extinguishment of debt		-			(258,273	)		258,273
Professional services		173,779			96,947			76,832
Penalties		-			(127,171	)		127,171
Other		147,150			6,516			140,634
Gain on sale of fixed assets		2,800			-			2,800
Total	$	362,372		$	141,642		$	220,730
Gan (loss) on derivative fair value adjustment		131,728			(214,397	)		346,125
Total	$	65,511		$	(1,079,680	)	$	1,145,191

~~Other~~Operating ~~income~~expenses ~~and~~for ~~expense during~~ the three months ended ~~September~~March 3031, ~~2016~~2017 ~~was~~were ~~a net gain of~~ $65362,~~511~~372 compared to ~~a net expense of~~ $1141,~~079,680~~642 ~~during~~for the three months ended ~~September~~March 3031, ~~2015~~2016. The ~~decrease~~increase ~~in net expense~~ of $1220,~~145,191~~730 or ~~106~~156% ~~was~~ is the result of ~~decreased~~the ~~interest~~Company’s ~~expense~~increased operations from ~~the~~its ~~recognition~~acquisition ofcompleted ~~debt~~during the ~~discounts~~three onmonths ~~convertible~~ended ~~notes~~March ~~being~~31, ~~higher~~2017. inSalaries ~~2015~~and ~~than 2016~~wages ~~and~~consist ~~excess~~of ~~initial~~management ~~measurements~~compensation onduring ~~derivative~~each ~~liabilities~~period ofpresented ~~approximately~~which is ~~$200,000~~relatively ~~being~~unchanged ~~charged~~due to ~~interest~~the renewal of existing employment agreements in ~~2015~~2017 ~~that were~~under ~~not~~the ~~present~~substantially the same terms as agreements in place for 2016. ~~Additionally,~~Professional ~~the~~fees ~~Company~~increased ~~experienced~~$76,832, ~~one~~or ~~time~~79%, ~~losses~~during onthe ~~debt~~three ~~that~~months ~~was~~ended ~~exchanged~~March ~~for~~31, ~~less~~2017 ~~favorable~~as the ~~terms~~result inof ~~2015~~acquisition ofrelated ~~$258,273~~legal ~~and~~costs ~~default~~incurred ~~penalties~~during onthe ~~convertible~~three ~~notes~~months ~~payable~~ended ofMarch ~~$127~~31,~~171~~ 2017 that were not present in 2016. ~~Lastly,~~ ~~the~~The ~~Company~~increase ~~recorded~~in ~~gains~~other onoperating expenses is the ~~change~~result inof the ~~fair~~Company ~~market~~incurring ~~value~~acquisition ofrelated ~~outstanding~~costs ~~derivatives~~ of $131,~~728~~855 ~~during~~as ~~2016~~part of ~~where~~the ~~this was~~acquisition aclosed ~~loss~~during ofthe ~~$214,397~~three inmonths ~~the~~ended ~~prior~~March ~~period~~31, 2017.

Nine months ended September 30, 2016 and 2015

	Nine months ended September 30,
	2016			2015			Change
Interest expense, net	$	(409,6397	)	$	(1,070,835	)	$	661,138
Gain (loss) on extinguishment of debt		2,142			(256,607	)		258,749
Penalties		-			(149,598	)		149,598
Gain on sale of fixed assets		16,550			-			16,550
Gain (loss) on derivative fair value adjustment		350,003			(702,507	)		1,052,510
Total	$	(41,002	)	$	(2,179,547	)	$	2,138,545

Other income and expense during the nine months ended September 30, 2016 was a net expense of $41,002 compared to a net expense of $2,179,547 during the nine months ended September 30, 2015. The decrease in net expense of $2,138,545 or 98% was the result of decreased interest expense from the recognition of debt discounts on convertible notes being higher in 2015 than 2016 ($508,733 during the nine months ended September 30, 2015 compared to $243,052 during the nine months ended September 30, 2016) and excess initial measurements on derivative liabilities of $390,607 being charged to interest in 2015 compared to $36,631 in 2016. Additionally, the Company experienced one time losses on debt that was exchanged for less favorable terms in 2015 of $256,607 and default penalties on convertible notes payable of $149,598 that were not present in 2016. Lastly, the Company recorded gains on the change in the fair market value of outstanding derivatives of $350,003 during 2016 where this was a loss of $702,507 in the prior period.

Net Loss

Three months ended September 30, 2016 and 2015

	Three months ended September 30,
	2016			2015			Change
Net loss	$	(63,002	)	$	(1,671,042	)	$	1,608,040

Net loss for the three months ended September 30, 2016 was $63,002 compared to $1,671,042 for the three months ended September 30, 2015. The decrease in net loss during the three months ended September 30, 2016 is attributable to the decreased business operations in the current period when compared to the same period in the prior year.

Nine months ended September 30, 2016 and 2015

	Nine months ended September 30,
	2016			2015			Change
Net loss	$	(439,123	)	$	(3,448,598	)	$	3,009,475

Net loss for the nine months ended September 30, 2016 was $439,123 compared to $3,448,598 for the nine months ended September 30, 2015. The decrease in net loss during the nine months ended September 30, 2016 is attributable to the decreased business operations in the current period when compared to the same period in the prior year.

Other Income and Expenses

Three months ended March 31, 2017 and 2016

	Three months ended March 31,
	2017			2016			Change
Interest expense, net	$	(45,178	)	$	(199,701	)	$	154,523
Gain on extinguishment of debt		-			40			(40	)
Gain on derivative fair value adjustment		9,487,661			270,252			9,217,409
Total	$	9,442,483		$	70,591		$	9,371,892

Other income and expense during the three months ended March 31, 2017 was a net gain of $9,442,483 compared to a net gain of $70,591 during the three months ended March 31, 2016. The increase in net gain of $9,371,892 was the result of increased gains recognized on the fair value adjustment of derivative liabilities. We do not expect this amount of gain to be recurring.

Net Income (Loss)

Three months ended March 31, 2017 and 2016

	Three months ended March 31,
	2017			2016			Change
Net income (loss) before non-controlling interest	$	9,154,288		$	(71,051	)	$	9,225,339
Non-controlling interest		(16,896	)		-			(16,896	)
Net income (loss) after non-controlling interest	$	9,171,184		$	(71,051	)	$	9,208,443

Net income for the three months ended March 31, 2017 was $9,171,184 compared to a net loss of $71,051 for the three months ended March 31, 2016. The increase in net income during the three months ended March 31, 2017 is attributable to the increased gain on the fair market value of derivatives partially offset by increased acquisition related costs.

Liquidity and Capital Resources

As of ~~September~~March 3031, ~~2016~~2017, we had cash of $~~298~~96,197, total current assets of $171,~~759~~009,168 and total current liabilities of $47,~~003~~509,~~588 creating~~865 creating a working capital deficit of $36,~~985~~500,~~829~~697. Current assets consisted of $~~298~~96,197 in cash, ~~and~~$897,990 of net contracts receivable and $1714,~~461~~981 of ~~prepaid~~costs ~~expenses~~in excess of billings. Current liabilities consisted of accounts payable $~~215~~1,~~648~~064,877, current notes payable ~~net~~ of ~~discounts of~~ $~~233~~589,~~770~~359, current convertible notes payable net of discounts of $~~969~~975,~~803~~287, a derivative liability of $~~736~~2,~~907~~196,937, accrued interest of $~~245~~308,~~395~~884, related party notes payable of $177,396, a credit line payable of $631,855 and accrued expenses and other liabilities of $1,~~594~~735,~~669~~270.

As of December 31, ~~2015~~2016, we had no$1,002 of cash on hand, total current assets of $861,~~560~~002 and total current liabilities of $315,~~662~~265,~~273~~ 943 creating a working capital deficit of $315,~~575~~264,~~713~~941. Current assets consisted of $711,~~341~~002 of ~~prepaid~~cash. ~~expenses~~Current ~~and~~liabilities ~~current~~consisted ~~deferred~~of accounts ~~loan~~payable ~~costs~~ of $~~15,~~219~~. Current~~,098, ~~liabilities~~accrued ~~consisted~~expenses ofand aother ~~bank~~liabilities ~~overdraft~~ of $21,~~981~~661, ~~accounts payable $176~~776,~~694,~~ ~~current~~ notes payable net of discounts of $~~154~~258,~~066~~609, ~~current~~ convertible notes payable net of discounts of $~~799~~986,~~976~~163, arelated ~~derivative~~party ~~liability~~notes ofpayable ~~$1,005,791, accrued interest~~ of $~~148~~7,~~655~~396, ~~related~~derivative ~~party~~liabilities ~~notes payable~~ of $711,00 855,072 and accrued ~~expenses~~interest ~~and other liabilities~~ of $1277,~~367,110~~829.

We expect our cash needs to fund operations during the twelve months to be approximately $~~250~~500,000. The Company will need additional financing to continue operations in 2017 and beyond which management anticipates will be generated from short term related party loans, convertible notes with non-related parties and non-convertible notes with non-related parties.

Cash Flows from Operating Activities

Cash flows used in operating activities during the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 was $7265,~~887~~271 which consisted of a net ~~loss~~income before non-controlling interest of $~~439~~9,~~123~~154, 288, non-cash expenses and gains of $29,~~983 and negative changes in working capital of $363~~314,~~253.~~672, ~~Net~~mainly ~~cash~~due ~~used~~to ina ~~operating activities~~gain ~~during~~on the ~~same~~fair ~~period~~market invalue ~~2015~~of ~~was~~derivative liabilities of $~~293~~9,~~935~~487,661 ~~which~~offset ~~consisted~~by ofexpenses apaid ~~net~~on ~~loss~~behalf of ~~$3,448,598,~~the ~~non-cash~~Company ~~expenses and gains~~ of $2137,~~729~~515,~~289~~ and negative changes in working capital of $~~425~~95,~~374~~113.

Cash flows used in operating activities during the three months ended March 31, 2016 was $45,662 which consisted of a net loss of $71,051, non-cash expenses and gains of $81,635, mainly due to a gain on the fair market value of derivative liabilities of $270,252 offset by the amortization of debt discounts of $121,090, and negative changes in working capital of $107,024.

Cash Flows from Investing Activities

During the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, we ~~used~~generated $160,466 and $-0- of cash in investing activities. Cash generated from investing activities during the three months ended March 31, 2017 consisted solely of cash acquired in the acquisition of Cresent Construction Company.

Cash Flows from Financing Activities

~~Cash~~The ~~provided~~Company bydid ~~financing~~not ~~activities~~generate ~~during~~cash ~~the nine months ended September 30, 2016 was $73,185 which consisted of proceeds~~ from ~~notes~~ ~~payable~~or ofuse ~~$75,770,~~cash ~~repayments~~in ~~of bank overdrafts of $2,981 and proceeds from related party notes payable of $396. Cash provided by~~ financing activities during the ~~same~~three ~~period~~months inended ~~2015~~March ~~was $228~~31,~~675~~ and consisted of repayments of convertible notes payable of $10,000, repayments of related party payables of $6,000, repayments of notes payable of $13,400, proceeds from convertible notes payable of $188,075 and proceeds from notes payable of $70,0002017.

Cash provided by financing activities during the three months ended March 31, 2016 was $48,107 which consisted of proceeds from notes payable of $53,955, repayments of notes payable of $3,263, repayments of bank overdrafts of $2,981 and proceeds from related party notes payable of $396.

Going Concern

Based on our financial history since inception, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. We have generated very little revenue and have limited tangible assets. Our company has a limited operating history. Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to on a profitable basis. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.

Management plans to continue to fund operations via short term related party loans and additional convertible as well as non-convertible debt from non-related parties.

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.

Critical Accounting Policies

There have been no changes in the Company’s significant accounting policies for the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017 as compared to those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016 filed with the Securities and Exchange Commission on ~~May~~June 1229, 2017.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

We are a Smaller Reporting Company and are not required to provide the information under this item.

2224

Item 4.

Controls and Procedures.

Disclosure of controls and procedures.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) (the Company’s principal executive officer) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective to ensure that: (1) information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms; and (2) that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of ~~September~~March 3031, ~~2016~~2017. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our CEO and ~~Interim~~ CFO have determined and concluded that, as of ~~September~~March 3031, ~~2016~~2017, the Company’s internal control over financial reporting was not effective.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that result in a more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of ~~September~~March 30 31,~~2016~~ 2017:

(1)

Lack of an independent audit committee or audit committee financial expert. Although our board of directors serves as the audit committee it has no independent directors. Further, we have not identified an audit committee financial expert on our board of directors. These factors are counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management.

We do not have sufficient experience from our accounting personnel with the requisite U.S. GAAP public company reporting experience that is necessary for adequate controls and procedures.

Our management determined that these deficiencies constituted material weaknesses.

Due to our small size, we were not able to immediately take any action to remediate these material weaknesses but plan to address these items in the near future. Notwithstanding the assessment that our Internal Controls over Financial Reporting was not effective and that there were material weaknesses identified herein, we believe that our consolidated financial statements contained in this report fairly present our financial position, results of operations, and cash flows for the quarter covered thereby in all material respects.

Changes in internal controls over financial reporting.

There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A.

Risk Factors.

We are a Smaller Reporting Company and are not required to provide the information under this item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

During the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017, the Company issued a total of ~~223~~212,~~292~~465,~~475~~932 shares of common stock for the conversion of of $511,~~825~~492 of outstanding principal and 247,534,068 shares of common stock for the conversion of $13,478 of outstanding interest on convertible notes payable.

The above shares were issued in reliance on the exemption under Section 4(2) of the Securities Act. These shares of our common stock qualified for exemption under Section 4(2) since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, manner of the issuance and number of shares issued. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the investors had the necessary investment intent as required by Section 4(2) since they either: (1) agreed to and received share certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a “public offering”; or (2) received shares pursuant to conversions of notes and the notes themselves had been held for longer than 6 months prior to conversion into unrestricted shares. Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Mine Safety Disclosures.

Not applicable

Item 5.

Other Information.

None

Item 6.

Exhibits.

Exhibit
Number		Exhibit Title

31.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Office pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1+		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2+		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS *		XBRL Instance Document

101.SCH *		XBRL Taxonomy Schema

101.CAL *		XBRL Taxonomy Calculation Linkbase

101.DEF *		XBRL Taxonomy Definition Linkbase

101.LAB *		XBRL Taxonomy Label Linkbase

101.PRE *		XBRL Taxonomy Presentation Linkbase

* Filed herewith.

+ In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

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SIGNATURES

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.

	INTELLIGENT HIGHWAY SOLUTIONS, INC.
Date: June 29, 2017	By:	/s/ Devon Jones
Date: July 17, 2017	By:	/s/ Devon Jones
		Devon Jones
		Chief Executive Officer
		(Principal Executive Officer)
Date: June 29, 2017	By:	/s/ Philip Kirkland
Date: July 17, 2017	By:	/s/ Philip Kirkland
		Philip Kirkland
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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Filing Compare · Intelligent Highway Solutions, Inc.