UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2018
For the quarterly period ended: September 30, 2018
OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from:___________ to___________
For the transition period from: _________ to _________

Commission file number: 000-53756

HIGHCOM GLOBAL SECURITY, INC.

(Formerly known as BlastGard International, Inc.)

(Exact name of small business issuer as specified in it charter)

Colorado		84-1506325
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2901 East 4^th Avenue, Unit J, Columbus, Ohio 43219

(Address of principal executive offices)

(727) 592-9400

(issuer’s telephone number)

BlastGard International, Inc., 2451 McMullen Booth Road, Suite 212, Clearwater, Florida 33759-1362

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the issuer 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 website, if any, every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T during the 12 preceding months (or such shorter period that the registrant was required to submit and post such file). Yes [X] No [ ]

Indicate by checkmark 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 [ ]
	Accelerated Filer [ ]		Smaller Reporting Company [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of ~~July~~October 2017, 2018, the issuer had 386,014,460 shares of $.001 par value common stock outstanding.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

HIGHCOM GLOBAL SECURITY, INC.

INDEX

		PAGE
	PART 1 – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated balance sheets as of June 30, 2018 (unaudited) and December 31, 2017	3
	Consolidated balance sheets as of September 30, 2018 (unaudited) and December 31, 2017	3
	Consolidated statements of operations, for the three and six months ended June 30, 2018 and 2017 (unaudited)	4
	Consolidated statements of operations, for the three and nine months ended September 30, 2018 and 2017 (unaudited)	4
	Consolidated statement of changes in stockholders’ equity for the six months ended June 30, 2018 (unaudited) and the year ended December 31, 2017	5
	Consolidated statement of changes in stockholders’ equity for the nine months ended September 30, 2018 (unaudited) and the year ended December 31, 2017	5
	Consolidated statements of cash flows for the six months ended June 30, 2018 and 2017 (unaudited)	6
	Consolidated statements of cash flows for the nine months ended September 30, 2018 and 2017 (unaudited)	6
	Notes to consolidated financial statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART I1 – OTHER INFORMATION
Item 1.	Legal Proceedings.	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	20
Item 6.	Exhibits	21
Signatures		22

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

HIGHCOM GLOBAL SECURITY, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2018			December 31, 2017
	September 30, 2018			December 31, 2017
	(unaudited)
Assets
Current assets
Cash	$	~~271~~345,~~343~~293		$	525,871
Accounts receivable		~~641~~550,~~198~~679			751,258
Inventory		1,~~619~~735,~~908~~646			1,699,770
Prepaid and other current assets		315,~~698~~108			27,339
Total current assets		2,~~564~~636,~~147~~726			3,004,238
Property & equipment, net		~~125~~112,~~466~~103			152,441
Deferred tax asset - net		3,~~505~~451,~~224~~756			3,475,805
Intangible property, net		8684,~~502~~073			91,360
Goodwill		2,061,649			2,061,649
Deposits		10,254			10,254
Total Assets	$	8,~~353~~356,~~242~~561		$	8,795,747
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	~~429~~335,~~347~~964		$	940,395
Accrued expenses		6539,~~192~~381			164,235
Customer deposits and deferred revenue		487,~~183~~076			4,658
Total current liabilities		~~542~~382,~~722~~421			1,109,288
Contingent liability		-			-
Total liabilities		~~542~~382,~~722~~421			1,109,288
Stockholders’ Equity
Preferred Stock, 1,000 shares authorized; $.001 par value; 0 and 0 issued and outstanding		-			-
Common Stock, $.001 par value, 500,000,000 shares authorized; 386,014,460 and 377,154,748 shares issued and outstanding respectively		386,015			377,155
Additional paid-in capital		18,554,907			18,349,683
Non-controlling interest		3945,~~858~~266			35,347
Accumulated deficit		(11,~~170~~012,~~260~~048	)		(11,075,726	)
Total stockholders’ equity		7,~~810~~974,~~520~~140			7,686,459
Total Liabilities and Stockholders’ Equity	$	8,~~353~~356,~~242~~561		$	108,~~684~~795,~~956~~747

See accompanying notes to consolidated financial statements

HIGHCOM GLOBAL SECURITY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended						For the ~~Six~~Nine Months Ended
	June 30,						June 30,
	September 30,						September 30,
	2018			2017			2018			2017
Revenues	$	1,~~706~~859,~~290~~574		$	1,~~571~~271,~~443~~687		$	34,~~058~~918,~~895~~468		$	23,~~718~~990,~~512~~199
Direct costs		~~979~~1,~~579~~024,455			1729,~~009,274~~316			12,~~861~~885,~~242~~696			12,~~654~~383,~~160~~476
Gross Profit		~~726~~835,~~711~~119			~~562~~542,~~169~~371			12,~~197~~032,~~653~~772			1,~~064~~606,~~352~~723
Operating expenses:
General and administrative		~~586~~594,~~091~~391			~~577~~649,~~828~~363			1,~~150~~744,~~103~~494			1,~~110~~759,~~505~~868
Research and Development		519,~~770~~605			4422,~~047~~205			4463,~~225~~829			5577,~~579~~784
Stock based compensation		~~93,584~~			-38,742			93,584			-38,742
Amortization and depreciation		15,~~769~~792			3617,~~052~~437			3147,~~833~~626			6885,~~433~~870
Total operating expenses		~~701~~629,~~214~~788			~~657~~727,~~927~~747			1,~~319~~949,~~745~~533			1,~~234~~962,~~517~~264
Operating profit (loss)		25,497			(95,758	)		(122,092	)		(170,165	)
Operating Income/(loss)		205,331			(185,376	)		83,239			(355,541	)
Non-operating activity
Other income		111,~~211~~757			-			214,~~650~~407			-
Gain on settlement of debt		-			~~102,325~~			-			102,325
Interest expenses		-			-			-			(5,874	)
Total other income (expense)		111,~~211~~757			~~102~~185,~~325~~376			214,~~650~~407			96,451
Income (loss) before non-controlling interest and income taxes		26,708			6,567			(119,442	)		(73,714	)
Income/(Loss) before non-controlling interest and income taxes		217,088			(185,376	)		97,646			(259,090	)
Non-controlling interest (gain) loss		(45,~~239~~408	)		~~464~~(1,383	)		(49,~~511~~919	)		~~772~~(611	)
Income tax benefit (provision)		(660,~~645~~113	)		(270,~~646~~278	)		29(24,~~419~~049	)		2797,~~448~~726
Net income (loss)	$	15151,~~824~~567		$	4(116,~~385~~481	)	$	~~(94~~63,~~534~~678	)	$	(45161,~~494~~975	)
Earnings (loss) per share:
Basic	$	-			-		$	-		$	-
Dilutive	$	-			-		$	-		$	-
Weighted average shares outstanding
Basic		~~380~~386,~~075~~014,~~532~~460			366,976,178			378,623,209			366,976,178
Dilutive		~~405~~408,~~491~~623,~~792~~586			~~411~~366,~~480~~976,~~570~~178			~~378~~411,~~623~~452,~~209~~392			366,976,178

See accompanying notes to consolidated financial statements

HIGHCOM GLOBAL SECURITY, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2018 AND THE YEAR ENDED DECEMBER 31, 2017

(UNAUDITED)

					Additional								Stock-
	Common				Additional Paid in			Non- controlling		Accumulated			Stock- Holders’
	Common				Paid in			Non-controlling		Accumulated			Holders’
	Shares		Par		Capital			Interest		Deficit			Equity
Balances at December 31, 2016		366,976,178	$	366,976	$	18,221,122		$	35,019	$	(8,956,587	)	$	9,666,530
Options issued for services						138,740								138,740
Exercise of options		10,178,570		10,179		(10,179	)							-
Net Income (Loss)									328		(2,~~119139~~119,139	)		(2,118,811	)
Balances at December 31, 2017		377,154,748	$	377,155	$	18,349,683		$	35,347	$	(11,075,726	)	$	7,686,459
Shares issued in satisfaction of accrued expenses		8,859,712		8,860		111,640								120,500
Shares issued for services		8,859,712		8,860		111,640								120,500
Options issued for services						93,584								93,584
Net Income (Loss)									49,~~511~~919		~~(94~~63,~~534~~678	)		~~(90~~73,~~023~~597	)
Balances at June 30, 2018		386,014,460	$	386,015	$	18,554,907		$	39,858	$	(11,170,260	)	$	7,810,520
Balances at September 30, 2018		386,014,460	$	386,015	$	18,554,907		$	45,266	$	(11,012,048	)	$	7,974,140

See accompanying notes to consolidated financial statements

HIGHCOM GLOBAL SECURITY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended
	For the Nine Months Ended
	June 30,
	September 30,
	2018			2017
Cash Flows from Operating Activities:
Net income (loss)	$	~~(94~~63,~~534~~678	)	$	(45161,~~494~~975	)
Adjustment to reconcile Net Income to net cash (used) provided by operations:
Non-controlling interest gain (loss)		49,~~511~~919			~~(772~~611	)
Income tax benefit		~~(29~~24,~~419~~049	)		(2797,~~448~~726	)
Depreciation and amortization		3147,~~833~~625			6885,~~433~~870
Stock based compensation		93,584			-38,742
Gain on settlement of debt		-			(102,325	)
Changes in assets and liabilities:
Accounts receivable		~~110~~200,~~060~~579			~~186~~328,~~722~~761
Inventory		79(35,~~862~~876	)		~~156~~103,~~337~~465
Prepaid expenses		(422,~~359~~231	)		5,000
Accounts payable and accruals		(~~489~~608,~~591~~785	)		(6327,~~697~~751	)
Customer deposits		432,~~525~~418			(~~9,050~~915	)
Net Cash (Used) Provided by Operating Activities		(~~254~~180,~~528~~578	)		~~167~~171,~~706~~973
Cash Flows from Investing Activities:
Purchase of property and equipment		-			(22,304	)
Net Cash Used by Investing Activities		-			(22,304	)
Cash Flows from Financing Activities:
Repayments of notes payable		-			(211,752	)
Net Cash Used by Financing Activities		-			(211,752	)
Net increase (decrease) in Cash		(~~254~~180,~~528~~578	)		(6662,~~350~~263	)
Cash at beginning of period		525,871			270,331
Cash at end of period	$	~~271~~345,~~343~~293		$	~~203~~208,~~981~~068
Supplemental cash flow information:
Interest paid	$	-		$	5,874
Taxes paid	$	-		$	-

Supplemental Schedule of Noncash Investing and Financing Activities

~~June~~In June of 2018, the Company issued 8,859,712 common shares in satisfaction of accrued compensation to directors and officers of the Company

See accompanying notes to consolidated financial statements

HIGHCOM GLOBAL SECURITY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~SIX~~NINE MONTHS ENDED ~~JUNE~~SEPTEMBER 30, 2018

(UNAUDITED)

(1) Basis of Presentation

The interim period financial statements have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such SEC rules and regulations. This report should be read in conjunction with our Form 10-K for our fiscal year ended December 31, 2017.

In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of the financial position at ~~June~~September 30, 2018 and the results of operations for the three and ~~six~~Nine months ended ~~June~~September 30, 2018 and 2017 and cash flows for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017 have been made.

HighCom Global Security, Inc. (the “Company”) went public through a shell merger on January 31, 2004, in which the Company acquired BlastGard Technologies, Inc. On March 21, 2004, the Company changed its name to BlastGard International, Inc. On March 4, 2011, the Company completed the acquisition of HighCom Armor Solutions, Inc. and subsidiaries. On June 28, 2017, the Company changed its name to HighCom Global Security, Inc. These consolidated financial statements include the assets, liabilities and activities of the following:

BlastGard Technologies Inc., a 100% wholly-owned subsidiary of the Company, was a dormant Florida corporation from 2005 through June 2017 when the Company’s tangible and intangible assets relating to BlastWrap technology were transferred back into BlastGard Technologies, Inc. (“BlastGard” or “BTI”). BTI was incorporated on September 26, 2003 in the State of Florida, to design and market proprietary blast mitigation materials

HighCom Armor Solutions, Inc. (HighCom Armor) is a 98.2% owned subsidiary of the Company. Founded in 1997 and originally based in San Francisco, HighCom Armor Solutions, Inc., a California corporation, is a global provider of security equipment. HighCom Armor is a leader in advanced ballistic armor manufacturing. With a 32,865 square foot manufacturing and distribution facility located in Columbus, Ohio, HighCom Armor is well positioned for large scale and time sensitive global supply needs. We design, manufacture and/or distribute a range of security products and personal protective gear. HighCom Armor serves a wide range of customers throughout the world. Our North American customer base includes the Department of Defense and the Department of Homeland Security. We cater to local law enforcement agencies, correctional facilities and municipal authorities, as well as large corporations. We export our products throughout the world and have in the past sold products in Asia, Africa, Europe, Latin America and the Middle East. Many of our products are controlled for export purposes and we require end user details prior to all sales. Strict compliance with U.S. and International laws and regulations is mandatory. HighCom Armor’s corporate office and manufacturing facility are located in Columbus, Ohio.

Business Segments

Although the Company accounts for its operations in three separate corporations, all of its business operations are associated with security for Individuals and Property. HighCom Global Security, Inc. primarily provides for corporate administration. HighCom Armor sales represent in excess of 99% of total sales and BTI has incidental sales of an immaterial amount. The Company has determined that all business operations should be aggregated together and not reported as separate operating segments.

Concentrations – Major Customers and Major Vendors

For the ~~six~~nine months ended ~~June~~September 30, 2018, approximately 4950% of the Company’s revenue was provided by three customers with ~~the~~ the largest representing approximately 2028%,. ~~and~~The ~~the~~next ~~other~~ two atlargest 17customers represented approximately 13% and 129 %.

For the ~~six~~nine months ended ~~June~~September 30, 2018, approximately 5254% of inventory purchases was provided by three vendors, with the largest ~~supplier~~ supplier representing approximately 2330%, and the next two approximately 1917% and 108% respectively. ~~The next three largest suppliers provided approximately 21% of inventory purchases combined.~~

For the ~~six~~nine months ended ~~June~~September 30, 2017, approximately 5051% of the Company’s revenue was provided by three customers with ~~the~~ the largest representing approximately 3128%,. ~~and~~The ~~the~~next ~~other~~ two atlargest 10customers represented approximately 13% and 9 %.

For the ~~six~~nine months ended ~~June~~September 30, 2017, approximately 6654% of inventory purchases was provided by five vendors, with the two ~~largest~~ largest suppliers representing approximately 2336% each of purchases. ~~The next three largest suppliers provided approximately 6% to 7% of purchases each.~~

Foreign Sales

For the ~~six~~nine months ended ~~June~~September 30, 2018, the Company generated sales from foreign customers in the amount of $~~107~~218,~~905~~523, representing approximately 34.54% of total sales. Sales to ~~four~~one ~~customers~~customer in Canada represented less than 1%, with the balance coming from atwo ~~single~~customers ~~customer~~ in Mexico.

For the ~~six~~nine months ended ~~June~~September 30, 2017, the Company generated sales from foreign customers in the amount of $116,794, representing approximately 4% of total sales. Sales to one customer in Mexico represented approximately 2% of total sales, and sales to one customer in New Zealand approximately 1%. Sales to three customers in Canada and small transactions with customers in United Arab Emirates and Colombia represent the balance

Principles of Consolidation

These consolidated financial statements include the assets and liabilities of HighCom Global Security, Inc. and its subsidiaries as of ~~June~~September 30, 2018 and December 31, 2017, and its results of operations and cash flows for the periods presented.

All material intercompany balances and transactions have been eliminated for periods presented.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Major estimates made by management include depreciation, amortization, allowance for bad debts, reserves for inventory obsolescence and deferred taxes. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considered all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.

Financial Instruments

The carrying amounts of cash, receivables and current liabilities approximated fair value due to the short-term maturity of the instruments. Debt obligations were carried at cost, which approximated fair value due to the prevailing market rate for similar instruments.

Fair Value Measurement

All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements. This value was evaluated on a recurring basis (at least annually). Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs were used to measure fair value.

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

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

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

Accounts Receivable

Accounts receivable consisted of amounts due from customers based in the United States and abroad. The Company considered accounts more than 30 days old to be past due. The Company used the allowance method for recognizing bad debts. When an account was deemed uncollectible, it was written off against the allowance. The Company generally does not require collateral for its accounts receivable. Management deems all accounts receivable to be collectable at ~~June~~September 30, 2018.

Inventory

Inventory was stated at the lower of cost (first-in, first-out) orand net realizable value. Inventory consisted of materials used to manufacture the Company’s product and finished goods ready for sale.

Property and Equipment

Property and equipment are stated at cost. Depreciation was calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Expenditures for additions and improvements were capitalized, while repairs and maintenance costs were expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of were removed from the accounts and any gain or loss was recorded in the year of disposal.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets at least annually. Impairment losses were recorded on long-lived assets used in operations when indicators of impairment were present and the undiscounted future cash flows estimated to be generated by those assets were less than the assets’ carrying amount. If such assets were impaired, the impairment to be recognized was measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of were reported at the lower of the carrying value or fair value, less costs to sell.

Revenue Recognition

In ~~May~~January 2014, the ~~FASB~~Company ~~issued~~adopted ~~ASU~~ASC ~~2014-09~~606, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance.

The guidance introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The five-step model requires that we;

	(i)	identify the contract with the customer,
	(ii)	identify the performance obligations in the contract,
	(iii)	determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur,
	(iv)	allocate the transaction price to the respective performance obligations in the contract, and
	(v)	recognize revenue when (or as) we satisfy the performance obligation.

The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from revenue. The majority of our contracts have a single performance obligation as we provide various products that are substantially the same and are transferred with the same pattern to the customer. For contracts with multiple performance obligations, we allocate the total transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. We use an observable price to determine the stand-alone selling price for separate performance obligations or a cost-plus margin approach when one is not available. The Company’s product and return policy allows for merchandise purchased directly from the Company to be returned after obtaining a Return Authorization Number during the 30-day period following date of shipment by the Company for a refund of the purchase price.

Research and Development

Research and development costs were expensed as incurred. Research and development costs totaled $4463,~~225~~829 and $5577,~~579~~784 for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017 respectively.

Advertising

Advertising, marketing and promotion costs were expensed as incurred. Advertising costs of $2617,~~261~~862 and $831,~~002~~363 were incurred during the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, respectively.

Shipping and Freight Costs

The Company includes shipping costs in cost of goods sold

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse.

The Company recognizes deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company reports uncertain tax positions in accordance with guidance provided by ASC-740-10, Accounting for Uncertainty in Income Taxes.

Stock-based Compensation

We use the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant, using assumptions for volatility, expected term, risk-free interest rate and dividend yield. We have used one grouping for the assumptions as our option grants were primarily basic with similar characteristics. The expected term of options granted has been derived based upon our history of actual exercise behavior and represents the period of time that options granted were expected to be outstanding. Historical data was also used to estimate option exercises and employee terminations. Estimated volatility was based upon our historical market price at consistent points in a period equal to the expected life of the options. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant and the dividend yield was based on the historical dividend yield. Compensation expense for stock-based compensation is recognized over the vesting period.

Income (Loss) per Common Share

Basic net loss per share excludes the impact of common stock equivalents. Diluted net income (loss) per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of ~~June~~September 30, 2018, and 2017, there were 5445,~~750~~375,000 and 4649,~~125~~250,000 vested common stock options outstanding, which were ~~not~~ included in the calculation of net income/loss per share-diluted because they were ~~anti-~~dilutive. In addition, at ~~June~~September 30, 2018 and 2017 the Company had 41,801,793 ~~remaining~~ remaining warrants outstanding issued in connection with convertible promissory notes and stock sales that were also ~~not~~ included ~~because~~ because they were ~~anti-~~dilutive.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.

ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606) issued May 28, 2014 by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017. The ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers which supersedes current revenue recognition guidance, including most industry-specific guidance. The guidance provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. Under the modified retrospective method, the Company would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application; however, we did not have any material adjustments as of the date of the adoption. The comparative periods have not been restated and continue to be reported under the accounting standards in effect for those periods.

ASU Update 2014-15 Presentation of Financial Statements-Going Concern (Sub Topic 205-40) issued August 27, 2014 by FASB defines managements responsibility to evaluate whether there is a substantial doubt about an organizations ability to continue as a going concern. The additional disclosure required became effective after December 31, 2016 and has been evaluated accordingly. This did not have a material impact on our Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory, which simplifies the measurement principle of inventories valued under the First-In, First-Out (“FIFO”) or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-1 1 is effective for reporting periods beginning after December 15, 2016 including interim periods within those annual periods. This did not have a material impact on our Consolidated Financial Statements.

In July 2015, the FASB issued ASU 2015-11, Inventory, which simplifies the measurement principle of inventories valued under the First-In, First-Out (“FIFO”) or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-1 1 is effective for reporting periods beginning after December 15, 2016 including interim periods within those annual periods. This did not have a material impact on our Consolidated Financial Statements.

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as non-current on the consolidated balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. Upon adoption, ASU 2015-17 may be applied either prospectively or retrospectively. This did not have a material impact on our Consolidated Financial Statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Consolidated Financial Statements.

(2) Inventory

Our inventory is made up of raw materials, work in progress and finished goods. Our inventory is maintained at our manufacturing facilities.

	June 30, 2018		December 31, 2017
	September 30, 2018		December 31, 2017
Raw materials	$	~~662~~744,~~966~~603	$	805,029
Work in process		~~278~~227,~~963~~866		222,336
Finished Goods		~~677~~763,~~979~~177		672,405
TOTAL	$	1,~~619~~735,~~908~~646	$	1,~~699~~669,770

(3) Property and Equipment, Net

Property and equipment are comprised of the following at June 30, 2018 and December 31, 2017

	June 30, 2018			December 31, 2017
Equipment	$	453,397		$	453,397
Furniture		106,525			106,525
Moulds		45,060			45,060
Test Range		110,802			110,802
		715,784			715,784
Less accumulated depreciation		(590,318	)		(563,343	)
Property and equipment, net	$	125,466		$	152,441

~~Depreciation~~(3) ~~expense~~Property ~~for~~and ~~the next five years ended June 30~~Equipment, Net

2019	$	48,826
2020		41,601
2021		22,805
2022		9,528
2023 and thereafter		2,706
	$	125,466

Property and equipment are comprised of the following at September 30, 2018 and December 31, 2017

Depreciation expense for the six months ended June 30, 2018 and 2017 was $26,975 and $32,524, respectively.

	September 30, 2018			December 31, 2017

Equipment	$	453,397		$	453,397
Furniture		106,525			106,525
Moulds		45,060			45,060
Test Range		110,802			110,802

		715,784			715,784
Less accumulated depreciation		(603,681	)		(563,343	)

Property and equipment, net	$	112,103		$	152,441

Depreciation expense for the next five years ended September 30,

2019	$	49,012
2020		37,995
2021		17,586
2022		6,708
2023		802

	$	112,103

Depreciation expense for the nine months ended September 30, 2018 and 2017 was $40,338 and $47,626, respectively.

(4) Intangible Assets, Net

Intangible Assets are comprised of the following at ~~June~~September 30, 2018 and December 31, 2017:

	June 30, 2018			December 31, 2017
	September 30, 2018			December 31, 2017
Patents and Trademarks	$	145,749		$	145,749
Websites		80,000			80,000
Lists		500,000			500,000
		725,749			725,749
Less accumulated amortization		(~~639~~641,~~247~~676	)		(634,389	)
Intangible assets, net	$	8684,~~502~~073		$	91,360

Amortization expense for the next five years ended ~~June~~September 30,

2019	$	9,717
2020		9,717
2021		9,717
2022		9,717
2023 and thereafter		4745,~~634~~205
	$	8684,~~502~~073

Amortization expense for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017 was $47,~~858~~287 and $3538,~~929,~~338 respectively.

(5) Notes Payable

The Company does not have any notes payable at June 30, 2018 and December 31, 2017.

(5) Notes Payable

The Company does not have any notes payable at September 30, 2018 and December 31, 2017.

Credit card payable - VISA

The Company utilizes a MasterCard credit card to facilitate short term cash flow demands

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

(6) Stockholders’ Equity

Preferred stock

The Company was authorized to issue 1,000 shares of $.001 par value preferred stock. The Company may divide and issue the Preferred Shares in series. Each Series, when issued, shall be designated to distinguish them from the shares of all other series. The relative rights and preferences of these series include preference of dividends, redemption terms and conditions, amount payable upon shares of voluntary or involuntary liquidation, terms and condition of conversion as well as voting powers. None of our preferred stock are outstanding.

Common stock issuances

In June 2018, the Company issued 8,859,712 common shares in satisfaction of accrued compensation payable to the directors and officers based on the fair market value of $0.136 per share,. in the total amount of $120,500.

386,014,460 and 377,154,748 shares were issued and outstanding at ~~June~~September 30, 2018 and December 31, 2017 respectively.

Stock Compensation

The Company periodically offered options to purchase stock in the company to vendors, board members and employees. The Board’s policy with respect to options is to grant options at the fair market value of the stock on the date of grant. Options generally become fully vested after one year from the date of grant and expire five years from the date of grant.

In April of 2018, the Company granted 15,500,000 options to purchase common stock to board members, of which 8,000,000 options vested immediately. The Company used the following Black- – Scholes assumptions in arriving at the fair value of the options to record stock-based compensation ~~expense~~ expenses of $93,584 for the ~~three~~nine months ended ~~June~~September 30, 2018.

Expected Life in Years	5.0 to 9.75
Expected life in years	5.0 to 9.75
Risk-free Interest Rates	2.72	%
Risk Free Interest Rates	2.72	%
Volatility	257.89	%
Dividend Yield	0	%

AtThe ~~June~~following ~~30,~~table ~~2018,~~represents ~~there~~stock ~~was~~option ~~approximately~~activity ~~$89,000~~as of ~~unrecognized~~and ~~compensation~~for ~~cost~~the ~~related~~nine tomonths ~~share-based~~ended ~~payments~~September ~~which~~30, ~~is expected to be recognized in the future.~~2018:

The following table represents stock option activity as of and for the six months ended June 30, 2018:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Options Outstanding – December 31, 2017		39,250,000	$	0.01		6.1 years	$	-
Granted		15,500,000		0.01		7.9 years		-
Exercised		-		-
Forfeited/expired/cancelled		-		-
Options Outstanding – September 30, 2018		54,750,000	$	0.01		6.3 years	$	-
Outstanding Exercisable – January 1, 2018		35,500,000	$	0.01		6.1 years	$	-
Outstanding Exercisable – September 30, 2018		45,375,000	$	0.01		6.4 years	$	-

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Options Outstanding – December 31, 2017		39,250,000	$	0.01		6.1 years		-
Granted		15,500,000		0.01		7.9 years		-
Exercised		-		-
Forfeited/expired/cancelled		-		-
Options Outstanding – June 30, 2018		54,750,000	$	0.01		6.3 years	$	-
Outstanding Exercisable – January 1, 2018		35,500,000	$	0.01		6.1 years	$	-
Outstanding Exercisable – June 30, 2018		43,500,000	$	0.01		6.4 years	$	-

The following table represents stock warrant activity as of and for the ~~six~~nine months ended ~~June~~September 30, 2018:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Warrants Outstanding – December 31, 2017		41,801,793	$	0.009		.5 years	$	-
Granted		-
Exercised		-		-
Forfeited/expired/cancelled		-
Warrants Outstanding – June 30, 2018		41,801,793	$	0.009		.5 years	$	-
Warrants Outstanding – September 30, 2018		41,801,793	$	0.009		.5 years	$	-
Outstanding Exercisable – January 1, 2018		41,801,793	$	0.009		2.9 years	$	-
Outstanding Exercisable – June 30, 2018		41,801,793	$	0.009		2.9 years	$	-
Outstanding Exercisable – September 30, 2018		41,801,793	$	0.009		2.9 years	$	-

(7) Income Taxes

In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly.

As of December 31, 2016, based on all the available evidence, management determined that it is more likely than not its deferred tax assets will be fully realized. Accordingly, the valuation allowance was reversed in full. As of December 31 2017, the Company had a deferred tax asset of $3,475,805. During the ~~six~~nine months ended ~~June~~September 30, 2018, the Company ~~incurred~~had ~~a net loss~~income, which created ana ~~increase~~decrease in its deferred tax asset with and a corresponding income tax ~~benefit~~expense in the amount of $2924,~~419~~049.

(8) Concentration of Credit Risk for Cash

The Company has concentrated its credit risk for cash by maintaining deposits in a financial institution, which may at times exceed the amounts covered by insurance provided by the United States Federal Deposit Insurance Corporation (“FDIC”). At ~~June~~September 30, 2018, the Company had no funds in excess of the FDIC insurance limits.

(9) Commitments and Contingencies

From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

Office Lease

We do not own any real estate properties. The corporate location for both HighCom Global and HighCom Armor is Columbus, OH. HighCom Armor secured the lease for both the office and the manufacturing plant in Columbus, Ohio. In October 2015, HighCom Armor entered into a three-year lease agreement for approximately 32,155 square feet of office and warehouse space in Columbus, OH. Rental payment under the new lease was $9,863 per month on a month to month basis through June 2016 and is now $9,734 per month through October 2018. ~~Two~~A satellite ~~offices~~office ~~are~~is maintained in ~~Florida and~~ Colorado for additional sales support.

Rent expense for the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017 was approximately $6598,~~276~~663 and $6497,~~256~~443, respectively.

(10) Change in Directors and Management

On January 16, 2018, Craig Campbell, an executive officer and director of the Company, submitted his resignation to the board. Francis Michaud, who was serving as Chief Financial Officer of the Company, was elected to the board of directors to fill the vacancy left by Mr. Campbell and was appointed to serve as Chief Executive Officer. On October 23, 2018, Paul Sparkes Chairman submitted his resignation to the board.

(11) Subsequent Events

The Company has evaluated all subsequent events through the filing date of this form 10Q for appropriate accounting and disclosures, and there are no subsequent event disclosures required.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements contained herein that are not historical facts are forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and those actual results may differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: well-established competitors who have substantially greater financial resources and longer operating histories, regulatory delays or denials, ability to compete as a start-up company in a highly competitive market, and access to sources of capital.

The following discussion should be read in conjunction with the Company’s financial statements and notes thereto included elsewhere in this Form 10-Q and in our Form 10-K for the fiscal year ended December 31, 2017. Except for the historical information contained herein, the discussion in this Form 10-Q contains certain forward-looking statements that involve risks and uncertainties, such as statements of the Company’s plans, objectives, expectations and intentions. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear herein. The Company’s actual results could differ materially from those discussed here.

The financial information furnished herein has not been audited by an independent accountant; however, in the opinion of management, all adjustments (only consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the period ended ~~June~~September 30, 2018, have been included.

Summary.

HighCom Global Security, Inc. is a leading provider of equipment and services for the security and defense industries. We acquire, manage and build industry leading businesses which provide specialized, mission-critical solutions that address the needs of our customers. The Company owns 100% of BlastGard Technologies, Inc. (“BTI”) which developed and has been marketing BlastWrap products to protect people and property against explosive forces. The Company owns 98.2% of HighCom Armor Solutions, Inc. (“HighCom Armor”) which provides a wide range of security and personal protective gear. Our protective gear includes shields, helmets, vests and plates which provide police and military with the protective gear they need to do their jobs.

We believe that the products of our operating subsidiaries have a certain synergy and that HighCom Global is poised to be a full-service provider for defensive and protective product needs. The term “the Company” shall include HighCom Global, BTI and HighCom Armor unless the context indicates otherwise.

HighCom Armor provides a wide range of security products and personal protective gear (including tactical armor) that are tailored and offer protection solutions to specific customer requirements. HighCom Armor caters to local law enforcement agencies, correctional facilities and municipal authorities. Given the equipment and ballistic protection solutions provided by HighCom Armor, compliance with the U.S. Department of Commerce, U.S. Department of State, U.S. Department of the Treasury and all other governmental agencies’ regulations is a high priority. HighCom Armor has sold its products in the defense and law enforcement sectors and is known for innovative technology, exceptional customer service and superior quality performance. We export our products throughout the world and have in the past sold products in Asia, Africa, Europe, Latin America and the Middle East. Many of our products are controlled for export purposes and we require end user details prior to all sales. Strict compliance with U.S. and International laws and regulations is mandatory.

Founded in 1997 and originally based in San Francisco, HighCom Armor Solutions, Inc. is a global provider of security equipment. HighCom Armor is a leader in advanced ballistic armor manufacturing. With a 32,865 square foot manufacturing and distribution facility located in Columbus, Ohio, HighCom Armor is well positioned for large scale and time sensitive global supply needs. We design, manufacture and/or distribute a range of security products and personal protective gear. HighCom Armor serves a wide range of customers throughout the world. Our North American customer base includes the Department of Defense and the Department of Homeland Security. We cater to local law enforcement agencies, correctional facilities and municipal authorities, as well as large corporations. We export our products throughout the world and have in the past sold products in Asia, Africa, Europe, Latin America and the Middle East. Many of our products are controlled for export purposes and we require end user details prior to all sales. Strict compliance with U.S. and International laws and regulations is mandatory.

Results of Operations

The following information represents our results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2018 and 2017:

For the three months ended ~~June~~September 30, 2018, we recognized revenues of $1,~~706~~859,~~290~~574 as compared to $1,~~571~~271,~~443~~687 for the comparable period of the prior year. For the ~~six~~nine months ended ~~June~~September 30, 2018, we recognized revenues of $34,~~058~~918,~~895~~468 as compared to $23,~~718~~990,~~512 for~~199 for the comparable period of the prior year. In future operation periods, the Company expects growth through the addition of new ~~distributors~~ distributors and from increased demand for personal body armor for both domestic and international markets.

For the three months ended ~~June~~September 30, 2018, gross profit was $~~726~~835,~~711~~119 as compared to a gross profit of $~~562~~542,~~169~~371 for the comparable ~~period~~ period of the prior year. For the ~~six~~nine months ended ~~June~~September 30, 2018, gross profit was $12,~~197~~032,~~653~~772 as compared to a gross profit of $1,~~064~~606,~~352~~ 723 for the comparable period of the prior year. The increased margins are primarily due to a change in product mix.

For the three months ended ~~June~~September 30, 2018, the Company’s operating expenses were $~~701~~629,~~214~~788 as compared to $~~657~~727,~~927~~747 for the ~~comparable~~ comparable period of the prior year. For the ~~six~~nine months ended ~~June~~September 30, 2018, the Company’s operating expenses were $1,~~319~~949,~~745~~533 as compared to $1,~~234~~962,~~517~~264 for the comparable period of the prior year. ~~The increased operating expenses were due primarily to stock-based compensation in the amount of $93,584 associated with the issuance of options.~~

For the three months ended ~~June~~September 30, 2018 and 2017, the Company had only a small amount of other income and no interest expense~~, as compared~~. ~~to a gain on settlement of debt of $102,235 for the prior year,~~ For the ~~six~~nine months ended ~~June~~September 30, 2018 and 2017, the Company had only ~~a small~~an immaterial amount of other income and no interest expense, as compared to a gain on settlement of debt of $102,235 and interest expense of $5,874.

For the three months ended June 30, 2018, the Company had a net income of $15,824, which included an income tax provision of $6,645, as compared to a net income for the comparable period of the prior year of $4,385, which included an income tax provision of $2,646. For the six months ended June 30, 2018, the Company had a net loss of $94,534, which included an income tax benefit of $29,419, as compared to a net loss for the comparable period of the prior year of $45,494, which included an income tax benefit of $27,448.

Backlog of Sales

As of June 30, 2018, the Company had a backlog of sales of $786,426, all of which is expected to ship in the third quarter of 2018. Management believes additional sales of the Company’s HighCom products will be secured during the balance of the third quarter and in future operating periods as the Company continues to bid on numerous sizeable contracts.

For the three months ended September 30, 2018, the Company had a net income of $151,567, which included an income tax provision of $60,113, as compared to a net (loss) for the comparable period of the prior year of ($116,481), which included an income tax benefit of $70,278. For the nine months ended September 30, 2018, the Company had net income of $63,678, which included an income tax provision of $24,049, as compared to a net loss for the comparable period of the prior year of $161,975 which included an income tax benefit of $97,726.

Backlog of Sales

As of September 30, 2018, the Company had a backlog of sales of $801,645 all of which is expected to ship in the 4th quarter of 2018. Management believes additional sales of the Company’s HighCom products will be secured during the balance of the fourth quarter and in future operating periods as the Company continues to bid on numerous sizeable contracts.

Various Security and Personal Protective Product Lines Identified

Body armor is classified by the NIJ according to the level of protection it provides from various threats. The classifications are as follows:

	●	Type IIA body armor- minimal protection against smaller caliber handgun threats.

	●	Type II body armor – provides protection against many handgun threats, including many common smaller caliber pistols with standard pressure ammunition, and against many revolvers.

	●	Type IIIA body armor- provides a higher level of protection and will generally protect against most pistol calibers including many law enforcement ammunitions, and against many higher-powered revolvers.

	●	Type III and IV body armor – provides protection against rifle rounds and are generally only used in tactical situations.

Our Security Products include the following:

	●	Ballistic helmets

	●	Ballistic soft body armor panels and vests

	●	Ballistic hard armor plates

	●	Ballistic shields

	●	Ballistic blankets

In 2015, HighCom Armor completed several new NIJ 0101.06 certifications. Our new hard armor products include: our new 4S17M economical Level IV stand alone in multi curve shapes; our new 3S11 lightweight all PE plate; our new 3S11M lightweight all PE multi curve plate; and our new AR1000 lightweight steel advanced plate. In 2016, we launched a new lightweight Level IV plate; a new multi-hit Level IV plate; a new series of ultra-lightweight helmet solutions; as well as several new soft armor solutions. We also designed a Rifle Special Threat Plate for special operators in SWAT and high-risk task forces. In 2017, we introduced 5 new hard armor models including a Level III++, multi-curve, hard armor ballistic plate and 1 new Level IIIa elite, lightweight, high performance soft armor panel. HighCom Armor now has 11 hard armor NIJ 0101.06 certified ballistic plate models as well as 5 soft armor NIJ 0101.06 certified panel solutions.

Manufactured products versus products supplied by third party vendors.

HighCom Armor manufactures ballistic plates, ballistic shields, ballistic vests, and ballistic helmets, along with ballistic and bomb-mitigating blankets. HighCom Armor’s hard and soft armor products are made under our brand name or a private label. Our ballistic helmets are assembled at the HighCom Armor plant. Third party vendors such as Team Wendy and Ops-Core provide accessories to our ballistic helmets. For a complete description of the HighCom Armor product line, reference is made to our Form 10-K for the fiscal year ended December 31, 2017.

Liquidity and Capital Resources.

At ~~June~~September 30, 2018, we had cash of $~~271~~345,~~343,~~293 a positive working capital of $2,~~021~~254,~~425,~~305 an accumulated deficit of $(11,~~170~~012,~~260~~048) and stockholders’ equity of $7,~~810~~974,~~520~~140.

For the ~~six~~nine months ended ~~June~~September 30, 2018, net cash used by operating activities was $~~254~~180,~~528~~578 primarily due to ~~a loss from operations and~~ reductions in accounts payable and accrued expenses. During the ~~six~~nine months ended ~~June~~September 30, 2018, we didn’t use any cash in our investing activities. During the ~~six~~nine months ended ~~June~~September 30, 2018, we didn’t use any cash in our financing activities.

For the six months ended June 30, 2017, net cash provided by operating activities was $167,706 primarily due to collections of accounts receivable and reductions in inventory. During the six months ended June 30, 2017, we used cash in investing activities for purchase of property and equipment of $22,304. During the six months ended June 30, 2017, we used cash in our financing activities for repayment of notes payable of $211,752.

Since 2016, we benefited from financial resources being provided from operations rather than from additional borrowings. We anticipate that future liquidity requirements will arise to finance our operations, accounts receivable and inventories, and for the need to fund our growth from operations, and capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations. If needed, the Company may also raise additional capital through equity and debt financing. We can provide no assurances that cash generated from operations will occur or additional financing will be obtained on terms satisfactory to us, if at all.

We have no known demands or commitments and are not aware of any events or uncertainties as of ~~June~~September 30, 2018, that will result in in or that are reasonably likely to materially increase or decrease our current liquidity.

Application of critical accounting policies

Management’s Discussion and Analysis of our Financial Condition and Results of Operations is based on the Company’s Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and corresponding disclosures at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we continue to evaluate our estimates which in large part are based on historical experience and on various assumptions that we believe to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our short-term money market investments. The Company does not have any financial instruments held for trading or other speculative purposes and does not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure. The Company does not have any credit facilities with variable interest rates.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective at the reasonable assurance level at the end of our most recent quarter. As part of the Company’s efforts to improve its controls and procedures, management is in the process of establishing an accounting department that will effectively address such matters as risk assessment, segregation of duties, and the reviewing and documentation of all processes. There were no changes in internal control during the quarter ended ~~June~~September 30, 2018.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not subject to any threatened or pending legal proceedings. Nevertheless, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business.

Item 1A. Risk Factors

As a Smaller Reporting Company, as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 1A.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) For the ~~six~~nine months ended ~~June~~September 30, 2018, we issued 8,859,712 common shares in satisfaction of accrued compensation. ~~Such~~We ~~shares~~had ~~were~~no ~~sold~~sales ~~under Section 4(2)~~ of ~~the~~unregistered ~~Securities Act of 1933~~securities, ~~as amended. No commissions were paid in connection with the issuance of said shares.~~ (b) Rule 463 of the Securities Act is not applicable to the Company. (c) In the ~~six~~nine months ended ~~June~~September 30, 2018, there were no repurchases by the Company of its Common Stock.

Item 3. Defaults upon Senior Securities

N/A

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information.

N/A

Item 6. Exhibits

Except for the exhibits listed below, other required exhibits have been previously filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Exhibit Number		Description
3.1		Articles of Incorporation (Incorporated by reference to Company’s Form 10-QSB for the quarter ended March 31, 2004.)
3.2		Amendment to Articles of Incorporation (Incorporated by reference to Form 8-K dated August 2, 2011.)
3.3		By-Laws (Incorporated by reference to Company’s Form 10-QSB for the quarter ended March 31, 2004.)
11.1		Statement re: computation of earnings per share. See condensed consolidated statement of operations and notes thereto.
31		Rule 13a-14(a) Certification – Chief Executive Officer *
31.1		Rule 13a-14(a) Certification – Chief Executive Officer *
32		Section 1350 Certification – Chief Executive Officer *
31.2		Rule 13a-14(a) Certification – Chief Financial Officer *
32.1		Section 1350 Certification – Chief Executive Officer *
32.2		Section 1350 Certification – Chief Financial Officer *
101.SCH		Document, XBRL Taxonomy Extension (*)
101.CAL		Calculation Linkbase, XBRL Taxonomy Extension Definition (*)
101.DEF		Linkbase, XBRL Taxonomy Extension Labels (*)
101.LAB		Linkbase, XBRL Taxonomy Extension (*)
101.PRE		Presentation Linkbase (*)

* Filed herewith.

SIGNATURES

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

	HIGHCOM GLOBAL SECURITY, INC.
Dated: August 2, 2018	By:	/s/ Francis Michaud
Dated: November 8, 2018	By:	/s/ Francis Michaud
		Francis Michaud Principal Executive and Principal Financial and Accounting Officer

Filing Compare · HighCom Global Security, Inc.