UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the ~~quarterly~~fiscal ~~period~~quarter ended ~~March~~June 3130, 2017

☐ 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: 000-53434

(Code Green Apparel LOGO)

Code Green Apparel Corp.

(Exact name of Registrant as specified in its charter)

Nevada		80-0250289
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

31642 Pacific Coast Highway, Ste 102, Laguna Beach, California		92651
(Address of principal executive offices)		(Zip Code)

(888) 884-6277

(Registrant’s telephone number, including area code)

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

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

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)		Smaller reporting company ☐
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 ☒

As of ~~May~~August 1022, 2017, there were ~~488~~783,~~376~~426,~~582~~230 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements		1
Condensed Balance Sheets		1
Condensed Statements of Operations		2
Statement of Stockholders’ Deficit		3
Condensed Statement of Cash Flows		4
Notes to Condensed Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1516
Item 3. Quantitative and Qualitative Disclosures About Market Risk		2228
Item 4. Controls and Procedures		2228
PART II – OTHER INFORMATION
Item 1. Legal Proceedings		2430
Item 1a. Risk Factors		2430
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		2430
Item 3. Defaults Upon Senior Securities		2531
Item 4. Mine Safety Disclosures		2531
Item 5. Other Information		2531
Item 6. Exhibits		2536
Signatures		2637
Exhibit Index		2738

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CODE GREEN APPAREL CORP.

CONDENSED BALANCE SHEETS

(UNAUDITED)

	March 31, 2017			December 31, 2016
	June 30, 2017			December 31, 2016
ASSETS
CURRENT ASSETS
Cash	$	—		$	47
Accounts receivable, net		—			7,834
Prepaid expenses		6416,000			—
Inventory		—			22,831
TOTAL CURRENT ASSETS		6416,000			30,712
Fixed assets, net		1211,~~122~~283			12,962
TOTAL ASSETS	$	7627,~~122~~283		$	43,674
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	~~328~~317,~~120~~052		$	341,615
Accrued interest		~~153~~179,~~066~~598			120,232
Notes payable, current		82,500			82,595
Convertible debts payable, net of discount of $10,995 and $19,811, respectively		546,999			556,388
Convertible debts payable, net of discount of $402,653 and $19,811, respectively		342,538			556,388
Derivative liability		1,~~251~~194,~~179~~128			1,525,135
TOTAL CURRENT LIABILITIES		2,~~361~~115,~~864~~816			2,625,965
Notes payable, net of current portion		200,000			200,000
TOTAL LIABILITIES		2,~~561~~315,~~864~~816			2,825,965
STOCKHOLDERS’ DEFICIT
Series A Preferred Stock, par value $0.001 per share, Authorized – 1,000 shares, Issued and outstanding – 1,000 shares		1			1
Series B Preferred Stock, par value $0.001 per share, Authorized – 200,000 shares, Issued and outstanding – 65,000 shares		65			65
Common stock, par value $0.001 per share, Authorized – 1,990,000,000 shares, Issued and outstanding – 466,985,101 and 404,985,101 shares, respectively		466,985			404,985
Common stock, par value $0.001 per share, Authorized – 1,990,000,000 shares, Issued and outstanding – 677,084,621 and 404,985,101 shares, respectively		677,085			404,985
Additional paid-in capital		11,~~476~~848,~~697~~634			11,352,697
Accumulated deficit		(14,~~429~~814,~~490~~318	)		(14,540,039	)
TOTAL STOCKHOLDERS’ DEFICIT		(2,~~485~~288,~~742~~533	)		(2,782,291	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	7627,~~122~~283		$	43,674

See notes to unaudited condensed financial statements.

CODE GREEN APPAREL CORP.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2017 AND 2016

UNAUDITED

	2017			2016
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
REVENUE	$	33,479		$	18,237
	2017			2016			2017			2016
COST OF GOODS SOLD		(24,628	)		(15,198	)
REVENUE	$	—		$	10,141		$	33,479		$	28,378
GROSS PROFIT		8,851			3,039
COST OF GOODS SOLD		—			(8,500	)		(24,628	)		(23,698	)
OPERATING EXPENSES
GROSS PROFIT		—			1,641			8,851			4,680
Selling, general and administrative		89,074			375,296
OPERATING EXPENSES
TOTAL OPERATING EXPENSES		89,074			375,296
Selling, general and administrative		332,577			226,390			421,652			601,686
LOSS FROM OPERATIONS		(80,233	)		(372,257	)
TOTAL OPERATING EXPENSES		332,577			226,390			421,652			601,686
OTHER INCOME (EXPENSE)
LOSS FROM OPERATIONS		(332,577	)		(224,749	)		(412,801	)		(597,006	)
Gain on conversion		22,757			—
OTHER INCOME (EXPENSE)
Change in fair value of derivative		(344,249	)		154,014
Gain on conversion of debt		19,060			—			41,817			—
Derivative liability gain (expense) – insufficient shares		561,447			(254,303	)
Change in fair value of derivative		1,256,670			(747,718	)		912,422			(593,704	)
Interest expense		(49,183	)		(11,967	)
Derivative liability gain (expense) – insufficient shares		—			(651,677	)		561,447			(905,980	)
TOTAL OTHER INCOME (EXPENSE)		190,772			(112,256	)
Interest expense		(1,327,981	)		(19,952	)		(1,377,164	)		(31,919	)
INCOME (LOSS) BEFORE INCOME TAXES		110,549			(484,513	)
TOTAL OTHER INCOME (EXPENSE)		(52,251	)		(1,419,347	)		138,522			(1,531,603	)
Income tax expense		—			—
INCOME (LOSS) BEFORE INCOME TAXES		(384,828	)		(1,644,096	)		(274,279	)		(2,128,609	)
NET INCOME (LOSS)		110,549			(484,513	)
Income tax expense		—			—			—			—
Discount attributable to beneficial conversion privilege of preferred stock		—			—
NET INCOME (LOSS)		(384,828	)		(1,644,096	)		(274,279	)		(2,128,609	)
Income (Loss) applicable to common stock		110,549			(484,513	)
Discount attributable to beneficial conversion privilege of preferred stock		—			—			—			—
NET INCOME (LOSS) PER COMMON SHARE
Income (Loss) applicable to common stock		(384,828	)		(1,644,096	)		(274,279	)		(2,128,609	)
Basic net income (loss) per common share	$	0.00		$	(0.00	)
NET INCOME (LOSS) PER COMMON SHARE
Diluted net income (loss) per common share	$	(0.00	)	$	(0.00	)
Basic net income (loss) per common share	$	0.00		$	0.00		$	0.00		$	(0.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic		~~434~~530,~~117~~165,~~323~~072			~~368~~373,~~602~~300,~~393~~195			482,738,567			370,951,294
Diluted		968,517,143			368,602,393

See notes to unaudited condensed financial statements.

CODE GREEN APPAREL CORP.

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE ~~THREE~~SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2017

UNAUDITED

	Series A Preferred Stock				Series B Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			~~Equity~~ (Deficit)
Balance, December 31, 2016		1,000	$	1		65,000	$	65		404,985,101	$	404,985	$	11,352,697	$	(14,540,039	)	$	(2,782,291	)
Issuance of shares for services		—		—		—		—		42,000,000		42,000,		84,000		—			126,000
Issuance of shares for convertible debt		—		—		—		—		20230,~~000~~099,~~000~~520		20230,~~000~~100		40411,~~000~~937		—			60642,~~000~~037
Net income		—		—		—		—		—		—		—		~~110~~(274,~~549~~279	)		~~110~~(274,~~549~~279	)
Balance, March 31, 2017		1,000	$	1		65,000	$	65		466,985,101	$	466,985	$	11,476,697	$	(14,429,490	)	$	(2,485,742	)
Balance, June 30, 2017		1,000	$	1		65,000	$	65		677,084,621	$	677,085	$	11,848,634	$	(14,814,318	)	$	(2,288,533	)

See notes to unaudited condensed financial statements.

CODE GREEN APPAREL CORP.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE ~~THREE~~SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2017 AND 2016

UNAUDITED

	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	~~110~~(274,~~549~~279	)	$	(~~484~~2,~~513~~128,609	)
Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities:
(Gain) loss on derivative revaluation		344,248			(154,014	)
Derivative liability - initial valuation		1,218,779
Derivative liability (income) expense - insufficient shares		(561,447	)		254,303
Loss on derivative revaluation		(912,423	)		593,704
Gain on conversion of debt		(22,757	)		—
Derivative liability (income) expense - insufficient shares		(561,447	)		905,980
Depreciation		840			658
Gain on conversion of debt		(41,817	)		—
Common stock issued for services		62,000			75,000
Depreciation		1,679			1,478
Amortization of debt discount		8,816			6,233
Common stock issued for services		126,000			117,000
Amortization of debt discount		34,392			13,354
Amortization of debt discount due to beneficial conversion feature		49,999
Changes in operating assets and liabilities:
Accounts receivable		7,834			—
Inventory		22,831			1523,~~197~~697
Prepaid expenses		—(16,000	)		33,387
Accounts payable and accrued expenses		(1324,~~495~~563	)		780,~~501~~595
Accrued interest		3258,~~834~~914			512,~~734~~075
NET CASH USED IN OPERATING ACTIVITIES		(7310,~~747~~101	)		(~~240~~347,~~514~~339	)
CASH FLOWS USED BY INVESTING ACTIVITIES:
Purchase of fixed assets		—			(13,928	)
NET CASH USED IN INVESTING ACTIVITIES		—			(13,928	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of Series B Preferred Stock		—			250,000
Proceeds from notes payable, net of repayments		7,700			—
Proceeds from notes payable		338,917			95,956
NET CASH PROVIDED BY FINANCING ACTIVITIES		7,700			250,000
Repayments on notes payable		(28,863	)		—
NET DECREASE IN CASH		(47	)		(4,442	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		310,054			345,956
NET DECREASE IN CASH		(47	)		(15,311	)
CASH AT THE BEGINNING OF THE YEAR		47			32,205
CASH AT THE END OF THE YEAR	$	—		$	2716,~~763~~894
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	714,~~534~~628		$	—6,490
Taxes paid	$	—		$	—
Issuance of shares upon debt conversion		60,000			—
Noncash transactions:
Issuance of shares upon debt conversion		642,037			—

See notes to unaudited condensed financial statements.

CODE GREEN APPAREL CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

UNAUDITED

NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION

Organization and Nature of Business

Code Green Apparel Corp. (the “Company”) was incorporated in Nevada on December 11, 2007. On April 26, 2014, and with the appointment of George Powell as its CEO and Director, the Company changed its business model to offer eco-friendly corporate apparel primarily constructed from recycled textiles.

The Company is a publicly held Nevada corporation, whose common stock trades on the OTC Market Group, Inc.’s Pink Sheets under the trading symbol, “CGAC.”

Basis of Presentation

The accompanying unaudited interim condensed financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company’s historical results as well as management’s future expectations. The Company’s actual results could vary materially from management’s estimates and assumptions. Additionally, interim results may not be indicative of the Company’s results for future interim periods, or the Company’s annual results.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At ~~March~~June 3130, 2017, the ~~company~~Company did not have any cash equivalents.

Accounts Receivable

Accounts receivable are not collateralized and interest is not accrued on past due accounts. Periodically, management reviews the adequacy of its provision for doubtful accounts based on historical bad debt expense results and current economic conditions using factors based on the aging of its accounts receivable. After management has exhausted all collection efforts, management writes off receivables and the related reserve. Additionally, the Company may identify additional allowance requirements based on indications that a specific customer may be experiencing financial difficulties. Actual bad debt results could differ materially from these estimates.

~~Inventories~~5

Inventories are stated at the lower of cost (first-in, first-out) or market. The Company periodically reviews its inventories for indications of slow movement and obsolescence and records an allowance when it is deemed necessary.

5Inventories are stated at the lower of cost (first-in, first-out) or market. The Company periodically reviews its inventories for indications of slow movement and obsolescence and records an allowance when it is deemed necessary. There was no inventory at June 30, 2017.

Revenue Recognition

The Company recognizes gross sales when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collection is probable. It recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605, Revenue Recognition (“ASC 605”).

Stock Based Compensation

The Company from time to time issues shares of common stock for services. These issuances have been valued based upon the quoted market price of the shares.

Disclosure About Fair Value of Financial Instruments

The Company estimates that the fair value of all financial instruments at ~~March~~June 3130, 2017 and December 31, 2016, do not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company has determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debentures have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period recorded in earnings as “Other income (expense) - gain (loss) on change in derivative liabilities.”

	Carrying Value		Fair Value Measurements Using Fair Value Hierarchy
			Level 1		Level 2		Level 3
Derivative liability – December 31, 2016	$	1,525,135	$	—	$	—	$	1,525,135
Derivative liability – March 31, 2017	$	1,251,179	$	—	$	—	$	1,251,179
Balance at December 31, 2016							$	1,525,135
Revaluation due to insufficient shares available for issuance								(561,447	)
Conversion								(56,758	)
Change in derivative liability during the three months March 31, 2017								344,249
Balance March 31, 2017							$	1,251,179

	Carrying Value		Fair Value Measurements Using Fair Value Hierarchy
			Level 1		Level 2		Level 3
Derivative liability – December 31, 2016	$	1,525,135	$	—	$	—	$	1,525,135
Derivative liability – June 30, 2017	$	1,194,128	$	—	$	—	$	1,194,128

Balance at December 31, 2016							$	1,525,135
Revaluation due to insufficient shares available for issuance								(561,447	)
Valuation upon issuance of debts								1,621,854
Conversion								(478,991	)
Change in derivative liability during the six months June 30, 2017								(912,423	)
Balance June 30, 2017							$	1,194,128

Net Income (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Any anti-dilutive effects on net income (loss) per share are excluded. The Company has ~~534~~ 591,~~399~~361,~~820~~228 potentially dilutive securities outstanding as of ~~March 31~~June 30, 2017.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

The Company has adopted the provisions of FASB ASC 740-10-05 Accounting for Uncertainty in Income Taxes. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Open tax-years subject to IRS examination include 2013 - 2016.

Recent ~~Accounting~~ Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Topic 842 affects any entity that enters into a lease, with some specified scope exemptions. The guidance in this ASU supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For public companies, the amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The WeCompany ~~are~~is currently evaluating the impact of adopting ASU No. 2016-02 on ~~our~~its financial statements.

In ~~March~~ March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. ASU 2016-08 clarifies that the analysis must focus on whether the entity has control of the goods or or services before they are transferred to the customer and provides additional guidance about how to apply the control principle when services are provided and when goods or services are combined with other goods or services. The effective date for ASU 2016-08 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-08 on its financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, or ASU No. 2016-09. The areas for simplification in this ASU involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method.7

7In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-10 on its financial statements.

~~In April 2016, the FASB issued ASU 2016-10, Revenue~~NOTE ~~from~~2 ~~Contracts~~FIXED ~~with Customers (Topic 606): Identifying Performance Obligations and Licensing~~ASSETS, which provides further guidance on identifying performance obligations and improves the operability and understandability of licensing implementation guidance. The effective date for ASU 2016-10 is the same as the effective date of ASU 2014-09 as amended by ASU 2015-14, for annual reporting periods beginning after December 15, 2017, including interim periods within those years. The Company has not yet determined the impact of ASU 2016-10 on its financial statements.NET

~~NOTE~~Fixed assets ~~2 PROPERTY~~consists ~~AND~~of ~~EQUIPMENT,~~the ~~NET~~following equipment:

Property and equipment consists of the following:

	June 30, 2017			December 31, 2016

Computer equipment	$	16,783		$	16,783
		16,783			16,783
Less accumulated depreciation		(5,500	)		(3,821	)
Total	$	11,283		$	12,962

	March 31, 2017			December 31, 2016
Computer equipment	$	16,783		$	16,783
		16,783			16,783
Less accumulated depreciation		(4,661	)		(3,821	)
Total	$	12,122		$	12,962

The aggregate depreciation charge to operations was $1,679 and $1,478 for the six months ended June 30, 2017 and 2016, respectively. The depreciation policies followed by the Company are described in Note 1.

~~The aggregate depreciation charge to operations~~NOTE ~~was~~3 ~~$840~~NOTES ~~and $658 for the three months ended March 31, 2017 and 2016, respectively. The depreciation policies followed by the Company are described in Note 1.~~PAYABLE

~~NOTE~~During June ~~3 NOTES~~2016, ~~PAYABLE~~the Company issued a $200,000 promissory note in connection with the Asset Purchase Agreement, see Note 9. The note carries interest at 10% per annum and is due June 23, 2018. Total outstanding debt was $200,000 at both June 30, 2017 and December 31, 2016. The accrued interest on the note was $20,384 and $10,466 at June 30, 2017 and December 31, 2016, respectively.

During July ~~June~~ 2016, the Company issued a ~~$200,000~~ promissory note in ~~connection with~~ the ~~Asset~~amount ~~Purchase~~of ~~Agreement~~$82, ~~see Note 9~~500. The note ~~carries~~is ~~interest~~currently atin ~~10%~~default. ~~per~~The ~~annum~~note ~~and is~~contains ~~due~~an ~~June~~original ~~23,~~issue ~~2018.~~discount ~~Total~~in ~~outstanding~~the ~~debt~~amount ~~was~~of $~~200~~7,~~000~~500. ~~and~~The ~~$200,000~~remaining balance due at ~~March~~June 3130, 2017 and December 31, 2016 was $82,500 and $82,500, respectively. The accrued interest on the note was $1543,~~397~~556 and $108,~~466~~945 at ~~March~~June 3130, 2017 and December 31, 2016, respectively.

During July 2016, the Company issued a promissory note in the amount of $82,500. The note is currently in default. The note contains an original issue discount in the amount of $7,500. The remaining balance due at March 31, 2017 and December 31, 2016 was $82,500 and $82,500, respectively. The accrued interest on the note was $26,238 and $8~~,945 at March 31, 2017 and December 31, 2016, respectively.~~

During September 2016, the Company issued a promissory note in the amount of $10,000. The note is due in six months. The note contains an original issue discount in the amount of $650. The remaining balance due at ~~March~~June 3130, 2017 and December 31, 2016 was $-0- and $95, respectively. Interest accrues at 12% and is paid daily. The accrued interest on the note was $-0- and $-0- at ~~March~~June 3130, 2017 and December 31, 2016, respectively. The balance of this note was paid in February 2017.

During January 2017, the Company issued a promissory note in the amount of $20,000. The note was due February 15, 2017. The note requires an interest payment of $5,000 upon repayment. The remaining balance due at ~~March~~June 3130, 2017 and December 31, 2016 was $~~20,000~~0 and $-0-, respectively. The accrued interest on the note was $~~5,000~~0 and $-0- at ~~March~~June 3130, 2017 and December 31, 2016, respectively. The balance of this note and accrued interest was paid in April 2017.

8NOTE 4 CONVERTIBLE NOTES

~~NOTE~~On May ~~4 CONVERTIBLE~~1, ~~NOTES~~2014, the Company entered into an agreement with Anubis Capital Partners, a business advisor. The agreement calls for monthly payments of $2,500 in service fees along with the issuance of a $500,000 fully earned convertible debt that accrues interest at 8% per annum. The holder has the option to convert any balance of principal and interest into common stock of the Company. The rate of conversion for the note is calculated as the lowest of the 20 trading closing prices immediately preceding such conversion, discounted by 50%. During December 2015, the Company issued 25,000,000 shares of common stock in payment of $212,500 of principal on this convertible debt. At both June 30, 2017 and December 31, 2016, $20,000 was owed in services fees, accrued interest was $98,954 and $88,795, and the outstanding convertible debt was $194,500 and $287,500, respectively.

OnDuring the ~~May~~year 1ended December 31, 2014, the Company ~~entered~~issued ~~into an agreement with Anubis Capital Partners~~$173,500 aof ~~business~~convertible ~~advisor~~notes. The ~~agreement~~convertible ~~calls~~notes ~~for~~carry ~~monthly~~interest ~~payments~~at of10% per ~~$2,500~~annum inand ~~service~~are ~~fees~~due ~~along~~24 ~~with~~ months from the ~~issuance~~date of ~~a $500~~issuance,~~000~~ ~~fully~~June ~~earned~~2016 ~~convertible~~through ~~debt~~September ~~that accrues interest at 8% per annum~~2016. The ~~holder~~note ~~has~~holders had the option to ~~convert~~ ~~any~~convert ~~balance of principal and interest~~ into ~~common~~shares ~~stock~~ of the Company.’s ~~The~~common ~~rate~~stock ofafter ~~conversion~~180 ~~for~~days ~~the~~at ~~note~~50% ~~is calculated as the lowest~~ of the 20market ~~trading~~price. ~~closing~~During ~~prices~~April ~~immediately~~and ~~preceding~~May ~~such~~of ~~conversion, discounted by 50%. During December~~ 2015, the Company issued 2514,~~000~~660,~~000~~440 shares of common stock inupon ~~payment~~conversion of $~~212~~173,500 of principal onamount ~~this~~outstanding ~~convertible~~under ~~debt~~these convertible notes. At ~~March~~June 3130, 2017 and December 31, 2016, ~~$20,000~~the ~~and~~remaining ~~$20,000 was owed in services fees,~~ accrued interest ~~was~~on ~~$94,403 and $88,795 and~~ the ~~outstanding~~ convertible ~~debt~~ notes was $~~261~~12,~~500~~027 and $~~287~~12,~~500~~027, respectively.

During ~~the year ended~~ December 312015, ~~2014,~~ the Company issued ~~$173,500~~a of convertible ~~notes.~~note ~~The~~in ~~convertible~~the ~~notes~~amount ~~carry~~of ~~interest~~$175,000. atThe ~~10%~~convertible ~~per~~note ~~annum~~was ~~and are~~ due 24in ~~months~~one ~~from~~year ~~the~~and ~~date~~is ofcurrently ~~issuance~~in default, ~~June~~and ~~2016~~contains ~~through~~a ~~September~~prepayment ~~2016~~penalty of $25,000. The ~~note~~holder ~~holders~~has ~~have~~ the option to convert ~~into~~any ~~shares~~balance of ~~the Company’s~~principal into common stock ~~after~~of ~~180~~the ~~days~~Company. atThe ~~50%~~rate of conversion for the ~~market~~note ~~price.~~is ~~During~~calculated ~~April~~as ~~and~~the ~~May~~lowest of ~~2015~~the 10 trading closing prices immediately preceding such conversion, discounted by 32.5%. During December 2016, the Company issued 1412,~~660~~000,~~440~~000 shares of common stock upon conversion of $~~173~~13,~~500~~770 of principal amount outstanding under ~~these~~this convertible ~~notes~~note. ~~Total~~During ~~outstanding~~June ~~convertible~~2017, the Company issued ~~debt~~70,119,900 ~~was~~shares ~~$-0-~~of ~~and~~common ~~$-0-~~stock atupon ~~March~~conversion 31of $48,436 ~~2017~~of ~~and~~principal ~~December~~amount ~~31,~~outstanding ~~2016,~~under ~~respectively~~this convertible note. AtThe remaining ~~March~~balance 31due at June 30, 2017 and December 31, 2016, ~~the accrued interest on the convertible notes~~ was $12112,~~027~~794 and $12161,~~027~~730, respectively.

During June ~~December 2015~~2016, the Company ~~issued~~ sold a convertible note in the principal amount of $~~175~~121,~~000~~325. The convertible note ~~was~~is due in one year and contains isan ~~currently~~original inissue ~~default,~~discount ~~and contains~~in athe ~~prepayment~~amount ~~penalty~~ of $2515,~~000~~825. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for ~~the~~this note is calculated as the average of the three lowest closing prices of the 10Company’s common stock during the 20 trading ~~closing~~days ~~prices~~ immediately preceding such conversion, discounted by ~~32.5~~50%. During ~~December~~April ~~2016~~and June 2017, the Company issued 1262,~~000~~498,~~000~~139 shares of common stock upon conversion of $1363,~~770~~ 427 of principal amount outstanding under this convertible note. The remaining balance due at ~~March~~June 3130, 2017 and December 31, 2016 was $~~161,730~~0 and $~~161~~73,~~730~~989, respectively. Interest accrues at 12% per annum and is paid daily.

During June 2016, the Company sold a convertible note in the principal amount of $121,325. The convertible note is due in one year and contains an original issue discount in the amount of $15,825. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for this note is calculated as the average of the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 50%. The remaining balance due at March 31, 2017 and December 31, 2016 was $65,884 and $73,989, respectively. Interest accrues at 12% per annum and is paid daily. The accrued interest on the note was $-0- and $-0- at March 31, 2017 and December 31, 2016, respectively.9

During September 2016, the Company sold a convertible note in the principal amount of $63,825. The convertible note is due in one year and contains an original issue discount in the amount of $13,825. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for this note is calculated as the average of the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 50%. The remaining balance due at ~~March~~ 31June 30, 2017 and December 31, 2016 was $4944,~~380~~671 and $53,481, respectively. Interest accrues at 12% per annum and is paid daily. ~~The accrued interest on the note was $-0- and $-0- at March 31, 2017 and December 31, 2016, respectively.~~

~~Derivative~~During April ~~Liability~~2017, the Company sold Carebourn a Convertible Promissory Note in the principal amount of $135,575 (the “April 2017 Carebourn Convertible Note”), pursuant to a Securities Purchase Agreement, dated April 17, 2017. The April 2017 Carebourn Convertible Note bears interest at the rate of 12% per annum (22% upon an event of default) and is due and payable on April 17, 2018. The conversion price of the April 2017 Carebourn Convertible Note is the average of the the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 50%. The April 2017 Carebourn Convertible Note had an original issue discount of $27,075. In addition, the Company paid $8,500 of Carebourn’s expenses and attorney fees in connection with the sale of the note, which were included in the principal amount of the note. The remaining balance due at June 30, 2017 was $125,726. The accrued interest on the note was $0 at June 30, 2017.

OnDuring April ~~May 1~~2017, ~~2014~~pursuant to a Note Purchase Agreement, the Company ~~secured~~sold ~~$500,000~~a in10% Convertible Debenture in the ~~form~~principal amount of $32,500 (which included a ~~convertible~~$5,000 ~~promissory~~original ~~note.~~issue ~~The~~discount) ~~note~~to ~~bears~~Sojourn ~~interest~~Investments, atLP (“Sojourn” and the ~~rate~~“Sojourn Debenture”). The principal amount of 8the debenture accrues at 10% per annum until itpaid ~~matures,~~ or converted ~~until~~into ~~there is~~common stock (18% upon the occurrence of an event of default). The ~~note~~Sojourn ~~matured~~Debenture onhas ~~May~~a 1,maturity ~~2015.~~date ~~The~~of ~~holder~~January 12, ~~has~~2018, provided the ~~option~~debenture tocan ~~convert~~be ~~any~~repaid ~~balance~~at ofany ~~principal~~time, ~~and~~provided ~~interest into~~that ~~common~~if ~~stock~~repaid ofmore ~~the~~than ~~Company.~~30 ~~The~~days ~~rate~~after ofthe ~~conversion~~issuance ~~for~~ date, the ~~note~~Company is ~~calculated~~required asto ~~the~~pay ~~lowest~~130% of the 20principal ~~trading~~amount ~~closing~~of ~~prices immediately~~the ~~preceding such conversion~~debenture, ~~discounted~~together bywith ~~50%~~accrued interest. AThe ~~total~~remaining balance ofdue ~~$287,500~~at ~~remains~~June ~~outstanding~~30, as2017 ofwas ~~December 31~~$32,500. ~~2016,~~The ~~and a~~accrued ~~total~~interest ofon ~~$212,500~~the note was ~~converted~~$703 ~~into~~at ~~shares~~June of30, ~~common stock~~2017.

OnDuring May ~~December 3~~2017, ~~2015,~~ the Company ~~secured~~sold ~~$175,000 in~~a ~~the~~convertible ~~form~~note ofin athe ~~convertible~~principal ~~promissory~~amount ~~note~~of $35,000. The convertible note ~~does~~is ~~not~~due ~~bear~~in ~~interest~~one ~~until~~year orand contains ~~unless there is~~ an ~~event~~original ofissue ~~default.~~discount ~~The note~~in ~~matured~~the onamount ~~December~~of $3, ~~2016~~000. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for ~~the~~this note is calculated as the ~~lowest~~average of the three 10lowest ~~trading~~ closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 3235%.5 The remaining balance due at June 30, 2017 was $35,000. Interest accrues at 12% per annum and is paid daily. The accrued interest on the note was $337 at June 30, 2017.

During May 2017, the Company sold a convertible note in the principal amount of $100,000. The convertible note is due in one year and contains an original issue discount in the amount of $9,500. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for this note is calculated as the average of the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 45%. The remaining balance due at June 30, 2017 was $100,000. Interest accrues at 12% per annum and is paid daily. The accrued interest on the note was $986 at June 30, 2017.

On During June 152017, ~~2016,~~ the Company ~~secured~~sold ~~$121,325~~ a convertible note in the ~~form~~principal amount of a$100,000. The convertible ~~promissory~~ note. ~~The~~is ~~note~~due ~~bears~~in ~~interest~~one atyear ~~12%~~and contains ~~per~~an ~~annum.~~original ~~The~~issue ~~note~~discount ~~matures~~in onthe ~~June~~amount ~~15,~~of ~~2017~~$11,083. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for this note is calculated as the average of the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 5042%. The remaining balance due at June 30, 2017 was $100,000. Interest accrues at 12% per annum and is paid daily.

On September 23, 2016, the Company secured $63,825 in the form of a convertible promissory note. The note bears interest at 12% per annum. The note matures on September 23, 2017. The holder has the option to convert any balance of principal into common stock of the Company after the initial 180 days. The rate of conversion for this note is calculated as the average of the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion, discounted by 50%.10

~~Due to the variable conversion price associated~~Derivative with these convertible promissory notes, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.Liability

~~The~~On May ~~initial~~1, ~~fair~~2014, ~~values~~the ofCompany secured $500,000 in the ~~embedded~~form ~~debt~~of ~~derivatives~~ a convertible promissory note. The note bears interest at the rate of 8% ~~$500,842,~~per ~~$227,746,~~annum ~~$322~~until it matures,~~660~~ ~~and~~or ~~$108~~until there is an event of default. The note matured on May 1,~~458~~ ~~were~~2015. ~~charged~~The holder has the option to ~~current~~convert ~~period~~any ~~operations~~balance asof principal and interest ~~expenses~~into common stock of the Company. The ~~fair~~rate ~~value~~ of conversion for the ~~described~~note ~~embedded~~is ~~derivative~~calculated as ~~was~~the ~~determined~~lowest ~~using~~of the ~~Black-Scholes~~20 ~~Model~~trading ~~with~~closing ~~the~~prices ~~following~~immediately ~~assumptions:~~preceding such conversion, discounted by 50%. A total of $194,500 remains outstanding as of June 30, 2017, and a total of $305,500 was converted into shares of common stock.

(1) risk free interest rate of	0.10% to 0.45%
(2) dividend yield of	0%;
(3) volatility factor of	248% to 435%;
(4) an expected life of the conversion feature of	365 days; and
(5) estimated fair value of the Company’s common stock of	$0.006 to $0.008 per share.

On December 3, 2015, the Company secured $175,000 in the form of a convertible promissory note. The note does not bear interest until or unless there is an event of default. The note matured on December 3, 2016. The holder has the option to convert any balance of principal into common stock of the Company. The rate of conversion for the note is calculated as the lowest of the 10 trading closing prices immediately preceding such conversion, discounted by 32.5%.

~~During~~On June 15, 2016, the ~~three~~Company ~~months~~secured ~~ended~~$121,325 ~~March~~in 31the form of a convertible promissory note. The note bears interest at 12% per annum. The note matures on June 15, 2017,. The holder has the option to convert any balance of principal into common stock of the Company after ~~recorded~~the ainitial ~~gain~~180 ondays. ~~fair~~The ~~value~~rate of ~~derivative~~conversion for this note is calculated as the average of ~~$84~~the three lowest closing prices of the Company’s common stock during the 20 trading days immediately preceding such conversion,~~603~~ discounted by 50%.

On September 23, 2016, the Company secured $63,825 in the form of a convertible promissory note. The ~~following~~note ~~table~~bears ~~represents~~interest at 12% per annum. The note matures on September 23, 2017. The holder has the ~~Company’s~~option to convert any balance of principal into common stock ~~derivative~~of ~~liability~~the ~~activity~~Company after the initial 180 days. The rate of conversion for this note is calculated as the average of the three ~~months~~lowest closing ~~ended~~prices ~~March~~of 31the Company’s common stock during the 20 trading days immediately preceding such conversion, ~~2017:~~discounted by 50%.

Balance at December 31, 2016	$	1,525,135
Revaluation due to insufficient shares available for issuance		(561,447	)
Conversion		(56,758	)
Change in derivative liability during the three months ended March 31, 2017		344,249
Balance March 31, 2017	$	1,251,179

Due to the variable conversion price associated with these convertible promissory notes, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.

~~NOTE~~The initial ~~5 DERIVATIVE~~fair ~~FINANCIAL~~values ~~INSTRUMENTS~~of the embedded debt derivatives of $500,842, $227,746, $322,660 and $108,458 were charged to current period operations as interest expenses. The fair value of the described embedded derivative was determined using the Black-Scholes Model with the following assumptions:

The following table presents the components of the Company’s derivative financial instruments associated with convertible promissory notes (See Note 4) which have no observable market data and are derived using the Black-Scholes option pricing model measured at fair value on a recurring basis, using Level 1 and 3 inputs to the fair value hierarchy, at March 31, 2017 and December 31, 2016:

(1) risk free interest rate of	0.10% to 0.45%
(2) dividend yield of	0%;
(3) volatility factor of	248% to 435%;
(4) an expected life of the conversion feature of	365 days; and
(5) estimated fair value of the Company’s common stock of	$0.006 to $0.008 per share.

	March 31, 2017		December 31, 2016
Embedded conversion features	$	1,251,179	$	963,688
Insufficient shares		—		561,447
Derivative liability	$	1,251,179	$	1,525,135

During the six months ended June 30, 2017, the Company recorded a gain on fair value of derivative of $70,599.

The ~~These~~following ~~derivative~~table ~~financial~~represents ~~instruments arise as a result of applying ASC 815 Derivative and Hedging (“ASC 815”), which requires~~ the Company ~~to make a determination whether an equity-linked financial instrument, or embedded feature, is indexed to the entity~~’s ~~own~~derivative ~~stock.~~liability ~~This~~activity ~~guidance~~for ~~applies to any freestanding financial instrument or embedded features that have~~ the ~~characteristics~~six ofmonths aended ~~derivative~~June 30, ~~and to any freestanding financial instruments that are potentially settled in an entity’s own stock.~~2017:

Balance at December 31, 2016	$	1,525,135
Revaluation due to insufficient shares available for issuance		(561,447	)
Valuation upon issuance of debts		1,621,854
Conversion		(478,991	)
Change in derivative liability during the six months ended June 30, 2017		(912,423	)
Balance June 30, 2017	$	1,194,128

During the three months ended March 31, 2017, the Company had outstanding notes with embedded conversion features and the Company did not, at this date, have a sufficient number of authorized and available shares of common stock to settle the outstanding contracts which triggered the requirement to account for these instruments as derivative financial instruments until such time as the Company has sufficient authorized shares.11

NOTE 5 ~~6 LEASE~~DERIVATIVE ~~COMMITMENTS~~FINANCIAL INSTRUMENTS

~~Laguna~~The following ~~Beach~~table ~~Office~~presents the components of the Company’s derivative financial instruments associated with convertible promissory notes (See Note 4) which have no observable market data and are derived using the Black-Scholes option pricing model measured at fair value on a recurring basis, using Level 1 and 3 inputs to the fair value hierarchy, at June 30, 2017 and December 31, 2016:

The Company is obligated under a commercial real estate lease agreement. The lease is for a term of 60 months which began February 1, 2016 and expires January 31, 2021. The lease calls for current monthly rental payments of $3,438.

	June 30, 2017		December 31, 2016
Embedded conversion features	$	1,194,128	$	963,688
Insufficient shares		—		561,447
Derivative liability	$	1,194,128	$	1,525,135

~~Dallas~~ These ~~Office~~derivative financial instruments arise as a result of applying ASC 815 Derivative and Hedging (“ASC 815”), which requires the Company to make a determination whether an equity-linked financial instrument, or embedded feature, is indexed to the entity’s own stock. This guidance applies to any freestanding financial instrument or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own stock.

~~The~~During the six months ended June 30, 2017, the Company ishad ~~obligated~~outstanding ~~under~~notes awith ~~commercial~~embedded ~~real estate~~conversion ~~sublease~~features ~~agreement.~~and ~~The~~the ~~sublease~~Company isdid ~~for~~not, at this date, have a ~~term~~sufficient number of ~~seven~~authorized ~~months~~and ~~which~~available ~~began~~shares onof ~~August~~common 1,stock ~~2016~~to ~~and~~settle ~~expires~~the onoutstanding ~~February 28,~~contracts ~~2017.~~which ~~The~~triggered ~~lease~~the ~~calls~~requirement to account for ~~current~~these ~~monthly~~instruments ~~rental~~as ~~payments~~derivative offinancial ~~$2,200~~instruments until such time as the Company has sufficient authorized shares.

~~Rental expense for the three months ended March~~NOTE ~~31,~~6 ~~2017~~LEASE ~~and 2016 was $7,134 and $13,254, respectively. Future minimum rental payments for the remaining terms are as follows:~~COMMITMENTS

Year Ending December 31,	Amount
2018 – remaining nine months	$	30,942
2019		41,256
2020		41,256
2021		3,438
Total	$	116,892

Laguna Beach Office

~~NOTE~~The Company ~~7 STOCKHOLDERS’~~is ~~EQUITY~~obligated under a commercial real estate lease agreement. The lease is for a term of 60 months which began February 1, 2016 and expires January 31, 2021. The lease calls for current monthly rental payments of $3,438.

~~On January 9, 2017, the~~Dallas Company issued 10,000,000 shares of its restricted common stock to its then newly appointed Director and COO, as a signing bonus for his appointment to the Company’s Board of Directors. The shares had a fair market value of $30,000.Office

~~On February 9, 2017, the~~ The Company ~~entered~~was ~~into~~obligated ~~an Advertising~~under ~~Services~~a ~~Agreement~~commercial ~~(the~~real ~~“Advertising~~estate ~~Agreement”)~~sublease ~~with~~agreement. ~~Cicero~~The ~~Consulting~~sublease ~~Group,~~was ~~LLC (“Cicero”), pursuant to which Cicero agreed to provide marketing and advertising services to the Company~~ for a term of ~~six~~seven months. Inwhich ~~consideration for agreeing to provide those services the Company agreed to issue Cicero 32~~began ~~million~~on ~~shares~~August of1, ~~common~~2016 ~~stock.~~and ~~The~~expired ~~value~~on ofFebruary ~~the 32~~28,~~000,000~~ ~~shares is $96,000~~2017. ~~Due~~The tolease ~~the~~called ~~terms~~for ofcurrent ~~the~~monthly ~~agreement,~~rental ~~$32,000~~payments ~~has been recorded in the statement~~ of ~~operations for the three months ended March 31, 2017 and~~ $642,~~000 remains as prepaid expense to be amortized through July 2017~~200.

OnRental expense ~~March~~for ~~22,~~the ~~2017,~~six ~~we issued~~months 20ended ~~million~~June ~~shares~~30, of2017 ~~common~~and ~~stock~~2016 towas ~~Anubis~~$21,318 ~~Capital~~and ~~Partners~~$25,023, inrespectively. ~~connection~~Future ~~with~~minimum ~~the~~rental ~~conversion~~payments for ofthe ~~debt~~remaining ~~valued~~terms atare ~~$26,000.~~as follows:

Series A Preferred Stock

Year Ending December 31,	Amount
2018 – remaining six months	$	20,628
2019		41,256
2020		41,256
2021		3,438
Total	$	106,578

~~On May 22, 2015, the Company designated a series~~NOTE of7 ~~Series A Preferred Stock. The holders of the Series A Preferred Stock are not entitled to receive dividends paid on the Company~~STOCKHOLDERS’~~s common~~ stock. The holders of the Series A Preferred Stock are not entitled to any liquidation preferences. The shares of the Series A Preferred Stock have no conversion rights. The Series A Preferred Stock provide the holder thereof the power to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to fifty-one percent (51%) of the total vote. Following the third anniversary of the original issuance of the Series A Preferred Stock, the Company has the option with (a) the unanimous consent or approval of all members of the Board of Directors of the Company; (b) the approval of the holders of a majority of the outstanding shares of Series A Preferred Stock; and (c) the approval of any interest or option holder(s) of such Series A Preferred Stock, to redeem any and all outstanding shares of the Series A Preferred Stock by paying the holders a redemption price of $100 per share.EQUITY

11On April 12, 2017, our Board of Directors and majority shareholder (i.e., George J. Powell, III, the Company’s Chief Executive Officer and Director, who holds (i) 1,000 shares of Series A Preferred Stock, which provides the holder thereof the right to vote 51% of the vote on all shareholder matters and (ii) 89,115,016 shares of the Company’s outstanding common stock), via a written consent to action without meeting, approved the filing of a Certificate of Amendment to our Articles of Incorporation to increase the authorized common stock of the Company, from one billion (1,000,000,000) shares of common stock, $0.001 par value per share, to one billion, nine hundred and ninety million (1,990,000,000) shares of common stock, $0.001 par value share (the “Amendment”). The increase in authorized shares is reflected in the balance sheets.

~~Series B Preferred Stock~~12

~~On December 7, 2015, the Company designated a series~~The ofAmendment ~~Series~~did Bnot ~~Preferred~~change ~~Stock. The Series B Preferred Stock have an original issue price and liquidation preference~~ (~~pro~~a) ~~rata with~~ the ~~common~~number ~~stock)~~ of ~~$10.00~~authorized ~~per~~shares ~~share.~~of ~~The~~our ~~Series~~preferred Bstock, ~~Preferred~~which ~~Stock~~remained ~~provides~~ten ~~the~~million ~~holders~~(10,000,000) ~~thereof the right to convert such~~ shares of ~~Series~~preferred ~~B Preferred Stock into common~~ stock ~~on a 100-for-one basis~~, ~~provided~~$0.001 ~~that~~par novalue ~~conversion~~per ~~can~~share; ~~result~~(b) in the ~~conversion~~ rights of ~~more~~our ~~than~~Board ~~that number~~ of ~~shares~~Directors ofto ~~Series~~designate ~~B Preferred Stock, if any, such that, upon such conversion,~~ the ~~aggregate~~rights ~~beneficial ownership of the Company’s common stock of any such holder~~ and ~~all persons affiliated with any such holder as described~~preferences ~~in Rule 13d-3 is more than 4.99%~~ of ~~the~~such ~~Company’s~~preferred ~~common~~ stock ~~then outstanding~~ (~~the~~as ~~“Maximum~~further ~~Percentage”). For~~described soin ~~long~~our asArticles ~~any shares~~ of ~~the Series B Convertible Preferred Stock remain issued and outstanding~~Amendment, ~~the~~as ~~holders~~amended); ~~thereof~~or ~~are~~(c) ~~entitled to vote that number of votes as equals~~ the ~~number~~previously ofdesignated ~~shares of common stock into which such holder’s aggregate shares~~series of ~~Series~~our Bpreferred ~~Convertible Preferred Stock are convertible, subject to the Maximum Percentage~~stock.

On April ~~December 7~~13, ~~2015~~2017, the Company ~~entered~~filed ~~into an Exchange Agreement (~~the ~~“Exchange”)~~Amendment with ~~its~~the ~~shareholder,~~Nevada ~~Dr.~~Secretary ~~Eric~~of ~~H. Scheffey~~State, ~~whereby~~which ~~Dr.~~became ~~Scheffey exchanged~~effective ~~forty~~on ~~million (40,000,000) shares of~~ the ~~Company’s~~same ~~restricted common stock for 40,000 shares of the Company’s Series B Preferred Stock~~date.

On January 49, ~~2016~~2017, the Company ~~sold~~issued 2510,000,000 shares of its restricted ~~Series~~common Bstock ~~Preferred~~to ~~Stock~~its inthen ~~connection~~newly ~~with~~appointed aDirector ~~Subscription Agreement dated December~~and 7COO, ~~2015~~as ~~(the~~a ~~January~~signing 1,bonus ~~2016~~for ~~payment)~~his ~~and~~appointment ~~received~~to ~~$250,000. The intrinsic value,~~ the ~~difference~~Company’s ~~between~~Board ~~the~~of ~~subscription~~Directors. ~~price and~~The ~~the~~shares ~~underlying~~had ~~price~~a offair ~~the~~market ~~common~~value ~~stock on the date~~ of ~~the subscription agreement, has been valued at~~ $~~250~~30,000. ~~Accordingly, this Discount attributable to beneficial conversion privilege of preferred stock has been recorded as a dividend in the current period and an increase in additional paid-in capital.~~

~~NOTE~~On February ~~8 GOING~~9, 2017, the Company entered into an Advertising Services Agreement (the “Advertising Agreement”) ~~CONCERN~~with Cicero Consulting Group, LLC (“Cicero”), pursuant to which Cicero agreed to provide marketing and advertising services to the Company for a term of six months. In consideration for agreeing to provide those services the Company agreed to issue Cicero 32 million shares of common stock. The value of the 32,000,000 shares is $96,000. Due to the terms of the agreement, $80,000 has been recorded in the statement of operations for the six months ended June 30, 2017 and $16,000 remains as prepaid expense to be amortized through July 2017.

~~The accompanying consolidated~~During ~~financial statements have been prepared assuming that~~ the ~~Company~~six ~~will~~months ~~continue~~ended asJune a30, ~~going concern~~2017, ~~which contemplates~~ the ~~realization~~ ~~of assets and the liquidation of liabilities in the normal course of business. The~~ Company ~~has~~issued ~~had only limited revenues since inception. Since inception~~230, ~~it has incurred significant losses to date~~099,520 ~~and~~shares as of ~~March~~common ~~31,~~stock ~~2017,~~in ~~has~~settlement ~~an accumulated deficit~~ of ~~approximately~~ $14204,~~400,000~~863 ~~and has negative working capital~~ of ~~$2,362,000. These factors raise~~principal ~~substantial~~indebtedness ~~doubt about the Company's ability to continue as a going concern. The Company’s ability to continue its operations is uncertain~~ and isrecorded ~~dependent upon its ability to implement~~ a ~~business~~net ~~plan~~gain ~~sufficient~~on toconversion ~~generate a positive cash flow and/or raise capital to fund its operations. These financial statements do not include any adjustments to the amounts and classifications~~ of ~~assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business~~$41,817.

~~NOTE~~Series A ~~9 ASSET~~Preferred ~~PURCHASE AGREEMENT~~Stock

~~Effective~~On May ~~on June 23~~22, ~~2016~~2015, the Company ~~entered into~~designated ana ~~Asset~~series ~~Purchase~~of ~~Agreement~~Series ~~with~~A ~~10Star~~Preferred ~~LLC~~Stock. ~~(“10Star”~~The ~~and~~holders of the ~~“Purchase~~Series ~~Agreement”),~~A Preferred Stock are not ~~pursuant~~entitled to ~~which,~~receive dividends paid on the Company’s ~~purchased~~common ~~certain~~stock. ~~contracts,~~The ~~relating~~holders of the Series A Preferred Stock are not entitled to ~~10Star’s~~any ~~“On~~liquidation preferences. The shares of the ~~Border”~~Series A Preferred Stock have no conversion rights. The Series A Preferred Stock provide the holder thereof the power to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Company and “7upon any action taken by stockholders of the Company with or without a meeting) equal to fifty-~~Eleven”~~one percent ~~accounts~~(51%) of the total vote. Following the third anniversary of the original issuance of the Series A Preferred Stock, the Company has the option with (a) the ~~“Purchased~~unanimous ~~Accounts”~~consent or approval of all members of the Board of Directors of the Company; (b) the approval of the holders of a majority of the outstanding shares of Series A Preferred Stock; and (c) the approval of any interest or option holder(s) of such Series A Preferred Stock, to redeem any and all outstanding shares of the Series A Preferred Stock by paying the holders a redemption price of $100 per share.

~~The purchase price paid for the Assets at closing~~Series onB ~~June~~Preferred 23, 2016, was (a) $50,000 in cash; (b) 5 million shares of restricted common stock; and (c) a promissory note in the amount of $200,000 (the “Promissory Note”). During December 2016, the asset value of $280,000 was considered fully impaired. As such, the entire value of $280,000 less the accumulated amortization in the amount of $60,000, was written off.Stock

~~Amounts~~On December ~~due~~7, ~~under~~2015, the ~~Promissory~~Company ~~Note~~designated ~~accrue~~a ~~interest at~~series ~~the~~of ~~rate~~Series ofB ~~10%~~Preferred ~~per~~Stock. ~~annum~~The ~~(12%~~Series ~~upon~~B ~~the~~Preferred ~~occurrence~~Stock ofhave an ~~event~~original ofissue price ~~default),~~and ~~with~~liquidation ~~all~~preference ~~interest~~(pro ~~payable~~rata onwith the ~~maturity~~common ~~date~~stock) of ~~the~~ ~~Promissory~~$10.00 ~~Note,~~per ~~June~~share. ~~23,~~The ~~2018,~~Series ~~provided~~B ~~that~~Preferred ~~the~~Stock ~~amounts~~provides ~~owed under~~ the ~~Promissory Note can be pre-paid in whole or part at~~ ~~any~~holders ~~time~~thereof ~~prior~~the right to ~~maturity.~~convert ~~Until~~such ~~the~~shares ~~earlier~~ of ~~(a)~~Series ~~the~~B ~~maturity~~Preferred ~~date~~Stock ofinto ~~the~~common ~~Promissory~~stock ~~Note;~~on ~~and~~a ~~(b)~~100-for-one ~~the~~basis, ~~date~~provided that ~~the~~no ~~Promissory Note~~conversion iscan ~~paid~~result in ~~full,~~the weconversion ~~are~~of ~~required~~more tothan ~~pay~~that ~~10Star~~number ~~fifty~~of ~~percent~~shares ~~(50%)~~ of ~~the~~Series ~~Gross~~B ~~Profits~~Preferred ~~generated~~Stock, byif usany, insuch ~~connection with~~that, ~~the~~upon ~~Purchased~~such ~~Accounts~~conversion, nothe ~~later~~aggregate ~~than~~beneficial ~~the~~ownership ~~end~~ of the ~~calendar~~Company’s ~~month~~common ~~following~~stock ~~the~~of ~~month~~any ~~during which we generate~~ such ~~Gross~~holder ~~Profits~~ and ~~receive~~all ~~payment~~persons affiliated inwith ~~connection~~any ~~therewith.~~such ~~“Gross~~holder ~~Profit”~~as ~~means:~~described ~~(x)~~in ~~the~~Rule ~~total~~13d-3 ~~gross~~is ~~revenues derived~~more ~~from~~than ~~the~~4.99% ~~Purchased Accounts, less (y) (i) cost~~ of ~~goods~~the ~~sold,~~Company’s ~~(ii)~~common ~~returns,~~stock ~~(iii)~~then ~~discounts,~~ outstanding (~~iv)~~the ~~adjustments,~~“Maximum ~~and (v~~Percentage”) ~~allowances,~~. ~~and~~For ~~those~~so ~~other~~long ~~items~~as ~~that~~any ~~are~~shares ~~customarily~~of ~~subtracted~~the ~~from~~Series ~~total~~B ~~gross~~Convertible ~~revenue~~Preferred toStock ~~determine~~remain ~~gross profit in accordance~~issued ~~with~~and ~~generally~~outstanding, ~~accepted~~the ~~accounting~~holders ~~principles~~thereof ~~(“GAAP”).~~are ~~Each~~entitled ~~payment is credited first~~ to ~~accrued interest~~vote ~~and~~that ~~second~~number toof ~~principal.~~votes ~~The~~as ~~Promissory~~equals ~~Note~~the ~~contains~~number ~~standard~~of ~~and~~shares ~~customary events~~ of ~~default.~~common ~~The~~stock into ~~Promissory~~which ~~Note~~such ~~is unsecured~~holder’s ~~and~~aggregate ~~10Star~~shares ~~has~~of noSeries ~~right~~B toConvertible ~~any~~Preferred ~~collateral~~Stock orare ~~security~~convertible, ~~interests~~subject into ~~connection~~the ~~therewith~~Maximum Percentage.

1213

~~NOTE~~On December 107, ~~EMPLOYMENT~~2015, ~~AGREEMENTS~~the Company entered into an Exchange Agreement (the “Exchange”) with its shareholder, Dr. Eric H. Scheffey, whereby Dr. Scheffey exchanged forty million (40,000,000) shares of the Company’s restricted common stock for 40,000 shares of the Company’s Series B Preferred Stock.

AsOn ~~part~~January of4, ~~and~~2016, asthe aCompany ~~required~~sold ~~term~~25,000 ~~and~~shares ~~condition~~ of ~~the~~its ~~Purchase~~restricted ~~Agreement,~~Series ~~the~~B ~~Company~~Preferred ~~entered~~Stock ~~into~~in ~~executive~~connection ~~employment agreements~~ with ~~Aaron~~a ~~Luna~~Subscription ~~and~~Agreement dated ~~William~~December ~~Joseph~~7, 2015 (~~J.B.~~the January 1, 2016 payment) ~~Hill~~and received $250,000. toThe ~~serve~~intrinsic asvalue, ~~Executive~~the ~~Vice~~difference ~~Presidents~~between the subscription price and the underlying price of the ~~Company~~common instock ~~May~~on ~~2016~~the date of the subscription agreement, inhas ~~anticipation~~been valued at $250,000. Accordingly, this Discount attributable to beneficial conversion privilege of preferred stock has been recorded as a dividend in the ~~Acquisition~~current period and an increase in additional paid-in capital.

~~The~~NOTE ~~employment~~8 GOING agreements each have substantially similar terms, including an effective date of April 1, 2016, an initial term of one year (automatically renewable thereafter for additional one year terms in the event neither party provides the other notice of non-renewal at least 30 days prior to the end of the then term). Both agreements include a base salary as determined by the Board of Directors in its sole and absolute discretion in addition to an equity consideration of 3.75 million restricted shares of common stock to Mr. Luna and 3.25 million restricted shares of common stock to Mr. Hill (the “Restricted Shares”), which Restricted Shares are subject to forfeiture and cancellation until March 31, 2017, pursuant to Restricted Stock Award Agreements. In addition to the base salary described above, the executives were to receive a commission on our net sales.CONCERN

~~Both~~The ~~Mr.~~accompanying ~~Luna~~consolidated ~~and~~financial ~~Mr.~~statements ~~Hill~~have ~~subsequently~~been ~~terminated~~prepared ~~their~~assuming ~~services~~that ~~with~~ the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in ~~October~~the ~~2016~~normal course of business. The Company has had only limited revenues since inception. Since inception, it has incurred significant losses to date, and ~~all~~as ~~Restricted~~of ~~Shares~~June ~~have~~30, ~~been~~2017, ~~forfeited~~has an accumulated deficit of approximately $14,800,000 ~~provided~~and ~~that~~has ~~such~~a ~~shares~~working ~~have~~capital deficit of $2,099,816. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate positive cash flow and/or raise capital to fund its operations. These financial statements do not ~~yet~~include ~~been~~any ~~cancelled~~adjustments to ~~date~~the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.

NOTE 9 ASSET 11PURCHASE ~~SUBSEQUENT EVENTS~~AGREEMENT

OnEffective ~~April~~on ~~12,~~June ~~2017~~23, ~~our Board of Directors and majority shareholder (i.e.~~2016, ~~George J. Powell, III,~~ the Company’s ~~Chief~~entered ~~Executive Officer~~into ~~and~~an ~~Director,~~Asset ~~who~~Purchase ~~holds~~Agreement ~~(i)~~with ~~1,000~~10Star ~~shares~~LLC of(“10Star” ~~Series~~and ~~A Preferred Stock, which provides~~ the ~~holder thereof the right to vote~~“Purchase ~~51% of the vote on all shareholder matters and (ii~~Agreement”) 89,~~115,016~~ ~~shares~~pursuant ~~of the Company’s outstanding common stock), via a written consent~~ to ~~action without meeting~~which, ~~approved~~ the ~~filing of a Certificate of Amendment to our Articles of Incorporation to increase the authorized common stock of the~~ Company, ~~from~~purchased ~~one~~certain ~~billion (1~~contracts,~~000,000,000)~~ ~~shares~~relating ofto ~~common~~10Star’s ~~stock,~~“On ~~$0.001 par value~~the ~~per~~Border” ~~share, to one billion, nine hundred~~ and ~~ninety~~“7-Eleven” ~~million~~accounts (~~1,990,000,000) shares of common stock, $0.001 par value share (~~the “~~Amendment~~Purchased Accounts”). ~~The increase in authorized shares is reflected in the balance sheets.~~

The ~~Amendment~~purchase ~~did~~price ~~not~~paid ~~change~~for ~~(a)~~ the ~~number~~Assets ofat ~~authorized~~closing ~~shares~~on ofJune ~~our~~23, ~~preferred stock~~2016, ~~which~~was ~~remained~~(a) ~~ten~~$50,000 ~~million~~in cash; (~~10,000,000~~b) 5 million shares of ~~preferred~~restricted common stock,; ~~$0.001~~and ~~par~~(c) ~~value~~a ~~per~~promissory ~~share;~~note ~~(b)~~in the ~~rights~~amount of ~~our~~$200,000 ~~Board~~(the of“Promissory ~~Directors~~Note”). toDuring ~~designate~~December 2016, the asset ~~rights~~value ~~and preferences~~ of ~~such~~$280,000 ~~preferred~~was ~~stock~~considered ~~(as~~fully ~~further~~impaired. ~~described~~As insuch, ~~our~~the ~~Articles~~entire value of ~~Amendment~~$280,000 asless ~~amended);~~the oraccumulated ~~(c)~~amortization in the ~~previously~~amount ~~designated series~~ of ~~our~~$60,000, ~~preferred~~was ~~stock~~written off.

OnAmounts ~~April~~due 13under the Promissory Note accrue interest at the rate of 10% per annum (12% upon the occurrence of an event of default), ~~2017~~with all interest payable on the maturity date of the Promissory Note, June 23, 2018, provided that the ~~Company~~amounts ~~filed~~owed under the ~~Amendment~~Promissory Note ~~with~~can be pre-paid in whole or part at any time prior to maturity. Until the ~~Nevada~~earlier ~~Secretary~~of (a) the maturity date of ~~State~~the Promissory Note; and (b) the date the Promissory Note is paid in full, we are required to pay 10Star fifty percent (50%) of the Gross Profits generated by us in connection with the Purchased Accounts, no later than the end of the calendar month following the month during which ~~became~~we ~~effective~~generate onsuch Gross Profits and receive payment in connection therewith. “Gross Profit” means: (x) the ~~same~~total ~~date~~gross revenues derived from the Purchased Accounts, less (y) (i) cost of goods sold, (ii) returns, (iii) discounts, (iv) adjustments, and (v) allowances, and those other items that are customarily subtracted from total gross revenue to determine gross profit in accordance with generally accepted accounting principles (“GAAP”). Each payment is credited first to accrued interest and second to principal. The Promissory Note contains standard and customary events of default. The Promissory Note is unsecured and 10Star has no right to any collateral or security interests in connection therewith.

On April 12, 2017, pursuant to a Note Purchase Agreement, we sold a 10% Convertible Debenture in the principal amount of $32,500 (which included a $5,000 original issue discount) to Sojourn Investments, LP (“Sojourn” and the “Sojourn Debenture”). The principal amount of the debenture accrues at 10% per annum until paid or converted into common stock (18% upon the occurrence of an event of default). The Sojourn Debenture has a maturity date of January 12, 2018, provided the debenture can be repaid at any time, provided that if repaid more than 30 days after the issuance date, we are required to pay 130% of the principal amount of the debenture, together with accrued interest.14

~~The~~NOTE ~~Sojourn~~10 ~~Debenture~~EMPLOYMENT ~~is convertible into shares of our common stock at any time, at a conversion price equal to 58% of the average of the lowest three (3) closing prices during the prior 20 trading days.~~AGREEMENTS

InAs ~~the~~part ~~event~~of, weand ~~fail~~as toa ~~deliver~~required ~~the~~term ~~shares~~and ofcondition ~~common stock issuable upon conversion~~ of the ~~debenture within three~~ ~~business~~Purchase ~~days~~Agreement, ofthe ~~our~~Company ~~receipt~~entered ofinto aexecutive ~~conversion~~employment ~~notice, we are required to pay Sojourn $1,000~~agreements ~~per~~with ~~day~~Aaron ~~for~~Luna ~~each~~and ~~day~~William ~~that~~Joseph we(J.B.) ~~fail~~Hill, to ~~deliver~~serve ~~such~~as ~~shares~~Executive ~~for~~Vice upPresidents toof the ~~first~~Company 30in ~~days~~May ~~that~~2016, ~~the~~in ~~failure~~anticipation of ~~continues~~the Acquisition.

AtThe noemployment ~~time~~agreements ~~may~~each ~~the Sojourn~~have ~~Debenture be~~substantially ~~converted~~similar ~~into~~terms, ~~shares~~including an effective date of ~~our~~April ~~common~~1, 2016, an initial term of ~~stock~~one ifyear ~~such~~(automatically ~~conversion~~renewable ~~would~~thereafter ~~result~~for additional one year terms in ~~Sojourn and~~ ~~its~~the ~~affiliates~~event ~~owning~~neither party provides the other notice anof ~~aggregate~~non-renewal at least 30 days prior to the end of the then term). Both agreements include a base salary as determined by the Board of Directors in ~~excess~~its sole and absolute discretion in addition to an equity consideration of 43.~~99%~~75 million restricted shares of ~~the~~common ~~then~~stock ~~outstanding~~to Mr. Luna and 3.25 million restricted shares of ~~our~~ common stock to Mr. Hill (the “Restricted Shares”), which Restricted Shares are subject to forfeiture and cancellation until March 31, 2017, pursuant to Restricted Stock Award Agreements. In addition to the base salary described above, the executives were to receive a commission on our net sales.

13Both Mr. Luna and Mr. Hill subsequently terminated their services with the Company in October 2016, provided that the Company has determined not to enforce the cancellation provisions relating the Restricted Shares.

~~The Sojourn~~NOTE ~~Debenture provides~~11 ~~for~~SUBSEQUENT ~~standard and customary events of default such as failing to timely make payments under the~~EVENTS Sojourn Debenture when due and the failure of the Company to timely comply with the Exchange Act reporting requirements. Additionally, upon the occurrence of certain defaults, as described in the Sojourn Debenture, we are required to pay Sojourn liquidated damages in addition to the amount owed under the Sojourn Debenture.

WeEffective ~~hope~~on toAugust ~~repay~~3, 2017, George J. Powell, III, our Chief Executive Officer, Interim Chief Financial Officer, Secretary and Director, and the ~~Sojourn~~ ~~Debenture prior~~holder toof ~~any~~all ~~conversion.~~1,000 Inshares of our outstanding Series A Preferred Stock, which provide the ~~event that~~holder thereof the ~~Sojourn~~ ~~Debenture is~~power to vote on all stockholder matters (including, but not ~~repaid~~limited into ~~cash~~at inevery ~~its~~meeting ~~entirety,~~of the stockholders of the Company and upon any ~~shareholders~~action ~~may~~taken ~~suffer~~by ~~dilution~~stockholders ifof ~~and~~the Company with or without a meeting) equal to fifty-one percent (51%) of the ~~extent~~total ~~that~~vote, executed a written consent in lieu of the ~~balance~~2017 annual meeting of stockholders (the ~~Sojourn Debenture is~~ ~~converted~~“Majority ~~into~~Stockholder ~~common~~Consent”), approving ~~stock.~~the following matters:

~~On April~~● ~~17, 2017, we sold Carebourn a Convertible Promissory Note in~~ the ~~principal~~appointment ~~amount~~ of ~~$135,575~~two ~~(the~~members ~~“April 2017 Carebourn Convertible Note”), pursuant~~ to ~~a Securities Purchase Agreement, dated April 17, 2017. The April 2017 Carebourn Convertible Note bears interest at~~ the ~~rate~~Company’s ofBoard ~~12% per annum (22% upon an event~~ of ~~default)~~Directors ~~and is due and payable on April 17, 2018~~(Mr. ~~The~~Powell ~~April 2017 Carebourn Convertible Note had an original issue discount of $27,075. In addition, we paid $8,500 of Carebourn’s expenses~~ and ~~attorney~~Thomas ~~fees in connection with the sale of the note, which were included in the principal amount of the note~~H. Witthuhn);

~~Periodic payments~~● ~~are due by us on~~ the ~~April~~adoption ~~2017 Carebourn Convertible Note at the rate~~ of ~~$565 per day ($135,575 / 240 days)(~~the ~~“Repayment Amount”),~~Code ~~via~~Green ~~direct~~Apparel ~~withdrawal from our bank account~~Corp. ~~The Repayment Amount automatically adjusts to a prorated higher amount in the amount any penalties or events of default occur under the April~~ 2017 ~~Carebourn~~Equity ~~Convertible~~Incentive ~~Note.~~Plan;

● The ~~April~~ ~~2017~~filing ~~Carebourn~~of ~~Convertible~~a ~~Note~~Certificate ~~provides~~of ~~for~~Amendment ~~standard~~to ~~and~~the ~~customary~~Company’s ~~events~~Articles of ~~default~~Incorporation ~~such~~to asincrease ~~failing~~the tonumber ~~timely~~of ~~make~~authorized ~~payments under~~shares of the ~~April~~Company’s ~~2017~~capital ~~Carebourn~~stock ~~Convertible~~to ~~Note~~five ~~when~~billion ~~due~~(5,000,000,000) ~~the~~shares, ~~failure~~consisting of ~~the~~four ~~Company~~billion tonine ~~timely~~hundred ~~comply~~ninety ~~with~~million ~~the~~(4,990,000,000) ~~Exchange~~shares ~~Act~~of ~~reporting requirements~~common ~~and~~stock, ~~the~~$0.001 ~~failure~~par tovalue ~~maintain~~per ashare ~~listing~~and onten ~~the~~million ~~OTCQB. Additionally~~(10,000,000) ~~upon~~shares ~~the occurrence~~ of ~~certain~~preferred ~~defaults~~stock, ~~as described~~$0.001 inpar ~~the~~value ~~April~~per ~~2017 Carebourn Convertible Note~~share, wewithout ~~are~~affecting ~~required~~or tomodifying ~~pay~~the ~~Carebourn~~Company’s ~~liquidated~~previously ~~damages~~designated inshares ~~addition~~of topreferred ~~the amount~~stock ~~owed~~in ~~under~~any ~~the April 2017 Carebourn Convertible Note.~~way;

~~The principal~~● ~~amount~~authority for our Board of ~~the~~Directors, ~~April~~without ~~2017~~further ~~Carebourn~~stockholder ~~Convertible~~approval, ~~Note~~to ~~and~~effect ~~all~~a ~~accrued~~reverse ~~interest~~stock issplit ~~convertible~~of atall of the ~~option~~outstanding common stock of the ~~holder thereof~~Company, ~~into~~by ~~our~~the ~~common~~filing ~~stock~~of ata ~~any~~Certificate ~~time~~of ~~following~~Amendment to the ~~180th~~Company’s ~~day~~Articles ~~after~~of Incorporation with the ~~April~~Secretary ~~2017~~of ~~Carebourn~~State ~~Convertible~~of ~~Note~~Nevada, ~~was~~in ~~issued. The~~a ~~conversion~~ratio ~~price~~of between one-for-one hundred and one-for-one thousand, with the Company’s Board of Directors having the ~~April~~discretion ~~2017~~as ~~Carebourn~~to ~~Convertible~~whether ~~Note~~or isnot ~~equal~~the reverse split is to ~~50%~~be ofeffected, and with the ~~average~~exact exchange ratio of ~~the~~any ~~lowest~~reverse ~~three~~split ~~(3)~~to ~~trading prices~~be ofset at a whole number within the ~~Company’s~~above ~~common~~range ~~stock~~as ~~during~~determined by the ~~twenty~~Board ~~trading~~of ~~days~~Directors ~~prior~~in toits sole discretion, at any time before the ~~conversion~~earlier of (a) August 3, 2018; and (b) the date. of the Company’s 2018 annual meeting of stockholders;

~~In the~~● ~~event we fail to deliver~~ the ~~shares~~appointment of ~~common~~Soles, ~~stock~~Heyn ~~issuable~~& ~~upon~~Company ~~conversion~~LLP ofas the ~~note~~Company’s ~~within~~independent ~~three~~registered ~~business~~public ~~days~~accounting ~~of our receipt of a conversion notice, we are required to pay Carebourn $1,500 per day for each day that we fail to deliver such shares.~~firm;

~~At no~~● ~~time~~an ~~may~~advisory ~~the~~vote ~~April~~on ~~2017~~the ~~Carebourn~~frequency ~~Convertible Note be converted into shares~~ of ~~our common stock if such conversion would result in Carebourn and its affiliates owning~~ an ~~aggregate~~advisory ofvote inon ~~excess~~executive ofcompensation; ~~4.99% of the then outstanding shares of our common stock.~~and

~~We may~~● ~~prepay~~an inadvisory ~~full~~vote ~~the unpaid principal and interest~~ on ~~the~~executive April 2017 Carebourn Convertible Note, with at least 20 trading days’ notice, (a) any time prior to the 180th day after the issuance date, by paying 130% of the principal amount of the note together with accrued interest thereon; and (b) any time after the 180th day after the issuance date and prior to the 364th day after issuance, by paying 150% of the principal amount of the note together with accrued interest thereoncompensation.

~~The~~In ~~April~~accordance ~~2017~~with ~~Carebourn~~Rule ~~Convertible~~14c-2 ~~Note~~of ~~also~~the ~~contains~~Exchange ~~customary~~Act, ~~positive~~the ~~and~~corporate ~~negative~~actions ~~covenants~~will be effective no earlier than forty (40) days after the date notice of the internet availability of an Information Statement disclosing the Majority Stockholder Consent is first sent to stockholders, which we expect to be on or around approximately September 25, 2017.

WeFrom ~~hope~~July to1, ~~repay the April~~ 2017 ~~Carebourn Convertible Note prior~~ to ~~any conversion. In~~ the ~~event~~date ~~that~~of ~~the~~this ~~April~~filing, ~~2017~~Auctus ~~Carebourn~~converted ~~Convertible Note~~an isadditional ~~not repaid in cash in its entirety~~$5,189 ~~Company~~of ~~shareholders may suffer dilution if and to~~ the ~~extent~~amount ~~that~~owed ~~the~~under ~~balance~~certain ofconvertible promissory ~~the~~note(s) ~~April~~held ~~2017~~by ~~Carebourn~~Auctus ~~Convertible~~into ~~Note~~72,650,000 isshares ~~converted~~of ~~into~~our common stock.

OnIn ~~April~~July 7, 2017, wea ~~issued~~note ~~21,481,481~~holder ~~shares~~converted $5,878 of ~~common~~the ~~stock~~amount toowed ~~Anubis~~under ~~Capital~~certain ~~Partners~~convertible inpromissory ~~connection~~note(s) ~~with~~held by the ~~conversion~~note holder into 33,781,609 shares of ~~debt~~our common stock.

On April 11, 2017, we issued 32 million shares of common stock which were due pursuant to the terms of the February 9, 2017 Consulting Agreement. These shares were valued at $0.003 per share or $96,000.15

14Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Item~~CAUTIONARY 2.STATEMENT ~~Management’s~~ON ~~Discussion~~FORWARD-LOOKING ~~and Analysis of Financial Condition and Results of Operations~~INFORMATION

~~CAUTIONARY~~This ~~STATEMENT~~Quarterly ONReport ~~FORWARD~~on Form 10-~~LOOKING~~Q ~~INFORMATION~~contains “forward looking statements” (as that term is defined in Section 27A(i)(1) of the Securities Act), including statements concerning plans, objectives, goals, strategies, expectations, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. In evaluating these statements, you should consider various factors, including the assumptions, risks and uncertainties outlined in this report, if any, and our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on May 22, 2017, under the heading “Risk Factors”. These factors or any of them may cause our actual results to differ materially from any forward-looking statement made in this report. Forward-looking statements in this report include, among others, statements regarding our capital needs, business plans, and expectations.

~~This~~While ~~Quarterly~~these ~~Report on Form 10-Q contains “~~forward -looking statements~~” (as that term is defined in Section 27A(i)(1) of the Securities Act)~~, ~~including~~and ~~statements~~any ~~concerning~~assumptions ~~plans,~~upon ~~objectives,~~which ~~goals,~~they ~~strategies,~~are ~~expectations~~based, ~~future~~are ~~events~~made orin ~~performance and~~good ~~underlying~~faith ~~assumptions~~ and ~~other~~reflect ~~statements~~our ~~which~~current judgment ~~are~~regarding ~~other~~future ~~than statements of historical facts. In some cases~~events, ~~you~~our ~~can~~actual ~~identify forward-looking~~results ~~statements~~will bylikely ~~terminology such as “may”~~vary, ~~“should”,~~sometimes ~~“expect”~~materially, ~~“plan”,~~ ~~“intend”,~~from ~~“anticipate”,~~any ~~“believe”~~estimates, ~~“estimate”~~predictions, ~~“predict”~~projections, ~~“potential”~~assumptions or ~~“continue”,~~other ~~the~~future ~~negative~~performance ofsuggested ~~such terms or other comparable terminology~~herein. InSome ~~evaluating~~of ~~these~~the ~~statements,~~risks ~~you~~and ~~should~~assumptions ~~consider various factors~~include, ~~including~~but ~~the~~are ~~assumptions, risks~~not ~~and~~limited ~~uncertainties~~to: ~~outlined~~our inneed ~~this~~for ~~report,~~additional iffinancing; ~~any,~~our ~~and~~limited ~~our~~operating ~~Annual~~history; ~~Report~~our onhistory ~~Form~~of ~~10-K~~operating ~~for~~losses; the ~~year~~competitive environment ~~ended~~in ~~December~~which ~~31,~~we ~~2016,~~operate; ~~filed with~~ the ~~SEC~~level onof ~~May~~government 22regulation, ~~2017,~~including ~~under~~environmental ~~the~~regulation; ~~heading~~changes ~~“Risk~~in ~~Factors”.~~governmental regulation ~~These~~and ~~factors~~administrative orpractices; ~~any~~our ofdependence ~~them~~on ~~may~~key ~~cause~~personnel; our ~~actual~~ ~~results~~ability to ~~differ~~fully ~~materially~~implement ~~from~~our ~~any~~business ~~forward-looking~~plan; ~~statement made in this report. Forward-looking statements in this~~our ~~report~~ability ~~include,~~to ~~among~~effectively ~~others,~~manage ~~statements regarding~~ our ~~capital~~growth; ~~needs,~~and ~~business~~other ~~plans~~regulatory, legislative and ~~expectations~~judicial developments.

~~While~~We ~~these~~advise ~~forward-looking~~the ~~statements,~~reader ~~and~~that ~~any~~these ~~assumptions~~cautionary ~~upon~~remarks ~~which~~expressly ~~they~~qualify ~~are based, are made~~ in ~~good~~their ~~faith~~entirety ~~and~~all ~~reflect~~forward-looking ~~our~~statements ~~current~~attributable ~~judgment~~to ~~regarding~~us ~~future events, our actual results will likely vary, sometimes materially, from any estimates, predictions, projections, assumptions~~ or ~~other~~persons ~~future~~acting performance suggested herein. Some of the risks and assumptions include, but are not limited to: our need for additional financing; our limited operating history; our history of operating losses; the competitive environment in which we operate; the level of government regulation, including environmental regulation; changes in governmental regulation and administrative practices; our dependence on ~~key personnel;~~ our ~~ability to fully implement our business plan; our ability to effectively manage our growth; and other regulatory, legislative and judicial developments~~behalf.

WeThe ~~advise~~forward-looking statements in this report are made as of the ~~reader~~date ~~that~~of ~~these~~this ~~cautionary~~report ~~remarks~~and ~~expressly~~we ~~qualify~~do innot ~~their~~intend ~~entirety~~or ~~all~~undertake to update any of the forward-looking statements ~~attributable~~ to usconform orthese ~~persons~~statements ~~acting~~to onactual ~~our~~results, ~~behalf~~except as required by applicable law, including the securities laws of the United States.

The ~~forward-looking~~following ~~statements~~is inmanagement’s ~~this~~discussion ~~report~~and ~~are~~analysis ~~made~~of asthe ofsignificant factors that affected the ~~date~~Company’s financial position and results of operations during the periods included in the accompanying unaudited consolidated financial statements. You should read this ~~report~~in ~~and~~conjunction wewith dothe ~~not~~discussion ~~intend~~under or“Item ~~undertake~~7. toManagement’s ~~update~~Discussion ~~any~~and Analysis of Financial Condition and Results of Operations” and the ~~forward-looking~~audited consolidated financial statements toincluded ~~conform~~in ~~these~~our ~~statements~~Annual Report toon ~~actual~~Form ~~results,~~10-K ~~except~~for asthe ~~required~~year byended ~~applicable~~December ~~law~~31, ~~including~~ 2016, and the ~~securities~~unaudited ~~laws~~consolidated financial statements included in this quarterly report. Expectations of ~~the~~future ~~United~~financial ~~States~~condition and results of operations are based upon current business plans and may change.

~~The~~Certain ~~following~~capitalized isterms ~~management’s~~used ~~discussion~~below and ~~analysis~~otherwise ofdefined ~~the~~below, ~~significant~~have ~~factors that affected~~ the ~~Company’s~~meanings ~~financial position~~given ~~and~~to ~~results~~such ofterms ~~operations during the periods included~~ in the ~~accompanying~~footnotes ~~unaudited~~to ~~consolidated~~our consolidated financial statements~~. You~~ ~~should~~included ~~read~~above ~~this in conjunction with the discussion~~ under “~~Item~~Part 7.I ~~Management’s~~- ~~Discussion and Analysis of~~ Financial ~~Condition and Results of Operations~~Information” ~~and the audited consolidated financial statements included in our Annual Report on Form 10~~-K ~~for~~“Item ~~the year ended December 31, 2016, and the unaudited consolidated financial statements included in this quarterly report~~1. ~~Expectations~~Financial ~~of future financial condition and results of operations are based upon current business plans and may change~~Statements”.

~~Certain~~In ~~capitalized~~this ~~terms~~Quarterly ~~used~~Report ~~below~~on Form 10-Q, we may rely on and ~~otherwise~~refer ~~defined~~to ~~below~~information regarding our industry which comes from market research reports, ~~have~~analyst ~~the~~reports ~~meanings~~and ~~given~~other topublicly ~~such~~available ~~terms~~information. inAlthough ~~the~~we ~~footnotes~~believe tothat ~~our~~this ~~consolidated~~information is reliable, we cannot ~~financial~~guarantee ~~statements~~the ~~included~~accuracy ~~above~~and ~~under~~completeness ~~“Part~~of Ithis -information, ~~Financial~~and ~~Information”~~we -have ~~“Item~~not 1.independently ~~Financial~~verified ~~Statements”~~any of it.

InUnless ~~this~~the ~~Quarterly~~context ~~Report~~requires ~~on Form 10-Q~~otherwise, wereferences ~~may rely on and refer~~ to ~~information~~the ~~regarding~~“Company,” ~~our~~“we,” ~~industry which comes from market research~~“us,” ~~reports~~“our,” ~~analyst~~“Code ~~reports~~Green” and ~~other~~“Code ~~publicly~~Green ~~available~~Apparel ~~information~~Corp.” ~~Although~~refer ~~we believe that this information is reliable, we cannot~~specifically ~~guarantee~~to ~~the~~Code ~~accuracy~~Green ~~and~~Apparel ~~completeness of this information, and we have not independently verified any of it~~Corp.

Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Code Green” and “Code Green Apparel Corp.” refer specifically to Code Green Apparel Corp.16

In addition, unless the context otherwise requires and for the purposes of this report only:

	●	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
	●	“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

●

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

15● “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

●

“Securities Act” refers to the Securities Act of 1933, as amended.

Description of Business

The Company was incorporated in Nevada on December 11, 2007.

The Company is engaged in the business of manufacturing, selling, marketing and outfitting companies of all sizes and industries with eco-friendly apparel made from recycled textiles. The corporate apparel market encompasses a wide variety of apparel products and accessories ranging from customized uniforms to caps, t-shirts and aprons. We believe that many of these companies are actively seeking ways to incorporate being more environmentally friendly into their company and would entertain mandating that all uniforms be manufactured from recycled fabrics. As all of our products are eco-friendly, our strategy is to emphasize the sustainability features while at the same time providing our products at market competitive rates.

Code Green reduces the environmental impact of the apparel industry by designing, manufacturing and distributing apparel products from eco-friendly and sustainable textiles. It supports both the uniform needs and sustainability initiatives of companies worldwide, by offering a complete line of recycled apparel in the form of T-shirts, hats, polo shirts, pants, shorts, aprons, jackets and accessories. In addition, the Company fulfills recycled clothing needs for organizations of all sizes hosting promotional, fundraising and special events. Its apparel collection is also available to distributors and screen printers through its wholesale distribution channel.

Recent Transactions:

InOn ~~September~~April ~~2016~~12, we2017, ~~entered~~our ~~into~~Board of Directors and majority shareholder (i.e., George J. Powell, III, the Company’s Chief Executive Officer and Director, who holds 1,000 shares of Series A Preferred Stock, which provides the holder thereof the right to vote 51% of the vote on all shareholder matters), via a ~~factoring~~written ~~agreement~~consent to action without meeting, ~~whereby~~approved wethe ~~sold~~filing ~~$14~~of a Certificate of Amendment to our Articles of Incorporation to increase the authorized common stock of the Company,~~590~~ infrom ~~accounts~~one ~~receivable~~billion ~~for~~(1,000,000,000) shares of common stock, $100.001 par value per share, to one billion, nine hundred and ninety million (1,990,000,000) shares of common stock, $0.001 par value share (the “Amendment”).

OnThe ~~September~~Amendment ~~23,~~did ~~2016, we sold~~not ~~Carebourn~~change ~~Capital, L.P.~~ (~~“Carebourn”)~~ a) ~~Convertible~~the ~~Promissory~~number ~~Note~~of inauthorized ~~the~~shares ~~principal amount~~ of ~~$63,825,~~our ~~representing~~preferred ~~$55~~stock,~~000~~ ~~borrowed~~which ~~from~~remained ~~Carebourn~~ten ~~and~~million an(10,000,000) ~~original~~shares ~~issue~~of ~~discount~~preferred ofstock, $~~8,325~~0.001 ~~(the~~par ~~“September~~value ~~2016~~per ~~Carebourn~~share; ~~Convertible Note”~~(b), ~~pursuant~~the torights aof ~~Securities~~our ~~Purchase Agreement,~~Board ~~dated~~of ~~September~~Directors ~~23,~~to ~~2016.~~designate ~~The~~the ~~September~~rights ~~2016~~and ~~Carebourn~~preferences of ~~Convertible~~such ~~Note~~preferred ~~bears~~stock ~~interest~~(as atfurther ~~the~~described ~~rate~~in ofour ~~12%~~Articles ~~per~~of ~~annum (22%~~Amendment, ~~upon~~as anamended); ~~event~~or ~~of default~~(c) ~~and~~the ispreviously ~~due~~designated ~~and~~series of ~~payable~~our onpreferred ~~September 23, 2017~~stock.

~~The~~On ~~principal~~April ~~amount~~13, of2017, the ~~September~~Company ~~2016~~filed ~~Carebourn Convertible Note and all accrued interest is convertible at~~ the ~~option~~Amendment ofwith the ~~holder~~ ~~thereof~~Nevada ~~into~~Secretary ~~our common stock at any time following the 180th day after the September 2016 Carebourn Convertible Note was issued. The conversion price~~ of ~~the~~State, ~~September~~which ~~2016~~became ~~Carebourn~~effective ~~Convertible~~on ~~Note is equal to 50% of~~ the ~~average~~same ~~of the lowest three trading prices of our common stock for the 20 trading days prior to the conversion~~ date. At no time can the September 2016 Carebourn Convertible Note be converted into shares of our common stock if such conversion results in Carebourn and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock, subject to the waiver of such limitation by Carebourn with at least 61 days prior written notice.

~~The~~In ~~September~~April ~~2016~~2017, ~~Carebourn~~the ~~Convertible~~Company ~~Note~~entered ~~provides~~into a consulting agreement with a consultant, pursuant to which the consultant agreed to provide business consulting services to the company for ~~customary~~a ~~events~~term of ~~default~~three ~~and~~months ~~contains~~(extendable ~~customary~~at ~~positive~~the ~~and~~option ~~negative covenants.~~of ~~Additionally~~the parties), ~~upon~~and the ~~occurrence~~Company agreed ofto ~~certain~~pay ~~fundamental~~the ~~defaults~~consultant $25,000 asper ~~described~~month in ~~the~~consideration ~~September~~for ~~2016~~such ~~Carebourn~~services, ~~Convertible Note~~with $25,000 wedue ~~are~~upon ~~required~~the toparties’ ~~pay~~entry into ~~Carebourn~~the ~~liquidated~~agreement, ~~damages~~$25,000 due in ~~addition~~15 todays ~~the~~and ~~amount~~$25,000 ~~owed~~due ~~under~~in ~~the~~30 ~~September~~days, ~~2016~~which ~~Carebourn~~amounts ~~Convertible Note~~were paid.

WeOn ~~have~~April ~~the~~12, ~~right~~2017, pursuant to ~~prepay~~a inNote ~~full~~Purchase ~~the~~Agreement, we sold ~~unpaid~~a ~~principal~~10% ~~and~~Convertible Debenture ~~interest~~in on the ~~September~~principal ~~2016~~amount ~~Carebourn~~of ~~Convertible Note~~$32,500 ~~upon~~(which ~~notice~~included a $5, ~~any~~000 ~~time~~original ~~prior~~issue discount) to ~~the~~Sojourn ~~364th day~~Investments, ~~after~~LP (“Sojourn” and the ~~issuance~~“Sojourn ~~date~~Debenture”). The principal amount of the ~~note,~~debenture ~~subject~~accrues toat ~~payment~~10% ofper aannum ~~prepayment~~until ~~amount~~paid or ~~ranging~~converted ~~from~~into ~~130%~~common tostock ~~150~~(18% ofupon the ~~then~~occurrence ~~outstanding~~of ~~balance~~an onevent ~~the~~of ~~September~~default). ~~2016~~The ~~Carebourn~~Sojourn ~~Convertible~~Debenture ~~Note~~has ~~(inclusive~~a maturity date of ~~accrued~~January ~~and~~12, ~~unpaid~~2018, ~~interest~~provided ~~and~~the debenture can be repaid at any ~~default~~time, ~~amounts~~provided ~~then~~that ~~owing)~~if repaid more than 30 days after the issuance date, we ~~depending~~are onrequired ~~when~~to ~~such~~pay ~~prepayment~~130% isof ~~made~~the principal amount of the debenture, together with accrued interest.

~~We paid $10,000 in fees to a related party of Carebourn’s and $1,000 in attorney’s fees in connection with the sale of the September 2016 Carebourn Convertible Note.~~17

16The Sojourn Debenture is convertible into shares of our common stock at any time, at a conversion price equal to 58% of the average of the lowest three (3) closing prices during the prior 20 trading days.

In the event ~~that~~we fail to deliver the ~~September~~shares ~~2016~~of ~~Carebourn~~common ~~Convertible~~stock ~~Note~~issuable isupon ~~not~~conversion ~~repaid~~of inthe debenture within three ~~cash~~business indays ~~its~~of ~~entirety,~~our ~~Company~~receipt ~~shareholders~~of ~~may~~a ~~suffer dilution~~conversion ifnotice, ~~and~~we are required to ~~the~~pay Sojourn $1,000 per ~~extent~~day for each day that ~~the~~we ~~balance~~fail ofto ~~the~~deliver ~~September~~such ~~2016~~shares ~~Carebourn~~for ~~Convertible~~up ~~Note~~to isthe ~~converted~~first ~~into~~30 ~~common~~days ~~stock~~that the failure continues.

OnAt ~~April~~no ~~12,~~time ~~2017,~~may ~~our Board of Directors and majority shareholder (i.e., George J. Powell, III,~~ the Sojourn ~~Company’s~~Debenture be ~~Chief~~converted ~~Executive Officer~~into ~~and Director, who holds 1,000~~ shares of ~~Series~~our Acommon stock ~~Preferred~~if ~~Stock,~~such ~~which~~conversion ~~provides~~would ~~the~~result ~~holder~~in Sojourn and ~~thereof~~its ~~the~~affiliates ~~right to vote~~owning ~~51%~~an ofaggregate ~~the vote on all shareholder matters), via a written consent to action without meeting, approved the filing~~ of ain ~~Certificate of~~excess ~~Amendment to our Articles~~ of ~~Incorporation~~4.99% ~~to increase the authorized common stock~~ of the ~~Company,~~then ~~from~~outstanding ~~one billion (1,000,000,000)~~ shares of ~~common~~our ~~stock, $0.001 par value per share, to one billion, nine hundred and ninety million (1,990,000,000) shares of~~ common stock~~, $0~~.~~001 par value share (the “Amendment”).~~

The Sojourn ~~Amendment~~Debenture provides ~~did~~for ~~not~~standard ~~change~~and ~~(a)~~customary ~~the~~events ~~number~~ of ~~authorized~~default ~~shares~~such ofas ~~our~~failing ~~preferred~~to ~~stock,~~timely ~~which~~make ~~remained~~payments ~~ten~~under ~~million (10,000,000) shares~~the Sojourn ofDebenture when ~~preferred~~due ~~stock,~~and ~~$0.001~~the ~~par~~failure ~~value~~of ~~per~~the ~~share;~~Company ~~(b)~~to ~~the~~timely ~~rights~~comply ofwith ~~our~~the ~~Board~~Exchange ofAct ~~Directors~~reporting torequirements. ~~designate~~Additionally, upon the ~~rights~~occurrence ~~and preferences~~ of ~~such~~certain ~~preferred~~defaults, ~~stock (~~as ~~further~~ described in ~~our~~the Sojourn ~~Articles~~Debenture, we ofare ~~Amendment,~~required asto ~~amended);~~pay Sojourn liquidated ordamages ~~(c)~~in ~~the~~addition ~~previously~~to ~~designated~~the ~~series~~amount ofowed ~~our~~under ~~preferred~~the Sojourn ~~stock~~Debenture.

OnWe ~~April~~hope ~~13,~~to ~~2017,~~repay the Sojourn ~~Company~~Debenture prior ~~filed~~to ~~the~~any ~~Amendment~~conversion. ~~with~~In the ~~Nevada~~event that ~~Secretary~~the Sojourn ofDebenture is ~~State~~not repaid in cash in its entirety, ~~which~~Company shareholders ~~became~~may ~~effective~~suffer ondilution if and to the ~~same~~extent ~~date.~~that the balance of the Sojourn Debenture is converted into common stock.

InOn April 17, 2017, we sold Carebourn a Convertible Promissory Note in the ~~Company~~principal ~~entered~~amount ~~into~~of a$135,575 ~~consulting~~(the ~~agreement~~“April 2017 ~~with~~Carebourn aConvertible ~~consultant~~Note”), pursuant to ~~which~~a ~~the~~Securities ~~consultant~~Purchase ~~agreed~~Agreement, todated ~~provide business~~April ~~consulting~~17, ~~services~~2017. toThe ~~the~~April ~~company~~2017 Carebourn ~~for~~Convertible aNote ~~term~~bears interest at the rate of ~~three~~12% ~~months~~per annum (~~extendable~~22% atupon ~~the~~an ~~option~~event of ~~the parties~~default), and ~~the~~is ~~Company~~due and payable on ~~agreed~~April to17, ~~pay~~2018. ~~the~~The ~~consultant~~April ~~$25,000~~2017 ~~per~~Carebourn ~~month~~Convertible inNote ~~consideration~~had ~~for~~an ~~such~~original ~~services,~~issue ~~with~~discount of $2527,~~000~~075. ~~due~~In ~~upon~~addition, ~~the~~we ~~parties’~~paid ~~entry~~$8,500 ~~into~~of ~~the~~Carebourn’s ~~agreement,~~expenses ~~$25,000~~and ~~due~~attorneys’ fees in 15connection ~~days~~with ~~and~~the ~~$25~~sale of the note,~~000~~ ~~due~~which were included in 30the ~~days~~principal amount of the note.

OnPeriodic ~~April~~payments ~~12,~~are ~~2017,~~due ~~pursuant~~by tous aon ~~Note~~the ~~Purchase~~April ~~Agreement, we sold~~2017 aCarebourn ~~10%~~ Convertible ~~Debenture~~ inNote at the ~~principal~~rate ~~amount~~ of $~~32,500~~565 ~~(which~~per ~~included~~day a ($5135,~~000~~575 ~~original~~/ ~~issue~~240 ~~discount~~days) ~~to Sojourn Investments, LP~~ (~~“Sojourn” and~~ the “~~Sojourn Debenture~~Repayment Amount”)., ~~The~~via ~~principal~~direct ~~amount~~withdrawal offrom ~~the~~our ~~debenture~~bank ~~accrues at 10% per annum until paid or converted into common stock (18% upon the occurrence of an event of default)~~account. The ~~Sojourn~~Repayment ~~Debenture~~Amount ~~has~~automatically aadjusts ~~maturity~~to ~~date~~a ofprorated ~~January~~higher ~~12,~~amount ~~2018,~~in ~~provided~~ the ~~debenture~~amount ~~can be repaid at~~ any ~~time,~~penalties ~~provided~~or ~~that~~events ~~if repaid more than 30 days after the issuance date, we are required to pay 130%~~ of ~~the~~default ~~principal~~occur ~~amount~~under of the ~~debenture,~~April ~~together~~2017 ~~with~~Carebourn ~~accrued~~Convertible ~~interest~~Note.

The ~~Sojourn~~April ~~Debenture~~2017 isCarebourn ~~convertible~~Convertible ~~into~~Note ~~shares~~provides for standard and customary events of ~~our~~default ~~common~~such ~~stock~~as atfailing ~~any~~to ~~time~~timely make payments under the April 2017 Carebourn Convertible Note when due, atthe afailure ~~conversion~~of ~~price~~the ~~equal~~Company to ~~58%~~timely ofcomply with the ~~average~~Exchange Act reporting requirements and the failure to maintain a listing on the OTCQB. Additionally, upon the occurrence of certain defaults, as described in the ~~lowest~~April ~~three~~2017 ~~(3)~~Carebourn ~~closing~~Convertible ~~prices~~Note, ~~during~~we are required to pay Carebourn liquidated damages in addition to the amount ~~prior~~owed 20under ~~trading~~the ~~days~~April 2017 Carebourn Convertible Note.

InThe principal amount of the ~~event~~April we2017 ~~fail~~Carebourn toConvertible ~~deliver~~Note and all accrued interest is convertible at the ~~shares~~option of the holder thereof into our common stock ~~issuable~~at ~~upon~~any ~~conversion~~time offollowing the ~~debenture within three~~ ~~business~~180th ~~days~~day ofafter ~~our~~the ~~receipt~~April of2017 aCarebourn Convertible Note was issued. The conversion ~~notice,~~price weof ~~are~~the ~~required~~April 2017 Carebourn Convertible Note is equal to ~~pay Sojourn $1,000 per~~50% ~~day~~of ~~for~~the ~~each~~average ~~day~~of ~~that~~the welowest ~~fail~~three to(3) ~~deliver~~trading prices ~~such~~of ~~shares~~the ~~for~~Company’s upcommon tostock during the ~~first~~twenty 30trading days ~~that~~prior to the ~~failure~~conversion ~~continues~~date.

AtIn nothe ~~time~~event ~~may~~we ~~the Sojourn~~fail ~~Debenture be~~to ~~converted~~deliver ~~into~~the shares of ~~our~~ common stock ifissuable ~~such~~upon conversion ~~would~~of ~~result~~the ~~in Sojourn and~~note ~~its~~within ~~affiliates~~three ~~owning an~~business ~~aggregate~~days of inour receipt ~~excess~~ of ~~4.99%~~a ofconversion ~~the~~notice, ~~then~~we ~~outstanding~~are ~~shares~~required ofto ~~our~~pay ~~common~~Carebourn ~~stock~~$1,500 per day for each day that we fail to deliver such shares.

The Sojourn Debenture provides for standard and customary events of default such as failing to timely make payments under the Sojourn Debenture when due and the failure of the Company to timely comply with the Exchange Act reporting requirements. Additionally, upon the occurrence of certain defaults, as described in the Sojourn Debenture, we are required to pay Sojourn liquidated damages in addition to the amount owed under the Sojourn Debenture.18

WeAt ~~hope~~no totime ~~repay~~may the ~~Sojourn~~ ~~Debenture prior~~April to2017 ~~any~~Carebourn ~~conversion.~~Convertible InNote ~~the~~be ~~event that~~converted ~~the Sojourn~~into ~~Debenture is~~shares ~~not~~of ~~repaid~~our incommon ~~cash~~stock inif ~~its~~such ~~entirety,~~conversion ~~Company~~would result ~~shareholders~~in ~~may~~Carebourn ~~suffer~~and ~~dilution~~its ifaffiliates ~~and~~owning toan ~~the~~aggregate ~~extent~~of ~~that~~in ~~the~~excess ~~balance~~of 4.99% of the ~~Sojourn Debenture is~~ ~~converted~~then ~~into~~outstanding shares of our common stock.

17We may prepay in full the unpaid principal and interest on the April 2017 Carebourn Convertible Note, with at least 20 trading days’ notice, (a) any time prior to the 180th day after the issuance date, by paying 130% of the principal amount of the note together with accrued interest thereon; and (b) any time after the 180th day after the issuance date and prior to the 364th day after issuance, by paying 150% of the principal amount of the note together with accrued interest thereon.

On April 17, 2017, we sold Carebourn a Convertible Promissory Note in the principal amount of $135,575 (the “April 2017 Carebourn Convertible Note”), pursuant to a Securities Purchase Agreement, dated April 17, 2017. The ~~April 2017~~ ~~Carebourn Convertible Note bears interest at the rate of 12% per annum (22% upon an event of default) and is due and payable on~~ April ~~17, 2018. The April~~ 2017 Carebourn Convertible Note ~~had~~also ancontains ~~original~~customary ~~issue~~positive ~~discount of $27,075. In addition, we paid $8,500 of Carebourn’s expenses~~ and ~~attorney~~negative ~~fees in connection with the sale of the note, which were included in the principal amount of the note~~covenants.

~~Periodic~~We ~~payments~~hope ~~are~~to ~~due~~repay ~~by us on~~ the April 2017 Carebourn Convertible Note atprior ~~the~~to ~~rate~~any ofconversion. ~~$565~~In ~~per~~the ~~day~~event ~~($135,575~~that /the ~~240~~April ~~days)(the~~2017 ~~“Repayment~~Carebourn Convertible ~~Amount”),~~Note ~~via~~is ~~direct~~not ~~withdrawal~~repaid ~~from~~in ~~our~~cash ~~bank~~in ~~account.~~its ~~The~~entirety, ~~Repayment~~Company ~~Amount~~shareholders ~~automatically~~may ~~adjusts~~suffer todilution aif ~~prorated~~and ~~higher amount~~to in the ~~amount~~extent ~~any~~that ~~penalties~~the orbalance ~~events~~ of ~~default occur under~~ the April 2017 Carebourn Convertible Note is converted into common stock.

~~The April 2017 Carebourn~~ Convertible ~~Note provides for standard and customary events of default such as failing to timely make payments~~ ~~under~~Promissory ~~the April 2017 Carebourn Convertible~~ Note ~~when due, the failure of the Company to timely comply~~ with ~~the~~Power ~~Exchange~~Up ~~Act~~Lending ~~reporting requirements~~Group ~~and the failure to maintain a listing on the OTCQB~~Ltd. Additionally, upon the occurrence of certain defaults, as described in the April 2017 Carebourn Convertible Note, we are required to pay Carebourn liquidated damages in addition to the amount owed under the April 2017 Carebourn Convertible Note.

~~The~~On ~~principal~~May ~~amount~~24, of2017, ~~the~~pursuant ~~April~~to a Securities Purchase Agreement dated May 22, 2017, we sold a ~~Carebourn~~9% Convertible Promissory Note ~~and~~dated ~~all~~May ~~accrued~~22, ~~interest~~2017, isin ~~convertible~~the atprincipal amount of $32,500, to Power Up Lending Group Ltd. (“Power Up” and the ~~option~~“Power Up Note”). The principal amount of the ~~holder~~note accrues interest at 9% per annum until ~~thereof~~paid ~~into~~or ~~our~~converted into common stock at(22% ~~any~~upon ~~time following~~ the ~~180th~~occurrence ~~day~~of ~~after~~an ~~the~~event ~~April~~of ~~2017~~default). ~~Carebourn~~The ~~Convertible~~Power Up Note ~~was~~has ~~issued. The~~a ~~conversion~~maturity ~~price~~date of February ~~the~~28, ~~April~~2018. ~~2017~~We ~~Carebourn~~have ~~Convertible~~the ~~Note~~right isto ~~equal~~prepay the note prior to ~~50%~~maturity, provided that we pay a prepayment penalty of between 15% and 40%, depending on the ~~average~~number of ~~the~~days ~~lowest~~that ~~three~~have ~~(3)~~elapsed ~~trading prices~~from ofthe date the ~~Company’s~~note ~~common~~was ~~stock~~sold, ~~during~~together with accrued interest. After the ~~twenty~~maturity ~~trading~~date ~~days~~we ~~prior~~have no right to repay the ~~conversion~~Power ~~date~~Up Note.

InThe ~~the~~Power ~~event~~Up weNote ~~fail~~is toconvertible ~~deliver~~into ~~the~~ shares of our common stock ~~issuable~~beginning ~~upon~~180 ~~conversion~~days ofafter the ~~note~~issuance ~~within~~date, ~~three~~at ~~business~~a ~~days~~conversion ~~of our~~price ~~receipt~~equal ofto athe ~~conversion~~greater ~~notice,~~of we65% ~~are~~of ~~required~~the toaverage ~~pay~~of ~~Carebourn~~the ~~$1,500~~two ~~per~~lowest ~~day~~trading ~~for~~prices ~~each~~during ~~day~~the ~~that~~20 wetrading ~~fail~~days prior to ~~deliver~~the ~~such~~applicable conversion ~~shares~~and $0.00006 per share.

AtIn nothe ~~time~~event ~~may~~we fail to deliver the ~~April~~shares ~~2017~~of ~~Carebourn~~common ~~Convertible~~stock ~~Note~~issuable beupon ~~converted~~conversion ~~into~~of ~~shares~~the note within three business days of our ~~common~~receipt ~~stock~~of ifa ~~such~~ conversion ~~would~~notice, ~~result in~~we ~~Carebourn~~are ~~and~~required ~~its~~to ~~affiliates~~pay Power Up $2,000 ~~owning~~per anday ~~aggregate~~for ofeach inday ~~excess~~that ofwe ~~4.99%~~fail ofto ~~the~~deliver ~~then~~such ~~outstanding~~ shares, ofsubject ~~our~~to ~~common~~certain ~~stock~~exceptions.

WeAt ~~may~~no ~~prepay~~time inmay ~~full~~ the Power ~~unpaid~~Up ~~principal and interest on the April 2017 Carebourn Convertible~~ Note, be ~~with~~converted atinto ~~least~~shares ~~20 trading days’ notice, (a) any time prior to the 180th day after the issuance date, by paying 130%~~ of ~~the~~our ~~principal~~common ~~amount of the note together~~stock ~~with~~if ~~accrued~~such ~~interest~~conversion ~~thereon;~~would ~~and~~result ~~(b)~~in Power ~~any time after the 180th day after the issuance date~~ Up and ~~prior~~its toaffiliates ~~the~~owning ~~364th day~~an ~~after~~aggregate ~~issuance,~~of byin ~~paying~~excess ~~150%~~ of ~~the~~4.99% ~~principal amount~~ of the ~~note~~then ~~together~~outstanding ~~with~~shares ~~accrued~~of ~~interest~~our ~~thereon~~common stock.

The Power ~~April~~Up ~~2017~~Note provides ~~Carebourn~~for ~~Convertible~~standard ~~Note~~and ~~also~~customary ~~contains~~events ~~customary~~of ~~positive~~default such as failing to timely make payments under the Power Up Note when due and ~~negative~~the ~~covenants~~failure of the Company to timely comply with our Exchange Act reporting requirements. Additionally, upon the occurrence of certain defaults, as described in the Power Up Note, we are required to pay Power Up liquidated damages in addition to the amount owed under the Power Up Note.

We hope to repay the Power ~~April~~Up ~~2017 Carebourn Convertible~~ Note prior to any conversion. In the event that the Power ~~April~~Up ~~2017 Carebourn Convertible~~ Note is not repaid in cash in its entirety, Company shareholders may suffer dilution if and to the extent that the balance of the Power ~~April~~Up ~~2017 Carebourn Convertible~~ Note is converted into common stock.

~~Plan~~Convertible ofNote ~~Operations~~with JSJ Investments Inc.

WeOn ~~have~~May ~~commenced~~25, ~~shipping products to several customers~~2017, ~~including~~we ~~Frisco~~sold ~~Rivet~~a ~~and~~10% ~~numerous~~Convertible ~~specialty~~Promissory ~~based~~Note ~~accounts. We are also working diligently~~ to ~~finalize~~JSJ ~~programs~~Investments ~~with numerous other accounts~~Inc. ~~Notwithstanding~~(“JSJ” and the ~~above, we believe we need $1.5 million~~“JSJ ofConvertible ~~additional~~Note”) ~~funding for production~~ in the ~~near~~amount ~~term~~of ~~and~~$100,000. ~~for~~The ~~our~~note ~~operations~~included ~~for~~a ~~the~~$7,500 ~~next~~original 12issuance ~~months~~discount and ~~$2.5~~we ~~million~~paid ~~for our operations~~$2,000 ~~over~~of ~~the~~JSJ’s ~~next~~legal 24fees ~~months.~~in Weconnection ~~plan~~with toour ~~raise~~entry ~~funding~~into ~~subsequent to~~ the ~~date~~note. ofAmounts ~~this~~owed ~~report~~under ~~through~~ the ~~sale~~JSJ ofConvertible ~~debt~~Note oraccrue ~~equity, which~~interest ~~may not be available on favorable terms, if~~ at ~~all.~~the Werate ~~require~~of ~~additional~~10% ~~funding~~per toannum (a)18% ~~fund~~upon ~~production~~an onevent ~~new~~of ~~programs that are coming on line; (b~~default). ~~fund~~The ~~additional~~JSJ ~~sales~~Convertible ~~and~~Note ~~marketing~~is ~~programs~~payable toby ~~enhance~~us ~~revenue~~on ~~growth;~~demand ~~(c)~~by ~~fund~~JSJ ~~development~~at ~~of and warehouse~~any ~~inventory~~time ~~for~~after anFebruary ~~E-Commerce~~25, ~~site;~~2018. ~~(d)~~We ~~fund~~have ~~synergistic~~the ~~acquisitions;~~right ~~and (e)~~ to ~~bridge~~prepay ~~operational~~the ~~working~~JSJ ~~capital~~Convertible ~~until~~Note ~~such time,~~prior ~~if ever, as we can generate sufficient revenues~~ to ~~support~~the ~~our~~maturity ~~expenses.~~date Ifin wethe ~~are~~event ~~unable to access additional capital moving~~we ~~forward,~~pay ita ~~will~~prepayment ~~hurt~~penalty ~~our~~of ~~ability~~between to30% ~~grow and~~ to ~~generate~~45% ~~future~~of ~~revenues.~~the Weprincipal ~~may~~then ~~not~~due, betogether ~~able~~with toaccrued ~~increase~~interest, ~~sales~~provided orthat ~~obtain~~the ~~additional~~note ~~financing,~~can ifonly ~~necessary,~~be atrepaid aif ~~level~~JSJ toconsents ~~meet our current obligations~~ to ~~continue~~such ~~as a going concern~~repayment.

1819

~~Results~~The JSJ Convertible Note and all accrued interest is convertible at the option of ~~Operations~~the holder thereof into the Company’s common stock at any time. The conversion price of the JSJ Convertible Note is 55% (a 45% discount) of the lower of (a) the third lowest intra-day trading prices of the Company’s common stock during the 20 trading days prior to any conversion date of the note, and (b) the lowest intra-day trading price of the Company’s common stock during the 20 trading days prior to the entry into the note. In the event we do not issue the holder the shares due in connection with a conversion within three business days, we are required to pay the holder $2,000 per day until such shares are delivered. In the event certain defaults under the note occur, the conversion discount increases by 5%.

~~Three~~The ~~months~~JSJ ~~ended~~Convertible ~~March~~Note 31contains standard and customary events of default, ~~2017~~including ~~versus~~in the ~~three~~event ~~months~~we ~~ended~~fail ~~March~~to 31timely file any and all reports due with the SEC. Upon the occurrence of an event of default, ~~2016~~we are required to pay JSJ liquidated damages in addition to the amount owed under the JSJ Convertible Note.

~~The~~At ~~following~~no ~~table~~time ~~presents~~may the ~~Company’s~~JSJ ~~results~~Convertible Note be converted into shares of ~~operations~~our ~~for~~common ~~the~~stock ~~three~~if ~~months~~such ~~ended~~conversion ~~March~~would ~~31,~~result ~~2017~~in ~~compared~~JSJ toand its affiliates owning an aggregate of in excess of 4.99% of the ~~three months~~then ~~ended~~outstanding ~~March~~shares 31of our common stock, ~~2016~~provided such percentage may be increased or decreased by JSJ upon not less than 61 days prior written notice to us.

	For Quarter Ended March 31,
	2017			2016			$ Change			% Change
Revenue	$	33,479		$	18,237		$	15,242			83.6	%
Cost Of Goods Sold		(24,628	)		(15,198	)		(9,430	)		62.0	%
Gross Profit		8,851			3,039			5,812			191.2	%
Operating Expenses
Selling, general and administrative		89,074			375,296			(286,222	)		(76.3	%)
Total Operating Expenses		89,074			375,296			(286,222	)		(76.3	%)
Loss From Operations		(80,233	)		(372,257	)		292,024			(78.4	%)
Other Income (Expense)
Gain on conversion		22,757			—			22,757			100.0	%
Change in fair value of derivative		(344,249	)		154,014			(498,263	)		(323.5	%)
Derivative liability expense – insufficient shares		561,447			(254,303	)		815,750			(320.8	%)
Interest expense		(49,183	)		(11,967	)		(37,216	)		311.0	%
Total Other Income (Expense)		190,772			(112,256	)		303,028			(269.9	%)
Net Income (Loss)	$	110,549		$	(484,513	)	$	595,062			(122.8	%)

We hope to repay the JSJ Convertible Note prior to any conversion. In the event that the JSJ Convertible Note is not repaid in cash in its entirety, Company shareholders may suffer dilution if and to the extent that the balance of the JSJ Convertible Note is converted into common stock.

~~Revenue~~Convertible ~~and~~Promissory ~~Gross~~Note ~~Loss~~with Auctus Fund, LLC

~~During~~On ~~the~~June ~~three~~5, ~~months~~2017, ~~ended~~pursuant ~~March~~to ~~31,~~a ~~2017~~Securities Purchase Agreement, we sold a 10% Convertible Promissory Note in the ~~Company~~principal ~~generated~~amount of $33150,~~479~~000 into ~~revenues~~Auctus ~~through~~Fund, LLC (“Auctus” and the ~~sale~~“Auctus Convertible Note”). The principal amount of ~~goods~~the ~~with~~note ~~associated~~accrues ~~costs~~at 10% per annum until paid or converted into common stock (24% upon the occurrence of ~~$24,628~~an event of default). The ~~Company~~Auctus ~~recognized~~Convertible Note has a ~~gross~~maturity ~~profit~~date of March 5, 2018. Auctus paid $8100,~~851~~000 ~~for~~of the ~~three~~purchase ~~months~~price ~~ended~~of ~~March~~the ~~31,~~note ~~2017.~~at ~~During~~ the ~~three~~closing ~~months ended~~and ~~March~~agreed ~~31,~~to ~~2016~~pay $50,000 of the ~~Company~~purchase ~~generated~~price ~~$18,237~~within inforty ~~revenues~~five ~~through~~(45) days after the ~~sale~~closing ofdate, ~~goods~~so ~~with~~long ~~associated~~as ~~costs~~an event of ~~$15,198~~default under the note has not occurred. The note can be repaid at any time ~~Company~~prior ~~recognized~~to athe ~~gross~~180th day ~~profit~~after the issuance date subject to prepayment penalties of ~~$3,039~~between ~~for~~35% and 50% of the ~~three~~principal amount ~~months~~of ~~ended~~the ~~March~~note, 31together with accrued interest, ~~2016~~depending on what is repaid.

~~Operating~~At closing, we reimbursed Auctus’ legal expenses in the amount of $2,750 and paid $8,333 to Auctus to cover due diligence, monitoring, and other transaction costs incurred for services rendered by Auctus. An additional $4,167 in due diligence, monitoring, and other transaction costs are due in connection with the payment of the $50,000 portion of the purchase price.

The ~~Company~~Auctus ~~incurred~~Convertible ~~$89,074~~Note inis ~~selling,~~convertible ~~general~~into ~~and~~shares ~~administrative~~of ~~expenses~~our ~~for~~common ~~the~~stock ~~three~~at ~~months~~any ~~ended March 31~~time, ~~2017,~~at a ~~$286,222 decrease~~conversion ~~from~~price ~~the~~equal ~~$375,296 in selling, general and administrative expenses incurred during the three months ended March 31, 2016. This decrease is directly related~~ to ~~the~~58% ~~limited~~of ~~cash resources which~~ the lowest ~~Company~~trading ~~had~~price during the ~~three~~prior ~~months~~20 ~~ending~~trading ~~March 31~~days, ~~2017.~~subject ~~Selling,~~to ~~general and administrative expenses consist of expenses the Company incurs during day~~anti-~~to-day~~dilution ~~operations~~rights.

19If we do not deliver common stock due upon a conversion of the note by DWAC, an additional 10% discount will apply for all future conversions under the note. If our common stock is “chilled” for deposit into the DTC system and only eligible for clearing deposit, an additional 15% discount will apply for all future conversions under the note while the “chill” is in effect. Additionally, if we cease to be a reporting company or if the note cannot be converted into free trading shares after 181 days from the closing date, an additional 30% discount will apply. Additionally, if we fail to maintain our status as “DTC Eligible” for any reason, or, if the conversion price is less than $0.0005 at any time, the principal amount of the note is increased by $10,000. If an event of default under the note occurs after the sixth month anniversary of the closing date, the principal amount of the note increases by $15,000. If the note is not paid at maturity, the principal amount of the note increases by $15,000. If, we do not maintain or replenish the reserve of shares required under the note within three (3) business days of the request of Auctus, the principal amount of the note increases by $5,000 per occurrence.

During the three months ended March 31, 2017, the Company incurred $1,000 of consulting expenses, which are included under selling, general and administrative expenses. The Company incurred $33,387 consulting expenses during the three months ended March 31, 2016. Consulting expenses relate to the development of products within the corporate logo wear industry made from sustainable textiles.20

~~During~~In the ~~three~~event ~~months~~we ~~ended~~fail ~~March~~to ~~31,~~deliver ~~2017,~~ the ~~Company~~shares ~~incurred $852~~ of ~~legal,~~common ~~accounting~~stock ~~and~~issuable ~~professional~~upon ~~expenses,~~conversion ~~which~~of ~~are~~the note within ~~included~~three ~~under~~business ~~selling,~~days ~~general~~of ~~and~~our ~~administrative~~receipt ~~expenses,~~of ~~which is~~ a ~~$151,219~~conversion ~~decrease from the $152~~notice,~~071~~ ~~incurred~~we ~~during~~are ~~the three~~required ~~months ended March 31, 2016. Legal, accounting and professional expenses relate~~ to ~~the Company’s registration statement~~pay Auctus $1,000 ~~and~~per ~~other~~day ~~filings with the Securities and Exchange Commission. The main reason~~ for ~~the~~each ~~decrease~~day inthat ~~professional~~we ~~fees~~fail ~~was the cost of the preparation of the Company’s Form S-1 registration statement during the prior period. Additionally, the Company did not have the resources in place~~ to ~~begin~~deliver ~~work~~such ~~on its required periodic reports during the three months ending March 31, 2017~~shares.

~~During~~At ~~the~~no ~~three~~time ~~months~~may ~~ended~~the Auctus ~~March~~Convertible ~~31,~~Note be ~~2017,~~converted ~~the~~into ~~Company~~shares ~~incurred $656~~ of ~~product development expenses, which are included under selling,~~our ~~general~~common ~~and~~stock ~~administrative~~if ~~expenses,~~such ~~which~~conversion iswould aresult ~~$24,588 decrease compared to the $25,244 incurred during the three months ended March 31, 2017.~~in ~~The~~Auctus and ~~product~~its ~~development~~affiliates ~~costs~~owning ~~relate~~an toaggregate ~~the development~~ of ~~products within the corporate logo wear industry made from sustainable textiles, and were higher~~ in ~~the~~excess ~~prior~~of ~~period as the Company was just starting its operations during that period~~4.99% Inof the ~~near~~then ~~term~~outstanding ~~the~~shares ~~Company~~of ~~expects~~our ~~product development~~common ~~expenses to remain consistent but over time and as revenue increases~~stock, wesubject ~~anticipate product development expenses~~ to ~~level~~ ~~out~~the asright ~~a percentage~~ of ~~sales.~~Auctus ~~As we get requests for products from new clients we anticipate our development costs spiking,~~to asincrease ~~each~~such ~~customer~~percentage ~~will~~to ~~want specific items developed for their specific needs~~9.99% ~~We will likely experience ups and downs~~ with ~~regards to~~61 ~~product~~days ~~development~~prior ~~costs for these specific reasons in the foreseeable future~~notice.

~~During~~The Auctus ~~the~~Convertible ~~three~~Note provides ~~months~~for ~~ended~~standard ~~March~~and ~~31,~~customary ~~2017,~~events ~~the~~of ~~Company~~default ~~incurred~~such ~~$10,908~~as offailing ~~travel~~to ~~expenses,~~timely ~~which~~make ~~are~~payments ~~included~~ under ~~selling, general~~ ~~and~~the Auctus ~~administrative~~Convertible ~~expenses,~~Note when ~~which~~due isand athe ~~$40,249~~failure ~~decrease~~of ~~from~~ the ~~$51,157~~Company ~~incurred~~to timely ~~during~~comply ~~the~~with ~~three~~our ~~months~~Exchange ~~ended~~Act ~~March~~reporting ~~31, 2016~~requirements. ~~Travel~~ ~~expenses~~Additionally, ~~relate~~upon to the ~~efforts~~occurrence byof ~~management~~certain todefaults, ~~meet~~as ~~with~~described in ~~new~~the Auctus ~~customers~~Convertible ~~and~~Note, ~~potential~~we ~~customers~~are ~~and~~required ~~vary from period-~~to~~-period.~~ pay Auctus liquidated ~~Over~~damages ~~time~~in ~~the~~addition ~~Company expects~~ to ~~see~~the aamount ~~leveling~~owed ~~off~~under ~~of these costs; however, as~~ the Auctus ~~Company~~Convertible ~~grows the Company anticipates these expenses increasing~~Note.

~~During~~We also agreed pursuant to the ~~three~~Securities ~~months~~Purchase ~~ended~~Agreement ~~March~~that ~~31,~~until ~~2017,~~the sooner of the ~~Company~~six ~~recorded~~month ~~$62,000~~ anniversary of the closing date ~~non-cash~~or ~~compensation~~the ~~related~~payment toof the ~~stock~~note ~~issuance~~in tofull, or full conversion of the ~~Company’s~~note, ~~COO~~we ~~and~~would anot, ~~consultant~~directly or indirectly, without Auctus’ prior written consent, which isconsent ~~included~~shall ~~under~~not ~~selling~~be unreasonably withheld, ~~general~~ ~~and~~undertake ~~administrative~~certain ~~expenses.~~transactions, ~~During~~including ~~the~~solicit ~~three~~any offers ~~months~~for, ~~ended~~respond ~~March~~to 31any unsolicited offers for, ~~2016~~or conduct any negotiations with any other person or entity in respect of any variable rate debt transactions (i.e., transactions where the ~~Company~~conversion ~~recorded~~or ~~$75,000~~exercise price of ~~non-cash~~the ~~compensation~~security issued by the Company ~~related~~varies tobased on the ~~stock~~market ~~issuance~~price toof the ~~Company’s~~common ~~COO~~stock) ~~and~~above a$500,000 ~~consultant~~(per variable rate debt transaction).

~~Other~~We ~~income~~hope ~~(expense)~~to repay the Auctus Convertible Note prior to any conversion. In the event that the Auctus Convertible Note is not repaid in cash in its entirety, Company shareholders may suffer dilution if and to the extent that the balance of the Auctus Convertible Note is converted into common stock.

~~During~~Written ~~the~~Consent ~~three~~in ~~months~~Lieu ~~ended March 31, 2017, the Company reported $49,183~~ of ~~interest~~Annual expense compared to $11,967 reported during the three months ended March 31, 2016. The interest expense relates to the promissory notes outstanding as described in greater detail in Notes 3 and 4 to the financial statements included herein.Meeting

~~During~~Effective ~~the~~on ~~three~~August ~~months~~3, ~~ended~~2017, ~~March~~George 31J. Powell, ~~2017~~III, our Chief Executive Officer, Interim Chief Financial Officer, Secretary and Director, and the ~~Company~~holder ~~recognized~~of aall ~~loss~~1,000 shares of ~~$344~~our outstanding Series A Preferred Stock,~~249~~ which provide the holder thereof the power to vote on ~~change~~all instockholder ~~fair~~matters ~~value~~(including, ofbut ~~derivative~~not inlimited ~~connection with~~to at every meeting of the ~~valuation~~stockholders of the ~~derivative~~Company ~~liabilities~~and ~~(see~~upon ~~Notes~~any action 4taken ~~and~~by 5stockholders of the ~~financial~~Company ~~statements~~with ~~included~~or ~~herein~~without a meeting), ~~compared~~equal to fifty-one percent (51%) of the total vote, executed a ~~gain~~written onconsent ~~change~~ in ~~fair~~lieu ~~value~~ of ~~derivative~~the of2017 ~~$154,014~~annual ~~for~~meeting ~~the~~of ~~three~~stockholders ~~months~~(the ~~ended~~“Majority ~~March~~Stockholder 31Consent”), approving ~~2016.~~the following matters:

~~The Company~~● ~~recognized a $561,447 gain in connection with insufficient shares being available for~~ the ~~Company’s~~appointment ~~derivative~~of ~~liability for~~two ~~the~~members ~~three months ended March 31, 2017, compared~~ to anour ~~expense~~Board of ~~$254,303~~Directors in(Mr. ~~connection~~Powell ~~therewith~~and ~~for~~Thomas ~~the three months ended March 31, 2016~~H. Witthuhn);

~~The Company~~● ~~had a $22,757 gain on~~ the ~~conversion~~adoption of ~~debt in connection with~~ the ~~conversion~~Code ofGreen ~~amounts~~Apparel ~~due~~Corp. ~~under~~2017 ~~the~~Equity ~~terms~~Incentive ofPlan ~~certain convertible~~(described ~~promissory~~in ~~notes~~greater ~~into~~detail ~~shares~~below ofunder ~~our~~“Part ~~common~~II ~~stock for~~– ~~the~~Other ~~three~~Information” ~~months~~– ~~ended~~“Item ~~March~~5. ~~31,~~Other ~~2017.~~Information”;

20● the filing of a Certificate of Amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of the Company’s capital stock to five billion (5,000,000,000) shares, consisting of four billion nine hundred ninety million (4,990,000,000) shares of common stock, $0.001 par value per share and ten million (10,000,000) shares of preferred stock, $0.001 par value per share, without affecting or modifying the Company’s previously designated shares of preferred stock in any way;

~~Net income (loss)~~21

~~The Company~~● ~~had~~authority ~~net~~for ~~income~~our ~~for~~Board ~~the~~of ~~three~~Directors, ~~months~~without ~~ended~~further ~~March~~stockholder 31approval, ~~2017~~to effect a reverse stock split of ~~$110~~all of the outstanding common stock of the Company,~~549,~~ by the filing of a ~~$595,062~~Certificate ~~increase~~of ~~from~~Amendment to the ~~net~~Company’s ~~loss~~Articles of ~~$484,513 incurred~~Incorporation ~~during~~with the ~~three~~Secretary ~~months~~of ~~ended~~State ~~March~~of 31Nevada, ~~2016.~~in ~~The~~a ~~increase~~ratio inof ~~net~~between ~~income~~one-for-one ~~was~~hundred ~~primarily~~and ~~due~~one-for-one thousand, with the Company’s Board of Directors having the discretion as to whether or not the ~~reasons~~reverse ~~described~~split is to be effected, and with the exact exchange ratio of any reverse split to be set at a whole number within the above. range as determined by the Board of Directors in its sole discretion, at any time before the earlier of (a) August 3, 2018; and (b) the date of the Company’s 2018 annual meeting of stockholders;

~~Liquidity and~~● ~~Capital~~the ~~Resources~~appointment of Soles, Heyn & Company LLP as our independent registered public accounting firm;

~~The Company~~● ~~had~~ an ~~accumulated~~advisory ~~deficit~~vote aton ~~March 31, 2017 of approximately $14.4 million. The Company had net income of $110,549 during~~ the ~~three~~frequency ~~months ended March 31, 2017, had $64,000~~ of ~~current~~an ~~assets~~advisory asvote of March 31, 2017, consisting solely of prepaid expenses, had only $76,122 in total assets and has negative working capital of $2,297,864, as of March 31, 2017. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on aexecutive ~~timely~~compensation; ~~basis, to obtain additional financing or refinancing as may be required~~ and, ultimately, to attain profitable operations. Management’s plans to eliminate the going concern situation include, but are not limited to, raising additional capital through the issuance of debt and equity, and improved cash flow management. Failure to raise additional capital or improve its performance in the next 12 months may cause the Company to significantly curtail its business activities and expansion plans within the next twelve months.

~~The Company~~● ~~had~~an noadvisory ~~cash~~vote ason ofexecutive ~~March 31, 2017, compared to $47 as of March 31, 2016~~compensation.

WeIn ~~had~~accordance ~~$76~~with Rule 14c-2 of the Exchange Act,~~122~~ the corporate actions will be effective no earlier than forty (40) days after the date notice of ~~total~~the ~~assets~~internet asavailability of ~~March~~an ~~31,~~Information ~~2017,~~Statement ~~consisting~~disclosing ~~solely~~the ofMajority ~~fixed~~Stockholder ~~assets~~Consent is first sent to stockholders, ~~net~~which ofwe ~~$12~~expect to be on or around approximately September 25,~~122~~ 2017.

WePlan ~~had total liabilities~~ of $2,561,864 as of March 31, 2017, including current liabilities consisting of accounts payable and accrued expenses of $328,120, accrued interest on our convertible notes of $153,066, notes payable of $82,500, convertible notes, net of discount, of $546,999 and derivative liability of $1,251,179, and long-term liabilities consisting of notes payable, net of current portion, of $200,000.Operations

~~Our~~We ~~outstanding~~have ~~promissory~~commenced ~~notes~~shipping products to several customers, ~~convertible~~including ~~notes~~Frisco Rivet and ~~derivative~~numerous ~~liability~~specialty based accounts. We are ~~described~~also working indiligently ~~greater~~to ~~detail~~finalize inprograms ~~Notes~~with 3numerous other accounts. Notwithstanding the above, 4we believe we need $1.5 million of additional funding for production in the near term and for our operations for the next 12 months and $2.5, million for our operations over the next 24 months. We plan to raise funding subsequent to the ~~financial~~date ~~statements~~of ~~attached~~this ~~herein~~report ~~and~~through ~~under~~the ~~“Part~~sale Iof -debt ~~Item~~or 2equity, which may not be available on favorable terms, if at all. ~~Management’s~~We ~~Discussion~~require additional funding to (a) fund production on new programs that are coming on line; (b) fund additional sales and ~~Analysis~~marketing programs to enhance revenue growth; (c) fund development of and warehouse ~~Financial~~inventory ~~Condition~~for an E-Commerce site; (d) fund synergistic acquisitions; and ~~Results~~(e) ofto ~~Operations~~bridge –operational ~~Recent~~working ~~Transactions”~~capital until such time, ~~above~~if ever, as we can generate sufficient revenues to support our expenses. If we are unable to access additional capital moving forward, it will hurt our ability to grow and to generate future revenues. We may not be able to increase sales or obtain additional financing, if necessary, at a level to meet our current obligations to continue as a going concern.

~~Cash Flows~~22

	Three Months Ending March 31,
	2017			2016
Net cash used by operating activities	$	(7,747	)	$	(240,514	)
Net cash used by investing activities	$	—		$	13,928
Net cash provided by financing activities	$	7,700		$	250,000

Results of Operations

~~Operating~~Three ~~Activities~~months ended June 30, 2017 versus the three months ended June 30, 2016

~~Net~~The ~~cash~~following ~~used~~table bypresents ~~operating~~the ~~activities~~Company’s results of operations for the three months ended ~~March~~June 3130, 2017 ~~was~~compared ~~mainly due~~ to ~~non-cash~~the ~~items including a derivative~~three ~~liability~~months ofended ~~$561,447,~~June ~~offset by $344~~30,~~248~~ ~~of loss on derivative revaluation and $110,549 of net income.~~2016:

Investing Activities

	For the Three Months Ended June 30,
	2017			2016			$ Change			% Change
Revenue	$	—		$	10,141			(10,141	)		(100	%)
Cost of Goods Sold		—			(8,500	)		8,500			100	%

Gross Profit		—			1,641			(1,641	)		(100	%)

Operating Expenses
Selling, General and Administrative		332,577			226,390			106,187			47	%

Total Operating Expenses		332,577			226,390			106,187			47	%

Loss From Operations		(332,577	)		(224,749	)		(107,828	)		(48	%)

Other Income (Expense)
Gain on Conversion		19,060			—			19,060			100	%
Change in Fair Value of Derivative		1,256,670			(747,718	)		2,004,388			268	%
Derivative Liability Gain (Expense) – Insufficient Shares		—			(651,677	)		651,677			100	%
Interest Expense		(1,327,981	)		(19,952	)		(1,308,029	)		656	%

Total Other Income (Expense)		(52,251	)		(1,419,347	)		1,367,096			96	%

Net (Loss)		(384,828	)		(1,644,096	)		1,259,268			77	%

~~Net~~Revenue ~~cash~~and ~~used~~Gross by investing activities for the three months ended March 31, 2016 was solely due to the purchase of fixed assets of $13,928. We had no net cash used by investing activities for the three months ended March 31, 2017.Loss

21During the three months ended June 30, 2017, the Company generated no revenues through the sale of goods and had no associated costs. The Company was unable to generate revenues due to the Company's lack of cash on hand, which made it impossible for the Company to purchase raw materials. During the three months ended June 30, 2016, the Company generated $10,141 in revenues through the sale of goods with associated costs of $8,500. The Company recognized a gross profit of $1,641 for the three months ended June 30, 2016.

~~Financing~~Operating ~~Activities~~expenses

~~Net~~The ~~cash~~Company ~~provided~~incurred by$332,577 ~~financing~~in ~~activities~~selling, general and administrative expenses for the three months ended ~~March~~June 3130, ~~2016~~2017, ~~was~~a $106,187 increase from the ~~sale of Series B Preferred Stock of~~ $~~250~~226,~~000.~~390 Wein ~~had $7~~selling,~~700~~ ofgeneral ~~net~~and ~~cash~~administrative ~~provided~~expenses ~~by financing activities for~~ incurred during the three months ended ~~March~~June 3130, ~~2017~~2016. This increase is directly related to ~~proceeds from~~increased ~~notes~~professional ~~payable,~~fees ~~net~~and ofproduct ~~repayments~~development expenses.

~~From~~During ~~time~~the tothree ~~time,~~months weended ~~may~~June ~~attempt~~30, to2017, ~~raise~~the ~~capital~~Company ~~through~~incurred ~~either~~$89,845 ~~equity~~of orconsulting ~~debt~~expenses, ~~offerings.~~which ~~Our~~are ~~capital~~included ~~requirements~~under ~~will~~selling, ~~depend on~~general ~~many~~and ~~factors,~~administrative ~~including,~~expenses. ~~among~~The ~~other~~Company ~~things,~~incurred ~~the rate at which our business grows~~$74,600 ~~with~~of ~~corresponding~~consulting ~~demands~~expenses ~~for~~during ~~working~~the ~~capital and~~three ~~expansion~~months ~~capacity.~~ended WeJune ~~could be required~~30, or2016. Consulting ~~may~~expenses ~~elect,~~relate to ~~seek~~the ~~additional~~development ~~funding~~of ~~through~~products ~~public~~within orthe ~~private~~corporate ~~equity,~~logo ~~debt financing~~wear orindustry ~~bank~~made ~~financing~~from sustainable textiles.

~~Critical~~During ~~Estimates~~the three months ended June 30, 2017, the Company incurred $84,665 of legal, accounting and ~~Judgments~~professional expenses, which are included under selling, general and administrative expenses, which is a $33,375 increase from the $51,290 incurred during the three months ended June 30, 2016. Legal, accounting and professional expenses relate to the Company’s registration statement and other filings with the Securities and Exchange Commission. The main reason for the decrease in professional fees was the cost of the preparation of the Company’s Form S-1 registration statement during the prior period. Additionally, the Company did not have the resources in place to begin work on its required periodic reports during the three months ended June 30, 2017.

The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates its estimates and judgments, including those related to receivables and accrued expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable based on the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of the Company’s intangible assets, the amount of stock compensation, and the amount of accrued liabilities that are not readily attainable from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements.23

~~The~~During ~~discussion~~the inthree ~~this~~months ~~report~~ended ~~contains~~June ~~forward-looking~~30, ~~statements~~2017, ~~that~~the ~~involve~~Company ~~risks~~incurred $70,938 of product development expenses, which are included under selling, general and ~~uncertainties~~administrative expenses, which is a $65,938 increase compared to the $45,000 incurred during the three months ended June 30, 2017. The ~~Company’s~~product ~~future~~development ~~actual~~costs ~~results~~relate ~~may~~to ~~differ~~the ~~materially~~development ~~from~~of products within the ~~results~~corporate ~~discussed~~logo ~~herein~~wear industry made from sustainable textiles, ~~including~~and ~~those~~were higher in the ~~forward-looking~~current ~~statements~~period as the Company was active in developing new products.

~~Item~~During 3.the ~~Quantitative~~three months ended June 30, 2017, the Company recorded $48,000 of non-cash compensation related to the stock issuance to a consultant, which is included under selling, general and ~~Qualitative~~administrative ~~Disclosures~~expenses. ~~about~~During ~~Market~~the ~~Risk~~three months ended June 30, 2016, the Company recorded $42,000 of non-cash compensation related to the stock issuance to a consultant.

~~Pursuant~~Other toincome ~~Item 305~~(eexpense) ~~of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).~~

~~Item~~During 4the three months ended June 30, 2017, the Company reported $1,327,981 of interest expense compared to $19,952 reported during the three months ended June 30, 2016. ~~Controls~~The interest expense relates to the promissory notes outstanding as described in greater detail in Notes 3 and ~~Procedures~~4 to the financial statements included herein.

~~Evaluation~~During the three months ended June 30, 2017, the Company recognized a gain of ~~Disclosure~~$1,256,670 ~~Controls~~on change in fair value of derivative in connection with the valuation of the derivative liabilities (see Notes 4 and ~~Procedures~~5 of the financial statements included herein), compared to a loss on change in fair value of derivative of $747,718 for the three months ended June 30, 2016.

WeThe ~~have~~Company ~~established~~recognized ~~and maintain~~ a ~~system~~$651,677 ofexpense ~~disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed~~ in ~~our~~connection ~~reports filed~~ with ~~the~~insufficient ~~Commission~~shares ~~pursuant~~being toavailable for the ~~Exchange,~~Company’s ~~is recorded, processed,~~derivative ~~summarized~~liability ~~and~~for ~~reported within~~ the ~~time~~three ~~periods~~months ~~specified~~ended inJune ~~the rules and forms of the Commission and that such information is accumulated and communicated to our management~~30, ~~including our Chief Executive Officer (CEO) and Interim Chief Financial Officer (CFO), to allow timely decisions regarding required disclosures~~2016.

~~Management,~~The ~~with~~Company ~~the~~had ~~participation~~a ~~of our CEO and CFO~~$19,060 ~~evaluated~~gain ~~the~~on ~~effectiveness of~~ the ~~design~~conversion ~~and operation~~ of ~~our~~debt ~~disclosure controls and procedures (as defined~~ in ~~Rules~~connection ~~13a-15(e)~~with ~~and~~the ~~15d-15(e)~~conversion of ~~the~~amounts ~~Exchange~~due ~~Act)~~under ~~as of~~ the ~~end~~terms of ~~the period covered by this report.~~certain Asconvertible ofpromissory ~~March~~notes ~~31,~~into ~~2017,~~shares ~~based on the evaluation~~ of ~~these disclosure controls and procedures, and in light of the reasons described below,~~ our ~~CEO~~common ~~and~~stock ~~CFO~~for ~~have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our reports filed with~~ the ~~Commission~~three ~~pursuant~~months toended ~~the~~June ~~Exchange Act~~30, is recorded properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures2017.

22Net income (loss)

~~Management~~The ~~has~~Company ~~identified~~had a net loss for the ~~following~~three ~~control~~months ~~deficiencies~~ended ~~that~~June ~~represent~~30, ~~material~~2017 ~~weaknesses~~of as$384,828, a $1,259,268 decrease from the net loss of $1,644,096 ~~March~~incurred 31during the three months ended June 30, ~~2017:~~2016. The decrease in net loss was primarily due to the reasons described above.

i) Lack of segregation of duties. At this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management will periodically reevaluate this situation.24

~~ii)~~Six ~~Lack~~months ofended anJune ~~independent~~30, ~~audit~~2017 ~~committee.~~versus ~~Although~~ the ~~Board~~six ofmonths ~~Directors~~ended ~~serves~~June ~~as an audit committee~~30, it is not comprised solely of independent directors. We may establish an audit committee comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent directors and to maintain such a committee.2016

~~iii)~~The ~~Insufficient~~following ~~number~~table ofpresents ~~independent directors. At~~ the ~~present~~Company’s ~~time,~~results ~~our Board~~ of ~~Directors~~operations ~~does~~for ~~not~~the ~~consist~~six ofmonths aended ~~majority of~~June ~~independent directors~~30, a2017 ~~factor~~compared ~~that is counter~~ to ~~corporate governance practices as set forth by~~ the ~~rules~~six months ofended ~~various~~June ~~stock exchanges.~~30, 2016:

Due to a lack of financial resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until we acquire sufficient financing to do so. We will implement further controls as circumstances, cash flow, and working capital permit. Notwithstanding the assessment that our disclosure controls and procedures were not effective and that there were material weaknesses as identified in this report, we believe that our financial statements fairly present our financial position, results of operations and cash flows for the periods covered thereby in all material respects.


	For the Six Months Ended June 30,
	2017			2016			$ Change			% Change

Revenue	$	33,479		$	28,378			5,101			18	%
Cost of Goods Sold		(24,628	)		(23,698	)		(930	)		(4	%)

Gross Profit		8,851			4,680			4,171			89	%

Operating Expenses
Selling, General and Administrative		421,652			601,686			(180,024	)		(30	%)

Total Operating Expenses		421,652			601,686			(180,024	)		(30	%)

Loss From Operations		(412,801	)		(597,006	)		(184,205	)		31	%

Other Income (Expense)
Gain on Conversion		41,817			—			41,817			100	%
Change in Fair Value of Derivative		912,422			(593,704	)		1,506,126			254	%
Derivative Liability Gain (Expense) – Insufficient Shares		561,447			(905,980	)		1,467,427			162	%
Interest Expense		(1,377,164	)		(31,919	)		(1,345,245	)		421	%

Total Other Income (Expense)		138,522			(1,531,603	)		1,670,125			109	%

Net Income (Loss)		(274,279	)		(2,128,609	)		1,854,330			87	%

~~Changes~~Revenue inand ~~Internal~~Gross ~~Control Over Financial Reporting~~Loss

~~There~~During ~~were~~the nosix ~~changes~~months ended June 30, 2017, the Company generated $33,479 in ~~our~~revenues ~~internal~~through ~~control~~the ~~over~~sale ~~financial~~of ~~reporting~~goods ~~during~~with associated costs of $24,628. The Company recognized a gross profit of $8,851 for the ~~three~~six months ended ~~March~~June 3130, 2017,. ~~that~~During ~~have~~the ~~materially affected~~six ormonths ~~are~~ended June ~~reasonably~~30, ~~likely~~2016, tothe ~~materially~~Company ~~affect~~generated $28,378 ~~our~~in ~~internal~~revenues ~~control~~through ~~over~~the ~~financial~~sale ~~reporting,~~of ~~including~~goods ~~any~~with ~~corrective~~associated costs of $23,698. The Company ~~actions~~recognized ~~with~~a ~~regard~~gross toprofit ~~significant~~of ~~deficiencies~~$4,680 ~~and~~for ~~material~~the ~~weaknesses~~six months ended June 30, 2016.

23Operating expenses

~~PART~~The IICompany –incurred ~~OTHER~~$421,651 ~~INFORMATION~~in selling, general and administrative expenses for the six months ended June 30, 2017, a $180,024 decrease from the $601,686 in selling, general and administrative expenses incurred during the six months ended June 30, 2016. This decrease is directly related to the limited cash resources which the Company had during the six months ending June 30, 2017. Selling, general and administrative expenses consist of expenses the Company incurs during day-to-day operations.

~~Item 1. Legal Proceedings~~25

~~Although~~During wethe ~~may,~~six ~~from~~months ~~time~~ended toJune ~~time~~30, be2017, ~~involved~~the inCompany ~~litigation~~incurred ~~and~~$90,645 ~~claims~~of ~~arising~~consulting ~~out~~expenses, ofwhich ~~our~~are ~~operations~~included inunder ~~the~~selling, ~~normal~~general and ~~course~~administrative ofexpenses. ~~business, we~~The ~~are~~Company ~~not~~incurred ~~currently~~$107,987 aof ~~party~~consulting toexpenses ~~any~~during ~~material~~the ~~legal~~six ~~proceeding.~~months Inended ~~addition~~June 30, we2016. ~~are~~Consulting expenses ~~not~~relate ~~aware~~to ofthe ~~any~~development ~~material~~of ~~legal~~products orwithin ~~governmental proceedings~~the ~~against~~corporate ~~us,~~logo orwear ~~contemplated~~industry tomade befrom ~~brought~~sustainable ~~against us~~textiles.

~~Item~~During 1Athe six months ended June 30, 2017, the Company incurred $85,517 of legal, accounting and professional expenses, which are included under selling, general and administrative expenses, which is a $151,219 decrease from the $203,360 incurred during the six months ended June 30, 2016. ~~Risk~~Legal, ~~Factors~~accounting and professional expenses relate to the Company’s registration statement and other filings with the Securities and Exchange Commission. The main reason for the decrease in professional fees was the cost of the preparation of the Company’s Form S-1 registration statement during the prior period. Additionally, the Company did not have the resources in place to begin work on its required periodic reports during the six months ending June 30, 2017.

~~There have been no material~~During ~~changes from~~ the ~~risk~~six ~~factors~~months ~~previously~~ended ~~disclosed~~June in30, ~~Part I~~2017, ~~Item 1A of~~ the Company’s ~~Annual~~incurred ~~Report~~$71,594 onof ~~Form~~product ~~10-K~~development ~~for the year ended December 31~~expenses, ~~2016,~~which ~~filed~~are ~~with~~included ~~the Commission on May 22, 2017,~~ under ~~the heading “Risk Factors”~~selling, ~~except~~ asgeneral ~~provided below,~~ and ~~investors~~administrative ~~should review the risks provided in the Form 10-K and below~~expenses, ~~prior to making an investment in~~ ~~the~~which ~~Company.~~is ~~The business, financial condition and operating results of the Company can be affected by~~ a ~~number of factors~~$41,350 ~~whether currently~~increase ~~known~~compared ~~or unknown, including but not limited~~ to ~~those described in~~ the ~~Form~~$30,244 ~~10-K~~incurred ~~for~~during the ~~year~~six months ended ~~December~~June 3130, ~~2016, under~~2017. The ~~“Risk~~product ~~Factors”~~development costs ~~and~~relate ~~below,~~to ~~any~~the ~~one~~development ~~or more~~ of ~~which~~products ~~could,~~within ~~directly or indirectly, cause~~ the ~~Company’s actual~~corporate ~~financial~~logo ~~condition~~wear ~~and~~industry ~~operating~~made ~~results to vary materially~~ from ~~past,~~sustainable ~~or from anticipated future~~textiles, ~~financial condition~~ and ~~operating results. Any of these factors,~~ were higher in ~~whole~~the orcurrent inperiod ~~part,~~as ~~could materially and adversely affect~~ the Company’s ~~business, financial~~was ~~condition,~~developing ~~operating~~new ~~results and stock price~~products.

~~There~~During the six months ended June 30, 2017, the Company incurred $28,476 of travel expenses, which are included under selling, general and administrative expenses, which is ~~substantial~~a $46,822 decrease from the $75,297 incurred during the six months ended June 30, 2016. ~~doubt~~Travel ~~about~~expenses relate to the efforts by management to meet with new customers and potential customers and vary from period-to-period. Over time the Company’s ~~ability~~expects to ~~continue~~see a leveling off of these costs; however, as athe ~~going~~Company ~~concern~~grows the Company anticipates these expenses increasing.

~~The accompanying financial~~During ~~statements have been prepared assuming that~~ the ~~Company~~six ~~will~~months ~~continue~~ended asJune a30, ~~going concern~~2017, ~~which contemplates~~ the ~~realization of assets and the liquidation of liabilities in the normal course of business. The~~ Company ~~has~~recorded ~~had only limited revenues since inception. The Company had an accumulated deficit at March 31, 2017 of approximately~~ $~~14.4 million. The Company had net income of $~~110,~~549 during the three months ended March 31, 2017, had only $64,~~000 of ~~current assets of March 31, 2017, consisting solely of prepaid~~ ~~expenses, and only $72,122 in total assets, and had no~~ non-cash ~~and~~compensation ~~negative~~related ~~working~~to ~~capital~~the ofstock ~~$2,297,864~~issuance asto ofthe ~~March 31, 2017. The~~ Company’s ~~continuation~~COO asand a ~~going~~consultant, ~~concern~~which is ~~dependent~~included ~~upon~~under ~~its ability to generate sufficient cash flow to meet its obligations~~selling, ongeneral aand ~~timely~~administrative ~~basis,~~expenses. toDuring ~~obtain~~the ~~additional~~six ~~financing~~months orended ~~refinancing~~June ~~as may be required and~~30, ~~ultimately~~2016, ~~to attain profitable operations. Management’s plans to eliminate~~ the ~~going~~Company ~~concern~~recorded ~~situation include~~$117,000 ~~but~~of ~~are~~non-cash ~~not~~compensation related ~~limited~~ to, the ~~raise~~stock ~~of additional capital through~~ issuance ~~of debt and equity, improved cash flow management. If we are unable~~ to ~~raise additional funding our business would be jeopardized and~~ the Company’s ~~may~~COO ~~not~~and bea ~~able to continue~~consultant. ~~If we ceased operations, it is likely that all of our investors would lose their investment.~~

~~Item~~Other 2.income ~~Unregistered Sales of Equity Securities and Use of Proceeds~~(expense)

OnDuring ~~March~~the 22six months ended June 30, 2017, wethe ~~issued~~Company 20reported ~~million~~$1,377,164 ~~shares~~ of ~~common~~interest ~~stock~~expense compared to ~~Anubis~~$31,919 ~~Capital~~reported ~~Partners~~during the six months ended June 30, 2016. The interest expense relates to the promissory notes outstanding as described in ~~connection~~greater detail ~~with~~in Notes 3 and 4 to the ~~conversion~~financial ofstatements ~~debt~~included herein.

OnDuring ~~April~~the 7six months ended June 30, 2017, wethe ~~issued~~Company ~~21,481,481~~recognized ~~shares~~income of ~~common~~$912,422 ~~stock~~in toconnection ~~Anubis~~with ~~Capital~~the ~~Partners~~change in fair value of derivative in connection with the ~~conversion~~valuation of ~~debt~~the derivative liabilities (see Notes 4 and 5 of the financial statements included herein), compared to an expense of $593,704 in change in fair value of derivative for the six months ended June 30, 2016.

OnThe ~~February~~Company 9,recognized ~~2017~~a $561,447 ~~the~~gain ~~Company~~in ~~entered~~connection ~~into~~with aninsufficient ~~Advertising~~shares ~~Services~~being ~~Agreement~~available (for the ~~“Advertising~~Company’s ~~Agreement”)~~derivative liability ~~with~~for ~~Cicero~~the ~~Consulting~~six ~~Group,~~months ~~LLC~~ended ~~(“Cicero”)~~June 30, ~~pursuant~~2017, tocompared ~~which Cicero agreed~~ to ~~provide~~an ~~marketing~~expense ~~and~~of ~~advertising services~~$905,980 toin ~~the~~connection ~~Company~~therewith for athe ~~term of~~ six months. Inended ~~consideration for agreeing to provide those services we issued Cicero 32~~June ~~million~~30, ~~shares of common stock~~2016.

WeThe ~~claim~~Company anhad ~~exemption from registration pursuant to Section 4(~~a~~)(2)~~ ~~and/or~~$41,817 ~~Rule~~gain ~~506~~on ofthe ~~Regulation~~conversion D of ~~the~~debt ~~Securities Act, and the rules and regulations promulgated thereunder~~ in connection with the ~~issuance~~conversion ~~described~~of ~~above~~amounts ~~since~~due the foregoing issuance did not involve a public offering, the recipient was (a) an “accredited investor”, and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the ~~Securities~~terms ~~Act..~~of ~~With respect to the~~certain ~~transaction~~convertible ~~described~~promissory ~~above,~~notes nointo ~~general~~shares ~~solicitation~~of ~~was made either by us or by any person acting on~~ our ~~behalf.~~common ~~The~~stock ~~transaction was~~for ~~privately negotiated, and did not involve any kind of public solicitation. No underwriters or agents were involved in~~ the ~~foregoing~~ ~~issuance~~six ~~and~~months weended ~~paid~~June ~~no underwriting discounts or commissions. The securities are subject to transfer restrictions~~30, ~~and~~ the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom2017.

We claim an exemption from registration provided by Section 3(a)(9) of the Securities Act for the debt conversions described above, as the securities were exchanged by us with our existing security holders in a transaction where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.26

24Net income (loss)

AsThe ~~described~~Company ~~above~~had ~~under~~a ~~“Part~~net Iloss -for ~~Item~~the 2.six ~~Management’s~~months ~~Discussion~~ended ~~and~~June ~~Analysis~~30, of2017 ~~Financial Condition and Results~~ of ~~Operations – Recent Transactions”~~$274, ~~on April 12~~279, ~~2017,~~a ~~we sold Sojourn the Sojourn Debenture and on April 17~~$1, ~~2017~~854,330 weincrease ~~sold~~from ~~Carebourn~~ the ~~April~~net ~~2017~~loss ~~Carebourn Convertible Note. The note and debenture are convertible into our common stock at a discount to the trading price~~ of ~~our common stock as described in greater detail~~ ~~above. We claim an exemption from registration for the issuance of such convertible securities pursuant to Section 4(a)(~~$2~~) and/or Rule 506 of Regulation D of the Securities Act~~, ~~since the foregoing issuances did not involve a public offering~~128,609 ~~the~~incurred ~~recipients were~~during ~~(i) “accredited investors”; and/or (ii) had access to similar documentation and information as would be required in a Registration Statement under~~ the ~~Securities~~six ~~Act,~~months ~~and~~ended ~~the~~June ~~recipients acquired the securities for investment only and not with a view towards~~30, ~~or for resale in connection with, the public sale or distribution thereof~~2016. The ~~securities~~increase ~~were offered without any general solicitation by us or our representatives. No underwriters or agents were involved~~ in ~~the~~net ~~foregoing~~loss ~~issuance and~~was weprimarily ~~paid~~due ~~no underwriting discounts or commissions. The securities sold are subject~~ to ~~transfer restrictions, and~~ the ~~certificates~~reasons ~~evidencing~~described ~~the~~above, ~~securities~~mainly, ~~contain an appropriate legend stating that such securities have not been registered under~~ the ~~Securities Act~~non-cash ~~and~~derivative ~~may~~liability ~~not be offered or sold absent registration or pursuant to an exemption therefrom~~gain. The securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

~~Use~~Liquidity ofand ~~Proceeds~~Capital ~~From Sale of Registered Securities~~ Resources

~~None~~The Company had an accumulated deficit at June 30, 2017 of approximately $14.8 million. The Company had net loss of $274,279 during the six months ended June 30, 2017, had $16,000 of current assets as of June 30, 2017, consisting solely of prepaid expenses, had only $27,283 in total assets and has negative working capital of $2,099,816, as of June 30, 2017. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required and, ultimately, to attain profitable operations. Management’s plans to eliminate the going concern situation include, but are not limited to, raising additional capital through the issuance of debt and equity (including the sale of additional convertible securities, which will likely be convertible into common stock at a discount to the trading price of the Company’s common stock), and improved cash flow management. Failure to raise additional capital or improve its performance in the next 12 months may cause the Company to significantly curtail its business activities and expansion plans within the next twelve months. The Company may be unable to sell additional debt, convertible debt and/or equity on favorable terms, if at all, and the sale of any such securities may cause substantial dilution to existing shareholders. In the event the Company is unable to fund its operations and expenses and satisfy outstanding liabilities in the future, it may be forced to liquidate assets, cease filing reports with the SEC or seek bankruptcy protection.

~~Issuer~~The ~~Purchases~~Company had no cash as of ~~Equity~~June ~~Securities~~30, 2017, compared to $47 as of December 31, 2016.

~~None~~We had $27,283 of total assets as of June 30, 2017, consisting solely of fixed assets, net of $11,283 and $16,000 of prepaid expenses.

~~Item~~We 3.had ~~Defaults~~total ~~Upon~~liabilities ~~Senior~~of ~~Securities~~$2,315,816 as of June 30, 2017, including current liabilities consisting of accounts payable and accrued expenses of $317,052, accrued interest on our convertible notes of $179,598, notes payable of $82,500, convertible notes, net of discount, of $342,538 and derivative liability of $1,194,128, and long-term liabilities consisting of notes payable, net of current portion, of $200,000.

~~None~~Our outstanding promissory notes, convertible notes and derivative liability are described in greater detail in Notes 3, 4 and 5, to the financial statements attached herein and under “Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Transactions”, above.

~~Item~~Cash ~~4. Mine Safety Disclosures~~Flows

Not applicable.

	Six Months Ending June 30,
	2017			2016
Net cash used by operating activities	$	(310,101	)	$	(347,339	)
Net cash used by investing activities	$	—		$	13,928
Net cash provided by financing activities	$	310,054		$	345,956

~~Item~~Operating ~~5. Other Information~~Activities

~~None~~Net cash used by operating activities for the six months ended June 30, 2017 of $310,101 was mainly due to non-cash items including a derivative liability of $561,447, offset by $912,423 of gain on derivative revaluation and $126,000 of common stock issued for services.

~~Item~~Investing ~~6. Exhibits~~Activities

~~See~~Net ~~the~~cash ~~Exhibit~~used ~~Index~~by ~~following~~investing activities for the ~~signature~~six ~~page~~months toended ~~this~~June ~~Quarterly~~30, ~~Report~~2016 onwas ~~Form~~solely ~~10-Q~~due ~~for~~to athe ~~list~~purchase of ~~exhibits~~fixed ~~filed~~assets orof ~~furnished~~$13,928. ~~with~~We ~~this~~had ~~report,~~no ~~which~~net ~~Exhibit~~cash ~~Index~~used isby ~~incorporated~~investing ~~herein~~activities byfor ~~reference~~the six months ended June 30, 2017.

2527

~~SIGNATURES~~Financing Activities

~~Pursuant~~Net tocash provided by financing activities for the ~~requirements~~six ofmonths ended June 30, 2016, was from the ~~Securities~~sale ~~Exchange~~of ~~Act~~Series B Preferred Stock of ~~1934~~$250,000 ~~the~~and ~~registrant~~$95,956 ~~has~~of ~~duly~~proceeds ~~caused~~from ~~this~~note ~~report~~payable tosales, benet ~~signed~~of onrepayments. ~~its~~We ~~behalf~~ had $310,054 of net cash provided by financing activities for the ~~undersigned~~six months ended June 30, ~~thereunto~~2017 ~~duly~~related ~~authorized~~to proceeds from notes payable, net of repayments.

		Code Green Apparel Corp.
Date: May 25, 2017	By:	/s/ George J. Powell, III
		George J. Powell, III
		Chief Executive Officer and Interim Chief Financial Officer
		(Principal Executive Officer and Principal Financial/Accounting Officer)

From time to time, we may attempt to raise capital through either equity or debt offerings. Our capital requirements will depend on many factors, including, among other things, the rate at which our business grows, with corresponding demands for working capital and expansion capacity. We could be required, or may elect, to seek additional funding through public or private equity, debt financing or bank financing.

26Critical Estimates and Judgments

~~EXHIBIT~~The ~~INDEX~~preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates its estimates and judgments, including those related to receivables and accrued expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable based on the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of the Company’s intangible assets, the amount of stock compensation, and the amount of accrued liabilities that are not readily attainable from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements.

		Incorporated By Reference
Exhibit No.	Description	Filed Herewith	Form	Exhibit	Filing Date/Period End Date	File Number
2.1+	Asset Purchase Agreement by and between Code Green Apparel Corp., as purchaser and 10Star LLC, as seller, dated June 23, 2016		8-K	2.1	7/13/2016	333-206089
3.1	Articles and Restated By-Laws		S-1	3.1	8/4/15	333-206089
3.2	Certificate of Designation of Series B Convertible Preferred Stock		S-1/A	99.3	1/29/16	333-206089
3.3	Certificate of Amendment to the Articles of Incorporation of Code Green Apparel Corp. (increasing the authorized capitalization to 2,000,000,000 shares, representing 1,990,000,000 shares of common stock and 10,000,000 shares of preferred stock), as filed with the Secretary of State of Nevada on April 13, 2017		8-K	3.1	4/14/17	333-206089
10.1	Form of Investor Subscription Agreement		S-1/A	10.2	11/13/15	333-206089
10.2	Employment Agreement with George J. Powell, III***		S-1/A	99.2	11/13/15	333-206089
10.3	Investor Subscription Agreement for Series B Convertible Preferred Stock		S-1/A	99.4	1/29/16	333-206089
10.4	Exchange Agreement dated December 7, 2015 between the Company and Dr. Eric H. Scheffey		S-1/A	99.5	1/29/16	333-206089
10.5	$150,000 Convertible Promisory Note dated December 3, 2015 between the Company and Beaufort Capital Partners, LLC		S-1/A	10.5	4/11/16	333-206089
10.6	Promissory Note by Code Green Apparel Corp., in favor of 10Star LLC ($200,000)		8-K	10.1	7/13/2016	333-206089
10.7	Form of Executive Employment Agreement***		8-K	10.2	7/13/2016	333-206089
10.8	Form of Restricted Stock Agreement***		8-K	10.3	7/13/2016	333-206089
10.9	June 15, 2016 Securities Purchase Agreement with Carebourn Capital, L.P.		10-Q	10.4	6/30/16	333-206089
10.10	$121,325 Convertible Promissory Note owed to Carebourn Capital, L.P.		10-Q	10.5	6/30/16	333-206089
10.11	$75,000 Promissory Note dated July 23, 2016		10-Q	10.6	9/30/16	333-206089
10.12	September 23, 2016 Securities Purchase Agreement with Carebourn Capital, L.P.		10-Q	10.7	9/30/16	333-206089
10.13	September 23, 2016 $63,825 Convertible Promissory Note owed to Carebourn Capital, L.P.		10-Q	10.8	9/30/16	333-206089
10.14	Note Purchase Agreement dated April 12, 2017, by and between Code Green Apparel Corp. and Sojourn Investments, LP		8-K	10.1	4/26/17	000-53434
10.15	10% Convertible Debenture dated April 12, 2017, by Code Green Apparel Corp. in favor of Sojourn Investments, LP		8-K	10.2	4/26/17	000-53434
10.16	Securities Purchase Agreement dated April 17, 2017, by and between Code Green Apparel Corp. and Carebourn Capital, L.P.		8-K	10.3	4/26/17	000-53434
10.17	$135,575 Convertible Promissory Note dated April 17, 2017, by Code Green Apparel Corp. in favor of Carebourn Capital, L.P.		8-K	10.4	4/26/17	000-53434
16.1	Letter From K. Brice Toussaint		8-K	16.1	8/22/16	333-206089
16.2	Letter From Patrick D. Heyn, CPA, P.A.		8-K	16.1	5/17/17	000-53434
31.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer and Chief 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	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X

The discussion in this report contains forward-looking statements that involve risks and uncertainties. The Company’s future actual results may differ materially from the results discussed herein, including those in the forward-looking statements.

*FurnishedItem ~~herein~~3. Quantitative and Qualitative Disclosures about Market Risk

~~***~~Pursuant ~~Indicates~~to ~~management~~Item ~~contract~~305(e) orof ~~compensatory~~Regulation ~~plan~~S-K or(§ ~~arrangement~~229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

~~+ Certain schedules and exhibits have been omitted pursuant to~~ Item ~~601(b)(2) of Regulation S-K~~ 4. AControls ~~copy of any omitted schedule or exhibit will be furnished supplementally to the Securities~~ and Exchange Commission upon request; provided, however that Code Green Apparel Corp. may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, for any schedule or exhibit so furnished.Procedures

27Evaluation of Disclosure Controls and Procedures

We have established and maintain a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed with the Commission pursuant to the Exchange, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Interim Chief Financial Officer (CFO), to allow timely decisions regarding required disclosures.

Management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. As of June 30, 2017, based on the evaluation of these disclosure controls and procedures, and in light of the reasons described below, our CEO and CFO have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our reports filed with the Commission pursuant to the Exchange Act, is recorded properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

Management has identified the following control deficiencies that represent material weaknesses as of June 30, 2017:

i) Lack of segregation of duties. At this time, our resources and size prevent us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management will periodically reevaluate this situation.

ii) Lack of an independent audit committee. Although the Board of Directors serves as an audit committee, it is not comprised solely of independent directors. We may establish an audit committee comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent directors and to maintain such a committee.

iii) Insufficient number of independent directors. At the present time, our Board of Directors does not consist of a majority of independent directors, a factor that is counter to corporate governance practices as set forth by the rules of various stock exchanges.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2017, that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us, or contemplated to be brought against us.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Commission on May 22, 2017, under the heading “Risk Factors”, except as provided below, and investors should review the risks provided in the Form 10-K and below, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K for the year ended December 31, 2016, under “Risk Factors” and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

There is substantial doubt about the Company’s ability to continue as a going concern.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company has had only limited revenues since inception. The Company had an accumulated deficit at June 30, 2017 of approximately $14.5 million. The Company had net income of $11,478 during the six months ended June 30, 2017, had $16,000 of current assets as of June 30, 2017, consisting solely of prepaid expenses, had only $27,283 in total assets and has negative working capital of $1,802,776, as of June 30, 2017. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required and, ultimately, to attain profitable operations. Management’s plans to eliminate the going concern situation include, but are not limited to, the raise of additional capital through issuance of debt and equity, improved cash flow management. If we are unable to raise additional funding our business would be jeopardized and the Company may not be able to continue. If we ceased operations, it is likely that all of our investors would lose their investment.

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

On February 9, 2017, the Company entered into an Advertising Services Agreement (the “Advertising Agreement”) with Cicero Consulting Group, LLC (“Cicero”), pursuant to which Cicero agreed to provide marketing and advertising services to the Company for a term of six months. In consideration for agreeing to provide those services we issued Cicero 32 million shares of common stock in April 2017.

We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, and the rules and regulations promulgated thereunder in connection with the issuance described above since the foregoing issuance did not involve a public offering, the recipient was (a) an “accredited investor”, and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. With respect to the transaction described above, no general solicitation was made either by us or by any person acting on our behalf. The transaction was privately negotiated, and did not involve any kind of public solicitation. No underwriters or agents were involved in the foregoing issuance and we paid no underwriting discounts or commissions. The securities are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.

On April 7, 2017, we issued 21,481,481 shares of common stock to Anubis Capital Partners in connection with the conversion of debt.

From March 31, 2017 to June 30, 2017, Anubis Capital Partners converted $67,000 of the amount owed under certain convertible promissory note(s) held by Anubis Capital Partners into 77,481,481 shares of our common stock.

From March 31, 2017 to June 30, 2017, Carebourn converted $63,427 of the amount owed under certain convertible promissory note(s) held by Carebourn into 62,498,139 shares of our common stock.

From March 31, 2017 to June 30, 2017, Auctus converted $48,436 of the amount owed under certain convertible promissory note(s) held by Auctus into 70,119,900 shares of our common stock.

From July 1, 2017 to the date of this filing, Auctus converted an additional $5,189 of the amount owed under certain convertible promissory note(s) held by Auctus into 72,650,000 shares of our common stock.

In July 2017, a note holder converted $5,878 of the amount owed under certain convertible promissory note(s) held by the note holder into 33,781,609 shares of our common stock.

As described above under “Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Transactions”, on April 12, 2017, we sold Sojourn the Sojourn Debenture, on April 17, 2017, we sold Carebourn the April 2017 Carebourn Convertible Note, on May 22, 2017 we sold Power Up, the Power Up Note, on May 25, 2017, we sold JSJ the JSJ Convertible Note, and on June 5, 2017, we sold Auctus, the Auctus Convertible Note. The notes and debenture are convertible into our common stock at a discount to the trading price of our common stock as described in greater detail above. We claim an exemption from registration for the issuance of such convertible securities pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, since the foregoing issuances did not involve a public offering, the recipients were (i) “accredited investors”; and/or (ii) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act, and the recipients acquired the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any general solicitation by us or our representatives. No underwriters or agents were involved in the foregoing issuance and we paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

Use of Proceeds From Sale of Registered Securities

None.

Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Effective on August 13, 2017, our Board of Directors and George J. Powell, III, our Chief Executive Officer, Interim Chief Financial Officer, Secretary and Director, and the holder of all 1,000 shares of our outstanding Series A Preferred Stock, which provide the holder thereof the power to vote on all stockholder matters (including, but not limited to at every meeting of the stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to fifty-one percent (51%) of the total vote, approved the adoption of the Code Green Apparel Corp. 2017 Equity Incentive Plan (the “Plan”). While the Plan went into effect on August 13, 2017, the approval of the Plan by Mr. Powell, in accordance with Rule 14c-2 of the Exchange Act, will be effective no earlier than forty (40) days after the date notice of the internet availability of an Information Statement disclosing such approval, and other items, is first sent to stockholders, which we expect to be on or around approximately September 25, 2017.

The material terms of the Plan are described below.

What is the purpose of the Plan?

The Plan is intended to secure for the Company the benefits arising from ownership of the Company’s common stock by the employees, officers, directors and consultants of the Company, all of whom are and will be responsible for the Company’s future growth. The Plan is designed to help attract and retain for the Company, qualified personnel for positions of exceptional responsibility, to reward employees, officers, directors and consultants for their services to the Company and to motivate such individuals through added incentives to further contribute to the success of the Company.

Who is eligible to participate in the Plan?

The Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to any limitations provided by federal or state securities laws, to receive (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options; (iii) restricted stock; (iv) stock awards; (v) shares in performance of services; or (vi) any combination of the foregoing. In making such determinations, the Board of Directors may take into account the nature of the services rendered by such person, his or her present and potential future contribution to the Company’s success, and such other factors as the Board of Directors in its discretion shall deem relevant. Incentive stock options granted under the Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Nonqualified (non-statutory stock options) granted under the Plan are not intended to qualify as incentive stock options under the Code. See “Federal Income Tax Consequences” below for a discussion of the principal federal income tax consequences of awards under the Plan.

No incentive stock option may be granted under the Plan to any person who, at the time of the grant, owns (or is deemed to own) stock possessing more than 10% of the total combined voting power of our Company or any affiliate of our Company, unless the exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and the term of the option does not exceed five years from the date of grant.

Who will administer the Plan?

The Plan will be administered by the Board of Directors of the Company. The Board will have the exclusive right to interpret and construe the Plan, to select the eligible persons who shall receive an award, and to act in all matters pertaining to the grant of an award and the determination and interpretation of the provisions of the related award agreement, including, without limitation, the determination of the number of shares subject to stock options and the option period(s) and option price(s) thereof, the number of shares of restricted stock or shares subject to stock awards or performance shares subject to an award, the vesting periods (if any) and the form, terms, conditions and duration of each award, and any amendment thereof consistent with the provisions of the Plan.

How much common stock is subject to the Plan?

Subject to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of common stock, or a reorganization or reclassification of the Company’s common stock, the maximum aggregate number of shares of common stock which may be issued pursuant to awards under the Plan is 75,000,000 shares. Such shares of common stock will be made available from the authorized and unissued shares of the Company.

If shares of common stock subject to an option or performance award granted under the Plan expire or otherwise terminate without being exercised (or exercised in full), such shares will become available again for grants under the Plan. If shares of restricted stock awarded under the Plan are forfeited to us or repurchased by us, the number of shares forfeited or repurchased will again be available under the Plan. Where the exercise price of an option granted under the Plan is paid by means of the optionee’s surrender of previously owned shares of common stock, or our withholding of shares otherwise issuable upon exercise of the option as may be permitted under the Plan, only the net number of shares issued and which remain outstanding in connection with such exercise will be deemed “issued” and no longer available for issuance under the Plan.

Does the Company have any present plans to grant or issue securities pursuant to the Plan?

The Company cannot determine the amounts of awards that will be granted under the Plan or the benefits of any awards to the executive officers as a group, or employees who are not executive officers as a group. Under the terms of the Plan, the number of awards to be granted is within the discretion of the Board of Directors.

The Board of Directors may issue Options, shares of restricted stock or other awards under the Plan for such consideration as determined in their sole discretion, subject to applicable law.

What will be the exercise price, vesting terms and expiration date of options and awards under the Plan?

The Board of Directors, in its sole discretion, will determine the exercise price of any Options granted under the Plan which exercise price will be set forth in the agreement evidencing the Option, provided however that at no time will the exercise price be less than $0.001 par value per share of the Company’s common stock. Also, the exercise price of incentive stock options may not be less than the fair market value of the common stock subject to the option on the date of the grant and, in some cases (see “Who is eligible to participate in the Plan?” above), may not be less than 110% of such fair market value. The exercise price of non-statutory options also may not be less than the fair market value of the common stock on the date of grant. The exercise price of options granted under the Plan must be paid either in cash at the time the option is exercised or, at the discretion of our Board, (i) by delivery of already-owned shares of our common stock, (ii) pursuant to a deferred payment arrangement, (iii) pursuant to a net exercise arrangement, or (iv) pursuant to a cashless exercise as permitted under applicable rules and regulations of the Securities and Exchange Commission.

Options and other awards granted under the Plan may be exercisable in cumulative increments, or “vest,” as determined by our Board. Our Board has the power to accelerate the time as of which an option may vest or be exercised. Shares of restricted stock acquired under a restricted stock purchase or grant agreement may, but need not, be subject to forfeiture to us or other restrictions that will lapse in accordance with a vesting schedule to be determined by the Board of Directors. In the event a recipient’s employment or service with our Company terminates, any or all of the shares of common stock held by such recipient that have not vested as of the date of termination under the terms of the restricted stock agreement may be forfeited to our Company in accordance with such restricted stock agreement.

The expiration date of Options and other awards granted under the Plan will be determined by our Board of Directors. The maximum term of options and performance shares under the Plan is ten years, except that in certain cases the maximum term is five years.

What equitable adjustments will be made in the event of certain corporate transactions?

Upon the occurrence of:

	(i)	the adoption of a plan of merger or consolidation of the Company with any other corporation or association as a result of which the holders of the voting capital stock of the Company as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation;

	(ii)	the approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Company) of substantially all of the assets of the Company; or

(iii)

in the absence of a prior expression of approval by the Board of Directors, the acquisition of more than 20% of the Company’s voting capital stock by any person within the meaning of Rule 13d-3 under the Exchange Act (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company);

and unless otherwise provided in the award agreement with respect to a particular award, all outstanding stock options will become immediately exercisable in full, subject to any appropriate adjustments, and will remain exercisable for the remaining option period, regardless of any provision in the related award agreement limiting the ability to exercise such stock option or any portion thereof for any length of time. All outstanding performance shares with respect to which the applicable performance period has not been completed will be paid out as soon as practicable; and all outstanding shares of restricted stock with respect to which the restrictions have not lapsed will be deemed vested and all such restrictions will be deemed lapsed and the restriction period ended.

Additionally, after the merger of one or more corporations into the Company, any merger of the Company into another corporation, any consolidation of the Company and one or more corporations, or any other corporate reorganization of any form involving the Company as a party thereto and involving any exchange, conversion, adjustment or other modification of the outstanding shares of the common stock, each participant will, at no additional cost, be entitled, upon any exercise of such participant’s stock option, to receive, in lieu of the number of shares as to which such stock option will then be so exercised, the number and class of shares of stock or other securities or such other property to which such participant would have been entitled to pursuant to the terms of the agreement of merger or consolidation or reorganization, if at the time of such merger or consolidation or reorganization, such participant had been a holder of record of a number of shares of common stock equal to the number of shares as to which such stock option will then be so exercised.

What happens to options upon termination of employment or other relationships?

The incentive stock options will lapse and cease to be exercisable upon the termination of service of an employee or director as defined in the Plan, or within such period following a termination of service as will have been determined by the Board and set forth in the related award agreement; provided, further, that such period will not exceed the period of time ending on the date three (3) months following a termination of service. Non-incentive stock options are governed by the related award agreements.

Will adjustments be made for tax withholding?

To the extent provided by the terms of an option or other award, a participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of such option, or award by a cash payment upon exercise, or in the discretion of our Board of Directors, by authorizing our Company to withhold a portion of the stock otherwise issuable to the participant, by delivering already-owned shares of our common stock or by a combination of these means.

Federal income tax consequences?

The following is a summary of the principal United States federal income tax consequences to the recipient and our Company with respect to participation in the Plan. This summary is not intended to be exhaustive, and does not discuss the income tax laws of any city, state or foreign jurisdiction in which a participant may reside.

Incentive Stock Options

There will be no federal income tax consequences to either us or the recipient upon the grant of an incentive stock option. Upon exercise of the option, the excess of the fair market value of the stock over the exercise price, or the “spread,” will be added to the alternative minimum tax base of the recipient unless a disqualifying disposition is made in the year of exercise. A disqualifying disposition is the sale of the stock prior to the expiration of two years from the date of grant and one year from the date of exercise. If the shares of common stock are disposed of in a disqualifying disposition, the recipient will realize taxable ordinary income in an amount equal to the spread at the time of exercise, and we will be entitled (subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation) to a federal income tax deduction equal to such amount. If the recipient sells the shares of common stock after the specified periods, the gain or loss on the sale of the shares will be long-term capital gain or loss and we will not be entitled to a federal income tax deduction.

Non-statutory Stock Options and Restricted Stock Awards

Non-statutory stock options and restricted stock awards granted under the Plan generally have the following federal income tax consequences.

There are no tax consequences to the participant or us by reason of the grant. Upon acquisition of the stock, the recipient will recognize taxable ordinary income equal to the excess, if any, of the stock’s fair market value on the acquisition date over the purchase price. However, to the extent the stock is subject to “a substantial risk of forfeiture” (as defined in Section 83 of the Code), the taxable event will be delayed until the forfeiture provision lapses unless the recipient elects to be taxed on receipt of the stock by making a Section 83(b) election within 30 days of receipt of the stock. If such election is not made, the recipient generally will recognize income as and when the forfeiture provision lapses, and the income recognized will be based on the fair market value of the stock on such future date. On that date, the recipient’s holding period for purposes of determining the long-term or short-term nature of any capital gain or loss recognized on a subsequent disposition of the stock will begin. If a recipient makes a Section 83(b) election, the recipient will recognize ordinary income equal to the difference between the stock’s fair market value and the purchase price, if any, as of the date of receipt and the holding period for purposes of characterizing as long-term or short-term any subsequent gain or loss will begin at the date of receipt.

With respect to employees, we are generally required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, we will generally be entitled to a business expense deduction equal to the taxable ordinary income realized by the participant.

Upon disposition of the stock, the recipient will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock plus any amount recognized as ordinary income with respect to the stock. Such gain or loss will be long-term or short-term depending on whether the stock has been held for more than one year.

Potential Limitation on Company Deductions

Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain senior executives of our Company (a “covered employee”) in a taxable year to the extent that compensation to such employees exceeds $1,000,000. It is possible that compensation attributable to awards, when combined with all other types of compensation received by a covered employee from our company, may cause this limitation to be exceeded in any particular year.

Certain kinds of compensation, including qualified “performance-based compensation,” are disregarded for purposes of the deduction limitation. In accordance with Treasury Regulations issued under Section 162(m), compensation attributable to stock options will qualify as performance-based compensation if the award is granted by a committee solely comprising “outside directors” and, among other things, the plan contains a per-employee limitation on the number of shares for which such awards may be granted during a specified period, the per-employee limitation is approved by the stockholders, and the exercise price of the award is no less than the fair market value of the stock on the date of grant. Awards to purchase restricted stock under the Plan will not qualify as performance-based compensation under the Treasury Regulations issued under Section 162(m).

May awards under the Plan be modified after they are granted?

Yes. The Board may reprice any stock option without the approval of the stockholders of the Company. For this purpose, “reprice” means (i) any of the following or any other action that has the same effect: (A) lowering the exercise price of a stock option after it is granted, (B) any other action that is treated as a repricing under U.S. generally accepted accounting principles (“GAAP”), or (C) cancelling a stock option at a time when its exercise price exceeds the fair market value of the underlying common stock, in exchange for another stock option, restricted stock or other equity, unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction; and (ii) any other action that is considered to be a repricing under formal or informal guidance issued by an exchange or market on which the Company’s common stock then trades or is quoted. In addition to, and without limiting the above, the Board may permit the voluntary surrender of all or a portion of any stock option granted under the Plan to be conditioned upon the granting to the participant of a new stock option for the same or a different number of shares of common stock as the stock option surrendered, or may require such voluntary surrender as a condition precedent to a grant of a new stock option to such participant. Subject to the provisions of the Plan, such new stock option will be exercisable at such option price, during such option period and on such other terms and conditions as are specified by the Board at the time the new stock option is granted. Upon surrender, the stock options surrendered will be canceled and the shares of common stock previously subject to them will be available for the grant of other stock options.

May the Plan be modified, amended or terminated?

The Board of Directors may adopt, establish, amend and rescind such rules, regulations and procedures as it may deem appropriate for the proper administration of the Plan, make all other determinations which are, in the Board’s judgment, necessary or desirable for the proper administration of the Plan, amend the Plan or a stock award as provided in Article XI of the Plan, and/or terminate or suspend the Plan as provided in Article XI thereof. Our Board of Directors may also amend the Plan at any time, and from time to time. However, except as relates to adjustments upon changes in common stock, no amendment will be effective unless approved by our stockholders to the extent stockholder approval is necessary to preserve incentive stock option treatment for federal income tax purposes. Our Board of Directors may submit any other amendment to the Plan for stockholder approval if it concludes that stockholder approval is otherwise advisable.

Unless sooner terminated, the Plan will terminate ten years from the date of its adoption by our Board, i.e., in August 2027.

Item 6. Exhibits

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

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.

		Code Green Apparel Corp.

Date: August 25, 2017	By:	*/s/ George J. Powell, III*
		George J. Powell, III
		Chief Executive Officer and Interim Chief Financial Officer
		(Principal Executive Officer and Principal Financial/Accounting Officer)

EXHIBIT INDEX

		Incorporated By Reference
Exhibit No.	Description	Filed Herewith	Form	Exhibit	Filing Date/Period End Date	File Number
2.1+	Asset Purchase Agreement by and between Code Green Apparel Corp., as purchaser and 10Star LLC, as seller, dated June 23, 2016		8-K	2.1	7/13/2016	333-206089
3.1	Articles and Restated By-Laws		S-1	3.1	8/4/15	333-206089
3.2	Certificate of Designation of Series B Convertible Preferred Stock		S-1/A	99.3	1/29/16	333-206089
3.3	Certificate of Amendment to the Articles of Incorporation of Code Green Apparel Corp. (increasing the authorized capitalization to 2,000,000,000 shares, representing 1,990,000,000 shares of common stock and 10,000,000 shares of preferred stock), as filed with the Secretary of State of Nevada on April 13, 2017		8-K	3.1	4/14/17	333-206089
10.1	Form of Investor Subscription Agreement		S-1/A	10.2	11/13/15	333-206089
10.2	Employment Agreement with George J. Powell, III***		S-1/A	99.2	11/13/15	333-206089
10.3	Investor Subscription Agreement for Series B Convertible Preferred Stock		S-1/A	99.4	1/29/16	333-206089
10.4	Exchange Agreement dated December 7, 2015 between the Company and Dr. Eric H. Scheffey		S-1/A	99.5	1/29/16	333-206089
10.5	$150,000 Convertible Promissory Note dated December 3, 2015 between the Company and Beaufort Capital Partners, LLC		S-1/A	10.5	4/11/16	333-206089
10.6	Promissory Note by Code Green Apparel Corp., in favor of 10Star LLC ($200,000)		8-K	10.1	7/13/2016	333-206089
10.7	Form of Executive Employment Agreement***		8-K	10.2	7/13/2016	333-206089
10.8	Form of Restricted Stock Agreement***		8-K	10.3	7/13/2016	333-206089
10.9	June 15, 2016 Securities Purchase Agreement with Carebourn Capital, L.P.		10-Q	10.4	6/30/16	333-206089
10.10	$121,325 Convertible Promissory Note owed to Carebourn Capital, L.P.		10-Q	10.5	6/30/16	333-206089
10.11	$75,000 Promissory Note dated July 23, 2016		10-Q	10.6	9/30/16	333-206089
10.12	September 23, 2016 Securities Purchase Agreement with Carebourn Capital, L.P.		10-Q	10.7	9/30/16	333-206089
10.13	September 23, 2016 $63,825 Convertible Promissory Note owed to Carebourn Capital, L.P.		10-Q	10.8	9/30/16	333-206089
10.14	Note Purchase Agreement dated April 12, 2017, by and between Code Green Apparel Corp. and Sojourn Investments, LP		8-K	10.1	4/26/17	000-53434
10.15	10% Convertible Debenture dated April 12, 2017, by Code Green Apparel Corp. in favor of Sojourn Investments, LP		8-K	10.2	4/26/17	000-53434

10.16

Securities Purchase Agreement dated April 17, 2017, by and between Code Green Apparel Corp. and Carebourn Capital, L.P.

8-K

10.3

4/26/17

000-53434

10.17

$135,575 Convertible Promissory Note dated April 17, 2017, by Code Green Apparel Corp. in favor of Carebourn Capital, L.P.

8-K

10.4

4/26/17

000-53434

10.18

Securities Purchase Agreement dated May 22, 2017, by and between Code Green Apparel Corp. and Power Up Lending Group Ltd.

8-K

10.1

6/16/17

000-53434

10.19

$35,000 Convertible Promissory Note dated May 22, 2017, by Code Green Apparel Corp. in favor of Power Up Lending Group Ltd.

8-K

10.2

6/16/17

000-53434

10.20

10% Convertible Promissory Note dated May 25, 2017, by Code Green Apparel Corp. in favor of JSJ Investment Inc.

8-K

10.3

6/16/17

000-53434

10.21

Securities Purchase Agreement dated June 5, 2017, by and between Code Green Apparel Corp. and Auctus Fund, LLC

8-K

10.4

6/16/17

000-53434

10.22

10% $150,000 Convertible Promissory Note dated June 5, 2017, by Code Green Apparel Corp. in favor of Auctus Fund, LLC

8-K

10.5

6/16/17

000-53434

10.23

Code Green Apparel Corp. 2017 Equity Incentive Plan

16.1

Letter From K. Brice Toussaint

8-K

16.1

8/22/16

333-206089

16.2

Letter From Patrick D. Heyn, CPA, P.A.

8-K

16.1

5/17/17

000-53434

31.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Chief Executive Officer and Chief 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 Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*Furnished herein.

*** Indicates management contract or compensatory plan or arrangement.

+ Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that Code Green Apparel Corp. may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, for any schedule or exhibit so furnished.

Filing Compare · CODE GREEN APPAREL CORP