UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period ended ~~June~~ September 30, 2018

[☐ ] 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: 000-28562

EXELED HOLDINGS INC.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

94-2857548

(I.R.S. Employer

Identification No.)

5310 Ward Road, Suite 106,

Arvada, CO

(Address of principal executive offices)

80002

(Zip Code)

(720) 361-2056

Registrant’s telephone number, including area code

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one)

Large accelerated filer [☐ ] Accelerated filer [☐ ] Non-accelerated filer [☐ ] Smaller reporting company ~~[X]~~☒ Emerging growth company ~~[X]~~☒

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 ☒

~~Yes~~As [of ]January No17, 2019, there were 249,447,433 ~~[X]~~shares of common stock, $0.0001 par value, issued and outstanding.

As of November 14, 2018, there were 249,447,433 shares of common stock, $0.0001 par value, issued and outstanding.

EXELED HOLDINGS INC.

Table of Contents

Part I – FINANCIAL INFORMATION

Part I – FINANCIAL INFORMATION

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4.	Controls and Procedures	17

Part II – OTHER INFORMATION

Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3.	Defaults upon Senior Securities	20
Item 4.	Mine Safety Disclosures	20
Item 5.	Other Information	20
Item 6.	Exhibits	20

Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4.	Controls and Procedures	16
Part II – OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	18

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “approximately,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by any forward-looking statements.

Factors that may cause or contribute actual results to differ from these forward-looking statements include, but are not limited to, for example:

•	adverse economic conditions;

•	risks related to the construction market;

•	risks related to the U.S. import market;

•	the inability to attract and retain qualified senior management and technical personnel;

•	other risks and uncertainties related to the changing lighting market and our business strategy.

All forward-looking statements speak only as of the date of this Report. We undertake no obligation to update any forward-looking statements or other information contained herein, except as may be required under applicable securities laws. Stockholders and potential investors should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements in this report are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations will be achieved.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

PART I. Financial Information

Item 1. Financial Statements

EXELED HOLDINGS INC.

Condensed Consolidated Balance Sheets

	June 30, 2018 (Unaudited)			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	10,201		$	—
Accounts receivable, net		3,649			—
Inventory		63,640			69,498
Prepaid expenses and other		58,592			54,163
Total current assets		136,082			123,661
Noncurrent assets:
Deposits and other		31,271			14,627
Total assets	$	167,353		$	138,288
LIABILITIES AND EQUITY
Current liabilities:
Cash overdraft	$	—		$	11,118
Accounts payable		3,027,399			2,893,614
Accrued liabilities		3,465,526			2,628,335
Debt, current portion, net of discount and debt issuance costs		13,433,228			11,249,083
Total current liabilities		19,926,153			16,782,150
Debt, long-term portion		607,058			676,058
Total liabilities		20,533,211			17,458,208
Commitments and contingencies (Note 4)		—			—
Equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at June 30, 2018 or December 31, 2017		—			—
Common stock, $0.0001 par value; 250,000,000 shares authorized; 249,447,433 shares issued and outstanding at June 30, 2018 and December 31, 2017		24,743			24,743
Additional paid-in capital		2,635,896			2,635,896
Accumulated deficit		(23,026,497	)		(19,980,559	)
Total deficit		(20,365,858	)		(17,319,920	)
Total liabilities and equity	$	167,353		$	138,288

See accompanying notes to condensed consolidated financial statements.

EXELED HOLDINGS INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2018			2017			2018			2017
Sales revenue	$	18,301		$	7,279		$	23,401		$	44,554
Cost of goods sold		(6,083	)		(3,075	)		(10,209	)		(20,394	)
Gross profit		12,218			4,204			13,192			24,160
Operating expenses:
Research and development		85,362			75,153			166,384			143,757
Sales and marketing		3,137			1,263			3,784			2,262
General and administrative		175,740			201,377			358,224			379,489
Total operating expenses		264,239			277,793			528,392			525,508
Loss from operations		(252,021	)		(273,589	)		(515,200	)		(501,348	)
Other income (expense):
Interest expense		(1,055,367	)		(584,927	)		(1,758,296	)		(1,128,339	)
Other expense		(561,746	)		(9,467	)		(772,442	)		(55,213	)
Other income (expense), net		(1,617,113	)		(594,394	)		(2,530,738	)		(1,183,552	)
Provision for taxes on income		—			—			—			—
Net loss	$	(1,869,134	)	$	(867,983	)	$	(3,045,938	)	$	(1,684,900	)
Net loss per common share:
Basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Weighted average common shares outstanding:
Basic and diluted		249,447,433			249,447,433			249,447,433			249,447,433

See accompanying notes to condensed consolidated financial statements

~~EXELED~~PART ~~HOLDINGS INC~~I. Financial Information

~~Condensed Consolidated~~Item ~~Statements~~1. ofFinancial ~~Cash Flows~~Statements

~~(Unaudited)~~EXELED HOLDINGS INC.

	Six months ended June 30,
	2018			2017
Operating Activities:
Net loss	$	(3,045,938	)	$	(1,684,900	)
Adjustments to reconcile net loss to net cash used in operating
activities:
Amortization of debt issuance costs and debt discount		522,485			301,615
Changes in operating assets and liabilities:
Accounts receivable		(3,649	)		(20,908	)
Inventory		5,858			3,263
Prepaid expenses and other		(4,429	)		(699	)
Other assets		(16,644	)		250
Accounts payable		133,785			109,730
Accrued liabilities		469,698			423,078
Net cash used in operating activities		(1,938,834	)		(868,571	)
Investing Activities:
Net cash from investing activities		—			—
Financing Activities:
Proceeds from debt		2,947,521			1,173,757
Payments of debt		(987,368	)		(303,150	)
Net cash provided by financing activities		1,960,153			870,607
Net change in cash (overdraft)		21,319			2,036
Cash (overdraft), beginning of period		(11,118	)		5,454
Cash, end of period	$	10,201		$	7,490
Cash paid for:
Interest	$	942,480		$	432,032
Taxes		—			—
Non-cash transactions:
Debt issuance costs	$	721,000		$	435,500
Debt reclassified as accrued liabilities	$	367,493		$	—

Unaudited Condensed Consolidated Balance Sheets

See accompanying notes to condensed consolidated financial statements.

	September 30, 2018			December 31, 2017
ASSETS

Current assets:
Cash and cash equivalents	$	675		$	–
Accounts receivable, net		1,967			–
Inventory		–			69,498
Prepaid expenses and other		73,725			54,163
Total current assets		76,367			123,661

Noncurrent assets:
Deposits and other		35,167			14,627

Total assets	$	111,534		$	138,288

LIABILITIES AND EQUITY
Current liabilities:
Cash overdraft	$	–		$	11,118
Accounts payable		3,147,973			2,893,614
Accrued liabilities		4,571,284			2,628,335
Debt, current portion, net of discount and debt issuance costs		13,902,742			11,249,083
Total current liabilities		21,621,999			16,782,150

Debt, long-term portion		572,558			676,058
Total liabilities		22,194,557			17,458,208


Commitments and contingencies (Note 4)		–			–

Equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2018 or December 31, 2017		–			–
Common stock, $0.0001 par value; 250,000,000 shares authorized; 249,447,433 shares issued and outstanding at September 30, 2018 and December 31, 2017		24,743			24,743
Additional paid-in capital		2,635,896			2,635,896
Accumulated deficit		(24,743,662	)		(19,980,559	)
Total deficit		(22,083,023	)		(17,319,920	)

Total liabilities and equity	$	111,534		$	138,288

4See accompanying notes to condensed consolidated financial statements.

~~EXELED HOLDINGS INC.~~4

~~Notes~~EXELED ~~to Condensed~~HOLDINGS ~~Consolidated Financial Statements~~INC.

~~For~~Condensed ~~the Three~~Consolidated ~~and~~Statements ~~Six Months Periods Ended June 30, 2018 and 2017~~of Operations

~~Note 1 — Description of Business and Summary of Significant Accounting Policies~~(Unaudited)

ExeLED Holdings, Inc. was incorporated in the State of Delaware on October 20, 1986 under the name “Verilink Corporation.” We have also been known as Energie Holdings, Inc. and Alas Aviation Corp. On December 31, 2013, we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, LLC, a Delaware limited liability company, and its wholly-owned subsidiary, Énergie LLC (hereinafter referred to as, “Énergie”). The Share Exchange Agreement was not effective until July 2. We issued 33,000,000 shares of our common stock, representing approximately 65% of our then issued and outstanding voting securities, in exchange for all of the issued and outstanding member interests of Énergie. The accounting is identical to that resulting from a reverse acquisition, except that no goodwill or other intangible is recorded.

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017

Sales revenue	$	1,706		$	5,167		$	25,107		$	49,721
Cost of goods sold		64,013			3,036			74,222			23,430
Gross profit (loss)		(62,307	)		2,131			(49,115	)		26,291

Operating expenses:
Research and development		48,214			60,535			214,598			204,292
Sales and marketing		230			79			4,014			2,341
General and administrative		334,754			201,201			692,978			580,690
Total operating expenses		383,198			261,815			911,590			787,323

Loss from operations		(445,505	)		(259,684	)		(960,705	)		(761,032	)

Other income (expense):
Interest expense		(1,192,194	)		(648,131	)		(2,950,490	)		(1,776,470	)
Other expense		(79,466	)		(101,486	)		(851,908	)		(156,698	)
Other income (expense), net		(1,271,660	)		(749,617	)		(3,802,398	)		(1,933,168	)
Provision for taxes on income		–			–			–			–
Net loss	$	(1,717,165	)	$	(1,009,301	)	$	(4,763,103	)	$	(2,694,200	)

Net loss per common share:
Basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)

Weighted average common shares outstanding:
Basic and diluted		249,447,433			249,447,433			249,447,433			249,447,433

~~Thereafter, on~~See ~~January~~accompanying ~~27,~~notes 2014, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with two of our then wholly owned subsidiaries, Energie Holdings, Inc. and Alas Acquisition Company. The net effect of the Merger Agreement was to ~~effectuate~~ acondensed ~~name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors~~consolidated offinancial ~~our entry into the LED lighting industry. Our management also changed.~~statements

All references herein to “us,” “we,” “our,” “Holdings,” or the “Company” refer to ExeLED Holdings, Inc. and its subsidiaries, and their respective business following the consummation of the Merger and Share Exchange Agreements, unless the context otherwise requires.5

~~Description~~EXELED ofHOLDINGS ~~Business~~INC.

WeCondensed ~~are~~Consolidated ~~focused on~~Statements ~~acquiring and growing specialized LED lighting companies for the architecture and interior design markets for both commercial~~of ~~and~~Cash residential applications. Our lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting.Flows

~~Our headquarters is located in Arvada, Colorado, and we also maintain a production and assembly facility in Zeeland, Michigan.~~(Unaudited)

Basis of Presentation

	Nine months ended September 30,
	2018			2017
Operating Activities:
Net loss	$	(4,763,103	)	$	(2,694,200	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt issuance costs and debt discount		826,380			502,481
Write-down of inventory		64,635			–
Changes in operating assets and liabilities:
Accounts receivable		(1,967	)		(2,394	)
Inventory		4,863			5,335
Due from related parties		–			(21,270	)
Prepaid expenses and other		(19,562	)		(11,269	)
Other assets		(20,540	)		250
Accounts payable		254,359			188,518
Accrued liabilities		1,103,877			625,564
Net cash used in operating activities		(2,551,058	)		(1,406,985	)

Investing Activities:
Net cash from investing activities		–			–

Financing Activities:
Proceeds from debt		3,778,825			1,891,283
Payments of debt		(1,215,974	)		(488,704	)
Net cash provided by financing activities		2,562,851			1,402,579

Net change in cash (overdraft)		11,793			(4,406	)

Cash (overdraft), beginning of period		(11,118	)		5,454

Cash, end of period	$	675		$	1,048

Cash paid for:
Interest	$	1,287,848		$	679,222
Taxes		–			–
Non-cash transactions:
Debt issuance costs	$	872,411		$	687,000
Debt reclassified as accrued liabilities		839,072			–

~~The~~See accompanying ~~condensed~~ ~~consolidated~~notes ~~balance~~to ~~sheet as of June 30, 2018, has been derived from our audited financial statements. The accompanying unaudited interim~~ condensed consolidated ~~financial statements have been prepared on the same basis as the annual audited financial~~ ~~statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim~~ financial ~~information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial~~ statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are not necessarily indicative of results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017.

~~Significant~~EXELED ~~Accounting~~HOLDINGS ~~Policy Updates~~INC.

~~Revenue~~Notes ~~Recognition~~to Condensed Consolidated Financial Statements

~~During~~For the ~~first~~ ~~quarter~~Three of 2018, we adopted the following accounting principles related to revenue recognition: (a) FASB ASU 2016-12 “Revenue from Contracts with Customers (Topic 606);” (b) FASB ASU 2016-11 “Revenue Recognition (Topic 605) and ~~Derivatives and~~Nine ~~Hedging~~Months ~~(Topic 815);” and (c) FASB ASU 2016-10 “Revenue from Contracts with Customers (Topic 606).”~~Periods ~~Due~~Ended toSeptember ~~the nature of our contracts with customers~~30, ~~adopting~~2018 ~~the~~and ~~new accounting principles did not have a significant impact on our prior period results of operations, cash flows or financial position.~~2017

~~Our~~Note ~~revenues arise~~1 ~~from~~— ~~contracts~~Description ~~with~~of ~~customers~~Business and ~~consists~~Summary of ~~operations segment product sales. The majority of our revenue is derived~~Significant ~~from~~Accounting ~~distinct performance obligations, such as the delivery of a specific product.~~Policies

ExeLED Holdings, Inc. was incorporated in the State of Delaware on October 20, 1986 under the name “Verilink Corporation.” We ~~may~~have also been known as Energie ~~enter~~Holdings, ~~into~~Inc. ~~contracts~~and ~~with~~Alas ~~customers~~Aviation ~~that~~Corp. ~~identify~~On aDecember ~~single~~31, ~~or few~~2013, ~~distinct~~we ~~performance~~entered ~~obligations~~into a Share Exchange Agreement (the “Share Exchange Agreement”) with OELC, ~~but~~LLC, ~~that~~a ~~also~~Delaware ~~have~~limited ~~non~~liability company, and its wholly-~~distinct~~owned subsidiary, Énergie LLC (hereinafter ~~underlying~~referred ~~performance~~to ~~obligations~~as, “Énergie”). ~~These~~ ~~contracts~~The ~~are~~Share ~~typically~~Exchange ~~fulfilled~~Agreement ~~within~~was ~~one~~not toeffective ~~three~~until ~~months~~July 2, 2014. ~~Only~~ anWe ~~insignificant~~issued 33,000,000 ~~portion~~shares of our ~~revenue~~common ~~would~~stock, berepresenting ~~assessed~~approximately ~~for~~65% ~~allocation~~of ~~between~~our ~~distinct~~then ~~(contractual)~~issued ~~performance~~and ~~obligations~~outstanding ~~and~~voting ~~non-distinct~~securities, in exchange for ~~deliverables~~all ~~between~~of ~~reporting~~the ~~periods~~issued and, ~~accordingly,~~outstanding wemember dointerests ~~not~~of ~~record~~Énergie. aThe ~~contract~~accounting ~~asset~~is ~~for~~identical ~~completed,~~to ~~non-distinct~~that ~~performance~~resulting from a reverse ~~obligations~~acquisition, ~~prior~~except tothat ~~invoicing~~no ~~the~~goodwill ~~customer~~or other intangible is recorded.

WeThereafter, ~~recognize~~on January 27, 2014, we entered ~~revenue~~into ~~when~~an Agreement and Plan of Merger (the ~~following~~“Merger ~~criteria~~Agreement”) ~~are~~with ~~met:~~two of our then wholly owned subsidiaries, Energie Holdings, Inc. and Alas Acquisition Company. The net effect of the Merger Agreement was to effectuate a name change from Alas Aviation Corp., to Energie Holdings, Inc. in order to provide a better understanding to investors of our entry into the LED lighting industry. Our management also changed.

~~Identify the~~All ~~contracts~~references ~~with~~herein ~~the~~to ~~customer~~“us,” “we,” – “our,” ~~customary~~“Holdings,” ~~practice~~or isthe “Company” refer to ~~obtain~~ExeLED ~~written~~Holdings, ~~evidence~~Inc. and its subsidiaries, ~~typically~~and intheir respective business following the ~~form~~consummation of a ~~contract~~the orMerger ~~purchase~~and ~~order~~Share Exchange Agreements, unless the context otherwise requires.

~~Identify the~~Description ~~performance obligations in the contract – we have rights to payment when custody is transferred to our customers either upon shipment to or receipt at our customers’ locations, with no right~~ of ~~return or further obligations.~~Business

~~Determine~~We are focused on acquiring and growing specialized LED lighting companies for the ~~transaction~~architecture ~~price~~and ~~– prices~~interior ~~are~~design ~~typically~~markets ~~fixed~~for both commercial and noresidential ~~price~~applications. Our ~~protections~~lighting orproducts ~~variables~~include ~~are~~both ~~offered~~conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Our objective is to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting.

~~Allocate the~~Our ~~transaction~~headquarters ~~price~~is tolocated ~~the~~in ~~performance~~Arvada, Colorado, ~~obligations~~and ~~– our~~we ~~contracts~~also ~~disclose~~maintain ~~exact~~a ~~products~~production and ~~therefor~~assembly ~~allocate the~~facility ~~transaction~~in ~~price~~Zeeland, ~~by individual product~~Michigan.

~~Recognize revenue~~Basis ~~when (or as) the performance obligation is satisfied – payment terms are typically zero to fifteen days within delivery~~ of ~~the good.~~Presentation

~~Customer~~The ~~deposits~~accompanying unaudited condensed consolidated ~~are~~balance ~~contract~~sheet ~~liabilities~~as ~~with~~of ~~customers~~September ~~that~~30, ~~represent~~2018, has been derived from our ~~obligation~~audited tofinancial ~~either~~statements. ~~transfer~~The ~~goods~~accompanying orunaudited ~~services~~interim condensed consolidated financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the ~~future,~~United orStates ~~refund~~(“GAAP”) for interim financial information and the ~~amount~~rules ~~received~~and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. ~~Customer~~In the ~~deposits~~opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. All intercompany transactions have been eliminated in consolidation. Operating results and cash flows for interim periods are ~~recognized~~not asnecessarily ~~revenue~~indicative asof weresults ~~perform~~that ~~under~~can be expected for the ~~contract~~entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017.

~~Going~~Significant ~~Concern~~Accounting Policy Updates

AsRevenue shown in the accompanying condensed consolidated financial statements, we had an equity deficit of $20,365,858 and a working capital deficit of $19,790,071 as of June 30, 2018, and have reported net losses of $3,045,938 and $1,684,900 for the six months ended June 30, 2018 and 2017, respectively. These factors raise substantial doubt regarding our ability to continue as a going concern. Recognition

~~Our ability~~During tothe ~~continue~~first asquarter aof ~~going concern is dependent on our ability to further implement our business plan~~2018, ~~attract~~we ~~additional~~adopted ~~capital~~the ~~and,~~following ~~ultimately,~~accounting ~~upon~~principles ~~our~~related ~~ability~~ to ~~develop~~revenue ~~future~~recognition: ~~profitable~~(a) ~~operations.~~FASB WeASU ~~intend~~2016-12 to“Revenue ~~fund~~from ~~our~~Contracts ~~business development,~~with ~~acquisition~~Customers ~~endeavors~~(Topic ~~and~~606);” ~~operations~~(b) ~~through~~FASB ~~equity~~ASU ~~and~~2016-11 ~~debt~~“Revenue ~~financing~~Recognition ~~arrangements.~~(Topic ~~However,~~605) ~~there~~and ~~can~~Derivatives beand noHedging ~~assurance that these~~(Topic ~~arrangements~~815);” ~~will~~and be(c) ~~sufficient~~FASB toASU ~~fund~~2016-10 ~~our~~“Revenue ~~ongoing~~from ~~capital~~Contracts ~~expenditures,~~with ~~working~~Customers ~~capital,~~(Topic ~~and~~606).” ~~other~~Due ~~cash~~to ~~requirements.~~the ~~The outcome~~nature of ~~these matters cannot be predicted at this time. These matters raise substantial doubt about~~ our ~~ability~~contracts towith ~~continue~~customers, asadopting athe ~~going concern.~~new ~~The~~accounting ~~consolidated~~principles ~~financial~~did ~~statements do~~ not ~~include~~have ~~any~~a ~~adjustments~~significant ~~that~~impact ~~might~~on beour ~~necessary~~prior ifperiod ~~we are unable to continue~~results asof ~~a going concern. Additionally~~operations, ~~current~~cash ~~economic~~flows ~~conditions~~or infinancial ~~the United States and globally create significant challenges attaining sufficient funding~~position.

~~Some of~~Our ~~our~~revenues ~~debt~~arise ~~agreements~~from ~~are~~contracts ~~due on demand. If demand for payment is made by one or multiple vendors, we would experience a liquidity~~with ~~issue~~customers asand weconsists doof ~~not~~operations ~~currently~~segment ~~have~~product ~~the funds available to pay off these debts~~sales. The ~~While~~majority ~~we have entered into extensions with several~~ of our ~~lenders,~~revenue ~~there~~is ~~can~~derived befrom nodistinct ~~assurances that any of the lenders will be cooperative or that if they are willing to provide~~performance ~~extensions or forbearances~~obligations, ~~that~~such as the ~~terms~~delivery ~~under~~of ~~which~~a ~~they~~specific ~~may be willing to provide them will be favorable to us~~product.

~~Prepaid~~We ~~Expenses~~may also enter into contracts with customers that identify a single, or few, distinct performance obligations, but that also have non-distinct, underlying performance obligations. These contracts are typically fulfilled within one to three months. Only an insignificant portion of our revenue would be assessed for allocation between distinct (contractual) performance obligations and ~~Other~~non-distinct deliverables between reporting periods and, accordingly, we do not record a contract asset for completed, non-distinct performance obligations prior to invoicing the customer.

We ~~have~~ ~~created~~recognize arevenue ~~joint~~when ~~venture with Kasper Consulting called Kas-Exe Parking Solutions LLC (“Kas-Exe”). The purpose of~~ the ~~joint venture is to capitalize on attractive business opportunities that present themselves. As of June 30,~~following ~~2018,~~criteria ~~we have paid Kasper Consulting $43,148 in order to help launch Kas-Exe. At this point, the joint venture is no longer seen as viable and we~~ are ~~in the process of being refunded the amounts paid to Kasper Consulting. The amount is included as Prepaid expenses and other in accompanying condensed consolidated financial statements.~~ met:

~~Reclassifications~~Identify the contracts with the customer – our customary practice is to obtain written evidence, typically in the form of a contract or purchase order.

~~Certain~~Identify ~~prior~~the ~~year~~performance ~~amounts~~obligations in the contract – we have ~~been~~ ~~reclassified~~rights to ~~conform~~payment when custody is transferred to our customers either upon shipment to or receipt at our customers’ locations, with ~~the~~no ~~current~~right ~~year~~of ~~presentation~~return or further obligations.

~~Recently~~Determine ~~Issued~~the ~~Accounting~~transaction price – ~~Pronouncements~~prices are typically fixed and no price protections or variables are offered.

~~The~~Allocate ~~Financial Accounting~~the ~~Standards~~transaction ~~Board~~price ~~and other entities have issued other new or modifications~~ to, ~~or interpretations of, existing accounting~~the ~~guidance~~performance ~~during~~obligations ~~2018.~~– our ~~Management~~contracts ~~has~~disclose ~~carefully~~exact ~~considered~~products ~~the new pronouncements that altered generally accepted accounting principles~~ and ~~does~~therefor ~~not~~allocate ~~believe that any other new or modified principles will have a material impact on~~ the ~~Company’s~~transaction ~~reported~~price ~~financial position~~by ~~or operations in the near term~~individual product.

Recognize revenue when (or as) the performance ~~Note~~obligation 2is —satisfied ~~Accounts~~– payment ~~receivable,~~terms ~~net~~are typically zero to fifteen days within delivery of the good.

~~The~~Customer ~~following~~deposits isare acontract ~~summary~~liabilities with ofcustomers ~~accounts~~that represent our obligation to either transfer goods or services in the future, or refund the amount received. ~~receivable:~~Customer deposits are recognized as revenue as we perform under the contract.

	June 30, 2018			December 31, 2017
Customer receivables	$	39,470		$	35,821
Less: Allowance for uncollectible accounts		(35,821	)		(35,821	)
	$	3,649		$	—

Going Concern

~~Note~~As 3shown —in ~~Debt~~the accompanying condensed consolidated financial statements, we had an equity deficit of $22,083,023 and a working capital deficit of $21,545,632 as of September 30, 2018, and have reported net losses of $4,763,103 and $2,694,200 for the nine months ended September 30, 2018 and 2017, respectively. These factors raise substantial doubt regarding our ability to continue as a going concern.

~~Debt~~Our ability to continue as a going concern is ~~comprised~~dependent on our ability to further implement our business plan, attract additional capital and, ultimately, upon our ability to develop future profitable operations. We intend to fund our business development, acquisition endeavors and operations through equity and debt financing arrangements. However, there can be no assurance that these arrangements will be sufficient to fund our ongoing capital expenditures, working capital, and other cash requirements. The outcome of these matters cannot be predicted at this time. These matters raise substantial doubt about our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Additionally, current economic conditions in the United States and globally create significant challenges attaining sufficient ~~following:~~funding.

Description	Note		June 30, 2018			December 31, 2017
Line of credit		A	$	6,531		$	31,588
Note payable to distribution partner		B		550,000			550,000
Investor debt		C		371,507			371,507
Related party debt		D		12,205,037			10,038,037
Other notes payable		E		1,012,937			1,021,937
Cash draw notes		F		886,293			338,083
Convertible promissory notes		G		58,937			58,937
Total				15,091,242			12,410,089
Less: unamortized discount and debt issuance costs				(683,463	)		(484,948	)
Debt, net of unamortized discount and debt issuance costs				14,407,779			11,925,141
Less: current portion				(13,800,721	)		(11,249,083	)
Debt, long-term portion			$	607,058		$	676,058

Some of our debt agreements are due on demand. If demand for payment is made by one or multiple vendors, we would experience a liquidity issue as we do not currently have the funds available to pay off these debts. While we have entered into extensions with several of our lenders, there can be no assurances that any of the lenders will be cooperative or that if they are willing to provide extensions or forbearances, that the terms under which they may be willing to provide them will be favorable to us.

~~A –~~Prepaid ~~Line~~Expenses of Credit – We utilized this entire bank line of credit for working capital purposes. The outstanding obligation is due on demand, has a stated initial interest rate of 10.5% that is subject to adjustment, and is guaranteed by our majority shareholder/CEO. Energie and our CEO (collectively, “the defendants”) were served with a summons and complaint, wherein the bank brought an action to collect the amount due, including interest, costs and attorney’s fees. On April 4, 2016, the parties to this action entered into a settlement agreement whereby the defendants agreed to pay to Vectra Bank the sum of $59,177 on or before April 30, 2016. This payment was not made and the bank requested and received a judgment against both defendants jointly and severally for $61,502 plus interest of 5.25% per annum plus 9.90% per annum on the default margin. On May 10, 2017, the bank agreed to stay further execution on the judgment so long as the defendants pay the balance of the judgment in monthly payments of $5,000 per month on the fifteenth of each month, commencing on May 15, 2017. Under this agreement, interest continues to accrue at the judgment interest rate. The current principal balance is $6,531.Other

BWe have created a joint venture with Kasper –Consulting ~~Note~~called ~~payable~~Kas-Exe toParking ~~distribution~~Solutions ~~partner~~LLC –(“Kas-Exe”). ~~Note~~The ~~payable~~purpose of the joint venture is to acapitalize ~~significant~~on attractive ~~European~~business ~~distribution~~opportunities ~~partner~~that present themselves. As of September 30, ~~entered~~2018, ~~into~~we inhave ~~October~~paid ~~2014~~Kasper Consulting $43,148 ~~bearing~~in ~~interest~~order atto 5%help launch ~~payable~~Kas-Exe. ~~quarterly~~At this point, ~~with~~the ~~principal~~joint ~~payable~~venture no longer seen as viable and we are in the process of being refunded the amounts ~~monthly~~paid ~~through~~to ~~September~~Kasper ~~2019~~Consulting. The amount is included as prepaid expenses and other in the accompanying unaudited condensed consolidated financial statements.

C – Investor Debt – Notes payable to lenders having an ownership interest in Holdings at June 30, 2018 and December 31, 2017. These loans are not collateralized. The following summarizes the terms and balances of the investor debt:Inventory

June 30, 2018		December 31, 2017		Interest Rate
$	87,787	$	87,787		24%
	50,000		50,000		24%
	50,000		50,000		24%
	25,000		25,000		8%
	25,000		25,000		85
	20,000		20,000		2%
	113,720		113,720		various
$	371,507	$	371,507

During the third quarter of 2018, we wrote down the full value of all inventory. We wrote down the full value of the inventory as we determined the inventory on hand to be either obsolete or slow-moving. We included the effect of the write-down on the condensed consolidated statements of operations in cost of goods sold.

~~D –Related Parties Debt – The following summarizes notes payable to related parties:~~Reclassifications

	June 30, 2018		December 31, 2017		Interest Rate
D1	$	4,635,865	$	4,635,865		various
D2		34,888		34,888		12	%
D3		366,550		362,550		various
D4		1,205,234		1,205,234		18	%
D5		5,962,500		3,799,500		6	%
Total	$	12,205,037	$	10,038,037

Certain prior year amounts have been reclassified to conform with the current year presentation.

~~D1 –~~Recently ~~Notes~~Issued ~~payable~~Accounting to Symbiote, Inc. (“Symbiote”), entered into from December 2014 to June 2016, with monthly principal and interest payable through November 2017. Symbiote is an owner of the common stock of the Company, is the lessor of our manufacturing facility, and the provider of our payroll services. We also owe Symbiote $1,463,235 in accounts payable and accrued interest.Pronouncements

~~D2 –~~The ~~Note~~Financial ~~payable~~Accounting toStandards ~~our~~Board and ~~Chief~~other ~~Executive~~entities ~~Officer~~have ~~(“CEO”),~~issued ~~entered~~other ~~into~~new inor ~~December~~modifications ~~2014~~to, ~~with~~or ~~monthly~~interpretations ~~principal and~~of, ~~interest~~existing ~~originally~~accounting ~~payable~~guidance ~~through~~during ~~December 2016~~2018. Management Wehas ~~are~~carefully ~~still~~considered ~~continuing~~the tonew ~~accrue~~pronouncements ~~interest~~that onaltered ~~this~~generally ~~note~~accepted ~~payable.~~accounting Weprinciples ~~also~~and does not ~~owe~~believe ~~Hal~~that ~~$902,465~~any inother ~~accrued~~new ~~compensation,~~or ~~accrued~~modified ~~interest,~~principles ~~and~~will ~~expenses~~have ~~incurred~~a onmaterial ~~behalf~~impact ofon the Company’s reported financial position or operations in the near term.

~~D3 –~~Note ~~Notes~~2 ~~payable~~— toAccounts ~~the spouse of our CEO~~receivable, ~~entered into from September 2013 to January 2018, with principal and interest payments due upon a specific event or upon demand. We also owe her $229,567 in accrued interest.~~net

8The following is a summary of accounts receivable:

D4 – Notes payable to the consulting firm that employs our Chief Financial Officer, entered into from June 2015 to December 2017. These notes aggregated previous accounts payable and accrued interest due to the consulting firm at the time the notes were made. These notes mature at various dates through December 2019. We also owe this firm $401,992 in accrued interest.

	September 30, 2018			December 31, 2017

Customer receivables	$	37,788		$	35,821
Less: Allowance for uncollectible accounts		(35,821	)		(35,821	)
	$	1,967		$	–

~~D5 – Notes~~Note ~~payable~~3 to— ~~the principal shareholders of Symbiote~~Debt, ~~entered into from April 2016 to June 2018, with principal and interest payments due upon a specific event or upon demand. We also owe them $201,218 in accrued interest.~~net

~~E –~~Debt Other Notes Payable – Represents the outstanding principal balance on six separate notes bearing interest at between 6% and 24% annually. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder/CEO, repayment of principal and interest is ~~due~~comprised ~~on one~~ of ~~these notes prior to using~~ the proceeds for any other purpose. During November 2017, one of these noteholders requested a summary judgment for a note that is in default as principal and interest payments were not made in accordance with the note. The note had consolidated past due rent amounts and interest to one of our former landlords. In January 2018, a summary judgment in the amount of $475,832, which represents the total principal and interest outstanding on the note as of October 31, 2017 was granted by the court.following:

F – Cash draw agreements – Under these agreements, the lender advances us the principal balance and then automatically withdraws a stated amount each business day. Accordingly, there is no stated interest rate. The total remaining daily payments of principal and interest due under these arrangements was $1,189,437 as of June 30, 2018. The maturity dates of the agreements range from July to October 2018.

Description	Note	September 30, 2018			December 31, 2017
Line of credit	A	$	6,531		$	31,588
Note payable to distribution partner	B		550,000			550,000
Investor debt	C		371,507			371,507
Related party debt	D		12,659,270			10,038,037
Other notes payable	E		642,444			1,021,937
Cash draw notes	F		717,590			338,083
Convertible promissory notes	G		58,937			58,937
Total			15,006,279			12,410,089
Less: unamortized discount and debt issuance costs			(530,979	)		(484,948	)
Debt, net of unamortized discount and debt issuance costs			14,475,300			11,925,141
Less: current portion			(13,902,742	)		(11,249,083	)
Debt, long-term portion		$	572,558		$	676,058

G – Convertible promissory notes – Represents the outstanding principal balance related to a convertible promissory note entered into during October 2014. In May 2017, LG Capital Funding LLC (“LG”), filed a complaint against us in the U.S. District Court for the Southern District of New York, Civil Action No. 17-cv-4006-(RJS), alleging that we owed LG the principal balance of $75,000 plus interest, costs and attorneys’ fees, arising out of two convertible notes issued to LG. LG amended its complaint in July 2017 and we filed our answer a week later denying any liability and affirmatively stating that LG had been repaid many times over. LG then immediately filed a pre-discovery motion for summary judgment. We submitted our opposition to the motion on September 25, 2017. LG filed reply papers in further support on October 5, 2017. LG asserts that no factual issues exist and that summary judgment is therefore appropriate. Our opposition asserts that summary judgment, as to both liability and damages, is woefully premature and unwarranted given the many factual issues that exist regarding, among other things, LG’s failure to disclose material facts, potential short selling and fraudulent concealment, usury, and fraud on the market. The motion remains pending before the Court.9

~~Our~~A ~~defense~~– Line of Credit – inWe utilized this ~~matter~~entire isbank ~~based~~line inof ~~part~~credit for working capital purposes. The outstanding obligation is due on demand, has a ~~separate~~stated initial ~~action~~interest ~~filed~~rate byof ~~the~~10.5% ~~Securities~~that is subject to adjustment, and ~~Exchange~~is ~~Commission~~guaranteed ~~against~~by ~~unrelated~~our ~~defendants~~majority shareholder/CEO. Energie and our inCEO (collectively, “the ~~U.S.~~defendants”) ~~District~~were ~~Court~~served ~~for~~with ~~the~~a ~~Southern~~summons ~~District~~and ofcomplaint, ~~Florida~~wherein ~~alleging~~the ~~that~~bank brought an action to collect the ~~defendant~~amount ~~there~~due, ~~which~~including ~~follows~~interest, costs and attorney’s fees. On April 4, 2016, the ~~same~~parties ~~business~~to this action entered ~~model~~into asa ~~LG,~~settlement ~~has~~agreement ~~violated~~whereby ~~federal~~the ~~securities~~defendants ~~laws~~agreed byto ~~not~~pay ~~registering~~to asVectra aBank ~~dealer.~~the Wesum ~~understand~~of ~~that~~$59,177 LGon ~~also~~or before April 30, 2016. This payment was not made and isthe ~~not registered~~bank asrequested and received a ~~dealer~~judgment ~~even~~against ~~though~~both itdefendants ~~too~~jointly ~~should~~and beseverally ~~given~~for it$61,502 plus ~~too~~interest ~~trades~~of ~~securities~~5.25% ~~for~~per ~~its~~annum ~~own~~plus ~~account~~9.90% asper ~~part~~annum ofon ~~its~~the ~~business~~default margin. ~~The~~ ~~SEC~~On ~~asserts~~May ~~that~~10, ~~all~~2017, ~~gains~~the ~~reaped~~bank byagreed ~~defendants~~to instay further execution on the ~~attached~~judgment ~~complaint~~so ~~should~~long beas ~~disgorged~~the ~~due~~defendants topay the ~~ill-gotten~~balance ~~gains~~of the judgment in monthly payments of $5,000 per month on the fifteenth ~~received.~~of LGeach ~~has~~month, ~~admittedly~~commencing on May 15, ~~likewise~~2017. ~~received~~Under ~~substantial~~this ~~profits~~agreement, ~~trading~~interest ~~our~~continues ~~stock~~to ~~for~~accrue ~~its~~at ~~own~~the ~~account~~judgment interest rate. The principal balance at September 30, 2018 was $6,531.

9B – Note payable to distribution partner – Note payable to a significant European distribution partner, entered into in October 2014, bearing interest at 5% payable quarterly, with principal payable monthly through September 2019.

AsC a– ~~result,~~Investor weDebt ~~have~~– ~~filed~~Notes anpayable ~~amended~~to ~~answer,~~lenders ~~alleging~~having ~~that~~an LGownership isinterest ~~entitled~~in toHoldings noat ~~recovery~~September 30, 2018 and ~~that~~December it31, ~~should~~2017. These ~~disgorge~~loans toare usnot ~~all~~collateralized. ~~gains~~The ~~unlawfully received~~following ~~from~~summarizes ~~selling~~the ~~our~~terms ~~shares~~and balances of ~~common~~the ~~stock.~~investor debt:

Debt issuance costs of $683,463 are being amortized over the life of the respective notes.

September 30, 2018		December 31, 2017		Interest Rate
$	87,787	$	87,787	24%
	50,000		50,000	24%
	50,000		50,000	24%
	25,000		25,000	8%
	25,000		25,000	8%
	20,000		20,000	2%
	113,720		113,720	various
$	371,507	$	371,507

~~Note~~D 4–Related —Parties ~~Commitments~~Debt ~~and~~– The following ~~Contingencies~~summarizes notes payable to related parties:

To the best of the Company’s knowledge and belief, no current legal proceedings of merit are currently pending or threatened against the Company, other than those described in the paragraph below as well as in Note 3 (E) and 3 (G).

	September 30, 2018		December 31, 2017		Interest Rate
D1	$	4,635,865	$	4,635,865	various
D2		34,888		34,888	12%
D3		366,550		362,550	various
D4		1,205,234		1,205,234	18%
D5		6,416,733		3,799,500	6%
Total	$	12,659,270	$	10,038,037

~~During~~D1 ~~November~~– ~~2017,~~Notes ~~Autumnwood~~payable ~~Investments~~to Symbiote, ~~LLC~~Inc. ~~requested~~(“Symbiote”), aentered ~~summary~~into ~~judgment~~from ~~for~~December a2014 ~~note~~to ~~that~~June ~~was~~2016, inwith ~~default~~monthly as principal and interest ~~payments were not made~~payable inthrough ~~accordance~~November ~~with the note~~2017. ~~The~~Symbiote ~~note~~is ~~had~~a ~~consolidated past due rent amounts and interest due to Autumwood. In January 2018~~shareholder, ~~a summary~~is ~~judgment in~~ the ~~amount~~lessor of ~~$475,832,~~our ~~which~~manufacturing ~~represents~~facility, ~~the total principal~~ and ~~interest outstanding on~~ the ~~note~~provider as of ~~October 31,~~our ~~2017, was granted by the court~~payroll services. ~~The~~We ~~principal~~also ~~balance~~owe ofSymbiote ~~the~~$1,565,207 ~~note~~in ~~has~~accounts ~~been~~payable ~~reclassified~~and ~~from debt to~~ accrued ~~liabilities. The~~ interest ~~that had accrued on the note was already included in accrued liabilities~~.

D2 – Note 5payable to —our ~~Net~~Chief ~~Loss~~Executive ~~Per~~Officer (“CEO”), entered into in December 2014, with monthly principal and interest originally ~~Share~~payable through December 2016. We are still continuing to accrue interest on this note payable. We also owe our CEO $939,681 in accrued compensation, accrued interest, and expenses incurred on behalf of the Company.

~~Basic~~D3 ~~net loss~~– ~~per~~Notes ~~share~~payable to ~~is computed by dividing net income by~~ the ~~weighted-average~~spouse ~~number~~ of ~~common~~our ~~shares~~CEO, ~~outstanding~~entered ~~during~~into ~~the~~from ~~reporting period.~~September ~~Diluted~~2013 ~~net loss per share is computed similarly~~ to ~~basic~~January ~~net~~2018, ~~loss~~with ~~per~~principal ~~share,~~and ~~except~~interest ~~that~~payments itdue ~~includes~~upon ~~the~~a ~~potential dilution~~specific ~~that~~event ~~could~~or ~~occur~~upon ~~if dilutive securities are exercised~~demand. InWe aalso ~~net~~owe ~~loss~~her ~~position~~$245,444 ~~however,~~in ~~potential~~accrued ~~securities are excluded, because they are considered anti-dilutive~~interest.

~~There are no dilutive instruments outstanding during the six months ended June 30, 2018 and 2017.~~10

~~Note~~D4 – 6Notes payable —to ~~Subsequent~~the ~~Events~~consulting firm that employs our Chief Financial Officer, entered into from June 2015 to December 2017. These notes aggregated previous accounts payable and accrued interest due to the consulting firm at the time the notes were made. These notes mature at various dates through December 2019. We also owe this firm $456,673 in accrued interest.

~~There~~D5 – ~~are~~Notes payable noto ~~events~~the ~~subsequent to~~principal ~~June~~shareholders 30of Symbiote, entered into from April 2016 to September 2018, with principal and upinterest payments todue ~~the~~upon ~~date~~a ofspecific ~~this~~event ~~filing~~or ~~that~~upon ~~require~~demand. ~~disclosure~~We also owe them $264,492 in accrued interest.

10E – Other Notes Payable – Represents the outstanding principal balance on six separate notes bearing interest at between 6% and 24% annually. In the event we receive proceeds as the beneficiary of a life insurance policy covering our majority shareholder/CEO, repayment of principal and interest is due on one of these notes prior to using the proceeds for any other purpose. During November 2017, one of these noteholders requested a summary judgment for a note that is in default as principal and interest payments were not made in accordance with the note. The note had consolidated past due rent amounts and interest to one of our former landlords. In January 2018, a summary judgment in the amount of $475,832, which represents the total principal and interest outstanding on the note as of October 31, 2017 was granted by the court.

~~Item~~F 2– Cash draw agreements – Under these agreements, the lender advances us the principal balance and then automatically withdraws a stated amount each business day. ~~Management~~Accordingly, there is no stated interest rate. The total remaining daily payments of principal and interest due under these arrangements was $717,590 as of September 30, 2018. The maturity dates of the agreements range from November 2018 to January 2019. During 2018, judgment was entered against us and in favor of ML Factors Funding, Green Capital Funding, and Queen Funding, whereby we are required to pay the outstanding principal and interest balance on the agreements. In addition, ML Factors Funding, Green Capital Funding, and Queen Funding also claim that they are to be paid additional interest, attorney’s ~~Discussion~~fees, and other ancillary expenses. While we are vigorously defending ourselves in these matters and ~~Analysis~~believe that we will not be required to pay more than the total principal and interest outstanding on the agreements, we have recorded the entire amount of ~~Financial~~all ~~Condition~~judgments into our financial statements as of September 30, 2018. We recorded the entire requested amount from ML Factors Funding of $240,480, the entire requested amount from Green Capital Funding of $312,056, and ~~Results~~the entire requested amount from Queen Funding of ~~Operations~~$304,826. In addition, we have reclassified these amounts to accrued liabilities.

~~The~~G ~~following~~– Convertible ~~discussion~~promissory ~~should~~notes be– ~~read~~Represents inthe ~~conjunction~~outstanding ~~with~~principal ~~our~~balance ~~consolidated~~related ~~financial~~to ~~statements~~a ~~and~~convertible ~~notes~~promissory ~~thereto~~note ~~included~~entered ~~herein. We caution~~into ~~readers~~during ~~regarding~~October ~~certain~~2014. In ~~forward~~May ~~looking~~2017, ~~statements~~LG inCapital ~~the~~Funding ~~following~~LLC ~~discussion~~(“LG”), ~~and~~filed ~~elsewhere~~a incomplaint ~~this~~against ~~report~~us ~~and~~ in ~~any~~the ~~other~~U.S. District ~~statement~~Court ~~made~~for ~~by,~~the orSouthern onDistrict ~~our~~of ~~behalf~~New York, ~~whether~~Civil orAction ~~not~~No. in17-cv-4006-(RJS), ~~future~~alleging ~~filings~~that ~~with~~we owed LG the ~~Securities~~principal ~~and~~balance of ~~Exchange~~$75,000 ~~Commission.~~plus ~~Forward~~interest, ~~looking statements~~costs ~~are~~and ~~statements~~attorneys’ ~~not~~fees, ~~based~~arising onout ~~historical~~of ~~information~~two ~~and~~convertible ~~which~~notes ~~relate~~issued to ~~future~~LG. ~~operations,~~LG ~~strategies,~~amended ~~financial~~its ~~results~~complaint orin ~~other~~July ~~developments.~~2017 ~~Forward~~and ~~looking~~we ~~statements~~filed ~~are~~our ~~necessarily~~answer ~~based~~a ~~upon~~week ~~estimates~~later denying any liability and ~~assumptions~~affirmatively stating that ~~are~~LG ~~inherently~~had ~~subject~~been repaid many totimes ~~significant~~over. ~~business,~~LG ~~economic~~then ~~and~~immediately ~~competitive~~filed ~~uncertainties~~a ~~and~~pre-discovery ~~contingencies,~~motion ~~many~~for ofsummary ~~which~~judgment. ~~are~~We ~~beyond~~submitted our ~~control~~opposition ~~and~~to ~~many~~the motion on ofSeptember ~~which~~25, ~~with~~2017. ~~respect~~LG tofiled ~~future~~reply ~~business~~papers ~~decisions,~~in ~~are~~further ~~subject~~support toon ~~change~~October 5, 2017. ~~These~~LG ~~uncertainties~~asserts ~~and~~that ~~contingencies~~no ~~can~~factual ~~affect~~issues ~~actual results~~exist and ~~could~~that summary ~~cause~~judgment ~~actual~~is ~~results~~therefore toappropriate. ~~differ~~Our ~~materially~~opposition ~~from~~asserts ~~those~~that ~~expressed~~summary injudgment, ~~any~~as ~~forward~~to ~~looking~~both ~~statements~~liability ~~made~~and bydamages, oris woefully onpremature ~~our~~and ~~behalf.~~unwarranted Wegiven ~~disclaim~~the ~~any~~many ~~obligation~~factual issues that exist regarding, among other things, LG’s failure to ~~update~~disclose material ~~forward~~facts, ~~looking~~potential ~~statements~~short ~~except~~selling asand ~~may~~fraudulent beconcealment, ~~required~~usury, ~~under~~and ~~applicable~~fraud ~~securities~~on the market. The motion remains pending ~~laws~~before the Court.

~~Overview~~Our defense in this matter is based in part on a separate action filed by the Securities and Exchange Commission against unrelated defendants in the U.S. District Court for the Southern District of Florida alleging that the defendant there, which follows the same business model as LG, has violated federal securities laws by not registering as a dealer. We understand that LG also was not and is not registered as a dealer even though it too should be given it too trades securities for its own account as part of its business. The SEC asserts that all gains reaped by defendants in the attached complaint should be disgorged due to the ill-gotten gains received. LG has, admittedly, likewise received substantial profits trading our stock for its own account.

~~ExeLED~~As ~~Holdings Inc.~~a ~~(“we~~result,” ~~“us,”~~we ~~“our”) was incorporated in the State of Delaware on October 20, 1986 under the name “Verilink Corporation.” We~~ have ~~also been known as Energie Holdings, Inc. and Alas Aviation Corp. On November 30, 2015, we~~ filed aan ~~Certificate~~amended ~~of Amendment to our Certificate of Incorporation with the State of Delaware to change our name from “Energie Holdings~~answer, ~~Inc.” to “ExeLED Holdings Inc.” We have~~ ~~two~~alleging ~~wholly-owned~~that ~~subsidiaries,~~LG ~~Énergie~~is ~~LLC~~entitled ~~(hereinafter referred~~ to asno ~~“Énergie”)~~recovery, and ~~OELC,~~that ~~LLC.~~it ~~All references~~should ~~herein~~disgorge to “us,” ~~“we,”~~all ~~“our,”~~gains ~~“Holdings,”~~unlawfully orreceived ~~the~~from ~~“Company” refer~~selling toour ~~ExeLED~~shares of ~~Holdings~~common ~~Inc~~stock. ~~and its subsidiaries, and their respective business, unless the context otherwise requires.~~

WeDebt ~~are~~issuance acosts ~~holding company engaged in the business~~ of ~~the~~$530,979 ~~import~~are ~~and~~being ~~sale~~amortized ofover ~~specialized interior lighting solutions to~~ the ~~architecture and interior~~ ~~design~~life ~~markets in North America. Our current business objective is to become a leading provider~~ of ~~advanced LED lighting solutions by acquiring and growing complementary LED based lighting fixture companies. We are focused on acquiring specialized LED lighting companies for~~ the ~~architecture~~respective and interior design markets for both commercial and residential applications, with the intention to grow, innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lightingnotes. The lighting products will include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. These objectives are subject to our obtaining additional financing, of which there can be no assurance.

Our management team and advisory board is comprised of experienced executives in the lighting industry with recent specific focus on the LED lighting industry. The group has over 300 years of combined experience in this industry.11

~~Our~~Note ~~principal place~~4 of— ~~business~~Commitments ~~is located at 5310 Ward Road, Suite 106, Arvada, Colorado, 80002. Our telephone number is (720) 361-2056. We also maintain a production~~ and ~~assembly facility in Zeeland, Michigan. Our website is www.exeledholdings.com.~~Contingencies

~~Énergie acts~~To as our operating subsidiary. Our creative lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Énergie was founded in 2001 and is engaged in the ~~import~~best ~~and sale~~ of ~~specialized interior lighting solutions to~~ the ~~architecture~~Company’s ~~and interior~~knowledge ~~design markets in North America. We have developed an end-to-end production~~ and ~~distribution platform for imported lighting products featuring HID~~belief, ~~fluorescent,~~no ~~and~~current ~~LED~~legal ~~technologies.~~proceedings ~~Long~~of ~~term~~merit ~~contracts~~are ~~with~~currently ~~five~~pending ~~European~~or ~~manufacturers~~threatened ~~and~~against ~~one~~the inCompany, ~~Taiwan~~other ~~provide us~~than ~~with~~those ~~exclusive North American distribution rights to over 270 total products~~ described in ~~37 categories. After processing any modifications necessary to meet UL standards and building code requirements,~~ the ~~products~~paragraph ~~are~~below ~~sold~~as towell ~~customers~~as ~~through~~in aNotes ~~network~~3 ~~of over 60 independent lighting sales agents. In addition to a highly competitive commission structure~~(E), we3 ~~provide our sales force with promotional materials~~(F), ~~product training,~~ and ~~technical~~3 ~~support~~(G).

~~Our~~During ~~condensed~~November 2017, Autumnwood Investments, ~~consolidated~~LLC ~~financial~~requested ~~statements~~a ~~have~~summary ~~been~~judgment ~~prepared~~for ~~assuming~~a note that wewas ~~will~~in ~~continue~~default as principal and interest payments were not made in accordance with the note. The note had consolidated past due rent amounts and interest due to Autumwood. In January 2018, a ~~going~~summary ~~concern~~judgment in the amount of $475,832, which ~~contemplates~~represents the ~~realization~~ oftotal ~~assets~~principal and ~~liquidation~~interest ofoutstanding ~~liabilities~~on in the ~~normal~~note ~~course~~as of ~~business~~October 31, 2017, was granted to Autumnwood by the court. The ~~condensed~~principal ~~consolidated~~balance ~~financial statements~~of dothe ~~not~~note ~~include~~has ~~any~~been ~~adjustment~~reclassified from debt to accrued liabilities. The interest that ~~might~~had ~~result~~accrued ~~from~~on the ~~outcome~~note ofwas ~~this~~already ~~uncertainty~~included in accrued liabilities.

11Note 5 — Net Loss Per Share

~~Results~~Basic net loss per share is computed by dividing net income by the weighted-average number of ~~Operations~~common shares outstanding during the reporting period. Diluted net loss per share is computed similarly to basic net loss per share, except that it includes the potential dilution that could occur if dilutive securities are exercised. In a net loss position, however, potential securities are excluded, because they are considered anti-dilutive.

~~Comparison~~There ofare ~~results~~no ofdilutive ~~operations~~instruments outstanding ~~for~~during the ~~three~~nine months ended ~~June~~September 30, 2018 and 2017.

	Three months ended June 30,
	2018			2017			Change			%
Sales revenue	$	18,301		$	7,279		$	11,022			151	%
Cost of revenue		(6,083	)		(3,075	)		3,008			98	%
Gross profit		12,218			4,204			8,014			191	%
Total operating expenses		264,239			277,793			(13,554	)		(5	)%
Interest expense		(1,055,367	)		(584,927	)		(470,440	)		80	%
Other		(561,746	)		(9,467	)		(552,279	)		5834	%
Net loss	$	(1,869,134	)	$	(867,983	)	$	(1,001,151	)		115	%

Note 6 — Subsequent Events

~~Sales~~There ~~Revenue~~are no events subsequent to September 30, ~~Cost~~2018 ofand ~~Revenue~~up ~~and~~to ~~Gross~~the ~~Profit~~date of this filing that require disclosure.

Sales revenue increased during the three months ended June 30, 2018 compared to the same period in 2017 due to a large order we received in the second quarter. However, current sales are not sufficient to cover our operating costs. While we are continuing to seek out and discuss external financing, no assurances can be made that we will be successful in our efforts. Cost of revenue also increased as a result of the large order in the second quarter.12

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

	Three months ended June 30,
	2018		2017		Change			%
Research and development	$	85,362	$	75,153	$	10,209			14	%
Sales and marketing		3,137		1,263		1,874			148	%
General and administrative		175,740		201,377		(25,637	)		(13	)%
	$	264,239	$	277,793	$	(13,554	)		(5	)%

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included herein. We caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements except as may be required under applicable securities laws.

Overall, operating costs stayed fairly consistent during the three months ended June 30, 2018 compared to the same period in 2017 as we have reduced costs as much as possible and continue to operate on a reduced budget.Overview

~~Other~~ExeLED Holdings Inc. (“we,” “us,” “our”) was incorporated in the State of Delaware on October 20, 1986 under the name “Verilink Corporation.” We have also been known as Energie Holdings, Inc. and Alas Aviation Corp. On November 30, 2015, we filed a Certificate of Amendment to our Certificate of Incorporation with the State of Delaware to change our name from “Energie Holdings, Inc.” to “ExeLED Holdings Inc.” We have two wholly-owned subsidiaries, Énergie LLC (hereinafter referred to as “Énergie”), and OELC, LLC. All references herein to “us,” “we,” “our,” “Holdings,” or the “Company” refer to ExeLED Holdings Inc. and its subsidiaries, and their respective business, unless the context otherwise requires.

~~During~~We are a holding company engaged in the ~~three~~business ~~months~~of ~~ended~~the ~~June~~import ~~30,~~and ~~2018,~~sale ~~interest~~of ~~expense~~specialized ~~increased~~interior ~~from~~lighting ~~$584,927~~solutions ~~incurred~~to ~~during~~ the ~~three~~architecture ~~months~~and ~~ended~~interior ~~June~~design ~~30,~~markets ~~2017,~~in North America. Our current business objective is to ~~$1,055,367,~~become ana ~~increase~~leading provider of ~~$470~~advanced LED lighting solutions by acquiring and growing complementary LED based lighting fixture companies. We are focused on acquiring specialized LED lighting companies for the architecture and interior design markets for both commercial and residential applications,~~440~~ with the intention to grow, ~~due~~innovate, and fully capture the rapidly growing lighting market opportunities associated with solid state lighting. The lighting products will include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to ~~additional~~create ~~debt~~energy efficiencies ofand ~~approximately~~a $5better visual environment. These objectives are subject to our obtaining additional financing,~~300,000~~ ~~over~~of ~~some~~which ~~point~~there can inbe ~~2017~~no assurance.

~~Other~~Our ~~income (expense)~~management ~~consists~~team ~~primarily~~and advisory board is comprised of ~~other~~experienced ~~fees~~executives ~~expenses~~in ~~related~~the tolighting ~~seeking~~industry ~~and~~with ~~securing~~recent ~~debt~~specific ~~and~~focus ~~other~~on ~~external~~the ~~financing~~LED lighting industry. The group has over 300 years of combined experience in this industry.

AsOur aprincipal ~~result, we~~place ~~incurred~~of abusiness ~~net~~is ~~loss~~located at of5310 $1Ward Road,~~869,134~~ ~~during~~Suite ~~the~~106, ~~three~~Arvada, ~~month~~Colorado, ~~period~~80002. ~~ended~~Our ~~June~~telephone ~~30,~~number ~~2018~~is (~~approximately~~720) $0361-2056.01 ~~per~~We ~~share),~~also ~~compared to~~maintain a ~~net~~production ~~loss~~and assembly offacility ~~$867~~in Zeeland,~~983~~ ~~during~~Michigan. ~~the~~Our ~~three~~website ~~month~~is ~~period ended June 30, 2017~~www.exeledholdings.com.

12Énergie acts as our operating subsidiary. Our creative lighting products include both conventional fixtures and advanced solid-state technology that can integrate with digital controls and day-lighting to create energy efficiencies and a better visual environment. Énergie was founded in 2001 and is engaged in the import and sale of specialized interior lighting solutions to the architecture and interior design markets in North America. We have developed an end-to-end production and distribution platform for imported lighting products featuring HID, fluorescent, and LED technologies. Long term contracts with five European manufacturers and one in Taiwan provide us with exclusive North American distribution rights to over 270 total products in 37 categories. After processing any modifications necessary to meet UL standards and building code requirements, the products are sold to customers through a network of over 60 independent lighting sales agents. In addition to a highly competitive commission structure, we provide our sales force with promotional materials, product training, and technical support.

~~Comparison~~Our ofunaudited ~~results~~condensed ofconsolidated ~~operations~~financial ~~for~~statements ~~the~~have ~~six~~been ~~months~~prepared ~~ended~~assuming ~~June~~that 30we will continue as a going concern, ~~2018~~which contemplates the realization of assets and liquidation ~~2017~~of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

	Six months ended June 30,
	2018			2017			Change			%
Sales revenue	$	23,401		$	44,554		$	(21,153	)		(47	)%
Cost of revenue		(10,209	)		(20,394	)		(10,185	)		(50	)%
Gross profit		13,192			24,160			(10,968	)		(45	)%
Total operating expenses		528,392			525,508			2,884			1	%
Interest expense		(1,758,296	)		(1,128,339	)		(629,957	)		56	%
Other income (expense)		(772,442	)		(55,213	)		(717,229	)		1299	%
Net loss	$	(3,045,938	)	$	(1,684,900	)	$	(1,361,038	)		81	%

~~Sales~~Results ~~Revenue, Cost~~ of ~~Revenue and Gross Profit~~Operations

~~Sales~~Comparison ~~revenue during~~of ~~the~~results ~~six months ended June 30, 2018 was $23,401, compared to revenue~~ of ~~$44,554~~operations ~~generated~~for ~~during~~ the ~~six~~three months ended ~~June~~ September 30, ~~2017, a decrease of $21,153. This decrease was attributable to our lack of available capital in which to generate sales in~~ 2018. ~~Cost of revenue~~ and ~~gross profit each decreased proportionately to the decrease in sales revenue for the six months ended June 30, 2018.~~2017

Operating expenses

	Three months ended September 30,
	2018			2017			Change			%
Sales revenue	$	1,706		$	5,167		$	(3,461	)	(67)%
Cost of revenue		64,013			3,036			60,977		2008%
Gross profit (loss)		(62,307	)		2,131			(64,438	)	(3024)%

Total operating expenses		(383,198	)		(261,815	)		(121,383	)	46%

Interest expense		(1,192,194	)		(648,131	)		(544,063	)	84%
Other expense		(79,466	)		(101,486	)		22,020		(22)%

Net loss	$	(1,717,165	)	$	(1,009,301	)	$	(707,864	)	70%

	Six months ended June 30,
	2018		2017		Change			%
Research and development	$	166,384	$	143,757	$	22,627			16	%
Sales and marketing		3,784		2,262		1,522			67	%
General and administrative		358,224		379,489		(21,265	)		(6	)%
	$	528,392	$	525,508	$	2,884			1	%

Sales Revenue, Cost of Revenue and Gross Profit

~~The~~Sales ~~decrease~~revenue indecreased ~~operating~~during ~~expenses~~the three ~~was~~months ~~driven~~ended bySeptember ~~our~~30, ~~controlling~~2018 ~~spending~~compared to the same period in 2017 due to aan ~~limitation~~overall lack of funding necessary for development and product launch costs. While we are continuing to seek out and discuss external financing, no assurances can be made that we will be successful in our efforts. See “Liquidity and Capital Resources” below. Cost of revenue increased dramatically during the three months ended September 30, 2018 compared to the same period in 2017 as we wrote down all inventory during the quarter. The write-down of the inventory was booked to cost of goods sold.

~~Other~~Operating expenses

During the six months ended June 30, 2018, interest expense increased due to additional debt of approximately $5,300,000 over the same period in 2017.

	Three months ended September 30,
	2018		2017		Change			%
Research and development	$	48,214	$	60,535	$	(12,321	)	(20)%
Sales and marketing		230		79		151		191%
General and administrative		334,754		201,201		133,553		66%
	$	383,198	$	261,815	$	121,383		46%

~~Other~~Operating ~~income~~costs ~~(expense)~~increased ~~consists~~during ~~primarily~~the ofthree ~~other~~months ~~expenses~~ended ~~related~~September 30, 2018 compared to ~~costs~~the ~~associated~~same period in 2017 as legal fees were charged in connection with ~~debt~~judgments ~~and~~entered ~~conversions~~against ofus ~~debt~~in connection with loans from ML Factors Funding, Green Capital Funding, and Queen Funding.

AsOther a result, we incurred a net loss of $3,045,938 during the six month period ended June 30, 2018 (approximately $0.01 per share), compared to a net loss of $1,684,900 during the six month period ended June 30, 2017.expense

WeDuring ~~have created a joint venture with Kasper Consulting called Kas-Exe Parking Solutions LLC (“Kas-Exe”). The purpose of~~ the ~~joint~~three ~~venture~~months isended ~~to capitalize~~September ~~on attractive business opportunities that present themselves. As of June~~ 30, 2018, weinterest ~~have~~expense ~~paid~~increased ~~Kasper~~from ~~Consulting~~ $43648,~~148~~131 inincurred ~~order to~~during ~~help~~the ~~launch~~three ~~Kas-Exe.~~months Atended ~~this~~September ~~point~~30, ~~the~~2017, ~~joint~~to ~~venture~~$1,192,194, noan increase ~~longer seen as viable and we are in the process~~ of ~~being~~$544,063, ~~refunded the~~due ~~amounts paid~~ to ~~Kasper~~additional ~~Consulting.~~debt ~~The~~of ~~amount~~approximately is$3,900,000 ~~included~~over asthe ~~Prepaid~~same ~~expenses~~point ~~and other~~ in ~~the accompanying condensed consolidated financial statements~~2017.

13Other expense consists primarily of other fees expenses related to seeking and securing debt and other external financing.

~~Liquidity~~As a result, we incurred a net loss of ~~and~~$1,717,165 ~~Capital~~during ~~Resources~~the three month period ended September 30, 2018 (approximately $0.01 per share), compared to a net loss of $1,009,301 during the three month period ended September 30, 2017.

~~At June 30, 2018, we had $10,201 in cash and cash equivalents.~~14

WeComparison ~~have~~of ~~not generated~~results ~~positive~~of ~~cash flows from~~ operations infor any year since our inception. Accordingly, our sources of liquidity may include potential debt and/or equity offerings. We believe that our principal difficulty in our inability to successfully implement our business plan and generate positive cash flows has been and continues to be the ~~lack~~nine ofmonths ~~available working capital to operate and~~ended ~~expand~~September ~~our business. While we are in discussions with various potential financing groups~~30, ~~other~~2018 ~~than as disclosed below, we have no other commitments from any investor or investment-banking firm to provide us with the necessary funding~~ and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits in the future and continue operations.2017

To fund our acquisition plan and fund working capital for our continuing operations we will require and are continuing to seek out and discuss financing with potential partners or lenders. These efforts have been unsuccessful thus far and there are no assurances that they will be successful in the future. Failure to obtain the financing necessary will have a significant negative impact on our Company and our ability to remain in business. We have identified multiple potential funding sources and have diligently pursued receiving financing from these sources for varying lengths of time. Management believes that these efforts will be coming to a conclusion in the near future and will either result in significant funding for us or in no funding at all. There are no assurances that these pursuits will be successful and, if none of them are successful, we will not have the financial resources to continue operations and may require relief from bankruptcy court.

	Nine months ended September 30,
	2018			2017			Change			%
Sales revenue	$	25,107		$	49,721		$	(24,614	)	(50)%
Cost of revenue		74,222			23,430			50,792		217%
Gross profit		(49,115	)		26,291			(75,406	)	(287)%

Total operating expenses		(911,590	)		(787,323	)		(124,267	)	16%

Interest expense		(2,950,490	)		(1,776,470	)		(1,174,020	)	66%
Other expense		(851,908	)		(156,698	)		(695,210	)	444%

Net loss	$	(4,763,103	)	$	(2,694,200	)	$	(2,068,903	)	77%

~~Working Capital~~Sales Revenue, Cost of Revenue and Gross Profit

~~Working~~Sales ~~capital is~~revenue during the ~~amount~~nine bymonths ~~which~~ended September ~~current~~30, ~~assets~~2018 ~~exceed~~was ~~current~~$25,107, ~~liabilities.~~compared Weto ~~had~~revenue ~~negative working capital~~ of $1949,~~790,071~~721 ~~and~~generated ~~$16,658,489, respectively,~~during asthe ofnine ~~June~~months ended September 30, ~~2018~~2017, ~~and~~a ~~December~~decrease of 31$24, ~~2017~~614. ~~The~~This ~~increase~~decrease inwas ~~negative~~attributable ~~working~~to our lack of available capital isin ~~due~~which to ~~the~~generate ~~increase~~sales in ~~debt of~~2018. ~~approximately~~Cost ~~$2,500,000~~of ~~and~~revenue increased adramatically ~~resulting~~during ~~increase~~the innine ~~accrued~~months ~~liabilities~~ended ofSeptember ~~approximately $470~~30,~~000~~ ~~from~~2018 ~~interest~~compared ~~expense.~~to ~~We also~~the ~~currently~~same ~~have~~period ~~insufficient~~in ~~cash~~2017 ~~flow~~as towe ~~meet~~wrote ~~our~~down ~~debt~~all inventory ~~obligations~~during the quarter. ~~This~~The ~~raises~~write-down ~~substantial~~of ~~doubt~~the ~~about~~inventory ~~our~~was ~~ability~~booked to ~~continue as~~cost aof ~~going~~goods ~~concern~~sold.

~~Cash~~Operating ~~Flows~~expenses

Our cash flows from operating, investing and financing activities were as follows:

	Nine months ended September 30,
	2018		2017		Change		%
Research and development	$	214,598	$	204,292	$	10,306		5%
Sales and marketing		4,014		2,341		1,673		71%
General and administrative		692,978		580,690		112,288		19%
	$	911,590	$	787,323	$	124,267		16%

	Six months ended June 30,
	2018			2017
Net cash used in operating activities	$	(1,938,834	)	$	(868,571	)
Net cash from investing activities		—			—
Net cash provided by financing activities		1,960,153			870,607

Operating Costs increased during the nine months ended September 30, 2018 compared to the same period in 2017 as legal fees were charged in connection with judgments entered against us in connection with loans from ML Factors Funding, Green Capital Funding and Queen Funding.

~~Net~~Other cash used in operating activities increased in 2018 by $1,070,263 compared to 2017. We relied heavily on increased debt, accounts payable, and accrued liabilities to keep our operations running. We anticipate that overhead costs in current operations will increase in the future if we are successful in raising the capital described herein as a result of our anticipated increased marketing and operating activities.expense

During ~~2018, we~~the ~~relied~~nine onmonths ~~additional~~ended ~~borrowings~~September 30, ~~under both new and existing debt agreements. In~~ 2018, ~~net~~interest ~~cash~~expense ~~flows~~increased ~~provided~~due byto ~~financing activities were composed of $2,947,521 of~~ additional ~~borrowings~~debt ~~and $987,368~~ of ~~debt~~approximately ~~pay down. In 2017, we borrowed~~ $13,~~173~~900,~~757 of~~000 ~~additional~~over ~~debt~~the ~~and~~same ~~paid~~point ~~down~~in ~~$303,150 of debt~~2017.

14Other expense consists primarily of other expenses related to costs associated with attempts to secure external funding.

We ~~believe that~~have ~~our~~created ~~principal~~a ~~difficulty~~joint inventure ~~our~~with ~~inability~~Kasper Consulting tocalled ~~successfully~~Kas-Exe ~~generate~~Parking ~~revenues~~Solutions ~~and~~LLC ~~corresponding~~(“Kas-Exe”). ~~profits~~The ~~has~~purpose ~~been~~of the ~~lack~~joint ~~of available~~venture ~~capital~~is to ~~implement~~capitalize ~~our~~on attractive business ~~plan. We~~opportunities ~~believe~~ that ~~Energie~~present ~~will need~~themselves. aAs ~~minimum~~ of ~~approximately $2,000,000~~September ~~in additional working capital to be utilized for a) development and launching of new products; b) funding the business development efforts to identify~~30, ~~qualify and acquire other LED lighting companies; and c) the balance for working capital~~2018, ~~and general and administrative expenses. In addition,~~ we ~~believe~~have wepaid ~~need~~Kasper ~~more~~Consulting ~~than~~ $1043,~~000,000~~148 toin ~~pay~~order ~~off a significant portion of our debt and~~ to ~~begin funding the business development efforts to identify, qualify and acquire other LED lighting companies,~~help ~~with~~launch ~~the balance for working capital and general and administrative expense~~Kas-Exe. As ofAt ~~the date of~~ this ~~report~~point, ~~other~~the ~~than as~~joint ~~disclosed~~venture ~~below, we have~~ no ~~other~~longer ~~commitment~~seen ~~from~~as ~~any~~viable ~~investor or investment-banking firm to provide us with the necessary funding~~ and ~~there can be no assurances~~ we ~~will~~are ~~obtain such funding~~ in the ~~future. Failure~~process toof ~~obtain~~being ~~this~~refunded ~~additional~~the amounts ~~financing~~paid ~~will~~to ~~have~~Kasper aConsulting. ~~material~~The ~~negative~~amount ~~impact~~is onincluded ~~our~~as ~~ability~~Prepaid toexpenses ~~generate profits~~ and toother ~~stay~~ in ~~business~~the inaccompanying ~~the~~unaudited ~~future~~condensed consolidated financial statements.

~~Inflation~~As a result, we incurred a net loss of $4,763,103 during the nine month period ended September 30, 2018 (approximately $0.02 per share), compared to a net loss of $2,694,200 during the nine month period ended September 30, 2017.

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the six month period ended June 30, 2018.15

~~Off-Balance~~Liquidity ~~Sheet~~and ~~Arrangements~~Capital Resources

WeAt ~~had~~September no30, ~~off-balance~~2018, ~~sheet~~we ~~arrangements as~~had of$675 ~~June~~in ~~30,~~cash ~~2018~~ and ~~December~~cash ~~31, 2017~~equivalents.

~~Critical~~We ~~Accounting~~have ~~Estimates~~not generated positive cash flows from operations in any year since our inception. Accordingly, our sources of liquidity may include potential debt and/or equity offerings. We believe that our principal difficulty in our inability to successfully implement our business plan and generate positive cash flows has been and continues to be the lack of available working capital to operate and expand our business. While we are in discussions with various potential financing groups, other than as disclosed below, we have no other commitments from any investor or investment-banking firm to provide us with the necessary funding and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits in the future and continue operations.

~~Our~~To ~~condensed consolidated~~fund ~~financial~~our ~~statements~~acquisition plan and ~~accompanying~~fund ~~notes~~working capital ~~have~~for ~~been~~our ~~prepared~~continuing inoperations ~~accordance~~we ~~with~~will ~~U.S.~~require ~~GAAP.~~and ~~The~~are ~~preparation~~continuing ofto ~~these financial~~seek ~~statements~~out ~~requires~~and ~~management~~discuss tofinancing ~~make~~with ~~estimates,~~potential ~~judgments~~partners or ~~and~~lenders. ~~assumptions~~These ~~that~~efforts ~~affect~~have ~~reported~~been ~~amounts~~unsuccessful ofthus ~~assets, liabilities,~~far ~~revenues~~ and ~~expenses.~~there Weare ~~continually~~no ~~evaluate~~assurances ~~the~~that ~~accounting~~they ~~policies~~will ~~and~~be ~~estimates~~successful ~~used~~in the future. Failure to ~~prepare~~obtain the ~~condensed consolidated~~financing ~~financial~~necessary ~~statements.~~will ~~The~~have ~~estimates~~a ~~are~~significant ~~based~~negative impact on ~~historical~~our ~~experience~~Company and ~~assumptions~~our ~~believed~~ability to beremain ~~reasonable~~in business. ~~under~~We ~~current~~have ~~facts~~identified ~~and~~multiple ~~circumstances.~~potential ~~Actual~~funding ~~amounts~~sources and ~~results~~have ~~could~~diligently ~~differ~~pursued receiving financing from these ~~estimates~~sources ~~made~~for byvarying lengths ~~management~~of time. ~~Certain accounting~~Management ~~policies~~believes that ~~require~~these ~~significant~~efforts ~~management~~will ~~estimates~~be ~~and~~coming ~~are~~to ~~deemed~~a ~~critical~~conclusion toin ~~our~~the ~~results~~near offuture ~~operations~~and orwill ~~financial~~either result ~~position~~in ~~are~~significant ~~discussed~~funding for us or in ~~our~~no ~~Annual~~funding ~~Report~~at onall. ~~Form 10-K~~There ~~for~~are ~~the~~no ~~year~~assurances ~~ended~~that ~~December~~these ~~31,~~pursuits ~~2017~~will inbe ~~the~~successful ~~Critical~~and, ~~Accounting~~if none ~~Policies~~of ~~section~~them ofare ~~Management’s~~successful, ~~Discussion~~we ~~and~~will ~~Analysis~~not ofhave ~~Financial~~the ~~Condition~~financial resources to continue operations and ~~Results~~may ofrequire ~~Operations~~relief from bankruptcy court.

15Working Capital

~~Item~~Working 3capital is the amount by which current assets exceed current liabilities. ~~Quantitative~~We had negative working capital of $21,545,632 and $16,658,489, respectively, as of ~~Qualitative~~September ~~Disclosures~~30, 2018 and December 31, 2017. The increase in negative working capital is due to the increase in debt of approximately $2,550,000 and a resulting increase in accrued liabilities of approximately $1,945,000 from interest expense and reclassifications to accrued liabilities. We also currently have insufficient cash flow to meet our debt obligations. This raises substantial doubt about ~~Market~~our ~~Risk~~ability to continue as a going concern.

AsCash ~~a smaller reporting company, as that term is defined in Item 10(f)(1) of Regulation S-K, we are not required to provide information required by this Item.~~Flows

~~Item~~Our 4.cash ~~Controls~~flows from operating, investing and ~~Procedures~~financing activities were as follows:

Evaluation of Disclosure Controls and Procedures

	Nine months ended September 30,
	2018			2017
Net cash used in operating activities	$	(2,551,058	)	$	(1,406,985	)
Net cash from investing activities		–			–
Net cash provided by financing activities		2,562,851			1,402,579

AsNet ~~required by~~cash ~~Rules~~used ~~13a-15(e)~~in ~~and~~operating ~~15d-15(e)~~activities ~~under~~increased in ~~the~~2018 ~~Securities~~by ~~Exchange~~$1,144,073 ~~Act~~compared ofto ~~1934,~~2017. We asrelied ~~amended~~heavily ~~(the~~on ~~“Exchange~~increased ~~Act”)~~debt, weaccounts ~~have carried~~payable, ~~out~~and anaccrued ~~evaluation~~liabilities to ofkeep ~~the~~our ~~effectiveness~~operations ofrunning. ~~the~~We ~~design~~anticipate ~~and~~that ~~operation~~overhead ofcosts ~~our~~in ~~disclosure~~current ~~controls~~operations ~~and~~will ~~procedures~~increase asin ofthe ~~June 30,~~future ~~2018. This~~if ~~evaluation~~we ~~was~~are ~~carried~~successful in ~~out~~raising ~~under~~ the ~~supervision~~capital ~~and~~described ~~with~~herein as ~~the~~a ~~participation~~result of our ~~Chief~~anticipated ~~Executive Officer~~increased marketing and ~~Chief~~operating ~~Financial Officer~~activities.

~~Based~~During ~~on this evaluation~~2018, ~~our~~we ~~CEO~~relied ~~and~~on ~~CFO~~additional ~~have~~borrowings under ~~concluded~~both ~~that~~new ~~our disclosure controls~~ and ~~procedures~~existing ~~were~~debt ~~not~~agreements. ~~effective~~In ~~as of June 30,~~ 2018, ~~because~~ ~~(a)~~net wecash ~~have~~flows ~~limited~~provided ~~entity-level~~by ~~controls,~~financing ~~because~~activities ofwere ~~the~~composed ~~time~~of ~~constraints for our management team; (b) we have a lack~~$3,778,825 of ~~segregation~~additional ofborrowings ~~duties due to limited personnel;~~ and ~~(c)~~$1,215,974 weof ~~have~~debt ~~not~~pay ~~implemented adequate system-based and manual controls~~down. We ~~have~~In ~~engaged consultants to evaluate our processes and procedures~~2017, ~~and~~we toborrowed ~~implement~~$1,891,283 ~~document~~of ~~and test~~ additional ~~internal controls.~~debt Weand ~~can~~paid ~~provide~~down ~~no assurance~~$488,704 of ~~however, that our internal controls will be effective in the near future~~debt.

Our Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. We are reviewing various potential solutions to remedy the processes that would eliminate the issues that may arise due to the absence of separation of duties within the financial reporting functions. Additionally, the Board of Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our internal controls over financial reporting and our disclosure controls and procedures.16

We believe that our ~~financial~~principal ~~statements~~difficulty in ~~presented~~our ininability ~~this~~to ~~quarterly~~successfully ~~report~~generate onrevenues ~~Form~~and ~~10-Q~~corresponding ~~fairly~~profits ~~present~~has been the lack of available capital to implement our business plan. We believe that Energie will need a minimum of approximately $2,000,000 in ~~all~~additional ~~material~~working ~~respects~~capital to be utilized for a) development and launching of new products; b) funding the business development efforts to identify, ~~our~~qualify and ~~financial~~acquire other LED lighting companies; and c) the balance for working capital, and general and administrative expenses. In addition, ~~position~~we believe we need more than $10,000,000 ~~results~~to pay off a significant portion of ~~operations~~our debt and to begin funding the business development efforts to identify, qualify and ~~cash~~acquire ~~flows~~other LED lighting companies, with the balance for ~~all~~working ~~periods~~capital ~~presented~~and ~~herein~~general and administrative expense. As of the date of this report, we have no commitment from any investor or investment-banking firm to provide us with the necessary funding and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits and to stay in business in the future.

Inherent Limitations – Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.Inflation

~~Changes~~Although inour ~~Internal~~operations ~~Control~~are influenced ~~over~~by ~~Financial~~general ~~Reporting~~economic conditions, we do not believe that inflation had a material effect on our results of operations during the nine month period ended September 30, 2018.

~~There~~Off-Balance ~~have~~Sheet been no changes in our internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.Arrangements

16We had no off-balance sheet arrangements as of September 30, 2018 and December 31, 2017.

~~PART~~Critical ~~II.~~Accounting ~~Other Information~~Estimates

~~Item~~Our 1condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. ~~Legal~~GAAP. ~~Proceedings~~The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare the condensed consolidated financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position are discussed in our Annual Report on Form 10-K for the year ended December 31, 2017 in the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

InItem July 2015, Energie LLC and Harold Hansen, our CEO (collectively, the “Defendants”), were served with a summons and complaint wherein Vectra Bank Colorado, National Association brought an action to collect monies due pursuant to a promissory note in the current principal balance of $47,000, plus interest, costs, and attorneys’ fees3. ~~The~~Quantitative ~~action was brought in the District Court for the City~~ and ~~County~~Qualitative ofDisclosures ~~Denver,~~about ~~Colorado~~Market (the “Court”). On April 4, 2016, the parties to this action entered into a settlement agreement whereby the Defendants agreed to pay to Vectra Bank the sum of $59,177 on or before April 30, 2016. This payment was not made and the bank requested and received a judgment against both Defendants jointly and severally for $61,502 plus interest of 5.25% per annum plus 9.90% per annum on the default margin. On May 10, 2017, the bank agreed to stay further execution on the judgment so long as the defendants pay the balance of the judgment in monthly payments of $5,000 per month on the fifteenth of each month, commencing on May 15, 2017. Under this agreement, interest continues to accrue at the judgment interest rate. The current principal balance is $31,588.Risk

InAs ~~May~~a ~~2017, LG~~smaller ~~Capital~~reporting ~~Funding LLC (“LG”)~~company, ~~filed~~as athat term ~~complaint~~is ~~against~~defined us in ~~the~~Item ~~U.S. District Court for the Southern District of New York, Civil Action No. 17-cv-4006-~~10(~~RJS~~f),(1) ~~alleging that we owed LG the principal balance~~ of ~~$75,000~~Regulation ~~plus interest~~S-K, ~~costs and attorneys’ fees, arising out of two convertible notes issued to LG. LG amended its complaint in July 2017 and~~ we ~~filed~~are ~~our answer~~not arequired ~~week later denying any liability and affirmatively stating that LG had been repaid many times over. LG then immediately filed a pre-discovery motion for summary judgment. We submitted our opposition~~ to ~~the~~provide ~~motion~~information onrequired ~~September~~by ~~25,~~this ~~2017~~Item. LG filed reply papers in further support on October 5, 2017. LG asserts that no factual issues exist and that summary judgment is therefore appropriate. Our opposition asserts that summary judgment, as to both liability and damages, is woefully premature and unwarranted given the many factual issues that exist regarding, among other things, LG’s failure to disclose material facts, potential short selling and fraudulent concealment, usury, and fraud on the market. The motion remains pending before the Court.

~~Our~~Item ~~defense in this matter is based in part on a separate action filed by the Securities and Exchange Commission against unrelated defendants in the U~~4.S. ~~District~~Controls Court for the Southern District of Florida alleging that the defendant there, which follows the same business model as LG, has violated federal securities laws by not registering as a dealer. We understand that LG also was not and is not registered as a dealer even though it too should be given it too trades securities for its own account as part of its business. The SEC asserts that all gains reaped by defendants in the attached complaint should be disgorged due to the ill-gotten gains received. LG has, admittedly, likewise received substantial profits trading our stock for its own account.Procedures

AsEvaluation aof ~~result, we~~Disclosure ~~have~~Controls ~~filed an amended answer, alleging that LG is entitled to no recovery,~~ and ~~that it should disgorge to us all gains unlawfully received from selling our shares of common stock.~~Procedures

~~During~~As ~~November 2017,~~required ~~Autumnwood~~by ~~Investments,~~Rules ~~LLC~~ 13a-15(ae) ~~former~~and ~~landlord of ours~~15d-15(e) under ~~requested~~the aSecurities ~~summary~~Exchange ~~judgment~~Act ~~for~~of a1934, ~~note~~as ~~that~~amended is(the in“Exchange ~~default~~Act”), aswe ~~principal and~~have ~~interest~~carried ~~payments~~out ~~were~~an ~~not~~evaluation ~~made~~of inthe effectiveness ~~accordance~~of ~~with~~ the ~~note.~~design ~~The~~and ~~note~~operation ~~had~~of ~~consolidated~~our ~~past~~disclosure ~~due~~controls ~~rent amounts~~ and ~~interest due~~procedures toas ~~Autumwood.~~of InSeptember ~~January~~30, 2018,. This evaluation awas ~~summary~~carried ~~judgment~~out inunder the ~~amount~~supervision ~~of $475,832, which represents the total principal~~ and ~~interest outstanding~~with on the ~~note~~participation as of ~~October~~our ~~31,~~Chief ~~2017~~Executive ~~was~~Officer ~~granted~~and byChief ~~the court~~Financial Officer.

AsBased aon ~~result of~~this evaluation, our ~~lack~~CEO ofand ~~available~~CFO have ~~capital~~concluded wethat ~~are~~our ~~unable~~disclosure tocontrols ~~pay~~and ~~many~~procedures ofwere ~~our~~not ~~bills~~effective ~~and~~as ~~outstanding~~of ~~promissory~~September ~~notes~~30, ~~when~~2018, ~~they~~because ~~become~~(a) ~~due. While~~ we have ~~not~~limited entity-level ~~been~~controls, ~~threatened~~because ~~specifically~~of ~~with~~the ~~litigation,~~time itconstraints isfor ~~impractical~~our tomanagement ~~believe~~team; or(b) ~~assume~~we ~~that~~have ~~our~~a ~~creditors~~lack ~~will not~~of ~~pursue~~segregation ~~actions~~of ~~against~~duties us due to ~~collect~~limited ~~balances~~personnel; ~~due.~~and ~~Many~~(c) ofwe ~~these~~have ~~obligations~~not implemented adequate system-based and ~~agreements~~manual ~~contain~~controls. ~~provisions~~We ~~requiring~~have usengaged consultants to ~~pay~~evaluate ~~costs~~our ofprocesses ~~collection~~and procedures, and ~~attorneys’~~to ~~fees~~implement, ~~over~~document and ~~above~~test ~~the~~additional ~~principal~~internal ~~amounts~~controls. ~~due~~We can provide no assurance, however, ~~which~~that ~~may~~our ~~increase~~internal ~~these~~controls ~~outstanding balances~~will be effective in the near future.

17Our Board of Directors has assigned a priority to the short-term and long-term improvement of our internal control over financial reporting. We are reviewing various potential solutions to remedy the processes that would eliminate the issues that may arise due to the absence of separation of duties within the financial reporting functions. Additionally, the Board of Directors will work with management to continuously review controls and procedures to identified deficiencies and implement remediation within our internal controls over financial reporting and our disclosure controls and procedures.

~~Item 1A. Risk Factors~~17

AsWe abelieve ~~smaller~~that ~~reporting~~our ~~company,~~financial statements aspresented ~~that~~in ~~term~~this isquarterly ~~defined~~report inon ~~Item~~Form 10~~(f)(1)~~-Q offairly ~~Regulation~~present, ~~S-K~~in all material respects, weour ~~are~~financial ~~not~~position, ~~required~~results toof ~~provide~~operations, and ~~information~~cash ~~required~~flows byfor ~~this~~all ~~Item~~periods presented herein.

~~Item~~Inherent 2Limitations – Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. ~~Unregistered~~ A control system, no matter how well conceived and operated, can ~~Sales~~provide only reasonable, not absolute, assurance that the objectives of ~~Equity~~the ~~Securities~~control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and ~~Use~~there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of ~~Proceeds~~a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

~~None.~~ Changes in Internal Control over Financial Reporting

~~Item~~There 3.have ~~Defaults~~been ~~upon~~no ~~Senior~~changes in our internal ~~Securities~~control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

~~None.~~18

~~Item~~PART 4II. ~~Mine~~Other ~~Safety Disclosures~~ Information

~~Not~~Item ~~applicable~~1. Legal Proceedings

~~Item~~In July 2015, Energie LLC and Harold Hansen, our CEO (collectively, the “Defendants”), were served with a summons and complaint wherein Vectra Bank Colorado, National Association brought an action to collect monies due pursuant to a promissory note in the current principal balance of $47,000, plus interest, costs, and attorneys’ fees. The action was brought in the District Court for the City and County of Denver, Colorado (the “Court”). On April 4, 2016, the parties to this action entered into a settlement agreement whereby the Defendants agreed to pay to Vectra Bank the sum of $59,177 on or before April 30, 2016. This payment was not made and the bank requested and received a judgment against both Defendants jointly and severally for $61,502 plus interest of 5.25% ~~Other~~per ~~Information~~annum plus 9.90% per annum on the default margin. On May 10, 2017, the bank agreed to stay further execution on the judgment so long as the defendants pay the balance of the judgment in monthly payments of $5,000 per month on the fifteenth of each month, commencing on May 15, 2017. Under this agreement, interest continues to accrue at the judgment interest rate. The current principal balance is $6,531.

~~None~~In May 2017, LG Capital Funding LLC (“LG”), filed a complaint against us in the U.S. District Court for the Southern District of New York, Civil Action No. 17-cv-4006-(RJS), alleging that we owed LG the principal balance of $75,000 plus interest, costs and attorneys’ fees, arising out of two convertible notes issued to LG. LG amended its complaint in July 2017 and we filed our answer a week later denying any liability and affirmatively stating that LG had been repaid many times over. LG then immediately filed a pre-discovery motion for summary judgment. We submitted our opposition to the motion on September 25, 2017. LG filed reply papers in further support on October 5, 2017. LG asserts that no factual issues exist and that summary judgment is therefore appropriate. Our opposition asserts that summary judgment, as to both liability and damages, is woefully premature and unwarranted given the many factual issues that exist regarding, among other things, LG’s failure to disclose material facts, potential short selling and fraudulent concealment, usury, and fraud on the market. The motion remains pending before the Court.

~~Item~~Our 6defense in this matter is based in part on a separate action filed by the Securities and Exchange Commission against unrelated defendants in the U.S. ~~Exhibits~~District Court for the Southern District of Florida alleging that the defendant there, which follows the same business model as LG, has violated federal securities laws by not registering as a dealer. We understand that LG also was not and is not registered as a dealer even though it too should be given it too trades securities for its own account as part of its business. The SEC asserts that all gains reaped by defendants in the attached complaint should be disgorged due to the ill-gotten gains received. LG has, admittedly, likewise received substantial profits trading our stock for its own account.

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32		Certifications of the Chief Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

As a result, we have filed an amended answer, alleging that LG is entitled to no recovery, and that it should disgorge to us all gains unlawfully received from selling our shares of common stock.

101.INS		XBRL Instance Document*
101.SCH		XBRL Schema Document*
101.CAL		XBRL Calculation Linkbase Document*
101.DEF		XBRL Definition Linkbase Document*
101.LAB		XBRL Label Linkbase Document*
101.PRE		XBRL Presentation Linkbase Document*

During November 2017, Autumnwood Investments, LLC (a former landlord of ours) requested a summary judgment for a note that is in default as principal and interest payments were not made in accordance with the note. The note had consolidated past due rent amounts and interest due to Autumwood. In January 2018, a summary judgment in the amount of $475,832, which represents the total principal and interest outstanding on the note as of October 31, 2017 was granted in favor of Autumnwood by the court.

~~______________________~~During 2018, judgment was entered against us and in favor of ML Factors Funding, Green Capital Funding, and Queen Funding, whereby we are required to pay the outstanding principal and interest balance on the agreements. In addition, ML Factors Funding, Green Capital Funding, and Queen Funding also claim that they are to be paid additional interest, attorney’s fees, and other ancillary expenses. While we are vigorously defending ourselves in these matters and believe that we will not be required to pay more than the total principal and interest outstanding on the agreements, we have recorded the entire amount of all judgments into our financial statements as of September 30, 2018. We recorded the entire requested amount from ML Factors Funding of $240,480, the entire requested amount from Green Capital Funding of $312,056, and the entire requested amount from Queen Funding of $304,826. In addition, we have reclassified these amounts to accrued liabilities.

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are not deemed filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Securities Exchange Act and otherwise not subject to liability.19

18As a result of our lack of available capital we are unable to pay many of our bills and outstanding promissory notes when they become due. While we have not been threatened specifically with litigation, it is impractical to believe or assume that our creditors will not pursue actions against us to collect balances due. Many of these obligations and agreements contain provisions requiring us to pay costs of collection and attorneys’ fees over and above the principal amounts due, which may increase these outstanding balances.

~~SIGNATURES~~Item 1A. Risk Factors

~~Pursuant~~As ~~to the~~a ~~requirements~~smaller ofreporting ~~Section~~company, 13as orthat ~~15(d)~~term ofis ~~the~~defined ~~Securities~~in ~~Exchange~~Item 10(f)(1) ~~Act~~ of ~~1934~~Regulation S-K, ~~the~~we ~~Registrant~~are ~~has~~not ~~duly~~required ~~caused this report~~ to be ~~signed~~provide oninformation ~~its~~required ~~behalf~~ by ~~the~~this ~~undersigned, thereunto duly authorized~~Item.

Date: November 15, 2018	By:	/s/ Harold Hansen
		Harold Hansen
		Chief Executive Officer (Principal Executive Officer)
	By:	/s/ Richard Cole Dennard
		Richard Cole Dennard
		Chief Financial Officer (Principal Financial and Accounting Officer)

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

19None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32		Certifications of the Chief Executive and Financial Officers pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document*
101.SCH		XBRL Schema Document*
101.CAL		XBRL Calculation Linkbase Document*
101.DEF		XBRL Definition Linkbase Document*
101.LAB		XBRL Label Linkbase Document*
101.PRE		XBRL Presentation Linkbase Document*

______________________

SIGNATURES

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


Date: January 17, 2019	By:	/s/ Harold Hansen
		Harold Hansen
		Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Richard Cole Dennard
		Richard Cole Dennard
		Chief Financial Officer (Principal Financial and Accounting Officer)

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