UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~March~~June 3130, 2019

☐ 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: 000-55152

ZNERGY, INC.

(Exact Name of Registrant As Specified In Its Charter)

Nevada		46-1845946
(State or other jurisdiction of incorporation or organization)		IRS I.D.
808 A South Huntington Street Syracuse, Indiana 46567
(Address of principal executive offices) (800) 931 5662 (Registrant’s telephone number, including area code)

Securities registered under 12(b) of the Exchange Act:

None

Securities registered under 12(g) of the Exchange Act:

Common Stock, par value $0.0001

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☐ No ☒

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

Yes ☐ No ☒

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

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☒		Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provide 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 ☒

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

Title of each class	Symbol	Name of each exchange on which registered
Common	ZNRG	OTC

On ~~July~~August 1231, 2021 there were ~~305~~308,~~208~~565,~~293~~436 shares of the registrant's common stock outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements	4
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1918
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2220
	Item 4.	Controls and Procedures	2220
Part II - OTHER INFORMATION
	Item 1.	Legal Proceedings	2322
	Item 5.	Other Information	2322
	Item 6.	Exhibits	2423
SIGNATURES			2524

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ZNERGY, INC.

INDEX

CONTENTS:
Condensed Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018	5
Condensed Consolidated Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	5
Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (unaudited)	6
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018 (unaudited)	6
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months ended March 31, 2019 and 2018 (unaudited)	7
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the periods ended June 30, 2019 and 2018 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)	8
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 (unaudited)	8
Notes to Unaudited Condensed Consolidated Interim Financial Statements	9

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ZNERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	June 30,			December 31,
	2019			2018
	(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash	$	1530,~~216~~898		$	593
Accounts receivable, net of allowance		13112,~~522~~420			-
Prepaid expenses		92105,~~460~~871			61,457
Inventory		~~353~~351,~~432~~268			299,428
Total current assets	$	~~474~~600,~~630~~457		$	361,478
Building, furniture and equipment, net		2114,~~267~~183			28,352
TOTAL ASSETS	$	~~495~~614,~~897~~640		$	389,830
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	~~456~~580,~~182~~531		$	403,307
Accrued expenses		343,~~871~~201			341,556
Customer deposits		~~216~~527,~~325~~529			30,642
Advances from related parties		270,788			222,788
Loan from related parties		1,~~310~~453,~~679~~387			1,290,304
Total current liabilities	$	23,~~597~~175,~~845~~436		$	2,288,597
COMMITMENTS AND CONTINGENCIES (Note 10)
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' DEFICIT
Preferred stock, $0.0001 par value, 100,000,000 authorized shares; no shares issued and outstanding		-			-
Common stock, $0.0001 par value; 500,000,000 shares authorized; 256,724,960 and 236,724,960 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		25,672			23,672
Common stock, $0.0001 par value; 500,000,000 shares authorized; 260,724,960 and 236,724,960 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		26,072			23,672
Additional paid-in-capital		16,~~108~~508,~~720~~001			14,220,537
Accumulated deficit		(1819,~~236~~094,~~340~~869	)		(16,142,976	)
Total stockholders' deficit		(2,~~101~~560,~~948~~796	)		(1,898,767	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	~~495~~614,~~897~~640		$	389,830

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

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ZNERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	March 31,			March 31,
	June 30,			June 30,			June 30,			June 30,
	2019			2018			2019			2018
Revenue	$	~~186~~416,~~618~~774		$	~~482~~259,~~972~~582		$	603,392		$	742,554
Cost of revenue		~~175~~391,~~402~~571			~~229~~176,~~628~~368			566,973			405,996
Gross profit		1125,~~216~~203			~~253~~83,~~344~~214			36,419			336,558
Selling, general and administrative expenses		2842,~~090,664~~801			1583,~~234,352~~649			2,933,465			1,818,001
Total operating expenses		2,090,664			1,234,352
Loss on sale of assets		-			43,488			-			43,488
Loss from operations		(2,079,448	)		(981,008	)
Total operating expenses		842,801			627,137			2,933,465			1,861,489
Other income (expense)
Loss from operations		(817,598	)		(543,923	)		(2,897,046	)		(1,524,931	)
Other income		1,459			-
Other income (expense)
Interest expense		(15,375	)		(111,559	)
Other income(expense)		1,777			-			3,236			-
Total other expense		(13,916	)		(111,559	)
Interest expense		(42,708	)		(64,591	)		(58,083	)		(176,150	)
Provision for income taxes		-			-
Total other expense		(40,931	)		(64,591	)		(54,847	)		(176,150	)
					-
Provision for income taxes		-			-			-			-
Net loss	$	(2858,~~093,364~~529	)	$	(1608,~~092,567~~514	)	$	(2,951,893	)	$	(1,701,081	)
Net loss per common share - basic and diluted	$	(0.0100	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average number of shares outstanding - basic and diluted		~~256~~258,~~724~~746,~~960~~938			~~214~~229,~~644~~024,~~216~~960			257,741,535			228,961,627

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

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ZNERGY, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2019 ~~and~~AND 2018

(Unaudited)

										Total
					Additional					Stockholders'
	Common Stock				Paid in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance at January 1, 2019		236,724,960	$	23,672	$	14,220,537	$	(16,142,976	)	$	(1,898,767	)
Stock based compensation		-		-		90,183		-			90,183
Shares issued for compensation		20,000,000		2,000		1,798,000		-			1,800,000
Shares issued for services		20,000,000		2,000		1,798,000		-			1,800,000
Net loss		-		-		-		(2,093,364	)		(2,093,364	)
Balance at March 31, 2019		256,724,960	$	25,672	$	16,108,720	$	(18,236,340	)	$	(2,101,948	)
Stock based compensation		-		-		103,681		-			103,681
Shares issued for services		4,000,000		400		295,600		-			296,000
Net loss		-		-		-		(858,529	)		(858,529	)
Balance at June 30, 2019		260,724,960	$	26,072	$	16,508,001	$	(19,094,869	)	$	(2,560,796	)

										Total
					Additional					Stockholders'
	Common Stock				Paid in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance at January 1, 2018		230,724,960	$	23,072	$	12,444,488	$	(12,439,218	)	$	28,342
Options issued for services		-		-		771,129		-			771,129
Stock options and deferred compensation						771,129		-			271,829
Shares issued for services		5,000,000		500		50,741		-			51500,~~241~~000
Net loss		-		-		-		(1,092,567	)		(1,092,567	)
Balance at March 31, 2018		235,724,960	$	23,572	$	13,266,358	$	(13,531,785	)	$	(241,855	)
Stock options and deferred compensation						107,472		-			107,472
Net loss		-		-		-		(608,514	)		(608,514	)
Balance at June 30, 2018		235,724,960	$	23,572	$	13,373,830	$	(14,140,299	)	$	(742,897	)

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

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ZNERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Three Months Ended
	For the Six Months Ended
	March 31,			March 31,
	June 30,			June 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(2,~~093~~951,~~364~~893	)	$	(1,~~092~~701,~~567~~081	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		714,~~085~~169			720,~~830~~394
Loss on sale of fixed assets		-			2943,~~739~~488
Non-cash interest expense		1558,~~375~~083			~~105~~169,~~560~~902
Stock and stock-based compensation for services		1,890,183			771,629
Stock based compensation		193,864			879,101
Common stock issued for services		2,096,000			-
Bad debt expense		-			38,034
Changes in operating assets and liabilities:
Accounts receivable		(13112,~~522~~420	)		(8212,~~697~~683	)
Prepaid expenses		(3144,~~003~~414	)		(6,~~341~~334	)
Inventory		(5451,~~004~~840	)		(2561,~~262~~980	)
Accounts payable and accrued expenses		55178,~~190~~869			(~~216~~182,~~400~~375	)
Customer deposits		~~185~~496,~~683~~887			3(39,~~616~~453	)
Net cash used in operating activities		(38122,~~377~~695	)		(~~504~~852,~~893~~987	)
Cash flows from investing activities:
Purchase of fixed assets		-			(1063,~~086~~566	)
Net cash used in investing activities		-			(10,086	)
Proceeds from sale of fixed assets		-			47,918
Net cash used in investing activities		-			(15,648	)
Cash flows from financing activities:
Repayment of advances from related parties		(2,000	)		-(2,967	)
Proceeds of advances from related parties		50,000			~~445~~320,~~000~~190
Proceeds of loan from related parties		5,000			-
Repayment of loan from related parties		-			(10,000	)
Net cash provided by financing activities		53,000			445,000
Proceeds of loan from related parties		105,000			445,000
(Decrease) increase in cash		14,623			(69,979	)
Net cash provided by financing activities		153,000			752,223
Increase/(decrease) in cash		30,305			(116,412	)
Cash, beginning of period		593			116,481
Cash, end of period	$	1530,~~216~~898		$	~~46,502~~69
Supplemental disclosures of cash flow information:
Non-cash investing and financing activities:
Related party advance paid directly to vendor	$	-		$	125,000
Transfer of building to related party in exchange for payment of loan	$	-		$	225,000

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

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ZNERGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~PERIODS~~FOR THE THREE AND SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2019 AND 2018

NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION

Znergy, Inc., (formerly Mazzal Holding Corp., formerly Boston Investment and Development Corp.) is a Nevada corporation (the “Company” or “Znergy”), incorporated on January 23, 2013. The Company is a provider of energy-efficient lighting products, lighting controls and energy management solutions. The Company offers a full turn-key lighting solution which includes economic assessments, energy efficient analysis, installation and rebate support for the Company’s customers. The Company’s business primarily involves retrofitting existing lighting solutions from traditional high intensity ~~and metal halide~~ fluorescent lighting to energy efficient LED (Light Emitting Diode) technology.

The spread of a novel strain of coronavirus (COVID-19) around the world in the first half of 2020 has caused significant volatility in U.S. and international markets. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to determine if it will have a material impact to its operations.

The Company is unsure of the outcome of the COVID-19 novel Coronavirus pandemic on its business. The duration of the pandemic, its effect on business in general and its effect on the Company specifically are unknown to management. For example, the Company’s largest client, one of the world’s largest clothing retail stores, was forced to close its doors at the onset of the pandemic and only recently re-opened some of its stores, thereby allowing the Company to continue to retrofit these limited stores with its LED lighting system. We were able to convert 27 stores starting November 26, 2019 through November 20, 2020, with the majority converted in the first quarter of 2020 before the full impact of the pandemic. The expectation is that by the ~~last~~middle ~~two quarters~~ of 2021, this retailer will have opened more stores, allowing for the LED retrofit to move forward. A continuation of the pandemic, a second surge of the pandemic, or a failure to find and commercialize a vaccine for COVID-19 could materially impact the Company’s revenues and its operations.

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company for the three and six months ended ~~March~~June 3130, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America (“"GAAP”") for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“"SEC”"). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company's financial position and the results of operations. Results shown for interim periods ~~ended March 31, 2019~~ are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2018 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K filed with the SEC on September 4, 2020. These financial statements should be read in conjunction with that report.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts or revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates, judgments, and assumptions used in these consolidated financial statements include those related to revenues, accounts receivable and related allowances, contingencies, and the fair values of stock-based compensation. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected in the financial statements prospectively from the date of the change in estimate.

Revenue Recognition

The Company accounts for revenue in accordance with ASC 606-10. The Company generally has two revenue sources - installation contracts and sales of lighting products. The installation contracts are short term in duration, typically within a week. The disaggregation of revenue for the three months ended ~~March~~June 3130, 2019 was $~~160~~394,~~768~~157 and $2522,~~850~~617 for installation contracts and sale of lighting products, respectively. For the six months ended June 30, 2019, the amounts were $554,924 and 48,467 for installation contracts and sale of lighting products, respectively. The disaggregation of revenue for the three months ended ~~March~~June 3130, 2018 was $228,974 and $30,608 for installation contracts and sale of lighting products, respectively. For the six months ended June 30, 2018, the amounts were $~~408~~687,~~437~~852 and $2454,~~095~~702 for installation contracts and sale of lighting products, respectively.

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When Znergy receives an order from a customer, either verbally or through a written purchase order for products such as individual lights or fixtures, but is not part of an installation contract, the Company recognizes the revenue when the goods are shipped, and title has passed to the customer. In these arrangements, we have determined that there is one performance obligation, and that revenue should be recognized at the point in time that title passes to the customer.

Installation contract revenue is recognized when the contract is considered complete by the customer, through a written customer acceptance form. Each contract for installation of lighting and fixtures, consists of labor and materials, and is given a unique number in the system. Each contract is accounted for individually. The Company identifies the performance obligations, which include labor and materials and are accounted for as one contract. The transaction price is identified in advance with an agreed proposal between the Company and the customer and the price can be adjusted if, during the installation process, changes are made during the process. Under this method, contract costs are accumulated as deferred assets and billings and/or cash receipts are recorded to a deferred revenue liability account during the contract period, but no revenues, costs, or profits are recognized in operations until the completion of the contract. Costs include direct material, direct labor, subcontract labor, and allocable indirect costs. All unallocated indirect costs and corporate general and administrative costs are charged in the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. A contract is considered complete when accepted by the customer that the Company has satisfied its performance obligations. There were no contracts which were not complete by the end of the quarter.

Consolidation

The ~~condensed~~ consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Znergy (FL) and Znergy Holdings (FL). All intercompany transactions have been eliminated in consolidation.

Inventory

Inventory consists of a variety of LED lamps, all of which are valued at the lower of cost or net realizable value. Inventory is accounted for using the FIFO basis.

Reclassification

Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation.

Adoption of recent accounting standards

In May 2014, the Financial Accounting Standards Board (“"FASB”") issued Accounting Standards Update (“"ASU”") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this ASU requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company has adopted Topic 606 as of January 1, 2018 utilizing the full retrospective method of adoption. The adoption of Topic 606 did not have any impact on its results of operations and financial condition.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which supersedes the current lease accounting requirements. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. In addition, this standard requires lessees to disclose certain key information about lease transactions. Upon implementation, an entity’s lease payment obligations will be recognized at their estimated present value along with a corresponding right-of-use asset. Lease expense recognition will be generally consistent with current practice. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which simplifies adoption of the new lease accounting requirements by allowing an additional transition method that will not require restatement of prior periods and providing a new practical expedient for lessors to avoid separating lease and non-lease components within a contract if certain requirements are met. The provisions of this guidance must be elected upon adoption of the new lease accounting requirements, which will be effective for interim and annual periods beginning after December 15, 2018.

We adopted the standard as required on January 1, 2019. Consequently, we did not update previously reported financial information and the disclosures under the new standard will not be provided for dates and periods prior to January 1, 2019, and elected all of the practical expedients available under the transition guidance. The new standard also provides practical expedients for ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify, and did not recognize right of use assets or lease liabilities for those leases. We also elected the practical expedient to not separate lease and non-lease components for all of our leases.

The adoption did not impact the business as no long-term, reportable leases existed as of ~~March~~June 3130, 2019. We do not expect that this standard will have a material impact on our financial statements. While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to the recognition of new right of use assets and lease liabilities on our balance sheet for our real estate and equipment operating leases, and the significant new required disclosures regarding our leasing activities. We do not expect a significant change in our leasing activities between now and adoption.

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Recent accounting standards

In April 2019, the FASB issued ASU No. 2019-04 “Codification Improvements to Topic 326, Financial Instruments — Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments”, which provides updates and clarifications to three previously-issued ASUs: 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities”; 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”; and 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. The adoption of this standards update is not expected to have a material impact on the Company’s financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes”. This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The guidance is effective non-public entities for fiscal years beginning after December 15, 2020, with early adoption permitted. The adoption method is dependent on the specific amendment included in this update as certain amendments require retrospective adoption, modified retrospective adoption, an option of retrospective or modified retrospective, and prospective adoption. The adoption of this standards update is not expected to have a material impact on the Company’s financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2023 and interim periods within those annual periods and early adoption is permitted in annual reporting periods ending after December 15, 2020. We are still assessing the impact of ASU 2020-06 on our condensed consolidated financial statements

The Company does not believe that there are any new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 - GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of ~~March~~June 3130, 2019, the Company has a working capital deficit of $2,~~123~~574,~~215~~979, insufficient cash resources to meet its planned business objectives and recurring losses of ($2858,~~093,364~~529) and ($12,~~092~~951,~~567~~893) infor the three and six months ended ~~March~~June 3130, 2019 and ~~March~~($608,514) 31and ($1,701,081) ~~2018~~for ~~respectively~~the three and six months ended June 30, 2018. The Company intends to fund operations through debt and equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements through ~~July~~January 2022, one year from the date the consolidated financial statements were issued.

The Company is dependent upon, among other things, obtaining additional financing to continue operations and to execute its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings. No assurances can be made that management will be successful in pursuing any of these strategies.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these consolidated financial statements were issued. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4 - BUILDING, EQUIPMENT AND FURNITURE, NET

Building, furniture and equipment were comprised of the following:

	March 31			December 31
	June 30			December 31
	2019			2018
Equipment and Furniture	$	59,609		$	59,609
Accumulated Depreciation		(38,342	)		(31,257	)
		59,609			59,609
Net	$	21,267		$	28,352
Accumulated Depreciation		(45,426	)		(31,257	)
Net	$	14,183		$	28,352

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Depreciation included in Selling, general and administrative expenses:

	March 31		March 31
	For the Three Months Ended				For the Six Months Ended
	2019		2018
	June 30		June 30		June 30		June 30
Depreciation Expense	$	7,085	$	7,830
	2019		2018		2019		2018
Depreciation Expense	$	7,084	$	7,231	$	14,169	$	20,394

NOTE 5 -– ADVANCES FROM RELATED PARTIES

Advances from related parties were comprised of the following:

	March 31		December 31
	June 30		December 31
	2019		2018
B2 Opportunity Fund	$	154,788	$	154,788
Other		116,000		68,000
Cary Baskin		116,000		68,000
	$	270,788	$	222,788

During the ~~three~~six months ended ~~March~~June 3130, 2019, the Company received an aggregate of $50,000 of short-term advances from Cary Baskin and paid back $2,000 of short-term ~~advances~~advance to Eco Energy. The amounts are non-interest bearing and payable on demand.

Since ~~March~~June 3130, 2019, through the filing date of this report the Company has received $0 in additional advances to fund operations.

NOTE 6 - LOANS FROM RELATED PARTIES

The table below sets forth a summary of the Company’s loans from related parties at ~~March~~June 3130, 2019 and December 31, 2018:

	March 31		December 31
	June 30		December 31
	2019		2018
Rick Mikles	$	~~520~~521,~~329~~079	$	514,579
Wayne Miller		~~656~~671,~~700~~325		642,075
Paul Ladd		58,650		58,650
Cary Baskin		75202,~~000~~333		75,000
	$	1,~~310~~453,~~679~~387	$	1,290,304

Rick Mikles

On November 15, 2017, the Company executed an unsecured promissory note in the amount of $50,000, payable to the Company’s chairman, Rick Mikles. The note was payable on December 1, 2017 with interest at 4% per annum. On December 1, 2017, the payment date was extended to June 1, 2018. The balance remains outstanding.

On February 15, 2018, the Company executed a promissory note in the amount of $25,000 payable to Rick Mikles, the Company’s Chairman. The note was due and payable on June 1, 2018 together with interest at 4% per annum. Pursuant to the terms of the note, if the note and accrued interest is not paid by the due date, interest at 12% per annum shall be accrued on the outstanding balance until paid in full. The balance at December 31, 2018 was $27,125 which includes unpaid interest.

On March 2, 2018, the Company executed an unsecured promissory note in the amount of $200,000 payable to Rick Mikles, the Company’s Chairman. The note was due on June 1, 2018 together with interest of $2,500. Pursuant to the terms of the note, there was a 15-day grace period, which ended on June 16, 2018 at which time a 15% penalty of the unpaid balance became due and payable together with the unpaid principal and accrued interest. The balance at December 31, 2018 was $~~475~~232,~~000~~875, which includes unpaid interest and penalties.

During the year ended December 31, 2018, the Company received various loans from the Company’s chairman, Rick Mikles, with a balance of $~~200~~475,000 as of December 31, 2018. These loans were non-interest bearing and payment is due on demand.

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~~Accrued~~Since ~~interest~~June ~~incurred~~30, on2019, through the ~~outstanding~~filing ~~loans~~date toof this report the ~~chairman~~company ~~for~~has ~~the~~received ~~three~~$496,238 ~~months~~in ~~ended~~additional ~~March~~loans ~~31,~~from Mr. Mikles. The notes bear interest at 10%. In February 2019 ~~was~~the Company and Mr. Mikles agreed to consolidate all outstanding debt and accrued interest into a single Note in the amount of $5928,~~750~~238. The Note is payable upon demand

Since March 31, 2019, through the filing date of this report the company has received $496,000 in additional loans from Mr. Mikles. The notes bear interest at 10%. In February 2021 the Company and Mr. Mikles agreed to consolidate all outstanding debt and accrued interest into a single Note in the amount of $928,238. The Note is payable upon demand.

Wayne Miller

On November 27, 2017, the Company executed an unsecured promissory note in the amount of $200,000, payable to Mr. Wayne Miller, a shareholder of the Company. The note was due and payable with interest of $2,000 on December 31, 2017. The note was repaid in full, with interest on December 22, 2017. Under the note agreement, the Company issued warrants to purchase 1,000,000 shares at an exercise price of $0.15 per share. The warrants expired on the first anniversary date of the initial exercise date of the warrants. The Company evaluated the warrants in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the warrants did not meet the definition of a liability and therefore did not account for them as a separate derivative liability. The fair value of the warrants was calculated using the Black-Sholes model amounting to $55,072, and was recorded as a debt discount and amortized over the term of the note. As of December 31, 2017, the debt discount was fully amortized.

On December 6, 2017, the Company executed an unsecured promissory note in the amount of $150,000 payable to Mr. Wayne Miller, a shareholder of the Company. The note was due and payable on March 12, 2018, with interest of $6,000. Under the note agreement, the Company issued warrants to purchase 1,000,000 shares at an exercise price of $0.15 per share. The warrants expire on the first anniversary date of the initial exercise date of the warrants. The Company evaluated the warrants in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the warrants did not meet the definition of a liability and therefore did not account for them as a separate derivative liability. The fair value of the warrants was calculated using the Black-Sholes model amounting to $42,345, and was recorded as a debt discount and amortized over the term of the note. As of December 31, 2018, the debt discount was fully amortized, and the principal balance of the note remains unpaid. Pursuant to the terms of the note, there was a 15-day grace period granted, which ended on March 27, 2018, at which a 15% penalty on the unpaid balance became due and payable along with the unpaid principal and any accrued interest.

On January 8, 2018, the Company executed an unsecured promissory note in the amount of $150,000 payable to Mr. Wayne Miller, a shareholder of the Company. The note was due and payable on April 8, 2018, with interest of $6,000. Pursuant to the terms of the note, there was a 15-day grace period, which ended on April 23, 2018 at which time a 15% penalty of the unpaid balance became due and payable together with the unpaid principal December 31, 2018 was $179,700, which includes unpaid principal, interest, and penalties. Under the note agreement, the Company issued warrants to purchase 1,000,000 shares at an exercise price of $0.15 per share. The warrants expire on the first anniversary date of the initial exercise date of the warrants. The Company evaluated the warrants in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the warrants did not meet the definition of a liability and therefore did not account for them as a separate derivative liability. The fair value of the warrants was calculated using the Black-Sholes model amounting to $47,867, and was recorded as a debt discount and amortized over the term of the note. As of December 31, 2018, the debt discount was fully amortized, and the principal balance of the note remains unpaid.

On March 22, 2018, the Company executed an unsecured promissory note in the amount of $20,000 payable to Mr. Wayne Miller, a shareholder of the Company. The note has interest at accruing at 10% per annum. The balance at December 31, 2018 was $10,250 which includes unpaid interest.

On October 4, 2018, the Company also borrowed $275,000 short-term payable to Wayne Miller. The balance as of December 31, 2018 is $281,875 which includes the unpaid principal and interest. This loan was due on April 3, 2019.

During the ~~three~~six months ended ~~March~~June 3130, 2019, the Company executed additional loans to Mr. Miller. The loan proceeds and accrued interest for the period were $~~14,625~~0 and $729,~~750~~250 respectively.

Paul Ladd

On March 22, 2018, the Company executed an unsecured promissory note in the amount of $50,000 payable to Paul Ladd, a shareholder. The note was due and payable on May 21, 2018 together with interest of $1,000. Pursuant to the terms of the note, there was a 15-day grace period, which ended on June 4, 2018 at which time a 15% penalty of the unpaid balance became due and payable together with the unpaid principal and accrued interest. The balance at December31, 2018 was $58,650 which includes the unpaid principal, interest, and penalties. Under the note agreement, the Company issued warrants to purchase 50,000 shares at an exercise price of $0.15 per share. The warrants expire on the first anniversary date of the initial exercise date of the warrants. The Company evaluated the warrants in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the warrants did not meet the definition of a liability and therefore did not account for them as a separate derivative liability. The fair value of the warrants was calculated using the Black-Sholes model amounting to $2,875 and was recorded as a debt discount and amortized over the term of the note. As of December 31, 2018, the debt discount was fully amortized, and the principal balance of the note remains unpaid.

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Paul Ladd

On March 22, 2018, the Company executed an unsecured promissory note in the amount of $50,000 payable to Paul Ladd, a shareholder. The note was due and payable on May 21, 2018 together with interest of $1,000. Pursuant to the terms of the note, there was a 15-day grace period, which ended on June 4, 2018 at which time a 15% penalty of the unpaid balance became due and payable together with the unpaid principal and accrued interest. The balance at December31, 2018 was $58,650 which includes the unpaid principal, interest, and penalties. Under the note agreement, the Company issued warrants to purchase 50,000 shares at an exercise price of $0.15 per share. The warrants expire on the first anniversary date of the initial exercise date of the warrants. The Company evaluated the warrants in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging – Contracts in Entity’s Own Stock and determined that the warrants did not meet the definition of a liability and therefore did not account for them as a separate derivative liability. The fair value of the warrants was calculated using the Black-Sholes model amounting to $2,875, and was recorded as a debt discount and amortized over the term of the note. As of December 31, 2018, the debt discount was fully amortized and the principal balance of the note remains unpaid.

Cary Baskin

On October 23, 2018, the Company also borrowed $75,000 in a non-interest bearing short-term payable to Cary Baskin, and was secured by shares owned by the Company’s CEO. The balance as of December 31, 2018 is $75,000. This loan was due on December 31, 2018.

~~Total~~On ~~interest~~April ~~expense~~4, ~~under~~2019, the ~~related~~Company ~~party~~executed ~~loans~~an ~~was~~unsecured ~~$15,375~~promissory ~~and~~note ~~$33,059~~in asthe amount of ~~March 31~~$100,000 ~~2019~~payable ~~and~~to ~~March~~Mr. ~~31,~~Cary ~~2018~~Baskin, ~~respectively.~~a ~~Such~~shareholder ~~interest~~of ~~was~~the ~~capitalized~~Company. asThe ~~part~~note ofhas ~~the~~interest ~~outstanding~~at ~~loan~~accruing ~~balance~~at 10% per annum.

~~Since~~Total ~~March~~interest 31expense for the three and six months ended June 30, 2019 was $42,078 ~~through~~and $58,083 and $64,591 and $176,150 for the ~~filing~~three ~~date~~and ofsix ~~this~~months ~~report~~ended the ~~Company~~three ~~has~~and ~~received~~six ~~$589~~months ended June 30,~~126~~ in2018. ~~additional~~Such ~~loans~~interest ~~from~~was ~~Mr.~~capitalized ~~Baskin.~~as ~~The~~part ~~notes~~of ~~bear~~the ~~interest~~outstanding atloan ~~10%~~balance.

Since ~~March~~June 3130, 2019, through the filing date of this report the ~~Company~~company has received $~~450~~489,~~000~~127 in additional loans from ~~other~~Mr. ~~related parties~~Baskin. The notes bear interest at 10%.

Since June 30, 2019, through the filing date of this report the company has received an additional $450,000 in additional loans from related parties.

NOTE 8 - STOCKHOLDERS' EQUITY

Common Stock

On January 1, 2019, under an employment agreement, the Company issued 20,000,000 shares to its Chief Executive Officer. Under this agreement there is no specific performance or time -based metrics. The shares were valued at fair on the date of issuance.

On ~~February~~May 1215, ~~2018~~2019, the Company ~~entered~~issued ~~into an employment agreement with Rick Mikles~~4, ~~the Company's Chairman~~000,000 shares to ~~become Chief Marketing Officer. The agreement has~~ a ~~three-year term~~Director, anJerald ~~annual~~Horowitz ~~base~~for ~~salary~~business ofdevelopment ~~$26,000~~efforts. ~~and~~The ashares ~~quarterly~~were ~~payment~~valued ~~based~~at fair on ~~3% of~~ the ~~quarterly~~date ~~revenue~~of ~~recognized by the Company~~issuance. ~~Mr.~~ ~~Mikles~~Through ~~was~~these ~~granted 5~~efforts,~~000,000~~ ~~shares of~~ the Company's ~~common stock, valued at its trading price of $0.10 per share, which vested immediately. He~~ was ~~granted~~introduced ~~5,000,000 options~~ to ~~purchase~~a ~~common~~large ~~stock~~retailer ofwhich ~~the~~resulted ~~Company~~in ~~at $0.10 per share. These options have~~ a ~~three~~multi-~~year~~store ~~expiration and vest one option per every 2 dollars of revenue recognized by the Company~~contract.

Stock Based Compensation

The Company has issued and outstanding two types of options, time vesting and performance vesting.

Options - Time Vesting

The following table shows the stock option activity during the period ended June 30, 2019:

			Weighted
	Number of		Average
	Options		Exercise Price
Options outstanding at beginning of period	$	13,904,166	$	0.10
Changes during the period:
Granted - at market price		-		-
Exercised		-		-
Forfeited		-		-
Adjustments		-		-
Options outstanding at end of period		13,904,166		0.10
Options exercisable at end of period		13,841,666		0.10
Weighted average fair value of options granted during the period	$	-	$	-

Costs incurred in respect of stock-based compensation for employees, advisors and consultants for the three and six month periods ended June 30, 2019 were $17,563 and $66,791, respectively. Costs incurred in respect of stock based compensation for employees, advisors and consultants for the three and six month periods ended June 30, 2018 were $119,554 and $249,116, respectively. The expense is included in selling, general and administrative expenses in the statement of operations

Unrecognized compensation costs related to options as of June 30, 2019 was $8,375, which is expected to be recognized ratably over a weighted average period of approximately 9 months.

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Options - Time Vesting

The following table shows the stock option activity during the period ended March 31, 2019:

			Weighted
	Number of		Average
	Options		Exercise Price
Options outstanding at beginning of period		13,904,166	$	0.10
Changes during the period:
Granted - at market price		-		0.10
Exercised		-		-
Forfeited		-		0.10
Adjustments		-		-
Options outstanding at end of period		13,904,166		0.10
Options exercisable at end of period		13,591,666		0.10
Weighted average fair value of options granted during the period		-		-

Costs incurred in respect of stock-based compensation for employees, advisors and consultants for the three-month periods ended March 31, 2019 were $49,230. Costs incurred in respect of stock based compensation for employees, advisors and consultants for the three month periods ended March 31, 2018 were $129,562. The expense is included in selling, general and administrative expenses in the statement of operations.

Unrecognized compensation costs related to options as of March 31, 2019 was $25,938, which is expected to be recognized ratably over a weighted average period of approximately 12 months.

Options - Performance Vesting

The options vest based on Company performance with one option vesting for every two dollars of revenue, vesting quarterly. The following table shows the stock option activity during the period ended ~~March~~June 3130, 2019:

				Weighted
	Number of			Average
	Options			Exercise Price
Options outstanding at beginning of period		26,081,808		$	0.10
Changes during the period:
Granted - at market price					~~0.10~~-
Exercised		-			-
Expired/forfeited		-(36,967	)		0.10
Adjustments					-
Options outstanding at end of period		26,~~081~~044,~~808~~841			0.10
Options exercisable at end of period		910,~~739~~690,~~785~~742			0.10
Weighted average fair value of options granted during the period		-		$	-

These options were issued to individuals for their business development efforts. The costs incurred in respect of stock- based compensation for employees, advisors and consultants for the three- and six month periods ended ~~March~~June 3130, 2019 were $4086,~~953~~118 and $127,073, respectively. Costs incurred in respect of stock based compensation for employees, advisors and consultants for the three and six month periods ended ~~March~~June 3130, 2018 were $~~142~~(12,~~067~~082) and $118,646, respectively. The expense is included in selling, general and administrative expenses in the statement of operations.

Unrecognized compensation costs related to options as of ~~March~~June 3130, 2019 was $1,~~421~~335,~~600~~ 481 which is expected to be recognized ratably over a weighted average period of approximately 1310 months.

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Warrants

The following table shows the warrant activity during the period ended ~~March~~June 3130, 2019:

				Weighted
	Number of			Average
	Warrants			Exercise Price
Warrants outstanding at beginning of period		32,~~050~~000,000		$	0.1510
Changes during the period:
Granted		-			-
Exercised		-			-
Expired/forfeited		(12,~~050~~000,000	)		0.1510
Warrants outstanding at end of period		~~2,000,000~~-			0.15
Warrants exercisable at end of period		~~2,000,000~~-		$	0.15

Costs incurred for warrants issued to related parties for the conversion of debt were recorded as interest expense ~~and was $0 and $50,741~~ for the three and six months ended ~~March~~June 3130, 2019 were $-0- and ~~2018~~$367,662, respectively.

NOTE 9 - BASIC AND DILUTED LOSS PER SHARE

Basic net loss per share is calculated by dividing the loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company's dilutive common stock equivalent shares, which include incremental common shares issuable upon i) the exercise of outstanding stock options and warrants and (ii) vesting of restricted stock units and restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is dilutive. Since the Company had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and dilutive net loss per share are equal.

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The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive.

	Three Months Ended
	For the Period Ended
	March 31,
	June 30,
	2019		2018
Stock Options		39,~~985~~949,~~974~~007		42,841,094
Warrants		~~2,000,000~~-		3,050,000
Total		4139,~~985~~949,~~974~~007		45,891,094

NOTE 10 - COMMITMENTS AND CONTINGENCIES

16(b) Litigation

On September 26, 2016, Registrant filed in the United States District Court for the Middle District of Florida a Complaint against defendants The Mazzal Trust, Nissim S. Trabelsi and Shawn Telsi (collectively the “Defendants”), seeking the disgorgement of profits obtained by Defendants and certain of their shareholder affiliates defined under Rule 16a-1(a)(1) under the Exchange Act defined below (collectively, the “Group”) through “short swing profits” in violation of Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, Registrant alleged that the Group acted under the guidance and control of the Defendants, whose individual defendants had filed forms 3 and 4 with the Securities and Exchange Commission (the “SEC”, declaring themselves to be “insiders” for the purpose of Section 16(b). The Group owned 100% of the shares of Registrant at the time that members of the group were engaged in the sale and purchase of such shares. The sales and purchases referenced all occurred with ~~three~~six months of other sales and purchases, subjecting Defendants to disgorge to Registrant all profits made by the Group in such sales and purchases. As detailed in paragraphs 16-22 of the Complaint, the total profits received by the Group is $1,695,689. Accordingly, Registrant has demanded the return of all such profits to Registrant plus the statutory payment of attorneys’ fees.

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On August 24, 2017, the Plaintiff received a Clerk’s Entry of Default against Nissim Trabelsi. The Plaintiff filed a Motion for Default Judgment for damages against Trabelsi on September 13, 2017, which to date has not been addressed by the Court. On March 5, 2018, Nissim Trabelsi filed a notice of bankruptcy. The Plaintiff is still pursuing its options in the Case and the Court has yet to address the service issues with the Mazzal Trust.

NOTE 11 –- CONCENTRATIONS

For the three months ended ~~March~~June 3130, 2019, four customers represented 3530%, 2729%, 1318% and 1211% of net ~~customer installation and product sale~~ revenue. For the three months ended ~~March~~June 3130, 2018, ~~the company recognized installation revenue of $178,898 from~~ one customer, ~~which~~represented ~~represents 37~~36% of ~~revenue~~net ~~for the quarter~~revenue.

AtFor ~~March~~the 31six months ended June 30, 2019, ~~two~~three customers represented 7130%, 23% and 1614% of net ~~accounts receivable~~revenue. AtFor ~~December~~the 31six months ended June 30, 2018, ~~two~~one ~~different~~customer ~~customers~~ represented 8324% and ~~18%~~one ~~respectively~~customer represented 12% of net ~~accounts receivable~~revenue.

~~The~~At ~~Company~~June ~~purchases~~30, ~~substantially~~2019, ~~all~~three ~~its~~customers ~~inventory~~represented ~~from~~35%, ~~one~~32% ~~supplier.~~and ~~The~~25% ~~Company~~of ~~does~~accounts ~~not have any commitments with this supplier for minimum purchases~~receivable.

The Company purchases substantially all of its inventory from one supplier. The Company does not have any commitments with this supplier for minimum purchases.

NOTE 12 - SUBSEQUENT EVENTS

Since ~~March~~June 3130, 2019, through the filing date of this report the Company has received $496,000 in additional advances and loans from the Chairman of the Board. In February 2021, the Company agreed to consolidate the total loans, advances and accrued interest into a single Note in the amount of $928,238, the full amount of which is payable upon demand. Since ~~March~~June 3130, 2019 through the filing date of this report the Company received $~~589~~489,126 from Mr. Baskin and a further $~~500~~450,000 from other related parties.

Subsequent to ~~March~~June 3130, 2019 through the filing date, the Company has issued 4544,983,333 shares of common stock. 11,200,000 shares were issued to the Chairman of the Board in exchange for the cancellation of 14,000,000 stock options outstanding. In addition 4,000,000 shares were issued to a Director, Jerry Horowitz in exchange for business development efforts. Through these efforts, the Company was introduced to a large retailer which resulted in a multi-store contract.

On ~~September~~July 103, 2019, the Company ~~executed~~issued ~~an unsecured $275~~2,500,000 ~~promissory~~shares ~~note payable to Randy Fluitt, a Company shareholder. The Note bears interest of 10% per annum. The Note is due and payable~~ in ~~the~~exchange ~~amount~~for of $~~302~~192,500 ~~on or before the Maturity Date of February 1~~, ~~2020.~~which ~~The~~was ~~Company’s~~discounted ~~failure~~from tofair ~~pay the principal and interest within 15 days of the Maturity Date~~value, will trigger a penalty of 10% of any amounts unpaid at the end of this period. The Company did not repay the loan by the Maturity Date and accrued the penalty as interest expense. In addition, 2,000,000 warrants are to bean ~~issued~~unrelated ataccredited ~~a strike price of $~~investor.~~10 with a one year maturity.~~

~~On December 19, 2019, the Company issued 2,500,000 shares in exchange for $192,500 to an unrelated accredited investor.~~16

On November 26, 2019, the Company received a third-party loan from the Korenstra Family Foundation for $150,000.

In April 2020, the Company received an unsecured loan (the “SBA Loan”) under the Small Business Administration (“SBA”) Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security Act CARES Act through Chase Bank (“Lender”). The SBA Loan has a two-year term expiring on April 2022. The SBA Loan has a principal amount of $87,457 with an interest rate of 1.0%. The Company expects that the full principal amount of the loan will be forgiven. Interest accrues during the period between funding date and the date the loan is forgiven. The Company has not yet applied for loan forgiveness but plans to in a future period.

In May 2020, the Company received an unsecured loan under the Small Business Administration (“SBA”), Economic Injury Disaster Loan (“EIDL”) program to assist business businesses effected by the COVID-19 pandemic. The EIDL Loan has a thirty-year term and has a principal amount of $150,000 with an interest rate of 3.75%. The Company expects that the full principal amount of the loan will be forgiven. Interest accrues during the period between funding date and the date the loan is forgiven. The Company has not yet applied for loan forgiveness but plans to in a future period.

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On November 26, 2019, the Company received a third-party loan from the Korenstra Family Foundation for $150,000.

In April 2020, the Company received an unsecured loan (the "SBA Loan") under the Small Business Administration ("SBA") Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Security Act CARES Act through Chase Bank (“Lender”). The SBA Loan has a two-year term expiring on April 2022. The SBA Loan has a principal amount of $87,457 with an interest rate of 1.0%. The Company expects that the full principal amount of the loan will be forgiven. Interest accrues during the period between funding date and the date the loan is forgiven. The Company has not yet applied for loan forgiveness but plans to in a future period.

On February 11, 2020, the Company entered into a Factoring and Security Agreement with Factors Southwest, LLC (“FSW”). The Company agrees to offer all of its accounts arising time to time from the ordinary course of business to FSW. FSW accepts those accounts at its sole discretion and is under no obligation to purchase the accounts. The purchase price for each factored account will be the net face account less a factoring fee of .58%. Upon purchase, FSW will advance the Company the advanced purchase amount equal to 80% of the net face amount. The remaining amounts will be held by FSW in a reserve account until all obligations of the Company are met.

In May 2020, the Company received an unsecured loan under the Small Business Administration ("SBA"), Economic Injury Disaster Loan (“EIDL”) program to assist business businesses effected by the COVID-19 pandemic. The EIDL Loan has a thirty-year term and has a principal amount of $150,000 with an interest rate of 3.75%. The Company expects that the full principal amount of the loan will be forgiven. Interest accrues during the period between funding date and the date the loan is forgiven. The Company has not yet applied for loan forgiveness but plans to in a future period.

On December 7, 2020, the Company issued a convertible promissory note to Tysadco Partners, LLC for the sum of $156,750. The Note bears interest of 12% per annum until the Note becomes due and payable on December 7, 2022 (Maturity Date). Any amount of principal or interest on this Note which is note repaid by the Maturity Date shall then bear interest at 20% per annum. At any time after 180 days from the Note’s inception until the Maturity Date or payment date, Tysadco may convert the balance or any portion of the balance to Common Stock at the lower of $.15 per share or 80% of the Market Price. Where the Market Price is defined as the ten day trading period prior to the conversion date.

On March 11, 2021, the Company closed a purchase agreement between the Company and Quantum Energy and the Company and Quantum’s owner, Jim Collins. Customer lists and name recognition were acquired from Quantum for $1. Further, the Company shall pay a 10% commission for any sales derived from Quantum’s pre-existing sales or audits that generate revenue for the Company. Quantum’s owner, Jim Collins agreed to a consulting agreement with the Company for a three year period. This consulting agreement states that Mr. Collins shall act as a sales manager, primarily in the Washington State area and he shall receive an 8% commission on any new sale generated. During this three year period, Mr. Collins shall receive 2,000,000 shares of the Company, vesting one third each year. The Company executed a consulting agreement with Justin Collins to be the Company’s National Project Manager. Under this agreement, Mr. Justin Collins, shall receive a commission of 6% on new sales and an additional bonus of 20% on the differential between budgeted and actual expense, should budgeted expense exceed actual. After a 90 day period, the Company has agreed to negotiations, at its sole discretion, for Mr. Justin Collins to become the Company’s Chief Operating Officer. The stated salary for this position is $80,000 per annum.

18On March 25, 2021, the Company executed an employment agreement with Justin Collins to become the Company’s National Project Manager. The term of the employment agreement is three (3) years commencing on March 29, 2021. This position reports to the Company’s CEO and will encompass the head of Company operations and management of the Company’s Washington location. The salary for this position shall be $80,000 per annum. Under this agreement, Mr. Justin Collins, shall receive a commission of 6% on new sales and an additional bonus of 20% on the differential between budgeted and actual expense, should budgeted expense exceed actual. Mr. Justin Collins also receives 1,000,000 options with a strike price of $.10 per share with annual vesting over a three year time period and expiring three years from the grant date.

On August 10, 2021, we announced the appointment of Mr. Bruce R. Albertson to our Board of Directors. Mr. Albertson replaces Jennifer Peek, whose business demands, and travel schedule prevent her from continuing to fulfill her role. Mr. Albertson will also serve as Chair of Znergy’s Audit Committee, a position formerly held by Ms. Peek.

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CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “"Securities Act”"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “"Exchange Act”"). We have based these forward-looking statements on our current expectations and projections about future events, and they are applicable on as of the dates of such statement. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “"may,~~” “~~" "will,~~” “~~" "should,~~” “~~" "could,~~” “~~" "would,~~” “~~" "forecast,~~” “~~" "expect,~~” “~~" "plan,~~” “~~" anticipate,~~” “~~" believe,”" “estimate,~~” “~~" continue,” " or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the heading “"Risk Factors” " and those listed in our other SEC filings. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available on our website or otherwise, and we undertake no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report. Throughout this Quarterly Report on Form 10-Q we will refer to Znergy, Inc., together with its subsidiaries, as the “"Company,~~” “~~" "we,~~” “~~" "us,” " and “"our”."

The following discussion and analysis of our financial condition should be read together with our unaudited Consolidated Financial Statements and related notes included in this Form 10-Q as well as our audited Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on September 4, 2020.

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

Overview

The Company was formed in January 2013 as a Nevada corporation. The original business plan of the Company was to build and sell multi-family housing projects. The Company acquired a parcel of land in Taunton, Massachusetts, from The Mazzal Trust, a trust of which the founder of the Company, Nissim Trabelsi, was the Trustee, in exchange for shares of the Company's common stock, and began development of the project and construction of multi-family units.

On October 26, 2015, the Company acquired Global ITS, Inc. and its wholly owned subsidiary, Znergy, Inc. in order to expand into the Energy Efficiency (EE) marketplace, focusing on commercial lighting and green project financing. On February 9, 2016, the Company agreed to sell to the Mazzal Trust the real property which the Trust had previously sold to the Company and the Trust returned to the Company 149,950,000 of the 150,000,000 shares of the Company's common stock owned by the Trust. This transaction caused a change of control with Global being the accounting acquirer. The Company is now focused solely on the EE marketplace with an emphasis on LED retrofitting and installing new lamps.

The Company determined that Global ITS, Inc. served no purpose for the Company. It held no assets or operations, had been dormant for over a year, except for the operations of its wholly owned Subsidiary. On October 1, 2018, the Company sold 100% of its shares in Global to Peter Peterson, a shareholder of the Company and a creditor of Global for a nominal amount. The sale did not include Global's investment in its subsidiary.

The Company is a provider of energy-efficient lighting products, lighting controls and energy management solutions. The Company offers a full turn-key lighting solution which includes economic assessments, energy efficient analysis, installation and rebate support for the Company's customers. The Company's business primarily involves retrofitting existing lighting solutions from traditional high intensity metal halide and fluorescent lighting to energy efficient LED (Light Emitting Diode) technology.

Managing energy consumption and the associate costs is increasingly important to building owners. Technological advancements in LED, together with significant private and public incentives for sustainability initiatives have made lighting infrastructure changes an effective way for building owners to cut energy costs. LED lighting provides energy efficiency, long life, low running temperatures and increasing technology such as dimmable lights.

The Company does not have long term contracts with its customers and the Company's revenue comes from the sales of lighting systems involving the replacement of existing lighting fixtures with new energy efficient LED fixtures. In addition, the Company generates revenue from available utility incentives and rebate programs.

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The Company provides its turn-key service though a detailed evaluation of the customer's needs and performing an audit of the customer's current energy consumptions and costs, together with an analysis of the benefits of retrofitting their lights. Typically, the customer experiences an average payback on their investment between 12 and 24 months.

The Company intends to grow organically by selling energy efficiency (EE) and commercial security (CS) products to industrial and commercial businesses as well as municipal and state governments, universities and colleges, K-12 schools, and hospitals (the “"MUSH” " market). Strained government budgets have convinced state and local governments across the United States to embrace a new form of performance-based investments in energy efficiency offered by Energy Services Companies, or ESCOs. An ESCO provides energy-efficiency-related and other value-added services and for which performance contracting is a core part of its energy-efficiency services business. In a performance contract, the ESCO guarantees energy or financial savings for the project, which means ESCOs only make money if the project performs as promised. A study prepared by Allied Market Research indicated that the market is expected to grow at a Compound Annual Growth Rate of 13.76% during the forecast period 2014-2020 and reach $44.4 billion by 2020.

The Company plans to increase its competitive position by providing financing to customers for installation projects through a strategic partnership the Company has developed with a well-established funding group focused on energy efficiency projects.

Results of Operations

The Company had revenues of $~~186~~416,~~618~~774 and $~~482~~259,~~972~~582 for the three-month ~~period~~periods ended ~~March~~June 3130, 2019, and 2018, respectively. The Company had revenues of $603,392 and $742,554 for the six-month periods ended June 30, 2019, and 2018, respectively. Revenues in ~~2019~~2018 and 2018 comprise LED installation projects and associated rebates from utilities. The ~~decrease~~increase in revenues for the three-month period is due to ascontinued ~~compared~~organic togrowth of the ~~same~~core ~~period~~business. inThe ~~2018~~decrease ~~was~~in ~~primarily~~revenues ~~driven~~for by the ~~Covid~~six-19month ~~pandemic~~period ~~and~~is ~~related~~due ~~closures~~to ~~and~~lost ~~shutdowns~~contracts. InThe ~~late~~Company ~~2018~~expects ~~and~~to ~~the~~continue ~~first~~to ~~quarter~~see ofincreased ~~2019~~revenue ~~the~~in ~~Company~~future ~~began~~periods ~~expanding~~but ~~inventory~~can ~~and~~make ~~installation~~no ~~staff~~assumptions inas ~~preparation~~to ~~for~~size aof ~~retail~~any ~~outlet~~increases ~~conversion~~or ~~project~~certainty ~~which~~thereof. ~~was~~Additionally, tothe ~~encompass~~normal asales ~~total~~cycle of ~~514~~the ~~stores~~business contains variability period over period.

The Company incurred costs of revenue of $~~175~~391,~~402~~571 and $~~229~~176,~~628~~368 for the three-month ~~period~~periods ended ~~March~~June 3130, 2019 and 2018, respectively. The Company incurred costs of revenue of $566,973 and $405,996 for the six-month periods ended June 30, 2019 and 2018, respectively. Costs of revenue in 2019 and 2018 comprise primarily LED product and installation costs, including labor and rental equipment. Cost of revenue as a percentage of revenue can be impacted by the type of jobs and if the job requires customized lighting.

The Company had ~~selling,~~ general and administrative expenses of $2842,~~090,664~~801 and $1583,~~234,352~~649 for the three-month ~~period~~periods ended ~~March~~June 3130, 2019 and 2018, respectively. The ~~increase~~Company ~~for~~had ~~the~~selling, ~~three-month~~general ~~period~~and isadministrative ~~primarily~~expenses ~~due~~of to$2,933,465 anand ~~increase~~$1,818,001for inthe ~~stock~~six-month ~~based~~periods ~~compensation~~ended June ~~and~~30, ~~associated taxes in~~ 2019 asand ~~compared to~~ 2018, respectively. OnThe ~~January~~increase 1,for ~~2019,~~the wethree-month ~~issued~~period ~~20,000,000~~is ~~shares~~also toprimarily ~~our~~due ~~CEO.~~to ~~The~~an ~~expense~~increased ~~associated~~equity-based ~~with~~compensation ~~this~~costs. ~~grant~~The ~~was~~increase ~~$1,800,000~~for ~~which was~~ the ~~main~~six-month ~~driver~~period ofis ~~our~~primarily ~~March~~due ~~31,~~to ~~2019~~an increase in ~~general~~stock-based ~~and~~compensation ~~administrative expenses~~costs.

The Company incurred interest expense of $1542,~~375~~708 and $~~111~~58,~~559~~083 for the three and six-month ~~period~~periods ended ~~March~~June 3130, 2019. This is compared to $64,591 and ~~2018~~$176,150 ~~respectively.~~for ~~The~~the ~~decrease~~same periods in ~~interest~~2018. ~~expense~~This is the result of the ~~exchange~~additional ofNotes ~~debt~~Payable ~~for~~and ~~common~~Advances ~~stock~~the ~~during~~company has entered into to finance the ~~period~~operations of the Company.

The Company had net losses of $858,529 and $608,514 for the three-month periods ended June 30, 2019 and 2018, respectively, and net losses of $2,~~093~~951,~~364~~893 and $1,~~092~~701,~~567~~081 for the ~~three~~six-month periods ended ~~March~~June 3130, 2019 and 2018, respectively.

Liquidity and Going Concern Discussion

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of ~~March~~June 3130, 2019, the company had a working capital deficit of $2,~~123~~574,~~215~~979, insufficient cash resources to meet its planned business objectives, and ~~accumulated~~recurring losses of ($18858,~~236~~529) and ($2,~~340~~951,893) for the three and six month’s ended June 30, 2019 and ($608,514) and ($1,701,081) for the three and six month’s ended June 30, 2018. The Company intends to fund operations through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements through 12April, ~~months from the date of issuance~~2022. As a result, the Company is seeking additional funding through debt and equity financing arrangements, or other funding opportunities.

The Company's success is dependent upon, among other things, obtaining the additional financing to continue operations and to execute its business plan. No assurances can be made that management will be successful in pursuing any of these strategies.

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Plan of Operation

The Company's anticipated plan of operation is to continue to (1) identify and train sales personnel in regions of the country that have advantageous utility company rebate programs, (2) identify and train lighting installation personnel where we have established sales personnel, (3) seek out the best current and incipient solutions in the Energy Efficiency marketplace and become a reseller of those solutions, (4) develop our own solutions for the EE marketplace, and (5) seek to acquire other businesses in the market where such acquisitions makes strategic sense and are accretive to earnings.

The Company continues to expand its solutions portfolio for both indoor and outdoor applications to capitalize on the evolving and growing market for intelligent networked systems that collect and exchange data to increase efficiency as well as provide a host of other economic benefits resulting from data analytics to better enable smart buildings and smart cities. The transition to solid-state lighting provides the opportunity for lighting to be integrated with other building automation systems to create an optimal platform for enabling the “"Internet of Things” " (IoT), which will support the advancement of smart buildings, smart cities, and the smart grid.

The Company's ability to grow its incipient operations is primarily dependent upon its ability to raise additional capital, most likely through the sale of additional shares of the Company's common stock or other securities. There can be no guarantee that the Company will be able raise additional capital on terms that are acceptable to the Company, or at all.

The realization of revenues in the next twelve months is important in the execution of the plan of operations. However, if the Company cannot raise additional capital by issuing capital stock in exchange for cash, or through obtaining commercial or bank financing, in order to continue as a going concern, the Company may have to curtail or cease its operations. As of the date of this Report, there were no formal or informal agreements to attain such financing. The Company cannot assure any investor that, if needed, sufficient financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for operations to continue.

Critical Accounting Policies

There have been no changes to our critical accounting policies from those included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on September 4, 2020.

Recently Issued Accounting Pronouncements

We are required to adopt certain new accounting pronouncements. See Note 2 to the condensed consolidated financial statements included in Item 1 of this Form 10-Q.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements or issued guarantees to third parties.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures that are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “"Exchange Act”") is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. We have carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this Quarterly Report.

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Based upon that evaluation we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to a material weakness in our internal control over financial reporting, which is described below.

Our management identified the following material weaknesses which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines although we plan to take steps to enhance and improve the design of our internal control over financial reporting, we have not been able to remediate the material weaknesses identified above.

The Company has not had sufficient internal accounting personnel working at their corporate office which has led to a lack of segregation of duties and timely closing processes, nor did we perform an effective assessment of our system of internal control. The accounting functions have been handled by a combination of third parties off-site and internal personnel which has hindered the Company’s ability to timely reconcile its accounts, maintain the proper controls under the underlying documentation and close its books and records. This was a result of the early stage in the Company's growth. The Company will be adding internal accounting personnel in 2020 which should allow the Company to start to remediate its internal control issues. The Company also hired a GAAP experienced consulting firm in January 2020.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the three-month period ended ~~March~~June 3130, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On June 26, 2016, Registrant filed in the United States District Court for the Middle District of Florida a Complaint against defendants The Mazzal Trust, Nissim S. Trabelsi and Shawn Telsi (collectively the “Defendants”), seeking the disgorgement of profits obtained by Defendants and certain of their shareholder affiliates defined under Rule 16a-1(a)(1) under the Exchange Act defined below (collectively, the “Group”) through “short swing profits” in violation of Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, Registrant alleged that the Group acted under the guidance and control of the Defendants, whose individual defendants had filed forms 3 and 4 with the Securities and Exchange Commission (the “SEC”, declaring themselves to be “insiders” for the purpose of Section 16(b). The Group owned 100% of the shares of Registrant at the time that members of the group were engaged in the sale and purchase of such shares. The sales and purchases referenced all occurred with ~~three~~six months of other sales and purchases, subjecting Defendants to disgorge to Registrant all profits made by the Group in such sales and purchases. As detailed in paragraphs 16-22 of the Complaint, the total profits received by the Group is $1,695,689. Accordingly, Registrant has demanded the return of all such profits to Registrant plus the statutory payment of attorneys’ fees.

On August 24, 2017, the Plaintiff received a Clerk’s Entry of Default against Nissim Trabelsi. The Plaintiff filed a Motion for Default Judgment for damages against Trabelsi on June 13, 2017, which to date has not been addressed by the Court. On March 5, 2018, Nissim Trabelsi filed a notice of bankruptcy. The Plaintiff is still pursuing its options in the Case and the Court has yet to address the service issues with the Mazzal Trust.

Item 5. Other Information.

None

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Item 6. Exhibits

(a) Exhibits

Exhibit No.		Description
3.1		Articles of Incorporation for BIDC (previously filed as an exhibit to the Company's registration statement on Form S-1, filed with the Commission on June 10, 2013)
3.2		Bylaws of BIDC (previously filed as an exhibit to the Company's registration statement on Form S-1, filed with the Commission on June 10, 2013)
3.3		Amended and Restated Articles of Incorporation, as filed with the Nevada Secretary of State on July 15, 2016 (previously filed as an exhibit to the Company's information statement on Form Def 14C, filed with the Commission on May 31, 2016)
10.1		Share Exchange Agreement, dated as of October 26, 2015 (previously filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on October 27, 2015)
10.2		Master Stock Purchase Agreement (previously filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on February 12, 2016)
10.3		Employment Agreement with Dave Baker (previously filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on October 4, 2016)
10.4		Employment Agreement with Dave Baker (previously filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on May 19, 2017)
10.5		Employment Agreement with Christopher Floyd (previously filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on May 19, 2017)
10.6		Employment Agreement with Ryan Smith (previously filed as an exhibit to the Company's Current Report on Form 8-K, filed with the Commission on July 12, 2017)
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350 as adopted pursuant to §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 Labels Linkbase Document*
101 PRE		XBRL Presentation Linkbase Document*

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SIGNATURES

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

ZNERGY, INC.

By: /s/ Dave Baker Dave Baker Chief Executive Officer and Director (Principal Executive Officer) Date: ~~July~~August 2231, 2021

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