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 ~~September 30~~March 31, ~~2016~~2017

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

For the transition period from to .

Commission file number: 000-49688

Speedemissions, Inc.

(Exact name of registrant as specified in its charter)

Florida	33-0961488
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1015 Tyrone Road Suite 710 Tyrone, GA	30290
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number (770) 306-7667

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, ~~and~~ “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 provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of ~~November~~May 45, ~~2016~~2017, there were ~~109~~118,~~914~~364,225 shares of common stock, par value $0.001, issued and outstanding.

Speedemissions, Inc.

TABLE OF CONTENTS

Cautionary Statement Relevant to Forward-Looking Information		3	3
PART I FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
ITEM 1		Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	17
ITEM 3		Quantitative and Qualitative Disclosures About Market Risk	16
ITEM 4.	Controls and Procedures	17
ITEM 4		Controls and Procedures	16
PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings	18
ITEM 1		Legal Proceedings	17
ITEM 1A.	Risk Factors	18
ITEM1A.		Risk Factors	17
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
ITEM 2		Unregistered Sales of Equity Securities and Use of Proceeds	17
ITEM 3.	Defaults Upon Senior Securities	18
ITEM 3		Defaults Upon Senior Securities	17
ITEM 4.	Mine safety disclosures	18
ITEM 4		Mine safety disclosures	17
ITEM 5.	Other Information	18
ITEM 5		Other Information	17
ITEM 6.	Exhibits	18
ITEM 6		Exhibits	17

CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q of Speedemissions, Inc. (references in this Report to “Speedemissions,” “Company,” “we,” “us” and “our” mean Speedemissions, Inc. and our consolidated subsidiaries) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that look to future events and consist of, among other things, statements about our anticipated future income including the amount and mix of revenue among type of product, category of customer, geographic region and distribution method and our anticipated future expenses and tax rates. Forward-looking statements include our business strategies and objectives and include statements about the expected benefits of our strategic alliances and acquisitions, our plans for the integration of acquired businesses, our continued investment in complementary businesses, products and technologies, our expectations regarding product acceptance, product and pricing competition, cash requirements and the amounts and uses of cash and working capital that we expect to generate. The words “may,” “would,” “should,” “will,” “assume,” “believe,” “plan,” “expect,” “anticipate,” “could,” “estimate,” “predict,” “goals,” “continue,” “project,” and similar expressions or the negative of these terms or other comparable terminology are meant to identify such forward-looking statements.

Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, including those described under Item 1A-Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016, some of which are beyond the Company’s control and are difficult to predict. We urge investors to consider all of these factors carefully in evaluating the forward-looking statements contained in this Quarterly Report on Form 10-Q. The Company’s future results and shareholder values may differ materially from those expressed or forecast in these forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this Report. Unless legally required, Speedemissions undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, or to update the reasons why actual results could differ from those expressed in, or implied or projected by, the forward-looking statements.

PART I - FINANCIAL INFORMATION

~~ITEM~~Item 1. Financial Statements

Speedemissions, Inc. and Subsidiaries

Consolidated Balance Sheets

	September 30, 2016			December 31, 2015
	March 31, 2017			December 31, 2016
	(unaudited)
Assets
Current assets:
Cash	$	61185,~~566~~652		$	-53,011
Notes receivable – current portion		-			56,200
Inventory		60,697			9,118
Certificate and merchandise inventory		9,435			9,476
Other current assets		47,807			49,932
Other current assets		59,288			34,295
Total current assets		294,156			112,061
Total current assets		130,289			99,971
Property and equipment, net		253,507			48,743
Property and equipment, net		49,926			92,933
Goodwill		210,884			390,985
Goodwill		390,985			390,985
Other assets		33,684			35,658
Other assets		35,409			34,990
Total assets	$	792,231		$	587,447
Total assets	$	606,609		$	618,879
Liabilities and Shareholders’ Deficit
Current liabilities:
Line of credit	$	2526,~~737~~856		$	26,~~592~~367
Notes payable		407,468			227,442
Current portion notes payable		354,383			449,437
Accounts payable		~~691~~463,~~569~~140			~~744~~678,~~827~~317
Accrued liabilities		~~472~~573,~~595~~813			~~501~~551,~~332~~377
Current portion - capitalized lease obligations		3,~~159~~399			273,~~326~~277
Current portion – deferred rent		2,~~362~~821			2,~~362~~821
Total current liabilities		1,~~602~~424,~~890~~412			1,~~529~~711,~~881~~596
Capitalized lease obligations, net of current portion		8,277			10,688
Notes payable, net of current portion		252,961			-
Deferred rent		36,587			34,091
Capitalized lease obligations, net of current portion		6,515			7,412
Total liabilities		1,647,754			1,574,660
Deferred rent, net of current portion		31,596			36,499
Total liabilities		1,715,484			1,755,507
Commitments and contingencies
Series A convertible, redeemable preferred stock, $.001 par value, 5,000,000 shares authorized, 5,133 shares issued and outstanding; liquidation preference: $5,133,000…		4,579,346			4,579,346
Series A convertible, redeemable preferred stock, $.001 par value, 5,000,000 shares authorized, 5,133 shares issued and outstanding; liquidation preference: $5,133,000		4,579,346			4,579,346
Shareholders’ deficit:
Common stock, $.001 par value, 250,000,000 shares authorized, 111,988,914 issued, with 109,914,225 shares outstanding at September 30, 2016 and December 31, 2015		111,919			111,919
Common stock, $.001 par value, 250,000,000 shares authorized, 120,438,914 issued with 118,364,225 shares outstanding at March 31, 2017 and December 31, 2016		120,369			120,369
Additional paid-in capital		16,259,851			16,259,851
Treasury stock at cost (2,074,689 shares)		(100,000	)		(100,000	)
Accumulated deficit		(21,~~892~~782,~~261~~819	)		(2122,~~806~~027,~~897~~626	)
Total shareholders’ deficit		(5,~~620~~502,~~491~~599	)		(5,~~535~~747,~~127~~406	)
Total liabilities and shareholders’ deficit	$	~~606~~792,~~609~~231		$	~~618~~587,~~879~~447

See accompanying notes to consolidated financial statements.

Speedemissions, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31
	2016			2015			2016			2015
	2017			2016
Revenue	$	~~900~~897,~~640~~411		$	~~846~~885,~~082~~551		$	~~2,627,988~~		$	~~2,473,746~~
Costs of operations:
Costs of revenue:
Cost of emission certificates		~~159~~166,~~360~~544			~~150~~159,~~543~~575			~~468,893~~			~~454,193~~
Store operating expenses		~~526~~517,~~684~~277			~~533~~522,~~808~~030			~~1,563,006~~			~~1,648,347~~
General and administrative expenses		~~179~~203,~~181~~951			~~180~~171,~~068~~146			~~509,814~~			~~647,529~~
(Gain) loss on sale of non-strategic assets		-			(500	)		(862	)		286
Gain from disposal of non-strategic assets		(74,099	)		(4,345	)
Operating income (loss)		35,415			(17,837	)		87,137			(276,609	)
Operating income		83,738			37,145
Interest income (expense)
Other income (expense)
Interest income		-			755			1,007			2,265
Other income		199,910			-
Interest expense		(66,490	)		(43,934	)		(173,508	)		(146,100	)
Interest income		-			755
Interest expense, net		(66,490	)		(43,179	)		(172,501	)		(143,835	)
Interest expense		(38,841	)		(62,907	)
Net loss	$	(31,075	)	$	(61,016	)	$	(85,364	)	$	(420,444	)
Other income (expense), net		161,069			(62,152	)
Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Net income (loss)	$	244,807		$	(25,007	)
Weighted average common shares outstanding, basic and diluted		109,914,225			108,964,225			109,914,225			108,964,225
Basic and diluted net income (loss) per share	$	0.00		$	(0.00	)
Weighted average common shares outstanding, basic and diluted		118,364,225			109,914,225

See accompanying notes to consolidated financial statements.

Speedemissions, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2016			2015
	2017			2016
Cash flows from operating activities:
Net loss	$	(85,364	)	$	(420,444	)
Net income (loss)	$	244,807		$	(25,007	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities:
Depreciation and amortization		4310,~~007~~203			5615,~~650~~469
(Gain) loss on sale of non-strategic assets		(862	)		286
Gain from derecognition of accounts payable		(199,910	)		-
Gain from disposal of non-strategic assets		(74,099	)		(4,345	)
Changes in operating assets and liabilities:
Certificate and merchandise inventory		40			2,243
Inventory		(51,579	)		(2,129	)
Other current assets		~~(24~~2,~~993~~126	)		~~55,073~~725
Other assets		(1,~~425~~974	)		(~~2,975~~755	)
Accounts payable and accrued liabilities		~~(81~~7,~~996~~170	)		~~218~~18,~~579~~335
Other liabilities		2(4,~~497~~903	)		(31,~~011~~089	)
Net cash used in operating activities		(149,096	)		(93,599	)
Net cash (used in) provided by operating activities		(64,211	)		3,382
Cash flows from investing activities:
Proceeds from notes receivable		51,208			35,664
Purchases of property and equipment		(214,968	)		-
Proceeds from asset sales		6,862			3,500
Proceeds from notes receivable		-			3,207
Purchases of property and equipment		-			(2,125	)
Proceeds from asset sales		254,200			4,345
Net cash provided by investing activities		5839,~~070~~232			377,~~039~~552
Cash flows from financing activities:
Proceeds from line of credit		2720,~~594~~600			292,~~000~~594
Payments on line of credit		(2820,~~448~~111	)		(218,~~210~~735	)
Proceeds from notes payable		~~462~~265,~~653~~000			~~438~~150,~~148~~761
Payments on notes payable		(~~282~~107,~~627~~094	)		(~~365~~80,~~252~~673	)
Payments on equipment financing obligations		-			(10,292	)
Payments on capitalized leases		(775	)		(10,872	)
Payments on capitalized leases		(26,580	)		(26,965	)
Net cash provided by financing activities		157,620			53,075
Net cash provided by financing activities		152,592			43,429
Net increase in cash		132,641			64,009
Net increase (decrease) in cash		61,566			(13,131	)
Cash at beginning of period		53,011			-
Cash at beginning of period		-			21,729
Cash at end of period	$	185,652		$	64,009
Cash at end of period	$	61,566		$	8,598
Supplemental Information:
Cash paid during the period for interest	$	~~173~~38,~~508~~841		$	~~146~~62,~~100~~907
Supplemental Disclosure of Non-Cash Activity:
Note receivable from sale of assets	$	-		$	2,496

See accompanying notes to consolidated financial statements.

Speedemissions, Inc.

Notes to Consolidated Financial Statements

~~September 30~~March 31, ~~2016~~2017

(Unaudited)

Note 1. Going Concern

The accompanying consolidated financial statements of Speedemissions, Inc. have been prepared on a going concern basis which contemplates the realization of assets and liquidation of liabilities in the normal course of business. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that may be necessary in the event the Company cannot continue as a going concern. References in this report to “Speedemissions,” the “Company,” “we,” “us” and “our” mean Speedemissions, Inc. and our consolidated subsidiaries.

Speedemissions has experienced recurring net losses which have caused an accumulated deficit of $21,~~892~~782,~~261~~819 at ~~September 30~~March 31, ~~2016~~2017. We had a working capital deficit of $1,~~472~~130,~~601~~256 at ~~September 30~~March 31, ~~2016~~2017 compared to a working capital deficit of $1,~~429~~599,~~910~~535 at December 31, ~~2015~~2016.

Our revenues for the ~~nine~~quarter ~~months~~ ended ~~September~~March 3031, ~~2016~~2017 and for the fiscal years ended December 31, ~~2015~~2016 and ~~2014~~2015 ~~were~~have ~~below~~been ~~our~~insufficient ~~expectations~~to ~~and~~attain ~~internal~~repeatable ~~forecasts~~profitable ~~primarily~~operations asand ato ~~result~~provide ofadequate ~~fewer~~levels ~~vehicle~~of ~~emissions~~cash ~~tests~~flow ~~and~~from ~~safety~~operations. ~~inspections~~While ~~being~~the ~~performed~~Company atreported ~~our~~net ~~stores.~~income ~~Our~~of ~~revenues~~$244,807 for the ~~nine~~quarter ~~months~~ ended ~~September~~March 3031, ~~2016~~2017, ~~and~~our ~~for~~profit ~~the~~included ~~fiscal~~two ~~years~~non-recurring ~~ended~~items. These ~~December 31~~non-recurring items were a gain of $199,910 ~~2015~~from derecognition of accounts payable and ~~2014~~a ~~have~~gain ~~been~~of ~~insufficient~~$74,099 tofrom ~~attain~~disposal ~~profitable~~of ~~operations~~non-strategic ~~and~~assets. Without tothese ~~provide~~two ~~adequate~~non-recurring ~~levels~~gains, we would have reported a net loss of ~~cash~~$29,202 ~~flow~~for ~~from~~the ~~operations.~~quarter ended March 31, 2017. Our near term liquidity and ability to continue as a going concern is dependent on our ability to generate sufficient revenues from our store operations to provide sufficient cash flow from operations to pay our current level of operating expenses, provide for inventory purchases and to reduce past due amounts owed to vendors and service providers. No assurances can be given that the Company will be able to achieve sufficient levels of revenues in the near term to provide adequate levels of cash flow from operations. Should an increase in revenues not materialize, we will seek to further reduce operating costs to bring them in line with reduced revenue levels. If the Company is unable to achieve near term profitability and generate sufficient cash flow from operations, and if the Company is unable to sufficiently reduce operating costs, we would need to raise additional capital or obtain additional borrowings beyond our existing credit facilities. We currently have very limited access to capital, including the public and private placement of equity securities and additional debt financing. No assurances can be given that additional capital or borrowings would be available or, if available, that we would be able to complete a capital raise or financing on satisfactory terms, to allow us to continue as a going concern. As a result of the Company’s history of losses and financial condition, there is substantial doubt about the ability of the Company to continue as a going concern. If the Company is unable to continue as a going concern, our shareholders will likely lose all of their investment in the Company.

OnWe ~~December~~have ~~13,~~been ~~2013~~unable ~~and~~to onmake ~~January~~all ~~10,~~required ~~2014,~~payments ~~the~~to ~~Circuit Court in~~ the ~~Twelfth~~federal ~~Judicial~~government ~~Circuit in and~~ for ~~Sarasota~~payroll ~~County,~~taxes ~~Florida~~withheld ~~(the~~from ~~“Court”),~~employee ~~entered~~paychecks anand ~~Order~~the ~~Granting~~associated ~~Approval~~matching ofemployer ~~Settlement~~payroll ~~Agreement~~taxes ~~(the~~from ~~“Order”)~~April ~~approving~~1, ~~among~~2015 ~~other~~through ~~things~~December 31, ~~the~~2015 ~~fairness~~and offor ~~the~~November ~~terms~~ and ~~conditions~~December of an2016. As ~~exchange pursuant to Section 3(a)(10)~~ of ~~the~~May ~~Securities~~5, ~~Act~~2017, ofwe ~~1933~~owed ~~(the~~approximately ~~“Securities Act”)~~$321,000, inincluding ~~accordance~~penalties ~~with~~and ainterest ~~Settlement~~assessed ~~Agreement~~through ~~(the~~December ~~“Settlement Agreement”) between the Company and IBC Funds~~31, ~~LLC~~2016, afor ~~Nevada limited liability company (“IBC”), in~~ the ~~matter~~previously ~~entitled~~described ~~IBC~~payroll ~~Funds,~~tax ~~LLC,~~obligations ~~vs.~~to ~~SpeedEmissions,~~the ~~Inc.,~~federal ~~Case Nos~~government. We ~~2013~~proposed CAa ~~008762~~payment NCplan ~~and~~to ~~2014 CA 000153 (~~the ~~“Actions”).~~federal ~~IBC~~government ~~commenced~~and ~~the~~made ~~Actions~~payments ~~against~~totaling usapproximately to$70,000 ~~recover~~from anSeptember ~~aggregate of $205~~30,~~643~~ of2015 ~~past-due~~through ~~accounts~~March ~~payable~~31, ~~which~~2017, ~~IBC~~but ~~had~~we ~~purchased~~have ~~from~~not ~~certain~~reached ofan ~~our~~agreed ~~vendors~~payment ~~pursuant~~schedule tofor the ~~terms~~remainder of ~~separate~~our ~~claim~~federal ~~purchase~~payroll ~~agreements~~tax ~~between~~obligations ~~IBC~~as ~~and each~~ of the ~~respective~~date ~~vendors~~of ~~(the~~this ~~“Assigned Accounts), plus fees and costs (the “Claim”)~~report. ~~The Assigned Accounts relate to certain research~~However, ~~technical,~~we ~~development~~made ~~and~~all ~~legal~~federal ~~services.~~tax ~~The~~deposits ~~Order provides~~ for ~~the~~2017 ~~full~~payroll ~~and~~periods ~~final~~through ~~settlement~~May ~~of the Claim and the Action. The Settlement Agreement became effective and binding on December 13~~5, ~~2013 and January 10, 2014, respectively~~2017.

~~The~~On ~~Settlement~~April ~~Agreement~~16, ~~provides~~2015, ~~that~~the inCompany noentered ~~event~~into ~~shall~~a ~~the~~revolving ~~number~~loan ofagreement ~~shares~~with ofCeltic ~~common~~Bank ~~stock~~(“CB”), ~~issued~~pursuant byto which the Company toinitially ~~IBC~~borrowed or$17,000 ~~its~~from ~~designee~~CB. Under inthe ~~connection~~terms ~~with~~of the ~~Settlement~~revolving ~~Agreement~~loan agreement, ~~when~~the ~~aggregated~~Company ~~with~~agreed ~~all~~to ~~other~~repay ~~shares~~the ofinitial ~~common~~loan, ~~stock~~plus ~~then~~interest, ~~beneficially~~for ~~owned~~a bytotal ~~IBC~~amount ~~and~~of ~~its~~$18,955 ~~affiliates~~by ~~(as~~October ~~calculated~~15, ~~pursuant~~2015. The toCompany ~~Section~~made ~~13(d) of~~ the ~~Securities~~required ~~Exchange~~six ~~Act~~monthly ofpayments ~~1934~~by (the ~~“Exchange~~October ~~Act”)~~15, ~~and~~2015 ~~the~~due ~~rules~~date. At ~~and~~their ~~regulations~~sole ~~thereunder)~~discretion, ~~result~~CB incan increase the ~~beneficial~~maximum ~~ownership~~availability byunder ~~IBC~~the ~~and~~revolving ~~its~~loan ~~affiliates~~agreement ~~(as~~above ~~calculated~~the ~~pursuant~~$17,000 toamount ~~Section~~established ~~13(d)~~upon of the ~~Exchange~~execution ~~Act~~of ~~and~~ the ~~rules~~revolving ~~and~~loan ~~regulations~~agreement ~~thereunder)~~and, ateffective ~~any~~April ~~time~~18, of2016, ~~more~~CB ~~than~~increased ~~9.99%~~our ofborrowing ~~the~~limit ~~common~~to ~~stock of the Company~~$33,200. ~~Pursuant~~At toMay ~~the~~5, ~~Settlement Agreement~~2017, the ~~Company~~outstanding ~~issued~~balance ~~59,098,059~~on ofour ~~its~~revolving ~~common~~loan ~~shares~~facility towith ~~IBC~~CB ~~during~~was ~~the~~approximately ~~year ended December 31~~$20,000 ~~2014,~~and inour ~~full~~cash ~~satisfaction~~balances ofwere ~~all~~approximately ~~amounts due IBC under the Settlement Agreement~~$11,000.

Our revenues during the years ended December 2016 and 2015, as well as the three months ended March 31, 2017, have been insufficient to attain repeatable profitable operations and to provide adequate levels of cash flow from operations. While the Company reported net income of $244,807 for the quarter ended March 31, 2017, our profit included two non-recurring items. These non-recurring items were a gain of $199,910 from derecognition of accounts payable and a gain of $74,099 from disposal of non-strategic assets. Without these two non-recurring gains, we would have reported a net loss of $29,202 for the quarter ended March 31, 2017. During the years ended December 31, 2016 and 2015 and the three months ended March 31, 2017, due to insufficient cash flow from operations and borrowing limitations under our line of credit facility, we have been extending payments owed to landlords and vendors beyond normal payment terms and deadlines. Until such vendors are paid within normal payment terms, no assurances can be given that required services and materials needed to support operations will continue to be provided. In addition, no assurances can be given that vendors will not pursue legal means to collect past due balances owed. Any interruption of services or materials would likely have an adverse impact on our operations and could impact our ability to continue as a going concern.

Furthermore, the Settlement Agreement provides that, for so long as IBC or any of its affiliates hold any shares of common stock of the Company, the Company and its affiliates are prohibited from, among other things, voting any securities of the Company in favor of: (1) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries, (2) a sale or transfer of a material amount of the Company’s assets or its subsidiaries’ assets, (3) any material change in the Company’s present capitalization or dividend policy, (4) any other material change in the Company’s business or corporate structure, (5) a change in the Company’s charter, bylaws, or instruments corresponding thereto (6) causing a class of the Company’s securities to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (7) causing a class of the Company’s equity securities to become eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act, (8) terminating the Company’s transfer agent, (9) taking any action which would impede the purposes and objects of the Settlement Agreement or (10) taking any action, intention, plan or arrangement similar to any of those enumerated above. These prohibitions may not be modified or waived without further order of the Court.

We have been unable to make all required payments to the federal government for payroll taxes withheld from employee paychecks and the associated matching employer payroll taxes from April 1, 2015 through December 31, 2015. As of November 4, 2016, we owed approximately $233,000 for 2015 payroll tax obligations to the federal government. We proposed a payment plan to the federal government and made payments totaling approximately $41,500 from September 30, 2015 through October 31, 2016, but we have not reached an agreed payment schedule for the remainder of our 2015 federal payroll tax obligations as of the date of this report. However, we made all federal tax deposits for 2016 payroll periods through September 30, 2016, but have not made payments for three fourth quarter 2016 payrolls for which the obligation to the federal government totals approximately $36,000.

On April 16, 2015, the Company entered into a revolving loan agreement with Celtic Bank (“CB”), pursuant to which the Company initially borrowed $17,000 from CB. Under the terms of the revolving loan agreement, the Company agreed to repay the initial loan, plus interest, for a total amount of $18,955 by October 15, 2015. The Company made the required six monthly payments, as required, by the October 15, 2015 due date. As the Company repays the initial loan, it can and has borrowed new funds which created new six-month payment cycles on the previously outstanding principal plus the new funds borrowed. At their sole discretion, CB can increase the maximum availability under the revolving loan agreement above the $17,000 amount established upon the execution of the revolving loan agreement. Effective April 18, 2016, CB increased our borrowing limit to $33,200. At November 4, 2016, the outstanding balance on our revolving loan facility with CB was approximately $30,000 and our cash balances were approximately $0.

Our revenues during the years ended December 2015 and 2014, as well as the nine months ended September 30, 2016, have been insufficient to attain profitable operations and to provide adequate levels of cash flow from operations. During the years ended December 31, 2015 and 2014 and the nine months ended September 30, 2016, due to insufficient cash flow from operations and borrowing limitations under our line of credit facility, we have been extending payments owed to landlords and vendors beyond normal payment terms and deadlines. Until such vendors are paid within normal payment terms, no assurances can be given that required services and materials needed to support operations will continue to be provided. In addition, no assurances can be given that vendors will not pursue legal means to collect past due balances owed. Any interruption of services or materials would likely have an adverse impact on our operations and could impact our ability to continue as a going concern.

Note 2: Nature of Operations

Description of Business

Speedemissions, Inc. is one of the largest test-only emissions testing and safety inspection companies in the United States. We perform vehicle emissions testing and safety inspections in certain cities in which vehicle emissions testing is mandated by the United States Environmental Protection Agency (“EPA”). As of ~~September~~March 3031, ~~2016~~2017, we operated 2221 vehicle emissions testing and safety inspection stations under the trade names of Speedemissions and Auto Emissions Express (in Atlanta, Georgia and St. Louis, Missouri) ~~and Just Emissions (in Salt Lake City, Utah)~~. We also operate three mobile testing units in the Atlanta, Georgia area which service automotive dealerships and local government agencies. We manage our operations based on these three regions, and we have one reportable segment. ~~References in this document to “Speedemissions,” “Company,” “we,” “us” and “our” mean Speedemissions, Inc. and our consolidated subsidiaries.~~

We use computerized emissions testing and safety inspections equipment that test vehicles for compliance with vehicle emissions and safety standards. We purchase or lease these computerized testing systems from state approved equipment vendors. Our revenues are mainly generated from the testing or inspection fees charged to the registered owner of the vehicle. As a service to our customers, we also sell automotive parts and supplies such as windshield wipers, taillight bulbs and gas caps at select locations. However, we do not provide automotive repair services.

On June 22, 2010, the Company announced the launch of its first iPhone application, Carbonga. Carbonga diagnoses an automobile’s computer system using the on board diagnostic port available on vehicles produced since 1996. Carbonga can check over 2,000 vehicle fault codes. We launched version two of Carbonga on February 16, 2011. Version two improved the speed and performance of the application and added additional features, including the ability to receive vehicle safety recalls and Technical Service Bulletins, for an annual subscription fee.

8During the quarter ended September 30, 2012, we formed a new company, SpeedEmissions Car Care, LLC, through which we franchised our vehicle emissions and safety inspections store model. Franchises are available to qualified store operators who have an interest in either a single- or multi-location opportunity in select cities where vehicle emissions testing/safety inspections and other automotive services are required. We signed an agreement with an Atlanta based franchise consulting company to assist with our plan to franchise our business model into a number of new U.S. markets. After securing approval for all the necessary disclosure documents, we began marketing franchises in the fourth quarter of 2012. However, as of March 31, 2017, we have sold no franchises.

~~During~~On ~~the~~November ~~quarter ended September~~ 30, 2012, we ~~formed~~completed athe ~~new~~acquisition ~~company,~~of ~~SpeedEmissions~~certain ~~Car~~operating ~~Care,~~assets ~~LLC,~~comprising ~~through~~five ~~which~~emission wetesting ~~franchised~~centers ~~our~~owned ~~vehicle~~by ~~emissions~~Auto ~~and~~Emissions ~~safety~~Express, ~~inspections~~LLC ~~store~~(“AEE”), ~~model. Franchises are available to qualified store operators who have an interest in either~~ a ~~single-~~Georgia orcorporation. ~~multi-location~~At ~~opportunity~~the intime ~~select~~of ~~cities~~the ~~where~~asset ~~vehicle~~acquisition, ~~emissions~~AEE ~~testing/safety~~owned ~~inspections~~ and ~~other~~operated ~~automotive~~12 ~~services~~emission ~~are~~testing ~~required.~~centers Wein ~~signed~~the ~~an agreement with an~~ Atlanta, ~~based~~Georgia ~~franchise consulting company to assist with our plan to franchise our business model into a number of new U.S. markets. After securing approval for all the necessary disclosure documents~~area, weincluding ~~began marketing franchises in~~ the ~~fourth~~five ~~quarter~~emission oftesting ~~2012. However,~~centers asthat ~~of September 30, 2016,~~ we ~~have sold no franchises~~purchased.

On November 30, 2012, we completed the acquisition of certain operating assets comprising five emission testing centers owned by Auto Emissions Express, LLC (“AEE”), a Georgia corporation.

On April 11, 2013, we sold the assets comprising three of our Texas stores for $110,000. We received $50,000 cash at closing and a note receivable for $60,000. This note was paid in full during the year ended December 31, 2014.

On October 25, 2013, we completed the acquisition of certain operating assets comprising the remaining seven emission testing centers owned by AEE. AEE originally owned and operated 12 emission testing centers in the Atlanta, Georgia area, consisting of the seven emission testing centers that we purchased in October 2013 and the five emission testing centers that we purchased in November 2012 as discussed above.

During the three months ended June 30, 2014, we sold the assets comprising six of our Houston, Texas stores for a combined amount of $220,000, consisting of $152,500 in cash and notes receivable for $67,500. The principal amount of the note was payable in equal monthly payments over a 12-month period with no interest. This note was paid in full during the year ended December 31, 2015.

On December 5, 2014, we sold the assets comprising five of our six Salt Lake City, Utah stores for $1,350,000 in cash. After accounting for the sale of these five emissions testing centers, we now operate 22 emission testing centers in Atlanta, Georgia, St. Louis, Missouri and Salt Lake City, Utah metropolitan areas, plus three mobile testing units in the Atlanta, Georgia area.

On March 10, 2017, we closed our Salt Lake City, Utah, station under a lease termination agreement with the landlord. As compensation for the early termination of the station’s lease, the Company received a cash payment of $250,000 on March 20, 2017. As a result, we now operate 21 emission testing centers in Atlanta, Georgia and St. Louis, Missouri metropolitan areas, plus three mobile testing units in the Atlanta, Georgia area.

On March 20, 2017, the Company entered into and closed an Asset Purchase Agreement (the “Purchase Agreement”) with Auto Recycling of Montgomery, Inc., an Alabama corporation (“ARM”), pursuant to which the Company agreed to purchase certain assets of ARM, including land, buildings, equipment and inventory previously used by ARM in an auto recycling operation which ceased operations in June of 2014. The purchase price was $175,000 for the land and buildings and $90,000 for the equipment and inventory. The company incurred $28,300 in expenses for professional services rendered in the identification of the purchased assets and closing of the Purchase Agreement. The Company entered into two separate note agreements with ARM to fund the purchase of the assets. Terms of each note included an interest rate of ten percent, an amortization term of ten years and a seven year balloon payment. Monthly payments for the $175,000 land and buildings note and for the $90,000 equipment and inventory note will be $2,313 and $1,189, respectively. Using the acquired assets, the Company intends to create an auto recycling business operation, but expects it will take approximately 60 days to hire employees and put the necessary business systems in place before sales operations can commence. We expect to begin reporting the auto recycling business as a separate business segment for the quarter ending June 30, 2017. Under the terms of the Purchase Agreement, payments on the notes will commence 120 days after the closing date of the Purchase Agreement.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as codified in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by GAAP for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.

The Company has evaluated subsequent events through the date of the filing its Form 10-Q with the Securities and Exchange Commission. The Company is not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Company’s Consolidated Financial Statements.

The accompanying consolidated financial statements include the accounts of Speedemissions and its non-operating subsidiaries, which are 100% owned by the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

Note 3: Significant Accounting Policies and Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 of revenues and expenses during the reporting periods. Significant estimates included in these financial statements relate to useful lives of property and equipment, the valuation allowance provided against deferred tax assets and the valuation of long-lived assets and goodwill. Actual results could differ from those estimates. For a description of Speedemissions’ critical accounting policies see the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2016.

Fair Value of Financial Instruments

The carrying amounts of cash, other current assets, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these accounts. Fair value of the equipment financing agreements and capital lease obligations approximate carrying value based upon current borrowing rates. The fair value of the Company’s note receivable and note payable also approximates the carrying value because outstanding balances can be repaid at any time.

Note 4: Inventory

Inventory at ~~September 30~~March 31, ~~2016~~2017 consisted of automobile parts, certificate and merchandise inventory and was $51,700, $8,~~060~~223 and $1774,~~375,~~ respectively. Inventory at December 31, ~~2015~~2016 consisted of certificate and merchandise inventory and was $87,~~118~~766 and $1,~~358~~352, respectively.

Note 5: Notes Receivable

On September 14, 2010, the Company settled a lawsuit originally filed in 2006 against a former manager. The Company alleged the manager, while employed by the Company, breached his fiduciary duty by purchasing property in Texas where one of the Company’s testing facilities he managed was located. Under the provisions of the settlement agreement, the Company was to receive a sum of $125,000 payable in monthly installments of $1,000 per month for 72 months. The balance of $53,000 was due and payable to the Company on June 1, 2016. The Company recognized a gain from the legal settlement in the amount of $106,881 during 2010. On May 6, 2016, in consideration of a payment of $47,000, the Company agreed to cancel the note as paid in full, recording a loss of $6,000.

During 2014, we sold the assets comprising six of our Houston, Texas stores for a combined amount of $220,000, consisting of $152,500 in cash and notes receivable for $67,500. The principal amount of the note was payable in equal monthly payments over a 12-month period with no interest. The note was paid in full during the year ended December 31, 2015.

During 2015, we sold equipment for $2,000 in cash plus a note receivable of $2,496. The principal amount of the note was payable in equal monthly payments over a 12-month period with no interest. The note was paid in full in January 2016.

~~There was no outstanding balance on notes receivable as of September 30, 2016.~~ The balance of notes receivable was $560 at March 31,~~200~~ as2017 ofand December 31, ~~2015~~2016.

Note 6: Property and Equipment

Property and equipment at ~~September~~March 3031, ~~2016~~2017 and December 31, ~~2015~~2016 consisted of the following:

	September 30, 2016		December 31, 2015
	March 31, 2017		December 31, 2016
Buildings	$	30,754	$	30,754
Land	$	98,000	$	-
Emission testing equipment		809,307		947,493
Buildings		107,754		30,754
Equipment		827,005		817,038
Furniture, fixtures and office equipment		56,326		56,326
Vehicles		19,356		19,356
Leasehold improvements		158,~~757~~758		158,757
		1,074,500		1,212,686
		1,267,199		1,082,231
Less: accumulated depreciation and amortization		1,~~024~~013,~~574~~692		1,~~119~~033,~~753~~488
	$	49253,~~926~~507	$	9248,~~933~~743

Note 7: Accrued Liabilities

Accrued liabilities at ~~September 30~~March 31, ~~2016~~2017 and December 31, ~~2015~~2016 consisted of the following:

	September 30, 2016		December 31, 2015
	March 31, 2017		December 31, 2016
Professional fees	$	5082,~~986~~900	$	6162,~~758~~500
Accrued payroll		~~331~~431,~~368~~233		~~298~~427,~~698~~660
Accrued property taxes		395,~~152~~055		391,~~838~~267
Other		5154,~~089~~625		~~101~~59,~~038~~950
	$	~~472~~573,~~595~~813	$	~~501~~551,~~332~~377

Accrued payroll liabilities at September 30, 2016 includes past due payroll tax payments, including related penalties and interest, due to the federal government in the approximate amount of $244,000. See Note 1 Going concern for additional information.

Note 8: Notes Payable

Bridge Note Agreement

On November 11, 2010, the Company entered into a $55,000 bridge note agreement (the “Note”) with an affiliate, GCA Strategic Investment Fund, Limited (“GCA”). The funds received from the Note were used for general working capital purposes. The Note bore 0% interest and was due in full on November 11, 2012. The Note is subject to mandatory prepayment upon a change of control, as defined in the Note. In consideration for the receipt of the Note, the Company issued GCA 4,000,000 warrants to purchase the Company’s common stock at $0.~~016~~50 per share. On April 15, as2011, ~~amended~~the Board of Directors of the Company and GCA agreed to amend GCA’s 4,000,000 warrants whereby the exercise price of the warrants would be reduced to $0.016 from $0.50. The closing price of the Company’s common stock was $0.013 on April 14, 2011. The warrants were exercised on April 18, 2011 at the reduced exercise price of $0.016 per share. The Note has been extended annually since the first renewal date. The most recent renewal of the Note was on November 6, ~~2015~~2016, establishing a new maturity date of November 6, ~~2016~~2017. The Note had a balance due of $60,000 on ~~September 30~~March 31, ~~2016~~2017 and December 31, ~~2015~~2016. ~~The warrants were exercised by GCA on April 18, 2011.~~

Secured Note Agreements

On March 20, 2017, the Company entered into and closed the Purchase Agreement with ARM, pursuant to which the Company agreed to purchase certain assets of ARM, including land, buildings, equipment and inventory previously used by ARM in an auto recycling operation which ceased operations in June of 2014. The purchase price was $175,000 for the land and buildings and $90,000 for the equipment and inventory. The company incurred $28,300 in expenses for professional services rendered in the identification of the purchased assets and closing of the Purchase Agreement. The Company entered into two separate note agreements with ARM to fund the purchase of the assets. Terms of each note included an interest rate of ten percent, an amortization term of ten years and a seven year balloon payment. Monthly payments for the $175,000 land and buildings note and for the $90,000 equipment and inventory note will be $2,313 and $1,189, respectively. Using the acquired assets, the Company intends to create an auto recycling business operation, but expects it will take approximately 60 days to hire employees and put the necessary business systems in place before sales operations can commence. We expect to begin reporting the auto recycling business as a separate business segment for the quarter ending June 30, 2017. Under the terms of the Purchase Agreement, payments on the notes will commence 120 days after the closing date of the Purchase Agreement. The secured notes had a balance due of $265,000 and $0 as of March 31, 2017 and December 31, 2016, respectively.

Promissory Note Agreements

On November 5, 2014, the Company entered into a promissory note agreement with Dianna Parlontieri, wife of the Company’s President, Chief Executive Officer and Chief Financial Officer, pursuant to which Mrs. Parlontieri loaned the Company $20,000 for working capital purposes. Under the terms of the promissory note, the Company agreed to repay the loan, plus interest, for a total amount of $20,400 by December 15, 2014. Because the Company did not repay the loan in full by December 15, 2014, the Company is required to repay $1,700 on the 15th of each month, starting December 15, 2014, until the loan is re-paid in full. If any of the monthly payments are not paid on the respective due date then the monthly payment amount is subject to a default interest rate of 10% per annum. The Company is currently in default of the terms of this promissory note as it did not make the required repayment on December 15, 2014 and has not made any of the required monthly payments as of the date of this report. The ~~promissory~~Note ~~note~~ had a principal ~~balance~~ due of $20,000 on ~~September 30~~March 31, ~~2016~~2017 and December 31, ~~2015~~2016, respectively.

Daily Payment Note Agreements

On ~~March~~June 68, 2015, the Company entered into aanother revenue-based factoring agreement with ~~Samson Partners, LLC (“~~SP”), pursuant to which the Company agreed to repay SP $60250,000 from a loan made by SP to the Company, plus a fixed fee which the Company ~~recorded~~will record as interest expense, for a total repayment amount of $76337,~~800~~500 by ~~June~~April 1614, ~~2015~~2016. Under the terms of the agreement, SP ~~was~~is authorized to make daily bank debits of $1,~~169~~600 on each available banking day during the term of the agreement which ~~represented~~represents a fee rate of 2834.08%. The Company repaid the remaining balance on ~~June~~January 168, ~~2015~~2016 and, as a result, there was no outstanding balance onas ~~September~~of 30March 31, ~~2016~~2017 or December 31, ~~2015~~2016.

On ~~April~~October 1612, 2015, the Company entered into another revenue-based factoring agreement with SP, pursuant to which the Company agreed to repay SP $75,000 from a loan made by SP to the Company, plus a fixed fee which the Company ~~recorded~~will record as interest expense, for a total repayment amount of $~~104~~101,~~175~~250 by ~~October 19, 2015. On~~ August 2122, ~~2015, the Company renegotiated its payment terms with SP reducing the daily payment from $827 to $500 and extending the due date from October 19, 2015 to November 27, 2015~~2016. The Company repaid the balance of the loan on ~~October~~May 1231, ~~2015~~2016 and, as a result, there was no outstanding balance onas ~~September~~of 30March 31, ~~2016~~2017 or December 31, ~~2015~~2016.

On ~~June~~January 85, ~~2015~~2016, the Company entered into another revenue-based factoring agreement with SP, pursuant to which the Company agreed to repay SP $~~250~~235,000 from a loan made by SP to the Company, plus a fixed fee which the Company ~~recorded~~will record as interest expense, for a total repayment amount of $~~337~~321,~~500~~950 by ~~April~~January 1410, ~~2016~~2017. A portion of the proceeds were used to pay off the ~~March~~June 68, 2015 SP revenue-based factoring agreement described above. The Company repaid the balance of the loan on ~~January~~September 823, 2016 and, as a result, there was no outstanding balance onas ~~September 30, 2016 compared to a balance~~ of ~~$90~~March 31,~~160~~ on2017 or December 31, ~~2015~~2016.

On ~~October~~May 1226, ~~2015~~2016, the Company entered into another revenue-based factoring agreement with SP, pursuant to which the Company agreed to repay SP $75200,000 from a loan made by SP to the Company, plus a fixed fee which the Company ~~recorded~~will record as interest expense, for a total repayment amount of $~~101~~260,~~250~~000 by ~~August~~May 2231, ~~2016~~2017. A portion of the proceeds were used to pay off the ~~April~~October 1612, 2015 SP revenue-based factoring agreement described above. Under the terms of the agreement, SP is authorized to make daily bank debits of $1,035 on each available banking day during the term of the agreement which represents a fee rate of 30.0%. The Company repaid the balance of the loan on ~~May~~December 3127, 2016 and, as a result, there was no outstanding balance onas ~~September 30, 2016 compared to a balance~~ of ~~$57~~March 31,~~282~~ on2017 or December 31, ~~2015~~2016.

On ~~January~~September 516, 2016, the Company entered into another revenue-based factoring agreement with SP, pursuant to which the Company agreed to repay SP $~~235~~200,000 from a loan made by SP to the Company, plus a fixed fee which the Company ~~recorded~~will record as interest expense, for a total repayment amount of $~~321~~270,~~950~~000 by ~~January~~September 10, 2017. A portion of the proceeds were used to pay off the ~~June~~January 85, ~~2015~~2016 SP revenue-based factoring agreement described above. ~~The~~ ~~Company~~Under ~~repaid~~ the ~~balance~~terms of the ~~loan~~agreement, onSP ~~September~~is ~~23,~~authorized ~~2016~~to ~~and~~make daily bank debits of $1,097 ason each available banking day during the term of the agreement which represents a ~~result,~~fee ~~there~~rate ~~was~~of no35.0%. ~~outstanding~~The agreement had a balance ondue ~~September~~of 30$96,801 and $147,182 as of March 31, 2017 and December 31, 2016, respectively.

On ~~May~~December 2619, 2016, the Company entered into another revenue-based factoring agreement with SP, pursuant to which the Company agreed to repay SP $~~200~~225,000 from a loan made by SP to the Company, plus a fixed fee which the Company will record as interest expense, for a total repayment amount of $~~260~~290,~~000~~250 by ~~May~~December 3112, 2017. A portion of the proceeds were used to pay off the ~~October~~May 1226, ~~2015~~2016 SP revenue-based factoring agreement described above. Under the terms of the agreement, SP is authorized to make daily bank debits of $1,~~035~~180 on each available banking day during the term of the agreement which represents a fee rate of 3029.0%. The agreement had a balance due of $~~131~~165,~~531~~543 onand ~~September~~$222,255 30as of March 31, 2017 and December 31, 2016, respectively.

Revolving Credit Facility On ~~September~~April 16, ~~2016~~2015, the Company entered into ~~another~~a ~~revenue-based~~revolving ~~factoring~~loan agreement with SPCB, pursuant to which the Company ~~agreed~~initially toborrowed ~~repay SP~~ $~~200~~17,000 from aCB. Under ~~loan~~the ~~made~~terms byof SPthe torevolving ~~the~~loan ~~Company~~agreement, ~~plus~~the aCompany ~~fixed~~agreed ~~fee~~to ~~which~~repay the ~~Company~~initial ~~will~~loan, ~~record~~plus as interest ~~expense~~, for a total ~~repayment~~ amount of $~~270~~18,~~000~~955 by ~~September~~October 1015, ~~2017~~2015. AThe ~~portion~~Company ofmade the ~~proceeds~~required ~~were~~six ~~used~~monthly topayments ~~pay~~by ~~off~~ the ~~January~~October 515, ~~2016~~2015 SPdue ~~revenue-based~~date. At ~~factoring~~their ~~agreement~~sole ~~described~~discretion, CB can increase the maximum availability under the revolving loan agreement above. ~~Under~~the $17,000 amount established upon the ~~terms~~execution of the revolving loan agreement and, SPeffective isApril ~~authorized~~18, to2016, ~~make~~CB ~~daily~~increased ~~bank~~our ~~debits~~borrowing oflimit to $133,~~097~~200. At onMay ~~each~~5, ~~available~~2017, ~~banking~~the ~~day~~outstanding ~~during~~balance ~~the~~on ~~term~~our ofrevolving ~~the~~loan ~~agreement~~facility ~~which~~with ~~represents~~CB awas ~~fee~~approximately ~~rate~~$20,000 ofand ~~35.0%.~~our cash balances were approximately $11,000. The revolving loan agreement had a balance due of $~~195~~26,~~937~~856 onand ~~September~~$26,367 30as of March 31, 2017 and December 31, 2016, respectively.

~~Revolving~~Note ~~Credit~~9: ~~Facility~~Net Income (Loss) Per Share

OnBasic ~~April~~earnings ~~16,~~per ~~2015,~~share ~~the~~(“EPS”) ~~Company~~or ~~entered~~net ~~into~~income a(loss) ~~revolving~~per ~~loan~~share ~~agreement~~represents ~~with~~net ~~CB,~~income ~~pursuant~~(loss) todivided ~~which~~by the ~~Company~~weighted ~~initially~~average ~~borrowed~~number ~~$17,000 from CB. Under the terms~~ of ~~the~~common ~~revolving~~shares ~~loan~~outstanding ~~agreement,~~during ~~the Company agreed to repay the initial loan, plus interest, for~~ a ~~total~~reported ~~amount of $18,955 by October 15, 2015~~period. ~~The~~ Diluted ~~Company~~EPS ~~made~~reflects the ~~required~~potential ~~six~~dilution ~~monthly~~that ~~payments,~~could asoccur ~~required,~~if bysecurities ~~the~~or ~~October~~other ~~15,~~contracts ~~2015~~to ~~due~~issue ~~date. As~~common ~~the Company repays the initial loan~~stock, itincluding ~~can~~stock ~~and has borrowed new funds which created new six-month payment cycles on the previously outstanding principal plus the new funds borrowed. At their sole discretion~~options, ~~CB can increase the maximum availability under the revolving loan agreement above the $17~~warrants,~~000~~ ~~amount~~and ~~established~~contingently ~~upon~~issuable ~~the~~shares ~~execution~~such ofas the ~~revolving~~Company’s ~~loan~~Series ~~agreement. Currently~~A ~~our~~and ~~borrowing~~Series ~~limit~~B ~~with~~preferred CBstock is(commonly ~~$33,200. The~~and ~~revolving~~hereinafter ~~loan~~referred ~~agreement~~to ~~had~~as a“Common ~~balance~~Stock ~~due of $25~~Equivalents”),~~737~~ ~~and~~were ~~$26,592~~exercised onor ~~September~~converted ~~30,~~into ~~2016~~common ~~and December 31, 2015, respectively~~stock.

~~Note~~The 9:following ~~Net~~table ~~Loss~~sets forth the computation for basic and diluted net income (loss) per ~~Common~~share ~~Share~~for the three month periods ended March 31, 2017 and 2016, respectively:

Basic earnings per share (“EPS”) or net loss per share represents net loss divided by the weighted average number of common shares outstanding during a reported period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, including stock options, warrants, and contingently issuable shares such as the Company’s Series A preferred stock (commonly and hereinafter referred to as “Common Stock Equivalents”), were exercised or converted into common stock.

	Three Months Ended March 31
	2017		2016
Net income (loss) (A)	$	244,807	$	(25,007	)

Weighted average common shares - basic (B)		118,364,225		109,914,225
Effect of dilutive securities:
Diluted effect of stock options (1)		—		—
Diluted effect of stock warrants (1)		—		—
Diluted effect of unrestricted Preferred Series A Stock (2)		—		—
Weighted average common shares - diluted (C)		118,364,225		109,914,225
Net income (loss) per share - basic (A/B)	$	0.00	$	(0.00	)
Net income (loss) per share - diluted (A/C)	$	0.00	$	(0.00	)

(1) The ~~following~~Company ~~table~~reported ~~sets~~net ~~forth~~income for the ~~computation~~three month period ended March 31, 2017. However, aggregate Common Stock Equivalents of 378,000 issuable under stock options and warrants that were potentially dilutive securities are anti-dilutive because the exercise prices for ~~basic~~both the stock options and ~~diluted~~warrants ~~net~~exceeded ~~loss~~the ~~per~~closing ~~share~~price of $0.006 for the Company’s common stock as of March 31, 2017and, therefore, have been excluded from the computation of weighted average common shares (diluted) for the three ~~and~~month ~~nine~~period ended March 31, 2017. As a result of the Company’s net loss for the three month ~~periods~~period ended ~~September 30~~March 31, 2016, aggregate Common Stock Equivalents of 426,000 issuable under stock options and ~~2015~~warrants that were potentially dilutive securities are anti-dilutive and have been excluded from the computation of weighted average common shares (diluted) for the three month period ended March 31, 2016, respectively:. These Common Stock Equivalents could be dilutive in future periods.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net loss (A)	$	(31,075	)	$	(61,016	)	$	(85,364	)	$	(420,444	)
Weighted average common shares - basic (B)		109,914,225			108,964,225			109,914,225			108,964,225
Effect of dilutive securities
Diluted effect of stock options (1)		—			—			—			—
Diluted effect of stock warrants (1)		—			—			—			—
Diluted effect of unrestricted Preferred Series A Shares (2)		—			—			—			—
Weighted average common shares - diluted (C)		109,914,225			108,964,225			109,914,225			108,964,225
Net loss per share - basic (A/B)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Net loss per share - diluted (A/C)	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

(2)

The Company reported a net income for the three month period ended March 31, 2017. However, aggregate Common Stock Equivalents of 4,277,498 issuable under Series A convertible, redeemable preferred stock that were potentially dilutive securities are anti-dilutive because the exercise prices for the Series A convertible, redeemable preferred stock (“Series A Preferred Stock”) exceeded the closing price of $0.006 for the Company’s common stock as of March 31, 2017 and, therefore, have been excluded from the computation of weighted average common shares (diluted) for the three month period ended March 31, 2017. As a result of the Company’s net loss in the three month periods ended March 31, 2016, aggregate Common Stock Equivalents of 4,277,498 issuable under Series A Preferred Stock that were potentially dilutive securities are anti-dilutive and have been excluded from the computation of weighted average common shares diluted for the three month periods ended March 31, 2017 and 2016. These Common Stock Equivalents could be dilutive in future periods.

(1) As a result of the Company’s net loss for the three and nine-month periods ended September 30, 2016 and 2015, aggregate Common Stock Equivalents of 426,000 and 431,000 issuable under stock option plans and stock warrants that were potentially dilutive securities are anti-dilutive and have been excluded from the computation of weighted average common shares (diluted) for the three and nine-month periods ended September 30, 2016 and 2015, respectively. These Common Stock Equivalents could be dilutive in future periods.

(2) As a result of the Company’s net loss in the three and nine-month periods ended September 30, 2016 and 2015, aggregate Common Stock Equivalents of 4,277,498 issuable under Series A convertible, redeemable preferred stock that were potentially dilutive securities are anti-dilutive and have been excluded from the computation of weighted average common shares (diluted) for the three and nine-month periods ended September 30, 2016 and 2015. These Common Stock Equivalents could be dilutive in future periods.

Note 10: Preferred and Common Stock

Preferred Stock

There were 5,133 shares of Series A ~~convertible redeemable preferred stock (“~~Preferred A Stock”) issued and outstanding as of ~~September 30~~March 31, ~~2016~~2017 and December 31, ~~2015~~2016. For financial statement purposes, the ~~Preferred~~Series A Preferred Stock has been presented outside of stockholders’ deficit on the Company’s consolidated balance sheets as a result of certain conditions that are outside the control of the Company that could trigger redemption of the securities.

Common Stock

The Company issued no common shares during the three ~~or nine~~ month period ended ~~September 30~~March 31, ~~2016~~2017. The Company had ~~109~~118,~~914~~364,225 common shares outstanding as of ~~September~~March 3031, 2017 and December 31, 2016.

Note 11: Share-Based Compensation

The Company has several share-based compensation plans under which employees and non-employee directors receive stock options. Additionally, the Company has issued shares of its common stock as compensation to employees and payments of services rendered by third parties. Share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity grant). Fair value of the award is calculated using the Black-Scholes model or based on the fair value of the shares issued for the services provided, whichever is more accurately determinable. Such value is recognized as an expense over the requisite service period, net of estimated forfeitures, using the straight-line attribution method. The estimate of awards that will ultimately vest requires significant judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class and historical employee attrition rates. Actual results, and future changes in estimates, may differ substantially from the Company’s current estimates.

There was no share based compensation expense during the three ~~or nine~~ months ended ~~September 30~~March 31, ~~2016~~2017 and ~~2015~~2016. Share-based compensation is included in general and administrative expenses in the consolidated statements of operations.

Stock Incentive Plans

The Company has granted options to employees and directors to purchase the Company’s common stock under various stock incentive plans. Under the plans, employees and non-employee directors are eligible to receive awards of various forms of equity-based incentive compensation, including stock options, restricted stock, restricted stock units and performance awards, among others. The plans are administered by the Compensation Committee of the Board of Directors, which determines the terms of the awards granted. Stock options are generally granted with an exercise price equal to the market value of the Company’s common stock on the date of grant, have a term of ten years or less, and generally vest over three years from the date of grant.

The following table sets forth ~~the~~ options outstanding under the Company’s stock option plans during the ~~nine-~~three month period ended ~~September~~March 3031, ~~2016:~~2017. The Company did not grant stock options in the three months ended March 31, 2017.

	Number of Shares		Weighted Average Exercise Price		~~Weighted Average Grant-date Fair Value~~	Weighted Average Grant-date Fair Value
Options outstanding at December 31, 2015		59,000	$	0.61
Options outstanding at December 31, 2016		6,000	$	0.50
Granted		—		—			—
Expired		~~5,000~~—		~~1.00~~—
Options outstanding at September 30, 2016		54,000	$	0.57
Options outstanding at March 31, 2017		6,000	$	0.50

The aggregate intrinsic value of options outstanding and exercisable at ~~September 30~~March 31, ~~2016~~2017 was $0. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.

The Company estimates the fair value for stock options at the date of grant using the Black-Scholes option pricing model, which requires management to make certain assumptions. Expected volatility is based on comparable company data. The Company bases the risk-free interest rate on U.S. Treasury note rates. The expected term is based on the vesting period and an expected exercise term. The Company does not anticipate paying cash dividends in the foreseeable future and therefore uses an expected dividend yield of 0%. ~~The Company did not grant stock options during the nine months ended September 30, 2016.~~

As of ~~September 30~~March 31, ~~2016~~2017, there was no unrecognized share-based compensation expense related to non-vested stock options. There were no options that vested during the ~~nine~~three months ended ~~September 30~~March 31, ~~2016~~2017 and ~~2015~~2016.

There were 546,000 ~~and 59,000~~ options issued and outstanding under the Company’s 2001 Stock Option Plan, the Amended and Restated 2005 Omnibus Stock Grant and Option Plan, Speedemissions Inc. 2006 Stock Grant and Option Plan and the 2008 Stock Grant and Option Plan (collectively, the “Option Plans”) as of ~~September 30~~March 31, ~~2016~~2017 and December 31, ~~2015, respectively~~2016. There were no options granted under these plans during the ~~nine~~three month period ended ~~September 30~~March 31, ~~2016~~2017. There were no options exercised during the ~~nine-~~three month periods ended ~~September 30~~March 31, ~~2016~~2017 and ~~2015~~2016.

Stock Warrants

There were 372,000 common stock warrants outstanding as of ~~September 30~~March 31, ~~2016~~2017, and there were no warrants granted or exercised during the ~~nine~~three month period ended ~~September 30~~March 31, ~~2016~~2017.

Note 12: Income Taxes

No provision for income taxes has been reflected for the three ~~and nine~~ month periods ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, as the Company has sufficient net operating loss carry forwards to offset ~~future~~ taxable income.

Note 13: Contingencies

From time to time, the Company may be involved in claims that arise out of the normal course of its business. In the opinion of management, we are not currently involved in any legal proceedings which would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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

Results of Operations

Three Months Ended ~~September~~March 3031, ~~2016,~~2017 and ~~2015~~2016

Our revenue, cost of emission certificates, store operating expenses, general and administrative expenses, ~~gain from sales of non-strategic assets~~ and operating results for the three months ended ~~September~~March 3031, ~~2016~~2017 as compared to the three months ended ~~September~~March 3031, ~~2015~~2016 were as follows:

	Three Months Ended September 30,						Percentage
	Three Months Ended March 31						Percentage Change
	2016			2015			Change
	2017			2016
Revenue	$	~~900~~897,~~640~~411		$	~~846~~885,~~082~~551			61.43%	%
Cost of emission certificates		~~159~~166,~~360~~544			~~150~~159,~~543~~575			54.94%	%
Store operating expenses		~~526~~517,~~684~~277			~~533~~522,~~808~~030			(10.39%)	%)
General and administrative expenses		179,181			180,068			(0.5	%)
General and administrative (income) expenses		203,951			171,146			19.2%
Gain from sale of non-strategic assets		-			(500	)		n/a
Gain from disposal of non-strategic assets		(74,099	)		(4,345	)		n/a
Operating income (loss)	$	35,415		$	(17,837	)		298.5	%
Operating income	$	83,738		$	37,145			125.4%

Revenue. Revenue increased $5411,~~558~~860, or 61.43%, to $~~900~~897,~~640~~411 for the three- month period ended ~~September 30~~March 31, ~~2016~~2017 compared to $~~846~~885,~~082~~551 for the three- month period ended ~~September 30~~March 31, ~~2015~~2016. The $5411,~~558~~860 increase in revenue was primarily due toan ~~pricing~~increase ~~increases~~of in$33,783 ~~certain~~or ~~Georgia~~4.1% ~~stores~~in ~~and~~same ~~increased~~store ~~emission~~revenue ~~tests performed~~ during the three months ended ~~September~~March 3031, ~~2016~~2017, reduced by a $21,923, or 31.2%, decrease in closed store revenue due to the March 10, 2017 closing of our Utah store.

Cost of emission certificates. Cost of emission certificates increased $86,~~817~~969, or 54.94%, for the three- month period ended ~~September 30~~March 31, ~~2016~~2017 and was $~~159~~166,~~360~~544, or 1718.76% of revenues, compared to $~~150~~159,~~543~~575, or 1718.80% of revenues, for the three- month period ended ~~September 30~~March 31, ~~2015~~2016. The $86,~~817~~969 increase was a direct result of increased emission tests performed in same stores during the three-month period ended ~~September 30~~March 31, ~~2016~~2017.

Store operating expenses. Store operating expenses decreased $74,~~124~~753, or 10.39%, for the three- month period ended ~~September 30~~March 31, ~~2016~~2017 and was $~~526~~517,~~684~~277, or 5857.56% of revenues, compared to $~~533~~522,~~808~~030, or 6358.19% of revenues, for the three- month period ended ~~September 30~~March 31, ~~2015~~2016. ~~The $7,124 decrease in store operating expenses was primarily due to a decline in wage expense of $8,343.~~

General and administrative expenses. Our general and administrative expenses ~~decreased~~increased $~~887~~32,805, or 019.52%, to $~~179~~203,~~181~~951 infor the three- month period ended ~~September~~March 3031, ~~2016,~~2017 from $~~180~~171,~~068~~146 infor the three- month period ended ~~September~~March 3031, ~~2015~~2016. The increase of $32,805 was primarily due to $28,300 of professional services expense incurred in the previously described purchase of assets from ARM.

Gain from sales of non-strategic assets. We ~~did~~ ~~not~~recorded ~~record~~gains ~~any~~of $74,099 and $4,345 from sales of non-strategic assets in the three-month ~~period~~periods ended ~~September~~March 3031, 2017 and 2016, ~~while~~respectively. weThe ~~recorded~~$74,099 gain during the three-months ended March 31, 2017 was due to the March 10, 2017 lease termination of our Salt Lake City, Utah station. As compensation for the early termination of the station’s lease, the Company received a ~~gain~~cash payment of $~~500~~250,000 on March 20, 2017, plus an additional payment of $4,200 from ~~sales~~the sale of ~~non-strategic~~miscellaneous ~~assets~~station inequipment. As a result of the ~~three-month~~Utah ~~period~~station ~~ended~~closing, ~~September 30~~we expensed $180,101 ~~2015~~of goodwill associated with the original purchase of the station.

Operating ~~results~~income. Our operating income increased by $5346,~~252~~593 in the three- month period ended ~~September~~March 3031, ~~2016~~2017 toand was $3583,~~415~~738 compared to an operating ~~loss~~income of $1737,~~837~~145 in the three- month period ended ~~September~~March 3031, ~~2015~~2016. The increase in our operating ~~profit~~income was primarily due to the ~~increase~~$74,099 ingain ~~revenues~~from ~~coupled~~disposal ~~with~~of ~~declines~~our Utah station less the $28,300 of professional services expense incurred in ~~store~~the ~~operating~~previously ~~expenses~~described ~~and~~purchase ~~general~~of ~~and~~assets ~~administrative~~from ~~expenses~~ARM.

~~Interest~~Other income, ~~interest~~and expense, net income (loss) and basic and diluted net income (loss) per share. Our ~~interest~~other income, interest expense, net income (loss) and basic and diluted net income (loss) per share for the three- month period ended ~~September~~March 3031, ~~2016~~2017 as compared to the three- month period ended ~~September~~March 3031, ~~2015~~2016 is as follows:

	Three Months Ended September 30,
	Three Months Ended March 31,
	2016			2015
	2017			2016
Operating income (loss)	$	35,415		$	(17,837	)
Operating income	$	83,738		$	37,145
Other income		199,910			-
Interest income		-			755
Interest expense		(6638,~~490~~841	)		(4362,~~934~~907	)
Net loss	$	(31,075	)	$	(61,016	)
Net income (loss)	$	244,807		$	(25,007	)
Basic and diluted net loss per share	$	0.00		$	0.00
Basic and diluted net income (loss) per common share	$	0.00		$	(0.00	)
Weighted average shares outstanding, basic and diluted		~~109~~118,~~914~~364,225			~~108~~109,~~964~~914,225

~~The~~ Other ~~Company~~Income. ~~incurred~~The ~~net~~increase ~~interest expense~~ of $66199,~~490~~910 ~~and~~in ~~$43,179~~other income during the three- month ~~periods~~period ~~ended~~ending ~~September~~March 3031, ~~2016~~2017 ~~and~~was ~~2015,~~due ~~respectively. The~~to ~~increase~~the derecognition of $23199,~~311~~910 in ~~net~~accounts ~~interest~~payable ~~expense~~with ~~during the quarter ended September 30~~$46,638 ~~2016~~resulting ~~compared~~from toagreed ~~2015~~settlements ~~was~~with ~~primarily~~vendors ~~the~~and ~~result of~~ $24153,~~774~~272 inresulting ~~additional~~from ~~interest~~the ~~expense~~Company’s ~~recorded~~decision into ~~the~~derecognize ~~quarter~~certain ~~ended~~non-current ~~September~~accounts ~~30,~~payable ~~2016~~which ~~resulting from~~ the ~~advanced~~Company ~~payoff~~did ofnot afeel SPlegally ~~revenue-based~~obligated ~~factoring~~to ~~agreement in September 2016~~pay.

Net ~~loss~~interest ~~and~~expense. The ~~basic~~Company ~~and~~incurred ~~diluted~~net ~~loss~~interest ~~per~~expense ~~common~~of ~~share. Net loss was~~ $3138,~~075~~841 and $6162,~~016 in~~152 during the three- month ~~period~~periods ended ~~September~~March 3031, ~~2016~~2017 and ~~2015~~2016, respectively. The ~~Basic~~decrease ~~and~~of ~~diluted~~$23,311 in net ~~loss~~interest ~~per~~expense ~~share~~during the quarter ended March 31, 2017, compared to 2016, was primarily the result of $~~0.00~~27,910 ~~for~~in ~~both~~additional ~~the~~interest ~~three-month~~expense ~~periods~~recorded in the quarter ended ~~September~~March 3031, 2016 ~~and~~resulting from the advanced payoff of the June 8, 2015 SP revenue-based factoring agreement in January 2016.

~~Nine~~Net ~~Months~~income ~~Ended~~(loss) ~~September~~and basic and diluted income (loss) per common share. Net income was $244,807 in the three month period ended March 3031, 2017 compared to a net loss of ($25,007) during the three month period ended March 31, 2016. Basic and diluted net income (loss) per share was $0.00 and ($0.00), respectively, in the three month periods ended March 31, 2017 and ~~2015~~2016.

Our revenue, cost of emission certificates, store operating expenses, general and administrative expenses, sales of non-strategic assets, and operating results for the nine months ended September 30, 2016, as compared to the nine months ended September 30, 2015, were as follows:

	Nine Months Ended September 30,
	2016			2015			Percentage Change
Revenue	$	2,627,988		$	2,473,746			6.2	%
Cost of emission certificates		468,893			454,193			3.2	%
Store operating expenses		1,563,006			1,648,347			(5.2	%)
General and administrative expenses		509,814			647,529			(21.3	%)
(Gain) loss on sale of non-strategic assets		(862	)		286			401.7	%
Operating income (loss)	$	87,137		$	(276,609	)		131.5	%

Revenue. Revenue increased $154,242 or 6.2% to $2,627,988 for the nine-month period ended September 30, 2016 compared to $2,473,746 for the nine-month period ended September 30, 2015. The $154,242 increase in revenue was primarily due to an increase in same store revenue of $156,497 or 6.3% during the nine months ended September 30, 2016, slightly reduced by a $2,255 decrease in closed store revenue. The increase in same store revenue was primarily due to pricing increases in certain Georgia stores and increased emission tests performed during the nine months ended September 30, 2016.

Cost of emission certificates. Cost of emission certificates increased $14,700 or 3.2% for the nine-month period ended September 30, 2016 and was $468,893, or 17.8% of revenues, compared to $454,193, or 18.4% of revenues, for the nine-month period ended September 30, 2015. The $14,700 increase was a direct result of increased emission tests performed during the nine-month period ended September 30, 2016.

Store operating expenses. Store operating expenses decreased $85,341 or 5.2% for the nine-month period ended September 30, 2016 to $1,563,006, or 59.5% of revenues, compared to $1,648,347, or 66.6% of revenues, for the nine-month period ended September 30, 2015. The $85,341 decrease in store operating expenses was primarily due to declines in wages, rent expense and depreciation expense of $20,508, $16,587 and $12,533, respectively, for open stores, with an additional decrease of $23,609 in aggregate closed store operating expenses.

General and administrative expenses. Our general and administrative expenses decreased $137,715 or 21.3% to $509,814 for the nine-month period ended September 30, 2016 from $647,529 for the nine-month period ended September 30, 2015. The decrease in general and administrative expenses during the nine-month period September 30, 2016 was primarily due to a decrease of $71,703 in legal and accounting fees and $18,345 in income resulting from early cancellation of an equipment lease by the lessor due to the obsolesce of the testing equipment underlying the lease. Additionally, general and administrative expenses in the nine-month period ending September 30, 2015 included a non-recurring expense of $34,000 related to the December 2014 sale of our five Utah stores.

Gain and loss from sales of non-strategic assets. We recorded a gain of $862 from sales of non-strategic assets in the nine-month period ended September 30, 2016, compared to a loss of $286 from sales of non-strategic assets in the nine-month period ended September 30, 2015.

Operating results. Our operating income increased by $363,746 in the nine-month period ended September 30, 2016 to $87,137 compared to an operating loss of $276,609 in the nine-month period ended September 30, 2015. The increase in our operating profit was primarily due to the increase in revenues coupled with declines in store operating expenses and general and administrative expenses.

Interest income, interest expense, net loss and basic and diluted net loss per share. Our interest income, interest expense, net loss and basic and diluted net loss per share for the nine-month period ended September 30, 2016, as compared to the nine-month period ended September 30, 2015, is as follows:

	Nine Months Ended September 30,
	2016			2015
Operating income (loss)	$	87,137		$	(276,609	)
Interest income		1,007			2,265
Interest expense		(173,508	)		(146,100	)
Net loss	$	(85,364	)	$	(420,444	)
Basic and diluted net loss per share	$	(0.00	)	$	(0.00	)
Weighted average shares outstanding, basic and diluted		109,914,225			108,964,225

The Company incurred net interest expense of $172,501 and $143,835 during the nine-month periods ended September 30, 2016 and 2015, respectively. The increase of $28,666 in net interest expense during the nine months ended September 30, 2016 compared to 2015 was primarily the result interest acceleration costs resulting from early payoffs of certain SP revenue-based factoring agreement in the nine months ended September 30, 2016.

Net loss and basic and diluted net loss per common share. Net loss was $85,364 and $420,444 in the nine-month periods ended September 30, 2016, and 2015, respectively. Basic and diluted net loss per common share was $0.00 for both the nine-month periods ended September 30, 2016, and 2015.

Liquidity and Capital Resources

Introduction

Our net cash position increased by $61132,~~566~~641 during the ~~nine~~three months ended ~~September 30~~March 31, ~~2016~~2017, primarily due to $~~152~~157,~~592~~620 in net cash provided by financing activities, while our total liabilities ~~increased~~decreased by $7340,~~094~~023. Our total liabilities ~~increased~~decreased mainly due to a $~~180~~215,~~026~~177 ~~increase~~decrease in ~~notes~~accounts payable, ~~partially~~which ~~offset~~consisted byprimarily anof a $81199,~~996~~910 ~~decrease~~from inderecognition of accounts payable, ~~and~~partially ~~accrued~~offset ~~liabilities~~by a $150,495 increase in notes payable. We hope to achieve an increase in our net operating cash flows on a long-term basis, but we may not achieve positive operating cash flows on a consistent basis during ~~2016~~2017.

As described above, on April 16, 2015, the Company entered into a revolving loan agreement with CB, pursuant to which the Company initially borrowed $17,000 from CB. Under the terms of the revolving loan agreement, the Company agreed to repay the initial loan, plus interest, for a total amount of $18,955 by October 15, 2015. The Company made the required six monthly payments, ~~as required,~~ by the October 15, 2015 due date. ~~As the Company repays the initial loan, it can and has borrowed new funds which created new six-month payment cycles on the previously outstanding principal plus the new funds borrowed.~~ At their sole discretion, CB can increase the maximum availability under the revolving loan agreement above the $17,000 amount established upon the execution of the revolving loan agreement~~. Effective~~ and, effective April 18, 2016, CB increased our borrowing limit to $33,200. At ~~November~~May 45, ~~2016~~2017, the outstanding balance on our revolving loan facility with CB was approximately $3020,000 and our cash balances were approximately $011,000.

16For the three months ended March 31, 2017, operating activities used net cash of $64,211. Our near term liquidity and ability to continue as a going concern is dependent on our ability to generate sufficient revenues from our store operations to provide sufficient cash flow from operations to pay our current level of operating expenses, to provide for inventory purchases and to reduce past due amounts owed to vendors and service providers. No assurances may be given that the Company will be able to achieve sufficient levels of revenues in the near term to provide adequate levels of cash flow from operations. If the Company is unable to achieve near term profitability and generate sufficient cash flow from operations, we would need to raise additional capital or obtain additional borrowings beyond our existing line of credit facility. We currently have very limited access to capital, including the public and private placement of equity securities and additional debt financing. No assurances can be given that additional capital or borrowings would be available to allow us to continue as a going concern. If the Company is unable to continue as a going concern, our shareholders will likely lose all of their investment in the Company.

For the nine months ended September 30, 2016, operating activities used net cash of $149,096. Our near term liquidity and ability to continue as a going concern is dependent on our ability to generate sufficient revenues from our store operations to provide sufficient cash flow from operations to pay our current level of operating expenses, to provide for inventory purchases and to reduce past due amounts owed to vendors and service providers. No assurances may be given that the Company will be able to achieve sufficient levels of revenues in the near term to provide adequate levels of cash flow from operations. If the Company is unable to achieve near term profitability and generate sufficient cash flow from operations, we would need to raise additional capital or obtain additional borrowings beyond our existing line of credit facility. We currently have very limited access to capital, including the public and private placement of equity securities and additional debt financing. No assurances can be given that additional capital or borrowings would be available to allow us to continue as a going concern. If the Company is unable to continue as a going concern, our shareholders will likely lose all of their investment in the Company.15

Cash Requirements

For the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017, our net cash used in operating activities was $~~149~~64,~~096,~~211 compared to net cash ~~used~~provided inby operating activities of $933,~~599,~~382 in the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. Negative operating cash flows during the ~~nine~~three months ended ~~September 30~~March 31, ~~2016~~2017 were primarily created by ana gain of $85199,~~364~~910 ~~operating~~resulting ~~loss~~from ~~plus~~derecognition aof ~~decrease~~accounts ofpayable, a $8174,~~996~~099 ingain ~~accounts~~from ~~payable~~asset disposal and ~~accrued~~a ~~liabilities~~$51,579 increase in inventory, partially offset by ~~depreciation~~a ~~and~~net ~~amortization~~income of $43244,~~007~~807.

~~Negative~~Positive operating cash flows during the ~~nine~~three months ended ~~September 30~~March 31, ~~2015~~2016 were primarily created by aan $~~420~~18,~~444~~335 ~~operating loss partially offset by a $218,579~~ increase in accounts payable and accrued liabilities, aplus ~~$55,073~~depreciation ~~decrease~~and inamortization ~~other~~of ~~current~~$15,469 ~~assets~~offset ~~and~~by ~~depreciation~~a ~~and~~net ~~amortization~~loss of $5625,~~650~~007.

Sources and Uses of Cash

Net cash provided by investing activities was $5839,~~070~~232 for the ~~nine~~three months ended ~~September~~March 3031, ~~2016,~~2017 compared to net cash provided by investing activities of $377,~~039~~552 for the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. The net cash provided by investing activities during the ~~nine~~three months ended ~~September 30~~March 31, ~~2016~~2017 was primarily the result of $51254,~~208~~200 in proceeds from ~~notes~~asset ~~receivable~~sales reduced by $214,968 in purchases of property and equipment. The net cash provided by investing activities during the ~~nine~~three months ended ~~September 30~~March 31, ~~2015~~2016 was ~~primarily~~ the result of $353,~~664~~207 in proceeds from notes receivable plus $4,345 in proceeds from asset sales.

Net cash provided by financing activities was $~~152~~157,~~592~~620 ~~for~~during the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017, ~~while~~compared ~~net~~to ~~cash of~~ $4353,~~429~~075 ~~was~~ provided by financing activities induring the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. During the ~~nine~~three months ended ~~September 30~~March 31, ~~2016~~2017, we had ~~net~~ proceeds of $~~180~~265,~~026~~000 from notes payable reduced by ~~principal~~ payments of $26107,~~580~~094 on ~~capital~~notes ~~leases~~payable. During the ~~nine~~three months ended ~~September 30~~March 31, ~~2015~~2016, we had net proceeds of $7270,~~896~~088 from notes payable reduced by principal payments of $10,~~292~~872 on capital leases and net payments of $266,~~965~~141 on ~~equipment~~our ~~financing~~line ~~obligations~~of ~~and capital leases, respectively~~credit.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, the Company has identified accounting policies related to valuation of our equity instruments, valuation of long-lived assets and goodwill, created as the result of business acquisitions, and valuation of the allowance provided against deferred tax assets as key to an understanding of our financial statements. These are important accounting policies that require management’s most difficult, subjective judgments.

ITEM 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item, pursuant to Item 305(e) of Regulation S-K.

ITEM 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~September 30~~March 31, ~~2016~~2017 (the “Evaluation Date”), have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to ensure the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. There were no changes in the Company’s internal controls over financial reporting during the ~~nine~~three months ended ~~September 30~~March 31, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, the internal controls and procedures as of the Evaluation Date.

(A) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. The Company’s disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving the Company’s disclosure control objectives. The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are, in fact, effective at this reasonable assurance level as of the end of the period covered. In addition, the Company reviewed its internal controls, and there have been no significant changes in its internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation or from the end of the reporting period to the date of this Form 10-Q.

(B) Changes in Internal Control ~~over~~Over Financial Reporting

In connection with the evaluation of the Company’s internal controls during the ~~nine~~three months ended ~~September~~March 3031, ~~2016~~2017, the Company’s Chief Executive Officer and Chief Financial Officer have determined that there are no changes to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially effect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1

Legal Proceedings

ITEM 1A. Risk Factors

As a smaller reporting company, we are not required to provide the information required by this Item.

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

There have been no events that are required to be reported under this Item.

ITEM 3. Defaults upon Senior Securities

There have been no events that are required to be reported under this Item.

ITEM 4. Mine safety disclosures

The disclosures under this Item are not applicable to the Company.

ITEM 5. Other Information

There have been no events that are required to be reported under this Item.

ITEM 6. Exhibits

(a)

Exhibits

~~31.1~~	~~Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
~~31.2~~	~~Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
~~32.1~~	~~Certification of Chief Executive Officer pursuant to 18 U~~32.~~S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~32.2~~	~~Certification of Chief Financial Officer pursuant to 18 U~~32.~~S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101~~	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (iii) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (iv) the notes to the Condensed Consolidated Financial Statements.101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016, (ii) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016, and (iv) the notes to the Condensed Consolidated Financial Statements.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~SPEEDEMISSIONS, INC.~~	SPEEDEMISSIONS, INC.
Date: November 10, 2016	By:	/s/ Richard A. Parlontieri
Date: May 15, 2017		By:	/s/ Richard A. Parlontieri
		~~Richard A. Parlontieri~~	Richard A. Parlontieri
		~~President and Chief Executive Officer (Principal Executive Officer)~~	President and Chief Executive Officer (Principal Executive Officer)
Date: November 10, 2016	By:	/s/ Richard A. Parlontieri
Date: May 15, 2017		By:	/s/ Richard A. Parlontieri
		~~Richard A. Parlontieri~~	Richard A. Parlontieri
		~~Chief Financial Officer and Chief Accounting Officer (Principal Financial and Accounting Officer)~~	Chief Financial Officer and Chief Accounting Officer (Principal Financial and Accounting Officer)

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