UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

EXCHANGE ACT OF 1934

For the quarterly period ended: ~~September~~June 30, ~~2017~~2019

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

For the transition period from__________ to _________

Commission File Number 333-139045

ENIGMA-BULWARK, LTD.

(Exact name of registrant as specified in its charter)

Nevada	46-4733512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3415 South Sepulveda Blvd., Suite 1100-#1234, Los Angeles, CA	90034
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:	(888) 287-9994

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 last 90 days.	Yes ☐ No ☒

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

136,591,547 common shares issued and outstanding as of May 31, 2023

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The Company’s unaudited interim consolidated financial statements for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, form part of this quarterly report. They are stated in United States Dollars (US$), and are prepared in accordance with United States generally accepted accounting principles.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included thereto for the year ended December 31, ~~2016~~2018, on Form 10-K, as filed with the Securities and Exchange Commission on June 68, 2023.

ENIGMA-BULWARK, LTD.

CONSOLIDATED BALANCE SHEETS

	September 30, 2017			December 31, 2016
	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets
Investment in securities	$	1,207		$	2,413
Cash and cash equivalents	$	1,021		$	--
Property and equipment, net		474			710
Accounts receivable		--			869
Intangible assets, net		30,366			31,166
Other receivables		--			5,985
Other assets		5,800			5,800
Prepaid expenses		--			806
TOTAL ASSETS	$	37,847		$	40,089
Total current assets		1,021			7,660
Non-current assets
Investment in securities		30,155			120,619
Property and equipment, net		1,300			1,654
Other assets		5,800			6,500
Total non-current assets		37,255			128,773
TOTAL ASSETS	$	38,276		$	136,433
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	1,~~347~~831,~~949~~123		$	1,~~206~~692,~~531~~746
Notes and loans payable		169,605			169,605
Notes payable, convertible		~~688~~500,~~755~~000			~~688~~500,~~755~~000
Notes payable, convertible, related party		~~500~~848,~~230~~985			~~500~~728,~~230~~985
Related party payables		~~635~~1,~~711~~008,197			~~499~~798,~~940~~261
Total current liabilities		34,~~342~~357,~~250~~910			3,~~065~~889,~~061~~597
Long-term liabilities
Notes and convertible notes payable, related party, net of unamortized discount		32,~~857~~443,~~021~~720			32,~~481~~443,~~070~~720
Total long-term liabilities		32,~~857~~443,~~021~~720			32,~~481~~443,~~070~~720
Total liabilities		76,~~199~~801,~~271~~630			6,~~546~~333,~~131~~317
Stockholders’ deficit
Preferred stock, $0.001 par value, 25,000,000 shares authorized, none issued and outstanding		--			--
Common stock, $0.001 par value, 250,000,000 shares authorized, 69,382,753 issued and outstanding as of September 30, 2017, and December 31, 2016		69,382			69,382
Common stock, $0.001 par value, 250,000,000 shares authorized, 77,382,753 issued and outstanding as of June 30, 2019, and December 31, 2018		77,382			77,382
Additional paid in capital		11,~~025~~063,~~120~~522			11,~~025~~057,~~120~~370
Accumulated deficit		(18,280,489	)		(17,620,884	)
Subscriptions receivable		(7,000	)		(7,000	)
Accumulated comprehensive income		24,992			116,684
Accumulated deficit		(17,893,535	)		(17,418,034	)
Total stockholders' deficit		(7,160,995	)		(6,409,698	)
Accumulated comprehensive income		(4,152	)		(2,946	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	38,276		$	136,433
Total stockholders' deficit		(6,763,783	)		(6,293,228	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	37,847		$	40,089

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

ENIGMA-BULWARK, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended						For the ~~nine~~six months ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenue
General and administrative expenses	$	211,128		$	152,702		$	366,439		$	304,465
Service fees	$	--		$	--		$	--		$	225,000
Operating loss		(211,128	)		(152,702	)		(366,439	)		(304,465	)
Product sales		--			723			649			2,354
Other expenses
Total revenue		--			723			649			227,354
Interest expense		(55,204	)		(51,105	)		(109,062	)		(99,789	)
Cost of sales		687			1,523			2,553			7,580
Discount amortization		--			(21,567	)		--			(42,897	)
Gross profit (loss)		(687	)		(800	)		(1,904	)		219,774
Total other expenses		(55,204	)		(72,672	)		(109,062	)		(142,686	)
Operating expenses
Net loss		(266,332	)		(225,374	)		(475,501	)		(447,151	)
General and administrative expenses		144,537			237,180			457,578			676,827
Comprehensive loss
Impairment losses		--			--			--			3,340,027
Unrealized loss on securities		--			--			(1,206	)		(2,412	)
Total operating expenses		144,537			237,180			457,578			4,016,854
Net comprehensive loss		--			--			(1,206	)		(2,412	)
Operating loss		(145,224	)		(237,980	)		(459,482	)		(3,797,080	)
Net loss and comprehensive loss	$	(266,332	)	$	(225,374	)	$	(476,707	)	$	(449,563	)
Other income (expenses)
Net loss per share - basic and diluted	$	(0.003	)	$	(0.003	)	$	(0.006	)	$	(0.006	)
Gain on write-off of accrued payroll taxes		--			--			--			145,711
Weighted average common shares outstanding - basic and diluted		77,382,753			69,382,753			76,899,328			69,382,753
Gain on settlement of accounts payable		--			--			--			33,075
Interest expense		(47,160	)		(40,293	)		(136,102	)		(114,626	)
Discount amortization		(21,804	)		(25,262	)		(64,701	)		(75,313	)
Realized gain on currency translation		184			288			680			592
Total other income (expenses)		(68,780	)		(65,267	)		(200,123	)		(10,561	)
Net loss		(214,004	)		(303,247	)		(659,605	)		(3,807,641	)
Comprehensive income (loss)
Unrealized gain (loss) on currency translation		(420	)		(188	)		(1,228	)		444
Unrealized gain (loss) on securities		26,536			120,619			(90,464	)		(844,329	)
Net comprehensive income (loss)		26,116			120,431			(91,692	)		(843,885	)
Net loss and comprehensive loss	$	(187,888	)	$	(182,816	)	$	(751,297	)	$	(4,651,526	)
Net loss per share - basic and diluted	$	(0.003	)	$	(0.004	)	$	(0.010	)	$	(0.055	)
Weighted average common shares outstanding - basic and diluted		69,382,753			69,382,753			69,382,753			69,382,753

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

ENIGMA-BULWARK, LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

(UNAUDITED)

	For the nine months ended September 30, 2016
	For the six months ended June 30, 2018
	Common Stock					Additional			Subscriptions			Accumulated			Accumulated Other Comprehensive
	Shares		Amount			Paid In Capital			Receivable			Deficit			Income (Loss)			Total
Equity Balance, December 31, 2015, as restated	69,516,089		$	69,516		$	10,920,448		$	(100	)	$	(13,460,627	)	$	1,201,202		$	(1,269,561	)
Equity Balance, December 31, 2017	69,382,753		$	69,382		$	11,025,120		$	--		$	(18,511,900	)	$	(534	)	$	(7,417,932	)
Cancellation of common stock for services	(133,336	)		(134	)		134												--
Net loss													(221,777	)		(2,412	)		(224,189	)
Subscriptions canceled							(100	)		100									--
Equity Balance, March 31, 2018	69,382,753			69,382			11,025,120			--			(18,733,677	)		(2,946	)		(7,642,121	)
Amortization of restricted stock awards							4,236												4,236
Net loss													(225,374	)		--			(225,374	)
Net income (loss)													(3,203,377	)		120,619			(3,082,758	)
Equity Balance, June 30, 2018	69,382,753		$	69,382		$	11,025,120		$	--		$	(18,959,051	)	$	(2,946	)	$	(7,867,495	)
Equity Balance, March 31, 2016	69,382,753			69,382			10,924,718			--			(16,664,004	)		1,321,821			(4,348,083	)
Amortization of restricted stock awards							37,436												37,436
Net loss													(301,017	)		(1,084,935	)		(1,385,952	)
Equity Balance, June 30, 2016	69,382,753			69,382			10,962,154			--			(16,965,021	)		236,886			(5,696,599	)
Amortization of restricted stock awards							37,439												37,439
Net loss													(303,247	)		120,431			(182,816	)
Equity Balance, September 30, 2016	69,382,753		$	69,382		$	10,999,593		$	--		$	(17,268,268	)	$	357,317		$	(5,841,976	)

	For the nine months ended September 30, 2017
	For the six months ended June 30, 2019
	Common Stock			Additional		Subscriptions			Accumulated			Accumulated Other Comprehensive
	Shares	Amount		Paid In Capital		Receivable			Deficit			Income (Loss)			Total
Equity Balance, December 31, 2016	69,382,753	$	69,382	$	11,025,120	$	--		$	(17,620,884	)	$	116,684		$	(6,409,698	)
Equity Balance, December 31, 2018	77,382,753	$	77,382	$	11,057,370	$	(7,000	)	$	(17,418,034	)	$	(2,946	)	$	(6,293,228	)
Net income (loss)										(231,811	)		(97,277	)		(329,088	)
Amortization of restricted stock award					750
Equity Balance, March 31, 2017	69,382,753		69,382		11,025,120		--			(17,852,695	)		19,407			(6,738,786	)
Net loss										(209,169	)		(1,206	)		(210.375	)
Net income (loss)										(213,790	)		(20,531	)		(234,321	)
Equity Balance, March 31, 2019	77,382,753		77,382		11,058,120		(7,000	)		(17,627,203	)		(4,152	)		(6,502,853	)
Equity Balance, June 30, 2017	69,382,753		69,382		11,025,120		--			(18,066,485	)		(1,124	)		(6,973,107	)
Amortization of restricted stock award					750											750
Net income (loss)										(214,004	)		26,116			(187,888	)
Amortization of stock options					4,652											4,652
Equity Balance, September 30, 2017	69,382,753	$	69,382	$	11,025,120	$	--		$	(18,280,489	)	$	24,992		$	(7,160,995	)
Net loss										(266,332	)		--			(266,332	)
Equity Balance, June 30, 2019	77,382,753	$	77,382	$	11,063,522	$	(7,000	)	$	(17,893,535	)	$	(4,152	)	$	(6,763,783	)

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

ENIGMA-BULWARK, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the nine months ended
	For the six months ended
	September 30, 2017			September 30, 2016
	June 30, 2019			June 30, 2018
Cash flow from operating activities:
Net loss and comprehensive loss	$	(~~751~~476,~~297~~707	)	$	(4449,~~651,526~~563	)
Comprehensive loss		(911,~~692~~206	)		(~~843~~2,~~885~~412	)
Net loss		(~~659~~475,~~605~~501	)		(3447,~~807,641~~151	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred stock compensation		--			79,111
Stock compensation/amortization of deferred compensation		6,152			--
Accruals converted to related party loans		~~311~~120,~~250~~000			~~459~~257,~~751~~975
Depreciation and amortization		~~354~~1,036			~~354~~236
Discount amortization		~~64,701~~--			7542,~~313~~897
Gain on write-off of accrued payroll taxes		--			(145,711	)
Gain on settlement of accounts payable		--			(33,075	)
Gain on foreign exchange		(680	)		(592	)
Impairment losses-intangible assets		--			3,340,027
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		887			(2,155	)
Increase in accounts payable and accrued expenses		138,377			125,172
(Increase) decrease in other receivables		5,985			(5,507	)
Increase in related party payables		209,936			20,871
Decrease in prepaid expenses		806			(302	)
Net cash provided by operating activities		--			--
(Increase) decrease in other assets		700			(700	)
Net change in cash		--			--
Increase in accounts payable and accrued expenses		140,852			100,828
Cash - beginning of period		--			--
Decrease in deferred revenue		--			(225,000	)
Cash - end of period	$	--		$	--
Increase in related party payables		135,771			151,594
Net cash provided (used) by operating activities		1,021			(13,705	)
Net increase (decrease) in cash		1,021			(13,705	)
Cash - beginning of period		--			14,769
Cash - end of period	$	1,021		$	1,064
NONCASH ACTIVITIES
Common stock subscriptions receivable	$	--		$	(100	)
Conversion of related party payable to related party convertible promissory note	$	120,000		$	257,975
Conversion of related party payable to related party convertible promissory note	$	311,250		$	459,751
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	40--		$	30--
Income taxes paid	$	--		$	--

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

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

NOTE 1. OVERVIEW AND NATURE OF BUSINESS

The accompanying unaudited consolidated financial statements of Enigma-Bulwark, Ltd., (the “Company” or “Enigma”) have been prepared in accordance with generally accepted accounting principles. The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 consolidated financial statements and that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, ~~2016~~2018. Notes to the consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted.

The Company was incorporated in Nevada on September 30, 2005, and is headquartered in Los Angeles, California. Formerly PearTrack Security Systems, Inc., the Company’s name was changed to Enigma-Bulwark, Ltd., on October 9, 2019, pursuant to a majority of the Company’s shareholders and unanimous resolution of the board of directors.

Enigma-Bulwark, Ltd. (“Enigma” or “Company”) is a security and risk management company that provides physical security, technology-systems integration, and risk management advisory services. Services offered to assess and mitigate risk include security guards, risk management analysis, and proprietary and third-party technology and software. Target markets include corporations, governments and individuals across the globe.

As of ~~September~~June 30, ~~2017~~2019, the Company was structured with three wholly-owned subsidiaries: PearTrack Systems Group, Ltd. (“PTSG”), Ecologic Products, Inc. (“EPI”), and Ecologic Car Rentals, Inc. (“ECR”), all Nevada corporations. The Company’s current business activities are diversified into two specific markets: security and risk management, and remote/mobile asset tracking products.

The Company intends to provide a unique solution to security issues in the intermodal shipping container marketplace, with its patented container tracking and locking system, EnigmaLok (formerly PearLoxx), the rights of which were licensed to the Company in perpetuity in 2015.

Through the subsidiaries, Ecologic Car Rentals, Inc. and Ecologic Products, Inc., the Company continues its pursuits for strategic opportunities for its shareholders, as management believes that the brands have value for companies with environmentally-friendly consumer-related products and services.

Going Concern

The Company has incurred losses since inception resulting in a current period net loss of $~~751~~476,~~297~~707, an accumulated deficit of $1817,~~280~~893,~~489~~535, and a working capital deficit of $34,~~341~~357,~~229~~910 as of ~~September~~June 30, ~~2017~~2019, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms. There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of significant accounting policies is presented to assist in understanding the Company’s consolidated financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the consolidated financial statements.

The Company’s fiscal year end is December 31.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. Estimates that are critical to the accompanying consolidated financial statements include the estimates related to asset impairments of long-lived assets and investments, classification of expenditures as either an asset or an expense, valuation of deferred tax assets, and the likelihood of loss contingencies. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and assumptions are revised periodically, and the effects of revisions are reflected in the consolidated financial statements in the period it is determined to be necessary. Actual results could differ from these estimates.

Fair Value Hierarchy

The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2: Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

Level 3: Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

The Company’s investment in securities are classified as Level 1 assets, and were valued using the quoted prices in the active market (Note 3).

Fair Value of Financial Instruments

As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, respectively, the carrying values of Company’s Level 1 financial instruments including cash and cash equivalents, investments in securities, accounts receivable, accounts payable, and short-term debt approximate fair value. The fair value of Level 3 instruments is calculated as the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 instruments may also be based on sales prices of similar assets. The Company’s fair value calculations take into consideration the credit risk of both the Company and its counterparties as of the date of valuation.

Cash and Cash Equivalents

The Company considers cash in banks, deposits in transit, and highly-liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents. As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, the Company had no cash equivalents.

Foreign Currency Translation

Items included in the financial statements of the Company’s subsidiary are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in US Dollars, which is the Company’s reporting currency.

The results and financial position of PearTrack Systems Group, Ltd., the Company’s wholly owned subsidiary, has a functional currency different from the reporting currency, the British Pound, and is translated into the reporting currency as follows:

(i)assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii)income and expenses for each statement of operations are translated at average exchange rates on a monthly basis; and

(iii)all resulting exchange differences are recognized as a separate component of equity.

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of operations as other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign entities are taken to stockholders’ equity. During the nine months ended September 30, 2017 and 2016, respectively, unrealized exchange differences of ($1,228) and $444 were recognized. As of September 30, 2017 and 2016, respectively, unrealized exchange differences of $6,899 and $7,523 have been accumulated.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTMBER 30, 2017, AND DECEMBER 31, 2016

The following represents the accumulated unrealized exchange differences, which are excluded from earnings and reflected as a component of other comprehensive income:

	Unrealized Foreign Currency Exchange
Balance, December 31, 2015	$	7,079
Unrealized exchange differences during period		444
Balance, September 30, 2016	$	7,523
Balance, December 31, 2016	$	8,127
Unrealized exchange differences during period		(1,228	)
Balance, September 30, 2017	$	6,899

Investments in Securities

Investments in securities are accounted for using the equity method if the investment provides the Company the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the Company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee's board of directors, are considered in determining whether the equity method is appropriate. All other equity investments, which consist of investments for which the Company does not possess the ability to exercise significant influence, are accounted for under the mark to market method. Under the mark to market method of accounting, investments are marked to market, with unrealized gains and losses being excluded from earnings and reflected as a component of other comprehensive income.

Property and Equipment

Property and equipment is carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the Company’s property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 5 to 7 years.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019, AND DECEMBER 31, 2018

Intangible Assets

Product processes, patents and customer lists are amortized on a straight-line basis over their estimated useful lives ofbetween 4 to 20 years. Application development stage costs for significant internally developed software projects are capitalized and amortized on a straight-line basis over the useful life, ofbetween 2 to 5 years. Costs to extend and maintain patents and trademarks are charged directly to expense as incurred.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

Due to the Company’s recurring losses and lack of revenue from its intellectual properties, its intellectual properties were evaluated for impairment, and it was determined that ~~its~~expected ~~intellectual~~future ~~property,~~cash ~~with~~flows awere ~~carrying~~sufficient ~~value~~for ofrecoverability ~~$3,340,027, was impaired. As a result, an impairment loss~~ of ~~$3,340,027 was recognized for~~ the ~~period~~assets ~~ended~~at ~~September~~December 3031, ~~2016~~2018.

Convertible Debt

The Company recognizes the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public on the date of the debt. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debt, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.

Revenue Recognition

Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.

The Company’s ~~has~~revenue ~~continuing~~is ~~revenue~~generated from limited customer contracts for its tracking units and system. In addition, the Company provides consulting services as an additional revenue source. As of ~~September~~June 30, ~~2017~~2019, the Company has not commenced its principal operations, generating limited test sales of its security product line.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTMBER 30, 2017, AND DECEMBER 31, 2016

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

The Company has net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established.

As of ~~September~~June 30, ~~2017~~2019, the Company had not yet filed its 2013 through ~~2016~~2018 annual corporate income tax returns, which were filed in April 2022. Due to the Company’s recurring losses, no corporate income taxes are due for these periods.

Net Income (Loss) Per Common Share

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when anti-dilutive, common stock equivalents, if any, are not considered in the computation.

Other Comprehensive Income (Loss)

Other comprehensive income includes unrealized gains and losses on securities available for sale, and unrealized gains and losses resulting from foreign exchange differences. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, respectively, other comprehensive ~~income (~~losses) of ($911,~~692)~~206 and ($~~843~~2,~~885)~~412 have been recognized. As of ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, respectively, other comprehensive ~~income~~losses ~~(loss)~~ of $244,~~992~~152 and $~~357~~2,~~317~~946 has been accumulated. The following represents the accumulated comprehensive income activity:

	Unrealized Foreign Currency Exchange			Unrealized Securities Gains (Losses)			Total Accumulated Other Comprehensive Income (Loss)
Balance, December 31, 2015	$	7,079			1,194,123			1,201,202
Balance, December 31, 2017	$	6,703		$	(7,237	)	$	(534	)
Gain (loss)		~~444~~--			(~~844~~2,~~329~~412	)		(~~843~~2,~~885~~412	)
Balance, September 30, 2016	$	7,523		$	349,794		$	357,317
Balance, June 30, 2018	$	6,703		$	(9,649	)	$	(2,946	)
Balance, December 31, 2016	$	8,127		$	108,557		$	116,684
Balance, December 31, 2018	$	6,703		$	(9,649	)	$	(2,946	)
Gain (loss)		~~(1,228~~--	)		(901,~~464~~206	)		(911,~~692~~206	)
Balance, September 30, 2017	$	6,899		$	(18,093	)	$	24,992
Balance, June 30, 2019	$	6,703		$	(10,855	)	$	(4,152	)

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019, AND DECEMBER 31, 2018

Stock Based Compensation

The Company records stock-based compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Recent Accounting Pronouncements

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:

Adopted:

In ~~July~~January ~~2015~~2016, the FASB issued ASU ~~2015~~No. 2016-1101, ~~Inventory~~Financial Instruments-Overall (~~Topic~~Subtopic ~~330)~~825-10: ~~Simplifying~~Recognition ~~the~~and Measurement of ~~Inventory. ASU~~Financial ~~2015-11~~Assets isand ~~part~~Financial ofLiabilities). ~~the~~The ~~Simplification~~new ~~Initiative,~~guidance ~~and its objective~~ is intended to ~~simplify~~improve the recognition, measurement, ofpresentation ~~inventory. This~~and ~~Update~~disclosure ~~applies~~of tofinancial ~~inventory~~instruments. ~~that~~Among isother ~~measured~~changes, ~~using~~there ~~FIFO~~will orno ~~average~~longer ~~cost,~~be ~~and requires~~ an ~~entity~~available-for-sale ~~measure~~classification ~~inventory~~for atwhich ~~the~~changes ~~lower~~in offair ~~cost~~value ~~and~~are ~~net~~currently ~~realizable~~reported ~~value. The amendments~~ in ~~this~~other ~~Update~~comprehensive ~~are~~income ~~effective~~ for ~~the~~equity ~~Company’s~~securities ~~consolidated~~with ~~financial~~readily ~~statements~~determinable ~~issued~~fair ~~for~~values. ~~fiscal~~Equity ~~years~~investments ~~beginning~~with ~~after~~readily ~~December~~determinable ~~15,~~fair ~~2016,~~values ~~and~~will ~~interim~~be ~~periods~~measured ~~within~~at ~~those~~fair ~~fiscal~~value ~~years.~~with ~~The~~changes ~~amendments~~ in ~~this~~fair ~~Update~~value ~~should~~recognized bein ~~applied~~net ~~prospectively~~income. ~~with~~ASU ~~earlier~~2016-01 ~~application~~is ~~permitted~~effective asfor of the Company beginning ofJanuary an1, ~~interim~~2018, orwith ~~annual~~early ~~reporting~~adoption ~~period.~~not permitted.

In ~~March~~February 2016, the FASB issued ASU No. 2016-0902, ~~Compensation-Stock Compensation~~Leases. ~~The~~Under the new guidance, ~~simplifies~~lessees ~~several~~will ~~aspects~~be ofrequired to recognize the ~~accounting~~following for ~~share-based~~all ~~payment~~leases ~~transactions,~~(with ~~including~~the exception of short-term leases) at the ~~income~~commencement ~~tax~~date: ~~consequences~~(a) a lease liability, ~~classification~~which ofis ~~awards~~a aslessee’s ~~either~~obligation ~~equity~~to ormake ~~liabilities~~lease payments arising from a lease, measured on a discounted basis; and ~~classification~~(b) ona right-of-use asset, which is an asset that represents the ~~statement~~lessee’s ofright ~~cash~~to ~~flows.~~use, ~~The~~or ~~amendments~~control inthe ~~this~~use ~~standard~~of, ~~are~~a ~~effective~~specified asset for the ~~Company's~~lease ~~annual~~term. ~~year~~The ~~and~~ASU ~~first~~is ~~fiscal~~effective ~~quarter~~for ~~beginning~~the onCompany beginning January 1, ~~2017~~2019, with early adoption permitted.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on eight specific cash flow issues, for which specific guidance had not previously been provided, with the objective of reducing the existing diversity in practice. The amendments in this update are effective for the Company for fiscal years beginning after December 15, 2017, and interim periods. Early adoption is permitted.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. As part of the Board’s initiative to reduce complexity in accounting standards. The amendments in this update are effective for the Company for annual reporting periods beginning after December 15, 2017, and interim periods. Early adoption is permitted for interim or annual reporting periods for which financial statements have not been issued or made available for issuance.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business. ASU 2017-01 assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments in this update are effective for the Company for annual periods beginning after December 15, 2017, and interim periods. Early adoption is permitted under certain conditions.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test, which should reduce the cost and complexity of evaluating goodwill for impairment. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 is effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted for testing performed after January 1, 2017.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. ASU 2017-09 clarifies and reduces both the (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 is effective for the Company for annual periods beginning after December 15, 2017, and interim periods. Early adoption is permitted.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

In ~~April~~July ~~2016~~2017, the FASB issued ASU ~~2016~~No. 2017-1011, ~~Revenue~~Earnings ~~from~~Per ~~Contracts~~Share ~~with~~(Topic ~~Customers~~260), Distinguishing Liabilities from Equity (Topic ~~606~~480):, ~~Identifying~~Derivatives ~~Performance~~and ~~Obligations~~Hedging ~~and~~(Topic ~~Licensing~~815). ASU ~~2016~~2017-1011 ~~clarifies~~addresses the complexity of accounting for ~~licenses~~certain offinancial ~~intellectual~~instruments ~~property~~with asdown ~~well~~round asfeatures. ~~the~~Down ~~identification~~round offeatures ~~distinct~~are ~~performance~~features ~~obligations~~of incertain aequity-linked ~~contract.~~instruments ~~The~~(or ~~amendments~~embedded infeatures) ~~this~~that ~~Update~~result ~~affect~~in the ~~guidance~~strike inprice ~~Accounting~~being ~~Standards~~reduced ~~Update~~on ~~2014-09,~~the ~~Revenue~~basis ~~from~~of ~~Contracts~~the ~~with~~pricing ~~Customers~~of ~~(Topic~~future ~~606),~~equity ~~which~~offerings. isASU ~~effective~~2017-11 ~~for~~also ~~annual~~addresses ~~reporting~~the ~~periods~~difficulty ~~beginning~~of onnavigating orTopic ~~after~~480, ~~December~~Distinguishing ~~15,~~Liabilities ~~2016.~~from ~~The~~Equity, ~~effective~~because ~~date~~of ~~and~~the ~~transition~~existence ~~requirements~~of ~~for~~extensive ~~the~~pending ~~amendments~~content in ~~this~~the ~~Update~~FASB ~~are~~Accounting ~~the~~Standards ~~same~~Codification®. asASU ~~the~~2017-11 is effective ~~date~~for ~~and~~the ~~transition~~Company ~~requirements~~for inannual ~~Topic~~periods ~~606~~beginning ~~(and~~after ~~any~~December ~~other~~15, ~~Topic~~2018, ~~amended~~and byinterim ~~Update~~periods. Early ~~2014-09)~~adoption is permitted.

In ~~May~~June ~~2016~~2018, the FASB issued ASU No. ~~2016~~2018-1207, ~~Revenue~~Compensation-Stock ~~from~~Compensation ~~Contracts with Customers~~ (Topic ~~606~~718):, ~~Narrow-Scope~~ Improvements ~~and~~to ~~Practical~~Nonemployee ~~Expedients.~~Share-Based Payment Accounting. ASU ~~2016~~2018-1207 ~~addresses~~expands ~~certain issues identified in~~ the ~~guidance~~scope onof ~~assessing~~Topic ~~collectability,~~718 ~~presentation~~to ofinclude ~~sales~~share-based ~~taxes,~~payment ~~noncash~~transactions ~~consideration,~~for ~~and~~acquiring ~~completed~~goods ~~contracts~~ and ~~contract~~services ~~modifications~~from ~~at transition~~nonemployees. ~~The~~ASU ~~effective~~2018-07 ~~date~~is ~~and~~effective ~~transition requirements~~ for the ~~amendments~~Company infor ~~this~~annual ~~Update~~periods ~~are~~beginning ~~the~~after ~~same~~December as15, ~~the~~2018, ~~effective date~~ and ~~transition~~interim ~~requirements~~periods. Early inadoption ~~Topic~~is ~~606 (and any other Topic amended by Update 2014-09)~~permitted.

In ~~October~~July ~~2016~~2018, the FASB issued ASU No. ~~2016~~2018-1711, ~~Consolidation~~Leases (Topic ~~810~~842), ~~Interests~~Targeted ~~Held~~Improvements. ~~through~~ASU ~~Related~~2018-11 ~~Parties~~addresses ~~That~~certain ~~Are~~issues ~~Under~~in ~~Common~~implementing ~~Control.~~ ASU 2016-1702, ~~amends~~Leases, ~~the~~which ~~consolidation~~was ~~guidance~~issued onto ~~how~~increase atransparency ~~reporting~~ad ~~entity~~comparability ~~that~~by isrecognizing lease assets and liabilities on the ~~single~~balance ~~decision~~sheet ~~maker~~and ofdisclosing akey ~~VIE~~information ~~should~~about ~~treat~~leasing ~~indirect~~transaction. ASU ~~interests~~2018-11 inclarifies ~~the~~1) ~~entity~~comparative ~~held~~reporting ~~through~~requirements ~~related~~for ~~parties~~initial ~~that~~adoption; ~~are~~and ~~under~~2) ~~common~~for ~~control~~lessors ~~with~~only, separating lease and non-lease components in a contract and allocating the ~~reporting~~consideration ~~entity~~in the contract to the separate components. The amendments in this ~~update~~Update ~~are~~related to separating components of a contract affect the amendments in Update 2016-02, which is effective for ~~fiscal~~the ~~years~~Company for annual periods beginning after December 15, ~~2016~~2018, and interim periods. Early adoption is permitted.

Not Yet Adopted:

In ~~January~~August ~~2016~~2018, the FASB issued ASU No. ~~2016~~2018-0113, ~~Financial~~Fair ~~Instruments-Overall~~Value ~~(Subtopic 825-10: Recognition and~~ Measurement of(Topic ~~Financial~~820), ~~Assets~~Disclosure ~~and~~Framework-Changes ~~Financial Liabilities. The new guidance is intended~~ to ~~improve~~ the ~~recognition,~~Disclosure ~~measurement,~~Requirements ~~presentation~~for ~~and~~Fair ~~disclosure~~Value ~~of financial instruments~~Measurement. ASU ~~Among other changes, there will no longer be an available~~2018-~~for-sale~~13 ~~classification~~modifies ~~for~~the ~~which~~disclosure ~~changes~~requirements inon fair value ~~are~~measurements ~~currently reported~~ in ~~other~~Topic ~~comprehensive~~820, ~~income~~Fair ~~for~~Value ~~equity~~Measurement, ~~securities~~based ~~with~~on ~~readily~~the ~~determinable~~concepts ~~fair~~in ~~values.~~the ~~Equity~~Concepts ~~investments~~Statement, ~~with~~including ~~readily~~the ~~determinable~~consideration ~~fair~~of ~~values~~costs ~~will~~and ~~be measured at fair value with changes in fair value recognized in net income~~benefits. ASU ~~2016~~2018-0113 ~~will~~is be effective for the Company for annual periods beginning ~~January~~after 1December 15, ~~2018~~2019, ~~with~~and ~~early~~interim periods. Early adoption ~~not~~is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In ~~February~~August ~~2016~~2018, the FASB issued ASU No. ~~2016~~2018-0215, ~~Leases.~~Intangibles-Goodwill ~~Under~~and ~~the~~Other ~~new~~Internal-Use ~~guidance,~~Software ~~lessees will be required to recognize the following for all leases~~ (~~with~~Subtopic ~~the exception of short~~350-~~term leases~~40). ASU at2018-15 ~~the~~was ~~commencement~~issued ~~date:~~to ~~(a)~~help aentities ~~lease~~evaluate ~~liability,~~the ~~which~~accounting isfor afees ~~lessee’s~~paid ~~obligation~~by ~~to make lease payments arising from~~ a ~~lease,~~customer ~~measured~~in on a ~~discounted~~cloud ~~basis;~~computing ~~and~~arrangement (bhosting arrangement) aby ~~right-of-use~~providing ~~asset,~~guidance ~~which~~for isdetermining anwhen ~~asset that represents~~ the ~~lessee’s~~arrangement ~~right~~includes ~~to use, or control the use of,~~ a ~~specified~~software ~~asset for the lease term~~license. ~~The~~ ASU ~~will~~2018-15 beis effective for the Company for annual periods beginning ~~January~~after 1December 15, 2019, ~~with~~and ~~early~~interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In ~~August~~April ~~2016~~2019, the FASB issued ASU No. ~~2016~~2019-1504, ~~Statement~~Codification ofImprovements ~~Cash~~to ~~Flows (~~Topic ~~230)~~326, ~~Classification~~Financial ofInstruments-Credit ~~Certain~~Losses, ~~Cash~~Topic ~~Receipts~~815, Derivatives and ~~Cash~~Hedging, ~~Payments~~and Topic 825, Financial Instruments. The amendments to Topic 326 and other Topics in ASU ~~2016~~2019-1504 ~~provides~~clarify ~~guidance~~or onaddress ~~eight~~stakeholders’ specific ~~cash~~issues ~~flow~~about ~~issues,~~certain ~~for~~aspects ~~which~~of ~~specific~~the ~~guidance~~amendments ~~had~~in ~~not~~Update ~~previously~~2016-13. ~~been~~The ~~provided,~~amendments ~~with~~to ~~the~~Topic ~~objective~~815 ofin ~~reducing~~ASU ~~the~~2019-04 ~~existing~~include ~~diversity~~items inrelated ~~practice~~to Update 2017- 12 and clarify certain aspects of Topic 815. The amendments to Topic 321 and other Topics in ~~this~~ASU ~~update~~2019-04 ~~are~~relate to the amendments in Update 2016-01 and clarify certain aspects of the amendments in Update 2016-01. ASU 2019-04 is effective for ~~fiscal~~the ~~years~~Company for annual periods beginning after December 15, ~~2017~~2019, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. As part of the Board’s initiative to reduce complexity in accounting standards. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017, and interim periods. Early adoption is permitted for interim or annual reporting periods for which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business. ASU 2017-01 assists entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The amendments in this update are effective for annual periods beginning after December 15, 2017, and interim periods. Early adoption is permitted under certain conditions. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTMBER 30, 2017, AND DECEMBER 31, 2016

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test, which should reduce the cost and complexity of evaluating goodwill for impairment. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. ASU 2017-04 will be effective for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted for testing performed after January 1, 2017. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting. ASU 2017-09 clarifies and reduces both the (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 will be effective for the Company for annual periods beginning after December 15, 2017, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). ASU 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. ASU 2017-11 also addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. ASU 2017-11 is effective for the Company for annual periods beginning after December 15, 2018, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its consolidated financial statements and related disclosures.

Recently Issued Accounting Standards Updates:

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows.

NOTE 3. INVESTMENT IN SECURITIES

As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, the Company held 12,061,854 shares of Amazonas Florestal, Ltd. (OTC: AZFL) common stock. The securities are classified as Level 1 investments (Note 2, Fair Value Hierarchy), and are valued using the quoted market prices. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, respectively, ($901,~~464)~~206 and ($~~844~~2,~~329)~~412 in unrealized ~~gains (~~losses) were recognized and included as part of comprehensive income (loss). As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, respectively, $1810,~~093~~855 and $~~108~~9,~~557~~649 in cumulative unrealized ~~gains~~losses were recognized, and the securities held a fair value of $301,~~155~~207 and $~~120~~2,~~619~~413.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2019, AND DECEMBER 31, 2018

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	September 30, 2017			December 31, 2016
	June 30, 2019			December 31, 2018
Office equipment	$	2,362		$	2,362
Accumulated depreciation		(1,~~062~~888	)		(~~708~~1,652	)
Property and equipment, net	$	~~1,300~~474		$	~~1,654~~710

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, respectively, $~~354~~236 and $~~354~~236 in depreciation was expensed.

NOTE 5. INTANGIBLE ASSETS

Intangible assets consists of the following:

	September 30, 2017			December 31, 2016
	June 30, 2019			December 31, 2018
Intellectual property, unencumbered	$	--		$	2,156,245
Intellectual property	$	31,500		$	31,500
Accumulated amortization		--(1,134	)		(~~167,370~~334	)
Impairment losses		--			(1,988,875	)
Intellectual property, net	$	30,366		$	31,166
Intellectual property, unencumbered, net		--			--
Intellectual property, pledged to creditors		--			1,567,060
Accumulated amortization		--			(215,908	)
Impairment losses		--			(1,351,152	)
Intellectual property, pledged to creditors, net	$	--		$	--

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, respectively, ~~the Company recognized~~ $0800 and $~~1,988,875 in impairment losses related to its unencumbered intellectual property, and $~~0 ~~and $1,351,152~~ in ~~impairment~~amortization ~~losses~~was ~~related to its intellectual property pledged to creditors, for a total of $0 and $3,340,027 in impairment losses~~expensed.

During the nine months ended September 30, 2017 and 2016, respectively, no amortization was expensed.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTMBER 30, 2017, AND DECEMBER 31, 2016

NOTE 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of:

	September 30, 2017		December 31, 2016
	June 30, 2019		December 31, 2018
Accounts payable-vendors	$	~~659,~~721,896	$	~~655~~713,~~340~~581
Accrued payroll and taxes		44101,995		4480,995
Accrued interest		~~641~~1,~~765~~006,453		~~505~~897,~~703~~391
Other liabilities		~~1,468~~779		~~493~~779
Total accounts payable and accrued expenses	$	1,~~347~~831,~~949~~123	$	1,~~206~~692,~~531~~746

~~During~~NOTE the nine months ended September 30, 2016, management determined that there is no future sacrifice of economic benefit arising from certain debt previously recognized by the Company to transfer assets or provide services in the future7. As aNOTES ~~result,~~AND ~~certain~~LOANS ~~vendor accounts payable in the amount of $33,075, and previously accrued payroll taxes in the amount of $145,711, was extinguished, and a gain of $178,786 was recognized.~~ PAYABLE

NOTE 7. DEFERRED REVENUE

In connection with a certain Service Agreement dated June 30, 2014 (the “Service Agreement”), revenue received in the amount of $450,000 was deferred, to be recognized over the term of the agreement, or twelve (12) months. During the year ended December 31, 2014, the Company recognized a total of $225,000 as revenues earned. Due to certain events beyond the Company’s control, the customer was unable to meet the terms of the Service Agreement, and the contract expired. There was no refund clause within the Service Agreement, and the remaining $225,000 in deferred revenues were recognized during the nine months ended September 30, 2016.

NOTE 8. NOTES AND LOANS PAYABLE

Notes and loans payable consists of the following:

	September 30, 2017		December 31, 2016
	June 30, 2019		December 31, 2018
Loans payable	$	44,605	$	44,605
Notes payable, short term		125,000		125,000
Total notes and loans payable		169,605		169,605
Notes payable, short-term, convertible		~~688~~500,~~755~~000		~~688~~500,~~755~~000
Total	$	~~858~~669,~~360~~605	$	~~858~~669,~~360~~605

Notes payable includes the following convertible promissory notes at ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018:

Description	Principal		Interest Rate (%)	Conversion Rate	Maturity Date
Kasper Group, Ltd.	$	188,755	7	$0.05	1 year from demand	[1]
Matrix Advisors, Inc.	$	500,000	5	$0.25	12/31/2015	[1]
Matrix Advisors, Inc.		500,000	5	$0.25	12/31/2015	[2]
Total convertible notes payable	$	500,000
Total convertible notes payable	$	688,755

[1] No ~~demand~~change ~~has~~in ~~been~~terms ~~made~~of promissory note due to breach. The debt was converted in November 2021.

~~[2]~~During Nothe ~~change~~six months ended June 30, 2019, and the year ended December 31, 2018, respectively, interest in ~~terms~~the amount of ~~promissory~~$25,786 ~~note~~and ~~due~~$60,797 towas ~~breach~~expensed. As ~~The~~of ~~debt~~June ~~was~~30, ~~converted~~2019, and December 31, 2018, respectively, interest in ~~November~~the ~~2021~~amount of $376,852 and $351,066 has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.

During the nine months ended September 30, 2017, and the year ended December 31, 2016, respectively, interest in the amount of $48,776 and $65,392 was expensed. As of September 30, 2017, and December 31, 2016, respectively, interest in the amount of $342,558 and $293,782 has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets. 12

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

NOTE 98. RELATED PARTY TRANSACTIONS

Related party transactions consists of the following:

	September 30, 2017			December 31, 2016
	June 30, 2019			December 31, 2018
Notes payable, convertible, short-term	$	~~500~~848,~~230~~985		$	~~500~~728,~~230~~985
Notes payable, long-term, secured		2,000,000			2,000,000
Notes payable, convertible, long-term		2,443,720			2,443,720
Less: unamortized discount		(103,273	)		(167,974	)
Total notes payable		3,292,705			3,172,705
Total long-term notes payable, secured, net of discount		1,896,727			1,832,026
Accrued compensation		855,491			645,555
Notes payable, convertible, long-term, subordinate		1,960,294			1,649,044
Reimbursable expenses/cash advances payable		152,706			152,706
Total long-term notes payable		3,857,021			3,481,070
Total related party payable		1,008,197			798,261
Total notes payable		4,357,251			3,981,300
Total related party transactions	$	4,300,902		$	3,970,966
Accrued compensation		482,318			356,835
Reimbursable expenses/cash advances payable		153,393			143,105
Total related party payable		635,711			499,940
Total related party transactions	$	4,992,962		$	4,481,240

Related party notes payable consists of the following convertible notes payable at ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018:

Description	Principal		Interest Rate (%)	Conversion Rate	Maturity Date
Short-term:
Huntington Chase Financial Group	$	413,913	7	$0.05	1 year from demand	[1]
Huntington Chase LLC		160,000	5	$0.05	12/31/2023
William Nesbitt		86,317	5	$0.05	Funding	[2]
Total short-term		500,230
Kasper Group, Ltd.		188,755	7	$0.05	1 year from demand	[1]
Total short-term		848,985
Long-term:
Huntington Chase Financial Group		~~863~~1,123,000	5	$0.05	12/31/2021
E. William Withrow Jr.		~~670~~894,~~830~~256	5	$0.05	12/31/2021
John Macey		426,464	4	$0.25	12/31/2023
Total long-term		12,~~960~~443,~~294~~720
Total convertible notes payable	$	23,~~460~~292,~~524~~705

[1] No demand has been made

[2] The requisite funding goals for repayment have not been met.

All outstanding promissory notes to related parties bear interest at a rate of 5 to 7 percent per annum, are due and payable within between one (1) year of written demand to December 31, 2023, or upon certain equity funding, and are convertible into the Company’s common stock at a price of between $0.05 to $0.25 per share.

As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, respectively, affiliates and related parties are due a total of $4,~~992~~300,~~962~~902 and $43,~~481~~970,~~240~~966, which is comprised of promissory notes to related parties, ~~net of unamortized discounts of $103,273 and $167,974,~~ in the amount of $43,~~357~~292,~~251~~705 and $3,~~981~~172,~~300~~705; accrued compensation in the amount of $~~482~~855,~~318~~491 and $~~356~~645,~~835~~555; and reimbursable expenses/cash advances to the Company in the amount of $~~153~~152,~~393~~706 and $~~143~~152,~~105~~706; for a net increase (decrease) of $~~511~~329,~~722~~936 and ($~~964~~1,~~853~~182,536). During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, and the year ended December 31, ~~2016~~2018, respectively, promissory notes to related parties increased (decreased) by $~~311~~120,~~250~~000 and ($~~626~~1,~~965~~391,569), unamortized discounts decreased by $~~64,701~~0 and $~~100~~81,~~575~~469, and accrued compensation increased by $~~125~~209,~~483~~936 and $~~150~~127,~~285, and reimbursable expenses/cash advances increased by $10,288 and $87,028~~564.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, and the year ended December 31, ~~2016~~2018, respectively, promissory notes to related parties, net of unamortized discounts, increased (decreased) by $~~375~~120,~~951~~000 and ($~~727~~1,~~540~~310,100), as a result of an increase in accrued compensation owed to related parties in the amount of $~~311~~120,~~250~~000 and $~~626~~419,~~965~~676 converted to convertible promissory notes; $0 and $188,755 reclassified from non-related party promissory notes; $0 and $2,000,000 in secured promissory notes canceled; and a decrease in unamortized discount in the amount of $~~64,701~~0 and $~~100~~81,~~575~~469.

14During the six months ended June 30, 2019, and the year ended December 31, 2018, respectively, $329,936 and $548,240 in related party compensation was accrued, of which $120,000 and $419,676 was converted into convertible promissory notes; and $0 and $1,000 was paid; for a net increase in accrued compensation in the amount of $209,936 and $127,564.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, and the year ended December 31, ~~2016~~2018, respectively, $~~436~~83,~~733~~276 and $~~777~~215,~~250~~096 in interest on related party ~~compensation~~loans was ~~accrued,~~expensed. As of ~~which~~June 30, 2019, and December 31, 2018, respectively, $~~311~~629,~~250~~601 and $~~626~~546,~~965~~325 ~~was~~in ~~converted~~interest ~~into~~on ~~convertible~~related ~~promissory~~party ~~notes~~loans has been accrued, ~~for~~and ais ~~net~~included ~~increase~~as inpart of accrued ~~compensation~~expenses inon the ~~amount~~accompanying ofconsolidated ~~$125,483~~balance ~~and $150,285~~sheets.

During the nine months ended September 30, 2017, and the year ended December 31, 2016, respectively, reimbursable expenses/cash advances owed to related parties increased by $10,288 and $87,028 as a result of an increase in cash loans to the Company and expenses paid by related parties on behalf of the Company in the amount of $10,288 and $92,589; and repayments to related parties in the amount of $0 and $5,561.Agreements

~~During~~On May 1, 2019, the ~~nine~~Company ~~months~~entered ~~ended~~into ~~September~~Consulting ~~30,~~Agreement ~~2017,~~with ~~and~~Mr. ~~the~~David ~~year~~Rocke. ~~ended~~The ~~December~~agreement ~~31,~~is ~~2016,~~for ~~respectively,~~an ~~$87~~initial term of three (3) years,~~286~~ and provides a base compensation of $91150,~~401~~000 inper ~~interest~~year, onto ~~related~~be ~~party~~deferred ~~loans~~until ~~was~~the ~~expensed.~~Company Asreaches certain funding goals, as well as 12.5% of ~~September~~Enigma-Bulwark 30Security, ~~2017~~Inc. adjusted gross earnings, ~~and~~as ~~December~~defined 31within the agreement. In addition, ~~2016~~the agreement includes a grant of 6,875,093 ~~respectively~~options to purchase shares of the Company’s common stock, valued at $~~299~~39,~~207~~875 ~~and~~using the Black-Scholes method, at an exercise price of $~~211~~0.005 per share. The options are exercisable for a period of five (5) years,~~921~~ inof ~~interest~~which on50% ~~related~~vest ~~party~~when ~~loans~~certain ~~has~~performance ~~been~~goals ~~accrued~~are met, and isthe ~~included~~remainder asvest ~~part~~when ofcertain ~~accrued~~funding ~~expenses~~goals onare met. The assumptions used in valuing the ~~accompanying~~options ~~consolidated~~were: ~~balance~~expected ~~sheets~~term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

~~NOTE~~On 10May 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., ~~CAPITAL~~entered ~~STOCK~~into Consulting Agreement with Mr. Michael Gabriele, to serve as its President, and the President of its subsidiary, Enigma-Bulwark Security, Inc. The agreement is for an initial term of three (3) years, and provides a base compensation of $175,000 per year, to be deferred until the Company reaches certain funding goals, as well as 12.5% of Enigma-Bulwark Security, Inc. adjusted gross earnings, as defined within the agreement. In addition, the agreement includes a grant of 2,750,040 options to purchase shares of the Company’s common stock, valued at $15,950 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

NOTE 9. CAPITAL STOCK

The total number of authorized shares of common stock that may be issued by the Company is 250,000,000 shares with a par value of $0.001; and the total number of authorized preferred stock is 25,000,000 shares with a par value of $0.001.

~~During~~As ~~the~~of ~~nine~~June ~~months ended September~~ 30, ~~2016~~2019, ~~133,336~~and ~~shares~~December of31, 2018, the Company’s ~~restricted~~had ~~common stock were canceled in connection with consulting services not provided pursuant to consulting agreements. As a result~~77,382,753 ~~$134~~shares ~~was~~of ~~recorded~~Common toStock ~~additional~~issued ~~paid~~and ~~in capital~~outstanding.

~~During~~NOTE ~~the nine months ended September 30, 2017, and the year ended December 31, 2016, respectively, a total of $0 and $104,072 in deferred stock compensation was expensed~~10. NoSTOCK ~~deferred~~OPTIONS ~~stock~~AND ~~compensation~~AWARDS ~~remained at September 30, 2017, and December 31, 2016.~~

As of September 30, 2017, and December 31, 2016, the Company had 69,382,753 shares of common stock issued and outstanding.

NOTE 11. STOCK OPTIONS AND AWARDS

Stock Options

As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, respectively, the Company had ~~102~~10,227,633 and 602,500 stock options issued and outstanding.

Outstanding and Exercisable Options
		Remaining	Exercise Price
	Number of	Contractual Life	times Number		Weighted Average
Exercise Price	Shares	(in years)	of Shares		Exercise Price
$3.20	102,500	3.55		328,000		$3.20
	102,500		$	328,000		$3.20

On May 15, 2019, in connection with certain consulting agreements, the Company granted 9,625,133 options to purchase shares of its Common Stock, valued at $55,825 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. .The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

Options Activity	Number		Weighted Average
Outstanding and Exercisable Options
	Of Shares		Exercise Price
				Remaining	Exercise Price
Outstanding at December 31, 2016	102,500			$3.20
		Number of		Contractual Life	times Number		Weighted Average
Granted	--			--
Exercise Price		Shares		(in years)	of Shares		Exercise Price
Exercised	--			--
$0.005		9,625,133		4.85	$	48,126		$0.16
Expired / Cancelled	--			--
$0.10		500,000		4.30		50,000		$0.63
Outstanding at September 30, 2017	102,500			$3.20
$3.20		102,500		1.80		328,000		$3.20
		10,227,633			$	426,126		$1.44

During the nine months ended September 30, 2017, and the year ended December 31, 2016, respectively, the Company expensed no stock option compensation. There remained no deferred stock option compensation at September 30, 2017, and December 31, 2016.

Options Activity	Number	Weighted Average
	of Shares	Exercise Price

Outstanding at December 31, 2018	602,500		$2.34
Granted	9,625,133		$0.16
Exercised	--		--
Expired / Cancelled	--		--
Outstanding at June 30, 2019	10,227,633		$1.44

15During the six months ended June 30, 2019, and the year ended December 31, 2018, 9,624,133 and 500,000 stock options were granted, for which $55,825 and $0 in deferred stock option compensation was recorded, and $4,652 and $0 was expensed. There remained $51,173 and $0 in deferred stock option compensation at June 30, 2019, and December 31, 2018, to be expensed over the next thirty-four (34) months.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

Restricted Stock Awards

During the ~~nine~~six months ~~and the year~~ ended ~~September~~June 30, ~~2017~~2019, and the year ended December 31, ~~2016~~2018, respectively, no0 and 1,000,000 restricted stock awards were granted, valued at $0 and $9,000, net of cost in the amount of $0 and ~~572~~$1,~~921~~000; and 166,667 and 83,333 restricted stock awards vested, for which $01,500 and $~~104,072~~750 in deferred stock compensation was expensed. As of ~~September~~June 30, ~~2017~~2019, and December 31, ~~2016~~2018, respectively, no750,000 and 916,667 shares remain to be vested, and no$6,750 and $8,250 deferred stock compensation remains to be expensed over the next twenty-seven (27) months.

Restricted Stock Awards Activity	Number of		Deferred
	Shares		Compensation
	of Shares		Compensation
Outstanding at December 31, 2015	572,921		$	104,072
Outstanding at December 31, 2018	916,667		$	8,250
Granted	--			--
Vested	(~~572~~166,~~921~~667	)		(~~104~~1,~~072~~500	)
Forfeited/Canceled	--			--
Outstanding at December 31, 2016	--		$	--
Outstanding at June 30, 2019	750,000		$	6,750

NOTE 1211. SUBSEQUENT EVENTS

The Company has evaluated the events and transactions for recognition or disclosure subsequent to ~~September~~June 30, ~~2017~~2019, and has determined that there have been no events that would require disclosure, with the exception of the following:

During the period ~~October~~July 1, ~~2017~~2019, to December 31, 2022, the Company increased its loans from related parties by $1,~~011~~703,~~906~~966, from a total of $4,~~992~~300,~~962~~902 at ~~September~~June 30, ~~2017~~2019, to $6,004,868 at December 31, 2022. The increase represents (a) an increase in promissory notes in the amount of $1,~~131~~703,~~920~~966, as a result of (i) $~~299~~110,~~750~~995 reclassified from non-related party transactions, (ii) $426,464 reclassified to non-related party transactions, (iii) $43,~~493~~849,~~271~~845 converted from accrued compensation, (iv) an increase in discounts resulting from beneficial conversion features of $1,052,494, (v) a decrease in ~~long-term secured promissory notes in the amount of $2,000,000 resulting from the cancellation of debt, (vi) a decrease in~~ unamortized discount of $~~844~~741,~~889~~616, (~~vii~~vi) payments to the Company in the amount of $5,500 for stock award payments, (~~viii~~vii) $521,557 converted to common stock, and (ixviii) payments to related parties in the amount of $499,975; (b) a decrease in accrued compensation of $3376,~~595~~768 as a result of (i) $43,~~607~~589,~~148~~549 in accrued compensation, of which $43,~~493~~849,~~271~~845 was converted into promissory notes, (ii) $55,000 in accrued compensation reclassified to non-related party transactions, (iii) payments to the Company in the amount of $65,500 for related party stock awards, and (iv) payments to related parties in the amount of $55,972; and (c) a decrease in reimbursable expenses and cash advances to the Company of $~~116~~115,~~419~~732. All outstanding related party promissory notes bear interest at a rate of 5 to 7 percent per annum, are due and payable between one (1) year of written demand and December 31, ~~2023~~2024, or upon certain equity funding, and are convertible into the Company’s common stock at a price of between $0.05 to $0.25 per share, or the 20-day average trading price.

On October 1, 2018, the Company entered into an Employment Agreement with Mr. Kyle W. Withrow to serve as the Company’s Chief Executive Officer. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, as well as customary bonuses and employee benefits. In addition, the agreement includes a grant to purchase 1,000,000 shares of the Company’s restricted common stock, valued at $10,000, for $0.001 per share.

On October 1, 2018, in connection with the Employment Agreement, the Company issued 1,000,000 shares of its restricted common stock at $0.001 per share, for cash in the amount of $1,000.

On October 11, 2018, the Company executed an Intellectual Property Agreement (the “Safer Agreement”) with Safer, Inc., a Florida corporation (the “Seller”), for the acquisition of certain intellectual property, as defined within the Safer Agreement, in the area of security and risk management (“Intellectual Property”). Pursuant to the Safer Agreement, in exchange for all rights, title and interest in the Intellectual Property, among other things, the Company shall deliver to Seller:

1.Common Stock Purchase Agreement providing for the Seller the right to purchase 3,500,000 shares of the Company’s restricted common stock at a price of $0.001 per share, for $3,500 cash; and

2.Revenue Sharing Agreement providing for a cash earn-out of 3% to be paid to the Seller, up to $1,000,000 paid to Seller, derived from the Adjusted Gross Revenue generated by the Company in connection with the Intellectual Property; and

3.Royalty Agreement providing for a royalty of 1.5% of the Adjusted Gross Revenue generated by the Company in connection with the Intellectual Property.

On October 11, 2018, in connection with the Safer Agreement, the Company issued 3,500,000 shares of its restricted common stock at $0.001 per share, for cash in the amount of $3,500.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTMBER 30, 2017, AND DECEMBER 31, 2016

On November 1, 2018, the Company entered into a consulting agreement with MJ Management Services, Inc., for the services of Ms. Calli R. Bucci to serve as the Company’s Chief Financial Officer. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a grant of 500,000 options to purchase shares of the Company’s common stock at an exercise price of $0.10 per share. The options are exercisable for a period of five (5) years, vest quarterly over a period of twenty-four (24) months, and were valued at $0 using the Black-Scholes method. The assumptions used in valuing the options were: expected term 4.75 years, expected volatility 35.59%, risk free interest rate 2.96%, and dividend yield 0%.

On November 1, 2018, the Company entered into a Consulting Agreement with Huntington Chase LLC for the services of Mr. Edward W. Withrow III. The agreement replaces any other written agreement with the Company or its subsidiaries, is for an initial term of three (3) years, and provides a base compensation of $240,000 per year.

On December 31, 2018, in connection with the Company’s inability to successfully commercialize the intellectual property acquired from PearTrack Systems Group in 2013 (collectively, the “PearTrack IP”), all rights, title and interest in the PearTrack IP reverted to the former licensees and, pursuant to the terms of the collateralized agreement, the related Senior Secured Convertible Note (the “Note”) issued to the former licensees (the “Note Holders”) is canceled. In addition, all rights to future royalties collectible under any sub-license previously issued by the Company for the PearTrack IP reverts to the Note Holders. As a result, in 2018, the Company has recognized a gain on the extinguishment of debt of $2,000,000.

On May 1, 2019, the Company entered into a Consulting Agreement with Mr. David Rocke. The agreement is for an initial term of three (3) years, and provides a base compensation of $150,000 per year, to be deferred until the Company reaches certain funding goals, as well as 12.5% of Enigma-Bulwark Security, Inc. adjusted gross earnings, as defined within the agreement. In addition, the agreement includes a grant of 6,875,093 options to purchase shares of the Company’s common stock, valued at $39,875 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

On May 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into a Consulting Agreement with Mr. Michael Gabriele, to serve as its President, and the President of its subsidiary, Enigma-Bulwark Security, Inc. The agreement is for an initial term of three (3) years, and provides a base compensation of $175,000 per year, to be deferred until the Company reaches certain funding goals, as well as 12.5% of Enigma-Bulwark Security, Inc. adjusted gross earnings, as defined within the agreement. In addition, the agreement includes a grant of 2,750,040 options to purchase shares of the Company’s common stock, valued at $15,950 using the Black-Scholes method, at an exercise price of $0.005 per share. The options are exercisable for a period of five (5) years, of which 50% vest when certain performance goals are met, and the remainder vest when certain funding goals are met. The assumptions used in valuing the options were: expected term 4.00 years, expected volatility 38.58%, risk free interest rate 2.15%, and dividend yield 0%.

On August 29, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. David Rocke. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 6,667,000 shares of the Company’s restricted common stock, valued at $66,670, for $0.001 per share, plus the issuance of shares of the Company’s restricted common stock equal to seven percent (7%) of any issuance of common stock through May 15, 2019, originating from any financial instrument issued by the Company or its subsidiaries, in exchange for certain restrictions placed upon Mr. Rocke’s business activities.

On August 29, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. Michael Gabriele, the President of the Company’s subsidiary, Enigma-Bulwark Risk Management, Inc. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 6,667,000 shares of the Company’s restricted common stock, valued at $66,670, for $0.001 per share, plus the issuance of shares of the Company’s restricted common stock equal to seven percent (7%) of any issuance of common stock through May 15, 2019, originating from any financial instrument issued by the Company or its subsidiaries, in exchange for certain restrictions placed upon Mr. Gabriele’s business activities.

On August 29, 2019, in connection with the Rocke and Gabriele NC Agreement, the Company issued 13,334,000 shares of its restricted common stock at $0.001 per share for cash in the amount of $13,334, plus 210,000 shares under the non-dilution provision at $0.001 per share for cash in the amount of $210.

On August 30, 2019, the Company formed Enigma-Bulwark Risk Management, Inc., a Delaware corporation and wholly-owned subsidiary, and acquired 100% of the common stock of Enigma-Bulwark Security, Inc., a Delaware corporation also formed by the Company.

17On September 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into Consulting Agreement with Mr. Clive Oosthuizen to serve as its Chief Executive Officer. The agreement is for an initial term of three (3) years, and provides a base compensation of $180,000 year one, $210,000 year two, and $240,000 year three, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a $25,000 signing bonus, and a grant of 1,250,000 options to purchase shares of the Company’s common stock, valued at $625 using the Black-Scholes method, at an exercise price of $0.05 per share. The options are exercisable for a period of five (5) years, and vest periodically over a period of thirty-six (36) months. The assumptions used in valuing the options were: expected term 5.75 years, expected volatility 41.3%, risk free interest rate 1.84%, and dividend yield 0%.

ENIGMA-BULWARK, LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTMBER~~JUNE 30, ~~2017~~2019, AND DECEMBER 31, ~~2016~~2018

On September 1, 2019, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into a Consulting Agreement with Mr. Clive Oosthuizen to serve as its Chief Executive Officer. The agreement is for an initial term of three (3) years, and provides a base compensation of $180,000 year one, $210,000 year two, and $240,000 year three, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a $25,000 signing bonus, and a grant of 1,250,000 options to purchase shares of the Company’s common stock, valued at $625 using the Black-Scholes method, at an exercise price of $0.05 per share. The options are exercisable for a period of five (5) years, and vest periodically over a period of thirty-six (36) months. The assumptions used in valuing the options were: expected term 5.75 years, expected volatility 41.3%, risk free interest rate 1.84%, and dividend yield 0%.

On September 20, 2019, in connection with the exercise of certain stock options, the Company issued 4,010,470 shares of its restricted common stock to related parties at an exercise price of $0.005, for cash in the amount of $20,052.

On October 1, 2019, the Company entered into a Consulting Agreement with Ms. Yinuo Jiang to serve as the Company’s Corporate Secretary effective October 8, 2019, among other duties. The agreement is for an initial term of three (3) years, and provides a base compensation of $100,000 per year, to be deferred until the Company reaches certain funding goals. In addition, the agreement includes a grant to purchase 1,000,000 shares of the Company’s restricted common stock, valued at $10,000, for $0.001 per share.

On October 1, 2019, in connection with the Consulting Agreement, the Company issued 1,000,000 shares of its restricted common stock at $0.001 per share, for cash in the amount of $1,000.

On October 6, 2019, pursuant to a resolution of the board of directors, the Company issued an aggregate of 6,000,000 shares of its restricted common stock, valued at $60,000, to its officers and directors at $0.001 per share, for cash in the amount of $6,000.

On October 10, 2019, the Company entered into a Non-Compete, Non-Dilution and Registration Rights Agreement (“NC Agreement”) with Mr. Clive Oosthuizen, the Chief Executive Officer of the Company’s subsidiary, Enigma-Bulwark Risk Management, Inc. The agreement is for an initial term of five (5) years, and provides as compensation a grant to purchase 4,000,000 shares of the Company’s restricted common stock, valued at $360,000, for $0.001 per share, plus the issuance of shares of the Company’s restricted common stock equal to four and one-half percent (4.5%) of any issuance of common stock originating from any financial instrument issued by the Company or its subsidiaries during the term, in exchange for certain restrictions placed upon Mr. Oosthuizen’s business activities.

On October 10, 2019, in connection with the Oosthuizen NC Agreement, the Company issued 4,000,000 shares of its restricted common stock at $0.001 per share for cash in the amount of $4,000.

On December 20, 2019, in connection with the exercise of certain stock options, the Company issued 802,094 shares of its restricted common stock to related parties at an exercise price of $0.005 for cash in the amount of $4,010.

On September 8, 2020, the Company, through its wholly-owned subsidiary, Enigma-Bulwark Risk Management, Inc., entered into a Joint Venture Agreement (the “JV Agreement”) with Prime African Security, Ltd., a South African corporation (“Prime”), to provide security and risk management services in South Africa. The joint venture formed Prime Enigma Africa (Pty) Ltd., a South African corporation (the “Joint Venture”), for which Prime owns 51% of the common stock and the Company owns 49%. The JV Agreement is for an initial term of three (3) years, and automatically renews unless canceled in writing by either party.

On August 31, 2021, in connection with the conversion of related party debt in the amount of $1,238,251, the Company issued an aggregate of 23,066,991 shares of its restricted Common Stock to six (6) related parties, including three (3) officers, of which $941,096 was at a conversion price of $0.05 per share, and $297,155 was at a conversion price of $0.07 per share.

On November 5, 2021, in connection with the conversion of debt in the amount of $696,301, the Company issued 2,785,205 shares of its restricted Common Stock at a conversion price of $0.25 per share.

On January 1, 2022, in connection with a consulting agreement, the Company issued 2,500,000 shares of restricted common stock at $0.001 per share for cash in the amount of $2,500.

Management Changes:

On January 20, 2017, Mr. David M. Engert resigned as a member of the board of directors. This resignation did not involve any disagreement with the Company.

On September 19, 2018, Mr. E. William Withrow Jr. resigned as President and Chief Executive Officer. This resignation did not involve any disagreement with the Company. Mr. Kyle W. Withrow, succeeded him to serve as President and Chief Executive Officer until the next annual meeting of the shareholders and/or until he, or his successor is duly appointed.

On September 20, 2019, during a meeting of the board of directors, Mr. John D. Macy was not re-elected to the board of directors.

On October 4, 2019, Mr. Clive Oosthuizen, Mr. David M. Rocke and Ms. Calli R. Bucci were appointed to the Board, to serve until the next annual meeting of the shareholders.

On October 8, 2019, Ms. Calli R. Bucci resigned as Corporate Secretary. This resignation did not involve any disagreement with the Company. Ms. Yinuo “Rachel” Jiang succeeded her to serve as Corporate Secretary until the next annual meeting of the shareholders and/or until she, or her successor is duly appointed.

On January 12, 2021, Mr. John L. Ogden resigned as a Board member. This resignation did not involve any disagreement with the Company. Mr. Kyle W. Withrow, the Company’s President and Chief Executive Officer, succeeded him as a director until the next annual meeting of the shareholders and/or until he, or his successor is duly appointed.

On April 6, 2021, Mr. E. William Withrow Jr. resigned as Executive Chairman of the Board. His resignation did not involve any disagreement with the Company. Mr. Clive Oosthuizen, a Board member, and the President of the Company’s subsidiary, Enigma-Bulwark Risk Management, Inc., succeeded him.

On April 6, 2021, Mr. Kyle W. Withrow resigned as the Company President and Chief Executive Officer, and as a Board member. His resignation did not involve any disagreement with the Company. Mr. Oosthuizen succeeded him as President and Chief Executive Officer until the next annual meeting of the shareholders and/or until he, or his successor, is duly appointed. The vacant Board member seat resulting from Mr. Withrow’s resignation will remain open until a new member is elected at the next annual meeting of the shareholders, or is duly appointed by the Board.

On April 12, 2021, Mr. David Rocke resigned as a Board member and consultant. His resignation was preceded by the Company’s inquiry into Mr. Rocke’s performance in connection with his Consulting Agreement dated May 1, 2019. The vacant Board member seat resulting from Mr. Rocke’s resignation will remain open until a new member is elected at the next annual meeting of the shareholders, or is duly appointed by the Board.

On April 12, 2021, Mr. Michael Gabriele resigned as President of Enigma-Bulwark Risk Management, Inc. and its subsidiaries. His resignation did not involve any disagreement with the Company.

* * * * *

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause the Company’s or the Company’s industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The Company’s unaudited consolidated financial statements are stated in United States Dollars (US$), and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with the Company’s unaudited consolidated financial statements and the related notes that appear elsewhere in this quarterly report.

As used in this quarterly report and unless otherwise indicated, the terms “we”, “us”, “our”, “our company” and “Enigma” refer to Enigma-Bulwark, Ltd., and its subsidiaries, unless otherwise indicated.

Corporate History

During 2014 through 2016, the Company, operating as PearTrack Security Systems, Inc., initiated a test deployment of its platform and system globally, and managed clients seeking to track their assets in motion and in remote locations.

During 2016 through 2018, the Company sought financing for the finalization of the PearLoxx container locking and tracking prototype. In addition, strategic acquisitions were pursued to expand the Company’s intellectual property portfolio.

Due to the Company’s inability to successfully commercialize the PearTrack IP tracking platform acquired in 2013, all rights, title and interest in the PearTrack IP reverted to the former licensees on December 31, 2018, and, pursuant to the terms of the collateralized agreement, the related Note issued to the licensors (the “Note Holders”) was canceled. In addition, all rights to future royalties collectible under any sub-license previously issued by the Company for the PearTrack IP reverted to the Note Holders. As a result, in 2018, the Company recognized a gain on the extinguishment of debt of $2,000,000.

Although the PearTrack IP commercialization was unsuccessful, the Company continued to focus on security and risk management, and acquired intellectual property that is based on a patent-pending ² interactive spontaneous video security technology (the “Safer IP”). On October 11, 2018, the Company executed an Intellectual Property Purchase Agreement (the “Safer Agreement”) with Safer, Inc., a Florida corporation (the “Seller”), for the acquisition of the Safer IP. Pursuant to the Safer Agreement, in exchange for all rights, title and interest in the Safer IP, among other things, the Company delivered to Seller:

1.Common Stock Purchase Agreement providing for the Seller the right to purchase 3,500,000 shares of the Company’s restricted common stock at a price of $0.001 per share, for $3,500 cash; and

3.Royalty Agreement providing for a royalty of 1.5% of the Adjusted Gross Revenue generated by the Company in connection with the Safer IP.

In 2019, the Company was presented with an opportunity to start a security and risk management business headquartered in Cape Town, South Africa, and identified key management to operate the business unit. On August 30, 2019, the Company formed Enigma-Bulwark Risk Management, Inc., a Delaware corporation and wholly-owned subsidiary (“EBRM”), to maintain the Company’s security and risk management operations and assets.

² On July 21, 2021, the Company received a Notice of Allowance from the United States Patent and Trademark Office that its Patent Application 16/618,038 “Network Based Video Surveillance and Logistics for Multiple Users” was granted and would be issued to the Company.

1917

In addition, EBRM acquired 100% of the shares of Enigma-Bulwark Security, Inc., a Delaware corporation formed by the Company in May 2019 (“EBS”). The Company attracted key senior management talent with backgrounds in structured finance, insurance, management, and M&A. On August 8, 2019, EBS received its license to provide physical security officers from the Florida Department of Agriculture and Consumer Services, and commenced its security protection operations in southern Florida, providing security services to the hospitality industry, as well as large events and VIPs/celebrities.

As part of the development of the South African business unit, the Company, through EBRM, entered into a Joint Venture Agreement (the “JV Agreement”) on September 8, 2020, with Prime African Security, Ltd., a South African corporation (“Prime”), to provide security and risk management services in South Africa. The joint venture formed Prime Enigma Africa (Pty) Ltd., a South African corporation (the “Joint Venture”), for which Prime owns 51% of the common stock and the Company owns 49%. The JV Agreement is for an initial term of three (3) years, and automatically renews unless canceled in writing by either party.

COVID-19 Pandemic

In December 2019, an outbreak of the COVID-19 virus was reported in Wuhan, China. On March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 virus a global pandemic, and on March 13, 2020, former President Donald J. Trump declared the virus a national emergency in the United States. As of the date of the filing of this Quarterly Report, the WHO reports over 757 million confirmed COVID-19 cases and over 6.8 million deaths worldwide, including over 1.1 million in the U.S. This highly contagious disease has spread to most of the countries in the world and throughout the United States, creating a serious impact on customers, workforces and suppliers, disrupting economies and financial markets, and potentially leading to a world-wide economic downturn. It has caused a disruption of the normal operations of many businesses, including the temporary closure or scale-back of business operations and/or the imposition of either quarantine or remote work or meeting requirements for employees, either by government order or on a voluntary basis.

The COVID-19 pandemic may adversely affect the Company’s clients’ operations, its employees and its employee productivity. It may also impact the ability of the Company’s subcontractors, partners, and suppliers to operate and fulfill their contractual obligations, and result in an increase in costs, delays or disruptions in performance. These effects, and the direct effect of the virus and the disruption on the Company’s employees and operations, may negatively impact both the Company’s ability to meet customer demand and its revenue and profit margins. The Company’s employees, in many cases, are working remotely and using various technologies to perform their functions. The Company might experience delays or changes in customer demand, particularly if customer funding priorities change. Further, in reaction to the spread of COVID-19 in the United States, many businesses have instituted social distancing policies, including the closure of offices and worksites and deferring planned business activity. Additionally, the disruption and volatility in the global and domestic capital markets may increase the cost of capital and limit the Company’s ability to access capital. Both the health and economic aspects of the COVID-19 virus are highly fluid and the future course of each is uncertain. For these reasons and other reasons that may come to light if the coronavirus pandemic and associated protective or preventative measures expand, the Company may experience a material adverse effect on its business operations, revenues and financial condition; however, its ultimate impact is highly uncertain and subject to change.

Current Business

The Company is currently structured with four wholly-owned subsidiaries: Enigma-Bulwark Risk Management, Inc., a Delaware corporation (“EBRM”), and PearTrack Systems Group, Ltd. (“PTSG”), Ecologic Products, Inc. (“EPI”), and Ecologic Car Rentals, Inc. (“ECR”), all Nevada corporations. The Company’s current business activities are diversified into two specific markets: security and risk management, and remote/mobile asset tracking products.

Enigma-Bulwark, Ltd. Los Angeles, California		Parent Corporation Patented EnigmaLok Locking Technology
Enigma-Bulwark Risk Management, Inc. Cape Town, South Africa		Tethered Drone System (Patent-Pending) Network-Based Video Surveillance (Patent-Pending) Security and Risk Management / Intelligence Security Guard Operations Hotels, Events, VIPs
	·Enigma-Bulwark Security, Inc. Miami, Florida
	·Prime-Enigma Africa Pvt. Joint Venture
Ecologic Products, Inc. / Ecologic Car Rentals, Inc. Los Angeles, California		Environmental Transportation and Products Seeking Strategic Opportunities

Through its wholly-owned subsidiary, EBRM, the Company is operating a security and risk management business, and developing its proprietary, patent-pending and patented technology. EBRM is focused on providing security guards, both armed and unarmed, as well as security consulting and systems integration of security technology and software through the development of its patent-pending intellectual property, along with third-party Plug-N-Play products.

2018

In August 2019, the Company, through EBRM’s subsidiary, Enigma-Bulwark Security, Inc. (“EBS”), a Delaware corporation, established and operates a full-service security business targeting hospitality, corporate/executives, and petroleum assets. In Miami, Florida. EBS services include security guards, both armed and unarmed, as well as CCTV and video capture technology and security consulting services. As of October 2022, EBS maintains a staff of approximately forty-five (45) employees, including over forty (40) fully licensed security personnel, serving eleven (11) luxury and boutique hotels, restaurants and resorts in the greater Miami Beach, Florida, area.

In August 2020, EBRM formed a joint venture with Prime African Security, Ltd. Pty, a Pretoria, South Africa based full-service security company, accredited under the Private Security Industry Regulation Act 56 of 2001 (PSIRA), called Prime-Enigma Africa Ltd. Pty (“Prime-Enigma”) headquartered in Pretoria, South Africa. Prime-Enigma is currently bidding on security tenders from large international corporations operating in South Africa.

The Company also intends to provide a unique solution to security issues in the intermodal shipping container marketplace, with its patented container tracking and locking system, EnigmaLok (formerly PearLoxx), the rights of which were licensed to the Company in perpetuity in 2015.

Management

Management experience and insight translates into best practices and proven strategies that will help anticipate and respond to myriad facility, operational, and safety challenges with confidence. Enigma’s management has extensive knowledge and experience in many fields requiring security and risk management protocols, such as multinational corporations, mining houses, telecommunication providers, transportation and energy companies.

Enigma’s team is at the core of its value, with decades of intelligence and military experience, as well as technology expertise and specialized experience in:

·advanced training techniques

·new and innovative technology applications

·intelligence and reconnaissance

·risk assessment and threat identification.

The Enigma team includes individuals with backgrounds from U.S. and South African Special Forces and military intelligence, and applies its experience to deliver measured and effective security management, regardless of adversary or operating environment. Additionally, Enigma is sensitive and experienced at managing low-profile, security operations in challenging environments.

The Company works with a core management team to remain flexible during times of non-engagement. With over forty years of professional military service, the Enigma team has established a large network of security professionals that can be deployed on a global basis. The Company will continue to identify diverse and skilled security personnel, and develop innovative solutions across the full spectrum of security needs.

The following summary of the Company’s financial condition and results of operations should be read in conjunction with the Company’s unaudited consolidated financial statements for the ~~nine~~six months ending ~~September~~June 30, ~~2017~~2019, which are included herein. The financial information of Enigma-Bulwark, Ltd., and its wholly-owned subsidiaries as of ~~September~~June 30, ~~2017~~2019, PearTrack Systems Group, Ltd., Ecologic Car Rentals, Inc. and Ecologic Products, Inc. is provided below on a consolidated basis, unless otherwise indicated. All significant intercompany accounts and transactions have been eliminated.

Balance Sheet

As of ~~September~~June 30, ~~2017~~2019, the Company had total assets of $3837,~~276~~847 compared with total assets of ~~$136~~40,~~433~~089 at December 31, ~~2016~~2018. The decrease in total assets of $982,~~157~~242 is attributable to ~~an increase in cash of $1,021,~~ a decrease in ~~accounts receivable of $869, a decrease in other receivables of $5,985, a decrease in prepaid expenses of $806, a decrease in~~ investment in securities of $901,~~464~~206, depreciation of $~~354~~236, and aamortization ~~decrease in other assets~~ of $~~700~~800.

As of ~~September~~June 30, ~~2017~~2019, the Company had total liabilities of $ 76,~~199~~801,~~271~~ 630 compared with total liabilities of $6,~~546~~333,~~131~~317 at December 31, ~~2016~~2018. The increase in total liabilities of $~~653~~468,~~140~~313 is attributable to an increase in accounts payable and accrued expenses of $~~141~~138,~~418~~377, an increase in related party payables of $~~135~~209,~~771~~936, and an increase in related party convertible notes payable, ~~net~~ of ~~unamortized discount, of~~ $~~375~~120,~~951~~000.

2119

Results of Operations

Three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, compared to three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018.

	For the three months ended						For the ~~nine~~six months ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Revenue	$	––		$	723		$	649		$	227,354
General and administrative expenses	$	211,128		$	152,702		$	366,439		$	304,465
Cost of sales	$	687		$	1,523		$	2,553		$	7,580
Operating loss	$	(211,128	)	$	(152,702	)	$	(366,439	)	$	(304,465	)
Gross profit (loss)	$	(687	)	$	(800	)	$	(1,904	)	$	219,774
Interest expense	$	(55,204	)	$	(51,105	)	$	(109,062	)	$	(99,789	)
General and administrative expenses	$	144,537		$	237,180		$	457,578		$	676,827
Discount amortization	$	––		$	(21,567	)	$	––		$	(42,897	)
Impairment losses	$	––		$	––		$	––		$	3,340,027
Net loss	$	(266,332	)	$	(225,374	)	$	(475,501	)	$	(447,151	)
Operating loss	$	(145,224	)	$	(237,980	)	$	(459,482	)	$	(3,797,080	)
Net comprehensive loss	$	––		$	––		$	(1,206	)	$	(2,412	)
Gain on extinguished debt	$	––		$	––		$	––		$	178,786
Net loss and comprehensive loss	$	(266,332	)	$	(225,374	)	$	(476,707	)	$	(449,563	)
Interest expense	$	(47,160	)	$	(40,293	)	$	(136,102	)	$	(114,626	)
Discount amortization	$	(21,804	)	$	(25,262	)	$	(64,701	)	$	(75,313	)
Realized gain on currency translation	$	184		$	288		$	680		$	592
Net loss	$	(214,004	)	$	(303,247	)	$	(659,605	)	$	(3,807,641	)
Net comprehensive income (loss)	$	26,116		$	120,431		$	(91,692	)	$	(843,885	)
Net loss and comprehensive income (loss)	$	(187,888	)	$	(182,816	)	$	(751,297	)	$	(4,651,526	)

Revenue

For the three months ended ~~September~~June 30, ~~2017~~2019 and 2018, no revenue was generated.

For the ~~three~~six months ended ~~September~~June 30, ~~2016,~~2019 ~~revenue~~and in2018, ~~the~~no ~~amount~~revenue ofwas ~~$723 consisted of limited sales resulting from test marketing of PearTrack tracking products~~generated.

~~For~~At ~~the~~June ~~nine months ended September~~ 30, ~~2017~~2019, ~~revenue in~~ the ~~amount~~Company ofhad ~~$649~~not ~~consisted~~yet ofbegun ~~limited~~full ~~sales~~operations, ~~resulting~~generating ~~from~~limited test ~~marketing~~market ~~of PearTrack tracking products~~sales.

For the nine months ended September 30, 2016, revenue in the amount of $227,354 consisted of $225,000 in consulting services fees and $2,354 in limited sales resulting from test marketing of PearTrack tracking products.

At September 30, 2017, the Company had not yet begun full operations, generating limited test market sales.

Cost of sales

For the three months ended ~~September~~June 30, ~~2017~~2019 and 2018, no cost of sales inwas ~~the amount of $687 consisted of limited product and system costs related to the PearTrack product line~~incurred.

For the ~~three~~six months ended ~~September~~June 30, ~~2016~~2019 and 2018, no cost of sales inwas ~~the amount of $1,523 consisted of limited product and system costs related to the PearTrack product line~~incurred.

~~For~~At ~~the~~June ~~nine months ended September~~ 30, ~~2017~~2019, ~~cost~~the ofCompany ~~sales~~had innot ~~the~~yet ~~amount~~begun offull $2operations,~~533~~ ~~consisted~~generating of limited ~~product~~test ~~and~~market ~~system costs related to the PearTrack product line~~sales.

For the nine months ended September 30, 2016, cost of sales in the amount of $7,580 consisted of limited product and system costs related to the PearTrack product line.

At September 30, 2017, the Company had not yet begun full operations, generating limited test market sales.

General and Administrative Expenses

	For the three months ended				For the ~~nine~~six months ended					Variances
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016			3-month			9-month
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018			3-month			6-month
Legal and accounting fees	$	4,000	$	34,000	$	128,000	$	38,000		$	~~1,000~~––		$	~~9,000~~––
Management fees		~~139~~201,~~423~~051		~~187~~148,~~028~~423		~~436~~350,~~983~~936		~~555~~296,~~818~~846			~~(47~~52,~~605~~628	)		~~(118~~54,~~835~~090	)
Other outside services		––		––		––		250			––			(250	)
Stock compensation/amortization of deferred compensation		5,402		––		6,152		––			5,402			6,152
Amortization of stock options/stock compensation		––		37,439		––		79,111			(37,439	)		(79,111	)
Depreciation and amortization		518		118		1,036		236			400			800
Depreciation		118		118		354		354			––			––
Office supplies and miscellaneous expenses		157		161		315		(617	)		(4	)		932
Rent expense		––		3,468		1,400		6,786			(3,468	)		(5,386	)
Total general and administrative expenses	$	211,128	$	152,702	$	366,439	$	304,465		$	58,426		$	61,974
Office supplies and miscellaneous expenses		996		6,127		6,841		31,508			(5,131	)		(24,667	)
Total general and administrative expenses	$	144,537	$	237,180	$	457,578	$	676,827		$	(92,643	)	$	(219,249	)

General and administrative expenses in the amount of $~~144~~211,~~537~~128 for the three months ended ~~September~~June 30, ~~2017~~2019, were comprised of $4,000 of legal and accounting fees, $~~139~~201,~~423~~051 of management fees, $~~118~~5,402 of stock compensation/amortization of deferred compensation, $518 of depreciation and amortization, and $~~996~~157 of office overhead and other general and administrative expenses.

General and administrative expenses in the amount of $~~237~~152,~~180~~702 for the three months ended ~~September~~June 30, ~~2016~~2018, were comprised of $34,000 of legal and accounting fees, $~~187~~148,~~028~~423 of management fees, $~~37,439 of amortization of stock compensation, $~~118 of depreciation ~~and amortization~~, ~~$3,468 of rent expense,~~ and $~~6,127~~161 of office overhead and other general and administrative expenses.

General and administrative expenses of $144,537 for the three months ended September 30, 2017, as compared to $237,180 for the three months ended September 30, 2016, resulted in a decrease in general and administrative expenses for the current period of $92,643. The decrease in general and administrative expenses of $92,643 was attributable to the following items: 20

~~·an~~General ~~increase~~and inadministrative ~~legal~~expenses of $211,128 ~~accounting~~for ~~and~~the ~~professional~~three ~~fees~~months ofended $1June 30,~~000~~ 2019, ~~due~~as compared to $152,702 for the three months ended June 30, 2018, resulted in an increase in ~~auditor~~general ~~fees~~and administrative expenses for the current period of $158,~~000;~~426. The increase in general and administrative expenses of $58,426 was attributable to the following items:

·aan ~~decrease~~increase in management fees of $4752,~~605~~628, due ato ~~reduction~~an increase in management personnel; and

·aan ~~decrease~~increase in amortization of stock ~~options~~compensation/stock ~~compensation~~options of $375,~~439~~402, due to ~~fully~~a ~~amortized~~stock grant in the prior year, resulting in deferred stock compensation amortization of $750; and stock options granted in the prior year, resulting in nostock ~~expense~~option inamortization ~~the~~of ~~current period~~$4,652; and

·aan ~~decrease~~increase in ~~rent~~depreciation and amortization expense of $3400,~~468,~~ due to athe ~~reduction~~acquisition of intellectual property, resulting in ~~office~~amortization ~~space~~expense of $400; and

·a decrease in other general and administrative expenses of $~~5,131, due to decreases in office supplies and expense of $1,611travel of $1,939 and other office supplies and miscellaneous expenses of $1,581~~4.

General and administrative expenses in the amount of $~~457~~366,~~578~~439 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, were comprised of $128,000 of legal and accounting fees, $~~436~~350,~~983~~936 of management fees, $~~354~~6,152 of ~~depreciation~~stock compensation/amortization of deferred compensation, $1,~~400~~036 of ~~rent~~depreciation ~~expense~~and amortization, and $~~6,841~~315 of office overhead and other general and administrative expenses.

General and administrative expenses in the amount of $~~676~~304,~~827~~465 for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018, were comprised of $38,000 of legal and accounting fees, $~~555~~296,~~818~~846 of management fees, $~~250~~236 of ~~other consulting fees, $79,111 of amortization of stock compensation, $354 of~~ depreciation ~~and amortization~~, ~~$6,786~~ ~~of rent expense,~~ and ($~~31,508~~617) of office overhead and other general and administrative expenses.

General and administrative expenses of $~~457~~366,~~578for~~439 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, as compared to $~~676~~304,~~827~~465 for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018, resulted in aan ~~decrease~~increase in general and administrative expenses for the current period of $~~219~~61,~~249~~974. The ~~decrease~~increase in general and administrative expenses of $~~219~~61,~~249~~974 was attributable to the following items:

·an increase in ~~legal,~~management ~~accounting and professional~~ fees of $954,~~000~~090, due to an increase in ~~auditor~~management ~~fees of $9,000~~personnel; and

·aan ~~decrease~~increase in ~~management~~amortization of stock compensation/stock options of $~~118~~6,~~835~~152, due to a ~~reduction~~stock grant in ~~management~~the ~~personnel~~prior year, resulting in deferred stock compensation amortization of $1,500; and stock options granted in the prior year, resulting in stock option amortization of $4,652; and

·aan ~~decrease~~increase in ~~other~~depreciation ~~consulting~~and ~~fees~~amortization expense of $~~250~~800, due to athe ~~reduction~~acquisition of intellectual property, resulting in ~~staff~~amortization expense of $800; and

·aan ~~decrease~~increase in ~~amortization~~other ofgeneral ~~stock~~and ~~options/stock~~administrative ~~compensation~~expenses of $~~79,111, due to fully amortized deferred stock compensation in the prior year, resulting in no expense in the current period; and~~932.

·aGeneral ~~decrease~~and inadministrative ~~rent~~expenses ~~expense~~for ofthe $5six months ended June 30,~~386~~ 2019 and 2018, ~~due~~were toincurred aprimarily ~~reduction~~for inthe ~~office~~purpose ~~space;~~of advancing the Company closer to its financing and operating goals.

·a decrease in other general and administrative expenses of $24,667, due to decreases in dues and subscriptions of $8,000, research and development of $8,500, taxes, licenses and permits of $2,942, and travel of $1,188; and an increase in other office supplies and miscellaneous expenses of $1,094.

General and administrative expenses for the nine months ended September 30, 2017 and 2016, were incurred primarily for the purpose of advancing the Company closer to its financing and operating goals.

Net Loss

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, the Company incurred a net loss of $~~659~~475,~~605~~501, compared with a net loss of $3447,~~807,641~~151 for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018. The ~~decrease~~increase in net loss of $328,~~148,036~~350 is attributable to aan ~~decrease~~increase in ~~revenue of $226,705, a decrease in cost of goods sold of $5,027, a decrease in~~ general and administrative expenses of $~~219~~61,~~249~~974, ~~a decrease in impairment losses of $3,340,027, a decrease in the gain on extinguishment of debt of $178,786,~~ an increase in interest expense of $219,~~476~~273, and a decrease in discount amortization of $1042,~~612, and an increase in realized gains on foreign currency changes of $88~~897.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, the Company incurred a net comprehensive loss of $911,~~692~~206, compared with a net comprehensive loss of $~~843~~2,~~885~~412 for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018. The decrease in net comprehensive loss of $~~752~~1,~~193~~206 is attributable to a decrease in unrealized ~~gain on currency translation of $1,672, and a decrease in unrealized~~ loss on securities of $~~753~~1,~~865~~206.

Liquidity and Capital Resources

Working Capital Deficit
	September 30, 2017				December 31, 2016			Increase (decrease)
	June 30, 2019				December 31, 2018			Increase (decrease)
Current assets	$	~~1,021~~––		$		~~7,660~~––		$	~~(6,639~~––	)
Current liabilities		34,~~342~~357,~~250~~910				3,~~065~~889,~~061~~597			~~277~~468,~~189~~313
Working capital (deficit)	$	(34,~~341~~357,~~229~~910	)	$		(3,~~057~~889,~~401~~597	)	$	~~283~~468,~~828~~313

As of ~~September~~June 30, ~~2017~~2019, ~~the~~and ~~Company~~December ~~had $1~~31,~~021~~ ~~in cash~~2018, ~~compared~~the toCompany ~~none~~had atno ~~December 31, 2016~~cash.

The Company had a working capital deficit of $34,~~341~~357,~~229~~910 as of ~~September~~June 30, ~~2017~~2019, compared to a working capital deficit of $3,~~057~~889,~~401~~597 at December 31, ~~2016~~2018. The increase in working capital deficit of $~~283~~468,~~828~~313 is primarily attributable to an increase in ~~cash of $1,021, a decrease in~~ accounts ~~receivable~~payable ofand ~~$869,~~accrued aexpenses ~~decrease in other receivables~~ of $5138,~~985~~377, ~~a decrease in prepaid insurance of $806,~~ an increase in ~~accounts~~convertible ~~payable~~related ~~and~~party ~~accrued~~promissory ~~expenses~~notes of $~~141~~120,~~418~~000, and an increase in related party payable of $~~135~~209,~~771~~936.

Cash Flows	For the nine months ended
	September 30, 2017		September 30, 2016			Increase (decrease)
Net cash provided (used) by operating activities	$	1,021	$	(13,705	)	$	14,726
Net cash provided by investing activities		––		––			––
Net cash provided by financing activities		––		––			––
Net decrease in cash	$	1,021	$	(13,705	)	$	14,726

Cash Flows	For the six months ended
	June 30, 2019		June 30, 2018		Increase (decrease)
Net cash provided by operating activities	$	––	$	––	$	––
Net cash provided by investing activities		––		––		––
Net cash provided by financing activities		––		––		––
Net change in cash	$	––	$	––	$	––

Cash Flows from Operating Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and 2018, the Company ~~was~~used ~~provided~~no ~~with $1,021 in~~ cash flow from operating activities,. ~~compared~~There ~~with~~was ~~$13,705~~an ~~used by operating activities for the nine months ended September 30, 2016. The~~ increase in ~~cash~~the ~~provided by operating activities of $14,726 is primarily attributable to a decrease in~~ net loss from operations of $328,~~148,036~~350; ~~increases~~an inincrease ~~foreign exchange gains of $88; decreases~~ in stock compensation/stock option amortization of $796,~~111,~~152; a decrease in accruals converted to related party loans of $~~148~~137,~~501,~~975; ~~discount~~an ~~amortization~~increase ofin ~~$10,612,~~depreciation ~~gain~~and onamortization ~~extinguished debt~~ of $~~178,786,~~800; ~~and~~a ~~impairment~~decrease ~~losses~~in discount amortization of $342,~~340,027~~897; and increases in the changes in accounts ~~receivable of $3,042, other receivables of $11,492, prepaid expenses of $1,108, other assets of $1,400, and accounts~~ payable and accrued expenses of $4013,~~024; and decreases in the changes in deferred revenue of $225~~205,~~000,~~ and related party payables of $15189,~~823~~065.

Cash Flows from Investing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, the Company was provided with no cash flows from investing activities.

Cash Flows from Financing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018, the Company was provided with no cash flows from financing activities.

As of ~~September~~June 30, ~~2017~~2019, affiliates and related parties are due a total of $4,~~992~~300,~~962~~902, which is comprised of promissory notes to related parties, ~~net of unamortized discounts of $103,273,~~ in the amount of $43,~~357~~292,~~251,~~705; accrued compensation in the amount of $~~482~~855,~~318,~~491; and reimbursable expenses/cash advances to the Company in the amount of $~~153~~152,~~393,~~706; for a net increase of $~~511~~329,~~722~~936. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, promissory notes to related parties, ~~net of unamortized discounts,~~ increased by $~~375~~120,~~951~~000, and accrued compensation increased by $~~125~~206,~~483 and reimbursable expenses/cash advances owed to related parties increased by $10,288~~936. All outstanding promissory notes to related parties bear interest at a rate of 5 to 7 percent per annum, are due and payable within between one (1) year of written demand and by December 31, 2023, or upon certain equity funding, and are convertible into the Company’s common stock at a price of between $0.05 and $0.25 per share.

The Company’s principal sources of funds have been from sales of the Company’s common stock and loans from related parties.

Contractual Obligations

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

Going Concern

The Company has incurred losses since inception resulting in a current period net loss of $~~751~~468,~~297~~313, nan accumulated deficit of $1817,~~280~~893,~~489~~535, and a working capital deficit of $34,~~341~~357,~~229~~910, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms. There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The unaudited consolidated financial statements included with this quarterly report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized, and liabilities settled in the ordinary course of business. Accordingly, the unaudited consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s audited consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions involved with the following aspects of the Company’s consolidated financial statements is critical to an understanding of its consolidated financial statements. The following should be read in conjunction with Note 2 to the Company’s consolidated financial statements, “Summary of Significant Accounting Policies”:

Impairment reviews

Management is required to perform tests annually, or more often if necessary, for impairment of its finite lived and indefinite lived assets, to determine if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters, including management’s expectations of:

·growth in EBITDA, calculated as adjusted operating profit before depreciation and amortization;

·long term growth rates; and

·the selection of discount rates to reflect the risks involved.

The Company prepares five-year projections and uses these as the basis for its impairment reviews. Changing the assumptions selected by management, in particular the discount rate and growth rate assumptions used in the projections, could significantly affect the Company’s impairment evaluation and, hence, results.

The Company’s review for impairment also includes the evaluation of key assumptions related to sensitivity in the projections. Included are estimates for varying levels of growth, including aggressive, median, and conservative. In the Company’s evaluation, the conservative level of growth is utilized. For additional information, see Impairment of Long-Lived Assets under Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements contained within this Quarterly Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s president, chief executive officer and chief financial officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of ~~September~~June 30, ~~2017~~2019, the end of the Company’s period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s president, chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s president, chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019, that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

2523

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company knows of no material existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company.

ITEM 1A. RISK FACTORS

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered securities issued by the Registrant during the current period, including sales of reacquired securities, as well as new issues, securities issued in exchange for property, services, or other securities, and new securities resulting from the modification of outstanding securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY STANDARDS

Not Applicable

ITEM 5. OTHER INFORMATION

None

2624

ITEM 6. EXHIBITS

Exhibit Number	Description	Filing Reference
(2)	Plan of Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession
2.1	Agreement and Plan of Merger between the Company, PearTrack Systems Group Limited and PearTrack Acquisition Corp. effective October 17, 2014	Filed with the SEC on October 23, 2014, as part of the Company’s Current Report on Form 8-K
(3)	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation	Filed with the SEC on November 30, 2006, as part of the Company’s registration statement on form SB-2
3.2	Bylaws	Filed with the SEC on November 30, 2006, as part of the Company’s registration statement on form SB-2
3.3	Certificate of Change filed with the Secretary of State of Nevada on April 2, 2008	Filed with the SEC on April 21, 2008, as part of the Company’s Current Report on Form 8-K
3.4	Articles of Merger	Filed with the SEC on June 26, 2008, as part of the Company’s Current Report on Form 8-K
3.5	Certificate of Change filed with the Secretary of State of Nevada on August 29, 2008, with respect to reverse stock split	Filed with the SEC on September 17, 2008, as part of the Company’s Current Report on Form 8-K
3.6	Articles of Merger	Filed with the SEC on June 11, 2009, as part of the Company’s Current Report on Form 8-K
3.7	Certificate of Change filed with the Secretary of State of Nevada on May 15, 2009, with respect to reverse stock split	Filed with the SEC on June 11, 2009, as part of the Company’s Current Report on Form 8-K
3.8	Articles of Merger filed with the Secretary of State of Nevada on June 2, 2009, with respect to the merger between Ecological Acquisition Corp. and Ecologic Sciences, Inc.	Filed with the SEC on July 9, 2009, as part of the Company’s Current Report on Form 8-K
3.9	Certificate of Amendment filed with the Secretary of State of Nevada on September 29, 2014, effective October 17, 2014	Filed with the SEC on October 2, 2014, as part of the Company’s Current Report on Form 8-K
3.10	Certificate of Amendment filed with the Secretary of State of Nevada on October 8, 2019, effective October 9, 2019	Filed with the SEC on October 9, 2019, as part of the Company’s Current Report on Form 8-K
3.11	Amended and restated Articles of Incorporation filed with the Secretary of State of Nevada on October 8, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
3.12	Certificate of Incorporation of Enigma-Bulwark Risk Management, Inc. filed August 30, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
(10)	Material Contracts
10.1	License Agreement between PearTrack Systems Group Ltd. and AudioEye, Inc. dated June 30, 2014	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.2	Assignment and Licensed Rights Agreement with PearLoxx Limited dated December 19, 2014	Filed with the SEC on January 26, 2015, as part of the Company’s Current Report on form 8-K
10.3	Amendment to the Assignment and Licensed Rights Agreement with and PearLoxx Limited dated March 9, 2015	Filed with the SEC on May 20, 2015, as part of the Company’s Quarterly Report on Form 10-Q
10.4	Intellectual Property Purchase Agreement with Safer, Inc. dated October 11, 2018	Filed with the SEC on October 10, 2019, as part of the Company’s Current Report on form 8-K
10.5	Revenue Sharing Agreement with Safer, Inc. dated October 11, 2018	Filed with the SEC on October 10, 2019, as part of the Company’s Current Report on form 8-K
10.6	Royalty Agreement with Safer, Inc. dated October 11, 2018	Filed with the SEC on October 10, 2019, as part of the Company’s Current Report on form 8-K
10.7	Employment Agreement with Kyle W. Withrow dated October 1, 2018	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.8	Intellectual Property Purchase Agreement with Intellectual Property Network, Inc. dated October 11, 2018	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.9	Revenue Sharing Agreement with Intellectual Property Network, Inc. dated October 11, 2018	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.10	Royalty Agreement with Intellectual Property Network, Inc. dated October 11, 2018	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.11	Consulting Agreement with MJ Management Services, Inc. dated November 1, 2018	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.12	Consulting Agreement with Huntington Chase Ltd. dated November 1, 2018	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.13	Consulting Agreement with David Rocke dated May 1, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.14	Consulting Agreement with Michael Gabriele dated May 1, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.15	Non-Compete, Non-Dilution and Registration Rights Agreement with David Rocke dated August 28, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.16	Non-Compete, Non-Dilution and Registration Rights Agreement with Michael Gabriele dated August 28, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.17	Consulting Agreement with Clive Oosthuizen dated September 1, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.18	Consulting Agreement with Yinuo Jiang dated October 1, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.19	Non-Compete, Non-Dilution and Registration Rights Agreement with Michael Gabriele dated August 28, 2019	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
10.20	Joint Venture Agreement with Prime Africa dated October 3, 2020	Filed with the SEC on June 6, 2023, as part of the Company’s Quarterly Report on Form 10-Q
(21)	Subsidiaries of the Registrant
21.1	Enigma-Bulwark Risk Management, Inc. PearTrack Systems Group, Ltd. Ecologic Car Rentals, Inc. Ecologic Products, Inc.
(31)	Section 302 Certifications
31.1*	Section 302 Certification of Clive Oosthuizen	Filed herewith.
31.2*	Section 302 Certification of Calli R. Bucci	Filed herewith.
(32)	Section 906 Certifications
32.1*	Section 906 Certification of Clive Oosthuizen	Filed herewith.
32.2*	Section 906 Certification of Calli R. Bucci	Filed herewith.
(101)	Interactive Data Files
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith.

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

2725

SIGNATURES

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

	ENIGMA-BULWARK, LTD.
Dated: June 7, 2023	/s/ Clive Oosthuizen
Dated: June 8, 2023	/s/ Clive Oosthuizen
	Clive Oosthuizen
	President and CEO
Dated: June 7, 2023	/s/ Calli Bucci
Dated: June 8, 2023	/s/ Calli Bucci
	Calli Bucci
	Chief Financial Officer

2826

Filing Compare · ENIGMA-BULWARK, LTD