UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended ~~November~~February 3028, ~~2017~~2018

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

For the transition period from __________ to __________

000-53598

Commission File Number

SAUER ENERGY, INC.

(Name of small business issuer in its charter)

Nevada

26-3261559

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identificación No.)

1620 Emerson Avenue, Oxnard, CA 93033

(Address of principal executive offices)

888-829-8748

(Registrant’s telephone number, including area code)

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

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

Yes [X]

No [ ]

Emerging Growth Company

If an emerging growth company, indicate by check mark if registrant has elected not to extended transition period for complying with any new of revise financial accounting standards provided pursuant to ‘Section 7(a)(2)(B) of the Security Act. YES [ ] NO [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated Filer [ ] Smaller reporting company [X]

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: ~~380~~437,~~297~~040,~~623~~839 shares of common stock, par value $0.0001 per share, as of ~~January~~April 1523, 2018.

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SAUER ENRGY, INC.

REPORT ON FORM 10-Q

TABLE OF CONTENTS

	Page
PART I – Financial Information
Item 1. Financial Statements (Unaudited)	4
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations	1415
Item 3. Quantitative and Qualitative Disclosures About Market Risk	1517
Item 4T. Controls and Procedures	1617
PART II – Other Information
Item 1. Legal Proceedings	1921
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	1921
Item 3. Defaults Upon Senior Securities	1921
Item 4. Mine Safety Disclosures	1921
Item 5. Other Information	1921
Item 6. Exhibits	1922
Signatures	2023

SAUER ENERGY, INC.
Condensed Balance Sheets
	November 30, 2017	August 31, 2017
	February 28, 2018	August 31, 2017
	(Unaudited)	(Audited)
ASSETS
Current Assets
Cash	$ 121,~~136~~015	$ 1,952
Petty Cash	1,500	1,500
Prepaid Expenses	14,014	-
Total Current Assets	2,515	3,452
	27,650	3,452
Property and Equipment, net	33,617	41,635
Property and Equipment, net	32,155	41,635
Other Assets
Intangible Assets	1,090,087	1,112,631
Intangible Assets (net)	1,067,543	1,112,631
Security Deposit	13,507	13,507
	1,103,594	1,126,138
	1,081,050	1,126,138
Total Assets	$ 1,~~163~~117,~~399~~182	$ 1,171,225
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and accrued liabilities	$ 59114,~~225~~595	$ 37,947
Accounts Payable and accrued liabilities - Related Party	5,000	3,000
Convertible note payable (net of discount)	11,444	105,000
Notes payable	45,000	105,000
Derivative liability	78,402	-
Total Current Liabilities	164,595	145,947
Total Current Liabilities	154,071	145,947
Commitments and Contingencies	-	-
Commitments and Contingencies	$ -	$ -
Stockholders' Equity
Common Stock, $0.0001 par value; authorized
650,000,000 shares, issued and outstanding were
380,297,623 on November 30, 2017 and 351,229,209 outstanding on August 31, 2017	38,027	35,121
437,040,839 on February 28, 2018 and 351,229,209 on August 31, 2017	43,703	35,121
Additional Paid-In Capital	1213,~~814~~130,~~703~~256	12,473,432
Accumulated deficit	(1112,~~843~~221,~~402~~372)	(11,483,275)
Total Stockholders' Equity	1952,~~009,328~~587	1,025,278
Total Liabilities and Stockholders' Equity	$ 1,~~163~~117,~~399~~182	$ 1,171,225

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

SAUER ENERGY, INC.
Condensed Statements of Operations
for the three months ended November 30,
for the three and six months ended February 28,
	(Unaudited) (Unaudited)
(Unaudited)
	2017	2016
	three months ended		six months ended
Revenue	$ 29,649	$ -
	2018	2017	2018	2017
Cost of goods sold	15,106	-
Revenue	$ -	$ -	$ 29,649	$ -
Gross Profit	14,543	-
Cost of goods sold	-	-	15,106	-
General and Administrative Expenses:
Gross Profit	-	-	14,543	-
Professional Fees	16,687	13,000
General and Administrative Expenses:
Consulting	54,773	52,850
Professional Fees	21,672	28,443	33,449	41,445
Rent Expense	45,013	46,523
Consulting	25,007	67,650	79,780	120,500
Research & development expense	44,855	71,933
Rent Expense	44,022	45,013	89,035	84,086
Other general and administrative expenses	67,219	68,168
Research & development expense	39,857	79,494	84,710	151,428
Total Operating Expenses	228,547	252,474
Other general and administrative expenses	56,737	111,528	128,868	187,127
Loss from operations	(214,004)	(252,474)
Total Operating Expenses	187,295	332,128	415,842	584,586
Other Income (expense)
Loss from operations	(187,295)	(332,128)	(401,299)	(584,586)
Interest and finance	(166,623)	(127,390)
Other Income (expense)
Changes in derivative liability	20,500	-
Interest and finance	(190,008)	(149,076)	(356,631)	(276,483)
	(146,123)	(127,390)
Changes in derivative liability	(667)	-	19,833	-
(Loss) before taxes	(360,127)	(379,864)
	(190,675)	(149,076)	(336,798)	(276,483)
Provision (credit) for taxes	-	-
(Loss) before taxes	(377,970)	(481,204)	(738,097)	(861,069)
Net (Loss)	$ (360,127)	$ (379,864)
Provision (credit) for taxes	-	-	-	-
Earnings (loss) per common share, basic and diluted	$ (0.00)	$ (0.00)
Net (Loss)	$ (377,970)	$ (481,204)	$ (738,097)	$ (861,069)
Basic and diluted weighted average number of common shares outstanding, basic	364,680,552	284,580,339
Earnings (loss) per common share, basic and diluted	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.01)
Basic and diluted weighted average number of common shares outstanding, basic	415,700,229	308,790,242	351,229,209	170,260,964

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

SAUER ENERGY, INC.
Condensed Statements of Cash Flows
for the three months ended November 30,
for the six months ended February 28,
	2017	2016
(Unaudited)
	2018	2017
Cash flows from operating activities:
Net (loss)	$ (~~360~~738,~~127~~097)	$ (~~379~~861,~~864~~069)
Adjustments to reconcile net loss to
net cash provided (used) by operating activities:
Amortization	22,554	22,544
Depreciation and Amortization	53,106	66,932
Depreciation	9,480	10,922
Chang in debt discount	93,981
Change in derivative liability	(20,500)	-
Change in derivative	(19,834)
Amortization of Debt discount	5,346	-
Note issued for commitment fee	45,000
Financing costs paid in shares	~~159~~219,~~178~~779	~~125~~274,~~417~~494
Changes in operating assets and liabilities:
Other Assets	~~(14,014)~~-	-2,995
Accounts payable and accrued expenses - related party	2,000	-
Accounts payable and accrued expenses	2181,~~277~~729	(1721,~~070~~609)
Net cash flows (used by) operating activities	(~~174~~262,~~816~~336)	(~~238~~538,~~051~~257)
Cash flows from investing activities:
Purchase of furniture and equipment	-	-
Net cash (used by) investing activities	-	-
Cash flows from financing activities:
Proceeds from issuance of note payable	-	-
Payments on note payable	-	(7990,~~283~~000)
Proceeds from issuance of common stock, net of costs	~~185~~261,~~000~~399	~~322~~689,500
Net cash (used by) provided by financing activities	~~185~~261,~~000~~399	~~243~~599,~~217~~500
Net increase (decrease) in cash	~~10,184~~(937)	561,~~166~~243
Cash, beginning of the period	1,952	46,585
Cash, end of the period	$ 121,~~136~~015	$ 51107,~~751~~828
Supplemental cash flow disclosure:
Interest paid	$ -5,161	$ 1,991
Taxes paid	$ -	$ -

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

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Sauer Energy, Inc.

Notes to the Financial Statements

~~November~~February 3028, ~~2017~~2018

(unaudited)

Note 1 - Organization and summary of significant accounting policies:

These unaudited interim financial statements as of and for the ~~three~~six months ended ~~November~~February 3028, ~~2017~~2018, reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These unaudited interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end August 31, 2017, report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the ~~three months~~six month period ended ~~November~~February 3028, ~~2017~~2018, are not necessarily indicative of results for the entire year ending August 31, 2018.

Organization

Sauer Energy, Inc. was incorporated in California on August 7, 2008. The Company was incorporated to develop and market wind power electric generators.

Current Business of the Company

On July 25, 2010, the Company executed a plan of reorganization with BCO Hydrocarbon Ltd., a Nevada exploration stage enterprise, in which Sauer Energy Inc. became a subsidiary of BCO. BCO changed its name to Sauer Energy, Inc.

The Company leases warehouse/office facilities in Oxnard, California, in which the Company develops wind power technology. A production prototype of a vertical axis wind turbine (“VAWT”) has been developed. Its compact size is aimed at the small business and home market. The company is focused on plans to manufacture and distribute the product. In May, 2012, the acquisition of the entire assets of a wind turbine company added two more wind turbine models to the Company, together with patents and a distribution network. During 2016 and 2017, the Company continued to develop its technology.

NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted August 31 as the fiscal year-end.

Cash and Cash Equivalents

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The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

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Use of Estimates

The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

· Level 1: Quoted prices in active markets for identical assets or liabilities.

· Level 12: ~~Quoted~~Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active ~~markets~~or other inputs that are observable or can be corroborated by observable market data for ~~identical~~substantially the full term of the related assets or liabilities.

· Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

~~Level~~The ~~2: Observable~~carrying ~~inputs~~amounts ~~other~~of ~~than~~the ~~Level~~Company’s 1financial ~~prices~~instruments ~~such~~ as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of ~~the~~August ~~related~~31, ~~assets~~2017, ~~or liabilities.~~reflect:

· Cash: Level 1 Measurement based on bank reporting.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments as of November 30, 2017, reflect:

Level 1 Cash Measurement based on bank reporting.

Level 2 Loans from Officers and related parties

Level 2 Based on promissory notes.

Level 3 Derivatives

Federal income taxes

The Company utilizes FASB ACS 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when, in the opinion of management, it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax credit through net operating loss carry-forward. A valuation allowance of 100% has been established.

Page 8 of 23

Interest and penalties on tax deficiencies recognized in accordance with ASC accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

Research and development costs

~~Page~~The 8Company expenses costs of 20research and development cost as incurred. The costs for the three months ended February 28, 2018, and three months ended February 28, 2017, were $ 39,857 and $79,494 respectively. The costs for the six months ended February 28, 2018, and February 28, 2017, were $84,710 and $151,428 respectively.

The Company expenses costs of research and development cost as incurred. The costs for the three months ended November 30, 2017, and three months ended November 30, 2016, were $71,933 and $44,855 respectively.

Stock-based Compensation

The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.

ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

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.

Basic and Diluted Earnings (Loss) Per Share –

Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. The Company ~~has~~does anot ~~convertible~~have ~~note payable which is~~ potentially dilutive, ~~however~~securities itoutstanding ~~has~~consisting ~~been~~of ~~omitted~~warrants ~~from~~to ~~the~~purchase ~~calculations~~common asstock itor isconvertible ~~antidilutive~~loans.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, the Company’s management has not determined whether implementation of such standards would be material to its financial statements.

Page 9 of 23

The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements.

§·

Update 2017-04—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

Update 2017-05—Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets

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Update 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)

§·

Update 2016-09—Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting

§·

Update 2016-07 —Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting

§·

Update 2016-06 —Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)

§·

Update 2016-03—Intangibles—Goodwill and Other (Topic 350), Business Combinations (Topic 805), Consolidation (Topic 810), Derivatives and Hedging (Topic 815): Effective Date and Transition Guidance (a consensus of the Private Company Council)

§·

Update 2016-01—Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities

Update 2015-17 —Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes

Update 2015-16—Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments

Update 2015-15—Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update)

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses, total assets, or stockholders’ equity as previously reported.

Page 10 of 23

Note 3 – Going Concern

The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated a deficit of $(1112,~~843~~221,~~402~~372) as of ~~November~~February 3028, ~~2017~~2018, and had ~~minimal~~no revenues, which raises substantial doubt as to the Company’s ability to continue as a going concern.

In view of these matters, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management plans to raise additional capital through the sale of stock to pursue business development activities.

Note 4 – Property and Equipment

Property and Equipment consisted of the following at ~~November~~February 3028, ~~2017~~2018, and August 31, 2017:

	11/30/17	8/31/17
	2/28/17	8/31/17
Property Plant and Equipment	$ 282,427	$ 282,427
Less accumulated depreciation	(~~250~~248,~~272~~810)	(240,~~972~~792)
Property and equipment, net	$ 3233,~~155~~617	$ 41,635

~~Page~~The 10Company depreciates its property and equipment using accelerated methods over lives of 20five or seven years. In six months ended February 28, 2018, and 2017, depreciation was $8018 and $9,480, respectively.

~~The~~Note ~~Company~~5 – Asset depreciates its property and equipment using accelerated methods over lives of five or seven years. In the three months ended November 30, 2017, and November 30, 2016, depreciation was $9,480 and $10,922, respectively. Purchase

~~Note~~On 5May –11, ~~Intangible~~2012, ~~Property~~the Company entered into an Asset Purchase Agreement with St. George Investments LLC, an Illinois limited liability company, to acquire certain assets in foreclosure for 6,000,000 common shares. The assets were formerly owned by Helix Wind, Inc., a Nevada corporation in the same business as the Company. The assets and agreed prices were:

The Company has acquired intangible property in patents, patents pending and goodwill. The patents are being amortized over their expected lives of not more than seventeen years. Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued. If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial.


Tangible Assets
Equipment	$ 23,000
Supplies	1,000
Inventory	1,000
Total Intangible Assets	$ 25,000

Intangible Assets
Goodwill	$ 5,000
Intellectual Property (10 patents, 2 trademarks, network
systems, wind turbine monitoring system, URL)	1,467,500
Restrictive Covenant	2,500
Total Intangible Assets	$ 1,475,000

	November 30, 2017	August 31, 2017
Patents	$ 109,092	$ 109,092
Purchased Patents	1,467,500	1,467,500
Goodwill	5,000	5,000
Less Amortization	(491,505)	(468,961)
	$ 1,090,087	$ 1,112,631

Note 6 – Intangible Property

InThe ~~three~~Company ~~months~~has ~~ended~~acquired ~~November~~intangible ~~30,~~property ~~2017~~in patents, patents pending and ~~November~~goodwill. The ~~30,~~patents ~~2016,~~are ~~amortization~~being ~~was~~amortized ~~$22,544~~over ~~and~~their ~~$22~~expected lives of not more than seventeen years. The restrictive covenants were fully amortized as of August 31,~~544,~~ ~~respectively~~2013. Those patent costs allocated to pending patents do not begin amortizing until the underlying patent is issued. If for some reason a patent is not issued the costs associated with the acquisition and the continuation of the application are fully amortized in the year of the denial.

Note 6 - Notes Payable



	February 28, 2018	August 31, 2017
Patents	$ 109,092	$ 109,092
Purchased Patents	1,467,500	1,467,500
Goodwill	5,000	5,000
Less Amortization	(514,049)	(468,961)
	$ 1,062,543	$ 1,112,631

In six months ended February 28, 2018 and 2017, amortization was $45,088 and $45,088, respectively.

Note 7 - Notes Payable

On July 26, 2016, the Company entered into short term note agreement with Beaufort Capital Partners, LLC., in the amount of $50,000 with an interest rate of 10% per annum, with a due date of October 26, 2016. It has been paid in full.

On August 30, 2016, the Company entered into a short- term note agreement with Beaufort Capital Partners, LLC., in the amount of $40,000 with an interest rate of 10% per annum, with a due date of December 1, 2016. ItThe balance has been paid in full.

On May 2, 2017, the Company entered into a short-term note agreement with an investor

in the amount of $50,000 with an interest rate of 10% per annum, with a due date of September 2, 2017. The Asbalance ofhas ~~November~~been ~~30,~~paid ~~2017,~~in ~~the outstanding balance due was $Zero~~full.

On May 24, 2017, the Company entered into a convertible promissory note with an investor in the amount of $105,000 with an interest rate of 8% per annum, with a due date of May 24, 2018. Convertible 180 ~~days after issuance, at 80% of the lowest trading price over the previous 20 trading days. This resulted in a derivative liability of $78,402 as of November 30, 2017.~~

Page 1112 of 2023

~~Note~~days 7after --issuance, ~~Related~~at ~~Party~~80% ~~Note~~of the lowest trading price over the previous 20 trading days. The balance has been paid in full.

AsOn ofFebruary ~~November 30~~21, ~~2017~~2018, ~~and~~the ~~August~~Company ~~31,~~entered ~~2017~~into a Promissory Note in the amount of $45,000, wewith ~~have~~an ~~related~~interest ~~party~~rate ~~payables~~of to8% ~~Dieter~~per ~~Sauer~~annum, inwith ~~the~~a ~~amounts~~due date of $5November 21,~~000~~ ~~and~~2018, $3which can be prepaid at any time,~~000~~ without consequence, ~~respectively~~and is not convertible.

Note 8 ~~– Commitments~~ ~~and~~- ~~Contingencies~~Related Party Note

As of February 28, 2018 , we have related party payable to Deiter Sauer for consulting in the amount of $5000.

Note 9 – Commitments and Contingencies

Rental Agreement:

On August 7, 2015, the Company entered into a Commercial Single-Tenant Lease for a 26,550- square foot building in Oxnard, California, with monthly payments of $13,507 for sixty months, plus common area costs of $507.38 per month. All company operations will be concentrated at the site.

Lease Commitments – following five fiscal years:

Fiscal year ended

August 31,

For the three months ~~ended~~ending ~~November~~February 3028, 2018, and 2017, ~~our~~the rent expense was $4542,~~013~~043 ~~compared~~and to $4642,~~523~~043, ~~for~~respectively. For the ~~three~~six months ~~ended~~ending ~~November~~February 3028, ~~2016~~2018, and 2017, the rent expense was $84,086 and $84,086, respectively.

Note 910 - Federal income tax

No provision was made for federal income tax, since the Company has had significant net operating losses. Net operating loss carryforwards may be used to reduce taxable income through the year 2035. The availability of the Company’s net operating loss carryforwards are subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock, unless the same or similar business is carried on. The net operating loss carryforward for federal and state income tax purposes was approximately $1112,~~843~~221,~~422~~372, which will expire in 2029 through 2035 if not utilized. The Company uses 21% for a composite tax rate to estimate the value of net operating losses for deferred taxes.

The Company as of ~~the~~six ~~three~~ months ended ~~November~~February 3028, ~~2017~~2018, and ~~November 30~~2017, ~~2016,~~ recognized net operating losses of approximately $~~360~~738,~~127~~097 and $~~379~~861,~~864~~069, respectively. The total estimated deferred tax asset as of ~~November~~three 30months ended February 28, ~~2017~~2018, was $2,~~487~~566,~~114~~488. The Company recorded a 100% valuation allowance ~~for the deferred tax asset since it is more likely than not that some part or all of the deferred tax asset will not be realized.~~

Page 13 of 23

for the deferred tax asset since it is more likely than not that some part or all of the deferred tax asset will not be realized.

Although Management believes that its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different than that which is reflected in our tax provisions. Ultimately, the actual tax benefits to be realized will be based upon future taxable earnings levels, which are very difficult to predict.

~~For~~No ~~the~~provision ~~three~~was ~~months~~made ~~ended~~for ~~November~~federal ~~30, 2017, and November 30, 2016, no~~ income tax, ~~expense~~since ~~has~~the ~~been~~Company ~~realized~~had asan aoverall ~~result~~net ofoperating ~~operations~~loss and nohas ~~income~~accumulated ~~tax~~net ~~penalties~~operating ~~and/or~~loss ~~interest have been accrued related to uncertain tax positions~~carryforwards. ~~The Company files income tax returns in the U.S. federal jurisdiction~~

~~Page~~For 12the three and six months ended February 28, 2018, and 2017, no income tax expense has been realized as a result of 20operations and no income tax penalties and/or interest have been accrued related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the State of California. These filings are subject to a three-year statute of limitations. The Company’s evaluation of income tax positions included the years ended August 31, 2014, through 2018 could be subject to agency examinations. No filings are currently under examination. No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates. Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.

~~and~~Note in11 – Capital the State of California. These filings are subject to a three-year statute of limitations. The Company’s evaluation of income tax positions included in the years ended August 31, 2013 through 2016, could be subject to agency examinations. No filings are currently under examination. No adjustments have been made to reduce the estimated income tax benefit at fiscal year-end or at the quarterly reporting dates. Any valuations relating to these income tax provisions will comply with U.S. generally accepted accounting principles.Stock

Note 10 – Capital Stock

The Company went public on 7/25/ 2010. Its Common Stock is traded on the open market under the symbol OTCQB: SENY.

During the quarter ending November 30, 2016, the Company issued 40,950,000 shares of common stock for services rendered.

During the quarter ending November 30, 2016, 75,000 shares were cancelled and returned to treasury.

During the quarter ending November 30, 2016, the Company issued 9,498,761 shares of common stock for $125,000 pursuant to a convertible note.

During the quarter ending November 30, 2016, the Company issued 26,075,562 shares of common stock for $322,500 pursuant to an Equity Purchase Agreement.

During the quarter ending February 28, 2017, the Company issued 24,365,406 shares of common stock for $367,000 pursuant to an Equity Purchase Agreement.

During the quarter ending May 31, 2017, the Company issued 5,259,032 shares of common stock for $73,075 pursuant to an Equity Purchase Agreement.

During the quarter ending August 31, 2017, the Company issued 22,095,545 shares of common stock for $210,000 pursuant to an Equity Purchase Agreement.

During the quarter ending November 30, 2017, the Company issued 29,068,414 shares of common stock for $185,000 pursuant to an Equity Purchase Agreement.

~~NOTE~~During 11the -quarter ~~Contingencies~~ending February 28, ~~Litigation~~2018, the Company issued 27,507,176 shares of common stock for $75,481.72 pursuant to a convertible note.

~~There~~During ~~were~~the noquarter ~~loss~~ending ~~contingencies~~February or28, ~~legal~~2018, ~~proceedings against~~ the Company ~~with~~issued ~~respect~~21,236,040 toshares ~~matters~~of ~~arising~~common instock ~~the~~for ~~ordinary~~$76,398.84 ~~course~~pursuant ofto ~~business~~an Equity Purchase Agreement.

NOTE 12 – Subsequent Events

~~Management~~Page ~~has~~14 ~~reviewed~~of ~~and evaluated subsequent events and transactions occurring after the balance sheet date:~~23

OnManagement ~~December~~has 4,reviewed ~~2017,~~and evaluated subsequent events and transactions occurring after the ~~Company~~balance ~~authorized~~sheet 4date,~~340~~ February 28,~~278~~ ~~shares~~2018, through the filing of ~~common~~this ~~stock~~Quarterly toreport beon ~~issued~~April ~~for~~23, ~~$25~~2018,~~000~~ atand ~~$0.00576~~determined ~~per~~that ~~share~~the ~~pursuant~~following toadditional ansubsequent ~~Equity~~events ~~Purchase~~have ~~Agreement.~~occurred:

On ~~December~~February 1528, ~~2017~~2018, the Company ~~authorized~~entered 3into a convertible Promissory Note with Geneva Roth Remark Holdings,~~472~~ Inc.,~~222~~ ~~shares~~in the amount of ~~common~~$78,000, ~~stock~~with toan interest rate of 12% per annum and a due date of February 28, 2019, which can be ~~issued~~prepaid ~~for~~prior ~~$17~~to 180 days. The unpaid portion becomes convertible after 180 days,~~500~~ at ~~$0.00504~~61% ~~per~~of ~~share~~the ~~pursuant~~average of the lowest two trading prices over the 15 trading days prior to anthe ~~Equity~~conversion ~~Purchase~~date. Funds ~~Agreement~~were received on March, 1, 2018.

OnThe ~~January~~Company 3,has ~~2018~~initiated ~~the~~a ~~Company~~one ~~authorized~~for ~~6,076,389~~five reverse split of its outstanding and authorized shares of common stock. Effecting tothis becorporate ~~issued~~action ~~for~~is ~~$17~~subject to regulatory (FINRA) approval,~~500~~ atwhich ~~$0.00288~~has ~~per~~not, ~~share~~as ~~pursuant~~of tothe andate ~~Equity~~of ~~Purchase~~this ~~Agreement~~report, been obtained.

Page 13 of 20

On December 20, 2017, the Company authorized 3,000,000 shares of common stock at $0.00495 per share to be issued in exchange for cancellation of $14,850 of the convertible loan.

On December 22, 2017, the Company authorized 5,000,000 shares of common stock at $0.00495 per share to be issued in exchange for cancellation of $24,750 of the convertible loan.

On January 2, 2018, the Company authorized 5,000,000 shares of common stock at $0.00300 per share to be issued in exchange for cancellation of $15,000 of the convertible loan.

On January 5, 2018, the Company authorized 5,000,000 shares of common stock at $0.00300 per share to be issued in exchange for cancellation of $15,000 of the convertible loan.

On January 10, 2018, the Company authorized 7,000,000 shares of common stock at $0.00300 per share to be issued in exchange for cancellation of $21,000 of the convertible loan.

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operation

Overview

We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions could be incorrect. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances. Some of the factors that may cause actual results, developments and business decisions to differ materially from those contemplated by such forward-looking statements.

RESULTS OF OPERATION

Three and Six months ended ~~November~~February 3028, ~~2017~~2018 v. ~~three~~ Three and Six months ended ~~November~~February 3028, ~~2016~~ 2017

~~During~~We have not realized any revenue through the 3three and six months ended ~~November~~February 3028, ~~2017~~2018. Our weoperating ~~realized~~expenses ~~revenue~~decreased into $187,295 for the ~~amount~~three ofmonths ending February 28, 2018, from $29332,~~649~~128 ~~due~~for the three months ended February 28, 2017, and they decreased to $415,842 for the ~~sale~~six ofmonths anending ~~R&D~~February ~~unit~~28, 2018, from $584,586 for the six months ended February 28, 2017.

Our ~~operating~~interest and financing expenses ~~were~~increased to $~~228~~190,~~547~~008 for the three months ending ~~November~~February 3028, 2018, from $149,076 for the three months ended February 28, 2017, ~~compared~~and they increased to $~~252~~356,~~474~~631 for the ~~three~~six months ending February 28, 2018, from $276,483 for the six months ended ~~November~~February 3028, ~~2016~~2017.

~~Our~~The ~~interest~~overall decreases in operating expenses and increases in financing ~~expenses~~costs ~~increased~~resulted toin our net loss of $~~146~~738,~~123~~097 for the ~~three~~six months ~~ending~~ended ~~November~~February 3028, ~~2017~~2018, ~~from~~as compared to the net loss of $~~127~~861,~~390~~069 for the ~~three~~six months ended ~~November~~February 3028, ~~2016.~~2017, and a net loss of $377,970 for the three

~~The~~Page ~~overall~~15 ~~decreases in operating expenses resulted in our net loss~~ of ~~$360,127 for the three months ended November 30, 2017 as compared to the net loss of $379,864 for the three months ended November 30, 2016.~~23

Wemonths ~~anticipate increased~~ended ~~costs~~February ~~associated~~28, ~~with~~2018, ~~increased~~as ~~levels~~compared ~~of operation anticipatory~~ to ~~our entering into~~ the ~~manufacturing~~net ~~stage~~loss ~~and~~of ~~our~~$481,204 ~~marketing~~for ~~processes~~the ~~which~~three ~~will~~months ~~begin~~ended inFebruary ~~the~~28, ~~current fiscal year~~2017.

We anticipate continued increased costs associated with increased levels of operation anticipatory to our entering into the manufacturing stage and our marketing processes which will begin in the current fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

~~Page~~Net 14cash offlows 20used in operating activities for the six months ended February 28, 2018, and 2017, was $307,336 and $538,257, respectively.

Net cash flows used in ~~operating~~investing activities for the ~~three~~six months ended ~~November~~February 3028, ~~2017,~~2018 and ~~November 30~~2017, ~~2016,~~ was $~~174,816~~0 and $~~238~~0,~~051~~ respectively.

Net cash flows ~~used~~provided inby ~~investing~~financing activities for the ~~three~~six months ended ~~November~~February 3028, ~~2017~~2018, and ~~November 30~~2017, ~~2016,~~ was $0306,399 and $0599,500, respectively.

~~Net~~We had cash ~~flows~~resources ~~provided~~of by$1,015 ~~financing~~at ~~activities~~February ~~for~~28, 2018, and we intend to rely on the ~~three~~sale ~~months~~of ~~ended~~stock ~~November~~in ~~30,~~private ~~2017~~placements to increase liquidity to enable us to execute on our plan to manufacture and ~~November~~market 30vertical axis wind turbines. As reported on a Current Report on Form 8-K filed on March 2, ~~2016~~2018, ~~was~~we ~~$185,000~~entered ~~and~~into ~~$243,217~~an ~~respectively.~~Equity Purchase Agreement.

WeAs ~~had~~of ~~cash~~February ~~resources~~16, ~~of $12~~2018,~~136~~ atthe ~~November~~Registrant ~~30,~~entered ~~2017,~~into ~~and~~two weagreements ~~intend~~with toGHS ~~rely~~Investments, onLLC, ~~the~~a ~~sale~~Nevada oflimited ~~stock~~liability incorporation ~~private~~(“GHS”), ~~placements~~an toEquity ~~increase~~Purchase ~~liquidity~~Agreement to(the ~~enable~~“EPA”) usand toa ~~execute~~Registration onRights ~~our~~Agreement ~~plan~~(the to“RRA”). The ~~manufacture~~two ~~and~~agreements ~~market~~we ~~vertical~~filed ~~axis~~as ~~wind~~exhibits ~~turbines. As~~to ~~reported~~the onRegistrant’s a Current Report on Form 8-K ~~filed~~dated March 2, 2018, and the Registrant’s Registration Statement on ~~July~~Form S-1, ~~2016,~~Number we333-223604 ~~have~~and ~~entered~~the ~~into~~following ansummary ~~Equity~~is ~~Purchase~~qualified ~~Agreement~~in its entirety by reference to such exhibits.

AsThe ofagreements ~~May,~~required ~~2017,~~ the Registrant ~~entered~~to ~~into~~file ~~two~~a ~~agreements~~registration ~~with~~statement ~~East~~for ~~Six~~the ~~Opportunity~~common ~~Fund~~stock underlying the EPA. Subject to various limitations set forth in the EPA, ~~LLC~~GHS, aafter ~~New~~effectiveness ~~York~~of ~~limited~~such ~~liability~~registration ~~corporation~~statement, ~~(“East~~was ~~Six”),~~required anto ~~Equity~~purchase ~~Purchase~~up ~~Agreement~~to ($7,000,000 worth of the ~~“EPA”)~~Registrant’s ~~and~~common stock at a ~~Registration~~price ~~Rights~~equal ~~Agreement~~to (80% of the ~~“RRA”~~lowest closing price as determined under the EPA (prior ten trading days). The ~~two~~EPA ~~agreements~~provides wefor ~~filed~~volume aslimitations ~~exhibits~~on to the ~~Registrant’s~~amount ~~Current~~of ~~Report~~shares onthat ~~Form~~GHS ~~8-K~~must ~~dated~~purchase ~~May~~at ~~12,~~any ~~2017,~~time and provides that the Registrant’s will be paid for the common stock upon electronic delivery of the shares to GHS. GHS bore the attorney fees relating to the Registration Statement onand ~~Form~~is not charging the Registrant any additional fees. The S-1 ~~Number~~Registration ~~333-218054~~Statement ~~and~~was ~~the~~filed ~~following~~on ~~summary~~March 12, 2018, and is ~~qualified~~not ineffective ~~its~~as ~~entirety~~of bythe ~~reference~~filing toof ~~such~~this ~~exhibits~~report.

~~The~~Funds ~~agreements~~on ~~required~~hand ~~the~~are ~~Registrant~~not sufficient to ~~file~~fund aour ~~registration~~operations ~~statement~~and ~~for~~we ~~the~~intend ~~common stock underlying the EPA. Subject~~ to ~~various~~rely ~~limitations~~on ~~set forth in~~ the ~~EPA,~~sale ~~East Six, after effectiveness~~ of ~~such~~stock ~~registration~~in ~~statement,~~private ~~was~~placements ~~required~~ to ~~purchase~~increase upliquidity ~~to $3~~and,~~000,000~~ ~~worth~~we ofanticipate ~~the~~deriving ~~Registrant’s~~additional ~~common~~revenue ~~stock~~from atproduct asales ~~price~~in ~~equal~~fiscal to2018 ~~72%~~but ofwe ~~the~~cannot ~~market~~at ~~price~~this astime ~~determined~~quantify ~~under~~ the ~~EPA (prior ten trading days)~~amount. ~~The~~ If ~~EPA~~we ~~provides~~are ~~for~~unable ~~volume~~to ~~limitations~~raise oncash through the ~~number~~sale of ~~shares~~our ~~that~~stock, ~~East~~we ~~Six~~may ~~must purchase at any time and provides that the Registrant will~~ be ~~paid~~required ~~for the common stock upon electronic delivery of the shares~~ to ~~East~~severely ~~Six. East~~restrict ~~Six~~our ~~bore the attorney fees relating to the Registration Statement and is not charging the Registrant any additional fees~~operations.

Funds on hand are not sufficient to fund our operations and we intend to rely on the sale of stock in private placements to increase liquidity. If we are unable to raise cash through the sale of our stock, we may be required to severely restrict our operations.

Critical Accounting Policies

~~Financial~~Page ~~Reporting~~16 ~~Release No. 60~~ of the SEC encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of the financial statements. There are no current revenue-generating activities that give rise to significant assumptions or estimates. Note 2 of our financial statements filed as part of our November 30, 2017, Quarterly Report on this Form 10-Q includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.23

Financial Reporting Release No. 60 of the SEC encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of the financial statements. There are no current revenue-generating activities that give rise to significant assumptions or estimates. Our financial statements filed as part of our February 28, 2018, Quarterly Report on Form 10-Q includes a summary of the significant accounting policies and methods used in the preparation of our financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. - Quantitative and Qualitative Disclosures About Market Risk

The Company is a smaller reporting company and is not required to provide this information.

Page 15 of 20

Item 4T. - Controls and Procedures

Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We conducted an evaluation, with the participation of our Chief Executive Officer who is also our principal financial officer, of the effectiveness of our disclosure controls and procedures as of ~~November~~February 3028, ~~2017~~2018. Based on that evaluation, our Chief Executive Officer has concluded that as of ~~November~~February 3028, ~~2017~~2018, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.

In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following three material weaknesses that have caused management to conclude that, as of November 30, 2017, our disclosure controls and procedures were not effective at the reasonable assurance level:

~~1. We~~Page do17 ~~not have written documentation~~ of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ending August 31, 2017, and the quarter ended November 30, 2017. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.23

deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following three material weaknesses that have caused management to conclude that, as of February 28, 2018 our disclosure controls and procedures were not effective at the reasonable assurance level:

1. We do not have written documentation of our internal control policies and procedures. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

Page 16 of 20

The Board of Directors has not provided an appropriate level of oversight of the Company’s financial reporting and procedures for internal control over financial reporting since there are, at present, no independent directors who could provide an appropriate level of oversight, including challenging management’s accounting for and reporting of transactions. Accordingly, we have determined that this control deficiency constitutes a material weakness.

To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officers and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the ~~Company are being made only in accordance with authorizations of management and directors of the issuer; and~~

Page 18 of 23

Company are being made only in accordance with authorizations of management and directors of the issuer; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of the end of our most recent fiscal quarter, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—~~2013~~ Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, as of ~~November~~February 3028, ~~2017~~2018, such internal control over financial reporting was not effective. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

~~Page~~The 17matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of 20the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives of having segregation of the initiation of transactions, the recording of transactions and the custody of assets. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of February 28, 2018.

~~The~~Management ~~matters~~believes ~~involving~~that ~~internal~~the ~~control~~material ~~over~~weaknesses ~~financial~~set ~~reporting~~forth ~~that~~in ~~our~~items ~~management~~(1) ~~considered~~and to(2) beabove ~~material~~did ~~weaknesses~~not ~~under~~have ~~the~~an ~~standards~~effect ofon ~~the~~our ~~Public~~financial ~~Company~~results. However, ~~Accounting~~management ~~Oversight~~believes ~~Board~~that ~~were:~~the ~~(1)~~ lack of a functioning audit committee ~~due to a lack of a majority of independent members~~ and athe lack of a majority of outside directors on our board of directors, ~~resulting~~results in ineffective oversight in the establishment and monitoring of required internal controls and procedures~~; and (2) inadequate segregation of duties consistent with control objectives of having segregation of the initiation of transactions~~, ~~the~~which ~~recording~~could ofresult ~~transactions~~in ~~and~~a ~~the custody of assets. The aforementioned~~ material ~~weaknesses~~misstatement ~~were identified by our Chief Executive Officer~~ in ~~connection with the review of~~ our financial statements asin offuture ~~November 30, 2017~~periods.

~~Management~~This ~~believes~~quarterly ~~that~~report ~~the~~does ~~material weaknesses set forth in items (1) and (2) above did~~ not ~~have~~include an ~~effect~~attestation onreport ~~our financial results. However, management believes that the lack~~ of ~~a functioning audit committee and~~ the ~~lack of a majority of outside directors on our board of director’~~Company's ~~results~~registered inpublic ~~ineffective~~accounting ~~oversight~~firm inregarding ~~the establishment and monitoring of required~~ internal ~~controls~~control ~~and~~over ~~procedures, which could result in a material misstatement in our~~ financial ~~statements~~reporting. Management's inreport ~~future~~was ~~periods.~~

~~This~~Page ~~quarterly~~19 ~~report does not include an attestation report~~ of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this quarterly report.23

not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only the management's report in this quarterly report.

Management's Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

We will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. First, we will create a position to segregate duties consistent with control objectives of having separate individuals perform (i) the initiation of transactions, (ii) the recording of transactions and (iii) the custody of assets. Second, we will create a senior position to focus on financial reporting and standardizing and documenting our accounting procedures with the goal of increasing the effectiveness of the internal controls in preventing and detecting misstatements of accounting information. Third, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. Although there is substantial uncertainty in any such estimate, we anticipate the costs of implementing these remediation initiatives will be approximately $100,000 to $150,000 a year in increased salaries, legal and accounting expenses.

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

We anticipate that these initiatives will be at least partially, if not fully, implemented by August 31, 2018.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange Act) during the quarter ended ~~November~~February 3028, ~~2017~~2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 18 of 20

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

None.

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

None.

Item 3 – Defaults Upon Senior Securities

None.

Page 20 of 23

Item 4. Mine Safety Disclosures

Not applicable

Item 5 – Other Information

None.

Item 6 – Exhibits

The following documents are filed as part of this Report:

10.1 Equity Purchase Agreement, dated as of May 9, 2017, by and between East Six Opportunity Fund, LLC, and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on May 12, 2017).

10.2 Registration Rights Agreement, dated as of May 9, 2017, by and between East Six Opportunity Fund, LLC, and Sauer Energy, Inc. (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed with the SEC on May 12, 2017).

31.1* Certification of Chief Executive and Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).

32.1* Certification pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

Page 21 of 23

101.INS** XBRL Instance Document

101.SCH** XBRL Taxonomy Extension Schema Document

101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB** XBRL Taxonomy Extension Label Linkbase Document

101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF** XBRL Taxonomy Extension Definition Linkbase Document

________________________

*Filed herewith.

Page 19 of 20

**Furnished herewith.

SIGNATURE

In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

SAUER ENERGY, INC.

Date: ~~January~~April 2223, 2018

Page 22 of 23

By: /s/Dieter R. Sauer, Jr.

Name: Dieter R. Sauer, Jr., CEO

(Principal Executive, Accounting and Financial Officer)

Page 2023 of 2023

~~135~~84,~~039~~086

Filing Compare · SAUER ENERGY, INC.