UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from: ___________ to ___________

Commission file number: 001-36387

HIGHCOM GLOBAL SECURITY, INC.

(Name of small business issuer as specified in its charter)

Colorado

84-1506325

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

2901 E 4th Avenue, Unit J, Columbus, OH		43219
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number: (614) 500-3065

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, $.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Check whether the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [ ]

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

Indicate by check mark whether the Registrant has submitted electronically and posted on it 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 similar period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this Form 10-K [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act: smaller reporting company [X].

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of June 29, 2018, the number of shares held by non-affiliates was approximately 119,044,950 shares. The approximate market value based on the last sale (i.e. $.0159 per share as of June 29, 2018) of the Company’s Common Stock was approximately $2,511,848. The number of shares outstanding of the issuer’s Common Stock, $.001 par value, as of February 28, 2019, was 386,014,460 shares.

TABLE OF CONTENTS

		Page

Part I

Item 1	Business	3
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	10
Item 2	Description of Property	10
Item 3	Legal Proceedings	10
Item 4	Mine Safety Disclosure	10

Part II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	11
Item 6	Selected Financial Data	11
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operation	12
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	14
Item 8	Financial Statements and Supplementary Data	14
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	34
Item 9A	Controls and Procedures	34
Item 9B	Other information	35

Part III

Item 10	Directors and Executive Officers and Corporate Governance.	36
Item 11	Executive Compensation	41
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	47
Item 13	Certain. Relationships and Related Transactions and Director Independence.	48
Item 14	Principal Accounting Fees and Services	49

Part IV

Item 15	Exhibits, Financial Statement Schedules	50
Signatures		51

PART I

CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS

THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO

DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS

All statements in this report that are not based on historical fact are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of 1934. Forward-looking statements, which are based on certain assumptions and describe the Company’s future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “seek,” “intend,” “plan,” “goal,” “estimate,” “anticipate,” or other comparable terms. Examples of forward-looking statements include, among others, statements we make regarding anticipated future operating results. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including, among others, the following: competition in the market, customer demand for our products, changes in technology, seasonality, business cycles and new regulatory requirements and the other risks and uncertainties. The forward-looking statements made in this report speak only as of the date of its release, and HighCom Global assumes no obligation to update any such forward-looking statements to reflect actual results or changes in expectations, except as otherwise required by law.

Item 1. Business

OVERVIEW

HighCom Global Security, Inc. (the “Company”) went public through a shell merger on January 31, 2004, in which the Company acquired BlastGard Technologies, Inc. On March 21, 2004, the Company changed its name to BlastGard International, Inc. On March 4, 2011, the Company completed the acquisition of HighCom Armor Solutions, Inc. and subsidiaries. On June 28, 2017, the Company changed its name to HighCom Global Security, Inc. These consolidated financial statements include the assets, liabilities and activities of the following:

HighCom Armor Solutions, Inc. (HighCom Armor) is a 98.2% owned subsidiary of the Company. HighCom Armor designs, manufactures and distributes a range of security products and personal protective gear, serving a wide range of customers globally. We cater to the military, local law enforcement agencies, correctional facilities and first responders. Many of HighCom’s products are controlled for export purposes and we are fully compliant with U.S. and International laws and regulations.

Blastgard Technologies, Inc. (BlastGard), a wholly-owned Florida corporation, holds patents on BlastWrap^®, an advanced blast mitigation technology that effectively contains explosions and suppresses resulting flash fires, regardless of the material or compound causing the explosion. Since the Company’s acquisition of HighCom Armor, we have devoted substantially all of our resources toward the development of HighCom Armor’s business. The Company is not currently actively marketing BlastGard products and it does not currently represent a material segment of the Company’s business. For fiscal 2018 and 2017, our BlastWrap^®product sales totaled $17,100 and $83,405, respectively.

Product Description

HighCom Armor provides a range of personal protective equipment tailored to satisfy specific customer requirements. With over a million of its products deployed in the defense and law enforcement sectors, it has never had a failure in the field or a recall, and is known for innovative technology, exceptional customer service and superior quality performance.

Our primary products include the following:

	●	Ballistic Helmets
	●	Hard Armor Plates
	●	Soft Armor Vests
	●	Ballistic Shields

Ballistic Helmets

HighCom Armor offers a line of high performing, light weight Level IIIA helmets in a wide range of styles, shapes, and configurations for use by military and law enforcement worldwide. HighCom’s helmets are manufactured using the highest quality materials at US Mil Spec standards and are tested in accordance with NIJ, Mil-Std, ASTM, and CRASH standards, including critical impact and trauma tests to ensure proper end results to protect our customers.

Hard Armor Plates

HighCom Armor offers a full line of military and law enforcement grade NIJ certified Level III, Level IIIA Special Threat, and Level IV hard armor plate inserts.

Soft Armor Vests

HighCom offers military and law enforcement grade Level IIIA soft armor vest packages in addition to several improved plate carrier options for first responders. HighCom has five NIJ Standard 0101.06 certified soft armor products that perform well in V50 and special threat tests and can be designed to meet specific customer requirements.

Ballistic Shields

HighCom Armor produces Levels III and IIIA ballistic shields that are among the most advanced in the market. HighCom’s shields have been battle tested in some of the harshest of conditions and are currently deployed with the U.S. military, domestic law enforcement SRT units, and internationally with the United Nations, Mexican Federal Police, and Allied forces in Iraq and Afghanistan.

HighCom Armor has nine vest and plate products that are “Member Tested and Approved” by the National Tactical Officer’s Association (“NTOA”).

Research and Development

During fiscal 2018 and 2017, HighCom Armor spent $76,363 and $97,746, respectively on research and development efforts. Future research and development expenses will depend upon our liquidity and capital resources.

MARKET DEFINITION

Industry Description and Outlook

There are over 17,000 law enforcement agencies in the U.S. with over 750,000 police officers. The law enforcement market is scattered across the country and is typically serviced by distributors.

Across the United States and Western Europe, municipalities are increasingly providing body armor to first responders, such as firefighters and EMS professionals. This trend has been driven by an increased need for first responders to be able to provide emergency relief during terrorist attacks, active shooter events, or other situations where they may encounter gunfire. With an estimated 1.13 million firefighters and 891,000 EMS professionals in the United States alone, this trend represents a significant expansion of the domestic body armor market.

Body armor has a life cycle of five years. This, combined with an average 10% attrition rate in law enforcement, means that approximately 30% of body armor purchases turn over every year.

In addition to an expanding domestic market, according to the latest research on the body armor market conducted by Grand View Research, the global body armor market is expected to expand at a CAGR of 5.5% from 2018 to 2025. The Company continues to focus on taking advantage of this global trend by marketing the HighCom product line internationally, particularly in Canada, Mexico and the Middle East and North Africa .

HighCom Compliance

HighCom has an in-depth ethics and compliance management and monitoring program that is tied to our International Standard Organization (“ISO”) certified quality processes. These policies and procedures ensure compliance with all local, state, federal, and international laws and regulations, including the Federal Acquisition Regulation (“FAR”), Defense Federal Acquisition Regulation (“DFAR”), International Traffic in Arms Regulations (“ITAR”), Office of Foreign Assets Control (“OFAC”), Export Administration Regulations (“EAR”), Arms Export Control Act (“AECA”), Export Administration Act (“EAA”), Automated Export System (“AES”), and Office of Federal Activities (“OFA”). The Company has also conducted internal and external training with regards to the Foreign Corrupt Practices Act (“FCPA”) and other foreign business regulations that help our employees recognize and avoid red flags and potential risk situations.

The Company makes compliance with the U.S. Department of Commerce, U.S. Department of State, U.S. Department of the Treasury and all other governmental agencies’ regulations a top priority. The Company is also registered through the Directorate of Defense Trade Controls as well as the Bureau of Industry and Security (“BIS”) to maintain control over the export management and compliance.

HighCom Armor is BA 9000:2016 and ISO 9001:2015 certified, the highest standards of manufacturing quality control within the industry. In fact, HighCom Armor was the first company in the world to achieve BA 9000 certification, a body armor quality management systems standard developed by the NIJ to provide greater confidence in consistency and reliability of the products manufactured by companies that achieve that certification.

The Company exceeds industry standard by having $10,000,000 of product liability insurance coverage.

HIGHCOM ARMOR’S MARKETING AND SALES STRATEGY

Strategy

HighCom is a global leader in the personal protective equipment industry. The Company continually seeks to enhance existing product offerings and sell them into new and existing markets. HighCom sells its products and services through a variety of distribution channels to various customers including distributors; federal, state, and municipal law enforcement agencies and officers; government and military agencies; businesses; retailers; and consumers.

Since HighCom Armor is a GSA contract holder any federal government agency can buy from us without additional prior approval. HighCom’s marketing tools include:

	●	HighCom Armor Website
	●	Trade Publications
	●	Defense Industry News Websites
	●	Trade Shows and Conferences
	●	GSA Advantage
	●	Bidding on Federal Government Supply Needs

Competition

HighCom operates in a highly competitive market. This intense competition creates the potential for pricing pressures, lower sales, reduced margins, and difficulty growing market share. HighCom’s focus is on producing the highest quality ballistic plates at a price point competitive with foreign and domestic alternatives. Some of HighCom’s competitors have greater financial, technical, marketing, distribution, and other resources and, in certain cases, may have lower cost structures, potentially affording them competitive advantages. As a result, they may be able to devote greater resources to the promotion and sale of products, to negotiate lower prices on raw materials and components, to deliver competitive products at lower prices, and to introduce new products and respond to customer requirements more effectively and quickly than HighCom.

SEC REPORTS AVAILABLE ON WEBSITE

The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our Annual Reports on Form 10-K, Quarterly Reports on Form l0-Q, Current Reports on Form 8-K and other SEC filings are available on the SEC’s website as well as our company website at www.highcomglohal.com.

Item 1A. Risk Factors

An investment in our common stock involves major risks. Before you invest in our common stock, you should be aware that there are various risks, including those described below. You should carefully consider these risk factors together with all the other information included in this Form 10-K before you decide to purchase shares of our common stock.

Purchase of our stock is a highly speculative and there can be no assurances that our operations will be profitable. Prior to 2014, we had been operating at a loss since inception and we have an accumulated deficit of approximately $11 million. At December 31, 2018, we have shareholder equity of approximately $8,111,555 as compared to shareholder equity of approximately $7,686,459 at December 31, 2017. We have operated at a profit for three of the last four years since 2014.

Although we had a working capital of approximately $2,000,000 at December 31, 2018, there can be no assurances that we will be able to meet our obligations as they become due and payable. While Management is projecting increased sales in 2019 as compared to the comparable period of the prior year and the expectation is that we will be able to meet our obligations as they become due and payable, we can provide no assurances that we will be successful in this regard.

Business and Operational Risks

The following are the major business and operational risks related to our HighCom Armor subsidiary:

	●	We must comply with all laws and regulations surrounding U.S. export controls.
	●	Many of our customers have fluctuating budgets, which may cause fluctuations in our results of operations.
	●	Our business is subject to various laws and regulations favoring the U.S. government’s contractual position, and our failure to comply with such laws and regulations could harm operating results and prospects.
	●	We rely on certain vendors to supply us with ballistics materials, composites materials, and other key materials that if we were unable to obtain could adversely affect our business.
	●	Growth of operations may strain resources and if we fail to manage growth successfully, our business could be adversely affected.
	●	Increases in the prices paid for raw materials or labor costs may adversely affect profit margins.

	●	Our products are used in situations that are inherently risky. Accordingly, we may face product liability and exposure to other claims for which we may not be able to obtain adequate insurance.
	●	We are engaged in a highly competitive marketplace, which demands that producers continue to develop new products. Our business will be adversely affected if we are not able to continue to develop new and competitive products.
	●	We face continuous pricing pressure from our customers and our competitors. This will affect our margins and therefore our profitability and cash flow unless we can efficiently manage our manufacturing costs and market our products based on superior quality.
	●	We may have difficulty protecting our proprietary technology.
	●	If we are unable to successfully retain executive leadership and other key personnel, our ability to successfully develop and market our products and operate our business may be harmed.
	●	We have launched and expect to continue to launch strategic and operational initiatives which if not successful could adversely affect our business.
	●	We may incur additional costs or material shortages due to new NIJ certification and testing standards.
	●	Internal controls over financial reporting are ineffective, potentially impacting our future prospects.

HighCom Armor faces intense competition that could result in our losing or failing to gain market share and suffering reduced revenue. HighCom Armor operates in intensely competitive markets that are characterized by competition from major domestic and international companies in our business and from a large number of competitive companies and alternative solutions in our security business. This intense competition could result in pricing pressures, lower sales, reduced margins, and lower market share. Any movement away from high-quality, domestic ballistic plates to lower priced or comparable foreign alternatives would adversely affect our business. Some of HighCom Armor’s competitors have greater financial, technical, marketing, distribution, and other resources and, in certain cases, may have lower cost structures than we possess and that may afford them competitive advantages. As a result, they may be able to devote greater resources to the promotion and sale of products, to negotiate lower prices on raw materials and components, to deliver competitive products at lower prices, and to introduce new products and respond to customer requirements more effectively and quickly than HighCom Armor can.

Competition is primarily based on quality of products, product innovation, price, consumer brand awareness, alternative solutions, and customer service and support. Pricing, product image, quality, and innovation are the dominant competitive factors in the industry. Our ability to compete successfully depends on a number of factors, both within and outside our control. These factors include the following:

	●	our success in designing and introducing innovative new products and services;
	●	our ability to predict the evolving requirements and desires of our customers;
	●	the quality of our customer service;
	●	product and service introductions by our competitors; and
	●	foreign labor costs and currency fluctuations, which may cause a foreign competitor’s products to be priced significantly lower than our products.

We can provide no assurances that we will be able to successfully compete with our competitors in the future.

If we are unable to compete effectively with our competitors, we will not be successful generating revenues or attaining profits. The personal body armor industry is highly competitive. Our ability to generate revenues and profitability is directly related to our ability to compete with our competitors. Currently, we believe that we have a competitive advantage because of our unique technology, our product performance, product mix and price. Our beliefs are based only on our research and development testing. We face competition in our markets from competing technologies and direct competition from additional companies that may enter this market with greater financial resources than we have. If we are unable to compete effectively, we will not be successful in generating revenues or attaining profits.

Loss of key personnel could cause a major disruption in our day-to-day operations and we could lose our relationships with third-parties with whom we do business. Our future success depends in a significant part upon the continued service of our executive officers as key management personnel. Competition for such personnel may be intense, and to be successful we must retain our key managerial personnel. The loss of key personnel or the inability to hire or retain qualified replacement personnel could cause a major disruption in our day-to-day operations and we could lose our relationships with third-parties with whom we do business, which could adversely affect our financial condition and results of operations.

We are primarily dependent upon the sales activities of HighCom Armor. Currently, the Company is devoting all of its manpower and capital resources to the operations of HighCom Armor, which accounts for all of our sales activities. If our parent corporation, HighCom Global, chooses to devote resources toward the development of sales in its traditional BlastWrap business, these sales activities may not be successful. We can provide no assurances that our operations will be able to operate profitably in the future.

Dependence on outside manufacturers and suppliers could disrupt our business if they fail to meet our expectations. Currently, we rely on outside manufacturers and suppliers for some of our products. In the event that any of our suppliers or manufacturers should become too expensive or suffer from quality control problems or financial difficulties, we would have to find alternative sources.

Possible technological obsolescence of our products. Our products may be subject to technological obsolescence, which would adversely affect our business by increasing our research and development costs and reducing our ability to generate sales . Discovery of another new technology by third parties could replace or result in lower than anticipated demand for our products and could materially adversely affect our operations.

We may not be able to successfully use or defend our intellectual property rights, which would prevent us from developing an advantage over our competitors. We rely on a combination of patent applications, trademarks, copyright and trade secret laws, and confidentiality procedures to protect our intellectual property rights, which we believe will give us a competitive advantage over our competitors. Even if a patent is issued, use of our technology may infringe upon patents issued to third-parties, which would subject us to the cost of defending the patent and possibly requiring us to stop using the technology or to license it from a third party. If a third party infringes on a patent issued to us, we will bear the cost of enforcing the patent. If we are not able to successfully use or defend our intellectual property rights, we may not be able to develop an advantage over our competitors.

We do not expect to be able to pay cash dividends in the foreseeable future, so you should not make an investment in our stock if you require dividend income. The payment of cash dividends, if any, in the future rests within the discretion of its Board of Directors and will depend, among other things, upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. We have not paid or declared any cash dividends upon our Common Stock since our inception and by reason of our present financial status and our contemplated future financial requirements does not contemplate or anticipate making any cash distributions upon our Common Stock in the foreseeable future.

We have a limited market for our common stock which causes the market price to be volatile and to usually decline when there is more selling than buying on any given day. Our common stock currently trades on the OTC-QB Venture® marketplace under the symbol “HCGS.” However, at most times in the past, our common stock has been thinly traded and as a result the market price usually declines when there is more selling than buying on any given day. As a result, the market price has been volatile, and the market price may decline immediately if you decide to place an order to sell your shares.

The market price of our common stock is highly volatile and several factors that are beyond our control, including our common stock being historically thinly traded, could adversely affect its market price. Our common stock has been historically thinly traded and the market price has been highly volatile. For these and other reasons, our stock price is subject to significant volatility and will likely be adversely affected if our revenues or earnings in any quarter fail to meet the investment community’s expectations. Additionally, the market price of our common stock could be subject to significant fluctuations in response to:

	●	announcements of new products or sales offered by HighCom Armor or its competitors;
	●	actual or anticipated variations in quarterly operating results;
	●	changes in financial estimates by securities analysts;
	●	changes in the market’s perception of us or the nature of our business; and
	●	sales of our common stock.

Future sales of common stock into the public market place will increase the public float and may adversely affect the market price. As of March 1, 2019, we had outstanding 386,014,460 shares of common stock, including an estimated 141,440,289 outstanding shares held by non-affiliated persons. Holders of restrictive securities may also sell their restrictive shares pursuant to Rule 144. In general, under Rule 144 of the Securities Act of 1933, as amended, shares of our common stock beneficially owned by a person for at least six months (as defined in Rule 144) are eligible for resale under Rule 144, subject to the availability of current public information about us and, in the case of affiliated persons, subject to certain additional volume limitations, manner of sale provisions and notice provisions. Pursuant to Rule 144, non-affiliates may sell or otherwise transfer their restricted shares without compliance with current public information where the restricted securities have been held for at least one year pursuant to Rule 144(a). Future sales of common stock or the availability of common stock for sale may have an adverse effect on the market price of our thinly traded common stock, which in turn could adversely affect our ability to obtain future funding as well as create a potential market overhang.

“Penny Stock” regulations may adversely affect your ability to resell your stock in market transactions. The SEC has adopted penny stock regulations which apply to securities traded over-the-counter. These regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser’s written consent to the transaction.

Our common stock is currently subject to the penny stock regulations. Compliance with the penny stock regulations by broker-dealers will likely result in price fluctuations and the lack of a liquid market for the common stock and may make it difficult for you to resell your stock in market transactions.

The recently passed comprehensive tax reform bill could adversely affect our business and financial condition. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“the Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Act is uncertain and our business and financial condition could be adversely affected. The impact of the Act on holders of our common stock is also uncertain and could be adverse. We urge our stockholders to consult with their legal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Description of Property

We do not own any real estate properties. The corporate location for HighCom Global and its subsidiaries HighCom Armor and BlastGard is Columbus, OH. HighCom Armor secured the lease for both the office and the manufacturing plant in Columbus, OH. Rental payment under the lease was $9,734 in 2017and 2018 per month. As of December 31, 2018, the Company is leasing its Columbus facility on a month to month basis. One satellite office is maintained in Colorado for additional sales support.

Rent expense for 2018 and 2017 was approximately $131,570 and $129,783 respectively.

Item 3. Legal Proceedings

We are currently not subject to any threatened or pending legal proceedings. Nevertheless, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Common Stock and Related Shareholder Matters

There is a limited public market for our Common Stock. Our common stock currently trades on the OTC-QB Ventura® marketplace under the symbol “HCGS.” The following table sets forth the range of high and low sales prices for our Common Stock for each quarterly period indicated, in the last two fiscal years.

Quarter Ended	High Sales		Low Sales
March 31, 2017	$	0.013	$	0.006
June 30, 2017	$	0.015	$	0.008
September 30, 2017	$	0.016	$	0.004
December 31, 2017	$	0.011	$	0.006
March 31, 2018	$	0.03	$	0.008
June 30, 2018	$	0.018	$	0.008
September 30, 2018	$	0.016	$	0.010
December 31, 2018	$	0.027	$	0.007

The quotations reflect inter-dealer prices, without retail markup, markdown or commission.

Holders

As of March 13, 2019, there were approximately 281 holders of record of our common stock (this number does not include beneficial owners who hold shares at broker/dealers in “street-name”).

Dividends

To date, we have not paid any dividends on our common stock and do not expect to declare or pay any dividends on such common stock in the foreseeable future. Payment of any dividends will be dependent upon future earnings, if any, our financial condition, and other factors as deemed relevant by our Board of Directors.

Repurchases of equity securities

During the past three years, we have not repurchased any of our outstanding equity securities.

Sales of Unregistered Securities

From January 1, 2017 to December 31, 2018, we had no sales or issuances of unregistered common stock, except as follows:

In 2018, the Company issued 8,859,712 shares of common stock as compensation to officers and board members. Exemption from registration is claimed under Section 3(a)(9) of the Securities Act as an exchange of securities of the same issuer with no commissions being paid.

In December 2017, the Company issued 10,178,570 shares of common stock for the cashless exercise of options valued at $97,500; and options totaling 8,571,430 were canceled in payment thereof. Exemption from registration is claimed under Section 4(2) of the Securities Act of 1933, as amended. No commissions were paid in connection with the exercise of these options.

Item 6. Selected Financial Data

Not applicable.

Item 7. Management’s Discussion and Analysis or Plan of Operation

Statements contained herein that are not historical facts are forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. We caution investors that any forward-looking statements made by us are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation: well-established competitors who have substantially greater financial resources and longer operating histories, regulatory delays or denials, ability to compete as a start-up company in a highly competitive market, and access to sources of capital.

The following discussion and analysis should be read in conjunction with our financial statements and notes thereto included elsewhere in this Form 10-K. Except for the historical information contained in this Form 10-K, the discussion in this Form 10-K contains certain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this Form 10-K should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-K. Our actual results could differ materially from the forward-looking statements discussed here.

Overview

HighCom Armor provides a wide range of security products and personal protective gear (including tactical armor) that are tailored and offer protection solutions to specific customer requirements. HighCom Armor caters to local law enforcement agencies, correctional facilities and municipal authorities. Given the equipment and ballistic protection solutions provided by HighCom Armor, compliance with the U.S. Department of Commerce, U.S. Department of State, U.S. Department of the Treasury and all other governmental agencies’ regulations is a high priority. HighCom Armor has sold its products in the defense and law enforcement sectors and is known for innovative technology, exceptional customer service and superior quality performance. We export our products throughout the world and have in the past sold products in Asia, Africa, Europe, Latin America and the Middle East. Many of our products are controlled for export purposes and we require end user details prior to all sales. Strict compliance with U.S. and International laws and regulations is mandatory.

Critical Accounting Policies

We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared, and actual results could differ from our estimates and such differences could be material. We have identified below the critical accounting policies which are assumptions made by management about matters that are highly uncertain and that are of critical importance in the presentation of our financial position, results of operations and cash flows. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation our financial statements.

●

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

	●	Long-lived Assets. Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.

	●	Goodwill. Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets we have acquired in our business combinations. We perform a goodwill impairment test on an annual basis. Application of the goodwill impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. We will conduct our annual goodwill impairment test as of December 31 of each year or more frequently if indicators of impairment exist. We periodically analyze whether any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained significant decline in our share price and market capitalization, a significant adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse actions or assessments by a regulator, among others. We compare the fair value of its reporting unit to its respective carrying value, including related goodwill. Future changes in the industry could impact the results of future annual impairment tests. There can be no assurance that future tests of goodwill impairment will not result in impairment charges.

RESULTS OF OPERATIONS

Year Ended December 31, 2018 vs, 2017

For the year ended December 31, 2018, we achieved revenues of $7,483,418 as compared to $6,217,072 for the comparable period of the prior year, an increase of $1,266,346. Our gross profit for fiscal 2018 was $3,015,919 as compared to $2,164,940 for the comparable period of the prior year, an increase of $850,919. Our gross profit percentage for 2018 and 2017 was approximately 40% for 2018 and 36% for 2017. Management is anticipating continued sales growth for 2019, based on a backlog of firm orders and the expectation of continued increases in municipal, state, and federal budgeting for personal protective equipment.

For the year ended December 31, 2018, our operating expenses were $2,856,097 as compared to $2,839,397 for the comparable period of the prior year.

Our operating income for the year ended December 31, 2018 was $159,882 as compared to an operating loss of $(674,457) for the comparable period of the prior year. In 2018 the Company had no gain or loss from non-operating activities. For 2017, the Company had a gain from non-operating activities of $218,528

Our net income for the year ended December 31, 2018 was $111,093 as compared to a net loss of ($2,119,139) for the comparable period of the prior year. The primary reasons for this substantial difference in net income were year-over-year revenue growth and the reversal in 2017 of a deferred income tax valuation allowance. The remeasurement of the deferred tax asset was a result of the Tax Cuts and Jobs Act of 2017, which reduced the corporate tax rate from 35% to 21% and thus the value of the tax asset.

Liquidity and Capital Resources

At December 31, 2018, we had current assets of $3,674,523 as compared to current liabilities of $1,222,153, resulting in working capital of $2,452,370. For the year ended December 31, 2017, we had current assets of $3,004,238 as compared to current liabilities of $1,109,288, resulting in a working capital surplus of $1,894,950. During 2018, net cash used by operating activities was $395,100. Our 2017 net loss of $2,119,139 included an income tax provision of $1,662,882, and a gain on settlement of debt of $224,402. Amortization and depreciation expense was $103,031. During 2018, no cash was used in financing activities. During 2017, net cash used in investing activities was $25,703.

Management believes that cash flow from operations will enable the Company to meet its operating expenses as they become due and payable during 2019, although no assurances can be given in this regard. See “Risk Factors.”

During 2018, we benefited from financial resources being provided from operations rather than from borrowings. We anticipate that our future liquidity requirements will arise from the need to finance our operations and inventories, and from the need to fund our growth from operations, current debt obligations and capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations, our line of credit, and raising additional capital through equity and debt financing as needed. We can provide no assurances that cash generated from operations will occur or additional financing will be obtained on terms satisfactory to us, if at all, or that additional debt conversions will occur.

We have no known demands or commitments and are not aware of any events or uncertainties as of December 31, 2018, that will result in or that are reasonably likely to materially increase or decrease our current liquidity.

Capital Resources

In July 2018, we committed to purchase software and consulting services from a vendor for a new ERP system. This requires payments of $13,161 quarterly beginning January 2019 through April 2021. There were no material commitments at the years ending December 31, 2017 and December 31, 2018.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements.

Exercise of Warrants/Reduction of Debt

In December 2017, the Company issued 10,178,570 shares of common stock for the cashless exercise of options valued at $97,500; and options totaling 8,571,430 were canceled hi payment thereof. Exemption from registration is claimed under Section 4(2) of the Securities Act of 1933, as amended. No commissions were paid in connection with the exercise of these options.

In April 2018 15,500,000 options were granted with various vesting dates. On December 31, 2018 an additional 10,000,000 options were granted that were immediately vested.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The information required by Item 7A is not required to be provided by issuers that satisfy the definition of “smaller reporting company” under SEC rules.

Item 8. Financial Statements

The information required by Item 8 and an index thereto commences on page 15, which pages follow this page.

INDEX

		Page

Reports of Independent Registered Public Accounting Firm		16

Consolidated Balance Sheets at December 31, 2018 and 2017		18

Consolidated Statements of Operations for the years ended December 31, 2018 and 2017		19

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018 and 2017		20

Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017		21

Notes to the Consolidated Financial Statements		22

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of HighCom Global Security, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of HighCom Global Security, Inc. (the Company) as of December 31, 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended December 31, 2018, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018, and the results of its operations and its cash flows for the year ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

/s/ Turner, Stone and Company L.L.P.

We have served as the Company’s auditor since 2018.

Dallas, Texas 75251

March 22, 2019

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of HighCom Global Security, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of HighCom Global Security, Inc. (the Company) as of December 31, 2017, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended December 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2017, and the results of its operations and its cash flows for the year ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

/s/ Green & Company CPAs

We have served as the Company’s auditor since 2015.

Tampa, Florida 33618

March 30, 2018

HighCom Global Security, Inc.

Consolidated Balance Sheets

	December 31, 2018			December 31, 2017
Assets
Current assets
Cash	$	130,771		$	525,871
Accounts receivable, net		1,360,835			751,258
Inventory (Note 2)		2,057,917			1,699,770
Prepaid and other current assets		125,000			27,339
Total current assets		3,674,523			3,004,238

Property & equipment, net (Note 3)		98,788			152,441
Deferred tax asset — net (Note 6)		3,406,850			3,475,805
Intangible property, net (Note 4)		81,643			91,360
Goodwill		2,061,649			2,061,649
Deposits		10,254			10,254

Total Assets	$	9,333,708		$	8,795,747

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	1,139,139		$	940,395
Accrued expenses		77,245			164,235
Customer deposits and deferred revenue		5,769			4,658
		-			-
Total current liabilities		1,222,153			1,109,288

Total liabilities		1,222,153			1,109,288
Commitments and Contingencies (Note 9)
Stockholders’ Equity
Preferred Stock, 1,000 shares authorized; $.001 par value; 0 and 0 issued and outstanding		-			-
Common Stock, $.001 par value, 500,000,000 shares authorized; 386,014,460 and 377,154,748 shares issued and outstanding at December 31, 2018 and 2017, respectively		386,015			377,155
Additional paid-in capital		18,644,907			18,349,683
Accumulated deficit		(10,964,632	)		(11,075,726	)
Total HighCom Global Security Equity		8,066,290			7,651,112

Noncontrolling interest		45,265			35,347
Total stockholders’ equity		8,111,555			7,686,459

Total Liabilities and Stockholders’ Equity	$	9,333,708		$	8,795,747

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

HighCom Global Security, Inc.

Consolidated Statements of Operations

	For the Years Ended December 31,
	2018			2017

Revenues	$	7,483,418		$	6,217,072
Direct costs		4,467,499			4,052,132
Gross Profit		3,015,919			2,164,940

Operating expenses:
General and administrative		2,532,780			2,500,150
Research and Development		76,363			97,476
Stock based compensation		183,584			138,740
Amortization and depreciation		63,370			103,031
Total operating expenses		2,856,097			2,839,397

Operating income (loss)		159,822			(674,457	)

Non-operating activity
Gains on settlement of debt (Note 11)					224,402
Interest expense
Miscellaneous income		30,144			(5,874	)
Total other income (expense)		30,144			218,528

Income (loss) before noncontrolling interest and income taxes		189,966			(455,929	)

Income tax benefit (provision)		(68,955	)		(1,662,882	)
Net income (loss)		121,011			(2,118,811	)
Income attributable to noncontrolling interest		(9,918	)		(328	)
Net income (loss) attributed to HighCom Global Security, Inc.	$	111,093		$	(2,119,139	)

Earnings (loss) per share:
Basic	$	0.00		$	(0.01	)
Dilutive	$	0.00		$	(0.01	)

Weighted average shares outstanding
Basic		382,349,209			367,004,064
Dilutive		386,014,460			367,004,064

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

HighCom Global Security, Inc.

Consolidated Statements of Stockholders’ Equity

For the Years Ended December 31, 2018 and 2017

	Common				Additional Paid in			Noncontrolling		Accumulated			Stock Holder’s
	Shares		Par		Capital			Interest		Deficit			Equity

Balance at December 31, 2016		336,976,178	$	366,976	$	18,221,122		$	35,019	$	(8,956,587	)	$	9,666,530

Stock issued as satisfaction of debt

Options issued for services						138,740								138,740

Exercise of options		10,178,570		10,179		(10,179	)

Net Income									328		(2,119,139	)		(2,118,811	)

Balances at December 31, 2017		377,154,748	$	377,155	$	18,349,683		$	35,347	$	(11,075,726	)	$	7,686,459
Options issued for services						183,584								183,584
Shares issued for services		8,859,712		8,860		111,640								120,500
Net Income									9,918		111,093			121,011

Balances at December 31, 2018		386,014,460	$	386,015	$	18,644,907		$	45,265	$	(10,964,632	)	$	8,111,555

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

HighCom Global Security, Inc.

Consolidated Statement of Cash Flows

	For the Years Ended December 31,
	2018			2017

Cash Flows from Operating Activities:
Net income (loss)	$	111,093		$	(2,119,139	)
Adjustment to reconcile Net Income(Loss) to net cash provided by operations:
Noncontrolling interest gain (loss)		9,919			328
Deferred tax asset		68,955			1,662,882
Depreciation and amortization		63,369			103,031
Stock based compensation		183,584			138,740
Inventory reserve					100,000
Gain on settlement of debt					(224,402	)
Changes in assets and liabilities:

Accounts receivable		(609,578	)		191,815
Inventory		(358,147	)		131,313
Prepaid Expenses and other current assets		(97,661	)
Accounts payable and accrued expenses		232,254			534,225
Customer deposits and deferred revenue		1,111			(7,209	)
Net Cash Provided by /(Used) in Operating Activities		(395,100	)		492,995

Casts Flows from Investing Activities:
Purchase of property and equipment					(25,703	)
Net Cash Used by Investing Activities					(25,703	)

Cash Flows from Financing Activities:
Repayments of notes payable					(211,752	)
Net Cash Used by Financing Activities					(211,752	)

Net increase/(Decrease) in Cash		(395,100	)		255,540

Cash at beginning of period		525,871			270,331
Cash at end of period	$	130,771		$	525,871

Supplemental cash flow information:
Interest paid	$			$	5,874
Taxes paid	$	-		$	-

Supplemental Schedule of Noncash Investing and Financing Activities

December 2017, the Company issued 10,178,570 common shares upon the cashless exercise of 18,750,000 stock options.

December 2017, the Company determined to record a reserve against the value of inventory of $100,000.

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

HighCom Global Security, Inc. Notes to

Consolidated Financial Statements

(1) Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization and Basis of Presentation

HighCom Global Security. Inc. (the “Company”) went public through a shell merger on January 31, 2004, in which the Company acquired BlastGard Technologies, Inc. On March 21, 2004, the Company changed its name to BlastGard International, Inc. On March 4, 2011, the Company completed the acquisition of HighCom Armor Solutions, Inc. and subsidiaries. On June 28, 2017, the Company changed its name to HighCom Global Security, Inc. These consolidated financial statements include the assets, liabilities and activities of the following:

BlastGard Technologies Inc., a 100% wholly-owned subsidiary of the Company, was a dormant Florida corporation from 2005 through June 2017 when the Company’s tangible and intangible assets relating to BlastWrap technology were transferred back into BlastGard Technologies, Inc. (“BlastGard” or “BTI”). BTI was incorporated on September 26, 2003 in the State of Florida, to design and market proprietary blast mitigation materials

HighCom Armor Solutions. Inc. (HighCom Armor) is a 98.2% owned subsidiary of the Company. Founded in 1997 and originally based in San Francisco, HighCom Armor Solutions, Inc., a California corporation, is a global provider of security equipment. HighCom Armor believes it is a leader in advanced ballistic armor manufacturing. With a 32,865 square foot manufacturing and distribution facility located in Columbus, OH.

Business Segments

Although the Company accounts for its operations in two separate corporations, all of its business operations are associated with security for individuals and property. HighCom Global Security, Inc. primarily provides for corporate administration. HighCom Armor sales represent in excess of 99% of total sales and BlastGard Technologies, Inc. has only incidental sales of an immaterial amount. Therefore, the Company has determined that all business operations should be aggregated together and not reported as separate operating segments.

Concentrations — Major Customers and Major Vendors

For the year ended December 31, 2018, approximately 45% of the Company’s revenue was provided by two customers, one representing approximately 35% and the other approximately 10%.

For the year ended December 31, 2018, approximately 69% of our accounts receivable was made up of two customers. One representing 51% and the second 18%.

Foreign Sales

For the year ended December 31, 2018, the Company generated sales from foreign customers in the amount of $771,890 representing approximately 10% of total sales. Sales to Uganda were 6%, Canada and Mexico represented approximately 4%,

Principles of Consolidation

These consolidated financial statements include the assets and liabilities of HighCom Global Security, Inc. and its subsidiaries as of December 31, 2018 and 2017.

All material intercompany transactions have been eliminated.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles required management to make estimates and assumptions that affected the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considered all highly liquid debt instruments with original maturities of three months or less when acquired to be cash equivalents.

Financial Instruments

The carrying amounts of cash, receivables and current liabilities approximated fair value due to the short-term maturity of the instruments.

Fair Value Measurement

All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements. This value was evaluated on a recurring basis (at least annually). Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs were used to measure fair value.

Level 1: Quotes market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that were corroborated by market data.

Level 3: Unobservable inputs that were not corroborated by market data.

Accounts Receivable

Accounts receivable consisted of amounts due from customers based in the United States and abroad. The Company considered accounts more than 30 days old to be past due. The Company used the allowance method to recognize bad debts. When an account was deemed uncollectible, it is written off against the allowance. The Company generally does not require collateral for its accounts receivable. Management deems all accounts receivable to be collectable at December 31, 2018.

Inventory

Inventory was stated at the lower of cost (first-in, first-out) or market. Market was generally considered to be net realizable value. Inventory consisted of materials used to manufacture the Company’s product and finished goods ready for sale.

Property and Equipment

Property and equipment were stated at cost. Depreciation was calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Expenditures for additions and improvements were capitalized, while repairs and maintenance costs were expensed as incurred. The cost and related accumulated depreciation of property and equipment sold or otherwise disposed of were removed from the accounts and any gain or loss was recorded in the year of disposal.

Impairment of Long-Lived Assets

The Company evaluates the carrying value of its long-lived assets at least annually. Impairment losses were recorded on long-lived assets used in operations when indicators of impairment were present and the undiscounted future cash flows estimated to be generated by those assets were less than the assets’ carrying amount. If such assets were impaired, the impairment to be recognized was measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of were reported at the lower of the carrying value or fair value, less costs to sell. During the years ended December 31, 2018 and 2017, management identified no such impairments.

Revenue Recognition

Based on management’s assessment of the revenue recognition criteria, we usually recognize revenue from sales of our products to customers upon shipment. Recognition is not contingent upon resale of the products by a distributor to their customer if in fact our customer was a distributor.

Revenue is recognized net of any distributor discount. Discounts usually involve special pricing arrangements and incentives used to stimulate distributor growth.

The Company’s product and return policy allows for merchandise purchased directly from the Company to be returned after obtaining a Return Authorization Number during the 30-day period following date of shipment by the Company for a refund of the purchase price.

Research and Development

Research and development costs were expensed as incurred. Research and development costs totaled $76,363 and $97,476 for the years ended December 31, 2018 and 2017 respectively.

Advertising

Advertising, marketing and promotion costs were expensed as incurred. Advertising costs of $61,742 and $97,622 were incurred during the years ended December 31, 2018 and 2017, respectively.

Shipping and Freight Costs

The Company includes shipping costs in cost of goods sold.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse.

The Company recognizes deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company reports uncertain tax positions in accordance with guidance provided by ASC-740-10, Accounting for Uncertainty in Income Taxes. As of December 31, 2018 and 2017 the Company had no uncertain tax positions.

Stock-based Compensation

We use the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant, using assumptions for volatility, expected term, risk-free interest rate and dividend yield. We have used one grouping for the assumptions as our option grants were primarily basic with similar characteristics. The expected term of options granted has been derived based upon our history of actual exercise behavior and represents the period of time that options granted were expected to be outstanding. Historical data was also used to estimate option exercises and employee terminations. Estimated volatility was based upon our historical market price at consistent points in a period equal to the expected life of the options. The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant and the dividend yield was based on the historical dividend yield. Compensation expense for stock-based compensation is recognized over the vesting period. Inputs used in 2018 were Volatility 155%, Risk Free Interest rate 2.91 %, Expected Dividend 0%, Expected Term 10 Years.

Income (Loss) per Common Share

Basic net loss per share excludes the impact of common stock equivalents. Diluted net income (loss) per share utilizes the average market price per share when applying the treasury stock method in determining common stock equivalents. As of December 31, 2018, there were 54,500,000 vested common stock options outstanding, which were included in the calculation of net income (loss) per share-diluted. In addition, at December 31, 2018 the Company had 41,801,793 remaining warrants outstanding issued in connection with convertible promissory notes and stock sales that were also included because they were dilutive.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial position.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This update provides a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to be entitled in exchange for those goods or services. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. We have adopted this update. The guidance’s adoption had no impact on our source of revenue from the sale of armor and related products or have a material impact on our financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU simplify the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. This ASU leaves the accounting for the organizations that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers.

The amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is evaluating the potential impact of ASU 2016-02 on its Consolidated Financial Statements. The Company is planning to enter a lease in 2019 , therefore ASU 2016-02 will impact us in future years.

(2) Inventory

Our inventory is made up of raw materials, work in progress and finished goods. The Company’s inventory is maintained at our manufacturing facilities.

	December 31, 2018		December 31, 2017

Raw materials	$	1,272,154	$	805,029
Work in process		145,862		222,336
Finished Goods		639,901		672,405
TOTAL	$	2,057,917	$	1,699,770

(3) Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed by applying principally the straight-line method to the estimated useful lives of the related assets. Useful lives range from 3 to 7 years for equipment, furniture, molds and the test range. When property or equipment is retired or otherwise disposed of, the net book value of the asset is removed from the Company’s balance sheet and the net gain or loss is included in the determination of operating income. Property and equipment acquired as part of a business acquisition are valued at fair value.

Property and equipment are comprised of the following at December 31, 2018 and December 31, 2017:

	December 31, 2018			December 31, 2017

Equipment	$	453,397		$	453,397
Furniture		106,525			106,525
Molds		45,060			45,060
Test Range		110,802			110,802

		715,784			715,784
Less accumulated depreciation		(616,996	)		(563,343	)

Property and equipment, net	$	98,788		$	152,441
Depreciation expense for the years ended December 31, 2018 and 2017	$	53,653		$	62,264

(4) Intangible Assets, Net

Intangible Assets are comprised of the following at December 31, 2018 and December 31, 2017:

	December 31, 2018			December 31, 2017

Patents and Trademarks	$	145,749		$	145,749
Websites		80,000			80,000
Lists		500,000			500,000
Research and Development		-			-

		725,749			725,749
Less accumulated amortization		(644,105	)		(634,389	)

Intangible assets, net	$	81,643		$	91,360

Amortization expense for the years ended December, 31 2018 and 2017	$	9,716		$	40,767

Amortization expense for the next five years ended December 31,
2019	$	9,716
2020		9,716
2021		9,716
2022		9,716
2023		9,716
Thereafter		33,063

	$	81,643

(5) Notes Payable

Notes payable at December 31, 2018 and 2017 there was no outstanding debt.

Line of Credit

The Company has a $250,000 line of credit with a bank. At December 31, 2018 there was no outstanding balance. No draws were taken during 2018. In 2019 this line of credit was increased to $500,000. As of March 22, 2019, the Company has drawn $250,000 from its line of credit to address short term cash flow needs.

(6) Shareholders’ Equity

Preferred stock

The Company was authorized to issue 1,000 shares of $.001 par value preferred stock. The Company may divide and issue the Preferred Shares in series. Each Series, when issued, shall be designated to distinguish them from the shares of all other series. The relative rights and preferences of these series include preference of dividends, redemption terms and conditions, amount payable upon shares of voluntary or involuntary liquidation, terms and condition of conversion as well as voting powers. None of our shares of preferred stock are outstanding.

Common stock issuances

At December 31, 2018, 386,014,460 shares were issued and outstanding. During 2018 8,859,712 shares were issued to board members and executives of the company. 377,154,748 shares were issued and outstanding at December 31, 2017. In December 2017, the Company issued 10,178,570 common shares in a cashless exercise of 18,750,000 options. On February 26, 2019, the Company filed Articles of Amendment to increase the number of authorized Common Shares to 600,000,000.

Stock Compensation

The Company periodically offers options to purchase stock in the company to vendors and employees and board members. There were 25,500,000 options granted during 2018 to board members for various consultant services.

The Board’s policy with respect to options is to grant options at the fair market value of the stock on the date of grant.

There were no net cash proceeds from the exercise of stock options during the year ended December 31, 2018. At December 31, 2018 and December 31, 2017, there was no unrecognized compensation cost related to share-based payments which was expected to be recognized in the future.

The following table represents stock option activity as of and for the twelve months ended December 31, 2018:

	Numbers of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Options Outstanding - January 1, 2018		39,250,000		$	0.01		5.4 years
Granted		25,500,000		$	0.01		4.0 years		-
Exercised									-
Forfeited/expired/cancelled		(1,500,000	)		-
Options Outstanding - December 31, 2018		63,250,000		$	0.01		5.3 years	$	-
Outstanding Exercisable - January 1, 2018		35,500,000		$	0.02		6.9 years		-
Outstanding Exercisable - December 31, 2018		54,500,000		$	0.01		5.4 years	$	-

The total grant date fair value of options vested during the twelve months ended December 31, 2018 and 2017 was $183,584 and $138,740 respectively.

The following table represents stock warrant activity as of and for the twelve months ended December 31, 2018:

	Numbers of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Warrants Outstanding - January 1, 2018		41,801,793	$	0.009		2.9 years		-
Granted		-
Exercised		-		-
Forfeited/expired/cancelled		-
Warrants Outstanding —December 31, 2018		41,801,793	$	0.009		2.9 years	$	-
Outstanding Exercisable — January 1, 2018		41,801,793	$	0.009		2.9 years	$	-
Outstanding Exercisable -December 31, 2018		41,801,793	$	0.009		2.9 years	$	-

(7) Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities based on the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse.

The Company recognizes deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, it considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If it determines that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, it would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly.

During the year ended December 31, 2018, the Company incurred income, which created a decrease in its deferred tax asset with a corresponding income tax expense of $68,955.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“the Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, immediate deductions for certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits. We have calculated our best estimate of the impact of the Act in our year end income tax provision in accordance with our understanding of the Act and guidance available as of the date of this filing and as a result have recorded $1,834,571 as additional income tax provision in the fourth quarter of 2017, the period in which the legislation was enacted. The amount related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was a provision of $1,834,571.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740, Income Taxes. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it can determine a reasonable estimate, it must record a provisional estimate in the financial statements.

In connection with our initial analysis of the impact of the Tax Act, we have recorded a provisional income tax provision of $1,834,571 for the revaluation of our net deferred tax asset.

The income tax benefit (provision) consists of the following for the years ending December 31, 2018 and 2017:

	December 31, 2018			December 31, 2017

Current
Federal	$	(52,273	)	$	159,786
State		(9,036	)		17,060
		(61,309	)		176,846
Deferred
Federal		(6,519	)		(4,659	)
State		(1,127	)		(498	)
		(68,955	)		171,689

Tax Cuts and Jobs Act of 2017 effect		-			(1,834,571	)
Valuation allowance

Income tax provision	$	(68,955	)	$	(1,662,882	)

As of December 31, 2018, the Company had net operating loss early forwards of approximately $13,500,000. The federal net operating loss carry forwards will not expire as a result of the Tax Act legislation, and state net operating loss early forwards that will expire in 2026 through 2037.

The components of deferred tax assets and liabilities as of December 31, 2018, and 2017 is as follows:

	December 31, 2018			December 31, 2017

Deferred tax assets:
NOL and contribution carry forwards	$	3,258,113		$	3,340,868
Meals and entertainment		3,350			870
Share based compensation		519,085			474,588

Total deferred tax assets		3,780,548			3,816,326

Deferred tax liabilities:
Property and equipment		(106,369	)		(106,369	)
Goodwill		(267,328	)		(234,152	)

Total deferred tax liabilities		(373,698	)		(340,521	)

Deferred tax asset - net before valuation allowance		3,406,850			3,475,805
Less valuation allowance		-			-

Deferred tax asset - net	$	3,406,850		$	3,475,805

A reconciliation of the federal and state statutory income tax rates to the Company’s effective income tax rate applicable to income before income tax benefit from continuing operations is as follows for the years ended December 31, 2018 and 2017:

	December 31, 2018			December 31, 2017

Expected provision at US statutory rate		21.00	%		(34.00	)%
State income tax net of federal benefit		3.63	%		(3.63	)%
Other items effecting timing differences			%		1.17	%
Tax cut and jobs act of 2017 effect		0.00	%		400.93	%
Valuation allowance		0.00	%		0.00	%

Effective income tax rate		24.63	%		364.47	%

The Company files income tax returns on a consolidated basis in the United States federal jurisdiction and the State of Florida. As of December 31, 2018, the tax returns for the Company for the years ending 2014 through 2017 remain open to examination by the Internal Revenue Service and Florida Department of Revenue. The Company and its subsidiaries are not currently under examination for any period.

Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company’s tax net operating loss carry forwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses.

(8) Concentration of Credit Risk for Cash

The Company has concentrated its credit risk for cash by maintaining deposits in a financial institution, which may at times exceed the amounts covered by insurance provided by the United States Federal Deposit Insurance Corporation (“FDIC”). At December 31, 2018, the Company had no funds in excess of the FDIC insurance limits.

(9) Commitments and Contingencies

In July 2018 we committed to purchase software and consulting services from a vendor for a new ERP system. This requires payments of $13,161 quarterly beginning in January 2019 through April 2021. As of December 31, 2018, no liability was recorded.

From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

Office Lease

We do not own any real estate properties. The corporate location for both HighCom Global and HighCom Armor is Columbus, OH. Warehouse space is in Columbus, OH. Rental payment under the lease is $9,863 per month on a month to month basis. A satellite office is maintained in Colorado for additional sales support.

Rent expense for 2018 and 2017 was approximately $131,570 and $129,783 respectively.

(10) Material Agreements and Transactions

On November 14, 2016, the Company entered into a Consulting Agreement with Resilience Capital Inc. (“Resilience”) for Resilience to provide strategic advice as to the business of HighCom Global and its subsidiaries.

Resilience agreed to provide the services of Craig Campbell, a former director of the Company, to serve as the engagement manager and, in such capacity, supervise the services provided to the Company. Mr. Campbell is the President and principal owner of Resilience.

Pursuant to the Agreement, the Company agreed to pay Resilience an annual fee of $250,000, payable in equal monthly installments. The initial term of the Agreement was one year, automatically renewed for successive one-year periods until either party provides at least 60 days’ prior written notice of termination to the other party.

On January 16, 2018, the Company and Resilience agreed to terminate the Consulting Agreement.

On April 5, 2018, the Company entered into an Employment Contract with Francis Michaud to continue as CEO/CFO through the end of 2018. Pursuant to the contract, Mr. Michaud received remuneration of $160,000 annually.

On January 31, 2019, the Company and Mr. Michaud agreed to terminate the Employment Contract

(11) Gain on settlement of debt

The Company has recorded in other income, a gain on settlement of debt for the nine months ended September 30, 2017 in the amount of $102,325. This amount includes $30,000 recorded as Acquisition Note Payable from a transaction originating in 2010, $67,593 recorded in Accounts Payable from a transaction originating in 2011, and $4,732 representing a 50% negotiated settlement of an amount included in Accounts Payable. The Company evaluated the two transactions from 2010 and 2011 pursuant to the Florida Statute of Limitations applicable to the circumstances of each and has concluded that these amounts are time-barred in Florida and should be taken into income.

The Company has recorded in other income, a gain on settlement of debt for the twelve months ended December 31, 2017 in the amount of $122,077. This amount includes $20,157 in accrued interest recorded as Prior Litigation Matter from a transaction originating in 2009. The Company evaluated the transaction from 2011 pursuant to the Florida Statute of Limitations applicable to the circumstances and has concluded that this amount is time-barred in Florida and should be taken into income.

(12) Change in Directors and Management

On June 28, 2017, an Annual Meeting of Shareholders was held as described under Item 5.07 of the Form 8-K and in a definitive Proxy Statement which was filed with the Securities and Exchange Commission. Paul Sparkes was re-elected to the Board of Directors and continued to serve as Chairman of the Board until his resignation in October, 2018. Craig Campbell, Curt Cronin, Andrew Blott and Bill Buckley were also elected to the Board as anticipated by the Proxy Statement.

On June 29, 2017, the Board of Directors elected Craig Campbell as Chief Executive Officer, Francis Michaud as Chief Financial Officer, and Greg Sullivan as Chief Commercial Officer. Their biographical information is set forth in the definitive Proxy Statement filed with the Securities and Exchange Commission on May 31, 2017 and incorporated by reference herein. The Proxy Statement also describes the compensation that is paid to an affiliate of Mr. Campbell, namely, Resilience Capital, Inc. Resilience was to receive an annual fee of $250,000 payable in equal monthly installments. The agreement was terminated on January 16, 2018. The other executive officers named above were compensated by Resilience as well.

On December 29, 2017, the Company announced that Michael J. Gordon, formerly a director and Chief Executive Officer of the Company and currently the Chief Executive Officer of the Company’s subsidiaries, namely HighCom Armor Solutions, Inc. and BlastGard Technologies, Inc. retired effective December 31, 2017. Michael Bundy, who was acting as the President and Chief Operating Officer of HighCom Armor has since transitioned into the Chief Executive Officer role. In December, 2017, Greg Sullivan, Chief Commercial Officer of the Company, resigned his position with HighCom Global.

On January 16, 2018, the Company announced that Craig Campbell, an executive officer and director of the Company, submitted his resignation to the board effective Tuesday, January 16, 2018. Francis Michaud, who is presently serving as Chief Financial Officer of the Company, was elected to the board of directors to fill the vacancy left by Mr. Campbell and he was appointed to serve as Chief Executive Officer. Mr. Michaud was paid $160,000 annually in equal monthly installments.

Francis Michaud resigned on December 31, 2018 as CEO and was replaced by Daniel Colson, Interim-Chief Executive Officer. On January 31, 2019 Francis Michaud also resigned as CFO and has been replaced by James Black on an interim basis. The Company is currently searching for a permanent Chief Financial Officer and expects to name one shortly. Additionally, The Company added or retained four Directors Curt Cronin, Tim Foley, James Black and Michael Bundy. Beginning with the year 2019, Directors will be compensated at the rate of $5,000 annually. This compensation can be made in cash or stock at the Individual directors’ request.

(13) 2017 Annual Meeting

The Annual Meeting of Shareholders held on June 28, 2017 also approved of the following amendments: 1) to file an amendment to the Company’s Articles of Incorporation to change the name of the corporation from BlastGard International, Inc. to “HighCom Global Security, Inc.”; 2) approval to grant the Board of Directors discretionary authority to amend the Company’s Articles of Incorporation (the ‘RS Amendment”) to effectuate a Reverse Stock split of the Company’s Common Stock, $.001 par value, by a ratio of no more than one-for-100 with such ratio to be determined by the sole discretion of the Board (the ‘Reverse Split’), with a decrease in the number of authorized shares of Common Stock to100,000,000 and with such Reverse split and change authorized number of common shares to be effective at such time and date, if at all, as determined by the Board in its sole discretion (the “Reverse Split Proposal”); 3) to file an Amendment to the Articles of Incorporation to permit the Company to hold meetings by action without a meeting in accordance with Section 7-107-104 (I)(b) of Title 7 of the Colorado Revised Statutes in order to permit the shareholders holding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all of the shares entitled to vote thereon were present and voted consent to such action in writing; 4) approval to transfer all the Company’s tangible and intangible assets, which exclude any HighCom assets, from HighCom Global Security, Inc. to its wholly-owned Florida subsidiary, BlastGard Technologies, Inc.; 5) approval to file an amendment to its Articles of Incorporation in the State of California to change HighCom Security, Inc’s name to “HighCom Armor Solutions, Inc.”; and 6) approval to ratify, adopt and approve a 2017 Employee Benefit and Consulting Services Compensation Plan covering a maximum of up to 10,000,000 post-split shares of Common Stock, which Plan will not be established until the discretionary stock split is approved by the Board. We had no Annual Meeting in 2018.

(14) Related Party Transactions

On January 1, 2019, the Company entered into a two-year Board-approved consulting agreement for 2019 and 2020 with 2428555 Ontario, Inc. a related party. (the “Consultant”), a Canadian Company with annual compensation of $175,000 per year payable in $43,750 quarterly installments in advance. This fee is adjustable quarterly and increased or decreased based on an Earnings before interest depreciation and amortization calculation. An advance payment of $100,000 was paid during 2018 to CB Capital Corporation in its capacity as a party in the consulting agreement with 2428555 Ontario, Inc. Pursuant to this agreement, the Consultant agrees to provide general business advisory and consulting services and provide personnel as needed.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On December 11, 2018, Highcom Global Security, Inc. (the “Company”) was informed by Green & Company, CPAs (“Green & Co.”), our prior independent registered public accounting firm, that they reluctantly declined to stand for re-election and as a result resigned as the independent public accounting firm of the Company.

During the two most recent fiscal years and through December 11, 2018, (i) there were no material disagreements between the Company and Green & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, and (ii) Green & Co. did not advise us of any of the events requiring reporting under Item 304(a)(1)(v) of Regulation S-K.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this annual report, an evaluation was carried out by the Registrant’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of December 31, 2018. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Registrant’s management concluded, as of the end of the period covered by this report, that the Registrant’s disclosure controls and procedures were ineffective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: inadequate segregation of duties consistent with control objectives and management is dominated by a single individual/small group without adequate compensating controls.

Management’s Report on Internal Control over Financial Reporting

Management believes that the material weaknesses set forth above did not have an effect on our financial results. The management of the Registrant is responsible for establishing and maintaining adequate internal control over financial reporting. The Registrant’s internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Registrant’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting 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 Registrant’s assets;

* Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and

* Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Registrant’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. Also, 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.

The Registrant’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was ineffective as of December 31, 2018.

Changes in Internal Controls over Financial Repotting

There were no changes in our internal controls over financial reporting that occurred during the fourth quarter of the fiscal year ended December 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Not Applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The Company has a Board of Directors, which is currently comprised of five members. Each director holds office until the next annual meeting of shareholders or until a successor is elected or appointed. The members of our Board of Directors and our executive officers and their respective age and position are as follows:

Name	Age	Position with Registrant	Director or Officer of Registrant Since

Michael L. Bundy	39	CEO, HighCom Armor / Director	March 2011

Chad Aaron Wright	37	VP Operations, HighCom Armor	September 2015

Francis Michaud	42	Director, Secretary	June 2017

Daniel Colson	71	Interim-CEO, HighCom Global / Director	January 2019

Curt Cronin⁽¹⁾	42	Director	June 2017

Timothy Foley	38	Director	January 2019

James Black	33	VP, Finance / Interim-CFO, HighCom Global / Director	January 2019

(1) Independent Director

Biographies of Executive Officers

Michael L. Bundy — In March 2011, Michael L. Bundy was retained as the Chief Operating Officer for HighCom Global and is currently interim CEO and President of HighCom Armor. Mr. Bundy has served as both a Director of Operations and Vice President for HighCom Armor in San Francisco from January 2006 through October 2010, where he was responsible for the daily management of operations and logistics. Mr. Bundy has been tasked with overseeing the operational and compliance processes for the combined companies.

Chad Aaron Wright - On September 1, 2015, the Board of Directors promoted Chad Wright to Vice President of Operations - Manufacturing and Distribution. Mr. Wright oversees our manufacturing and distribution operations in Columbus Ohio as well as our research and development programs. He has been with the company since 2011.

Francis Michaud — In June 2017, Francis Michaud was named as CFO of HighCom Global. In January 2018, Francis Michaud assumed the role of CEO as well and was appointed to the board of directors. Mr. Michaud is a bilingual finance executive with proven track record of achievements in demanding environments and financially challenging times. Mr. Michaud resigned as CEO on December 31, 2018 and resigned as CFO effective January 31, 2019.

Daniel Colson- In December 2018, Daniel was elected Chairman of the Board and appointed as Interim Chief Executive Officer. He is a lawyer by training who for more than twenty years was a partner of a major international law firm. Both as a lawyer and subsequently as a corporate executive, he has been very involved with a large number of mergers and acquisitions in a successful career spanning decades. He has served as a director and/or officer of many companies in various countries including Hellespont Shipping (a provider of integrated management services to the shipping industry), Perry Baromedical (a medical device manufacturer), Molson Inc. (a Canadian brewery), and previously served as Vice Chairman of Hollinger Inc. and Deputy Chairman and CEO of Telegraph Media Group (newspaper holding companies).

Curt Cronin - In June 2017, Curt Cronin was elected at the annual shareholder meeting to fill a vacancy on the board of directors. Mr. Cronin is an expert on Leading High-Performance Teams, Former Navy SEAL. Over his 16-year-long career as a Navy SEAL, Curt Cronin deployed thirteen times and spent more than four years overseas. In that time, living and working in an environment where milliseconds made the difference between life and death and winning and losing, he honed his talent as a catalyst for transformation and rose to eventually lead the nation’s premier SEAL assault force.

Timothy J. Foley In December 2018, Timothy was elected to the Board of Directors. He is a successful entrepreneur, investor, and has worked at The Butterfield Corporation for the past 5 years, where is their current Vice-President of Acquisitions and Development. The Butterfield Corporation is a private equity firm focused on real estate and hospitality investments. He serves on that company’s Board of Directors and serves on the Board of a luxury resort development in the Caribbean.

James Black- In December 2018, James was elected Vice President of Finance and a director. On January 31, 2019, he agreed to become interim Chief Financial Officer. He is a business executive specializing in strategic inorganic growth. He spent the past 4 years as a key member of a small corporate finance group in the media sector, where he primarily focused on mergers and acquisition deals. Mr. Black’s prior experience includes serving as an advisor and director of a number of private holding companies, a not-for-profit organization, and a single-family office.

Corporate Governance

Our business, property and affairs are managed by, or under the direction of, our Board, in accordance with the General Corporation Law of the State of Colorado and our By-Laws. Members of the Board are kept informed of our business through discussions with the Chief Executive Officer and other key members of management, by reviewing materials provided to them by management.

We continue to review our corporate governance policies and practices by comparing our policies and practices with those suggested by various groups or authorities active in evaluating or setting best practices for corporate governance of public companies. Based on this review, we have adopted, and will continue to adopt, changes that the Board believes are the appropriate corporate governance policies and practices for our Company. We have adopted changes and will continue to adopt changes, as appropriate, to comply with the Sarbanes-Oxley Act of 2002 and subsequent rule changes made by the SEC and any applicable securities exchange.

Director Qualifications and Diversity

The board seeks directors who represent a diversity of backgrounds and experiences that will enhance the quality of the board’s deliberations and decisions. Candidates shall have substantial experience with one or more publicly traded companies or shall have achieved a high level of distinction in their chosen fields. The board is particularly interested in maintaining a mix that includes individuals who are active or retired executive officers and senior executives, particularly those with experience in the defense, sales and marketing and capital market industries.

In evaluating nominations to the Board of Directors, our Board also looks for certain personal attributes, such as integrity, ability and willingness to apply sound and independent business judgment, comprehensive understanding of a director’s role in corporate governance, availability for meetings and consultation on Company ‘natters, and the willingness to assume and carry out fiduciary responsibilities. Qualified candidates for membership on the Board will be considered without regard to race, color, religion, sex, ancestry, national origin or disability.

Risk Oversight

Enterprise risks are identified and prioritized by management and each prioritized risk is assigned to a board committee or the full board for oversight as follows:

	●	Full Board - Risks and exposures associated with corporate governance, and management and director succession planning, strategic, financial and execution risks and other current matters that may present material risk to our operations, plans, prospects or reputation.

	●	Audit Committee - Risks and exposures associated with financial matters, particularly financial reporting, tax, accounting, disclosure, internal control over financial reporting, financial policies, investment guidelines and credit and liquidity matters.

	●	Compensation Committee - Risks and exposures associated with leadership assessment, and compensation programs and arrangements, including incentive plans.

Board Leadership Structure

The Chairman of the Board presides at all meetings of the Board. The Chairman is appointed on an annual basis by at least a majority vote of the remaining directors. Currently, the office of Chairman of the Board and Interim Chief Executive Officer is held by Daniel Colson. The Company has no fixed policy with respect to the separation of the offices of the Chairman of the Board and Chief Executive Officer. The Board believes that the separation of the offices of the Chairman of the Board and Chief Executive Officer is part of the succession planning process and that it is in the best interests of the company to make this determination from time to time.

Review of Risks Arising from Compensation Policies and Practices

We have reviewed our compensation policies and practices for all employees and concluded that any risks arising from our policies and practices are not reasonably likely to have a material adverse effect on the Company.

Code of Ethics

In May 2017, the Board of Directors established a new written code of ethics that applies to our senior executive and financial officers. A copy of the code of ethics may be obtained by any person, without charge, who sends a written request to HighCom Global Security, Inc., c/o Investor Relations, 2901 E 4th Avenue, Unit J, Columbus, OH 43219. The Code of Ethics is filed as an Exhibit to this form 10-K.

COMMITTEES

We have no nominating committee of the Board of Directors or committees performing similar functions. In February 2006, we established a Compensation Committee and Audit Committee and in March 2007, we established a Management Committee.

Compensation Committee

Our Board of Directors established a Compensation Committee and adopted a written charter. Our Compensation Committee currently consists of Curt Cronin and Francis Michaud. Our Compensation Committee has such powers and functions as may be assigned to it by the Board of Directors from time to time; however, such functions shall, at a minimum, include the following:

	●	to review and approve corporate goals and objectives relevant to senior executive compensation, evaluate senior executive performance its light of those goals and objectives, and to set the senior executive compensation levels based on this evaluation;

	●	to approve employment contracts of its officers and employees and consulting contracts of other persons;

	●	to make recommendations to the Board with respect to incentive compensation plans and equity-based plans, including, without limitation, the Company’s stock options plans; and

	●	to administer the Company’s stock option plans and grant stock options or other awards pursuant to such plans.

During fiscal 2018 and 2017, the Compensation Committee had total of three meetings.

Management Committee

In March 2007, our Board of Directors established a Management Committee and adopted a written charter. The current members of our Management Committee consist of Daniel Colson as Chairman, along with Curt Cronin. The charter includes, among other things, the following responsibilities of the Management Committee:

	●	Administer the business of the Corporation and generally supervise its day-to-day activities.

	●	Control and manage the funds and other property of the Corporation and have general oversight of business matters affecting the Corporation, consistent with the strategic directions established by the Board of Directors.

	●	Designate banks to be used as depositories of Corporation funds, upon the recommendation of the auditors and approval by the Board.

	●	Review the budget as submitted by the CFO and submit its recommendations to the Board for approval.

	●	Make recommendations concerning the Corporation’s fiscal structure, resource allocations and other financial matters to the Board.

	●	Make recommendations to the Board on the appointment of Corporate Executives.

	●	Undertake any other duties as may be assigned from time to time by the Board.

During fiscal 2018 and 2017, the Management Committee had a total of three meetings.

Audit Committee

Effective February 16, 2006, the Board adopted a written charter for an Audit Committee. The charter includes, among other things:

	●	annually reviewing and reassessing the adequacy of the committee’s formal charter;

	●	reviewing the annual audited financial statements with the Company’s management and its independent auditors and the adequacy of its internal accounting controls;

	●	reviewing analyses prepared by the Company’s management and independent auditors concerning significant financial reporting issues and judgments made in connection with the preparation of its financial statements;

	●	being directly responsible for the appointment, compensation and oversight of the independent auditor, which shall report directly to the Audit Committee, including resolution of disagreements between management and the auditors regarding financial reporting for the purpose of preparing or issuing an audit report or related work;

	●	reviewing the independence of the independent auditors;

	●	reviewing the Company’s auditing and accounting principles and practices with the independent auditors and reviewing major changes to its auditing and accounting principles and practices as suggested by the independent auditor or its management;

	●	reviewing all related party transactions on an ongoing basis for potential conflict of interest situations; and

	●	all responsibilities given to the Audit Committee by virtue of the Sarbanes-Oxley Act of 2002 (which was signed into law by President George W. Bush on July 30, 2002) and all amendments thereto.

	●	reviewing required PCAOB auditor communications.

With the resignations of Paul Sparkes and Andrew Blott, the current members of the Company’s audit committee are Francis Michaud as Chairman, James Black, and Daniel Colson, none of whom are independent directors.

During fiscal 2018, the audit committee, which consisted of Andrew Blott, Curt Cronin and Paul Sparkes, reviewed the annual audit and quarterly information before filings were made and issued such filings with management and the external auditors.

Nominating Committee

The Board does not currently have a nominating committee.

The policy of the Board is to consider properly submitted stockholder nominations for candidates for membership on the Board as described below in the section entitled “Identifying and Evaluating Nominees for Directors” and in our Bylaws. In evaluating such nominations, the Board will address the membership criteria set forth below in the section entitled “Director Qualifications”. Any stockholder nominations proposed for consideration by the Board should include the nominee’s name and qualifications for membership on the Board and other information in accordance with the Company’s Bylaws and should be addressed to:

HighCom Global Security, Inc.

2901 E 4th Avenue, Unit J

Columbus, OH 43219

Attn: Daniel Colson Chief Executive Officer

Director Qualifications

New members of the Board should possess certain core competencies, some of which may include broad experience in business, finance or administration, familiarity with national and international business matters, and familiarity with the defense and law enforcement industries. In addition to having one or more of these core competencies, members of the Board are identified and considered on the basis of knowledge, experience, integrity, diversity, leadership, reputation, and ability to understand our business.

Identifying and Evaluating Nominees for the Board

The Board utilizes a variety of methods for identifying and evaluating nominees for the Board. However, there are no specific minimum qualifications that the Board requires to be met by a director nominee recommended for a position on the Board, nor are there any specific qualities or skills that are necessary for one or more of our Board to possess, other than as are necessary to meet any requirements under rules and regulations applicable to us. Although the Board does not have a specific policy with respect to the diversity, the Board considers the extent to which potential candidates possess sufficiently diverse skill sets and diversity characteristics that would contribute to the Board’s overall effectiveness. The Board has the duty of regularly assessing the composition of the Board, including the size of the Board, diversity, age, skills and experience in the context of the needs of the Board. In addition, the Board also has the duty of identifying individuals qualified to become members of the Board. Candidates may come to the attention of the Board through current members of the Board, professional search firms, stockholders or other persons. These candidates will be evaluated by the Board and may be considered at any point during the year. As described above, the Board will consider properly submitted stockholder nominations for candidates for the Board. Following verification of the stockholder status of persons proposing candidates, recommendations will be aggregated and considered by the Board. If any materials are provided by a stockholder in connection with the nomination of a director candidate, such materials will be forwarded to the Board. We have previously, and we may in the future, review materials provided by professional search firms or other parties to identify, evaluate and recruit potential director nominees who are not proposed by a stockholder. In addition, a professional search firm may be used to make initial contact with potential candidates to assess, among other things, their availability, fit and major strengths.

Communications with the Board

Stockholders may communicate with the Company by writing to: HighCom Global Security, Inc., Attention: Daniel Colson, 2901 E 4th Avenue, Unit J, Columbus, OH 43219. Communications received from stockholders are forwarded directly to the Board, or to any individual member or members, as appropriate, depending on the facts and circumstances outlined in the communication. The Board has authorized the Chief Executive Officer of the Company to exclude communications that are patently unrelated to the duties and responsibilities of the Board, such as spam, junk mail and mass mailings. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded, with the provision that any communication that is filtered out by the Secretary pursuant to the policy will be made available to any non-management director upon request.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “Commission”). Officers, directors and greater than ten percent stockholders are required by the Commission’s regulations to furnish us with copies of all Section 16(a) forms they file. During fiscal 2018, the current officers and directors and principal stockholder had one or more late filings of Form 3’s, Form 4’s and/or Form 5’s.

Item 11. Executive Compensation.

Summary Compensation Table

The following table sets forth the overall compensation earned over the fiscal year ended December 31, 2018 and 2017 by (1) each person who served as the principal executive officer of the Company during fiscal year 2018; and (2) the Company’s most highly compensated (up to a maximum of two) executive officers as of December 31, 2018 with compensation during fiscal year 201 of $100,000 or more.

Name and Principal Position	Fiscal Year		Salary ($)			Bonus ($)		Stock Awards		Warrant/ Option Awards ($) (1)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($) (2) (3)		Total
Michael Bundy		2018	$	125,000	(4)	$	89,618		-0-		-0-		-0-		-0-		-0-	$	214,618
Divisional CEO/P		2017	$	125,000	(4)	$	116,888		-0-		-0-		-0-		-0-		-0-	$	241,888
Chad Wright		2018	$	89,000	(4)	$	44,809		-0-		-0-		-0-		-0-		12,000	$	145,809
Divisional VP		2017	$	89,000	(4)	$	55,319		-0-		-0-		-0-		-0-		-0-	$	144,319
Craig Campbell		2017	$	-0-	(5)	$			-0-		-0-		-0-		-0-		-0-	$
Former CEO		2018	$	-0-	(5)	$			-0-		-0-		-0-		-0-		-0-	$
Francis Michaud		2017	$	-0-	(5)	$			-0-		-0-		-0-		-0-		-0-	$
Former CEO/CFO		2018	$	160,000		$			-0-	$	11,000		-0-		-0-		-0-	$	171,000
Daniel Colson		2017	$	-0-		$			-0-		-0-		-0-		-0-		-0-	$	-0-
Interim-CEO		2018	$	-0-		$			-0-	$	90,000		-0-		-0-		-0-	$	90,000

(1)	The options and restricted stock awards presented in this table reflect the full fair value as of the date of grant. However, the accompanying financial statements reflect the dollar amount expensed by the company during applicable fiscal year for financial statement reporting purposes pursuant to guidance issued by the FASB. Such guidance requires the company to determine the overall value of the stock awards and options as of the date of grant. The stock awards are valued based on the fair market value of such shares on the date of grant and are charged to compensation expense over the related vesting period. The options are valued at the date of grant based upon the Black-Scholes method of valuation, which is expensed over the service period over which the options because vested. As a general rule, for time-in-service-based options, the company will immediately expense any option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the option. For a description of the guidance issued by the FASB and the assumptions used in determining the value of the options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-K.

(2)	Includes all other compensation not reported in the preceding columns, including (i) perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is less than $10,000; (ii) any “gross-ups” or other amounts reimbursed during the fiscal year for the payment of taxes; (iii) discounts from market price with respect to securities purchased from the company except to the extent available generally to all security holders or to all salaried employees; (iv) any amounts paid or accrued its connection with any termination (including without limitation through retirement, resignation, severance or constructive termination, including change of responsibilities) or change its control; (v) contributions to vested and unvested defined contribution plans; (vi) any insurance premiums paid by, or on behalf of, the company relating to life insurance for the benefit of the named executive officer; and (vii) any dividends or other earnings paid on stock or option awards that are not factored into the grant date fair value required to be reported in a preceding column.

(3)	Includes compensation for service as a director described under Director Compensation, below.

(4)	Salary includes commissions and accrued cash compensation. The salary paid to all key employees in 2018 and 2017 included commissions based on total quarterly sales.

(5)	Any and all compensation paid to Craig Campbell and Francis Michaud (prior to April, 2018) were paid through a services contract.

For a description of the material terms of each named executive officers’ employment agreement, including, without limitation, the terms of any common share purchase option grants, any agreement, plan or other arrangement that provides for any payment to a named executive officer in connection with his or her resignation, retirement or other termination, or a change in control of the company see “Employment Agreements”.

None of the outstanding common share purchase options or other equity-based awards granted to or held by any named executive officer in 2018 were re-priced or otherwise materially modified, including extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined, nor was there any waiver or modification of any specified performance target, goal or condition to payout.

Executive Officer Outstanding Equity Awards At Fiscal Year-End

The following table provides certain information concerning any common share purchase options, stock awards or equity incentive plan awards held by each of our named executive officers that were outstanding as of December 31, 2018.

	Option Awards									Stock Awards

Name	Number of Securities Underlying Unexercised Option (#) Exercisable		Number of Securities Underlying Unexercised Option (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Option (#)		Option Exercise Price($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Michael		10,000,000		0		0	$	0.01	11/11/2023		0		0		0		0
Bundy		10,000,000		0		0	$	.009	08/30/2025		0		0		0		0

Chad		5,000,000		0		0	$	0.01	11/11/2023		0		0		0		0
Wright		5,000,000		0		0	$	.009	08/30/2025				0		0		0

Francis		11,000,000		0		0	$	.011	01/16/2028		7,500,000		0		0		0
Michaud

Daniel		10,000,000		0		0	$	.011	12/31/2028		0		0		0		0
Colson

As of December 31, 2017, Craig Campbell and Francis Michaud did not own any options. In December 2017, Michael Gordon, immediately prior to his retirement from the Company, was issued 10,178,570 shares of common stock in exchange for the cashless exercise of 18,750,000 options. Options totaling 8,571,430 valued at $97,500 were canceled as part of this transaction. During 2018 Francis Michaud was granted 11,000,000 options at an exercise price of $.011

Employment Agreements

While their contracts expired in 2017, Michael Bundy and Chad Aaron Wright are employees at will, receiving compensation pursuant to their prior employment agreements.

Francis Michaud’s employment contract expired on January 31, 2019 when he resigned from the Company. He continued as the Company’s Vice-Chairman of the Board at an annual remuneration of $8,000.

Compensation for James Black, the Company’s VP, Finance and Shareholder Relations and interim-CFO, is included in the Company’s agreement with the Consultant referred to in Note 14 in the Notes to Financial Statements.

Daniel Colson serving as Chairman of the Board of Directors of the Company and interim-CEO following the resignation of Francis Michaud effective December 31, 2018, will receive annual compensation of $50,000 and 10,000,000 10-year options exercisable at $.011 per share.

Compensation of former CEO, Craig Campbell and CFO/CEO Francis Michaud

See Note 10 to the Notes to Financial Statements regarding a description of our agreement with Resilience Capital, a company in which Craig Campbell is a principal.

Review of Risks Arising from Compensation Policies and Practices

DIRECTOR COMPENSATION

Consulting Agreement with Paul Sparkes

On September 1, 2015, the Company entered into a consulting agreement with Paul Sparkes who agreed to serve as the Company’s non-executive Chairman of the Board of the Company. Mr. Sparkes received compensation at a pre-determined hourly rate. Such compensation was paid in common stock, warrants, options or other securities as the parties may agree in writing. The term of the consulting agreement is for a term of one year and shall automatically renew on an annual basis unless either party provides written notice of intent to terminate the agreement no less than 30 days prior to the anniversary date of the execution of the agreement. Mr. Sparkes received options to purchase 1,500,000 shares of the Company’s Common Stock, all of which are immediately vested and are exercisable at $.009 per share over a term of up to three years. Mr. Sparke’s resigned at December 31, 2018.

Compensation

In fiscal 2018 cash compensation was paid out to the directors. In 2017, no cash compensation was paid out to directors of the Company. Options of the Company were granted to various board members in connection with their services to the Company. As of December 31, 2018, the Company has outstanding options to purchase 64,750,000 shares at prices ranging trout $009 per share to $.01 per share. Michael Bundy owns options to purchase 20,000,000 shares; Chad Wright owns options to purchase 10,000,000 shares; and Daniel Colson has an option to purchase 10,000,000 shares. All other options outstanding were granted to persons who are not existing officers and directors of the Company.

During 2017 our independent directors: Paul Sparkes, Bill Buckley, Andrew Blott and Curt Cronin were each granted an annual retainer and per-meeting fee for serving as Board members. The amounts are as follows: 1. $20,000 annually for serving on the Board; 2. $5,000 additional for serving as the “head” or Chair of the Audit Committee; 3. The Chairman of the Board to receive $30,000 as total compensation annually for said services; 4. For telephonic meetings, an additional $500; and 5. For in-person meeting another $2,000. As of December 31, 2017, there was $62,500 in accrued director compensation that can be paid in cash or converted in the Company’s common stock. All 2018 Director Compensation was paid in cash or accrued at December 31, 2018

Summary of Director Compensation for 2018

The following table shows the overall compensation earned for the 2017 fiscal year with respect to each non-employee and non-executive director as of December 31, 2018:

Name and Principal Position	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($) (1)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All other Compensation ($)		Total ($)
Paul Sparkes Director	$	17,000		0	$	0		0		0		0	$	17,000
Andrew Blott Director	$	17,000		0	$	0		0		0		0	$	17,000
Curt Cronin Director	$	17,000		0	$	0		0		0		0	$	17,000
Timothy Foley Director		-0-		0	$	0		0		0		0	$	0
James Black Director		-0-		0	$	0		0		0		0	$	0

(1)

No options and restricted stock awards were presented in this table. However, the accompanying financial statements reflect the dollar amount expensed by the company during applicable fiscal years for financial statement reporting purposes pursuant to guidance issued by the FASB. Such guidance requires the company to determine the overall value of the stock awards and options as of the date of grant. The stock awards are valued based on the fair market value of such shares on the date of grant and are charged to compensation expense over the related vesting period. The options are valued at the date of grant based upon the Black-Scholes method of valuation, which is expensed over the service period over which the options become vested. As a general rule, for time-in-service-based options, the company will immediately expense any option or portion thereof which is vested upon grant, while expensing the balance on a pro rata basis over the remaining vesting term of the option. For a description of the guidance issued by the FASB and the assumptions used in determining the value of the options under the Black-Scholes model of valuation, see the notes to the consolidated financial statements included with this Form 10-K.

2005 Employee and Consulting Compensation Plan

On November 30, 2005, we established an Employee Benefit and Consulting Compensation Plan (the “2005 Plan”) covering 5,000,000 shares. On January 28, 2011, the board approved a resolution to increase the 2005 Plan from 5,000,000 shares to 10,000,000 shares and again on March 12, 2015, the board approved a resolution to increase the 2005 Plan from 10,000,000 shares to 50,000,000 shares.

Administration

Our Board of Directors, Compensation Committee or both, in the sole discretion of our Board, administer the 2005 Plan. The Board, subject to the provisions of the 2005 Plan, has the authority to determine and designate officers, employees, directors and consultants to whom awards shall be made and the terms, conditions and restrictions applicable to each award (including, but not limited to, the option price, any restriction or limitation, any vesting schedule or acceleration thereof, and any forfeiture restrictions). The Board may, in its sole discretion, accelerate the vesting of awards. The Board of Directors must approve all grants of Options and Stock Awards issued to our officers or directors.

Types of Awards

The 2005 Plan is designed to enable us to offer certain officers, employees, directors and consultants of us and our subsidiaries equity interests in as and other incentive awards in order to attract, retails and reward such individuals and to strengthen the mutuality of interests between such individuals and our stockholders. In furtherance of this purpose, the 2005 Plan contains provisions for granting non-statutory stock options (and originally incentive stock options which have now become non-statutory stock options) and Common Stock Awards.

Stock Options

A “stock option” is a contractual right to purchase a number of shares of Common Stock at a price determined on the date the option is granted. The option price per share of Common Stock purchasable upon exercise of a stock option and the time or times at which such options shall be exercisable shall be determined by the Board at the time of grant. Such option price shall not be less than 100% of the fair market value of the Common Stock on the date of grant. The option price must be paid in cash, money order, check or Common Stock of the Company. The Options may also contain at the time of grant, at the discretion of the Board, certain other cashless exercise provisions.

Options shall be exercisable at the times and subject to the conditions determined by the Board at the date of grant, but no option may be exercisable more than ten years after the date it is granted. If the Optionee ceases to be an employee of our company for any reason other than death, any option granted as an incentive stock option exercisable on the date of the termination of employment may be exercised for a period of thirty days or until the expiration of the stated term of the option, whichever period is shorter. In the event of the Optionee’s death, any option originally granted as an incentive stock option exercisable at the date of death may be exercised by the legal heirs of the Optionee from the date of death sunlit the expiration of the stated term of the option or six months from the date of death, whichever event first occurs. In the event of disability of the Optionee, any Options granted as an incentive stock option shall expire on the stated date that the Option would otherwise have expired or 12 months from the date of disability, whichever event first occurs. The termination and other provisions of a non-statutory stock option shall be fixed by the Board of Directors at the date of grant of each respective option.

Common Stock Award

“Common Stock Award” are shares of Common Stock that will be issued to a recipient at the end of a restriction period, if any, specified by the Board if he or she continues to be an employee, director or consultant of us. If the recipient remains an employee, director or consultant at the end of the restriction period, the applicable restrictions will lapse and we will issue a stock certificate representing such shares of Common Stock to the participant. If the recipient ceases to be an employee, director or consultant of us for any reason (including death, disability or retirement) before the end of the restriction period unless otherwise determined by the Board, the restricted stock award will be terminated.

Eligibility

Our officers, employees, directors and consultants of HighCom Global and our subsidiaries are eligible to be granted stock options, and Common Stock Awards. Eligibility shall be determined by the Board and all Options and Stock Awards granted to officers and directors must be approved by the Board.

Termination or Amendment of the 2005 Plan

The Board may at any time amend, discontinue, or terminate all or any part of the 2005 Plan, provided, however, that unless otherwise required by law, the rights of a participant may not be impaired without his or her consent, and provided that we will seek the approval of our stockholders for any amendment if such approval is necessary to comply with any applicable federal or state securities laws or rules or regulations.

On December 30, 2017, options to purchase 18,750,000 common shares were exercised resulting in 10,178,570 shares being issued as a result of the cashless exercise of options. The 2005 Plan expired on November 30, 2015 and no awards may be granted after that date. No further individuals will receive future awards under the 2005 Plan. As of March 1, 2018, the Company has outstanding options to purchase 39,250,000 shares at prices ranging from $.009 per share to $.01 per share. Michael Bundy owns options to purchase 20,000,000 shares. Chad Wright owns options to purchase 10,000,000 shares. Paul Sparkes had an option to purchase 1,500,000 shares, which expired on August 30, 2018. All other options outstanding were granted to persons who are not existing officers and directors of the Company. Various board members were issued 24,000,000 options during 2018at a price of $.011 per share. As of December 31, 2018, the Company’s Common Stock had a closing sales price of $.01 per share.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth certain information regarding the beneficial ownership for common stock as of March 1, 2018 by our executive officers and directors, both individually and as a group. Unless otherwise indicated, all shares are directly beneficially owned and investing power is held by the persons named.

Name and Address of Beneficial Owners(1)	Amount and Nature of Beneficial Ownership ⁽¹⁾		Percentage Outstanding ⁽²⁾
Michael Bundy⁽³⁾		20,000,000		5.2	%
Francis Michaud⁽⁴⁾		7,308,624		1.9	%
Chad Wright⁽⁵⁾		10,000,000		2.6	%
Daniel Colson⁽⁵⁾		10,000,000		2.6	%
Curt Cronin⁽⁶⁾		2,911,382		*
James Black⁽⁸⁾		-0-		*
Timothy Foley		-0-		*
Includes all officers and directors as a group (seven persons)⁽⁷⁾		58,613,388		15.1	%

Alpha Capital Anstalt		32,229,356		7.85	%
2538093 Ontario Inc.⁽⁸⁾		152,726,554		39.45	%
The Butterfield Corporation		48,251,808		12.5	%

* Represents less than 1% of the outstanding shares of Common Stock.

(1)	Unless otherwise indicated, all shares are directly beneficially owned and investing power is held by the persons named. The address of each person is HighCom Global Security, Inc. at 2901 E 4th Avenue, Unit J, Columbus, OH 43219.

(2)	Based upon 386,014,460 shares of Common Stock outstanding as of March 1, 2019, and includes the amount of shares each person or group has the right to acquire under options, warrants, rights, conversion privileges, or similar obligations.

(3)	Includes options to purchase 20,000,000 shares of common stock.

(4)	Includes options to purchase 6,000,000 shares of common stock.

(5)	Includes options to purchase 10,000,000 shares of common stock.

(6)	Includes options to purchase 1,000,000 shares of common stock.

(7)	Includes options to purchase 51,000,000 shares of common stock.

(8)	2538093 Ontario Inc, owns 152,726,554 shares and warrants to purchase 41,801,793 shares. While James Black owns no securities of the Company, he has a direct family relationship with the beneficial owner of 2538093 Ontario Inc. and another Canadian entity that holds 2,000,000 shares of the Company.

We are unaware of any arrangement or pledge of its securities by persons now considered in control of the Company that might result in a further change of control.

Equity Compensation Plan Information

The following summary information is as of March 1, 2019 and relates to our 2005 Stock Option Plan pursuant to which we have granted options to purchase our common stock:

(a)

(b)

(c)

Plan Category

Number of shares of common stock to be issued upon exercise of outstanding options

Weighted average exercise price of outstanding options

Number of securities
remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)

Equity compensation Plans (1)

39,250,000

)

-0-

	(1)	Our Plan has not been approved by stockholders.
	(2)	Exercise prices of options range from $.009 per share to $.01 per share.

Item 13. Certain Relationships. Related Transactions and Director Independence

During the last two fiscal years ended December 31, 2018, Item 11 describes transactions in which our current officers and directors had a material interest

Surviving Arrangements from Historical Transactions

Pursuant to the previously disclosed April 4, 2013 Purchase and Exchange Agreement by and among Alpha Capital Amstalt and 2538093 Ontario Inc. and the Company, the parties agreed to the following:

	●	2538093 Ontario Inc. has the right to nominate and appoint to the Board at least 50% of the Board members and;

	●	2538093 Ontario Inc. has a right of first refusal to participate in future financings up to its pro rata share of Common Stock of the Company.

Board Members Who Are Deemed Independent

Our board of directors has determined that Curt Cronin is an independent director.

Item 14. Principal Accountant Fees and Services

(1) Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection wills statutory and regulatory filings or engagements for those fiscal years was:

2018		$	48,000
2017		$	48,000

(2) Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

2018		$	-
2017		$	-

(3) Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

2018		$	-
2017		$	-

(4) All Other Fees

None.

(5) The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was 0%.

Part IV

Item 15. Exhibits

Exhibit No.		Description

2.1		Agreement and Plan of Reorganization dated January 31, 2004, by and among the Registrant, BlastGard Technologies, Inc., (‘BTI”) and the shareholders of BTI. (Incorporated by reference to Exhibit 2.4 to the Company’s current report on Form 8-K dated January 31, 2004.)

3.1		The Company’s Articles of Incorporation, as amended and currently in effect. (Incorporated by reference to Exhibit 3.7 to the Company’s quarterly report on Form 10-QSB dated March 21, 2004).

3.1(A)		Amendment to Articles of Incorporation (Incorporated by reference to Form 8-K dated August 2, 2011).

3.2		The Company’s Bylaws, as amended and currently in effect. (Incorporated by reference to Exhibit 3.8 to the Company’s quarterly report on Form 10-QSB dated March 21, 2004).

10.1		Form of Purchase and Exchange Agreement dated March 21, 2013. (Incorporated by reference to Form 8-K dated April 4, 2013.)

10.2		Employment Agreement dated September 1, 2015 — with Francis Michaud dated April 5, 2018.(incorporated by reference to 8-K dated April 9, 2018)

10.3		Consulting Agreement with 2428555 Ontario dated January 1, 2019(incorporated by reference to Form 8-K dated January 18, 2019.)

14.1		Code of Ethics*

21.1		Subsidiaries of Registrant*

31(a)		Rule 13a-14(a) Certification Principal Executive Officer *

31(b)		Rule 13a-14(a) Certification Principal Financial Officer *

32(a)		Section 1350 Certification — Principal Executive Officer *

99.1		Employee Benefit and Consulting Services Compensation Plan (Incorporated by reference to Exhibit 99.lto the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005).

99.2		Amendment to Exhibit 99.1 (Incorporated by reference to the Company’s Form 10-K for the fiscal year ended December 31, 2012.

101.SCH		Document, XBRL Taxonomy Extension *

101.CAL		Calculation Linkbase, XBRL Taxonomy Extension Definition *

101.DEF		Linkbase, XBRL Taxonomy Extension Labels *

101.LAB		Linkbase, XBRL Taxonomy Extension *

101.PRE		Presentation Linkbase *

* Filed herewith.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HIGHCOM GLOBAL SECURITY, INC

Dated: March 26, 2019	By:	/s/ Daniel Colson
		Daniel Colson
		Principal Executive Officer

Dated: March 26, 2019	By:	/s/ James Black
		James Black
		Principal Financial and Accounting Officer and Director

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: March 26, 2019	By:	/s/ Francis Michaud
		Francis Michaud, Director

Dated: March 26, 2019	By:	/s/ James Black
		James Black
		Principal Financial and Accounting Officer

Dated: March 26, 2019	By:	/s/ Curt Cronin
		Curt Cronin, Director

Dated: March 26, 2019	By:	/s/ Tim Foley
		Tim Foley, Director

Dated: March 26, 2019	By:	/s/ Daniel Colson
		Daniel Colson
		Chairman of the Board and Principal Executive Officer

HighCom Global Security, Inc. 10-K