10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

___________________________

FORM 10-Q

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

FOR THE QUARTER ENDED: 31 MARCH 2016

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

Commission File Number: 000 – 53492

___________________________

EMAV Holdings, Inc.

(Name of small business issuer in its charter)

___________________________

Delaware	26-3167800
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1900 Main Street, #300
Irvine, California 92614	92614
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:  (949) 851-5996

___________________________

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

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

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	S

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 May 13, 2016, there were 50,274,070 shares of the registrant's common stock, $0.001 par value per share, issued and 49,399,070 shares outstanding.

EMAV Holdings, Inc.

Form 10-Q

For the Quarter Ended 31 March 2016

TABLE OF CONTENTS

		Page
Part I- Financial Information
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
Part II- Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Default Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
	Signatures	42

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

EMAV HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
	March 31,			December 31,
	2016			2015
ASSETS	(Unaudited)
Current Assets
Cash and cash equivalents	$	9,863		$	1,802
Deferred offering costs		75,000			75,000
Prepaid expenses		1,000			1,000
Total Current Assets		85,863			77,802
Property and equipment, net		2,686			3,318
Total Assets	$	88,549		$	81,120
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	27,732		$	42,731
Accrued liabilities		15,187			10,859
Payable to related party		22,500			22,500
Embedded conversion option liability		2,287,496			78,713
Notes payable, current portion, net of debt discount of $12,707 and $15,639 at March 31, 2016 and December 31, 2015, respectively		137,980			144,339
Convertible note payable, current portion, net of discount of $179,611 and $27,426 at March 31, 2016 and December 31, 2015, respectively		24,631			22,574
Total Current Liabilities		2,515,526			321,716
Total Liabilities		2,515,526			321,716
Commitments and contingencies (Note 8)
Stockholders' Equity (Deficit)
Common stock, $0.001 par value, 100,000,000 shares authorized; 48,841,071 shares and 47,780,465 shares issued and 47,966,071 shares and 46,905,465 shares outstanding at March 31, 2016 and December 31, 2015 and 2014, respectively		48,842			47,781
Treasury stock, 875,000 shares, $0.001 par value, issued  not outstanding		(875	)		(875	)
Additional paid in capital		5,112,832			5,011,145
Accumulated deficit		(7,587,776	)		(5,298,647	)
Total Stockholders' Equity (Deficit)		(2,426,977	)		(240,596	)
Total Liabilities and Stockholders' Equity	$	88,549		$	81,120

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

1

EMAV HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
	For the Three Months Ended March 31,
	2016			2015
	(Unaudited)			(Unaudited)
Revenues	$	-		$	-
Cost of goods sold		-			-
Gross Profit (Loss)		-			-
Operating Expenses
Depreciation		632			2,864
General and administrative		116,542			148,507
Total Operating Expenses		117,174			151,371
Operating Loss from Operations		(117,174	)		(151,371	)
Other Income (Expenses)
Interest expense		(50,183	)		(9,056	)
Change in the fair value of embedded conversion option liability		(2,121,772	)		-
Total Other Income (Expenses)		(2,171,955	)		(9,056	)
Loss from Continuing Operations before Income Taxes		(2,289,129	)		(160,427	)
Provision for income tax		-			-
Net loss	$	(2,289,129	)	$	(160,427	)
Basic and diluted net loss per share	$	(0.05	)	$	(0.00	)
Weighted average number of shares outstanding		47,097,634			46,590,721

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

2

EMAV HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
	For the Three Months Ended March 31,
	2016			2015
	(Unaudited)			(Unaudited)
Cash Flows from Operating Activities:
Net loss	$	(2,289,129	)	$	(160,427	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation		632			2,864
Amortization of prepaid consulting services for stock issuances		-			42,666
Amortization of OID discount on notes payable		2,932			7,023
Amortization of embedded conversion option liability discount		42,016			-
Change in the fair value of embedded conversion option liability		2,121,772			-
Changes in operating assets and liabilities:
Accounts payable		(15,000	)		7,646
Accrued liabilities		4,329			11,408
Net cash used in operating activities		(132,448	)		(88,820	)
Cash Flows from Financing Activities:
Cash proceeds from sale of stock		-			51,000
Cash proceeds from note payable		149,800			-
Cash payments against note payable		(9,291	)		(6,953	)
Net cash provided by financing activities		140,509			44,047
Net increase (decrease) in cash and cash equivalents		8,061			(44,773	)
Cash and cash equivalents, beginning of the period		1,802			63,914
Cash and cash equivalents, end of the period	$	9,863		$	19,141
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	909		$	626
Supplemental disclosures of non-cash investing and financing activities:
Issuance of common stock pursuant to debt conversion	$	17,758		$	-
Settlement of embedded conversion derivative	$	84,990		$	-

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

3

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

As used herein and except as otherwise noted, the term "Company", "it(s)", "our", "us", "we" and "EMAV" shall mean EMAV Holdings, Inc., a Delaware corporation, and its consolidated subsidiary Electric Motors and Vehicles Company.

EMAV Holdings, Inc. was originally incorporated on May 14, 1987 in Florida as Ventura Promotion Group, Inc. The Company became a public company in July 1998 and on November 12, 1998 changed its name to American Surface Technologies International, Inc.  In September 2001, the State of Florida administratively dissolved the Company for not maintaining proper filings with the state and not paying franchise tax fees. In 2006, the Company changed its name to Global Environmental, Inc. In December 2007, the Company re-domiciled to Delaware and on August 27, 2008, changed its name to Ravenwood Bourne, Ltd. Effective September 30, 2011 the Company changed its name to PopBig, Inc.

On December 26, 2013, the Company changed its name to EMAV Holdings, Inc. and entered into a merger agreement to acquire Electric Motors and Vehicles Company, a Delaware corporation ("EMAVC"). The merger completed on December 27, 2013 and was accounted for as a reverse merger and a recapitalization in which EMAVC was deemed to be the accounting acquirer. Consequently, the assets and liabilities and the operations are reflected as the historical financial statements prior to the merger will be those of EMAVC and are recorded at the historical cost basis of EMAVC, and the consolidated financial statements subsequent to completion of the merger include the assets and liabilities of EMAV and EMAVC, and the operations of the combined Company from the closing date of the merger. The Company elected to change its fiscal year end to be December 31.

Electric Motors And Vehicles Company was formed under the laws of Delaware on March 11, 2010. EMAVC's principal business is electric vehicle manufacturing and sales. It plans to design, assemble, and sell premium electric rugged sport adventure vehicles directly through a network of dealerships. EMAVC will deploy a unique approach to build and bring its vehicles to market. Rather than creating a new vehicle and building out a new distribution network, EMAVC will use the four-door Jeep Wrangler as the platform for its signature electric vehicle.

Going Concern

The accompanying (a) condensed consolidated balance sheet at December 31, 2015 has been derived from the audited statements, and (b) the condensed consolidated unaudited financial statements as of and for the periods ended March 31, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 (the "2015 Annual Report"), filed with the Securities and Exchange Commission (the "SEC") on April 4, 2016.  It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results of operations expected for the year ending December 31, 2016.

4

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The Company's unaudited consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established a stable ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company funded its operations in 2015 and 2016 through sale of its equity, debt financing and sale of its vehicle. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company incurred a net loss of $2,289,129 for the three months ended March 31, 2016, used net cash in operating activities of $132,448, has a working capital deficit of $2,429,663, and has an accumulated deficit of $7,587,776 as of March 31, 2016. These factors, among others raise a substantial doubt regarding the Company's ability to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following summary of significant accounting policies of the Company is presented to assist in the understanding of the Company's consolidated financial statements. The consolidated financial statements and notes are the representation of the Company's management who is responsible for their integrity and objectivity. The consolidated financial statements of the Company conform to accounting principles generally accepted in the United States of America (U.S. GAAP).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Electric Motors and Vehicles Company. All intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's estimates of valuation of equity instruments. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

5

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Fair value of Financial Instruments and Fair Value Measurements

ASC 820, "Fair Value Measurements and Disclosures", requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial instruments consist principally of cash, accounts payable, accrued liabilities, loan payable to a related party and promissory notes payable. Pursuant to ASC 820 and ASC 825, "Financial Instruments", the fair value of our cash equivalents is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Assets and liabilities measured at fair value on a recurring and non-recurring basis consist of the following at March 31, 2016:

				Fair Value Measurements  at March 31, 2016
	Carrying Value at March 31, 2016			(Level 1)			(Level 2)			(Level 3)
Embedded conversion option liability		$	2,287,496		$	-		$	2,287,496		$	-

6

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The following is a summary of activity of Level 2 assets and liabilities for the period ended March 31, 2016:

Embedded conversion option liability
Balance – January 1, 2016	$	78,713
Additions		87,011
Change in fair value		2,121,772
Balance – March 31, 2016	$	2,287,496

Changes in fair value of the embedded conversion option liability are included in Other Income (Expenses) in the accompanying Condensed Consolidated Statements of Operations.

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured. The Company closely follows the provisions of ASC 605 "Revenue Recognition", which includes the guidelines of Staff Accounting Bulletin No. 104 as described above.  The Company has not recognized any revenue for the three months ended March 31, 2016 and 2015, respectively.

Earnings (Loss) Per Common Share

The Company computes net earnings (loss) per share in accordance with ASC 260, "Earnings per Share". ASC 260 requires presentation of both basic and diluted net earnings per share ("EPS") on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At March 31, 2016 and December 31, 2015, there were 4,615,646 and 363,636 common shares available for conversion of convertible note into equity, which if exercised, may dilute future earnings per share. Outstanding warrants to purchase 2,500,000 shares of common stock were excluded from this calculation as their effect would be anti-dilutive due to the reported net losses in each period.

Equity Instruments Issued to Non-Employees for Acquiring Goods or Services

Issuances of the Company's common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a "performance commitment" which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. However, situations may arise in which counter performance may be required over a period of time but the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates.

7

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

Non-Cash Equity Transactions

Shares of equity instruments issued for non-cash consideration are recorded at the estimated fair market value of the consideration granted based on the estimated fair market value of the equity instrument, or at the estimated fair market value of the goods or services received whichever is more readily determinable.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, "Income Taxes". The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company follows the provisions of ASC 740-10, "Accounting for Uncertain Income Tax Positions." When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Recent Accounting Pronouncements

We qualify as an "emerging growth company" under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

8

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

Consolidation Reporting

In February 2015, the FASB issued ASU 2015-02, "Consolidation: Amendments to the Consolidation Analysis" ("ASU 2015-02"). This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of March 31, 2016, and the adoption is not expected to have an impact on the Company's consolidated financial statements.

Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  The Company has not adopted ASU 2015-02 as of March 31, 2016, and the adoption is not expected to have an impact on the Company's consolidated financial statements.

New Accounting Pronouncements

In May 2014, and later amended in August 2015, the Financial Accounting Standards Board ("FASB") issued new Accounting Standards Update ("ASU") regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance and, and is effective for public entities for annual and interim periods beginning after December 31, 2017. Early adoption is permitted for reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of this new guidance on the Company's financial statements.

In August 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-15, "Presentation of Financial Statements Going Concern", which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. The guidance is not expected to have a material impact on the Company's financial statements. 

9

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted.  The guidance is not expected to have a material impact on the Company's financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update simplify the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. These amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance is not expected to have a material impact on the Company's financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a public entity. Early adoption of the amendments in this standard is permitted for all entities and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the effect this guidance will have on its financial statements and related disclosures.

The Financial Accounting Standards Board issues Accounting Standard Updates to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consists of:

	March 31,			December 31,
	2016			2015
	(Unaudited)
Property and equipment	$	7,583		$	7,583
Less: accumulated depreciation		(4,897	)		(4,265	)
Property and equipment, net	$	2,686		$	3,318

Depreciation expense for the three months ended March 31, 2016 and 2015 was $632 and $2,864, respectively.

10

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

NOTE 4 – NOTES PAYABLE

Notes payable consist of:

	March 31, 2016		December 31, 2015
	(Unaudited)
Stockholder note payable, principal balance $40,000, unsecured, 5% stated annual interest, monthly interest only payments from September 18, 2014 to April 2015, 24 fixed monthly payments of $3,290 from May 18, 2015 to April 18, 2017. Original discount of $33,233 applied to normalize interest to 5% will be amortized over the loan term (P/Note 1)	$	73,233	$	73,233
Stockholder note payable, principal balance of $53,000, unsecured, interest bearing, monthly payment of $3,790 starting February 1, 2014, due April 1, 2016 (P/Note 2)		2,454		11,745
Note payable, principal balance of $75,000, unsecured, bearing 10% annual interest, due in full for unpaid principal and interest on or before June 30, 2016 (P/Note 3)		75,000		75,000
Total	$	150,687	$	159,978
Note payable - current portion	$	150,687	$	159,978
Note payable - long term portion	$	-	$	-
Debt discount - current portion	$	12,707	$	15,639
Debt discount - long term portion	$	-	$	-

On June 18, 2014, the Company executed a promissory note (the "P/Note 1") with a stockholder lender in the principal amount of $40,000. The terms of the P/Note 1 require the Company to make (a) monthly interest only payments (5% annual rate) starting on September 18, 2014; (b) twenty-four (24) payments of $3,290 each, including principal and interest, beginning May 18, 2015 through April 18, 2017, at which time the entire principal amount, plus any and all accrued interest shall be due and payable; and, (c) in the event of an investment or series of related investments of at least $5,000,000 before April 18, 2017, then the entire principal balance and all accrued and unpaid interest shall be due in full in addition to a $5,000 prepayment penalty. In connection with the issuance of P/Note 1, the Company has recorded a debt discount of $33,233 applied to normalize interest to 5% which will be amortized as interest expense over the life of the P/Note 1. The Company is in default in making its note payments as of March 31, 2016 and the note holder has not made a demand for the past due payments. The Company has recognized interest expense of $2,932 for amortization of debt discount related to P/Note 1 for both the three months ended March 31, 2016 and 2015, respectively. The unamortized portion of debt discount was $12,707 and $15,639 at March 31, 2016 and December 31, 2015, respectively. In addition, the Company has recorded an interest expense of $143 and $500 for the three months ended March 31, 2016 and 2015, and accrued interest on P/Note 1 was $2,775 and $2,632 at March 31, 2016 and December 31, 2015, respectively.

11

EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

On May 23, 2013, the Company executed a promissory note (the "P/Note 2") with a stockholder in the principal amount of $53,000. The terms of the P/Note 2 required the Company to make (a) a principal payment of $3,000 on or before June 6, 2013, and (b) fifteen (15) monthly payments of $3,790 each, including principal and interest, beginning February 2014 through April 2015, at which time the entire principal amount, plus any and all accrued interest was due and payable.

On March 30, 2015, the Company and the shareholder mutually agreed to extend the due date of payment of the P/Note 2 to April 1, 2016. During the three months ended March 31, 2016, the Company made note payments of principal of $9,291 and interest payments of $909. The Company is delinquent in making a payment of $2,454 as of March 31, 2016, and the note holder has not made a demand for the past due payment. The Company has recorded interest expense of $920 and $909 on P/Note 2 for the three months ended March 31, 2016 and 2015, and accrued interest on P/Note 2 was $6,204 and $6,194 at March 31, 2016 and December 31, 2015, respectively.

In conjunction with the execution of P/Note 2, the Company agreed to issue 100,000 shares of restricted common stock at its fair value of $30,000 to the stockholder on May 23, 2014, as an additional consideration and not as additional interest. In connection with the issuance of the common stock pursuant to P/Note 2, the Company recorded a debt discount in the amount of $30,000 which was being amortized to interest expense over the life of the Note. The Company recorded interest expense of $0 and $4,091 as the amortization of debt discount related to P/Note 2 for the three months ended March 31, 2016 and 2015, respectively. The net book value of the unamortized portion of the debt discount was $0 at both March 31, 2016 and December 31, 2015, respectively.

On December 22, 2015, the Company executed a promissory note (P/Note 3) to pay a third party a commitment fee of $50,000 and legal fees of $25,000 for a total consideration of $75,000. The third party agreed to commit to purchase up to $5 million worth of common stock over a period of time terminating on the earlier of (i) 24 months from the date on which the agreement was executed and delivered by the Company and the third party, or (ii the date on which the third party has purchased the aggregate maximum purchase of $5 million. The promissory note bears an interest at the rate of 10% per annum. Payment of all amounts due under P/Note 3, principal and interest, is due on or before June 30, 2016. The Company has recorded the principal amount of the promissory note of $75,000 as a deferred asset upon execution of the promissory note and which will be offset as fee for capital raise against the additional paid in capital when capital is raised by the third party. The Company has recorded an interest expense of $1,870 for the three months ended March 31, 2016, and accrued interest on P/Note 3 was $2,055 and $185 at March 31, 2016 and December 31, 2015, respectively.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The Company has recorded total interest expense on P/Note 1 and P/Note 2 relating to amortization of debt discount of $2,932 and $9,056 for the three months ended March 31, 2016 and 2015, respectively. The Company has recorded interest expense of $2,932 and $1,409 for the three months ended March 31, 2016 and 2015, made interest payments of $909 and $626 for the three months ended March 31, 2016 and 2015, and recorded accrued interest of $11,034 and $9,012 on P/Note 1, P/Note 2 and P/Note 3 as of March 31, 2016 and December 31, 2015, respectively.

NOTE 5 – CONVERTIBLE NOTES PAYABLE

Convertible notes payable consist of:

	March 31,			December 31,
	2016			2015
	(Unaudited)
Convertible note payable to a third party, principal balance of $50,000, secured, bearing interest of 12%, due on May 17, 2016 (CPN 1 Note)	$	32,242		$	50,000
Convertible note payable to a third party, principal balance of $86,000, secured, bearing annual interest at 6%, due on January 28, 2017 (CPN 2 Note)		86,000			-
Convertible note payable to a third party, principal balance of $86,000, secured, bearing annual interest at 6%, due on January 28, 2017 (CPN 3 Note)		86,000			-
		204,242			50,000
Less: debt discounts		(179,611	)		(27,426	)
Convertible notes payable, net	$	24,631		$	22,574
Less: current portion	$	(24,631	)	$	(22,574	)
Convertible notes payable, non-current	$	-		$	-

Convertible Promissory Note (the "CPN 1 Note")

On August 17, 2015, the Company received $45,000 from a third party investor against a $50,000 Convertible Promissory Note (the "CPN 1" Note) executed on August 17, 2015. The CPN 1 Note bears an interest rate of 10% per annum. The maturity date of the CPN 1 Note is May 17, 2016 and is the date upon which the principal sum of this promissory note, as well as any unpaid interest and other fees, shall be due and payable. The lender has the right at any time after the effective date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the conversion price. The conversion price is the lessor of 55% of the lowest trade price in the 25 trading days previous to the conversion date.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

In connection with the issuance of the CPN 1 Note, the Company recorded an original issuance debt discount ("OID") in the amount of $5,000 which will be amortized to interest expense over the term of the draw of nine months. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $50,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $3,307 for a total initial embedded conversion option liability of $53,307. On February 17, 2016, the Company issued 108,403 shares of its common stock to the third party investor pursuant to a conversion notice under the terms of CPN 1 Note. Pursuant to the conversion notice, the investor converted $12,521 of the principal and interest of CPN 1 Note into 108,403 shares of our common stock valued at $0.1155 per share. On March 14, 2016, the Company issued 952,203 shares of its common stock to the third party investor pursuant to a conversion notice under the terms of CPN 1 Note. Pursuant to the conversion notice, the investor converted $5,237 of the principal of CPN 1 Note into 952,203 shares of our common stock valued at $0.0055 per share. As a result of the debt conversions, the Company recorded an expense of $320,810 due to change in fair value of the embedded conversion option liability for the three months ended March 31, 2016.

For the three months ended March 31, 2016, the Company has recorded interest expense of $1,100 on the CPN 1 Note, interest expense of $1,630 related to the amortization of the OID, $16,852 related to the amortization of the embedded conversion option liability discount, and $320,810 expense due the change in fair value of embedded conversion option liability due to debt conversions. The CPN 1 Note balance was $32,242 and $50,000 at March 31, 2016 and December 31, 2015, respectively, unamortized debt discount was $741 and $2,426, unamortized embedded conversion option liability discount was $8,148 and $25,000, and accrued interest of $2,924 and $1,849 at March 31, 2016 and December 31, 2015, respectively.

Convertible Promissory Note (the "CPN 2 Note")

On February 04, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with a third party (the "Investor"). Pursuant to the Purchase Agreement, the Investor purchased from the Company a Convertible Promissory Note (the "CPN 2 Note", and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and the Company received net proceeds of $74,900 on February 4, 2016.

The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the CPN 2 Note is due and payable on the maturity date, which is January 28, 2017. Any amount of principal or interest that is due under the CPN 2 Note, which is not paid by the maturity date, will bear interest at the rate of 24% per annum until it is paid. Further, the Company is obligated to reduce the Principal Amount by 50% on or before July 28, 2016. Should the Company fail to do so, then outstanding principal amount will be increased by 200%.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The Note is convertible into shares of the Company's common stock at any time at the discretion of the Investor at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. The Company agreed to reserve that number of shares of common stock equal to 70% of our authorized shares of common stock not otherwise issued.

The CPN 2 Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the CPN 2 Note, the promissory note shall become immediately due and payable and subject to penalties provided for in the CPN 2 Note.

In connection with the issuance of the CPN 2 Note, the Company recorded an original issuance debt discount ("OID") in the amount of $11,100 which will be amortized to interest expense over the term of the draw of 357 days. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $10,995 for a total initial embedded conversion option liability of $96,995. For the three months ended March 31, 2016, the Company has recorded interest expense of $792 on the CPN 2 Note, interest expense related to the amortization of the OID discount of $1,741, interest expense related to the amortization of the embedded conversion option liability discount of $13,490, and change in fair value of embedded conversion option liability of $898,952. At March 31, 2016, the principal balance of CPN 2 Note was $86,000, embedded conversion option liability of CPN 2 Note was $887,957, unamortized OID discount was $9,359, unamortized embedded conversion option liability discount was $72,510, and accrued interest was $792.

Convertible Promissory Note (the "CPN 3 Note")

On February 29, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with the same third party (the "Investor") who also executed CPN 2 Note. Pursuant to the Purchase Agreement, the Investor purchased from the Company a Convertible Promissory Note (the "CPN 3 Note"), and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and the Company received net proceeds of $74,900 on February 29, 2016.

The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the CPN 3 Note is due and payable on the maturity date, which is March 1, 2017. Any amount of principal or interest that is due under the CPN 3 Note, which is not paid by the maturity date, will bear interest at the rate of 24% per annum until it is paid. Further, the Company is obligated to reduce the Principal Amount by 50% on or before July 28, 2016. Should the Company fail to do so, then outstanding principal amount will be increased by 200%.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The Note is convertible into shares of the Company's common stock at any time at the discretion of the Investor at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. The Company agreed to reserve that number of shares of common stock equal to 70% of our authorized shares of common stock not otherwise issued.

The CPN 3 Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the CPN 2 Note, the promissory note shall become immediately due and payable and subject to penalties provided for in the CPN 3 Note.

In connection with the issuance of the CPN 3 Note, the Company recorded an original issuance debt discount ("OID") in the amount of $11,100 which will be amortized to interest expense over the term of the draw of one year. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $11,734 for a total initial embedded conversion option liability of $97,734. For the three months ended March 31, 2016, the Company has recorded interest expense of $438 on the CPN 3 Note, interest expense related to the amortization of the OID of $943, interest expense related to the amortization of the embedded conversion option liability discount of $7,304, and change in the fair value of embedded conversion option liability of $902,010. At March 31, 2016, the principal balance of CPN 3 Note was $86,000, embedded conversion option liability on CPN 3 Note was $890,275, unamortized original issuance debt discount was $10,157, unamortized embedded conversion option liability discount was $78,690, and accrued interest was $438.

The Company has recorded a total interest expense of $2,305 and $0, on the principal balances of CPN 1 Note, CPN 2 Note and CPN 3 Note, for the three months ended March 31, 2016 and 2015, respectively. In addition, the Company has recorded interest expense for the three months ended March 31, 2016 and 2015, relating to (i) amortization of OID discount of $4,369 and $0, and (ii) amortization of the embedded conversion option liability discount of $37,646 and $0. The Company has recorded accrued interest of $4,179 and $1,849 as of March 31, 2016 and December 31, 2015, respectively.

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

Under the provisions of ASC 815-40, convertible instruments issued by the Company qualify for derivative treatment due to the variable conversion formula (Note 5). The embedded conversion features of the convertible note is bifurcated and recorded as a liability which is revalued at fair value each reporting date. If the fair value of the embedded conversion feature exceeds the face value of the related debt, net of other discounts, the excess is recorded as a change in fair value on the issuance date. Embedded conversion features are valued at their fair value, rather than by the intrinsic value method.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The Company calculated the estimated fair values of the liabilities for embedded conversion feature at March 31, 2016 with the Black-Scholes option pricing model using the closing price of the Company's common stock at each respective date and the ranges for volatility, expected term, and risk free interest indicated in the table below. As a result, the Company recorded a change in the fair value of the liabilities for embedded conversion option derivative instruments for the three months ended March 31, 2016 of $348,201 which was included in Other Income (Expenses) (See Note 2 Fair Value Measurements) in the accompanying Condensed Consolidated Statements of Operations.

The fair market value of the Company's common stock on February 4, 2016, February 29, 2016 and March 31, 2016 was $0.30, $0.21 and $0.04 per share, respectively.

Embedded Conversion Options

	Black-Scholes Model Assumptions
	During The Three Months Ended March 31, 2016
Annualized volatility	82.58% - 328.16%
Expected term	0.13 – 1.00 year
Risk free interest rate	0.32% - 0.52%

A significant factor in which impacted the fair market value of the derivative liability was the significant difference between the fair market value of the Company's common stock of $0.04 per share and the conversion price of $0.0075 per share at March 31, 2016. The conversion price is based upon the lowest trade within the previous 20 - 25 days from the fair value date. Thus, the valuation is highly dependent upon the price of these trades and the fair market value of the Company's common stock at each measurement date.

NOTE 7 – RELATED PARTY TRANSACTIONS

In April 2010, the Company entered into a verbal agreement with its executive director for providing business consulting and marketing services to the Company. No fixed compensation was agreed at the time of the verbal agreement. On November 14, 2014, the executive director resigned from his position and entered into a separation agreement which provided for, among other covenants and conditions, a mutual release of all claims between the Company and its executive director. The executive director was previously allotted 13,000,000 shares of the Company's common stock. Pursuant to the separation agreement, the executive agreed to retain 1,000,000 shares of common stock, and the Company had the sole discretion to determine the disposition of the remaining 12,000,000 shares of common stock. The Company has allocated these 12,000,000 shares of common stock as follows: (i) 6,125,000 shares of common stock have been reallocated to other persons and the Company has recorded an expense of $3,062,500 upon their issuance, (ii) 5,000,000 shares of common stock were cancelled and returned to the status of authorized and unissued shares, and (iii) the remaining 875,000 shares of common stock to remain issued and held in treasury as of March 31, 2016 (See Note 9). The Company made no cash payments to the executive director for consulting fees for the three months ended March 31, 2016 and 2015, respectively.

The Company has engaged an entity owned by the Chief Executive Officer/Director ("Officer") of the Company to provide business advisory, consulting, and legal services. The Company has recorded and paid legal and professional fees of$38,000 and $34,500 to this entity for the three months ended March 31, 2016 and 2015, respectively. Payments are made to this entity as the funds are available. The Company is indebted to this entity $0 as of March 31, 2016 and December 31, 2015, respectively. In addition, the Company has made payments of $1,800 and $500 to the Officer's family members for performing services for the Company for the three months ended March 31, 2016, as compared to $0 for the same comparable period in 2015.

The Officer has occasionally provided short term advances to the Company for its working capital needs. The short term advances are non-interest bearing, unsecured and due on demand. The Company is indebted to the Officer $22,500 due and payable as of March 31, 2016 and December 31, 2015, respectively.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Settlement of Litigation

The Company entered into an agreement for public relations services (the "Agreement") with an unrelated third party ("DLC") in September 2010. The Company disputed the quality of the services rendered and failed to tender final payment under the Agreement. DLC initiated legal action against the Company in January 2012 for collection under the Agreement. The Company did not have the resources to contest the action, so a default judgment was entered against the Company in favor of DLC in July 2012 in the amount of $14,425. Thereafter, DLC sought to collect on the judgment, and the total amount claimed by DLC grew to over $25,000 as DLC was entitled to collect attorney's fees under the Agreement.

In October 2013, the entire Agreement with DLC was negotiated and settled, requiring the Company to pay DLC $3,000 in November 2013 and $1,000 per month for the next 12-month period. The Company agreed not to contest DLC's ownership of 80,000 shares of the Company's stock. As of March 31, 2016 and December 31, 2015, the remaining liability on the settlement of $7,000 is included in accounts payable in accompanying consolidated financial statements. The Company plans on paying DLC for the months of May 2014 through November 2014, which DLC has yet to demand.

Legal Costs and Contingencies

In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.

If a loss is considered probable and the amount can be reasonable estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss if recovery is also deemed probable.

NOTE 9 – STOCKHOLDERS' EQUITY

The Company's capitalization at March 31, 2016 was 300,000,000 authorized common shares with a par value of $0.001, and 10,000,000 authorized preferred shares with a par value of $0.001.

Common stock

On November 14, 2014, pursuant to a separation agreement with an executive, the Company received 875,000 shares of returned common stock, which remain issued and not outstanding and held as treasury shares as of March 31, 2016 and December 31, 2015 (See Note 7).

Warrants

On April 14, 2010, the Company granted three individuals, warrants to purchase 2,500,000 shares of common stock at an exercise price of $0.25 per share as compensation in connection with the individuals providing introductions for raising capital for the Company. The warrants have a six year term and expire in April 2016. The fair value of 2,500,000 warrants at the original issue date was estimated to be $1,077,927 using a Black-Scholes option pricing model with an expected life of 6 years, a risk free interest rate of 2.96%, a dividend yield of 0%, and an expected volatility of 100%. The expected volatility was estimated to be 100% since the Company's stock is not traded and no historical volatility data is available. As these services were provided as part of the Company's equity funding, the value of the warrants were recorded within equity as part of the accounting for the related equity transactions. There have been no other grants of warrant instruments through March 31, 2016.

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EMAV Holdings, Inc. and Subsidiary

Notes to Condensed Consolidated Financial Statements

March 31, 2016 and 2015

(Unaudited)

The Company has not established a stock option plan nor has issued any stock options through March 31, 2016.

As a result of all common stock issuances and cancellations, the total common shares issued at March 31, 2016 were 48,841,071 of which 47,966,071 shares were outstanding and the remaining 875,000 shares were held in treasury.

Preferred Stock

At March 31, 2016, the Company had no shares of preferred stock issued or outstanding.

NOTE 10 - CONCENTRATION OF CREDIT RISK

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses related to this in any such accounts. The Company's bank balances did not exceed FDIC insured amounts as of March 31, 2016 and December 31, 2015, respectively.

NOTE 11 – SUBSEQUENT EVENTS

Management has evaluated subsequent events and transactions that occurred through the date and time our financial statements were available to be issued, noting no items that would impact the accounting for events or transactions in the current period or require additional disclosure.

On April 14, 2010, the Company granted three individuals, warrants to purchase 2,500,000 shares of common stock at an exercise price of $0.25 per share as compensation in connection with the individuals providing introductions for raising capital for the Company. The warrants had a six year term and expired on April 14, 2016.

On April 29, 2016, the Company issued 1,432,999 shares of its common stock to a third party investor pursuant to a conversion notice under the terms of CPN 1 Note. The investor converted $19,704 of the principal and interest of CPN 1 Note into 1,432,999 shares of our common stock valued at $0.01375 per share.

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

All references to "Holdings", "we", "our," "us" and the "Company" in this Item 2 refer to EMAV Holdings, Inc. and our wholly owned subsidiary, Electric Motors and Vehicles Company ("EMAV").

The discussion in this section contains forward-looking statements. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "should," "would" or "will" or the negative of these terms or other comparable terminology, but their absence does not mean that a statement is not forward-looking. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, which could cause our actual results to differ from those projected in any forward-looking statements we make. Several risks and uncertainties we face are discussed in more detail under "Risk Factors" in the 2015 Annual Report filed with the Securities and Exchange Commission on April 4, 2016. You should, however, understand that it is not possible to predict or identify all risks and uncertainties and you should not consider the risks and uncertainties identified by us to be a complete set of all potential risks or uncertainties that could materially affect us. You should not place undue reliance on the forward-looking statements we make herein because some or all of them may turn out to be wrong. We undertake no obligation to update any of the forward-looking statements contained herein to reflect future events and developments, except as required by law. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing in the 2015 Annual Report filed with the Securities and Exchange Commission on April 4, 2016 and elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events.

Overview

Company Overview

Electric Motors and Vehicles Company ("EMAV") was started in March 2010 with the intent of bringing to market rugged electric vehicles. The business was initially focused on developing a relationship with the Jeep brand as that was the desired model to use for EMAV's electric vehicles. EMAV designed a trailer/camper in conjunction with the MOPAR division of Jeep. The camper was approved as the first camper to be branded as a Jeep. EMAV sold the Jeep Camper directly through dealerships in 2010 and 2011. EMAV abandoned its involvement in the project in 2011 due to slow sales and the lack of financial resources to support marketing for the program.

Through 2011 and 2012, EMAV focused its efforts on electric vehicle technology to be used in vehicles it planned to introduce. EMAV also developed the Power Regeneration Unit ("PRU"). It is a small camper designed to be towed behind an electric vehicle and is designed to significantly increase the range of the electric vehicle. EMAV has not commercialized the PRU and has not sold any units of the PRU. It is anticipated that at some time in the future the PRU may become one of the products offered by EMAV.

In 2013, EMAV once again focused its efforts on bringing to market a rugged electric vehicle. EMAV is described as a new car company which we propose to operate out of (i) a Jeep dealership we propose to acquire; and, (ii) an assembly facility we propose to lease.  EMAV will design, assemble, and sell premium rugged sport adventure vehicles ("SAVs") to consumers, with an emphasis on offering electric versions, in addition to commercial products for the construction, fleet, military, homeland security and related industries. EMAV intends to acquire a Jeep automotive dealership through which it will conduct certain aspects of its operations, and which will also afford EMAV access to Jeep vehicles which will serve as the platform/foundation for its vehicle sales. The automotive industry has invested heavily in electric vehicle technology and most manufacturers are now introducing electric vehicles as part of their product line. In addition, a number of new companies have emerged which exclusively manufacture and sell electric vehicles. EMAV intends to be unique in the marketplace in that its proposed signature vehicle, the ES, will be based upon an existing iconic vehicle, the 4-door Jeep Wrangler.

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On December 27, 2013, we acquired all of the issued and outstanding common shares of EMAV in exchange for issuing 38,840,525 shares of our common stock. In addition, we assumed the obligations of EMAV to issue common shares pursuant to all outstanding warrants. Following the closing of the merger, EMAV became our wholly-owned subsidiary and the combined entity solely engaged in EMAV's business. EMAV was the acquirer for financial reporting purposes and EMAV Holdings, Inc. was the acquired company. The merger was accounted for as a reverse-merger and recapitalization. Consequently, the assets and liabilities and the operations that are reflected in the historical financial statements prior to the merger are those of EMAV and are recorded at the historical cost basis, and the consolidated financial statements after completion of the merger include the assets and liabilities of the Company and EMAV, and the historical operations of EMAV and operations of the combined company from the closing date of the merger. Subsequent to the merger, our operations are consolidated with the operations of EMAV.

In late 2014, we initiated a plan to acquire auto dealerships in addition to our electric vehicle business. We propose to engage industry experts to enable us to identify, acquire, operate, and integrate auto dealerships. Our roll-up strategy is designed to not compete with the larger acquirers recently entering into this same space. We propose to acquire mid-market, smaller, profitable dealerships often overlooked by the private equity groups and public companies which are now actively pursuing acquisitions in this space. We have identified and initiated discussions with a number of experienced professionals to manage and operate this segment of our business.

Electric Vehicles

Our wholly-owned subsidiary, Electric Motors and Vehicles Company, Inc. ("EMAV"), is a new car company. It is anticipated that the sales, marketing, and administrative functions for our commercial electric vehicles will be operated out of the Detroit, Michigan area. All other functions, including though not limited to all assembly operations; sales and marketing for our consumer sales; and, all other general corporate administrative functions will be conducted in a facility which location we have yet to determine. We have identified suitable properties in a number of locations though we have not yet leased or acquired or made any formal arrangements for such lease or acquisition of a facility.

Consumer Vehicles

EMAV will design, assemble, and sell premium rugged sport adventure vehicles ("SAVs"), with an emphasis on offering electric versions. EMAV intends to acquire a Ford and a Jeep automotive dealership through which it will conduct certain aspects of its operations, and which will also afford EMAV access to Ford and Jeep vehicles which will serve as the platform/foundation for its vehicle sales. The automotive industry has invested heavily in electric vehicle technology and most manufacturers are now introducing electric vehicles as part of their product line to the consumer public. In addition, a number of new companies have emerged which exclusively manufacture and sell electric vehicles. EMAV intends to be unique in the marketplace in that its proposed signature vehicle (the "ES"), will be based upon an existing iconic vehicle; the 4-door Jeep Wrangler.

21

EMAV proposes to design, develop, manufacture, and sell premium rugged electric vehicles built from the base chassis of the 4-door Jeep Wrangler, and commercial use plug-in hybrid electric vehicles on the chassis of the Ford F-150. We will be a low volume vehicle design, engineering, and manufacturing company focusing on premium rugged electric vehicles. Our initial product offering will focus on the consumer market.

The EMAV ES intends to leverage the iconic design of the 4-door Jeep Wrangler and combine that with aerodynamic body modifications and styling and significant interior comfort and technology upgrades to create its own brand identity. The EMAV ES will maintain the rugged, cool exterior appearance of a Jeep, while the interior will be upgraded with luxury features and technology such as continuous online information access from a 15-17 inch interactive touch screen monitor. The electric 4-wheel drive drive-train is intended to deliver a new premium high performance standard, and with zero emissions the ES will be in a class by itself. EMAV intends to create and dominate the Sport Adventure Vehicle market by delivering a luxurious, comfortable, cool driving experience which is environmentally conscious. At this time EMAV has yet to produce a vehicle for sale and has not yet completed an electric vehicle using the 4-door Jeep Wrangler as its platform.

This Quarterly Report contains additional trade names, trademarks, and service marks of others, which are the property of their respective owners. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies.

We plan to begin shipments of our signature vehicle, the EMAV ES, in Spring of 2017. In order to do so we must raise sufficient capital so that we can build sales/demonstration models for placement at Jeep dealerships and promote the vehicle through a marketing campaign. We plan to begin shipments of our plug-in hybrid electric Ford F-150 in early 2017. Again, we need to do raise sufficient capital so that we can build sales/demonstration models and promote the vehicle through a marketing campaign. As of the filing of this Quarterly Report we have not yet produced any vehicles. We will be adapting the platform architecture of the 4-door Jeep Wrangler to develop our EMAV ES. This all electric vehicle is designed to create a new niche in the automotive industry: a luxury/premium all electric SUV, which we refer to as a premium Sport Adventure Vehicle.

We plan to begin shipments of our signature vehicle, the EMAV ES, in Spring of 2017. We plan to begin shipments of our plug-in hybrid electric Ford F-150 in early 2017. As of the filing of this Quarterly Report we have not yet produced any vehicles. We will be adapting the platform architecture of the 4-door Jeep Wrangler to develop our EMAV ES. This all electric vehicle is designed to create a new niche in the automotive industry: a luxury/premium all electric SUV, which we refer to as a premium Sport Adventure Vehicle.

We propose to sell our vehicles directly through auto dealership we plan to acquire, as well as on the internet through those dealership, and directly to commercial users. We also propose to sell our vehicles directly through selected dealerships we don't own throughout North America, and then globally. We may also lease small retail spaces in high-traffic areas (such as shopping malls and retail areas of large metropolitan areas) in order to highlight and advertise our product offerings. We will deploy a build-on-demand model so as to keep finished inventory low. Similar to the manner in which many large laptop manufacturers operate, we will maintain low levels of parts and platform vehicles, and then build the vehicle "to order" when our customer places the order. We believe that this approach provides us with a competitive advantage as compared to incumbent automobile manufacturers.

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The battery pack and electric power train system we propose to purchase from a third party vendor should enable us to deliver competitive range capability at what we believe will be a compelling battery cost per kilowatt-hour. Our battery packs will use commercially available lithium-ion battery cells. Our proprietary energy management software and system should maximize the energy efficiency of our vehicles. Our proprietary technology includes charge balancing systems, battery engineering, and software and electronics management systems necessary to manage battery and vehicle performance.

We believe that our vehicles will offer consumers a compelling alternative to other electric vehicles, as well as to similar internal combustion engine or hybrid electric vehicles. We expect our electric vehicles will have a lower relative maintenance costs than hybrid, plug-in hybrid, or internal combustion engine vehicles due to fewer moving parts and the absence of certain components, including oil, oil filters, spark plugs, and engine valves. Additionally, government incentives that are currently available can reduce the cost of ownership even further.

Our approach and business model of leveraging a successful and iconic brand and its dealership network will enable us to succeed where so many other electric vehicle manufacturers have failed. We have not created a new vehicle in search of a market. Rather, we have started with a vehicle which has documented and growing demand and will transform it into a premium electric vehicle. We do not require the hundreds of millions of dollars other electric vehicle manufacturers required to start from the ground up. We will not have to raise that level of capital and we will be able to avoid the design, performance, and marketing issues which doomed most early electric vehicle companies.

Commercial Vehicles

We also plan to enter the market for commercial applications and the military, homeland protection, civil, and law enforcement markets. By using a single platform for both commercial and consumer use (the 4-Door Jeep Wrangler and the Ford F-150), we will leverage economies of scale and operating efficiencies to simultaneously produce consumer and commercial vehicles from a single facility. Our signature commercial vehicles will consist of two vehicles:

EMAV Power Station: Designed to replace noisy and polluting towed generators, the vehicle will be the power plant. Non-polluting and silent, the Power Station is ideal for use in myriad industries and applications, such as construction, military, homeland defense, and disaster response.

Fleet, delivery, multi-purpose vehicle: The 4-door Jeep Wrangler has traditionally has been under used in this fast-growing market. Our vehicle will offer a variety of drive-trains, each specifically suited for its specific use and intended demands of the industry.

Acquisition of Car Dealerships

Our engagement of and association with industry experts should give us the ability to identify, acquire, operate, and integrate auto dealerships. Our roll-up strategy is designed to not compete with the larger acquirers recently entering into this same space. We propose to acquire mid-market, smaller, profitable dealerships often overlooked by the private equity groups and public companies which are now actively pursuing acquisitions in this space. We have identified and initiated discussions with a number of experienced professionals to manage and operate this segment of our business.  These individuals are auto industry veterans and have owned and operated car dealerships for many years.

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EMAV has generated limited revenues from product sales, and no revenue from product sales during the three months ended March 31, 2016 and 2015, and for years ended December 31, 2015, 2014 and 2013. To date, we have funded our operations through the private sale of equity securities. We do not expect to generate revenue from product sales for at least the next twelve months.

We have an accumulated deficit of $7,587,776 as of March 31, 2016. Our net loss for the three months ended March 31, 2016 was $2,289,129 as compared to $160,427 for the same comparable period in 2015. Substantially all of our operating losses in the three months ended March 31, 2016 resulted from the interest expense on convertible notes payable and change in fair value of embedded conversion option liability associated with convertible debt.

We expect to continue to incur significant expenses and increasing operating losses for at least the next two to four years. In the near term, we anticipate that our expenses will increase as we:

• complete our initial vehicle offering;

• enter into production and marketing of our initial vehicle offering;

• continue our development additional vehicle offerings;

• maintain, expand and protect our intellectual property portfolio; and

• provide general and administrative support for our operations.

To fund our future operations and acquisitions of car dealerships, we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs, and related general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources. We cannot be certain that anticipated additional financing will be available to us on favorable terms, or at all.

Financial Operations Overview

Revenue

We have not earned revenues from product sales for the three months ended March 31, 2016 and 2015, respectively. We do not expect to earn revenues from product sales for at least the next twelve months. We may never generate revenues from product sales as we may never succeed in selling our initial vehicle or commercializing any other products or vehicles.

Operating Expenses

Operating expenses for the three months ended March 31, 2016 were $117,174 compared to $151,371 for the same comparable period in 2015. Operating expenses decreased by $34,197 in 2016 primarily due to the reduction in general and administrative expense and depreciation expense as discussed below. 

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General and administrative expense (G&A) was $116,542 and $148,507 for the three months ended March 31, 2016 and 2015, respectively. G&A expense decreased by $31,965 in 2016 over 2015 primarily due to the (a) decrease in consulting expenses related to development plans of our business and initial design of our vehicle by $16,364, (b) decrease in investor relations expense by $50,667, (c) increase in professional fees for auditing, tax and legal services of $13,500, (d) increase in transfer agent fees of $21,206, and (e) reduction in travel expenses of $6,027. We expect that general and administrative expenses will increase materially as we operate as a public company. These increases will likely to include salaries and related expenses, legal and consulting fees, accounting and audit fees, director fees, increased directors' and officers' insurance premiums, fees for investor relations services and enhanced business and accounting systems, and other costs.

Depreciation expense for the three months ended March 31, 2016 and 2015 was $632 and $2,864, respectively. During 2015, we sold a vehicle with a cost of $35,821 resulting in reduction in depreciation expense in 2016.

Other Income and Expenses

Other expenses consisted of interest expense of $50,183 for the three months ended March 31, 2016 as compared to $9,056 for the same comparable period in 2015.  Interest expense was accrued and recorded on a (a) $53,000 stockholder loan obtained by us on May 23, 2013 for our working capital requirements. In conjunction with the execution of $53,000 stockholder loan, we issued 100,000 shares of our common stock to the lender as additional consideration, and recorded a debt discount of $30,000 which is being accreted to interest expense over the term of the promissory note, (b) $40,000 stockholder loan obtained on June 18, 2014 for our working capital requirements. In conjunction with the execution of $40,000 stockholder loan, we recorded a debt discount of $33,233 applied to normalize interest to 5% which will be amortized as interest expense over the loan term of 34 months, (c) a promissory note to pay a third party a commitment fee of $50,000 and legal fees of $25,000 for a total consideration of $75,000, bearing an annual interest rate of 10%, and due on or before June 30, 2016. The third party agreed to commit to purchase up to $5 million worth of common stock over a period of time terminating on the earlier of (i) 24 months from the date on which the agreement was executed and delivered by the Company and the third party, or (ii the date on which the third party has purchased the aggregate maximum purchase of $5 million, (d) Convertible Promissory Note ("CPN 1 Note") executed on August 17, 2015 of $50,000, bearing 10% interest and maturing on May 17, 2016. In connection with the issuance of the CPN 1 Note, we recorded a debt discount of $5,000 which will be amortized to interest expense over the term of the draw of nine months. In accordance with ASC 815, we recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $50,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $3,307 for a total initial embedded conversion option liability of $53,307 on the date of issuance of Note, (e) Convertible Promissory Note ("CPN 2 Note") executed on February 4, 2016 of $86,000, bearing 6% interest and maturing on January 28, 2017. In connection with the issuance of the CPN 2 Note, we recorded a debt discount of $11,100 which will be amortized to interest expense over the term of the draw of 357 days. In accordance with ASC 815, we recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $10,995 for a total initial embedded conversion option liability of $96,995 on the date of issuance of CPN 2 Note, and (f) Convertible Promissory Note ("CPN 3 Note") executed on February 29, 2016 of $86,000, bearing 6% interest and maturing on January 28, 2017. In connection with the issuance of the CPN 3 Note, we recorded a debt discount of $11,100 which will be amortized to interest expense over the term of the draw of 357 days. In accordance with ASC 815, we recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $11,734 for a total initial embedded conversion option liability of $97,734 on the date of issuance of CPN 3 Note.

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As a result, the Company recorded interest expense of (a) $2,931 on the shareholders loans and a promissory note for the three months ended March 31, 2016  as compared to $909 for the same comparable period in 2015, (b) $2,305 on three convertible promissory notes for the three months ended March 31, 2016 as compared to $0 for the same comparable period in 2015, (c) $7,301 related to the amortization of original issue discount and debt discount related to the shareholders loans and convertible promissory notes for the three months ended March 31, 2016 as compared to $8,149 for the same comparable period in 2015, and (d) $37,646 related to amortization of embedded conversion option liability discount on convertible promissory notes for the three months ended March 31, 2016 as compared to $0 for the same comparable period.

The convertible promissory notes issued by the Company on (i) August 17, 2015 for $50,000, (ii) February 4, 2016 for $86,000, and (iii) February 29, 2016 for $86,000, qualifies for derivative accounting treatment due to the variable conversion formula. As a result, the Company recorded an expense of $2,121,772 for the three months ended March 31, 2016 due to a change in the fair value of the liabilities for the embedded conversion option derivative instrument. The change in the fair value of embedded conversion option liability is included in other income (expenses) as of March 31, 2016. The Company did not have any convertible derivative instruments outstanding as of March 31, 2015.

Liquidity and Capital Resources

Since our inception, our operations have been primarily financed through private sales of our equity and debt financing. We have devoted our resources to funding the development of our initial vehicle. We have incurred operating losses in each year since our inception and we expect to continue to incur operating losses into the foreseeable future as we advance the ongoing development of our initial vehicle.

As of March 31, 2016, we had $9,863 of cash and cash equivalents compared to $1,802 at December 31, 2015. We believe that our existing capital resources, together with interest thereon, will not be sufficient to meet our projected operating requirements for at least the next 12 months and we will need to raise additional capital through sale of equity or debt financing. Based on our operating plan, we will need additional funds to meet operational needs and capital requirements for product development and commercialization. We currently have no credit facility or committed sources of capital. To fund future operations we will need to raise additional capital and our requirements will depend on many factors, including the following:

Funding may not be available to us on acceptable terms or at any terms. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or even suspend development of our initial vehicle. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our vehicle and future revenue streams, and we may have to grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

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The accompanying financial statements for the three months ended March 31, 2016 and 2015, respectively, have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have continuing net losses and negative cash flows from operating activities. In addition, we have deficiencies in working capital as of most of the balance sheet dates. These conditions raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. These circumstances caused our independent registered public accounting firm to include an explanatory paragraph in their report dated April 4, 2016, regarding their concerns about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to obtain additional financing as may be required to fund current operations. Management's plans include selling our common stock to investors to raise working capital for operations and there is no assurance these plans will be realized.

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2016 was $132,448 which resulted primarily from the loss of $2,289,129, depreciation of $632, amortization of OID discount on notes payable of $2,932, amortization of embedded conversion option liability discount of $42,016, change in the fair value of embedded conversion option liability of $2,121,772, decrease in accounts payable of $15,000, and increase in accrued liabilities of $4,329.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2016 was $140,509 primarily due to cash proceeds of $149,800 received from two convertible promissory notes and cash payment of $9,291 against note payable. 

As a result of the above activities, we experienced a net increase in cash and cash equivalents of $8,061 for the three months ended March 31, 2016. Our ability to continue as a going concern is still dependent on our success in obtaining additional financing from investors or from sale of our common stock.

Contractual Commitments and Contingencies

Contractual Obligations

Note Payable - Stockholder (Note 1)

On May 23, 2013, we executed a promissory note (the "Note 1") with a stockholder third party lender in the principal amount of $53,000. The terms of the Note 1 required us to make (a) a principal payment of $3,000 on or before June 6, 2013, and (b) fifteen (15) monthly payments of $3,790 each, including principal and interest, beginning  February 2014 through April 2016, at which time the entire principal amount, plus any and all accrued interest shall be due and payable. We have made the cumulative principal payments on the Note 1 of $50,546 as of March 31, 2016 and the remaining balance of $2,454 on the Note 1 is due as of March 31, 2016. The Company is delinquent in making a payment of $2,454 as of March 31, 2016, and the note holder has not made a demand for the past due payment. We have recorded interest expense of $919 on Note 1 for the three months ended March 31, 2016, and the total accrued interest payable at March 31, 2016 was $6,204.

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 Note Payable - Stockholder (Note 2)

On June 18, 2014, we executed a promissory note (the "Note 2") with a stockholder lender in the principal amount of $40,000. The terms of the Note 2 required us to make (a) monthly interest only payments (5% annual rate) starting on September 18, 2014; (b) twenty-four (24) payments of $3,290 each, including principal and interest, beginning May 18, 2015 through April 18, 2017, at which time the entire principal amount, plus any and all accrued interest shall be due and payable; and, (c) in the event of an investment or series of related investments of at least $5,000,000 before April 18, 2017, then the entire principal balance and all accrued and unpaid interest shall be due in full in addition to a $5,000 prepayment penalty. In connection with the issuance of Note 2, we have recorded a debt discount of $33,233 applied to normalize interest to 5% which will be amortized as interest expense over the life of the Note 2. We have not paid any principal payments towards the Note 2 as of March 31, 2016 and have recorded an interest expense of $2,932 for amortization of debt discount related to Note 2 for the three months ended March 31, 2016. The unamortized portion of debt discount was $12,707 at March 31, 2016. In addition, we have recorded an interest expense of $143 on Note 2 for the three months ended March 31, 2016 and the total accrued interest payable at March 31, 2016 was $2,775.

Note Payable (Note 3)

On December 22, 2015, we executed a promissory note (the "Note 3") to pay a third party a commitment fee of $50,000 and legal fees of $25,000 for a total consideration of $75,000. The third party agreed to commit to purchase up to $5 million worth of our common stock over a period of time terminating on the earlier of (i) 24 months from the date on which the agreement was executed and delivered by the Company and the third party, or (ii the date on which the third party has purchased the aggregate maximum purchase of $5 million. The promissory note bears an interest at the rate of 10% per annum. Payment of all amounts due under Note 3, principal and interest, is due on or before June 30, 2016. We have recorded the principal amount of the promissory note of $75,000 as a deferred asset upon execution of the promissory note and which will be offset as fee for capital raise against the additional paid in capital when capital is raised by the third party. We have recorded an interest expense of $1,870 for the three months ended March 31, 2016 and the total accrued interest payable at March 31, 2016 was $2,055.

The following table shows our contractual obligation to make the payments in accordance with the terms of the Notes Payable:

Contractual Obligations of Notes Payable at March 31, 2016:

For the year ended	Note 1- $53,000		Note 2- $73,233		Note 3- $75,000		Total
December 31, 2016	$	2,454	$	67,141	$	75,000	$	144,595
December 31, 2017		-		13,161		-		13,161
Total	$	2,454	$	80,302	$	75,000	$	157,756

Convertible Promissory Note (the "CPN 1 Note")

On August 17, 2015, the Company received $45,000 from a third party investor against a $50,000 Convertible Promissory Note (the "CPN 1" Note) executed on August 17, 2015. The CPN 1 Note bears an interest rate of 10% per annum. The maturity date of the CPN 1 Note is May 17, 2016 and is the date upon which the principal sum of this promissory note, as well as any unpaid interest and other fees, shall be due and payable. The lender has the right at any time after the effective date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the conversion price. The conversion price is the lessor of 55% of the lowest trade price in the 25 trading days previous to the conversion date. 

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In connection with the issuance of the CPN 1 Note, the Company recorded an original issuance debt discount ("OID") in the amount of $5,000 which will be amortized to interest expense over the term of the draw of nine months. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $50,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $3,307 for a total initial embedded conversion option liability of $53,307. On February 17, 2016, the Company issued 108,403 shares of its common stock to the third party investor pursuant to a conversion notice under the terms of CPN 1 Note. Pursuant to the conversion notice, the investor converted $12,521 of the principal and interest of CPN 1 Note into 108,403 shares of our common stock valued at $0.1155 per share. On March 14, 2016, the Company issued 952,203 shares of its common stock to the third party investor pursuant to a conversion notice under the terms of CPN 1 Note. Pursuant to the conversion notice, the investor converted $5,237 of the principal of CPN 1 Note into 952,203 shares of our common stock valued at $0.0055 per share. As a result of the debt conversions, the Company recorded an expense of $320,810 due to change in fair value of the embedded conversion option liability for the three months ended March 31, 2016.

For the three months ended March 31, 2016, the Company has recorded interest expense of $1,100 on the CPN 1 Note, interest expense of $1,630 related to the amortization of the OID, $16,852 related to the amortization of the embedded conversion option liability discount , and $320,810 expense due the change in fair value of embedded conversion option liability due to debt conversions.  The CPN 1 Note balance was $32,242 and $50,000 at March 31, 2016 and December 31, 2015, respectively, unamortized debt discount was $796 and $2,426, unamortized embedded conversion option liability discount was $8,148 and $25,000, and accrued interest of $2,924 and $1,849 at March 31, 2016 and December 31, 2015, respectively.

Convertible Promissory Note (the "CPN 2 Note")

On February 04, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with a third party (the "Investor"). Pursuant to the Purchase Agreement, the Investor purchased from the Company a Convertible Promissory Note (the "CPN 2 Note", and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and the Company received net proceeds of $74,900 on February 4, 2016.

The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the CPN 2 Note is due and payable on the maturity date, which is January 28, 2017. Any amount of principal or interest that is due under the CPN 2 Note, which is not paid by the maturity date, will bear interest at the rate of 24% per annum until it is paid. Further, the Company is obligated to reduce the Principal Amount by 50% on or before July 28, 2016. Should the Company fail to do so, then outstanding principal amount will be increased by 200%.

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The Note is convertible into shares of the Company's common stock at any time at the discretion of the Investor at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. The Company agreed to reserve that number of shares of common stock equal to 70% of our authorized shares of common stock not otherwise issued.

The CPN 2 Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the CPN 2 Note, the promissory note shall become immediately due and payable and subject to penalties provided for in the CPN 2 Note.

In connection with the issuance of the CPN 2 Note, the Company recorded an original issuance debt discount ("OID") in the amount of $11,100 which will be amortized to interest expense over the term of the draw of 357 days. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $10,995 for a total initial embedded conversion option liability of $96,995. For the three months ended March 31, 2016, the Company has recorded interest expense of $792 on the CPN 2 Note, interest expense related to the amortization of the OID discount of $1,741, interest expense related to the amortization of the embedded conversion option liability discount of $13,490, and change in fair value of embedded conversion option liability of $898,952. At March 31, 2016, the principal balance of CPN 2 Note was $86,000, embedded conversion option liability of CPN 2 Note was $887,957, unamortized OID discount was $9,359, unamortized embedded conversion option liability discount was $72,510, and accrued interest was $792.

Convertible Promissory Note (the "CPN 3 Note")

On February 29, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with the same third party (the "Investor") who also executed CPN 2 Note. Pursuant to the Purchase Agreement, the Investor purchased from the Company a Convertible Promissory Note (the "CPN 3 Note"), and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and the Company received net proceeds of $74,900 on February 29, 2016.

The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the CPN 3 Note is due and payable on the maturity date, which is March 1, 2017. Any amount of principal or interest that is due under the CPN 3 Note, which is not paid by the maturity date, will bear interest at the rate of 24% per annum until it is paid. Further, the Company is obligated to reduce the Principal Amount by 50% on or before July 28, 2016. Should the Company fail to do so, then outstanding principal amount will be increased by 200%.

The Note is convertible into shares of the Company's common stock at any time at the discretion of the Investor at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. The Company agreed to reserve that number of shares of common stock equal to 70% of our authorized shares of common stock not otherwise issued.

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The CPN 3 Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the CPN 2 Note, the promissory note shall become immediately due and payable and subject to penalties provided for in the CPN 3 Note.

In connection with the issuance of the CPN 3 Note, the Company recorded an original issuance debt discount ("OID") in the amount of $11,100 which will be amortized to interest expense over the term of the draw of one year. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $11,734 for a total initial embedded conversion option liability of $97,734. For the three months ended March 31, 2016, the Company has recorded interest expense of $438 on the CPN 3 Note, interest expense related to the amortization of the OID of $943, interest expense related to the amortization of the embedded conversion option liability discount of $7,304, and change in the fair value of embedded conversion option liability of $902,010. At March 31, 2016, the principal balance of CPN 3 Note was $86,000, embedded conversion option liability on CPN 3 Note was $890,275, unamortized original issuance debt discount was $10,157, unamortized embedded conversion option liability discount was $78,690, and accrued interest was $438.

The Company has recorded a total interest expense of $2,305 and $0, on the principal balances of CPN 1 Note, CPN 2 Note and CPN 3 Note, for the three months ended March 31, 2016 and 2015, respectively. In addition, the Company has recorded interest expense for the three months ended March 31, 2016 and 2015, relating to (i) amortization of OID discount of $4,369 and $0, and (ii) amortization of the embedded conversion option liability discount of $37,646 and $0. The Company has recorded accrued interest of $4,179 and $1,849 as of March 31, 2016 and December 31, 2015, respectively.

Other Obligations

Settlement of litigation

The Company entered into an agreement for public relations services (the "Agreement") with an unrelated third party ("DLC") in September 2010. The Company disputed the quality of the services rendered and failed to tender final payment under the Agreement. DLC initiated legal action against the Company in January 2012 for collection under the Agreement. The Company did not have the resources to contest the action, so a default judgment was entered against the Company in favor of DLC in July 2012 in the amount of $14,425. Thereafter, DLC sought to collect on the judgment, and the total amount claimed by DLC grew to over $25,000 as DLC was entitled to collect attorney's fees under the Agreement.

In October 2013, the entire Agreement with DLC was negotiated and settled requiring the Company to pay DLC $3,000 in November 2013 and $1,000 per month for the next 12-month period. The Company agreed not to contest DLC's ownership of 80,000 shares of the Company's stock. The Company had recorded a liability and an expense of $15,000 as a result of this litigation in its consolidated financial statements as of March 31, 2016. As of March 31, 2016, the remaining liability on the settlement of $7,000 is included in accounts payable in accompanying consolidated financial statements. The Company plans on paying DLC for the months of May 2014 through November 2014, which DLC has yet to demand.

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JOBS Act Accounting Election

We are an "emerging growth company," as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We have identified the following accounting policies that we believe require application of management's most subjective judgments, often requiring the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results could differ from these estimates and such differences could be material.

While our significant accounting policies are described in more detail in Note 2 of our annual consolidated financial statements included in this Quarterly Report, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured. The Company closely follows the provisions of ASC 605, "Revenue Recognition", which includes the guidelines of Staff Accounting Bulletin No. 104.

Stock-Based Compensation

In accordance with ASC 718, Compensation – Stock Compensation, the Company accounts for share-based payments to employees using the fair value method. All transactions in which goods or services are received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The Company generally uses the Black-Scholes option pricing method to compute the fair value of options or warrants granted for goods or services.

Share based payments to non-employees are accounted for under the measurement and recognition criteria of ASC 505-50 "Equity Based Payments to Non-Employees".

Issuances of the Company's common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a "performance commitment" which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. However, situations may arise in which counter performance may be required over a period of time but the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates.

32

Non Cash Equity Transactions

Shares of equity instruments issued for noncash consideration are recorded at the estimated fair market value of the consideration granted based on the estimated fair market value of the equity instrument, or at the estimated fair market value of the goods or services received whichever is more readily determinable.

Off-Balance Sheet Arrangements

We have not engaged in any off-balance sheet arrangements as defined in Item 303(c) of the SEC's Regulation S-B. We did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special-purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the "Exchange Act"), and as provided in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and, therefore, are not required to provide the information requested by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (who is also our Chief Financial Officer), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2016. The term "disclosure controls and procedures," as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on their evaluation, management concluded as of March 31, 2016 that our disclosure controls and procedures were not effective because of material weaknesses in our internal control over financial reporting, described below in Management's Report on Internal Control Over Financial Reporting. Notwithstanding the identified material weaknesses, management believes the consolidated financial statements included in this quarterly report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

33

Management's Report on Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of Company management, including the CEO and the CFO, an evaluation was performed of the effectiveness of the Company's internal control over financial reporting. The evaluation was based on the framework in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").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.

Based on our evaluation under the criteria set forth in Internal Control — Integrated Framework (1992), our management concluded that, as of March 31, 2016, our internal control over financial reporting was not effective because of the identification of material weaknesses described as follows:

• We did not have controls designed to validate the completeness and accuracy of underlying data used in the determination of accounting transactions. As a result, errors were identified in the underlying data used to support accounting transactions. Accordingly, we believe we have a material weakness because there is a reasonable possibility that a material misstatement to the interim or annual financial statements would not be prevented or detected on a timely basis.

• We did not have an adequate process or appropriate controls in place to support the accurate and timely reporting of our financial results and disclosures in our Form 10-Q. As a result, errors were identified primarily related to stock issuances and their accounting treatment. Accordingly, we believe we have a material weakness because there is a reasonable possibility that a material misstatement to the interim or annual financial statements would not be prevented or detected on a timely basis.

Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting

With the oversight of senior management, the Company has begun taking steps and plans to take additional measures to remediate the underlying causes of the material weaknesses.

With respect to validation of the completeness and accuracy of underlying data used in the determination of stock issuance and accounting transactions, management intends to:

34

•	Timely issue all stock certificates contemporaneous with the closing of transactions resulting in a stock issuance.
•	Have the Company's independent transfer agent issue all stock certificates to stockholders listed on the Company's stock ledger.
•	As soon as the Company can afford it, hire an employee who will be dedicated to overseeing all stock issuance and related matters.
With respect to timely and accurate filing of our financial results, management intends to:
•	As soon as the Company can afford to do so, engage consultants to identify efficiencies and enhance reporting capabilities as well as opportunities to reduce the incidence of errors.
•	Implement more robust accounting policies and work with consultants to streamline activities and implement best practices.
•	As soon as we can afford to do, hire a Chief Financial Officer so the same person is not serving as both Chief Executive Officer and Chief Financial Officer.
•	Additionally, as soon as we can afford to do so we plan on creating a new position to oversee accounting systems, designing internal controls and ensuring compliance, implementing accounting policies and procedures, and implementing process improvements.

While senior management is closely monitoring the implementation of these remediation plans, there is no assurance that the aforementioned plans will be sufficient and that additional steps may not be necessary. There is also no assurance that we will be able to afford to implementation of these improvements during the current fiscal year.

35

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of our business. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and any adverse result in these or other matters may arise from time to time that could harm our business. The Company's officers and directors are not aware of any threatened or pending litigation to which the Company is a party or which any of its property is the subject and which would have any material, adverse effect on the Company.

Item 1A - Risk Factors

The section entitled "Risk Factors" in the 2015 Annual Report filed with the Securities and Exchange Commission on April 4, 2016 is hereby incorporated by reference in this report as if set forth herein in its entirety.

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

During the three months ended March 31, 2016, the Company did not sell any shares of its common stock.

On February 23, 2016, the Company issued 108,403 shares of its common stock to Auctus Fund, LLC ("Auctus"), pursuant to a conversion notice from Auctus under the terms of the convertible promissory note dated August 17, 2015 (the "Auctus Note"), which was previously disclosed and reported by the Company on Form 8-K filed with the SEC on August 21, 2015. Pursuant to the Auctus Note and the conversion notice, Auctus converted $12,521 of principal and interest due under the Auctus Note into 108,403 shares of our common stock. These securities were issued in transactions not registered under the Securities Act in reliance upon the exemption provided under Section 4(2) of the Securities Act and/or Regulation D promulgated by the Securities and Exchange Commission. We believed that the exemption was available because the offer and sale of the securities did not involve a public offering and because of the limited number of recipients, the purchaser's representation of sophistication in financial matters, and its access to information concerning our business.

On March 17, 2016, the Company issued 952,203 shares of its common stock to Auctus pursuant to a conversion notice and converted $5,237 of principal and interest due under the Auctus Note into 952,203 shares of our common stock. These securities were issued in transactions not registered under the Securities Act in reliance upon the exemption provided under Section 4(2) of the Securities Act and/or Regulation D promulgated by the Securities and Exchange Commission. We believed that the exemption was available because the offer and sale of the securities did not involve a public offering and because of the limited number of recipients, the purchaser's representation of sophistication in financial matters, and its access to information concerning our business.

Subsequent to our fiscal quarter ended March 31, 2016 and prior to May 12, 2016, the Company did not sell any shares of its common stock.

36

On February 4, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with EMA Financial, LLC, a Delaware limited liability company ("EMA Financial"). Pursuant to the Purchase Agreement, EMA Financial purchased from the Company a Convertible Promissory Note (the "Note", and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and delivered net proceeds of $74,900, which amount became available for use by the Company on February 4, 2016. The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which is January 28, 2017 (the "Maturity Date"). EMA may extend the Maturity Date by providing us with written notice at least 5 days before the Maturity Date. However, EMA may only extend the Maturity Date for up to an additional one-year period. Any amount of principal or interest that is due under the Note, which is not paid by the Maturity Date, will bear interest at the rate of 24% per annum until it is paid (the "Note Default Interest"). Further, we are obligated to reduce the Principal Amount by 50% on or before July 28, 2016, either through (i) accessing the funds under the Equity Purchase Agreement we described in our 8-K we filed  December 28, 2015; or, (ii) subsequent financing closed by the Company. Should we fail to do so, the then outstanding principal amount will be increased by 200%. The Note is convertible into shares of the Company's common stock ("Common Stock") at any time at the discretion of EMA Financial at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion (the "Conversion Price"). The Conversion Price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. We agreed to reserve that number of shares of Common Stock equal to 70% of our authorized shares of Common Stock not otherwise issued. The Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the Note the Note shall become immediately due and payable and subject to penalties provided for in the Note. All amounts due under the Note become immediately due and payable by us upon the occurrence of an event of default, including but not limited to (i) our sale of all or substantially all of our assets, (ii) our failure to pay the amounts due at maturity, (iii) our failure to issue shares of Common Stock upon any conversion of the Note, (iv) our breach of the covenants, representations or warranties under the Note, (v) our appointment of a trustee, (vi) a judgment against us in excess of $50,000 (subject to a 20 day cure period), (vii) our liquidation, (viii) the filing of a bankruptcy petition by us or against us, (ix) our failure to remain current in our reporting obligations under the Securities Exchange Act of 1934, (x) the delisting of our Common Stock from the OTCQB or equivalent exchange, (xi) a restatement of our financial statements for any period from two years prior to the Note until the Note has been paid in full, or (xi) our effectuation of a reverse stock split without 20 days prior written notice to EMA Financial. These securities were issued in transactions not registered under the Securities Act in reliance upon the exemption provided under Section 4(2) of the Securities Act and/or Regulation D promulgated by the Securities and Exchange Commission. We believed that the exemption was available because the offer and sale of the securities did not involve a public offering and because of the limited number of recipients, the purchaser's representation of sophistication in financial matters, and its access to information concerning our business.

37

On February 29, 2016 the Company entered into, closed, and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with EMA Financial, LLC, a Delaware limited liability company ("EMA Financial"). Pursuant to the Purchase Agreement, EMA Financial purchased from the Company a Convertible Promissory Note (the "Note", and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and delivered net proceeds of $74,900 to the Company. The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which is March 1, 2017 (the "Maturity Date"). EMA may extend the Maturity Date by providing us with written notice at least 5 days before the Maturity Date. However, EMA may only extend the Maturity Date for up to an additional one-year period. Any amount of principal or interest that is due under the Note, which is not paid by the Maturity Date, will bear interest at the rate of 24% per annum until it is paid (the "Note Default Interest"). Further, we are obligated to reduce the Principal Amount by 50% on or before July 28, 2016, either through (i) accessing the funds under the Equity Purchase Agreement we described in our 8-K we filed December 28, 2015; or, (ii) subsequent financing closed by the Company. Should we fail to do so, the then outstanding principal amount will be increased by 200%. The Note is convertible into shares of the Company's common stock ("Common Stock") at any time at the discretion of EMA Financial at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion (the "Conversion Price"). The Conversion Price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. We agreed to reserve that number of shares of Common Stock equal to 70% of our authorized shares of Common Stock not otherwise issued. The number of shares Common Stock reserved are the same shares we reserved under the Convertible Promissory Note we disclosed in our Current Report filed on Form 8-K on February 10, 2016. As such, there is no increase in the number of shares of Common Stock from the earlier Convertible Promissory Note. The Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the Note the Note shall become immediately due and payable and subject to penalties provided for in the Note. All amounts due under the Note become immediately due and payable by us upon the occurrence of an event of default, including but not limited to (i) our sale of all or substantially all of our assets, (ii) our failure to pay the amounts due at maturity, (iii) our failure to issue shares of Common Stock upon any conversion of the Note, (iv) our breach of the covenants, representations or warranties under the Note, (v) our appointment of a trustee, (vi) a judgment against us in excess of $50,000 (subject to a 20 day cure period), (vii) our liquidation, (viii) the filing of a bankruptcy petition by us or against us, (ix) our failure to remain current in our reporting obligations under the Securities Exchange Act of 1934, (x) the delisting of our Common Stock from the OTCQB or equivalent exchange, (xi) a restatement of our financial statements for any period from two years prior to the Note until the Note has been paid in full, or (xi) our effectuation of a reverse stock split without 20 days prior written notice to EMA Financial. These securities were issued in transactions not registered under the Securities Act in reliance upon the exemption provided under Section 4(2) of the Securities Act and/or Regulation D promulgated by the Securities and Exchange Commission. We believed that the exemption was available because the offer and sale of the securities did not involve a public offering and because of the limited number of recipients, the purchaser's representation of sophistication in financial matters, and its access to information concerning our business.

38

Subsequent to our fiscal quarter ended March 31, 2016, and prior to May 12, 2016, the Company issued additional shares of its common stock. On April 29, 2016 the Company issued 1,432,999 shares of its common stock to Auctus pursuant to a conversion notice from Auctus under the terms of the Auctus Note. Pursuant to the Auctus Note and the conversion notice, Auctus converted $18,360 due under the Auctus Note into 1,432,999 shares of our common stock. These securities were issued in transactions not registered under the Securities Act in reliance upon the exemption provided under Section 4(2) of the Securities Act and/or Regulation D promulgated by the Securities and Exchange Commission. We believed that the exemption was available because the offer and sale of the securities did not involve a public offering and because of the limited number of recipients, the purchaser's representation of sophistication in financial matters, and its access to information concerning our business.

Item 3 - Defaults Upon Senior Securities

None.

Item 4 - Mine Safety Disclosures

None.

Item 5 - Other Information

None.

Item 6 - EXHIBITS

The following Exhibits are filed as part of this Quarterly Report pursuant to Item 601 of Regulation S-K:             

Exhibit Number	Description
2.1.1	Agreement and Plan of Merger dated December 5, 2007(1)
2.1.2	Certificate of Merger - Delaware - dated December 5, 2007(1)
2.1.3	Articles of Merger - Florida - dated December 7, 2007(1)
2.1.4	Certificate of Merger – Delaware - dated September 20, 2011 (2)
2.1.5	Agreement and Plan Of Merger Dated December 27, 2013 By and Among EMAV Holdings, Inc., Electric Motors and Vehicles Company, and EV Pop Acquisition Company (3)

39

3.1.1	Certificate of Incorporation dated May 14, 1987(1)
3.1.2	Articles of Amendment dated June 30, 1998(1)
3.1.3	Articles of Amendment dated November 12, 1998(1)
3.1.4	Articles of Amendment dated June 22, 2006(1)
3.1.5	Certificate of Incorporation of Delaware entity dated October 11, 2007(1)
3.1.6	Articles of Amendment dated October 18, 2007(1)
3.1.7	Certificate of Amendment dated August 27, 2008(1)

3.1.8	Amendment to Certificate of Incorporation dated December 27, 2013 (3)
3.1.9	Certificate of Merger dated December 27,2013 (3)
3.2.1	Florida Amended and Restated By-Laws(1)
3.2.2	Delaware Amended and Restated By-Laws(1)
10.1	Stock Purchase Agreement dated March 31, 2010 by and between the Company and Bedrock Ventures, Inc. (4)
10.2	Repurchase Agreement dated April 1, 2010 by and among the Company and CENTURY  CAPITAL PARTNERS, LLC, and  CORPORATE SERVICES INTERNATIONAL, INC. (4)
31.1*	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)
31.2*	Certification of the Chief Financial Officer and Chief Operating Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(*)
32.1*	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002(*)
32.2*	Certification of the Chief Financial Officer and Chief Operating Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002(*)

40

101*+ The following materials from the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2016 and December 31, 2015; (ii) Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015; (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015; and (iv) Notes to Consolidated Financial Statements.

101 INS	XBRL Instance Document*
101 SCH	XBRL Schema Document*
101 CAL	XBRL Calculation Linkbase Document*
101 DEF	XBRL Definition Linkbase Document*
101 LAB	XBRL Labels Linkbase Document*
101 PRE	XBRL Presentation Linkbase Document*

(1)	Previously filed with the Company's Form 10 filed with the SEC on November 12, 2008 and incorporated herein by reference.
(2)	Incorporated by reference to Exhibit 2.1.4 to the Annual Report on Form 10-K filed with the SEC on 30 January 2012.
(3)	Previously filed with the Company's Form 8-K filed on December 31, 2013 and incorporated herein by reference.
(4)	Previously filed with the Company's Form 8-K filed on April 7, 2010 and incorporated herein by reference.
(*)	Filed herewith.

41

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:  May 13, 2016	EMAV Holdings, Inc.
By:	/s/ Keith A. Rosenbaum
	KEITH A. ROSENBAUM,
	Chief Executive Officer and Chief Financial Officer
	(Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer)

42

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith A. Rosenbaum, Chief Executive Officer of EMAV Holdings, Inc., certify that:

1. I have reviewed this report on Form 10-Q of EMAV Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2016	BY:	/s/ KEITH A. ROSENBAUM
		KEITH A. ROSENBAUM,
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith A. Rosenbaum, Chief Financial Officer of EMAV Holdings, Inc., certify that:

1. I have reviewed this report on Form 10-Q of EMAV Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2016	BY:	/s/ KEITH A. ROSENBAUM
		KEITH A. ROSENBAUM,
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of EMAV Holdings, Inc. (the "Company") hereby certifies, to such officer's knowledge, that:

(i)the accompanying report on Form 10-Q of the Company for the period ended March 31, 2016, to which this Certificate is attached (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 13, 2016	BY:	/s/ KEITH A. ROSENBAUM
		KEITH A. ROSENBAUM,
		Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to EMAV Holdings, Inc. and will be retained by EMAV Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of EMAV Holdings, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

EX-31.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER / CHIEF OPERATING OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and 18 U.S.C. § 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of EMAV Holdings, Inc. (the "Company") hereby certifies, to such officer's knowledge, that:

(i)the accompanying report on Form 10-Q of the Company for the period ended March 31, 2016, to which this Certificate is attached (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 13, 2016	BY:	/s/ KEITH A. ROSENBAUM
		KEITH A. ROSENBAUM,
		Chief Financial Officer

 A signed original of this written statement required by Section 906 has been provided to EMAV Holdings, Inc. and will be retained by EMAV Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of EMAV Holdings, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 12, 2016
Document and Entity Information:
Entity Registrant Name	EMAV HOLDINGS, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Trading Symbol	rvnw
Amendment Flag	false
Entity Central Index Key	0001076744
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		49,399,070
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Incorporation, Date of Incorporation	May 14, 1987
Entity Incorporation, State Country Name	Florida

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Consolidated Balance Sheets - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 9,863	$ 1,802
Deferred offering costs	75,000	75,000
Prepaid expenses	1,000	1,000
Total Current Assets	85,863	77,802
Property and equipment, net	2,686	3,318
Total Assets	88,549	81,120
Current liabilities
Accounts payable	27,732	42,731
Accrued liabilities	15,187	10,859
Payable to related party	22,500	22,500
Embedded conversion option liability	2,287,496	78,713
Notes payable, current portion, net of debt discount of $12,707 and $15,639 at March 31, 2016 and December 31, 2015, respectively	137,980	144,339
Convertible note payable, current portion, net of discount of $179,611 and $27,426 at March 31, 2016 and December 31, 2015, respectively	24,631	22,574
Total Current Liabilities	2,515,526	321,716
Total Liabilities	$ 2,515,526	$ 321,716
Commitments and contingencies (Note 8)
Stockholders' Equity (Deficit)
Common stock, $0.001 par value, 100,000,000 shares authorized; 48,841,071 shares and 47,780,465 shares issued and 47,966,071 shares and 46,905,465 shares outstanding at March 31, 2016 and December 31, 2015 and 2014, respectively	$ 48,842	$ 47,781
Treasury stock, 875,000 shares, $0.001 par value, issued not outstanding	(875)	(875)
Additional paid in capital	5,112,832	5,011,145
Accumulated deficit	(7,587,776)	(5,298,647)
Total Stockholders' Equity (Deficit)	(2,426,977)	(240,596)
Total Liabilities and Stockholders' Equity	$ 88,549	$ 81,120

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Consolidated Balance Sheets Parenthetical - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Consolidated Balance Sheets Parenthetical
Debt Discount - current	$ 12,707	$ 15,639
Debt Discount on Convertible Notes Payable, Current	$ 179,611	$ 27,426
Common stock par value	$ 0.001	$ 0.001
Common stock shares authorized	300,000,000	300,000,000
Common stock shares issued	48,841,071	47,780,465
Common stock shares outstanding	47,966,071	46,905,465
Treasury stock par value	$ 0.001	$ 0.001
Treasury stock shares issued	875,000	875,000
Treasury stock shares outstanding

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Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements of Operations
Revenues
Cost of goods sold
Gross Profit (Loss)
Operating Expenses
Depreciation	$ 632	$ 2,864
General and administrative	116,542	148,507
Total Operating Expenses	117,174	151,371
Operating Loss from Operations	(117,174)	(151,371)
Other Income (Expenses)
Interest expense	(50,183)	(9,056)
Change in the fair value of embedded conversion option liability	(2,121,772)
Total Other Income (Expenses)	(2,171,955)	(9,056)
Loss from Continuing Operations before Income Taxes	$ (2,289,129)	$ (160,427)
Provision for income tax
Net loss	$ (2,289,129)	$ (160,427)
Basic and diluted net loss per share	$ (0.05)	$ (0.00)
Weighted average number of shares outstanding	47,097,634	46,590,721

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Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flows from Operating Activities:
Net loss	$ (2,289,129)	$ (160,427)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation	632	2,864
Amortization of prepaid consulting services for stock issuances		42,666
Amortization of OID discount on notes payable	2,932	7,023
Amortization of Embedded conversion option liability discount	42,016
Change in the fair value of embedded conversion option liability	2,121,772
Changes in operating assets and liabilities:
Change in Accounts payable	(15,000)	7,646
Change in Accrued liabilities	4,329	11,408
Net cash used in operating activities	(132,448)	(88,820)
Cash Flows from Financing Activities:
Cash proceeds from sale of stock		51,000
Cash proceeds from note payable	149,800
Cash payments against note payable	(9,291)	(6,953)
Net cash provided by financing activities	140,509	44,047
Net increase (decrease) in cash and cash equivalents	8,061	(44,773)
Cash and cash equivalents, beginning of the period	1,802	63,914
Cash and cash equivalents, end of the period	$ 9,863	$ 19,141
Supplemental disclosures of cash flow information:
Cash paid for income taxes
Cash paid for interest	$ 909	$ 626
Supplemental disclosures of non-cash investing and financing activities:
Issuance of common stock pursuant to debt conversion	17,758
Settlement of embedded conversion derivative	$ 84,990

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Note 1 - Nature of Operations and Going Concern

3 Months Ended

Mar. 31, 2016

Notes

Note 1 - Nature of Operations and Going Concern

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

As used herein and except as otherwise noted, the term “Company”, “it(s)”, “our”, “us”, “we” and “EMAV” shall mean EMAV Holdings, Inc., a Delaware corporation, and its consolidated subsidiary Electric Motors and Vehicles Company.

EMAV Holdings, Inc. was originally incorporated on May 14, 1987 in Florida as Ventura Promotion Group, Inc. The Company became a public company in July 1998 and on November 12, 1998 changed its name to American Surface Technologies International, Inc.  In September 2001, the State of Florida administratively dissolved the Company for not maintaining proper filings with the state and not paying franchise tax fees. In 2006, the Company changed its name to Global Environmental, Inc. In December 2007, the Company re-domiciled to Delaware and on August 27, 2008, changed its name to Ravenwood Bourne, Ltd. Effective September 30, 2011 the Company changed its name to PopBig, Inc.

On December 26, 2013, the Company changed its name to EMAV Holdings, Inc. and entered into a merger agreement to acquire Electric Motors and Vehicles Company, a Delaware corporation (“EMAVC”). The merger completed on December 27, 2013 and was accounted for as a reverse merger and a recapitalization in which EMAVC was deemed to be the accounting acquirer. Consequently, the assets and liabilities and the operations are reflected as the historical financial statements prior to the merger will be those of EMAVC and are recorded at the historical cost basis of EMAVC, and the consolidated financial statements subsequent to completion of the merger include the assets and liabilities of EMAV and EMAVC, and the operations of the combined Company from the closing date of the merger. The Company elected to change its fiscal year end to be December 31.

Electric Motors And Vehicles Company was formed under the laws of Delaware on March 11, 2010. EMAVC’s principal business is electric vehicle manufacturing and sales. It plans to design, assemble, and sell premium electric rugged sport adventure vehicles directly through a network of dealerships. EMAVC will deploy a unique approach to build and bring its vehicles to market. Rather than creating a new vehicle and building out a new distribution network, EMAVC will use the four-door Jeep Wrangler as the platform for its signature electric vehicle.

Going Concern

The accompanying (a) condensed consolidated balance sheet at December 31, 2015 has been derived from the audited statements, and (b) the condensed consolidated unaudited financial statements as of and for the periods ended March 31, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2016.  It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results of operations expected for the year ending December 31, 2016.

The Company’s unaudited consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established a stable ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company funded its operations in 2015 and 2016 through sale of its equity, debt financing and sale of its vehicle. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company incurred a net loss of $2,289,129 for the three months ended March 31, 2016, used net cash in operating activities of $132,448, has a working capital deficit of $2,429,663, and has an accumulated deficit of $7,587,776 as of March 31, 2016. These factors, among others raise a substantial doubt regarding the Company’s ability to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Note 2 - Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Notes

Note 2 - Significant Accounting Policies

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following summary of significant accounting policies of the Company is presented to assist in the understanding of the Company’s consolidated financial statements. The consolidated financial statements and notes are the representation of the Company’s management who is responsible for their integrity and objectivity. The consolidated financial statements of the Company conform to accounting principles generally accepted in the United States of America (U.S. GAAP).

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Electric Motors and Vehicles Company. All intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates of valuation of equity instruments. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Fair value of Financial Instruments and Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, loan payable to a related party and promissory notes payable. Pursuant to ASC 820 and ASC 825, “Financial Instruments”, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Assets and liabilities measured at fair value on a recurring and non-recurring basis consist of the following at March 31, 2016:

			Fair Value Measurements at March 31, 2016
	Carrying Value at March 31, 2016		(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liability	$	2,287,496	$	-	$	2,287,496	$	-

The following is a summary of activity of Level 2 assets and liabilities for the period ended March 31, 2016:

Embedded conversion option liability
Balance – January 1, 2016	$	78,713
Additions		87,011
Change in fair value		2,121,772
Balance – March 31, 2016	$	2,287,496

Changes in fair value of the embedded conversion option liability are included in Other Income (Expenses) in the accompanying Condensed Consolidated Statements of Operations.

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured. The Company closely follows the provisions of ASC 605 “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above.  The Company has not recognized any revenue for the three months ended March 31, 2016 and 2015, respectively.

Earnings (Loss) Per Common Share

The Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At March 31, 2016 and December 31, 2015, there were 4,615,646 and 363,636 common shares available for conversion of convertible note into equity, which if exercised, may dilute future earnings per share. Outstanding warrants to purchase 2,500,000 shares of common stock were excluded from this calculation as their effect would be anti-dilutive due to the reported net losses in each period.

Equity Instruments Issued to Non-Employees for Acquiring Goods or Services

Issuances of the Company’s common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. However, situations may arise in which counter performance may be required over a period of time but the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist as the instruments fully vested on the date of agreement, the Company determines such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to general and administrative expense in the accompanying statement of operations over the contract period. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates.

Non-Cash Equity Transactions

Shares of equity instruments issued for non-cash consideration are recorded at the estimated fair market value of the consideration granted based on the estimated fair market value of the equity instrument, or at the estimated fair market value of the goods or services received whichever is more readily determinable.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company follows the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Recent Accounting Pronouncements

We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

Consolidation Reporting

In February 2015, the FASB issued ASU 2015-02, "Consolidation: Amendments to the Consolidation Analysis" (“ASU 2015-02”). This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of March 31, 2016, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  The Company has not adopted ASU 2015-02 as of March 31, 2016, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

New Accounting Pronouncements

In May 2014, and later amended in August 2015, the Financial Accounting Standards Board (“FASB”) issued new Accounting Standards Update (“ASU”) regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance and, and is effective for public entities for annual and interim periods beginning after December 31, 2017. Early adoption is permitted for reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of this new guidance on the Company’s financial statements.

In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements Going Concern”, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. The guidance is not expected to have a material impact on the Company’s financial statements. 

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted.  The guidance is not expected to have a material impact on the Company’s financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update simplify the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. These amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance is not expected to have a material impact on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a public entity. Early adoption of the amendments in this standard is permitted for all entities and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the effect this guidance will have on its financial statements and related disclosures.

The Financial Accounting Standards Board issues Accounting Standard Updates to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

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Note 3 - Property and Equipment

3 Months Ended

Mar. 31, 2016

Notes

Note 3 - Property and Equipment

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consists of:

		March 31,		December 31,
		2016		2015
		(Unaudited)
Property and equipment	$	7,583	$	7,583
Less: accumulated depreciation		(4,897)		(4,265)
Property and equipment, net	$	2,686	$	3,318

Depreciation expense for the three months ended March 31, 2016 and 2015 was $632 and $2,864, respectively.

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Note 4 - Note Payable

3 Months Ended

Mar. 31, 2016

Notes

Note 4 - Note Payable

NOTE 4 – NOTES PAYABLE

Notes payable consist of:

		March 31, 2016		December 31, 2015
		(Unaudited)
Stockholder note payable, principal balance $40,000, unsecured, 5% stated annual interest, monthly interest only payments from September 18, 2014 to April 2015, 24 fixed monthly payments of $3,290 from May 18, 2015 to April 18, 2017. Original discount of $33,233 applied to normalize interest to 5% will be amortized over the loan term (P/Note 1)	$	73,233	$	73,233
Stockholder note payable, principal balance of $53,000, unsecured, interest bearing, monthly payment of $3,790 starting February 1, 2014, due April 1, 2016 (P/Note 2)		2,454		11,745
Note payable, principal balance of $75,000, unsecured, bearing 10% annual interest, due in full for unpaid principal and interest on or before June 30, 2016 (P/Note 3)		75,000		75,000
Total	$	150,687	$	159,978
Note payable - current portion	$	150,687	$	159,978
Note payable - long term portion	$	-	$	-
Debt discount - current portion	$	12,707	$	15,639
Debt discount - long term portion	$	-	$	-

On June 18, 2014, the Company executed a promissory note (the “P/Note 1”) with a stockholder lender in the principal amount of $40,000. The terms of the P/Note 1 require the Company to make (a) monthly interest only payments (5% annual rate) starting on September 18, 2014; (b) twenty-four (24) payments of $3,290 each, including principal and interest, beginning May 18, 2015 through April 18, 2017, at which time the entire principal amount, plus any and all accrued interest shall be due and payable; and, (c) in the event of an investment or series of related investments of at least $5,000,000 before April 18, 2017, then the entire principal balance and all accrued and unpaid interest shall be due in full in addition to a $5,000 prepayment penalty. In connection with the issuance of P/Note 1, the Company has recorded a debt discount of $33,233 applied to normalize interest to 5% which will be amortized as interest expense over the life of the P/Note 1. The Company is in default in making its note payments as of March 31, 2016 and the note holder has not made a demand for the past due payments. The Company has recognized interest expense of $2,932 for amortization of debt discount related to P/Note 1 for both the three months ended March 31, 2016 and 2015, respectively. The unamortized portion of debt discount was $12,707 and $15,639 at March 31, 2016 and December 31, 2015, respectively. In addition, the Company has recorded an interest expense of $143 and $500 for the three months ended March 31, 2016 and 2015, and accrued interest on P/Note 1 was $2,775 and $2,632 at March 31, 2016 and December 31, 2015, respectively.

On May 23, 2013, the Company executed a promissory note (the “P/Note 2”) with a stockholder in the principal amount of $53,000. The terms of the P/Note 2 required the Company to make (a) a principal payment of $3,000 on or before June 6, 2013, and (b) fifteen (15) monthly payments of $3,790 each, including principal and interest, beginning February 2014 through April 2015, at which time the entire principal amount, plus any and all accrued interest was due and payable.

On March 30, 2015, the Company and the shareholder mutually agreed to extend the due date of payment of the P/Note 2 to April 1, 2016. During the three months ended March 31, 2016, the Company made note payments of principal of $9,291 and interest payments of $909. The Company is delinquent in making a payment of $2,454 as of March 31, 2016, and the note holder has not made a demand for the past due payment. The Company has recorded interest expense of $920 and $909 on P/Note 2 for the three months ended March 31, 2016 and 2015, and accrued interest on P/Note 2 was $6,204 and $6,194 at March 31, 2016 and December 31, 2015, respectively.

In conjunction with the execution of P/Note 2, the Company agreed to issue 100,000 shares of restricted common stock at its fair value of $30,000 to the stockholder on May 23, 2014, as an additional consideration and not as additional interest. In connection with the issuance of the common stock pursuant to P/Note 2, the Company recorded a debt discount in the amount of $30,000 which was being amortized to interest expense over the life of the Note. The Company recorded interest expense of $0 and $4,091 as the amortization of debt discount related to P/Note 2 for the three months ended March 31, 2016 and 2015, respectively. The net book value of the unamortized portion of the debt discount was $0 at both March 31, 2016 and December 31, 2015, respectively.

On December 22, 2015, the Company executed a promissory note (P/Note 3) to pay a third party a commitment fee of $50,000 and legal fees of $25,000 for a total consideration of $75,000. The third party agreed to commit to purchase up to $5 million worth of common stock over a period of time terminating on the earlier of (i) 24 months from the date on which the agreement was executed and delivered by the Company and the third party, or (ii the date on which the third party has purchased the aggregate maximum purchase of $5 million. The promissory note bears an interest at the rate of 10% per annum. Payment of all amounts due under P/Note 3, principal and interest, is due on or before June 30, 2016. The Company has recorded the principal amount of the promissory note of $75,000 as a deferred asset upon execution of the promissory note and which will be offset as fee for capital raise against the additional paid in capital when capital is raised by the third party. The Company has recorded an interest expense of $1,870 for the three months ended March 31, 2016, and accrued interest on P/Note 3 was $2,055 and $185 at March 31, 2016 and December 31, 2015, respectively.

The Company has recorded total interest expense on P/Note 1 and P/Note 2 relating to amortization of debt discount of $2,932 and $9,056 for the three months ended March 31, 2016 and 2015, respectively. The Company has recorded interest expense of $2,932 and $1,409 for the three months ended March 31, 2016 and 2015, made interest payments of $909 and $626 for the three months ended March 31, 2016 and 2015, and recorded accrued interest of $11,034 and $9,012 on P/Note 1, P/Note 2 and P/Note 3 as of March 31, 2016 and December 31, 2015, respectively.

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Note 5 - Convertible Note Payable

3 Months Ended

Mar. 31, 2016

Notes

Note 5 - Convertible Note Payable

NOTE 5 – CONVERTIBLE NOTES PAYABLE

Convertible notes payable consist of:

		March 31,		December 31,
		2016		2015
		(Unaudited)
Convertible note payable to a third party, principal balance of $50,000, secured, bearing interest of 12%, due on May 17, 2016 (CPN 1 Note)	$	32,242	$	50,000
Convertible note payable to a third party, principal balance of $86,000, secured, bearing annual interest at 6%, due on January 28, 2017 (CPN 2 Note)		86,000		-
Convertible note payable to a third party, principal balance of $86,000, secured, bearing annual interest at 6%, due on January 28, 2017 (CPN 3 Note)		86,000		-
		204,242		50,000
Less: debt discounts		(179,611)		(27,426)
Convertible notes payable, net	$	24,631	$	22,574
Less: current portion	$	(24,631)	$	(22,574)
Convertible notes payable, non-current	$	-	$	-

Convertible Promissory Note (the “CPN 1 Note”)

On August 17, 2015, the Company received $45,000 from a third party investor against a $50,000 Convertible Promissory Note (the “CPN 1” Note) executed on August 17, 2015. The CPN 1 Note bears an interest rate of 10% per annum. The maturity date of the CPN 1 Note is May 17, 2016 and is the date upon which the principal sum of this promissory note, as well as any unpaid interest and other fees, shall be due and payable. The lender has the right at any time after the effective date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the conversion price. The conversion price is the lessor of 55% of the lowest trade price in the 25 trading days previous to the conversion date.

In connection with the issuance of the CPN 1 Note, the Company recorded an original issuance debt discount (“OID”) in the amount of $5,000 which will be amortized to interest expense over the term of the draw of nine months. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $50,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $3,307 for a total initial embedded conversion option liability of $53,307. On February 17, 2016, the Company issued 108,403 shares of its common stock to the third party investor pursuant to a conversion notice under the terms of CPN 1 Note. Pursuant to the conversion notice, the investor converted $12,521 of the principal and interest of CPN 1 Note into 108,403 shares of our common stock valued at $0.1155 per share. On March 14, 2016, the Company issued 952,203 shares of its common stock to the third party investor pursuant to a conversion notice under the terms of CPN 1 Note. Pursuant to the conversion notice, the investor converted $5,237 of the principal of CPN 1 Note into 952,203 shares of our common stock valued at $0.0055 per share. As a result of the debt conversions, the Company recorded an expense of $320,810 due to change in fair value of the embedded conversion option liability for the three months ended March 31, 2016.

For the three months ended March 31, 2016, the Company has recorded interest expense of $1,100 on the CPN 1 Note, interest expense of $1,630 related to the amortization of the OID, $16,852 related to the amortization of the embedded conversion option liability discount, and $320,810 expense due the change in fair value of embedded conversion option liability due to debt conversions.  The CPN 1 Note balance was $32,242 and $50,000 at March 31, 2016 and December 31, 2015, respectively, unamortized debt discount was $741 and $2,426, unamortized embedded conversion option liability discount was $8,148 and $25,000, and accrued interest of $2,924 and $1,849 at March 31, 2016 and December 31, 2015, respectively.

Convertible Promissory Note (the “CPN 2 Note”)

On February 04, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with a third party (the “Investor”). Pursuant to the Purchase Agreement, the Investor purchased from the Company a Convertible Promissory Note (the "CPN 2 Note", and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and the Company received net proceeds of $74,900 on February 4, 2016.

The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the CPN 2 Note is due and payable on the maturity date, which is January 28, 2017. Any amount of principal or interest that is due under the CPN 2 Note, which is not paid by the maturity date, will bear interest at the rate of 24% per annum until it is paid. Further, the Company is obligated to reduce the Principal Amount by 50% on or before July 28, 2016. Should the Company fail to do so, then outstanding principal amount will be increased by 200%.

The Note is convertible into shares of the Company's common stock at any time at the discretion of the Investor at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. The Company agreed to reserve that number of shares of common stock equal to 70% of our authorized shares of common stock not otherwise issued.

The CPN 2 Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the CPN 2 Note, the promissory note shall become immediately due and payable and subject to penalties provided for in the CPN 2 Note.

In connection with the issuance of the CPN 2 Note, the Company recorded an original issuance debt discount (“OID”) in the amount of $11,100 which will be amortized to interest expense over the term of the draw of 357 days. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $10,995 for a total initial embedded conversion option liability of $96,995. For the three months ended March 31, 2016, the Company has recorded interest expense of $792 on the CPN 2 Note, interest expense related to the amortization of the OID discount of $1,741, interest expense related to the amortization of the embedded conversion option liability discount of $13,490, and change in fair value of embedded conversion option liability of $898,952. At March 31, 2016, the principal balance of CPN 2 Note was $86,000, embedded conversion option liability of CPN 2 Note was $887,957, unamortized OID discount was $9,359, unamortized embedded conversion option liability discount was $72,510, and accrued interest was $792.

Convertible Promissory Note (the “CPN 3 Note”)

On February 29, 2016, the Company closed and funded a financing transaction by entering into a Securities Purchase Agreement (the "Purchase Agreement") with the same third party (the “Investor”) who also executed CPN 2 Note. Pursuant to the Purchase Agreement, the Investor purchased from the Company a Convertible Promissory Note (the "CPN 3 Note"), and together with the Purchase Agreement, the "Transaction Documents") in the aggregate principal amount of $86,000 (the "Principal Amount"), and the Company received net proceeds of $74,900 on February 29, 2016.

The Principal Amount bears interest at 6% per annum. All outstanding principal and accrued interest on the CPN 3 Note is due and payable on the maturity date, which is March 1, 2017. Any amount of principal or interest that is due under the CPN 3 Note, which is not paid by the maturity date, will bear interest at the rate of 24% per annum until it is paid. Further, the Company is obligated to reduce the Principal Amount by 50% on or before July 28, 2016. Should the Company fail to do so, then outstanding principal amount will be increased by 200%.

The Note is convertible into shares of the Company's common stock at any time at the discretion of the Investor at a conversion price per share equal to the lesser of: (a) the closing price of the Common Stock on the day before the conversion; or, (b) 50% of the lowest trading price for the common stock during the 30-days of trading ending on the latest complete trading day prior to the date of conversion. The conversion price is subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the Transaction Documents. The Company agreed to reserve that number of shares of common stock equal to 70% of our authorized shares of common stock not otherwise issued.

The CPN 3 Note may be repaid in whole at any time. The repayment amount is subject to a premium on the outstanding principal balance of 150%. If the Company fails to meet its obligations under the terms of the CPN 2 Note, the promissory note shall become immediately due and payable and subject to penalties provided for in the CPN 3 Note.

In connection with the issuance of the CPN 3 Note, the Company recorded an original issuance debt discount (“OID”) in the amount of $11,100 which will be amortized to interest expense over the term of the draw of one year. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $86,000 which will be amortized to interest expense over the term of the draw and an initial change in fair value of $11,734 for a total initial embedded conversion option liability of $97,734. For the three months ended March 31, 2016, the Company has recorded interest expense of $438 on the CPN 3 Note, interest expense related to the amortization of the OID of $943, interest expense related to the amortization of the embedded conversion option liability discount of $7,304, and change in the fair value of embedded conversion option liability of $902,010. At March 31, 2016, the principal balance of CPN 3 Note was $86,000, embedded conversion option liability on CPN 3 Note was $890,275, unamortized original issuance debt discount was $10,157, unamortized embedded conversion option liability discount was $78,690, and accrued interest was $438.

The Company has recorded a total interest expense of $2,305 and $0, on the principal balances of CPN 1 Note, CPN 2 Note and CPN 3 Note, for the three months ended March 31, 2016 and 2015, respectively. In addition, the Company has recorded interest expense for the three months ended March 31, 2016 and 2015, relating to (i) amortization of OID discount of $4,369 and $0, and (ii) amortization of the embedded conversion option liability discount of $37,646 and $0. The Company has recorded accrued interest of $4,179 and $1,849 as of March 31, 2016 and December 31, 2015, respectively.

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Note 6 - Derivative Financial Instruments

3 Months Ended

Mar. 31, 2016

Notes

Note 6 - Derivative Financial Instruments

NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS

Under the provisions of ASC 815-40, convertible instruments issued by the Company qualify for derivative treatment due to the variable conversion formula (Note 5). The embedded conversion features of the convertible note is bifurcated and recorded as a liability which is revalued at fair value each reporting date. If the fair value of the embedded conversion feature exceeds the face value of the related debt, net of other discounts, the excess is recorded as a change in fair value on the issuance date. Embedded conversion features are valued at their fair value, rather than by the intrinsic value method.

The Company calculated the estimated fair values of the liabilities for embedded conversion feature at March 31, 2016 with the Black-Scholes option pricing model using the closing price of the Company’s common stock at each respective date and the ranges for volatility, expected term, and risk free interest indicated in the table below. As a result, the Company recorded a change in the fair value of the liabilities for embedded conversion option derivative instruments for the three months ended March 31, 2016 of $348,201 which was included in Other Income (Expenses) (See Note 2 Fair Value Measurements) in the accompanying Condensed Consolidated Statements of Operations.

The fair market value of the Company’s common stock on February 4, 2016, February 29, 2016 and March 31, 2016 was $0.30, $0.21 and $0.04 per share, respectively.

Embedded Conversion Options

	Black-Scholes Model Assumptions
	During The Three Months Ended March 31, 2016
Annualized volatility	82.58% - 328.16%
Expected term	0.13 – 1.00 years
Risk free interest rate	0.32% - 0.52%

A significant factor in which impacted the fair market value of the derivative liability was the significant difference between the fair market value of the Company's common stock of $0.04 per share and the conversion price of $0.0075 per share at March 31, 2016. The conversion price is based upon the lowest trade within the previous 20 - 25 days from the fair value date. Thus, the valuation is highly dependent upon the price of these trades and the fair market value of the Company's common stock at each measurement date.

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Note 7 - Related Party Transactions

3 Months Ended

Mar. 31, 2016

Notes

Note 7 - Related Party Transactions

NOTE 7 – RELATED PARTY TRANSACTIONS

In April 2010, the Company entered into a verbal agreement with its executive director for providing business consulting and marketing services to the Company. No fixed compensation was agreed at the time of the verbal agreement. On November 14, 2014, the executive director resigned from his position and entered into a separation agreement which provided for, among other covenants and conditions, a mutual release of all claims between the Company and its executive director. The executive director was previously allotted 13,000,000 shares of the Company’s common stock. Pursuant to the separation agreement, the executive agreed to retain 1,000,000 shares of common stock, and the Company had the sole discretion to determine the disposition of the remaining 12,000,000 shares of common stock. The Company has allocated these 12,000,000 shares of common stock as follows: (i) 6,125,000 shares of common stock have been reallocated to other persons and the Company has recorded an expense of $3,062,500 upon their issuance, (ii) 5,000,000 shares of common stock were cancelled and returned to the status of authorized and unissued shares, and (iii) the remaining 875,000 shares of common stock to remain issued and held in treasury as of March 31, 2016 (See Note 9). The Company made no cash payments to the executive director for consulting fees for the three months ended March 31, 2016 and 2015, respectively.

The Company has engaged an entity owned by the Chief Executive Officer/Director (“Officer”) of the Company to provide business advisory, consulting, and legal services. The Company has recorded and paid legal and professional fees of $38,000 and $34,500 to this entity for the three months ended March 31, 2016 and 2015, respectively. Payments are made to this entity as the funds are available. The Company is indebted to this entity $0 as of March 31, 2016 and December 31, 2015, respectively. In addition, the Company has made payments of $1,800 and $500 to the Officer’s family members for performing services for the Company for the three months ended March 31, 2016, as compared to $0 for the same comparable period in 2015.

The Officer has occasionally provided short term advances to the Company for its working capital needs. The short term advances are non-interest bearing, unsecured and due on demand. The Company is indebted to the Officer $22,500 due and payable as of March 31, 2016 and December 31, 2015, respectively.

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Note 8 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Notes

Note 8 - Commitments and Contingencies

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Settlement of Litigation

The Company entered into an agreement for public relations services (the “Agreement”) with an unrelated third party (“DLC”) in September 2010. The Company disputed the quality of the services rendered and failed to tender final payment under the Agreement. DLC initiated legal action against the Company in January 2012 for collection under the Agreement. The Company did not have the resources to contest the action, so a default judgment was entered against the Company in favor of DLC in July 2012 in the amount of $14,425. Thereafter, DLC sought to collect on the judgment, and the total amount claimed by DLC grew to over $25,000 as DLC was entitled to collect attorney’s fees under the Agreement.

In October 2013, the entire Agreement with DLC was negotiated and settled, requiring the Company to pay DLC $3,000 in November 2013 and $1,000 per month for the next 12-month period. The Company agreed not to contest DLC’s ownership of 80,000 shares of the Company’s stock. As of March 31, 2016 and December 31, 2015, the remaining liability on the settlement of $7,000 is included in accounts payable in accompanying consolidated financial statements. The Company plans on paying DLC for the months of May 2014 through November 2014, which DLC has yet to demand.

Legal Costs and Contingencies

In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.

If a loss is considered probable and the amount can be reasonable estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss if recovery is also deemed probable.

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Note 9 - Stockholders' Equity

3 Months Ended

Mar. 31, 2016

Notes

Note 9 - Stockholders' Equity

NOTE 9 – STOCKHOLDERS’ EQUITY

The Company’s capitalization at March 31, 2016 was 300,000,000 authorized common shares with a par value of $0.001, and 10,000,000 authorized preferred shares with a par value of $0.001.

Common stock

On November 14, 2014, pursuant to a separation agreement with an executive, the Company received 875,000 shares of returned common stock, which remain issued and not outstanding and held as treasury shares as of March 31, 2016 and December 31, 2015 (See Note 7).

Warrants

On April 14, 2010, the Company granted three individuals, warrants to purchase 2,500,000 shares of common stock at an exercise price of $0.25 per share as compensation in connection with the individuals providing introductions for raising capital for the Company. The warrants have a six year term and expire in April 2016. The fair value of 2,500,000 warrants at the original issue date was estimated to be $1,077,927 using a Black-Scholes option pricing model with an expected life of 6 years, a risk free interest rate of 2.96%, a dividend yield of 0%, and an expected volatility of 100%. The expected volatility was estimated to be 100% since the Company's stock is not traded and no historical volatility data is available. As these services were provided as part of the Company’s equity funding, the value of the warrants were recorded within equity as part of the accounting for the related equity transactions. There have been no other grants of warrant instruments through March 31, 2016.

The Company has not established a stock option plan nor has issued any stock options through March 31, 2016.

As a result of all common stock issuances and cancellations, the total common shares issued at March 31, 2016 were 48,841,071 of which 47,966,071 shares were outstanding and the remaining 875,000 shares were held in treasury.

Preferred Stock

At March 31, 2016, the Company had no shares of preferred stock issued or outstanding.

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Note 10 - Concentration of Credit Risk

3 Months Ended

Mar. 31, 2016

Notes

Note 10 - Concentration of Credit Risk

NOTE 10 - CONCENTRATION OF CREDIT RISK

The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses related to this in any such accounts. The Company’s bank balances did not exceed FDIC insured amounts as of March 31, 2016 and December 31, 2015, respectively.

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Note 11 - Subsequent Events

3 Months Ended

Mar. 31, 2016

Notes

Note 11 - Subsequent Events

NOTE 11 – SUBSEQUENT EVENTS

Management has evaluated subsequent events and transactions that occurred through the date and time our financial statements were available to be issued, noting no items that would impact the accounting for events or transactions in the current period or require additional disclosure.

On April 14, 2010, the Company granted three individuals, warrants to purchase 2,500,000 shares of common stock at an exercise price of $0.25 per share as compensation in connection with the individuals providing introductions for raising capital for the Company. The warrants had a six year term and expired on April 14, 2016.

On April 29, 2016, the Company issued 1,432,999 shares of its common stock to a third party investor pursuant to a conversion notice under the terms of CPN 1 Note. The investor converted $19,704 of the principal and interest of CPN 1 Note into 1,432,999 shares of our common stock valued at $0.01375 per share.

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Note 1 - Nature of Operations and Going Concern: Substantial Doubt about Going Concern (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Substantial Doubt about Going Concern

Going Concern

The accompanying (a) condensed consolidated balance sheet at December 31, 2015 has been derived from the audited statements, and (b) the condensed consolidated unaudited financial statements as of and for the periods ended March 31, 2016 and 2015, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2016.  It is management’s opinion, however, that all material adjustments (consisting of normal recurring adjustments), have been made which are necessary for a fair financial statements presentation. The financial statements include all material adjustments (consisting of normal recurring accruals) necessary to make the financial statements not misleading as required by Regulation S-X, Rule 10-01. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results of operations expected for the year ending December 31, 2016.

The Company’s unaudited consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established a stable ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company funded its operations in 2015 and 2016 through sale of its equity, debt financing and sale of its vehicle. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company incurred a net loss of $2,289,129 for the three months ended March 31, 2016, used net cash in operating activities of $132,448, has a working capital deficit of $2,429,663, and has an accumulated deficit of $7,587,776 as of March 31, 2016. These factors, among others raise a substantial doubt regarding the Company’s ability to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Note 2 - Significant Accounting Policies: Principles of Consolidation (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Electric Motors and Vehicles Company. All intercompany balances and transactions are eliminated in consolidation.

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Note 2 - Significant Accounting Policies: Use of Estimates (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates of valuation of equity instruments. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

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Note 2 - Significant Accounting Policies: Cash and Cash Equivalents (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

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Note 2 - Significant Accounting Policies: Fair Value of Financial Instruments and Fair Value Measurements (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Fair Value of Financial Instruments and Fair Value Measurements

Fair value of Financial Instruments and Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, loan payable to a related party and promissory notes payable. Pursuant to ASC 820 and ASC 825, “Financial Instruments”, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Assets and liabilities measured at fair value on a recurring and non-recurring basis consist of the following at March 31, 2016:

			Fair Value Measurements at March 31, 2016
	Carrying Value at March 31, 2016		(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liability	$	2,287,496	$	-	$	2,287,496	$	-

The following is a summary of activity of Level 2 assets and liabilities for the period ended March 31, 2016:

Embedded conversion option liability
Balance – January 1, 2016	$	78,713
Additions		87,011
Change in fair value		2,121,772
Balance – March 31, 2016	$	2,287,496

Changes in fair value of the embedded conversion option liability are included in Other Income (Expenses) in the accompanying Condensed Consolidated Statements of Operations.

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Note 2 - Significant Accounting Policies: Revenue Recognition (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Revenue Recognition

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists; delivery has occurred; price is fixed or determinable; and collectability of the related receivable is reasonably assured. The Company closely follows the provisions of ASC 605 “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above.  The Company has not recognized any revenue for the three months ended March 31, 2016 and 2015, respectively.

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Note 2 - Significant Accounting Policies: Earnings (loss) Per Common Share (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Earnings (loss) Per Common Share

Earnings (Loss) Per Common Share

The Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At March 31, 2016 and December 31, 2015, there were 4,615,646 and 363,636 common shares available for conversion of convertible note into equity, which if exercised, may dilute future earnings per share. Outstanding warrants to purchase 2,500,000 shares of common stock were excluded from this calculation as their effect would be anti-dilutive due to the reported net losses in each period.

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Note 2 - Significant Accounting Policies: Income Taxes (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Income Taxes

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company follows the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

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Note 2 - Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2016

Policies

Recent Accounting Pronouncements

Recent Accounting Pronouncements

We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

Consolidation Reporting

In February 2015, the FASB issued ASU 2015-02, "Consolidation: Amendments to the Consolidation Analysis" (“ASU 2015-02”). This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in ASU 2015-02 are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The Company has not adopted ASU 2015-02 as of March 31, 2016, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

Debt Issuance Costs

In April 2015, the FASB issued ASU 2015-03, "Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs". This standard update requires an entity to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability as opposed to an asset. Amortization of the costs will continue to be reported as interest expense. The update is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued, and the new guidance would be applied retrospectively to all prior periods presented.  The Company has not adopted ASU 2015-02 as of March 31, 2016, and the adoption is not expected to have an impact on the Company’s consolidated financial statements.

New Accounting Pronouncements

In May 2014, and later amended in August 2015, the Financial Accounting Standards Board (“FASB”) issued new Accounting Standards Update (“ASU”) regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance and, and is effective for public entities for annual and interim periods beginning after December 31, 2017. Early adoption is permitted for reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of this new guidance on the Company’s financial statements.

In August 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements Going Concern”, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. The guidance is not expected to have a material impact on the Company’s financial statements. 

In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted.  The guidance is not expected to have a material impact on the Company’s financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this update simplify the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. These amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The amendments are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The guidance is not expected to have a material impact on the Company’s financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 840), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this standard are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a public entity. Early adoption of the amendments in this standard is permitted for all entities and the Company must recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently in the process of evaluating the effect this guidance will have on its financial statements and related disclosures.

The Financial Accounting Standards Board issues Accounting Standard Updates to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

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Note 2 - Significant Accounting Policies: Fair Value of Financial Instruments and Fair Value Measurements: Fair Value Measurements, Recurring and Nonrecurring (Tables)

3 Months Ended

Mar. 31, 2016

Tables/Schedules

Fair Value Measurements, Recurring and Nonrecurring

			Fair Value Measurements at March 31, 2016
	Carrying Value at March 31, 2016		(Level 1)		(Level 2)		(Level 3)
Embedded conversion option liability	$	2,287,496	$	-	$	2,287,496	$	-

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Note 2 - Significant Accounting Policies: Fair Value of Financial Instruments and Fair Value Measurements: Summary of activity of Level 3 assets and liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Tables/Schedules

Summary of activity of Level 3 assets and liabilities

Embedded conversion option liability
Balance – January 1, 2016	$	78,713
Additions		87,011
Change in fair value		2,121,772
Balance – March 31, 2016	$	2,287,496

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Note 3 - Property and Equipment: Schedule of property and equipment (Tables)

3 Months Ended

Mar. 31, 2016

Tables/Schedules

Schedule of property and equipment

Property and equipment consists of:

		March 31,		December 31,
		2016		2015
		(Unaudited)
Property and equipment	$	7,583	$	7,583
Less: accumulated depreciation		(4,897)		(4,265)
Property and equipment, net	$	2,686	$	3,318

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Note 4 - Note Payable: Schedule of note payable (Tables)

3 Months Ended

Mar. 31, 2016

Tables/Schedules

Schedule of note payable

Notes payable consist of:

		March 31, 2016		December 31, 2015
		(Unaudited)
Stockholder note payable, principal balance $40,000, unsecured, 5% stated annual interest, monthly interest only payments from September 18, 2014 to April 2015, 24 fixed monthly payments of $3,290 from May 18, 2015 to April 18, 2017. Original discount of $33,233 applied to normalize interest to 5% will be amortized over the loan term (P/Note 1)	$	73,233	$	73,233
Stockholder note payable, principal balance of $53,000, unsecured, interest bearing, monthly payment of $3,790 starting February 1, 2014, due April 1, 2016 (P/Note 2)		2,454		11,745
Note payable, principal balance of $75,000, unsecured, bearing 10% annual interest, due in full for unpaid principal and interest on or before June 30, 2016 (P/Note 3)		75,000		75,000
Total	$	150,687	$	159,978
Note payable - current portion	$	150,687	$	159,978
Note payable - long term portion	$	-	$	-
Debt discount - current portion	$	12,707	$	15,639
Debt discount - long term portion	$	-	$	-

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Note 5 - Convertible Note Payable: Convertible Note Payable (Tables)

3 Months Ended

Mar. 31, 2016

Tables/Schedules

Convertible Note Payable

		March 31,		December 31,
		2016		2015
		(Unaudited)
Convertible note payable to a third party, principal balance of $50,000, secured, bearing interest of 12%, due on May 17, 2016 (CPN 1 Note)	$	32,242	$	50,000
Convertible note payable to a third party, principal balance of $86,000, secured, bearing annual interest at 6%, due on January 28, 2017 (CPN 2 Note)		86,000		-
Convertible note payable to a third party, principal balance of $86,000, secured, bearing annual interest at 6%, due on January 28, 2017 (CPN 3 Note)		86,000		-
		204,242		50,000
Less: debt discounts		(179,611)		(27,426)
Convertible notes payable, net	$	24,631	$	22,574
Less: current portion	$	(24,631)	$	(22,574)
Convertible notes payable, non-current	$	-	$	-

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Note 6 - Derivative Financial Instruments: Schedule of Assumptions Used (Tables)

3 Months Ended

Mar. 31, 2016

Tables/Schedules

Schedule of Assumptions Used

	Black-Scholes Model Assumptions
	During The Three Months Ended March 31, 2016
Annualized volatility	82.58% - 328.16%
Expected term	0.13 – 1.00 years
Risk free interest rate	0.32% - 0.52%

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Note 1 - Nature of Operations and Going Concern (Details)	3 Months Ended
	Mar. 31, 2016
Details
Entity Incorporation, Date of Incorporation	May 14, 1987
Entity Incorporation, State Country Name	Florida

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Note 1 - Nature of Operations and Going Concern: Substantial Doubt about Going Concern (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Details
Net loss	$ 2,289,129	$ 160,427
Net cash used in operating activities	132,448	$ 88,820
Represents the monetary amount of WorkingCapitalDeficit, as of the indicated date.	2,429,663
Accumulated deficit	$ 7,587,776		$ 5,298,647

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Note 2 - Significant Accounting Policies: Fair Value of Financial Instruments and Fair Value Measurements: Fair Value Measurements, Recurring and Nonrecurring (Details)	Mar. 31, 2016 USD ($)
Represents the monetary amount of EmbeddedConversionOptionLiaibility, as of the indicated date.	$ 2,287,496
Fair Value, Inputs, Level 2
Represents the monetary amount of EmbeddedConversionOptionLiaibility, as of the indicated date.	$ 2,287,496

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Note 2 - Significant Accounting Policies: Fair Value of Financial Instruments and Fair Value Measurements: Summary of activity of Level 3 assets and liabilities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Represents the monetary amount of EmbeddedConversionOptionLiaibility, as of the indicated date.	$ 2,287,496
Additions to the Embedded Conversion Option Liability	87,011
Change in the fair value of embedded conversion option liability	2,121,772
Fair Value, Inputs, Level 3
Represents the monetary amount of EmbeddedConversionOptionLiaibility, as of the indicated date.	$ 2,287,496	$ 78,713

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Note 2 - Significant Accounting Policies: Earnings (loss) Per Common Share (Details) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Details
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	2,500,000	2,500,000

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Note 3 - Property and Equipment: Schedule of property and equipment (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Details
Property, Plant and Equipment, Gross	$ 7,583	$ 7,583
Property, Plant and Equipment, Other, Accumulated Depreciation	(4,897)	(4,265)
Property and equipment, net	$ 2,686	$ 3,318

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Note 3 - Property and Equipment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Details
Depreciation	$ 632	$ 2,864

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Note 4 - Note Payable: Schedule of note payable (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Other Notes Payable	$ 150,687	$ 159,978
Other Notes Payable, Current	150,687	159,978
Debt Discount - current	12,707	15,639
Notes Payable 1
Other Notes Payable	73,233	73,233
Notes Payable 2
Other Notes Payable	2,454	11,745
Notes Payable 3
Other Notes Payable	$ 75,000	$ 75,000

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Note 4 - Note Payable (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015	Jun. 18, 2014	May. 23, 2013
Interest Expense, Debt	$ 2,932	$ 1,409
Accrued Liabilities, Current	11,034		$ 9,012
Common shares issued in conjunction with debt settlement	30,000
Debt Discount	30,000
Amortization of OID discount on notes payable	(2,932)	(7,023)
Net stock value of the unamortized portion of the debt discount	0		0
Interest Expense, Other	$ 2,932	9,056
Common Stock
Common shares issued in conjunction with debt settlement - Shares	100,000
Notes Payable 1
Original Amount of Promissory Note				$ 40,000
Debt Instrument, Unamortized Discount (Premium), Net	$ 12,707		15,639
Interest Expense, Debt	143	500
Accrued Liabilities, Current	2,775		2,632
Notes Payable 2
Original Amount of Promissory Note					$ 53,000
Accrued Liabilities, Current	6,204		$ 6,194
Amortization of OID discount on notes payable	0	4,091
PNote2Member
Interest Expense, Debt	$ 920	$ 909

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Note 5 - Convertible Note Payable: Convertible Note Payable (Details) - USD ($)	Mar. 31, 2016	Dec. 31, 2015
Convertible Debt	$ 204,242	$ 50,000
Debt Discount on Convertible Notes Payable, Current	(179,611)	(27,426)
Convertible note payable, current portion, net of discount of $179,611 and $27,426 at March 31, 2016 and December 31, 2015, respectively	24,631	22,574
CPN 1 Note
Convertible Debt	32,242	$ 50,000
CPN 2 Note
Convertible Debt	86,000
CPN 3 Note
Convertible Debt	$ 86,000

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Note 5 - Convertible Note Payable (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Details
Convertible Debt	$ 204,242	$ 50,000
Interest Expense Related to the amortization of the embedded conversion option liability discount	$ 16,852

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Note 6 - Derivative Financial Instruments: Schedule of Assumptions Used (Details)	3 Months Ended
	Mar. 31, 2016
Minimum
Fair Value Assumptions, Expected Volatility Rate	82.58%
Fair Value Assumptions, Expected Term	1 month 17 days
Fair Value Assumptions, Risk Free Interest Rate	0.32%
Maximum
Fair Value Assumptions, Expected Volatility Rate	328.16%
Fair Value Assumptions, Expected Term	1 year
Fair Value Assumptions, Risk Free Interest Rate	0.52%

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Note 7 - Related Party Transactions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Details
Consulting fees paid to related party	$ 38,000	$ 34,500
Accounts Payable, Related Parties, Current	0		$ 0
Payable to related party	$ 22,500		$ 22,500

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Note 8 - Commitments and Contingencies (Details) - USD ($)	1 Months Ended
	Oct. 31, 2013	Jul. 31, 2012	Mar. 31, 2016
Litigation Settlement, Amount		$ 14,425
Estimated Litigation Liability		$ 25,000
Initial payment to settle litigation debt	$ 3,000
Subsequent monthly payments to settle litigation debt	$ 1,000
Remaining Liability on the Settlement
Accounts Payable, Current			$ 7,000

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Note 9 - Stockholders' Equity (Details) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Details
Common stock shares authorized	300,000,000	300,000,000
Common stock par value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.001
Treasury Stock, Shares	875,000
Common stock shares issued	48,841,071	47,780,465
Common stock shares outstanding	47,966,071	46,905,465

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Note 9 - Stockholders' Equity: Warrants (Details)	1 Months Ended
	Apr. 30, 2010 USD ($) shares
Details
Warrants Granted to Three Individuals | shares	2,500,000
Fair Value of Warrants Granted to Three Individuals | $	$ 1,077,927