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 quarterly period ended June 30, 2019

or

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

For the transition period from ___________ to ______________

Commission File Number: 000-53047

GREENKRAFT, INC.

(Exact name of registrant as specified in its charter)

Nevada	20-8767728
(State or other jurisdiction of incorporation)	(IRS Employer Identification Number)

2530 S. Birch Street

Santa Ana, CA 92707 USA

(Address of principal executive offices)

(714) 545-7777

(Registrant’s telephone number, including area code)

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

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

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

Large Accelerated Filer [  ] Accelerated Filer [  ] Non-accelerated filer [X] Smaller Reporting company [X] Emerging Growth reporting company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

As of September 30, 2019 there were outstanding 103,102,718 shares of the registrant’s common stock, $.001 par value.

TABLE OF CONTENTS

		Page
PART I	Financial Information
Item 1.	Financial Statements.
	Condensed Balance Sheets as of June 30, 2019 (unaudited) and December 31, 2018	3
	Condensed Statements of Operations for three months and Six Months ended  June 30, 2019 and 2018 (unaudited)	4
	Condensed statement of changes in stockholders’ deficit for the three months ended June 30, 2019 and June 30 2018 (unaudited)	5
	Condensed Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 (unaudited)	6
	Notes to Condensed Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II	Other Information
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Default Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
Signatures		18

2

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS 

GREENKRAFT, INC

CONDENSED BALANCE SHEETS

	As of			As of
	6/30/2019			12/31/18
	(unaudited)
Assets
Current Assets
Cash	$	259,471		$	23,876
Accounts receivable, net of allowance for doubtful account of $0		3,600			3,600
Inventories, net		1,809,161			1,806,056
Total Current Assets		2,072,232			1,833,532
Property and equipment, net		158,291			154,383
Right of use asset		245,927			-
Total Non- Current Assets		404,218			154,383
Total Assets	$	2,476,450		$	1,987,915
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable	$	51,217		$	3,399
Accounts payable - related party		310,000			250,000
Accrued liabilities		113,991			111,745
Deferred income		484,870			475,995
Convertible notes payable		3,500			5,500
Other liabilities		75,000			75,000
Short term debt CEC		240,000			240,000
Short term debt related party		100,000			-
Lease Liability - current		102,811			-
Deferred rent - current		-			831
Total Current Liabilities		1,481,389			1,162,470
Non-Current Liabilities
Deferred rent - net of current		-			8,000
Long term payable related party		1,901,916			1,901,916
Long term payable - related party Defiance		285,389			285,389
Long term payable - related party FWP		525,000			525,000
Long term payable - related party CEE		5,945			5,945
Long term debt CEC		583,981			704,000
Lease Liability - Long Term		147,449			-
Total Non-Current Liabilities		3,449,680			3,430,250
Total Liabilities		4,931,069			4,592,720
Commitments and Contingencies		-			-
Shareholders’ Deficit
Common Stock, 400,000,000 shares authorized, 103,102,718 and 105,102,718 shares issued and outstanding, respectively		103,103			105,103
Additional Paid-In Capital		4,809,777			4,812,778
Accumulated Deficit		(7,367,499	)		(7,522,686	)
Total Stockholders’ Deficit		(2,454,619	)		(2,604,805	)
Total Liabilities and Stockholders’ Deficit	$	2,476,450		$	1,987,915

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

3

GREENKRAFT, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited) 

	3 months ended June 30,						6 months ended June 30,
	2019			2018			2019		2018
Revenue	$	97,252		$	207,384		$	721,523	$	318,960
Cost of revenue		90,405			138,622			330,410		233,717
Gross Profit		6,847			68,762			391,113		85,243
Costs and expenses:
Payroll Expenses		58,393			38,746			79,994		86,913
Rent		29,413			30,000			55,502		60,000
Selling, general and administrative		45,066			79,992			100,432		147,401
Total costs and expenses		132,872			148,738			235,928		294,314
Income (Loss) from operations		(126,025	)		(79,976	)		155,185		(209,071	)
Net Income / (Loss)	$	(126,025	)	$	(79,976	)	$	155,185	$	(209,071	)
Basic Income (Loss) per share		(0.00	)		(0.00	)		0.00		(0.00	)
Weighted average number of common shares outstanding- Basic		105,102,718			105,102,718			105,098,567		104,837,525
Diluted Income per Share		(0.00	)		(0.00	)		0.00		(0.00	)
Weighted average number of common shares outstanding - Diluted		105,102,718			105,102,718			108,602,718		104,837,525

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

4

GREENKRAFT, INC.

Condensed Statement of changes in stockholders’ deficit

Three months ended June 30, 2019 and 2018

(Unaudited)

	Common Stock						Additional Paid-In			Accumulated			Total Stockholders’
	Shares			Amount			Capital			Deficit			Deficit
Balance December 31, 2017		103,102,718		$	103,103		$	4,105,577		$	(6,829,745	)	$	(2,621,065	)
Shares issued on conversion of debt		2,000,000			2,000			182,200						184,200
Net loss											(129,095	)		(129,095	)
Balance March 31, 2018		105,102,718			105,103			4,287,777			(6,958,840	)		(2,565,960	)
Net loss											(79,976	)		(79,976	)
Balance June 30, 2018		105,102,718			105,103			4,287,777			(7,038,816	)		(2,645,936	)
Net loss											(111,587	)		(111,587	)
Balance September 30, 2018		105,102,718			105,103			4,287,777			(7,150,403	)		(2,757,523	)
Forgiveness of debt - related party								525,000						525,000
Net loss											(372,281	)		(372,281	)
Balance December 31, 2018		105,102,718			105,103			4,812,777			(7,522,684	)		(2,604,804	)
Net income											281,211			281,211
Balance March 31, 2019		105,102,718			105,103			4,812,777			(7,241,473	)		(2,323,593	)
Stock repurchase		(2,000,000	)		(2,000	)		(3,000	)					(5,000	)
Net Loss											(126,024	)		(126,024	)
Balance June 30, 2019		103,102,718		$	103,103		$	4,809,777		$	(7,367,497	)	$	(2,454,617	)

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

5

GREENKRAFT, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	June 30,
	2019			2018
Operating Activities:
Income (loss)	$	155,185		$	(209,071	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock compensation Expense					-
Depreciation expense		5,471			5,471
Change in operating assets and liabilities		-			-
Inventory		(3,104	)		(477,314	)
Prepaid Inventory		-			509,365
Right of use asset, long term		(245,927	)		-
Accounts payable		47,818			(23,325	)
Accounts payable- related party		60,000			60,000
Accrued expense		2,245			21,342
Deferred Income		8,875			-
Deferred Rent current		(831	)		-
Deferred Rent non current		(8,000	)		-
Short Term debt CEC		(120,019	)		(40,000	)
Lease Liability , current		102,811			-
Lease Liability, Long term		147,449			-
Short term debt		-			(80,000	)
Net cash (used) in provided by operating activities		151,973			(233,532	)
Investing Activities:
Purchase of Machinery and Equipment		(9,380	)		-
Net cash used in investing activities		(9,380	)		-
Financing Activities:
Stock repurchase		(5,000	)		-
convertible repayment		(2,000	)		-
Borrowings under lines of credit-related party		100,000			350,000
Net cash provided by financing activities		93,000			350,000
Net increase in cash		235,595			116,468
Cash, Beginning of period		23,876			18,339
Cash, End of period	$	259,471		$	134,807
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non cash investing or financing activities
Debt converted to Common Stock	$	-		$	2,000

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

6

GREENKRAFT, INC.

Notes to Condensed Financial Statements (unaudited)

NOTE 1 – BASIS OF PRESENTATION

The included (a) condensed balance sheet as of December 31, 2018, which has been derived from audited financial statements, and (b) the unaudited condensed financial statements as of June 30, 2019 and 2018, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s December 31, 2018 Form 10-K on May 10, 2019. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the condensed financial statements which substantially duplicate the disclosure contained in the financial statements as reported in the Annual Report on Form 10-K for the year ended December 31, 2018 as filed on May 10, 2019 have been omitted.

The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

The Company currently operates in one business segment. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of businesses or separate business entities.

Recently issued accounting pronouncements

Leases

FASB ASU 2016-02 Leases (Topic 842) – In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but has been updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We have adopted the above ASU as of January 1, 2019. The right of use asset and lease liability have been recorded at the present value of the future minimum lease payments, utilizing a 5% average borrowing rate.

The Company is using the transition relief provided by the Financial Accounting Standards Board (FASB) for ASU 2016-02 at their November 29, 2017 meeting related to applying ASC 840 for comparative periods, and providing the disclosures required by ASC 840 for the comparative periods. The Company did not recognize the effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings as of January 1, 2019 as the amount was not considered to be material.

The Company believes that other recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

7

NOTE 2 - SIGNIFICIANT ACCOUNTING POLICIES AND PRACTICES

Reclassifications - Certain prior year amounts have been reclassified to conform with the current year presentation.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States necessarily requires management to make estimates and assumptions that affect the amounts reported in the financial statements. We regularly evaluate estimates and judgments based on historical experience and other relevant facts and circumstances. Actual results could differ from those estimates.

Fair Value Measurements

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Fair Value of Financial Instruments

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC 820, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2019 and December 31, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand except as noted in the table shown below.

The following table summarize items measured at fair market value during the period ended June 30, 2019:

	Level 1		Level 2		Level 3		Total
Lease	$	-	$	-	$	245,927	$	245,927
Total	$	-	$	-	$	245,927	$	245,927

8

Concentration of credit risk –Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times, such cash may be in excess of the FDIC limit. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited.

Accounts Receivable – Trade accounts receivable consist of amounts due from the sale of trucks and parts. Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 90 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. At June 30, 2019 and December 31, 2018, the Company characterized $0 and $0 as uncollectible, respectively. At June 30, 2019, the accounts receivable, $3,600 represents one customer from the sale of parts.

Inventories – Inventories are primarily raw materials. Inventories are valued at the lower of, cost as determined on a weighted average cost basis, or market. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Management writes down the inventories to market value if it is below cost. Management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if valuation allowance is required. Costs of raw material inventories include purchase and related costs incurred in bringing the products to their present location and condition. No allowance was deemed necessary by management as of June 30, 2019 and 2018, respectively.

Property and equipment – Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are ten years for all the equipment held by the Company. Depreciation expense of $2,735 and $2,735 are recognized for the quarters ended June 30, 2019 and 2018, respectively.

Research and development – Costs incurred in connection with the development of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred. During the quarter ended June 30, 2019 and 2018, $0 and $0, respectively, were expensed as research and development costs.

Long Lived Assets - In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. No allowance was deemed necessary by management as of June 30, 2019 and 2018, respectively.

9

Revenue recognition – The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, the Company applies the following methodology to recognize revenue:

i.	Identify the contract with a customer.
ii.	Identify the performance obligations in the contract.
iii.	Determine the transaction price.
iv.	Allocate the transaction price to the performance obligations in the contract.
v.	Recognize revenue when (or as) the entity satisfies a performance obligation.

Accordingly, the Company recognizes specific components of revenue as described below:

1. Parts – Performance obligation to deliver “X” parts are recognized as products are shipped. Typically there is not a large volume of parts (recently), thus contract price allocated to performance obligations (ratable parts) as shipped.

2. Service – “Right to invoice” practical expedient pursuant to 606-10-55-18, billed at hourly rates plus parts.

3. Trucks – Performance obligation to deliver system. Recognition of revenue at a point in time, given recognition over time criteria not met pursuant to 606-10-25-24. Final transfer of control passed to customer upon receipt and final acceptance. When the truck is accepted by the customer the final invoice is issued and all deferred revenue is recognized along with the related work in process costs for the truck. Trucks generally take 90 days to manufacture, assemble and then ship to our various customers. As of June 30, 2019 and December 31, 2018 customer deposits were $484,870  and $475,995 respectively. 

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

We have net operating loss carry forwards available to reduce future taxable income. Future tax benefits for these net operating losses carry forwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that we will not realize a future tax benefit, a valuation allowance is established.

Earning or Loss per Share - The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As there was net income for the Six months ended June 30, 2019, basic and diluted income per share are calculated separately. As there was a net loss for the quarter ended June 30, 2019, basic and diluted loss per share are the same.

10

Related Parties - A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

NOTE 3 – INVENTORY

Inventory principally consists of the cost of parts purchased and assembled during the six months ended June 30, 2019 and year ended December 31, 2018 for the assembly of the fuel-efficient vehicles to sell to the customers.

	June 30, 2019		December 31, 2018
Raw materials	$	1,809,161	$	1,806,056
Total Inventory		1,809,161		1,806,056

NOTE 4- PROPERTY AND EQUIPMENT

For the three months ended June 30, 2019 and June 30, 2018, depreciation expense of fixed assets totaled approximately $2,735 and $2,735, respectively.

For the six months ended June 30, 2019 and June 30, 2018, depreciation expense of fixed assets totaled approximately $5,471 and $5,47 1 respectively.

	June 30, 2019			December 31, 2018
Equipment	$	238,573		$	229,193
Less: Accumulated Depreciation		(80,282	)		(74,810	)
Total	$	158,291		$	154,383

NOTE 5 – RELATED PARTY TRANSACTIONS

The Defiance Company, LLC is owned by the Company’s president and controlling stockholder. As of June 30, 2019, accounts payable to Defiance is $285,389 for amounts paid by Defiance Company, LLC on behalf of Greenkraft, which is the same amount as of December 31, 2018.

As of June 30, 2019, and December 31, 2018, Greenkraft has notes payable for a total of $1,901,916, to its President and his related entities. All amounts are due on demand, unsecured and do not bear interest. This amount is classified as a long-term liability as the Company’s President does not expect repayment during the next 12 months.

The Company’s president is a member of CEE, LLC which performs emission testing services. During the six months ended June 30, 2019, Greenkraft did not have any services performed by CEE, LLC and as of June 30, 2019 and December 31, 2018, Greenkraft owed CEE the amount of $5,945 for insurance.

11

First Warner Properties LLC is the owner of 2215 S. Standard Ave Santa Ana Ca 92707. The company’s president is a member of First Warner. Greenkraft leased the property as assembly plant from First Warner. The term of the lease agreement was from July 2014 to July 2019, with a monthly rent of $27,500. Greenkraft terminated the lease agreement with First Warner Properties LLC at the end of August 2016. As of June 30, 2019 and December 31, 2018, Greenkraft owed $525,000 to First Warner Properties LLC. The debt does not require interest and there is no maturity date at this time.

First Standard Real Estate LLC is the owner of 2530 South Birch Street, Santa Ana, CA 92707. Greenkraft’s president is a member of First Standard Real Estate LLC. Greenkraft leased a portion of the building designated as 20,000 square feet garage area. The term of the lease agreement is from September 1, 2016 to September 30, 2021, with a monthly rent of $10,000. As of June 30, 2019 and December 31, 2018, Greenkraft owed $310,000 and $250,000 to First Standard Real Estate LLC, respectively.

NOTE 6 – LINE OF CREDIT

During the six months ended June 30, 2019 the company used a line of credit for $100,000 from the CEO.

NOTE 7 – CONVERTIBLE NOTES

As of June 30, 2019 and December 31, 2018 convertible notes had a balance of $3,500  and $5,500 respectively.

The outstanding note is convertible at a rate of $0.001 into shares of common stock $2,000 of the convertible note was paid back during the quarter ended March 31, 2019. 

NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company leases space for its offices and warehouse under a lease expiring 5 years after September 1, 2017. Rent expense is $120,000 per year, payable in installments of $10,000 per month. The future minimum lease payments under the operating lease is as follows:

Years ending December 31,	Amount
2019		60,000
2020		120,000
2021		80,000
Total	$	260,000

As discussed in Note 1, the Company adopted ASU 2016-02 related to leases as of January 1, 2019. The Company is using the transition relief discussed in Note 1 for lease accounting treatment. Rent expense was $55, 502 and $60,000  for the six months ended June 30, 2019 and 2018, respectively.

NOTE 9 – SUBSEQUENT EVENTS

Management has evaluated subsequent events from the balance sheet date through the date the financial statements were available to be issued and determined that no material subsequent events have transpired.

12

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

Safe Harbor Statement

This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

Results of Operations for the six  months ended June 30, 2019 compared to the six  months ended June 30, 2018 

Working Capital

	Six Months Ended June 30, 2019		Six Months Ended June 30, 2018
Current Assets	$	2,072,232	$	2,111,803
Current Liabilities		1,481,389		1,346,887
Working capital (deficit)		590,843		764,916

13

As at June 30, 2019, we had working capital of $590,843  and $764,916 at June 30, 2018.

Cash Flows

	Six Months Ended June 30, 2019			Six Months Ended June 30, 2018
Cash Flows Provided by (Used in) Operating Activities	$	151,976		$	(233,532	)
Cash Flows used in Investing Activities		(9,380	)		-
Cash Flows provided (used) in Financing Activities		93,000			350,000
Net Increase in Cash During Period		235,596			116,468

Cash flow from Operating Activities

During the six months ended June 30, 2019, the net cash provided by operating activities totaled $151,976 compared to the cash used total of $233,532 during the quarter ended June 30, 2018.

Cash flow from Investing Activities

During the six months ended June 30, 2019 and 2018, the net cash used by investing activities totaled $9,380 and 0.

Cash flow from Financing Activities

During the six months ended June 30, 2019, the net cash provided by financing activities totaled $93,000   compared with total of $350,000 during the six months ended June 30, 2018.

Operations

	Three Months Ended June 30, 2019			Three Months Ended June 30, 2018
Revenue	$	97,252		$	207,384
Cost of revenue		90,405			138,622
Gross profit		6,847			68,762
Operation expense		(132,872	)		(148,738	)
Income (loss) from operation	$	(126,025	)	$	(79,976	)

	Six Months Ended June 30, 2019			Six Months Ended June 30, 2018
Revenue	$	721,523		$	318,960
Cost of revenue		330,410			233,717
Gross profit		391,113			85,243
Operation expense		(235,928	)		(294,314	)
Income (loss) from operation	$	155,185		$	(209,071	)

Revenues 

We earned revenues of $97,252  during the three months ended June 30, 2019 compared to earning revenues of $207,384  during the same period in 2018 due to that period having less sales.

We earned revenues of $721,523 during the six months ended June 30, 2019 compared to earning revenues of $318,960 during the same period in 2018, which is due more truck sales for the six months ended June 30, 2019.

Operation Expenses

Our total operating expenses decreased from $148,738  to $132,872  for the three months ended June 30, 2019 compared to the same period in 2018. The reason for the decrease was in an effort to decrease operational costs.

Our total operating expenses decreased from $294,314 to $235,928  for the six months ended June 30, 2019 compared to the same period in 2018. The reason for the decrease was in an effort to decrease operational costs.

14

Liquidity

During the six months ended June 30, 2019, the Company had income from continuing operations of $721,523, net income of $155,185 stockholders’ deficit of $2,454,619  and working capital of $ 590,843.

Based on the financial support letter from the CEO of Greenkraft, he and his related party entities have no present or future plans or intentions to (A) liquidate Greenkraft, Inc.; (B) sell or otherwise dispose of all, or a significant portion of, its investment in the Company or otherwise change its capital structure; (C) discontinue providing financial support to Greenkraft, Inc; or (D) pursue the collection if the company has cash flow issues. Also, the company has $240,000 government incentives as deferred revenue in current liability. Based on the cash burn calculation, the Company is expected to have sufficient cash flow to cover the normal business operation for the twelve month-ended June 30, 2019. In the next 12 months, the Company will continue to receive sales orders, recognize revenue by selling the qualified trucks for the government incentive program, and committed financial support from the owner and his related parties to fund its ongoing operations until the Company is able to meet its own obligation as they become due.

Off-Balance Sheet Arrangements

As of June 30, 2019, we had no off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company we are not required to provide the information called for by this Item 3.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation required by Rule 13a-15 of the Exchange Act under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” and “internal control over financial reporting” as of the end of the period covered by this Report.

Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this Annual Report (the “Evaluation Date”), pursuant to Rule 13a-15(b) under the Exchange Act.

Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, due to material weaknesses in our control environment and financial reporting process.

15

Limitations on the Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, do not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision- making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in internal controls

There were no changes in our internal control over financial reporting during the six months ended June 30, 2019  that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of June 30, 2019 there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which we or any of our subsidiaries are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

ITEM 1A. Risk Factors

As a smaller reporting company we are not required to provide the information called  for by this Item 1A.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

16

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS.

(a) The following exhibits are filed herewith:

Exhibit Number	Exhibit Description
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-101.INS	XBRL Instance Document
EX-101.SCH	XBRL Taxonomy Extension Schema
EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase
EX-101.LAB	XBRL Taxonomy Extension Label Linkbase
EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase
EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase

17

SIGNATURES

Pursuant to the requirements 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.

	GREENKRAFT, INC.
Date: October 7, 2019	By:	/s/ George Gemayel
		George Gemayel
		President, Chief Executive
		Officer and Director
Date: October 7, 2019	By:	/s/ Sosi Bardakjian
		Sosi Bardakjian
		Chief Financial Officer
		and Director

18

EX-31.1

Exhibit 31.1

Certification Of The Chief Executive Officer - Pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, George Gemayel, certify that:

1.	I have reviewed this Quarterly Report on Form 10Q of Greenkraft, 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 the 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.	I am 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 15(d)-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 fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my 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.

By:	/s/ George Gemayel
	George Gemayel
	President and Chief Executive Officer
	October 7, 2019

EX-31.2

Exhibit 31.2

Certification Of The Chief Financial Officer - Pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Sosi Bardakjian, certify that:

1.	I have reviewed this Quarterly Report on Form 10Q of Greenkraft, 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 the 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.	I am 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 15(d)-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 fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my 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.

By:	/s/ Sosi Bardakjian
	Sosi Bardakjian
	Chief Financial Officer, Principal Accounting Officer
	October 7, 2019

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Greenkraft, Inc., (the “Company”) on Form 10Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George Gemayel, Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ George Gemayel
	George Gemayel
	President and Chief Executive Officer
	October 7, 2019

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Greenkraft, Inc., (the “Company”) on Form 10Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sosi Bardakjian, Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Sosi Bardakjian
	Sosi Bardakjian
	Chief Financial Officer
	October 7, 2019

XML

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Property, Plant and Equipment [Abstract]
Equipment	$ 238,573	$ 229,193
Less Accumulated Depreciation	(80,282)	(74,810)
Total	$ 158,291	$ 154,383

XML

Significant Accounting Policies and Practices (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Accounts receivable	$ 3,600		$ 3,600		$ 3,600
Depreciation expense	2,735	$ 2,735	5,471	$ 5,471
Research and development	0	$ 0
Customer deposits	484,870		484,870		475,995
Uncollectible Receivables [Member]
Accounts receivable	$ 0		$ 0		$ 0

XML

Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating Activities:
Income (loss)	$ 155,185	$ (209,071)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock compensation Expense
Depreciation expense	5,471	5,471
Change in operating assets and liabilities
Inventory	(3,104)	(477,314)
Prepaid Inventory		509,365
Right of use asset, long term	(245,927)
Accounts payable	47,818	(23,325)
Accounts payable- related party	60,000	60,000
Accrued expense	2,245	21,342
Deferred Income	8,875
Deferred Rent current	(831)
Deferred Rent non current	(8,000)
Short Term debt CEC	(120,019)	(40,000)
Lease Liability , current	102,811
Lease Liability, Long term	147,449
Short term debt		(80,000)
Net cash (used) in provided by operating activities	151,973	(233,532)
Investing Activities:
Purchase of Machinery and Equipment	(9,380)
Net cash used in investing activities	(9,380)
Financing Activities:
Stock repurchase	(5,000)
convertible repayment	(2,000)
Borrowings under lines of credit-related party	100,000	350,000
Net cash provided by financing activities	93,000	350,000
Net increase in cash	235,595	116,468
Cash, Beginning of period	23,876	18,339
Cash, End of period	259,471	134,807
Cash paid for interest
Cash paid for income taxes
Non cash investing or financing activities
Debt converted to Common Stock		$ 2,000

XML

Condensed Balance Sheets - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Current Assets
Cash	$ 259,471	$ 23,876
Accounts receivable, net of allowance for doubtful account of $0	3,600	3,600
Inventories, net	1,809,161	1,806,056
Total Current Assets	2,072,232	1,833,532
Property and equipment, net	158,291	154,383
Right of use asset	245,927
Total Non- Current Assets	404,218	154,383
Total Assets	2,476,450	1,987,915
Current Liabilities
Accounts payable	51,217	3,399
Accounts payable - related party	310,000	250,000
Accrued liabilities	113,991	111,745
Deferred income	484,870	475,995
Convertible notes payable	3,500	5,500
Other liabilities	75,000	75,000
Short term debt CEC	240,000	240,000
Short term debt related party	100,000
Lease Liability - current	102,811
Deferred rent - current		831
Total Current Liabilities	1,481,389	1,162,470
Non-Current Liabilities
Deferred rent - net of current		8,000
Long term payable related party	1,901,916	1,901,916
Long term debt CEC	583,981	704,000
Lease Liability - Long Term	147,449
Total Non-Current Liabilities	3,449,680	3,430,250
Total Liabilities	4,931,069	4,592,720
Commitments and Contingencies
Shareholders' Deficit
Common Stock, 400,000,000 shares authorized, 103,102,718 and 105,102,718 shares issued and outstanding, respectively	103,103	105,103
Additional Paid-In Capital	4,809,777	4,812,778
Accumulated Deficit	(7,367,499)	(7,522,686)
Total Stockholders' Deficit	(2,454,619)	(2,604,805)
Total Liabilities and Stockholders' Deficit	2,476,450	1,987,915
Defiance [Member]
Non-Current Liabilities
Long term payable related party	285,389	285,389
FWP [Member]
Non-Current Liabilities
Long term payable related party	525,000	525,000
CEE [Member]
Non-Current Liabilities
Long term payable related party	$ 5,945	$ 5,945

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 8 – COMMITMENTS AND CONTINGENCIES

The Company leases space for its offices and warehouse under a lease expiring 5 years after September 1, 2017. Rent expense is $120,000 per year, payable in installments of $10,000 per month. The future minimum lease payments under the operating lease is as follows:

Years ending December 31,	Amount
2019		60,000
2020		120,000
2021		80,000
Total	$	260,000

As discussed in Note 1, the Company adopted ASU 2016-02 related to leases as of January 1, 2019. The Company is using the transition relief discussed in Note 1 for lease accounting treatment. Rent expense was $55, 502 and $60,000  for the six months ended June 30, 2019 and 2018, respectively.

XML

Property and Equipment

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 4- PROPERTY AND EQUIPMENT

For the three months ended June 30, 2019 and June 30, 2018, depreciation expense of fixed assets totaled approximately $2,735 and $2,735, respectively.

For the six months ended June 30, 2019 and June 30, 2018, depreciation expense of fixed assets totaled approximately $5,471 and $5,47 1 respectively.

	June 30, 2019			December 31, 2018
Equipment	$	238,573		$	229,193
Less: Accumulated Depreciation		(80,282	)		(74,810	)
Total	$	158,291		$	154,383

XML

Inventory (Tables)

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory

	June 30, 2019		December 31, 2018
Raw materials	$	1,809,161	$	1,806,056
Total Inventory		1,809,161		1,806,056

XML

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

	June 30, 2019			December 31, 2018
Equipment	$	238,573		$	229,193
Less: Accumulated Depreciation		(80,282	)		(74,810	)
Total	$	158,291		$	154,383

XML

Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

NOTE 9 – SUBSEQUENT EVENTS

Management has evaluated subsequent events from the balance sheet date through the date the financial statements were available to be issued and determined that no material subsequent events have transpired.

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 5 – RELATED PARTY TRANSACTIONS

The Defiance Company, LLC is owned by the Company’s president and controlling stockholder. As of June 30, 2019, accounts payable to Defiance is $285,389 for amounts paid by Defiance Company, LLC on behalf of Greenkraft, which is the same amount as of December 31, 2018.

As of June 30, 2019, and December 31, 2018, Greenkraft has notes payable for a total of $1,901,916, to its President and his related entities. All amounts are due on demand, unsecured and do not bear interest. This amount is classified as a long-term liability as the Company’s President does not expect repayment during the next 12 months.

The Company’s president is a member of CEE, LLC which performs emission testing services. During the six months ended June 30, 2019, Greenkraft did not have any services performed by CEE, LLC and as of June 30, 2019 and December 31, 2018, Greenkraft owed CEE the amount of $5,945 for insurance.

First Warner Properties LLC is the owner of 2215 S. Standard Ave Santa Ana Ca 92707. The company’s president is a member of First Warner. Greenkraft leased the property as assembly plant from First Warner. The term of the lease agreement was from July 2014 to July 2019, with a monthly rent of $27,500. Greenkraft terminated the lease agreement with First Warner Properties LLC at the end of August 2016. As of June 30, 2019 and December 31, 2018, Greenkraft owed $525,000 to First Warner Properties LLC. The debt does not require interest and there is no maturity date at this time.

First Standard Real Estate LLC is the owner of 2530 South Birch Street, Santa Ana, CA 92707. Greenkraft’s president is a member of First Standard Real Estate LLC. Greenkraft leased a portion of the building designated as 20,000 square feet garage area. The term of the lease agreement is from September 1, 2016 to September 30, 2021, with a monthly rent of $10,000. As of June 30, 2019 and December 31, 2018, Greenkraft owed $310,000 and $250,000 to First Standard Real Estate LLC, respectively.

XML

Related Party Transactions (Details Narrative)	6 Months Ended
	Jun. 30, 2019 USD ($) ft²	Dec. 31, 2018 USD ($)
Accounts payable - related party	$ 310,000	$ 250,000
Defiance Company, LLC [Member]
Accounts payable - related party	285,389	285,389
President and Related Entities [Member]
Notes payable related parties	1,901,916	1,901,916
CEE, LLC [Member]
Long term debt - related party CEE	$ 5,945	5,945
First Warner Properties LLC [Member]
Lease term description	The term of the lease agreement was from July 2014 to July 2019
Monthly rent	$ 27,500
Due to related parties	$ 525,000	525,000
First Standard Real Estate LLC [Member]
Lease term description	The term of the lease agreement is from September 1, 2016 to September 30, 2021
Monthly rent	$ 10,000
Due to related parties	$ 310,000	$ 250,000
Area of land | ft²	20,000

XML

Significant Accounting Policies and Practices - Schedule of Fair Value Measurements (Details)	Jun. 30, 2019 USD ($)
Fair value liability measurement	$ 245,927
Level 1 [Member]
Fair value liability measurement
Level 2 [Member]
Fair value liability measurement
Level 3 [Member]
Fair value liability measurement	245,927
Lease [Member]
Fair value liability measurement	245,927
Lease [Member] | Level 1 [Member]
Fair value liability measurement
Lease [Member] | Level 2 [Member]
Fair value liability measurement
Lease [Member] | Level 3 [Member]
Fair value liability measurement	$ 245,927

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

The included (a) condensed balance sheet as of December 31, 2018, which has been derived from audited financial statements, and (b) the unaudited condensed financial statements as of June 30, 2019 and 2018, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s December 31, 2018 Form 10-K on May 10, 2019. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for future quarters or for the full year. Notes to the condensed financial statements which substantially duplicate the disclosure contained in the financial statements as reported in the Annual Report on Form 10-K for the year ended December 31, 2018 as filed on May 10, 2019 have been omitted.

The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

The Company currently operates in one business segment. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does not currently operate any separate lines of businesses or separate business entities.

Recently issued accounting pronouncements

Leases

FASB ASU 2016-02 Leases (Topic 842) – In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. Lessor accounting is similar to the current model, but has been updated to align with certain changes to the lessee model and the new revenue recognition standard. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We have adopted the above ASU as of January 1, 2019. The right of use asset and lease liability have been recorded at the present value of the future minimum lease payments, utilizing a 5% average borrowing rate.

The Company is using the transition relief provided by the Financial Accounting Standards Board (FASB) for ASU 2016-02 at their November 29, 2017 meeting related to applying ASC 840 for comparative periods, and providing the disclosures required by ASC 840 for the comparative periods. The Company did not recognize the effects of applying ASC 842 as a cumulative-effect adjustment to retained earnings as of January 1, 2019 as the amount was not considered to be material.

The Company believes that other recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.

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Condensed Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful account	$ 0	$ 0
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	103,102,718	105,102,718
Common stock, shares outstanding	103,102,718	105,102,718

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Significant Accounting Policies and Practices (Tables)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Schedule of Fair Value Measurements

The following table summarize items measured at fair market value during the period ended June 30, 2019:

	Level 1		Level 2		Level 3		Total
Lease	$	-	$	-	$	245,927	$	245,927
Total	$	-	$	-	$	245,927	$	245,927

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Convertible Notes

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Convertible Notes

NOTE 7 – CONVERTIBLE NOTES

As of June 30, 2019 and December 31, 2018 convertible notes had a balance of $3,500  and $5,500 respectively.

The outstanding note is convertible at a rate of $0.001 into shares of common stock $2,000 of the convertible note was paid back during the quarter ended March 31, 2019. 

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Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Rent expense	$ 29,413	$ 30,000	$ 55,502	$ 60,000
Offices and Warehouse [Member]
Lease term	5 years		5 years
Rent expense			$ 120,000
Lease monthly payments payable			$ 10,000

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Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 2,735	$ 2,735	$ 5,471	$ 5,471

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Basis of Presentation (Details Narrative)	Jan. 02, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Average borrowing rate	5.00%

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Convertible Notes (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Debt Disclosure [Abstract]
Convertible notes payable		$ 3,500		$ 5,500
Debt instrument, convertible, conversion price	$ 0.001
Payments of convertible note	$ 2,000	$ 2,000

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Condensed Statement of Changes in Stockholders' Deficit (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2017	$ 103,103	$ 4,105,577	$ (6,829,745)	$ (2,621,065)
Balance, shares at Dec. 31, 2017	103,102,718
Shares issued on conversion of debt	$ 2,000	182,200		184,200
Shares issued on conversion of debt, shares	2,000,000
Net income loss			(129,095)	(129,095)
Balance at Mar. 31, 2018	$ 105,103	4,287,777	(6,958,840)	(2,565,960)
Balance, shares at Mar. 31, 2018	105,102,718
Balance at Dec. 31, 2017	$ 103,103	4,105,577	(6,829,745)	(2,621,065)
Balance, shares at Dec. 31, 2017	103,102,718
Net income loss				(209,071)
Balance at Jun. 30, 2018	$ 105,103	4,287,777	(7,038,816)	(2,645,936)
Balance, shares at Jun. 30, 2018	105,102,718
Balance at Mar. 31, 2018	$ 105,103	4,287,777	(6,958,840)	(2,565,960)
Balance, shares at Mar. 31, 2018	105,102,718
Net income loss			(79,976)	(79,976)
Balance at Jun. 30, 2018	$ 105,103	4,287,777	(7,038,816)	(2,645,936)
Balance, shares at Jun. 30, 2018	105,102,718
Net income loss			(111,587)	(111,587)
Balance at Sep. 30, 2018	$ 105,103	4,287,777	(7,150,403)	(2,757,523)
Balance, shares at Sep. 30, 2018	105,102,718
Forgiveness of debt - related party		525,000		525,000
Net income loss			(372,281)	(372,281)
Balance at Dec. 31, 2018	$ 105,103	4,812,777	(7,522,684)	(2,604,805)
Balance, shares at Dec. 31, 2018	105,102,718
Net income loss			281,211	281,211
Balance at Mar. 31, 2019	$ 105,103	4,812,777	(7,241,473)	(2,323,593)
Balance, shares at Mar. 31, 2019	105,102,718
Balance at Dec. 31, 2018	$ 105,103	4,812,777	(7,522,684)	(2,604,805)
Balance, shares at Dec. 31, 2018	105,102,718
Net income loss				155,185
Balance at Jun. 30, 2019	$ 103,103	4,809,777	(7,367,497)	(2,454,619)
Balance, shares at Jun. 30, 2019	103,102,718
Balance at Mar. 31, 2019	$ 105,103	4,812,777	(7,241,473)	(2,323,593)
Balance, shares at Mar. 31, 2019	105,102,718
Stock repurchase	$ (2,000)	(3,000)		(5,000)
Stock repurchase, shares	(2,000,000)
Net income loss			(126,024)	(126,025)
Balance at Jun. 30, 2019	$ 103,103	$ 4,809,777	$ (7,367,497)	$ (2,454,619)
Balance, shares at Jun. 30, 2019	103,102,718

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Sep. 30, 2019
Document And Entity Information
Entity Registrant Name	GREENKRAFT, INC.
Entity Central Index Key	0001398529
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Reporting Status Current	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		103,102,718
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2019

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Inventory

6 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

Inventory

NOTE 3 – INVENTORY

Inventory principally consists of the cost of parts purchased and assembled during the six months ended June 30, 2019 and year ended December 31, 2018 for the assembly of the fuel-efficient vehicles to sell to the customers.

	June 30, 2019		December 31, 2018
Raw materials	$	1,809,161	$	1,806,056
Total Inventory		1,809,161		1,806,056

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Line of Credit (Details Narrative)	Jun. 30, 2019 USD ($)
CEO [Member]
Line of credit	$ 100,000

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Inventory - Schedule of Inventory (Details) - USD ($)	Jun. 30, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Raw materials	$ 1,809,161	$ 1,806,056
Total Inventory	$ 1,809,161	$ 1,806,056

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases

The future minimum lease payments under the operating lease is as follows:

Years ending December 31,	Amount
2019		60,000
2020		120,000
2021		80,000
Total	$	260,000

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Significant Accounting Policies and Practices

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Significant Accounting Policies and Practices

NOTE 2 - SIGNIFICIANT ACCOUNTING POLICIES AND PRACTICES

Reclassifications - Certain prior year amounts have been reclassified to conform with the current year presentation.

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States necessarily requires management to make estimates and assumptions that affect the amounts reported in the financial statements. We regularly evaluate estimates and judgments based on historical experience and other relevant facts and circumstances. Actual results could differ from those estimates.

Fair Value Measurements

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Fair Value of Financial Instruments

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC 820, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2019 and December 31, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand except as noted in the table shown below.

The following table summarize items measured at fair market value during the period ended June 30, 2019:

	Level 1		Level 2		Level 3		Total
Lease	$	-	$	-	$	245,927	$	245,927
Total	$	-	$	-	$	245,927	$	245,927

Concentration of credit risk –Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times, such cash may be in excess of the FDIC limit. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited.

Accounts Receivable – Trade accounts receivable consist of amounts due from the sale of trucks and parts. Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 90 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. At June 30, 2019 and December 31, 2018, the Company characterized $0 and $0 as uncollectible, respectively. At June 30, 2019, the accounts receivable, $3,600 represents one customer from the sale of parts.

Inventories – Inventories are primarily raw materials. Inventories are valued at the lower of, cost as determined on a weighted average cost basis, or market. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Management writes down the inventories to market value if it is below cost. Management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if valuation allowance is required. Costs of raw material inventories include purchase and related costs incurred in bringing the products to their present location and condition. No allowance was deemed necessary by management as of June 30, 2019 and 2018, respectively.

Property and equipment – Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are ten years for all the equipment held by the Company. Depreciation expense of $2,735 and $2,735 are recognized for the quarters ended June 30, 2019 and 2018, respectively.

Research and development – Costs incurred in connection with the development of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred. During the quarter ended June 30, 2019 and 2018, $0 and $0, respectively, were expensed as research and development costs.

Long Lived Assets - In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. No allowance was deemed necessary by management as of June 30, 2019 and 2018, respectively.

Revenue recognition – The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, the Company applies the following methodology to recognize revenue:

i.	Identify the contract with a customer.
ii.	Identify the performance obligations in the contract.
iii.	Determine the transaction price.
iv.	Allocate the transaction price to the performance obligations in the contract.
v.	Recognize revenue when (or as) the entity satisfies a performance obligation.

Accordingly, the Company recognizes specific components of revenue as described below:

1. Parts – Performance obligation to deliver “X” parts are recognized as products are shipped. Typically there is not a large volume of parts (recently), thus contract price allocated to performance obligations (ratable parts) as shipped.

2. Service – “Right to invoice” practical expedient pursuant to 606-10-55-18, billed at hourly rates plus parts.

3. Trucks – Performance obligation to deliver system. Recognition of revenue at a point in time, given recognition over time criteria not met pursuant to 606-10-25-24. Final transfer of control passed to customer upon receipt and final acceptance. When the truck is accepted by the customer the final invoice is issued and all deferred revenue is recognized along with the related work in process costs for the truck. Trucks generally take 90 days to manufacture, assemble and then ship to our various customers. As of June 30, 2019 and December 31, 2018 customer deposits were $484,870  and $475,995 respectively. 

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

We have net operating loss carry forwards available to reduce future taxable income. Future tax benefits for these net operating losses carry forwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that we will not realize a future tax benefit, a valuation allowance is established.

Earning or Loss per Share - The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As there was net income for the Six months ended June 30, 2019, basic and diluted income per share are calculated separately. As there was a net loss for the quarter ended June 30, 2019, basic and diluted loss per share are the same.

Related Parties - A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

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Condensed Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenue	$ 97,252	$ 207,384	$ 721,523	$ 318,960
Cost of revenue	90,405	138,622	330,410	233,717
Gross Profit	6,847	68,762	391,113	85,243
Costs and expenses:
Payroll Expenses	58,393	38,746	79,994	86,913
Rent	29,413	30,000	55,502	60,000
Selling, general and administrative	45,066	79,992	100,432	147,401
Total costs and expenses	132,872	148,738	235,928	294,314
Income (Loss) from operations	(126,025)	(79,976)	155,185	(209,071)
Net Income / (Loss)	$ (126,025)	$ (79,976)	$ 155,185	$ (209,071)
Basic Income (Loss) per share	$ (0.00)	$ (0.00)	$ 0.00	$ (0.00)
Weighted average number of common shares outstanding- Basic	105,102,718	105,102,718	105,098,567	104,837,525
Diluted Income per Share	$ (0.00)	$ (0.00)	$ 0.00	$ (0.00)
Weighted average number of common shares outstanding - Diluted	105,102,718	105,102,718	108,602,718	104,837,525

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Significant Accounting Policies and Practices (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Reclassifications

Reclassifications - Certain prior year amounts have been reclassified to conform with the current year presentation

Use of Estimates

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States necessarily requires management to make estimates and assumptions that affect the amounts reported in the financial statements. We regularly evaluate estimates and judgments based on historical experience and other relevant facts and circumstances. Actual results could differ from those estimates.

Fair Value Measurements

Fair Value Measurements

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC 820, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2019 and December 31, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand except as noted in the table shown below.

The following table summarize items measured at fair market value during the period ended June 30, 2019:

	Level 1		Level 2		Level 3		Total
Lease	$	-	$	-	$	245,927	$	245,927
Total	$	-	$	-	$	245,927	$	245,927

Concentration of Credit Risk

Concentration of credit risk –Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and trade receivables. The Company places its cash with high credit quality financial institutions. At times, such cash may be in excess of the FDIC limit. With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence, believes that the receivable credit risk exposure is limited.

Accounts Receivable

Accounts Receivable – Trade accounts receivable consist of amounts due from the sale of trucks and parts. Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 90 days of receipt of the invoice. The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts based on historical collection experience and a review of the current status of trade accounts receivable. At June 30, 2019 and December 31, 2018, the Company characterized $0 and $0 as uncollectible, respectively. At June 30, 2019, the accounts receivable, $3,600 represents one customer from the sale of parts.

Inventories

Inventories – Inventories are primarily raw materials. Inventories are valued at the lower of, cost as determined on a weighted average cost basis, or market. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates based on prevailing market conditions. Management writes down the inventories to market value if it is below cost. Management also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if valuation allowance is required. Costs of raw material inventories include purchase and related costs incurred in bringing the products to their present location and condition. No allowance was deemed necessary by management as of June 30, 2019 and 2018, respectively.

Property and Equipment

Property and equipment – Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repair and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of the property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are ten years for all the equipment held by the Company. Depreciation expense of $2,735 and $2,735 are recognized for the quarters ended June 30, 2019 and 2018, respectively.

Research and Development

Research and development – Costs incurred in connection with the development of new products and manufacturing methods are charged to selling, general and administrative expenses as incurred. During the quarter ended June 30, 2019 and 2018, $0 and $0, respectively, were expensed as research and development costs.

Long Lived Assets

Long Lived Assets - In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. No allowance was deemed necessary by management as of June 30, 2019 and 2018, respectively.

Revenue Recognition

Revenue recognition – The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). In accordance with ASC 606, the Company applies the following methodology to recognize revenue:

i.	Identify the contract with a customer.
ii.	Identify the performance obligations in the contract.
iii.	Determine the transaction price.
iv.	Allocate the transaction price to the performance obligations in the contract.
v.	Recognize revenue when (or as) the entity satisfies a performance obligation.

Accordingly, the Company recognizes specific components of revenue as described below:

1. Parts – Performance obligation to deliver “X” parts are recognized as products are shipped. Typically there is not a large volume of parts (recently), thus contract price allocated to performance obligations (ratable parts) as shipped.

2. Service – “Right to invoice” practical expedient pursuant to 606-10-55-18, billed at hourly rates plus parts.

3. Trucks – Performance obligation to deliver system. Recognition of revenue at a point in time, given recognition over time criteria not met pursuant to 606-10-25-24. Final transfer of control passed to customer upon receipt and final acceptance. When the truck is accepted by the customer the final invoice is issued and all deferred revenue is recognized along with the related work in process costs for the truck. Trucks generally take 90 days to manufacture, assemble and then ship to our various customers. As of June 30, 2019 and December 31, 2018 customer deposits were $484,870  and $475,995 respectively.

Income Taxes

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

We have net operating loss carry forwards available to reduce future taxable income. Future tax benefits for these net operating losses carry forwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that we will not realize a future tax benefit, a valuation allowance is established.

Earning or Loss Per Share

Earning or Loss per Share - The Company accounts for earnings per share pursuant to ASC 260, Earnings per Share, which requires disclosure on the financial statements of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the year. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each year. As there was net income for the Six months ended June 30, 2019, basic and diluted income per share are calculated separately. As there was a net loss for the quarter ended June 30, 2019, basic and diluted loss per share are the same.

Related Parties

Related Parties - A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

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Line of Credit

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Line of Credit

NOTE 6 – LINE OF CREDIT

During the six months ended June 30, 2019 the company used a line of credit for $100,000 from the CEO.

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Commitments and Contingencies - Schedule of Future Minimum Rental Payments for Operating Leases (Details)	Jun. 30, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 60,000
2020	120,000
2021 and thereafter	80,000
Total	$ 260,000