ABCO Energy, Inc. - Quarter Report: 2014 September (Form 10-Q)

abcoenergy10q093014.htm

As filed with the Securities and Exchange Commission on November 19, 2014

File No: 000-55235

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ending September 30, 2014

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

For the transition period from _____to_____

Commission file number: 000-55235

ABCO ENERGY, INC.

(Name of registrant as specified in its Charter)

Nevada		20-1914514
(State of Incorporation)		(IRS Employer Identification No.)

2100 North Wilmot, Tucson, AZ		85712
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

520-777-0511

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ¨ Accelerated file ¨ Non-accelerated filer ¨ Smaller reporting company x.

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by the court. Yes ¨ No ¨ N/A

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of October 31, 2014 we had 22,448,527 shares of common stock issued and outstanding.

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TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements	3

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3. Quantitative and Qualitative Disclosures about Market Risk	17

Item 4. Controls and Procedures	18

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	19

Item 1A. Risk Factors	19

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds	19

Item 3. Defaults upon Senior Securities	19

Item 4. Mine Safety Disclosures	19

Item 5. Other Information	19

Item 6. Exhibits	19

Signatures	20

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PART 1 – FINANCIAL INFORMATION

Item 1. Financial Statements

ABCO ENERGY, INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2014

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Consolidated Balance Sheets: As of September 30, 2014 and as of December 31, 2013 (Unaudited)

Consolidated Statements of Operations: For the Nine and Three Months Ended September 30, 2014 and September 30, 2013 (Unaudited)

Consolidated Statement of Stockholders’ Equity: For the Period Beginning December 31, 2011 through the Period Ended September 30, 2014 (Unaudited)

Consolidated Statements of Cash Flows: For the Nine Months Ended September 30, 2014 and September 30, 2013 (Unaudited)

Notes to the Consolidated Financial Statements (Unaudited)

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ABCO ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2014 AND DECEMBER 31, 2013

(UNAUDITED)

ASSETS	September 30, 2014			December 31, 2013
Current Assets
Cash in bank	$	89,186		$	92,157
Accounts receivable –net of reserve of $0 – Note 2		129,533			81,418
Inventory and work in process – Note 5		40,,270			38,375
Prepaid expenses		14,055
Total Current Assets		273,044			211,950
Fixed Assets – Note 8
Vehicles, office furniture & equipment – net of accumulated depreciation		61,783			35,203
Other Assets
Investment in long term leases –Note 7		21,015			21,712
Security deposits – Note 6		7,235			5,190
Total Other Assets		28,250			26,902
Total Assets	$	363,077		$	274,055

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	192,100		$	116,600
Note payable – Director – Note 9		60,000			60,000
Current portion of long term debt – Note 10		47,436
Total Current Liabilities		299,536			176,600
Long term debt – Note 10		29,644
Total liabilities		329,180			176,600



Stockholders’ Equity: - Note 11
Common stock, 500,000,000 shares authorized, $0.001 par value, 22,330,510 outstanding at September 30, 2014 and 17,768,574 outstanding at December 31, 2013	$	22,331		$	17,768
Additional paid in capital in excess of par		1,533,310			1,244,520
Accumulated deficit		(1,521,744	)		(1,164,833	)
Total Stockholders’ Equity		33,897			97,455
Total Liabilities and Stockholders’ Equity	$	363,077		$	274,055

See accompanying unaudited notes to the financial statements.

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ABCO ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS & NINE MONTHS ENDED SEPTEMBER 30, 2014 & 2013

(UNAUDITED)

	For the Three Months Ended						For The Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Revenues – Note 2	$	260,835		$	367,920		$	937,158		$	710,895
Cost of Sales		298,004			302,078			684,652			625,829
Gross Profit		(37,169)			65,842			252,506			85,066
Operating Expenses:
Selling, General & Administrative		225,227			138,790			589,926			396,475
Loss from operations		(262,396	)		(72,948	)		(337,420	)		(311,409	)
Other expenses
Interest on notes payable		5,646			1,456			19,491			4,354
Loss before provision for income taxes		(268,042	)		(74,404	)		(356,911	)		(315,763	)
Provision for income tax - Note 2		-						-			-
Net loss applicable to common shareholders	$	(268,042	)	$	(74,404	)	$	(356,911	)	$	(315,763	)
Net loss per share (Basic and fully diluted)	$	(0.01	)	$	(0.01	)	$	(0.01)		$	(0.01	)

Weighted average number of common shares used in the calculation		21,291,658,			16,061,306			20,049,550			18,302,277

See accompanying unaudited notes to the financial statements.

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ABCO ENERGY, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE PERIOD BEGINNING DECEMBER 31, 2011

THROUGH THE PERIOD ENDED SEPTEMBER 30, 2014

(UNAUDITED)

	Common Stock												Total
	Shares			Amount $0.001Par			Addt’l Paid in Capital			Accumulated Deficit			Stock holders’ Equity
Balance at December 31, 2011		18,129,871		$	18,130		$	855,274		$	(374,130	)	$	499,274
Common shares issued under private placement offering net of expenses		1,935,763			1,936			172,204						174,140
Legal & administrative expense- public offering								(208,041	)					(208,041	)
Net (loss) for the period		-			-			-			(164,119	)		(164,119	)
Balance at Dec. 31, 2012		20,065,634			20,066			819,437			(538,249	)		301,254
Common shares issued under private placement offering net of expenses		4,302,940			4,302			464,816						469,118
Common shares cancelled		(6,600,000	)		(6,600	)								(6,600	)
Legal & administrative expense- public offering								(39,733	)					(39,733	)
Net (loss) for the period		-			-			-			(626,584	)		(626,584	)
Balance at Dec. 31, 2013		17,768,574		$	17,768		$	1,244,520		$	(1,164,833	)	$	97,455
Common shares issued under private placement offering net of expenses		4,561,953			4,563			300,290						304,853
Legal & administrative expense- public offering								(11,500	)					(11,500	)
Net loss for the period		-			-			-			(356,911	)		(356,911	)
Balance at September 30, 2014		22,330,527			22,331		$	1,533,310		$	(1,521,744	)	$	33,897

See accompanying unaudited notes to the financial statements.

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ABCO ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(UNAUDITED)

	For The Nine Months Ended
	September 30, 2014			September 30, 2013
Cash Flows From Operating Activities:
Net Loss for the period	$	(356,911	)	$	(315,763	)
Add back non-cash items -depreciation		12,600			8,240
Adjustments to reconcile net income or (loss) to net cash provided by (used for) operating activities
Accounts receivable (incr.) decr.		(48,115	)		(36,493)
Inventory (incr.) decr.		(1,895	)		99,668
Other current assets (incr.) decr.		(14,055	)		494
Accounts payable & accrued expenses - incr. (decr.)		75,500			25,824
Net cash used in operating activities		(332,876	)		(218,030	)
Cash Flows From Investing Activities:
Purchase of vehicles, furniture & equipment		(39,180	)		611
Principal payments on long term leases rec.		697			(739	)
Product and lease deposits		(2,045	)		(997	)
Net cash used in investing activities		(40,528	)		(1,125	)
Cash Flows From Financing Activities:
Loans from director					45,000
Loans from financial institution		77,080
Proceeds from common stock issuances – net of expenses and cancellations		293,353			173,752
Net cash provided by financing activity		370,433			218,752
Net Increase (Decrease) in cash		(2,971	)		(403	)
Cash At The Beginning Of The Period		92,157			45,785
Cash At The End Of The Period	$	89,186		$	45,382

Schedule of Non-Cash Investing and Financing Activities - Supplemental Disclosure

Cash paid for interest		$	19,491			$	4,354
Shares issue under Regulation A for services – Note 11		$	55,000

See accompanying unaudited notes to the financial statements.

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ABCO ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

AND THE YEAR ENDED DECEMBER 31, 2013

(UNAUDITED)

Description of Business

Note 1 Overview and Description of the Company

ABCO Energy, Inc. is an installation contractor for alternative energy products that are used in the replacement of fossil fuel energy generation. ABCO is a Nevada corporation, which maintains offices located in Tucson and Phoenix, Arizona.

ABCO Energy holds 100% of the outstanding common shares of ABCO Solar, Inc., an Arizona corporation, whose business is the installation of solar photovoltaic products, solar thermal products and energy efficient lighting products (LED lighting).

ABCO Energy holds 100% of the outstanding common shares of ABCO Thermal, LLC, an Arizona limited liability company, whose business is the installation of solar hot water and plumbing systems.

ABCO Energy holds 100% of the outstanding common shares of Alternative Energy Finance Corporation (AEFC), a Wyoming and Arizona corporation. AEFC offers leasing and other financial services for the alternative energy industry.

ABCO Energy, Inc. (the “Company” or “ABCO Energy”) was formerly named “Energy Conservation Technologies, Inc. (ENYC)” and currently trades with the symbol “ABCE”.

ABCO sells and installs Solar Photovoltaic, Solar Thermal products and LED lighting products that are purchased from both USA and offshore manufacturers. We have available and utilize many suppliers of US manufactured solar products from such companies as UP Solar, Sunpower, Mage, Siliken Solar, Westinghouse Solar and others. We also purchase products from Schuco, Phillips and various Chinese suppliers. In addition, we purchase from a number of local and regional distributors whose products are readily available and selected for markets and price.

ABCO offers various solar leasing and long term financing programs from Sunpower, NRG, Clean Power Finance, Soligent, UP-Solar, SunWize and AEFC that are offered to ABCO Energy customers and other marketing and installation organizations.

We are operating in Tucson, Phoenix and Williams, Arizona. We operate all of our locations as company owned businesses. Tucson is our warehousing and training facility for all other company operations.

Note 2 Summary of significant accounting policies

Critical Accounting Policies and Use of Estimates

These financial statements consist of the consolidated financial positions and results of operations of both the parent, ABCO Energy, Inc. and the subsidiary companies. In the opinion of Management, all adjustments necessary for a fair statement of results for the fiscal years presented and for the interim period have been included. These financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) generally accepted in the United States of America.

GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets. On an on-going basis, the Company evaluates its estimates and judgments, including those related to revenue recognition, inventories, adequacy of allowances for doubtful accounts, valuation of long-lived assets, income taxes, equity-based compensation, litigation and warranties. The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events.

The policies discussed below are considered by management to be critical to an understanding of the Company’s financial statements. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent for other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from those estimates.

Cash and Cash Equivalents

There are only cash accounts included in our cash equivalents in these statements. For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of three months or less to be cash equivalents. There are no short term cash equivalents reported in these financial statements.

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Property and Equipment

Property and equipment are to be stated at cost less accumulated depreciation. Depreciation is recorded on the straight-line and accelerated basis according to IRS guidelines over the estimated useful lives of the assets, which range from three to ten years. Maintenance and repairs are charged to operations as incurred.

Revenue Recognition

The Company generates revenue from sales of solar products, LED lighting, installation services and leasing fees. During the last fiscal year the company had product sales as follows:

Sales Product and Services Description	Nine Months Sept. 30, 2014		Nine Months Sept. 30, 2013		Twelve Months December 31, 2013
Solar PV residential and commercial sales	$	781,781	$	418,504	$	471,585	57	%
Solar thermal residential -commercial		11,113		80,872		92,611	11	%
ABCO LED & energy efficient lighting		143,783		210,255		256,435	31	%
Interest Income		481		1,264		2,516	1	%
Total revenue	$	937,158	$	710,895	$	823,147	100	%

The Company recognizes product revenue, net of sales discounts, returns and allowances, in accordance Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB No. 104”) and ASC 605. These statements establish that revenue can be recognized when persuasive evidence of an arrangement exists, delivery has occurred and all significant contractual obligations have been satisfied, the fee is fixed or determinable, and collection is considered probable.

Our revenue recognition is recorded on the percentage of completion method for sales and installation revenue and on the accrual basis for fees and interest income. We recognize and record income when the customer has a legal obligation to pay. All of our revenue streams are acknowledged by written contracts for any of the revenue we record. There are no differences between major classes of customers or customized orders. We record discounts, product returns, rebates and other related accounting issues in the normal business manner and experience very small number of adjustments to our written contractual sales. There are no post-delivery obligations because warranties are maintained by our suppliers. Our lease fees are earned by providing services to contractors for financing of solar systems. Normally we will acquire the promissory note (lease) on a leased system that will provide cash flow for up to 20 years. Interest is recorded on the books when earned on amortized leases.

Accounts Receivable

The Company recognizes revenue upon delivery of product to customers and does not make bill-and-hold sales. Contracts spanning reporting periods are recorded on the percentage of completion method for recognition of revenue and expenses. Accounts receivable includes fully completed and partially completed projects and partially billed statements for completed work and product delivery.

Inventory

Inventory is recorded at cost and is managed on a first in first out method.

Income Taxes

Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of certain assets and liabilities for financial and tax reporting. Deferred taxes represent the future tax return consequences of those differences, which will be taxable either when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for net operating losses (NOL) that are available to offset future federal income taxes. Income tax expense is the current tax payable or refundable for the period plus or minus the net change in the deferred tax asset and liability accounts. A deferred tax asset results from the benefit of utilizing the NOL carry-forwards in future years.

Due to the current uncertainty of realizing the benefits of the tax NOL carry-forward, a valuation allowance equal to the tax benefits for the deferred taxes has not been established. The full realization of the tax benefit associated with the carry-forward depends predominately upon the Company's ability to generate taxable income during future periods, which is not assured.

We have adopted FIN 48, Accounting for Uncertainty in Income Taxes – An interpretation of FASB Statement No. 109 (“FIN48”). FIN 48 clarifies the accounting for uncertainty in tax positions by prescribing the recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. During the periods presented in this report there were no changes in our unrecognized tax benefits.

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Fair Values of Financial Instruments

ASC 825 requires the Corporation to disclose estimated fair value for its financial instruments. Fair value estimates, methods, and assumptions are set forth as follows for the Corporation’s financial instruments. The carrying amounts of cash, receivables, other current assets, payables, accrued expenses and notes payable are reported at cost but approximate fair value because of the short maturity of those instruments.

Stock-Based Compensation

The Company accounts for employee and non-employee stock awards under ASC 718, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to non-employees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. The company has stock based compensation reported in these financial statements. (See note 10)

Effects of Recently Issued Accounting Pronouncements

The Company has reviewed all recently issued accounting pronouncements noting that they do not affect the financial statements.

Per Share Computations

Basic net earnings per share are computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted-average number of common shares and the dilutive potential common shares outstanding during the period.

Reclassification

Certain reclassifications have been made to conform to prior periods’ data to the current presentation. These reclassifications had no effect on reported income.

Note 3 Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. As a result, the Company incurred accumulated net losses from inception through the period ended September 30, 2014 of $1,521,744. In addition, the Company's development activities since inception have been financially sustained through capital contributions from shareholders.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

Note 4 Share Exchange Agreements between ABCO Energy, Inc. and Energy Conservation Technologies, Inc. (ENYC)

On July 1, 2011 Energy Conservation Technologies, Inc. (ENYC) completed a share exchange agreement (SEA) to exchange ENYC shares for 100 % of the common shares of ABCO Energy. The Company has accounted for this transaction utilizing the purchase method as directed in SFAS 141 and FASB Statement No. 38.

As a result of the SEA, the outstanding shares of ENYC as of September 30, 2011 were restated in a one for twenty three (1 for 23) reverse division prior to the exchange, equaling approximately 9% of the post-exchange outstanding ABCO common shares. The result of the reverse split was a reissue of all pre-acquisition shares of ENYC with ABCO shares.

The share exchange agreement resulted in the issuance of the following shares:

Issued to	Issued for	Number of shares
Management of ENYC (1) (Cancelled in 2013)	Inventory – subject to escrow agreement		0
To be issued to management and insiders	Shares exchanged		112,849
To be issued to ENYC preferred shareholder	Preferred share conversion		124,254
To be issued to non-management ENYC shareholders	Common shares exchanged		538,627
Total shares issued	Exchanged shares total		775,730

(1) The controlling shareholders of pre-exchange ENYC agreed to purchase the inventory of ENYC for cash after closing of the SEA. A total of 600,000 restricted shares will be held in escrow until the payment to the company of $92,248 or these shares will be cancelled for non-payment. This group of shares was canceled in 2013 in exchange for the inventory by mutual agreement resulting in a net acquisition issue of 775,730 shares.

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ABCO Energy pre-acquisition shareholders were issued 13,957,708 shares of the post-acquisition company.

An additional 120,000 shares were issued to consultants who were instrumental in the completion of the transaction. The value of $120 ($0.001 per share (par)) for this service has been charged to expense in the transaction.

The predecessor to ABCO Energy, the private company, was liquidated after transferring all of its assets to ENYC. The private company owned the wholly owned subsidiaries, ABCO Solar and AEFC prior to the exchange agreement.

Note 5 Inventory and work in process

The company records inventory at cost and uses the first in first out method to charge inventory to operations. Work in process consists of costs recovered and revenue earned on projects on a percentage of completion method for work performed on contracts signed during the nine months ended September 30, 2014. The total of inventory and work in process was $40,270 as of September 30, 2014.

Note 6 Security deposits and Long Term Commitments

The Company has paid security deposits on the three rented spaces it occupies for offices and warehouse which total $7,235 on September 30, 2014 and $5,190 on December 31, 2013.

ABCO lease a 1,200 square foot office and warehouse in an industrial park in Phoenix Arizona for a monthly rental of $1,254 which expires on February 28, 2016. The aggregate total rent due on this lease through expiration is $21,318.

There is no lease on the Williams, Arizona property because this office is located in the office of a Director and no lease has been established.

On May 1, 2014 the Company rented office and warehouse space at 2100 N. Wilmot #211, Tucson, Arizona 85712. This facility consists of 3,600 square feet and the two year lease has a forward commitment of $52,200 with an option to cancel one third of the rental after October 31, 2014.

Note 7 Alternative Energy Finance Corporation (AEFC)

AEFC is a wholly owned subsidiary of ABCO Energy. AEFC provides funding for leases of photovoltaic systems. AEFC finances its leases from cash payments from its own cash or from single payments or long term leases from lessees. Long term leases recorded on the consolidated financial statements were $21,015 and $21,712 at September 30, 2014 and December 31, 2013 respectively. The aggregate total of leases receivable over the entire term including inputted interest at 8% internal rate of return is approximately $37,619 and $40,897 at September 30, 2014 and December 31, 2013 respectively.

Note 8 Property and equipment

The Company has acquired all of its office and field work equipment with cash payments and financial institution loans. During the nine months ended September 30, 2014 the company acquired lease hold improvements, office equipment, boom truck, trailer and auto for the sum of $39,180 and financed $15,804 of the acquisitions from loans. The total fixed assets consist of vehicles, office furniture, tools and various equipment items and the totals are as follows:

Asset	September 30, 2014		December 31, 2013
Equipment	$	111,488	$	72,308
Accumulated depreciation		49,705		37,105
Net Fixed Assets	$	61,783	$	35,203

Note 9 Note Payable Officer

Officer’s loan is a demand note totaling $60,000 as of September 30, 2014 and December 31, 2013. This note provides for interest at 12% per annum and is unsecured. Notes payable to the Director resulted in an interest charge of $5,277 and $7,240 for the period ended September 30, 2014 and December 31, 2013 respectively.

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Note 10 Long Term Debt

During the quarter ended September 30, 2014 the company financed operations and a truck acquisition with loans from Ascentium Capital, a Texas based financial entity. The following table describes the purpose and terms of the loans.

Schedule of Long term Debt											September 30, 2014
Lender	Date of Loan	Original Loan		Prepaid Interest		Purpose	Interest Rate			Term	Current Portion		Long Term Portion
Ascentium Capital	08/27/14	$	50,000	$	12,703	Credit Line		30	%	18 Months	$	41,804	$	17,417
Ascentium Capital	09/01/14	$	14,975	$	2,057	Truck loan		8	%	36 Months	$	5,632	$	12,227
		$	64,975	$	14,760						$	47,436	$	29,644

This debt is collateralized by the specific asset in the case of the truck loan and both loans are personally guaranteed by the officers of the Company.

Note 11 Stockholder’s Equity

ABCO Energy was incorporated on July 29, 2004. Its subsidiary and predecessor ABCO Solar, Inc. was incorporated October 8, 2008 and capitalized for the sum of $10,000 and the Founders were issued 10,000,000 restricted common shares for organizational efforts. The capitalization sum of $10,000 was charged to compensation, common stock and additional paid in capital. On December 31, 2010 an ABCO director converted a promissory note in the amount of $50,000 into 1,000,000 shares of common stock. These transactions resulted in total common stock equity of $60,000.

On March 2, 2010, the Company began a private placement of an 8% Series A Convertible Preferred Stock (“Preferred Stock”) offering which was offered only in the European markets. All preferred shares sold in this offering were convertible to common stock upon the event of going public on USA markets. The Preferred Stock had an interest requirement of 8% per annum which ceased upon the conversion to common or when held for 12 months. This offering was terminated as of March 31, 2011. Effective July 1, 2011, all of the Preferred Stock was converted to common shares. The conversion resulted in the issue of 2,957,708 common shares with a net capitalized value of $403,018 after related offering expenses.

Effective July 1, 2011 the Company entered into the Share Exchange Agreement (SEA) with ENYC, traded over the counter under the symbol ENYC.OTC. As a result of the SEA, the Company’s pre-acquisition shareholders and consultants retained ownership of 1,375,730 shares and 120,000 shares respectively. The owners elected to retain the inventory and accordingly canceled 600,000 shares of common stock in 2013 as a condition of the SEA.

In August 2011, the Company began a second European private placement offering of restricted common stock to non USA citizens only. The offering consisted of up to 5,000,000 shares of common stock offered at the price of $0.40 USD per share. As of December, 2013, the Company had sold 4,841,856 shares.

In March 1, 2013 the Company began a third European private placement offering of restricted common stock to non USA citizens only. The offering consisted of up to 8,000,000 shares of common stock offered at the price of $0.33 USD per share. As of September 30, 2014, the Company had sold 7,711,564 shares.

ABCO settled a substantial legal billing for the preparation of the Regulation A offering and its FINRA applications with the issuance of 50,000 shares of restricted common stock. The shares were recorded at par during the 2013 and resulted in a reduction in legal fees expense and an increase in equity.

On March 18, 2013 the company founder cancelled the original issue 6,000,000 shares to satisfy a requirement for FINRA approval of the company merger, name change and roll back of ENYC shares. Additional shares sold plus this action resulted in the total number of common shares outstanding to be 22,330,510 and 17,768,574 as of September 30, 2014 and December 31, 2013 respectively.

On August 19, 2014 the Company issued an aggregate of 1,100,000 shares to financial consulting entities for services relating to fund raising activities and to law firms for legal fees and expenses incurred for public share registrations and other business related activities. These shares were issued with the SEC order dated September 11. 2013 declaring effective the offering statement registered pursuant to Regulation A under section 3(b) of the Securities act of 1933, as amended. The shares were issued to legal consultants for assistance with the Form 10 and the 15c211 filing and for consultants who have assisted in the funding of the Company, as aforesaid. The total issuance was valued at $55,000 for fair market value as negotiated and that amount is charged to additional paid in capital.

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Note 12 Legal Matters

On June 5, 2014, the Arizona Superior Court entered a Judgment (“AZ Judgment”) affirming the ruling of the Arizona Corporate Commission (“ACC”) dated March 21, 2013. This means that the Company, a successor in interest to Westcap Energy, Corp. (“Westcap”) may have successor liability and may be required to participate in the rescission process; however there is no judgment or order against the Company. A Notice of Appeal has been filed on behalf of Westcap and the other defendants with the Arizona Court of Appeals. The filing of this Notice does not stay the enforcement of AZ Judgment. Westcap, under the AZ Judgment, has sixty (60) days from June 5, 2014, to commence the Rescission Offer to the 24 shareholders who are now Company shareholders. It has been the Company’s opinion that the defense of the legal position of all defendants is in the best interest of all shareholders and therefore has paid legal fees during 2013 totaling $23,785.

In August of 2014, the ACC refused to allow the Company to participate in any rescission pursuant to the AZ Judgment on the grounds the Company was not a party to the ACC action and therefore had no involvement in the rescission requirement. As of August 4, 2014, the deadline for rescission requirements, the Arizona Corporate Commission has refused to act or make a decision for action even though all materials had been presented to them for the completion of the rescission. In light of the ACC refusal to even evaluate rescission documents prepared by the Company, the Company has informed the ACC that it will take no further action with respect to the ACC Judgment at this time and the Company has not recorded a liability on the Arizona judgment on its books. As of the date of this report there have been no changes in the status of this case.

Note 13 Other matters

On August 29, 2013 the Securities and Exchange Commission approved the ABCO Energy, Inc. Regulation A offering documents, as amended, so that the Company may offer shares of free trading common stock for capital raising purposes. The Company is presently in the process of completing this financing. Legal fees relating to the Regulation A offering, blue sky registrations with states and other fund raising expenses were charged to additional paid in capital in the amount $11,500 for the nine months ended September 30, 2014 and $39,733 and $208,041 during the years ended December 31, 2013 and 2012 respectively.

Note 14 Warranties of the Company

ABCO Energy provides a five and ten year workmanship warranties for installed systems that cover labor and installation matters only. All installed products are warranted by the manufacturer. In the last four years of operations, all claims on workmanship have been handled expeditiously and inexpensively by the company. Management does not consider the warranty as a significant or material risk.

Note 15 Subsequent Events

The Company has evaluated all matters through this filing date and there are no events to disclose.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS – OVERVIEW

THREE MONTHS ENDED SEPTEMBER 30, 2014 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2013.

Our discussion of operating results for the three months ended September 30, 2014 and September 30, 2013 are presented below with major category details of revenue and expense including the components of operating expenses.

Sales consist of photovoltaic products, LED lighting products and installation during both periods for the three months ended September 30, 2014 and for the three months ended September 30, 2013. We have also sold a number of our proprietary LED solar street lights and revenue from this project was recorded during the current period.

Sales for the three months ended September 30, 2014 were $260,835 as compared to $367,920 for the same three months in 2013. This is a reduction of $107,085 or 39% from the 2013 sales. The majority of the 2014 reduction is the result of declining residential solar sales during the quarter from seasonal adjustments. Our year to date sales has increased so this is not a matter of great concern. The Solar sales revenue in 2014 and 2013 reflected changing market conditions in the financing of solar installations and a reduction in utility incentives offered to residential and commercial buyers. When the utilities in Arizona cancelled or substantially reduced the rebate programs, the financing or leasing companies were able to reduce the financial requirements by accepting the rebates as partial payments were no longer able to make loans or lease that required no money down or longer terms for their finance products. This severally reduced the opportunities for sales and reduced gross margins substantially. Without available financing, the sales of solar products became even more difficult. We are not aware of any trends that may have a similar affect or a similar negative affect on the market as happened in Arizona during 2012 and 2013. The prices of solar products were reduced in 2013 and 2014 to offset the reduction or elimination of rebates and the market has recovered from this time. ABCO has worked diligently to overcome these changes by focusing on large commercial applications and the increased interest of business and government in the LED lighting contracts.

Cost of sales was 114% of revenues in 2014 and 82% of revenues in 2013. Gross margins were negative and 18% of revenue respectively for the two three month periods. During 2013 the prices of solar products had not yet been reduced by suppliers to compensate for the previously discussed market conditions. This resulted in higher product prices as a percentage of product sales and had a negative effect on gross margins. During 2014 we have been offering new products and have found our entry market prices with some LED product lines have been reduced to gain market share and our gross profit reflects this decision. We feel that we have made progress in entering the LED markets and that our gross margins will improve in the future.

Total selling, general and administrative expenses were 87% of revenues in 2014 and 38 % of revenues for the same period in 2013. Net loss for the three months period ended September 30, 2014 was $(268,042) as compared to the net loss of $(74,404) for the same three month period ended September 30, 2013. Our operating expenses for this period were higher than the comparative period in 2013. This combination of factors increased the operating loss for the period ending September 30, 2014 as compared to September 30, 2013. Since our year to date revenues is higher than the previous year, this resulted in higher operating expenses.

As noted in previous paragraphs discussing market conditions, ABCO could not finish its backlog of work and expand into the markets of LED lights and commercial solar markets without maintaining staff, facilities and sales expenses. When sales revenues fall, and expenses are not reduced in equal amounts or percentages, the result is an increase of the percentage of operating expenses to sales revenue. Operating expenses for the two periods increased to accommodate our expansion of sales programs, but not in the same ratio as the reduction in sales. ABCO chose to maintain a level of expenses that would not cripple the Company’s future.

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The following table shows the actual numbers for the periods discussed. For three month periods the selling general and administrative expenses show increase over the comparative previous period. To counteract the effect of the reduction in sales opportunities, the Company chose to add sales personnel and increase marketing expense. The short term effect of this strategy resulted in increased expenses but also resulted in substantial increase in sales revenue, by $293,169 or 230% for the three months periods. As is evident for the following table, this strategy also reduced the loss from operations by $213,167 (93%) for the three months period. It is our plan to continue to reduce our operating losses by increasing sales and keeping expenses as low as possible without effecting sales revenue.

	For the Three Months Ended
	September 30, 2014			September 30, 2013			Change

Revenues	$	260,835		$	367,920		$	107,085
Cost of Sales		298,004			302,078			4,074
Gross Profit		(37,169	)		65,842			103,011
Operating Expenses:
Selling, General & Administrative		225,227			138,790			86,437
Loss from operations		(262,396	)		(72,948	)		(189,448	)
Other expenses
Interest on notes payable		5,646			1,456			4,190
Loss before provision for income taxes		(268,042	)		(74,404	)		(193,638	)
Provision for income tax - Note 1		-
Net loss applicable to common shareholders	$	(268,042	)	$	(74,404	)	$	(193,638	)

NINE MONTHS ENDED SEPTEMBER 30, 2014 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2013.

Our operating results for the nine months ended September 30, 2014 and September 30, 2013 are presented below with major category details of revenue and expense including the components of operating expenses.

Sales consist of photovoltaic products and LED lighting products and installation during both periods for the six months ended September 30, 2014 and for the nine months ended September 30, 2013.

Sales for the nine months ended September 30, 2014 were $937,155 as compared to $710,895 for the same nine months in 2013. Sales increased by $226,623 for the nine month period or 32%. The Solar sales revenue in 2013 reflected changing market conditions in the financing of solar installations and a reduction in utility incentives offered to residential and commercial buyers. When the utilities in Arizona cancelled or substantially reduced the rebate programs, the financing or leasing companies that were able to reduce the financial requirements by accepting the rebates as partial payments were no longer able to make loans or leases that required no money down or longer terms for their finance products. This severally reduced the opportunities for sales and reduced gross margins substantially. Without available financing, the sales of solar products became even more difficult. We are not aware of any trends that may have a similar affect or a similar negative affect on the market as happened in Arizona during 2012 and 2013. The prices of solar products were reduced in 2013 and 2014 to offset the reduction or elimination of rebates and the market has recovered from this time. ABCO has worked diligently to overcome these changes by focusing on large commercial applications and the increased interest of business and government in the LED lighting contracts. This has resulted in larger sales revenue in 2014. We have no reason to believe that any such change will have a material adverse effect on our liquidity.

Cost of sales was 73% of revenues in 2014 and 88% of revenues in 2013. Gross margins were 27% and 12% of revenue respectively for the two nine month periods. During 2013 the prices of solar products had not yet been reduced by suppliers to compensate for the previously discussed market conditions. This resulted in higher product prices as a percentage of product sales and had a negative effect on gross margins.

Total selling, general and administrative expenses were 63% of revenues in 2014 and 56% of revenues for the same period in 2013. Net loss for the nine months period ended September 30, 2014 was $(356,911) as compared to the net loss of $(315,763) for the same nine month period ended September 30, 2013. The increase in sales revenue and gross profit margins reduces our losses. Our operating expenses for this period were higher than the comparative period in 2013, but not as a percentage of total sales. The major expenses increased are in legal and accounting fees and corporate expenses for the 2014 year. This combination of factors reduced the operating loss for the period ending September 30, 2014 as compared to September 30, 2013. As noted in previous paragraphs discussing market conditions, ABCO could not finish its backlog of work and expand into the markets of LED lights and commercial solar markets without maintaining staff, facilities and sales expenses. When sales revenues fall, and expenses are not reduced in equal amounts or percentages, the result is an increase of the percentage of operating expenses to sales revenue. Operating expenses for the two periods increased to accommodate our expansion of sales programs, but not in the same ratio as the increase in sales. ABCO chose to maintain a level of expenses that would not cripple the company’s future.

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The following table shows the actual numbers for the periods discussed. It is our plan to continue to reduce our operating losses by increasing sales and keeping expenses as low as possible without effecting sales revenue.

	For The Nine Months Ended
	September 30, 2014		September 30, 2013			Change
Revenues	$	937,158	$	710,895		$	226,,263
Cost of Sales		684,652		625,829			58,823
Gross Profit		252,506		85,066			167,440
Operating Expenses:
Selling, General & Administrative		589,926		396,475			193,451
Loss from operations		(337,420		(311,409	)		26,011
Other expenses
Interest on notes payable		19,491		4,354			15137
Loss before provision for income taxes		(356,911		(315,763	)		41148
Provision for income tax - Note 1		-		-
Net loss applicable to common shareholders	$	(356,911	$	(315,763	)	$	41,148

STATEMENTS OF CASH FLOWS - DESCRIPTION OF STATEMENT

In financial accounting, the cash flow statement also known as a statement of cash flows is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills.

The cash flow statement reflects a firm's liquidity.

The balance sheet is a snapshot of a firm's financial resources and obligations at a single point in time.

The income statement summarizes a firm's financial transactions over an interval of time.

These last two financial statements reflect the accrual basis accounting used by firms to match revenues with the expenses associated with generating those revenues.

The cash flow statement includes only inflows and outflows of cash and cash equivalents; it excludes transactions that do not directly affect cash receipts and payments. These non-cash transactions include depreciation or write-offs on bad debts or credit losses to name a few. The cash flow statement is a cash basis report on three types of financial activities: operating activities, investing activities, and financing activities. Non-cash activities are usually reported in footnotes.

The cash flow statement is intended to:

1.	Provide information on a firm's liquidity and solvency and its ability to change cash flows in future circumstances

2.	Provide additional information for evaluating changes in assets, liabilities and equity

3.	Improve the comparability of different firms' operating performance by eliminating the effects of different accounting methods

4.	Indicate the amount, timing and probability of future cash flows

The cash flow statement has been adopted as a standard financial statement because it eliminates allocations, which might be derived from different accounting methods, such as various timeframes for depreciating fixed assets.

STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30 2014 AND 2013

During the nine months ended September 30, 2014 our net cash used by operating activities was $(332,876) and comparatively the net cash used by operating activities in the nine months ended September 30, 2013 was $(218,030). Net cash used by operating activities in the period ended September 30, 2014 consisted primarily of net losses from operations $(356,911) for 2014 as compared to $(315,763) for 2013. Depreciation adjustments were of non-cash expenses were $12,800 and $8,240 for each year respectively. The Company experienced an increase in accounts payable of $75,500 and $25,624 for each year respectively. This is primarily due to increases in sales for 2014 requiring more credit from our suppliers and slower credit payments from the Company during the 2013 period. The corresponding increases in inventory and accounts receivable reflect cash required because of growth in sales during each period. The decrease in Accounts receivable during the period ended September 30, 2013 reflected the decrease in sales during the period from higher sales in the 2012 prior period.

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Net cash used in investing activities for the nine months ended September 30, 2014 and 2013 was $(40,528) and $(1,125) respectively due to receipt of principal on leases, $697 and $739 respectively ,acquisitions of equipment, $39,180 and $611 respectively, and deposits on leaseholds, $2,045 paid out and $997 refund received respectively. The larger negative number $(40,528) for 2014 was caused by larger equipment purchases in 2014.

Net cash provided by financing activities for the nine months ended September 30, 2014 and 2013 was $370,433 and $218,752 respectively. Net cash provided by financing activities for 2014 and 2013 resulted primarily from the sale of common stock. Part of the increase in 2013 was a loan from a Director in the first quarter of 2013.

Cash flows from Financing Activities were reduced by legal and other costs of SEC Regulation A offering circular, Blue Sky registrations in various states and other offering expenses that aggregated a total of $11,500 for the nine months ended September 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity and capital requirements have been for carrying cost of accounts receivable after completion of contracts. The industry habitually requires the solar contractor to wait for the utility rebate and in order to be paid for the contracts. This process can easily exceed 90 days and requires the contractor to pay all or most of the cost of the project without assistance from suppliers. Our working capital at September 30, 2014 was $20,944 and it was $35,350 at December 31, 2013. This decrease of $14,406 was primarily caused by losses from operations during the nine months ended September 30, 2014 and the year ended December 31, 2013. Bank financing has not been available to the Company but we have been able to increase our credit lines with our suppliers because of good credit. There are no material covenants on our credit lines, normally due in 30 days, since they are standard in the industry and the balances vary on a daily basis.

We have been able to borrow $60,000 from one of our Directors to increase working capital during the first quarter of 2013. There are no existing agreements or arrangement with any Director to provide additional funds to the Company.

PLAN OF OPERATIONS

Based on our current financial position, we cannot anticipate whether we will have sufficient working capital to sustain operations for the next year if we do not raise additional capital. We will not however, be able to reach our goals and projections for multistate expansion without a cash infusion. We have been able to raise sufficient capital through the sale of our common shares and we have paid off nearly all of our debt considering that our trade creditors are due in the normal course of business. Management will not expand the business until adequate working capital is provided. Our ability to maintain sufficient liquidity is dependent on our ability to attain profitable operations or to raise additional capital. We have no anticipated timeline for obtaining neither additional financing nor the expansion of our business. We will continue to keep our expenses as low as possible and keep our operations in line with available working capital as long as possible. There is no guarantee that the Company will be able to obtain adequate capital from any sources, or at all.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable to Smaller Reporting Companies.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

As of the end of the reporting period, September 30, 2014, we carried out an evaluation, under the supervision and with the participation of our management, including the Company's Chairman and Chief Executive Officer/Principal Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified by the SEC's rules and forms. Based upon that evaluation, the Chairman/CEO and the Chief Financial Officer concluded that our disclosure controls and procedures are not currently effective in timely alerting them to material information relating to the Company required to be included in the Company's period SEC filings. The Company is attempting to expand such controls and procedures, however, due to a limited number of resources the complete segregation of duties is not currently in place.

(b) Changes in Internal Control.

Subsequent to the date of such evaluation as described in subparagraph (a) above, there were no changes in our internal controls or other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. However, we believe that our disclosure controls and procedures are designed to provide reasonable assurance of achieving this objective. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be 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 our 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 simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II-OTHER INFORMATION

Item 1. Legal Proceedings

In August of 2014, the ACC refused to allow the Company to participate in any rescission pursuant to the AZ Judgment on the grounds the Company was not a party to the ACC action and therefore had no involvement in the rescission requirement. As of August 4, 2014, the deadline for rescission requirements, the Arizona Corporate Commission has refused to act or make a decision for action even though all materials had been presented to them for the completion of the rescission. In light of the ACC refusal to even evaluate rescission documents prepared by the Company, the Company has informed the ACC that it will take no further action with respect to the ACC Judgment at this time and the Company has not recorded a liability on the Arizona judgment on its books. As of the date of this report, there have been no changes in the status of this case.

Item 1A. Risk Factors

Not Applicable.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.

During the quarter ended September 30, 2014, we issued 2,108,338 shares of Common Stock for $132,242 net of expenses in private Regulation S transactions in reliance of the exemption from registration contained in Regulation S under the Securities Act of 1933, as amended and the issuance of shares for legal and consulting services under the Company’s registered Regulation A offering.

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information

Not Applicable

Item 6. Exhibits

Exhibits Index

	31.1		Section 302 Certification of Chief Executive Officer
	31.2		Section 302 Certification of Chief Financial Officer
	32.1		Section 906 Certification of Chief Executive Officer
	32.2		Section 906 Certification of Chief Financial Officer
	101.INS		XBRL Instance Document
	101.SCH		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

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

November 19, 2014

	ABCO ENERGY, INC


	/s/ Charles O’Dowd
	Charles O’Dowd
	Title: President &
	Chief Executive Officer (CEO)


	/s/ Charles O’Dowd
	Charles O’Dowd
	Chief Financial Officer (CFO)
	Principal Accounting Officer (PAO)