CarbonMeta Technologies, Inc. - Quarter Report: 2014 June (Form 10-Q)

n32715310q.htm

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 OF 1934

For the quarterly period ended June 30, 2014

o 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: 000-33231

COROWARE, INC.

(EXACT NAME OF THE COMPANY AS SPECIFIED IN ITS CHARTER)

Delaware	95-4868120
(State or Other Jurisdiction	(I.R.S. Employer
of Incorporation)	Identification No.)

601 108th Avenue NE, Suite 1900

Bellevue, WA 98004

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(800) 641-2676

(ISSUER REGISTRANT TELEPHONE NUMBER)

Indicate by check mark whether the Company (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 such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. o 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 o 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 o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company	Smaller reporting company x

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

As of April 14, 2015 there were 8,414,279,084 shares of the issuer's $0.0001 par value common stock outstanding.

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COROWARE, INC.

June 30, 2014 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		PAGE
PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets at June 30, 2014 (Unaudited) and December 31, 2013	3
	Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2014 and 2013	4
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	5
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	19

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	20
Item 2.	Unregistered Sales of Equity Securities and Use of Funds	20
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Procedures	21
Item 5.	Other Information	21
Item 6.	Exhibits	21
SIGNATURES		22

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PART I – FINANCIAL INFORMATION

ITEM 1.

CONSOLIDATED FINANCIAL STQATEMENTS

COROWARE, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

	June 30,			December 31,
	2014			2013
	(Unaudited)
CURRENT ASSETS

Cash	$	208		$	-
Accounts receivable, net		69,082			-
Inventory, net		18,718			23,601
Other current assets		1,109			1,109

Total Current Assets		89,117			24,710

PROPERTY AND EQUIPMENT, net		10,408			12,820

OTHER ASSETS
Other assets, net		10,356			10,356

Total Other Assets		10,356			10,356

TOTAL ASSETS	$	109,881		$	47,886

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

Accounts payable and accrued expenses	$	5,627,990		$	6,133,491
Accrued expenses- related parties		171,090			183,929
Obligations collateralized by receivables		193,133			149,637
Bank overdraft		-			1,635
Notes payable		540,082			515,082
Notes payable-related parties		222,214			218,275
Dividend payable		15,969			-
Derivative liability		5,181,237			4,780,032
Current maturities of convertible debt, net of discount		1,977,761			2,452,430

Total Current Liabilities		13,929,476			14,434,511

LONG-TERM LIABILITIES

Small business administration loan		980,450			980,450

Total Long-Term Liabilities		980,450			980,450

Total Liabilities		14,909,926			15,414,961

Commitments and contingencies

STOCKHOLDERS' DEFICIT

Redeemable preferred stock, Series A, $.001 par value, 125,000
shares authorized, 0 shares issued and outstanding		-			-
Redeemable preferred stock, Series B, $.001 par value, 525,000
shares authorized, 159,666 shares issued and outstanding		160			160
Redeemable preferred stock, Series C, $.001 par value, 500,000
shares authorized, 0 shares issued and outstanding		-			-
Redeemable preferred stock, Series D, $.001 par value, 500,000
shares authorized, 100,000 shares issued and outstanding		100			100
Redeemable preferred stock, Series E, $.001 par value, 500,000
shares authorized, 777,856 and 339,559 shares issued
and outstanding, respectively		788			340
Redeemable preferred stock, Series F, $.001 par value, 500,000
shares authorized, 190,000 and 0 shares issued and outstanding,
respectively		190			-
Redeemable preferred stock, Series G, $.001 par value, 500,000
shares authorized, 25,000 and 0 shares issued and outstanding,
respectively		25			-
Common stock; 73,000,000,000 shares authorized
at $0.0001 par value, 8,042,402,021 and 23,842,518
shares issued and outstanding, respectively		804,242			2,383
Additional paid-in capital		28,258,257			25,948,063
Non controlling interest		92,244			91,553
Treasury stock		(35,700	)		(35,700	)
Accumulated deficit		(43,920,351	)		(41,373,974	)

Total Stockholders' Deficit		(14,800,045	)		(15,367,075	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	109,881		$	47,886

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

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COROWARE, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013

REVENUES	$	391,213		$	239,596		$	682,751		$	558,184
COST OF SALES		360,745			178,192			593,301			376,820
GROSS PROFIT		30,468			61,404			89,450			181,364

OPERATNG EXPENSES
General and administrative		271,872			209,334			428,616			554,713
Sales and marketing		24,620			-			32,009			-
Research and Development		38,291			-			54,860			-
Depreciation and amortization		1,748			4,231			3,831			8,462

Total Operating Expenses		336,531			213,565			519,316			563,175

LOSS FROM OPERATIONS		(306,063	)		(152,161	)		(429,866	)		(381,811	)

OTHER INCOME (EXPENSE)
Derivative Income (Expense)		616,292			57,011,047			(1,155,526	)		57,752,615
Interest expense		(120,510	)		(354,049	)		(1,009,254	)		(408,555	)
Gain on extinguishment of debt		40,813			-			45,513			-

TOTAL OTHER INCOME (EXPENSE)		536,595			56,656,998			(2,119,267	)		57,344,060

INCOME (LOSS) BEFORE NON CONTROLLING INTEREST		230,532			56,504,837			(2,549,133	)		56,962,249
Net income (loss) attributable to non controlling interest		(37	)		10,193			2,756			22,826

INCOME (LOSS) BEFORE INCOME TAXES		230,495			56,515,030			(2,546,377	)		56,985,075

INCOME TAX EXPENSE		-			-			-			-

NET INCOME (LOSS)	$	230,495		$	56,515,030		$	(2,546,377	)	$	56,985,075


BASIC INCOME (LOSS) PER SHARE	$	0.00		$	0.02		$	(0.00	)	$	0.02

DILUTED INCOME (LOSS) PER SHARE	$	0.00		$	0.02		$	(0.00	)	$	0.02

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC		5,962,079,900			2,935,326,681			3,161,912,157			2,401,827,198

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - DILUTED		15,753,270,261			2,935,326,681			3,161,912,157			2,401,827,198

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

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COROWARE, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 30,
	2014			2013

OPERATING ACTIVITIES
Net income (loss)	$	(2,549,133	)	$	56,962,249
Net income (loss) attributable to non controlling interest		2,756			22,826
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization		3,831			9,693
(Gain) loss on derivative valuation		1,871,607			(57,752,615	)
Amortization of debt discount		35,764			-
Preferred Stock issued for services and compensation		848,066			-
Common Stock issued for services and compensation		-			30,478
Changes in operating assets and liabilities:
Accounts receivable		(69,082	)		(39,594	)
Other current assets		-			20,000
Inventory		4,883			(19,503	)
Dividends payable		15,969			-
Accounts payable and accrued expenses		(518,339	)		341,551

Net Cash Used in Operating Activities		(353,678	)		(424,915	)

INVESTING ACTIVITIES
Purchase of property and equipment		(1,419	)		-

Net Cash Used in Investing Activities		(1,419	)		-

FINANCING ACTIVITIES
Net proceeds from obligations collateralized by receivables		43,496			62,802
Proceeds from related party loans		3,939			18,757
Proceeds from convertible debt financings		283,814			261,477
Net proceeds from line of credit		-			10,912
Proceeds from non controlling interest		691			10,000
Proceeds from notes payable		25,000			62,250

Net Cash Provided by Financing Activities		356,940			426,198

NET INCREASE (DECREASE) IN CASH		1,843			1,283
CASH AT BEGINNING OF PERIOD		(1,635	)		2,754

CASH AT END OF PERIOD	$	208		$	4,037

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

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COROWARE, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

(Unaudited)

	For the Six Months Ended
	June 30,
	2014		2013
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION

CASH PAID FOR:
Interest	$	-	$	-
Income taxes		-		-

NON CASH FINANCING ACTIVITIES:
Debt discounts on derivative liability	$	2,398	$	-
Common stock issued upon conversion of debt	$	2,308,344	$	249,656
Conversion of Preferred E stock in to common stock	$	29,205	$	-
Cancellation of common stock	$	22,341	$	-

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

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COROWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements of CoroWare, Inc. (“CoroWare” or “the Company”) 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 annual report filed with the SEC on Form 10-K for the year ended December 31, 2013. The consolidated financial statements include the accounts of the Company and its wholly-owned operating subsidiary, CoroWare Technologies, Inc. Also included in the consolidated statements are the Company’s inactive wholly-owned subsidiaries, Innova Robotics, Inc., Robotic Workspace Technologies, Inc., and Robotics Software Service, Inc. (herein referred to as the “Subsidiaries”). The Company also consolidates its 51% interest in Aricon, LLC. All significant inter-company balances and transactions have been eliminated in the consolidated financial statements. 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 the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year ended December 31, 2013 as reported in Form 10-K have been omitted.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsequent Events

The Company evaluated events occurring between the end of the current period and the date these financial statements were issued for potential subsequent event disclosures.

Recent Accounting Pronouncements

Management does not expect the impact of any other recently issued accounting pronouncements to have a material impact on its financial condition or results of operations.

Reclassifications

None

Basic and Diluted Loss per Share

Basic loss per share is calculated by dividing the Company’s net loss applicable to shareholders by the weighted average number of shares outstanding during the period. Diluted loss per share is calculated by dividing the Company’s net loss available to shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is adjusted for any potentially dilutive debt or equity instruments. As of June 30 2014 there were 7,710,868,240 common stock equivalents outstanding which were excluded from the calculation of diluted loss per unit as their effect would have been anti-dilutive.

Inventories

Inventories consist of the following:

	June 30, 2014		December 31, 2013
Raw materials	$	-	$	-
Work in process		-		-
Finished goods		18,718		23,601
Subtotal		18,718		23,601
Less: Inventory reserve		-		-
Inventory, net	$	18,718	$	23,601

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NOTE 3 – FINANCIAL CONDITION AND GOING CONCERN

The Company has a loss from operations for the six months ended June 30, 2014 of $2,546,377. Because of this loss, the current working capital deficit, and the projection of additional losses for the remainder of 2014, the Company will require additional working capital to develop its business operations.

The Company intends to raise additional working capital through the use of public offerings and/or related party financings.

There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings, bank financing and/or related party financing necessary to support the Company's working capital requirements. To the extent that funds generated from operations, any private placements, public offerings, bank financing and/or related party financings are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available or, if available, will be on terms acceptable to the Company.

These conditions raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 4 – ACCOUNTS RECEIVABLE FACTORING

On March 21, 2010, the Company established a $200,000 factoring line with an asset-based lender, CapeFirst Funding, LLC (“Capefirst”) that is secured by accounts receivable that the Lender may accept and purchase from the Company. The agreement calls for Capefirst to advance up to 80% of the net face amount of each assigned account or up to 50% of eligible assigned purchase orders. The agreement calls for a maximum facility amount of $200,000 with a purchase fee of 2% of the net face amount of each assigned account and a collection fee of 0.1% compounded daily. In the event of a dispute or in the event of fraud, misrepresentation, willful misconduct or negligence on the part of the Company, Capefirst may require the Company to immediately repurchase the assigned accounts at a purchase price that includes the amount of the assigned account plus the discount fee, interest and collection fee and may include a processing fee of 10%. Obligations collateralized by receivables under the Capefirst agreement were $193,133 and $149,637 as of June 30, 2014 and December 31, 2014, respectively.

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NOTE 5 - CONVERTIBLE DEBT

The following table illustrates the carrying value of convertible debt:

Lender Name	Reference	June 30, 2014		December 31, 2013
AGS Capital Group, LLC	5(a)	$	105,929	$	157,687
Asher Enterprises, Inc.	5(b)		-		102,795
Barclay Lyons, LLC			10,750		10,750
Blackbridge Capital, LLC	5(d)		28,937		52,042
Burrington Capital, LLC	5(e)		-		-
Cariou			31,838		31,838
Collins, Thomas			39,170		39,170
Dakota Capital	5(h)		200,000		-
Ferro, Patrick	5(i)		50,000		-
IBC Funds	5(j)		5,550		-
Kellburgh, Ltd.			13,000		13,000
LG Capital Funding, LLC	5(l)		56,000		-
Liben, Barry	5(m)		-		-
Magna Group, LLC	5(n)		8,500		-
Panache Capital, LLC			32,685		32,685
Premier IT Solutions Corp.			21,962		21,962
Ratzker, David	5(q)		-		39,184
Redwood Management, LLC	5(r)		122,611		169,647
Reserve Capital	5(s)
Ridgepoint Capital	5(t)		5,852		63,715
Sobeck, Michael	5(u)		-		14,538
Tangiers Investment Group, LLC	5(v)		31,795		62,891
Tuohy	5(w)		-		-
Westmount International Holdings	5(x)		537,318		537,318
YA Global Investments, LP	5(y)		646,628		1,065,433
Zoom Marketing Corporation	5(z)		65,000		140,000

Total			2,013,525		2,554,655
Discount			(35,764)		(102,225)
Less: Current portion of convertible debt			(1,977,761)		(2,452,430)
Long term portion of convertible debt		$	-	$	-

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(a) AGS Capital financing:

During the six month period ending June 30, 2014, AGS converted $51,758 of principal into 460,235,631 shares of the Company’s common stock.

(b) Asher financing:

During the six month period June 30, 2014, Asher converted $102,795 of principal and $4,480 of interest into 343,639,834 shares of the Company’s common.

(d) Blackbridge financing:

On February 21, 2014 the Company entered into a $40,000 Convertible Note Agreement with Blackbridge Capital. The note calls for 5% interest through the maturity date of August 21, 2014. On February 21, 2014 the Company entered into a $5,000 Convertible Note Agreement with Blackbridge Capital. The note calls for 8% interest through the maturity date of September 21, 2014. During the six month period ended June 30, 2014, Blackbridge converted $68,105 of principal into 521,790,033 shares of the Company’s common stock.

(e) Burrington financing:

On April 8, 2014, a note holder, YA Global, sold a portion of their note in the amount of $93,250 to an unrelated third party (“Burrington”). CoroWare then entered into a Convertible Note Agreement with Burrington for that debt. The note calls for 14% interest through the maturity date and is due upon demand. During the six month period ended June 30, 2014, Burrington converted $93,250 of principle into 625,000,000 shares of the Company’s common stock.

(h) Dakota Capital financing:

On April 8, 2014, a note holder, YA Global, sold a portion of their note in the amount of $200,000 to an unrelated third party (“Dakota Capital”). CoroWare then entered into a Convertible Note Agreement with Dakota Capital for that debt. The note calls for 14% interest through the maturity date December 31, 2014.

(i) Ferro financing:

On April 8, 2014, a note holder, YA Global, sold a portion of their note in the amount of $50,000 to an unrelated third party (“Ferro”). CoroWare then entered into a Convertible Note Agreement with Dakota Capital for that debt. The note calls for 14% interest through the maturity date December 31, 2014.

(j)	IBC financing:

On April 2, 2014 the Company entered into a $96,800 Settlement Agreement with IBC Capital. The amount is due upon demand and the discount is increased 5% for each delinquency up to a maximum of 90%. During the six month period June 30, 2014, IBC converted $91,250 of principal into 800,000,000 share of the Company’s common stock.

(l) LG Capital financing:

On March 11, 2014 the Company entered into a $40,000 Convertible Note Agreement with LG Capital. The note calls for 12% interest through the maturity date of March 11, 2015. On March 11, 2014 the Company entered into a $32,000 Convertible Note Agreement with LG Capital. The note calls for 12% interest through the maturity date of March 11, 2015. During the six month period ended June 30, 2014, LG converted $16,000 of principal and $160 of interest into 46,171,428 shares of the Company’s common stock.

(m) Liben financing:

On April 1, 2014 the Company entered into a $25,000 Convertible Note Agreement with Barry Liben. The note calls for 10% interest through the maturity date of March 11, 2015. On March 11, 2014 the Company entered into a $32,000 Convertible Note Agreement with LG Capital. The note calls for 12% interest through the maturity date of October 1, 2014. During the six month period ended June 30, 2014, Liben converted $25,000 of principal and $160 of interest into 147,058,823 shares of the Company’s common stock.

(n) Magna financing:

On February 7, 2014, a note holder, Cariou, sold their note in the amount of $36,514 to an unrelated third party (“Magna”). CoroWare then entered into a Convertible Note Agreement with Magna for that debt. The note calls for 10% interest through the maturity date of February 7, 2015. On February 7, 2014 the Company entered into an $8,500 Convertible Note Agreement with Magna. The note calls for 1% interest through the maturity date of February 7, 2015. During the six month period ended June 30, 2014, Magna converted $36,514 of principal and $164 of interest into 97,436,053 shares of the Company’s common stock.

(q) Ratzker financing :

During the six month period ended June 30, 2014, Ratzker converted $3,350 of principal and $19,185 of interest into 31,524,412, shares of the Company’s common stock.

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(r) Redwood financing:

During the six month period ending June 30, 2014, Redwood converted $47,036 of principal into 210,147,424 shares of the Company’s common stock.

(s) Reserve Capital financing:

During the six month period ending June 30, 2014, Reserve Capital converted $10,000 of principal into 100,000,000 shares of the Company’s common stock.

(t) Ridge Point financing:

During the six month period ended June 30, 2014, Ridge Point converted $60,503 of principal into 650,085,000 shares of the Company’s common stock.

(u) Sobeck financing:

During the six month period ended June 30, 2014, Sobeck converted $14,538 of principal and $17,921 of interest into 44,934,636 shares of the Company’s common stock.

(v) Tangiers financing:

On March 27, 2014, a note holder, Zoom Marketing, sold their note in the amount of $75,000 to an unrelated third party (“Tangiers”). CoroWare then entered into a Convertible Note Agreement with Tangiers for that debt. The note calls for 5% interest through the maturity date of March 27, 2015. During the six month period ended June 30, 2014, Tangiers converted $185,686 of principal and $1,357 of interest into 1,561,412,909 shares of the Company’s common stock.

(w) Tuohy financing:

On April 1, 2014, a note holder, YA Global, sold a $40,000 of their original note of in the amount $1,250,000 to an unrelated third party (“Tuohy”). CoroWare then entered into a Convertible Note Agreement with Tangiers for that debt. The note calls for 14% interest through the maturity date of December 31, 2014. During the six month period ended June 30, 2014, Tuohy converted $40,000 of principal into 171,117,647 shares of the Company’s common stock.`

(x) Westmount financing:

During the six month period ended June 30, 2014, Westmount converted $261,259 of interest into 571,291,829 shares of the Company’s common stock.

(y) YA Global Investments Global, LP financing:

During the six month period ended June 30, 2014, YA Global converted $43,805 of principal and $269,223 of interest into 1,264,167,158 shares of the Company’s common stock.

(z) Zoom Marketing financing:

See Tangiers financing note above.

-11-

During the six month period ended June 30, 2014, conversions were as follows:

Financing or other contractual arrangement:	Principal converted		Interest Converted	Shares Issued

AGS Capital Group convertible note financing	$	51,758	0	460,235,631
Asher convertible note financing		102,795	4,480	343,639,834
Blackbridge convertible note financing		68,105	0	521,790,033
Burrington convertible note financing		93,250	0	698,671,428
IBC Funds convertible note financing		91,250	0	800,000,000
LC Capital convertible note financing		16,000	160	46,171,428
Liben convertible note financing		25,000	0	147,058,823
Magna convertible note financing		36,514	164	97,436,053
Ratzker convertible note financing		3,350	19,185	31,524,412
Redwood convertible note financing		47,036	0	210,147,424
Reserve Capital convertible note financing		10,000	0	100,000,000
Ridge Point convertible note financing		60,503	0	525,905,000
Sobeck convertible note financing		14,538	17,921	44,934,636
Tangiers convertible note financing		185,686	1,357	1,561,412,909
Tuohy, Patrick convertible note financing		40,000	0	171,117,647
Westmount convertible note financing		0	261,259	571,291,829
YA Global convertible note financing		43,805	269,223	1,264,167,158

Several of the convertible notes are in default, however, the terms of the agreements allow conversion of the debt during periods of default. In computing the derivative liability associated with the conversion, one of the inputs is maturity of the instruments which, in this case, is technically in the past. Accordingly, management has estimated a debt maturity date of six months to one year from the period-end date for purposes of the derivative liability calculations. During the six month period ended June 30, 2014 the Company realized a derivative expense of $1,155,526 and derivative income for the three months ended June 30, 2014 of $616,292.

NOTE 6 – RELATED PARTY TRANSACTIONS

As of June 30, 2014 and December 31, 2013, the Company had notes payable related party of $222,214 and $218,275. The Company is currently accruing interest on these loans at a rate of 1.5% per annum. Total accrued interest related to related party loans was $155,621 and $183,929 as of June 30, 2014 and December 31, 2013, respectively. Related party interest amounts are included in accrued expenses related party on the balance sheet. The June 30, 2014 balance also includes Board of Director fees payable in the amount $15,469.

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NOTE 7 - OTHER STOCKHOLDERS’ EQUITY

a) Stock Options:

The following table summarizes stock option activity:

	Number of Options and Warrants
Outstanding, December 31, 2013		53,164
Options and warrants, granted		-
Options and warrants, exercised		-
Options and warrants, forfeited or expired		(15,000	)
Outstanding, June 30, 2014		38,164
Exercisable at June 30, 2014		38,164

	Options and Warrants						Options and Warrants
	Outstanding						Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price

$1 to $69		38,164		1.87	$	3.60		38,164	$	3.60
$70 to $120		-		-	$	-		-	$	-
$121 to $1,200		-		-	$	-		-	$	-
		53,164		1.84	$	3.60		38,164	$	3.60

The following table summarizes common stock issued for services during the comparable periods:

	2014				2013
	Shares		Value		Shares		Value
Employee compensation		-	$	-		119,429,987	$	37,522

The following table summarizes other common stock issued during the comparable periods:

	2014				2013
	Shares		Value		Shares		Value
Satisfaction of payables		-	$	-		-	$	-
Redemption of convertible debenture		7,726,512,817	$	2,264,650		3,996,220,260	$	1,421,852
Notes payable		-	$	-		-	$	-
		7,726,512,817	$	2,264,650		3,996,220,260	$	$1,421,852

d) Dividends on preferred stock:

At June 30, 2014 and December 31, 2013, there were cumulative undeclared dividends to Preferred Series B shareholders of $49,896 and $47,900, respectively, the obligation for which is contingent on declaration by the board of directors.

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e) Series A Preferred Stock

The Company has authorized 125,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock (i) pays a dividend of 5%, payable at the discretion of the Company in cash or common stock, (ii) is convertible immediately after issuance into the Company's common stock at the lesser of $0.005 per share or 75 percent of the average closing bid prices over the 20 trading days immediately preceding the date of conversion, (iii) has a liquidation preference of $1.00 per share, (iv) may be redeemed by the Company at any time up to five years after the issuance date for $1.30 per share plus accrued and unpaid dividends, and (v) has no voting rights except when mandated by Delaware law. There were no shares of Series A Preferred Shares outstanding at any time during the periods ended June 30, 2014 and 2013.

f) Series B Preferred Stock

The Company has authorized 525,000 shares of Series B Preferred Stock. Each share of Series B Preferred Stock (i) pays a dividend of 5 percent, payable at the discretion of the Company in cash or common stock, (ii) is convertible immediately after issuance into the Company's common stock at the lesser of $15 per share or 75 percent of the average closing bid prices over the 20 trading days immediately preceding the date of conversion, (iii) has a liquidation preference of $1.00 per share, and (iv) may be redeemed by the Company at any time up to five years.

There were 159,666 and 159,666 shares of Series D Preferred Stock issued and outstanding as of June 30, 2014 and December 31, 2013, respectively.

g) Series D Preferred Stock

The Company has authorized 500,000 shares of Series D Preferred Stock. During 2007, the Company initiated a private offering under Regulation D of the Securities Act of 1933 (the “Private Offering”), of an aggregate 500,000 units (collectively referred to as the “Units”) at a price of $1.00 (one dollar) per unit, with each unit consisting of one share of Series D Convertible Preferred Stock at the lesser of eighty five percent (85%) of the average closing bid price of the Common Stock over the twenty (20) trading days immediately preceding the date of conversion or $0.04 and stock purchase warrants equal to the number of shares of common stock converted from the Series D Convertible Preferred Stock, exercisable at $0.06 per share and which expire five (5) years from the conversion date.

There were 100,000 and 100,000 shares of Series D Preferred Stock issued and outstanding as of June 30, 2014 and December 31, 2013, respectively.

h) Preferred Stock, Series E:

On March 9, 2012 the Board approved by unanimous written consent an amendment to the Corporation’s Certificate of Incorporation to designate the rights and preferences of Series E Preferred Stock. There are 500,000 shares of Series E Preferred Stock authorized with a par value of $0.001. Each share of Series E Preferred Stock has a stated value equal to $1.00 and shall be entitled to receive dividends at the rate of 5% per annum on the stated value before dividends are declared on any other outstanding shares of stock of the Company. These preferred shares rank higher than the common shares and pari passu with all other classes of preferred stock. Each outstanding share of Series E Preferred Stock shall be convertible into the number of shares of the Corporation’s common stock determined by dividing the Stated Value by the Conversion Price which is defined as $0.0001. Mandatory conversion can be demanded by the Company prior to October 1, 2013. The holders of the Series E Preferred Stock shall have no voting power.

During the six-month period ended June 30, 2014 the Company issued 607,856 shares of preferred series E for $212,248 worth of deferred salary, $60,608 worth of accrued salary, and $335,000 worth of bonuses. The fair value of the preferred series E shares was based on the trading price of common stock equivalents into which the preferred shares were convertible on the date of issuance and was $658,707, which resulted in additional charges to professional fees of $113,386.

There were 788,084 and 339,559 shares of Series E Preferred Stock issued and outstanding as of June 30, 2014 and December 31, 2013, respectively.

i) Preferred Stock, Series F:

On October 4, 2013, the Company filed the certificate of designation pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of 500,000 authorized shares of Series F Convertible Preferred Stock, par value $0.001 per share.

The shares of preferred stock have a stated value of $1.00, have no voting rights, are entitled to no dividends due or payable and are convertible into the number of shares of the Corporation’s common stock determined by dividing the stated value by the conversion price which is defined as eighty five percent (85%) of the average closing bid price of the common stock over the five (5) trading days immediately preceding the date of conversion, but no less than par value of the common stock. At any time after the issuance date through the fifth (5th) anniversary of the issuance of the preferred stock, the Company shall have the option to redeem any unconverted shares at an amount equal to one hundred thirty percent (130%) of the stated value of the stock plus accrued and unpaid dividends, if any. Redemption shall be established by the Company in its sole and absolute discretion and no holder of Series F Preferred Stock may demand that the Series F Preferred Stock be redeemed.

During the six-month period ended June 30, 2014 the Company issued 190,000 shares of preferred series F for $60,000 worth of deferred salary, $80,000 worth of accrued salary, and $50,000 worth of accounts payable. The fair value of the preferred series F shares was based on the trading price of common stock equivalents into which the preferred shares were convertible on the date of issuance and was $101,824, which resulted in a gain on settlement of accrued liabilities, recorded as a decrease in charges to professional fees, of $88,176.

There were 190,000 and -0- shares of Series F Preferred Stock issued and outstanding as of June 30, 2014 and December 31, 2013, respectively.

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j) Preferred Stock, Series G:

On April 17, 2014, the Company filed the certificate of designation pursuant to which the Company set forth the designation, powers, rights, privileges, preferences and restrictions of 500,000 authorized shares of Series G Convertible Preferred Stock, par value $0.001 per share.

The shares of preferred stock have a stated value of $1.00, have voting rights equal to 5,000,000 votes of common stock, are entitled to no dividends due or payable, are non-redeemable and are convertible into the number of shares of the Corporation’s common stock determined by dividing the stated value by the conversion price which is defined as eighty five percent (85%) of the average closing bid price of the common stock over the twenty (20) trading days immediately preceding the date of conversion, but no less than par value of the common stock.

During the six-month period ended June 30, 2014 the Company issued 25,000 shares of preferred series G to a related party for $25,000 worth of deferred salary. The fair value of the preferred series G shares was based on the trading price of common stock equivalents into which the preferred shares were convertible on the date of issuance and was $8,780, which, as the recipient is a related party resulted in an increase to additional paid-in capital of $16,220.

There were 25,000 and -0- shares of Series G preferred stock issued and outstanding as of June 30, 2014 and December 31, 2013, respectively.

k) Common Stock:

In addition to the common stock issued for convertible debt, the Company had the following issuances of common stock during the period.

On January 14, 2014, a nonrelated party shareholder converted 1,040 shares of preferred E stock into 1,155,556 shares of common stock.

On January 23, 2014, a related party shareholder converted 100,000 shares of preferred E stock into 60,606,061 shares of common stock.

On March 7, 2014, a nonrelated party shareholder converted 5,820 shares of preferred E stock into 16,628,571 shares of common stock.

On March 13, 2014, a nonrelated party shareholder converted 5,000 shares of preferred E stock into 14,285,714 shares of common stock.

On March 14, 2014, a nonrelated party shareholder converted 5,500 shares of preferred E stock into 15,784,216 shares of common stock.

On March 18, 2014, a nonrelated party shareholder converted 10,000 shares of preferred E stock into 28,571,429 shares of common stock.

On March 24, 2014, a nonrelated party shareholder converted 15,257 shares of preferred E stock into 43,591,429 shares of common stock.

On April 14, 2014, a nonrelated party shareholder converted 16,714 shares of preferred E stock into 111,423,710 shares of common stock.

l) Reverse split:

On January 3, 2014, the Company effected a one-for-two hundred (1:200) reverse split of the Company’s Common Stock. All common share amounts within this document have been adjusted to reflect this change.

NOTE 8 – SUBSEQUENT EVENTS

Management has evaluated subsequent events according to the requirements of ASC Topic 855, and has determined that there were no material reportable subsequent events to be disclosed, other than those listed below:

Share Issuances on Convertible Debt

Subsequent to June 30, 2014, Company note holders elected to convert an aggregate of $14,024 in note principal into 371,877,063 shares of the Company’s common stock, pursuant to the respective conversion terms of the notes.

Preferred Stock

Series E Preferred Stock

Subsequent to June 30, 2014, the Company entered into a subscription agreements to sell 30,000 shares of Series E preferred stock for services.

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

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may" "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those in the forward-looking statements as a result of various important factors. Although we believe that the expectations reflected in the forward-looking statements are reasonable, they should not be regarded as a representation by CoroWare, Inc., or any other person, that such expectations will be achieved. The business and operations of CoroWare, Inc. are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.

BACKGROUND

CoroWare, Inc is a public holding company whose principal subsidiary, CoroWare Technologies, Inc. (“CTI”), has expertise in information technology consulting, mobile robotics, and affordable collaboration. Through our subsidiary, CoroWare delivers custom engineering services, hardware and software products, and subscription services that benefit customers in North America, Europe, Australia, Asia and the Middle East. Our customers span multiple industry sectors and comprise universities, large enterprises and small businesses, software and hardware product development companies, and non-profit organizations. The company also maintains a Near Shore practice which is comprised of multiple subcontracting companies with whom the Company maintains close working relationships. Through these relationships, the Company is able to provide services in South America.

COROWARE TECHNOLOGIES, INC.

CTI is a software professional services company with a strong focus on Information Technology integration and robotics integration, business automation solutions, and unmanned systems solutions to its customers in North America and Europe.

CTI’s expertise includes the deployment and integration of computing platforms and applications, as well as the development of unmanned vehicle software and solutions for customers in the research, commercial, and homeland security market segments. CTI shall continue to offer its high value software systems development and integration services that complement the growing trend in outsourced software development services in Asia, Latin America, and Eastern Europe.

CoroWare Technologies comprises three separately managed lines of business:

	·	CoroWare Business Solutions: IT and lab management; business intelligence; software architecture, design and development; content delivery; partner and program management.
	·	Robotics and Automation: Custom engineering such as visualization, simulation and software development; and mobile robot platforms.
	·	Enhanced Collaboration Solution: Collaboration and conferencing products, solutions and subscription services.

The Company’s revenues are principally derived from standing contracts that include Microsoft (partner management and IT professional services), a European auto manufacturer (simulation software custom development), and other customers whose product development groups require custom software development and consulting companies. Existing contract revenues vary month by month based on the demands of the clients. The Company’s collaboration effort is in the early stages of growth and will require additional working capital to compete effectively against new entrants in this rapidly growing market.

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RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2014 COMPARED TO SIX MONTHS ENDED JUNE 30, 2013:

During the three-month period ended June 30, 2014 (the "2014 Period") revenues were $391,213 compared to revenues of $239,596 during the three-month period ended June 30, 2013 (the "2013 Period"). Our revenues increased compared to the previous year as customers continued to increase spending on software development services for IT consulting and software development projects.

Cost of revenues was $360,745 for the 2014 Period compared to $178,192 for the 2013 Period. Cost of revenues represents primarily labor and labor-related costs in addition to overhead costs. Gross profit on these 2014 revenues amounted to $30,468 (8%) gross profit percentage) compared to $178,192 (26% gross profit percentage) for the 2013 Period. The decreased gross profit percentage resulted from increased labor costs and retaining key service delivery personnel for anticipated service engagements in the upcoming 2014 Period.

Research and development was $38,291 (5% of gross revenues) for the 2014 Period compared to $0 (0%) of gross revenues) in the 2013 Period. The increased research and development investment resulted from completing our software development and testing initiatives related to robotics software product development.

Operating expenses were $336,531 during the 2014 Period compared to $213,565 during the 2013 Period. General and Administration expenses increased to $271,872 in the 2014 Period compared to $209,334 for the 2013. This increase was due to an increase in stock issued for professional services. Sales and marketing expenses increased to $24,260 in the 2014 Period compared to $0 for the 2013 Period as the Company refocused its sales and marketing efforts on selling IT consulting and software development services. Loss from operations was $651,367 during the 2014 Period compared to $152,161 in the 2013 Period.

Total other income was $536,595 during the 2014 Period compared to $56,656,998 in the 2013 Period. Other income is comprised primarily of derivative income and expense as well as interest expense. Keeping the number of shares constant, the liability associated with the embedded conversion features increases as our share price and volatility increases and, likewise, decreases when our share price and share price volatility decreases. Derivative income (expense) displays the inverse relationship. The derivative expense in the 2014 Period is primarily due to expense recognized in connection with redemptions on various debentures during the quarter. Interest expense for the three month 2014 Period is $125,510 compared to $354,049 for the three month 2013 Period. The debt discount amortized using the effective interest method was $2,398 during 2014 compared to $0 during 2013. Under this method, the amount of amortization increases exponentially as the underlying carrying value of the amortized debt increases.

Net income for the 2014 Period was $230,495 compared to net income of $56,515,030 for the 2013 Period.

Basic weighted average shares outstanding were 5,962,079,900 during the 2014 Period compared to 2,935,326,681 in the 2013 Period.

Diluted weighted average shares outstanding were 15,753,270,261 during the 2014 Period compared to 2,935,326,681 in the 2013 Period.

SIX MONTHS ENDED JUNE 30, 2014 COMPARED TO SIX MONTHS ENDED JUNE 30, 2013:

During the six-month period ended June 30, 2014 (the "2014 Period") revenues were $682,751 compared to revenues of $558,184 during the six-month period ended June 30, 2013 (the "2013 Period"). Our revenues increased compared to the previous year as customers continued increased spending on software development services for IT consulting and software development projects.

Cost of revenues was $593,301 for the 2014 Period compared to $376,820 for the 2013 Period. Cost of revenues represents primarily labor and labor-related costs in addition to overhead costs. Gross profit on these 2014 revenues amounted to $89,450 (13% gross profit percentage) compared to $181,364 (32% gross profit percentage) for the 2013 Period. The decreased gross profit percentage resulted from increased labor costs and retaining key service delivery personnel for anticipated service engagements in the upcoming 2014 Period.

Research and development was $54,860 (8% of gross revenues) for the 2014 Period compared to $0 (0%) of gross revenues) in the 2013 Period. The increased research and development investment resulted from completing our software development and testing initiatives related to robotics software product development.

Operating expenses were $519,316 during the 2014 Period compared to $563,175 during the 2013 Period. General and Administration expenses decreased to $428,616 in the 2014 Period compared to $554,713 for the 2013 Period as the Company. . Sales and marketing expenses increased to $54,860 in the 2014 Period compared to $0 for the 2013 Period as the Company refocused its sales and marketing efforts on selling IT consulting and software development services. Loss from operations was $429,866 during the 2014 Period compared to $381,811 in the 2013 Period.

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Total other expense was $2,119,267 during the 2014 Period compared to other income of $57,344,060 in the 2013 Period. Other income is comprised primarily of derivative income and expense as well as interest expense. Keeping the number of shares constant, the liability associated with the embedded conversion features increases as our share price and volatility increases and, likewise, decreases when our share price and share price volatility decreases. Derivative income (expense) displays the inverse relationship. The derivative expense in the 2014 Period is primarily due to expense recognized in connection with redemptions on various debentures during the quarter. Interest expense for the six month 2014 Period is $1,009,254 compared to $408,555 for the six month 2013 Period. The debt discount amortized using the effective interest method was $35,764 during 2014 compared to $0 during 2013. Under this method, the amount of amortization increases exponentially as the underlying carrying value of the amortized debt increases.

Net Loss for the 2014 Period was $2,546,377 compared to net income of $56,985,075 for the 2013 Period.

Basic and Diluted weighted average shares outstanding were 3,161,912,157 during the 2014 Period compared to 2,401,827,198 in the 2013 Period.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2014, we had current assets of $89,117, current liabilities of $13,929,476, negative working capital of $13,840,359 and an accumulated deficit of $43,920,351. For the six months ending June 30, 2014, we had net cash flows used in operating activities of ($353,678), net cash flows used in investing activities of $1,419 and net cash flows provided by financing activities of $356,940.

We will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding. We will still need additional capital in order to continue operations until we are able to achieve positive operating cash flow. Additional capital is being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. If we do not obtain additional capital, we may cease operations.

However, even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

OFF-BALANCE SHEET ARRANGEMENTS

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

CONTRACTUAL OBLIGATIONS

The following table sets forth the contractual obligations of the Company as of June 30, 2014:

	Payments due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Convertible debt, net	$	1,977,761	$	1,977,761	$	-	$	-	$	-
Notes payable		540,082		540,082		-		-		-
Notes payable, related parties		222,214		222,214		-		-		-
Long –term debt		980,450		-		980,450		-		-
Total	$	3,720,507	$	2,740,057	$	980,450	$	-	$	-

EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Form 10-K for the year ended December 31, 2013.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are not required to provide the information required by this item.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

With the participation of Lloyd T. Spencer, who serves as the Chief Executive Officer (the principal executive officer) and Interim Chief Financial Officer (the principal financial officer); the Company’s management has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. As of the end of the period covered by this Report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and interim chief financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on this evaluation, our chief executive officer and interim chief financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. The ineffectiveness of our disclosure controls and procedures is the result of certain deficiencies in internal controls constituting material weaknesses as discussed below.

The Company has historically had limited operating revenue and, as such, all accounting and financial reporting operations have been and are currently performed by a limited number of individuals. The parties that perform the accounting and financial reporting operations are the only parties with any significant knowledge of generally accepted accounting principles. Thus, we lack segregation of duties in the period-end financial reporting process. This lack of additional accounting/auditing staff with significant knowledge of generally accepted accounting principles in order to properly segregate duties could result in ineffective oversight and monitoring and the possibility of a misstatement within the consolidated financial statements. However, the material weaknesses identified did not result in the restatement of any previously reported financial statements or any other related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company's consolidated financial statements for the current reporting period.

The Company is currently reviewing its policies and is evaluating its disclosure controls and procedures so that it will be able to determine the changes it can and should make to make such controls more effective.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company's internal control over financial reporting during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.

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Part II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this item.

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

During the six months ended June 30, 2014, the Company made issuances of 460,235,631 shares of its common stock, at a price equal to $0.0001 per share, to AGS as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 343,639,834 shares of its common stock, at a price equal to $0.0001 per share, to Asher as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 521,790,033 shares of its common stock, at a price equal to $0.0001 per share, to Blackbridge as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 698,671,428 shares of its common stock, at a price equal to $0.0001 per share, to Burrington as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 800,000,000 shares of its common stock, at a price equal to $0.0001 per share, to IBC as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 46,171,428 shares of its common stock, at a price equal to $0.0001 per share, to LC Capital as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 147,058,823 shares of its common stock, at a price equal to $0.00011per share, to Liben as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 97,436,053 shares of its common stock, at a price equal to $0.0001 per share, to Magna as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 31,524,412 shares of its common stock, at a price equal to $0.0001 per share, to Ratzker as described in NOTE 5 - CONVERTIBLE DEBT

During the six months ended June 30, 2014, the Company made issuances of 210,147,424 shares of its common stock, at a price equal to $0.0001 per share, to Redwood as described in NOTE 5 - CONVERTIBLE DEBT

During the six months ended June 30, 2014, the Company made issuances of 100,000,000 shares of its common stock, at a price equal to $0.0001 per share, to Reserve Capital as described in NOTE 5 - CONVERTIBLE DEBT

During the six months ended June 30, 2014, the Company made issuances of 525,905,000 shares of its common stock, at a price equal to $0.0001 per share, to RidgePoint as described in NOTE 5 - CONVERTIBLE DEBT

During the six months ended June 30, 2014, the Company made issuances of 44,934,636 shares of its common stock, at a price equal to $0.0001 per share, to Sobeck as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 1,561,412,909 shares of its common stock, at a price equal to $0.0001 per share, to Tangiers as described in NOTE 5 - CONVERTIBLE DEBT.

During the six months ended June 30, 2014, the Company made issuances of 171,117,647 shares of its common stock, at a price equal to $0.0001 per share, to Tuohy as described in NOTE 5 - CONVERTIBLE DEBT

During the six months ended June 30, 2014, the Company made issuances of 571,921,829 shares of its common stock, at a price equal to $0.0001 per share, to Westmount as described in NOTE 5 - CONVERTIBLE DEBT

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During the six months ended June 30, 2014, the Company made issuances of 1,264,167,158 shares of its common stock, at a price equal to $0.0001 per share, to Yorkville as described in NOTE 5 - CONVERTIBLE DEBT

The shares were issued in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, including Regulation D.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

(a)	No material default in the payment of principal, interest, a sinking fund or purchase fund installment, or any other material default not cured within 30 days exists as of the balance sheet date.

(b)	As of the balance sheet date the company is in arrears in the payment of dividends related to its Series B preferred stock in the amount of $15,969.

(c)	At June 30, 2014, we are in default on all of our secured and unsecured debt except for the small business administration loan.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

ITEM 6. EXHIBITS

31		Certification of Periodic Financial Reports by Lloyd Spencer in satisfaction of Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of Periodic Financial Reports by Lloyd Spencer in satisfaction of Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. Section 1350

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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.

	CoroWare, Inc.

Dated: April 14, 2015	By:	/s/ Lloyd T. Spencer
		Lloyd T. Spencer
		Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Accounting and Financial Officer)

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