RAADR, INC. - Quarter Report: 2016 September (Form 10-Q)

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's December 31, 2015, Annual Report on Form 10-K, previously filed with the Commission on April 14, 2016.

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RAADR, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

See accompanying notes to the condensed consolidated financial statements.

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RAADR, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

See accompanying notes to the condensed consolidated financial statements.

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RAADR, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to the condensed consolidated financial statements.

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RAADR, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - History and Organization

Organization

The Company was organized March 29, 2006 (Date of Inception) under the laws of the State of Nevada, as White Dental Supply, Inc.  On December 27, 2012, the Company formed two wholly owned subsidiaries, Choice One Mobile, Inc. and PITOOEY! Mobile, Inc., under the laws of the State of Nevada. On January 7, 2013, the Board of Directors of the Company authorized and a majority of the stockholders of the Company ratified, by written consent, resolutions to change the name of the Company to PITOOEY!, Inc.  The name change was effective with the State of Nevada February 7, 2013. On February 6, 2013, the Company formed a wholly owned subsidiary, Rockstar Digital, Inc., under the laws of the State of Nevada.  On October 31, 2013, the Company, as part of its settlement agreement with the employees of Rockstar Digital, ceased operations of its wholly owned subsidiary, Rockstar Digital, Inc. On July 29, 2015, the Company changed their name to Raadr, Inc. The name change was effective with the State of Nevada on July 29, 2015.

Business

The Company offers a unique software tool in www.raadr.com that allows individuals to monitor social media activity online. As the digital world of the 21st Century continues to evolve, parents, guardians, and children are faced with challenges and threats not just in the real world, but in the omnipresent realm of Social Media as well. PITOOEY! INC., makers of the proprietary technology application RAADR© have developed a web based tool that provides families with peace of mind when it comes to knowing that children are safe from bullying and predatory behavior unfortunately so prevalent today.

By customizing their own unique monitoring and alert settings, parents and guardians can be alerted when their children’s Facebook, Twitter, Instagram and other pertinent social media platforms under scrutiny become posted with inappropriate language. By utilizing customized keywords chosen by the user that are added to an already existing database, parents and guardians can carry a sense of assuredness that the youth they love and are responsible for are safe and acting in a fun, yet appropriate manner.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying condensed consolidated financial statements, the Company has an accumulated deficit of approximately $15.7 million as of September 30, 2016, a net loss of approximately $740,000 and cash used from operations of approximately $243,000 during the nine months ended September 30, 2016 and a working capital deficit of $4.3 million as of September 30, 2016.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. During the nine months ended September 30, 2016 the Company received $227,950 in capital from the issuances of convertible notes payable.  The Company is significantly dependent upon its ability, and will continue to attempt, to secure equity and/or additional debt financing. The Company is attempting to conduct private placements of its preferred and common stock to raise proceeds to finance its plan of operation. There are no assurances that the Company will be successful and without sufficient financing it would be unlikely for the Company to continue as a going concern.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments that might arise from this uncertainty.

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Note 2 - Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Raadr, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. All significant intercompany balances and transactions have been eliminated.  Raadr, Inc., Choice One Mobile, Inc., PITOOEY! Mobile, Inc. and Rockstar Digital, Inc. will be collectively referred herein to as the “Company”.

Risks and Uncertainties

The Company has a limited operating history and has not generated revenues from our planned principal operations.

The Company's business and operations are sensitive to general business and economic conditions in the U.S. and worldwide. These conditions include short-term and long-term interest rates, inflation, fluctuations in debt and equity capital markets and the general condition of the U.S. and world economy. A host of factors beyond the Company's control could cause fluctuations in these conditions, including the political environment and acts or threats of war or terrorism. Adverse developments in these general business and economic conditions, including through recession, downturn or otherwise, could have a material adverse effect on the Company's consolidated financial condition and the results of its operations.

The Company currently has no sales and limited marketing and/or distribution capabilities. The Company has limited experience in developing, training or managing a sales force and will incur substantial additional expenses if we decide to market any of our current and future products. Developing a marketing and sales force is also time consuming and could delay launch of our future products. In addition, the Company will compete with many companies that currently have extensive and well-funded marketing and sales operations. Our marketing and sales efforts may be unable to compete successfully against these companies. In addition, the Company has limited capital to devote sales and marketing.

The Company's industry is characterized by rapid changes in technology and customer demands. As a result, the Company's products may quickly become obsolete and unmarketable. The Company's future success will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and enhance our current products on a timely and cost-effective basis. Further, the Company's products must remain competitive with those of other companies with substantially greater resources. The Company may experience technical or other difficulties that could delay or prevent the development, introduction or marketing of new products or enhanced versions of existing products. Also, the Company may not be able to adapt new or enhanced products to emerging industry standards, and the Company's new products may not be favorably received. Nor may we have the capital resources to further the development of existing and/or new ones.

Interim Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission.  Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these consolidated financial statements have been included.  Such adjustments consist of normal recurring adjustments.  These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2015. The results of operations for the nine months ended September 30, 2016 are not indicative of the results that may be expected for the full yearear.

Use of Estimates

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

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Cash and Cash Equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

Property and Equipment

Property and equipment is recorded at cost.  Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods (generally accelerated) for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment there was no impairment as of September 30, 2016.

Revenue Recognition

The Company recognizes revenue when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of our fees is probable.

Sales related to long-term contracts for services (such as programming, website development and maintenance) extending over several years are accounted for under the percentage-of-completion method of accounting. Sales and earnings under these contracts are recorded based on the ratio of actual costs incurred to total estimated costs expected to be incurred related to the contract under the cost-to-cost method based budgeted milestones or tasks as designated per each contract. Anticipated losses on contracts are recognized in full in the period in which losses become probable and estimable.

For all other sales of product or services the Company recognizes revenues based on the terms of the customer agreement. The customer agreement takes the form of either a contract or a customer purchase order and each provides information with respect to the product or service being sold and the sales price. If the customer agreement does not have specific delivery or customer acceptance terms, revenue is recognized on the date of the customer agreement, invoice or purchase order.

Stock-based Compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

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The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Loss Per Common Share

Net loss per share is provided in accordance with ASC Subtopic 260-10. The Company presents basic loss per share (“EPS”) and diluted EPS on the face of statements of operations. Basic EPS is computed by dividing reported losses by the weighted average shares outstanding. Except where the result would be anti-dilutive to income from continuing operations, diluted earnings per share has been computed assuming the conversion of the convertible long-term debt and the elimination of the related interest expense, and the exercise of stock warrants. Loss per common share has been computed using the weighted average number of common shares outstanding during the year. Dilutive loss per share for the nine months ended September 30, 2016 and 2015 excludes all potential dilutive common shares as their effects are anti-dilutive. Dilutive income per share for the three months ended September 30, 2016 was capped at the authorized shares of eight (8) billion.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability.

The three levels of the fair value hierarchy are described below:

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

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

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

As of September 30, 2016 and December 31, 2015 the derivative liabilities are considered a level 2 item; see Note 4.

The carrying amounts reflected in the balance sheets for cash, accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items.

Recent Pronouncements

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

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Note 3 - Financial Statement Elements

Accrued liabilities as of September 30, 2016 and December 31, 2015 consisted of:

In August 2015, the Company entered into a settlement agreement with their former Chief Executive Officer. In connection with the agreement, the Company has the obligation to issue 703,550 shares of common stock in settlement of amounts payable to the former Chief Executive Officer for accrued salaries and an investment in Series B preferred stock.  The Company has yet to issue the required shares and thus as of September 30, 2016 and December 31, 2015, the liabilities remain. During the quarter ended September 30, 2016, the Company amended the agreement so that an anti-dilution in which was present in the original settlement was removed.

Note 4 - Notes Payable

Notes payable as of September 30, 2016 and December 31, 2015 consisted of:

As of September 30, 2016, all notes indicated above are in default.

Convertible Promissory Notes

Commencing in December 2014 and through June 2016, the Company issued various convertible promissory notes to third parties to be used for operations. In most cases, these convertible promissory notes are convertible upon issuance into a variable number of shares of common stock.  Based on the requirements of ASC 815, we determined that a derivative liability was triggered upon issuance due to the variable conversion price. Using the Black-Scholes pricing model, we calculated the derivative liability upon issuance and recorded the fair market value of the derivative liability as a discount to the convertible promissory notes. When a derivative liability associated with a convertible note is in excess of the face value of the convertible note, the excess of fair value of derivative is charged to the statement of operations. The derivative liability is required to be revalued at each conversion event and at each reporting period.

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The Company doesn't account for the derivative liability until the convertible promissory note is convertible. In addition, these convertible promissory notes include various default provisions in which increase the interest rate to rates ranging from 12% to 35% and at times the principal balance at rates ranging from 5% to 50%. Additionally, most convertible promissory notes have prepayment penalties in which range from 15% to 50%

2015 Issuances

In October to December 2015, the Company issued eight convertible promissory note to various third parties resulting proceeds of $312,000.  The convertible notes included on issuance discounts of $45,125 which are included as part of the discount to the convertible notes disclosed below. Upon issuance, total principal due on the convertible notes at maturity is $357,125. The convertible notes bear interest rates ranging from 4% to 10%, due at dates ranging from March 2016 to July 2017, and are convertible any time after issuance at a variable conversion prices calculated as the lower of prices ranging from $0.10 to $0.30 or discounts ranging from 50% to 55% of the lowest trading price in the 20 to 25 days prior to conversion. In addition, the principal balance of one of the convertible notes increased from $123,625 to $247,250 as it wasn't repaid by June 9, 2016.

In connection with two of the convertible notes discussed above the Company issued a total of 500,000 shares of common stock and warrants to purchase 250,000 shares of common stock. The Company valued the common shares at $11,950 based upon the closing market price of the Company's common stock on the date of the agreement. The warrants were valued at $11,184 based upon the Black-Scholes inputs disclosed in within the Company's Form 10-K. The Company recorded the value of these items as interest expense as the convertible notes had already been fully discounted due to the on issuance discounts and derivative liabilities, as discussed below.

2016 Issuances

During the nine months ended September 30, 2016, the Company entered into eight convertible notes with stated principal balances of $238,410, of which $227,950 in proceeds were received. The difference between the stated principal balance and proceeds received related to on issuance discounts and fees withheld from the proceeds by the lender. The convertible notes bear interest rates ranging from 4-35%, are due at dates ranging from July 2016 to April 2017, and are convertible any time after issuance at a variable conversion price calculated at discounts ranging from 45%to 58% of the lowest trading price in the 10-20 days prior to conversion.

In connection with one of the convertible notes discussed above the Company issued a total of 250,000 shares of common stock. The Company valued the common shares at $4,075 based upon the closing market price of the Company's common stock on the date of the agreement. The Company recorded the value of these items as interest expense as the convertible notes had already been fully discounted due to the on issuance discounts and derivative liabilities, as discussed below.

Discounts and Conversions

The convertible notes issued in 2015 and 2016 were fully discounted at issuance due to the associated derivative liabilities being in excess of the convertible notes payable. The excess fair value of $283,707 was immediately expensed as a loss on the fair value of the derivative liabilities during the nine months ended September 30, 2016. During the nine months ended September 30, 2016 and 2015, interest expense from accretion of the discount was $469,384 and $41,250, respectively. As of September 30, 2016, $62,112 of the discount remained.  At September 30, 2016, the derivative liabilities were re-valued at $950,151. See below for weighted average variables used.

During the nine months ended September 30, 2016, seven of the holders converted principal of $82,208 resulting in the issuance of 490,149,052 shares of common stock. In connection with these conversions, $16,828 of the derivative liability was reclassed to additional paid-in capital. The Company also recorded a loss on extinguishment of $5,900.

As of September 30, 2016, these convertible notes were convertible into approximately 11.2 billion shares of common stock. If all convertible notes were converted, the Company would be in excess of their authorized shares.

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Derivative Liabilities

During the six months ended September 30, 2016 and 2015, the average of inputs used to calculate the derivative liability were as follows:

Debentures with Warrants

At various dates in 2014 and 2013, the Company issued debentures with warrants. These debentures contain interest rates ranging from 8% to 20% and mature at various times from July 2014 through July 2015. As of September 30, 2016, these notes were in technical default.

The warrants issued with these debentures contain an exercise price of $0.50 per share and expire three years from the date of issuance. Based on a valuation of the warrants using the Black-Sholes method, discounts of $76,452 and $275,499 were attributed to the warrants during the years ended December 31, 2014 and 2013, respectively. These discounts are being amortized over the respective twelve month maturity periods of the debentures using the straight line method due to the limited amortization period. During the nine months ended September 30, 2015, $21,102 was amortized to interest expense. As of September 30, 2015, the discounts were fully amortized.

In March 2015, the Company extended a $20,000 convertible note payable to September 30, 2015, requiring monthly interest payments. In addition, the Company modified the exercise price of the warrants to $0.20 per share. The Company accounted for the difference in fair market value of the note and warrants as a modification and recorded as interest expense due to the insignificant amount.

Notes Issued Under an Investment Agreement

On April 29, 2013, the Company entered into an Investment Agreement, in which an investor agreed to purchase debentures up to a total principal amount of $1,100,000.  This commitment was increased to $2,000,000 based on an agreement modification entered into on December 2, 2013. Each debenture will accrue interest on the unpaid principal of each individual debenture at the rate of 8% per year from the date each debenture is issued until paid. Maturity dates of the debentures issued range from April 2014 through May 2015. As such, these notes are in default as of September 30, 2016. As of September 30, 2016 and December 31, 2015, the principle balance owed on these debentures was $532,431 and $532,431, respectively, plus accrued interest.

Promissory Notes

On July 25, 2012, the Company entered into an Intellectual Property Assignment Agreement. In accordance with the terms and conditions contained therein, the Company has agreed to pay the Seller $8,000 in two installments: The first payment of $4,000 was due July 25, 2013, and second payment of $4,000 was due July 25, 2014. The note is currently in default due to non-payment.

During the year ended December 31, 2013, the Company issued a $50,000 promissory note bearing interest at 10% and due on May 31, 2014. The note is payable in monthly payments of principal and interest. As of September 30, 2016 and December 31, 2015, the remaining principal balance of $10,606 and $10,606, respectively, is past due and in default.

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In June 2015, the Company received $20,000 in proceeds from convertible notes payable. The notes are convertible, only at the Company's option, for a minimum of $40,000 in common stock based upon the closing stock price on the date of conversion for a period of one year. In addition, the notes incur interest at 12% per annum and is due June 1, 2016. Since the note is only convertible at the Company's option, the accounting for such will be triggered if the option is exercised.

Debentures with Warrants Issued to Related Parties

At various times in 2014 and 2013, the Company issued debentures with warrants to several related parties. These debentures bear interest at 8% and mature at various times from July 2014 through February 2015. As of September 30, 2016, all the notes are in default as they are past the maturity dates.

The warrants issued with these debentures contain an exercise price of $0.50 per share and expire three years from the date of issuance. Based on a valuation of the warrants using the Black-Sholes method, discounts of $2,010 and $105,055, respectively, were attributed to the warrants during the years ended December 31, 2014 and 2013. These discounts were being amortized over the respective twelve month maturity periods of the debentures using the straight line method due to the limited amortization period. As of December 31, 2014, all discounts had been amortized and none remained.

Demand Notes Issued to Related Parties

The Company has various notes outstanding to related parties totaling $111,759 as of September 30, 2016 and December 31, 2014, respectively. These notes are due on demand and have no stated interest rate.

Note 5 - Commitments and Contingencies

Consulting Agreements

On December 30, 2015, effective January 1, 2016, the Company entered into an agreement with two consultants to promote the Company’s RAADR mobile app for a period of 60 days. Under the terms of the agreement, the consultants received a total of 100,000 shares of common stock and were to be paid a total of $50,000 for their services. In addition, the consultants were to receive 50% of all revenues generated from the RAADR mobile app. See Note 6 for valuation of shares issued for services. As of September 30, 2016, no amounts had been earned under the revenue arrangement.

On July 29, 2014 (the “Effective date”), the Company entered into an agreement with cmdR Consulting, to develop the Company’s RAADR mobile app, the purpose of which is to develop a subscriber-like mobile application to allow the monitoring of a variety of forms of social mention in social media.  Contractual details call for an initial payment of $40,000, an additional payment of $30,000 in December, 2014 and five monthly payments of $10,000 commencing in January 2015.  In addition, stock options of up to 1,000,000 shares, with a strike price of $0.09, were granted for achieving certain milestones including an expected launch date in Fall 2014, with pre-registration to begin early September, 2014.  In addition, a user-based bonus of $0.20 per user will be paid if the platform exceeds 330,000 users by December 31, 2014. Due to cash flow restrictions and the likely hood of the deliverables being provided, the contract was cancelled subsequent to December 31, 2014.

On September 5, 2015, the Company entered into a new agreement with cmdR Consulting for the same services as described above. Under the terms of the agreement, the Company was to pay $10,000 per month through August 5, 2016 and a one-time payment of $20,000. On June 15, 2016, the monthly amount was increased to $16,500. In addition, the Company issued warrants to purchase 1,200,000 shares of common stock at $0.08 per share expiring in five years. The shares vest at various periods through September 30, 2016. Compensation expense recorded during the nine months ended was $96,000.

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On March 4, 2017, effective January 1, 2017, the Company entered into an agreement with Raadr Secuirity, Inc, an entity controlled by a principal of cmdR Consulting whereby it licensed the rights to the Company's software for $100 per year through December 31, 2020. In addition, the Company issued Raadr Security, Inc 20,000,000 shares of common stock. The agreement is non-cancellable and if cancelled by the Company they have the requirement to pay $35,000 for each month remaining on the agreement. Under the agreement, Raadr Security, Inc. retains all revenues related to the licensed software. In addition, past due amounts incur interest at 10% per annum.

Operating Leases

The Company previously leased its office facility under an operating lease agreement that was to expire May 31, 2016.  On August 29, 2014, the Company and lessor of this lease, upon mutual agreement, terminated the lease, with no additional obligation. The Company currently subleases an office on a month to month basis.

Legal

On February 6, 2013, we formed a wholly owned subsidiary, Rockstar Digital, Inc. (“Rockstar”), under the laws of the State of Nevada. Rockstar was organized to specialize in internet branding through social media marketing, mobile marketing and iPhone ® app development Company. On October 31, 2013, the Company entered into a settlement agreement with certain former employees to assume responsibility for certain payroll taxes of Rockstar Digital, Inc. (“Rockstar”) and assign its ownership of Mobile Application and Transition Services intellectual property rights to Rockstar. In addition, the Company agreed to not assert a claim against certain computer equipment (cost of $28,307) in use at Rockstar. The Company agreed to assume liability for any payroll taxes owed on payroll paid by the Company on behalf of Rockstar’s employees. The Company estimated this liability at $30,000 which they have recorded in accrued liabilities at September 30, 2016 and December 31, 2015.

On July 29, 2014, a default judgment was issued against the Company in Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. This judgment stems from a legal filing by a consulting firm, with which the Company entered into an agreement for consulting services, on February 20, 2013. On September 25, 2013, the Company cancelled the agreement because it determined that services had not been provided by consulting firm, as promised per the agreed-upon contract terms. In November 2014, we entered into a settlement agreement whereby the Company shall pay the plaintiff $13,246, in monthly installments of $1,472. In addition, the Company issued options to purchase 100,000 shares of the Company's common stock at an exercise price of $1.75 expiring in two years. The Company valued the options on the date of issuance at $21,424 using the Black-Sholes model. The required payments on the settlement have not been made; however, the full amount of the liability has been recorded within accrued liabilities as of September 30, 2016 and December 31, 2015.

Note 6 - Stockholders’ Deficit

Nine months Ended September 30, 2016

During the nine months ended September 30, 2016, the Company issued 21,700,000 shares of common stock to eight parties in connection with consulting agreements. Services performed included capital raising, strategic partnerships, business planning, Raadr product promotion, etc. The Company recorded $52,850 in connection with these agreements based upon the closing market price of the Company's common stock on the date of agreements. The common shares issued in connection with these agreements is non-forfeitable and thus the entire value of the common shares was expensed upon issuance. In addition, there are no future performance commitments under the agreements.

Nine months Ended September 30, 2015

In March 2015, the Company issued a total of 30,000,000 shares of common stock in connection with three consulting contracts, 10 million shares each, related to capital raising, strategic partnerships, etc. The Company recorded $6,600,000 in connection with these agreements based upon the closing market price of the Company's common stock on the date of agreements. The common shares issued in connection with these agreements is non-forfeitable and thus the entire value of the common shares was expensed upon issuance. In addition, there are no future performance commitments under the agreements.

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Under the agreements, the consultants have non-dilutive clauses which require a true up at the end of the contract based upon the percentage the 30,000,000 represented of the total issued on the date of the initial issuance, or approximately 22%. At each quarter end, the Company determines whether or not additional common shares are required to be issued and records a liability for the value of such shares. As of September 30, 2016 and December 31, 2015, the estimated value of additional shares issuable was approximately $10,678 and $84,600, respectively and recorded within accrued liabilities. The change in the fair value of the additional shares is recorded within other income and expense.

See Note 4 for additional issuances of common stock.

Note 7 - Related Party Transactions

As of September 30, 2016 and December 31, 2015, amounts included within accrued liabilities related to payroll due to Jacob DiMartino, our Chief Executive Officer, were $215,454 and $159,422, respectively. The Company accrues $8,000 per month in connection with the CEO's services.

See Note 4 discussion related to notes payable to related parties.

Note 8 - Subsequent Events

2017 Convertible Note Issuances

During the year ended December 31, 2017, the Company received $81,775 in proceeds from the issuance of eight convertible notes payable. Under the terms of the agreements, the notes are due in 180 days from the date of issuance, incur interest at rates ranging from 20%- 40% per annum and are convertible into common stock at a 35% to 50% discount to the average closing bid price per share of common stock during the 10 - 20 consecutive trading days immediately prior to conversion. In addition, the notes include a 50% prepayment penalty. Due to the variable conversion price, the Company recorded a derivative liability in connection with these notes.

On October 3, 2017, a $20,000 debenture holder sold its note to a third party. The note was amended to add a conversion feature and was reclassed to convertible notes payable. Under the terms of the amended agreement, the holder can convert at a 75% discount to the lowest bid price of the Company's common stock for the proceeding 10 days. No other terms of the note were modified. The Company accounted for the exchange as an extinguishment. On issuance, the Company determined that a derivative liability existed due to the variable conversion price. Thus, the Company recorded a derivative liability on the date of issuance with $20,000 being recorded as interest expense, due to a full and amortized discount, and the remainder as loss on derivative liability.

2018 Convertible Note Issuances

During the year ended December 31, 2018, the Company received $45,775 in proceeds from the issuance of six convertible notes payable. Under the terms of the agreements, the notes are due in 180 days from the date of issuance, incur interest at rates ranging from 10%- 25% per annum and are convertible into common stock at a 50% discount to the average closing bid price per share of common stock during the 10 consecutive trading days immediately prior to conversion. In addition, the notes include a 50% prepayment penalty. Due to the variable conversion price, the Company recorded a derivative liability in connection with these notes.

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2017 and 2018 Conversions

The Company issued 27,950,741 shares of common stock in connection with the conversion of $1,398 in convertible notes payable.

Increase in Authorized Shares

On May 4, 2017, the Company increased their authorized common stock to eight (8) billion shares.

3a10 Transaction

On April 5, 2017, the Circuit Courts within the Twelfth Judicial Circuit of Florida entered an order approving the stipulation of the parties (the "Stipulation") in the matter of Northbridge Financial, Inc. ("NBF") v. Raadr Inc. Under the Stipulation, the Company agreed to issue, as settlement of liabilities owed by the Company to NBF in the aggregate amount of $272,250 (the "Claim Amount") and the following:

(a)

In one or more tranches as necessary, 35,000,000 shares of common stock (the "Initial Issuance") and $27,500 in fees.

(b)

Through the Initial Issuance and any required additional issuances, that number of shares of common stock with an aggregate value equal to the Purchase Price (defined under the Stipulation as the market price (defined as the lowest closing bid price of the Company's common stock during the valuation period set forth in the Stipulation) less the product of the Discount (equal to 50%) and the market price.

(c)

If at any time during the valuation period the closing bid price of the Company's common stock is below 90% of the closing bid price on the day before an issuance date, the Company will immediately cause to be issued to BF such additional shares as may be required to affect the purposes of the Stipulation.

(d)

Notwithstanding anything to the contrary in the Stipulation, the number of shares beneficially owned by NBF will not exceed 4.99% of the Company's outstanding common stock.

In connection with the Settlement Shares, the Company relied on the exemption from registration provided by Section 3(a)(10) under the Securities Act.

The Company cannot reasonably estimate the amount of proceeds NBF expects to receive from the sale of these shares which be used to satisfy the liabilities. Thus, the Company accounts for the transaction as the shares are sold and the liabilities are settled. All amounts are included within accounts payable. Shares in which are held by NBF at each reporting period are accounted for as issued but not outstanding. During the year ended December 31, 2017, the Company issued 3,131,250,000 shares of common stock in settlement of $219,250 in accounts payable. The Company valued the common stock issued at $847,250 based upon the closing market price of the common stock on the settlement date. The difference between the fair market value of the common stock and accounts payable relieved of $628,000 was recorded as additional interest expense. As of September 30, 2018, outstanding amounts payable to NBF were $53,000.

Consulting Contracts

On March 15, 2018, two individuals entered into separate agreements with the Company to acquire 33.3% of the Company, in exchange for services performed and to be performed over a period of six months. In connection, with these agreements the Company estimated that they would have to issue 5,330,690,880 shares of common stock to each individual (a total of 10,661,381,760 shares.) The Company valued the shares issuable at $1,066,138 for which the value is being expensed over the vesting period of six months. During the nine months ended September 30, 2018, the Company recorded stock based compensation related to these agreements of $1,066,138, the offset to which as common stock to be issued on the accompany condensed consolidated balance sheet as of September 30, 2018.

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The remaining expense will be recorded via straight line through September 15, 2019. In addition, under the agreements, the Company is required to pay the individuals each 20% of all mobile application download revenues (40% in total.) Additionally, upon the Company receiving funding in excess of $2.5 million, the individuals will each receive a $75,000 payment as well as a monthly recurring fee of $16,667.

In October 2018, the Company entered into an agreement with an individual whereby the individual is to provide consulting services in exchange for 50,000,000 shares of common stock. Additionally, the agreement notes a signing bonus of $10,000 as well as bonuses for certain milestones, none of which have been paid.

See Note 5 for an additional subsequent events.

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

Forward-Looking Statements

The statements contained in all parts of this document that are not historical facts are, or may be deemed to be, "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. Such forward-looking statements include, but are not limited to, those relating to the following: the Company's ability to secure necessary financing; expected growth; future operating expenses; future margins; fluctuations in interest rates; ability to continue to grow and implement growth, and regarding future growth, cash needs, operations, business plans and financial results and any other statements that are not historical facts.

When used in this document, the words "anticipate," "estimate," "expect," "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements.  Raadr, Inc.’s results may differ significantly from the results discussed in the forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to the Company’s dependence on its ability to attract and retain skilled managers and other personnel; the uncertainty of the Company's ability to manage and continue its growth and implement its business strategy; its vulnerability to general economic conditions; accuracy of accounting and other estimates; the Company's future financial and operating results, cash needs and demand for services; and the Company's ability to maintain and comply with permits and licenses; as well as other risk factors described in this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

Management’s Discussion and Analysis

We were originally incorporated in the State of Nevada on March 29, 2006, under the name “White Dental Supply, Inc.” We were authorized to issue 100,000,000 shares of our $0.001 par value common stock and 100,000,000 shares of our $0.001 par value preferred stock. On February 7, 2013, we changed our corporate name to PITOOEY!, Inc. and increased the number of shares we are authorized to issue to 400,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock. On July 29, 2015, the Company changed their name to Raadr, Inc. The name change was effective with the State of Nevada on July 29, 2015.

As the digital world of the 21st Century continues to evolve, parents, guardians, and children are faced with challenges and threats not just in the real world, but in the omnipresent realm of Social Media as well. Raadr, Inc., makers of the proprietary technology application RAADR© have developed a web based tool that provides families with peace of mind when it comes to knowing that children are safe from bullying and predatory behavior unfortunately so prevalent today.

By customizing their own unique monitoring and alert settings, parents and guardians can be alerted when their children’s Facebook, Twitter, Instagram and other pertinent social media platforms under scrutiny become posted with inappropriate language. By utilizing customized keywords chosen by the user that are added to an already existing database, parents and guardians can carry a sense of assuredness that the youth they love and are responsible for are safe and acting in a fun, yet appropriate manner.

No parent or guardian has the time or resources to be in constant surveillance of all the Social Media platforms in which their children might be active. Nor do most children want intense scrutiny of their updates and postings, despite the best intentions. You want to trust your children, while at the same time knowing that you are protecting them.

RAADR© gives families the ability to protect their image, combat erroneous postings and for individuals safeguard their children from online bullying.

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Raadr, Inc. makers of the proprietary technology application RAADR© is a software development and mobile application developer formed in late 2012. The Company’s core competency is focused on building and acquiring apps and other products, services and companies to build a nationwide network of related businesses that are positioned to serve the mobile app development needs of small businesses and individuals.

This summary serves as a basic overview to the functions and features the RAADR platform currently has and will have in the near future. Many of these can be viewed in whole or in part at: www.raadr.com.

-- Social Media Monitoring -

First and foremost, RAADR assists parents in the monitoring of what their children are posting online. There are such a large number of social media platforms these days that it is too much for any parent to keep up with and more importantly, spot the potential dangers or issues in what a child is posting online. Also, most parents only hear about certain social networks long after their children have already been using them for a while. Everyone has heard of Facebook, Instagram, Twitter, Snapchat, etc. but few parents know sites like Phhoto, YouNow, and Periscope, exist much less why they might want to be monitoring them.  With RAADR, keeping up-to-date with all of these and more is as simple as clicks of a button.

One of the commonly asked questions is, How will I know what my child’s account name is so I can track it? That’s a big part of what we want RAADR to help parents with. Rather than needing to know every account name, we really just need your child’s name to get started. The more information a parent is able to provide, the faster and easier it will be to find new profiles on other social media sites. For example, if a parent adds a child’s name, Instagram username, and zip code, we will have a much easier time looking for whether or not their child also has a Facebook, Twitter, SnapChat, etc.

-- Facial Recognition -

This is where our facial recognition software comes into play as well. Many children are constantly uploading pictures of themselves and their friends. This allows us to start to track where else the children might be posting pictures of themselves. Facial recognition comes into play even more so for scenarios where children might try and create accounts with an alias. Regardless, they still use their own pictures making it easy to track and notify parents when a new account is registered and using their children’s pictures.

There are multiple other applications for facial recognition online but one of the others we focus on is, notifying parents when their child’s picture might appear with malicious or harmful words. Children often post pictures of other peers as a form of online bullying or other unfortunate intent.  These can be seen and identified to be brought to the parents attention without parents needing to constantly search various websites, most of which they’ll never even hear of.

-- Other Features -

In addition to the social media and facial recognition aspects, parents will be able to see private messages with the use of the extension, view browser history, get real time alerts as RAADR finds potential problems, and much more. These are just the beginning and the system can be modified to fit a number of different verticals.

As of July 1, 2015, the RAADR software is live online at www.raadr.com. The launch of the RAADR application on IOS and ANDROID is scheduled for late September 2015.

We have discontinued offering services through our wholly owned subsidiaries PITOOEY MOBILE INC. and CHOICE ONE MOBILE INC. However, discontinued operations are not presented as the Company still intends to operate in the mobile app sector.

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Results of Operations

Three months ended September 30, 2016 compared to the three months ended September 30, 2015

Revenues and Costs of Goods Sold.  The Company had no revenues or cost of goods sold during the three months ended September 30, 2016 and 2015 due to the Company not having any active sales contracts or products in which could generate revenues. In 2015, the Company expected minimal revenues due to the recent launch of RAADR in September 2015. In addition, the Company lacks sufficient capital to promote this product.

Executive Compensation.  Executive compensation accrued to our corporate officers and directors was $24,000 during the three months ended September 30, 2016 and $24,000 in the comparable period ended September 30, 2015.

General and Administrative.  In the course of our operations, we incur operating expenses composed primarily of computer and internet expenses, professional fees, payroll, and other general and administrative costs. General and administrative expenses are essentially the cost of doing business, and encompass, without limitation, the following: business and operating licenses; taxes; general office expenses, such as postage, supplies and printing; utilities; bank charges; website costs; and other miscellaneous expenditures not otherwise classified. During the three months ended September 30, 2016, general and administrative expenses were $63,431. Comparatively, general and administrative expenses were $4,746 in the period ended September 30, 2015.

Professional Fees.  We expect to continue to incur professional fees in relation to maintaining our public reporting status with the Securities and Exchange Commission. During the period ended September 30, 2016, we incurred $22,587 in professional fees as compared to $86,869 for the period ended September 30, 2015. The decrease in actual capital expenditures for professional fees net of stock compensation during 2016 relates to professional and other fees related to the annual audit and financial reporting for which weren’t expended during 2016 as the Company didn’t have the capital resources to continue the upkeep of their public filings.

Salaries and Wages.  As of September 30, 2016, we had no employees. Salaries and wages expensed during the quarters ended September 30, 2016 and 2015 were zero and zero, respectively.

Interest Expense.  During the three months ended September 30, 2016, we incurred $143,564 of interest expense related to our notes payable. In the period ended September 30, 2015, interest expense was $137,204.

Change in Fair Value of Derivatives.  During the three months ended September 30, 2016, we recorded a gain of $134,450 related to the change in the fair value of our derivative liability. The significant change in the derivative liability was attributed to the decreased difference between the closing market price of the Company's common stock and the calculated exercise price. As the exercise price is based upon traded securities, the value of the derivative liability will have significant fluctuations.

Nine months ended September 30, 2016 compared to the nine months ended September 30, 2015

Revenues and Costs of Goods Sold.  The Company had no revenues or cost of goods sold during the nine months ended September 30, 2016 and 2015 due to the Company not having any active sales contracts or products in which could generate revenues. In 2015, the Company expected minimal revenues due to the recent launch of RAADR in September 2015. In addition, the Company lacks sufficient capital to promote this product.

Executive Compensation.  Executive compensation accrued to our corporate officers and directors was $88,503 during the nine months ended September 30, 2016 and $72,000 in the comparable period ended September 30, 2015. The increase is due to various expenses paid on the behalf of our chief executive officer.

General and Administrative.  In the course of our operations, we incur operating expenses composed primarily of computer and internet expenses, professional fees, payroll, and other general and administrative costs. General and administrative expenses are essentially the cost of doing business, and encompass, without limitation, the following: business and operating licenses; taxes; general office expenses, such as postage, supplies and printing; utilities; bank charges; website costs; and other miscellaneous expenditures not otherwise classified. During the nine months ended September 30, 2016, general and administrative expenses were $191,930. Comparatively, general and administrative expenses were $25,909 in the period ended September 30, 2015.

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Professional Fees.  We expect to continue to incur professional fees in relation to maintaining our public reporting status with the Securities and Exchange Commission. During the period ended September 30, 2016, we incurred $400,724 in professional fees as compared to $6,708,912 for the period ended September 30, 2015. The $6,600,000 during the 2015 period related 100% to stock based compensation in connection with common stock we issued to consultants for assistance in capital raising, business strategies, etc. The increase in actual capital expenditures for profession fees net of stock compensation during 2016 relates to professional and other fees related to the annual audit and financial reporting. During the 2015 period, some of these costs were delayed to a later date due to cash flow restrictions.

Salaries and Wages.  As of September 30, 2016, we had no employees. Salaries and wages expensed during the nine months ended September 30, 2016 and 2015 were $17,944 and $116,596, respectively.

Interest Expense.  During the nine months ended September 30, 2016, we incurred $702,220 of interest expense related to our notes payable. During the nine months ended September 30, 2015, interest expense was $285,669.

Change in Fair Value of Derivatives.  During the nine months ended September 30, 2016, we recorded a gain of $574,408 related to the change in the fair value of our derivative liability. The significant change in the derivative liability was attributed to the decreased difference between the closing market price of the Company's common stock and the calculated exercise price. As the exercise price is based upon traded securities, the value of the derivative liability will have significant fluctuations.

Liquidity and Capital Resources

As of September 30, 2016, we had $50 in cash and $60 in prepaid expenses and deposits. To date, we have financed our operations through the issuance of stock and debt securities.

Operating Activities.  Net cash used in operating activities was $243,454 for the nine months ended September 30, 2016, compared to net cash used of $106,192 during the nine months ended September 30, 2015. The significant increase in cash used was attributable to increased expenditures related to professional and other fees related to our annual audit and financial reporting. During the prior period, our limited access to capital hampered our operations.  

Financing Activities.  Net cash provided by financing activities for the nine months ended September 30, 2016 was $228,001, as compared to $60,000 for the comparable period ended September 30, 2015. During 2016, we obtained financing from the issuance of convertible notes in an effort to expand our operations and pursue new business opportunities. During 2015, the financing was not as readily available due to our continued losses from operations.

As of September 30, 2016, we had $50 of cash on hand.  We expect to require significant capital to continue to fund research and development activities related to development of our products. Without sufficient cash flow from operations we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months.  We will require additional cash resources due to changed business conditions, implementation of our strategy to successfully expand our operations.  If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities.  The sale of additional equity securities will result in dilution to our stockholders.  The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all.  Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.

We only recently began to venture into the mobile and social media marketing space. We are experiencing significant changes to our corporate and operational structures and have been expanding our base of employees. Over the next 12 months, we expect the number of full- and part-time employees to fluctuate substantially, though we are unable to predict the amount of such fluctuations.

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There are no known trends, events or uncertainties that have had or that are reasonably expected to have a material impact on our revenues from continuing operations. However, we may not adequately encapsulate unforeseen economic or industry specific factors that may be beyond our control. These external forces may restrict growth and advertising spending by our clients, which could, in turn, adversely affect our operations. We currently do not own any significant plant or equipment that we would seek to sell in the near future.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and related notes. Our significant accounting policies are described in Note 3 to our consolidated financial statements included in our Annual Report on Form 10- K for the year ended December 31, 2014. We have identified below our critical accounting policies and estimates that we believe require the greatest amount of judgment. These estimates and judgments have a significant impact on our consolidated financial statements. Actual results could differ materially from those estimates. The accounting policies that reflect our more significant estimates and judgments and that we believe are the most critical to fully understand and evaluate our reported financial results include the following:

Stock-based Compensation

The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

This item is not applicable to smaller reporting companies, such as ourselves.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of September 30, 2016, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.

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Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 15d-15(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2016.  In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, management concluded that, as of September 30, 2016, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of September 30, 2016. The weaknesses were initially identified during the year ended December 31, 2013:

1)

Lack of an independent audit committee or audit committee financial expert, and no independent directors. We do not have any members of the Board who are independent directors and we do not have an audit committee. These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;

2)

Management did not identify accounting issues and implement appropriate solutions for several technical accounting issues.

3)

Bank reconciliations were not reviewed or approved and responsibilities were not adequately segregated in the area of cash receipts and cash disbursements;

4)

Journal entries were not reviewed or approved before being entered into the general ledger;

5)

The Company had not effectively implemented comprehensive entity-level internal controls;

6)

The Company did not adequately segregate duties within the accounting department due to an insufficient number of staff;

7)

Management failed to implement and monitor appropriate safeguards in relation to fixed assets and cash;

8)

The Company does not have policies and procedures in place to ensure timely recording of its transactions in accordance with generally accepted accounting principles;

9)

The Company does not have proper oversight over management and employees.

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Management's Remediation Initiatives

As of September 30, 2016, management assessed the effectiveness of our internal control over financial reporting.  Based on that evaluation, it was concluded that during the period covered by this report, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting. However, management believes these weaknesses did not have an effect on our financial results.  During the course of their evaluation, we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.

Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until, if ever, we acquire sufficient financing and staff. We will implement further controls as circumstances, cash flow, and working capital permits. Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the period ended September 30, 2016, fairly presents our financial position, results of operations, and cash flows for the periods covered, as identified, in all material respects.

Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size. Management also believes that these weaknesses did not have an effect on our financial results.

We are committed to improving our financial organization. As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee and who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources. We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary, and as funds allow.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in internal controls over financial reporting

There were no changes in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material legal proceedings.

Item 1A. Risk Factors

Not applicable.

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

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers.

None.

Item 6. Exhibits and Reports on Form 8-K

* To be filed by amendment

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SIGNATURES

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

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