10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

FOR THE QUARTERLY PERIOD ENDED:

SEPTEMBER 30, 2017 OR

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

COMMISSION FILE NUMBER: 333-04066

GEOSPATIAL CORPORATION

(Exact name of registrant as specified in its charter)

NEVADA	870554463
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

229 Howes Run Road, Sarver, PA 16055 (Address of principal executive offices)

(724) 353-3400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   

YES ☒  NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    YES  ☒  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. (Check one):

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller Reporting Company	☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): YES ☐ NO ☒

The number of $0.001 par value common shares outstanding at August 3, 2017: 270,747,118.

1

FORWARD-LOOKING STATEMENT NOTICE

The statements set forth in this report which are not historical constitute "Forward-Looking Statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder, including statements regarding our expectations, beliefs, intentions or strategies for the future.  When used in this report, the terms "anticipate," "believe," "estimate," "expect" and "intend" and words or phrases of similar import, as they relate to our business or our subsidiaries or our management, are intended to identify Forward-Looking Statements.  These Forward-Looking Statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance.  Forward-Looking Statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the Forward-Looking Statements.

Because our common stock is considered to be a "penny stock", the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995 do not apply to such Forward-Looking Statements.

Our business involves various risks, including, but not limited to, our ability to implement our business strategies as planned in a timely manner or at all; our lack of operating history; our ability to protect our proprietary technologies; our ability to obtain financing sufficient to meet our capital needs; our inability to use historical financial data to evaluate our financial performance; and the other risk factors identified in our filings with the Securities and Exchange Commission.

.   '

Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed or implied in any Forward-Looking Statements made by us or on our behalf, readers of this report should not place undue reliance on any Forward-Looking Statement.  Further, any Forward-Looking Statement speaks only as of the date on which it is made, and we undertake no obligations to update any Forward-Looking Statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of future events or developments.  New factors emerge from time to time, and it is not possible for us to predict which factors will arise.  In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any Forward-Looking Statements.

TABLE OF CONTENTS

PART II - OTHER INFORMATION19 

ITEM 2. SALES OF UNREGISTERED EQUITY SECURITIES AND USE OF PROCEEDS19 

2

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS 

GEOSPATIAL CORPORATION INDEX

Page

FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017 AND DECEMBER 31, 2016 AND FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

Consolidated Balance Sheets (Unaudited)4 

Consolidated Statements of Operations (Unaudited)5 

Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited)6 

Consolidated Statements of Cash Flows (Unaudited)7 

Notes to Unaudited Consolidated Financial Statements8 

3

Geospatial Corporation and Subsidiaries

Consolidated Balance Sheets

	September 30,	December 31,
	2017	2016
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$ 5,662	$ 66,992
Accounts receivable	192,011	65,800
Prepaid expenses and other current assets	100,261	140,105
Total current assets	297,934	272,897
Property and equipment:
Field equipment	359,591	357,070
Field vehicles	43,285	43,285
Total property and equipment	402,876	400,355
Less:  accumulated depreciation	(386,948)	(355,616)
Net property and equipment	15,928	44,739
Total assets	$ 313,862	$ 317,636
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$ 305,936	$ 274,319
Accrued expenses	1,098,945	813,197
Capital lease liability to related party	603	3,278
Notes payable, net of deferred debt issue costs	1,396,015	1,365,738
Accrued registration payment arrangement	76,337	522,115
Total current liabilities	2,877,836	2,978,647
Stockholders' deficit:
Preferred stock:        Undesignated, $0.001 par value;  10,000,000 shares authorized at September 30, 2017        and December 31, 2016; no shares issued and outstanding at September 30, 2017        and December 31, 2016	-	-
Series B Convertible Preferred Stock, $0.001 par value;  5,000,000 shares authorized        at September 30, 2017 and December 31, 2016;  no shares issued and outstanding at        September 30, 2017 and December 31, 2016	-	-
Series C Convertible Preferred Stock, $0.001 par value;  10,000,000 shares authorized        at September 30, 2017 and December 31, 2016;  3,644,578 and 4,543,654 shares        issued and outstanding at September 30, 2017 and December 31, 2016, respectively	3,645	4,544
Common stock, $0.001 par value; 750,000,000 shares authorized at September 30, 2017        and December 31, 2016;   279,080,452 and 226,211,740 shares issued and outstanding        at September 30, 2017 and December 31, 2016, respectively	279,080	226,212
Additional paid-in capital	39,714,321	38,905,332
Additional paid-in capital, warrants	170,000	20,626
Accumulated deficit	(42,731,020)	(41,817,725)
Total stockholders' deficit	(2,563,974)	(2,661,011)
Total liabilities and stockholders' deficit	$ 313,862	$ 317,636
The accompanying notes are an integral part of these consolidated financial statements.

4

Geospatial Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2017	2016	2017	2016
Sales	$ 230,330	$ 132,371	$ 521,465	$ 572,371
Cost of sales	89,636	54,838	175,722	185,374
Gross profit	140,694	77,533	345,743	386,997
Selling, general and administrative expenses	431,480	463,657	1,469,427	1,240,381
Net loss from operations	(290,786)	(386,124)	(1,123,684)	(853,384)
Other income (expense):
Interest expense	(89,583)	(47,334)	(235,882)	(180,106)
Gain on extinguishment of debt	-	58,603	13,693	192,124
Registration payment arrangements	-	(482,863)	432,578	9,720
Total other income (expense)	(89,583)	(471,594)	210,389	21,738
Net income (loss) before income taxes	(380,369)	(857,718)	(913,295)	(831,646)
Provision for income taxes	-	-	-	-
Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)
Basic and fully-diluted net loss per share of common stock	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
The accompanying notes are an integral part of these consolidated financial statements.

5

Geospatial Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders' Deficit

For the Nine Months Months Ended September 30, 2017

(Unaudited)

						Additional
					Additional	Paid-In
	Preferred Stock		Common Stock		Paid-In	Capital,	Accumulated
	Shares	Amount	Shares	Amount	Capital	Warrants	Deficit	Total
Balance, December 31, 2016	4,543,654	$ 4,544	226,211,740	$ 226,212	$ 38,905,332	$ 20,626	$ (41,817,725)	$ (2,661,011)
Sale of common stock, net of issuance  costs	-	-	23,333,335	23,333	526,667	-	-	550,000
Conversion of Series C Convertible  Preferred Stock to common stock	(899,076)	(899)	17,981,520	17,981	(17,082)	-	-	-
Issuance of common stock for  registration penalty	-	-	132,000	132	13,068	-	-	13,200
Exercise of warrants to purchase  common stock	-	-	4,421,857	4,422	54,204	(20,626)	-	38,000
Issuance of common stock for services	-	-	7,000,000	7,000	193,000	-	-	200,000
Issuance of convertible securities with  beneficial conversion features	-	-	-	-	39,132	-	-	39,132
Issuance of warrants to purchase  common stock for loan concessions	-	-	-	-	-	170,000	-	170,000
Net loss for the nine months ended    September 30, 2017	-	-	-	-	-	-	(913,295)	(913,295)
Balance, September 30, 2017	3,644,578	$ 3,645	279,080,452	$ 279,080	$ 39,714,321	$ 170,000	$ (42,731,020)	$ (2,563,974)
The accompanying notes are an integral part of these consolidated financial statements.

6

Geospatial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	September 30,
	2017	2016
Cash flows from operating activities:
Net income (loss)	$ (913,295)	$ (831,646)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	31,332	82,670
Amortization of discount on notes payable	54,949	62,500
Amortization of deferred debt issue costs	18,613	-
Gain on extinguishment of debt	(13,693)	(192,124)
Accrued registration payment arrangement	(432,578)	(9,720)
Accrued interest payable	156,866	95,586
Issuance of common stock for services	200,000	-
Changes in operating assets and liabilities:
Accounts receivable	(126,210)	(23,871)
Prepaid expenses and other current assets	39,844	22,971
Accounts payable	54,869	(10,832)
Accrued expenses	327,322	74,127
Due to related parties	-	(504)
Net cash used in operating activities	(601,981)	(730,843)
Cash flows from investing activities:
Purchase of property and equipment	(2,521)	(15,202)
Net cash used in investing activities	(2,521)	(15,202)
Cash flows from financing activities:
Proceeds from issuance of notes payable	-	250,000
Principal payments on notes payable	(42,153)	(156,881)
Principal payments on capital lease liabilities	(2,675)	(2,599)
Proceeds from sale of common stock, net of offering costs	550,000	100,000
Proceeds from exercise of warrants to purchase common stock	38,000	110,000
Proceeds from sale of Series C Convertible Preferred Stock, net of offering costs	-	543,373
Net cash provided by financing activities	543,172	843,893
Net change in cash and cash equivalents	(61,330)	97,848
Cash and cash equivalents at beginning of period	66,992	16,962
Cash and cash equivalents at end of period	$ 5,662	$ 114,810
Supplemental disclosures:
Cash paid during period for interest	$ 5,454	$ 22,020
Cash paid during period for income taxes	-	-
Non-cash transactions:
Issuance of common stock for registration penalty	13,200	1,080
Liabilities settled by issuance of notes payable	51,227	33,416
Issuance of convertible securities with beneficial conversion features	39,132	-
Issuance of common stock in settlement of liabilities	-	1,201,176
Issuance of Series C Convertible Preferred Stock in settlement of liabilities	-	358,731
Issuance of warrants to purchase common stock in settlement of liabilities	-	54,278
Issuance of common stock for services	200,000	-
Issuance of warrants to purchase common stock for loan concessions	170,000	-
The accompanying notes are an integral part of these consolidated financial statements.

7

Note 1 – Basis of Presentation

The Unaudited Consolidated Financial Statements included herein have been prepared by Geospatial Corporation (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and regulations issued pursuant to the Securities Exchange Act of 1934, as amended.  Accordingly, the accompanying Unaudited Consolidated Financial Statements do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  The accompanying Unaudited Consolidated Financial Statements as of and for the nine months ended September 30, 2017 should be read in conjunction with the Company’s Financial Statements as of and for the year ended December 31, 2016.  In the opinion of the Company’s management, all adjustments considered necessary for a fair statement of the accompanying Unaudited Consolidated Financial Statements have been included, and all adjustments, unless otherwise discussed in the Notes to the Unaudited Consolidated Financial Statements, are of a normal and recurring nature.  Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017, or any other interim periods, or any future year or period.   

The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.   

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, Geospatial Mapping Systems, Inc. and Utility Services and Consulting Corporation, which ceased operations in 2011.  All intercompany accounts and transactions have been eliminated.   

Note 2 – Accrued Expenses

Accrued expenses consisted of the following: 

	September 30,	December 31,
	2017	2016
Payroll and taxes	$ 904,508	$ 632,678
Accounting	76,976	62,792
Contractors and subcontractors	10,227	10,227
Interest	2,243	2,150
Other	104,991	105,350
Accrued expenses	$ 1,098,945	$ 813,197

8

Note 3 – Related-Party Transactions

The Company leases its headquarters building from Mark A. Smith, the Company’s Chairman and Chief Executive Officer.  The building has approximately 3,200 square feet of office space, and is used by the Company’s corporate, technical, and operations staff.  Mr. Smith has agreed to suspend collection of rent effective April 1, 2016.  No rent will accrue during the suspension.  The lease is cancellable by either party upon 30 days’ notice.  The Company incurred no lease expense during the three and nine months ended September 30, 2017, and $0 and $19,500 of lease expense during the three and nine months ended September 30, 2016, respectively.  

On November 9, 2012, the Company and Mr. Smith entered into a Lease Agreement, pursuant to which the Company leases a field vehicle from Mr. Smith.  The lease is for 60 months, and is for substantially the same terms for which Mr. Smith leases the vehicle from the manufacturer.  Interest on the lease amounted to $9 and $34 for the three months ended September 30, 2017 and 2016, respectively, and $46 and $122 for the nine months ended September 30, 2017 and 2016, respectively.  The lease is recorded as a capital lease.  At September 30, 2017, gross assets recorded under the lease and associated accumulated depreciation were $16,870 and $16,448, respectively.  Future minimum payments under the capital lease are as follows as of September 30, 2017: 

Balance of 2017	$ 605
Thereafter	-
Total minimum payments	605
Less:  minimum interest payments	(2)
Minimum principal payments	$ 603

9

Note 4 – Notes Payable

Current notes payable consisted of the following:

	September 30, 2017	December 31, 2016
Secured Promissory Note, net of deferred debt issue costs, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount.  On August 31, 2017, the due date was amended to June 1, 2018.  From January 31, 2017 to August 31, 2017, the note bore interest at 20%.  After August 31, 2017, the note bears interest at 15%.  The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company	$ 1,353,877	$ 1,332,920
Note payable under settlement agreement with vendor, payable monthly over 10 months, with no interest	2,560	-
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 16 months, with interest rates ranging from 0% to 20%	39,578	32,818
Current notes payable	$ 1,396,015	$ 1,365,738

10

Note 5 – Income Taxes

The Company’s provision for (benefit from) income taxes is summarized below:

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Current:
Federal	$ -	$ -	$ -	$ -
State	-	-	-	-
	-	-	-	-
Deferred:
Federal	(113,240)	(116,029)	(279,482)	(261,352)
State	(35,949)	(36,834)	(88,725)	(82,969)
	(149,189)	(152,863)	(368,207)	(344,321)
Total income taxes	(149,189)	(152,863)	(368,207)	(344,321)
Less:  valuation allowance	149,189	152,863	368,207	344,321
Net income taxes	$ -	$ -	$ -	$ -

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Federal statutory rate	35.0 %	35.0 %	35.0 %	35.0 %
State income taxes (net of federal benefit)	6.5	6.5	6.5	6.5
Valuation allowance	(41.5)	(41.5)	(41.5)	(41.5)
Effective rate	0.0 %	0.0 %	0.0 %	0.0 %

11

Note 5 – Income Taxes (continued)

Significant components of the Company’s deferred tax assets and liabilities are summarized below.  A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.  

	September 30, 2017	December 31, 2016
Start-up costs	$ 20,283	$ 35,033
Depreciation	(41,128)	(37,423)
Accrued expenses	305,809	745,103
Net operating loss carryforward	16,934,258	15,714,795
Deferred income taxes	17,219,223	16,457,508
Less:  valuation allowance	(17,219,223)	(16,457,508)
Net deferred income taxes	$ -	$ -

At September 30, 2017, the Company had federal and state net operating loss carryforwards of approximately $40,805,000.  The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively.  The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law.  

12

Note 6 – Net Income (Loss) Per Share of Common Stock

Basic net income (loss) per share of common stock are computed by dividing earnings available to common stockholders by the weighted average number of shares of common stock outstanding during the period.  Diluted net income (loss) per share reflects per share amounts that would have resulted if dilutive potential common stock had been converted to common stock.  Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value.  The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities.  

The following reconciles amounts reported in the financial statements:

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)
Weighted average number of shares of common stock outstanding	274,660,162	149,451,206	257,745,741	146,393,639
Dilutive potential shares of common stock	274,660,162	149,451,206	257,745,741	146,393,639
Net loss per share of common stock:
Basic	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
Diluted	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)

13

Note 6 – Net Income (Loss) Per Share of Common Stock (continued)

The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:  

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Series C Convertible Preferred Stock	72,891,560	77,503,160	75,526,216	53,222,914
Options and warrants to purchase common stock	16,018,393	71,378,151	29,147,461	68,205,580
Secured Promissory Note	56,315,086	6,732,841	34,593,939	15,097,294
Total	145,225,039	150,579,542	139,267,616	136,525,788

14

Note 7 – Stock-Based Payments

During the nine months ended September 30, 2017, the Company granted warrants to purchase 1,833,334 shares of the Company’s common stock to investors in connection with investments in the Company’s common stock.  The Company issued warrants to purchase 20,000,000 shares of the Company’s common stock to the holder of the Secured Promissory Note pursuant to an amendment of the Secured Promissory Note.  The Company recorded deferred debt issue costs of $170,000, the fair value of the warrants.  The Company also issued 7,000,000 shares of common stock to vendors in consideration for services.  The Company recorded expense of $200,000, the fair value of the services received.  

Note 8 – Gains on Extinguishment of Debt

Due to significant cash flow problems, the Company has negotiated concessions on the amounts of certain liabilities and extensions of payment terms.  The Company accounts for such concessions in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 470-60, Troubled Debt Restructurings by Debtors, and ASC 405-20, Extinguishment of Liabilities, and recognizes gains to the extent that the carrying value of the liability exceeds the fair value of the restructured payment plan.  Such gains are included as “Gains on extinguishment of debt” in “Other income and expenses” on the Company’s Consolidated Statement of Operations.  In addition, the Company has accounts payable that have aged or are expected to age beyond the statute of limitations.  The Company is amortizing those liabilities over the remaining term of the statute of limitations.  No gain or loss on extinguishment was recorded during the three months ended September 30, 2017. Gains on extinguishment of $58,603 were recorded during the three months ended September 30, 2016, and gains of $13,693 and $192,124 were recorded during the nine months ended September 30, 2017 and 2016, respectively.   

Note 9 – Registration Payment Arrangements

The Company is contractually obligated to issue shares of its common stock to certain investors for failure to register shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”).  The Company has recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued.  The Company measures fair value by the price of its common stock at its most recent sale.  The Company reviews its estimate of the number of shares to be issued and the fair value of the stock to be issued quarterly.  The liability is included on the Consolidated Balance Sheet under the heading “accrued registration payment arrangement,” and amounted to $76,337 and $522,115 at September 30, 2017 and December 31, 2016, respectively.  Gains or losses resulting from changes in the carrying amount of the liability are included in the Consolidated Statement of Operations in other income and expense under the heading “registration payment arrangements”.  The Company had no gain or loss from registration payment arrangements of during the three months ended September 30, 2017.  The Company had losses from registration payment arrangements of $482,863 during the three months ended September 30, 2016.  The Company had gains of $432,578 and $9,720 during the nine months ended September 30, 2017 and 2016, respectively.     

15

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

Overview

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) together with our financial statements and notes thereto as of and for the year ended December 31, 2016, filed with our Annual Report on Form 10-K on April 14, 2017, and our financial statements and notes thereto as of and for the three and nine months ended September 30, 2017, which appear elsewhere in this Quarterly Report on Form 10-Q.

We provide cloud-based geospatial solutions to accurately locate and digitally map underground pipelines and other infrastructure in three dimensions. Our professional staff offers the expertise, ability, and technologies required to design and execute solutions that are delivered in a cloud-based GIS (geographic information system) platform.

We believe that the market for aggregating and maintaining positional data for underground assets is maturing, and that business and governmental entities are beginning to understand the value of such data.  We believe that this developing market presents us with an opportunity to deliver long-term value to our shareholders.  In order to realize that value, our primary challenge is to raise working capital sufficient to operate our business, and investment capital to hire employees, acquire assets, and expand our business.  Management is currently focused on raising capital, and planning to position our business to capitalize on the maturing market for positional data once such capital is in place, including identifying new technologies for aggregating positional data, developing our GeoUnderground software, and planning the strategies and processes for our upcoming marketing campaigns.  We use financial and non-financial performance indicators to assess our business, including liquidity measures, revenues, gross margins, operating revenue, and backlog.

Liquidity and Capital Resources

At September 30, 2017, we had current assets of $297,934, and current liabilities of $2,877,836.

Our Company has incurred net losses since inception.  Our operations and capital requirements have been funded by sales of our common and preferred stock, advances from our chief executive officer, and issuance of notes payable.  At September 30, 2017, current liabilities exceeded current assets by $2,579,902, and total liabilities exceeded total assets by $2,563,974.  Those factors raise doubts about our ability to continue as a going concern.

On April 2, 2015, we entered into a Note and Warrant Purchase Agreement with David M. Truitt, pursuant to which Mr. Truitt loaned us $1,000,000 pursuant to a Secured Note Payable (as amended, the “Truitt Note”) that is secured by substantially all of the Company’s assets, and is convertible at the holder’s option to shares of the Company’s common stock at a discount to our trading value.  The Truitt Note was originally due on October 2, 2015.  On January 26, 2016, we entered into an Agreement and Amendment with Mr. Truitt (the “January 2016 Amendment”), pursuant to which Mr. Truitt loaned us an additional $250,000, and extended the due date of the Truitt Note to July 31, 2016.  We also issued Mr. Truitt warrants to purchase 25.0 million shares of our common stock in connection with the January 2016 Amendment.  On August 12, 2016, we entered into an Agreement and Amendment with Mr. Truitt (the “August 2016 Amendment”), pursuant to which Mr. Truitt agreed to extend the maturity date of the Truitt Note to January 31, 2017 in consideration for the Company issuing to Mr. Truitt warrants to purchase 12.0 million shares of the Company’s common stock.  On November 9, 2016, we made a payment of $200,000 of the balance of the Truitt Note.  On December 14, 2016, we entered into a Note and Warrant Purchase Agreement (together with the Truitt Note, as amended, the “Truitt Notes”) with Mr. Truitt, pursuant to which Mr. Truitt loaned the Company an additional $100,000 subject to the terms of the Truitt Note, and the Company issued to Mr. Truitt warrants to purchase 100,000 shares of the Company’s common stock.  On August 31, 2017, we entered into an Agreement and Amendment with Mr. Truitt (the “August 2017 Amendment”) pursuant to which (i) the maturity date of the Truitt Notes were extended to June 1, 2018;  (ii) the price at which the Truitt Notes are convertible to shares of the Company’s common stock was amended to institute a floor of $0.02 per share;  (iii) the interest rate on the Truitt Notes were amended to 15% per annum effective upon the execution of the August 2017 Amendment;  (iv) the events of default under the Truitt Notes were waived; and (v) the Company delivered to Mr. Truitt a warrant to purchase 20.0 million shares of the Company’s common stock at a price of $0.01 per share.    

On March 16, 2016, we designated 10.0 million shares of preferred stock as Series C Convertible Preferred Stock (“Series C Stock”).  Series C Stock is convertible to common stock at a conversion ratio of 20 shares of common stock for each share of Series C Stock, subject to adjustment for stock dividends, splits, and similar events.  Series C Stock has a liquidation preference equal to its original issue price, and has voting rights equal to five times the number of shares of common stock into which the Series C Stock is convertible.  

During 2016, we sold 1.5 million shares of Series C Stock to Mr. Truitt for $300,000, and 1.3 million shares of Series C Stock to other investors.  We converted notes payable totaling approximately $197,000 to shares of Series C Stock, and we converted a note payable of approximately $54,000 to warrants to purchase common stock.  We also converted approximately $1.3 million of our officers’ accrued salaries to shares of common stock, and approximately $162,000 of other liabilities to our officers to shares of Series C Stock.  We sold 1.4 million shares of common stock for $100,000.  We received $472,000 from the exercise of warrants to purchase 47.2 million shares of common stock.  We issued 1.0 million shares of common stock in consideration for services with a fair value of $100,000, and converted approximately $88,000 of liabilities to 2.8 million shares of common stock.  

In 2017, we sold 23.3 million shares of common stock for $550,000.  We received $38,000 for exercises of warrants to purchase 4.4 million shares of common stock, and we issued 7.0 million shares of common stock in consideration for services with a fair value of $200,000.  

16

Management is continuing its efforts to secure funding sufficient for the Company’s operating and capital requirements through private sales of Series C Stock and common stock, and to negotiate settlements or extensions of existing liabilities.  The proceeds of such sales of stock, if any, will be used to repay the Truitt Notes and to fund general working capital needs.

We changed the focus of our company to position us to generate revenue from both data acquisition and data management.  We expanded our service offerings to provide data acquisition services utilizing twelve different technologies.  We developed new, cloud-based mapping software to be marketed under our existing name GeoUndergound that replaces our previous version of GeoUnderground.  We currently utilize GeoUnderground to deliver data to customers.  We intend to offer GeoUnderground as a subscription-based stand-alone product.  We believe that our changes to our operating focus will enable us to begin to generate significant revenue from operations.

We believe that our actions and planned actions will enable us to finance our operations beyond the next twelve months.

We do not believe that inflation and changing prices will have a material impact on our net sales and revenues, or on income from continuing operations.

Results of Operations

We had sales of $230,330 and $521,465 during the three and nine months, respectively, ended September 30, 2017.  Cost of sales were $89,636 and $175,722 for the three and nine months, respectively, ended September 30, 2017.  Sales were $132,371 and $572,371 during the three and nine months, respectively, ended September 30, 2016.  Cost of sales were $54,838 and $185,374 during the three and nine months, respectively, ended September 30, 2016.  Our sales have fluctuated throughout 2017 and 2016 as our ability to market and perform jobs was hampered by our financial condition.  We expect sales and cost of sales to continue to fluctuate as our business continues to mature.

Selling, general, and administrative (“SG&A”) expenses were $431,480 and $1,469,427 for the three and nine months, respectively, ended September 30, 2017.  SG&A expenses were $463,657 and $1,240,381 for the three and nine months, respectively, ended September 30, 2016.  The decrease in SG&A costs for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 was due to a decrease in sales and marketing expenses due to budget constraints, and decreases in taxes and licenses due to a decrease in estimated franchise tax liabilities.  The increase in SG&A expenses for the nine months ended September 30, 2017 compared to September 30, 2016 is due to increased payroll cost related to an increase in staffing, and professional fees due to investor relations and investment banking expenses incurred in 2017.  The increases in payroll cost and professional fees were partially offset by a decrease in rent expense due to a suspension of rent effective April 1, 2016.   

Other income and expense for the three and nine months, respectively, ended September 30, 2017 were net expense of $89,583 and net income of $210,389.  Other expense for the three months ended September 30, 2017 consisted entirely of interest expense.  Net other income for the nine months ended September 30, 2017 included interest expense of $235,882, gains on extinguishment of debt of $13,693, and gains related to registration payment arrangements of $432,578.  Other income and expense for the three and nine months, respectively, ended September 30, 2016 were net expense of $471,594 and net income of $21,738.  Included in other income and expense for the three and nine months, respectively, ended September 30, 2016 was interest expense of $58,603 and $192,124, respectively, gains on extinguishment of debt of $58,603 and $192,124, respectively, and gains (losses) related to registration payment arrangements of ($482,683) and $9,720, respectively.    

The increase in interest expense in 2017 was due to interest on the Truitt Note, which increased due to a higher outstanding balance, a higher interest rate incurred after the due date of January 31, 2017, and amortization of deferred debt issue costs incurred after August 31, 2017.    

Gains or expense related to registration payment arrangements result from a series of Stock Subscription Agreements we entered into in 2009 and 2010 (the “Stock Subscription Agreements”).  We were required to register the shares of common stock sold pursuant to the Stock Subscription Agreements under the Securities Act.  Our failure to timely register the shares of common stock under the Securities Act timely resulted in our obligation to issue additional shares (“Penalty Shares”) to investors who purchased shares pursuant to the Stock Subscription Agreements.  We recorded a liability on our books for the value of the estimated number of shares to be issued.  We incur losses on our registration payment arrangements when the estimated number of Penalty Shares to be issued increases, or when the value of our common stock increases.  We record gains on our registration payment arrangements when the estimated number of Penalty Shares to be issued decreases, or when the value of our common stock decreases.

We had no gain or loss related to registration payment arrangements during the three months ended September 30, 2017.  During the nine months ended September 30, 2017, we had gains related to registration payment arrangements of $432,578 due to a decrease in the value of our common stock.  During the three months ended September 30, 2016, we had losses from registration payment arrangements of $482,863 due to an increase in the value of our common stock.  We had gains related to registration payment arrangements of $9,720 during the nine months ended September 30, 2016 due to a decrease in the estimated number of Penalty Shares to be issued.  We expect that income or expense related to registration payment arrangements will fluctuate as the price of our common stock and the estimate of the number of Penalty Shares to be issued fluctuate.

We had no benefit from income taxes during the three and nine months ended September 30, 2017 and 2016, as our deferred tax benefit was completely offset by a valuation allowance due to the uncertainty of realization of the benefit.

17

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements as of September 30, 2017.

Application of Critical Accounting Policies

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Estimates and assumptions which, in our opinion, are significant to the underlying amounts included in the financial statements and for which it would be reasonably possible that future events or information could change those estimates include:

Registration Payment Arrangements.  We are contractually obligated to issue shares of our common stock to certain investors for failure to timely register their shares of our common stock under the Securities Act. We have recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued.  We review on a quarterly basis our estimate of the number of shares to be issued and the fair value of the stock to be issued.

Realization of Deferred Income Tax Assets. We provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between financial reporting and tax accounting methods and any available operating loss or tax credit carryovers. At September 30, 2017, we had a deferred tax asset resulting principally from our net operating loss deduction carryforward available for tax purposes in future years.  This deferred tax asset is completely offset by a valuation allowance due to the uncertainty of realization.  We evaluate the necessity of the valuation allowance quarterly.

Estimated Costs to Complete Fixed-Price Contracts.  We record revenues for fixed-price contracts under the percentage-of-completion method of accounting, whereby revenues are recognized ratably as those contracts are completed. This rate is based primarily on the proportion of contract costs incurred to date to total contract costs projected to be incurred for the entire project, or the proportion of measurable output completed to date to total output anticipated for the entire project. We review our estimates of costs to complete each contract quarterly, and make adjustments if necessary. At September 30, 2017, we had no open contracts.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

Interest Rate Risk—Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. We do not have significant short-term investments. Accordingly, we believe that we do not have a material interest rate exposure.

Foreign Currency Risk—Our functional currency is the United States dollar.  We do not currently have any assets or liabilities denominated in foreign currencies. Consequently, we have no direct exposure to foreign currency risk.

Commodity Price Risk—Based on the nature of our business, we have no direct exposure to commodity price risk.

ITEM 4.CONTROLS AND PROCEDURES. 

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the United States Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of Company management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(e) and 15d-15(e). Based upon, and as of the date of this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three and nine months ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

18

PART II - OTHER INFORMATION

ITEM 2.SALES OF UNREGISTERED EQUITY SECURITIES 

Between July 17, 2017 and August 22, 2017, the Company sold 10,000,001 shares of its common stock, and issued warrants purchase 1,000,001 shares of common stock at an exercise price of $0.04, to an investor at a price of $0.015 per share, for an aggregate sales price of $150,000.  The sale took place in a series of private placement transactions pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) of the Securities Act and/or Regulation D.  The purchasers are accredited investors, and the Company conducted the private placements without any general solicitation or advertisement, and with a restriction on resale.

On August 31, 2017, the Company issued to an investor warrants to purchase 20,000,000 shares of its common stock at a price of $0.01 per share, which are exercisable through August 31, 2022.  The issuance took place in a private placement transaction pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(2) of the Securities Act and/or Regulation D.  The investor is an accredited investor, and the Company conducted the private placement without any general solicitation or advertisement, and with a restriction on resale.

The recipients of the securities in each of these transactions described above represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with us, to information about us.

19

ITEM 6.EXHIBITS 

Exhibit	Description
31.1	Rule 13a-14(a) Certification of Mark A. Smith
31.2	Rule 13a-14(a) Certification of Thomas R. Oxenreiter
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Extension Schema
101.LAB	XBRL Labels Linkbase
101.DEF	XBRL Definitions Linkbase
101.CAL	XBRL Calculations Linkbase
101.PRE	XBRL Presentation Linkbase

20

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 hereunto duly authorized.

Date: November 20, 2017

Geospatial Corporation (Registrant)
By:		/S/   MARK A. SMITH
Name: Title:		Mark A. Smith Chief Executive Officer
By:	/S/	THOMAS R. OXENREITER
Name: Title:		Thomas R. Oxenreiter Chief Financial Officer

21

EX-31.1

GEOSPATIAL CORPORATION - 10-Q

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark A. Smith, certify that:

1)I have reviewed this Quarterly Report for the quarter ended September 30, 2017 on Form 10-Q of Geospatial Corporation; 

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

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

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

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

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

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

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

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

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

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

Date: November 20, 2017By:/s/ Mark A. Smith           

Name:Mark A. Smith 

Title:Chief Executive Officer 

EX-31.2

Certification

EX-32.1

GEOSPATIAL CORPORATION - 10-Q

Exhibit 32.1

CERTIFICATION PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Geospatial Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Mark A Smith, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 

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

Date: November 20, 2017By:/s/ Mark A. Smith           

Name:Mark A. Smith 

Title:Chief Executive Officer 

EX-32.2

GEOSPATIAL CORPORATION - 10-Q

Exhibit 32.2

CERTIFICATION PURSUANT TO TITLE 18, UNITED STATES CODE, SECTION 1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Geospatial Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Thomas R. Oxenreiter, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 

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

Date: November 20, 2017By:/s/ Thomas R. Oxenreiter           

Name:Thomas R. Oxenreiter 

Title:Chief Financial Officer 

XML

Document and Entity Information - $ / shares		9 Months Ended
	Jun. 30, 2016	Sep. 30, 2017	Aug. 03, 2017
Details
Registrant Name		GEOSPATIAL CORP
Registrant CIK		0001011395
SEC Form		10-Q
Period End date		Sep. 30, 2017
Fiscal Year End		--12-31
Trading Symbol		GSPH
Tax Identification Number (TIN)		870554463
Number of common stock shares outstanding			270,747,118
Filer Category		Smaller Reporting Company
Current with reporting		Yes
Voluntary filer		No
Well-known Seasoned Issuer		No
Amendment Flag		false
Document Fiscal Year Focus		2017
Document Fiscal Period Focus		Q3
Entity Incorporation, State Country Name		NEVADA
Entity Address, Address Line One		229 Howes Run Road
Entity Address, City or Town		Sarver
Entity Address, State or Province		PA
Entity Address, Postal Zip Code		16055
City Area Code		724
Local Phone Number		353-3400
Entity Listing, Par Value Per Share	$ 0.001

XML

Consolidated Balance Sheets - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 5,662	$ 66,992
Accounts receivable	192,011	65,800
Prepaid expenses and other current assets	100,261	140,105
Total current assets	297,934	272,897
Property and equipment:
Field equipment	359,591	357,070
Field vehicles	43,285	43,285
Total property and equipment	402,876	400,355
Less: accumulated depreciation	(386,948)	(355,616)
Net property and equipment	15,928	44,739
Total assets	313,862	317,636
Current liabilities:
Accounts payable	305,936	274,319
Accrued expenses	1,098,945	813,197
Capital lease liability to related party	603	3,278
Notes payable, net of deferred debt issue costs	1,396,015	1,365,738
Accrued registration payment arrangement	76,337	522,115
Total current liabilities	2,877,836	2,978,647
Stockholders' deficit:
Common Stock, Value, Issued	279,080	226,212
Additional paid-in capital	39,714,321	38,905,332
Additional paid-in capital, warrants	170,000	20,626
Accumulated deficit	(42,731,020)	(41,817,725)
Total stockholders' deficit	(2,563,974)	(2,661,011)
Total liabilities and stockholders' deficit	313,862	317,636
Undesignated
Stockholders' deficit:
Preferred Stock, Value, Issued	$ 0	$ 0

XML

Consolidated Balance Sheets - Parenthetical - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	750,000,000	750,000,000
Common Stock, Shares, Issued	279,080,452	226,211,740
Common Stock, Shares, Outstanding	279,080,452	226,211,740
Undesignated
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Series B Convertible
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Series C Convertible
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	3,644,578	4,543,654
Preferred Stock, Shares Outstanding	3,644,578	4,543,654

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
Sales	$ 230,330	$ 132,371	$ 521,465	$ 572,371
Cost of sales	89,636	54,838	175,722	185,374
Gross profit	140,694	77,533	345,743	386,997
Selling, general and administrative expenses	431,480	463,657	1,469,427	1,240,381
Net loss from operations	(290,786)	(386,124)	(1,123,684)	(853,384)
Interest expense	(89,583)	(47,334)	(235,882)	(180,106)
Gain on extinguishment of debt	0	58,603	13,693	192,124
Registration payment arrangements	0	(482,863)	432,578	9,720
Total other income (expense)	(89,583)	(471,594)	210,389	21,738
Net income (loss) before income taxes	(380,369)	(857,718)	(913,295)	(831,646)
Provision for income taxes	0	0	0	0
Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)
Basic and fully-diluted net loss per share of common stock	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)

XML

Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($)	Preferred Stock	Common Stock	Additional Paid-in Capital	Additional Paid-in Capital, Warrants	Retained Earnings	Total
Shareholders' Equity, Starting Balance at Dec. 31, 2016	$ 4,544	$ 226,212	$ 38,905,332	$ 20,626	$ (41,817,725)	$ (2,661,011)
Shares Outstanding, Starting Balance at Dec. 31, 2016	4,543,654	226,211,740
Sale of common stock, net of issuance costs, Value	$ 0	$ 23,333	526,667	0	0	550,000
Sale of common stock, net of issuance costs, Shares	0	23,333,335
Conversion of Series C Convertible Preferred Stock to common stock, Value	$ (899)	$ 17,981	(17,082)	0	0	0
Conversion of Series C Convertible Preferred Stock to common stock, Shares	(899,076)	17,981,520
Issuance of common stock for registration penalty, Value	$ 0	$ 132	13,068	0	0	13,200
Issuance of common stock for registration penalty, Shares	0	132,000
Exercise of warrants to purchase common stock, Value	$ 0	$ 4,422	54,204	(20,626)	0	38,000
Exercise of warrants to purchase common stock, Shares	0	4,421,857
Issuance of common stock for services, Value	$ 0	$ 7,000	193,000	0	0	$ 200,000
Issuance of common stock for services, Shares	0	7,000,000				7,000,000
Issuance of convertible securities with beneficial conversion features, Value	$ 0	$ 0	39,132	0	0	$ 39,132
Issuance of convertible securities with beneficial conversion features, Shares	0	0
Issuance of warrants to purchase common stock for loan concessions, Value	$ 0	$ 0	0	170,000	0	170,000
Issuance of warrants to purchase common stock for loan concessions, Shares	0	0
Net loss	$ 0	$ 0	0	0	(913,295)	(913,295)
Shareholders' Equity Balance at Sep. 30, 2017	$ 3,645	$ 279,080	$ 39,714,321	$ 170,000	$ (42,731,020)	$ (2,563,974)
Shares Outstanding, Ending Balance at Sep. 30, 2017	3,644,578	279,080,452

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net loss	$ (913,295)	$ (831,646)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	31,332	82,670
Amortization of discount on notes payable	54,949	62,500
Gain on extinguishment of debt	(13,693)	(192,124)
Accrued registration payment arrangement	(432,578)	(9,720)
Accrued interest payable	156,866	95,586
Issuance of common stock for services, Value	200,000	0
Changes in operating assets and liabilities:
Accounts receivable	(126,210)	(23,871)
Prepaid expenses and other current assets	39,844	22,971
Accounts payable	54,869	(10,832)
Accrued expenses	327,322	74,127
Due to related parties	0	(504)
Net cash used in operating activities	(601,981)	(730,843)
Amortization of deferred debt issue costs	18,613	0
Cash flows from investing activities:
Purchase of property and equipment	(2,521)	(15,202)
Net cash used in investing activities	(2,521)	(15,202)
Cash flows from financing activities:
Proceeds from issuance of notes payable	0	250,000
Principal payments on notes payable	(42,153)	(156,881)
Principal payments on capital lease liabilities	(2,675)	(2,599)
Proceeds from sale of common stock, net of offering costs	550,000	100,000
Proceeds from exercise of warrants to purchase common stock	38,000	110,000
Proceeds from sale of Series C Convertible Preferred Stock, net of offering costs	0	543,373
Net cash provided by financing activities	543,172	843,893
Net change in cash and cash equivalents	(61,330)	97,848
Cash and cash equivalents at beginning of period	66,992	16,962
Cash and cash equivalents at end of period	5,662	114,810
Supplemental disclosures:
Cash paid during period for interest	5,454	22,020
Cash paid during period for income taxes	0	0
Non-cash transactions:
Issuance of common stock for registration penalty, Value	13,200	1,080
Liabilities settled by issuance of notes payable	51,227	33,416
Issuance of convertible securities with beneficial conversion features, Value	39,132	0
Issuance of common stock in settlement of liabilities	0	1,201,176
Issuance of Series C Convertible Preferred Stock in settlement of liabilities	0	358,731
Issuance of warrants to purchase common stock in settlement of liabilities	0	54,278
Issuance of common stock for services, Value	200,000	0
Issuance of warrants to purchase common stock for loan concessions, Value	$ 170,000	$ 0

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Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2017

Notes

Note 1 - Basis of Presentation

Note 1 – Basis of Presentation

The Unaudited Consolidated Financial Statements included herein have been prepared by Geospatial Corporation (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information and regulations issued pursuant to the Securities Exchange Act of 1934, as amended.  Accordingly, the accompanying Unaudited Consolidated Financial Statements do not include all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.  The accompanying Unaudited Consolidated Financial Statements as of and for the nine months ended September 30, 2017 should be read in conjunction with the Company’s Financial Statements as of and for the year ended December 31, 2016.  In the opinion of the Company’s management, all adjustments considered necessary for a fair statement of the accompanying Unaudited Consolidated Financial Statements have been included, and all adjustments, unless otherwise discussed in the Notes to the Unaudited Consolidated Financial Statements, are of a normal and recurring nature.  Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017, or any other interim periods, or any future year or period.   

The use of accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.   

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, Geospatial Mapping Systems, Inc. and Utility Services and Consulting Corporation, which ceased operations in 2011.  All intercompany accounts and transactions have been eliminated.   

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Note 2 - Accrued Expenses

9 Months Ended

Sep. 30, 2017

Notes

Note 2 - Accrued Expenses

Note 2 – Accrued Expenses

Accrued expenses consisted of the following: 

	September 30,	December 31,
	2017	2016
Payroll and taxes	$ 904,508	$ 632,678
Accounting	76,976	62,792
Contractors and subcontractors	10,227	10,227
Interest	2,243	2,150
Other	104,991	105,350
Accrued expenses	$ 1,098,945	$ 813,197

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Note 3 - Related Party Transactions

9 Months Ended

Sep. 30, 2017

Notes

Note 3 - Related Party Transactions

Note 3 – Related-Party Transactions

The Company leases its headquarters building from Mark A. Smith, the Company’s Chairman and Chief Executive Officer.  The building has approximately 3,200 square feet of office space, and is used by the Company’s corporate, technical, and operations staff.  Mr. Smith has agreed to suspend collection of rent effective April 1, 2016.  No rent will accrue during the suspension.  The lease is cancellable by either party upon 30 days’ notice.  The Company incurred no lease expense during the three and nine months ended September 30, 2017, and $0 and $19,500 of lease expense during the three and nine months ended September 30, 2016, respectively.  

On November 9, 2012, the Company and Mr. Smith entered into a Lease Agreement, pursuant to which the Company leases a field vehicle from Mr. Smith.  The lease is for 60 months, and is for substantially the same terms for which Mr. Smith leases the vehicle from the manufacturer.  Interest on the lease amounted to $9 and $34 for the three months ended September 30, 2017 and 2016, respectively, and $46 and $122 for the nine months ended September 30, 2017 and 2016, respectively.  The lease is recorded as a capital lease.  At September 30, 2017, gross assets recorded under the lease and associated accumulated depreciation were $16,870 and $16,448, respectively.  Future minimum payments under the capital lease are as follows as of September 30, 2017: 

Balance of 2017	$ 605
Thereafter	-
Total minimum payments	605
Less:  minimum interest payments	(2)
Minimum principal payments	$ 603

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Note 4 - Notes Payable

9 Months Ended

Sep. 30, 2017

Notes

Note 4 - Notes Payable

Note 4 – Notes Payable

Current notes payable consisted of the following:

	September 30, 2017	December 31, 2016
Secured Promissory Note, net of deferred debt issue costs, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount.  On August 31, 2017, the due date was amended to June 1, 2018.  From January 31, 2017 to August 31, 2017, the note bore interest at 20%.  After August 31, 2017, the note bears interest at 15%.  The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company	$ 1,353,877	$ 1,332,920
Note payable under settlement agreement with vendor, payable monthly over 10 months, with no interest	2,560	-
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 16 months, with interest rates ranging from 0% to 20%	39,578	32,818
Current notes payable	$ 1,396,015	$ 1,365,738

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Note 5 - Income Taxes

9 Months Ended

Sep. 30, 2017

Notes

Note 5 - Income Taxes

Note 5 – Income Taxes

The Company’s provision for (benefit from) income taxes is summarized below:

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Current:
Federal	$ -	$ -	$ -	$ -
State	-	-	-	-
	-	-	-	-
Deferred:
Federal	(113,240)	(116,029)	(279,482)	(261,352)
State	(35,949)	(36,834)	(88,725)	(82,969)
	(149,189)	(152,863)	(368,207)	(344,321)
Total income taxes	(149,189)	(152,863)	(368,207)	(344,321)
Less:  valuation allowance	149,189	152,863	368,207	344,321
Net income taxes	$ -	$ -	$ -	$ -

The reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Federal statutory rate	35.0 %	35.0 %	35.0 %	35.0 %
State income taxes (net of federal benefit)	6.5	6.5	6.5	6.5
Valuation allowance	(41.5)	(41.5)	(41.5)	(41.5)
Effective rate	0.0 %	0.0 %	0.0 %	0.0 %

Significant components of the Company’s deferred tax assets and liabilities are summarized below.  A valuation allowance has been established as realization of such assets has not met the more-likely-than-not threshold requirement under FASB ASC 740.  

	September 30, 2017	December 31, 2016
Start-up costs	$ 20,283	$ 35,033
Depreciation	(41,128)	(37,423)
Accrued expenses	305,809	745,103
Net operating loss carryforward	16,934,258	15,714,795
Deferred income taxes	17,219,223	16,457,508
Less:  valuation allowance	(17,219,223)	(16,457,508)
Net deferred income taxes	$ -	$ -

At September 30, 2017, the Company had federal and state net operating loss carryforwards of approximately $40,805,000.  The federal and state net operating loss carryforwards will expire beginning in 2021 and 2026, respectively.  The amount of the state net operating loss carryforward that can be utilized each year to offset taxable income is limited by state law.  

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Note 6 - Net Income (Loss) Per Share of Common Stock

9 Months Ended

Sep. 30, 2017

Notes

Note 6 - Net Income (Loss) Per Share of Common Stock

 

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)
Weighted average number of shares of common stock outstanding	274,660,162	149,451,206	257,745,741	146,393,639
Dilutive potential shares of common stock	274,660,162	149,451,206	257,745,741	146,393,639
Net loss per share of common stock:
Basic	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
Diluted	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)

The following securities were not included in the computation of diluted net loss per share, as their effect would have been anti-dilutive:  

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Series C Convertible Preferred Stock	72,891,560	77,503,160	75,526,216	53,222,914
Options and warrants to purchase common stock	16,018,393	71,378,151	29,147,461	68,205,580
Secured Promissory Note	56,315,086	6,732,841	34,593,939	15,097,294
Total	145,225,039	150,579,542	139,267,616	136,525,788

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Note 7 - Stock-Based Payments

9 Months Ended

Sep. 30, 2017

Notes

Note 7 - Stock-Based Payments

Note 7 – Stock-Based Payments

During the nine months ended September 30, 2017, the Company granted warrants to purchase 1,833,334 shares of the Company’s common stock to investors in connection with investments in the Company’s common stock.  The Company issued warrants to purchase 20,000,000 shares of the Company’s common stock to the holder of the Secured Promissory Note pursuant to an amendment of the Secured Promissory Note.  The Company recorded deferred debt issue costs of $170,000, the fair value of the warrants.  The Company also issued 7,000,000 shares of common stock to vendors in consideration for services.  The Company recorded expense of $200,000, the fair value of the services received.  

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Note 8 - Gains on Extinguishment of Debt

9 Months Ended

Sep. 30, 2017

Notes

Note 8 - Gains on Extinguishment of Debt

Note 8 – Gains on Extinguishment of Debt

Due to significant cash flow problems, the Company has negotiated concessions on the amounts of certain liabilities and extensions of payment terms.  The Company accounts for such concessions in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 470-60, Troubled Debt Restructurings by Debtors, and ASC 405-20, Extinguishment of Liabilities, and recognizes gains to the extent that the carrying value of the liability exceeds the fair value of the restructured payment plan.  Such gains are included as “Gains on extinguishment of debt” in “Other income and expenses” on the Company’s Consolidated Statement of Operations.  In addition, the Company has accounts payable that have aged or are expected to age beyond the statute of limitations.  The Company is amortizing those liabilities over the remaining term of the statute of limitations.  No gain or loss on extinguishment was recorded during the three months ended September 30, 2017. Gains on extinguishment of $58,603 were recorded during the three months ended September 30, 2016, and gains of $13,693 and $192,124 were recorded during the nine months ended September 30, 2017 and 2016, respectively.   

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Note 9 - Registration Payment Arrangements

9 Months Ended

Sep. 30, 2017

Notes

Note 9 - Registration Payment Arrangements

Note 9 – Registration Payment Arrangements

The Company is contractually obligated to issue shares of its common stock to certain investors for failure to register shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”).  The Company has recorded a liability for the estimated number of shares to be issued at the fair value of the stock to be issued.  The Company measures fair value by the price of its common stock at its most recent sale.  The Company reviews its estimate of the number of shares to be issued and the fair value of the stock to be issued quarterly.  The liability is included on the Consolidated Balance Sheet under the heading “accrued registration payment arrangement,” and amounted to $76,337 and $522,115 at September 30, 2017 and December 31, 2016, respectively.  Gains or losses resulting from changes in the carrying amount of the liability are included in the Consolidated Statement of Operations in other income and expense under the heading “registration payment arrangements”.  The Company had no gain or loss from registration payment arrangements of during the three months ended September 30, 2017.  The Company had losses from registration payment arrangements of $482,863 during the three months ended September 30, 2016.  The Company had gains of $432,578 and $9,720 during the nine months ended September 30, 2017 and 2016, respectively.     

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Note 2 - Accrued Expenses: Schedule of Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Accounts Payable and Accrued Liabilities

	September 30,	December 31,
	2017	2016
Payroll and taxes	$ 904,508	$ 632,678
Accounting	76,976	62,792
Contractors and subcontractors	10,227	10,227
Interest	2,243	2,150
Other	104,991	105,350
Accrued expenses	$ 1,098,945	$ 813,197

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Note 3 - Related Party Transactions: Schedule of Future Minimum Lease Payments for Capital Leases (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Future Minimum Lease Payments for Capital Leases

Balance of 2017	$ 605
Thereafter	-
Total minimum payments	605
Less:  minimum interest payments	(2)
Minimum principal payments	$ 603

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Note 4 - Notes Payable: Schedule of Current Notes Payable (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Current Notes Payable

	September 30, 2017	December 31, 2016
Secured Promissory Note, net of deferred debt issue costs, payable to an individual, bearing interest at 10% per annum, due January 31, 2017, net of discount.  On August 31, 2017, the due date was amended to June 1, 2018.  From January 31, 2017 to August 31, 2017, the note bore interest at 20%.  After August 31, 2017, the note bears interest at 15%.  The note is convertible to common stock at 75% of the weighted average trading price, and is secured by substantially all the assets of the Company	$ 1,353,877	$ 1,332,920
Note payable under settlement agreement with vendor, payable monthly over 10 months, with no interest	2,560	-
Notes payable under settlement agreements with former employees, payable monthly with terms of up to 16 months, with interest rates ranging from 0% to 20%	39,578	32,818
Current notes payable	$ 1,396,015	$ 1,365,738

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Note 5 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Components of Income Tax Expense (Benefit)

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Current:
Federal	$ -	$ -	$ -	$ -
State	-	-	-	-
	-	-	-	-
Deferred:
Federal	(113,240)	(116,029)	(279,482)	(261,352)
State	(35,949)	(36,834)	(88,725)	(82,969)
	(149,189)	(152,863)	(368,207)	(344,321)
Total income taxes	(149,189)	(152,863)	(368,207)	(344,321)
Less:  valuation allowance	149,189	152,863	368,207	344,321
Net income taxes	$ -	$ -	$ -	$ -

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Note 5 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Effective Income Tax Rate Reconciliation

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Federal statutory rate	35.0 %	35.0 %	35.0 %	35.0 %
State income taxes (net of federal benefit)	6.5	6.5	6.5	6.5
Valuation allowance	(41.5)	(41.5)	(41.5)	(41.5)
Effective rate	0.0 %	0.0 %	0.0 %	0.0 %

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Note 5 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Deferred Tax Assets and Liabilities

	September 30, 2017	December 31, 2016
Start-up costs	$ 20,283	$ 35,033
Depreciation	(41,128)	(37,423)
Accrued expenses	305,809	745,103
Net operating loss carryforward	16,934,258	15,714,795
Deferred income taxes	17,219,223	16,457,508
Less:  valuation allowance	(17,219,223)	(16,457,508)
Net deferred income taxes	$ -	$ -

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Note 6 - Net Income (Loss) Per Share of Common Stock: Schedule of Earnings Per Share, Basic and Diluted (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Earnings Per Share, Basic and Diluted

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)
Weighted average number of shares of common stock outstanding	274,660,162	149,451,206	257,745,741	146,393,639
Dilutive potential shares of common stock	274,660,162	149,451,206	257,745,741	146,393,639
Net loss per share of common stock:
Basic	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
Diluted	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)

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Note 6 - Net Income (Loss) Per Share of Common Stock: Schedule of Excluded Securities (Tables)

9 Months Ended

Sep. 30, 2017

Tables/Schedules

Schedule of Excluded Securities

	Three Months Ended September 30, 2017	Three Months Ended September 30, 2016	Nine Months Ended September 30, 2017	Nine Months Ended September 30, 2016
Series C Convertible Preferred Stock	72,891,560	77,503,160	75,526,216	53,222,914
Options and warrants to purchase common stock	16,018,393	71,378,151	29,147,461	68,205,580
Secured Promissory Note	56,315,086	6,732,841	34,593,939	15,097,294
Total	145,225,039	150,579,542	139,267,616	136,525,788

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Note 2 - Accrued Expenses: Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Payroll and taxes	$ 904,508	$ 632,678
Accounting	76,976	62,792
Contractors and subcontractors	10,227	10,227
Interest	2,243	2,150
Other	104,991	105,350
Accrued expenses	$ 1,098,945	$ 813,197

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Note 3 - Related Party Transactions (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Gross assets recorded under the lease and associated accumulated depreciation	$ 16,870	$ 16,448

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Note 3 - Related Party Transactions: Schedule of Future Minimum Lease Payments for Capital Leases (Details)	Sep. 30, 2017 USD ($)
Details
Capital Leases, Future Minimum Payments Due, Next Twelve Months	$ 605
Capital Leases, Future Minimum Payments Due	605
Capital Leases, Future Minimum Payments, Executory Costs	(2)
Capital Leases, Future Minimum Payments, Net Minimum Payments	$ 603

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Note 4 - Notes Payable: Schedule of Current Notes Payable (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Secured Promissory Note
Debt Instrument, Interest Rate, Stated Percentage	10.00%
Debt Instrument, Convertible, Terms of Conversion Feature	convertible to common stock at 75% of the weighted average trading price
Debt Instrument, Collateral	secured by substantially all the assets of the Company
Notes Payable, Current	$ 1,353,877	$ 1,332,920
Note payable under settlement agreement with vendor
Debt Instrument, Interest Rate, Stated Percentage	0.00%
Notes Payable, Current	$ 2,560	0
Notes payable under settlement agreements with former employees
Notes Payable, Current	39,578	32,818
Notes Payable, Current	$ 1,396,015	$ 1,365,738

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Note 5 - Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Current:
Federal	$ 0	$ 0	$ 0	$ 0
State	0	0	0	0
Deferred:
Federal	(113,240)	(116,029)	(279,482)	(261,352)
State	(35,949)	(36,834)	(88,725)	(82,969)
Total income taxes	(149,189)	(152,863)	(368,207)	(344,321)
Less: valuation allowance	149,189	152,863	368,207	344,321
Net Income Taxes	$ 0	$ 0	$ 0	$ 0

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Note 5 - Income Taxes: Schedule of Effective Income Tax Rate Reconciliation (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
Federal statutory rate	35.00%	35.00%	35.00%	35.00%
State income taxes (net of federal benefit)	6.50%	6.50%	6.50%	6.50%
Valuation allowance	(41.50%)	(41.50%)	(41.50%)	(41.50%)
Effective rate	0.00%	0.00%	0.00%	0.00%

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Note 5 - Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Details
Deferred Tax Assets and Liabilities, Start-up Costs	$ 20,283	$ 35,033
Deferred Tax Assets and Liabilities, Depreciation	(41,128)	(37,423)
Deferred Tax Assets and Liabilities, Accrued Expenses	305,809	745,103
Net operating loss carryforward	16,934,258	15,714,795
Deferred income taxes	17,219,223	16,457,508
Less: valuation allowance	(17,219,223)	(16,457,508)
Net deferred income taxes	$ 0	$ 0

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Note 6 - Net Income (Loss) Per Share of Common Stock: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
Net loss	$ (380,369)	$ (857,718)	$ (913,295)	$ (831,646)
Weighted average number of shares of common stock outstanding	274,660,162	149,451,206	257,745,741	146,393,639
Dilutive potential shares of common stock	274,660,162	149,451,206	257,745,741	146,393,639
Net loss per share of common stock:
Basic	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
Diluted	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)

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Note 6 - Net Income (Loss) Per Share of Common Stock: Schedule of Excluded Securities (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
Series C Convertible Preferred Stock	$ 72,891,560	$ 77,503,160	$ 75,526,216	$ 53,222,914
Options and warrants to purchase common stock	16,018,393	71,378,151	29,147,461	68,205,580
Secured Promissory Note	56,315,086	6,732,841	34,593,939	15,097,294
Total	$ 145,225,039	$ 150,579,542	$ 139,267,616	$ 136,525,788

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Note 7 - Stock-Based Payments (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Details
Issuance of common stock for services, Shares	7,000,000
Issuance of common stock for services, Value	$ 200,000	$ 0

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Note 8 - Gains on Extinguishment of Debt (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Details
Gain on extinguishment of debt	$ 0	$ 58,603	$ 13,693	$ 192,124

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Note 9 - Registration Payment Arrangements (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Details
Accrued registration payment arrangement	$ 76,337		$ 76,337		$ 522,115
Registration payment arrangements	$ 0	$ (482,863)	$ 432,578	$ 9,720