10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2015
Or
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 000-52942
BLUE LINE PROTECTION GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada		20-5543728
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1350 Independence St., Lakewood, CO		80215
(Address of principal executive offices)		(Zip Code)
(800) 844-5576
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark 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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [  ]

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

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

Large accelerated filer  [  ]	Accelerated filer                   [  ]
Non-accelerated filer    [  ]  (Do not check if a smaller reporting company)	Smaller reporting company [X]

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Common Stock, $0.001 par value	123,525,282 shares
(Class)	(Outstanding as at May 15, 2015)

BLUE LINE PROTECTION GROUP, INC.

Table of Contents

	Page
PART I - FINANCIAL INFORMATION	3
Unaudited Financial Statements	3
Condensed Balance Sheets	4
Condensed Statements of Operations	5
Condensed Statements of Cash Flows	6
Notes to Condensed Financial Statements	7
Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Controls and Procedures	26
PART II - OTHER INFORMATION	27
Legal Proceedings	27
Exhibits and Reports on Form 8-K	31
SIGNATURES	32

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, 2014, Annual Report on Form 10-K previously filed with the Commission on April 15, 2015.

3

Blue Line Protection Group, Inc.

Condensed Consolidated Balance Sheets

	March 31,		December 31,
	2015		2014
	(Unaudited)		(Audited)
Assets
Current assets:
Cash and equivalents	$	112,105	$	211,922
Accounts receivable, net		22,434		62,101
Accrued receivables		92,873		54,790
Notes receivable		38,470		46,451
Prepaid expenses and deposits		2,500		2,500
Total current assets		268,382		377,764
Fixed assets:
Total fixed assets, net		179,161		189,438
Property, plant and equipment		750,000		750,000
Building improvements		348,553		348,553
Total fixed assets		1,277,714		1,287,991
Total assets	$	1,546,096	$	1,665,755
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	162,286	$	143,019
Accrued liabilities		270,049		152,844
Notes payable		50,470		2,000
Notes payable - related parties		183,271		288,271
Current portion of long-term debt		3,735		3,735
Total current liabilities		669,811		589,869
Long-term liabilities:
Long-term debt		690,793		691,780
Total current liabilities		690,793		691,780
Total liabilities		1,360,604		1,281,649
Stockholders' equity (deficit):
Preferred Stock, $0.001 par value, 100,000,000 shares authorized,
no shares issued and outstanding as of March 31, 2015 and
December 31, 2014, respectively		-		-
Common Stock, $0.001 par value, 1,400,000,000 shares authorized,
123,525,282 and 122,845,282 issued and outstanding as of
March 31, 2015 and December 31, 2014, respectively		123,525		122,845
Common Stock, owed but not issued, 568,750 shares and 748,750 shares
as of March 31, 2015 and December 31, 2014, respectively		569		749
Additional paid-in capital		2,961,281		2,788,934
Accumulated (deficit)		(2,899,883)		(2,528,422)
Total stockholders' equity (deficit)		185,492		384,106
Total liabilities and stockholders' equity (deficit)	$	1,546,096	$	1,665,755

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

4

Blue Line Protection Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the three months ended
	March 31,
	2015		2014
Revenue, net	$	520,231	$	50,662
Cost of revenue		(368,022)		(5,315)
Gross profit		152,209		45,347
Expenses:
Advertising		273		-
Depreciation		10,277		379
Executive compensation		51,000		11,603
General and administrative expenses		162,168		14,678
Professional fees		36,594		25,278
Salaries and wages		132,317		54,679
Stock-based compensation		108,561		-
Total expenses		501,190		106,617
Operating loss		(348,981)		(61,270)
Other income:
Interest expense		(24,535)		-
Interest income		2,056		-
Total other income		(22,479)		-
Loss before provision for income taxes		(371,460)		(61,270)
Provision for income taxes		-		-
Net loss	$	(371,460)	$	(61,270)
Weighted average number of
common shares outstanding - basic		123,134,171		107,563,952
Weighted average number of    common shares outstanding - fully diluted		130,519,515		109,219,662
Net loss per share - basic	$	(0.00)	$	(0.00)
Net loss per share - fully diluted	$	(0.00)	$	(0.00)

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

5

Blue Line Protection Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the three months ended
	March 31,
	2015		2014
Operating activities
Net loss	$	(371,460)	$	(61,270)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation		10,277		379
Stock-based compensation		108,561		-
Amortization of discount on note payable		12,655		-
Changes in operating assets and liabilities:
(Increase) in accounts receivable and accrued receivables		(1,584)		(24,703)
Increase in accounts payable and accrued liabilities		136,472		3,308
Increase in long-term liabilities		(987)		-
Net cash (used) by operating activities		(102,898)		(82,286)
Investing activities
Receipt of payments from notes receivable		7,981		-
Purchase of fixed assets		-		(64,552)
Net cash (used) by investing activities		7,981		(64,552)
Financing activities
Donated capital		-		7,000
Proceeds from notes payable		50,000		150,000
Proceeds from notes payable - related parties		67,000		-
Repayment of notes payable - related parties		(172,000)		-
Common stock payable		100		-
Issuances of common stock		50,000		-
Net cash provided by financing activities		(4,900)		157,000
Net increase (decrease) in cash		(99,817)		10,162
Cash - beginning of the period		211,922		2,844
Cash - end of the period	$	112,105	$	13,006
Supplemental disclosures:
Interest paid		-		-
Income taxes paid		-		-
Non-cash transactions:
Shares issued for fixed assets	$	-	$	30,000
Number of shares issued for fixed assets		-		323,078
Stock-based compensation	$	108,561	$	-
Number of options issued for stock-based compensation		820,000		-
Number of stock options cancelled		(4,680,000)		-

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

6

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 - Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2014 and notes thereto included in the Company's annual report on Form 10-K.  The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative of annual results.

Note 2 - History and business of the company

The Company was originally organized September 11, 2006 (Date of Inception) under the laws of the State of Nevada, as The Engraving Masters, Inc.  The Company was authorized to issue up to 100,000,000 shares of its common stock and 100,000,000 shares of preferred stock, each with a par value of $0.001 per share.

On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 (“Blue Line Colorado”), as a wholly-owned subsidiary of the Company.  Blue Line Colorado provides protection, compliance and financial services to the lawful cannabis industry.

On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. (“BLPG”)

On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held.  Additionally, the authorized number capital of the Company concurrently increased to 1,400,000,000 shares of $0.001 par value common stock.  All references to share and per share amounts in the condensed consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.

Blue Line Protection Group, Inc. provides armed protection, financial solutions, logistics, and compliance services for businesses engaged in the legal cannabis industry.  The Company offers asset logistic services, such as armored transportation service; security services, including shipment protection, money escorts, security monitoring, asset vaulting, VIP and dignitary protection, and others; financial services, such as handling transportation and storage of currency; training; and compliance services.

7

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 3 - Going concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company incurred a net loss of ($371,461) during the three months ended March 31, 2015, and had net sales of $520,231 during the such same period.  

In order to continue as a going concern, the Company will need, among other things, additional capital resources.  The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing.  The Company is currently conducting a private placement of its 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 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 financial statements do not include any adjustments that might arise from this uncertainty.

Note 4 -Accounting policies and procedures

Principles of consolidation

For the years ended December 31, 2014 and 2013, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”).  All significant intercompany balances and transactions have been eliminated.   BLPG and its subsidiaries are collectively referred herein to as the “Company.”

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.

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.

Accounts receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest.  The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future.  On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days.  Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.

Notes receivable

Notes receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans.  Interest income on notes receivable is recognized using the interest method.  Interest income on impaired loans is recognized as cash is collected or on a cost-recovery basis.

8

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 4 -Accounting policies and procedures (continued)

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 its 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.

Allowance for uncollectible accounts

The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. The allowance for doubtful customer and vendor receivables was $18,864 and $0 at March 31, 2015 and 2014, respectively.

Cost of Sales

The Company’s cost of revenue primarily consists of items purchased by the Company specifically purposed for the benefit of the Company’s client.

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.

Advertising and marketing costs

The Company expenses all costs of advertising as incurred.  During the three months ended March 31, 2015 and 2014, advertising and marketing costs were $273 and $0, respectively.

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.

9

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 4 -Accounting policies and procedures (continued)

Fair Value of Financial Instruments

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. The Company does not hold any investments that are available-for-sale.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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).

Contingencies

The Company is not currently a party to any pending or threatened legal proceedings.  The company has one potential contingent liability.  A shareholder and employee asserts he has loaned the Company cash and paid for various expenses on behalf of the Company in the aggregate amount of $447,896.  The Company is disputing its need to pay this claim on the grounds that a number of items in the claim were unauthorized and minimal, if any, supporting documentation was provided to substantiate the validity of the claim.  While the Company can reasonably estimate the liability, it is improbable that the Company will pay, due the Claimant’s (a) failure mutually agree upon the alleged amounts owed and (b) failure to validate the claims.  

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through November 14, 2014, and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows.

Note 5 - Notes receivable

On May 15, 2014, the Company loaned $50,000 to a non-affiliated entity on a revolving basis at a rate of 18% per annum and due within one year from the date of issuance.  During the three months ended March 31, 2015 and 2014, interest income earned was $2,056 and $0, respectively.  As of March 31, 2015, the principal balance of the loan is $38,470 and accrued interest thereupon was $596.

10

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 6 - Fixed assets

Fixed assets consisted of the following at:

		March 31, 2015		December 31, 2014
Automotive vehicles	$	173,926	$	173,926
Furniture and equipment		44,204		44,204
Fixed assets, total		218,130		218,130
Less: accumulated depreciation		(38,969)		(28,692)
Fixed assets, net	$	179,161	$	189,438

Depreciation expenses for the three months ended March 31, 2015 and 2014 were $10,277 and $379, respectively.

On July 15, 2014, the Company purchased a commercial building for a total purchase price of $750,000, for which the Company paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a rate of 5% per annum on the unpaid principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in the amount of $2,813 beginning August 31, 2014.  Through March 31, 2015, approximately $348,553 in capital improvements have been made to the property.  As of March 31, 2015, the Company has not yet placed the property into service and, accordingly, no depreciation expense has been recorded.

Note 7 - Debt and interest expense

Through March 31, 2015, a non-affiliated third-party loaned the Company an aggregate of $2,000 in cash.  The note bears no interest and is due upon demand.  Beginning January 1, 2015, the Company began accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $29 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $29 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $2,000.

On February 6, 2015, the Company borrowed $50,000 in cash from one non-affiliated person.  The loan is due and payable on April 6, 2015 and bears interest at a rate of 10% per annum.  During the three month periods ended March 31, 2015 and 2014, interest expense was $726 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $50,000.  In connection with the note, the Company is obligated to issue 100,000 shares of its common stock to the holder, for which a discount of $14,286 is attributed to the note, which is being amortized of the life of the note and recorded as interest expense.  As of March 31, 2015 and 2014, $12,755 of the discount has been amortized and recorded as interest expense, leaving a balance of $1,531 in discounts related to this note.  See Note 10 - Stockholders’ Equity for additional information.

Note 8 - Notes payable - Related Party

On July 31, 2014, the Company borrowed $98,150 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company is accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $1,436 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $1,436 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $98,150.

Through March 31, 2015, a shareholder loaned the Company an aggregate of $286,446, in the form of cash and expenses paid on behalf of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $231,825 and as of March 31, 2015, the principal balance owed on this loan is $54,921.   The Company is accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $799 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $799 and $0, respectively.

11

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 8 - Notes payable - Related Party (continued)

Through March 31, 2015, the Company borrowed $30,000 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company is accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $232 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $232 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $30,000.

Through March 31, 2015, the Company borrowed $43,500 from an officer and shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $43,000 and as of March 31, 2015, the principal balance owed on this loan is $500.  

Note 9 - Long Term Notes Payable

On July 15, 2014, the Company purchased a commercial building for a total purchase price of $750,000, for which the Company paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a rate of 5% per annum on the unpaid principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in the amount of $2,813 beginning August 31, 2014.  As of March 31, 2015, the principal balance is $675,000.  During the three months ended March 31, 2015 and 2014 and a total of $8,438 and $0 in interest payments have been made.

On November 21, 2014, the Company purchased a vehicle for a purchase price of $20,827, net of discounts.  The Company financed the entire amount of $20,827 at an interest rate of 2.42% for five years, with a maturity date of December 5, 2019.  As of March 31, 2015, the total principal balance of the note is $19,528, of which $15,793 is considered a long-term liability and the current portion of $3,735 is considered a current liability.

Note 10 - Stockholders’ equity

On February 6, 2015, the Company borrowed $50,000 in cash from one non-affiliated person.  In connection with the note, the Company is obligated to issue 100,000 shares of its common stock to the holder, bearing a fair value of $14,286.  The Common Stock was considered fully-paid and non-assessable as of March 31, 2015; however, the certificates representing the shares were not issued during the period and resultantly, the Company recorded $100 in Common Stock Payable.  See Note 7 - Debt and Interest Expense for additional information.

On March 16, 2015, the Company sold 400,000 shares of its common stock for gross cash proceeds of $50,000 to a non-related entity.

As of March 31, 2015, there have been no other issuances of common stock.

Note 11 - Warrants and options

All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-Scholes option valuation model.  The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model.  Volatility is an estimate based on the calculated historical volatility of similar entities in industry, in size and in financial leverage, whose share prices are publicly available. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award.  The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term equal to the expected life of the award.

12

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 11 - Warrants and options (continued)

The following is a summary of the Company’s stock option activity:

	Number Of Shares	Weighted-Average Exercise Price
Outstanding at December 31, 2013	0	$ 0.00
Granted	4,806,900	$ 0.14
Exercised	0	$ 0.00
Vested	133,525	$ 0.14
Cancelled	0	$ 0.00
Outstanding at March 31, 2014	4,806,900	$ 0.14
Granted	6,000,000	$ 0.39
Exercised	0	$ 0.00
Vested	2,221,917	$ 0.25
Cancelled	0	$ 0.00
Outstanding at December 31, 2014	10,836,900	$ 0.29
Granted	1,750,000	$ 0.22
Exercised	0	$ 0.00
Vested	614,836	$ 0.20
Cancelled	(4,680,000)	$ 0.39
Outstanding at March 31, 2015	7,876,900	$ 0.22
Options exercisable at March 31, 2014	133,525	$ 0.00
Options exercisable at March 31, 2015	2,208,178	$ 0.20

The following tables summarize information about stock options outstanding and exercisable at March 31, 2015:

	OPTIONS OUTSTANDING AND EXERCISABLE
Range of Exercise Prices	Number of Options Outstanding	Weighted-Average Remaining Contractual Life in Years	Weighted- Average Exercise Price	Number Exercisable	Weighted- Average Exercise Price
$ 0.14 - 0.71	7,876,900	2.17	$ 0.22	2,208,178	$ 0.20
	7,876,900	2.17	$ 0.22	2,208,178	$ 0.20

Total stock-based compensation expense in connection with options granted to employees recognized in the consolidated statement of operations for the three-month periods ended March 31, 2015 and 2014 was $108,561 and $0, respectively.

Note 12 - Related party transactions

On July 31, 2014, the Company borrowed $98,150 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  As of March 31, 2015, the principal balance owed on this loan is $98,150.

Through March 31, 2015, a shareholder loaned the Company an aggregate of $286,446, in the form of cash and expenses paid on behalf of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $231,825 and as of March 31, 2015, the principal balance owed on this loan is $54,921.  

Through March 31, 2015, the Company borrowed $30,000 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  As of March 31, 2015, the principal balance owed on this loan is $30,000.

13

Blue Line Protection Group, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 12 - Related party transactions (continued)

Through March 31, 2015, the Company borrowed $43,500 from an officer and shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $43,000 and as of March 31, 2015, the principal balance owed on this loan is $500.  

Note 13 - Subsequent Events

The Company’s management has reviewed all material events through the date of this report in accordance with ASC 855-10, and believes there are no further material subsequent events to report.

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

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about Blue Line Protection Group, Inc.’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available.  We can give no assurance that the expectations indicated by such forward-looking statements will be realized.  If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, Blue Line Protection Group’s actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.

There may be other risks and circumstances that management may be unable to predict.  When used in this Quarterly Report, words such as,  "believes,"  "expects," "intends,"  "plans,"  "anticipates,"  "estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

Business History

We were originally incorporated in Nevada on September 11, 2006, under the name The Engraving Masters, Inc.  We subsequently amended our Nevada Articles of Incorporation to change our name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. (“BLPG”)

On March 14, 2014, we acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 (“Blue Line Colorado”), with the sole purpose to be a wholly-owned subsidiary of the Company.  Blue Line Colorado conducts substantially all of our operations, to date, and has been our primary revenue-generating subsidiary.  

On April 14, 2014, we formed a wholly-owned subsidiary, BLPG, Inc., under the laws of the State of Nevada (“BLPG NV”).  In March 2015, BLPG NV, was granted licenses to provide our suite of protection, transportation and compliance services within the State of Nevada.  BLPG NV will operate under the Private Investigator license #2034A and Private Patrolman license #2034B, both issued to BLPG NV, with Ricky G. Bennett, Blue Line’s Vice President of Operations and Compliance, listed as the qualifying agent.  Our operations and compliance consultants plan to help Nevada marijuana businesses develop transparent relationships with banks, offering the industry-leading independent, third-party compliance solution to financial institutions that need to comply with federal guidelines, including Cole Memo and FinCEN requirements.

During October 2014, we acquired Blue Line Capital Corp, a Colorado corporation originally formed on March 28, 2014 (“BL Capital”).  As a result of the acquisition, BL Capital became a wholly-owned subsidiary of BLPG.  BL Capital maintains an ownership position of 2,300,000 units in Integrated Compliance Solutions, LLC, a Nevada limited liability company (“ICS”).  ICS was formed with the purpose of providing a financial compliance solution to help banks comply with federal guidelines.  

During March 2015, the Company formed a wholly-owned subsidiary, Blue Line Advisory Services, Inc. (“BLAS”), to provide a complete accounting solution for the legal marijuana industry.  BLAS will provide lawful marijuana businesses access to experienced bookkeepers and audit protection advisors.  Its financial professionals, trained in the unique reporting requirements of cannabis businesses, minimize the burden of maintaining complex financial records. During April 2015, BLAS appointed Jim Marty to its board of directors.  Mr. Marty is a preeminent cannabis industry CPA with decades of experience providing in tax preparation assistance, business valuation and financial forensics.  He serves more than 100 lawful cannabis clients across the United States and has assisted in numerous medical marijuana IRS and State of Colorado audits.  In May 2015, BLAS rounded out its management team and hired four employees to begin servicing clients.

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Overview of Operations

Blue Line Protection Group, Inc. provides armed protection, financial solutions, logistics, and compliance services for businesses engaged in the legal cannabis industry.  Blue Line provides on-site security, transportation and compliance verification services to marijuana businesses to ensure that they are operating according to local, state and federal regulations.  Blue Line helps keep the cannabis industry operating lawfully and transparently by acting as an independent, third-party risk mitigation provider to banking institutions looking to provide their services to marijuana businesses.  We do not grow, test or dispense cannabis products.  In general, we primarily target businesses involved in the growing and dispensing of cannabis for both medical and recreational uses, in jurisdictions were such is legal.

Our services cover the following categories:

Banking

The banking system in the U.S. is, in most states, federally mandated.  Possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions.  Currently, almost all payments for the sales of cannabis are made in cash, due the inability of sellers to obtain merchant processing accounts.  As a result, processing money from marijuana sales puts federally insured banks at risk of drug racketeering charges, so they've refused to open accounts for marijuana-related businesses.

Marijuana businesses that can't use banks may have too much cash they can't safely put away, leaving them vulnerable to criminals.  Jurisdictions that allow cannabis sales want a channel to receive taxes.  

In February 2014, The Obama administration gave banks a road map for conducting transactions with cannabis sellers operating within state regulations, so these companies can stash away savings, make payroll and pay taxes like a traditional place of business.  The move was designed to let financial institutions serve such businesses while ensuring that they know their customers' legitimacy and remain obligated to report possible criminal activity.  However, there remains nothing expressly protecting banks that work with state-legal, state-licensed marijuana businesses from prosecution.  We are unaware of any bank, in any state, allowing bank accounts for cannabis-related businesses for fear of prosecution and losing their FDIC status and insurance.

We have created a means for the banks to validate compliance with the Federal Mandate.  Currently only a security company could match the compliance requirements as only we can vertically integrate the source of funds through the Federally required 12 steps, summarised as from grow, to sale, (to those of approved age or license), to purchaser, to funds received, to where the funds were held, to vault, to third party validation, to tax, to profits, to access to the banking system etc.  We are uniquely positioned, through a number of partnership and cooperation agreements, to provide banking solutions to our clients.

Compliance

Laws concerning business procedures and practices are changing across the nation. It’s hard to keep up with all the changes, and business owners have to balance their day-to-day operations with remaining compliant with and responsive to regulatory agencies.  Blue Line Protection Group provides daily on-site compliance verification to ensure that local business owners are operating lawful and inspection-ready establishments.  Our security experts, trained in crime prevention through environmental design (CPTED) techniques, can provide crucial advice about enhancing the interior and exterior security of your establishment.

Blue Line Protection Group communicates regularly with local and national government representatives to ensure that we remain the top-tier security and protection group in the nation.  Retail establishments aren’t the only ones who have to remain compliant with the pertinent laws - we do, as well.

We have agreed a joint venture with one of the largest PEO HR companies in America out of Phoenix Arizona.  They will handle all payments to employees of the companies we serve.  They will also handle background checks on all employees. BL will receive a percentage of every contract.

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With the addition of our compliance module clients can be confident they will not lose their license for some small or large error by their staff that might put their cannabis license in jeopardy.  Their license being, in most instances, their most valuable asset.  We are relieving them of several burdens they are ill suited to comply with.  (Most licensees were formally acting outside the law prior to the recent legislation and have little to no compliance experience).  

Protection

Fundamental to the legal cannabis industry is the protection of product and cash throughout the distribution channel.  Growers ship product from their cultivation facilities to independent laboratories where it is tested for compliance with state-mandated parameters.  From the labs, the product is then delivered to the retail dispensaries, where it is sold to the public.  

Due to the current banking and regulatory environments, payments between each step in the distribution network are made in cash: from the customer back to the grower.  Therefore, these businesses are forced into having to transport bags of money between growers and dispensaries and their own vaults or storage facilities.

The risk of theft of cash and product is present at every stage, even when they are not in transit.  Accordingly, all cannabis businesses require security measures to prevent theft, mitigate risk to employees and maintain regulatory compliance.

We began our security and protection operations in the State of Colorado in February 2014. We offer a fully integrated approach to managing the movement of cannabis and cash from growers through dispensaries via armed and armored transport, money processing, vaulting and related credit.  Money processing services generally include counting, sorting and wrapping currency.  We are focused on encompassing all compliance needs on behalf of our clients, as mandated by the State and Federal authorities for the protection, transport and sale of cannabis.  

Training

Over 90% of our security personnel have established military or police background.  We ensure our employees are prepared to offer clients, their staff and customers a safe and secure environment.  All members of the Company's armored transportation team and security operators are required to undertake our mandatory, rigorous 40-hour introductory compliance and training curriculum.  In addition to internal training, we also offer other businesses, houses of worship and the general public a wide variety of safety, security and personal defense courses and firearms training.  

Accounting and Bookkeeping

The Company was originally established in an effort to physically safeguard cash and product for marijuana businesses.  During March 2015, the Company formed a wholly-owned subsidiary, Blue Line Advisory Services, Inc. (“BLAS”), to provide a complete accounting solution for the legal marijuana industry.  

Accounting is a critical component of every business, from simply knowing how much money a business has to analyzing financial trends.  For legal marijuana companies, tracking cash from seed to bank is essential from both operational and regulatory compliance standpoints.  Through its staff and network of independent CPA's and professionals, BLAS offers, without limitation, the following services:

·

Bank activity reconciliation 


·

Daily point-of-sale system validation 


·

Payables and receivables organization and resolution 


·

Payroll and time sheet entry, correction and validation 


·

Federal and state payroll withholding and unemployment tax deposits and reporting 


·

Monthly sales tax deposits and quarterly sales tax returns and state franchise tax deposits 


·

Reconciliation of whole-chart accounts 


·

Periodic financial reporting

·

Federal and state tax preparation and audit defense

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Management’s Discussion and Analysis

Prior to March 14, 2014, the date we acquired Blue Line Colorado, our results of operations were immaterial.  As such, comparison data and growth ratios presented in this management’s discussion between the three months periods ended March 31, 2015 and 2014 may not be indicative of future results.

Revenue

We provide banking compliance, asset logistics, armed and armored escorts, security training and license compliance verification.  In general, we primarily target businesses involved in the growing and dispensing of cannabis for both medical and recreational uses, in jurisdictions were such is legal.  We do not grow, test or dispense cannabis products.  

In the normal course of our business, the bulk of our sales are paid and rendered either immediately or on a bi-weekly basis.  These sales are recognized as revenue at the time an invoice in generated and delivered to the client.

During the three months ended March 31, 2015, we generated net revenue of $520,231 from our operations, all of which was attributable to our Blue Line Colorado subsidiary.  In the three month period ended March 31, 2014, we realized net revenue in the amount of $50,662.

Revenue has increased steadily quarter-over-quarter, which management attributes to exceptional customer service from our security and transport teams, word-of-mouth and increased brand awareness.

We are actively engaged in expanding our presence into new jurisdictions and growing our service portfolio.  Our financial compliance packages are structured to take advantage of our core competencies, while vertically integrating higher gross margin service lines.  Management expects to realize increased revenues in fiscal year 2015 to due to the following factors:

1.

Due to our recent licensure to conduct security and investigation operations in the State of Nevada, we have been drafting budgets and operational plans to establish ourselves in the Southern Nevada region.  The market has not yet opened for business, thus we are unable to predict when, if at all, we will begin to service and realize revenues in Nevada.

2.

The addition of our new accounting and bookkeeping division - Blue Line Advisory Services – will begin to contribute incrementally to revenues in the second fiscal quarter of 2015, although we are unable to estimate the extent of such contribution.

3.

We recently entered into a cooperation and cross-promotion agreement with DigiPath, Inc., which management believes will expand our industry reach.

However, there can be no assurance that we will continue to experience similar, if any, revenue growth in future periods, sustain current revenue levels or that we any of our growth and expansion efforts will come to fruition.

Costs of Sales and Gross Profit

Costs of sales consist primarily of labor and fuel costs directly attributable to the provision of our services to clients.  As we continue to grow our core business, we expect labor and fuel costs to increase, at a minimum, proportionate to any increase we experience in revenues.  Over our relatively short history, cost of labor has fluctuated primarily due to turnover, levels of overtime and our ability to retain sufficient staffing levels to meet client demand.  Our ability to service current clients, as well as grow our core business, is dependent upon our ability to manage labor levels and costs, of which there can be no guarantee.

During the period ended March 31, 2015, costs of sales totaled $368,022, compared to $5,315 in the comparable period ended March 31, 2014.

After accounting for costs of sales, we realized a gross profit of $152,209 during the quarter ended March 31, 2015.  For the period ended March 31, 2014, our gross profit was $45,347.  Our profit margins have fluctuated significantly from quarter-to-quarter, and it is difficult for management to forecast with any certainty.

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Costs and Operating Expenses

For the three month periods ended March 31, 2015 and 2014, the primary components of our operating expenses were, as follows:

Advertising.  During the periods ended March 31, 2015 and 2014, we recognized $273 and $0 in advertising expense, respectively.  Historically, our advertising efforts have focused primarily on public- and media-relations efforts.  We are a small company and expect to continue to invest in advertising and marketing to increase brand awareness.  

Depreciation.  Depreciation expense related to our furniture, equipment and armored vehicles were $10,277 and $379 during the quarters ended March 31, 2015 and 2014, respectively.  Depreciation is directly correlated to capital expenditures.  As we seek to expand our geographic reach and service portfolio, we expect capital expenditures to increase, and, accordingly, expect depreciation expense to increase.  

Executive Compensation.  Executive compensation paid to or accrued on behalf of our corporate officers and directors was $51,000 and $11,603 during the three months ended March 31, 2015 and 2014, respectively.

General and Administrative.  In the course of our operations, we incur general and administrative expenses, which are essentially the cost of doing business, and encompass, without limitation, the following: business and operating licenses; taxes; general office expenses and supplies, such as postage, supplies and printing; repairs and maintenance; bank charges; occupancy costs; and other miscellaneous expenditures not otherwise classified.  During the comparable three-month periods ended March 31, 2015 and 2014, general and administrative expenses were $162,168 and $14,678, respectively. We expect general and administrative expenses to increase in line with growth in our operations.  

Professional Fees. During the quarters ended March 31, 2015 and 2014, we incurred $36,594 and $25,278 in professional fees.  The professional fees we incurred are related to the costs of being a public reporting company, as well as legal fees paid in relation to researching expansion opportunities and protecting our corporate properties.  We also expect amounts paid for legal representation and consulting expenses to increase substantially as we expand our operations into additional jurisdictions.

Salaries and Wages.  Salaries and wages expense is attributable to administrative, management and other salaried personnel not directly involved in the servicing of our clientele.  Salaries and wages paid during the three-month periods ended March 31, 2015 and 2014 was $132,317 and $54,679, respectively.  Our ability to grow is tied directly to our ability to attract, hire and retain quality employees.  We expect our staffing levels to fluctuate substantially from month-to-month; therefore, it is difficult to forecast changes in salaries and wages from period to period.

Stock-based Compensation.  We issue incentive stock-based compensation to employees and contractors in the form of stock options and grants. However, in the quarter ended March 31, 2015, we cancelled 4,680,000, employee stock options as a result of forfeiture due to termination or resignations of employees.  Resultantly, we recorded stock-based compensation of 108,561 in the period ended March 31, 2015.  During the comparable three-months ended March 31, 2014, we did not incur any stock-based compensation expense.  

Other Income and Expenses

In the quarter ended March 31, 2015, we incurred interest expense in the amount of $24,535, related to interest charged on our Denver, Colorado building, vehicle loans and notes payable.  We did not recognize any interest expense in the comparable quarter ended March 31, 2014.

During the three months ended March 31, 2015, we realized interest income of $2,056, attributable to our lending short-term, fully-collateralized loans to existing, recurring clients.  As of March 31, 2015, the remaining aggregate principal balance of notes receivable was $38,470.  During the three months ended March 31, 2014, we did not realize any interest income.

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Net Loss

Our net loss for three-months ended March 31, 2015 was $371,460, compared to a net loss of $61,270 in the comparable three-month period ended March 31, 2014. We expect to continue to incur net losses for the foreseeable future and cannot assure you when we will be able to mitigate our losses or begin to achieve profitability. Our management believes that expansion of our operations are likely to continue to adversely affect our operating results and will lead to net losses for at least the next 12 months of operations.

Liquidity and Capital Resources

The following table provides summary financial information as of and for the periods ended March 31, 2015 and 2014:

	Three months ended
	March 31, 2015		March 31, 2014
Net cash used by operations	$	(102,898)	$	(82,286)
Net cash provided by (used in) investing activities		7,981		(64,552)
Net cash provided by (used in) financing activities		(4,900)		157,000
Net increase (decrease) in cash		(99,817)		10,162
Cash at the beginning of the period		211,922		2,844
Cash as the end of the period	$	112,105	$	13,006

Operating Activities.  Net cash used in operating activities was $102,898 during the three months ended March 31, 2015, the bulk of which was primarily attributable to expenditures related to our entry into the market for protection, compliance and financial services catering to the lawful cannabis industry.  In the comparable period ended March 31, 2014, net cash used in operating activities was $82,286.  Our management expects to continue to experience net cash outflows related to operating activities for at least the next fiscal quarter, related primarily to continuing operations, the introduction of new service offerings and expansion into new geographic markets.  

Investing Activities.  During the period ended March 31, 2015, cash provided by investing activities was $7,981, related solely to the collection of principal paid on notes receivable.  In the period ended March 31, 2014, we purchased $64,552 of furniture, equipment and vehicles for use in our operations.  The expansion of our Colorado operations, as well as into additional geographic territories, is expected to require additional investment in equipment and vehicles, although the cost of such will vary materially and cannot be readily estimated by management.

Financing Activities.  To date, we have financed our operations through the issuance of stock and debt securities.  Net cash used in financing activities for the quarter ended March 31, 2015 was $4,900, related primarily to the repayment of notes payable to related parties.  In the comparable period ended March 31, 2014, financing activities provided net cash of $157,000.  

Changes in Cash.  During the three months ended March 31, 2015, we experienced a net decrease in cash on hand of $99,817, leaving a balance of $112,105 of cash on hand.  In the year ago period ended March 31, 2014, we had a net increase in cash of $10,162, creating a balance of $13,006 of cash on hand.

Factors Affecting Future Growth

We are a small company with very little historical data upon which to evaluate our future prospects.  However, we are actively engaged in the expansion of our current revenue streams, as well as exploring entry into new and developing markets.  We are experiencing significant changes to our corporate and operational structures and have been expanding our base of employees.  We continue to 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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Since 2014, we have worked with banks and financial industry professionals to develop a proprietary means for the banking industry to validate compliance with Federal Mandate.  Our management believes that only a security company with the relationships and experience like Blue Line is able to ensure that clients we validate will remain fully compliant with all of the various Cole Memo, FinCEN, banking, Patriot Act and BSA guidelines.  We are able to vertically integrate the source of funds through the Federally required 12 steps, summarised as from grow, to sale, (to those of approved age or license), to purchaser, to funds received, to where the funds were held, to vault, to third party validation, to tax, to profits, to access to the banking system etc.

Beginning in 2015, we started to provide on-site compliance services to ensure that legal marijuana businesses are operating according to local, state and federal guidelines.  Blue Line investigative personnel, using our proprietary systems, produce compliance assessment reports to banks, based on on-site audits and investigations of the businesses, their operation procedures, and customer and product sales tracking methods. Our management expects these compliance services will provide us with a new revenue stream and, in combination with our traditional security and transport services, offer significant value to our clients and partners.

In March 2015, we formed Blue Line Advisory Services, a wholly-owned subsidiary, with the goal of providing accounting and bookkeeping services to the legal marijuana industry via our network of employees and independent professionals.  During the second quarter of 2015, we plan to establish BLAS offices in Colorado and Nevada.  Our goal is for BLAS to be accretive during the year ended December 31, 2015, although there can be no guarantee of such.

There can be no assurance that our continuing efforts will lead to profitability.  

We expect to require significant capital to continue to expand our operations and to complete the improvements to our office building, which will be a training and high-security vault facility, and the purchase of capital equipment.  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.  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.

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 rent an approximately 2,000 square foot office at a rate of approximately $1,442 per month.  This lease is currently on a month-to-month basis and is cancellable at any time with prior written notice by either party.  

We currently do not own any significant plant or equipment that we would seek to sell in the near future.  

We do not have any firm commitments from any person to provide us with any additional capital.

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 2 to our consolidated financial statements included in our Annual Report on Form 10- K for the year ended December 31, 2014.  Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates and such differences may be material.

Management considers the following policies critical because they are both important to the portrayal of our financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters.

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Principles of consolidation.  For the periods ended March 31, 2015 and 2014, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”).  All significant intercompany balances and transactions have been eliminated.   BLPG and its subsidiaries are collectively referred herein to as the “Company.”

Accounts receivable.  Accounts receivable are stated at the amount we expect to collect from outstanding balances and do not bear interest.  We provide for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary.  The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future.  On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days.  Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.

Notes receivable.  Notes receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans.  Interest income on notes receivable is recognized using the interest method.  Interest income on impaired loans is recognized as cash is collected or on a cost-recovery basis.

Revenue recognition.  We recognize 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 its 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 we recognize 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.

Allowance for uncollectible accounts.  The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. The allowance for doubtful customer and vendor receivables was $18,864 and $0 at March 31, 2015 and 2014, respectively.

Cost of Sales.  The Company’s cost of revenue primarily consists of items purchased by the Company specifically purposed for the benefit of the Company’s client.

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.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risks

This item is not required for smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms.  Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.  We evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. As a result of this evaluation, management concluded that our disclosure controls and procedures were ineffective for the period ended March 31, 2015, due to the following:

Lack of Functioning Audit Committee:  We do not have an Audit Committee; our board of directors currently acts as our Audit Committee.  We do not have an independent director and out current director is not considered a “Financial Expert,” within the meaning of Section 407 of the Sarbanes-Oxley Act.

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

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item

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

On March 16, 2015, we sold 400,000 shares of our common stock for gross cash proceeds of $50,000.  This sale of stock did not involve any public offering, general advertising or solicitation.  At the time of the issuance, the purchaser had fair access to and was in possession of all available material information about our company.  Additionally, the purchaser represented its intent to acquire securities for its own account and not with a view to further distribute the shares.  The shares bear a restrictive transfer legend.  On the basis of these facts, we claim that this issuance of stock qualifies for the exemption from registration contained in Rule 506, promulgated under Regulation D of the Securities Act of 1933, for sales of securities by an issuer to accredited investors, not involving a public offering.  

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number	Name and/or Identification of Exhibit
31	Rule 13a-14(a)/15d-14(a) Certifications
32	Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)
99	2014-2015 Stock Incentive Plan
101	Interactive Data File
	(INS) XBRL Instance Document
	(SCH) XBRL Taxonomy Extension Schema Document
	(CAL) XBRL Taxonomy Extension Calculation Linkbase Document
	(DEF) XBRL Taxonomy Extension Definition Linkbase Document
	(LAB) XBRL Taxonomy Extension Label Linkbase Document
	(PRE) XBRL Taxonomy Extension Presenation Linkbase Document

24

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.

BLUE LINE PROTECTION GROUP, INC.
(Registrant)
Signature	Title	Date
/s/ Sean Campbell	Chief Executive Officer	May 15, 2015
Sean Campbell
/s/ Patrick Deparini	Chief Financial Officer	May 15, 2015
Patrick Deparini

25

EX-31.1

CERTIFICATIONS

I, Sean Campbell, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Blue Line Protection Group, Inc.;

2.

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

3.

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

4.

The registrant's other certifying officer(s) 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; and

5.

The registrant's other certifying officer(s) 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:  May 15, 2015

/s/ Sean Campbell

     Sean Campbell

     Chief Executive Officer

EX-31.2

CERTIFICATIONS

I, Patrick Deparini, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Blue Line Protection Group, Inc.;

2.

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

EX-32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Blue Line Protection Group, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Sean Campbell, acting in the capacity as the Chief Executive Officer of the Company, and I, Patrick Deparini, acting in the capacity as the Chief Financial Officer of the Company, certify to the best of our knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

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

(2)

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

/s/ Sean Campbell

     Sean Campbell

     Chief Executive Officer

     May 15, 2015

/s/ Patrick Deparini

     Patrick Deparini

     Chief Financial Officer

     May 15, 2015

XML

Going Concern (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Net loss	$ (371,461)	$ (61,270)
Net sales	$ 520,231

XML

Notes Payable - Related Party, Disclosure (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Amount of loan repaid, related party	$ 172,000
Entity controlled by a shareholder
Proceeds from related party borrowings		98,150
Accrued interest payable	1,436
Interest expense on borrowings	1,436
Principal balance owed	98,150
A shareholder
Proceeds from related party borrowings	286,446
Accrued interest payable	799
Interest expense on borrowings	799
Principal balance owed	54,921
Amount of loan repaid, related party	231,825
Entity controlled by an officer and shareholder2
Proceeds from related party borrowings	30,000
Accrued interest payable	232
Interest expense on borrowings	232
Principal balance owed	30,000
Officer and shareholder2
Proceeds from related party borrowings	43,500
Principal balance owed	500
Amount of loan repaid, related party	$ 43,000

XML

Fixed Assets Disclosure (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Details
Depreciation expense for the period	$ 10,277	$ 379
Commercial building purchased	750,000
Capital improvements to building	$ 348,553		$ 348,553

XML

Accounting Policies and Procedures: Contingencies Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Contingencies Policy

Contingencies

The Company is not currently a party to any pending or threatened legal proceedings.  The company has one potential contingent liability.  A shareholder and employee asserts he has loaned the Company cash and paid for various expenses on behalf of the Company in the aggregate amount of $447,896.  The Company is disputing its need to pay this claim on the grounds that a number of items in the claim were unauthorized and minimal, if any, supporting documentation was provided to substantiate the validity of the claim.  While the Company can reasonably estimate the liability, it is improbable that the Company will pay, due the Claimant’s (a) failure mutually agree upon the alleged amounts owed and (b) failure to validate the claims. 

XML

Accounting Policies and Procedures: Allowance For Uncollectible Accounts Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Allowance For Uncollectible Accounts Policy

Allowance for uncollectible accounts

The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. The allowance for doubtful customer and vendor receivables was $18,864 and $0 at March 31, 2015 and 2014, respectively.

XML

Items (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Borrowing of cash February 6, 2015
Stock subscribed for but not yet issued	100,000
Sale of stock, March 16, 2015
Common stock issued for cash	400,000
Proceeds from issuance of common stock for cash	50,000

XML

Accounting Policies and Procedures: Allowance For Uncollectible Accounts Policy (Details) (USD $)	Mar. 31, 2015
Details
Allowance for doubtful customer and vendor receivables	$ 18,864

XML

Warrants and Options Disclosure: Schedule of Stock Options, Activity (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Stock Options, Activity

	Number Of Shares	Weighted-Average Exercise Price
Outstanding at December 31, 2013	0	$ 0.00
Granted	4,806,900	$ 0.14
Exercised	0	$ 0.00
Vested	133,525	$ 0.14
Cancelled	0	$ 0.00
Outstanding at March 31, 2014	4,806,900	$ 0.14
Granted	6,000,000	$ 0.39
Exercised	0	$ 0.00
Vested	2,221,917	$ 0.25
Cancelled	0	$ 0.00
Outstanding at December 31, 2014	10,836,900	$ 0.29
Granted	1,750,000	$ 0.22
Exercised	0	$ 0.00
Vested	614,836	$ 0.20
Cancelled	(4,680,000)	$ 0.39
Outstanding at March 31, 2015	7,876,900	$ 0.22
Options exercisable at March 31, 2014	133,525	$ 0.00
Options exercisable at March 31, 2015	2,208,178	$ 0.20

XML

Warrants and Options Disclosure: Schedule of Stock Options, Activity (Details) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Details
Stock options granted during the period	1,750,000	4,806,900	6,000,000
Options granted, weighted average exercise price	$ 0.22	$ 0.14	$ 0.39
Stock options vested during the period	614,836	133,525	2,221,917
Options vested, weighted average exercise price	$ 0.20	$ 0.14	$ 0.25
Stock options outstanding	7,876,900	4,806,900	10,836,900
Options outstanding, weighted average exercise price	$ 0.22		$ 0.29
Stock options cancelled during the period	(4,680,000)
Options cancelled, weighted average exercise price	$ 0.39
Stock options exercisable	2,208,178	133,525
Options exercisable, weighted average exercise price	$ 0.20

XML

Debt and interest expense (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Non-affiliated third-party Loan 1
Loan received	$ 2,000
Accrued interest payable	29
Interest expense on borrowings	29
Principal balance owed	2,000
Non-affiliated third-party Loan 3
Loan received	50,000
Interest expense on borrowings	726
Principal balance owed	$ 50,000

XML

Accounting Policies and Procedures

3 Months Ended

Mar. 31, 2015

Notes

Accounting Policies and Procedures

Note 4 - Accounting policies and procedures

Principles of consolidation

For the years ended December 31, 2014 and 2013, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”).  All significant intercompany balances and transactions have been eliminated.   BLPG and its subsidiaries are collectively referred herein to as the “Company.”

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.

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.

Accounts receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest.  The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future.  On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days.  Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.

Notes receivable

Notes receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans.  Interest income on notes receivable is recognized using the interest method.  Interest income on impaired loans is recognized as cash is collected or on a cost-recovery basis.

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 its 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.

Allowance for uncollectible accounts

The Company estimates losses on receivables based on known troubled accounts, if any, and historical experience of losses incurred. The allowance for doubtful customer and vendor receivables was $18,864 and $0 at March 31, 2015 and 2014, respectively.

Cost of Sales

The Company’s cost of revenue primarily consists of items purchased by the Company specifically purposed for the benefit of the Company’s client.

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..

Advertising and marketing costs

The Company expenses all costs of advertising as incurred.  During the three months ended March 31, 2015 and 2014, advertising and marketing costs were $273 and $0, respectively.

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.

Fair Value of Financial Instruments

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. The Company does not hold any investments that are available-for-sale.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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).

Contingencies

The Company is not currently a party to any pending or threatened legal proceedings.  The company has one potential contingent liability.  A shareholder and employee asserts he has loaned the Company cash and paid for various expenses on behalf of the Company in the aggregate amount of $447,896.  The Company is disputing its need to pay this claim on the grounds that a number of items in the claim were unauthorized and minimal, if any, supporting documentation was provided to substantiate the validity of the claim.  While the Company can reasonably estimate the liability, it is improbable that the Company will pay, due the Claimant’s (a) failure mutually agree upon the alleged amounts owed and (b) failure to validate the claims. 

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through November 14, 2014, and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows.

XML

Accounting Policies and Procedures: Advertising Costs Policy (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Details
Advertising costs	$ 273

XML

Accounting Policies and Procedures: Loss Per Share Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Loss Per Share Policy

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.

XML

Accounting Policies and Procedures: Advertising Costs Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Advertising Costs Policy

Advertising and marketing costs

The Company expenses all costs of advertising as incurred.  During the three months ended March 31, 2015 and 2014, advertising and marketing costs were $273 and $0, respectively.

XML

Notes Receivable Disclosure (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Interest income	$ 2,056
Notes receivable	38,470	46,451
Accrued interest receivable	596
Loan 2
Loan provided by the Company, issuance of note		$ 50,000

XML

Accounting Policies and Procedures: Fair Value of Financial Instruments (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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. The Company does not hold any investments that are available-for-sale.

As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

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).

XML

Accounting Policies and Procedures: Income Taxes Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Income Taxes Policy

Income Taxes

The Company follows FASB Codification Topic 740-10-25 (ASC 740-10-25) for recording the provision for income taxes.  Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.  Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate.  Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

XML

Going Concern

3 Months Ended

Mar. 31, 2015

Notes

Going Concern

Note 3 - Going concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As shown in the accompanying financial statements, the Company incurred a net loss of $(371,460) during the three months ended March 31, 2015, and had net sales of $520,231 during the such same period. 

In order to continue as a going concern, the Company will need, among other things, additional capital resources.  The Company is significantly dependent upon its ability, and will continue to attempt, to secure additional equity and/or debt financing.  The Company is currently conducting a private placement of its 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 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 financial statements do not include any adjustments that might arise from this uncertainty.

XML

Accounting Policies and Procedures: Dividends Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Dividends Policy

Dividends

The Company has not yet adopted any policy regarding payment of dividends.  No dividends have been paid or declared since inception

XML

Accounting Policies and Procedures: Property and Equipment Policy: Property and Equipment, Estimated Usefule Lives (Details)	3 Months Ended
	Mar. 31, 2015
Automobiles
Property, Plant and Equipment, Useful Life	5 years
Furniture and Fixtures
Property, Plant and Equipment, Useful Life	7 years
Building and Building Improvements
Property, Plant and Equipment, Useful Life	15 years

XML

Related Party Transactions (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Amount of loan repaid, related party	$ 172,000
Entity controlled by a shareholder
Proceeds from related party borrowings		98,150
Principal balance owed	98,150
A shareholder
Proceeds from related party borrowings	286,446
Principal balance owed	54,921
Amount of loan repaid, related party	231,825
Entity controlled by an officer and shareholder2
Proceeds from related party borrowings	30,000
Principal balance owed	30,000
Officer and shareholder2
Proceeds from related party borrowings	43,500
Principal balance owed	500
Amount of loan repaid, related party	$ 43,000

XML

Balance Sheets (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalent	$ 112,105	$ 211,922
Accounts receivable	22,434	62,101
Accrued receivables	92,873	54,790
Notes receivable	38,470	46,451
Prepaid expenses and deposits	2,500	2,500
Total current assets	268,382	377,764
Fixed assets, net:
Fixed assets	179,161	189,438
Property, plant and equipment	750,000	750,000
Building improvements	348,553	348,553
Total fixed assets	1,277,714	1,287,991
Total assets	1,546,096	1,665,755
Current liabilities:
Accounts payable	162,286	143,019
Accrued liabilities	270,049	152,844
Note payable	50,470	2,000
Note payable - related parties	183,271	288,271
Current portion of long-term debt	3,735	3,735
Total current liabilities	669,811	589,869
Non-current liabilities:
Long-term debt	690,793	691,780
Total non-current liabilities	690,793	691,780
Total liabilities	1,360,604	1,281,649
Stockholders' equity (deficit)
Preferred stock value
Common stock value	123,525	122,845
Common stock payable	569	749
Additional paid-in capital	2,961,281	2,788,934
Accumulated deficit	(2,899,883)	(2,528,422)
Total stockholders' equity (deficit)	185,492	384,106
Total liabilities and stockholders' equity (deficit)	$ 1,546,096	$ 1,665,755

XML

Fixed Assets Disclosure: Schedule of fixed assets (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment, Gross	$ 218,130	$ 218,130
(Less) accumulated depreciation	(38,969)	(28,692)
Fixed assets	179,161	189,438
Automobiles
Property, Plant and Equipment, Gross	173,926	173,926
Furniture and Fixtures
Property, Plant and Equipment, Gross	$ 44,204	$ 44,204

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2015

Notes

Basis of Presentation

Note 1 - Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein.  It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2014 and notes thereto included in the Company's annual report on Form 10-K.  The Company follows the same accounting policies in the preparation of interim reports.

Results of operations for the interim periods are not indicative of annual results.

XML

Accounting Policies and Procedures: Property and Equipment Policy: Property and Equipment, Estimated Usefule Lives (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Property and Equipment, Estimated Usefule Lives

Automotive Vehicles	5 years
Furniture and Equipment	7 years
Buildings and Improvements	15 years

XML

Accounting Policies and Procedures: Property and Equipment Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Property and Equipment Policy

Property and equipment

Property and equipment is recorded at cost and capitalized from the initial date of service.  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:

Automotive Vehicles	5 years
Furniture and Equipment	7 years
Buildings and Improvements	15 years

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 March 31, 2015 and 2014.  Depreciation expense for the three months ended March 31, 2015 and 2014 totaled $10,277 and $379, respectively.

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Fixed Assets Disclosure: Schedule of fixed assets (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of fixed assets

		March 31, 2015		December 31, 2014
Automotive vehicles	$	173,926	$	173,926
Furniture and equipment		44,204		44,204
Fixed assets, total		218,130		218,130
Less: accumulated depreciation		(38,969)		(28,692)
Fixed assets, net	$	179,161	$	189,438

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Accounting Policies and Procedures: Revenue Recognition, Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Revenue Recognition, Policy

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 its 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.

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History and organization of the company

3 Months Ended

Mar. 31, 2015

Notes

History and organization of the company

Note 2 - History and business of the company

The Company was originally organized September 11, 2006 (Date of Inception) under the laws of the State of Nevada, as The Engraving Masters, Inc.  The Company was authorized to issue up to 100,000,000 shares of its common stock and 100,000,000 shares of preferred stock, each with a par value of $0.001 per share.

On March 14, 2014, the Company acquired Blue Line Protection Group, Inc., a Colorado corporation formed in February 2014 (“Blue Line Colorado”), as a wholly-owned subsidiary of the Company.  Blue Line Colorado provides protection, compliance and financial services to the lawful cannabis industry.

On May 2, 2014, the Company changed its name from The Engraving Masters, Inc. to Blue Line Protection Group, Inc. (“BLPG”)

On May 6, 2014, the Company effected a forward stock split and a pro-rata increase in its authorized common stock on a basis of 14-to-1, whereby each shareholder received 14 newly issued shares of common stock for each 1 share held.  Additionally, the authorized number capital of the Company concurrently increased to 1,400,000,000 shares of $0.001 par value common stock.  All references to share and per share amounts in the condensed consolidated financial statements and accompanying notes thereto have been retroactively restated to reflect the forward stock split.

Blue Line Protection Group, Inc. provides armed protection, financial solutions, logistics, and compliance services for businesses engaged in the legal cannabis industry.  The Company offers asset logistic services, such as armored transportation service; security services, including shipment protection, money escorts, security monitoring, asset vaulting, VIP and dignitary protection, and others; financial services, such as handling transportation and storage of currency; training; and compliance services.

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Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Balance Sheet
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	100,000,000	100,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	1,400,000,000	1,400,000,000
Common stock, shares issued	123,525,282	122,845,282
Common stock, shares outstanding	123,525,282	122,845,282
Common stock shares owed but not issued	568,750	748,750

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Subsequent Events

3 Months Ended

Mar. 31, 2015

Notes

Subsequent Events

Note 13 - Subsequent Events

The Company’s management has reviewed all material events through the date of this report in accordance with ASC 855-10, and believes there are no further material subsequent events to report.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015
Document and Entity Information
Entity Registrant Name	Blue Line Protection Group, Inc.
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Amendment Flag	false
Entity Central Index Key	0001416697
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding	123,525,282
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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Accounting Policies and Procedures: Principles of Consolidation (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Principles of Consolidation

Principles of consolidation

For the years ended December 31, 2014 and 2013, the consolidated financial statements include the accounts of Blue Line Protection Group, Inc. (formerly The Engraving Masters, Inc.), Blue Line Advisory Services, Inc. (a Nevada corporation; “BLAS”), Blue Line Capital, Inc. (a Colorado corporation; “Blue Line Capital”), Blue Line Protection Group (California), Inc. (a California corporation; “Blue Line California”), Blue Line Colorado, Blue Line Protection Group Illinois, Inc. (an Illinois corporation; “Blue Line Illinois”), BLPG, Inc. (a Nevada corporation; “Blue Line Nevada”), Blue Line Protection Group (Washington), Inc. (a Washington corporation; “Blue Line Washington”).  All significant intercompany balances and transactions have been eliminated.   BLPG and its subsidiaries are collectively referred herein to as the “Company.”

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Statements of Operations (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement
Revenue	$ 520,231	$ 50,662
Cost of revenue	(368,222)	(5,315)
Gross profit	152,209	45,347
Expenses:
Advertising	273
Depreciation	10,277	379
Executive compensation	51,000	11,603
General and administrative expenses	162,168	14,678
Professional fees	36,594	25,278
Salaries and wages	132,317	54,679
Stock-based compensation expense	108,561
Total expenses	501,190	106,617
Operating income (loss)	(348,981)	(61,270)
Other expenses:
Interest expense	(24,535)
Interest income	2,056
Total other expenses	(22,479)
Loss before provision for income taxes	(371,460)	(61,270)
Provision for income taxes
Net loss	$ (371,461)	$ (61,270)
Net loss per share - basic and diluted	$ 0.00	$ 0.00
Weighted average number of common shares outstanding - basic	123,134,171	107,563,952
Weighted average number of common shares outstanding - diluted	130,519,515	109,219,662

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Debt and interest expense

3 Months Ended

Mar. 31, 2015

Notes

Debt and interest expense

Note 7 - Debt and interest expense

Through March 31, 2015, a non-affiliated third-party loaned the Company an aggregate of $2,000 in cash.  The note bears no interest and is due upon demand.  Beginning January 1, 2015, the Company began accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $29 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $29 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $2,000.

On February 6, 2015, the Company borrowed $50,000 in cash from one non-affiliated person.  The loan is due and payable on April 6, 2015 and bears interest at a rate of 10% per annum.  During the three month periods ended March 31, 2015 and 2014, interest expense was $726 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $50,000.  In connection with the note, the Company is obligated to issue 100,000 shares of its common stock to the holder, for which a discount of $14,286 is attributed to the note, which is being amortized of the life of the note and recorded as interest expense.  As of March 31, 2015 and 2014, $12,755 of the discount has been amortized and recorded as interest expense, leaving a balance of $1,531 in discounts related to this note.  See Note 10 - Stockholders’ Equity for additional information.

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Fixed Assets Disclosure

3 Months Ended

Mar. 31, 2015

Notes

Fixed Assets Disclosure

Note 6 - Fixed assets

Fixed assets consisted of the following at:

		March 31, 2015		December 31, 2014
Automotive vehicles	$	173,926	$	173,926
Furniture and equipment		44,204		44,204
Fixed assets, total		218,130		218,130
Less: accumulated depreciation		(38,969)		(28,692)
Fixed assets, net	$	179,161	$	189,438

Depreciation expenses for the three months ended March 31, 2015 and 2014 were $10,277 and $379, respectively.

On July 15, 2014, the Company purchased a commercial building for a total purchase price of $750,000, for which the Company paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a rate of 5% per annum on the unpaid principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in the amount of $2,813 beginning August 31, 2014.  Through March 31, 2015, approximately $348,553 in capital improvements have been made to the property.  As of March 31, 2015, the Company has not yet placed the property into service and, accordingly, no depreciation expense has been recorded.

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Accounting Policies and Procedures: Long-lived Assets, Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Long-lived Assets, Policy

Long-Lived Assets

All property and equipment and other long-lived assets are reviewed when events or changes in circumstances indicate that the assets’ carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than their carrying amounts. No material impairments were recorded as of March 31, 2015 and 2014 as a result of the tests performed.

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Accounting Policies and Procedures: Use of Estimates (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Use of Estimates

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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Warrants and Options Disclosure

3 Months Ended

Mar. 31, 2015

Notes

Warrants and Options Disclosure

Note 11 - Warrants and options

All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-Scholes option valuation model.  The Company has not paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero in the Black-Scholes-Merton option valuation model.  Volatility is an estimate based on the calculated historical volatility of similar entities in industry, in size and in financial leverage, whose share prices are publicly available. The expected life of awards granted represents the period of time that they are expected to be outstanding. The Company has no historical experience with which to establish a basis for determining an expected life of these awards. Therefore, the Company only gave consideration to the contractual terms and did not consider the vesting schedules, exercise patterns and pre-vesting and post-vesting forfeitures significant to the expected life of the option award.  The Company bases the risk-free interest rate used in the Black-Scholes-Merton option valuation model on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term equal to the expected life of the award.

The following is a summary of the Company’s stock option activity:

	Number Of Shares	Weighted-Average Exercise Price
Outstanding at December 31, 2013	0	$ 0.00
Granted	4,806,900	$ 0.14
Exercised	0	$ 0.00
Vested	133,525	$ 0.14
Cancelled	0	$ 0.00
Outstanding at March 31, 2014	4,806,900	$ 0.14
Granted	6,000,000	$ 0.39
Exercised	0	$ 0.00
Vested	2,221,917	$ 0.25
Cancelled	0	$ 0.00
Outstanding at December 31, 2014	10,836,900	$ 0.29
Granted	1,750,000	$ 0.22
Exercised	0	$ 0.00
Vested	614,836	$ 0.20
Cancelled	(4,680,000)	$ 0.39
Outstanding at March 31, 2015	7,876,900	$ 0.22
Options exercisable at March 31, 2014	133,525	$ 0.00
Options exercisable at March 31, 2015	2,208,178	$ 0.20

The following tables summarize information about stock options outstanding and exercisable at March 31, 2015:

	OPTIONS OUTSTANDING AND EXERCISABLE
Range of Exercise Prices	Number of Options Outstanding	Weighted-Average Remaining Contractual Life in Years	Weighted- Average Exercise Price	Number Exercisable	Weighted- Average Exercise Price
$ 0.14 - 0.71	7,876,900	2.17	$ 0.22	2,208,178	$ 0.20
	7,876,900	2.17	$ 0.22	2,208,178	$ 0.20

Total stock-based compensation expense in connection with options granted to employees recognized in the consolidated statement of operations for the three-month periods ended March 31, 2015 and 2014 was $108,561 and $0, respectively.

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Notes Payable - Related Party, Disclosure

3 Months Ended

Mar. 31, 2015

Notes

Notes Payable - Related Party, Disclosure

Note 8 - Notes payable - Related Party

On July 31, 2014, the Company borrowed $98,150 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company is accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $1,436 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $1,436 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $98,150.

Through March 31, 2015, a shareholder loaned the Company an aggregate of $286,446, in the form of cash and expenses paid on behalf of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $231,825 and as of March 31, 2015, the principal balance owed on this loan is $54,921.   The Company is accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $799 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $799 and $0, respectively.

Through March 31, 2015, the Company borrowed $30,000 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company is accruing implied interest on the unpaid principal balance at a rate of 6% per annum.  As of March 31, 2015 and 2014, accrued interest payable was $232 and $0, respectively.  During the three month periods ended March 31, 2015 and 2014, interest expense was $232 and $0, respectively.  As of March 31, 2015, the principal balance owed on this loan is $30,000.

Through March 31, 2015, the Company borrowed $43,500 from an officer and shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $43,000 and as of March 31, 2015, the principal balance owed on this loan is $500. 

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Long Term Notes Payable Disclosure

3 Months Ended

Mar. 31, 2015

Notes

Long Term Notes Payable Disclosure

Note 9 - Long Term Notes Payable

On July 15, 2014, the Company purchased a commercial building for a total purchase price of $750,000, for which the Company paid a down payment of $75,000 and financed the remaining $675,000 in the form of a promissory note.  The note bears interest at a rate of 5% per annum on the unpaid principal balance and is due in full on July 31, 2016.  Interest is paid monthly, in arrears, in the amount of $2,813 beginning August 31, 2014.  As of March 31, 2015, the principal balance is $675,000.  During the three months ended March 31, 2015 and 2014 and a total of $8,438 and $0 in interest payments have been made.

On November 21, 2014, the Company purchased a vehicle for a purchase price of $20,827, net of discounts.  The Company financed the entire amount of $20,827 at an interest rate of 2.42% for five years, with a maturity date of December 5, 2019.  As of March 31, 2015, the total principal balance of the note is $19,528, of which $15,793 is considered a long-term liability and the current portion of $3,735 is considered a current liability.

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Related Party Transactions

3 Months Ended

Mar. 31, 2015

Notes

Related Party Transactions

Note 12 - Related party transactions

On July 31, 2014, the Company borrowed $98,150 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  As of March 31, 2015, the principal balance owed on this loan is $98,150.

Through March 31, 2015, a shareholder loaned the Company an aggregate of $286,446, in the form of cash and expenses paid on behalf of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $231,825 and as of March 31, 2015, the principal balance owed on this loan is $54,921. 

Through March 31, 2015, the Company borrowed $30,000 from an entity materially controlled by a shareholder of the Company.  The loan is due and payable on demand and bears no interest.  As of March 31, 2015, the principal balance owed on this loan is $30,000.

Through March 31, 2015, the Company borrowed $43,500 from an officer and shareholder of the Company.  The loan is due and payable on demand and bears no interest.  The Company has repaid $43,000 and as of March 31, 2015, the principal balance owed on this loan is $500. 

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Accounting Policies and Procedures: Recent Pronouncements (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Recent Pronouncements

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through November 14, 2014, and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows.

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Warrants and Options Disclosure (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Details
Stock-based compensation expense	$ 108,561

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Accounting Policies and Procedures: Receivables Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Receivables Policy

Accounts receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest.  The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable; however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future.  On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days.  Account balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.

Notes receivable

Notes receivable are measured at historical cost and reported at their outstanding principal balances net of any unearned income, charge-offs, unamortized deferred fees and costs on originated loans.  Interest income on notes receivable is recognized using the interest method.  Interest income on impaired loans is recognized as cash is collected or on a cost-recovery basis.

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Accounting Policies and Procedures: Cost of Sales Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Cost of Sales Policy

Cost of Sales

The Company’s cost of revenue primarily consists of items purchased by the Company specifically purposed for the benefit of the Company’s client.

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Long Term Notes Payable Disclosure (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Commercial building purchased	$ 750,000
Purchase of assets financed	690,793	691,780
Interest payments	8,438
Vehicle purchased	20,827
Purchase of vehicle, amount due current	3,735	3,735
Commercial building
Purchase of assets financed	675,000
Vehicle
Purchase of assets financed	15,793
Purchase of vehicle, amount due current	$ 3,735

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Accounting Policies and Procedures: Property and Equipment Policy (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Details
Depreciation expense for the period	$ 10,277	$ 379

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Statements of Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating activities
Net loss	$ (371,461)	$ (61,270)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation	10,277	379
Stock-based compensation	108,561
Amortization of discount on note payable	12,655
Changes in operating assets and liabilities:
(Increase) in accounts receivable	(1,584)	(24,703)
Increase in accounts payable and accrued liabilities	136,472	3,308
Increase in long-term liabilities	(987)
Net cash used by operating activities	(102,898)	(82,286)
Investing activities
Receipt of payments from notes receivable	7,981
Purchase of fixed assets		64,552
Net cash used by investing activities	7,981	(64,552)
Financing activities
Donated capital		7,000
Proceeds from notes payable	50,000	150,000
Repayment of notes payable - related parties	172,000
Proceeds from notes payable - related parties	67,000
Common stock payables	100
Issuance of common stock	50,000
Net cash provided by financing activities	(4,900)	157,000
Net increase (decrease) in cash	(99,817)	10,162
Cash - beginning of the period	211,922	2,844
Cash - ending of the period	112,105	13,006
Supplemental disclosures
Interest paid
Income taxes paid
Non-cash transactions
Shares issued for fixed assets		30,000
Number of shares issued for fixed assets		323,078
Stock-based compensation	108,561
Number of options issued for stock-based compensation	820,000
Number of stock options cancelled	$ (4,680,000)

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Notes Receivable Disclosure

3 Months Ended

Mar. 31, 2015

Notes

Notes Receivable Disclosure

Note 5 - Notes receivable

On May 15, 2014, the Company loaned $50,000 to a non-affiliated entity on a revolving basis at a rate of 18% per annum and due within one year from the date of issuance.  During the three months ended March 31, 2015 and 2014, interest income earned was $2,056 and $0, respectively.  As of March 31, 2015, the principal balance of the loan is $38,470 and accrued interest thereupon was $596.

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Accounting Policies and Procedures: Stock-based Compensation Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Stock-based Compensation Policy

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..

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Warrants and Options Disclosure: Schedule of Options Outstanding and Exercisable (Tables)

3 Months Ended

Mar. 31, 2015

Tables/Schedules

Schedule of Options Outstanding and Exercisable

	OPTIONS OUTSTANDING AND EXERCISABLE
Range of Exercise Prices	Number of Options Outstanding	Weighted-Average Remaining Contractual Life in Years	Weighted- Average Exercise Price	Number Exercisable	Weighted- Average Exercise Price
$ 0.14 - 0.71	7,876,900	2.17	$ 0.22	2,208,178	$ 0.20
	7,876,900	2.17	$ 0.22	2,208,178	$ 0.20

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Accounting Policies and Procedures: Cash and Cash Equivalents Policy (Policies)

3 Months Ended

Mar. 31, 2015

Policies

Cash and Cash Equivalents Policy

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.