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, 2012
|
or
|
☐
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from __________________ to __________________________
|
|
Commission file number: 000-54395
|
GREEN ENVIROTECH HOLDINGS CORP.
|
(Exact name of registrant as specified in its charter)
|
DELAWARE
|
|
32-0218005
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
PO Box 692 Riverbank, CA
|
|
95367
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(209) 881-3523
|
(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 registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes
☐
No
☑
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes
☐
No
☑
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
☐
|
|
Accelerated filer
☐
|
Non-accelerated filer
☐
(Do not check if 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
☑
Indicated the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable date; 200,833,233 shares of common stock are
issued and outstanding as of August 6, 2012.
TABLE OF CONTENTS
|
|
Page
No.
|
PART I. - FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements.
|
F - 1
|
|
Condensed Consolidated Balance Sheets as of March 31, 2012(Unaudited) and December 31, 2011
|
F - 2
|
|
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011(Unaudited)
|
F - 3
|
|
Condensed Consolidated Statements of Cash Flows for the Three months ended March 31, 212 and 2011 (Unaudited)
|
F - 4
|
|
Notes to Unaudited Condensed Consolidated Financial Statements
|
F - 5
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
4
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
10
|
Item 4T
|
Controls and Procedures.
|
10
|
PART II - OTHER INFORMATION
|
Item 1.
|
Legal Proceedings.
|
11
|
Item 1A.
|
Risk Factors.
|
11
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
11
|
Item 3.
|
Defaults Upon Senior Securities.
|
11
|
Item 4.
|
Mine Safety Disclosures.
|
11
|
Item 5.
|
Other Information.
|
11
|
Item 6.
|
Exhibits.
|
11
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
Statements in this
quarterly report on Form 10-Q may be “forward-looking statements.” Forward-looking statements include, but are not
limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating
to our future activities or other future events or conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results
may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous
factors, including those described above and those risks discussed from time to time in this quarterly report on Form 10-Q, including
the risks described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
in this quarterly report on Form 10-Q and in other documents which we file with the Securities and Exchange Commission. In addition,
such statements could be affected by risks and uncertainties related to our ability to raise any financing which we may require
for our operations, competition, government regulations and requirements, pricing and development difficulties, our ability to
make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions
and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made,
and, except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date of this quarterly report on Form 10-Q.
PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements.
GREEN ENVIROTECH HOLDINGS CORP.
|
(A DEVELOPMENT STAGE COMPANY)
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(IN US$)
|
|
|
|
(Unaudited)
|
|
|
|
|
MARCH 31,
|
|
DECEMBER 31,
|
|
|
2012
|
|
2011
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
3,823
|
|
|
$
|
112,103
|
|
Other current assets
|
|
|
75,000
|
|
|
|
75,000
|
|
Total current assets
|
|
|
78,823
|
|
|
|
187,103
|
|
|
|
|
|
|
|
|
|
|
Fixed Assets
|
|
|
|
|
|
|
|
|
Plant Equipment
|
|
|
125,000
|
|
|
|
125,000
|
|
Construction in progress
|
|
|
113,929
|
|
|
|
113,929
|
|
|
|
|
238,929
|
|
|
|
238,929
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
261,890
|
|
|
|
261,890
|
|
|
|
|
261,890
|
|
|
|
261,890
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
579,642
|
|
|
$
|
687,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
489,891
|
|
|
$
|
560,873
|
|
Accrued expenses
|
|
|
994,653
|
|
|
|
736,784
|
|
Secured debentures payable
|
|
|
380,000
|
|
|
|
380,000
|
|
Loan payable - other
|
|
|
629,250
|
|
|
|
777,250
|
|
Loan payable - convertible
|
|
|
203,250
|
|
|
|
203,250
|
|
Derivative liability
|
|
|
77,219
|
|
|
|
151,738
|
|
Loan payable - related party
|
|
|
74,596
|
|
|
|
72,496
|
|
Total current liabilities
|
|
|
2,848,859
|
|
|
|
2,882,391
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
2,848,859
|
|
|
|
2,882,391
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 25,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
0 shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Common stock, $0.001 par value, 250,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
185,833,233 and 170,433,232 shares issued and outstanding
|
|
|
185,833
|
|
|
|
170,433
|
|
(4,790,081 shares are held in reserve)
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
4,755,949
|
|
|
|
4,216,149
|
|
Additional paid in capital - warrants
|
|
|
390,798
|
|
|
|
387,799
|
|
Deficit accumulated during the development stage
|
|
|
(7,601,797
|
)
|
|
|
(6,968,850
|
)
|
Total stockholders' equity (deficit)
|
|
|
(2,269,217
|
)
|
|
|
(2,194,469
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
$
|
579,642
|
|
|
$
|
687,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
GREEN ENVIROTECH HOLDINGS CORP.
|
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
|
|
|
COMPREHENSIVE LOSS (UNAUDITED)
|
|
|
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011 AND
|
|
|
FOR THE PERIOD OCTOBER 6, 2008 (INCEPTION) THROUGH MARCH 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
IN US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OCTOBER 6, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
(INCEPTION)
|
|
|
|
|
THREE MONTHS
|
|
|
|
THREE MONTHS
|
|
|
|
THROUGH
|
|
|
|
|
MARCH 31, 2012
|
|
|
|
MARCH 31, 2011
|
|
|
|
MARCH 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF REVENUES
|
|
|
—
|
|
|
|
—
|
|
|
|
33,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
—
|
|
|
|
—
|
|
|
|
(31,683
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and professional fees
|
|
|
249,278
|
|
|
|
205,505
|
|
|
|
2,289,701
|
|
Professional fees - common stock issued and warrants issued
|
|
|
66,700
|
|
|
|
116,992
|
|
|
|
2,989,528
|
|
General and administrative
|
|
|
59,183
|
|
|
|
40,462
|
|
|
|
751,404
|
|
Total operating expenses
|
|
|
375,161
|
|
|
|
362,959
|
|
|
|
6,030,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
40,496
|
|
|
|
123,120
|
|
Interest expense
|
|
|
32,806
|
|
|
|
23,042
|
|
|
|
227,674
|
|
Interest expense-penalty
|
|
|
—
|
|
|
|
—
|
|
|
|
67,750
|
|
Interest expense-Equity Issues
|
|
|
(41,520
|
)
|
|
|
—
|
|
|
|
328,555
|
|
Loss on debt conversion
|
|
|
266,500
|
|
|
|
—
|
|
|
|
409,300
|
|
Total non-operating expenses
|
|
|
257,786
|
|
|
|
63,538
|
|
|
|
1,156,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) FROM OPERATIONS
|
|
|
(632,947
|
)
|
|
|
(426,497
|
)
|
|
|
(7,218,715
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposition of Riverbank Permits
|
|
|
—
|
|
|
|
—
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISCONTINUED OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on disposal of discontinued operations
|
|
|
—
|
|
|
|
—
|
|
|
|
(429,066
|
)
|
Income from discontinued operations
|
|
|
—
|
|
|
|
24,186
|
|
|
|
24,186
|
|
Total loss from discontinued operations
|
|
|
—
|
|
|
|
24,186
|
|
|
|
(404,880
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)
|
|
$
|
(632,947
|
)
|
|
$
|
(402,311
|
)
|
|
$
|
(7,373,595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
|
|
|
171,110,155
|
|
|
|
63,559,219
|
|
|
|
72,421,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) PER SHARE
|
|
$
|
(0.0037
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
GREEN ENVIROTECH HOLDINGS CORP.
|
|
|
(A DEVELOPMENT STAGE COMPANY)
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
|
|
|
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
|
|
|
FOR THE PERIOD OCTOBER 6, 2008 (INCEPTION) THROUGH MARCH 31, 2012
|
|
|
|
|
|
|
|
|
|
IN US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
OCTOBER 6, 2008
|
|
|
|
|
Unaudited
|
|
|
|
Unaudited
|
|
|
|
(INCEPTION)
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
THROUGH
|
|
|
|
|
MARCH 31, 2012
|
|
|
|
MARCH 31, 2011
|
|
|
|
MARCH 31, 2012
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(632,947
|
)
|
|
$
|
(402,311
|
)
|
|
$
|
(7,373,595
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services, net of cancelations, including shares issued
|
|
|
66,700
|
|
|
|
98,750
|
|
|
|
2,829,729
|
|
for loss on disposal of discontinued operations ($104,880)
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium reconized on Common stock issued to reduce and extend debt
|
|
|
296,500
|
|
|
|
—
|
|
|
|
861,800
|
|
Warrants issued as loan fees to brokers
|
|
|
2,999
|
|
|
|
18,242
|
|
|
|
33,321
|
|
Warrants issued to officers
|
|
|
—
|
|
|
|
|
|
|
|
234,357
|
|
Amortization of debt discount
|
|
|
—
|
|
|
|
40,496
|
|
|
|
123,120
|
|
Fair value change in derivative liability
|
|
|
(74,519
|
)
|
|
|
—
|
|
|
|
77,218
|
|
Loss on disposal of discontined operations
|
|
|
—
|
|
|
|
|
|
|
|
324,186
|
|
Income from discontined operations
|
|
|
—
|
|
|
|
|
|
|
|
(24,186
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) in inventory
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(Increase) in deposits and other current assets
|
|
|
—
|
|
|
|
(28,984
|
)
|
|
|
(336,890
|
)
|
Increase in accounts payable and accrued expenses
|
|
|
186,888
|
|
|
|
125,323
|
|
|
|
1,486,657
|
|
Total adjustments
|
|
|
478,568
|
|
|
|
253,827
|
|
|
|
5,609,312
|
|
Net cash (used in) operating activities
|
|
|
(154,379
|
)
|
|
|
(148,484
|
)
|
|
|
(1,764,283
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures related to purchase of equipment for Riverbank Plant
|
|
|
—
|
|
|
|
|
|
|
|
(125,000
|
)
|
Cash paid for acquisition of Magic Bright
|
|
|
—
|
|
|
|
(300,000
|
)
|
|
|
(300,000
|
)
|
Expenditures related to construction of building
|
|
|
—
|
|
|
|
—
|
|
|
|
(113,929
|
)
|
Net cash (used in) investing activities
|
|
|
—
|
|
|
|
(300,000
|
)
|
|
|
(538,929
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock for cash
|
|
|
—
|
|
|
|
—
|
|
|
|
80,000
|
|
Proceeds received from loan payable - related party
|
|
|
2,100
|
|
|
|
6,600
|
|
|
|
1,233,456
|
|
Payments on loan payable - related party
|
|
|
—
|
|
|
|
|
|
|
|
(404,483
|
)
|
Proceeds received from loan payable - convertible
|
|
|
—
|
|
|
|
|
|
|
|
203,250
|
|
Proceeds received from loan payable - other
|
|
|
44,000
|
|
|
|
442,000
|
|
|
|
1,324,312
|
|
Payments on loan payable - other
|
|
|
—
|
|
|
|
—
|
|
|
|
(509,500
|
)
|
Discount on Debenture Loans
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
Proceeds received from secured debentures
|
|
|
—
|
|
|
|
50,000
|
|
|
|
380,000
|
|
Net cash provided by financing activities
|
|
|
46,100
|
|
|
|
498,600
|
|
|
|
2,307,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
(108,279
|
)
|
|
|
50,116
|
|
|
|
3,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
|
|
|
112,103
|
|
|
|
26,184
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF PERIOD
|
|
$
|
3,823
|
|
|
$
|
76,300
|
|
|
$
|
3,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
32,806
|
|
|
$
|
23,042
|
|
|
$
|
213,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH SUPPLEMENTAL INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock and liability for stock to be issued for services and interest
|
|
$
|
66,700
|
|
|
$
|
98,750
|
|
|
$
|
2,829,729
|
|
Interest expense-Equity Issues
|
|
$
|
(41,520
|
)
|
|
$
|
—
|
|
|
$
|
328,555
|
|
Warrants issued as loan fees to brokers
|
|
$
|
2,999
|
|
|
$
|
18,242
|
|
|
$
|
33,321
|
|
Conversion of loans payable for common stock
|
|
$
|
192,000
|
|
|
$
|
—
|
|
|
$
|
1,523,377
|
|
GREEN ENVIROTECH HOLDINGS CORP.
|
(FORMERLY WOLFE CREEK MINING, INC.)
|
(A DELELOPMENT STAGE COMPANY)
|
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
|
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND THE YEAR ENDED DECEMBER 31, 2011
|
(UNAUDITED)
|
IN US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
Additional
|
Additional
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Additional
|
Paid-In
|
Paid-In
|
|
During the
|
|
|
|
|
|
Preferred Stock
|
Common Stock
|
Paid-In
|
Capital -
|
Capital -
|
|
Development
|
|
|
|
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Warrants
|
Options
|
|
Stage
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - June 26, 2007 (Inception of Wolfe
|
-
|
$ -
|
-
|
-
|
$ -
|
-
|
|
|
$ -
|
|
$ -
|
|
Creek Mining, Inc.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to founders for cash
|
-
|
-
|
44,999,895
|
45,000
|
(30,000)
|
-
|
|
|
-
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(9,105)
|
|
(9,105)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2007
|
-
|
-
|
44,999,895
|
45,000
|
(30,000)
|
-
|
|
|
(9,105)
|
|
5,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
-
|
-
|
15,000,000
|
15,000
|
10,000
|
-
|
|
|
-
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(19,608)
|
|
(19,608)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2008
|
-
|
-
|
59,999,895
|
60,000
|
(20,000)
|
-
|
|
|
(28,713)
|
|
11,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period January 1, 2009 through
|
|
|
|
|
|
|
|
|
|
|
November 20, 2009 - date of merger with
|
|
|
|
|
|
|
|
|
|
|
Green EnviroTech Corp.
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(9,845)
|
|
(9,845)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of recapitalization with GreenEnviroTech
|
|
|
|
|
|
|
|
|
|
Corp. including repurchase and subsequent
|
|
|
|
|
|
|
|
|
|
|
cancellation of shares and issuance of new shares
|
-
|
-
|
-
|
-
|
(208,202)
|
-
|
|
|
(310,350)
|
|
(518,552)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To reclassify negative paid in capital to retained earnings
|
-
|
-
|
-
|
-
|
228,202
|
-
|
|
|
(228,202)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period November 21, 2009 through
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(347,179)
|
|
(347,179)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2009
|
-
|
-
|
59,999,895
|
60,000
|
-
|
-
|
|
|
(924,289)
|
|
(864,289)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to consultants and officers
|
-
|
-
|
2,510,375
|
2,511
|
2,125,271
|
-
|
|
|
-
|
|
2,127,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable to common stock
|
-
|
-
|
1,006,488
|
1,006
|
1,005,482
|
-
|
|
|
-
|
|
1,006,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2010
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(3,261,492)
|
|
(3,261,492)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2010
|
-
|
-
|
63,516,758
|
63,517
|
3,130,753
|
-
|
-
|
|
(4,185,781)
|
|
(991,511)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued Preferred Stock in purchase Magic Bright
|
1,000,000
|
1,000
|
-
|
-
|
4,999,000
|
-
|
-
|
|
-
|
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition Reserve in purchase Magic Bright
|
(1,000,000)
|
(1,000)
|
|
|
(4,999,000)
|
-
|
-
|
|
|
|
(5,000,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued in purchase of Magic Bright
|
-
|
-
|
184,000
|
184
|
104,696
|
-
|
-
|
|
-
|
|
104,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to consultants for fees
|
-
|
-
|
27,119,141
|
27,119
|
445,013
|
-
|
-
|
|
-
|
|
472,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash
|
-
|
-
|
333,333
|
333
|
49,667
|
-
|
-
|
|
-
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for debt extensions
|
380,000
|
380
|
1,520
|
-
|
-
|
|
-
|
|
1,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable and liabilities to common shares
|
78,900,000
|
78,900
|
484,500
|
-
|
-
|
|
-
|
|
563,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued to secured debenutre holders
|
-
|
-
|
-
|
-
|
-
|
123,120
|
-
|
|
-
|
|
123,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued to brokers
|
-
|
-
|
-
|
-
|
-
|
18,242
|
-
|
|
-
|
|
18,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued to consultants for fees
|
-
|
-
|
-
|
-
|
-
|
12,080
|
-
|
|
-
|
|
12,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued to Officers
|
-
|
-
|
-
|
-
|
-
|
234,357
|
-
|
|
-
|
|
234,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options issued to Officers
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(2,783,068)
|
|
(2,783,068)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2011
|
-
|
$ -
|
170,433,232
|
$ 170,433
|
$ 4,216,149
|
$ 387,799
|
$ -
|
|
$(6,968,849)
|
|
$ (2,194,469)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to consultants and employees
|
-
|
-
|
2,300,000
|
2,300
|
64,400
|
-
|
-
|
|
|
|
66,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes payable and liabilities to common shares
|
-
|
-
|
12,100,000
|
12,100
|
446,400
|
-
|
-
|
|
|
|
458,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for debt extensions
|
-
|
-
|
1,000,001
|
1,000
|
29,000
|
-
|
-
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued to secured debenutre holders
|
|
|
|
2,999
|
|
|
|
|
2,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued to Officers
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended March 31, 2012
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
(632,947)
|
|
(632,947)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
$ -
|
185,833,233
|
$ 185,833
|
$ 4,755,949
|
$ 390,798
|
$ -
|
|
$(7,601,797)
|
|
$ (2,269,217)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
|
|
Note 1
|
Basis of Presentation:
|
The Financial Statements presented
herein have been prepared by us in accordance with the accounting policies described in our December 31, 2011 and 2010 audited
financial statements included in Form 10-K and should be read in conjunction with the Notes to Financial Statements which appear
in that report.
The preparation of these financial
statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on going basis, we evaluate our estimates, including those related intangible assets, income taxes, insurance
obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates
under different assumptions or conditions.
In the opinion of management,
the information furnished in these interim financial statements reflect all adjustments necessary for a fair statement of the financial
position and results of operations and cash flows as of and for the three-month periods ended March 31, 2012 and 2011. All such
adjustments are of a normal recurring nature. The financial statements do not include some information and notes necessary to conform
with annual reporting requirements.
Note 2
|
Earnings/Loss Per Share
|
Basic net
loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per
common share is computed using the weighted average number of common and dilutive equivalent shares outstanding during the period.
Dilutive common equivalent shares consist of options to purchase common stock (only if those options are exercisable and at prices
below the average share price for the period) and shares issuable upon the conversion of the convertible note. Due to the net losses
reported, dilutive common equivalent shares were excluded from the computation of diluted loss per share, as inclusion would be
anti-dilutive for the periods presented..
There were no common equivalent
shares required to be added to the basic weighted average shares outstanding to arrive at diluted weighted average shares outstanding
in 2012 or 2011.
Note 3
|
New Accounting Standards
|
Emerging Growth Company
Critical Accounting Policy Disclosure:
We qualify as an “emerging growth company”
under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
In June 2011, the FASB issued
ASC update No. 2011-05,
Comprehensive Income (Topic 220), Presentation of Comprehensive Income
. The FASB decided
to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’
equity, among other amendments in this update. The amendments require that all non-owner changes in stockholder’s
equity be presented in a single continuous statement of comprehensive income or in two separate but consecutive statements. In
both choices, the Company is required to present each component of net income along with total net income, each component of other
comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The
statement of other comprehensive income should immediately follow the statement of net income and include the components of other
comprehensive income and total for other comprehensive income, along with a total for comprehensive income.
The entity is also required to
present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive
income to net income in the statement(s) where the components of net income and the components of comprehensive income are presented. The
amendments in this update should be applied retrospectively, and are effective for fiscal years, and interim periods within those
years, beginning after December 15, 2011
Management does not anticipate
that the adoption of these standards will have a material impact on the financial statements.
Note 4
|
Stockholders’ Equity
(Deficit)
As of March 31, 2012, there were
185,833,233 shares of common stock issued and outstanding compared to 170,433,232 shares of common stock issued and outstanding
December 31, 2011 as reflected in the schedule below:
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Additional
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Paid-In
|
|
|
|
|
|
|
|
|
Shares
|
|
Amount
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2011
|
|
|
|
170,433,232
|
|
$ 170,433
|
|
$ 4,216,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued to consultants and employees
|
|
2,300,000
|
|
2,300
|
|
64,400
|
Conversion of notes payable and liabilities to common shares
|
12,100,000
|
|
12,100
|
|
446,400
|
Common shares issued for debt extensions
|
|
|
1,000,001
|
|
1,000
|
|
29,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 31, 2012
|
|
|
|
185,833,233
|
|
$ 185,833
|
|
$ 4,755,949
|
|
|
|
|
|
|
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|
|
|
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|
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|
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Note
5 Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at March 31, 2012
and December 31, 2011consisted of:
|
March 31,
2012
|
|
December 31, 2011
|
|
|
|
|
|
Accounts Payable
|
$ 473,779
|
|
$
|
516,690
|
Accounts Payable – Related
Parties
|
16,112
|
|
44,183
|
Accrued Salary - Officers
|
617,619
|
|
446,119
|
Accrued Payroll – Non Officers
|
117,000
|
|
84,000
|
Accrued Payroll Tax
|
79,623
|
|
|
58,068
|
Accrued Interest
|
180,411
|
|
|
148,597
|
|
$ 1,484,544
|
|
$
|
1,297,657
|
|
|
|
|
Accounts payable- related party
balances are to officers of the Company for non-reimbursed expenses paid on behalf of the Company. Accrued interest is related
to outstanding loans payable.
Note
6 Loan Payable – Related Party
The Company has an unsecured,
loan payable in the form of a line of credit with its CEO. The CEO had provided a line of credit up to $1,000,000 at 4% interest
per annum to the Company to cover various expenses and working capital infusions until the Company can be funded. This loan has
been extended to December 31, 2012. Balance of the loan at March 31, 2012 was $74,596 with accrued interest in the amount of $27,771.
Note
7 Loan Payable – Other
The
Company has unsecured loans with H. E. Capital, S. A. in different amounts. These loans accrue interest at the rate of 8% per annum.
The due dates of the loans have been extended to December 31, 2012. Balance of the loans at March 31, 2012 was $621,750 with accrued
interest in the amount of $76,925.
History of the H. E. Capital loans is as follows:
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|
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|
|
|
|
|
|
|
|
March 31, 2012
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
|
|
$ 769,750
|
|
$ 362,500
|
|
|
Additions
|
|
|
|
44,000
|
|
542,250
|
|
|
Subtractions
|
|
|
|
-
|
|
70,000
|
|
|
Stock Conversion
|
|
|
|
192,000
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
|
|
$ 621,750
|
|
$ 769,750
|
|
|
|
|
|
|
|
|
|
|
|
Note
8 Loan Payable – Convertible
The Company has issued three Convertible
Promissory Notes to Asher Enterprises, Inc. totaling $135,500. These notes call for 4,790,081 shares of the Company’s common
stock to be placed into a reserve account. On August 23, 2011, the Company received a notice of default on these notes from Asher
as a result of the Company’s failure to remain current in its SEC filings and elected to impose a penalty of 50% of the outstanding
note balance or $67,750 against the Company. The notes remain outstanding and in default as of March 31, 2012.
The Promissory Notes issued to
Asher Enterprises, Inc. are Convertible Promissory Notes with a discounted conversion price. The value of the discount based upon
the current market price of the Company Stock was recorded as a Derivative Liability. This Derivative Liability at March 31, 2012
was $77,219.
Note
9 Subsequent Events:
On May 16, 2012, the Company dismissed
KBL, LLP (“KBL”) as the Company’s independent registered public accounting firm. KBL’s audit report on
the Company’s financial statements for the fiscal years ended December 31, 2010 and 2009 did not contain an adverse opinion
or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that,
the audit report included an explanatory paragraph with respect to the uncertainty as to the Company’s ability to continue
as a going concern since it is a startup company. During the years ended December 31, 2011 and 2010 and during the subsequent interim
period preceding the date of KBL’s dismissal, there were no disagreements with KBL on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure, and no reportable events.
On May 18, 2012, the Company engaged Michael
F. Cronin, CPA to serve as its independent registered public accounting firm. During the years ended December 31, 2011 and 2010
and during the subsequent interim period preceding the date of Cronin’s engagement, the Company did not consult with Cronin
regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion
that might be rendered on the Company’s financial statements.
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Corporate History
Green EnviroTech Holdings
Corp. (formerly known as Wolfe Creek Mining, Inc. and referred to herein as (the “Company”)), was incorporated in the
State of Delaware on June 26, 2007. On November 20, 2009, the Company entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with Green EnviroTech Acquisition Corp., a Nevada corporation, and Green EnviroTech Corp. (“Green EnviroTech”),
a waste plastics recovery, separation, cleaning, and recycling company. Green EnviroTech is a Nevada corporation formed on October
6, 2008 under the name EnviroPlastics Corporation. On October 21, 2009, Enviroplastics Corporation changed its name
to Green EnviroTech Corp. On July 20, 2010, the Company filed an amendment to its certificate of incorporation with
the secretary of state of Delaware to (i) change its name from Wolfe Creek Mining, Inc. to Green EnviroTech Holdings
Corp. and (ii) to increase its total authorized common shares to 250,000,000 common shares.
Pursuant to the Merger
Agreement, on November 20, 2009 (the “Closing Date”), Green EnviroTech Acquisition Corp. merged with and into Green
EnviroTech, resulting in Green EnviroTech becoming a wholly-owned subsidiary of the Company (the “Merger”). As a result
of the consummation of the Merger, the Company issued approximately 45,000,000 shares of its common stock to the shareholders of
Green EnviroTech, representing approximately 75% of the issued and outstanding common stock of the Company following the closing
of the Merger. Further, the outstanding shares of common stock of Green EnviroTech were cancelled. The acquisition of Green EnviroTech
is treated as a reverse acquisition, and the business of Green EnviroTech became the business of the Company. Immediately prior
to the reverse acquisition, the Company was not engaged in any active business.
On December 4, 2009, the
Company formed Green EnviroTech Wisconsin, Inc., (“GET WISC”) a Wisconsin corporation, in anticipation of opening a
plant in Wisconsin.
References hereinafter
to “Green EnviroTech”, “we”, “us”, “our” and similar words refer to the Company
and its wholly-owned subsidiaries.
Overview of Our Business
We are a development stage
waste plastics recovery, separation, cleaning, and recycling company. We intend to supply recycled commercial plastics to industries
such as the automotive and consumer products industries, and plan to construct large-scale plastics recycling facilities near automotive
shredder locations nationwide. Operating with large national metal recycling partners, the Company, using a patent-pending process
developed in conjunction with Thar Process, Inc., and Ergonomy LLC, will produce recycled commercial grade plastics ready to be
re-introduced into commerce. Additionally, with other strategic partners, we will convert waste and scrap plastic
(both from its own processing and from other sources) into high-value energy products, including synthetic oil.
Each year, millions of
tons of automotive shredder residue (“Shredder Residue”) containing reusable and recyclable plastics are unnecessarily
disposed of in landfills. We believe this is because, while national and global demand for recycled plastic has increased
dramatically over the past decade, the technology to efficiently and effectively recycle plastic material from this residue stream
has lagged behind. This has resulted in tremendous waste and created a huge unmet market for recycled commercial
plastics, creating an opportunity for someone with a cost-effective recovery process.
We now have such a process.
We were formed to capitalize on the growing market to supply recycled commercial plastic to businesses which currently use or want
to use recycled plastics in their products, such as the automotive and consumer products industries. Working with our
metal shredder/recycling partners, we intend to utilize our proprietary cleaning technology to take the Shredder Residue headed
to landfills tainted with contaminants and convert it into two streams of recyclable material with no remaining trace of contaminants. Using
our process, plastics, rubber, and foam, can be recovered from the shedder waste. We will use our proprietary technology
to process the plastic stream, removing the contaminants and creating recycled commercial plastic material ready to be re-introduced
into commerce.
Our plastic recovery process
is both highly cost effective and efficient, and it dramatically reduces the amount of Shredder Residue going to landfills. Our
process is environmentally responsible on multiple levels, and it will assist our customers in reducing their carbon footprint
by allowing them to utilize a greater percentage of recycled material in their products.
The recovered plastics
by us will be our main source of revenue. Automotive parts manufacturers are our primary target market. However,
the use of our recycled materials isn’t limited to automotive parts. Numerous other durable goods manufacturers
utilize plastics, and recycled plastic will work in many applications. As a result, we believe there is significant demand
in both domestic and international markets for these materials, and we have identified multiple targets for our output stream of
recycled material, beginning with a large multi-national supplier to the automotive industry worldwide. We believe that
our customers will be able to utilize a larger percentage of highly cost-effective recycled plastic in the manufacturing process
of their products and create dramatic savings over the cost of using only virgin plastic (tied to the cost of petroleum).
Critical Accounting Policy and Estimates
Our Management’s
Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these
financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going
basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing
operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various
other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation
of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are
not readily apparent from other sources.
The following discussion
of our financial condition and results of operations should be read in conjunction with our audited financial statements for the
year ended December 31, 2011, together with notes thereto as previously filed with our Annual Report on Form 10-K. In
addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the
financial statements included in our Quarterly Report on Form 10-Q for the period ended March 31, 2012.
Results of Operations
Three Months Ended March 31, 2012 compared
to Three Months Ended March 31, 2011.
Revenues
The Company had no operating
revenues for the three months ended March 31, 2012 and 2011.
Cost of Revenues
The Company had no cost
of revenues from operations for the three months ended March 31, 2012 and 2011
Operating Expenses
The wages and professional
fees for the three months ended March 31, 2012 were $249,278 as compared to $205,505 for the three months ended March 31, 2011.
The wages and professional fees for the three months ended March 31, 2012 included $33,278 in professional fees and $216,000 in
wages. There was $66,700 in professional fees paid by issuing 2,300,000 shares of common stock.
The general and administrative
expenses for the three months ended March 31, 2012 were $54,656 as compared to $40,462 for the three months ended March 31, 2011,
an increase of approximately 35.08%. This increase of $14,194 was the result of an increase in travel, entertainment, advertising
and marketing concerning the promotion of the company.
Non-Operating Expenses
The non operating expenses
for the three months ended March 31, 2012 were in the amount of $256,652 as compared to $63,538 for the three months ended March
31, 2011. There was no amortization of debt discount for the three months ended March 31, 2012 as compared to $40,496 for the three
months ended March 31, 2011. The interest expense on the working capital notes was $32,806 for the three months ended March 31,
2012 as compared to $23,042 in interest expense for the three months ended March 31, 2011. The overall increase totaling
$193,114 was the result of the Company recording a loss of $266,500 on debt conversion when the Company issued common shares to
pay off $192,000 in H.E. Capital notes. The Company using the Black-Sholes calculation to figure the Derivative Liability on the
convertible notes for March 31, 2012, had a reduction in the Derivative Liability in the amount of $74,519. The Company recorded
$31,865 in interest expense related to equity issues when the Company issued common shares and warrants to the Legend debenture
holders for extending their notes to September 24, 2012.
As a result of the above,
the Company had a net loss of $631,813 for the three months ended March 31, 2012 compared to $402,311 for the three months ended
March 31, 2011.
Liquidity and Capital Resources
Green EnviroTech Holdings
Corp on March 31, 2012 had a balance of cash in the bank in the amount of $3,823. The Company had no accounts receivable and no
Inventory on March 31, 2012. The Company had other current assets in the amount of $75,000. The Company had accounts payable to
vendors and accrued expenses in the amount of $1,484,545.
The Company has an unsecured,
loan payable in the form of a line of credit with its CEO. The CEO had provided a line of credit up to $1,000,000 at 4% interest
per annum to the Company to cover various expenses and working capital infusions until the Company can be funded. This note has
been extended to December 31, 2012. The CEO has advanced $1,233,456 from inception through March 31, 2012 and the Company has repaid
$1,158,859 of these advances. The Company converted $754,377 of these advances into shares of common stock on May 11,
2010 at $1 per share and converted $200,000 into shares of common stock on December 1, 2011 at $0.005 per share. The remaining
principal under this loan due as of March 31, 2012 is $74,596. $27,771 of interest is accrued on the loan at March 31,
2012.
The Company has unsecured loans with H. E.
Capital, S. A. in different amounts. These loans accrue interest at the rate of 8% per annum. The due dates of the loans have been
extended to December 31, 2012. Balance of the loans at March 31, 2012 was $621,750 with accrued interest in the amount of $76,925.
History of the H. E. Capital loans is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2012
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
|
|
$ 769,750
|
|
$ 362,500
|
|
|
Additions
|
|
|
|
44,000
|
|
542,250
|
|
|
Subtractions
|
|
|
|
-
|
|
70,000
|
|
|
Stock Conversion
|
|
|
|
192,000
|
|
65,000
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
|
|
$ 621,750
|
|
$ 769,750
|
|
|
|
|
|
|
|
|
|
|
|
The Company also entered
into a loan payable with an individual in the amount of $20,000 at 10% due on demand. The Company repaid $10,000 of this note on
August 10, 2010. As of March 31, 2012 the loan has an outstanding balance of $7,500. Interest expense for
the three months ended March 31, 2012 and 2011, was $222 and $247 respectively. Accrued interest as of March 31, 2012 was $2,479
On January 24, 2011, the
Company entered into a series of securities purchase agreements with accredited investors (the “Investors”), pursuant
to which the Company sold an aggregate of $380,000 in 12% secured debentures (the “Debentures”). Legend Securities,
Inc. a broker dealer which is a member of FINRA, received a commission of $45,600 and 19,000 warrants at an exercise price of $0.40
in connection with the sale of the Debentures. The Debentures are due at the earlier of 6 months from the date of issuance or upon
the Company receiving gross proceeds from subsequent financings in the aggregate amount of $1,000,000. The Company raised $380,000
from the investors. The Company agreed to issue to the Investors five-year warrants to purchase an aggregate of 190,000 shares
of common stock at an exercise price of $0.40, which may be exercised on a cashless basis. The Debentures bear interest at the
rate of 12% per annum, payable upon maturity. The Debentures are secured by the assets of the Company pursuant to security agreements
entered into between the Company and the Investors.
The $380,000 in proceeds
from the financing transaction was allocated to the debt features and the warrants based upon their fair values. The
value of the warrants ($123,120) was recorded as a debt discount on the secured debentures. This discount was amortized over the
life of the secured debentures, six months.
The estimated fair value
of the 190,000 warrants to the investors at issuance on January 24, 2011 was $141,362 and has been classified as Additional Paid
In Capital - Warrants on the Company’s condensed consolidated balance sheet. The estimated fair value of the warrants was
determined using the Black-Scholes option-pricing model.
The maturity date
of these debentures has been extended to September 24, 2012. The Company issued common shares and warrants to the debenture holders
for the extension. The Company issued 1,000,000 common shares with a value of $30,000 and 100,000 five year warrants exercisable
at $0.10 per share valued at $2,999. The remaining balance on the Debentures on March 31, 2012 was $380,000. Interest incurred
for the three months ended March 31, 2012 and 2011 were $11,527 and $11,067respectively. Interest accrued through March 31, 2012
was $60,077.
The Company has issued three Convertible Promissory
Notes to Asher Enterprises, Inc., in the amounts of $53,000 on April 12, 2011, $42,500 on April 27, 2011 and $40,000 on May 23,
2011. The notes call for interest in the amount of eight percent (8%) per annum from the date of issue until due nine months from
the issue date. Asher Enterprises, Ins. has the right to convert the note or any part of the unpaid principal balance of the note
into common shares of the Company anytime after one hundred eighty (180) days following the issue date of the note. The conversion
price is sixty three percent (63%) on the note issued April 12, 2011 and sixty one percent (61%) on the other two notes. The conversion
price is calculated on the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day
period ending on the latest complete trading day prior to the conversion date. The funds were used for working capital.
These notes also call for
4,790,081 shares of the Company’s common stock to be placed into a reserve account. On August 23, 2011, the Company received
a notice of default on thes notes from Asher as a result of the Company’s failure to remain current in its SEC filings and
elected to impose a penalty of 50% of the outstanding note balance or $67,750 against the Company. The notes remain outstanding
and in default as of March 31, 2012.
The Promissory Notes issued to Asher Enterprises,
Inc. are Convertible Promissory Notes with a discounted conversion price. The value of the discount based upon the current market
price of the Company Stock was recorded as a Derivative Liability. This Derivative Liability at March 31, 2012 was $77,219.
.
Cash provided by financing activities for the three months ended March 31, 2012 was $46,100 as compared to $498,600 for
the three months ended March 31, 2011.
We will seek to raise additional
funds to meet our working capital needs principally through the additional sales of our securities. However, we cannot
guaranty that we will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable
on terms satisfactory to us.
We had cash of $3,823 as
of March 31, 2012. In the opinion of management, our available funds will not satisfy our working capital requirements for the
next twelve months. Our forecast for the period for which our financial resources will be adequate to support our operations
involves risks and uncertainties and actual results could fail as a result of a number of factors. Besides generating revenue from
our current operations, we will need to raise additional capital to expand our operations to the point at which we are able to
operate profitably. The Company expects increases in the legal and accounting costs and costs to obtain funding.
We intend to pursue capital
through public or private financing as well as borrowings and other sources, such as our officers, directors and principal shareholders.
We cannot guaranty that additional funding will be available on favorable terms, if at all. If adequate funds are not
available, then our ability to expand our operations may be significantly hindered. If adequate funds are not available, we believe
that our officers, directors and principal shareholders will contribute funds to pay for our expenses to achieve our objectives
over the next twelve months. However, our officers, directors and principal shareholders are not committed to contribute funds
to pay for our expenses.
Critical Accounting Policies Involving Management Estimates and
Assumptions
Our discussion and analysis of our financial
condition and results of operations is based on our financial statements. In preparing our financial statements in conformity with
accounting principles generally accepted in the United States of America, we must make a variety of estimates that affect the reported
amounts and related disclosures.
Stock Based Compensation
. We will account
for employee stock-based compensation costs in accordance with accounting standards requiring all share-based payments to employees,
including grants of employee stock options, to be recognized in our statements of operations based on their fair values. We will
utilize the Black-Scholes option pricing model to estimate the fair value of employee stock based compensation at the date of grant,
which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs
and assumptions could materially affect the measure of estimated fair value of our stock-based compensation.
Use of Estimates
. The preparation of
financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Deferred Tax Valuation Allowance
.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount
more likely than not to be realized. Income tax expense is the total of tax payable for the period and the change during the period
in deferred tax assets and liabilities.
Emerging Growth
Company.
We qualify as an “emerging growth company” under the JOBS Act. As
a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an
emerging growth company, we will not be required to:
·
have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
·
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm
rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(i.e., an auditor discussion and analysis);
·
submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;”
and
·
disclose certain executive compensation related items such as the correlation between executive compensation and performance and
comparisons of the CEO’s compensation to median employee compensation.
In addition, Section
107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging
growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not
be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging
growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total
annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule
12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates
exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which
we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Rule 12b-2 of
the Securities Exchange Act of 1934, as amended, defines a Smaller Reporting Company as
an issuer
that is not an investment company, an asset-backed issuer), or a majority-owned subsidiary of a parent that is not a smaller reporting
company and that:
·
Had a public float of less than $ 75 million as of the last business day of its most recently completed second fiscal quarter,
computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates
by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal
market for the common equity; or
·
In the case of an initial registration statement under the Securities Act or Exchange Act for shares of its common equity, had
a public float of less than $75 million as of a date within 30 days of the date of the filing of the registration statement, computed
by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of
a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public
offering price of the shares; or
·
In the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero, had annual revenues
of less than $50 million during the most recently completed fiscal year for which audited financial statements are available.
We qualify as a Smaller Reporting
Company. Moreover, as a Smaller Reporting Company and so long as we remain a Smaller Reporting Company, we benefit from the same
exemptions and exclusions as an Emerging Growth Company. In the event that we cease to be an Emerging Growth Company as a result
of a lapse of the five year period, but continue to be a Smaller Reporting Company, we would continue to be subject to the exemptions
available to Emerging Growth Companies until such time as we were no longer a Smaller Reporting Company.
Off-Balance Sheet Arrangements
We do not have any off-balance
sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is
material to investors.
Item 3.
Quantitative and Qualitative Disclosures about
Market Risk.
Not applicable for a smaller reporting company.
Item 4T.
Controls and Procedures.
Evaluation of Disclosures and Procedures
We maintain disclosure
controls and procedures designed to ensure that information required to be disclosed in the reports we file pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated
and communicated to our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to allow timely
decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated, can only provide a reasonable assurance of achieving
the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management designed the disclosure controls
and procedures to provide reasonable assurance of achieving the desired control objectives.
We carried out an evaluation,
under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design
and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls
and procedures are ineffective.
Changes in Internal Controls Over Financial
Reporting
There have been no changes
in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under
the Securities Exchange Act) during the three months ended March 31, 2012 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings to which the Company
or any of its property is the subject.
Item 1A. Risk Factors.
Not applicable to a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the quarter ended March 31, 2012, the Company issued 2,300,000shares
of common stock for services, 12,100,000shares of common stock in exchange for the cancellation of debt and 1,000,000 shares of
common stock in exchange for debt extension.
In connection with the foregoing, the Company relied on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.
Item 3. Defaults Upon Senior Securities.
The Company is in default under promissory notes issued to Asher
Enterprises, Inc. for failure to make required payments of interest and principal and failure to comply with the reporting requirements
of the Exchange Act. Aggregate principal and interest owed as of the date of this filing is $ 223,000.
Item 4. Mine Safety Disclosures.
Not Applicable
Item 5. Other Information.
None.
Item 6. Exhibits.
No.
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Description
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31.1
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|
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Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
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31.2
|
|
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Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
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|
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32.1
|
|
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Section 1350 Certification of Chief Executive Officer
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|
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32.2
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|
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Section 1350 Certification of Chief Financial Officer
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EX-101.INS
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|
XBRL INSTANCE DOCUMENT
|
EX-101.SCH
|
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
EX-101.CAL
|
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
|
EX-101.LAB
|
|
XBRL TAXONOMY EXTENSION LABELS LINKBASE
|
EX-101.PRE
|
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Green EnviroTech Holdings Corp.
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Date: August 6 , 2012
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By:
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/s/ Gary DeLaurentiis
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Gary DeLaurentiis
|
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Chief Executive Officer (principal executive officer)
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Date: August 6, 2012
|
By:
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/s/ Wayne Leggett
|
|
|
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Wayne Leggett
|
|
|
|
Chief Financial Officer (principal financial officer, principal accounting officer)
|
|
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