Attached files
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2009
GREENSTART, INC.
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
Nevada 26-0678509
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
161 N. Main Street
Bountiful, UT 84010
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 532-6800
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 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]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
4,500,000 shares of common stock, $0.001 par value, as of November 23, 2009
FORM 10-Q
TABLE OF CONTENTS
Page
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS F-1
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) F-2
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) F-3
CONDENSED STATEMENTS OF STOCKHOLDER'S DEFICIT (UNAUDITED) F-4
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 7
CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT 9
MARKET RISK
ITEM 4. CONTROLS AND PROCEDURES 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND 10
USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 5. OTHER INFORMATION 10
ITEM 6. EXHIBITS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GREENSTART INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
as of as of
September 30, 2009 December 31, 2008
(Unaudited) (Audited)
------------------ -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 390 $ 53
------------------ -----------------
TOTAL CURRENT ASSETS 390 53
INTANGIBLE ASSETS
License rights, net of accumulated
amortization of $85,514 and $64,729,
respectively 691 24,078
------------------ -----------------
TOTAL ASSETS $ 1,082 $ 24,131
================== =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 1,530 $ 6,058
Accounts payable - related parties 363,684 333,533
Accrued expenses - related parties 149,500 68,500
Accrued interest - related parties 34,798 18,287
Notes payable - related parties 384,701 358,399
------------------ -----------------
TOTAL CURRENT LIABILITIES 934,213 784,777
------------------ -----------------
STOCKHOLDERS' DEFICIT
Common stock; $0.001 par value;
100,000,000 shares authorized;
4,500,000 shares issued and
outstanding. 9/30/2009 (unaudited)
and 12/31/2008 (audited). 4,500 4,500
Additional paid-in capital 43,495 43,495
Deficit accumulated during development stage (981,127) (808,641)
------------------ -----------------
TOTAL STOCKHOLDERS' DEFICIT (933,132) (760,646)
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,082 $ 24,131
================== =================
The accompanying notes are an integral part of these condensed financial statements
F-1
GREENSTART INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
THREE THREE NINE NINE JUNE 12, 2007
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED (INCEPTION) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2009 2008 2009 2008 2009
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------ --------------
OPERATING EXPENSES
General and administrative $ 39,696 $ 43,017 $ 132,587 $ 156,920 $ 492,727
Amortization 2,601 11,101 23,387 33,303 $ 88,115
Research & Development - - - 364,435 $ 365,486
------------ ------------ ------------ ------------ --------------
TOTAL OPERATING EXPENSES 42,297 54,118 155,974 554,657 946,328
------------ ------------ ------------ ------------ --------------
LOSS FROM OPERATIONS (42,297) (54,118) (155,974) (554,657) (951,971)
------------ ------------ ------------ ------------ --------------
OTHER EXPENSES:
Interest expense 5,644 (4,963) (16,512) (11,254) (34,799)
------------ ------------ ------------ ------------ --------------
TOTAL OTHER EXPENSE - (4,963) (16,512) (11,254) (34,799)
------------ ------------ ------------ ------------ --------------
LOSS BEFORE PROVISION FOR INCOME TAXES (47,942) (59,081) (172,485) (565,911) (981,127)
------------ ------------ ------------ ------------ --------------
PROVISION FOR INCOME TAXES -
NET LOSS $ (47,942) $ (59,081) $ (172,485) $ (565,911) $ (981,127)
============ ============ ============ ============ ==============
NET LOSS PER SHARE -
BASIC AND DILUTED (0.01) (0.01) (0.04) (0.13) (0.22)
============ ============ ============ ============ ==============
WEIGHTED AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING -
BASIC AND DILUTED 4,500,000 4,500,000 4,500,000 4,500,000 4,500,000
============ ============ ============ ============ ==============
The accompanying notes are an integral part of these condensed financial statements
F-2
GREENSTART INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS DEFICIT
(Unaudited)
DEFICIT
ACCUMULATED
ADDITIONAL DURING
COMMON STOCK PAID-IN DEVELOPMENT
SHARES PAR VALUE CAPITAL STAGE TOTAL
--------- --------- ---------- ----------- ----------
Balance,
December 31, 2008 4,500,000 $ 4,500 $ 43,495 $ (808,641) $ (760,646)
========= ========= ========== =========== ==========
Net loss - - - (172,485) (172,485)
--------- --------- ---------- ----------- ----------
Balance,
September 30, 2009 4,500,000 $ 4,500 $ 43,495 $ (981,127) $ (933,132)
========= ========= ========== =========== ==========
The accompanying notes are an integral part of these condensed financial statements
F-3
GREENSTART INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
NINE NINE JUNE 12, 2007
MONTHS ENDED MONTHS ENDED (INCEPTION) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2009 2008 2009
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------------ ------------ ------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (172,485) $ (565,911) $ (981,127)
Adjustment to reconcile net loss to net cash -
used in operating activities: -
Amortization 23,387 33,303 88,115
Changes in operating liabilities: -
Increase (decrease) in: -
Accounts payable (4,528) 279,012 1,530
Accounts payable - related party 30,150 32,750 363,683
Accrued expenses - related party 81,000 36,000 149,500
Accrued interest - related party 16,512 11,254 34,799
----------- ----------- ------------
Net cash used in operating activities (25,964) (173,592) (343,498)
----------- ----------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Payments for license rights - - (40,812)
----------- ----------- ------------
Net cash used in investing activities - - (40,812)
----------- ----------- ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable -
related parties 26,302 159,190 384,701
----------- ----------- ------------
Net cash provided by financing activities 26,302 159,190 384,701
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 337 (14,402) 390
CASH AND CASH EQUIVALENTS, Beginning of period 53 14,493 -
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, End of period $ 390 $ 91 $ 391
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest - - -
=========== =========== ============
Income taxes - - -
=========== =========== ============
Non-cash investing and financing transactions:
Purchase of patent with investment by
parent company $ 47,995
=========== =========== ============
The accompanying notes are an integral part of these condensed financial statements
F-4
GREENSTART, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
GreenStart, Inc. (the "Company") was incorporated in Nevada on June 12, 2007
for the purpose of managing alternative energy technologies and patents. The
Company intends to develop and commercialize its licensed technologies which
are capable of producing large volumes of alternative energy, (syngas, dimethyl
ether, fuels) from urban waste, garbage, sewage sludge and animal waste
products. The Company has also been in the application stages of patenting its
own technologies. The Company's initial development strategy has been to
acquire the technologies and resources needed to create and market a new
alternative energy source.
The Company is currently a development stage company with a limited operating
history, limited assets, and limited cash resources. The Company has not yet
begun production operations to date, except for the production of a prototype
Gasifier unit, and the Company has not offered or sold our products to any
major customers. We continue to be in the process of developing our
gasification technologies and the gasifier units. However, the Company has
received a going concern opinion from our auditor during our last audit of our
financial statements.
On October 31, 2008, the Company's former majority shareholder, Granite Energy,
Inc. entered into a reorganization with Amerigo Energy, Inc. As a part of the
reorganization, the interest in the Company that was held by Granite was sold
to Amerigo Energy, Inc. Amerigo Energy, Inc. is now the majority shareholder of
the Company (see Note 5). The note payable formerly held by Granite Energy was
sold to Amerigo, Inc., a wholly-owned subsidiary of Amerigo Energy.
The accompanying unaudited interim financial statements include all
adjustments, which in the opinion of management, are necessary in order to make
the accompanying financial statements not misleading, and are of a normal
recurring nature. Except as disclosed herein, there has been no material
change in the information disclosed in the notes to the financial statements
included in our annual financial statements for the year ended December 31,
2008 included in Form 10-K. Operating results for the periods ended June 30,
2009, are not necessarily indicative of the results that can be expected for
the year ending December 31, 2009.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has incurred recurring losses, has used
significant cash in support of its operating activities and, based upon current
operating levels, requires additional capital or significant reconfiguration of
its operations to sustain its operations for the foreseeable future. These
factors, among others, may indicate that the Company will be unable to continue
as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern. The Company's ability to
continue as a going concern is dependent upon its ability to generate
sufficient cash flow to meet obligations on a timely basis and ultimately to
attain profitability. The Company has obtained working capital through equity
offerings and management plans to obtain additional funding through equity or
debt financings in the future. The Company's majority shareholder (Amerigo
Energy, Inc.) has also funded the Company's operations with working capital
advances; however, no directors, officers or shareholders have committed to
fund the Company's operations or to make loans or other financing arrangements
available to the Company. There is no assurance that the Company will be
successful in its efforts to raise additional working capital or achieve
profitable operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
DEVELOPMENT STAGE COMPANY
The accompanying financial statements have been prepared in accordance with the
FASB ASC 915-10 "Development-Stage Entities". A development-stage enterprise is
one in which planned principle operations have not commenced or if its
operations have commenced, there has been no significant revenue there from.
Development-stage companies report cumulative costs from the enterprises
inception.
3
RESEARCH AND DEVELOPMENT
Research and development costs are expensed in the period incurred in
accordance with FASB ASC 970-10 "Research and Development".
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of highly liquid investments with maturities
of three months or less when purchased.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INTANGIBLE ASSETS
The Company follows Statement of FASB ASC 350-10 "Intangibles-Goodwill
and Other" to determine the method of amortization of its intangible assets.
The Company amortizes its intangible assets using the straight-line method over
an estimated useful life of 2 years (see Note 3).
IMPAIRMENT AND DISPOSAL OF LONG-LIVED ASSETS
The Company evaluates the carrying value of its long-lived assets under the
provisions of FASB ASC 360-10-35, "Subsequent Measurement". This requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted future cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. If such assets are impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying value or fair value, less costs to sell. No
impairments were recognized during the year ended December 31, 2008 and nine
months ended September 30, 2009.
EARNINGS PER SHARE
FASB ASC 260-10, Earnings per Share, requires presentation of "basic" and
"diluted" earnings per share on the face of the statements of operations for
all entities with complex capital structures. Basic earnings per share is
computed by dividing net income by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflect the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted during the period. Dilutive securities
having an anti- dilutive effect on diluted earnings per share are excluded
from the calculation. At December 31, 2008 and September 30, 2009 (unaudited),
the Company has options outstanding that could be exercised representing a
total of 1,000,000 additional shares. All have been excluded from the weighted
average share calculation because they would be anti-dilutive.
INCOME TAXES
The Company maintained a full valuation allowance on its net deferred tax
assets as of December 31 2008. The valuation allowance was determined in
accordance with the provisions of Statement FASB ASC 740-10, "Income Taxes",
which requires an assessment of both positive and negative evidence when
determining whether it is more likely than not that deferred tax assets
are recoverable; such assessment is required on a jurisdiction by jurisdiction
basis. Expected future losses represented sufficient negative evidence under
FASB ASC 640-10 and accordingly, a full valuation allowance was recorded
against deferred tax assets. The Company intends to maintain a full valuation
allowance on the deferred tax assets until sufficient positive evidence
exists to support reversal of the valuation allowance. Deferred income tax
liabilities and assets are determined based on the differences between the
financial statement and income tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse.
STOCK-BASED COMPENSATION
In July 2009, the Financial Accounting Standards Board issued FASB ASC 505-10,
Equity.
This requires the measurement and recognition of compensation expense for all
stock-based payment awards made to employees and directors. Under the fair
value recognition provisions, stock-based compensation cost is measured at the
grant date based on the value of the award and is recognized as expense over
the vesting period.
4
Determining the fair value of stock-based awards at the grant date requires
considerable judgment, including estimating the expected future volatility of
our stock price, estimating the expected length of term of granted options and
selecting the appropriate risk-free rate. There is no established trading
market for our stock.
NOTE 3 - INTANGIBLE ASSETS
The Company currently has License Rights to patents from the University of Utah
for technology that will be used with its gasification processes. In addition,
certain intellectual property was acquired in a purchase of intangible assets
of N-Tek by Granite Energy, our former majority shareholder, and transferred to
the Company. The Company amortizes the intangibles using the straight-line
method over a useful life of 2 years. The historical cost of the intangible
assets was $88,807. Accumulated amortization totaled $64,729 and $88,114
(unaudited) for the period ended December 31, 2008 and the nine months ended
September 30, 2009, respectively.
NOTE 4 - INCOME TAXES
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company
incurred net operating losses during all periods presented resulting in a
deferred tax asset, which was fully allowed for in a valuation allowance. As a
result, the net benefit and expense resulted in no income taxes.
NOTE 5 - STOCKHOLDERS' DEFICIT
On July 1, 2007, Granite owned all 4,500,000 shares of the Company's common
stock. On October 15, 2007, a dividend of 1,178,863 shares of the Company's
stock was distributed by Granite to its shareholders at a ratio of 1 share of
GreenStart common stock for every 45 shares of Granite Energy, Inc. stock
owned.
During the period ended September 30. 2008, Granite Energy distributed 410,260
shares of GreenStart common stock that they held.
On October 31, 2008, Granite Energy entered into a reorganization with Amerigo
Energy, Inc. As a part of the reorganization, Granite's interest in the Company
was sold to Amerigo Energy, Inc. Amerigo Energy is now the majority shareholder
of the Company's Common Stock and as of December 31, 2008 holds 3,073,036
shares or 68.29% of our outstanding common stock.
As of December 31, 2008 and September 30, 2009, 4,500,000 shares were issued
and outstanding.
NOTE 6 - STOCK OPTIONS
On November 1, 2007 the Company's Board of Directors approved the Qualified
Equity Incentive Stock Plan. The Qualified Equity Incentive Stock Plan ("Plan")
is intended to afford an incentive to the Company's key managerial employees to
acquire a proprietary interest in the Company and to enable the Company to
attract and retain such key employees. The plan provides for 1,000,000 shares
of $0.001 par value common stock. On November 1, 2007, the Board granted four
of the Company's officer's options to acquire a total of 1,000,000 shares of
the Company's common stock. The options expire in October 2012 and are
exercisable at a price or $0.46 per share.
5
A summary of changes in the number of stock options outstanding for the period
ended December 31, 2008 and the nine months ended September 30, 2009 are as
follows:
Weighted Weighted
Average Average
Exercise Remaining Aggregate
Number of Price Contractual Intrinsic
Shares Per Share Life Value
--------- --------- ----------- ---------
Outstanding at December 31, 2007 1,000,000 $ 0.46 4.83 years $ -
Granted - - N/A -
Exercised - - N/A -
Cancelled/Expired - - N/A -
--------- --------- ---------
Outstanding at December 31, 2008 1,000,000 $ 0.46 3.83 years $ -
========= ========= =========
Granted - - N/A -
Exercised - - N/A -
Cancelled/Expired - - N/A -
--------- --------- ---------
Outstanding at March 31, 2009 1,000,000 $ 0.46 3.58 years $ -
========= ========= =========
Granted - - N/A -
Exercised - - N/A -
Cancelled/Expired - - N/A -
--------- --------- ---------
Outstanding at June 30, 2009 1,000,000 $ 0.46 3.33 years $ -
========= ========= =========
Granted - - N/A -
Exercised - - N/A -
Cancelled/Expired - - N/A -
--------- --------- ---------
Outstanding at September 30, 2009 1,000,000 $ 0.46 3.07 years $ -
========= ========= =========
Exercisable at December 31, 2008 1,000,000 $ 0.46 3.83 years $ -
========= ========= =========
Exercisable at March 31, 2009 1,000,000 $ 0.46 3.58 years $ -
========= ========= =========
Exercisable at June 30, 2009 1,000,000 $ 0.46 3.33 years $ -
========= ========= =========
Exercisable at September 30, 2009 1,000,000 $ 0.46 3.07 years $ -
========= ========= =========
The weighted average grant date fair value of options granted during the period
ended September 30, 2009 was $-0-. The total intrinsic value of options
exercised during the period ended September 30, 2009 was $-0-.
Outstanding options at December 31, 2008 had a weighted average remaining
contractual life of 3.83 years with an aggregate intrinsic value of $-0-.
Exercisable options at December 31, 2008 also had a weighted average remaining
contractual life of 3.83 years with an aggregate intrinsic value of $-0-.
Outstanding options at September 30, 2009 had a weighted average remaining
contractual life of 3.07 years with an aggregate intrinsic value of $-0-
(unaudited). Exercisable options at September 30, 2009 also had a weighted
average remaining contractual life of 3.07 years with an aggregate intrinsic
value of $-0- (unaudited).
The Black-Scholes option-pricing model was used in determining the fair value
of each option grant. Assumptions used in the Black-Scholes model are presented
below:
Risk-free interest rate 3.45%
Dividend yield 0.00%
Volatility factor 50.000%
Weighted average expected life 3.07 years
6
On November 1, 2007, the Board also approved the issuance of an additional
1,100,000 options to three of the Company's officers. The options are to be
granted once the Company's common stock is accepted for trading on Over-the-
Counter Bulletin Board (OTCBB), NASDAQ (Small Cap), American Stock Exchange or
other recognized stock exchange. As of the date of this filing the Company is
still in the process of being listed on the OTCBB.
NOTE 7 - RELATED PARTY TRANSACTIONS
The Company had issued a note payable to its former majority shareholder
(Granite), totaling $191,558 as of December 31, 2007. As part of a
reorganization of Granite, the note has been transferred to Amerigo, Inc., a
wholly-owned subsidiary of our majority shareholder Amerigo Energy, Inc. As of
September 30, 2009 the balance on that note was $356,820. This obligation is
due on demand and accrues interest at 6% annually. The accrued interest on this
loan totaled $18,287 and $34,343, respectively, at December 31, 2008 and
September 30, 2009. The amounts are considered short term due to the demand
status of the note. Please refer to Note 1 for more information on the transfer
of the liability.
The Company has issued a note payable to Amerigo, Inc., the wholly-owned
subsidiary of its majority shareholder, Amerigo Energy, Inc. The balance on the
note payable was $27,881 and $2,129 on September 30, 2009 and December 31,
2008, respectively. This obligation is due on demand and accrues interest at 6%
annually. The accrued interest on this loan totaled $455 at September 30, 2009
and $0 at December 31, 2008. The amount is considered short term due to the
demand status of the note.
Effective October 1, 2007, the Company entered into a consulting agreement with
a firm controlled by the Company's Chief Executive Officer for a fee of $3,500
per month. The consulting firm has been engaged to assist in organizing and
completing the process of filing a registration statement and other filings
with the Securities and Exchange Commission. The Company owed the firm $52,500
and $84,000, respectively, as of December 31, 2008 and September 30, 2009,
which are included as part of Accounts payable - related party in the
accompanying financial statements.
During the fourth quarter of 2008, an entity by the name of Green N-ergy
Corporation (formed in the State of Utah on September 15, 2008) paid a
liability in the amount of $278,763 which was due to Peterson, Inc. Green N-
ergy Corporation is an entity controlled by the father of our President, Morris
Ebeling, Jr. The liability has been kept as an account payable to Green N-ergy
Corporation. As of August 2009, the Company and Mr. Ebeling Sr. have not
reached an agreement on what Mr. Ebeling Sr. and his company will receive in
exchange for the settling of that liability. Management is still in talks with
him as to determine an equitable solution for all parties.
As of December 31, 2008 and September 30, 2009, the Company owed two directors
and President a total of $68,500 and $149,500, respectively, for services
provided related to their respective offices held or according to agreements
since inception. The obligations are included in the accompanying financial
statements as Accrued expenses - related parties.
NOTE 8 - SUBSEQUENT EVENTS
MJG TRADING ACQUISITION
The Company has entered into ongoing negotiations with MJG Trading, LLC, a
Florida limited liability corporation, for the purchase of certain executory
contracts as well as the hiring of certain key personnel which we believe will
enhance shareholder value.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This discussion contains forward-looking statements. The reader should
understand that several factors govern whether any forward-looking statement
contained herein will be or can be achieved. Any one of those factors could
cause actual results to differ materially from those projected herein. These
forward-looking statements include plans and objectives of management for
future operations, including plans and objectives relating to the products and
the future economic performance of the Company. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions, future business decisions, and the
time and money required to successfully complete development projects, all of
which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. Although the Company believes that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of those assumptions could prove inaccurate and, therefore,
there can be no assurance that the results contemplated in any of the forward-
looking statements contained herein will be realized. Based on actual
experience and business development, the Company may alter its marketing,
capital expenditure plans or other budgets, which may in turn affect the
Company's results of operations. In light of the significant uncertainties
inherent in the forward-looking statements included therein, the inclusion of
any such statement should not be regarded as a representation by the Company or
any other person that the objectives or plans of the Company will be achieved.
7
A complete discussion of these risks and uncertainties are contained in our
Annual Financial Statements included in the Form 10-K for the fiscal year ended
December 31, 2008, as filed with the Securities and Exchange Commission on May
15, 2009.
INTRODUCTION
GreenStart, Inc. (the "Company") was incorporated on June 12, 2007 in the State
of Nevada. The Company is in the alternative energy business and was formed for
the purpose of managing certain intangible assets acquired by Granite Energy,
Inc. ("Granite"), the Company's former majority shareholder. Granite acquired
alternative energy technologies and patents in early 2007 from the University
of Utah. In April 2008, the University of Utah renewed the patent license and
transferred the license agreement to the Company to utilize the rights to that
intellectual property. In October of 2008, Granite entered into a
reorganization and transferred its interest in GreenStart to Amerigo Energy,
Inc. This change of control has no impact on the intellectual property of the
Company because the intellectual property is all held in its name.
The Company has also been in the application stages of patenting its own
technologies. The Company's initial development strategy has been to acquire
the technologies and resources needed to create and market a new alternative
energy source.
The following is a discussion of the Company's financial condition, results of
operations, financial resources and working capital. This discussion and
analysis should be read in conjunction with the Company's financial statements
contained in this Form 10-Q.
DESCRIPTION OF REVENUES
At this time we are not generating revenues. There can be no assurance that we
will generate revenues in the future.
REVENUE RECOGNITION
Sales revenue relating to any future product or service offerings, if
applicable, will be recognized when earned and collection is probable.
DESCRIPTION OF EXPENSES
Our current expenses consist primarily of general and administrative matters,
including consulting and professional fees and accrued payroll expenses related
to our President.
RESULTS OF OPERATIONS
REVENUES
We did not realize revenues for the nine months ended September 30, 2009 and
September 30, 2008 or period from inception to September 30, 2009.
OPERATING EXPENSES
General and Administrative - General and administrative expenses were $132,587
for the nine months ended September 30, 2009, compared to $156,920 for the nine
months ended September 30, 2008, representing a decrease of $24,333. The
decrease in general and administrative expense reflects the decrease in
activities of the company.
Research & Development - Research and development expenses were $0 for the nine
months ended September 30, 2009, and $364,435 for the nine months ended
September 30, 2008.
OTHER EXPENSES
During the nine months ended September 30, 2009, interest expense was $16,512,
compared to $11,254 during the nine months ended September 30, 2008,
representing an increase of $5,258. The increase relates to the accrued
interest on the $384,701 notes payable to related parties. See Note 7 for
further information on the related party note payable.
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
We realized a net loss of $172,485 for the nine months ended September 30,
2009, compared to a net loss of $565,911 for the nine months ended September
30, 2008, a decrease of $393,426 primarily related to research and development
expenses during the prior period.
8
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2009, we had cash in the amount of $390, and a working capital
deficit of $933,823, as compared to cash in the amount of $53 and a working
capital deficit of $784,724 for the period ended December 31, 2008. In
addition, our stockholders' deficit was $933,132 at September 30, 2009,
compared to stockholders' deficit of $760,646 at December 31, 2008.
Our accumulated deficit increased from $808,641 at December 31, 2008 to
$981,127 at September 30, 2009.
Our operations used net cash of $25,964 during the nine months ended September
30, 2009, compared to $173,592 during the nine months ended September 30, 2008,
a decrease of $147,628.
Our cash used for investing activities was $0 for the nine months ended
September 30, 2009 and $0 for nine months ended September 30, 2008.
Our financing activities provided net cash of $26,302 during the nine months
ended September 30, 2009, compared to net cash of $159,190 during the nine
months ended September 30, 2008.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS
We evaluated the effectiveness of our disclosure controls and procedures as of
September 30, 2009, the end of the period covered by this Quarterly Report on
Form 10-Q. This evaluation was undertaken by our chief executive officer, and
chief financial officer, Jason F. Griffith. Mr. Griffith serves as our
principal executive officer as well as our principal accounting and financial
officer.
We reviewed and evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, as of the end of the fiscal quarter covered
by this report, as required by Securities Exchange Act Rule 13a-15, and
concluded that our disclosure controls and procedures are effective to ensure
that information required to be disclosed in our reports filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, is accumulated and communicated to management on a timely
basis, including our principal executive officer and principal financial and
accounting officer.
CONCLUSIONS
Based on this evaluation, our principal executive officer and principal
financial and accounting officer concluded that our disclosure controls and
procedures are effective to ensure that the information we are required to
disclose in reports that we file pursuant to the Exchange Act are recorded,
processed, summarized, and reported in such reports within the time periods
specified in the Securities and Exchange Commission's rules and forms.
CHANGES IN INTERNAL CONTROLS
There were no changes in our internal controls over financial reporting that
occurred during the last fiscal quarter, i.e., the three months ended September
30, 2009, that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS
(a) Exhibits.
31.1 Certification of our Principal Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
31.2 Certification of our Principal Financial and Accounting Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of our Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section
1350)
10
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GREENSTART, INC.
(REGISTRANT)
Date: November 23, 2009
By: /s/ Michael Georee
-----------------------
Micahel Goeree
Its: Chief Executive Officer
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission this Form 10-Q under
the Securities Act. You may read and copy all or any portion of the filing or
any reports, statements or other information in the files at SEC's Public
Reference Room located at 100 F Street, NE., Washington, DC 20549, on official
business days during the hours of 10 a.m. to 3 p.m.
You can request copies of these documents upon payment of a duplicating fee by
writing to the Commission. You may call the Commission at 1-800-SEC-0330 for
further information on the operation of its public reference room. Our filings,
including the registration statement, will also be available to you on the
website maintained by the Commission at http://www.sec.gov.
We intend to furnish our stockholders with annual reports which will be filed
electronically with the SEC containing consolidated financial statements
audited by our independent auditors, and to make available to our stockholders
quarterly reports for the first three quarters of each year containing
unaudited interim consolidated financial statements.
We maintain a website at www.greenstartenergy.com. Our website and the
information contained on that site, or connected to that site, is not part of
or incorporated by reference into this filing.
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