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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
 
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the year ended December 31, 2011
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to_________.
Commission file number 000-54018
GREEN ENDEAVORS, INC.
(Exact name of registrant as specified in its charter)
 
 
Utah
27-3270121
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
59 West 100 South, 2nd Floor, Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 575-8073
(Registrant's Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
 
 
Title of Each Class
Names of Each Exchange on which Registered
$0.001 Common Stock
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o      No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o      No x
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 x      No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (check one):
 
 
 
 
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company x
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o      No x
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant's most recently completed second quarter ended June 30, 2011 was $543,048.
On April 5, 2012, approximately 862,355,708 shares of the Registrant's Common Stock, $0.001 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None

 
 
 
Green Endeavors, Inc.
Annual Report on Form 10-K
For the Year Ended December 31, 2011
Table of Contents
 
 
 
 
 
 
 
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43
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PART I.
Item 1. Business
          This Annual Report on Form 10-K and the documents incorporated by reference in this Annual Report on Form 10-K contain forward-looking statements. Certain of such statements, including, but not limited to, statements regarding the extent and timing of future revenues and expenses and customer demand, statements regarding our reliance on third parties and other statements using words such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "should," "will" and "would," and words of similar import and the negatives thereof, constitute forward-looking statements. These statements are predictions based upon our current expectations about future events. Actual results could vary materially as a result of certain factors, including but not limited to, those expressed in these statements. We refer you to the "Competition," "Risk Factors," "Results of Operations," and "Liquidity and Capital Resources" sections contained in this Annual Report on Form 10-K and the risks discussed in our other Securities Exchange Commission, or SEC, filings, which identify important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.
          We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Annual Report on Form 10-K. All subsequent written or spoken forward-looking statements attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this Annual Report on Form 10-K are made only as of the date of this Annual Report on Form 10-K. We do not intend, and undertake no obligation, to update these forward-looking statements.
Overview
          Green Endeavors, Inc. ("Green") is a Utah corporation originally formed on April 25, 2002. Our fiscal year ends on December 31. We have never filed bankruptcy nor been through any similar financial reorganization.
          We run two high-quality hair care salons that feature Aveda(TM) products for retail sale. Landis Salons, Inc. ("Landis I") operates its business within a 4,000 square foot space located in the Liberty Heights District of Salt Lake City, Utah as an Aveda Lifestyle Salon. Landis Salons II, Inc. ("Landis II") operates within a 3,024 square foot space located in the Marmalade District of Salt Lake City, Utah under the Landis Lifestyle Salon brand as an Aveda Lifestyle Salon. Aveda Lifestyle Salons can be distinguished from Aveda Concept Salons in that Aveda Lifestyle Salons are required to carry all of Aveda's products and must meet a higher threshold for product sales than Aveda(TM) Concept Salons. An Aveda(TM) Lifestyle Salon is the highest level within the Aveda hierarchy of salons which is classified by higher purchasing volume, location, array of products carried and size of retail space.
          The salon operations consist of three major components, an Aveda(TM) retail store, an advanced hair salon, and a training academy, which educates and prepares future staff about the culture, services, and products provided by the salon. The design of the salons is intended to look modern and feel comfortable, appealing to both genders and all age groups.
          Additional information on Landis can be found on its website at www.landissalon.com.
Products and Services
          The salons offer high quality hair care and other salon services such as makeup, skin care and nail care. The salons incorporate the use of the Aveda line of products in all the services performed and exclusively offer Aveda retail product for sale. The Aveda brand, owned by Estee Lauder Companies, Inc., manufactures professional plant-based hair care, skin care, makeup, Pure-Fume(TM), and other lifestyle products. The products used during services and which are available for purchase, include the following for both men and women:
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Hair care - hair color and styling products, shampoos, conditioners and finishing sprays.
 
 
 
 
Makeup - lipsticks, lip glosses, mascaras, foundations, eye shadows, nail polishes-remove nail polishes and powders.
 
 
 
 
Skincare - moisturizers, creams, lotions, cleansers and sunscreens.
 
 
 
 
Fragrance - oils, candles, and a variety of fragrance products used on hair, the body, and in the home.
          These products are sold directly to a broad consumer base for personal use. Therefore, we do not rely on any single customer for product sales.
Marketing and Sales
          The target market for the salons are 70% female and 30% male, seeking customers with high expectations at a reasonable cost. The average customer in Salt Lake City is expected to visit the salon 6-8 times per year and will spend an average of $66 on services and purchase about $12 of Aveda products per visit.
          The Liberty Heights location was selected for its central location, high income demographics within easy driving distance, and the trendy nature of the area. The Marmalade location was chosen because of the high traffic count, high visibility, easy access from an I-15 freeway exit, trendy up and coming neighborhood, high income demographics within a 1 mile area east of the salon, ample parking, proximity to the new City Creek Shopping mall and the modern building that houses our facility. The primary marketing efforts of the salons continue to be word of mouth, supplemented by targeted advertising campaigns and referrals from existing customers. Our marketing campaigns are heavily focused on organically ranking under certain search terms online, and online sites such as Yelp and CitySearch, coupled with other social media sites.
          Another form of marketing is done through community and charitable involvement. Our salons pride themselves in giving back to the community by sponsoring as many charitable events as possible which align with our values revolving around women's issues, high fashion, environmental conservation and other community based programs.
Competition
          The Company's primary competition comes from other high end salons offering above-and-beyond customer service in the Salt Lake City market. The closest competitors offering a similar level of service that are within our area include: Lunatic Fringe, Salon Zazou, and Salon Keiji. Low cost salons with large scale hair cutting operations, such as Great Clips, Supercuts, and Fantastic Sams also compete for clients, and may be competing directly with our stylists that are training to become senior stylists. The price point of our entry level hair and color services in most cases is only slightly higher than some of the above mentioned discount hair cutting operations. However, they do not offer comparable extra services and products which is our competitive point of difference.
Employees
          As of December 31, 2011, Landis employed 73 individuals, with approximately 70 providing salon and support services and 3 in management, administration and finance. None of our employees are represented by labor unions and we have experienced no work stoppages. We believe that our employee relations are good.
ITEM 1A. RISK FACTORS
          Our business faces many risks. Described below are what we believe to be the material risks that we face. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could suffer.
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Our ability to continue as a going concern is in doubt absent obtaining adequate new debt or equity financing and achieving sufficient sales levels.
          We have limited capital. Because we do not have sufficient working capital for continued operations for at least the next 12 months our continued existence is dependent upon us sustaining operating profitability or obtaining the necessary capital to meet our expenditures. Our operating capital requirements, in excess of what is generated from operations, for the next 12 months are approximately $500,000. This primarily consists of the costs associated with our financial statement reporting obligations and costs associated with future expansion plans in 2012. We have signed a 7 year lease for an Aveda Experience Center which is a shop that sells retail Aveda products only. The cost associated with construction, stocking the store and negative cash flow is expected to be $250,000 for 2012. At this time, we are still in the process of identifying additional salon locations within the Salt Lake valley. The funding for our operations will primarily come from private investors purchasing our Preferred stock as well as obtaining traditional lines of credit and loans to finance equipment, furniture, leasehold improvements and operations. We cannot assure you that we will be able to generate sufficient sales or raise adequate capital to meet our future working capital needs.
The voting control held by Nexia Holdings Inc. creates an anti-takeover or change of control limitation. Nexia currently holds voting control of the Company through its ownership of Supervoting preferred stock.
          The 5,850,000 shares of Supervoting Preferred Stock (100 votes for each share) held by Nexia combined with the 250,000,000 shares of common stock provide Nexia with voting control over any proposal requiring a vote of the shareholders. Through its ownership of the preferred voting shares and common stock it holds voting rights equal to 835,000,000 shares of common stock. This effectively gives Nexia a veto over any attempt to take over or change control of the Company. Such an event would include a vote by the board of directors to conduct a reverse or forward split of the common stock. The shares held by Nexia thus have a strong anti-takeover effect. The interests of Nexia may not always conform to the interests of the common stockholders, in general, and thus its voting rights may not always be exercised in the best interests of the common stockholders of the Company.
Our business and our industry are affected by cyclical factors in the State of Utah, including the risk of a prolonged recession.
          Our financial results are substantially dependent upon overall economic conditions in the State of Utah. General economic factors that are beyond our control, such as interest rates, recession, inflation, deflation, tax rates and policy, energy costs, unemployment trends, and other matters that influence consumer confidence and spending, may impact our business. In particular, visitation patterns to our salons can be adversely impacted by increases in unemployment rates and decreases in discretionary income levels.
          A prolonged or a deepening recession in the United States, specifically in Utah, could substantially decrease the demand for our products and services below current levels and adversely affect our business. Our industry has historically been vulnerable to significant declines in consumption and product and service pricing during prolonged periods of economic downturn such as at present.
          Recessions and other periods of economic dislocation typically result in a lower level of discretionary income for consumers. To the extent discretionary income declines, consumers may be more likely to reduce discretionary spending. This could result in our salon customers foregoing salon treatments or using home treatments as a substitute.
          We believe that the economic downturn slightly affected our financial results for the fiscal year ended December 31, 2011, with some increase in sales from the previous year. However, we continue to have sales in the first months of 2012 increase from the comparable months of 2011. If economic conditions result in negative sales in future periods and we are unable to offset the impact with operational savings, our financial results may be further affected.
If we cannot improve same-store sales our business and results of operations may be affected.
          Our success depends, in part, upon our ability to improve sales, as well as both gross margins and operating margins. A variety of factors affect comparable sales, including fashion trends, competition, current economic conditions, changes in our product assortment, the success of marketing programs and weather conditions. These factors may cause our comparable store sales results to differ materially from prior periods and from our expectations. If we are unable to improve our comparable sales on a long-term basis or offset the impact with operational savings, our financial results may be affected.
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Changes in our key relationships may adversely affect our operating results.
          We maintain key relationships with certain companies, including Aveda(tm). Termination or modification of any of these relationships could significantly reduce our revenues and have a material and adverse impact on our business, our operating results and our ability to expand.
Changes in fashion trends may impact our revenue.
          Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair may reduce the number of visits to, and therefore, sales at our salons.
We are dependent on key personnel, specifically Richard Surber, our President, CEO, and CFO.
          We are dependent on the services of Richard Surber, our President, CEO, CFO, and a director. The Company does not have an employment agreement with Mr. Surber, and losing his services would likely have an adverse effect on our ability to conduct business.
The salon operations are dependent on key personnel.
          The operations of the two salons are dependent on the day to day management of current staff at those locations who work in the salons and train their personnel. Losing the services of these long term employees would likely have an adverse effect on the operations and business development of the salons.
Our success depends on our ability to attract and retain trained stylists in order to support our existing salon business and to staff future expansion.
          The salons are actively recruiting qualified candidates to fill stylist positions. There is substantial competition for experienced personnel in this area, which we expect to continue. We will compete for experienced candidates with companies who have substantially greater financial resources than we do. If we fail to attract, motivate and retain qualified stylists, it could harm our business and limit our ability to be successful and hamper expansion plans. For example, we will depend upon the expertise and training abilities of our current staff and management at the salons. Since we do not maintain insurance policies on any of our employees, if we lose the services of any key officers or employees it could harm our business and results of operations.
Changes in regulatory and statutory laws may result in increased costs to our business.
          Our financial results can be adversely impacted by regulatory or statutory changes in laws. Due to the number of people we employ, laws that increase costs to provide employee benefits may result in additional costs to our business. Compliance with new, complex and changing laws may cause our expenses to increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our ability to market certain products, which could adversely affect our business, financial condition and results of operations.
If we are not able to successfully compete in our business segments, our financial results may be affected.
          Competition on a market by market basis remains strong. Therefore, our ability to raise prices in certain markets can be adversely impacted by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be impaired.
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We face significant competition in the salon business, which could harm our sales and profitability.
          The primary competition to our operations comes from salons offering excellent customer service in the Salt Lake Area market. We have identified our main competitors as Lunatic Fringe, Salon Zazou and Salon Keiji. We are also in competition with large scale hair cutting operations such as Great Clips, Supercuts, and Fantastic Sams, though these operations do not compete in offering the high-end services and products of our salons.
The loss of the Aveda(tm) line of products would damage the operation of our salons and have a significant and negative impact on our ability to operate and generate revenues.
          Our salons offer the Aveda(tm) line of products, which are used exclusively in the services provided to customers of the salon and offered for retail sale at the salon location. Loss of the Aveda(tm) product line would have a significant and negative impact on the operation of the salons and their ability to generate revenues from either retail sales of health and beauty products or from providing services to consumers at the salon. We believe that the high quality and reputation of this line of products is key to our current operations and future success.
Changes in manufacturers' choice of distribution channels may negatively affect our revenues.
          The retail products that we sell are licensed to be carried exclusively by professional salons. The products we purchase for sale in our salons are purchased pursuant to purchase orders, as opposed to long-term contracts, and generally can be terminated by the producer without much advance notice. Should the various product manufacturers decide to utilize other distribution channels, such as large discount retailers, it could negatively impact the revenue earned from product sales.
If we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions or private litigation and our reputation could suffer.
          The nature of our business involves processing, transmission and storage of personal information about our customers. If we experience a data security breach, we could be exposed to government enforcement actions and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to stop visiting our salons altogether. Such events could lead to lost future sales and adversely affect our results of operations.
Our stock price may be volatile.
          The market price of our common stock is highly volatile and fluctuates widely in price in response to various factors, many of which are beyond our control, including the following:
 
 
 
 
significant dilution;
 
 
 
 
our services or our competitors;
 
 
 
 
additions or departures of key personnel;
 
 
 
 
our ability to execute our business plan;
 
 
 
 
operating results that fall below expectations;
 
 
 
 
loss of any strategic relationship;
 
 
 
 
economic and other external factors; and,
 
 
 
 
period-to-period fluctuations in our financial results.
          In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Investors bear a risk that a liquid market may never develop and as a result, you may not be able to buy or sell our securities at the times you may wish and market liquidity may be limited.
          Even though our securities are quoted on the "Pink Sheets," that may not permit our investors to sell securities when and in the manner that they wish. There is not currently a significant volume of shares trading in the Company's common stock and there may never be sufficient volume to create a liquid market such as to allow all shareholders to sell or buy shares whenever they desire. A liquid market for the sale of shares of the Companies securities may never develop.
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Our common stock is currently deemed to be "penny stock", which makes it more difficult for investors to sell their shares.
          Our common stock is and will be subject to the "penny stock" rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.
Item 1B. Unresolved Staff Comments
          None.
Item 2. Properties
          We lease two facilities for our salon operations in Salt Lake City Utah. We believe that these facilities are adequate for our current needs and that suitable additional or substitute space will be available as needed to accommodate any expansion of our operations.
          Our Liberty Heights facility is located at 1298 South 900 East, Salt Lake City, Utah 84105. This lease is for a 4,000 square foot free standing commercial building with a preliminary term of ten years beginning on October 1, 2005 and the lease provides for one five year extended term.
          Our Landis II facility is located at 600 North 300 West, Salt Lake City, Utah 84103. This lease is for a 3,000 square foot commercial building with a term of ten years beginning on September 15, 2010 and the lease provides for two, five year extended terms.
          Subsequent Event. On March 10, 2012, we signed a lease through a newly formed subsidiary, Landis Experience Center, LLC to operate an Aveda(tm) experience center in the newly opened City Creek Mall located in downtown Salt Lake City, Utah. This 430 square foot store will focus on the sale of products only, no salon services will be provided. The lease is for a period of seven years beginning when the store opens in a few months.
Item 3. Legal Proceedings
          From time to time, we are involved in various disputes and litigation that arise in the ordinary course of business. If the potential loss from any claim or legal proceeding is considered probable and the amount or the range of loss can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to pending claims and litigation matters and may revise estimates.
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While the outcome of disputes and litigation matters cannot be predicted with any certainty, management does not believe that the outcome of any current matters will have a material adverse effect on our consolidated financial position, liquidity or results of operations.
At the current time there are no material pending legal proceedings to which Green or its subsidiaries are parties.
Item 4. Submission of Matters to a Vote of Security Holders
          None.
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
          Our common stock is traded on the Pink Sheets under the symbol GRNE. We have never declared or paid any cash dividends on our common stock in the past, and we do not plan to pay cash dividends in the foreseeable future. Currently, there are no securities authorized for issuance and no compensation plans in place. All share and per share information included in this Annual Report on Form 10-K has been adjusted to reflect our August 2010 five for one forward stock split.
          As of February 29, 2012, we had approximately 3,500 registered stockholders and approximately four beneficial owners of our common stock.
          The following table sets forth the high and low sales prices of our common stock for each quarter in the two-year period ended December 31, 2011:
 
 
 
 
 
 
 
 
 
 
High
 
Low
 
2010
 
 
 
 
 
 
 
First Quarter
 
$
0.0180
 
$
0.0010
 
Second Quarter
 
 
0.0134
 
 
0.0050
 
Third Quarter
 
 
0.0002
 
 
0.0042
 
Fourth Quarter
 
 
0.0200
 
 
0.0044
 
 
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
First Quarter
 
$
0.0065
 
$
0.0032
 
Second Quarter
 
 
0.0100
 
 
0.0021
 
Third Quarter
 
 
0.0062
 
 
0.0012
 
Fourth Quarter
 
 
0.0035
 
 
0.0001
 
 
 
 
 
 
 
 
 
2012
 
 
 
 
 
 
 
First Quarter
 
$
0.0012
 
$
0.0001
 
Unregistered Sales of Equity Securities
          On March 10, 2011, Green issued 14,333 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.74 per share which was mutually agreed upon by the Board of Directors and the individual investor. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.
          On March 16, 2011, Green issued 16,333 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.
          On April 5, 2011, Green issued an 8% Convertible Promissory Note in the principal face amount of $75,000 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a due date of January 9, 2012. The note provides for potential conversion of Green's common stock beginning in six months with the conversion price set at 61% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. The transaction was handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933.
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          On April 26, 2011, Green issued 10,000 Series B Preferred shares to an investor for $15,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.
          On June 14, 2011, Green issued an 8% Convertible Promissory Note in the principal face amount of $32,500 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a due date of March 16, 2012. The note provides for potential conversion of Green's common stock beginning in six months with the conversion price set at 61% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. The transaction was handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933.
          On July 19, 2011, Green issued an 8% Convertible Promissory Note in the principal face amount of $25,000 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a due date of April 25, 2012. The note provides for potential conversion of Green's common stock beginning in six months with the conversion price set at 61% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. The transaction was handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933.
          On December 7, 2011, Green issued an 8% Convertible Promissory Note in the principal face amount of $22,500 to Asher Enterprises Inc. in exchange for a cash payment of the same amount. The note has a due date of September 12, 2012. The note provides for potential conversion of Green's common stock beginning in six months with the conversion price set at 56% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) trading day period prior to the date of conversion. The transaction was handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933.
          SUBSEQUENT EVENTS
          On January 11, 2012, the Board of Directors approved the conversion of $4,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 21,052,632 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.
          On January 13, 2012, the Board of Directors approved the conversion of $5,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 26,315,789 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.
          On January 24, 2012, the Board of Directors approved the conversion of $5,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 27,272,727 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.
          On February 2, 2012, Green issued an 8% Convertible Promissory Note in the principal face amount of $42,500 to Asher Enterprises Inc. in exchange for a cash payment of the same amount. The note has a due date of November 6, 2012. The note provides for potential conversion of Green's common stock beginning in six months with the conversion price set at 58% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) trading day period prior to the date of conversion. The transaction was handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933.
          On February 17, 2012, the Board of Directors approved the conversion of $3,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 29,666,667 shares of Common Stock. The shares were converted at $0.00012 per share which was the conversion price provided for by the terms of the note.
10

 

 
          On February 23, 2012, the Board of Directors approved the conversion of $3,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 28,666,667 shares of Common Stock. The shares were converted at $0.00012 per share which was the conversion price provided for by the terms of the note.
          On February 27, 2012, Green and Landis Experience Center LLC issued an 11% Convertible Note in the principal face amount of $50,000 to William and Nina Wolfson in exchange for a cash payment of the same amount. The note has a due date of February 27, 2016. The note provides for monthly payments in the amount of $1,292.28 of principal and interest. The note provides for potential conversion of Green's common stock with the conversion price set at 50% of the bid price on the date of conversion. The transaction was handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933.
          On March 2, 2012, the Board of Directors approved the conversion of $6,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 31,578,947 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.
          On March 14, 2012, the Board of Directors approved the conversion of $7,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 30,434,783 shares of Common Stock. The shares were converted at $0.00023 per share which was the conversion price provided for by the terms of the note.
          On March 16, 2012, the Board of Directors approved the conversion of 3,888 Series B Preferred shares into 38,880,000 shares of Common Stock for an investor. The shares were converted at $0.0005 per share which was the quoted closing price on the date the conversion request was received from the shareholder.
          On March 29, 2012 the Company filed with the State of Utah an Amendment to its Articles of Incorporation that increased the number of authorized shares of common stock to ten billion shares. This action was taken after notice to the shareholders and having consent from a majority of the voting rights.
          All other unregistered sales of equity securities that have occurred during the years December 31, 2011 and 2010 have previously been reported in our Form 10, Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Item 6. Selected Financial Data
          Item 301(c) of Regulation S-K states that Smaller reporting companies, as defined by section 229.10(f)(1) of Regulation S-K, are not required to provide this information.
11

 

 
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
          This annual report, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain "forward-looking statements" within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management's best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include but are not limited to competition within the personal hair care industry, price sensitivity; changes in economic conditions and in particular, continued weakness in the U.S. economies; changes in consumer tastes and fashion trends; the ability of the Company to maintain compliance with financial covenants in its credit agreements; labor and benefit costs; legal claims; the continued ability of the Company to obtain suitable locations and financing for new salon development and to maintain satisfactory relationships with landlords with respect to existing locations; governmental initiatives such as minimum wage rates, taxes; the ability of the Company to maintain satisfactory relationships with suppliers; or other factors not listed above. The ability of the Company to meet its expected revenue growth is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A of this Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC.
          The forward-looking statements included in this Annual Report on Form 10-K are made only as of the date of this Annual Report on Form 10-K. We do not intend, and undertake no obligation, to update these forward-looking statements.
Results of Operations
          Through our two wholly-owned subsidiaries, Landis Salons, Inc. and Landis Salons II, Inc., we operate two full-service hair and retail salons featuring the Aveda(TM) line of products. In August 2010, we determined that Newby Salons, LLC, which operated our Bountiful salon, did not meet our operational performance or real estate requirements and was closed. Revenue and expenses from the Bountiful salon are included in the following analysis of our operations until December 1, 2010 when Newby Salons, LLC was sold. The following discussion examines our results of operations and financial condition based on our consolidated financial statements for the years ended December 31, 2011 and 2010.
Revenue
          We generate revenue through the sale of services and products in the hair salon industry. For the years ended December 31, 2011 and 2010, we had net sales of $2,814,026 and $2,250,998, respectively. Our net sales increased $563,028 or 25.0% for the year ended December 31, 2011 as compared to an increase of $206,647 or 10.1% for the year ended December 31, 2010. These increases in revenue were driven by the following factors:
 
 
 
 
 
 
Percentage Increase (Decrease) in Revenues For the Years Ended
 
Factor
 
December 31, 2011
 
December 31, 2010
 
Same-store
 
 
25.0
%
 
6.2
%
New salon construction
 
 
0.0
%
 
7.6
%
Closed salon
 
 
0.0
%
 
(3.7
)%
Total
 
 
25.0
%
 
10.1
%
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          The following table shows the same-store change in service revenue for the years ended December 31, 2011 and 2010:
 
 
Years Ended
 
Increase (Decrease)
Over Prior Calendar Year
 
Salon
 
December 31, 2011
 
December 31, 2010
 
Dollar
 
Percentage
 
Liberty Heights
 
$
1,572,863
 
$
1,496,401
 
$
76,463
 
 
5
%
Marmalade
 
 
557,321
 
 
110,451
 
 
446,870
 
 
405
%
Bountiful
 
 
-
 
 
61,572
 
 
(61,572
)
 
(100
)%
Total Service Revenue
 
$
2,130,184
 
$
1,668,424
 
$
461,761
 
 
28
%
          The following table shows the same-store change in product revenue for the years ended December 31, 2011 and 2010:
 
 
 
 
 
 
 
 
Years Ended
 
Increase (Decrease)
Over Prior Fiscal Year
 
Salon
 
December 31, 2011
 
December 31, 2010
 
Dollar
 
Percentage
 
Liberty Heights
 
$
495,352
 
$
510,910
 
$
(15,558
 
 
(3%
)
Marmalade
 
 
188,490
 
 
44,707
 
 
143,783
 
 
322
%
Bountiful
 
 
-
 
 
26,957
 
 
(26,957
)
 
(100
)%
Total Product Revenue
 
$
683,842
 
$
582,574
 
$
101,066
 
 
17
%
Cost of Revenue
          The following table shows cost of revenue as a percentage of related revenue for the years ended December 31, 2011 and 2010:
 
 
 
 
 
 
Years Ended
 
 
 
December 31,
 
December 31,
 
Revenue Type
 
2011
 
2010
 
Services
 
 
55.7
%
 
59.6
%
Product
 
 
62.6
%
 
53.3
%
Operating Expenses
          We had a net loss of $264,379 for the year ended December 31, 2011 as compared to net income of $13,939 for the year ended December 31, 2010. The single largest item that accounts for this $278,318 change from net income in 2010 to net loss in 2011 was the $320,770 gain from the sale of Green's Newby salon subsidiary in Bountiful during 2010. The amount is recorded in the other income and expense section of the consolidated statements of operations as it is not considered part of normal salon operations. The increased general and administrative expenses are explained below in more detail.
          General and administrative
          The following table shows General and administrative expense for the years ended December 31, 2011 and 2010:
 
 
Years Ended
 
 
 
December 31,
2011
 
December 31,
2010
 
Change
 
Salaries and wages
 
$
346,730
 
$
300,919
 
$
45,811
 
Rent
 
 
154,615
 
 
115,214
 
 
39,401
 
Advertising
 
 
102,176
 
 
106,207
 
 
(4,031
)
Credit card merchant fees
 
 
39,170
 
 
52,546
 
 
(13,376
)
Insurance
 
 
44,576
 
 
44,369
 
 
207
 
Utilities and telephone
 
 
43,676
 
 
35,596
 
 
8,080
 
Professional services
 
 
186,571
 
 
143,448
 
 
43,123
 
Repairs and maintenance
 
 
18,508
 
 
22,593
 
 
(4,085
)
Dues and subscriptions
 
 
19,226
 
 
18,330
 
 
896
 
Office expense
 
 
58,121
 
 
69,947
 
 
(11,826
)
Travel
 
 
16,473
 
 
11,681
 
 
4,793
 
Other
 
 
20,714
 
 
39,101
 
 
(18,387
)
Total General and administrative expenses
 
$
1,050,556
 
$
959,951
 
$
90,605
 
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          The increase in general and administrative expenses over the comparable annual period is primarily due to increases in salaries and wages, rent, professional services, and office expense. These 2011 increases over 2010 were primarily related to the opening and full year of operations for the Landis II salon.
          Depreciation expense for the year ended December 31, 2011 increased to $93,983 from $77,042 for the year ended December 31, 2010. The increase is primarily due to having a full year of depreciation for new assets placed into service toward the end of 2010 due to the opening of the Landis II salon in 2010.
Other Income (Expenses), net
 
 
 
 
 
 
Years Ended
 
 
 
December 31,
2011
 
December 31,
2010
 
Interest expense
 
$
(321,745
)
$
(253,514
)
Interest income
 
 
834
 
 
 
 
Gain on sale of subsidiary
 
 
-
 
 
320,770
 
Other income, net
 
 
1,560
 
 
38,083
 
Total Other income (expenses), net
 
$
(319,351
)
$
105,339
 
          Other income (expenses), net, went from $105,339 for the year ended December 31, 2010 to $(319,351) for the year ended December 31, 2011 for a change of $(424,690) or (403)%. This change is primarily due to a gain on sale of subsidiary in 2010 as can be seen in the table above.
Liquidity and Capital Resources
          Cash and Investments in marketable securities
          As of December 31, 2011, our principal source of liquidity consisted of $97,983 of cash, as compared to $67,593 as of December 31, 2010. Our primary sources of cash during the year ended December 31, 2011 were customer payments for salon services and products and cash proceeds from the sale of our Preferred Series B shares and from the issuance of convertible notes payable. Our primary uses of cash in the year ended December 31, 2011 were payments relating to salaries, benefits, rent, and other general operating expenses.
          Working Capital As of December 31, 2011 and December 31, 2010
          We had a working capital deficit of $4,229,734 as of December 31, 2011. Our current assets were $213,840, which consisted of $97,983 in cash, $109,470 in inventory, $6,244 in prepaid expenses and $143 in accounts receivable. Our total assets were $1,036,562, which included $420,089 in property and equipment (net), and $402,631 in other assets. Our current liabilities were $4,443,574, including $293,794 in accounts payable and accrued expenses, $838,274 due to related parties, and $310,523 in the current portion of notes payable, and a $2,943,160 derivative liability. Our long-term liabilities were $2,949,483. Our total stockholders' deficit at December 31, 2011, was $6,356,495.
          Working capital decreased by $2,942,861 as of December 31, 2011, as compared to December 31, 2010 primarily due to the addition of the 2011 current derivative liability of $2,943,160. This addition is most of the overall change in working capital from 2010 to 2011.
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          Cash Flows from Operating Activities
          Cash flows from operating activities include net income (loss), adjusted for certain non-cash charges, as well as changes in the balances of certain assets and liabilities. Our net cash used in operating activities decreased by $304,918 as of December 31, 2011, as compared to December 31, 2010 primarily due to the overall $278,318 change from having net income in 2010 to having a net loss in 2011. Most of the net loss, as discussed earlier, was due to the $320,770 gain on sale of a subsidiary.
          Cash Flows from Investing Activities
          Net cash used in investing activities decreased by $284,299 during the year ended December 31, 2011, as compared to the year ended December 31, 2010 primarily due to decreased purchases of property, plant, and equipment by $259,214.
          As resources are available, we expect to continue our investing activities, including purchasing property, plant and equipment and making short and long-term equity investments.
          Cash Flows from Financing Activities
Net cash provided by financing activities decreased by $592,764 during the year ended December 31, 2011, as compared to the year ended December 31, 2010. This is primarily due to a decrease of proceeds from the sale of preferred stock by $546,000. Other less significant financing activities net to a decrease of $46,764 in cash provided.
Other Factors Affecting Liquidity and Capital Resources
          8% Series A Senior Subordinated Convertible Redeemable Debentures
          On April 30, 2008, we entered into a stock transfer agreement with our parent company Nexia and Nexia's wholly-owned subsidiary DHI whereby they would each sell their holdings in Landis and Newby in exchange for an 8% Series A Senior Subordinated Convertible Debenture with a face amount of $3,000,000. Interest on the debenture commenced on December 30, 2008. DHI has the option, at any time, to convert all or any amount over $10,000 of principal face amount and accrued interest into shares of Common stock, $0.001 par value per share, at a conversion price equal to 95% of the average closing bid price of the common stock three days prior to the date we receive notice. In February of 2011, DHI transferred the Debenture to Nexia in exchange for the release of debt obligations owed to Nexia by DHI and Nexia is the current holder of the Debenture.
          Impact of Inflation
          We compensate some of our salon employees with percentage commissions based on sales they generate. Accordingly, this provides us certain protection against inflationary increases, as payroll expense is a variable cost of sales. In addition, we may increase pricing in our salons to offset any significant increases in wages and cost of services provided. Therefore, we do not believe inflation has had a significant impact on the results of our operations.
Off-Balance Sheet Arrangements
          As of December 31, 2011 and December 31, 2010, we had no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
Critical Account Policies and Estimates
          The preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles, or "GAAP," is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. We consider the accounting policies discussed below to be critical to the understanding of our financial statements. Actual results could differ from our estimates and assumptions, and any such differences could be material to our consolidated financial statements.
15

 

 
New Accounting Standards
          In June 2011, the FASB issued amendments to existing standards for reporting comprehensive income. Accounting Standards Update (ASU) 2011-05 rescinds the requirement to present a Consolidated Statement of Changes in Share Owners' Equity and introduces a new statement, the Consolidated Statement of Comprehensive Income. The new statement begins with net income and adds or deducts other recognized changes in assets and liabilities that are not included in net earnings under GAAP. For example, unrealized changes in currency translation adjustments are included in the measure of comprehensive income but are excluded from net earnings. The amendments are effective for our first quarter 2012 financial statements. The amendments affect only the display of those components of equity categorized as other comprehensive income and do not change existing recognition and measurement requirements that determine net earnings.
          In May 2011, the FASB issued amendments to existing standards for fair value measurement and disclosure, which are effective in the first quarter of 2012. The amendments clarify or change the application of existing fair value measurements, including: that the highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets; that a reporting entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds that instrument as an asset; to permit an entity to measure the fair value of certain financial instruments on a net basis rather than based on its gross exposure when the reporting entity manages its financial instruments on the basis of such net exposure; that in the absence of a Level 1 input, a reporting entity should apply premiums and discounts when market participants would do so when pricing the asset or liability consistent with the unit of account; and that premiums and discounts related to size as a characteristic of the reporting entity's holding are not permitted in a fair value measurement. The impact of adopting these amendments is expected to be immaterial to the financial statements.
Item 8. Financial Statements and Supplementary Data
          The financial statements required by Item 8 are submitted as a separate section of this Annual Report on Form 10-K. See Item 15, "Exhibits and Financial Statement Schedules."
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
          None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
          We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and our Chief Financial Officer, or CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2011.
          The evaluation of our disclosure controls and procedures included a review of our processes and the effect on the information generated for use in this Annual Report on Form 10-K. In the course of this evaluation, we sought to identify any material weaknesses in our disclosure controls and procedures, to determine whether we had identified any acts of fraud involving personnel who have a significant role in our disclosure controls and procedures, and to confirm that any necessary corrective action, including process improvements, was taken. This type of evaluation is performed every fiscal quarter so that our conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these disclosure controls and procedures, modifying them as circumstances warrant.
16

 

 
          Based on evaluation as of December 31, 2011, the CEO and CFO has concluded that our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
          Based on management's most recent evaluation of our company's internal control over financial reporting, management determined that there were no changes in our company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting that occurred during the most recent fiscal quarter.
Inherent Limitations on Effectiveness of Internal Control over Financial Reporting and Disclosure Controls and Procedures
          Our management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. An internal control framework, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of internal control are met. Further, the design of internal control must reflect the fact that there are resource constraints, and the benefits of the controls must be considered relative to their costs. While our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in internal control, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Green have been detected.
Management's Report on Internal Control Over Financial Reporting
          Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. Our management has concluded that, as of December 31, 2011, our internal control over financial reporting is effective. This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Our management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
Item 9B. Other Information
          None.
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
Executive Officers of the Registrant
          The following table provides information regarding the executive officers of Green as of December 31, 2011:
 
 
 
 
 
Name
 
Age
 
Positions and Offices
Richard D. Surber
 
38
 
President, CEO, CFO, and Director
 
 
 
 
 
Logan C Fast
 
25
 
Vice President and Director
          Our executive officers are appointed by the Board of Directors and serve at the discretion of the Board of Directors.
Richard D. Surber - Mr. Surber graduated from the University of Utah with a Bachelor of Science degree in Finance and then with a Juris Doctorate with an emphasis in corporate law, including securities, taxation and bankruptcy. He has served as President and Director of Nexia Holdings, Inc. since May of 1999. He has been an officer and director of several public companies. He was appointed as president and to the board of Green Endeavors, Inc. in September of 2007. Mr. Surber holds 37,134 shares of Series B Preferred stock and 12,972,625 shares of Voting Common stock of Green Endeavors, Inc.
17

 

 
Logan C. Fast - Mr. Fast was appointed to these offices as of August 28, 2008. He is currently working as a grand salon stylist and as an instructor at the Landis Salon locations. Mr. Fast does not hold any position as officer or director of any other publicly held company. Mr. Fast holds 2,000 shares of Series B Preferred stock in Green Endeavors, Inc.
          There are no family relationships among any officer or director of Green Endeavors, Inc.
Item 11. Executive Compensation
          The following table sets forth the compensation of the named executive officer for each of the two years ended December 31, 2011 and 2010:
 
 
 
 
 
 
 
 
 
 
 
 
Name and Principal Position
 
Year
 
Salary ($)
 
Bonus ($)
 
Stock
Awards ($)
 
Total ($)
 
Richard D. Surber (3) - President, CEO, CFO, and Director
 
 
2011
 
$
40,419
(1)
$
-
 
$
-
 
$
40,419
 
 
 
 
2010
 
$
35,000
(1)
$
-
 
$
-
 
$
35,000
 
Richard G. Clegg (3) - former CFO and former Director
 
 
2011
 
$
11,512
(1)
$
-
 
$
-
 
$
40,419
 
 
 
 
2010
 
$
7,415
(1)
$
2,500
 
$
125,000
 
$
134,915
 
Logan C. Fast - Vice President, Director
 
 
2011
 
$
57,301
(2)
$
-
 
$
-
 
$
57,301
 
 
 
 
2010
 
$
51,212
(2)
$
-
 
$
10,000
 
$
61,212
 
 
 
(1)
Compensation for services not related to positions as director.
(2)
Wages received for services performed as a stylist at the salons.
(3)
Mr. Clegg resigned as CFO and Director in October, 2011, and the Board appointed Mr. Surber as CFO at that time.
     
          No director compensation was paid or accrued during the years ended December 31, 2011 and 2010.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Beneficial Owners of More than Five Percent, Directors, and Management
          The following table sets forth certain information concerning the ownership of the Company's stock with respect to: (i) each person known to the Company to be the beneficial owner of more than five percent of the Company's stock; (ii) all directors; and (iii) directors and executive officers of the Company as a group. The notes accompanying the information in the table below are necessary for a complete understanding of the figures provided below. As of April 5, 2012, there were 862,355,708 shares of common stock issued and outstanding.
18

 

 
 
 
 
 
 
 
 
 
Title of Class
 
Name and Address of Beneficial Owner
 
Amount
And Nature of
Beneficial
Ownership
 
Percent of
Class
 
Supervoting Preferred ($0.001 par value)
 
Nexia Holdings, Inc.
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
5,850,000
 
 
100
%
Preferred Series
"B" Stock
($0.001par value)
 
Richard Surber, President and Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
37,134
 
 
6.3
%
Voting Common Stock
($0.001 par value)
 
Richard Surber, President, CEO, CFO, and Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
12,972,625
 
 
1.5
%
Voting Common Stock
($0.001 par value)
 
Logan Fast, Vice President and Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
-
 
 
-
 
Preferred Series
"B" Stock
($0.001par value)
 
Logan Fast, Vice President and Director
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
2,000
 
 
0.3
%
Voting Common Stock ($0.001 par value)
 
AmeriResource Technologies, Inc.
3440 E. Russell Road, Suite 89120
Las Vegas, Nevada 89120
 
 
25,000,005
 
 
2.9
%
Voting Common Stock
($0.001 par value)
 
Nexia Holdings, Inc.
59 West 100 South, Second Floor
Salt Lake City, Utah 84101
 
 
250,000,000
 
 
29
%
Preferred Series
"B" Stock
($0.001par value)
 
Directors and Executive Officers as a Group
 
 
39,134
 
 
10.8
%
Voting Common Stock
($0.001 par value)
 
Directors and Executive Officers as a Group
 
 
12,972,625
 
 
1.5
%
Change in Control
          There are no agreements, pledges or arrangements of any kind that could affect a change in control of Green Endeavors, Inc.
Item 13. Certain Relationships and Related Transactions and Director Independence
Related Transactions
          On April 30, 2008, Green entered into a stock transfer agreement with its parent company Nexia and Nexia's wholly-owned subsidiary DHI whereby they would each sell their holdings in Landis and Newby in exchange for an 8% Series A Senior Subordinated Convertible Debenture with a face amount of $3,000,000. Interest on the debenture commenced on December 30, 2008. DHI has the option, at any time, to convert all or any amount over $10,000 of principal face amount and accrued interest into shares of Common stock, $0.001 par value per share, at a conversion price equal to 95% of the average closing bid price of the Common stock three days prior to the date notice is received by Green. Based on the intrinsic value on the date of issuance, Green has a beneficial conversion feature, for which it has recorded a debt discount of $150,000 as of April 30, 2008. This discount is being amortized to the maturity date of the debenture, which is 10 years. During 2011, this Debenture was transferred from DHI to Nexia which currently holds the Debenture.
          On September 30, 2009, Landis issued 1,315,000 new shares of its Common stock to Green thereby increasing the amount of controlling interest in Landis to 99%. In addition to the issuance of Common stock, Green issued a note payable in the amount of $250,000 to Nexia. For consideration of the additional interest in Green, Nexia transferred $250,000 of restricted non-marketable securities in AmeriResource Technologies, Inc. to Landis. During the nine months ended September 30, 2009, Green recognized an other-than-temporary loss on its investment in AmeriResource Technologies, Inc. of $250,000 due to continued decline and duration in market value of the investment.
19

 

 
          On December 23, 2009, the board of directors approved a partial settlement of debt represented by the $3,000,000 Debenture. Green agreed to issue 250,000,000 shares of common stock to Nexia in exchange for a credit against the Debenture in the amount of $125,000. The shares were valued based on the average closing price of the stock prior to the date of issuance. Green also adjusted the debt discount to account for the change in the related beneficial conversion feature.
          On June 24, 2010, the Board of Directors approved the purchase of 650,000 shares of Green's Supervoting Preferred stock from AmeriResource Technologies, Inc. in exchange for 52,000 shares of Green's Series B Preferred stock. The number of Series B Preferred shares issued in this transaction was determined based on one share of Green's Supervoting Preferred stock being equivalent to 10 shares of Common stock and each Series B Preferred share is convertible into $5.00 of Common stock. The Series B Preferred shares were valued at $260,000. At the time of this filing, AmeriResource Technologies is no longer considered a related party.
          On July 7, 2010, the Board of Directors authorized the issuance of 25,000 shares of restricted Series B Preferred shares to Richard G. Clegg, at the time an officer and director of Green, pursuant to the terms of his employment agreement with a related party, Diversified Holdings I, Inc. The shares were issued pursuant to The 2008 Benefit Plan of Green to a natural person, providing bona fide services and not in conjunction with a capital raising transaction, exempt from registration under Rule 701 of the Securities Act of 1933. These shares are subject to being redeemed as a result of Mr. Clegg's resignation under the terms of his employment contract.
          On July 9, 2010, the Board of Directors approved the issuance of 50,000 shares of restricted Series B Preferred shares to Landis Salons II, Inc., a subsidiary of Green, to be used as collateral for a lease entered into by Landis Salons II, Inc. to serve as the location for a new Landis Lifestyle Salon. The shares are held by the landlord of the Marmalade facility to be converted and liquidated in the event of default on the part of Landis II. The shares will be returned to Landis II on the second anniversary of the lease commencement date provided that all obligations under the lease are current and the shares are reflected as an other non-current asset on Green's Consolidated Balance Sheet.
          Green shares its corporate office space, certain personnel, and lines of credit with Nexia Holdings, Inc. or entities controlled by Nexia Holdings under the direction of Richard Surber. A Consulting Agreement is expected to be formalized in 2012 to memorialize costs related to shared office space, utilization of certain staff members and lines of credit that are guaranteed by Richard Surber.
Director Independence
          Our Board of Directors does not have any independent members. Both are employed in some capacity by the Company or its affiliates. There are no committees made up of less than all members of the board for audit, nominating, compensation or hiring purposes. Based upon the size of the Company and its limited resources there are currently not sufficient resources to expand the size of the board and operate committees for these purposes. Richard D. Surber has the education and experience to be the financial expert on the board. The Board of Directors has always operated as a whole and has not proceeded without the other member(s) of the board consenting to any action.
Item 14. Principal Accountant Fees and Services
          Madsen & Associates CPA's, Inc. served as our independent registered public accounting firm for the years ended December 31, 2011 and 2010. The following fees were paid to our independent registered public accounting firm for services rendered during our last two fiscal years:
Audit Fees
          The aggregate fees billed for professional services rendered by our principal accountant for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended December 31, 2011 and 2010 were $36,035 and $31,685, respectively.
20

 

 
Audit Related Fees
          There were no fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of the financial statements, other than those previously reported above, for the years ended December 31, 2011 and 2010.
Tax Fees
          There were no fees billed for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning for the years ended December 31, 2011 and 2010, respectively.
All Other Fees
          There were no other fees billed for products or services provided by our principal accountant, other than those previously reported above, for the years ended December 31, 2011 and 2010.
21

 

 
PART IV.
Item 15. Exhibits and Financial Statement Schedules
 
 
Page
(a)
1. Financial Statements
 
 
 
 
 
23
 
 
 
 
24
 
 
 
 
25
 
 
 
 
26
 
 
 
 
27
 
 
 
 
28
 
 
 
(a)
2. Financial Statement Schedules
 
 
 
 
 
All other schedules are omitted because they are not required or the required information is shown in the Consolidated Financial Statements or Notes thereto.
 
 
 
 
(a)
44
 
 
 
 
The exhibits listed in the accompanying Exhibit Index (following the Signatures section of this Annual Report on Form 10-K) are filed or incorporated by reference as part of this Annual Report on Form 10-K.
 
 
 
 
 
The exhibits filed or incorporated by reference as part of this Annual Report on Form 10-K contain agreements to which Green Endeavors, Inc. is a party. These agreements are included to provide information regarding their terms and are not intended to provide any other factual or disclosure information about Green Endeavors, Inc. or the other parties to the agreements. Certain of the agreements contain representations and warranties by each of the parties to the applicable agreement, and any such representations and warranties have been made solely for the benefit of the other parties to the applicable agreement as of specified dates, may apply materiality standards that are different than those applied by investors, and may be subject to important qualifications and limitations that are not necessarily reflected in the agreement. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and should not be relied upon as statements of factual information.
 
___________________
22

 

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Green Endeavors, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Green Endeavors, Inc. and Subsidiaries (the Company) as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the years in the two-year period ended December 31, 2011. The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Green Endeavors, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in the notes to the consolidated financial statements, the Company will need additional working capital for its planned activity and to service its debt. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are described in the notes to the consolidated financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Madsen & Associates CPA's, Inc.
Madsen & Associates CPA's, Inc.
Salt Lake City, Utah
April 12, 2012
23

 

 
Green Endeavors, Inc. and Subsidiaries
Consolidated Balance Sheets
 
 
 
 
 
 
 
 
 
 
December 31,
 
December 31,
 
 
 
2011
 
2010
 
Assets
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
Cash
 
$
97,983
 
$
67,593
 
Accounts receivable
 
 
143
 
 
941
 
Inventory
 
 
109,470
 
 
107,365
 
Prepaid expenses
 
 
6,244
 
 
3,317
 
Total current assets
 
 
213,840
 
 
179,216
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net of accumulated depreciation of $342,923 and $248,939 respectively
 
 
420,093
 
 
493,205
 
Other assets
 
 
402,629
 
 
408,614
 
Total Assets
 
$
1,036,562
 
$
1,081,035
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders' Deficit
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
$
293,794
 
$
200,327
 
Deferred revenue
 
 
57,823
 
 
48,525
 
Due to related parties
 
 
838,274
 
 
893,405
 
Derivative liability
 
 
2,943,160
 
 
-
 
Current portion of notes payable related party
 
 
-
 
 
125,584
 
Current portion of notes payable
 
 
200,629
 
 
198,248
 
Convertible notes payable, net of debt discount of $30,606 and $0, respectively
 
 
109,894
 
 
-
 
Total current liabilities
 
 
4,443,574
 
 
1,466,089
 
 
 
 
 
 
 
 
 
Long-Term Liabilities:
 
 
 
 
 
 
 
Notes payable related party
 
 
112,723
 
 
105,000
 
Notes payable
 
 
72,128
 
 
102,056
 
Convertible debentures, net of debt discount of $95,168 and $110,193, respectively
 
 
2,764,632
 
 
2,749,607
 
Total long-term liabilities
 
 
2,949,483
 
 
2,956,663
 
 
 
 
 
 
 
 
 
Stockholders' Deficit:
 
 
 
 
 
 
 
Convertible Supervoting preferred stock, $0.001 par value, 10,000,000 shares authorized; 5,850,000 and 5,850,000 shares issued and outstanding at December 31, 2011 and 2010; respectively, no liquidation value
 
 
5,850
 
 
5,850
 
Convertible preferred series B stock - $0.001 par value 2,000,000 shares authorized, 630,732 and 610,332 shares issued and outstanding at December 31, 2011and 2010, respectively
 
 
631
 
 
610
 
Preferred stock - $0.001 par value 3,000,000 shares authorized, no shares issued and outstanding at December 31, 2011 and 2010, respectively
 
 
-
 
 
-
 
Common stock, $0.001 par value, 2,500,000,000 shares authorized; 570,886,764 and 430,149,464 shares issued and outstanding at December 31, 2011 and 2010, respectively
 
 
570,887
 
 
430,150
 
Additional paid-in capital
 
 
(4,585,663
)
 
(1,694,506
)
Accumulated deficit
 
 
(2,348,200
)
 
(2,083,821
)
 
 
 
 
 
 
 
 
Total stockholders' deficit
 
 
(6,356,495
)
 
(3,341,717
)
Total Liabilities and Stockholders' Deficit
 
$
1,036,562
 
$
1,081,035
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
24

 

 
Green Endeavors, Inc. and Subsidiaries
Consolidated Statements of Operations
 
 
 
 
 
 
Years Ended
 
 
 
December 31,
2011
 
December 31,
2010
 
Revenue:
 
 
 
 
 
 
 
Services, net of discounts
 
$
2,130,184
 
$
1,668,424
 
Product, net of discounts
 
 
683,842
 
 
582,574
 
Total revenue
 
 
2,814,026
 
 
2,250,998
 
 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
Cost of services
 
 
1,186,726
 
 
994,765
 
Cost of product
 
 
427,789
 
 
310,640
 
Depreciation
 
 
93,983
 
 
77,042
 
General and administrative
 
 
1,050,556
 
 
959,951
 
Total costs and expenses
 
 
2,759,054
 
 
2,342,398
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
 
54,972
 
 
(91,400
)
 
 
 
 
 
 
 
 
Other income (expenses), net:
 
 
 
 
 
 
 
Interest expense
 
 
(321,745
)
 
(253,514
)
Interest income
 
 
834
 
 
-
 
Gain on sale of subsidiary
 
 
-
 
 
320,770
 
Other income
 
 
1,560
 
 
38,083
 
Total other income (expenses), net
 
 
(319,351
)
 
105,339
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(264,379
)
$
13,939
 
 
 
 
 
 
 
 
 
Basic and diluted net income (loss) per share
 
$
(0.00
)
$
0.00
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding - basic and diluted
 
 
459,868,549
 
 
381,748,573
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
25

 

 
Green Endeavors, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Deficit
December 31, 2009 through December 31, 2011
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supervoting Preferred Stock
 
Series B
Preferred Stock
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Additional
Paid-
in Capital
 
Retained Earnings (Deficit)
 
Non- controlling Interest
 
Total Stockholders'Deficit
 
Balance, December 31, 2009
 
 
6,500,000
 
$
6,500
 
 
183,800
 
$
183
 
 
321,395,650
 
$
321,396
 
$
(1,778,595
)
$
(2,100,450
)
$
2,690
 
$
(3,548,276
)
Series B preferred shares issued in settlement agreement issued
 
 
-
 
 
-
 
 
10,000
 
 
10
 
 
-
 
 
-
 
 
(6,010
)
 
-
 
 
-
 
 
(6,000
)
Series B preferred shares issued to repurchase Supervoting preferred stock issued
 
 
(650,000
)
 
(650
)
 
52,000
 
 
52
 
 
-
 
 
-
 
 
598
 
 
-
 
 
-
 
 
-
 
Write-off of related party receivables
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(702,572
)
 
-
 
 
-
 
 
(702,572
)
Acquisition of remaining 1% ownership of Landis Salons, Inc.
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
2,690
 
 
(2,690
)
 
-
 
Conversion of series B preferred shares
 
 
-
 
 
-
 
 
(54,200
)
 
(54
)
 
108,753,814
 
 
108,754
 
 
(108,700
)
 
-
 
 
-
 
 
-
 
Series B preferred shares sold for cash between $1.50 and $2.50 per share
 
 
-
 
 
-
 
 
337,732
 
 
338
 
 
-
 
 
-
 
 
510,662
 
 
-
 
 
-
 
 
511,000
 
Series B preferred shares issued pursuant to employment agreement with related party issued
 
 
-
 
 
-
 
 
25,000
 
 
25
 
 
-
 
 
-
 
 
124,975
 
 
-
 
 
-
 
 
125,000
 
Series B preferred shares issued as collateral pursuant to the facility lease agreement for Landis II issued
 
 
-
 
 
-
 
 
50,000
 
 
50
 
 
-
 
 
-
 
 
249,950
 
 
-
 
 
-
 
 
250,000
 
Amortization of debt discount on convertible debenture
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(14,808
)
 
-
 
 
-
 
 
(14,808
)
Series B preferred shares issued for key employees issued
 
 
-
 
 
-
 
 
6,000
 
 
6
 
 
-
 
 
-
 
 
29,994
 
 
-
 
 
-
 
 
30,000
 
Net income for year ended December 31, 2010
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
13,939
 
 
-
 
 
13,939
 
Balance, December 31, 2010
 
 
5,850,000
 
 
5,850
 
 
610,332
 
 
610
 
 
430,149,464
 
 
430,150
 
 
(1,694,506
)
 
(2,083,821
)
 
-
 
 
(3,341,717
)
Write-off of related party receivables
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(1,588
)
 
-
 
 
-
 
 
(1,588
)
Conversion of series B preferred shares
 
 
-
 
 
-
 
 
(20,266
)
 
(20
)
 
44,414,417
 
 
44,414
 
 
(44,394
)
 
-
 
 
-
 
 
-
 
Debt discount on 8% convertible notes payable
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
104,512
 
 
-
 
 
-
 
 
104,512
 
Stock options granted for services
 
 
-
 
 
-
 
 
-
 
 
-
 
 
 
 
 
 
 
 
25,364
 
 
-
 
 
-
 
 
25,364
 
Exercise of common stock options granted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60,000,000
 
 
60,000
 
 
(60,000
)
 
 
 
 
 
 
 
-
 
Conversion of convertible note payable to common shares
 
 
-
 
 
-
 
 
-
 
 
-
 
 
36,322,883
 
 
36,323
 
 
(21,823
)
 
-
 
 
-
 
 
14,500
 
Series B preferred shares sold for cash at $1.50 per share
 
 
-
 
 
-
 
 
40,666
 
 
41
 
 
-
 
 
-
 
 
64,959
 
 
-
 
 
-
 
 
65,000
 
Amortization of debt discount on convertible debenture
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(15,027
)
 
-
 
 
-
 
 
(15,027
)
Derivative Liability      -      -      -      -      -      -      (2,943,160 )    -      -      (2,943,160
Net income for year ended December 31, 2011
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
 
 
(264,379
)
 
-
 
 
(264,379
)
Balance, December 31, 2011
 
 
5,850,000
 
$
5,850
 
 
630,732
 
$
631
 
 
570,886,764
 
$
570,887
 
$
(4,585,663
)
$
(2,348,200
)
$
-
 
$
(6,356,495
)
The accompanying notes are an integral part of these Consolidated Financial Statements.
26

 

 
Green Endeavors, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 
 
 
 
 
 
Years Ended
 
 
 
December 31,
2011
 
December 31,
2010
 
Cash Flows from Operating Activities:
 
 
 
 
 
 
 
Net income (loss)
 
$
(264,379
)
$
13,939
 
Adjustments to reconcile net loss attributable to controlling interest to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Depreciation
 
 
93,983
 
 
77,042
 
Gain on sale of subsidiary
 
 
-
 
 
(320,770
)
Accretion of convertible debt discounts
 
 
73,905
 
 
-
 
Write-down of related party receivables
 
 
(1,588
)
 
(40,349
)
Stock-based compensation
 
 
25,364
 
 
30,000
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
 
 
799
 
 
-
 
Due from related parties
 
 
(55,131
)
 
(643,962
)
Inventories
 
 
(2,105
)
 
(14,331
)
Prepaid expenses
 
 
(2,927
)
 
(3,317
)
Other assets
 
 
5,983
 
 
(190,175
)
Accounts payable and accrued expenses
 
 
93,467
 
 
661,431
 
Deferred revenue
 
 
9,298
 
 
19,030
 
Other long-term liabilities
 
 
7,723
 
 
90,936
 
Net cash provided by (used in) operating activities
 
 
(15,608
)
 
(320,526
)
 
 
 
 
 
 
 
 
Cash Flows from Investing Activities:
 
 
 
 
 
 
 
Purchases of long-term investment
 
 
-
 
 
(25,085
)
Purchases of property, plant, and equipment
 
 
(20,871
)
 
(280,085
)
Net cash provided by (used in) investing activities
 
 
(20,871
)
 
(305,170
)
 
 
 
 
 
 
 
 
Cash Flows from Financing Activities:
 
 
 
 
 
 
 
Proceeds from bank loan
 
 
-
 
 
100,000
 
Payments made on bank loan
 
 
(8,569
)
 
(51,367
)
Payments made on notes payable
 
 
(18,978
)
 
-
 
Payments made on related party notes payable
 
 
(125,584
)
 
-
 
Proceeds from issuance of convertible notes payable
 
 
155,000
 
 
-
 
Proceeds from issuance of preferred stock
 
 
65,000
 
 
611,000
 
Net cash provided by (used in) financing activities
 
 
66,869
 
 
659,633
 
 
 
 
 
 
 
 
 
Increase in cash
 
 
30,390
 
 
33,937
 
 
 
 
 
 
 
 
 
Cash at Beginning of Year
 
 
67,593
 
 
33,656
 
 
 
 
 
 
 
 
 
Cash at end of year
 
$
97,983
 
$
67,593
 
 
 
 
 
 
 
 
 
Supplemental cash flow information:
 
 
 
 
 
 
 
Cash paid during the year for:
 
 
 
 
 
 
 
Interest
 
$
5,699
 
$
7,317
 
Non-cash investing and financing activities:
 
 
 
 
 
 
 
Issuance of series B preferred shares
 
$
5,699
 
$
369,000
 
Issuance of common stock options
 
$
25,364
 
$
-
 
Conversion of convertible note payable to common shares
 
$
(14,500
)
$
-
 
Derivative Liability
  $  2,943,160    -  
Conversion of B preferred shares
 
$
44,394
 
$
108,700
 
The accompanying notes are an integral part of these Consolidated Financial Statements.
27

 

 
Green Endeavors, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
          Cash Flows from Operating Activities
          Cash flows from operating activities include net income (loss), adjusted for certain non-cash charges, as well as changes in the balances of certain assets and liabilities. Our net cash used in operating activities decreased by $304,918 as of December 31, 2011, as compared to December 31, 2010 primarily due to a change from net income in 2010 to a net loss in 2011 in the amount of $278,318, an increase of $93,467 of accounts payable and accrued expenses, partially offset by an increase of $320,770 of gain on sale of subsidiary.
Note 1 - Organization and Basis of Financial Statement Presentation
Business Description
          Green Endeavors, Inc., ("Green") owns and operates two hair salons carrying the Aveda(tm) product line through its wholly-owned subsidiaries Landis Salons, Inc. ("Landis") and Landis Salons II, Inc. ("Landis II") in Salt Lake City Utah.
Organization
          Green Endeavors, Inc. was incorporated under the laws of the State of Delaware on April 25, 2002 as Jasper Holdings.com, Inc.. During the year ended December 2004, Green changed its name to Net2Auction, Inc. In July of 2007, Green changed its name to Green Endeavors, Ltd. On August 23, 2010, Green changed its name to Green Endeavors, Inc. and moved the corporate domicile from Delaware to Utah. On August 26, 2010, Green effected a forward split of the issued and outstanding shares of its common stock on a one for five basis and by the same proportion the number of authorized shares were increased to 2.5 billion to maintain the same ratios of authorized shares to issued shares and amended the designations of its Preferred Stock. All share and per share information included in these financial statements has been adjusted to reflect this forward stock split. The change in the designation of the Supervoting Preferred Stock increased its voting rights from 10 votes per share to 100 votes per share, and the amendment to the designation of the Series B Preferred Shares will modify the language in the designation regarding changes in the Common stock and the time period allowed to the corporation to respond to request for conversion up to 90 days. All share and per share information included in these financial statements has been adjusted to reflect this forward stock split. Green is quoted on the Pink Sheets as an OTCQB issuer under the symbol GRNE.
          Green is a 90% controlled subsidiary of Nexia Holdings, Inc ("Nexia").  Nexia acquired Green from AmeriResource Technologies, Inc. in October 2007 in exchange for 150,000 shares of Nexia Series C Preferred Stock valued at $750,000. Nexia is not currently a reporting company and is quoted on the Pink Sheets under the symbol NXHD.
          Landis Salons, Inc., a Utah corporation, was organized on May 4, 2005 for the purpose of operating an Aveda Lifestyle Salon. As of December 31, 2009, Landis was 99% owned by Green and a noncontrolling interest of 1% was held by a former employee. During the three months ended March 31, 2010, Green issued 10,000 Series B Preferred shares for the remaining 1% noncontrolling interest in Landis.
          Landis Salons II, Inc., a Utah corporation was organized on March 17, 2010 as a wholly-owned subsidiary of Green for the purpose of opening a second Aveda Lifestyle Salon. On September 20, 2010, Landis II opened its doors for operations.
28

 

 
Basis of Financial Statement Presentation
          The consolidated financial statements include the accounts of Green and its subsidiaries after elimination of intercompany accounts and transactions. All consolidated subsidiaries are wholly-owned by Green as of December 31, 2011 and 2010.
          Green consolidates entities under control and records a noncontrolling interest for the portions not owned by Green. Control is determined, where applicable, by the sufficiency of equity invested and the rights of the equity holders, and by the ownership of a majority of the voting interests, with consideration given to the existence of approval or veto rights granted to the minority shareholder. If the minority shareholder holds substantive participating rights, it overcomes the presumption of control by the majority voting interest holder. In contrast, if the minority shareholder simply holds protective rights (such as consent rights over certain actions), it does not overcome the presumption of control by the majority voting interest holder.
Note 2 - Summary of Significant Accounting Policies
Use of Estimates
          The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
          The carrying values of all financial instruments are deemed to approximate fair value due to the short maturity of these instruments and interest rates that approximate current market rates.
Cash and Cash Equivalents
          Investments with original maturities of three months or less at the time of purchase are considered cash equivalents. As of December 31, 2011 and 2010, Green had no cash equivalents.
Inventory
          Inventory consists of items held for resale and is carried at the lower of cost or market. Cost is determined using the first in, first out ("FIFO") method.
Property, Plant and Equipment
          Property, plant and equipment is stated at historical cost. Depreciation is generally provided over the estimated useful lives, using the straight-line method, as follows:
Leasehold improvements
Shorter of the lease term or the estimated useful life
Computer equipment and related software
3 years
Furniture and fixtures
3-10 years
Equipment
3-10 years
Vehicle
7 years
Signage
10 years
          During the years ending December 31, 2011 and 2010, Green recorded depreciation expense in the amount of $93,983 and $77,042, respectively.
          The following is a summary of Green's Property, plant, and equipment by major category as of December 31, 2011:
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost
 
Accumulated
Depreciation
 
Net
 
Computer equipment and related software
 
$
18,992
 
$
11,733
 
$
7,259
 
Leasehold improvements
 
 
443,579
 
 
204,377
 
 
239,202
 
Furniture and fixtures
 
 
21,504
 
 
11,652
 
 
9,852
 
Equipment
 
 
205,593
 
 
107,431
 
 
98,162
 
Vehicle
 
 
48,193
 
 
4,590
 
 
43,603
 
Signage
 
 
25,154
 
 
3,139
 
 
22,015
 
Total
 
$
763,015
 
$
342,992
 
$
420,093
 
29

 

 
          The following is a summary of Green's Property, plant, and equipment by major category as of December 31, 2010:
 
 
Cost
 
Accumulated
Depreciation
 
Net
 
Computer equipment and related software
 
$
15,859
 
$
4,249
 
$
11,610
 
Leasehold improvements
 
 
438,678
 
 
155,993
 
 
282,685
 
Furniture and fixtures
 
 
20,473
 
 
9,239
 
 
11,234
 
Equipment
 
 
194,838
 
 
76,463
 
 
118,375
 
Vehicle
 
 
48,193
 
 
2,295
 
 
45,898
 
Signage
 
 
24,103
 
 
700
 
 
23,403
 
Total
 
$
742,144
 
$
248,939
 
$
493,205
 
Investments in Equity Securities
          Marketable Securities
          Green considers all of its investments in marketable securities as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses presented net of tax and reported as a separate component of Stockholders' deficit. Realized gains and losses are determined using the specific identification method. Gains are recognized when realized and are recorded in the Consolidated Statements of Operations as Other income. Losses are recognized as realized or when Green has determined that an other-than-temporary decline in fair value has occurred.
          Non-Marketable Securities
          Green uses either the cost or equity method of accounting to account for its long-term, non-marketable investment securities. If Green determines that an other-than-temporary decline exists in a non-marketable equity security, Green writes down the investment to its fair value and records the related write-down as an impairment loss in the Consolidated Statements of Operations.
Series B Preferred Stock
          The Series B preferred stock is voting, convertible preferred. Each share of Green's Series B Preferred Stock is convertible into $5.00 worth of common stock. The number of common shares received is based on the market value of the common stock on the date of conversion. Series B Preferred Stock shareholders, at the option of Green, can receive cash or common stock upon conversion. The Preferred Stock is classified as equity as long as there are sufficient shares available to effect the conversion. In some instances certain contracts may pass the option to receive cash or Common Stock to the shareholder. In this case, it is assumed that a cash settlement will occur and balance sheet classification of the affected Preferred Stock and related preferred paid-in capital as a liability.
30

 

 
Deferred Revenue
          Deferred revenue arises when customers pay for products and/or services in advance of revenue recognition. Green's deferred revenue consists solely of unearned revenue associated with the purchase of gift certificates for which revenue is recognized only when the service is performed or the product is delivered.
Revenue Recognition
          Revenue is recognized at the time the service is performed or the product is delivered.
Stock-Based Compensation
          Green recognizes the cost of employee services received in exchange for awards of equity instruments as stock-based compensation expense. Stock-based compensation expense is measured at the grant date based on the value of the restricted stock award, option, or purchase right and is recognized as expense, less expected forfeitures, over the requisite service period, which typically equals the vesting period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The fair value of each restricted stock issuance is determined using the fair value of Green's common stock on the grant date.
          Determining the fair value of stock-based awards at the grant date requires judgment, including estimating the following:
 
 
 
 
Expected volatility of Green's stock;
 
 
Expected term of stock options;
 
 
Risk-free interest rate for the period;
 
 
Expected dividends (if any); and,
 
 
Expected forfeitures.
          The computation of the expected volatility assumption used in the Black-Scholes option pricing model for new grants is based on implied volatility when the remaining maturities of the underlying traded options are at least one year and, when the remaining maturities of the underlying traded options are less than one year, it is based on an equal weighting of historical and implied volatilities.
          When establishing the expected life assumption, Green reviews annual historical employee exercise behavior with respect to option grants having similar vesting periods. The risk-free interest rate for the period within the expected term of the option is based on the yield of United States Treasury notes in effect at the time of grant. Green has not historically paid dividends, thus the expected dividends used in any calculations are zero. Judgment is required in estimating the amount of stock-based awards that Green expects to be forfeited. Green calculates an expected forfeiture rate for stock options issuances based on historical trends.
          The valuation of all options, including the expected life and forfeiture rates of stock options, are calculated based on one employee pool because there is no significant difference in exercise behavior between classes of employees.
          During the year ended December 31, 2011, Green issued 60,000,000 shares of common stock to three individuals for services calculated at $25,364 using the Black-Scholes option pricing model. See footnotes to the financial statements for additional disclosures regarding the Company's stock-based compensation.
Income Taxes
          Deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Also, Green's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.
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          The following is a table of Green's net operating losses (NOL), related estimated deferred tax assets, and expiration dates of the NOLs:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating
Income (Loss)
 
Deferred
Tax Asset (Liability)
 
Expiration
Year of NOL
 
2008
 
$
(1,697,742
)
$
577,000
 
 
2028
 
2009
 
 
(385,160
)
 
131,000
 
 
2029
 
2010
 
 
13,939
 
 
(4,800
)
 
2030
 
2011
 
 
(264,379
)
 
90,000
 
 
2031
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
(2,333,342
)
$
793,200
 
 
 
 
          The related deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The deferred tax asset above has been fully offset by a valuation allowance because the Company expects that it will not realize the benefits of the deferred tax asset in the near future.
Net Loss Per Share
          Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and potential common shares during the specified period. For the year ended December 31, 2011, potential common shares are not included in the diluted net loss per share calculation as their effect would be anti-dilutive.
Recent Accounting Pronouncements
          In January 2010, the FASB issued ASU No. 2010-06, "Improving Disclosures about Fair Value Measurements" ("ASU 2010-06"). ASU 2010-06 requires new disclosures for (i) transfers of assets and liabilities in and out of levels one and two fair value measurements, including a description of the reasons for such transfers and (ii) additional information in the reconciliation for fair value measurements using significant unobservable inputs (level three). This guidance also clarifies existing disclosure requirements including (i) the level of disaggregation used when providing fair value measurement disclosures for each class of assets and liabilities and (ii) the requirement to provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for level two and three assets and liabilities. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about activity in the roll forward for level three fair value measurements, which is effective for fiscal years beginning after December 15, 2010. The adoption of this guidance has not had a material impact on Green's financial position and results of operations.
          In February 2010, the FASB issued ASU No. 2010-09, "Amendments to Certain Recognition and Disclosure Requirements" ("ASU 2010-09"), which amends ASC Topic 855, "Subsequent Events." The amendments to ASC Topic 855 do not change existing requirements to evaluate subsequent events, but: (i) defines a "SEC Filer," which we are; (ii) removes the definition of a "Public Entity"; and (iii) for SEC Filers, reverses the requirement to disclose the date through which subsequent events have been evaluated. ASU 2010-09 was effective for us upon issuance. This guidance did not have a material impact on Green's financial position and results of operations.
         In April 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-13, "Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades" ("ASU 2010-13"). ASU 2010-13 addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification ("ASC") Topic 718 was amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trade shall not be considered to contain a market, performance or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, with early application permitted. We do not anticipate that the adoption of this guidance will have a material impact on Green's financial position and results of operations.
32

 

 
          In May 2011, the FASB issued amendments to existing standards for fair value measurement and disclosure, which are effective in the first quarter of 2012. The amendments clarify or change the application of existing fair value measurements, including: that the highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets; that a reporting entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds that instrument as an asset; to permit an entity to measure the fair value of certain financial instruments on a net basis rather than based on its gross exposure when the reporting entity manages its financial instruments on the basis of such net exposure; that in the absence of a Level 1 input, a reporting entity should apply premiums and discounts when market participants would do so when pricing the asset or liability consistent with the unit of account; and that premiums and discounts related to size as a characteristic of the reporting entity's holding are not permitted in a fair value measurement. The impact of adopting these amendments is expected to be immaterial to the financial statements.
          In June 2011, the FASB issued amendments to existing standards for reporting comprehensive income. Accounting Standards Update (ASU) 2011-05 rescinds the requirement to present a Consolidated Statement of Changes in Share Owners' Equity and introduces a new statement, the Consolidated Statement of Comprehensive Income. The new statement begins with net income and adds or deducts other recognized changes in assets and liabilities that are not included in net earnings under GAAP. For example, unrealized changes in currency translation adjustments are included in the measure of comprehensive income but are excluded from net earnings. The amendments are effective for our first quarter 2012 financial statements. The amendments affect only the display of those components of equity categorized as other comprehensive income and do not change existing recognition and measurement requirements that determine net earnings.
          Management believes the impact of other recently issued standards and updates, which are not yet effective, will not have a material impact on Green's consolidated financial position, results of operations or cash flows upon adoption.
Note 3 - Inventory
          Green's inventory consists of items held for resale and product that is used in services by the Landis and Landis II Salons. Inventory is carried at the lower of cost or market. As of December 31, 2011 and 2010, inventory amounted to $109,470 and $107,365, respectively.
Note 4 - Other Assets
          The following table shows other assets as of December 31, 2011 and 2010:
 
 
 
 
 
 
 
 
 
 
December 31,
2011
 
December 31,
2010
 
Green Series B Preferred shares pledged as collateral for the Landis II facility lease (1)
 
$
250,000
 
$
250,000
 
Note receivable pledged as collateral for the Landis II facility lease (2)
 
 
105,000
 
 
105,000
 
Lease and utility deposits
 
 
21,403
 
 
23,684
 
Certificate of deposit
 
 
26,226
 
 
25,462
 
Other
 
 
-
 
 
4,468
 
Total other assets
 
$
402,629
 
$
408,614
 
______________
(1)

On July 9, 2010, the Board of Directors approved the issuance of 50,000 shares of restricted Series B Preferred shares to Landis Salons II, Inc., a subsidiary of Green, to be used as collateral for a lease entered into by Landis Salons II to serve as the location for a new Landis Lifestyle Salon. These shares were then assigned to the landlord of Landis II as a security deposit with a related value of $250,000.

(2)
On July 12, 2010, Landis Salons II, Inc. issued a promissory note in the principal amount of $105,000 payable to Wasatch Capital Corporation, which is a subsidiary of Nexia Holdings, Inc. Principal and interest, accruing at the rate of 5% per year, will be due on or before November 10, 2018. This promissory note was issued in exchange for a note receivable assigned to Landis Salons II, for $105,000 with the same terms. As of December 31, 2011 and 2010, there was $7,724 and $2,474 of accrued interest on the note, respectively.
33

 

 
Note 5 - Derivative Liability
Derivative Liability
          On December 31, 2011, it was determined that Green's authorized number of common shares of stock (2,500,000,000) was insufficient to cover the potential conversion of the Company's convertible debt instruments, Preferred Series B stock, and Preferred Supervoting stock into common stock. Green has recorded a derivative liability to account for such potential conversion. The shortage of authorized common stock was approximately 9,810,532,249 shares. This number of needed authorized shares was multiplied by the quoted price of Green's stock on December 31, 2011 ($.0003). The result of the shortage is a current liability in the amount of $2,943,160. This amount will be remeasured at each reporting period as long as the shortage in authorized common shares exists.
          On March 29, 2012, the Company filed with the State of Utah an Amendment to its Articles of Incorporation that increased the number of authorized shares of common stock to ten billion shares. This action was taken after notice to the shareholders and having consent from a majority of the voting rights.
Note 6 - Lease Commitments
Operating Leases
          Facilities are leased under operating leases expiring at various dates through 2020. Certain of these leases contain renewal options. For the years ended December 31, 2011 and 2010, rent expense was $154,615 and $115,214, respectively.
          As of December 31, 2011, future minimum lease payments under non-cancelable operating leases were as follows:
 
 
 
 
 
For the fiscal years:
 
Operating
Leases
 
2012
 
 
141,528
 
2013
 
 
145,066
 
2014
 
 
148,693
 
2015
 
 
132,415
 
2016
 
 
75,741
 
Thereafter
 
 
301,087
 
Total lease payments
 
$
944,530
 
Capital Leases
          The following is a summary of the gross amount of assets by class recorded under capital leases as of December 31, 2011 and 2010:
 
 
 
 
 
 
 
 
Classes of Property
 
December 31,
2011
 
December 31,
2010
 
Salon equipment
 
$
-
 
$
50,603
 
          During the year ended December 31, 2011, Green completed its capital lease through a bargain purchase option extended in the lease agreement. The bargain purchase amount was $4,916 which was the entire amount of the security deposit.
34

 

 
          
Note 7 - Related Party Transactions
          The following table summarizes the principal and accrued interest balance of the Convertible Debentures as of December 31, 2011and 2010:
 
 
 
 
 
 
 
 
 
 
December 31,
2011
 
December 31,
2010
 
Principal balance
 
$
2,859,800
 
$
2,875,000
 
Accrued interest
 
 
699,062
 
 
470,278
 
Total
 
$
3,558,862
 
$
3,330,078
 
          On June 24, 2010, the Board of Directors approved the purchase of 650,000 shares of Green's Supervoting Preferred stock from AmeriResource Technologies, Inc. in exchange for 52,000 shares of Green's Series B Preferred stock. The number of Series B Preferred shares issued in this transaction was determined based on one share of Green's Supervoting Preferred stock being equivalent to 10 shares of Common stock and each Series B Preferred share is convertible into $5.00 of Common stock. The Series B Preferred shares were valued at $260,000.
          On July 7, 2010, the Board of Directors authorized the issuance of 25,000 shares of restricted Series B Preferred shares to Richard G. Clegg, an officer and director of Green, pursuant to the terms of his employment agreement with a related party, Diversified Holdings I, Inc. The shares were issued pursuant to The 2008 Benefit Plan of Green to a natural person, providing bona fide services and not in conjunction with a capital raising transaction, exempt from registration under Rule 701 of the Securities Act of 1933. These shares are subject to redemption based upon Mr. Cleggs resignation under the terms of his employment agreement.
          On July 9, 2010, the Board of Directors approved the issuance of 50,000 shares of restricted Series B Preferred shares to Landis Salons II, Inc., a subsidiary of Green, to be used as collateral for a lease entered into by Landis Salons II, Inc. to serve as the location for a new Landis Lifestyle Salon. The shares are held by the landlord of the Marmalade facility to be converted and liquidated in the event of default on the part of Landis II. The shares will be returned to Landis II on the second anniversary of the lease commencement date provided that all obligations under the lease are current and the shares are reflected as an other non-current asset on Green's Consolidated Balance Sheet.
          On July 12, 2010, Landis Salons II, Inc. issued a promissory note in the principal amount of $105,000 payable to Wasatch Capital Corporation, which is a subsidiary of Nexia Holdings, Inc. Principal and interest, accruing at the rate of 5% per year, will be due on or before November 10, 2018. This promissory note was issued in exchange for a note receivable assigned to Landis Salons II, for $105,000 with the same terms.
          On December 1, 2010, Green sold its ownership interest in Newby to Diversified Holdings X, Inc. whose president is also the president of Green Endeavors, Inc. See Note 9 for additional information on the sale of Newby.
          On December 2, 2010, the Board of Directors approved the issuance of 2,000 Series B Preferred shares each to three employees of Landis Salons, Inc. for services rendered. The shares were valued at $5 per share or $30,000. One of the employees who received such shares was Logan Fast, an officer and director of Green.
          On January 6, 2011, the Board of Directors approved the conversion of 12,866 Series B Preferred shares into 12,866,000 shares of Common stock for Richard Surber, President, CEO and Director of Green. The shares were converted at $0.005 per share which was the quoted closing price on the date the conversion letter was received from Mr. Surber.
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Note 8 - Notes Payable
          A summary of notes payable as of December 31, 2011 and 2010 is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Creditor
 
Interest
Rate
 
Due
Date
 
December 31,
2011
 
December 31,
2010
 
Xing Investment Corp (1)
 
 
10.00
%
 
05-12-2008
 
$
171,000
 
$
171,000
 
Salt Lake City Corporation (2)
 
 
3.25
%
 
06-18-2015
 
 
73,294
 
 
92,272
 
Asher Enterprises, Inc. (3)..
 
 
8.00
%
 
01-09-2012
 
 
60,500
 
 
-
 
Asher Enterprises, Inc. (4)..
 
 
8.00
%
 
03-16-2012
 
 
32,500
 
 
-
 
Asher Enterprises, Inc. (5)..
 
 
8.00
%
 
04-25-2012
 
 
25,000
 
 
-
 
Asher Enterprises, Inc. (6)..
 
 
8.00
%
 
09-12-2012
 
 
22,500
 
 
-
 
Chase Bank
 
 
7.24
%
 
02-13-2015
 
 
28,463
 
 
37,032
 
Nexia Holdings, Inc (related party).
 
 
-
 
 
09-11-2011
 
 
-
 
 
125,584
 
Wasatch Capital Corp. (related party)
 
 
5.00
%
 
11-10-2018
 
 
112,724
 
 
105,000
 
Total
 
 
 
 
 
 
 
 
525,981
 
 
530,888
 
Less: Current portion of notes payable
 
 
 
 
 
 
 
 
341,129
 
 
323,832
 
Long-term portion of notes payable
 
 
 
 
 
 
 
$
184,852
 
$
207,056
 
_______________
(1)
On May 12, 2006, Green borrowed $171,000 from Xing Investment Corp with a convertible promissory note. The note is interest bearing at 10% per annum with no interest due until the note maturity date of May 12, 2008. Both principal and accrued interest, at the option of the note holder, may be converted into Common stock of Green at $0.01 per share. The note was not liquidated at the maturity date and is currently in default. No payments have been made on the obligation because Green is unable to locate Xing Investment Corp. or its representatives. As of December 31, 2011 and December 31, 2010, accrued interest reported in accounts payable and accrued expenses was $34,200, respectively.
 
 
(2)
On June 18, 2010, Landis Salons, Inc. received a loan in the amount of $100,000 from the Division of Economic Development of Salt Lake City Corporation. The loan includes a 1% origination fee and bears interest at the rate of 3.25% per annum. Principal and interest payments are made monthly over a five year term commencing June 2010. The loan is secured by a $25,000 certificate deposit held in the name of Landis Salons, Inc. and personally guaranteed by Richard Surber, CEO of Green.
 
 
(3)
On April 5, 2011, the Green issued an 8% Convertible Promissory Note in the principal face amount of $75,000 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a maturity date of January 9, 2012. The note provides for potential conversion into Green's common stock beginning in six months with the conversion price set at 61% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. Based on the intrinsic value on the date of issuance, Green has a beneficial conversion feature, for which it has recorded a debt discount of $47,951. This discount is being amortized to the maturity date of the debenture, which is approximately nine months. For the year ended December 31, 2011, $46,703 of the debt discount had been amortized and recorded as an interest expense. At December 31, 2011, the remaining, unamortized debt discount balance was $1,248 and the accrued interest balance on the note was $4,158. During 2011, $14,500 of the note had been converted to common stock as follows: a.) on October 12, 2011, the Board of Directors approved the conversion request from Asher Enterprises, Inc. to convert $10,000 of the convertible promissory note into 16,666,667 shares of common stock at a conversion rate of $0.0006 per share, and b.) on December 5, 2011, the Board of Directors approved the conversion request from Asher Enterprises, Inc. to convert $4,500 of the convertible promissory note into 19,656,217 shares of common stock at a conversion rate of $0.00023 per share.
 
 
(4)
On June 14, 2011, the Green issued an 8% Convertible Promissory Note in the principal face amount of $32,500 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a maturity date of March 16, 2012. The note provides for potential conversion into Green's common stock beginning in six months with the conversion price set at 61% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. Based on the intrinsic value on the date of issuance, Green has a beneficial conversion feature, for which it has recorded a debt discount of $20,779. This discount is being amortized to the maturity date of the debenture, which is approximately nine months. For the year ended December 31, 2011, $15,057 of the debt discount had been amortized and recorded as interest expense. At December 31, 2011, the remaining, unamortized debt discount balance was $5,722 and the accrued interest balance on the note was $1,425.
36

 

 
 
 
(5)
On July 19, 2011, the Green issued an 8% Convertible Promissory Note in the principal face amount of $25,000 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a due date of April 25, 2012. The note provides for potential conversion into Green's common stock beginning in six months with the conversion price set at 58% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. Based on the intrinsic value on the date of issuance, Green has a beneficial conversion feature, for which it has recorded a debt discount of $18,103. This discount is being amortized to the maturity date of the debenture, which is approximately nine months. For the year ended December 31, 2011, $10,630 of the debt discount had been amortized and recorded as an interest expense. At December 31, 2011, the remaining, unamortized debt discount balance was $7,473 and the accrued interest balance on the note was $871.
 
 
(6)
On December 7, 2011, the Green issued an 8% Convertible Promissory Note in the principal face amount of $22,500 to Asher Enterprises Inc., in exchange for a cash payment of the same amount. The note has a due date of September 12, 2012. The note provides for potential conversion into Green's common stock beginning in six months with the conversion price set at 56% of the average of the lowest three (3) trading prices for the Common Stock during the ten (10) Trading Day period prior to the date of conversion. Based on the intrinsic value on the date of issuance, Green has a beneficial conversion feature, for which it has recorded a debt discount of $17,679. This discount is being amortized to the maturity date of the debenture, which is approximately nine months. For the year ended December 31, 2011, $1,515 of the debt discount had been amortized and recorded as an interest expense. At December 31, 2011, the remaining, unamortized debt discount balance was $16,164 and the accrued interest balance on the note was $118.
Note 9 - Stockholders' Deficit
Preferred Stock
          On August 4, 2010 by Written Consent of the majority of the voting rights of the shareholders of Green, consent was given to authorize the Board of Directors to amend the designations of the Preferred Stock. The change in the designation of the Supervoting Preferred Stock increased its voting rights from 10 votes per share to 100 votes per share.
          Green is authorized to issue 15,000,000 shares of preferred stock. Green's preferred stock may be divided into such series as may be established by the Board of Directors. Each share of the Supervoting preferred stock is convertible into 100 shares of Green's Common stock and has the voting rights equal to 100 shares of Common stock.
          The Series B preferred stock is non-voting, convertible preferred. Each share of Green's Series B Preferred Stock is convertible into $5.00 worth of Common stock. The number of common shares received is based on the market value of the Common stock on the date of conversion. Series B Preferred Stock shareholders, at the option of Green, can receive cash.
          On January 21, 2010, the Board of Directors approved the conversion of 6,400 shares of Series B Preferred shares into 32,000,000 shares of Common stock. The shares were converted at $0.001 per share based on the closing price of the stock prior to the date of conversion.
          On February 17, 2010, Green issued 10,000 Series B Preferred shares to a former employee for the remaining 1% noncontrolling interest in Landis.
          On February 26, 2010, Green issued 4,400 Series B Preferred shares to an investor for $11,000. The shares were valued at $2.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On March 12, 2010, the Board of Directors approved the conversion of 400 Series B Preferred shares into 1,000,000 shares of Common stock for an employee. The shares were converted at $0.002 per share based on the closing price of the stock prior to the date of issuance.
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          On April 13, 2010, the Board of Directors approved the conversion of 2,000 Series B Preferred shares into 10,000,000 shares of Common stock for an investor. The shares were converted at $0.001 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On April 16, 2010, Green issued 33,334 Series B Preferred shares to an investor for $50,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On June 24, 2010, the Board of Directors approved the exchange of 650,000 shares of Green's Supervoting Preferred stock from AmeriResource Technologies, Inc. for 52,000 shares of Green's Series B Preferred stock. The number of Series B Preferred shares issued in this transaction were determined based on one share of Green's Supervoting Preferred stock being equivalent to 10 shares of Common stock and each Series B Preferred shared is convertible into $5.00 of Common stock. The Series B Preferred shares were valued at $260,000.
          On June 28, 2010, Green issued 33,334 Series B Preferred shares to two separate investors for $50,000 each. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On July 7, 2010, the Board of Directors authorized the issuance of 25,000 shares of restricted Series B Preferred shares to Richard G. Clegg, an officer and director of Green, pursuant to the terms of his employment agreement with a related party, Diversified Holdings I, Inc.
          On July 9, 2010, the Board of Directors approved the issuance of 50,000 shares of restricted Series B Preferred shares to Landis Salons II, Inc., a subsidiary of Green, to be used as collateral for a lease entered into by Landis Salons II to serve as the location for a new Landis Lifestyle Salon. These shares were then assigned to the landlord of Landis II as a security deposit with a related value of $250,000. This amount is recorded as an other asset on the Balance Sheet.
          On August 4, 2010, the Board of Directors approved for two different investors the conversions of 3,000 Series B Preferred shares into 15,000,000 shares of common stock for each of the investors. The shares were converted at $0.001 per share which was mutually agreed upon by the Board of Directors and each of the investors.
          On August 5, 2010, the Board of Directors approved the conversion of 3,000 Series B Preferred shares into 15,000,000 shares of common stock. The shares were converted at $0.001 per share which was mutually agreed upon by the Board of Directors and each of the investors.
          On August 19, 2010, Green issued 33,334 Series B Preferred shares to an investor for $50,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On August 26, 2010, Green issued 33,334 Series B Preferred shares to an investor for $50,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On September 21, 2010, the Board of Directors approved the conversion of 2,200 Series B Preferred shares into 2,000,000 shares of Common stock. The shares were converted at $0.0055 per share, which was mutually agreed upon by the Board of Directors and the investor.
          On September 21, 2010, Green issued 16,666 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On September 27, 2010, the Board of Directors approved the conversion of 5,000 Series B Preferred shares into 4,901,960 shares of Common stock. The shares were converted at $0.0051 per share, which was the closing price on the last trading day prior to the conversion.
          On September 28, 2010, Green issued 16,666 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
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          On October 12, 2010, Green issued 16,666 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On October 26, 2010, Green issued 16,666 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On October 28, 2010, the Board of Directors approved the conversion of 5,800 Series B Preferred shares into 3,411,765 shares of Common stock for an investor. The shares were converted at $0.0085 per share which was the quoted closing price on the date the conversion letter was received from the shareholder.
          In November and December of 2010, Green issued 99,998 Series B Preferred shares to various investors for $150,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investors.
          On November 12, 2010, the Board of Directors approved the conversion of 16,600 Series B Preferred shares into 7,155,172 shares of Common stock for an investor. The shares were converted at $0.0116 per share which was the quoted closing price on the date the conversion letter was received from the shareholder.
          On November 16, 2010, the Board of Directors approved the conversion of 4,600 Series B Preferred shares into 1,284,916 shares of Common stock for an investor. The shares were converted at $0.0179 per share which was the quoted closing price on the date the conversion letter was received from the shareholder.
          On November 22, 2010, the Board of Directors approved the conversion of 2,200 Series B Preferred shares into 2,000,000 shares of Common stock for an investor. The shares were converted at $0.0055 per share which was the quoted closing price on the date the conversion letter was received from the shareholder.
          On December 2, 2010, the Board of Directors approved the issuance of 2,000 Series B Preferred shares each to three employees of Landis Salons, Inc. for services rendered. The shares were valued at $5 per share or $30,000.
          On January 6, 2011, the Board of Directors approved the conversion of 12,866 Series B Preferred shares into 12,866,000 shares of Common stock for Richard Surber, President, CEO and Director of Green. The shares were converted at $0.005 per share which was the quoted closing price on the date the conversion letter was received from Mr. Surber.
          On March 10, 2011, Green issued 14,333 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.74 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On March 16, 2011, Green issued 16,333 Series B Preferred shares to an investor for $25,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On April 1, 2011, the Board of Directors approved the conversion of 4,600 Series B Preferred shares into 3,833,333 shares of Common stock for an investor. The shares were converted at $0.006 per share which was the quoted closing price on the date the conversion letter was received from the shareholder. As of December 31, 2011, the Board of Directors had rescinded the approval as no shared had been issued by that date.
          On April 26, 2011, Green issued 10,000 Series B Preferred shares to an investor for $15,000. The shares were valued at $1.50 per share which was mutually agreed upon by the Board of Directors and the individual investor.
          On April 28, 2011, the Board of Directors approved the conversion of 5,000 Series B Preferred shares into 5,000,000 shares of Common stock for an investor. The shares were converted at $0.005 per share which was the quoted closing price on the date the conversion letter was received from the shareholder.
          On June 13, 2011, the Board of Directors approved the conversion of 2,000 Series B Preferred shares into 2,500,000 shares of Common stock for an investor. The shares were converted at $0.004 per share which was the quoted closing price on the date the conversion letter was received from the shareholder. As of December 31, 2011, the Board of Directors had rescinded the approval as no shared had been issued by that date.
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          On November 22, 2011 the Board of Directors approved the conversion of 2,400 Series B Preferred shares into 24,000,000 shares of Common Stock for an investor. The shares were converted at $0.0005 per share which was the quoted closing price on the date the conversion request was received from the shareholder.
          As of December 31, 2011 and 2010, Green had 5,850,000 and 5,850,000 shares of Supervoting Preferred stock issued and outstanding and 630,732 and 610,332 shares of convertible Series B Preferred stock issued and outstanding, respectively.
Common Stock
          Green is authorized to issue 2,500,000,000 shares of Common stock with a par value of $0.001 per share. As of December 31, 2011 and 2010, Green had 570,886,794 and 430,149,464 shares of Common stock outstanding, respectively.
          On August 4, 2010, by Written Consent of the majority of the voting rights of the shareholders of Green consent was given to authorize the Board of Directors to carry out a forward split of the issued and outstanding shares of the common stock on a 1 for five basis and by the same proportion, the number of authorized shares was increased to 2.5 billion to maintain the same ratios of authorized shares to issued shares. All share and per share information included in these financial statements has been adjusted to reflect this forward stock split.
          On October 1, 2011, the Board of Directors approved the conversion of $10,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 16,666,667 shares of Common Stock. The shares were converted at $0.0006 per share which was the conversion price provided for by the terms of the note.
          On December 6 2011, the Board of Directors approved the conversion of 4,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 19,656,217 shares of Common Stock. The shares were converted at $0.00023 per share which was the conversion price provided for by the terms of the note.
          On December 16 2011, the Board of Directors approved the two issuances of 20,000,000 common shares each to two individuals who are employees of an affiliate of Green. The affiliate provides accounting and legal services to Green. The shares were issued pursuant to a stock option agreement and were valued at $19,510.
          On December 27 2011, the Board of Directors approved the issuances of 20,000,000 common shares to an individual who provides accounting and tax consulting services to Green. The shares were issued pursuant to a stock option agreement and were valued at $5,854.
Note 10 - Gain on Sale of Subsidiary
          On December 1, 2010, Green affected the sale of its ownership interest in Newby Salons, LLC to Diversified Holdings X, Inc., whose president is also the president of Green. Newby Salons, LLC operated the Bountiful salon location which was closed on August 15, 2010. Green transferred its stock ownership to DHX in exchange for $100. The Stock Purchase Agreement indemnifies and protects Green from any and all obligations, indebtedness and liabilities arising from the course of business.
          The following table summarizes the gain on sale of Newby Salons, LLC on December 1, 2010:
 
 
 
 
 
Cash consideration received
 
$
100
 
Net current and long-term liabilities sold
 
 
320,670
 
Gain on sale of subsidiary
 
$
320,770
 
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