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EX-32.1 - CERTIFICATION - GREEN ENVIROTECH HOLDINGS CORP.ex321.htm
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UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  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 fiscal year ended December 31, 2011

 

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

 

For the transition period from _______ to _______

Commission File No. 000-54395

 

GREEN ENVIROTECH HOLDINGS CORP.

 (Exact Name of registrant as specified in its charter)

 

Delaware   32-0218005

(State or Other Jurisdiction of Incorporation

or Organization)

  (I.R.S.  Employer Identification No.)
     

PO Box 692

Riverbank, CA

  95367
(Address of Principal Executive Offices)   (Zip Code)

 

(209) 881-3523.
(Issuer’s Telephone Number, Including Area Code)

 

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of Each Class

to be so registered:

 

Name of each exchange on which

registered:

None   None

 

Securities registered under Section 12(g) of the Act: Common Stock, par value $0.001

 

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐      No ☑

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    

Yes ☐     No ☑

 

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☐ No ☑

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☐      No ☑

 

Indicate by check mark 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 the registrant’s knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or amendment to Form 10-K. ☐

 

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 definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check One):

 

 

 

Large Accelerated Filer ☐ Accelerated Filer ☐  
Non-accelerated Filer ☐ Smaller reporting company [X]  

 

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

 

 

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant was approximately $3.9 million as of June 30, 2011. Shares of voting stock held by each executive officer and director of the registrant and each person who beneficially owns 10% or more of the registrant’s outstanding voting stock has been excluded from the calculation. This determination of affiliated status may not be conclusive for other purposes.

 

 

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

 

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

 

Yes ☐ No ☐

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: The Registrant’s common stock as of July 31, 2012, was 200,833,233 shares.

 

 
 

 

 

TABLE OF CONTENTS

 

        Page
    PART I    
         
Item 1.   Business   4
Item 1A.   Risk Factors   12
Item 1B.   Unresolved Staff Comments   17
Item 2.   Properties   17
Item 3.   Legal Proceedings   17
Item 4.   Mine Safety Disclosures   17
         
    PART II    
         
Item 5.   Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   17
Item 6.   Selected Financial Data   18
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations   18
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk   24
Item 8.   Financial Statements and Supplementary Data   24
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   24
Item 9A(T).   Controls and Procedures   24
Item 9B.   Other Information   25
    PART III    
         
Item 10.   Directors, Executive Officers and Corporate Governance   26
Item 11.   Executive Compensation   27
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   28
Item 13.   Certain Relationships and Related Transactions, and Director Independence   29
Item 14.   Principal Accounting Fees and Services   29
Item 15.   Exhibits, Financial Statement Schedules   30
SIGNATURES   31

 

 

 
 

 

 

 

PART I

 

ITEM 1. BUSINESS.

 

 

Corporate History

 

              Green EnviroTech Holdings Corp. (the “Company”), formerly known as Wolfe Creek Mining, Inc., was incorporated in the State of Delaware on June 26, 2007. On November 20, 2009, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Green EnviroTech Acquisition Corp., a Nevada corporation, and Green EnviroTech Corp. (“Green EnviroTech”), a plastics recovery, separation, cleaning, and recycling company. Green EnviroTech is a Nevada corporation formed on October 6, 2008 under the name EnviroPlastics Corporation. On October 21, 2009, Enviroplastics Corporation changed its name to Green EnviroTech Corp. and on July 20, 2010, the Company changed its name to Green EnviroTech Holdings Corp.

 

Pursuant to the Merger Agreement, on November 20, 2009 (the “Closing Date”), Green EnviroTech Acquisition Corp. merged with and into Green EnviroTech, resulting in Green EnviroTech becoming a wholly-owned subsidiary of the Company (the “Merger”). As a result of the consummation of the Merger Agreement, the Company issued approximately 45,000,000 shares of its common stock to the shareholders of Green EnviroTech, representing approximately 45% of the issued and outstanding common stock of the Company following the closing of the Merger. Further, the outstanding shares of common stock of Green EnviroTech were cancelled. The acquisition of Green EnviroTech is treated as a reverse acquisition, and the business of Green EnviroTech became the business of the Company. Immediately prior to the reverse acquisition, Wolfe Creek was not engaged in any active business.

 

Our common stock (“Common Stock”) is quoted on the Pink Sheets under the symbol “GETH”.  We have legally changed our name to Green EnviroTech Holdings Corp. in the State of Delaware and FINRA has approved the corporate name change of the Company. There has been limited trading to date in the Common Stock. We have a total of 250,000,000 authorized common shares with a par value of $0.001 per share and 25,000,000 authorized preferred shares. On March 11, 2010, the Company effected a 14-to-1 stock dividend, pursuant to which each stockholder of the Company was issued 14 additional shares of common stock for each share of common stock held by such shareholder as of the record date for the stock dividend of March 11, 2010. As a result of this stock dividend, the number of shares of the Company’s common stock issued and outstanding increased from approximately 4,000,000 to 60,000,000. On June 28, 2010, the Company amended its certificate of incorporation to effect an increase in its authorized common shares from 75,000,000 to 250,000,000. As of July 31, 2012, there are 200,833,233 shares of common stock issued and outstanding.

 

References hereinafter to “Green EnviroTech”, “we”, “us”, “our” and similar words refer to the Company and its wholly-owned subsidiary, Green EnviroTech Corp., unless the context otherwise requires. Prior to the effectiveness of the reverse acquisition, these terms refer to Green EnviroTech Corp.  References to “Wolfe Creek” refer to the Company and its business prior to the reverse acquisition

 

 

Our Principal Offices

 

Our executive offices are located at P. O. Box 692, Riverbank, CA 95367, and our phone number at this address is (209) 881-3523.

               

 

Overview of Our Business

 

We are a development stage plastics recovery, separation, cleaning, and recycling company. We intend to supply recycled commercial plastics to industries such as the automotive and consumer products industries, and plan to construct large-scale plastics recycling facilities near automotive shredder locations nationwide. Operating with large national metal recycling partners, the Company, using a patent-pending process developed in conjunction with Thar Process, Inc., and Ergonomy LLC, will produce recycled commercial grade plastics ready to be re-introduced into commerce.  Additionally, with other strategic partners, we will convert waste and scrap plastic (both from its own processing and from other sources) into high-value energy products, including sweet crude oil.

 

 

 

 
 

 

 

 

Each year, millions of tons of automotive shredder residue (“Shredder Residue”) containing reusable and recyclable plastics are unnecessarily disposed of in landfills.  We believe this is because, while national and global demand for recycled plastic has increased dramatically over the past decade, the technology to efficiently and effectively recycle plastic material from this residue stream has lagged behind.   This has resulted in tremendous waste and created a huge unmet market for recycled commercial plastics, creating an opportunity for someone with a cost-effective recovery process.

 

We now have such a process. We were formed to capitalize on the growing market to supply recycled commercial plastic to businesses which currently use or want to use recycled plastics in their products, such as the automotive and consumer products industries.  Working with our metal shredder/recycling partners, we intend to utilize our proprietary cleaning technology to take the Shredder Residue headed to landfills tainted with contaminants and convert it into two streams of recyclable material with no remaining trace of contaminants.  Using our process, plastics and rubber can be recovered from the shedder waste.  We will use our proprietary technology to process the plastic and rubber stream, removing the contaminants and creating recycled commercial plastic material ready to be re-introduced into commerce.

 

Our plastic recovery process is both highly cost effective and efficient, and it dramatically reduces the amount of Shredder Residue going to landfills. Our process is environmentally responsible on multiple levels, and it will assist our customers in reducing their carbon footprint by allowing them to utilize a greater percentage of recycled material in their products.

 

The recovered plastics by us will be our main source of revenue.  Automotive parts manufacturers are our primary target market.  However, the use of our recycled materials isn’t limited to automotive parts.  Numerous other durable goods manufacturers utilize plastics, and recycled plastic will work in many applications. As a result, we believe there is significant demand in both domestic and international markets for these materials, and we have identified multiple targets for our output stream of recycled material, beginning with a large multi-national supplier to the automotive industry worldwide.  We believe that our customers will be able to utilize a larger percentage of highly cost-effective recycled plastic in the manufacturing process of their products and create dramatic savings over the cost of using only virgin plastic (tied to the cost of petroleum).

 

Automotive Parts---Our Largest Market Prospect

 

The automotive industry uses plastic for its durability, corrosion resistance, ease of coloring and finishing, resiliency, cost, energy efficiency, and lightweight characteristics. Utilizing lightweight manufacturing products translates directly into improved fuel usage experience and lowered costs to the consumer as well as lower costs to the manufacturer. And, the use of plastics in car bodies, along with improvements in coating technology, contribute to automobiles lasting much longer than vehicles did before the widespread use of plastics in fender liners, quarter panels, and other body parts. 

 

According to the U.S. Department of Labor, despite news of plant closures and unemployed autoworkers, the motor vehicle and parts manufacturing industry continues to be one of the largest employers in the country and a major contributor to the US economy.

 

In 2006, it was determined by the automotive industry that approximately 9,200 establishments manufactured motor vehicles and motor vehicle parts. We believe number of such establishments has since declined due to the economic down turn.  The exact number of establishments that have closed has not been determined.  However, a number of the establishments have down sized and merged.  Their trend indicates they are coming back stronger.   Such establishments include small parts plants with a few workers to huge assembly plants that employ thousands; the largest sector of this industry is motor vehicle parts manufacturing. This industry includes electrical and electronic equipment, engines and transmissions, brake systems, seating and interior trim, steering and suspension components, air-conditioners, and motor vehicle stampings, such as fenders, tops, body parts, trim, and molding.  Plastics are a large and growing part of many of these products.

 

 

In 2001, Chrysler Motors created the “Care Car II” program to demonstrate the usage of recycled plastics in automotive design, manufacturing and materials certification.  It was thought that use of recycled plastic in vehicles would reduce costs (from the cost of virgin plastic), reduce the carbon foot print ‘created’ in production, and improve the life cycle analysis results on each vehicle. The key objectives of the “Care Car II” program were to:

 

1.   Obtain recycled plastics;
2.   Work with the supplier base responsible for the production molding of many parts and components;
3.   Allow suppliers to manufacture these parts using recycled plastics, and process them using the same procedures used in manufacturing parts from virgin plastic; and
4.   Demonstrate recovery technology that made plastic recycling more cost effective.

 

    

 

 

To demonstrate the “Care Car II” program, plastics were recovered from shredder residue including PP/PE (Polypropylene/Polyethylene), ABS (Acrylonitrile butadiene styrene), PUR( Polyurethane) as well as rubber. These materials were then used to create over 150 pounds of recycled plastic that could replace virgin plastics in a new vehicle.  The program vehicles’ parts (molded from recycled plastics) were then subjected to accelerated durability testing and met all Chrysler’s performance and material specifications. The vehicles were subsequently shown at the following technical and public events in 2002:

 

· New York Auto Show;

· Paris Auto Show;

· GPEC International Plastics Convention, Detroit, MI;

· Automotive Reporters Review, New York, NY;

· Washington, DC (Received Environmental Award for the Year);

· Senior Management- DaimlerChrysler, Auburn Hills, MI. and Stuttgart Germany; and

· Ford Motor Company, GM, Mercedes and Porsche.

 

This demonstration program received numerous write-ups in technical magazines, SAE (Society of Automotive Engineers) Papers, newspapers and proved that substantial cost savings were available to automotive manufacturers through the use of recycled plastic material. It was determined that 100-150 pounds of recycled plastic could be implemented into automotive plastics components for both the interior and exterior parts of new vehicles.  However, at the time in 2001, the necessary production, recovery, and cleaning technologies (removal of PCB’s (Polychlorinated biphenyls)) for recycling plastics from waste were lacking, thus making large-scale operations unfeasible.

 

Today, our cleaning technologies can provide a viable stream of recycled plastics into commerce.  We intend to take advantage of the increasing market for recycled goods, starting with automotive parts, and to assist companies facing growing mandates to utilize recyclable material in their products.  With our strategic partners, we will focus on industries faced with rising material costs and searching for ways to apply and introduce “green” technology and materials to their products.  Our technology will allow these industries to reduce manufacturing costs and decrease the carbon footprint of their products.

 

Ironically, the automotive recyclers will supply the Shredder Residue used by Green EnviroTech to create commercially recycled plastics from the shredding of old vehicles.  Currently, about 15,000,000 automobiles are shredded every year in the US alone.   According to the Institute for Scrap Recycling Industries (ISRI) and US Car data, each vehicle contains roughly 300 pounds of plastics (recyclable potential: 4.5  billon pounds per year) that can be recycled by our process.  Therefore, we create a virtuous circle of recycling: Shredder Residue from old vehicles creating recycled plastics then sold to major automotive manufacturers for use in new vehicles.

 

The Green EnviroTech Separation Process

 

Our recycling process begins by receiving Shredder Residue generated by metal recycling companies. The Shredder Residue is separated into four (4) distinct streams of material:  plastics, foam, rubber, and waste. The automated separation of shredder residue is a mechanical process developed by one of our strategic partners and shareholder, Central Manufacturing located in Groveland, IL.

 

 Once the plastics are separated from the shredder residue, they are ground into inch-long pieces and the cleaning process starts.  With our patent pending, proprietary technology we then remove any contaminants from the plastics stream using a single step process consisting of a combination of two liquefied gases under pressure. This innovative cleaning system is effective and extremely cost efficient.

 

Plastic resin which has been surface contaminated is submerged in a liquefied gas mixture.  The gas mixture works to remove the contaminants in a unique way.  A propane component of the mixture dissolves the heavy "oils" and "waxes" because of its high solvent capability.  A carbon dioxide component provides light oil removal, a small molecule to reach deep into the material, and a safety blanket for the propane.  Throughout the system, the plastic resin is contacted with the gas or liquid stream of the mixture and agitated to ensure complete removal of the contaminants.  The liquid mixture is then distilled for reuse while the contaminants are safely collected.   

 

 
 

 

 

Once cleaned, the plastic stream is then separated into three (3) separate streams using sink float technology. The separated streams are then sent through a metal detector and are ready for market—either packaged, or sent into a rail car or bulk truck ready for use by our compounding partner. The three (3) output streams offered for sale will include a PP/PE mix, an ABS / HIPS mix, and mixed plastics.   Rubber and foam waste streams will be disposed of, and any plastic waste will be utilized in the P2Ffuel conversion process wherever possible.

 

We plan to combine our proprietary technology and the experience of our management team to further streamline and improve this process over time. Our on-going research and development efforts will be focused on continually improving the characteristics and quality of the recycled plastics, thus allowing our customers to use increased percentages of recycled material in their end products. We plan to provide plastics parts manufacturing industries with increasing cost savings, production efficiencies, and environmentally friendly methods, which will allow them to integrate commercially recycled plastics into the production of new products too.

 

  

Compounding After Cleaning and Separation

 

The Modern Plastics Encyclopedia (1995) defines “plastics compounding” as: the incorporation of additional ingredients to base plastic types needed for processing to create optimal properties in the finished material. These ingredients may include additives to improve a polymer's physical properties, stability or process ability.

 

Compounding is usually required for recycled materials for the following reasons:

 

1.   It allows virgin materials to be mixed with recycled materials to meet material specifications for performance and recycled material content (minimum: 25%) targets;
2.   It allows additives to be compounded into the recycled material to meet target application requirements;
3.   Recycled materials are typically ground from parts that produce flakes.  The compounding process turns them into pellets that can be more easily handled by traditional plastics processing equipment; and
4.   It provides a very important homogenization step.  Recycled materials are usually a mix of many different grades of the same basic material.  Even though the materials might be from the same family, differences in molecular weight, copolymer ratios, etc. can lead to a mixed material having poor homogeneity.  The intensive physical mixing in a molten polymer that is achieved during extrusion can homogenize different grades of materials.

 

 

Chemical Resources, Inc. of Chesapeake, VA., will provide compounding services for us and our end-user customers.  They have a facility within ten (10) miles of a projected Company plant location, and have easy access to multiple modes of transportation including truck, rail, and ship on the site.

 

Facilities Locations Reduce Transportation Costs

 

We keep our own production costs to a minimum by locating our recycling facilities in close proximity to metal shredders, and thus our shredder residue source material.  Over thirty (30) potential sites nationally (and one hundred forty (140) sites internationally) have been identified with the assistance of one of our strategic partners, Sadoff & Rudoy Metals. Additionally, we project to have one facility on the same site as our plastics compounding partner, which will dramatically reduce our shipping costs and (necessary) price mark-ups to end user customers.  At these sites, we intend to build or lease its facilities to minimize transportation costs, to potentially reduce land and plant costs, and to help create and foster relationships with our various partners’ industries.  This location strategy will continually benefit both our suppliers and customers.

 

Facilities Development Plan

 

On December 4, 2009, the Company formed Green EnviroTech Wisconsin, Inc., (“GET WISC”) a Wisconsin corporation, in anticipation of opening a plant in Wisconsin.

 

The Company had previously announced it was exploring the idea of opening a plant in Fond du Lac, Wisconsin.  However, we have since decided to locate the plant in another city in Wisconsin.  There were no incentives offered by Fond du Lac other than to offer to sell land suitable for plant construction when no building for lease was found suitable for the Company’s needs.  The Industrial Park location appeared to be suitable and the Company started design work at the location.  The site called for a rail spur which was turned down by the railroad for lack of enough space to meet their requirements.  The Company looked elsewhere and decided to direct its efforts to Sheboygan where the city has offered incentives and the city has commercial building space available suitable for the needs of the plant.  The area also has a pool of experienced work force available to compliment the employee requirements needed for the plant.

 

 

 The Company received on September 23, 2010 an Incentive Offer from the City of Sheboygan laying out its proposal of incentives for the Company to consider locating its plant in Sheboygan.  Sheboygan offered a low-interest loan in the amount of $400,000 to be used for equipment, working capital, or training purposes from its Business Development Loan Program.  The city offered to sponsor a bond resolution for the Industrial Revenue Bonds which can be used for funding of a large portion of the project.  The city will sponsor and prepare the grant application for a Transportation Economic Assistance Grant for assistance of up to 50% of the costs of a railroad spur if the Company qualifies.  The city is working with a Bay-Area Workforce Development Board in conjunction with a Technical College who are proposing a $100,000 grant for training associated with start-up of the new building and equipment.  The city spoke to Alliant Energy who offers a Shared Savings program that is available if the efficiency levels of our equipment, meets their energy savings.  This could equate to 2% money toward a five year loan.  The city reports there are energy efficiency incentives from the Wisconsin Public Service as well.

 

In January of 2011, the State of Wisconsin Investment Board indicated its interest to commit $5 million in a low interest loan to the Company for the purchase of a building in Sheboygan, Wisconsin to be used for the Sheboygan Plant. As of December 31, 2011, the Company had not received a letter of commitment for financial assistance from the State of Wisconsin.

 

On August 9, 2010, the Company formed Green EnviroTech Riverbank, Inc., (“GETRB”) a California corporation, in anticipation of opening the Riverbank, CA plant. The Company is currently leasing space in Riverbank, CA and anticipates operations to commence in the second quarter of 2011.

 

On December 15, 2011, the Company’s wholly-owned subsidiary, Green EnviroTech Riverbank, Inc. (“GETRB”) entered into an asset purchase agreement pursuant to which GETRB sold its inventory and permits to a third party. GETRB’s remaining assets and liabilities were transferred to the Company and GETRB was dissolved on December 31, 2011. The Company has decided to maintain its contract with Agilyx Corporation for the purchase of its equipment and has decided to look for a more favorable location in California or surrounding states. The inventory and permits were sold for $250,000. $175,000 was used for working capital and $75,000 was used to repay debt.

 

On December 12, 2009, Green EnviroTech entered into an (i) equipment purchase and installation agreement (the “Purchase Agreement”) with Agilyx (formally Plas2Fuel) Corporation (“Agilyx (formally Plas2Fuel)”), (ii) oil marketing and distribution agreement with Agilyx (formally Plas2Fuel) (the “Oil Marketing Agreement”), and (iii) license agreement with Agilyx (formally Plas2Fuel) (the “License Agreement”).  Plas2Fuel Corporation changed its name to Agilyx Corporation effective June 8, 2010.  All agreements and contracts negotiated as Plas2Fuel Corporation are still in full force and will be honored by Agilyx Corporation.

 

Pursuant to the Purchase Agreement, Green EnviroTech agreed to purchase, and Agilyx (formally Plas2Fuel) agreed to sell and install, a twelve vessel waste plastic to oil recycling system (the “System”), for a purchase price of $5,595,645. Green EnviroTech agreed to pay the purchase price over five installments.  On December 31, 2009, Agilyx (formally Plas2Fuel) issued a waiver to Green EnviroTech leaving it to the discretion of Green EnviroTech to implement the first installment due date before the equipment would be shipped.  As of December 31, 2011, the first installment date had not been determined.  The waiver issued to the Company by Agilyx is still in place and recognized by Agilyx.  

 

Pursuant to the Oil Marketing Agreement, Green EnviroTech agreed to provide to Agilyx (formally Plas2Fuel), on an exclusive basis, the sweet crude oil generated by the System, meeting the specifications set forth in the Oil Marketing Agreement, and Agilyx (formally Plas2Fuel) agreed to broker the oil for sale to third parties, for a commission of 10%. The Oil Marketing Agreement has a term of five years commencing on December 12, 2009, which will renew automatically for successive one year terms unless either party provides written notice at least 90 days prior to such renewal.

 

Pursuant to the License Agreement, Agilyx (formally Plas2Fuel) agreed to grant Green EnviroTech a limited license to use Agilyx (formally Plas2Fuel)’s proprietary technology and information in connection with operation of the System at Green EnviroTech’s facilities, for a license fee of 10% of Net Oil Revenue. On May 18, 2010, the License Agreement was amended to give Green EnviroTech an exclusive provisional right to the Auto Shredder Residue (“ASR”) market within North America. The right expires on January 1, 2021. Agilyx (formally Plas2Fuel) excluded producers they are servicing on Exhibit A which indicated “none”.  The exclusive right is contingent upon the Company purchasing from Agilyx (formally Plas2Fuel) and paying in full for Plastic Reclamation Units on a prearranged schedule as follows:

 

 

a)   Twelve (12) Plastic Reclamation Units (“ PRU’s ”) between January 1, 2010 and December 31, 2010; Twenty (20) PRU’s between January 1, 2011 and December 31, 2011; (as of December 31, 2011, no units had been ordered.  Even though no units have been ordered as set forth in the agreement, Agilyx still recognizes Green EnviroTech as having exclusive rights with no liability to Agilyx until the first order.  The Company expects to order its first units by the end of April 2011).
b)   Forty (40) PRU’s between January 1, 2012 and December 31, 2012; and
c)   Forty (40) PRU’s between January 1, 2013 and December 31, 2013; and
d)   Forty (40) PRU’s between January 1, 2014 and December 31, 2014; and
e)   Forty (40) PRU’s between January 1, 2015 and December 31, 2015; and
f)   Forty (40) PRU’s between January 1, 2016 and December 31, 2016; and
g)   Forty (40) PRU’s between January 1, 2017 and December 31, 2017; and
h)   Forty (40) PRU’s between January 1, 2018 and December 31, 2018; and
i)   Forty (40) PRU’s between January 1, 2019 and December 31, 2019; and
j)   Forty (40) PRU’s between January 1, 2020 and December 31, 2020.

 

 

On September 24, 2010, the Company received a “term sheet” from Naranza Capital Partners for the lease purchase of $5,000,000 of equipment to be placed in the Riverbank facility.   On November 23, 2010, the Company signed an Equipment Lease Agreement with Naranza Capital Partners for the lease of the equipment needed in the Riverbank Plant.  This Capital Lease also included the installation of this equipment and has a $1 (one dollar) buyout clause.  The term of the lease is for five years (60 months) starting from the date the equipment is operational. The Company paid an application fee of $12,500 plus the first and last month’s lease payments in the amount of $128,945 each.  The Company also paid $10,000 doc fees, site visit fee and legal fees.  As of December 31, 2011, the equipment had not been ordered for shipment.  

 

The Company will recognize the assets and the obligation under the capital lease at the time that Naranza Capital Partners honors the commitment and places the order of the equipment and installs the equipment. The deposits are recognized as non-current assets on the Company’s consolidated balance sheets at December 31, 2011. As of December 31, 2011, the equipment had not been ordered for shipment. On April 1, 2011, a Demand Letter was sent to Naranza Capital Partners for the return of the Company’s deposit.

 

Naranza Capital Partners have not returned the deposit as of December 31, 2011.

 

Strategic Partners and Business Synergies

 

            0n October 8, 2010 the Company received a Letter of Intent from Ravago Manufacturing Americas (“Ravago”) for joint activities with the Company. Ravago has experience as an engineering resin custom compounder, toll and producer services provider, and world class recycler of both engineering polymers and basic commodity plastics has made them one of America's leading resins suppliers. Their broad product portfolio and unique manufacturing assets allow for versatility beyond compare. Ravago has facilities strategically located to serve both the producer and end user, with activities in the Midwest, Southeast, and Gulf Coast regions.  The non-binding Ravago Letter of Intent contemplates that

 

1.   Ravago will install and operate manufacturing equipment in Green EnviroTech’s facilities to produce compounded plastic products.  Ravago will provide all materials needed to make the compound to spec.
2.   The Company will purchase virgin plastic material from another division of Ravago, H. Muehlstein. This virgin material will be mixed with the reclaimed plastic to make compound plastic to spec.
3.   The Company will pay Ravago $0.15 per pound for the compound produced.
4.   Ravago, with its worldwide customer list, will take 100% of the compounded material produced at the Company facilities and market the material for a 10% commission thru its division ENTEC.

 

There is no assurance a definitive agreement will be reached.

 

Sales and Marketing

 

The definitive agreement to be entered into with Ravago would guarantee Ravago as the Company’s one customer for its compound material.

 

Pursuant to the Oil Marketing Agreement discussed above, Green EnviroTech agreed to provide to Agilyx (formally Plas2Fuel), on an exclusive basis, the crude oil generated by the System, meeting the specifications set forth in the Oil Marketing Agreement, and Agilyx (formally Plas2Fuel) agreed to broker the oil for sale to third parties, for a commission of 10%. The Oil Marketing Agreement has a term of five years commencing on December 12, 2009, which will renew automatically for successive one year terms unless either party provides written notice at least 90 days prior to such renewal.

 

 

Product Focus

 

Keys to Recycled Plastics Sales include having products that are:

 

1.   Free of substances of concern
2.   Lower Cost (than virgin)
3.   Green/environmentally responsible
4.   Able to provide Improved Life Cycle Analysis
5.   Able to Reduced Carbon foot Print in manufacturing process
6.   Offered in large production volumes and
7.   Able to meet Quality control Standards.

 

Potential Customers:

 

Our potential customers include automotive parts suppliers and car manufactures.

 

 

Other Markets--Opportunities

 

Durable Goods Plastics

 

Manufactured items with a useful life of more than three (3) years, including automobiles, appliances, computers, etc., are referred to as durable goods. Plastics can reduce energy consumption for all of these industries, providing a substantial saving in production costs.

 

Manufacturers of durable goods choose plastics for other reasons as well. Appliance manufacturers use plastics because of their ease of fabrication, wide range of design potential, and thermal, electrical, and acoustic insulation.  Plastic insulation in refrigerators and freezers helps reduce operations costs to the consumer.  Plastics characteristics can significantly reduce production and use energy consumption and greenhouse gas generation, thus creating an environmentally friendly (“green”) marketing opportunity.  In major household appliances, plastic parts can increase product life of some appliances by as much as sixty seven percent (67%), and the possible applications for injection molded plastic parts are virtually unlimited.  For example:

 

1)   Use of durable, inexpensive plastic parts in refrigerators, freezers and air conditioners helps control costs;

 

2)   Injection molded plastic parts have improved efficiency of major appliances by more than 30 percent since the early 1970’s; and

 

3)   Injection molded plastic components help appliances resist corrosion.

 

 

 

Some examples of white goods products/parts using plastic and/or recycled plastic are:

 

Washing Machine / Dryers Refrigerators
Agitators Ice Trays
Knobs Ice Makers
Switches Shelves
Gears Drawers
Lint Filters Handles
   
Dishwashers Air Conditioners
Baskets Vents
Dish racks Knobs/Switches
Rollers Panels
Panels Fan Blades
Door Seals Blower Wheels
Water Tubes / Inlets  
Valves  
   
Refrigerators Microwave Ovens
Ice Trays Handles
Ice Makers Trays
Shelves Switches
Drawers  

 

In light of the above, the appliance industry represents another potential market for us. Additional potential markets also include off road vehicles, garden tools, including lawn mowers, and related potential markets in Asia.  As we are able to open more of our facilities nationally, we would be able to approach these potential markets with our ability to reduce their demand for the use of the landfills.

 

 

 

 
 

 

 

 

Competition

 

Given the substantial size and scope of the plastics industry worldwide, and the commoditized nature of many of its “sub-markets” we recognize that we will be operating in a volatile, and highly competitive international environment consisting of large and small petroleum, chemical, and compounding companies.  Our competitive edge nationally and we believe internationally is our ability to locate our facilities next to large producers of shredded waste normally headed to the landfill.  We will be able to capture this waste direct from the source thus saving transportation costs.  We believe no one would be able to undercut our pricing.

 

Employees

 

As of the date of the filing of this annual report on Form 10-K, we have four employees who are full-time and three are also our executive officers.  We also have two (2) other employees.  We consider our employee relations to be good.

 

Bankruptcy or Similar Proceedings

 

There has been no bankruptcy, receivership or similar proceeding.

 

Compliance with Government Regulation

 

We will be required to comply with various environmental laws and regulations enacted in the jurisdictions in which we operate which govern the manufacture, importation, handling and disposal of certain materials used in our operations. We are in the process of establishing procedures to address compliance with current environmental laws and regulations and we monitor our practices concerning the handling of environmentally hazardous materials.

 

 

Patents, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor Contracts

 

We own a number of registered, applied-for and/or unregistered trademarks and service marks that we use in connection with our businesses. Currently, we are developing a patent-pending process in conjunction with Ergonomic LLC and Thar Process, Inc. We have no other current plans for any other registrations such as copyrights, franchises, concessions, royalty agreements or labor contracts.

 

Need for Government Approval for its Products or Services

 

We are not required to apply for or have any government approval for our products or services.  We have to obtain local permits for the location of our facilities; we see no problems obtaining these permits.

 

Research and Development Costs during the Last Two Years

 

We have not expended funds for research and development costs since inception.

 

 

ITEM 1A. RISK FACTORS

 

Risks Related to our Business

 

We are currently not profitable and may never become profitable.

 

We have a history of losses totaling $6,506,103 through December 31, 2011 and we expect to incur additional substantial operating losses for the foreseeable future and we may never achieve or maintain profitability.  We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability.  We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our Common Stock and investors would in all likelihood lose their entire investment.

   

Our independent registered accounting firm has expressed doubt about our ability to continue as a going concern.

 

Because we have not generated revenue since our inception, our independent registered accounting firm has included in their report for the years ended December 31, 2011 and 2010, an uncertainty with respect to the Company’s ability to continue as a going concern.

 

Our business is difficult to evaluate because we have no operating history and an uncertain future.

 

We have no operating history upon which to evaluate our present business and future prospects.  We face risks and uncertainties relating to our ability to implement our business plan successfully.  Our operations are subject to all of the risks inherent in the establishment of a new business enterprise generally.  The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the formation of a new business, the commencement of operations and the competitive environment in which we operate.  If we are unsuccessful in addressing these risks and uncertainties, our business, results of operations, financial condition and prospects will be materially harmed.

 

We will need significant additional capital, which we may be unable to obtain.

 

As of December 31, 2011, we had $112,103 in cash available. We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures.  Accordingly we need significant additional capital to fund our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.  If we are unable to raise substantial capital, investors will lose their entire investment.

 

If our strategy is unsuccessful, we will not be profitable and our stockholders could lose their investment.

 

We do not believe there are track records for companies pursuing our strategy, and there is no guarantee that our strategy will be successful or profitable. If our strategy is unsuccessful, we will fail to meet our objectives and not realize the revenues or profits from the business we pursue, which would cause the value of the Company to decrease, thereby potentially causing in all likelihood, our stockholders to lose their investment.

 

Our business will be dependent on a few large suppliers for feedstock and is vulnerable to changes in availability or supply of such feedstock.

 

We intend to derive our feedstock from suppliers who are operating large automotive shredders. Any substantial alteration or termination of our contracts or agreements with those particular suppliers may have a material adverse effect on our revenue as we may be unable to run our operation at capacity without a sufficient source of feedstock.

 

We will rely on several large customers for our product and are vulnerable to dramatic shifts in their industry.

 

We intend to focus on selling our product to the automotive industry initially, for use in production of new automobiles.  Most of our customers and end users are subject to budgetary and political constraints which may delay or limit purchases of our products, and we will have no control over those decisions.

 

We may be unable to successfully execute any of our identified business opportunities or other business opportunities that we determine to pursue.

 

We currently have a limited corporate infrastructure. In order to pursue business opportunities, we will need to continue to build our infrastructure and operational capabilities. Our ability to do any of these successfully could be affected by any one or more of the following factors:

 

1.   Our ability to raise substantial additional capital to fund the implementation of our business plan
2.   Our ability to execute our business strategy
3.   The ability of our products and services to achieve market acceptance
4.   Our ability to manage the expansion of our operations and any acquisitions we may make, which could result in increased costs, high employee turnover or damage to customer relationships
5.   Our ability to attract and retain qualified personnel
6.   Our ability to manage our third party relationships effectively
7.   Our ability to accurately predict and respond to the rapid technological changes in our industry and the evolving demands of the markets we serve
   
     

  

Our failure to adequately address any one or more of the above factors could have a significant impact on our ability to implement our business plan and our ability to pursue other opportunities that arise.

 

If we are unable to manage our intended growth, our prospects for future profitability will be adversely affected.

 

We intend to aggressively expand our marketing and sales program.  Rapid expansion may strain our managerial, financial and other resources.  If we are unable to manage our growth, our business, operating results and financial condition could be adversely affected.  Our systems, procedures, controls and management resources also may not be adequate to support our future operations.  We will need to continually improve our operational, financial and other internal systems to manage our growth effectively, and any failure to do so may lead to inefficiencies and redundancies, and result in reduced growth prospects and profitability.

 

Our insurance policies may be inadequate in a catastrophic situation and potentially expose us to unrecoverable risks.

 

We will have limited commercial insurance policies.  Any significant claims against us would have a material adverse effect on our business, financial condition and results of operations.  Insurance availability, coverage terms and pricing continue to vary with market conditions.  We endeavor to obtain appropriate insurance coverage for insurable risks that we identify, however, we may fail to correctly anticipate or quantify insurable risks. We may not be able to obtain appropriate insurance coverage, and insurers may not respond as we intend to cover insurable events that may occur.  We have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance.  Such conditions have resulted in higher premium costs, higher policy deductibles and lower coverage limits.  For some risks, we may not have or maintain insurance coverage because of cost or availability.

 

We may become liable for damages for violations of environmental laws and regulations.

 

We are subject to various environmental laws and regulations enacted in the jurisdictions in which we operate which govern the manufacture, importation, handling and disposal of certain materials used in our operations. We are in the process of establishing procedures to address compliance with current environmental laws and regulations and we monitor our practices concerning the handling of environmentally hazardous materials. However, there can be no assurance that our procedures will prevent environmental damage occurring from spills of materials handled by the Company or that such damage has not already occurred. On occasion, substantial liabilities to third parties may be incurred. We may have the benefit of insurance maintained by the Company. However, the Company may become liable for damages against which it cannot adequately insure or against which it may elect not to insure because of high costs or other reasons.

 

  We face intense competition and may not be able to successfully compete.

 

The Company currently does not have direct competitors in the capacity range we target. However, there can be no assurance that: (i) the Company will not have direct competition in the future, (ii) that such competitors will not substantially increase the resources devoted to the development and marketing of their products and services that compete with those of the Company, or (iii) that new or existing competitors will not enter the market in which the Company is active.

 

We rely on key personnel and, if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively.

 

Our success depends in large part upon the abilities and continued service of our executive officers and other key employees, particularly Mr. Gary DeLaurentiis, our Chief Executive Officer.  There can be no assurance that we will be able to retain the services of such officers and employees.  Our failure to retain the services of our key personnel could have a material adverse effect on the Company.   In order to support our projected growth, we will be required to effectively recruit, hire, train and retain additional qualified management personnel.  Our inability to attract and retain the necessary personnel could have a material adverse effect on the Company.  We have no “key man” insurance on any of our key employees.

 

Risks Related to the Common Stock

 

There is a limited trading market for the Common Stock.

 

Our Common Stock is currently being traded on the Pink Sheets. However, to date there has been a limited trading market for the Common Stock, and we cannot give assurance that a more active trading market will develop. The lack of an active, or any, trading market will impair a stockholder’s ability to sell his shares at the time he wishes to sell them or at a price that he considers reasonable.  An inactive market will also impair our ability to raise capital by selling shares of capital stock and will impair our ability to acquire other companies or assets by using common stock as consideration.

 

Stockholders may have difficulty trading and obtaining quotations for our Common Stock.

 

There has been limited trading market for our Common Stock, which does not actively trade, and the bid and asked prices for our Common Stock on the Over-the-Counter Bulletin Board may fluctuate widely in the future. As a result, investors may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities. This severely limits the liquidity of our Common Stock, and would likely reduce the market price of our Common Stock and hamper our ability to raise additional capital.

 

The market price of our Common Stock is likely to be highly volatile and subject to wide fluctuations.

 

Dramatic fluctuations in the price of our Common Stock may make it difficult to sell our Common Stock. The market price of our Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control, including:

 

dilution caused by our issuance of additional shares of Common Stock and other forms of equity securities in connection with (i) future capital financings to fund our operations and growth, and (ii) attracting and retaining valuable personnel and in connection with future strategic partnerships with other companies;

 

variations in our quarterly operating results;

 

announcements that our revenue or income are below or that costs or losses are greater than analysts’ expectations;

 

the general economic slowdown;

 

sales of large blocks of our Common Stock;

 

announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; and

 

Fluctuations stock market prices and volumes.

 

These and other factors are largely beyond our control, and the impact of these risks, singly or in the aggregate, may result in material adverse changes to the market price of our Common Stock and/or our results of operations and financial condition.

 

The ownership of our Common Stock is highly concentrated in our officers.

 

Based on the 200,833,233 shares of Common Stock outstanding as of July 31, 2012, Gary DeLaurentiis our Chief Executive Officer beneficially owns approximately 26.21% of our outstanding Common Stock. As a result, Mr. DeLaurentiis has the ability to exercise a significant degree of control over our business by, among other items, his voting power with respect to the election of directors and all other matters requiring action by stockholders. Such concentration of share ownership may have the effect of discouraging, delaying or preventing, among other items, a change in control of the Company.

 

Our founders received their shares of our Common Stock at a price of $.01 per share.

 

Our founders received their shares of our Common Stock at a price of $.01 per share. The low purchase price for such shares may make it more likely that the shares will be sold at lower trading prices. The sale of such shares into the market could have a depressive effect on the trading price of our Common Stock, if then traded.

 

The Common Stock will be subject to the “penny stock” rules of the SEC, which may make it more difficult for stockholders to sell the Common Stock.

 

The United States Securities and Exchange Commission (the “Commission”) has adopted Rule 15g-9 which establishes the definition of a "penny stock" for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

 

1.   That a broker or dealer approve a person's account for transactions in penny stocks; and
2.   The broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

  

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

 

1.   Obtain financial information and investment experience objectives of the person; and
2.   Obtain financial information and investment experience objectives of the person; and
3.   Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks
4.   The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination; and
5.   That the broker or dealer received a signed, written agreement from the investor prior to the transaction

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

 

The regulations applicable to penny stocks may severely affect the market liquidity for the Common Stock and could limit an investor’s ability to sell the Common Stock in the secondary market.

 

As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward looking statements does not apply to the Company.

 

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, the Company will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by the Company contained a material misstatement of fact or was misleading in any material respect because of the Company’s failure to include any statements necessary to make the statements not misleading. Such an action could adversely affect our financial condition.

 

The Company has not paid dividends in the past and does not expect to pay dividends for the foreseeable future.  Any return on investment may be limited to the value of the Common Stock.

 

No cash dividends have been paid on the Common Stock. We expect that any income received from operations will be devoted to our future operations and growth. The Company does not expect to pay cash dividends in the near future. Payment of dividends would depend upon our profitability at the time, cash available for those dividends, and other factors as the Company’s board of directors may consider relevant. If the Company does not pay dividends, the Common Stock may be less valuable because a return on an investor’s investment will only occur if the Company’s stock price appreciates.

 

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

NOT APPLICABLE

 

ITEM 2. PROPERTIES .

 

On September 1, 2010, the Company signed a five year lease for office space and opened its Riverbank, California offices and changed its corporate offices to California.  The mail for the Company is currently received at 5300 Claus Road, Riverbank, CA 95367.  Our monthly rent is $3,018. On November 16, 2011, the Company asked the City of Riverbank to terminate the three leases with the City the Company had entered into in anticipation of opening the Riverbank plant. The City of Riverbank granted the release and the Company moved out of the Riverbank location. The Company mailing address is P.O. Box 692, Riverbank, CA 95367.

 

 

ITEM 3. LEGAL PROCEEDINGS.

 

We are not party to any legal proceedings.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

 Not Applicable

 

PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITES.

 

Market Information

 

Previously, our Common Stock was eligible for quotation on the Over-the-Counter Bulletin Board under the symbol “WCRM.OB”.   The symbol was changed to “GETH” when the Company’s name was changed to Green EnviroTech Holdings Corp. The Common Stock is presently being quoted on the Pink Sheets. “GETH.PK” For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.   All per share amounts have been adjusted for the Company’s 15 to 1 stock split effected on March 11, 2010.

 

 

 

Fiscal Quarter   Fiscal 2011     Fiscal 2010  
    High     Low     High     Low  
First Quarter Ended March 31   $ 1.15     $ 0.52     $ 1.01     $ 0.00  
Second Quarter Ended June 30   $ 1.65     $ 0.125     $ 1.65     $ 0.51  
Third Quarter Ended September 30   $ 0.205     $ 0.03     $ 1.25     $ 0.60  
Fourth Quarter Ended December 31   $ 0.045     $ 0.005     $ 1.01     $ 0.55  

 

Holders

 

As of July 31, 2012, there were 200,833,233 shares of $0.001 par value common stock issued and outstanding, held by approximately 101shareholders of record.

 

Dividends

 

We have never declared or paid any cash dividends on our Common Stock. The Company currently intends to retain future earnings, if any, to finance the expansion of its business. As a result, the Company does not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will be dependent upon the existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company has not adopted any equity compensation plans as of December 31, 2011.

 

 

Recent Sales of Unregistered Securities.

 

None.

 

 

 Issuer Repurchases of Equity Securities

 

None.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

NOT APPLICABLE

 

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-Looking Statements

 

Statements in this annual report on Form 10-K may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this annual report on Form 10-K, including the risks described under “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report on Form 10-K and in other documents which we file with the Commission. In addition, such statements could be affected by risks and uncertainties related to our ability to raise any financing which we may require for our operations, competition, government regulations and requirements, pricing and development difficulties, our ability to make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this annual report on Form 10-K, except as may be required under applicable securities laws.

 

Corporate History

 

            Green EnviroTech Holdings Corp. (formerly known as Wolfe Creek Mining, Inc. and referred to herein as (the “Company”)), was incorporated in the State of Delaware on June 26, 2007. On November 20, 2009, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Green EnviroTech Acquisition Corp., a Nevada corporation, and Green EnviroTech Corp. (“Green EnviroTech”), a plastics recovery, separation, cleaning, and recycling company. Green EnviroTech is a Nevada corporation formed on October 6, 2008 under the name EnviroPlastics Corporation.  On October 21, 2009, Enviroplastics Corporation changed its name to Green EnviroTech Corp.  On July 20, 2010, the Company filed an amendment to its certificate of incorporation with the secretary of state of Delaware to  (i) change its name from Wolfe Creek Mining, Inc. to Green EnviroTech Holdings Corp.  and (ii)  to increase its total authorized common shares to 250,000,000 common shares.

 

Pursuant to the Merger Agreement, on November 20, 2009 (the “Closing Date”), Green EnviroTech Acquisition Corp. merged with and into Green EnviroTech, resulting in Green EnviroTech becoming a wholly-owned subsidiary of the Company (the “Merger”). As a result of the consummation of the Merger, the Company issued approximately 45,000,000 shares of its common stock to the shareholders of Green EnviroTech, representing approximately 75% of the issued and outstanding common stock of the Company following the closing of the Merger. Further, the outstanding shares of common stock of Green EnviroTech were cancelled. The acquisition of Green EnviroTech is treated as a reverse acquisition, and the business of Green EnviroTech became the business of the Company. Immediately prior to the reverse acquisition, the Company was not engaged in any active business.

 

References hereinafter to “Green EnviroTech”, “we”, “us”, “our” and similar words refer to the Company and its wholly-owned subsidiary, Green EnviroTech, unless the context otherwise requires.

 

            On December 4, 2009, the Company formed Green EnviroTech Wisconsin, Inc., (“GET WISC”) a Wisconsin corporation, in anticipation of opening a plant in Wisconsin.

 

On August 9, 2010, the Company formed Green EnviroTech Riverbank, Inc., (“GETRB”) a California corporation, in anticipation of opening the Riverbank, CA plant. The Company is currently leasing space in Riverbank, CA and anticipates operations to commence in the second quarter of 2011. On November 16, 2011, the Company asked the City of Riverbank to terminate the three leases with the City the Company had entered into in anticipation of opening the Riverbank plant. The City of Riverbank granted the release and the Company moved out of the Riverbank location. The Company mailing address is P.O. Box 692, Riverbank, CA 95367.

 

Critical Accounting Policy and Estimates

 

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended December 31, 2011, together with notes thereto as previously filed with our Annual Report on Form 10-K.  In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Form 10-K for the year ended December 31, 2011..

 

 

Results of Operations

 

 

Year Ended December 31, 2011 compared to Year Ended December 31, 2010

 

There were $526,836 in professional fees paid by issuing common stock and or warrants for year ended December 31, 2011 compared to $2,127,782 for the year ended December 31, 2010, a decrease of $1,600,946. The wages and professional fees for the year ended December 31, 2011 were $991,644 as compared to $760,541 for the year ended December 31, 2010, an increase of approximately 30%. This increase of $231,103 in wages and professional fees is the result of the Company’s efforts in engineering and design related to the equipment and building projections and landfill testing concerning the Wisconsin plant and the hiring of our Chief Operations Officer to help with the engineering and design relating to the equipment and building projections. There have been substantial increases in legal and accounting fees, which have been a result of the Company's reporting obligations with the Securities and Exchange Commission.  The increase in professional fees also had to do with the use of financing experts preparing financial models for use in the financing arena.  The Company incurred substantial accounting and auditing expenses when doing the due diligence on Magic Bright Limited, a Hong Kong Corporation (“Magic Bright”).   Magic Bright is a plastics brokerage company brokering plastic in Europe and Asia.   Audits had to be prepared on Magic Bright for the fiscal years ended March 31, 2009 and March 31, 2010.   The Company on February 14, 2011 entered into an agreement to purchase Magic Bright.

 

 

On March 5, 2012, the Company entered into a letter agreement (the “Letter Agreement”) with Magic Bright Limited (“Magic Bright”), Wong Kwok Wing Tony (“Tony”), and Chan Sau Fong (collectively with Tony, the “Sellers”). Pursuant to the Letter Agreement, the parties agreed that as a result of the failure by the Company to pay $700,000 in Cash Consideration (as defined in the Purchase Agreement) of the aggregate $1,000,000 Cash Consideration payable by the Company under the Purchase Agreement, dated February 14, 2012, among the Company, Magic Bright, and the Sellers, as amended by Amendment No. 1 and Amendment No.2 thereto, dated March 16, 2011 and March 25, 2011, respectively (as amended, the “Purchase Agreement”), including $300,000 of Cash Consideration due on June 16, 2011, $200,000 of Cash Consideration due on September 16, 2011, and $200,000 of Cash Consideration due on December 16, 2011, the Company was unable to obtain requisite financial statements relating to Magic Bright for periods subsequent to April 1, 2011 (the “Termination Effective Date”).

 

As a result of the failure to obtain requisite financial statements for Magic Bright, the Purchase Agreement was terminated, such termination to be deemed effective as of the Termination Effective Date. The Magic Bright Acquisition Shares (as defined in the Purchase Agreement) will be deemed to have been returned to the Company and cancelled effective as of the Termination Effective Date. The Ordinary Shares (as defined in the Purchase Agreement) will be deemed to have been returned to the Sellers effective as of the Termination Effective Date. The Sellers may retain the $300,000 of Cash Consideration paid by the Company. The Employment Agreement between the Company and Tony was terminated, such termination to be deemed effective as of the Termination Effective Date. Tony resigned as a director of the Company, effective March 5, 2012. The parties provided mutual general releases.

 

As a result of this transaction, the Company’s financial statements have been prepared with the results of operations and cash flows of the disposition of Magic Bright Limited shown as discontinued operations.

 

The general and administrative expenses for the year ended December 31, 2011 were $238,581 as compared to $333,741 for the year ended December 31, 2010, a decrease of approximately 29%. This decrease of $95,160 was the result of a decrease in travel, entertainment, advertising and marketing concerning the promotion of the company as a result of a decrease in working capital.

 

The non-operating expenses for the year ended December 31, 2011 were $844,717 as compared to $34,126 for the year ended December 31, 2010, an increase of 2375%.  The increase of $810,591 in non-operating expenses was the result of $140,972 in interest incurred on the working capital notes the Company incurred since inception through December 31, 2011, $123,120 was the result of the amortization of the debt discount incurred on the Legend debentures for the issuance of stock and warrants for the extension of the debt. Asher Enterprises, Inc. levied an interest penalty in the amount of $67,750 against the Company as a result of the Company’s failure to remain current with its SEC reporting obligations. $370,075 in Interest Expense Equity Issues was recorded in relation to the Derivative Liability recorded in conjunction with the Asher Convertible Notes. Also recorded with this interest expense was a $246,437write off of the value of the warrants issued during the year to officers and Mosaic Capital. In December 2011 the Company recorded a loss in the amount of $142,800 in relation to the $525,000 of debt converted to shares of common stock of the Company.

 

The Company has generated $1,950 in revenues from the one time sale of a few bales of scrape plastic from October 6, 2008 (inception) through December 31, 2011, but incurred $28,331 in cost of revenues due to equipment leasing in connection with the waste plastic inventory disposed of with the sale of the Riverbank Plant permits in December 2011.  On December 15, 2011, the Company’s wholly-owned subsidiary, Green EnviroTech Riverbank, Inc. (“GETRB”) entered into an asset purchase agreement pursuant to which GETRB sold its inventory and permits to a third party. GETRB’s remaining assets and liabilities were transferred to the Company and GETRB was dissolved on December 31, 2011. The Company has decided to maintain its contract with Agilyx Corporation for the purchase of its equipment and has decided to look for a more favorable location in California or surrounding states. The inventory was disposed of at the same time the permits were sold for $250,000 and the sale was record on the Operations Statement as Disposition of Riverbank Permits. $175,000 was used for working capital and $75,000 was used to repay debt.

 

The Company reflected a Gross Profit of ($26,381).  The Company is still in its development stage.

 

As a result of the above, the Company had a net loss of $6,740,647 since inception through December 31, 2011.

 

 

 

Liquidity and Capital Resources

 

As of December 31, 2011, the Company had a balance of cash in the bank in the amount of $112,103 as compared to $26,184 as of December 31, 2010.  As of December 31, 2011, the Company had accounts payable to vendors and accrued expenses in the amount of $1,297,657 as compared to $528,914 as of December 31, 2010.  As of December 31, 2011, the Company has loans payable-other in the amount of $777,250 as compared to $372,500 as of December 31, 2010.  These loans were used for working capital and to fund the expenses involved in the merger as previously discussed in the business section.  The loan payable to related party was a working capital loan to the Company in the amount of $72,496 by its chief executive officer, Mr. Gary DeLaurentiis.  The related party loan payable was $304,696 for the year ended December 31, 2010. The Company has three Promissory Notes to Asher Enterprises, Inc. These are Convertible Promissory Notes with a discounted conversion price. The amounts of these notes were $135,500 at the yearend. This amount included an interest penalty in the amount of $67,750 assessed against the Company by Asher as a result of the Company’s failure to remain current in its SEC reporting obligations. The total amount reflects $203,250. The value of the discount based upon the current market price of the Company Stock was recorded as a Derivative Liability. This Derivative Liability at December 31, 2011 was $151,738 and was determined by the Black-Scholes formula. Please refer to Note 7 of the financial statements for further information.

 

The unsecured, loan payable in the form of a line of credit with the CEO provided up to $200,000 at 4% interest per annum to cover various expenses and working capital infusions until the Company can be funded. This loan was extended from the original due date to December 31, 2011 and the amount was increased from $200,000 to $1,000,000. This loan has been extended again to December 31, 2012.  The CEO has advanced $1,231,356 from inception through December 31, 2011 and the Company repaid $180,483 of these advances.  The Company converted $754,377 of these advances into shares of common stock on May 11, 2010 at a $1 per share and converted $200,000 in common shares on December 1, 2011. The remaining principal under this loan due as of December 31, 2011 is $72,496. Interest expense on this line of credit for the years ended December 31, 2011 and 2010 was $14,666 and $12,375, respectively.  In addition, $27,041 interest is accrued at December 31, 2011. The Company anticipates the CEO to convert the balance of these advances into common stock in the future.

 

The Company received $215,000 on March 31, 2010 and an additional $35,000 on April 9, 2010 from HE Capital, SA as a loan on March 31, 2010.  These notes accrue interest at 8% annually. The Company accrued interest of $2,111 on the loan through May 11, 2010.  These amounts were converted into shares of common stock at $1 per share.  On August 6, 2010, HE Capital loaned the Company $100,000 and loaned the Company an additional $50,000 on September 13, 2010.  These loans are for one year with 8% interest rate. The cash was used for operations of the Company during its development stage. HE Capital loaned the Company $22,500 on October 13. 2010 and $190,000 on December 3, 2010.  These loans are also for one year with 8% interest rate.  HE Capital during the year loaned the Company $542,250 of which $70,000 was paid back and $65,000 was converted into shares of common stock on December 1, 2011. These loans were used to pay the fees and first and last lease payments on the Naranza Capital Partners equipment lease (see Note 6).  The total balance outstanding with HE Capital at December 31, 2011 is $769,750. Interest incurred on the $769,750 loans from HE Capital, SA for the year ended December 31, 2011 was $63,482 and accrued as of December 31, 2010 is $6,787.

 

The Company also entered into a loan payable with an individual in the amount of $20,000 at 10% due on demand. Interest expense for the year ended December 31, 2010 and accrued interest as of December 31, 2010 is $1,304. The Company repaid $10,000 of this note on August 10, 2010 and repaid $2,500 on April 13, 2011.  The interest went to 12% on February 25, 2011 when the note was not paid in full. As of December 31, 2011 the loan still has an outstanding balance of $7,500 and accrued interest in the amount of $2,257.

 

On October 22, 2010, the Company entered into an engagement for independent introducing agent services with Legend Securities, Inc. (“LSI”) where in LSI agreed to introduce investors to the Company in the form of equity and/or debt.  In accordance with the agreement, LSI was to receive 10% of the cash equivalent received by the Company as a fee and 2% of the cash equivalent as an expense allowance.  LSI received as compensation for this agreement, $39,600 in fees and expenses in 2010 and $6,000 on January 21, 2011.

 

The Company as of December 31, 2010, raised $330,000 from the investors, and an additional $50,000 in January 2011. The amounts advanced to the Company were converted into a 12% Secured Debenture dated January 24, 2011 due July 24, 2011. On July 21, 2011, the Secured Debentures were extended an additional six months to a new maturity date of January 24, 2012. All other original terms remained the same. The Investors received an additional 380,000 shares of common stock in exchange for granting the extension. In addition, the investors received 50% warrant coverage totaling 190,000 warrants dated January 24, 2011. LSI also received warrants as a fee totaling 19,000 (10% of the total warrants issued). Interest accrued as of December 31, 2011(12%) was $48,550. $75,000 of these notes was paid on April 27, 2012. Please refer to Note 8 of the financial statements which are a part of this filing for further information.

 

  The following tables provide selected financial data about our company for the years ended December 31, 2011 and 2010.

 

Balance Sheet Data:      12/31/11       12/31/10  
                 
Cash   $ 112,103     $ 26,184  
Total assets   $ 687,922     $ 544,599  
Total liabilities   $ 2,882,391     $ 1,536,110  
Shareholders' equity   $ (2,194,469 )   $ (991,511 )

                 

 

Cash provided by financing activities since inception through December 31, 2011 was $2,520,185. $80,000 was the result from the sale of shares for cash, $1,413,312 (net) as a result of a loan from different entities and $1,026,873 (net) was a loan from a related party, the company CEO.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

 

ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

NOT APPLICABLE

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

All financial information required by this Item is attached hereto at the end of this annual report on Form 10-K beginning on page F-1 and is hereby incorporated by reference.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

 None.

 

ITEM 9A(T). CONTROLS AND PROCEDURES.

 

Our principal executive and principal financial officers have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a – 15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report.  They  have concluded that, based on such evaluation, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting as of December 31, 2011, as further described below.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

 

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

 

  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

 

As of December 31, 2011 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial Statements as of December 31, 2011.  These material weaknesses can be rectified by an injection of funding needed to hire personnel to fill the positions needed to carry out the necessary duties for adequate internal controls.  Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

            This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission which permanently exempt smaller reporting companies.

 

Management’s Remediation Initiatives

 

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate when funding permits, the following series of measures:

 

We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. Further, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

 

We anticipate that these initiatives will be at least partially, if not fully, implemented by December 31, 2012. Additionally, we plan to test our updated controls and remediate our deficiencies by December 31, 2012.

 

Changes in Internal Controls Over Financial Reporting

 

There was no change in our internal controls over financial reporting that occurred during the last quarter ended December 31, 2011, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

 

ITEM 9B. OTHER INFORMATION.

 

None.

 

 

 PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE .

 

Below are the names and certain information regarding the Company’s executive officers and directors.

 

Name   Age   Position
Gary M. DeLaurentiis   67   Chief Executive Officer and Chairman
Wayne Leggett   66   Chief Financial Officer, Director
Lou Perches     64   Chief Operating Officer
         

                                                                                                                                                        

Directors serve until the next annual meeting of stockholders or until their successors are elected and qualified.  Officers serve at the discretion of the board of directors.

 

Gary M. De Laurentiis, Chairman and Chief Executive Officer

 

Mr. De Laurentiis has been our Chief Executive Officer and Chairman since July 2009.  Prior to that, he served as our Chief Operating Officer from September 2008 until July 2009.  Mr. DeLaurentiis has been active in the plastics recycling business for nearly 20 years. In partnership with the Chinese government, he designed and built his first plastics recycling plant in 1987. In the years since, he has designed, remodeled, built and operated plants in Mexico, North Carolina, Ohio, Florida, California and Canada for both local governments and private industries. From 1992 to 1995, Mr. De Laurentiis worked directly with the state government in Campeche, Mexico, living on-site for eighteen (18) months while directing the entire project. In 1996, an Ohio based group recruited Mr. De Laurentiis to open a shuttered recycling plant. Mr. De Laurentiis left the Company in 1999 to start ECO2 Plastics Inc. Subsequently, he left Eco2 Plastics in September 2008 to start Green EnviroTech. Mr. DeLaurentiis’s experience in the plastics industry led to the conclusion that Mr. De Laurentiis should serve on the Company’s board given the Company’s business and structure.

 

Wayne Leggett, CFO, Director

 

    Mr. Leggett was elected to serve as the Company’s Chief Financial Officer in March 2010 and has served as a director since January 2011.  An accredited accountant with 35 years of experience, Mr. Leggett has extensive knowledge in tax accounting, financial statements, budgeting and cash flow analysis.  He was the former Assistant Treasurer for The Goldfield Corporation, a listed American Stock Exchange company, responsible for cash flow analysis, budget variances, consolidated statements and SEC filings, from June 1975 to November 1976.  Over the past 35 years he also has conferred with clients on major purchases, cash flows, budgets and growth matters.  Mr. Leggett has served as CFO of Corporate Host Development, Inc., Austin, Texas, from December 1984 to June 1986, where he performed the duties of acquisitions, feasibility studies and financing.   Mr. Leggett joined Fuji Corporation as the Comptroller/Manager reporting to headquarters the monthly and annual reports concerning operations in the Phoenix area for 2 years, from March 1990 to July 1992. Mr. Leggett received his Bachelor of Science in Business Administration from the University of Central Florida and is a member of the National Society of Accountants. Mr. Leggett’s financial and accounting experience and knowledge led to the conclusion that Mr. Leggett should serve on the Company’s board given the Company’s business and structure.

 

 

 

Lou Perches, Chief Operating Officer

 

Mr. Perches has served as our Chief Operating Officer since January 2011. Mr. Perches, 63, was a systems and management consultant for Florida Fruit Juice from May 2010 to September 2010.  Mr. Perches was General Manager of Bapco Closures LLC from October 2008 to April 2010. From March 2008 to August 2008 Mr. Perches was Manager, Quality Control at Rexam Pharma. From January 2007 to February 2008 Mr. Perches was Manager Quality Assurance at Amcor Packaging. From October 2005 to January 2006 Mr. Perches was Quality System 3rd Party Auditor (Consultant) for A.I.B. International. Mr. Perches received a BA in Industrial Technology, Quality Engineering from Fullerton State University.

 

 

  Section 16(a) Beneficial Ownership Compliance

Our officers, directors and shareholders owning greater than ten percent (10%) of our shares are required to file beneficial ownership reports pursuant to Section 16(a) of the Securities and Exchange Act (the “Exchange Act”). All such reporting obligations were complied with during the year ended December 31, 2011, except that, our chief executive officer and chief operating officers have not filed Form 3’s, which will be filed in the near future.

 

 Code of Ethics

 

We do not currently have a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or Controller, or persons performing similar functions.  Because we have only limited business operations and three (3) officers and two (2) directors, we believe a code of ethics would have limited utility. We intend to adopt such a code of ethics as our business operations expand and we have more directors, officers and employees.

 

Audit Committee Financial Expert

 

Because the small size and early stage of the Company, we do not currently have a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act, or a committee performing similar functions.

 

Board Leadership Structure and Role in Risk Oversight

 

Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined that it is in the best interests of the Company and its shareholders to combine these roles.  Mr. DeLaurentiis has served as our Chairman since July 2009. Due to the small size and early stage of the Company, we believe it is currently most effective to have the Chairman and Chief Executive Officer positions combined.

 

Our board of directors is primarily responsible for overseeing our risk management processes.  The board of directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The board of directors focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our Company are consistent with the board’s appetite for risk. While the board oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach. 

 

Changes in Nominating Process

 

During the year ended December 31, 2011, there are no material changes to the procedures by which security holders may recommend nominees to our board of directors.

 

ITEM 11. EXECUTIVE COMPENSATION.

  

SUMMARY COMPENSATION TABLE

 

 The following table sets forth all compensation paid in respect of our Chief Executive Officer and those executive officers who received compensation in excess of $100,000 per year for the years ended December 3, 2010 and 2011:


 

                   
Name & Principal position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) All Other Compensation Earnings ($) Total ($)
                   
Gary DeLaurentiis Chief Executive Officer and Chariman  2010 2011    $29,167 $214,800               $29,167 $214,800
                   
Wayne Leggett Chief Financial Officer Director  2010 2011     $82,500 $162,500    $24,000 $234,357        $82,500 $420,857
                   
Lou Perches Chief Operations Officer   2010 2011      $0 $131,250    $6,000          $0 $137,250
                   

 

 

 

·Gary DeLaurentiis CEO salary was all accrued at December 31, 2011
·Wayne Leggett CFO salary was accrued in the amount of $127,512 at December 31, 2011and $54,000 at December 31, 2010
the stock awards of 4,000,000 common shares was issued on December 1, 2011 at $0.006 per share
the option awards was 1,500,000 warrants issued on May 5, 2011, restricted for six months and exercisable within three years from date of issuance at a price of $0.01 per share of common stock per one warrant. The value of the warrants was $234,357 at the date of issue based upon the Black Scholes formula.
·Lou Perches COO salary was accrued in the amount of $103,807 at December 31, 2011
the stock awards of 1,000,000 common shares was issued on December 1, 2011 at $0.006 per share

 

 

Employment Agreements

 

Employment Agreement with Gary DeLaurentiis and Wayne Leggett

 

On June 1, 2011, the Company entered into employment contracts with its Chief Executive Officer at a base salary of $300,000 and its Chief Financial Officer at a base salary of $240,000 for a term of 36 months with one year automatic extensions. Each contract provided for annual bonuses in an amount equal to at least the base salary of the officers. The contracts also provide for stock and/or option incentive for the purchase of common stock at the discretion of the Board of Directors. Salaries and bonuses are being accrued until such time the company has the funds to pay accrued wages.

 

 

 

 

Director Compensation

 

No director of the Company received any compensation for services as director for the year ended December 31, 2011.

 

Outstanding Equity Awards at December 31, 2011

 

 

The following table sets forth outstanding equity awards to our named executive officers as of December 31, 2011:

 

OPTION AWARDS     STOCK AWARDS  

Name

(a)

 

Number of Securities Underlying Unexercised Options

(#)

Exercisable

(b)

   

Number of

Securities Underlying Unexercised

Options

(#) Unexercisable

(c)

   

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options

(#)

(d)

   

Option Exercise Price

($)

(e)

   

Option Expiration Date

(f)

   

Number of Shares or Units of Stock That Have Not Vested

(#)

(g)

   

Market Value of Shares or Units of Stock That Have Not Vested

($)

(h)

   

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested

(#)

(i)

   

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

(#)

(j)

 
Wayne Leggett     1,500,000       0       -     0.01       5/05/2014       -       -       -       -  
                                                                         

 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

 

The following table sets forth certain information, as of June 15, 2012 with respect to the beneficial ownership of the outstanding Common Stock by (i) any holder of more than five (5%) percent; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.  This is based upon a total of 200,833,233 shares issued and outstanding as of July 31, 2012

 

 

Name of Beneficial Owner (1)

 

Common Stock

Beneficially Owned

   

Percentage of

Common Stock (2)

 
Directors and Officers:            
Gary M. De Laurentiis     52,630,182       26.21 %
 Wayne Leggett     18,625,000       9.27 %
Lou Perches     1,000,000       .50 %
                 
All officers and directors as a group (3  persons)     72,255,182        35.98 
                 

 Beneficial owners of more than 5%:

HE Capital

    13,363,111       6.65
 JDS Squared     10,000,000       4.98

 

 

 

(1)   Except as otherwise indicated, the address of each beneficial owner is:  P.O. Box 692, Riverbank, CA 95367.
(2)   Applicable percentage ownership is based on 200,833,233 shares of Common Stock outstanding as of July 31, 2012 together with securities exercisable or convertible into shares of Common Stock within 60 days of July 31, 2012 for each stockholder.  Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Options or warrants to purchase shares of Common Stock that are currently exercisable or exercisable within 60 days of July 31, 2012 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

  Certain Relationships and Related Transactions

 

Gary De Laurentiis has provided Green EnviroTech with an unsecured line of credit of up to $ 1,000,000. Interest on the line of credit is 4% per annum. As of December 31, 2011, Mr. De Laurentiss has loaned the Company $ 72,496 pursuant to the line of credit and there is interest due of $ 27,041.

 

The Company issued 40,000,000 shares to the CEO of the Company to reduce $200,000 of the note due him and issued 16,000,000 shares to the CFO to reduce $80,000 in accrued salary due him.     

 

Effective January 25, 2011, Jeffrey Chartier resigned as President and as a director of Green EnviroTech Holdings Corp. (the “Company”). In connection with Mr. Chartier’s resignation, the Company and Mr. Chartier entered into a separation agreement pursuant to which:

 

Mr. Chartier agreed to a six month lock-up of the 4,495,680 shares of the Company’s common stock owned by Mr. Chartier (the “JC Shares”), and subsequent “leak-out” selling of no more than 1% of the Company’s issued and outstanding shares of common stock in any 90 day period, in consideration for which the Company agreed to issue Mr. Charter 50,000 shares of common stock (the “LL Transfer Shares”).

 

Mr. Chartier relinquished voting rights to his 4,495,680 shares of common stock, giving Gary DeLaurentiis (the Company’s Chief Executive Officer and Chairman) the proxy to vote such shares, in consideration for which the Company agreed to issue Mr. Chartier 25,000 shares of common stock (the “Proxy Transfer Shares”).

 

Mr. Chartier provided the Company a right of first refusal on any proposed sale of the JC Shares, LL Transfer Shares, Proxy Transfer Shares, and an additional 25,000 shares the Company agreed to issue to Mr. Chartier as partial reimbursement for $30,000 of outstanding expenses.

 

The Company agreed to issue or cause the transfer of an additional 50,000 shares of common stock for Mr. Chartier as severance.

 

Mr. Chartier provided a general release.

 

Director Independence

 

Our directors are not independent as that term is defined under the Nasdaq Marketplace Rules.

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

 

For the year ended December 31, 2011, the total fees charged to the company for audit services, including quarterly reviews, were $28,000, for other audit-related services were $0, for tax services were $0, and for other services were $0.

 

For the year ended December 31, 2010, the total fees charged to the company for audit services, including quarterly reviews, were $21,500, for other audit-related services were $0, for tax services were $0, and for other services were $30,000 in relation to Magic Bright Limited (please refer to the Subsequent Events Section in Note 9 in the Notes to the Financial Statements which are part of this 10-K.)

 

 

 
 

 

  

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES.

 

 

 

Exhibit Number   Description
3.1   Certificate of Incorporation (Incorporated by reference to our registration statement on Form S-1 (File No. 333-149626), filed with the Securities and Exchange Commission on March 11, 2008)
     
3.2   Certificate of Amendment of Incorporation (Incorporated by reference to our current report on Form 8-K, filed with the Securities and Exchange Commission on July 23, 2010
     
3.3   Certificate of Designation of Magic Bright Acquisition Series C Convertible Preferred Stock (incorporated by reference to our current report on Form 8-K filed with the SEC on February 15, 2011)
     
3.4   By-Laws (Incorporated by reference to our registration statement on Form S-1 (File No. 333-149626), filed with the Securities and Exchange Commission on March 11, 2008)
     
10.1   Agreement and Plan of Merger, dated November 20, 2009, by and among the Company, Green Enviro Tech Corp. and Green EnviroTech Acquisition Corp. (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2009)
     
10.2   Equipment Purchase and Installation Agreement, dated December 12, 2009, by and among Green Enviro Tech Corp., and Plast2Fuel Corporation (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009)
     
10.3   Oil Marketing and Distribution Agreement, dated December 12, 2009, by and among Green Enviro Tech Corp. and Plast2Fuel Corporation (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009)
     
10.4   License Agreement, dated December 12, 2009, by and among Green Enviro Tech Corp. and Past2Fuel Corporation (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009)
     
10.5   Employment Agreement between the Company and Gary De Laurentiis (incorporated by reference to our annual report on  Form 10-K filed with the SEC on April 8, 2010)
     
10.6   Employment Agreement between the Company and Jeffrey Chartier (incorporated by reference to our annual report on  Form 10-K filed with the SEC on April 8, 2010)
     
10.7   Employment Agreement between the Company and Andrew Kegler (incorporated by reference to our annual report on  Form 10-K filed with the SEC on April 8, 2010)
     
10.7   HE Capital, SA Note dated April 14, 2010 (incorporated by reference to our quarterly report on Form 10-Q filed with the SEC on May 12, 2010)
     
10.8   First Amendment to Plas2Fuel License Agreement, dated May 18, 2010, by and between Green EnviroTech and Plas2Fuel, Inc.  (incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)
     
10.9  

License Agreement, dated April 30, 2010, by and between Green EnviroTech and Ergonomy

(incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)

     
10.10   License Agreement, dated May 18, 2010, by and between Green EnviroTech and Thar Process, Inc. (incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)
     
10.11  

License Agreement, dated May 18, 2010, by and between Green EnviroTech and Thar Process, Inc.

(incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)

     
10.12   8% Promissory Note, dated August 6, 2010 (incorporated by reference to our quarterly report on Form 10-Q, filed with the SEC on November 9, 2010)
     
10.13   8% Promissory Note, dated September 13, 2010 (incorporated by reference to our quarterly report on Form 10-Q, filed with the SEC on November 9, 2010)
     
10.14   Form of  Securities Purchase Agreement (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
     
10.15   Form of Debenture (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
     
10.16   Form of Security Agreement (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
     
10.17   Form of Warrant (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
     
10.18   Separation Agreement, dated as of January 25, 2011, between the Company and Jeffrey Chartier incorporated by reference to our current report on Form 8-K filed with the SEC on January 31, 2011)
     
10.19   Securities Purchase Agreement, dated February 14, 2011, between the Company, Magic Bright and the Sellers incorporated by reference to our current report on Form 8-K filed with the SEC on February 15, 2011)
     
10.20   Amendment No. 1 to Securities Purchase Agreement, between the Company, Magic Bright and the Sellers, dated March 16, 2011 (incorporated by reference to Form 8-K filed with the SEC on March 18, 2011)
     
10.21   Amendment No. 2 to Securities Purchase Agreement, between the Company, Magic Bright and the Sellers, dated March 25, 2011 (incorporated by reference to Form 8-K filed with the SEC on March  31, 2011)
     
10.22   Employment Agreement, dated as of March 30, 2011 between the Company and Wong Kwok Wing, Tony, dated  as of March 31, 2011 (incorporated by reference to Form 8-K filed with the SEC on April 1, 2011)
     
10.22  

Letter Agreement, dated as of March 5, 2012, between the Company, Magic Bright, and the Sellers (incorporated by reference to Form 8-K filed with the SEC on March 9, 2012).

 

16  

Letter from KBL, LLP (incorporated by reference to 8-K filed with the SEC on May 22, 2012)

 

21.1   List of Subsidiaries
     
31.1   Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
     
31.2   Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
     
32.1   Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code
     
32.2   Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code
     
EX-101.INS   XBRL INSTANCE DOCUMENT
     
EX-101.SCH   XBRL TAXONOMY EXTENSION SCHEDULE
     
EX-101.CAL   XBRL EXTENSION CALCULATION LINKBASE
     
EX-101.DEF   XBRL EXTENSION DEFINITION LINKBASE
     
EX-101.LAB   XBRL EXTENSION LABLE LINKBASE
     
EX-101.PRE   XBRL EXTENSION PRESENTATION LINKBASE

 

 

 

 
 

 

GREEN ENVIROTECH HOLDINGS CORP.

(FORMERLY WOLFE CREEK MINING, INC.)

(A DEVELOPMENT STAGE COMPANY)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

•Consolidated Financial Statements:

 

•Report of Independent Registered Public Accounting Firm

 

•Consolidated Balance Sheets as of December 31, 2011 and December 31, 2010

 

•Consolidated Statements of Operations For the Years Ended December 31, 2011 and 2010 and Period October 6, 2008 (Inception) through December 31, 2011

 

•Consolidated Statements of Changes in Stockholders’ Equity (Deficit) For the Years Ended December 31, 2011 and 2010

 

•Consolidated Statements of Cash Flows For the Years Ended December 31, 2011 and 2010 and Period October 6, 2008 (Inception) through December 31, 2011

 

•Notes to Consolidated Financial Statements

 

 
 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Michael F. Cronin
Certified Public Accountant
Orlando, FL


Board of Directors and Shareholders

Green EnviroTech Holdings Corp

Riverbank, CA.

 

I have audited the accompanying consolidated balance sheet of Green EnviroTech Holdings Corp. (a development stage company) as of December 31, 2011 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 2011 and the period of October 6, 2008 (Inception) through December 31, 2011 These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The financial statements of Green EnviroTech Holdings Corp. as of December 31, 2010 were audited by other auditors whose report thereon, dated April 4, 2011, expressed an unqualified opinion.

 

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor was I engaged to perform, an audit of its internal control over financial reporting. My 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, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Green EnviroTech Holdings Corp. (a development stage company) as of December 31, 2011 and the results of its operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended and the period of October 6, 2008 (Inception) through December 31, 2011 in conformity with U.S. generally accepted accounting principles.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company is in process of executing its business plan and expansion. The Company has not generated significant revenue to this point, however, has been successful in raising funds in their private placement. The lack of profitable operations and the need to continue to raise funds raise significant doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

August 6, 2012

 

/s/ Michael F. Cronin

 

Michael F. Cronin
Certified Public Accountant

NY, FL

Orlando, Florida

 

 

 
 

Report of Independent Registered Public Accounting Firm

To the Directors of

Green EnviroTech Holdings Corp.

 

We have audited the accompanying consolidated balance sheets of Green EnviroTech Holdings Corp. (formerly Wolfe Creek Mining, Inc.) (the "Company") (a development stage company) as of December 31, 2010, and the related consolidated statements of operations, changes in stockholders' equity (deficit) and cash flows for the year ended December 31, 2010 and period October 6, 2008 (Inception) through December 31, 2010. These consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Green EnviroTech Holdings Corp. (a development stage company) as of December 31, 2010, and the results of its statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended and period October 6, 2008 (Inception) through December 31, 2010 in conformity with U.S. generally accepted accounting principles.

 
 

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company is in process of executing its business plan and expansion. The Company has not generated significant revenue to this point, however, has been successful in raising funds in their private placement. The lack of profitable operations and the need to continue to raise funds raise significant doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/KBL, LLP

 

New York, NY

April 4, 2011

 
 

 

GREEN ENVIROTECH HOLDINGS CORP.
(FORMERLY WOLFE CREEK MINING, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
   IN US$
       
   2011  2010
ASSETS   
       
       
CURRENT ASSETS          
  Cash  $112,103   $26,184 
  Inventory   —      15,496 
  Other current assets   75,000    5,000 
Total current assets   187,103    46,680 
           
Fixed Assets          
 Plant Equipment   125,000    120,000 
 Construction in  progress   113,929    113,929 
    238,929    233,929 
Other Assets:          
 Deposits   261,890    263,990 
    261,890    263,990 
           
TOTAL ASSETS  $687,922   $544,599 
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)     
           
CURRENT LIABILITIES          
  Accounts payable  $560,873   $458,541 
  Accrued expenses   736,784    70,373 
  Secured debentures payable   380,000    330,000 
  Loan payable - other   777,250    372,500 
  Loan payable - Convertible   203,250    —   
  Derivative liability   151,738    —   
  Loan payable - related party   72,496    304,696 
Total current liabilities   2,882,391    1,536,110 
           
TOTAL LIABILITIES   2,882,391    1,536,110 
           
STOCKHOLDERS' EQUITY (DEFICIT)          
  Preferred stock, $0.001 par value, 25,000,000 shares authorized,          
     0 shares issued and outstanding   —      —   
  Common stock, $0.001 par value, 250,000,000 shares authorized,          
     170,433,232 and  63,516,758 shares issued and outstanding   170,433    63,517 
     (4,790,081 shares are held in reserve)          
  Additional paid in capital   4,216,149    3,130,753 
  Additional paid in capital - warrants   387,799    —   
  Deficit accumulated during development stage    (6,968,850 )   (4,185,781)
Total stockholders' equity (deficit)   (2,194,469)   (991,511)
           
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)  $687,922   $544,599 
           
           
           

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

 

 
 

GREEN ENVIROTECH HOLDINGS CORP.   
(FORMERLY WOLFE CREEK MINING, INC.)   
(A DEVELOPMENT STAGE COMPANY)   
CONSOLIDATED STATEMENTS OF OPERATIONS AND   
COMPREHENSIVE LOSS   
FOR THE YEARS  ENDED DECEMBER 31, 2011 AND 2010 AND   
FOR THE PERIOD OCTOBER 6, 2008 (INCEPTION) THROUGH DECEMBER 31, 2011   
          
IN US$               
              
OCTOBER 6, 2008
 
              
(INCEPTION)
 
    
YEAR ENDED
    
YEAR ENDED
    
THROUGH
 
    DECEMBER 31, 2011    
DECEMBER 31, 2010
    
DECEMBER 31, 2011
 
                
REVENUE  $1,950   $—     $1,950 
                
COST OF REVENUES   28,331    5,302    33,633 
                
GROSS PROFIT   (26,381)   (5,302)   (31,683)
                
OPERATING EXPENSES               
   Wages and professional fees   781,699    760,541    2,040,423 
   Professional fees - common stock issued and warrants issued   736,811    2,127,782    2,922,828 
   General and administrative    238,580    333,741     692,220  
Total operating expenses    1,757,090      3,222,064      5,655,471  
                
NON-OPERATING EXPENSES               
   Amortization of debt discount   123,120    —      123,120 
   Interest expense   140,972    34,126    194,868 
   Interest expense-Penalty   67,750         67,750 
   Interest expense-Equity Issues   370,075         370,075 
   Loss on debt conversion    142,800         142,800 
Total non-operating expenses   844,717    34,126    898,613 
                
NET (LOSS) FROM OPERATIONS   (2,628,188)    (3,261,492)       (6,585,767 )
                
OTHER INCOME:               
    Disposition of Riverbank Permits   250,000    —      250,000 
                
DISCONTINUED OPERATIONS:               
  ( Loss) on disposal of discontinued operations   (429,066)   —      (429,066)
   Income from discontinued operations   24,186    —      24,186 
Total loss from discontinued operations   (404,880)   —      (404,880)
                
NET (LOSS)  $(2,783,068)  $(3,261,492)  $(6,740,647)
                
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING   73,435,356    62,184,274    64,823,280 
                
NET (LOSS) PER SHARE  $(0.04)  $(0.05)  $(0.10)
                
                
                

 

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

 

 

 

 

 
 

 

 

 

 

 

 

 

 

 

 

GREEN ENVIROTECH HOLDINGS CORP.   
(FORMERLY WOLFE CREEK MINING, INC.)   
(A DEVELOPMENT STAGE COMPANY)   
CONSOLIDATED STATEMENTS OF CASH FLOW   
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 AND   
FOR THE PERIOD OCTOBER 6, 2008 (INCEPTION) THROUGH DECEMBER 31, 2011   
          
IN US$     
                
              OCTOBER 6, 2008 
              (INCEPTION) 
    YEAR ENDED    YEAR ENDED    THROUGH 
    DEC 31, 2011    DEC 31, 2010    DEC 31, 2011 
CASH FLOWS FROM OPERATING ACTIVITIES:               
  Net (loss)  $(2,783,068)  $(3,261,492)  $(6,740,647)
                
                
Adjustments to reconcile net (loss)               
 to net cash used in operating activities:               
    Common stock issued for services, net of cancelations, including shares issued   472,132    2,127,782    2,658,149 
       for loss on disposal of discontinued operations ($104,880)               
    Common stock issued to reduce and extend debt   306,050         306,050 
    Warrants issued as loan fees to brokers   30,322    —      30,322 
    Warrants issued to officers   234,357         234,357 
    Amortization of debt discount   123,120    —      123,120 
    Fair value change in derivative liability   151,737    —      151,737 
   Loss on disposal of discontinued operations   429,066         429,066 
   Income from discontinued operations   (24,186)        (24,186)
                
Change in assets and liabilities               
(Increase) in inventory   15,496    (15,496)   —   
   (Increase) in deposits and other current assets   (67,900)   (268,990)   (336,890)
   Increase in accounts payable and accrued expenses   768,743    176,930    1,299,769 
         Total adjustments   2,438,937    2,020,226    4,871,494 
         Net cash (used in) operating activities   (344,131)   (1,241,266)   (1,869,153)
                
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
  Cash paid for acquisition of Magic Bright   (300,000)   —      (300,000)
  Expenditures related to purchase of equipment for Riverbank Plant   (5,000)   (120,000)   (125,000)
  Expenditures related to construction of building        (53,856)   (113,929)
         Net cash (used in) investing activities   (305,000)   (173,856)   (538,929)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
  Issuance of stock for cash   50,000    —      80,000 
  Proceeds received from loan payable - related party   26,300    934,766    1,231,356 
  Payments on loan payable - related party   (58,500)   (145,983)   (204,483)
  Proceeds received from loan payable - other   604,250    962,500    1,610,312 
  Proceeds received from loan payable - convertible   135,500         135,500 
  Payments on loan payable - other   (72,500)   (310,000)   (382,500)
  Proceeds received from secured debentures   50,000    —      50,000 
         Net cash provided by financing activities   735,050    1,441,283    2,520,185 
                
                
NET INCREASE IN CASH AND CASH EQUIVALENTS   85,919    26,161    112,103 
                
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD   26,184    23    —   
                
CASH AND CASH EQUIVALENTS - END OF PERIOD  $112,103   $26,184   $112,103 
                
SUPPLEMENTAL CASH FLOW INFORMATION:               
 Cash paid during the period for:               
    Interest  $140,972   $34,126   $180,998 
                
NON-CASH SUPPLEMENTAL INFORMATION:               
 Stock issued for services  $472,132   $2,127,782   $2,658,149 
 Warrants issued as loan fees to brokers  $30,322   $—     $286,759 
 Conversion of loans payable for common stock  $306,050   $1,006,488   $1,312,538 
                

 

 

 

 

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

 

 

 
 

 

GREEN ENVIROTECH HOLDINGS CORP.
(FORMERLY WOLFE CREEK MINING, INC.)
(A DELELOPMENT STAGE COMPANY)
 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 2011 AND THE YEAR ENDED DECEMBER 31, 2010
 
IN US$
                           
                        Deficit  
                    Additional Additional Accumulated  
                Additional Paid-In Paid-In During the  
          Preferred Stock Common Stock Paid-In Capital - Capital - Development  
          Shares Amount Shares Amount Capital Warrants Options Stage  Total 
                           
Balance - June 26, 2007 (Inception of Wolfe                 -    $           -                     -    $          -    $              -    $             -      $              -    $                -  
  Creek Mining, Inc.)                      
                           
Common shares issued to founders for cash                -                 -      44,999,895        45,000         (30,000)                   -                      -              15,000
                           
Net loss for the period                    -                 -                     -                  -                    -                     -               (9,105)             (9,105)
                           
Balance - December 31, 2007                  -                 -      44,999,895        45,000         (30,000)                   -               (9,105)              5,895
                           
Common shares issued for cash                  -                 -      15,000,000        15,000          10,000                   -                      -              25,000
                           
Net loss for the year                    -                 -                     -                  -                    -                     -             (19,608)           (19,608)
                           
Balance - December 31, 2008                  -                 -      59,999,895        60,000         (20,000)                   -             (28,713)            11,287
                           
Net loss for the period January 1, 2009 through                  
  November 20, 2009 - date of merger with                  
  Green EnviroTech Corp.                  -                 -                     -                  -                    -                     -               (9,845)             (9,845)
                           
Net effect of recapitalization with GreenEnviroTech                  
  Corp. including repurchase and subsequent                  
  cancellation of shares and issuance of new shares                 -                 -                     -                  -         (208,202)                   -           (310,350)         (518,552)
                           
To reclassify negative paid in capital to retained earnings                -                 -                     -                  -          228,202                   -           (228,202)                    -  
                           
Net loss for the period November 21, 2009 through                  
  December 31, 2009                    -                 -                     -                  -                    -                     -           (347,179)         (347,179)
                           
Balance - December 31, 2009                  -                   -    59,999,895        60,000                  -                     -           (924,289)         (864,289)
                           
Common shares issued to consultants and officers                -                 -        2,510,375          2,511     2,125,271                   -                      -         2,127,782
                           
Conversion of notes payable  to common stock                -                 -        1,006,488          1,006     1,005,482                   -                      -         1,006,488
                           
Net loss for the year ended December 31, 2010                -                 -                     -                  -                    -                     -        (3,261,492)      (3,261,492)
                           
Balance - December 31, 2010                  -                 -      63,516,758        63,517     3,130,753                   -             -      (4,185,781)         (991,511)
                           
Issued Preferred Stock in purchase Magic Bright    1,000,000          1,000                   -                  -       4,999,000                   -             -                    -         5,000,000
                           
Acquisition Reserve in purchase Magic Bright  (1,000,000)        (1,000)        (4,999,000)                   -             -          (5,000,000)
                           
Issued Common Stock in purchase of Magic Bright                -                 -           184,000             184        104,696                   -             -                    -            104,880
                           
Common shares issued to consultants for fees                -                 -      27,119,141        27,119        445,013                   -             -                    -            472,132
                           
Common shares issued for cash                  -                 -           333,333             333          49,667                   -             -                    -              50,000
                           
Common shares issued for debt extensions             380,000             380            1,520                   -             -                    -                1,900
                           
Conversion of notes payable and liabilities to common stock      78,900,000        78,900        484,500                   -             -                    -            563,400
                           
Warrants issued to secured debenture holders                -                 -                     -                  -                    -           123,120           -                    -            123,120
                           
Warrants issued to brokers                  -                 -                     -                  -                    -             18,242           -                    -              18,242
                           
Warrants issued to consultants for fees                -                 -                     -                  -                    -             12,080           -                    -              12,080
                           
Warrants issued to Officers                  -                 -                     -                  -                    -           234,357           -                    -            234,357
                           
Options issued to Officers                  -                 -                     -                  -                    -                     -             -                    -                      -  
                           
Net loss for the year ended December 31, 2011                -                 -                     -                  -                    -                     -             -      (2,783,068)      (2,783,068)
                           
                           
Balance - December 31, 2011                  -    $           -   170,433,232  $  170,433  $ 4,216,149  $     387,799  $       -    $(6,968,849)  $  (2,194,469)

 

 

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

 

 

 

 

 
 

NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION

Green EnviroTech Holdings Corp. (the “Company”) was incorporated on June 26, 2007 under the name Wolfe Creek Mining, Inc. under the laws of the State of Delaware as a result of a reverse merger on November 20, 2009 with Green EnviroTech Acquisition Corp. and Green EnviroTech Corp. Wolfe Creek Mining, Inc. up until November 20, 2009 was primarily engaged in the acquisition and exploration of mining properties. Green EnviroTech Corp was incorporated on October 6, 2008 and was engaged in plastics recovery. The financial statements included herein are the financials of Green EnviroTech Holdings and subsidiaries from October 6, 2008 to current.

The Company is a plastics recovery, separation, cleaning, and recycling company, with the intent to supply recycled commercial plastics to industries such as the automotive and consumer products industries, and it plans to construct large-scale plastics recycling facilities near automotive shredder locations nationwide. Operating in conjunction with large national recycling partners, the Company using a patent pending process developed in conjunction with Thar Process, Inc. will produce recycled commercial grade plastics ready to be re-introduced into commerce. Additionally, the Company plans to convert waste and scrap plastic into high-value energy products, including crude oil.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated.

Development Stage Company

 

The Company is considered to be in the development stage as defined in ASC 915, “Accounting and Reporting by Development Stage Enterprises”. The Company has devoted substantially all of its efforts to the corporate formation and the raising of capital.

 

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company acquired Magic Bright Limited (“Magic Bright”), a Hong Kong Corporation, on March 30, 2011. Magic Bright is a plastics brokerage company brokering waste plastic in Europe and Asia.

The Company has not generated revenues since inception and has generated losses totaling $6,530,674 for the period October 6, 2008 (Inception) through December 31, 2011 and needs to raise additional funds to carry out the business plan.

The Company has raised net debt financing of $1,292,750 from non-related third parties through December 31, 2011and $96,496from the Company’s CEO through December 31, 2011. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and the ability of the Company to obtain necessary equity financing to continue and expand operations.

The Company has had very little operating history to date. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the ability of the Company to continue as a going concern.

Besides generating revenues from proposed operations, the Company may need to raise additional funds to expand operations to the point at which the Company can achieve profitability. The terms of new debt or equity that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company’s officers and directors may need to contribute additional funds to sustain operations.

 

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

 

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

 

Comprehensive Income (Loss)

 

The Company adopted ASC 220-10, “Reporting Comprehensive Income.” ASC 220-10 requires the reporting of comprehensive income in addition to net income from operations.

Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of information that historically has not been recognized in the calculation of net income.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents.

The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation.

 

 

 

Fixed Assets

 

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Costs of maintenance and repairs will be charged to expense as incurred. The Company through December 31, 2011, incurred some engineering and design costs on a facility they are planning to build or purchase to refurbish. All of these costs are non-depreciable until the facility is in service.

 

Recoverability of Long-Lived Assets

 

The Company reviews long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment will be based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis.

 

If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell.

 

Fair Value of Financial Instruments

 

The carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.

 

Income Taxes

 

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

 

Revenue Recognition

 

The Company will generate revenue from sales as follows:

1)
Persuasive evidence of an arrangement exists;
2)
Delivery has occurred or services have been rendered;
3)
The seller’s price to the buyer is fixed or determinable, and
4)
Collectable is reasonably assured.

 

 

 

 

The Company anticipates that the plastics that are recovered will be their main source of revenue, with the automotive parts manufacturers being the primary market. However, the use of the Company’s recycled materials is not limited to just automotive parts, therefore the Company will market numerous other industries both domestically and internationally.

In addition, the Company believes that they will generate revenue from joint ventures with companies in the waste oil and waste plastics recycling businesses, including royalties generated by the sale of crude oil products developed by the joint venture partners.

 

(Loss) Per Share of Common Stock

 

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented.

 

Inventory

Inventory is valued at the lower of cost (on a first-in, first-out (FIFO) basis) or market. As of December 31, 2011, the Company has no Inventory. There has been no reserve for obsolescence of inventory and inventory is only removed upon use. The Company includes in its Cost of Revenues its costs of materials as well as other direct costs in the delivery of its materials to the warehouse and products to its customers as well as freight and other costs. When the Company commences the conversion process they will also include the work in process inventory and finished goods in its inventory.

 

Goodwill and Other Intangible Assets

 

Impairment of Excess Purchase Price over Net Assets Acquired (Goodwill and Other Long-Term Assets) – The Company determines impairment by comparing the fair value of the goodwill, using the undiscounted cash flow method, with the carrying amount of that goodwill. ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with ASC 350.

 

ASC 350 also requires that intangible assets with finite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” The Company’s assessment for impairment of assets involves estimating the undiscounted cash flows expected to result from use of the asset and its eventual disposition. An impairment loss recognized is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset, and considers year-end the date for its annual impairment testing, unless information during the year becomes available that requires an earlier evaluation of impairment testing.

 

Uncertainty in Income Taxes

The Company follows ASC 740-10, “Accounting for Uncertainty in Income Taxes” (“ASC 740-10”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. ASC 740-10 is effective for fiscal years beginning after December 15, 2006. Management has adopted ASC 740-10 for 2007, and they evaluate their tax positions on an annual basis, and have determined that as of December 31, 2011, no additional accrual for income taxes is necessary.

 

Off-Balance Sheet Arrangements-We have no off-balance sheet arrangements.

 

Stock-Based Awards

 

The Company measures the cost of employee services received in exchange for an award of equity instruments, including stock options, based on the grant-date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. The Company estimates the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s statement of operations.  The forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For the fiscal periods ended December 31, 2011 and 2010. The Company’s estimated forfeiture rate is 0% based on the Company’s historical experience. There were 0 stock options granted during the period ended December 31, 2011 and 0 stock options granted during the year ended December 31, 2010.

 

During the fiscal periods ended December 31, 2011 and 2010, the Company granted common stock warrants to investors, lenders and certain officers as discussed in Note 3. The fair value of stock warrants issued in conjunction with the issuance of common stock is recorded against common stock as stock issuance cost. The fair value of stock warrants issued in conjunction with notes payable is recognized as a discount on the related debt and amortized to interest expense over the term to maturity.

 

The fair value of stock-based awards to employees and directors is calculated using the Black-Scholes-Merton pricing model.  The Black-Scholes-Merton model requires subjective assumptions regarding future stock price volatility and expected time to exercise, which greatly affect the calculated values.  The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior.  The risk-free rate selected to value any particular grant is based on the U.S. Treasury rate that corresponds to the pricing term of the grant effective as of the date of the grant.  The expected volatility is based on the historical volatility of the common stock of comparable publicly traded companies.  In making this determination and finding another similar company, the Company considered the industry, stage of life cycle, size and financial leverage of such other entities.  These factors could change in the future, affecting the determination of stock-based compensation expense in future periods.

 

Fair Value Measurements

The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 inputs: Quoted prices for identical instruments in active markets.

Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 inputs: Instruments with primarily unobservable value drivers.

 

Recent Issued Accounting Standards

In May 2011, FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. FASB ASU 2011-04 amends and clarifies the measurement and disclosure requirements of FASB ASC 820 resulting in common requirements for measuring fair value and for disclosing information about fair value measurements, clarification of how to apply existing fair value measurement and disclosure requirements, and changes to certain principles and requirements for measuring fair value and disclosing information about fair value measurements. The new requirements are effective for fiscal years beginning after December 15, 2011. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.

 

In June 2011, FASB issued ASU No. 2011-05, Presentation of Comprehensive Income, which amends the disclosure and presentation requirements of Comprehensive Income. Specifically, FASB ASU No. 2011-05 requires that all nonowner changes in stockholders’ equity be presented either in 1) a single continuous statement of comprehensive income or 2) two separate but consecutive statements, in which the first statement presents total net income and its components, and the second statement presents total other comprehensive income and its components. These new presentation requirements, as currently set forth, are effective for the Company beginning October 1, 2012, with early adoption permitted. The Company plans to adopt this amended guidance on October 1, 2012 and at this time does not anticipate that it will have a material impact on the Company’s results of operations, cash flows or financial position.

 

 

In September 2011, FASB issued ASU 2011-08, Testing Goodwill for Impairment, which amended goodwill impairment guidance to provide an option for entities to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the totality of events and circumstances, if an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, performance of the two-step impairment test is no longer required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. Adoption of this guidance is not expected to have any impact on the Company’s results of operations, cash flows or financial position.

 

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

NOTE 3- STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The Company has 25,000,000 preferred shares of $0.001 par value stock authorized. The Company has no preferred stock issued and outstanding.

Common Stock

The Company has 250,000,000 common shares of $0.001 par value stock authorized. On December 31, 2011, the Company had 170,433,232 common shares outstanding and 4,790,081 common shares held in reserve in agreement with the Asher Enterprises, Inc. notes.

Issuances of Common Stock since inception are as follows:

On October 17, 2007, the Company issued 44,999,895 shares of common stock to one director for cash in the amount of $0.000334 per share for a total of $15,000.

On July 17, 2008, the Company sold 15,000,000 shares of common stock to a group of 26 investors for cash in the amount of $0.001667 per share for a total of $25,000 pursuant to a registration statement on Form S-1 which became effective on April 8, 2008.

In October 2009, Kristen Paul, the owner of 44,999,895 shares of the Company’s common stock sold her shares to Green EnviroTech Corp. These shares were cancelled. With the cancellation of those shares, Kristen Paul resigned as the sole officer and director and was replaced by former officers of Green EnviroTech.

 

Pursuant to the Merger Agreement, on November 20, 2009 (the “Closing Date”), the Subsidiary merged with and into Green EnviroTech resulting in Green EnviroTech becoming a wholly-owned subsidiary of the Company (the “Merger”). As a result of the Merger, the Company issued 44,999,895 shares of its common stock (the “Acquisition Shares”) to the shareholders of Green EnviroTech, representing 75% of the issued and outstanding common stock following the closing of the Merger. The outstanding shares of Green EnviroTech were cancelled.

On March 11, 2010, the Company effected a fifteen to 1 forward stock split in the form of a stock dividend. The shares and per share amounts included herein have been reflected retroactive to the stock split.

During the year ended December 31, 2010, the Company issued 2,600,000 shares of common stock with a fair value of $2,195,000 (between $0.65 and $1.00 per share). In addition, the Company issued 1,006,488 shares of common stock to convert loans payable that were outstanding to a related party (754,377) and to a non-related party (252,111). These shares were converted at $1.00 which was the fair value of the stock at the date of conversion. The Company also canceled 89,625 shares of common stock valued at $67,218 to a consultant for services not performed, as the certificate was returned.

During the three months ended March 31, 2011, the Company issued 131,250 shares of common stock with a fair value of $98,750 (100,000 shares valued at $.80 and 31,250 shares valued at $.60) for professional services. The Company also issued 184,000 shares of common stock with a fair value of $104,880 (valued at $.57 per share) to employees of Magic Bright Limited as a condition for the acquisition of Magic Bright.

During the three months ended June 30, 2011, the Company issued 597,250 shares of common stock with a fair value of $108,495 (250,000 shares valued at $.18 per share, 70,000 shares valued at $.15 per share, 177,250 shares valued at $.22 per share and 100,000 shares valued at $.14 per share) for professional services. The Company issued an additional 290,641 shares of common stock issued to Centurion Private Equity LLC for fees in connection with a funding agreement which is further explained in Note 13. (248,591 shares valued at $.50 per share and 42,050 shares valued at $.24 per share). The Company issued an additional 333,333 shares of common stock issued at a price of $.15 per share for working capital. The $50,000 from these common shares was used to reduce the note balance owed to HE Capital S.A. The Company issued an additional 4,790,081 shares of common stock placed into reserve as part of the agreement with Asher Enterprises Inc. concerning their notes which are further explained in Note 6. (These shares were valued at par value $.001 while in reserve)

During the three months ended September 30, 2011, the Company did not issue any shares of common stock.

 

 

 

 

During the three months ended December 31, 2011, the Company issued common shares as follows. On December 1, 2011, the Company authorized the acceptance of the Debt Settlement Agreements dated December 1, 2011 between the Company and certain officers and creditors of the Company. The agreements called for the issue of Common Shares to settle debt. On December 1, 2011, Common Shares of the Company were selling for $0.006 per share and was agreed as the conversion price. On December 7, 2011, 105,380,000 shares of Common Stock were issued to settle $526,900 of debt. The Company issued 40,000,000 shares to the CEO of the Company to reduce $200,000 of the note due him and issued 16,000,000 shares to the CFO to reduce $80,000 in accrued salary due him. The Company also issued 49,380,000 shares for services rendered and additional debt conversion amounting to $246,900.

 

Warrants

The Company used the Black-Scholes option pricing model in valuing options and warrants. The inputs for the valuation analysis of the options and warrants include the market value of the Company’s common stock, the estimated volatility of the Company’s common stock, the exercise price and the risk free interest rate. As of December 31, 2011, total unrecognized compensation expense related to nonvested share-based compensation arrangements was $0.

The key inputs in determining grant date fair value are as follows:

 

                         Period Ended
  2011  
Risk-free interest rate 1.25%  
Dividend yield 0.00%  
Expected volatility 200.2%  
Expected term (in years) 5.0  
Weighted average grant date fair value of warrants granted during the period $0.10  

 

 

During fiscal 2011, a valuation allowance was recorded against substantially all of our net deferred tax assets, including those generated by the stock-based compensation expense related tax benefits.

On January 24, 2011, the Company issued 190,000 warrants to the investors who subscribed to the Secured Debenture financing. These warrants are five-year warrants to purchase an aggregate of 190,000 shares of common stock at an exercise price of $0.40 per share, which may be exercised on a cashless basis.

The value of these warrants was $123,120 at inception which represents the debt discount on the Secured Debentures issued on January 24, 2011. The debt discount was amortized over the six month life of the debt. On July 21, 2011, the debt was extended an additional six months to a new due date of January 24, 2012. The investors received a total 380,000 shares of common on December 7, 2011 for agreeing to the extension. The extension and modification to the Secured Debentures did not constitute a material modification under ASC 470-50, and thus the Company recorded the shares as additional expense. On February 2, 2012, this due date was again extended to September 24, 2012. (See Note 8 & Note 13)

In addition, the Company issued 19,000 five-year warrants to the brokers as commission on the Secured Debenture transaction. These warrants carry the same term as the investor warrants. The value of the warrants was $18,242 and was reflected as loan fees for the year ended December 31, 2011.

On April 22, 2011, the Company entered into an Agreement with Mosaic Capital LLC wherein Mosaic will act as the Company’s financial advisor. Contained in Mosaic’s compensation package is a $30,000 fee payable in cashless warrants. On August 1, 2011, Mosaic received 142,857 warrants, convertible into one (1) share of the Company’s common stock within five years from the date of the Agreement in payment of the fee. These warrants were valued at $0.21 per share which was the value of the Company’s common share on the date of execution of the Agreement. These warrants were issued on August 1, 2011.

 

 

On May 25, 2011, the Company issued to the CFO 1,500,000 common stock purchase warrants, exercisable on a cashless basis for three years at an exercise price of $0.01 per share. These warrants are restricted for six months from the date of issuance. The warrants were issued in consideration for deferring salary and as a discretionary bonus for 2009 and 2010. The value of these warrants on December 31, 2011 by using the Black Scholes Method was $32,570 and this amount was expensed on December 31, 2011.

 

The Following is a breakdown of the warrants:

 

             
Warrants   Exercise Price   Date Issued   Term
             
 90,000   $0.40   1/24/2011    5 Years 
 9,000   $0.40   1/24/2011    5 Years 
1,500,000   $0.01   5/25/2011    3 Years 
142,857   $0.01   8/1/2011    5 Years 
             
1,851,857            
             
             
             
             
             
             

 

 

NOTE 4- ACCOUNTS PAYABLE & ACCRUED EXPENSES

Accounts payable and accrued expenses at December 31, 2011 and 2010 consisted of:

 

 

 

December 31,2011

 

 

December 31, 2010

         

Accounts Payable

 

$           516,692   $ 386,341

Accounts Payable – Related Parties

 

44,183   42,211
Accrued Salary - Officer 446,119   54,312
Accrued Payroll – Non Officers 84,000   -
Accrued Payroll Tax 58,066     19,667
Accrued Interest 148,597     26,383
  $       1,297,657    $ 528,914
       

 

Accounts payable- related party balances are to officers of the Company for non-reimbursed expenses paid on behalf of the Company. Accrued interest is related to outstanding loan payables referred to in notes 5, 6, 7 and 8.

 

NOTE 5- LOAN PAYABLE – RELATED PARTY

 

 

The Company has an unsecured, loan payable in the form of a line of credit with its CEO. The CEO had provided a line of credit up to $1,000,000 at 4% interest per annum to the Company to cover various expenses and working capital infusions until the Company can be funded. This loan has been extended to December 31, 2012. Balance of the loan at December 31, 2011 was $72,496 with accrued interest in the amount of $27,041. History of the loan is as follows:

 

 

 

                 
         Decembeer 31, 2011     Decembeer 31, 2010     
                 
                 
Beginning Balance        $        304,696    $         270,290    
   Additions                    26,300               934,766    
   Subtractions                    58,500               145,983    
   Stock Conversion                  200,000               754,377    
                 
Ending Balance        $          72,496    $         304,696    
                 

 

 

 

NOTE 6- LOAN PAYABLE – OTHER

 

 

The Company has several unsecured loans with H. E. Capital, S. A.. These loans accrue interest at the rate of 8% per annum. The due dates of the loans have been extended to December 31, 2012. Balance of the loans at December 31, 2011 was $769,750 with accrued interest in the amount of $63,482. History of the H. E. Capital loans is as follows:

 

 

 

                 
         Decembeer 31, 2011     Decembeer 31, 2010     
                 
                 
Beginning Balance        $        362,500    $                    -    
   Additions                  542,250               612,500    
   Subtractions                    70,000                          -    
   Stock Conversion                    65,000               250,000    
                 
Ending Balance        $        769,750    $         362,500    
                 

 

 

 

 

The Company also entered into a loan payable with an individual in the amount of $20,000 at 10% due on demand. The Company repaid $10,000 of this note on August 10, 2010. The Company also repaid $2,500 of this note on April 13, 2011. As of December 31, 2011 the loan has an outstanding balance of $7,500 and accrued interest in the amount of $2,257.

 

NOTE 7- LOAN PAYABLE – CONVERTIBLE

 

The Company is obligated under three short-term Convertible Promissory Notes due Asher Enterprises, Inc. The proceeds of each note is as follows: $53,000 on April 12, 2011, $42,500 on April 27, 2011 and $40,000 on May 23, 2011. The notes call for interest in the amount of eight percent (8%) per annum from the date of issue until due nine months from the issue date. The Company has the right to prepay the note with interest anytime after sixty (60) days following the issue date of the note. The Company has to issue a prepayment notice within three (3) trading days prior to the prepayment date. The prepayment amount is one hundred twenty-five percent (125%) of the principal balance. Asher Enterprises, Ins. has the right to convert the note or any part of the unpaid principal balance of the note into common shares of the Company anytime after one hundred eighty (180) days following the issue date of the note. The conversion price is sixty three percent (63%) on the note issued April 12, 2011 and sixty one percent (61%) on the other two notes. The conversion price is calculated on the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. The funds were used for working capital.

 

 

These notes also call for 4,790,081 shares of the Company’s common stock to be placed into a reserve account. On August 23, 2011, the Company received a notice of default on this note from Asher as a result of the Company’s failure to remain current in its SEC filings and elected to impose a penalty of 50% of the outstanding note balance or $67,750 against the Company. The note remains outstanding and in default as of December 31, 2011.

 

The Promissory Notes to Asher Enterprises, Inc. are Convertible Promissory Notes with a discounted conversion price. The value of the discount based upon the current market price of the Company Stock. We determined that the conversion formula did not provide for the conversion of the debt to a fixed and determinate number of common shares. Accordingly, the underlying debt was accounted for as a Derivative Liability and recorded at fair value on the balance sheet date. This Derivative Liability at December 31, 2011 was recorded at $151,738 in excess of the $203,250 carrying value of the underlying debt.

 

NOTE 8- SECURED DEBENTURES

On January 24, 2011, the Company entered into a series of securities purchase agreements with accredited investors (the “Investors”), pursuant to which the Company sold an aggregate of $380,000 in 12% secured debentures (the “Debentures”). Legend Securities, Inc. a broker dealer which is a member of FINRA, received a commission of $45,600 and 19,000 warrants at an exercise price of $0.40 in connection with the sale of the Debentures. The Debentures are due at the earlier of 6 months from the date of issuance or upon the Company receiving gross proceeds from subsequent financings in the aggregate amount of $1,000,000. The Debentures bear interest at the rate of 12% per annum, payable upon maturity. The Debentures are secured by the assets of the Company pursuant to security agreements entered into between the Company and the Investors.

 

On July 21, 2011, the Secured Debentures were extended an additional six months to a new maturity date of January 24, 2012. All other original terms remained the same. The Investors received an additional 380,000 shares of common stock in exchange for granting the extension. These shares were valued at $38,000 on July 25, 2011, the first day of the extension. This amount was treated as additional interest to the investors and was expensed. The extension and modification to the Secured Debentures did not constitute a material modification under ASC 470-50. These shares were issued to the Investors on December 7, 2011.

 

The Company also issued to the Investors five-year warrants to purchase an aggregate of 190,000 shares of common stock at an exercise price of $0.40, which may be exercised on a cashless basis.

 

Interest on these notes for the year ended December 31, 2011 was $45,900 and accrued as of December 31, 2011 (12%) was $48,550.

 

The $380,000 in proceeds from the financing transaction was allocated to the debt features and the warrants based upon their fair values. The value of the warrants ($123,120) was recorded as a debt discount on the secured debentures. This discount has been fully amortized as of December 31, 2011.

 

 

 

The estimated fair value of the 190,000 warrants to the investors at issuance on January 24, 2011 was $141,362 and has been classified as Additional Paid In Capital - Warrants on the Company’s consolidated balance sheet. The estimated fair value of the warrants was determined using the Black-Scholes option-pricing model and the assumptions described in Note 3.

 

 

NOTE 9- PROVISION FOR INCOME TAXES

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

 

Net Deferred Tax Assets consisted of the following components as of December 31, 2011 and 2010:

 

 

             
             
Deferred Tax Assets:     2011   2010
             
    NOL Carryover      $        1,946,500    $      487,900
    Accrued Payroll                   148,700             18,500
Valuation allowance               (2,095,200)          (506,400)
             
         $                    -      $              -  
             

The income tax provision differs from the amount of income tax determined by applying the U.S. Federal Income tax rate to pretax income from continuing operations for the years ended December 31, 2011 and 2010 due to the following:

             
        2011   2010
             
Book Income      $          (946,400)    $  (1,345,800)
Meal & Entertainment                       900               6,500
Other non-deductable expense                 214,000           746,500
Accrued Payroll                   130,200             18,500
Valuation allowance                   601,300           574,300
             
         $                      -    $                -
             

At December 31, 2011, the Company had a net operating loss carry forward in the amount of $5,725,000 available to offset future taxable income through 2031. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the periods ended December 31, 2011 and 2010 is summarized below.

 

         
         
Federal statutory rate   -34.0%
State income taxes, net of federal benefits 0.0%
Valuation allowance     34.0%
        0.0%
         

NOTE 10- COMMITMENTS

Employment Agreements

 

As of December 31, 2011, there were accrued salaries to officers and directors and others.

 

             
             
          2011 2010
Accrued salaries to officers and directors    $           342,312  $      54,312
Accrued salaries to officers not under contract               103,807                   -
Accrued salaries other                     84,000                   -
             
           $           530,119  $      54,312
             

 

 

 

 

On January 27, 2011, Wayne Leggett was elected to the Board of Directors of the Company, and Lou Perches was appointed Chief Operating Officer of the Company. Mr. Leggett has been the Company’s Chief Financial Officer since March 2010. Mr. Perches received a salary of $7,500 per month for six months during which he devoted 100% of his time to the Company. The Company currently uses Mr. Perches on an as needed basis and accrues any compensation to him that is unpaid.

 

 

 

 

 

The Company executed on June 1, 2011 employment contracts for the hire of its Chief Executive Officer at a base salary of $300,000 and its Chief Financial Officer at a base salary of $240,000 for a term of 36 months with one year automatic extensions. The contracts also provide for stock and/or option incentive for the purchase of common stock at the discretion of the Board of Directors. Salaries and bonuses are being accrued until such time the company has the funds to pay accrued wages. Our current expense and future obligation under these employment contracts is as follows:

 

             
             
      2011 2012 2013 2014
             
Officers Salaries    $315,000  $540,000  $540,000  $ 225,000
             
             
             
             

 

 

 

Capital Lease – Riverbank

 

On September 24, 2010, the Company received a “term sheet” from Naranza Capital Partners for the lease purchase of $5,000,000 of equipment to be placed in the Riverbank facility. On November 23, 2010, the Company signed an Equipment Lease Agreement with Naranza Capital Partners for the lease of the equipment needed in the Riverbank Plant. This Capital Lease also included the installation of this equipment and has a $1 (one dollar) buyout clause. The term of the lease is for five years (60 months) starting from the date the equipment is operational. The Company paid an application fee of $12,500 plus the first and last month’s lease payments in the amount of $128,945 each. The Company also paid $10,000 doc fees, site visit fee and legal fees. As of December 31, 2011, the equipment had not been ordered for shipment.

On April 1, 2011, a Demand Letter was sent to Naranza Capital Partners for the return of the Company’s deposit.

 

Naranza Capital Partners have not returned the deposit as of December 31, 2011.

 

 

 

Riverbank Site

 

On December 15, 2011, the Company’s wholly-owned subsidiary, Green EnviroTech Riverbank, Inc. (“GETRB”) entered into an asset purchase agreement pursuant to which GETRB sold its inventory and permits to a third party. GETRB’s remaining assets and liabilities were transferred to the Company and GETRB was dissolved on December 31, 2011. The Company has decided to maintain its contract with Agilyx Corporation for the purchase of its equipment and has decided to look for a more favorable location in California or surrounding states. The inventory and permits were sold for $250,000. $175,000 was used for working capital and $75,000 was recorded as an Other Asset for the benefit of the debenture investors who had a lien on the permits. The $75,000 was issued to the debenture investors on April 27, 2012. (See Note 13)

 

NOTE 11- ACQUISITION AND RESCISSION OF MAGIC BRIGHT, INC.

Magic Bright Transaction

 

On February 14, 2011, the Company entered into a securities purchase agreement with Magic Bright. Pursuant to the Purchase Agreement, the Company agreed to purchase, and the Stockholders of Magic Bright agreed to sell, all of the issued shares of Magic Bright, subject to the terms and conditions therein. Company agreed to pay to the Sellers, in consideration for the Ordinary Shares, an aggregate purchase price of $6,000,000, consisting of $1,000,000 in cash and $5,000,000 in securities.

 

On March 5, 2012, the Company entered into a letter agreement with Magic Bright Limited (“Magic Bright”), Wong Kwok Wing Tony (“Tony”), and Chan Sau Fong (collectively with Tony, the “Sellers”) effectively rescinding the 2011 purchase of Magic Bright. ,

 

As a result of the failure to obtain requisite financial statements for Magic Bright, the Purchase Agreement was terminated, such termination to be deemed effective as of April 1, 2011 (the termination date). The Magic Bright Acquisition Shares were returned to the Company and cancelled effective as of the Termination Effective Date. The Ordinary Shares have been returned to the Sellers effective as of the Termination Effective Date. The Sellers retained the $300,000 of Cash Consideration paid by the Company. The Employment Agreement between the Company and Tony was terminated, such termination to be deemed effective as of the Termination Effective Date. Tony resigned as a director of the Company, effective March 5, 2012. The parties provided mutual general releases.

 

As a result of this transaction, the Company’s financial statements have been prepared with the results of operations and cash flows of the disposition of Magic Bright Limited shown as discontinued operations. All historical statements have been restated in accordance with GAAP.

 

The following are the operating results included in discontinued operations for the year ended December 31, 2011:

 

     
  

NINE  MONTH DECEMBER 31, 2012

 

THREE MONTHS

DECEMBER 31, 2012

  

 

 

 

REVENUE

 
$32,555
 
$   --
  
 

 

COST OF REVENUE

 

8,197

 
--
  
 

GROSS PROFIT

 

24,358

 

   --

  
 

OPERATING EXPENSES

 
 

  General and Adminstrative

 

172

 

   --

     

NET INCOME FROM OPERATIONS

 

$24,186

 

$    --

     
     


 

 For the year ended December 31, 2011, the transaction had the following impact on the Company’s statement of operations: The Company increased its Expenses by $429,066 as a result of the loss created from writing off its investment in Magic Bright Limited when the Company discontinued its operations. The Company also decreased its net loss by $24,186 as a result of recognizing one day of net income from the discontinued operations of Magic Bright.

 

 

NOTE 12- SUBSEQUENT EVENTS

On February 2, 2012, the Company considered the form terms and provisions of the proposed Addendum to Secured Debentures pursuant to which the Company shall issue 1,000,000 shares of common stock and the maturity date of the debentures referred to shall be extended to September 24, 2012, are approved in all respects; and such shares, when issued, will be duly issued, fully paid and non assessable, and the Company’s Authorized Officers and each of them hereby is authorized to execute and deliver in the name and on behalf of the Company the Addendum. The Company by direction of Legend Securities, Inc. shall also issue to the holders of the Secured Debentures five-year warrants to purchase 100,000 shares of common stock at an exercise price of $0.10 per share which said warrants were originally issued to certain employees of Legend Securities, Inc. per a previous Legend Agreement. The warrants will be issued to the holders of the Secured Debentures simultaneously with the issuance of the above mentioned stock.

 

On March 5, 2012, the Company entered into a letter agreement with Magic Bright Limited (“Magic Bright”), Wong Kwok Wing Tony (“Tony”), and Chan Sau Fong (collectively with Tony, the “Sellers”) to terminate the Purchase Agreement as amended on March 25, 2011 between the Company and Sellers effective April 1, 2011. (See Note 11)

 

On April 27, 2012, the debenture lien holders were issued the $75,000 by the third party in the completion of the asset purchase agreement for the sale of the Riverbank inventory and permits. The $75,000 was carried on the books as an Other Asset for the benefit of the debenture lien holders. (See Note 8)

 

On May 16, 2012, the Company dismissed KBL, LLP (“KBL”) as the Company’s independent registered public accounting firm. KBL’s audit report on the Company’s financial statements for the fiscal years ended December 31, 2010 and 2009 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that, the audit report included an explanatory paragraph with respect to the uncertainty as to the Company’s ability to continue as a going concern since it is a startup company. During the years ended December 31, 2011 and 2010 and during the subsequent interim period preceding the date of KBL’s dismissal, there were no disagreements with KBL on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, and no reportable events. 

 

On May 18, 2012, the Company engaged Michael F. Cronin, CPA to serve as its independent registered public accounting firm. During the years ended December 31, 2011 and 2010 and during the subsequent interim period preceding the date of Cronin’s engagement, the Company did not consult with Cronin regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on the Company’s financial statements.

 

 

 

 

 

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

     
  GREEN ENVIROTECH HOLDINGS, CORP.
     
Date: August 17, 2012 By:   /s/ Gary M. De Laurentiis
 

Gary M. De Laurentiis

Chief Executive Officer (Principal Executive Officer)

     
Date: August 17, 2012 By:   /s/ Wayne Leggett
 

Wayne Leggett

Chief Financial Officer  (Principal Financial and Accounting Officer)

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature   Title   Date
         
         
/s/ Gary M. De Laurentiis     Chief Executive Officer and Chairman of the Board   August 17, 2012
Gary M. De Laurentiis   (Principal Executive Officer)     
         
         
 /s/ Wayne Leggett        
Wayne Leggett  

 Chief Financial Officer and Director

(Principal Financial and Accounting Officer)

   August 17, 2012