Green Endeavors, Inc. - FORM 10-Q

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EX-31.02 - EXHIBIT 31.02 - Green Endeavors, Inc.	ex312.htm
EX-32.02 - EXHIBIT 32.02 - Green Endeavors, Inc.	ex322.htm
EX-32.01 - EXHIBIT 32.01 - Green Endeavors, Inc.	ex321.htm
EX-31.01 - EXHIBIT 31.01 - Green Endeavors, Inc.	ex311.htm
EXCEL - IDEA: XBRL DOCUMENT - Green Endeavors, Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2012

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

For the transition period from __________ to __________

Commission file number 000-54018

______________________

GREEN ENDEAVORS, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________

Utah (State or Other Jurisdiction of Incorporation or Organization)	27-3270121 (I.R.S. Employer Identification No.)
59 West 100 South 2nd Floor Salt Lake City, Utah (Address of Principal Executive Offices)	84101 (Zip Code)

(801) 575-8073

Registrant’s Telephone Number, including Area Code

______________________

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

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

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x

(Do not check if a smaller reporting company)

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

On February 28, approximately 4,453,039,148 shares of the registrant’s common stock, $0.001 par value, were outstanding.

GREEN ENDEAVORS, INC. AND SUBSIDIARIES

INDEX

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):	1

	Condensed Consolidated Balance Sheets:
	June 30, 2012 and December 31, 2011	1

	Condensed Consolidated Statements of Operations:
	Three and Six Months Ended June 30, 2012 and June 30, 2011	2

	Condensed Consolidated Statements of Cash Flows:
	Three and Six Months Ended June 30, 2012 and June 30, 2011	3

	Notes to Condensed Consolidated Financial Statement	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	24


PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3.	Defaults Upon Senior Securities	32

Item 4.	[Reserved]	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

	Signatures	34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Green Endeavors, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2012			2011
	(Unaudited)
Assets
Current Assets:
Cash	$	105,548		$	97,983
Accounts receivable		8,405			143
Inventory		106,579			109,470
Prepaid expenses		530			6,244
Total current assets		221,062			213,840

Property, plant, and equipment, net of accumulated depreciation of $400,463 and $342,922 respectively		424,445			420,093
Other assets		436,682			402,629
Total Assets	$	1,082,189		$	1,036,562

Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable and accrued expenses	$	456,459		$	293,906
Deferred revenue		51,213			57,823
Due to related parties		265,853			845,997
Derivative liability		177,499			116,409
Current portion of notes payable		219,115			200,629
Convertible notes payable, net of debt discount of $25,668 and $41,793, respectively		98,832			98,707
Total current liabilities		1,268,971			1,613,471

Long-Term Liabilities:
Notes payable related party		105,000			105,000
Notes payable		138,060			72,128
Convertible debentures related party, net of debt discount of $73,046 and $79,307, respectively		2,286,754			2,280,493
Convertible debentures, net of debt discount of $14,609 and $15,861, respectively		485,391			484,139
Total long-term liabilities		3,015,205			2,941,760
Total Liabilities		4,284,176			4,555,231

Stockholders’ Deficit:
Convertible Supervoting preferred stock, $0.001 par value, 10,000,000 shares authorized; 10,000,000 and 5,850,000 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively; no liquidation value		10,000			5,850
Convertible preferred series B stock - $0.001 par value, 2,000,000 shares authorized, 608,144 and 630,732 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		608			631
Preferred stock - $0.001 par value 3,000,000 shares authorized, no shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		-			-
Common stock, $0.001 par value, 10,000,000,000 and 2,500,000,000 shares authorized; 3,572,322,482 and 570,886,764 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		3,572,323			570,887
Additional paid-in capital		(4,037,566	)		(1,735,952	)
Accumulated deficit		(2,747,352	)		(2,360,085	)
Total stockholders’ deficit		(3,201,987	)		(3,518,669	)
Total Liabilities and Stockholders’ Deficit	$	1,082,189		$	1,036,562

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

Table of Contents

Green Endeavors, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
Revenue:
Services, net of discounts	$	584,923		$	522,424		$	1,138,290		$	1,018,000
Product, net of discounts		173,722			165,885			354,379			332,392
Total revenue		758,645			688,309			1,492,669			1,350,392

Costs and expenses:
Cost of services		326,708			329,162			658,770			608,465
Cost of product		94,867			108,365			184,948			177,281
Depreciation		33,930			22,156			57,535			47,314
General and administrative		324,265			255,980			692,359			511,498
Total costs and expenses		779,770			715,663			1,593,612			1,344,558

Income (loss) from operations		(21,125	)		(27,354	)		(100,943	)		5,834

Other income (expenses):
Interest income		201			-			405			-
Interest expense		(45,015	)		(68,077	)		(118,159	)		(78,778	)
Interest expense, related parties		(51,508	)		(50,198	)		(103,019	)		(99,877	)
Gain (loss) on default of convertible notes payable		9,122			-			(70,182	)		-
Gain on derivative fair value adjustment		30,648			9,867			2,901			9,867
Other income (expense)		(421	)		(1,984	)		1,731			(6,139	)
Total other expenses		(56,973	)		(110,392	)		(286,323	)		(174,927	)

Net loss	$	(78,098	)	$	(137,746	)	$	(387,266	)	$	(169,093	)

Net loss per common share – basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average common shares outstanding – basic and diluted		2,229,253,171			450,735,244			1,458,711,958			446,470,182

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

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Green Endeavors, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30, 2012			June 30, 2011
Cash Flows from Operating Activities:
Net loss	$	(387,266	)	$	(169,093	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		57,535			47,314
Debt discount amortization		87,629			57,823
Stock-based compensation		71,774			-
Loss contingency		70,182			-
Forgiveness of related party debt		(129,720	)		-
Gain on derivative liability fair value adjustment		(2,901	)		(9,867	)
Changes in operating assets and liabilities:
Accounts receivable		(8,262	)		-
Inventory		2,891			3,716
Prepaid expenses		5,714			1,990
Other assets		(34,053	)		5,446
Accounts payable and accrued expenses		100,275			56,848
Accounts payable and accrued expenses - related parties		94,134			(758	)
Deferred revenue		(6,610	)		(92	)
Net cash used in operating activities		(78,678	)		(6,673	)

Cash Flows from Investing Activities:
Purchases of property, plant, and equipment		(61,893	)		(6,491	)
Net cash used in investing activities		(61,893	)		(6,491	)

Cash Flows from Financing Activities:
Payments made on notes payable		(18,811	)		(139,131	)
Proceeds from issuance of notes payable		103,230			107,500
Proceeds from issuance of convertible notes payable		42,500			-
Proceeds from exercising of stock options		21,217			-
Proceeds from issuance of preferred stock		-			65,000
Net cash provided by financing activities		148,136			33,369

Increase in cash		7,565			20,205

Cash at beginning of period		97,983			67,593

Cash at end of period	$	105,548		$	87,798

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	7,667		$	3,371
Non-cash investing and financing activities:
Reduction of convertible debt due to conversions	$	58,500		$	-
Increase of derivative liability	$	42,500		$	136,565
Conversion of series B preferred shares to common stock	$	413,880		$	-
Cashless exercise of stock options	$	153,894		$	-
Conversion of related party debt to supervoting preferred stock	$	44,558		$	-
Conversion of related party debt to common stock	$	2,105,263		$	-

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

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 1 – Organization and Basis of Financial Statement Presentation

Business Description

Green Endeavors, Inc., (“Green”) owns and operates two hair salons carrying the Aveda™ product line through its wholly-owned subsidiaries Landis Salons, Inc. (“Landis”) and Landis Salons II, Inc. (“Landis II”) in Salt Lake City, Utah. Green also owns and operates Landis Experience Center LLC (“LEC”), an Aveda retail store in Salt Lake City, Utah.

Organization

Green Endeavors, Inc. was incorporated under the laws of the State of Delaware on April 25, 2002 as Jasper Holdings.com, Inc. During the year ended December 2004, Green changed its name to Net2Auction, Inc. In July of 2007, Green changed its name to Green Endeavors, Ltd. On August 23, 2010, Green changed its name to Green Endeavors, Inc. and moved the corporate domicile from Delaware to Utah. Green has four classes of stock as follows: common with 10,000,000,000 shares authorized; preferred with 3,000,000 shares authorized; convertible preferred with 2,000,000 shares authorized; and, convertible supervoting preferred with 10,000,000 shares authorized. Green is quoted on the Pink Sheets as an OTCQB issuer under the symbol GRNE.

Green is a more than 50% controlled subsidiary of Nexia Holdings, Inc (“Nexia”). Nexia is quoted on the Pink Sheets under the symbol NXHD and is not currently a reporting company.

Landis Salons, Inc., a Utah corporation, was organized on May 4, 2005 for the purpose of operating an Aveda Lifestyle Salon. Landis Salons, Inc. is a wholly-owned subsidiary of Green.

Landis Salons II, Inc., a Utah corporation was organized on March 17, 2010 as a wholly-owned subsidiary of Green for the purpose of opening a second Aveda Lifestyle Salon.

Landis Experience Center, LLC (“LEC”), a Utah limited liability company, was organized on January 23, 2012 as a wholly-owned subsidiary of Green for the purpose of operating an Aveda retail store in the City Creek Mall in Salt Lake City, Utah. LEC opened its doors August 16, 2012.

Basis of Financial Statement Presentation

The condensed consolidated financial statements include the accounts of Green and its subsidiaries after elimination of intercompany accounts and transactions. All consolidated subsidiaries are wholly-owned by Green.

In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included. These condensed consolidated financial statements are unaudited. They should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended December 31, 2011 as filed with the SEC. Operating results for the six months ended June 30, 2012 are not necessarily indicative of the results that can be expected for the year ending December 31, 2012.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 2 – Summary of Significant Accounting Policies

Use of Estimates

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

Fair Value of Financial Instruments

The carrying values of all financial instruments are deemed to approximate fair value due to the short maturity of these instruments and interest rates that approximate current market rates.

Cash and Cash Equivalents

Investments with original maturities of three months or less at the time of purchase are considered cash equivalents. As of June 30, 2012 and December 31, 2011, Green had no cash equivalents.

Inventory

Inventory consists of items held for resale and is carried at the lower of cost or market. Cost is determined using the first in, first out (“FIFO”) method.

Property, Plant, and Equipment

Property, plant, and equipment is stated at historical cost. Depreciation is generally provided over the estimated useful lives, using the straight-line method, as follows:

Leasehold improvements	Shorter of the lease term or the estimated useful life
Computer equipment and related software	3 years
Furniture and fixtures	3-10 years
Equipment	3-10 years
Vehicle	7 years
Signage	10 years

For the three month periods ended June 30, 2012 and 2011, Green recorded depreciation expense of $33,930 and $22,156, respectively. For the six month periods ended June 30, 2012 and 3011, Green recorded depreciation expense of $57,535 and $47,314, respectively.

The following is a summary of Green’s Property, plant, and equipment by major category as of June 30, 2012:

	Cost		Accumulated Depreciation		Net

Computer equipment and related software	$	22,888	$	13,989	$	8,899
Leasehold improvements		443,579		228,016		215,563
Furniture and fixtures		21,504		12,960		8,544
Equipment		263,590		125,488		138,102
Vehicle		48,193		15,491		32,702
Signage		25,154		4,519		20,635
Total	$	824,908	$	400,463	$	424,445

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 2 – Summary of Significant Accounting Policies (continued)

The following is a summary of Green’s Property, plant, and equipment by major category as of December 31, 2011:

	Cost		Accumulated Depreciation		Net

Computer equipment and related software	$	18,992	$	11,733	$	7,259
Leasehold improvements		443,579		204,377		239,202
Furniture and fixtures		21,504		11,652		9,852
Equipment		205,593		107,431		98,162
Vehicle		48,193		4,590		43,603
Signage		25,154		3,139		22,015
Total	$	763,015	$	342,922	$	420,093

Series B Preferred Stock

Each share of Green’s Series B Preferred Stock has one vote per share and is convertible into $5.00 worth of common stock. The number of common shares received is based on the average market price for the five days before conversion notice date by the shareholder. Series B Preferred Stock shareholders, at the option of Green, can receive cash or common stock upon conversion. The Preferred Stock is classified as equity as long as there are sufficient shares available to effect the conversion. In some instances certain contracts may pass the option to receive cash or common stock to the shareholder. In this case, it is assumed that a cash settlement will occur and balance sheet classification of the affected Preferred Stock and related preferred paid-in capital as a liability.

Deferred Revenue

Deferred revenue arises when customers pay for products and/or services in advance of revenue recognition. Green’s deferred revenue consists solely of unearned revenue associated with the purchase of gift certificates for which revenue is recognized only when the service is performed or the product is delivered.

Revenue Recognition

Revenue is recognized at the time the service is performed or the product is delivered.

Stock-Based Compensation

Green recognizes the cost of employee services received in exchange for awards of equity instruments as stock-based compensation expense. Stock-based compensation expense is measured at the grant date based on the value of the restricted stock award, option, or purchase right and is recognized as expense, less expected forfeitures, over the requisite service period, which typically equals the vesting period. Because the employee is expected to and has historically received shares of common stock on or about the date of the employee stock option grant date as part of the exercise process, the fair value of each stock issuance is determined using the fair value of Green’s common stock on the grant date.

During the six month period ended June 30, 2012, Green issued 146,000,000 shares of common stock to four employees for services with a fair value of $71,774. There was no stock based compensation for the six month period ended June 30, 2011. See Note 9 to these financial statements for additional disclosures regarding the Company’s stock-based compensation.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 2 – Summary of Significant Accounting Policies (continued)

Net Loss Per Share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and potential common shares during the specified period. For the six months ended June 30, 2012, potential common shares are not included in the diluted net loss per share calculation as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. There were 39,922,196,901 such potentially dilutive shares excluded as of June 30, 2012.

Reclassification of Financial Statement Accounts

Certain amounts in the December 31, 2011 financial statements have been reclassified to conform to the presentation in the June 30, 2012 financial statements.

Recent Accounting Pronouncements

Management believes the impact of recently issued standards and updates, which are not yet effective, will not have a material impact on Green’s consolidated financial position, results of operations or cash flows upon adoption.

Note 3 – Inventory

Green’s inventory consists of items held for resale and product that is used in services by the Landis and Landis II salons. Inventory is carried at the lower of cost or market. As of June 30, 2012 and December 31, 2011, inventory amounted to $106,579 and $109,470, respectively.

Note 4 – Other Assets

The following table shows other assets as of June 30, 2012 and December 31, 2011:

	June 30, 2012		December 31, 2011
Green Series B Preferred shares pledged as collateral for the Landis II facility lease (1)	$	250,000	$	250,000
Note receivable pledged as collateral for the Landis II facility lease (2)		105,000		105,000
Lease and utility deposits		55,067		21,403
Certificate of deposit		26,615		26,226
Total other assets	$	436,682	$	402,629

(1) On July 9, 2010, the Board of Directors approved the issuance of 50,000 shares of restricted Series B Preferred shares to Landis Salons II, Inc., a subsidiary of Green, to be used as collateral for a lease entered into by Landis Salons II to serve as the location for a new Landis Lifestyle Salon. These shares were then assigned to the landlord of Landis II as a security deposit with a related value of $250,000. On September 28, 2012, the landlord returned the shares back to Landis II and terminated the requirements of the Stock Pledge Agreement. The shares have been cancelled and are no longer considered issued and outstanding.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 4 – Other Assets (continued)

(2) On July 12, 2010, Landis Salons II, Inc. issued a promissory note in the principal amount of $105,000 payable to Wasatch Capital Corporation, a subsidiary of Nexia. Principal and interest, accruing at the rate of 5% per year, will be due on or before November 10, 2018. The note was issued to Wasatch in consideration of Wasatch assigning its interest in a trust deed note in the amount of $105,000 and has been recorded as a note receivable. Landis II then pledged as collateral the trust deed note as a material inducement for Landis II to be able to enter into a lease agreement for the opening of a salon in Salt Lake City. On September 28, 2012, the landlord terminated and canceled the Note Pledge Agreement and released its interest in the trust deed note back to Landis II. As of June 30, 2012 and December 31, 2011, there was $10,349 and $7,724 of accrued interest on the promissory note, respectively.

Note 5 – Derivative Liability

As discussed in Note 7 – “Notes Payable”, during 2011, Green issued an aggregate of $197,500 Convertible Promissory Notes to Asher Enterprises, Inc. (“Asher Notes”) that mature from January 9, 2012 to November 6, 2012. The Asher Notes bear interest at a rate of 8% per annum and can be convertible into Green’s common shares, at the holder’s option, at the conversion rates of 56% to 61% discount to the market price of the lowest three trading prices of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. Green analyzed the conversion feature of the agreement for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative because the exercise price of these convertible notes are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. The Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability.

The embedded derivative is carried on Green’s balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change. Green fair values the embedded derivative using the Black-Scholes option pricing model. The aggregate fair value of the derivative at the inception dates of the Asher Notes was $269,507. Of the total, $197,500 was recorded as a debt discount, which is up to but not more than the net proceeds of the notes. $72,007 was charged to operations as non-cash interest expense. The fair value of $269,507 was recorded as a derivative liability on the balance sheet.

The debt discount is amortized over the life of the notes (approximately nine months each). On June 30, 2012, Green marked-to-market the fair value of the derivatives and determined an aggregate fair value of $177,499 and recorded a $2,901 gain from change in fair value of derivatives for the six months ended June 30, 2012. The fair value of the embedded derivatives for the notes was determined using the Black-Scholes option pricing model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 388%, (3) risk-free interest rate of 0.02%, (4) expected life of 0.2 to 0.6 of a year, and (5) estimated fair value of Green’s common stock of $0.00006 to $.00009 per share.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 6 – Related Party Transactions

On April 30, 2008, Green entered into a stock transfer agreement with its parent company Nexia and Nexia’s wholly-owned subsidiary DHI whereby they would each sell their holdings in Landis and Newby in exchange for an 8% Series A Senior Subordinated Convertible Debenture with a face amount of $3,000,000. Interest on the debenture commenced on December 30, 2008. DHI has the option, at any time, to convert all or any amount over $10,000 of principal face amount and accrued interest into shares of Common stock, $0.001 par value per share, at a conversion price equal to 95% of the average closing bid price of the Common stock three days prior to the date notice is received by Green. Green determined that there is a beneficial conversion feature for the debt and recorded a debt discount of $150,000 on April 30, 2008, which is being amortized for 10 years to the maturity date of the debenture. In December 2009, Nexia converted $125,000 of the debenture into common stock of Green and during 2010 Green paid $15,200 of principal on the debenture. During 2010, Nexia sold $500,000 of its holdings of the debenture to unrelated parties for cash thus leaving the related and unrelated party portions of the debenture at $2,359,800 and $500,000, respectively for a total amount of $2,859,800. As of June 30, 2012 and December 31, 2011, the entire amount is considered long-term. The following table shows the related and unrelated party amounts of the debenture and their respective amortized debt discount amounts:

	June 30, 2012		December 31, 2011
Convertible Debenture - Related Party
Principal amount	$	2,359,800	$	2,359,800
Debt discount		73,046		79,307
Convertible debenture, net of debt discount	$	2,286,754	$	2,280,493

Convertible Debenture - Unrelated Party
Principal amount	$	500,000	$	500,000
Debt discount		14,609		15,861
Convertible debenture, net of debt discount	$	485,391	$	484,139

Convertible Debenture – Totals
Principal amount	$	2,859,800	$	2,859,800
Debt discount		87,655		95,168
Convertible debenture, net of debt discount	$	2,772,145	$	2,764,632

The following table summarizes the related party amounts of principal and accrued interest on the Convertible Debentures as of June 30, 2012 and December 31, 2011.

	June 30, 2012		December 31, 2011
Principal balance	$	2,359,800	$	2,359,800
Accrued interest		176,682		627,106
Total	$	2,536,482	$	2,986,906

As of June 30, 2012 and December 31, 2011, amounts due to related parties are $265,853 and $845,997, respectively. The $268,853 consists of $176,682 of accrued interest from the convertible debenture as shown in the table above and $89,171 from various amounts owed to Nexia and its subsidiaries. The $845,997 consists of $627,106 of accrued interest from the convertible debenture as shown in the table above and $218,891 from various amounts owed to Nexia and its subsidiaries.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 6 – Related Party Transactions (continued)

On January 6, 2011, the Board of Directors approved the conversion of 12,866 Series B Preferred shares into 12,866,000 shares of Common stock for Richard Surber, President, CEO and Director of Green. The shares were converted at $0.005 per share which was the quoted closing price on the date the conversion letter was received from Mr. Surber.

On April 27, 2012, Nexia Holdings Inc., converted $144,558 of debt into 4,150,000 shares of convertible preferred supervoting stock of the Company. The transaction was valued at $144,558 as per the conversion provisions of the convertible debt. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 4, 2012. The issuance results in Nexia holding 100% of the 10 million shares of Supervoting Preferred Stock authorized for the Company, resulting in Nexia holding 1 billion votes in any shareholder action. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On May 23, 2012, Nexia Holdings Inc., converted $400,000 of debt into 2,105,263,158 shares of common stock. The transaction was valued at $400,000 as per the conversion provisions of the convertible debt. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 24, 2012. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On May 25, 2012, the Company and its parent company, Nexia Holdings, Inc., entered into a Security Agreement with Richard Surber, CEO of the Company. Mr. Surber has potential exposure created due to his serving as a guarantor of numerous debts and obligations of the Company and of Nexia, and the Company and Nexia have amounts owed to Mr. Surber personally. The total amount of these personal guarantees obligations owed to Mr. Surber is estimated to exceed $1.7 million. The Security Agreement provides that Mr. Surber is secured by assets of the Company, including the ownership of shares in the subsidiaries of the Company, to secure these debts and obligations of the Company that are owed to Mr. Surber.

On June 5, 2012, Green entered into a secured agreement with Richard Surber, President, CEO and Director of Green, to provide him a record lien (UCC-1 file number 413621201234, Utah) on certain assets of the company for the debts and obligations of the company for which Mr. Surber is providing a personal guaranty to lenders of the Company. The assets included in the secured interest include: all inventory, equipment fixtures, stock ownership, including but not limited to the shares held by Green Endeavors Inc. in Landis Salons, Inc., Landis Salons II, Inc., Landis Salons III, Inc. and ownership rights in Landis Experience Center LLC and any other intangible property and all tangible personal property held by, granted to or owned by Green or that is later acquired by Green subject only to purchase money liens held by sellers or grantor. Subsequent to June 30, 2012, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.

During the six months ended June 30, 2012, the Company forgave $129,720 of related party debt with its parent company Nexia and several of its subsidiaries.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 7 – Notes Payable

A summary of notes payable as of June 30, 2012 and December 31, 2011 is as follows:

Creditor	Interest Rate			Due Date		June 30, 2012			December 31, 2011
Xing Investment Corp. (1)		10.00	%		05-12-2008	$	171,000		$	171,000
Chase Bank (3)		7.24	%		02-13-2015		23,412			28,463
Salt Lake City Corporation (4)		3.25	%		06-18-2015		63,572			73,294
William and Nina Wolfson (5)		11.00	%		02-02-2016		47,537			-
Castleton Equipment (7)		16.96	%		04-23-2016		51,654			-
Total							357,175			272,757
Less: Current portion							(219,115	)		(200,629	)
Long-term portion						$	138,060		$	72,128

A summary of convertible notes payable as of June 30, 2012 and December 31, 2011 is as follows:

Creditor	Interest Rate			Due Date		June 30, 2012			December 31, 2011
Asher Enterprises, Inc. (2)*..		22.00	%		01-09-2012	$	2,000		$	60,500
Asher Enterprises, Inc. (2)*..		22.00	%		03-16-2012		32,500			32,500
Asher Enterprises, Inc. (2)*..		22.00	%		04-25-2012		25,000			25,000
Asher Enterprises, Inc. (2)*..		8.00	%		09-12-2012		22,500			22,500
Asher Enterprises, Inc. (2)*..		8.00	%		09-12-2012		42,500			-
Debt discount - convertible notes, net (2)*..							(25,668	)		(41,793	)
Total, net							98,832			98,707
Less: Current portion							(98,832	)		(98,707	)
Long-term portion						$	-		$	-

* For all Asher notes payable, the interest rate increases from 8% to 22% after the maturity date.

A summary of the related party note payable as of June 30, 2012 and December 31, 2011 is as follows:

Creditor	Interest Rate			Due Date		June 30, 2012		December 31, 2011
Wasatch Capital Corp. (related party) (6)		5.00	%		11-10-2018	$	105,000	$	105,000
Total							105,000		105,000
Less: Current portion							-		-
Long-term portion						$	105,000	$	105,000

(1) On May 12, 2006, Green borrowed $171,000 from Xing Investment Corp with a convertible promissory note. The note is interest bearing at 10% per annum with no interest due until the note maturity date of May 12, 2008. Both principal and accrued interest, at the option of the note holder, may be converted into Common stock of Green at $0.01 per share. The note was not liquidated at the maturity date and is currently in default. No payments have been made on the obligation because Green is unable to locate Xing Investment Corp. or its representatives. As of June 30, 2012 and December 31, 2011, accrued interest reported in accounts payable and accrued expenses was $34,200.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 7 – Notes Payable (continued)

(2) During the period from April 5, 2011 through February 2, 2012, Green has issued a series of convertible promissory notes with an aggregate face amount of $197,500 to Asher Enterprises, Inc. that mature from January 9, 2012 to November 6, 2012. The transactions have been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The notes mature in approximately 270 days from issuance and bear interest at a rate of 8% per annum. At the holder’s option, the notes can be convertible into Green’s common shares at the conversion rates of 56% to 61% discount to the market price of the lowest three trading prices of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. Upon maturity of a given note, the interest rate increases to 22%. As of June 30, 2012 $73,000 of the first note had been converted into 372,615,444 shares of common stock. As of June 30, 2012, the notes are considered in default. Accordingly, a loss contingency of $70,182 has been recorded, which is calculated by multiplying the June 30, 2012 principal balance on the notes of $124,500 plus $15,863 in accrued interest ($140,363 combined) by 50% per the terms of the notes thus bringing the amount owed to Asher as of June 30, 2012 $210,545. The Company is working on a cure for the default.

The exercise price of these convertible notes are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. As a result, the Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability.

(3) On January 6, 2010, Landis Salons, Inc. received a loan in the amount of $51,930 from Chase Bank for the financing of a Company truck. The loan has a maturity date of February 13, 2015 and bears interest at the rate of 7.24% per annum. Principal and interest payments of $899 are made monthly over a five year term commencing February 2010. The loan is secured by a lien on the vehicle in addition to the corporate guarantee for the loan. Richard Surber, CEO of the Company has personally guaranteed the loan. As of June 30, 2012, the note balance is $23,412. Principal payments made on the note during the six months ended June 30, 2012 amounted to $5,051.

(4) On June 18, 2010, Landis Salons, Inc. received a loan in the amount of $100,000 from the Division of Economic Development of Salt Lake City Corporation. The loan includes a 1% origination fee and bears interest at the rate of 3.25% per annum. Principal and interest payments are made monthly over a five year term commencing June 2010. The loan is secured by a $25,000 certificate deposit held in the name of Landis Salons, Inc. and is personally guaranteed by Richard Surber, CEO of Green. As of June 30, 2012, the note balance is $63,572. Principal payments made on the note during the six months ended June 30, 2012 amounted to $9,722.

(5) On February 27, 2012, Green and Landis Experience Center, LLC issued an 11% note payable in the principal face amount of $50,000 to William and Nina Wolfson in exchange for a cash payment of the same amount. The note has a due date of February 27, 2016. The note provides for monthly payments in the amount of $1,292.28 of principal and interest. In addition to the Company’s guarantee to the note, Richard Surber has personally guaranteed the note. . As of June 30, 2012, the note balance is $47,537. Principal payments made on the note during the six months ended June 30, 2012 amounted to $2,463.

(6) On July 12, 2010, Landis Salons II, Inc. issued a promissory note in the principal amount of $105,000 payable to Wasatch Capital Corporation, a subsidiary of Nexia. The note bears 5% per year simple interest and accrues until the November 10, 2018 maturity date at which time accrued interest and principal are due in one payment. The note was issued to Wasatch in consideration of Wasatch assigning its interest in a trust deed note in the amount of $105,000. As of June 30, 2012, the note balance is $105,000. Principal payments made on the note during the six months ended June 30, 2012 amounted to $0.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 7 – Notes Payable (continued)

(7) On April 23, 2012, Landis Salons, Inc. entered into a capital lease financing agreement in the principal amount of $53,230 with Castleton Capital Corporation. The lease agreement requires 48 monthly payments of principal and interest in the amount of $1,535. Interest is at the rate of 16.96% per year and the maturity date is April 23, 2016. Landis has the option to purchase the leased salon equipment at maturity for a $1 bargain purchase amount. The Company applied the guidance of ASC 840 in its determination of the lease being a capital lease. In addition to the Company’s guarantee for the debt, Richard Surber is personal guarantor to the lease. . As of June 30, 2012, the note balance is $51,654. Principal payments made on the note during the six months ended June 30, 2012 amounted to $1,576.

Note 8 – Stockholders’ Deficit

Preferred Stock

On August 4, 2010, by Written Consent of the majority of the voting rights of the shareholders of Green, consent was given to authorize the Board of Directors to amend the designations of the Preferred Stock. The change in the designation of the Supervoting Preferred Stock increased its voting rights from 10 votes per share to 100 votes per share. Green is authorized to issue 15,000,000 shares of preferred stock. Green’s preferred stock may be divided into such series as may be established by the Board of Directors. Each share of the Supervoting preferred stock is convertible into 100 shares of Green’s Common stock and has the voting rights equal to 100 shares of Common stock. Each share of Green’s Series B Preferred Stock is convertible into $5.00 worth of Common stock and has one vote. The number of common shares received is based on the market value of the Common stock on the date of conversion. Series B Preferred Stock shareholders, at the option of Green, can receive cash.

During the six months ended June 30, 2012, the Board of Directors approved the conversions of 22,588 shares of Series B Preferred shares into 413,880,000 shares of Common Stock. The shares were converted at prices per share of $.0002 to $.0005 based on the conversion provisions for the Series B Preferred Stock designation.

On April 27, 2012, Nexia Holdings Inc., converted $144,558 of debt into 4,150,000 shares of convertible preferred supervoting stock of the Company. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 4, 2012. The issuance results in Nexia holding 100% of the 10 million shares of Supervoting Preferred Stock authorized for the Company, resulting in Nexia holding 1 billion votes in any shareholder action. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

As of June 30, 2012 and December 31, 2011, Green had 10,000,000 and 5,850,000 shares of Supervoting Preferred stock issued and outstanding, respectively; and, 608,144 and 630,732 shares of convertible Series B Preferred stock issued and outstanding, respectively.

Common Stock

During the six months ended June 30, 2012, the Board of Directors approved the conversions $58,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 336,292,560 shares of Common Stock. The shares were converted at prices per share of $.00012 to $.00006 based on the conversion provisions of the convertible notes.

On March 29, 2012, the Company filed with the State of Utah an Amendment to its Articles of Incorporation that increased the number of authorized shares of common stock from 2,500,000,000 to 10,000,000,000. This action was taken after notice to the shareholders and having consent from a majority of the voting rights. The par value per share is $0.001. As of June 30, 2012, Green had 3,572,322,482 shares of Common stock outstanding.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 8 – Stockholders’ Deficit (continued)

During the six months ended June 30, 2012, 146,000,000 shares of common stock were issued to employees pursuant to the exercise of their stock options.

Note 9 – Stock-Based Compensation

On December 2, 2011, the Board of Directors approved a stock-based compensation program entitled The 2011 Benefit Plan of Green Endeavors, Inc. (the “Plan”) wherein common stock options are granted to employees. A total of 300,000,000 shares of the Green’s common stock (par $.001) are authorized to be issued or granted to employees (“Employees”) under the Plan. Employees include actual employees or certain non-employee, consultants and advisors of Green, its subsidiaries, and parent company. The Plan is designed to attract and retain employees.

Under the Plan and during the year ended December 31, 2011, the company granted 60,000,000 stock options to three employees (20,000,000 options each) for services of which all were exercised by the year ended December 31, 2011. For the year ended December 31, 2011, stock-based compensation expense was $25,364 and was accounted for under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. The weighted average components used for the calculation of the fair value for the options granted were: $.0003 – exercise price, one year term, 422% volatility, and a .12% risk free rate. The income tax benefit related to the 2011 stock-based compensation expense was $0. Also, the aggregate intrinsic value of all options outstanding and exercisable at December 31, 2011, was $0. As of December 31, 2011, grants unexercised and shares available for future stock-based compensation grants were -0- and 240,000,000 shares, respectively.

Under the Plan and during the six months ended June 30, 2012, the company granted 146,000,000 stock options to four employees for services. For the six months ended June 30, 2012, stock-based compensation expense was $71,774 and was accounted for under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. The weighted average components used for the calculation of the fair value for the options granted were approximately: $.0004 – exercise price, one year term, 502% volatility, and a .18% risk free rate. The income tax benefit related to the stock-based compensation expense during the period was $0. Also, the aggregate intrinsic value of all options outstanding and exercisable at June 30, 2012, was $0. As of June 30, 2012, grants unexercised and shares available for future stock-based compensation grants were 106,409,720 and 94,000,000 shares, respectively.

Note 10 – Going Concern

Generally accepted accounting principles in the United States of America contemplate the continuation of Green as a going concern. As of and for the six months ended June 30, 2012, Green had negative working capital of $1,047,909 and a net loss of $387,266, respectively, which raises substantial doubt about the Green’s ability to continue as a going concern. Green’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to successfully fulfill its business plan. Management plans to attempt to raise additional funds to finance the operating and capital requirements of Green through a combination of equity and debt financings. While Green is making its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be sufficient for operations.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 11 – Subsequent Events

During the period from July 12, 2012 through September 10, 2012, Asher Enterprises, Inc. gave conversion notices to Green totaling $34,500 as per the provisions of the convertible notes they hold. The Board of Directors approved the notices of which the $34,500 converted into 400,000,000 shares of Common Stock at per shares prices of $.00006 to $.00012 based on the conversion provisions of the convertible notes.

During the period from August 20, 2012 through October 19, 2012, investors converted 10,666 shares of Convertible Preferred Stock into 438,466,666 shares of Common Stock at per share prices ranging from $.0001 to $.0002 based on the conversion provisions for the Series B Preferred Stock designation.

On August 15, 2012 Green Endeavors Inc. (the “Company”) entered into an Investment Agreement (“Agreement”) with Southridge Partners II, LP (“Southridge”) wherein Southridge has committed to purchase up to $10,000,000 of the Company’s common stock over 36 months. The Company may draw on the facility from time to time in the form of puts, as and when it determines appropriate up to a maximum of less than 4.99% of the issued and outstanding shares of common stock of the Company per put notice. Southridge’s purchase price for each put is set at 91% of the lowest closing bid price of the common stock of the Company during the pricing period as defined in the Agreement as the period beginning on the Put Notice Date and ending on and including the date that is five Trading Days after such Put Notice Date. The option to draw down on the equity line is at the sole direction of the company. The Company is obligated to file one or more registration statements with the SEC to register the sale to Southridge of shares of common stock issued or issuable under the Agreement. The Company has agreed to file with the SEC an initial registration statement of From S-1 in order to carry out the terms of the Agreement. Upon the execution of the Agreement the Company paid to Southridge a $75,000 document preparation fee for preparation of the agreements referred to herein in the form of a promissory note.

On August 16, 2012, a wholly owned subsidiary of Green, Landis Experience Center, LLC, opened its doors for business at its Aveda retail store in the City Creek Mall in Salt Lake City, Utah.

On August 20, 2012, the Board of Directors of LEC approved that LEC enter into a loan agreement with Salt Lake City Corporation in the amount of $50,000. Pursuant to the board approval, a note in the amount of $50,000 was issued on August 21, 2012. The note bears interest at 5% per annum and requires 60 monthly installments of $943.56 commencing October 1, 2012. In addition to corporate guarantees and the personal guarantee by Richard Surber, President, CEO, and Director of LEC, a certificate of deposit is being held as collateral for the loan.

On August 24, 2012, the Company received a notice from The Depository Trust Company (“DTC”) that is was imposing a deposit transaction restriction (“Deposit Chill”) on the common stock of the Company. The notice states that the DTC is imposing the Deposit Chill in order to prevent additional deposits of the Company’s common stock with the DTC. The DTC serves as the depository trust for shares held in the majority of brokerage accounts; therefore, this action has prevented many brokerages from accepting new deposits of the Company’s common stock. The notice sets forth the DTC’s position that the Deposit Chill was imposed as a result of various unusually large deposits of shares during the period from October 18, 2011 through June 19, 2012. The Company filed an objection to the Deposit Chill and has retained legal counsel that is working with the DTC to remove the Deposit Chill and any restrictions on the deposit of additional shares with the DTC.

On September 7, 2012, Green received a Reset Notice from Southridge Partners II LP wherein, per the terms of reset provision of the August 10, 2012 Securities Transfer Agreement, Green is obligated to issue 42,250,000 shares to Southridge. The Board of Directors approved the Reset Notice for issuance of the 42,250,000 shares on September 13, 2012.

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Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

June 30, 2012 (Unaudited)

Note 11 – Subsequent Events (continued)

On September 28, 2012, Landis II entered into a Release and Termination of Stock Pledge Agreement wherein it was agreed that the 50,000 shares of restricted Series B Preferred stock that was pledged as collateral pursuant to the July 16, 2010 Stock Pledge Agreement between Landis II and its landlord be returned and the pledge agreement be terminated. The shares have been cancelled and are no longer considered issued and outstanding.

On September 28, 2012, Landis II entered into a Release and Termination of Note Pledge Agreement where in it was agreed that the trust deed that was pledged as collateral pursuant to the July 10, 2010 Note Pledge Agreement between Landis II and its landlord be returned to Landis II.

On November 5, 2012, Landis Salons II, Inc. entered into a Promissory Note with Richard Surber, President, CEO and Director of Green, for the sum of $25,000 for funds loaned. The note bears interest at the rate of 20% per annum, with a term of five years and monthly payments of $662.35 and a demand feature by which the note can be called upon the demand of Mr. Surber. Landis Salons II as security for the note pledged all of its assets, stock in trade, inventory, furniture, fixtures, supplies, any intangible property and all tangible personal property of Landis Salons II and all and any other assets to which Landis Salons II holds title or claims ownership or that is hereafter acquired by Landis Salons II, subject only to purchase money liens held by sellers or grantors. Mr. Surber is also providing his personal guaranty for several lines of credit and credit cards that are being utilized by the Company and its operating subsidiaries. The total amount of these credit obligations fluctuate from day to day and are not for any set amount, but the potential liability could exceed the amount of $150,000. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of $186,176.

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

The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto included in this Quarterly Report on Form 10-Q, or this Quarterly Report, and in conjunction with our Form 10-K/A for the fiscal year ended December 31, 2011 and Form 10-Q for the quarter ended June 30, 2011. Certain of these statements, including, without limitation, statements regarding the extent and timing of future revenues and expenses, customer demand and other statements using words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecast,” “intends,” “may,” “plans,” “projects,” “should,” “will” and “would,” and words of similar import and the negatives thereof, constitute forward-looking statements. These statements are predictions based upon management’s best judgment at the time they are made about future events that are not historical facts. Actual results could vary materially as a result of certain factors, including but not limited to, those expressed in these statements. We refer you to the “Risk Factors,” “Results of Operations,” and “Liquidity and Capital Resources” sections contained in this Quarterly Report, which identify important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.

We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this Quarterly Report. All subsequent written or oral forward-looking statements attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included in this Quarterly Report are made only as of the date of this Quarterly Report. We do not intend, and undertake no obligation, to update these forward-looking statements.

Overview

Green Endeavors, Inc. (“Green”) is a Utah corporation originally formed on April 25, 2002. Our fiscal year ends on December 31. We have never filed bankruptcy nor been through any similar financial reorganization.

As of June 30, 2012, we run two high-quality hair care salons that feature Aveda™ products for retail sale. Landis Salons, Inc. (“Landis I”) operates its business within a 4,000 square foot space located in the Liberty Heights District of Salt Lake City, Utah as an Aveda Lifestyle Salon. Landis Salons II, Inc. (“Landis II”) operates within a 3,024 square foot space located in the Marmalade District of Salt Lake City, Utah under the Landis Lifestyle Salon brand as an Aveda Lifestyle Salon. A third location opened August 16, 2012, and operates as an Aveda Experience Center in the newly developed City Creek Mall in Salt lake City, Utah.

Aveda Lifestyle Salons can be distinguished from Aveda Concept Salons in that Aveda Lifestyle Salons are required to carry all of Aveda’s products and must meet a higher threshold for product sales than Aveda Concept Salons. An Aveda Lifestyle Salon is the highest level within the Aveda hierarchy of salons which is classified by higher purchasing volume, location, array of products carried and size of retail space.

Salon operations consist of three major components, an Aveda™ retail store, an advanced hair salon, and a training academy, which educates and prepares future staff about the culture, services, and products provided by the salon. The design of the salons is intended to look modern and feel comfortable, appealing to both genders, and all age groups.

Additional information on Landis can be found on its website at www.landissalon.com.

Critical Accounting Estimates

In preparing our Consolidated Financial Statements, we make assumptions, judgments and estimates that can have a significant impact on our revenue, operating income and net income, as well as on the value of certain assets and liabilities on our Consolidated Balance Sheets. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. At least quarterly, we evaluate our assumptions, judgments and estimates and make changes accordingly. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.

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Results of Operations

Through our two wholly-owned subsidiaries, Landis Salons, Inc. and Landis Salons II, Inc., we operate two full-service hair and retail salons featuring the Aveda™ line of products. The following discussion examines our results of operations and financial condition based on our consolidated financial statements for the three and six months ended June 30, 2012 and 2011.

Revenue

We generate revenue through the sale of services and products in the hair salon industry. As compared to the respective prior fiscal year, revenues increased 10.2% to $758,645 during the three months ended June 30, 2012 and increased 10.5% to $1,492,669 during the six months ended June 30, 2012.

The percentage change in revenues for the three months ended June 30, 2012 compared to the same period in 2011 and the percentage change in revenues for the six months ended June 30, 2012 compared to the same period in 2011, were driven by the following factors:

Factor	June 30, 2012			June 30, 2011
Same-store		10.2	%		(2.57	)%
New salon		0	%		35.32	%
Closed salon		0	%		(7.17	)%
Total		10.2	%		25.58	%

The 10.2 % increase in same-store sales is primarily because the salon operating under Landis Salons II, Inc. was no longer considered a new store, but had experienced continued growth in the same-store category as it increased its clientele base.

Three months ended June 30, 2012 and 2011

The following table shows the increase in revenues by type for the three months ended June 30, 2012 compared to June 30, 2011. This increase in revenues is primarily because of the continued growth of the newer Landis Salons II, Inc. salon.

	Three Months Ended
	June 30, 2012		June 30, 2011		Change
Services	$	584,923	$	522,424	$	62,499
Product		173,722		165,885		7,837
Total revenue	$	758,645	$	688,309	$	70,336

Six months ended June 30, 2012 and 2011

The following table shows the increase in revenues by type for the six months ended June 30, 2012 compared to June 30, 2011. This increase in revenues is primarily because of the continued growth of the newer Landis Salons II, Inc. salon.

	Six Months Ended
	June 30, 2012		June 30, 2011		Change
Services	$	1,138,290	$	1,018,000	$	120,290
Product		354,379		332,392		21,987
Total revenue	$	1,492,669	$	1,350,392	$	142,277

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Costs of Revenue

Three months ended June 30, 2012 and 2011

Costs of service and product revenue for the three months ended June 30, 2012, decreased by 3.6% to $421,575 from $437,527 for the three months ended June 30, 2011. This decrease over the comparable quarterly period is primarily attributable to a lower amount of inventory costs.

Cost of services revenue for the three months ended June 30, 2012, decreased to $326,708 from $329,162 for the three months ended June 30, 2011. Cost of product revenue for the three months ended June 30, 2012, decreased to $94,867 from $108,365 for the three months ended June 30, 2011.

The following table shows cost of revenue by type as a percentage of related revenue:

	Three Months Ended
	June 30, 2012			June 30, 2011
Services		55.9	%		63.0	%
Product		54.6	%		65.3	%

Six months ended June 30, 2012 and 2011

Cost of service and product revenue for the six months ended June 30, 2012, increased to $843,718 from $785,746 for the six months ended June 30, 2011, an increase of 7.4%. This increase over the comparable quarterly periods is primarily attributable to an increased number of service providers and product sales.

Cost of service revenue for the six months ended June 30, 2012, increased to $627,595 from $608,465 for the six months ended June 30, 2011. Cost of product revenue for the six months ended June 30, 2012, increased to $216,123 from $177,281 for the six months ended June 30, 2011.

The following table shows cost of revenue by type as a percentage of related revenue:

	Six Months Ended
	June 30, 2012			June 30, 2011
Services		57.9	%		59.8	%
Product		52.2	%		53.3	%

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Operating Expenses

Three months ended June 30, 2012 and 2011

The following table shows General and administrative expense for the three months ended June 30, 2012 and 2011:

	Three Months Ended
	June 30, 2012		June 30, 2011		Change
Salaries and wages	$	147,454	$	78,641	$	68,813
Rent		39,816		40,007		(191	)
Advertising		23,640		25,518		(1,878	)
Credit card merchant fees		6,481		8,098		(1,617	)
Insurance		14,152		12,429		1,723
Utilities and telephone		10,774		10,210		564
Professional services		40,078		46,163		(6,085	)
Repairs and maintenance		9,955		2,424		3,838
Dues and subscriptions		3,467		3,832		(365	)
Office expense		8,174		7,776		398
Travel		3,385		3,057		328
Investor relations and company promotion		9,912		-		9,912
Other		10,670		17,825		(7,155	)
Total General and administrative expenses	$	324,265	$	255,980	$	68,285

The increase in General and administrative expenses over the comparable quarterly period is primarily due to increases in salaries and wages. While salaries and wages increased partially due to additional personnel, most of the increase is due to employee $33,600 of stock option compensation expense during the three months ended June 30, 2012 as compared to $0 for the same period in 2011.

Depreciation expense for the three months ended June 30, 2012, increased to $33,930 from $22,156 for the three months ended June 30, 2011. The increase is primarily due to an increase in property, plant, and equipment purchased during the last half of fiscal 2011 and the first half of fiscal 2012 relating to the opening of the Landis II salon offset by fixed assets becoming fully depreciated between the comparative periods.

Six months ended June 30, 2012 and 2011

The following table shows General and administrative expense for the six months ended June 30, 2012 and 2011:

	Six Months Ended
	June 30, 2012		June 30, 2011		Change
Salaries and wages	$	281,351	$	159,697	$	121,654
Rent		79,607		78,310		1,297
Advertising		40,107		55,349		(15,242	)
Credit card merchant fees		24,399		20,981		3,418
Insurance		27,001		22,609		4,392
Utilities and telephone		22,259		21,960		299
Professional services		88,400		94,635		(6,235	)
Repairs and maintenance		9,955		6,394		3,561
Dues and subscriptions		8,886		8,933		(47	)
Office expense		26,024		12,171		13,853
Travel		9,012		5,128		3,884
Investor relations and company promotion		61,238		-		61,238
Other		14,120		25,331		(11,211	)
Total General and administrative expenses	$	692,359	$	511,498	$	180,861

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The increase in General and administrative expenses over the comparable quarterly period is primarily due to increases in salaries and wages and investor relations and company promotion. Salaries and wages increased due to additional personnel and also $71,744 of employee stock option compensation expense that was not present in the prior comparative period. The Company also decreased advertising by $15,242 to put more effort into investor relations and company promotion, which increased by $61,238. Office expense also increased by $13,8538 due to increased an increase in related expenses including the additional initial expenses from the addition of the new LEC store.

Depreciation expense for the six months ended June 30, 2012, increased to $57,535 from $47,314 for the six months ended June 30, 2011. The increase is primarily due to an increase in property, plant, and equipment during the six months ended June 30, 2012.

Other Expense

Three months ended June 30, 2012 and 2011

Other expense for the three months ended June 30, 2012, decreased to $56,973 from $110,392 for the three months ended June 30, 2011, a decrease of $53,419. This increase over the comparable quarterly period is primarily due to a $20,781 increase in the gain on derivative fair value adjustment and a $23,062 decrease in interest expense.

Six months ended June 30, 2012 and 2011

Other expense for the six months ended June 30, 2012, increased to $286,323 from $174,927 for the six months ended June 30, 2011, an increase of $111,396. This increase over the comparable quarterly periods is primarily due to an increase of $70,182 in the loss on the default of convertible notes payable and a $39,381 increase in interest expense primarily due to the interest expense associated with the amortization of debt discount.

Liquidity and Capital Resources

As of June 30, 2012 and December 31, 2011

We had a working capital deficit of $1,047,909 as of June 30, 2012. Our current assets were $221,062, which consisted of $105,548 in cash, $8,405 in accounts receivable, $106,579 in inventory, and $530 in prepaid expenses. Our total assets were $1,082,189, which included $424,445 in property and equipment (net), and $436,682 in other assets. Our current liabilities were $1,268,971, including $456,459 in accounts payable and accrued expenses, $265,853 in accounts payable and accrued expenses - related parties, $219,115 in the current portion of notes payable, $51,213 in deferred revenue, and a $177,499 derivative liability. Our long-term liabilities were $3,015,205. Our total stockholders’ deficit at June 30, 2012 was $3,201,987.

We had a working capital deficit of $1,399,631 as of December 31, 2011. Our current assets were $213,840, which consisted of $97,983 in cash, $109,470 in inventory, $6,244 in prepaid expenses and $143 in accounts receivable. Our total assets were $1,036,562, which included $420,089 in property and equipment (net), and $402,631 in other assets. Our current liabilities were $1,613,471, including $293,906 in accounts payable and accrued expenses, $845,997 in accounts payable and accrued expenses - related parties, $200,629 in the current portion of notes payable, $57,823 in deferred revenue, and a $116,409 derivative liability. Our long-term liabilities were $2,941,760. Our total stockholders’ deficit at December 31, 2011, was $3,518,669.

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Cash Flows from Operating Activities

Cash flows from operating activities include net loss, adjusted for certain non-cash charges, as well as changes in the balances of certain assets and liabilities.

Six months ended June 30, 2012 and 2011

Cash flows from operating activities include net loss, adjusted for certain non-cash charges, as well as changes in the balances of certain assets and liabilities. Net cash used in operating activities for the six months ended June 30, 2012 was $(78,678) as compared to $(6,673) used by operating activities for the six months ended June 30, 2011. This $72,005 change in cash used in operating activities over the comparable periods is primarily due to the $218,173 increase in net loss for the same comparable period, which is partially offset by $71,774 of stock based compensation, $70,182 of loss contingency, and $129,720 of related party forgiveness of debt all of which were present in the current year that were not present in the prior year. In addition to the above three items, there was a $43,427 change in accounts payable and accrued expenses and a $94,892 change in related party accounts payable and accrued expenses.

We expect that our cash provided by operating activities will decrease over the next twelve months as we purchase inventory and increase operating expenses as a result of opening one additional salon during the next 12 months.

Cash Flows from Investing Activities

Six months ended June 30, 2012 and 2011

Cash flow used in investing activities for the six months ended June 30, 2012 was $61,893 as compared to $6,491 for the six months ended June 30, 2011. The increase in cash flow used in investing activities is primarily due to purchase of salon equipment.

We expect to continue our investing activities, including purchasing both property and equipment and making both short and long-term equity investments.

Cash Flows from Financing Activities

Six months ended June 30, 2021 and 2011

Cash flow provided by financing activities for the six months ended June 30, 2012 was $148,136 as compared to $33,369 that was provided by financing activities for the six months ended June 30, 2011. The $114,767 increase in cash flow provided by financing activities was primarily due to proceeds from the issuance of $42,500 in convertible notes payable and $21,217 from the exercise of stock options during the six months ended June 30, 2012. Also, there was $120,320 less in payments made on notes payable during the six months ended June 30, 2012 as compared to the comparable six month period ending June 30, 2011.

We expect to continue to use cash flow from financing activities in the near term as necessary to expand operations.

Other Factors Affecting Liquidity and Capital Resources

We have insufficient current assets to meet our current liabilities due to negative working capital of $1,047,909 as of June 30, 2012. Historically, we have funded our cash needs from a combination of revenues, carried payables, sales of equity, and debt transactions. Since we are not currently realizing net cash flows from our business, we may need to seek financing to continue our operations. Prospective sources of funding could include shareholder loans, equity sales or loans from other sources though no assurance can be given that such sources would be available or that any commitment of support is forthcoming to date.

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On October 27, 2008, we adopted The 2008 Benefit Plan of Green Endeavors, Inc. (the “Plan”) pursuant to which we may issue stock, or grant options to acquire our Voting Common Stock, par value $0.001 or our Series B Preferred Stock, par value $0.001(the “Stock”), to our employees or employees of our subsidiaries, on the terms and conditions set forth in the Plan (“Benefits”). The Plan is intended to aid us in maintaining and developing a management team, attracting qualified officers and employees capable of contributing to our future success. In addition, at the discretion of the Board of Directors, Benefits may be granted under this Plan to other individuals, including consultants or advisors, who contribute to our success or to the success of our subsidiaries, provided that bona fide services are rendered and such services are not in connection with the offer or sale of securities in a capital-raising transaction. No Stock may be issued, or options granted under the Plan to consultants, advisors, or other persons who directly or indirectly promote or maintain a market for our securities. We have issued 191,000 shares of Series B Preferred stock pursuant to the Plan as of June 30, 2012.

On April 30, 2008, we entered into a stock transfer agreement with our parent company Nexia and Nexia’s wholly-owned subsidiary DHI whereby they would each sell their holdings in Landis and Newby in exchange for an 8% Series A Senior Subordinated Convertible Debenture with a face amount of $3,000,000. Interest on the debenture commenced on December 30, 2008. DHI has the option, at any time, to convert all or any amount over $10,000 of principal face amount and accrued interest into shares of Common stock, $0.001 par value per share, at a conversion price equal to 95% of the average closing bid price of the common stock three days prior to the date we receive notice. In February of 2011, DHI transferred the Debenture to Nexia in exchange for the release of debt obligations owed to Nexia by DHI and Nexia is the current holder of the Debenture.

We do not intend to pay cash dividends in the foreseeable future.

We have no contractual commitment with any of our officers or directors.

We expect to purchase property or equipment as part of our normal ongoing operations.

Going Concern

Our audit opinion for the year ended December 31, 2011 expressed substantial doubt as to our ability to continue as a going concern as a result of reoccurring losses and negative working capital. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans to address our ability to continue as a going concern include raising additional funds to finance the operating and capital requirements through a combination of equity and debt financings. While we are making our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

Impact of Inflation

We compensate some of our salon employees with percentage commissions based on sales they generate. Accordingly, this provides us certain protection against inflationary increases, as payroll expense is a variable cost of sales. In addition, we may increase pricing in our salons to offset any significant increases in wages and cost of services provided. Therefore, we do not believe inflation has had a significant impact on the results of our operations.

Off-Balance Sheet Arrangements

As of June 30, 2012 and December 31, 2011, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies pursuant to Item 305 of Regulation S-K.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer, or CEO, and the Chief Financial Officer, or CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2012.

The evaluation of our disclosure controls and procedures included a review of our processes and the effect on the information generated for use in this Quarterly Report on Form 10-Q. In the course of this evaluation, we sought to identify any material weaknesses in our disclosure controls and procedures, to determine whether we had identified any acts of fraud involving personnel who have a significant role in our disclosure controls and procedures, and to confirm that any necessary corrective action, including process improvements, was taken. This type of evaluation is done every fiscal quarter so that our conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. The overall goals of these evaluation activities are to monitor our disclosure controls and procedures and to make modifications as necessary. We intend to maintain these disclosure controls and procedures, modifying them as circumstances warrant.

Based on his evaluation as of June 30, 2012, our CEO / CFO has concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2012 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. Internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of internal control are met. Further, the design of internal control must reflect the fact that there are resource constraints, and the benefits of the control must be considered relative to their costs. While our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Green Endeavors, Inc. have been detected.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

No material change in any legal matter, as reported in the Annual Report on Form 10-K for the years ended December 31, 2012 and 2011, occurred during the six months ended June 30, 2012.

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Item 1A. Risk Factors

Our business faces many risks. Described below are what we believe to be the material risks that we face. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could suffer.

Our ability to continue as a going concern is in doubt absent obtaining adequate new debt or equity financing and achieving sufficient sales levels.

We have limited capital. Because we do not have sufficient working capital for continued operations for at least the next 12 months our continued existence is dependent upon us sustaining operating profitability or obtaining the necessary capital to meet our expenditures. Our operating capital requirements, in excess of what is generated from operations, for the next 12 months are approximately $150,000. This primarily consists of the costs associated with our financial statement reporting obligations. At this time, we are still in the process of identifying additional salon locations within the Salt Lake valley. The funding for our operations will primarily come from private investors purchasing our Preferred stock, making loans secured by convertible promissory notes, as well as obtaining traditional lines of credit and loans to finance equipment, furniture, leasehold improvements and operations. We cannot assure you that we will be able to generate sufficient sales or raise adequate capital to meet our future working capital needs.

The voting control held by Nexia Holdings Inc. creates an anti-takeover or change of control limitation. Nexia currently holds voting control of the Company through its ownership of Supervoting preferred stock.

The 10,000,000 shares of Supervoting Preferred Stock (100 votes for each share) currently held by Nexia combined with the 2,355,263,158 shares of common stock provide Nexia with voting control over any proposal requiring a vote of the shareholders. Through its ownership of the preferred voting shares and common stock it holds voting rights equal to 3,355,263,158 shares of common stock. This effectively gives Nexia a veto over any attempt to take over or change control of the Company. Such an event would include a vote by the Board of Directors to conduct a reverse or forward split of the common stock. The shares held by Nexia thus have a strong anti-takeover effect. The interests of Nexia may not always conform to the interests of the common stockholders, in general, and thus its voting rights may not always be exercised in the best interests of the common stockholders of the Company. Richard Surber is CEO of both the Company and Nexia and has voting control of the Company through his control of Nexia.

Our business and our industry are affected by cyclical factors in the State of Utah, including the risk of a prolonged recession.

Our financial results are substantially dependent upon overall economic conditions in the State of Utah. General economic factors that are beyond our control, such as interest rates, recession, inflation, deflation, tax rates and policy, energy costs, unemployment trends, and other matters that influence consumer confidence and spending, may impact our business. In particular, visitation patterns to our salons can be adversely impacted by increases in unemployment rates and decreases in discretionary income levels.

A prolonged or a deepening recession in the United States, specifically in Utah, could substantially decrease the demand for our products and services below current levels and adversely affect our business. Our industry has historically been vulnerable to significant declines in consumption and product and service pricing during prolonged periods of economic downturn such as at present.

Recessions and other periods of economic dislocation typically result in a lower level of discretionary income for consumers. To the extent discretionary income declines, consumers may be more likely to reduce discretionary spending. This could result in our salon customers foregoing salon treatments or using home treatments as a substitute.

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We believe that the economic downturn slightly affected our financial results for the fiscal years ended December 31, 2012 and 2011, with a small increase in sales from each of the previous years. However, we continue to have sales in the second quarter of 2012 increase from the comparable months of 2011. If economic conditions result in negative sales in future periods and we are unable to offset the impact with operational savings, our financial results may be further affected.

If we cannot improve same-store sales our business and results of operations may be affected.

Our success depends, in part, upon our ability to improve sales, as well as both gross margins and operating margins. A variety of factors affect comparable sales, including fashion trends, competition, current economic conditions, changes in our product assortment, the success of marketing programs and weather conditions. These factors may cause our comparable store sales results to differ materially from prior periods and from our expectations. If we are unable to improve our comparable sales on a long-term basis or offset the impact with operational savings, our financial results may be affected.

Changes in our key relationships may adversely affect our operating results.

We maintain key relationships with certain companies, including Aveda™. Termination or modification of any of these relationships could significantly reduce our revenues and have a material and adverse impact on our business, our operating results and our ability to expand.

Changes in fashion trends may impact our revenue.

Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair may reduce the number of visits to, and therefore, sales at our salons.

We are dependent on key personnel, specifically Richard Surber, our President and CEO.

We are dependent on the services of Richard Surber, our President, CEO, and a Director. Green does not have an employment agreement with Mr. Surber, and losing his services would likely have an adverse effect on our ability to conduct business.

The salon operations are dependent on key personnel.

The operations of the two salons are dependent on the day to day management of current staff at those locations who work in the salons and train their personnel. Losing the services of these long term employees would likely have an adverse effect on the operations and business development of the salons.

Our success depends on our ability to attract and retain trained stylists in order to support our existing salon business and to staff future expansion.

The salons are actively recruiting qualified candidates to fill stylist positions. There is substantial competition for experienced personnel in this area, which we expect to continue. We will compete for experienced candidates with companies who have substantially greater financial resources than we do. If we fail to attract, motivate and retain qualified stylists, it could harm our business and limit our ability to be successful and hamper expansion plans. For example, we will depend upon the expertise and training abilities of our current staff and management at the salons. Since we do not maintain insurance policies on any of our employees, if we lose the services of any key officers or employees it could harm our business and results of operations.

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Changes in regulatory and statutory laws may result in increased costs to our business.

Our financial results can be adversely impacted by regulatory or statutory changes in laws. Due to the number of people we employ, laws that increase costs to provide employee benefits may result in additional costs to our business. Compliance with new, complex and changing laws may cause our expenses to increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our ability to market certain products, which could adversely affect our business, financial condition and results of operations.

If we are not able to successfully compete in our business segments, our financial results may be affected.

Competition on a market by market basis remains strong. Therefore, our ability to raise prices in certain markets can be adversely impacted by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be impaired.

We face significant competition in the salon business, which could harm our sales and profitability.

The primary competition to our operations comes from salons offering excellent customer service in the Salt Lake Area market. We have identified our main competitors as Lunatic Fringe, Salon Zazou and Salon RZ. We are also in competition with large scale hair cutting operations such as Great Clips, Supercuts, and Fantastic Sams, though these operations do not compete in offering the high-end services and products of our salons.

The loss of the Aveda™ line of products would damage the operation of our salons and have a significant and negative impact on our ability to operate and generate revenues.

Our salons offer the Aveda™ line of products, which are used exclusively in the services provided to customers of the salon and offered for retail sale at the salon location. Loss of the Aveda™ product line would have a significant and negative impact on the operation of the salons and their ability to generate revenues from either retail sales of health and beauty products or from providing services to consumers at the salon. We believe that the high quality and reputation of this line of products is key to our current operations and future success.

Changes in manufacturers' choice of distribution channels may negatively affect our revenues.

The retail products that we sell are licensed to be carried exclusively by professional salons. The products we purchase for sale in our salons are purchased pursuant to purchase orders, as opposed to long-term contracts, and generally can be terminated by the producer without much advance notice. Should the various product manufacturers decide to utilize other distribution channels, such as large discount retailers, it could negatively impact the revenue earned from product sales.

If we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions or private litigation and our reputation could suffer.

The nature of our business involves processing, transmission and storage of personal information about our customers. If we experience a data security breach, we could be exposed to government enforcement actions and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to stop visiting our salons altogether. Such events could lead to lost future sales and adversely affect our results of operations.

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Our stock price may be volatile.

The market price of our common stock is highly volatile and fluctuates widely in price in response to various factors, many of which are beyond our control, including the following:

·	significant dilution;

·	our services or our competitors;

·	additions or departures of key personnel;

·	our ability to execute our business plan;

·	operating results that fall below expectations;

·	loss of any strategic relationship;

·	economic and other external factors; and

·	period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

Investors bear a risk that a liquid market may never develop and as a result, you may not be able to buy or sell our securities at the times you may wish and market liquidity may be limited.

Even though our securities are quoted on the OTC Markets, that may not permit our investors to sell securities when and in the manner that they wish. There is not currently a significant volume of shares trading in the Company’s common stock and there may never be sufficient volume to create a liquid market such as to allow all shareholders to sell or buy shares whenever they desire. A liquid market for the sale of shares of the Companies securities may never develop.

Our common stock is currently deemed to be “penny stock”, which makes it more difficult for investors to sell their shares.

Our common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

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

On January 11, 2012, the Board of Directors approved the conversion of $4,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 21,052,632 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.

On January 13, 2012, the Board of Directors approved the conversion of $5,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 26,315,789 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.

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On January 24, 2012, the Board of Directors approved the conversion of $6,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 27,272,727 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.

On February 17, 2012, the Board of Directors approved the conversion of $3,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 29,666,667 shares of Common Stock. The shares were converted at $0.00012 per share which was the conversion price provided for by the terms of the note.

On February 23, 2012, the Board of Directors approved the conversion of $3,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 28,666,667 shares of Common Stock. The shares were converted at $0.00012 per share which was the conversion price provided for by the terms of the note.

On February 29, 2012, the Board of Directors received a request from a shareholder to convert of 3,500 Series B Preferred shares into 35,000,000 shares of Common Stock. The shares were converted at $0.0005 per share which was the quoted closing price on the date the conversion request.

On March 2, 2012, the Board of Directors approved the conversion of $6,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 31,578,947 shares of Common Stock. The shares were converted at $0.00019 per share which was the conversion price provided for by the terms of the note.

On March 14, 2012, the Board of Directors approved the conversion of $7,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 30,434,783 shares of Common Stock. The shares were converted at $0.00023 per share which was the conversion price provided for by the terms of the note.

On March 16, 2012, the Board of Directors approved the conversion of 3,888 Series B Preferred shares into 38,880,000 shares of Common Stock for an investor. The shares were converted at $0.0005 per share which was the quoted closing price on the date the conversion request was received from the shareholder.

On March 29, 2012 the Company filed with the State of Utah an Amendment to its Articles of Incorporation that increased the number of authorized shares of common stock to ten billion shares. This action was taken after notice to the shareholders and having consent from a majority of the voting rights.

On March 29, 2012, the Board of Directors approved the conversion of 2,400 Series B Preferred shares into 40,000,000 shares of Common Stock for an investor. The shares were converted at $0.0003 per share which was the quoted closing price on the date the conversion request was received from the shareholder.

On March 30, 2012, the Board of Directors approved the conversion of 2,400 Series B Preferred shares into 40,000,000 shares of Common Stock for an investor. The shares were converted at $0.0003 per share which was the quoted closing price on the date the conversion request was received from the shareholder.

During six month period ended June 30, 2012, 146,000,000 shares of common stock were issued to four employees pursuant to the exercise of their stock options.

On April 17, 2012, the Board of Directors approved the conversion of $9,500 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 41,304,348 shares of Common Stock. The shares were converted at $0.00023 per shares which was the conversion price provided for by the terms of the note.

On April 23, 2012, Landis Salons, Inc. entered into an equipment lease agreement in the amount of $53,230. In addition to the Company’s guarantee for the debt, Richard Surber is personal guarantor to the lease.

On April 27, 2012, the Board of Directors approved the conversion of $8,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 50,000,000 shares of Common Stock. The shares were converted at $0.00016 per shares which was the conversion price provided for by the terms of the note.

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On April 27, 2012, the Company authorized the issuance of 4,150,000 shares of Supervoting Preferred Stock to Nexia Holdings Inc. in exchange for $144,558 in debt settlement of related party obligations owed to Nexia by the Company that will be removed from the Company’s liabilities. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 4, 2012. The issuance results in Nexia holding 100% of the 10 million shares of Supervoting Preferred Stock authorized for the Company, resulting in Nexia holding 1 billion votes in any shareholder action. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On May 22, 2012, the Company entered into a Security Agreement with Richard Surber, CEO of the Company. The agreement provides that Mr. Surber is secured by the assets of the company, including the ownership of shares in the subsidiaries of the Company, to secure the debts and obligations of the Company owed to Mr. Surber and to compensate him for serving as a guarantor of numerous debts and obligations of the Company to third parties. The total amount of the potential exposure created through the guaranties and the obligations owed by the Company and its parent Nexia Holdings, Inc. to Mr. Surber is estimated at this time to exceed $1.7 million.

On May 22, 2012, the Company received a notice of Default from Asher Enterprises Inc. (“Asher”) based upon the failure of the Company to have remained in full compliance with its reporting requirements of the Exchange Act due to the late filing of its first quarter 10-Q. The demand is for payment of all principal, interest, and penalties due under the five notes between the Company and Asher. The notice of default demands a payment of $296,250 as of May 22, 2012. On June 30, 2012, as a result of the default notice, the Company recorded a contingency loss of $79,304, which is calculated by multiplying the June 30, 2012 principal balance on the notes of $148,000 plus $10,608 in accrued interest ($158,608 combined) by 50% per the terms of the notes thus bringing the amount owed to Asher as of June 30, 2012 $237,912. The Company is working on a cure for the default.

On May 23, 2012, the Company authorized the issuance of 2,105,263,158 shares of common stock to Nexia Holdings Inc. in exchange for $400,000 in debt settlement of related party obligations owed to Nexia by the Company that will be removed from the Company’s liabilities. The shares were issue with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 24, 2012. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On May 30, 2012, the Board of Directors approved the conversion of $6,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 50,000,000 shares of Common Stock. The shares were converted at $0.00012 per shares which was the conversion price provided for by the terms of the note.

On June 5, 2012, Green entered into a secured agreement with Richard Surber, President, CEO and Director of Green, to provide him a record lien (UCC-1 file number 413621201234, Utah) on certain assets of the company for the debts and obligations of the company for which Mr. Surber is providing a personal guaranty to lenders of the Company. The assets included in the secured interest include: a inventory, equipment fixtures, stock ownership, including but not limited to the shares held by Green Endeavors Inc. in Landis Salons, Inc., Landis Salons II, Inc., Landis Salons III, Inc. and ownership rights in Landis Experience Center LLC and any other intangible property and all tangible personal property held by, granted to or owned by Green or that is later acquired by Green subject only to purchase money liens held by sellers or grantor. Subsequent to June 30, 2012, Mr. Surber is continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.

On June 6, 2012, the Board of Directors approved the conversion of 10,400 shares of Series B Preferred Stock held by two investors into 260,000,000 shares of Common Stock. The shares were converted at $0.0002 per share based on the conversion provisions for the Series B Preferred Stock designation.

Subsequent Events

On July 12, 2012, the Board of Directors approved the conversion of $3,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 50,000,000 shares of Common Stock. The shares were converted at $0.00006 per shares which was the conversion price provided for by the terms of the note.

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On August 15, 2012 Green Endeavors Inc. (the “Company”) entered into an Investment Agreement (“Agreement”) with Southridge Partners II, LP (“Southridge”) wherein Southridge has committed to purchase up to $10,000,000 of the Company’s common stock over 36 months. The Company may draw on the facility from time to time in the form of puts, as and when it determines appropriate up to a maximum of less than 4.99% of the issued and outstanding shares of common stock of the Company per put notice. Southridge’s purchase price for each put is set at 91% of the lowest closing bid price of the common stock of the Company during the pricing period as defined in the Agreement as the period beginning on the Put Notice Date and ending on and including the date that is 5 Trading Days after such Put Notice Date. The option to draw down on the equity line is at the sole direction of the company. The Company is obligated to file one or more registration statements with the SEC to register the sale to Southridge of shares of common stock issued or issuable under the Agreement. The Company has agreed to file with the SEC an initial registration statement of From S-1 in order to carry out the terms of the Agreement. Upon the execution of the Agreement the Company paid to Southridge a $75,000 document preparation fee for preparation of the agreements referred to herein in the form of a promissory note.

On August 16, 2012, a wholly owned subsidiary of Green, Landis Experience Center, LLC, opened its doors for business at its Aveda retail store in the City Creek Mall in Salt Lake City, Utah.

On August 16, 2012, the Board of Directors approved the conversion of $2,000 of the April 5, 2011 Convertible Note held by Asher Enterprises, Inc. into 16,666,667 shares of Common Stock. The shares were converted at $0.00012 per shares which was the conversion price provided for by the terms of the note.

On August 16, 2012, the Board of Directors approved the conversion of $19,000 of the June 14, 2011 Convertible Note held by Asher Enterprises, Inc. into 158,333,333 shares of Common Stock. The shares were converted at $0.00012 per shares which was the conversion price provided for by the terms of the note.

On August 20, 2012, the Board of Directors approved the Directors approved the conversion of 1,690 shares of Series B Preferred Stock held by Southridge Partners II, LP into 42,250,000 shares of Common Stock. The shares were converted at $0.0002 per share based on the conversion provisions for the Series B Preferred Stock designation.

On September 07, 2012, the Board of Directors approved the Directors approved the conversion of 2,960 shares of Series B Preferred Stock held by Southridge Partners II, LP into 123,333,333 shares of Common Stock. The shares were converted at $0.00012 per share based on the conversion provisions for the Series B Preferred Stock designation.

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On September 10, 2012, the Board of Directors approved the conversion of $10,500 of the June 14, 2011 Convertible Note held by Asher Enterprises, Inc. into 175,000,000 shares of Common Stock. The shares were converted at $0.0006 per shares which was the conversion price provided for by the terms of the note.

On October 3, 2012, the Board of Directors approved the conversion of 3,350 shares of Series B Preferred Stock held by an investor into 139,583,333 shares of Common Stock. The shares were converted at $0.00012 per share based on the conversion provisions for the Series B Preferred Stock designation.

On October 19, 2012, the Board of Directors approved the conversion of 2,666 shares of Series B Preferred Stock held by an investor into 133,300,000 shares of Common Stock. The shares were converted at $0.0001 per share based on the conversion provisions for the Series B Preferred Stock designation.

On November 5, 2012 Landis Salons II, Inc. entered into a Promissory Note with Richard Surber, President, CEO and Director of Green, for the sum of $25,000 for funds loaned. The note bears interest at the rate of 20% per annum, with a term of five years and monthly payments of $662.35 and a demand feature by which the note can be called upon the demand of Mr. Surber. Landis Salons II as security for the note pledged all of its assets, stock in trade, inventory, furniture, fixtures, supplies, any intangible property and all tangible personal property of Landis Salons II and all and any other assets to which Landis Salons II holds title or claims ownership or that is hereafter acquired by Landis Salons II, subject only to purchase money liens held by sellers or grantors. Mr. Surber is also providing his personal guaranty for several lines of credit and credit cards that are being utilized by the company and its operating subsidiaries. The total amount of these credit obligations fluctuate from day to day and are not for any set amount but as a potential liability could exceed the amount of $300,000. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of $186,176.

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Reserved]

Item 5. Other Information

None.

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Item 6. Exhibits

(a)	The following exhibits are filed herewith or incorporated by reference as indicated in the table below:

		Incorporated by Reference
Exhibit Number	Description	Form	File Number	Exhibit Number	Filing Date	Provided Herewith
3(i)	Amended and Restated Certificate of Incorporation	10-12G/A	000-54018	3(i)	08/23/10
3(ii)	Bylaws	10-12G/A	000-54018	3(ii)	08/23/10
3(iii)	Plan of Merger	8-K	000-54018	3(iii)	08/26/10
3(iv)	Plan of Merger and Share Exchange	8-K	000-54018	3(iv)	08/31/10
3(v)	Utah Articles of Incorporation	8-K	000-54018	3(v)	08/31/10
4(i)	Certificate of Designation for Series B Preferred Stock.	10-12G/A	000-54018	4(i)	08/23/10
4(ii)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to DHI dated April 30, 2008.	10-12G/A	000-54018	4(ii)	08/23/10
4(iii)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates, Inc. dated January 15, 2010.	10-12G/A	000-54018	4(iii)	08/23/10
4(iv)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Desert Vista Capital, LLC. dated January 15, 2010.	10-12G/A	000-54018	4(iv)	08/23/10
4(v)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates, Inc. dated March 16, 2010.	10-12G/A	000-54018	4(v)	08/23/10
4(vi)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates dated May 11, 2010.	10-12G/A	000-54018	4(vi)	08/23/10
4(vii)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Desert Vista Capital, LLC dated May 11, 2010.	10-12G/A	000-54018	4(vii)	08/23/10
4(viii)	Amended Certificate of Designation for Series B Preferred Stock.	10-12G/A	000-54018	4(viii)	09/22/10
10(i)	8% Convertible Promissory Note issued February 2, 2012, to Asher Enterprises, Inc.	10-K	000-54018	10(i)	04/16/12
10(ii)	11% Promissory Note issued February 27, 2012 to William and Nina Wolfson	10-K	000-54018	10(ii)	04/16/12
10(iii)	May 22, 2012 Security Agreement with Richard Surber, CEO of the Company	10-Q	000-54018	10(iii)	01/30/12
31.01	Certification of the Registrant’s Chief Executive Officer, Richard D. Surber, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.					X
31.02	Certification of the Registrant’s Chief Financial Officer, Richard D. Surber, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.					X
32.01	Certification of the Registrant’s Chief Executive Officer, Richard D. Surber, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.02	Certification of the Registrant’s Chief Financial Officer, Richard D. Surber, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GREEN ENDEAVORS, INC.

(Registrant)

	GREEN ENDEAVORS, INC. (Registrant)
DATE: February 28, 2013	By: /s/ Richard D. Surber Richard D. Surber President, Chief Executive Officer and Director
DATE: February 28, 2013	By: /s/ Richard D. Surber Richard D. Surber Chief Financial Officer

Attached files

Green Endeavors, Inc. Reports

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