UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549

 

 

FORM 10-K

(mark one)

 

[X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 For the fiscal year ended December 31, 2013

 

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

 

               For the transition period from _______ to _______

 

Commission File No. 000-54395

 

GREEN ENVIROTECH HOLDINGS CORP.

 (Exact Name of registrant as specified in its charter)

 

 

 

 

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

 

 

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

 

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐      No ☑

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐     No ☑

 

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

 

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

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or amendment to Form 10-K. ☐

 

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

 

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-accelerated Filer ☐	Smaller reporting company ☑

 

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

 

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant was approximately $4,113,571 as of June 30, 2013. Shares of voting stock held by each executive officer and director of the registrant and each person who beneficially owns 10% or more of the registrant’s outstanding voting stock has been excluded from the calculation. This determination of affiliated status may not be conclusive for other purposes.

 

 

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

 

Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: The Registrant’s common stock as of March 31, 2014, was 8,093,017 shares.

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TABLE OF CONTENTS

 

 

 

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PART I

 

ITEM 1. BUSINESS

 

Corporate History

 

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

 

Pursuant to the Merger Agreement, on November 20, 2009, Green EnviroTech Acquisition Corp. merged with and into Green EnviroTech, resulting in Green EnviroTech becoming a wholly-owned subsidiary of the Company (the “Merger”). The acquisition of Green EnviroTech is treated as a reverse acquisition, and the business of Green EnviroTech became the business of the Company.

 

Recent Developments

 

Effective March 27, 2013, the Company completed a 1 for 100 reverse split of its common stock.  Share amounts in this report have been retroactively adjusted for the reverse split.

 

During 2013, the Company entered into an agreement with Black Lion Oil Limited (Black Lion) whose primary focus is on emerging energy technology with broad applications.  Under the agreement, the Company granted to Black Lion exclusive rights to the waste to oil process in specific territories outside of the United States.  In return Black Lion paid $100,000 in cash to the Company as a fee and agreed to pay the Company royalties amounting to ten percent (10.0%) of the gross sales of the plants outside of the United States using the waste to oil process.  The Company used the fee for working capital.  

 

References hereinafter to “Green EnviroTech”, “we”, “us”, “our” and similar words refer to the Company.

 

Our Principal Offices

 

Our executive offices are located at 210 S. Sierra Ave. Suite A, Oakdale, CA 95361 and our phone number at this address is (209) 848-4384.

 

Overview of Our Business

 

Green EnviroTech Holdings Corp. is a development-stage technology company that has developed a patent pending oil conversion process utilizing a mixture of plastic and tires. We believe the "GETH Process" has the potential to revolutionize the disposal of plastic waste and tires and cleans up our landfills by producing a high grade of oil.

 

HIGHLIGHTS:

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§

A 12 module plant will produce approximately 25,000 barrels of GETH Oil per month

§

GETH produces oil that does not need to be reprocessed and can be blended into most products produced at a refinery    

§

Contract to purchase GETH Oil through a third party with a contract with a major oil company at Brent Crude prices minus $5.25 per barrel for marketing and transportation differentials.  1% of gross will go to the third party.  

§

Tire & plastic feedstock providers have been identified for the first 10 selected regional plant sites; to be secured with refined multi plant sites. Initial California sources and plant site are secured.

§

GETH Process is a closed system with no environmental impact

§

Highly experienced management team in engineering, permitting, manufacturing and feedstock supply

 

The Company in 2014 is concentrating on raising $3,000,000 to build a demonstration plant, which consist of one reactor and one distillation system.  The initial start up cost includes the cost of the infrastructure, which will facilitate the expansion of the plant at a future time.

 

The Company has determined its capital needs will be $16 Million to execute phase-one of its business model.  Negotiations with a New York Lending Institution for a $12 Million loan with a lien against the plant and equipment have been received with enthusiasm and with positive feedback.  In addition, the Company has received partial commitments on receiving $4 Million in equity funding from qualified investors looking for warrants in exchange for equity injections.  Permits needed to operate and construct the plant have been applied for and the Company does not anticipate any complications with its applications.  The plants operating systems are considered a closed system with zero emissions.  The estimated time to close funding is 60 days with an estimated seven months to complete construction and outfit the plant.

 

TECHNOLOGY OVERVIEW OF THE "GETH PROCESS" 

 

The system to convert plastic and tires to oil uses electromagnetic pyrolysis to produce oil by using the GETH Process.  This oil is referred to as GETH Oil, carbon black, syngas, and steel. The use of electromagnetic pyrolysis facilitates more effective heat transfer while causing no environmental impact. A standard twelve module plant, utilizing 6 for plastic and 6 for tire conversion produces approximately 25,000 barrels of oil per month.  Plastic or tire processing ratios can be adjusted to correspond to the current supply volumes.

 

 

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One Module - Plastic to GETH Oil Conversion:

 

·

The maximum processing of a single module is 940,000 pounds of plastic per month - estimated to produce 2,710 barrels of GETH Oil per month, among other outputs.

 

Outputs and Ratios:

 

o

85% average by weight converted into GETH Oil

o

10% average by weight of syngas

o

5% average by weight of carbon black

 

One Module -Tire to GETH Oil Conversion:

 

·

The maximum processing of a single module is 940,000 pounds of tires per month - estimated to produce 1,435 barrels of GETH Oil per month, among other outputs.

 

Outputs and Ratios:

 

o

40-45% by weight converted into GETH Oil

o

30-33% converted into carbon black

o

10-11% recovered steel wire

o

11-20% syngas  

Process Description for a Twin Reactor Pyrolysis Conversion Module:

 

Process charge material is compressed into bales to increase charge weight and provide a convenient material handling package. Variations of this process, criteria, will be investigated within the demonstration phase of the initial plant operation.

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The conversion process is composed of a combination of three steps that have been placed in line so that they present an integrated process stream. Modules are operated in a continuous batching scheme.

  

The first step is an electromagnetic pyrolysis induction system that converts tire and/or plastic feedstock into crude oil. A process module contains two rotating electrically heated reaction chambers.  Each reactor is operated independently and controlled by a computerized process controller that monitors three zones on the reactors as well as the other processes within the full operating module. As the feedstock material temperature rises certain fractions turn into a gaseous phase (at about 700 degree F) which gases pass through a condensation/separation chamber. The resultant light oil condensate is a final product.  

 

Variations of the pyrolysis energy source criteria will be investigated within the demonstration phase of the initial plant operation.

In a second step heavy un-vaporized oil is collected in a heavy oil reservoir and further refined by distillation into finished oil.  

 

The last step in the process is an organic chloride filtration system. Process oil is transferred directly to this system, re-heated to 500° F, and passed through a catalyst media to remove residual organic chloride. Finished oil is moved into a product storage vessel for testing.

 

The entire module is a closed loop that sorts vapors and gases throughout the entire process. At no time are there any gases or vapors emitted into the atmosphere. The reactor chamber is closed and sealed throughout the entire process cycle and is only opened once all of the vapors and gases have been evacuated from the reactor chamber. There is a main check valve in place between the reactor and the separator that prevents any gases or vapors from flowing back into the reactor chamber.

 

Other non-oil Products:

 

Carbon black is produced as a by-product in volumes related to the feed stock material as noted earlier. Carbon black collects in the separator vessel and is released through a valve gate at the bottom at the termination of each batch process. The carbon black enters a contained storage vessel, which is sealed so that the carbon black is fully captured without becoming airborne.

 

The steel from tires is removed from the reactor in preparation for the next batch.

 

The last by-product is syngas which is evacuated from the module continuously and processed through a filtration system to clean out any residual carbon; the gas is then compressed into syngas storage vessels.

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HANDLING AND SHIPPING:

 

All the by-products are separated into their own specific storage vessels until they’re shipped. All products will be shipped by certified transporters. The certified oil and syngas transporters have all the necessary permits, pumps and valves systems to eliminate any vapors or emissions from being released into the atmosphere during the tanker loading process.

 

MATERIAL SOURCING / VALUES

 

The relevant issue as it applies to the GETH production economics are:

 

·

Cost and availability of raw materials (feedstock)

·

Price the GETH Oil is sold to the refinery

 

PLASTICS

 

The EPA states that in the US 31 million tons of plastic waste is generated annually. With plastic recyclers volumes already committed there is an abundant flow of plastics available for the GETH facilities. The cost of waste plastic for processing is set at $75 per ton including transport and is detailed in the financial projections.  

 

This chart reflects 10% of the volume of plastic waste (1-7 categories) in millions of lbs. generated in one year in the respected locations according to the EPA. The Company believes 10% percent is readily available to the company and has been secured as feedstock. The Company will only process 3-7 types of plastic as feedstock.

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TIRES

 

The EPA data states that there is one scrap tire generated for every person in the US, meaning there are 311 million waste tires generated annually. Due to the weight and size configuration and slow breakdown, tires are the most problematic source of waste in the US. The financial equation for tires is more compelling because in most locations the company will be paid to receive the tires.

 

The Company is currently in negotiations with the largest multi-state tire retailer to be its exclusive tire recycler.  

 

 

The back graphs represent the total number of waste tires generated annually in selected states and the graphs in the forefront reflect the number of tires that been identified as readily available or secured to the company for conversion.

OIL PRICING

 

According to the US Energy Information Administration report “International Energy Outlook 2013” http://www.eia.gov/forecasts/aeo/index.cfm the world’s energy consumption will grow by 56% between 2012 and 2040. Much of the growth will occur outside the Organisation for Economic Co-operation & Development (OECD), known as the non- OECD, where the demand will be driven by long-term economic growth. Renewable energy and nuclear power are the world’s fastest-growing energy resources. The fossil fuel products will continue to supply up to 80% of the world energy through 2040. The pricing set forth in the chart below reflects the current Brent Crude price for oil as established by GETH's contract with Conoco to purchase the oil.

 

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Demand:  According to the OPEC oil demand analysis for 2012, the world used 84 million barrels of oil per day.  The world’s liquid consumption will increase by about one-third from 87 million barrels per day in 2010 to 115 million barrels per day in 2040. Petroleum and other liquids will remain the world’s dominant fuel source. Rising prices for liquids increase the cost-competitiveness of other fuels, leading many users of liquids outside the transportation and industrial sectors to switch to other sources of energy when possible. The transportation and industrial sectors account for 92 percent of global liquid fuels demand in 2040, whereas in every other end-use sector the consumption of liquid fuels decreases on a worldwide basis over the projection period.

 

According to the “International Energy Outlook 2013” the analyses below represent a long-term balance between supply and demand.  It does not reflect the crude oil price volatility that occurs over days, months, or years. Over the past two decades, volatility within a single year has averaged about 30 percent. In the Reference case, world oil prices reach $106 per barrel (real 2011 dollars) in 2020 and $163 per barrel in 2040. The Reference case represents current judgment regarding exploration and development costs and accessibility of oil resources. It also assumes that OPEC producers maintain their share of the market and will schedule investments in incremental production capacity so that OPEC’s oil production will represent between 39 and 43 percent of the world’s total petroleum and other liquids production over the projection period. In this case, OECD consumption of petroleum and other liquids is virtually flat between 2010 and 2040, while non-OECD consumption increases by 28 million barrels per day over the same period. The High and Low Oil Price cases as alternatives to the Reference case. The price cases were developed by adjusting four key factors: (1) the economics of non-OPEC petroleum liquids supply; (2) OPEC investment and production decisions; (3) the economics of other liquids supply; and (4) economic growth in non-OECD countries, key driver of petroleum and other liquids demand.

 

To view the Energy Outlook Report 2013, cut and paste the link below: https://files.secureserver.net/0fyNgsK2QegLTe

 

 

Employees

 

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

 

Bankruptcy or Similar Proceedings

 

There has been no bankruptcy, receivership or similar proceeding.

 

Compliance with Government Regulation

 

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

 

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

 

The Company has a patent pending as previously mentioned and a number of, applied-for and/or unregistered trademarks and service marks that we use in connection with our businesses.  We have no other current plans for any other registrations such as copyrights, franchises, concessions, royalty agreements or labor contracts.

 

Need for Government Approval for its Products or Services

 

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

 

Research and Development Costs during the Last Two Years

 

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

 

ITEM 1A. RISK FACTORS

 

Risks Related to our Business

 

We are currently not profitable and may never become profitable.

 

We have a history of losses totaling $16,213,181 through December 31, 2013 and we expect to incur additional substantial operating losses for the foreseeable future and we may never achieve or maintain profitability.  We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability.  We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our Common Stock and investors would in all likelihood lose their entire investment.

   

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

 

Because we have not generated revenue since our inception, our independent registered accounting firm has included in their report for the years ended December 31, 2013 and 2012, an uncertainty with respect to the Company’s ability to continue as a going concern.

 

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

 

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

 

 

 

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

 

As of December 31, 2013, we had $185 in cash available. We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures.  Accordingly we need significant additional capital to fund our operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.  If we are unable to raise substantial capital, investors will lose their entire investment.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

  

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Risks Related to the Common Stock

 

There is a limited trading market for the Common Stock.

 

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

 

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

 

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

 

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

 

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

 

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

 

•	variations in our quarterly operating results;

 

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

 

•	the general economic slowdown;

 

•	sales of large blocks of our Common Stock;

 

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

 

•	Fluctuations stock market prices and volumes.

 

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

 

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

 

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

 

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

 

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

 

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

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

  

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

NOT APPLICABLE

 

ITEM 2. PROPERTIES

 

On June 1, 2013, the Company signed a three year lease agreement for office space and opened its new offices  The Company’s new offices are located at 210 S. Sierra Ave., Suite A, Oakdale, CA 95361.

 

 

 

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ITEM 3. LEGAL PROCEEDINGS.

 

The Company is party to one legal proceeding.  MicroCap vs Green EnviroTech is a claim being litigated in New York for the breach of contract.  The case is being vigorously defended and the Company expects the resolution of the case to be in its favor.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

 Not Applicable

 

PART II

 

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

 

Market Information

 

The Company’s Common Stock is quoted on the OTCQB under the symbol “GETH” For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.   All per share amounts have been adjusted for the Company’s 100 for 1reverse stock split effected on March 27, 2013.

 

 

Holders

 

As of March 19, 2014, there were 8,093,017 shares of common stock issued and outstanding, held by approximately 136 shareholders of record.

 

Dividends

 

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

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The Company has not adopted any equity compensation plans as of December 31, 2013.

 

 

-15-

 

Recent Sales of Unregistered Securities.

 

None.

 

 Issuer Repurchases of Equity Securities

 

None.

 

ITEM 6. SELECTED FINANCIAL DATA.

 

Not applicable.

 

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

 

Forward-Looking Statements

 

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

 

Corporate History

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

Pursuant to the Merger Agreement, on November 20, 2009 (the “Closing Date”), Green EnviroTech Acquisition Corp. merged with and into Green EnviroTech, resulting in Green EnviroTech becoming a wholly-owned subsidiary of the Company (the “Merger”). The acquisition of Green EnviroTech is treated as a reverse acquisition, and the business of Green EnviroTech became the business of the Company.

 

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

-16-

Critical Accounting Policy and Estimates

 

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

 

The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended December 31, 2012, together with notes thereto as previously filed with our Annual Report on Form 10-K.  In addition, these accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this Form 10-K for the year ended December 31, 2012..

Results of Operations

 

Year Ended December 31, 2013 compared to Year Ended December 31, 2012

 

The Company incurred $2,407,588 in wages and professional fees for the year ended December 31, 2013 as compared to $2,538,199 for the year ended December 31, 2012, a decrease of approximately 5%. This decrease of $130,611 in wages and professional fees is the result of the Company’s decrease in engineering and design related to the equipment and building projections.  

 

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

 

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

 

The Company incurred impairment in the amount of $443,000 in 2013 as a result of the Company disposing of damaged equipment with no potential production value to the Company when it did have value in the past.  The equipment had been carried on the books for over two years at a value of $125,000.  The Company also incurred a write off of $318,000 on behalf of Petrosonics, LLC in the anticipation of forming a joint venture together.  The Company entered into a joint venture agreement with Petrosonics, LLC. Pursuant to the Joint Venture Agreement, the parties agreed to the formation of an Irish registered company for the purpose of researching, development, manufacture and commercialization of oil-industry corroborated processes that remove sulfur from crude oil and refined fuels on a worldwide basis. The Company agreed to make a capital contribution of $14,000,000 (including $2,000,000 which the Company agreed to contribute within 30 days of execution of the Joint Venture Agreement, and an additional $12,000,000 which the Company agreed to contribute within 180 days of execution of the Joint Venture Agreement) into the Joint Venture Company for a 51% interest. Petrosonics agreed to contribute certain intellectual property to the Joint Venture Company for a 49% interest.  During the Company’s due diligence production, it incurred various delays which resulted in funding deferments.  The parties agreed to terminate the initial Joint Venture Agreement, effective as of September 3, 2013, with the understanding that a new Joint Venture Agreement may be entered into at a later date.   The parties have also agreed verbally to enter into a termination agreement wherein the Company will be reimbursed a portion of the funds raised in exchange for a release of the IP that was assigned in advance to the entity formed for the Joint Venture.  The Company incurred impairment in the amount of $118,783 in 2012 when it determined the construction in progress it had been carrying on the balance sheet for the previous two years would not be conducive to the plastic and tires to oil process.  The Company wrote off in 2012 the Naranza lease deposit in the amount of $261,890 as bad debt when it was concluded the collection of the deposit had become questionable.   

-17-

The general and administrative expenses for the year ended December 31, 2013 were $105,233 as compared to $117,457 for the year ended December 31, 2012, a decrease of approximately 10%. This decrease of $12,224 was the result of an decrease in, travel, entertainment, advertising and marketing concerning the promotion of the company.

 

The non-operating expenses for the year ended December 31, 2013 were $2,547,527 as compared to $454,005 for the year ended December 31, 2012, an increase of 461%.  The increase of $2,093,522 in non-operating expenses was the result of an increase of $64,286 in amortization of debt discount when the Company received $150,000 in cash from a private party and the Company issued 60,000 shares of restricted common stock when making the loan.  The discounted value of the stock was $64,286 as compared to none for the year ended December 31, 2012.  Interest expense in the amount of $122,514 for the year ended December 31, 2013 increased by $217 when compared to the $122,297 recorded for the year ended December 31, 2012.   The Company had no derivatives for the year ended December 31, 2013. The Company recorded a loss in the amount of $2,360,727 when it agreed to convert debt to shares of restricted common stock of the Company as compared to a $447,446 loss when it converted debt to shares of restricted common stock for the year ended December 31, 2012.

 

As a result of the above, the Company had an accumulated deficit of $16,213,181 since inception through December 31, 2013.

 

Liquidity and Capital Resources

 

As of December 31, 2013, the Company had a balance of cash in the bank in the amount of $185 as compared to $1,986 as of December 31, 2012.  The Company estimates it will need to raise an additional $475,000 in 2014 for working capital.   As of December 31, 2013, the Company had accounts payable to vendors and accrued expenses in the amount of $686,538 as compared to $749,144 as of December 31, 2012.  As of December 31, 2013, the Company had no accounts payable to related parties as compared to $4,975 as of December 31, 2012. As of December 31, 2013, the Company has loans payable-other in the amount of $1,115,572 as compared to $840,750 as of December 31, 2012.  These loans were used for working capital.  The loan payable to related party was a working capital loan to the Company in the amount of $12,287 by its chief executive officer, Mr. Gary DeLaurentiis.  The related party loan payable was $44,187 for the year ended December 31, 2012.  The Company had three outstanding promissory notes issued to Asher Enterprises, Inc. in the aggregate amount of $203,250 at year end 2011.  These were convertible promissory notes with a discounted conversion price.  These notes were paid off during the year ended 2012

 

The unsecured, loan payable in the form of a line of credit with the CEO originally dated October 7, 2009 provided up to $200,000 at 4% interest per annum to cover various expenses and working capital infusions until the Company can be funded. This loan has been extended every year to the end of December of the next upcoming year.  The original amount was increased from $200,000 to $1,000,000. This loan has been extended again to December 31, 2014.  The CEO has advanced $1,242,456 from inception through December 31, 2013 and the Company repaid $275,792 of these advances.  The Company converted $754,377 of these advances into shares of common stock on May 11, 2010 at a $1.00 per share and converted $200,000 in common shares on December 1, 2011.  The remaining principal under this loan due as of December 31, 2013 is $12,287. Interest expense on this line of credit for the years ended December 31, 2013 and 2012 was $1,197 and $2,224, respectively.  In addition, $30,463 interest is accrued at December 31, 2013. The Company anticipates the CEO will convert the balance of these advances into common stock in the future.

 

The Company at the beginning of 2013 had three unsecured loans with H. E. Capital, S. A.  in the amount of $663,250.  These loans accrue interest at the rate of 8% per annum.  The due dates of the loans were extended to December 31, 2014.  Balance of the loans at December 31, 2013 was $616,772 with accrued interest in the amount of $50,473.   In 2013, $676,750 of principal and $119,324 of accrued interest was converted into 1,592,148 shares of the Company’s common stock.   Two of the above mentioned loans with H. E. Capital, S. A. were eliminated in the conversions.  In 2012, $387,000 of principal was converted into 349,333 shares of the Company’s common stock.   Please refer to Note 5 of the financial statements which are a part of this filing for further information for a detail of the transactions during the year ended December 31, 2013.

 

The Company during the year ended December 31, 2010 entered into a loan payable with an individual for a total amount of $20,000 at 10% due on demand. The Company repaid $10,000 of this note on August 10, 2010 and repaid $2,500 on April 13, 2011.  The interest went to 12% on February 25, 2011 when the note was not paid in full.  As of December 31, 2013 the loan has an outstanding balance of $7,500 and accrued interest in the amount of $4,057.

-18-

 

 

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

 

The Company as of December 31, 2010, raised $330,000 from the investors, and an additional $50,000 in January 2011. The amounts advanced to the Company were converted into a 12% secured debenture dated January 24, 2011 due July 24, 2011. On July 21, 2011, the secured debentures were extended an additional six months to a new maturity date of January 24, 2012.  All other original terms remained the same.  The Investors received an additional 380,000 shares of common stock in exchange for granting the extension.  In addition, the investors were issued 190,000 warrants dated January 24, 2011. LSI also was issued 19,000 warrants as a fee (10% of the total warrants issued). On February 2, 2012, the Company issued 1,000,000 shares of common stock to the holders of the secured debentures for extending the maturity date of the debentures to September 24, 2012. The Company by direction of Legend Securities, Inc. also issued to the holders of the secured debentures five-year warrants to purchase 100,000 shares of common stock at an exercise price of $0.10 per share.  The warrants were issued to the holders of the secured debentures simultaneously with the issuance of the above mentioned stock.  The Company is in negotiations with the investors to extend their loans.  The balance of these debentures on December 31, 2013 was $305,000 compared to $305,000 for the year ended December 31, 2013.  Interest accrued as of December 31, 2013 (12%) was $88,685.  $75,000 of these notes was paid on April 27, 2012.  Please refer to Note 5 of the financial statements which are a part of this filing for further information.

 

On November 16, 2012, the Company entered into a loan agreement with an individual in the amount of $170,000 at 8% due on November 16, 2013. The Company used the funds to pay off the convertible notes held by Asher Enterprise, Inc.  As of December 31, 2013 this loan has an outstanding balance of $170,000 and accrued interest in the amount of $15,314.

 

The Company issued a promissory note on March 19, 2013 to an individual in the amount of $150,000 at 8% due on March 18, 2014.  The Company used the funds for working capital.  As of December 31, 2013 this loan has an outstanding balance of $150,000 and accrued interest in the amount of $4,356. >

 

The Company issued a promissory note in the amount of $171,300 on October 1, 2013 to a vendor in exchange for converting accounts payable.  The note accrues interest at 8% and is due on September 30, 2014.  As of December 31, 2013 this note has an outstanding balance of $171,300 and accrued interest in the amount of $3,454.

 

The following tables provide selected financial data about our company for the years ended December 31, 2012 and 2011.

 

                 

Cash provided by financing activities since inception through December 31, 2013 was $3,364,826. $293,000 was the result from the sale of shares for cash, $2,099,662 (net) as a result of a loan from different entities and $972,164 (net) was a loan from a related party, the company CEO.

-19-

 

 

Off-Balance Sheet Arrangements

 

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

 

ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

Not applicable.

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

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

 

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

 

 None.

 

ITEM 9A(T). CONTROLS AND PROCEDURES

 

Our principal executive and principal financial officers have evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this annual report.  They  have concluded that, based on such evaluation, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting as of December 31, 2013, as further described below.

 

Management’s Report on Internal Control Over Financial Reporting

 

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

 

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

 

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

 

 

-20-

 

 

As of December 31, 2013 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, as of December 31, 2013, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial Statements as of December 31, 2013.  These material weaknesses can be rectified by an injection of funding needed to hire personnel to fill the positions needed to carry out the necessary duties for adequate internal controls.  Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

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

 

Management’s Remediation Initiatives

 

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

 

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

 

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

 

We anticipate that these initiatives will be at least partially, if not fully, implemented by December 31, 2014. Additionally, we plan to test our updated controls and remediate our deficiencies by December 31, 2014.

 

Changes in Internal Controls Over Financial Reporting

 

There was no change in our internal controls over financial reporting that occurred during the quarter ended December 31, 2013, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

 

 

-21-

 

ITEM 9B. OTHER INFORMATION.

 

None.

 

 

 PART III

 

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

 

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

 

                                                                                                                                                        

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

 

Gary M. De Laurentiis, Chairman and Chief Executive Officer

 

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

   

Lou Perches, Chief Operating Officer

 

Mr. Perches has served as our Chief Operating Officer since January 2011 and as a director since March 2013. Mr. Perches was a systems and management consultant for Florida Fruit Juice from May 2010 to September 2010.  Mr. Perches was General Manager of Bapco Closures LLC from October 2008 to April 2010. From March 2008 to August 2008 Mr. Perches was Manager, Quality Control at Rexam Pharma. From January 2007 to February 2008 Mr. Perches was Manager Quality Assurance at Amcor Packaging. From October 2005 to January 2006 Mr. Perches was Quality System 3rd Party Auditor (Consultant) for A.I.B. International. Mr. Perches received a BA in Industrial Technology, Quality Engineering from Fullerton State University.

 

 

-22-

 

Section 16(a) Beneficial Ownership Compliance

 

Our officers, directors and shareholders owning greater than ten percent (10%) of our shares are required to file beneficial ownership reports pursuant to Section 16(a) of the Securities and Exchange Act (the “Exchange Act”). All such reporting obligations were complied with during the year ended December 31, 2013, except that, our chief executive officer and chief operating officer have not filed Form 3’s.

 

 Code of Ethics

 

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

 

Audit Committee Financial Expert

 

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

 

Board Leadership Structure and Role in Risk Oversight

 

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

 

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

 

Changes in Nominating Process

 

During the year ended December 31, 2013, there are no material changes to the procedures by which security holders may recommend nominees to our board of directors.

 

 

-23-

 

ITEM 11. EXECUTIVE COMPENSATION.

  

SUMMARY COMPENSATION TABLE

 

 The following table sets forth all compensation paid in respect of our Chief Executive Officer and those executive officers who received compensation in excess of $100,000 per year for the years ended December 31, 2013 and 2012

 

 

-24- 

 

Employment Agreements

 

Employment Agreement with Gary DeLaurentiis and Wayne Leggett

 

On June 1, 2011, the Company entered into employment contracts with its Chief Executive Officer at a base salary of $300,000 and its Chief Financial Officer at a base salary of $240,000 for a term of 36 months with one year automatic extensions. Each contract provided for annual bonuses in an amount equal to at least the base salary of the officers. The contracts also provide for stock and/or option incentive for the purchase of common stock at the discretion of the Board of Directors. Salaries and bonuses are being accrued until such time the company has the funds to pay accrued wages. Wayne Leggett resigned as the Company’s Chief Financial Officer and Director on March 11, 2013.

 

Director Compensation

 

No director of the Company received any compensation for services as director for the year ended December 31, 2013.

 

Outstanding Equity Awards at December 31, 2013

 

 

The following table sets forth outstanding equity awards to our named executive officers as of December 31, 2013

 

 

 

-25-

 

 

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

 

The following table sets forth certain information, as of March 31, 2014 with respect to the beneficial ownership of the outstanding Common Stock by (i) any holder of more than five (5%) percent; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned.  This is based upon a total of 8,093,017 shares issued and outstanding as of March 18, 2014.

 

Name of Beneficial Owner (1)		Common Stock Beneficially Owned				Percentage of Common Stock (2)
Directors and Officers:
Gary M. De Laurentiis			900,000				11.12
Lou Perches			85,000				*
All officers and directors as a group (2  persons)			985,000				12.17

Way                      Black Lion Oil Ltd	779,016		9.63
(1)	Except as otherwise indicated, the address of each beneficial owner is:   210 S. Sierra Ave Suite A, Oakdale, CA 95361.
(2)	Applicable percentage ownership is based on 8,093,017 shares of Common Stock outstanding as of March 19, 2014 together with securities exercisable or convertible into shares of common stock within 60 days of April 3, 2014 for each stockholder.  Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Options or warrants to purchase shares of Common Stock that are currently exercisable or exercisable within 60 days of April 3, 2014 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

-26-

 

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

 

  Certain Relationships and Related Transactions

 

Gary De Laurentiis, the Company’s chief executive officer, has provided Green EnviroTech with an unsecured line of credit of up to $1,000,000. Interest on the line of credit is 4% per annum. As of December 31, 2013, Mr. De Laurentiis has loaned the Company $12,287 pursuant to the line of credit and there is interest due of $30,463.

 

On December 7, 2011, the Company issued 40,000,000 restricted common shares of the Company to Mr. DeLaurentiis to reduce $200,000 of accrued salary due him.  The Company also issued to Mr. DeLaurentiis 20,000,000 restricted common shares of the Company on September 25, 2012 to reduce $240,000 of accrued salary due him.  On December 7, 2011, the Company issued 16,000,000 restricted common shares to Wayne Leggett, the Company’s then- CFO to reduce $80,000 in accrued salary due him. These shares were impacted by the 1 for 100 reverse common stock split on March 27, 2013.  During the year ended 2013, the Company issued to Mr. DeLaurentiis 267,698 restricted common shares to reduce $267,448 of accrued salary due him.  During the year ended 2013, the Company issued to Mr. Lou Perches, COO, 75,000 restricted common shares to reduce $20,650 of accrued salary due him.

 

Director Independence

 

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

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

For the year ended December 31, 2013, the total fees charged to the company for audit services, including quarterly reviews, were $21,000, for other audit-related services were $0, for tax services were $0, and for other services were $0.

For the year ended December 31, 2012, the total fees charged to the company for audit services, including quarterly reviews, were $29,000, for other audit-related services were $0, for tax services were $0, and for other services were $0.

   

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES.

 

 

Exhibit Number		Description
3.1		Certificate of Incorporation (Incorporated by reference to our registration statement on Form S-1 (File No. 333-149626), filed with the Securities and Exchange Commission on March 11, 2008)
3.2		Certificate of Amendment of Incorporation (Incorporated by reference to our current report on Form 8-K, filed with the Securities and Exchange Commission on July 23, 2010
3.3		Certificate of Designation of Magic Bright Acquisition Series C Convertible Preferred Stock (incorporated by reference to our current report on Form 8-K filed with the SEC on February 15, 2011)
3.4		Certificate of Amendment to Certificate of Incorporation effective March 17, 2013
3.5		By-Laws (Incorporated by reference to our registration statement on Form S-1 (File No. 333-149626), filed with the Securities and Exchange Commission on March 11, 2008)
10.1		Agreement and Plan of Merger, dated November 20, 2009, by and among the Company, Green Enviro Tech Corp. and Green EnviroTech Acquisition Corp. (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on November 25, 2009)
10.2		Equipment Purchase and Installation Agreement, dated December 12, 2009, by and among Green Enviro Tech Corp., and Plast2Fuel Corporation (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009)
10.3		Oil Marketing and Distribution Agreement, dated December 12, 2009, by and among Green Enviro Tech Corp. and Plast2Fuel Corporation (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009)
10.4		License Agreement, dated December 12, 2009, by and among Green Enviro Tech Corp. and Past2Fuel Corporation (Incorporated by reference to our current report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2009)
10.5		Employment Agreement between the Company and Gary De Laurentiis (incorporated by reference to our annual report on  Form 10-K filed with the SEC on April 8, 2010)
10.6		Employment Agreement between the Company and Jeffrey Chartier (incorporated by reference to our annual report on  Form 10-K filed with the SEC on April 8, 2010)
10.7		Employment Agreement between the Company and Andrew Kegler (incorporated by reference to our annual report on  Form 10-K filed with the SEC on April 8, 2010)
10.7		HE Capital, SA Note dated April 14, 2010 (incorporated by reference to our quarterly report on Form 10-Q filed with the SEC on May 12, 2010)

-27-

10.8		First Amendment to Plas2Fuel License Agreement, dated May 18, 2010, by and between Green EnviroTech and Plas2Fuel, Inc.  (incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)
10.9		License Agreement, dated April 30, 2010, by and between Green EnviroTech and Ergonomy (incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)
10.10		License Agreement, dated May 18, 2010, by and between Green EnviroTech and Thar Process, Inc. (incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)
10.11		License Agreement, dated May 18, 2010, by and between Green EnviroTech and Thar Process, Inc. (incorporated by reference to our current report on Form 8-K filed with the SEC on June 8, 2010)
10.12		8% Promissory Note, dated August 6, 2010 (incorporated by reference to our quarterly report on Form 10-Q, filed with the SEC on November 9, 2010)
10.13		8% Promissory Note, dated September 13, 2010 (incorporated by reference to our quarterly report on Form 10-Q, filed with the SEC on November 9, 2010)
10.14		Form of  Securities Purchase Agreement (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
10.15		Form of Debenture (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
10.16		Form of Security Agreement (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
10.17		Form of Warrant (incorporated by reference to our current report on Form 8-K filed with the SEC on January 27, 2011)
10.18		Separation Agreement, dated as of January 25, 2011, between the Company and Jeffrey Chartier incorporated by reference to our current report on Form 8-K filed with the SEC on January 31, 2011)
10.19		Securities Purchase Agreement, dated February 14, 2011, between the Company, Magic Bright and the Sellers incorporated by reference to our current report on Form 8-K filed with the SEC on February 15, 2011)
10.20		Amendment No. 1 to Securities Purchase Agreement, between the Company, Magic Bright and the Sellers, dated March 16, 2011 (incorporated by reference to Form 8-K filed with the SEC on March 18, 2011)
10.21		Amendment No. 2 to Securities Purchase Agreement, between the Company, Magic Bright and the Sellers, dated March 25, 2011 (incorporated by reference to Form 8-K filed with the SEC on March  31, 2011)
10.22		Employment Agreement, dated as of March 30, 2011 between the Company and Wong Kwok Wing, Tony, dated  as of March 31, 2011 (incorporated by reference to Form 8-K filed with the SEC on April 1, 2011)
10.23		Letter Agreement, dated as of March 5, 2012, between the Company, Magic Bright, and the Sellers (incorporated by reference to Form 8-K filed with the SEC on March 9, 2012).
10.24		Letter Agreement, dated as of June 1, 2013, between the Company and Black Lion Oil Limited
16.1		Letter from KBL, LLP (incorporated by reference to 8-K filed with the SEC on May 22, 2012)
16.2		Letter from Michael F. Cronin, CPA (incorporated by reference to 8-K filed with the SEC on March 13, 2013)

-28-

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

 

 

 

-29-

SIGNATURES

 

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

 

	GREEN ENVIROTECH HOLDINGS, CORP.
Date: March 31, 2014	By:	/s/ Gary M. De Laurentiis
		Gary M. De Laurentiis Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature		Title		Date
/s/ Gary M. De Laurentiis		Chief Executive Officer and Chairman of the Board		March 31, 2014
Gary M. De Laurentiis		(Principal Executive, Financial and Accounting Officer)
/s/ Lou Perches
Lou Perches		Director		March 31, 2014

 

 

 

-30-

 

 

 

GREEN ENVIROTECH HOLDINGS CORP.

(FORMERLY WOLFE CREEK MINING, INC.)

 (A DEVELOPMENT STAGE COMPANY)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

F-1

GREEN ENVIROTECH HOLDINGS CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Green Envirotech Holdings Corp. (a development stage company)

Riverbank, California

 

We have audited the accompanying consolidated balance sheet of Green Envirotech Holdings Corp. and its subsidiary (a development stage company) (collectively, the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended and the period from October 6, 2008 (inception) through December 31, 2013. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the period from October 6, 2008 (inception) through December 31, 2011 were audited by other auditors whose report dated August 6, 2012 expressed an unqualified opinion, with an explanatory paragraph discussing the Company’s ability to continue as a going-concern. Our opinion on the consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit, and cash flows for the period from October 6, 2008 (inception) through December 31, 2013, insofar as it relates to amounts for prior periods through December 31, 2011, is solely based on the report of other auditors.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Green Envirotech Holdings Corp. and its subsidiary as of December 31, 2013 and 2012 and the results of their operations and their cash flows for the years then ended and the period from inception through December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has a working capital deficit as of December 31, 2013 and has suffered recurring losses from operations, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ MaloneBailey, LLP

www.malonebailey.com

Houston, Texas

 

March 31, 2014

F-2

 

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

 

 

 

F-3

 

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

 

 

F-4

 

 

 

 

GREEN ENVIROTECH HOLDINGS CORP.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012 AND

FOR THE PERIOD OCTOBER 6, 2008 (INCEPTION) THROUGH DECEMBER 31, 2013

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

 

 

F-5