B
GREEN INNOVATIONS, INC.
(Exact
name of the Registrant as specified in Charter)
New
Jersey
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20-1862731
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(State
of Incorporation)
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(I.R.S.
Employer ID Number)
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|
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750
Highway 34, Matawan, New Jersey
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07747
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(Address
of Principal Executive Offices)
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(Zip
Code)
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|
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Registrant’s
Telephone No. including Area Code:
732-441-7700
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Securities
registered under 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act: None
Indicate
by checkmark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No
☑
Indicate
by checkmark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the 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 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 ☐ No ☑
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 (§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 definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this 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 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 ☐
|
Accelerated
filer ☐
|
Non-accelerated
filer ☐
(Do
not check if a smaller reporting company)
|
Smaller
reporting company ☑
|
Indicate
by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Act). Yes ☐
No ☑
As
of March 30, 2014, the Registrant had 3,273,942,408 shares of Class A common stock outstanding and 46,014 shares of Class B common
stock outstanding.
The
aggregate market value of the voting Common Stock held by non-affiliates on June 30, 2013 (the last business day of our most recently
completed second fiscal quarter) was $585,989 using the closing price on June 28, 2013.
TABLE
OF CONTENTS
PART
I
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Item 1.
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Business
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3
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Item 2.
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Properties
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19
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Item 3.
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Legal Proceedings
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19
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PART II
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Item 5.
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Market for Registrant's Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities
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19
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Item 7.
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Management's Discussion and Analysis
of Financial Condition and Results of Operations
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25
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Item 8.
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Financial Statements and Supplementary
Data
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28
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Item 9.
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Controls & Procedures
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28
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Item 9B.
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Other
Information
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29
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PART III
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Item 10.
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Directors, Executive Officers and Corporate
Governance
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30
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Item 11.
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Executive Compensation
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32
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Item 12.
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Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters
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34
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Item 13.
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Certain Relationships and Related Transactions,
and Director Independence
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35
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PART IV
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Item 14.
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Principal Accountant Fees and Services
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36
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Item 15.
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Exhibits and Financial Statement Schedules
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37
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Signatures
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40
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PART
I
ITEM
1. BUSINESS
BACKGROUND
OVERVIEW
B
Green Innovations, Inc., a Matawan, New Jersey-based corporation, (OTC Markets: BGNN), formerly iVoice Technology, Inc., (“B
Green Innovations” or the “Company”) was incorporated under the laws of New Jersey on November 10, 2004 as a
wholly owned subsidiary of iVoice, Inc. (“iVoice”). The Company received by assignment all of the interests
in and rights and title to, and assumed all of the obligations of, all of the agreements, contracts, understandings and other
instruments of iVoice Technology, Inc., a Nevada corporation and affiliate of the Company. When we refer to or describe
any agreement, contract or other written instrument of the Company in these notes, we are referring to an agreement, contract
or other written instrument that had been entered into by iVoice Technology Nevada and assigned to the Company.
In
May 2008, the Company formed B Green Innovations, Inc. (“B Green”), a wholly owned subsidiary, and committed to invest
up to $500,000 in B Green, to commercialize its “green” technology platforms.
On
November 17, 2009, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), B Green Innovations, Inc.,
a wholly owned subsidiary of iVoice Technology, Inc. (the “Company”), merged into iVoice Technology, Inc.
On
July 28, 2009, the Board of Directors and shareholders through written consent representing a majority of the total voting Class
A and Class B Common stock voted to change the name of the Company to B Green Innovations, Inc. On November 20, 2009,
the Company filed an Amendment to the Certificate of Incorporation with the State of New Jersey to officially change the name
of the Company.
Our
principal office is located at 750 Highway 34, Matawan, New Jersey 07747. Our telephone number is (732) 696-9333. Our company
website is located at www.bgreeninnovations.com.
OUR
BUSINESS
B
Green Innovations, Inc. is dedicated to becoming a “green” technology company, focused on acquiring and identifying
promising technologies that address environmental issues.
The
Company’s “Go Green” mission from its inception is to create a “Green” company for the development
of solutions to eliminate waste from the world’s environment. B Green offers consumers a realistic and necessary
solution to the problem of waste around the world. We believe that to truly have an impact on the planet, one must be committed
to the environment and seek out environmentally friendly products.
The
first technology was to create new products from recycled tire rubber. EcoPod® and VibeAway® address important environmental
concerns and problems facing the planet today. EcoPod® and VibeAway® are 100% recycled rubber-based products that can
be utilized as support pads under any units that vibrate and make noise, including washing machines, dryers, compressors, commercial
condensers, and many other units that advantageously benefit from sound and vibration control. In addition, we announced that
we had filed a new patent application for a process described as “Recycled Tire Pod with Appliance Recess Guide.”
Recently,
the Company released its new 100% degradable/biodegradable compactor bags. These bags include oxo-biodegradable additive using
the latest technology that supports the 3 R’s of Packaging: “Reduce”, “Reuse”, “Recycle”
and provides a fourth R, “Remove”. Independent Scientific Testing show that plastics incorporated with an additive
called Renatura™ will degrade and then fully biodegrade, without leaving behind harmful residues in the soil.
These
oxo-biodegradable plastic products are scientifically proven to be non-toxic and are FDA compliant, meaning they are safe for
food packaging applications and have been awarded approved food film contact ‘no migration’ status. Regular plastic
bags can take up to 100 years to break down causing plastic pollution and harm to both domestic and wild life. Standard plastics
are filling our landfills and greatly impacting our planet. Plastics incorporating this additive in the presence of oxygen disappear
when exposed to UV light or thermal heat. Our product is designed to allow plastics to degrade like a leaf, slowly yielding CO2
(which through photosynthesis becomes oxygen), water, bio-waste, and mineral salts that condition the soil in the process.
The
Company continues to evaluate additional green products to its product line as well as expanding its distribution channels.
The
Company will also continue to support the Interactive Voice Response ("IVR"), software that was developed by iVoice.
The Company's Interactive Voice Response line was designed to read information from and write information to, databases, as well
as to query databases and return information. We currently have no plans to engage in future research and development, to launch
any additional versions of the IVR software or other products, or to continue to market this product.
IVR
is an application generator that allows full connectivity to many databases, including Microsoft Access, Microsoft Excel, Microsoft
Fox Pro, and Paradox, or to standard text files. The IVR software is sold as an application generator that gives the end user
the ability to develop its own customized IVR applications or as a customized turnkey system. IVR performs over 40 different customizable
commands. Examples of IVR range from simply selecting announcements from a list of options stored in the computer (also known
as audio text) to more complex interactive exchanges such as querying a database for information.
The
Company has received a going concern opinion from its auditors. Its continuation as a going concern is dependent upon
obtaining the financing necessary to operate its business. If the Company cannot find sources of additional financing
to fund its working capital needs, the Company will be unable to obtain sufficient capital resources to operate our business. We
cannot assure you that we will be able to access any financing in sufficient amounts or at all when needed. Our inability
to obtain sufficient working capital funding will have an immediate material adverse effect upon our financial condition and our
business.
Management
plans to increase the development, manufacture, and distribution of “green” products to generate a positive cash flow.
However, these plans are dependent upon obtaining additional capital. There can be no assurance that the Company will be able
to obtain the necessary capital, and achieve its growth objectives. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
The
business of the Company is not seasonal. The Company maintains no special arrangements relating to working capital items, and
as far as it is aware this is standard in the industry. None of the Company’s present business is subject to renegotiation
of profits or termination of contracts or subcontracts at the election of the government.
PRODUCTS
AND SERVICES
In
2006, the Environmental Protection Agency (“EPA”) became involved, publishing a guidebook called “Scrap Tire
Cleanup” in which it noted that large scrap tire stockpiles present a risk to human health and the environment for several
reasons. It noted that, “They provide an ideal breeding ground for mosquitoes, which carry and transmit life-threatening
diseases, such as encephalitis, West Nile and Eastern equine virus, and dengue fever in some regions. Stockpiles can also catch
on fire as a result of lightning strikes, equipment malfunctions or arson. The longer the stockpile continues unabated, the more
likely it is to catch fire, some experts no longer consider it a question of if a stockpile will catch fire, but when it will
burn.”
According
to this report, “State, federal and local agencies have spent tens of millions of dollars over the past several decades
in responding to tire fires and, as a general rule, it is five to ten times more expensive to remediate a fire site than it is
to remove tires before they catch fire.” This is where B Green comes in. The Company recently completed its review and analysis
relating to the manufacture of products from recycled tires and will be filing for several patents to address this problem. The
Company’s products include its VibeAway® Pads and EcoPod® (see below).
The
Company released its new 100% degradable/biodegradable compactor bags. These bags include oxo-biodegradable additive using the
latest technology that supports the 3 R’s of Packaging: “Reduce”, “Reuse”, “Recycle”
and provides a fourth R, “Remove”. Independent Scientific Testing show that plastics incorporated with an additive
called Renatura™ will degrade and then fully biodegrade, without leaving behind harmful residues in the soil.
These
oxo-biodegradable plastic products are scientifically proven to be non-toxic and are FDA compliant, meaning they are safe for
food packaging applications and have been awarded approved food film contact ‘no migration’ status. Regular plastic
bags can take up to 100 years to break down causing plastic pollution and harm to both domestic and wild life. Standard plastics
are filling our landfills and greatly impacting our planet. Plastics incorporating this additive in the presence of oxygen disappear
when exposed to UV light or thermal heat. Our product is designed to allow plastics to degrade like a leaf, slowly yielding CO2
(which through photosynthesis becomes oxygen), water, bio-waste, and mineral salts that condition the soil in the process.
In
today's times, balancing and maintaining a business to meet customer demand can be difficult. The public demands unique, cost
effective and planet friendly products prompting business owners to creatively meet these requests. In the recent months, more
retailers are switching to biodegradable plastic bags in their stores, and many manufacturers are packaging their products using
degradable / biodegradable plastics. B Green is also responding to the demands of consumers by providing planet friendly alternatives
to regular plastics by providing our customers with fully certified degradable / biodegradable options.
B
Green products offer an oxo-biodegradable additive using the latest technology that supports the 3 R's of Packaging: “Reduce”,
“Reuse”, “Recycle” and provides a fourth R, “Remove”. Independent Scientific Testing show
that plastics incorporated with an additive called Renatura™ will degrade and then fully biodegrade, without leaving behind
harmful residues in the soil. These oxo-biodegradable plastic products are scientifically proven to be non toxic and are FDA compliant,
meaning they are safe for food packaging applications and have been awarded approved food film contact 'no migration' status.
The additive meets ASTM D 6954 Standard Guide for Exposing and Testing Plastics that Degrade in the Environment by a Combination
of Oxidation and Biodegradation, as well as D5338 Standard Test Method for Determining Aerobic Biodegradation of Plastic Materials
under Controlled Composting Conditions.
Regular
plastic bags can take up to 100 years to break down causing plastic pollution and harm to both domestic and wild life. Standard
plastics are filling our landfills and greatly impacting our planet. Plastics incorporating this additive in the presence of oxygen
disappear when exposed to UV light or thermal heat. The product is designed to allow plastics to degrade like a leaf, slowly yielding
CO2 (which through photosynthesis becomes oxygen), water, bio-waste, and mineral salts that condition the soil in the process.
The
cost of changing from regular plastic bags to B Green oxo-biodegradable plastic bags is negligible, and depending on the type
of packaging application, can cost considerably less than non-degradable / biodegradable plastics. Many large companies are incorporating
degradable plastic packaging including the Body Shop, Coca-Cola, Quantis and Butchart Gardens. B Green is committed to meeting
environmental needs by providing customers with environmentally safe, practical solutions for their businesses.
SEGMENT
DATA
The
Company has determined it has two reportable segments – “green” technology products, and support of Interactive
Voice Response (“IVR”) software. There are no inter-segment revenues. Please see Note 13 to the Financial
Statements filed herein.
STRATEGIC
ALLIANCES
Strategic
alliances are an important part of our product development and distribution strategies. We rely on strategic alliances to provide
technology, complementary product offerings and increased and quicker access to markets. We seek to form relationships with those
entities that can provide technology or complementary market advantages for establishing the company in new market segments
MARKETING AND
DISTRIBUTION
The
Company plans to market and sell its products through a distribution network and also through the use of telemarketing. B Green
Innovations has distribution agreements with reputable distributors that have proven themselves within their territories and industry
segments. The four main sales areas we will concentrate on will be direct selling to the appliance manufactures, large retail
chains, regional distributors of appliances (suppliers) and the strong internet marketing presence. Distributors receive discounts
for stocking and selling, and such discounts are determined by industry standards. The loss of any of one these distributors
would not have a material adverse effect on the Company or its operations. One distributor represented 16% of sales and another
represented 14% of sales.
PRODUCTS
The
following are our product offerings:
EcoPod®
- The EcoPod® is made from recycled tire rubber. It is a shock absorption pad that is used to reduce sound, vibrations, and
pulsating of heavy equipment. EcoPod® is a compact, solid crumb rubber isolation blocks engineered to reduce structure noise
transmission. When installed between the noise source and a secondary surface, EcoPod® will minimize sound radiation through
floors, walls, ceilings and other surfaces such as sheet metal, fiberglass, glass and plastic.
Applications:
EcoPod®
is designed to separate noise-generating sources such as heating and air conditioning (HVAC) units, appliances, pumps, motors,
and generators.
Typical
applications include:
•
Appliances:
Can be mounted on the bottom of washing machines, dryers, dishwashers and refrigerators to reduce vibration and noise transmission
•
HVAC:
Mount under feet of slab or rooftop mounted air conditioners, heat pumps and other refrigeration equipment to reduce structure
borne vibration noise
•
Equipment:
Used to isolate vibration from pool pumps, generators and other vibration generating equipment. Excellent for use in isolating
sheet metal enclosures
VibeAway®
- VibeAway® pads are specially designed washing machine anti-vibration pads for washing machines and dryers. The 100% crumb
rubber pad, made from recycled tires, is designed to reduce the transfer of vibration that occurs in most typical washing and
drying cycles. It is a shock absorption pad that is used to reduce sound, vibrations, and pulsating of washing machines, dryers,
table saws, freezers and other large appliances. Our VibeAway® pads prevent washing machines from "walking," and
help prolong the life of your washing machine, dryer or other appliance. They also reduce the need to reinforce upper level floors
to reduce vibration and noise. The pads have a full refund guarantee and have the following advantages:
•
Reduces
the transfer of vibration
•
Prevents
washing machines from "walking"
•
Protect
floors
•
Made
from 100% recycled tire rubber, address important environmental concerns
•
Recessed
for easy guidance for foot of washing machine/dryer
•
Full
refund guarantee
Degradable/biodegradable
plastic bags include an oxo-biodegradable additive using the latest technology that supports the 3 R’s of Packaging: “Reduce”,
“Reuse”, “Recycle” and provides a fourth R, “Remove”. Independent Scientific Testing show
that plastics incorporated with an additive called Renatura™ will degrade and then fully biodegrade, without leaving behind
harmful residues in the soil. These oxo-biodegradable plastic products are scientifically proven to be non toxic and are FDA compliant,
meaning they are safe for food packaging applications and have been awarded approved food film contact ‘no migration’
status. The additive meets ASTM D 6954 Standard Guide for Exposing and Testing Plastics that Degrade in the Environment by a Combination
of Oxidation and Biodegradation, as well as D5338 Standard Test Method for Determining Aerobic Biodegradation of Plastic Materials
under Controlled Composting Conditions. These bags are available in two sizes:
Biodegradable
compactor bag- 15.75 x 10.75 x 32.5 2.5 Mil. thick
Biodegradable
trash tall kitchen bag- 13 Gallon-1.0 Mil. thick
Biodegradable tall
kitchen bag- 30 Gallon-.9 Mil. Thick
Biodegradable
drawstring trash tall kitchen bag- 13 Gallon-1.0 Mil. thick
Biodegradable
drawstring tall kitchen bag- 30 Gallon-.9 Mil. thick
CUSTOMERS
Our
end user customers are consumers that want products that are help provide a solution to minimize waste around the world. For our
EcoPod® and VibeAway® products, we primarily sell to wholesale distributors that are recognized in the HVAC, appliance,
motors, plumbing, maintenance, electrical, tools and refrigeration industries. For our biodegradable plastic bags, we sell to
wholesale distributors, supermarket chain, and other retail sales outlets.
We
do not rely on any one specific customer for any significant portion of our revenue base.
COMPETITION
The
Company competes with a number of small and large companies. We may not be able to compete effectively against current
and potential competitors, especially those with significantly greater resources and market leverage. As a result, these competitors
may respond more quickly than we do to new or emerging technologies or changes in customer requirements. In addition, some of
our larger competitors may be able to provide greater incentives to customers through rebates and marketing development funds
and similar programs. Furthermore, some of our competitors with multiple product lines may integrate other products that we do
not sell or bundle their products to offer a broader product portfolio, which may make it difficult for us to gain or maintain
market share.
No
assurance can be given that our competitors will not develop new technologies or enhancements to their existing products or introduce
new products that will offer superior price or performance features. We expect our competitors to offer new and existing products
at prices necessary to gain or retain market share. Certain of our competitors have substantial financial resources, which may
enable them to withstand sustained price competition or a market downturn better than us. There can be no assurance that we will
be able to compete successfully in the pricing of our products, or otherwise, in the future.
MANUFACTURING
AND SUPPLIERS
The
Company does not have the internal capability to manufacture products. We use third party contract manufacturing companies to
produce the products. Our inability to coordinate the efforts of our third party contract-manufacturing partners, or
the lack of capacity available at our third party contract-manufacturing partners, could impair our ability to supply product
to our customers. Such an interruption could cause us to incur substantial costs and our ability to generate revenue may be adversely
affected. We may not be able to enter into alternative supply arrangements at commercially acceptable rates, if at all. Moreover,
while we may choose to manufacture products in the future, we have no experience in the manufacture of these products.
PATENTS
AND TECHNOLOGY DEVELOPMENT
The
Company will continue its research and development to generate new and improved product offerings while strengthening its intellectual
property portfolio. The patents listed below have been filed and certain have been issued, but there can be no assurance that
the remaining patents will be approved. The Company expects to make additional filings in the future.
•
New
interlocking paver and patio locks – Patent issued
•
Recycled
tire trash cans
•
Vehicle
mud flaps made of recycled tires
•
Recycled
tire pod with appliance recess guide – Patent issued
•
Pad
with appliance pod
•
Method
of plastic sheet container – Patent issued
•
Embedded
container plastic sheet – Patent issued
•
Embedded
recycled container sheet binder – Patent issued
There
can be no assurance that we will not become the subject of claims of infringement with respect to intellectual property rights
associated with our products. In addition, we may initiate claims or litigation against third parties for infringement
of our proprietary rights or to establish the validity of our proprietary rights. Any such claims could be time consuming
and could result in costly litigation or lead us to enter into royalty or licensing agreements rather than disputing the merits
of such claims.
GOVERNMENT
REGULATION
We
are subject to licensing and regulation by a number of authorities in their respective state or municipality. These may include
health, safety, and fire regulations. Our operations are also subject to federal and state minimum wage laws governing such matters
as working conditions and overtime.
We
are not subject to any necessary government approval or license requirement in order to market, distribute or sell our principal
or related products other than ordinary federal, state, and local laws, which governs the conduct of business in general. We are
unaware of any pending or probable government regulations that would have any material impact on the conduct of business.
RESEARCH
AND DEVELOPMENT
We
currently have no plans to engage in future research and development or to launch any additional versions of the IVR software
or other products. The Company has not incurred any research and development expenses related to its “green” products
activities.
For
the years ended December 31, 2012 and 2011, the Company has not incurred any research and development expenditures.
EMPLOYEES
At
December 31, 2012, we had 3 full-time employees and 1 part-time employee as well as 1 part-time consultant. Our employees are
not covered by labor union contracts or collective bargaining agreements. From time to time, the Company also employs independent
contractors to support its operations.
We
have entered into an employment agreement with our President, Chief Executive Officer and Secretary (Jerome Mahoney). Mr.
Mahoney will not provide services to the Company on a full-time basis. The Company is evaluating its need to hire additional personnel,
and such plans will be based upon available financial resources. Currently, we expect our current employees to continue to fulfill
orders received by telephone. Within the industry, competition for key technical and management personnel is intense, and there
can be no assurance that we can retain our future key technical and managerial employees or that, should we seek to add or replace
key personnel, we can assimilate or retain other highly qualified technical and managerial personnel in the future.
In
addition to other information in this Annual Report on Form 10-K, the following important factors should be carefully considered
in evaluating the Company and its business because such factors currently have a significant impact on the Company's business,
prospects, financial condition and results of operations
FORWARD
LOOKING STATEMENTS - CAUTIONARY FACTORS
Certain
statements in this report on Form 10-K contain "forward-looking statements" within the meaning of the Private Securities
Litigation Act of 1995. These statements are typically identified by their inclusion of phrases such as "the Company anticipates",
or "the Company believes", or other phrases of similar meaning. These forward-looking statements involve risks and uncertainties
and other factors that may cause the actual results, performance or achievements to differ from any future results, performance
or achievements expressed or implied by such forward-looking statements. Except for the historical information and statements
contained in this Report, the matters and items set forth in this Report are forward looking statements that involve uncertainties
and risks some of which are discussed at appropriate points in the Report and are also summarized as follows:
Additional
risks and uncertainties not currently known or deemed to be immaterial also may materially adversely affect the business, financial
condition and/or operating results.
WE
HAVE A LIMITED OPERATING HISTORY WITH OUR CURRENT “GREEN PRODUCTS” AND WILL FACE MANY OF THE DIFFICULTIES THAT COMPANIES
IN THE EARLY STAGE MAY FACE.
As
a result of the Company’s limited operating history with “green” products, the current difficult economic conditions
of the marketplace and the competition in the industry, it may be difficult for you to assess our growth and earnings potential.
Therefore, we have faced many of the difficulties that companies in the early stages of their development in new and evolving
markets often face, as they are described herein. We may continue to face these difficulties in the future, some of
which may be beyond our control. If we are unable to successfully address these problems, our future growth and
earnings will be negatively affected.
WE
HAVE A LIMITED OPERATING HISTORY AS AN INDEPENDENT PUBLIC COMPANY AND MAY BE UNABLE TO OPERATE PROFITABLY AS A STAND-ALONE COMPANY.
The
Company only has limited operating history as an independent public company. The business has operated at a loss for
the last few years, and such losses may continue or increase. We may not be able to successfully put in place the financial, administrative
and managerial structure necessary to operate as an independent public company, and the development of such structure will require
a significant amount of management’s time and other resources.
WE
HAVE A HISTORY OF LOSSES AND CASH FLOW SHORTFALLS
The
Company has incurred recurring operating losses while cash continues to decrease. The Company had losses from operations
of approximately $372,649 and $472,708 for the years ended December 31, 2012 and 2011, respectively. The Company has been and
may, in the future, be dependent upon outside and related party financing to develop and market their products, perform their
business development activities, and provide for ongoing working capital requirements. Our inability to obtain sufficient financing
would have an immediate material adverse effect on our financial condition, our business, and us.
WE
HAVE RECEIVED A REPORT FROM OUR INDEPENDENT AUDITORS THAT DESCRIBES THE UNCERTAINITY REGARDING OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
The
Company had received a report from its independent auditors for the fiscal year ended December 31, 2011 containing an explanatory
paragraph describing the issues leading to substantial doubt about the uncertainty regarding the Company’s ability to continue
as a going concern due to its historical negative cash flow and because, as of the date of the auditors’ opinion, the Company
did not have access to sufficient committed capital to meet its projected operating needs for at least the next 12 months.
Our
financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. We have not made any adjustments to our financial statements
as a result of the going concern modification to the report of our independent registered public accounting firm. If
we become unable to continue as a going concern, we could have to liquidate our assets, which means that we are likely to receive
significantly less for those assets than the values at which such assets are carried on our financial statements Any shortfall
in the proceeds from the liquidation of our assets would directly reduce the amounts, if any, that holders of our common stock
could receive in liquidation.
There
can be no assurance that management’s plans will be successful, and other unforeseeable actions may become necessary. Any
inability to raise capital may require us to reduce the level of our operations. Such actions would have a material adverse effect
on business, our operations, and us and result in charges that would be material to our business and results of operations.
WE
CANNOT ACCURATELY FORECAST OUR FUTURE REVENUES AND OPERATING RESULTS, WHICH MAY FLUCTUATE.
Our
short operating history and the rapidly changing nature of the markets in which we compete make it difficult to accurately forecast
our revenues and operating results. Our operating results are unpredictable, and we expect them to fluctuate in the future due
to a number of factors, including the following:
•
the
timing of sales of our products and services, particularly in light of our minimal sales history;
•
the
introduction of competitive products by existing or new competitors;
•
reduced
demand for any given product;
•
difficulty
in obtaining a supply for its products;
•
difficulty
in keeping current with changing technologies;
•
unexpected
delays in introducing new products, new features and services;
•
the
timing of product implementation, particularly large design projects;
•
increased
or uneven expenses, whether related to sales and marketing, product development, or administration;
•
deferral
of recognition of our revenue in accordance with applicable accounting principles, due to the time required to complete projects;
•
seasonality
in the end-of-period buying patterns of foreign and domestic markets;
•
the
mix of product license and services revenue; and
•
costs
related to possible acquisitions of technology or businesses.
Due
to these factors, forecasts may not be achieved, either because expected revenues do not occur or because they occur at lower
prices or on terms that are less favorable to us. In addition, these factors increase the chances that our results could diverge
from the expectations of investors and analysts. If this is the case, the market price of our stock would likely decline.
WE
DEPEND ON THIRD PARTIES TO MANUFACTURE AND DISTRIBUTE OUR PRODUCTS FOR B GREEN INNOVATIONS, INC.
We
do not have the internal capability to manufacture products. We use third party contract manufacturing companies to
produce the products. Our inability to coordinate the efforts of our third party contract-manufacturing partners, or
the lack of capacity available at our third party contract-manufacturing partners, could impair our ability to supply product
to our customers. Such an interruption could cause us to incur substantial costs and our ability to generate revenue may be adversely
affected. We may not be able to enter into alternative supply arrangements at commercially acceptable rates, if at all. Moreover,
while we may choose to manufacture products in the future, we have no experience in the manufacture of these products.
WE
HAVE IN THE PAST AND MAY IN THE FUTURE SELL ADDITIONAL UNREGISTERED CONVERTIBLE SECURITIES, POSSIBLY WITHOUT LIMITATIONS ON THE
NUMBER OF SHARES OF COMMON STOCK THE SECURITIES ARE CONVERTIBLE INTO, WHICH COULD DILUTE THE VALUE OF THE HOLDINGS OF CURRENT
STOCKHOLDERS AND HAVE OTHER DETRIMENTAL EFFECTS ON YOUR HOLDINGS.
We
have relied on the private placement of equity securities, convertible debentures and promissory notes to obtain working capital
and may continue to do so in the future. As of December 31, 2012, we have outstanding convertible obligations. The
deferred compensation of $639,188 (plus accrued interest of $159,614) owing to Mr. Mahoney provides that, at Mr. Mahoney’s
option, principal and interest due on the note can be converted into shares of the Company’s Class B Common Stock, which
is convertible into the number of shares of Class A Common Stock determined by dividing the number of shares of Class B Common
Stock being converted by a 20% discount of the lowest price of at which the Company had ever issued its Class A Common Stock.
However, the Board of Directors of the Company maintains control over the issuance of shares and may decline the request for conversion
of the repayment into shares of the Company. There is no limit upon the number of shares that we may be required to
issue upon conversion of any of these obligations.
In
order to obtain working capital in the future, we intend to issue additional equity securities and convertible obligations.
In
the event that the price of our Class A Common Stock decreases, and our convertible obligations (or any other convertible obligations
we may issue) are converted into shares of our Class A Common Stock:
•
the
percentage of shares outstanding that will be held by these holders upon conversion will increase accordingly,
•
increased
share issuance, in addition to a stock overhang of an indeterminable amount, may depress the price of our Class A Common Stock,
•
the
sale of a substantial amount of convertible debentures to relatively few holders could effectuate a possible change in control
of the Company, and
•
in
the event of our voluntary or involuntary liquidation while the secured convertible debentures are outstanding, the holders of
those securities will be entitled to a preference in distribution of our property.
In
addition, if the market price declines significantly, we could be required to issue a number of shares of Class A Common Stock
sufficient to result in our current stockholders not having an effective vote in the election of directors and other corporate
matters. In the event of a change in control of the Company, it is possible that the new majority stockholders may
take actions that may not be consistent with the objectives or desires of our current stockholders.
LOSS
OF THE SERVICES OF KEY PERSONNEL, INCLUDING OUR CHIEF EXECUTIVE OFFICE OR OUR DIRECTORS COULD MATERIALLY HARM OUR BUSINESS.
We
are dependent on our key officers and directors, including Jerome R. Mahoney, our President, Chief Executive Officer, Chief Financial
Officer and Secretary. The loss of any of our key personnel could materially harm our business because of the cost
and time necessary to retain and train a replacement. Such a loss would also divert management attention away from
operational issues. To minimize the effects of such loss, the Company has entered into an employment contract with
Jerome Mahoney.
OUR
FUTURE BUSINESS ACQUISITIONS MAY BE UNPREDICTABLE AND MAY CAUSE OUR BUSINESS TO SUFFER.
The
Company may seek to expand its operations through the acquisition of additional businesses. These potential acquired additional
businesses may be outside the current field of operations of the Company. The Company may not be able to identify,
successfully integrate or profitably manage any such businesses or operations. The proposed expansion may involve a number of
special risks, including possible adverse effects on the Company’s operating results, diversion of management attention,
inability to retain key personnel, risks associated with unanticipated events and the financial statement effect of potential
impairment of acquired intangible assets, any of which could have a materially adverse effect on the Company’s business,
financial condition and results of operations. In addition, if competition for acquisition candidates or assumed operations were
to increase, the cost of acquiring businesses or assuming customers’ operations could increase materially. The inability
of the Company to implement and manage its expansion strategy successfully may have a material adverse effect on the business
and future prospects of the Company. Furthermore, through the acquisition of additional businesses, the Company may effect a business
acquisition with a target business, which may be financially unstable, under-managed, or in its early stages of development or
growth. While the Company may, under certain circumstances, seek to effect business acquisitions with more than one target business,
as a result of its limited resources, the Company, in all likelihood, will have the ability to effect only a single business acquisition
at one time. Currently, the Company has no plans, proposals or arrangements, either orally or in writing, regarding
any proposed acquisitions and is not considering any potential acquisitions.
THE
INDUSTRIES IN WHICH WE COMPETE ARE CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND FAILURE TO ADAPT OUR PRODUCT DEVELOPMENT TO
THESE CHANGES MAY CAUSE OUR PRODUCTS TO BECOME OBSOLETE.
We
participate in a highly dynamic industries characterized by rapid change and uncertainty relating to new and emerging technologies
and markets. Future technology or market changes may cause some of our products to become obsolete more quickly than expected.
OUR
SHAREHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION IF FUTURE EQUITY OFFERINGS ARE USED TO FUND OPERATIONS OR ACQUIRE BUSINESSES.
If
working capital or future acquisitions are financed through the issuance of equity securities, B Green Innovations stockholders
would experience significant dilution. In addition, the conversion of outstanding debt obligations into equity securities
would have a dilutive effect on the Company’s shareholders. Further, securities issued in connection with future
financing activities or potential acquisitions may have rights and preferences senior to the rights and preferences of the B Green
Innovations Class A Common Stock.
If
B Green Innovations is unable to obtain funds from the equity financing, management believes that the Company can limit its operations,
defer payments to management and maintain its business at nominal levels until it can identify alternative sources of capital.
However, there is no assurance that management will be able to obtain additional funding.
WE
FACE INTENSE PRICE-BASED COMPETITION FOR OUR “GREEN” PRODUCTS, WHICH COULD REDUCE PROFIT MARGINS.
Price
competition is often intense in this market. Many of our competitors have significantly reduced the price of their products. Price
competition may continue to increase and become even more significant in the future, resulting in reduced profit margins.
WE
MAY DEPEND ON DISTRIBUTION BY RESELLERS AND DISTRIBUTORS FOR A SIGNIFICANT PORTION OF REVENUES.
We
may distribute some of our products through resellers and distributors. To effectively do so, we must establish and
maintain good working relationships with these resellers and distributors. If we are unsuccessful in establishing and maintaining
relationships with resellers and distributors or with new resellers and distributors, or if these resellers and distributors are
unsuccessful in reselling our products, our future net revenues and operating results may be adversely affected. The
Company does not have any material relationship with any single distributor or reseller.
THE
LIMITED SCOPE OF RESULTS OF OUR RESEARCH AND DEVELOPMENT MAY LIMIT OUR ABILITY TO EXPAND OR MAINTAIN ITS SALES AND PRODUCTS IN
A COMPETITIVE MARKETPLACE.
The
Company currently has no plans to engage in research and development of new products or improvements on existing technologies. Failure
to engage in such research and to develop new technologies or products or upgrades, enhancements, applications or uses for existing
technologies may place the Company at a competitive disadvantage in the marketplace for its products. As no current
research and development program currently exists within the Company, any future research and development programs could cause
us to incur substantial fixed costs, which may result in such programs being prohibitively expensive to initiate without substantial
additional financing being obtained on favorable terms. In addition, the lack of any current research and development
program may result in an extended launch period for a research and development program at a point in our business when time is
of the essence. These delays could have a material adverse effect on the amount and timing of future revenues.
Such
limited research and development may also adversely affect the ability of B Green Innovations to test any new technologies, which
may be established in the future in order to determine if they are successful. If they are not technologically successful,
our resulting products may not achieve market acceptance and our products may not compete effectively with products of our competitors
currently in the market or introduced in the future.
IF
WE MUST RESTRUCTURE OUR OPERATIONS, VALUABLE RESOURCES WILL BE DIVERTED FROM OTHER BUSINESS OBJECTIVES.
We
intend to continually evaluate our product and corporate strategy. We have in the past undertaken, and will in the future undertake,
organizational changes and/or product and marketing strategy modifications. These organizational changes increase the risk that
objectives will not be met due to the allocation of valuable limited resources to implement changes. Further, due to the uncertain
nature of any of these undertakings, these efforts may not be successful and we may not realize any benefit from these efforts.
WE
FACE AGGRESSIVE COMPETITION IN MANY AREAS OF THE BUSINESS, AND THE BUSINESS WILL BE HARMED IF WE FAIL TO COMPETE EFFECTIVELY.
We
encounter aggressive competition from numerous competitors in many areas of our business. Many of our current and potential competitors
have longer operating histories, greater name recognition and substantially greater financial, technical and marketing resources
than we have. We may not be able to compete effectively with these competitors. Our competition may engage in research and development
to develop new products and periodically enhance existing products in a timely manner, while we have no established plan or intention
to engage in any manner of research or development. We anticipate that we may have to adjust the prices of many of our products
to stay competitive. In addition, new competitors may emerge, and entire product lines may be threatened by new technologies or
market trends that reduce the value of these product lines.
WE
MAY NOT BE ABLE TO ACCESS SUFFICIENT FUNDS WHEN NEEDED.
We
are dependent on external financing to fund our operations. Our inability to obtain sufficient financing would have an immediate
material adverse effect on our financial condition, our business and us.
JEROME
MAHONEY THE PRESIDENT AND CEO OF B GREEN INNOVATIONS MAY HAVE CONTROL OVER OUR MANAGEMENT AND DIRECTION.
Mr.
Mahoney owns 762 shares of the Company’s 3% Preferred Stock, 46,014 shares of the Company’s Class B common stock and
will have the right to convert $639,188 of deferred compensation, together with accrued but unpaid interest of $159,614, into
798,802 shares of B Green Innovations Class B Common Stock, which Class B Common Stock is convertible into the number of shares
of Class A Common Stock determined by dividing the number of shares of Class B Common Stock being converted by a 20% discount
of the lowest price at which the Company had ever issued its Class A Common Stock. Interest accrues on the outstanding
principal balance of the note at prime plus 2% per annum. There is no limitation on the number of shares of Class A
Common Stock we may be required to issue to Mr. Mahoney upon the conversion of this indebtedness. If Mr. Mahoney converts
his indebtedness into 798,802 shares of Class B Common Stock, he will have aggregate voting rights equal to 10,324,474,982 shares
of Class A Common Stock and will have control over the management and direction of B Green Innovations, including the election
of directors, appointment of management and approval of actions requiring the approval of stockholders.
WE
RELY ON INTELLECTUAL AND PROPRIETARY RIGHTS WHICH MAY NOT REMAIN UNIQUE TO US.
We
regard our underlying technology as proprietary. We seek to protect our proprietary rights through a combination of
confidentiality agreements and copyright, patent, trademark and trade secret laws.
We
do not have any patents or statutory copyrights on any of our proprietary technology that we believe to be material to our future
success. Our future patents, if any, may be successfully challenged and may not provide us with any competitive advantages. We
may not develop proprietary products or technologies that are patentable and other parties may have prior claims.
Patent,
trademark and trade secret protection is important to us because developing and marketing new technologies and products is time-consuming
and expensive. We do not own any U.S. or foreign patents or registered intellectual property. We may not obtain issued patents
or other protection from any future patent applications owned by or licensed to us.
Our
competitive position is also dependent upon unpatented trade secrets. Trade secrets are difficult to protect. Our competitors
may independently develop proprietary information and techniques that are substantially equivalent to ours or otherwise gain access
to our trade secrets, such as through unauthorized or inadvertent disclosure of our trade secrets.
There
can be no assurance that our means of protecting our proprietary rights will be adequate or that our competitors will not independently
develop similar technology substantially equivalent or superseding proprietary technology. Furthermore, there can be no assurance
that any confidentiality agreements between us and our employees will provide meaningful protection of our proprietary information,
in the event of any unauthorized use or disclosure thereof. As a consequence, any legal action that we may bring to protect proprietary
information could be expensive and may distract management from day-to-day operations.
WE
MAY BECOME INVOLVED IN FUTURE LITIGATION, WHICH MAY RESULT IN SUBSTANTIAL EXPENSE AND MAY DIVERT OUR ATTENTION FROM THE IMPLEMENTATION
OF OUR BUSINESS STRATEGY.
We
believe that the success of our business depends, in part, on obtaining intellectual property protection for our products, defending
our intellectual property once obtained and preserving our trade secrets. Litigation may be necessary to enforce our
intellectual property rights, to protect our trade secrets and to determine the validity and scope of our proprietary rights. Any
litigation could result in substantial expense and diversion of our attention from our business, and may not adequately protect
our intellectual property rights.
In
addition, third parties who claim that our products infringe the intellectual property rights of others may sue us. This
risk is exacerbated by the fact that the validity and breadth of claims covered in technology patents involve complex legal and
factual questions for which important legal principles are unresolved. Any litigation or claims against us, whether
valid or not, could result in substantial costs, place a significant strain on our financial resources, divert management resources
and harm our reputation. Such claims could result in awards of substantial damages, which could have a material adverse impact
on our results of operations. In addition, intellectual property litigation or claims could force us to:
•
cease
licensing, incorporating or using any of our products that incorporate the challenged intellectual property, which would adversely
affect our revenue;
•
obtain
a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms,
if at all; and
•
redesign
our products, which would be costly and time-consuming.
IF
OUR TECHNOLOGIES AND PRODUCTS CONTAIN DEFECTS OR OTHERWISE DO NOT WORK AS EXPECTED, WE MAY INCUR SIGNIFICANT EXPENSES IN ATTEMPTING
TO CORRECT THESE DEFECTS OR IN DEFENDING LAWSUITS OVER ANY SUCH DEFECTS.
Voice-recognition
products are not currently accurate in every instance, and may never be. Furthermore, we could inadvertently have sold products
and technologies that contain defects. In addition, third-party technology that we include in our products could contain defects.
We may incur significant expenses to correct such defects. Clients who are not satisfied with our products or services could bring
claims against us for substantial damages. Such claims could cause us to incur significant legal expenses and, if successful,
could result in the plaintiffs being awarded significant damages. Our payment of any such expenses or damages could prevent us
from becoming profitable.
PROTECTING
OUR INTELLECTUAL PROPERTY IN OUR TECHNOLOGY THROUGH PATENTS MAY BE COSTLY AND INEFFECTIVE AND IF WE ARE NOT ABLE TO PROTECT OUR
INTELLECTUAL PROPERTY, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AND WE MAY NOT BE PROFITABLE.
Our
future success depends in part on our ability to protect the intellectual property for our technology by obtaining patents. We
will only be able to protect our products and methods from unauthorized use by third parties to the extent that our products and
methods are covered by valid and enforceable patents or are effectively maintained as trade secrets.
The
protection provided by our patents, and patent applications if issued, may not be broad enough to prevent competitors from introducing
similar products into the market. The courts of any jurisdiction, if challenged or if we attempt to enforce them, may not uphold
our patents. Numerous publications may have been disclosed by, and numerous patents may have been issued to, our competitors and
others relating to methods, which we are not aware and additional patents relating to methods that may be issued to our competitors
and others in the future. If any of those publications or patents conflict with our patent rights, or cover our products, then
any or all of our patent applications could be rejected and any or all of our granted patents could be invalidated, either of
which could materially adversely affect our competitive position.
Litigation
and other proceedings relating to patent matters, whether initiated by us or a third party, can be expensive and time consuming,
regardless of whether the outcome is favorable to us, and may require the diversion of substantial financial, managerial and other
resources. An adverse outcome could subject us to significant liabilities to third parties or require us to cease any related
development product sales or commercialization activities. In addition, if patents that contain dominating or conflicting claims
have been or are subsequently issued to others and the claims of these patents are ultimately determined to be valid, we may be
required to obtain licenses under patents of others in order to develop, manufacture use, import and/or sell our products. We
may not be able to obtain licenses under any of these patents on terms acceptable to us, if at all.
If
we do not obtain these licenses, we could encounter delays in, or be prevented entirely from using, importing, developing, manufacturing,
offering or selling any products or practicing any methods, or delivering any services requiring such licenses.
IF
WE ARE NOT ABLE TO PROTECT OUR TRADE SECRETS THROUGH ENFORCEMENT OF OUR CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS, THEN WE
MAY NOT BE ABLE TO COMPETE EFFECTIVELY AND WE MAY NOT BE PROFITABLE.
We
attempt to protect our trade secrets, including the processes, concepts, ideas and documentation associated with our technologies,
through the use of confidentiality agreements and non-competition agreements with our current employees and with other parties
to whom we have divulged such trade secrets.
If
the employees or other parties breach our confidentiality agreements and non-competition agreements or if these agreements are
not sufficient to protect our technology or are found to be unenforceable, our competitors could acquire and use information that
we consider to be our trade secrets and we may not be able to compete effectively. Most of our competitors have substantially
greater financial, marketing, technical and manufacturing resources than we have and we may not be profitable if our competitors
are also able to take advantage of our trade secrets.
OUR
SECURITIES
WE
DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We
intend to retain any future earnings to finance the growth and development of our business. Therefore, we do not expect to pay
any cash dividends in the foreseeable future on our common stock. Any future dividends will depend on our earnings, if any, and
our financial requirements. The Company has Series A Convertible Preferred Stock, which includes a mandatory 3% dividend prior
to any distribution to common shareholders.
FUTURE
SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.
Sales
of our common stock in the public market could lower the market price of our Class A Common Stock. Sales may also make it more
difficult for us to sell equity securities or equity-related securities in the future at a time and price that our management
deems acceptable or at all.
OUR
COMMON STOCK IS DEEMED TO BE “PENNY STOCK” WHICH MAY MAKE IT MORE DIFFICULT FOR INVESTORS TO SELL THEIR SHARES DUE
TO SUITABILITY REQUIREMENTS.
Our
common stock is deemed to be “penny stock” as that term is defined in Rule 3A51-1 promulgated under the Securities
Exchange Act of 1934. Penny stocks are stock:
•
with
a price of less than $5.00 per share;
•
that
are not traded on a “recognized” national exchange;
•
whose
prices are not quoted on the NASDAQ automated quotation system (NASDAQ listed stock must still have a price of not less than $5.00
per share); or
•
in
issuers with net tangible assets of less than $2.0 million (if the issuer has been in continuous operation for at least three
years) or $5.0 million (if in continuous operation for less than three years), or with average revenues of less than $6.0 million
for the last three years.
Broker/dealers
dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover,
broker/dealers are required to determine whether an investment in a penny stock is a suitable investor for a prospective investor. These
requirements may reduce the potential market for our common stock by reducing the number of potential investors. This
may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This
could cause our stock price to decline.
THE
PRICE OF OUR STOCK MAY BE AFFECTED BY A LIMITED TRADING VOLUME AND MAY FLUCTUATE SIGNIFICANTLY
There
has been a limited public market for our Class A common stock and there can be no assurance that an active trading market for
our stock will continue. An absence of an active trading market could adversely affect our stockholders' ability to sell our Class
A common stock in short time periods, or possibly at all. Our Class A common stock has experienced, and is likely to experience
in the future, significant price and volume fluctuations, which could adversely affect the market price of our stock without regard
to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and
changes in the overall economy or the condition of the financial markets could cause the price of our Class A common stock to
fluctuate substantially.
Risk
Factor Related to Controls and Procedures
The
Company has limited segregation of duties amongst its employees with respect to the Company's preparation and review of the Company's
financial statements due to the limited number of employees, which is a material weakness in internal controls, and if the Company
fails to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent
fraud. As a result, current and potential stockholders could lose confidence in the Company's financial reporting which could
harm the trading price of the Company's stock.
Management
has found it necessary to limit the Company's administrative staffing in order to conserve cash, until the Company's level of
business activity increases. As a result, the Company and its independent public accounting firm have identified this as a material
weakness in the Company's internal controls. The Company intends to remedy this material weakness by hiring additional employees
and reallocating duties, including responsibilities for financial reporting, among the employees as soon as there are sufficient
resources available. However, until such time, this material weakness will continue to exist. Despite the limited number of administrative
employees and limited segregation of duties, management believes that the Company's administrative employees are capable of following
its disclosure controls and procedures effectively.
ITEM
2. PROPERTIES.
We
do not own any real property. Our corporate headquarters are located at 750 Highway 34, Matawan, New Jersey. We
intend to continue subleasing such space, and anticipate no relocation of our offices in the foreseeable future. We are unaware
of any environmental problems in connection with this location, and, because of the nature of our activities, do not anticipate
such problems.
ITEM
3. LEGAL PROCEEDINGS
.
We
are subject to litigation from time to time arising from our normal course of operations. Currently, there are no open litigation
matters.
PART
II
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND PURCHASES OF EQUITY SECURITIES.
MARKET
INFORMATION
Our
Class A common stock, no par value, is quoted on the OTC Bulletin Board under the symbol "BGNN." The following table
shows the high and low closing prices for the periods indicated.
Year
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.0020
|
|
|
$
|
0.0006
|
|
Second Quarter
|
|
$
|
0.0018
|
|
|
$
|
0.0010
|
|
Third Quarter
|
|
$
|
0.0012
|
|
|
$
|
0.0006
|
|
Fourth Quarter
|
|
$
|
0.0011
|
|
|
$
|
0.0005
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.0008
|
|
|
$
|
0.0004
|
|
Second Quarter
|
|
$
|
0.0013
|
|
|
$
|
0.0004
|
|
Third Quarter
|
|
$
|
0.0011
|
|
|
$
|
0.0002
|
|
Fourth Quarter
|
|
$
|
0.0005
|
|
|
$
|
0.0002
|
|
The
quotations listed above reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual
transactions
HOLDERS
OF COMMON EQUITY.
As
of December 31, 2012, the number of record holders of our common shares was approximately 781.
DIVIDEND
INFORMATION
.
To
date, the Company has never paid a dividend. We have no plans to pay any dividends on common stock in the near future. We intend
to retain all earnings, if any, for the foreseeable future, for use in our business operations. The Company has Series A 3 % Preferred
Stock, which includes a mandatory 3% dividend prior to any distribution to common shareholders.
SALE
OF UNREGISTERED SECURITIES.
On
February 10, 2010, the Company issued 1,100 shares of the Company’s Series A 3% Preferred Stock for $1,100,000 in cash,
which includes a mandatory 3% dividend prior to any distribution to common shareholders. The previously issued Series
A 10 % Preferred Stock has been changed to a 3% dividend rate.
On
February 10, 2010, the Company issued 119 shares of the Company’s Series A 3% Preferred Stock in exchange for $119,000 of
convertible debt to iVoice, Inc.
DESCRIPTION
OF SECURITIES
Pursuant
to our certificate of incorporation, we are authorized to issue 1,000,000 shares of preferred stock, par value of $1.00 per share,
10,000,000,000 shares of Class A common stock, no par value per share, 50,000,000 shares of Class B common stock, par value $.01
per share, and 20,000,000 shares of Class C Common Stock, par value $.01 per share. Below is a description of the Company’s
outstanding securities, including Preferred stock, Class A common stock, Class B common stock, Class C common stock, options,
warrants and debt.
PREFERRED
STOCK
The
Board of Directors expressly is authorized, subject to limitations prescribed by the New Jersey Business Corporations Act and
the provisions of this Certificate of Incorporation, to provide, by resolution and by filing an amendment to the Certificate of
Incorporation pursuant to the New Jersey Business Corporations Act, for the issuance from time to time of the shares of Preferred
Stock in one or more series, to establish from time to time the number of shares to be included in each series, and to fix the
designation, powers, preferences and other rights of the shares of each such series and to fix the qualifications, limitations
and restrictions thereon, including, but without limiting the generality of the foregoing, the following:
a)
the number of shares constituting that series and the distinctive designation of that series;
b)
the dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and
the relative rights of priority, if any, of payment of dividends on shares of that series;
c)
whether that series shall have voting rights, in addition to voting rights provided by law, and, if so, the terms of such voting
rights;
d)
whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provisions
for adjustment of the conversion rate in such events as the Board of Directors
shall determine;
e)
whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including
the dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
f)
whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
g)
the rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares of that series; and
h)
any other relative powers, preferences and rights of that series, and qualifications, limitations or restrictions on that series.
In
the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Preferred
Stock of each series shall be entitled to receive only such amount or amounts as shall have been fixed by the certificate of designations
or by the resolution or resolutions of the Board of Directors providing for the issuance of such series.
The
Company is authorized to issue 1,000,000 shares of Preferred Stock, par value $1.00 per share.
Of
the 1,000,000 shares of Preferred Stock, 10,000 shares are designated Series A 3% Preferred Stock, par value $1.00 per share,
with a stated value of $1,000. The stated value is used for calculation of dividends and liquidation preferences.
On
March 6, 2009, the Company filed with the State of New Jersey an Amendment to the Certificate (the “Amendment”) that
revised the rights of the holders of the Company’s Series A 10% Preferred Stock. The revisions included:
a.
This
preferred stock will be referred to in the Company’s Certificate of Incorporation as: “Series A 10% Preferred Stock”.
b.
The
holders of the Series A 10% Preferred Stock shall have no voting rights.
c.
The
Series A 10% Preferred Stock shall no longer be convertible.
On
February 10, 2010, iVoice, Inc. agreed to purchase 1,219 shares of the Company’s 3% Preferred Stock for $1,100,000 in cash
and exchange of a convertible promissory note.
On
February 10, 2010, the Company issued 119 shares of Series A Preferred Stock in exchange for $112,058 Convertible Promissory Note
and accrued interest of $6,708 to iVoice, Inc.
On
January 5, 2011, the Company converted $66,104 of the principal amount and accrued interest of the iVoice Note Receivable, dated
April 30, 2010 for redemption of 1,057.664 shares of B Green Innovations Series A 3% Preferred Stock in accordance with the terms
of the Promissory Note.
In
February 2011, the Board of Directors authorized the Company to sell up 350 shares of the Series A 3% Preferred Stock.
In
February 2010, the Company filed with the State of New Jersey an Amendment to the Certificate that revised the rights of the holders
of the Company’s Series A 3% Convertible Preferred Stock. The revisions included:
a.
The
preferred stock will be referred to in the Company’s Certificate of Incorporation as: “Series A 3% Preferred Stock”.
b.
The
holders of the preferred stock will have a new dividend rate of 3%.
c.
The
holders of the Series A 3% Preferred Stock shall have no voting rights.
d.
Series
A 3% Preferred Stock is convertible, at the option of the holder with the consent of the Corporation, at any time after the date
of issuance of such share into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing
the Series A Initial Value, as may be adjusted from time to time, by the Conversion Price applicable to such share. The "Conversion
Price” per share shall be calculated as the closing bid price of the Class A Common stock on the last trading day immediately
prior to the date that the Notice of Conversion is tendered to the Corporation, subject to certain adjustments.
e.
The
holders of shares of Series A Preferred Stock shall be prohibited from converting shares of Series A Preferred Stock, and the
Corporation shall not honor any attempted conversion of Series A Preferred Stock, if, and to the extent, the shares of Common
Stock held by such converting holder of Series A Preferred Stock following any attempted conversion would exceed 9.99% of the
outstanding shares of Common Stock of the Corporation after giving effect to such conversion.
On
November 13, 2012 the Company filed with the State of New Jersey an Amendment to the Certificate of Incorporation that revised
the rights of the holders of the Company’s Series A 3% Preferred Stock which provided additional conversions rights. The
holder may convert, with the consent of the Corporation their stock into (b) such amount of marketable securities held by the
Corporation equal in value to the Series A Initial Value, as may be adjusted from time to time, or (c) cash equal in value to
the Series A Initial Value, as may be adjusted from time to time.
During the year ended December 31, 2012
, the holder converted 843.624 shares of Series A 3%
Preferred Stock
for
marketable securities at the Initial Value of $843,624.
As
of December 31, 2012 dividends in arrears amounted to $432,564.
CLASS
A COMMON STOCK
Each
holder of our Class A common stock is entitled to one vote for each share held of record. Holders of our Class A common stock
have no preemptive, subscription, conversion, or redemption rights. Upon liquidation, dissolution or winding-up, the holders of
Class A Common Stock are entitled to receive our net assets pro rata. Each holder of Class A common stock is entitled to receive
ratably any dividends declared by our board of directors out of funds legally available for the payment of dividends. We have
not paid any dividends on our common stock and do not contemplate doing so in the foreseeable future. We anticipate
that any earnings generated from operations will be used to finance our growth.
As
of December 31, 2012, there are 10,000,000,000 shares of Class A Common Stock authorized, no par value, and 1,362,359,182 shares
were issued, 1,361,164,699 shares were outstanding, and 1,194, 483 shares were issued pending conversion by YA Global Investments.
As
of December 31, 2011, there are 10,000,000,000 shares of Class A Common Stock authorized, no par value, and 611,452,726 shares
were issued, 610,258,243 shares were outstanding, and 1,194, 483 shares were issued pending conversion by YA Global Investments
CLASS
B COMMON STOCK
Each
holder of Class B Common Stock shall have the right to convert each share of Class B Common Stock into the number of Class A Common
Stock Shares calculated by dividing the number of Class B Common Stock Shares being converted by twenty percent (20%) discount
of the lowest price that the Company had previously issued its Class A Common Stock since the Class B Common Stock Shares were
issued. Every holder of the outstanding shares of the Class B Common Stock Shares shall be entitled on each matter to cast the
number of votes equal to the number of Class A Common Stock Shares that would be issued upon the conversion of the Class B Common
Stock Shares held by that holder, had all of the outstanding Class B Common Stock Shares held by that holder been converted on
the record date used for purposes of determining which stockholders would vote in such an election. With respect to all matters
upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding
shares of Class B Common Stock Shares shall vote together with Class A Common Stock Shares without regard to class, except as
to those matters on which separate class voting is required by applicable law.
There
shall be no cumulative voting by stockholders. Each Class B Common Stock Share shall receive dividends or other distributions,
as declared, equal to the number of Class A Common Stock Shares that would be issued upon the conversion of the Class B Common
Stock Shares, had all of the outstanding Class B Common Stock Shares been converted on the record date established for the purposes
distributing any dividend or other stockholder distribution.
During
2009, the Company issued 115,025 shares of Class B Common Stock as repayment of $115,205 of a promissory note.
As
of December 31, 2012 and 2011, there are 46,014 and 85,251 shares outstanding.
CLASS
C COMMON STOCK
Each
holder of Class C Common Stock is entitled to 1,000 votes for each share held of record. Shares of Class C Common Stock are not
convertible into Class A Common Stock. Upon liquidation, dissolution or wind-up, the holders of Class C Common Stock are not entitled
to receive our net assets pro rata.
As
of December 31, 2012 and 2011, there are 20,000,000 shares of Class C Common Stock authorized; par value $.01 per share, and no
shares were issued or outstanding.
OPTIONS
AND WARRANTS
During
the year 2005, the Company adopted the 2005 Stock Incentive Plan and the 2005 Directors’ and Officers’ Stock Incentive
Plan (the “Plan”) in order to attract and retain qualified personnel. Under the Plan, the Board of Directors (the
"Board"), in its discretion may grant stock options (either incentive or non-qualified stock options) to officers and
employees to purchase the Company's common stock.
The
Company did not issue any stock options for the years ended December 31, 2012 and 2011.
EQUITY
COMPENSATION PLAN INFORMATION
|
|
Number
of securities to be issued upon exercise of outstanding options, warrants and rights (a)
|
|
|
Weighted-average
exercise price of outstanding options, warrants and rights (b)
|
|
|
Number
of securities remaining available for future issuance under equity compensation plans (excluding securities reflected
in column (a))
(c)
|
|
Equity compensation
plans approved by security holders
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans
not approved by security holders
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
(1)
|
(1)
As of December 31, 2012, subject to approval by the Board of Directors, up to twenty percent (20%) of the total issued and outstanding
Class A Common Stock are available for future issuance pursuant to the Company’s 2005 Stock Incentive Plan (the “Stock
Incentive Plan”) and up to twenty percent (20%) of the total issued and outstanding Class A Common Stock are available for
future issuance pursuant to the Company’s 2005 Directors' and Officers' Stock Incentive Plan (the “Directors’
and Officers’ Stock Incentive Plan”). As of December 31, 2012 the Board had previously approved for issuance
a total of 5,495,000 Class A Common Stock shares for each the Stock Incentive Plan and the Directors’ and Officers’
Stock Incentive Plan. All authorized shares have been issued pursuant to each plan with no additional shares remaining. The
Board of Directors must take further action to authorize additional shares of issuance under each plan.
The
Company’s 2005 Stock Incentive Plan (the "Plan") was approved by the Board of Directors, and became effective,
on December 12, 2005. The shares that may be delivered or purchased or used for reference purposes under the Plan shall
not exceed an aggregate of twenty percent (20%) of the issued and outstanding shares of the Company's Class A Common Stock, no
par value per share, as determined by the Board from time to time. The purpose of the Plan is to (i) provide long-term incentives
and rewards to employees, directors, independent contractors or agents of B Green Innovations and its subsidiaries; (ii) assist
the Company in attracting and retaining employees, directors, independent contractors or agents with experience and/or ability
on a basis competitive with industry practices; and (iii) associate the interests of such employees, directors, independent contractors
or agents with those of the Company’s stockholders. Awards under the Plan may include, but need not be limited to, stock
options (including non-statutory stock options and incentive stock options, stock appreciation rights, warrants, dividend equivalents,
stock awards, restricted stock, phantom stock, performance shares or other securities or rights that the Board of Directors determines
to be consistent with the objectives and limitations of the Plan. Under the Plan, the Board may provide for the issuance of shares
of the Company's Class A Common Stock as a stock award for no consideration other than services rendered or, to the extent permitted
by applicable state law, to be rendered. The Board shall have all the powers vested in it by the terms of the Plan, such powers
to include exclusive authority (within the limitations of the Plan) to select the Eligible Participants to be granted awards under
the Plan, to determine the type, size and terms of the awards to be made to each Eligible Participant selected, to determine the
time when the awards will be granted, when they will vest, when they may be exercised, and when they will be paid, to amend awards
previously granted, and the establish objectives and conditions, if any, for earning awards and whether awards will be paid after
the end of the award period.
The
Company’s 2005 Directors' and Officers' Stock Incentive Plan (the "D&O Plan") was approved by the Board of
Directors, and become effective, on December 12, 2005. The shares that may be delivered or purchased or used for reference purposes
under the D&O Plan shall not exceed an aggregate of twenty percent (20%) of the issued and outstanding shares of the Company's
Class A Common Stock, no par value per share, as determined by the Board from time to time. The purpose of the D&O
Plan is to (i) provide long-term incentives and rewards to officers and directors of the Company and its subsidiaries; (ii) assist
the Company in attracting and retaining officers and directors, with experience and/or ability on a basis competitive with industry
practices; and (iii) associate the interests of such officers and directors with those of the Company's stockholders. Awards
under the D&O Plan
may
include, but need not be limited to, stock options (including non-statutory stock options and incentive stock options), stock
appreciation rights, warrants, dividend equivalents, stock awards, restricted stock, phantom stock, performance shares or other
securities or rights that the Board of Directors determines to be consistent with the objectives and limitations of the D&O
Plan. Under the D&O Plan, the Board may provide for the issuance of shares of the Company's Class A Common Stock
as a stock award for no consideration other than services rendered or, to the extent permitted by applicable state law, to be
rendered. The Board shall have all the powers vested in it by the terms of the Plan, such powers to include exclusive authority
(within the limitations of the Plan) to select the Eligible Participants to be granted awards under the Plan, to determine the
type, size and terms of the awards to be made to each Eligible Participant selected, to determine the time when the awards will
be granted, when they will vest, when they may be exercised, and when they will be paid, to amend awards previously granted, and
the establish objectives and conditions, if any, for earning awards and whether awards will be paid after the end of the award
period.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward
Looking Statements
See
Forward Statements – Cautionary Factors in Item 1 herein.
Overview
and Plan of Operation
The
Company business was formed from the contribution by iVoice of certain assets and related liabilities on August 5, 2005, and sought
to leverage the value of underutilized developed technology and believed that the transition to an independent company will provide
the Company with greater access to capital. In connection with this Spin-off by iVoice, iVoice assigned and conveyed
to the Company its IVR software business and related liabilities, including all intellectual property of iVoice relating to the
IVR software business. The board and management of iVoice elected not to transfer any part of its working cash balance
to the Company. Based upon the current intention of the Company not to conduct any research and development or hire
additional employees and instead focus on the sale of the existing products, the board has determined that, on balance, the Company
has the ability to satisfy its working capital needs as a whole. The board and management has also determined that
B Green Innovations has the ability to obtain financing to satisfy any addition working capital needs as a stand-alone company.
The
emerging nature of the interactive voice response industry, and the Company’s lack of resources to develop and market new
products made it difficult to compete in this industry. The Company is now dedicated to the development, manufacture, and distribution
of “green” products. The Company will also continue to support the Interactive Voice Response ("IVR"), software
that was developed by iVoice. We currently have no plans to engage in future research and development, to launch any additional
versions of the IVR software or other products, or to continue to market this product.
The
B Green Innovations, Inc. ("B Green"), "Go Green" mission from its inception, is to create a "Green"
company for the development of solutions to eliminate waste from the world's environment. B Green offers consumers a realistic
and necessary solution to the problem of waste around the world. We believe that to truly have an impact on the planet, one must
be committed to the environment and seek out environmentally friendly products.
The
first technology was to create new products from recycled tire rubber. EcoPod® and VibeAway® address important environmental
concerns and problems facing the planet today. EcoPod® and VibeAway® are 100% recycled rubber-based products that can
be utilized as support pads under any units that vibrate and make noise, including washing machines, dryers, compressors, commercial
condensers, and many other units that advantageously benefit from sound and vibration control. In addition, we announced that
we had filed a new patent application for a process described as “Recycled Tire Pod with Appliance Recess Guide.”
In
addition, the Company released its new 100% degradable/biodegradable compactor bags. These bags include oxo-biodegradable additive
using the latest technology that supports the 3 R’s of Packaging: “Reduce”, “Reuse”,
“Recycle” and provides a fourth R, “Remove”. Independent Scientific Testing show that plastics incorporated
with an additive called Renatura™ will degrade and then fully biodegrade, without leaving behind harmful residues in the
soil.
These
oxo-biodegradable plastic products are scientifically proven to be non-toxic and are FDA compliant, meaning they are safe for
food packaging applications and have been awarded approved food film contact ‘no migration’ status. Regular plastic
bags can take up to 100 years to break down causing plastic pollution and harm to both domestic and wild life. Standard plastics
are filling our landfills and greatly impacting our planet. Plastics incorporating this additive in the presence of oxygen disappear
when exposed to UV light or thermal heat. Our product is designed to allow plastics to degrade like a leaf, slowly yielding CO2
(which through photosynthesis becomes oxygen), water, bio-waste, and mineral salts that condition the soil in the process.
The
Company continues to evaluate additional products to its product line as well as expanding its distribution channels.
The
Company will also continue to support the Interactive Voice Response ("IVR"), software that was developed by iVoice.
The Company's Interactive Voice Response line is designed to read information from and write information to, databases, as well
as to query databases and return information.
The
Company had received a going concern opinion from its auditors. Its continuation as a going concern is dependent upon
obtaining the financing necessary to operate its business. If the Company cannot find sources of additional financing to fund
its working capital needs, the Company will be unable to obtain sufficient capital resources to operate our business. On
February 10, 2010, iVoice, Inc. agreed to purchase 1,219 shares of the Company’s 3% Preferred Stock for $1,100,000 in cash
and exchange of convertible debt.
We
cannot assure you that we will be able to access any financing in sufficient amounts or at all when needed. Our inability to obtain
sufficient working capital funding will have an immediate material adverse effect upon our financial condition and our business.
See “Liquidity and Capital Resources.”
The
Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United
States, and reflect the historical financial position, results of operations, and cash flows of the business transferred to the
Company by iVoice as part of the Spin-off from iVoice, Inc.. The financial information included in this report is not
necessarily indicative of its future performance as an independent company.
Results
of Operations 2012 Compared to 2011
Total
revenues increased $53,106 (19.9%) for the year ended December 31, 2012 to $319,413 as compared to $266,307 for the year ended
December 31, 2011. This increase is primarily attributed to the sales of our ”vibe-away” products to our distributors
offset by a decrease maintenance fees on our IVR products. The Company continues to evaluate additional products to
add to its product line as well as expanding its distribution channels.
Gross
profit increased $28,427 (14.0%) to $230,979 for the year ended December 31, 2012 as compared to $202,552 for the same period
in the prior year primarily as a result of the increased volume. The gross profit percentage was 72.3% for the year ended December
31, 2012 decreased slightly as compared to 76.1% for the year ended December 31, 2011 as maintenance services were a lower percentage
of total sales in 2012.
Total
operating expenses decreased to $603,628 for the year ended December 31, 2012 from $675,260 for the previous year, a decrease
of $71,632 (10.6%). A decrease in legal and professional fees, lower insurance costs and lower selling expenses were offset by
increase in general office expenses.
Loss
from operations for the year ended December 31, 2012 decreased $100,059 (21.2%) to $372,649 as compared to a loss from operations
of $472,708 for the year ended December 31, 2011. The decrease in loss from operations was the result of the factors
discussed above.
Total
other income (expense) was an expense of $127,591 for the year ended December 31, 2012 and compared to an income of $341,381 for
the year ended December 31, 2011. This decrease in other income is primarily attributed to the non-recurrence of several
onetime gains realized in the prior period, such as the termination of the administrative agreement with iVoice and the write-off
of old debts recorded in the year ended December 31, 2011.
The
net loss for the year ended December 31, 2012 was $500,240 as compared to net loss of $131,327 for the year ended December 31,
2011. The decrease in net income was the result of the factors discussed above, primarily in other income (expense).
LIQUIDITY
AND CAPITAL RESOURCES
To
date, the Company has incurred substantial losses, and will require financing for working capital to meet its operating obligations. We
anticipate that we will require financing on an ongoing basis for the foreseeable future.
If
the Company cannot find sources of additional financing to fund its working capital needs, the Company will be unable to obtain
sufficient capital resources to operate our business. We cannot assure you that we will be able to access any financing in sufficient
amounts or at all when needed. Our inability to obtain sufficient working capital funding will have an immediate material adverse
effect upon our financial condition and our business. The Company currently has no other significant sources of working capital
or cash commitments. However, no assurance can be given that the Company will raise sufficient funds from such financing arrangements,
or that Company will ever produce sufficient revenues to sustain its operations, or that a market will develop for its common
stock for which a significant amount of the Company’s financing is dependent upon.
During
the year ended December 31, 2012, the Company had a net decrease in cash of $67,200. The Company’s principal
sources and uses of funds were as follows:
Cash
provided by (used in) operating activities
. The Company used $27,963 in cash for operating activities for the year ended December
31, 2012 as compared to providing $17,205 in the prior year. The decrease in cash provided by operating activities is primarily
the result of unfavorable changes in accounts payable, accrued expenses and prepaid expense when compared to the prior year offset
by favorable changes in cash flow from operations and related party accounts.
Cash
provided by (used in) investing activities.
The Company provided $843,624 in investing activities for the year ended
December 31, 2012 from the liquidation of the marketable securities. The Company used $922,036 in investing activities for the
year ended December 31, 2011 for the purchase of marketable securities and reinvested dividends.
Cash
used in financing activities
. The
Company used $882,861 in financing activities for the year ended December 31, 2012 for conversion of Series A 3% Preferred Stock
and repurchase of Class B Common Stock. The Company used $29,774 in financing activities for the year ended December 31, 2011to
repurchase of Class B Common Stock from the majority shareholder.
There
was no significant impact on the Company’s operations as a result of inflation for the year ended December 31, 2011.
Critical
Accounting Policies
The
discussion and analysis of our financial condition and results of operations are based on our financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation
of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate these estimates,
including those related to bad debts, inventory obsolescence, intangible assets, payroll tax obligations, and litigation. We base
our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of certain assets and liabilities. Actual results
may differ from these estimates under different assumptions or conditions.
We
have identified below the accounting policies, revenue recognition and software costs, related to what we believe are most critical
to our business operations and are discussed throughout Management’s Discussion and Analysis of Financial Condition or Plan
of Operation where such policies affect our reported and expected financial results.
Revenue
Recognition
For
“green” products, revenues are recognized at the time of shipment to, or acceptance by customer, provided title and
risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right to return exists.
With
respect to customer support services for IVR, upon the completion of one year from the date of sale, the Company offers customers
an optional annual software maintenance and support agreement for subsequent one-year periods. Sales of purchased maintenance
and support agreements are recorded as deferred revenues and recognized over the respective terms of the agreements.
Impact
of Recent Accounting Pronouncements
There
were various other updates recently issued, most of which represented technical
corrections to the accounting literature or application to specific industries and are not expected to a have a material impact
on the Company's financial position, results of operations or cash flows.
Management
does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted, would have
a material effect on the accompanying financial statements.
OFF
BALANCE SHEET ARRANGEMENTS
During
fiscal 2012, we did not engage in any material off-balance sheet activities nor have any relationships or arrangements with unconsolidated
entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide
additional funding to any such entities.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
.
The
financial statements and notes of this Form 10-K appear after the signature page to this Form 10-K
ITEM
9A. CONTROLS AND PROCEDURES.
Evaluation
of disclosure controls and procedures.
An
evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer
and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures
as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of December 31, 2012. Based
on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer had concluded that the Company's
disclosure controls and procedures were not effective.
The
Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by
us in our reports filed under the securities Exchange Act, is recorded, processed, summarized, and reported within the time periods
specified by the SEC's rules and forms. Disclosure controls are also designed with the objective of ensuring that this information
is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure.
Management’s
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2012 based on the criteria set forth in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria set
forth in Internal Control — Integrated Framework, our management concluded that our internal control over financial
reporting was not effective for the following reasons:
a)
|
The
deficiency was identified as the Company's limited segregation of duties amongst the Company's employees with respect to the
Company's control activities. This deficiency is the result of the Company's limited number of employees. This deficiency
may affect management's ability to determine if errors or inappropriate actions have taken place. Management is required to
apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.
|
This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. We have not engaged an independent registered public accounting firm to perform, an audit on our internal
control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only
management’s report in this Annual Report.
Changes
in internal controls.
Management
of the Company has also evaluated, with the participation of the Chief Executive Officer of the Company, any change in the Company's
internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during
the fiscal year covered by this Annual Report on Form 10-K. There was no change in the Company's internal control over
financial reporting identified in that evaluation that occurred during the fiscal year covered by this Annual Report on Form 10-K
that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Risk
factors related to controls and procedures
The
Company has limited segregation of duties amongst its employees with respect to the Company's preparation and review of the Company's
financial statements due to the limited number of employees, which is a deficiency in internal controls, and if the Company fails
to maintain an effective system of internal controls, it may not be able to accurately report its financial results or prevent
fraud. As a result, current and potential stockholders could lose confidence in the Company's financial reporting which could
harm the trading price of the Company's stock.
Management
has found it necessary to limit the Company's administrative staffing in order to conserve cash, until the Company's level of
business activity increases. As a result, there is very limited segregation of duties amongst the administrative employees, and
the Company and its independent public accounting firm have identified this as a deficiency in the Company's internal controls.
The Company intends to remedy this deficiency by hiring additional employees and reallocating duties, including responsibilities
for financial reporting, among the employees as soon as there are sufficient resources available. However, until such time, this
deficiency will continue to exist. Despite the limited number of administrative employees and limited segregation of duties, management
believes that the Company's administrative employees are capable of following its disclosure controls and procedures effectively.
Item
9B. Other Information.
Section
5 Corporate Governance and Management
Item
5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
Item
5.02(b)
On May 13, 2013 the Company received and accepted the resignation of the Company’s
outside director because of ongoing family health issues.
Item
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On
November 13, 2012 the Company filed with the State of New Jersey an Amendment to the Certificate of Incorporation that revised
the rights of the holders of the Company’s Series A 3% Preferred Stock which provided additional conversions rights. The
holder may convert, with the consent of the Corporation their stock into (b) such amount of marketable securities held by the
Corporation equal in value to the Series A Initial Value, as may be adjusted from time to time, or (c) cash equal in value to
the Series A Initial Value, as may be adjusted from time to time.
Item
5.07 Submission of Matters to a Vote of Security Holders
.
On
November 8, 2012, through written consent of the majority shareholder of the Series A 3% Preferred Stock and unanimous written
consent in lieu of meeting of directors, passed a resolution approving the amendment to the Certificate of Incorporation to provide
additional conversion rights to induce the majority shareholder to accept the terms of the Exchange Agreement between the majority
shareholder, American Security Resources Corporation and the Company.
PART III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
B
Green Innovations’ board of directors consists of two directors. Listed below is certain information concerning
individuals who currently serve as directors and executive officers of B Green Innovations.
Name
|
|
Age
|
|
Position
with B Green Innovations, Inc.
|
|
Director
since
|
|
|
|
|
|
|
|
Jerome
R. Mahoney
|
|
53
|
|
President
and Secretary
|
|
2004
|
|
|
|
|
|
|
|
Frank
V. Esser
|
|
73
|
|
Director
|
|
2005
|
Jerome
R. Mahoney.
Mr. Mahoney has served as the Company’s President, Chief Executive Officer and Secretary since August 30,
2006. Mr. Mahoney formerly served as the Company’s Non-Executive Chairman of the Board. He has been
a director of iVoice since May 21, 1999. Mr. Mahoney was also the Chairman of the Board of Trey Resources, Inc. and
had been a director of Trey Resources from January 1, 2002 until May 2009. He was also the Non-Executive Chairman of
the Board of SpeechSwitch, Inc. and had been a director of SpeechSwitch from August 2004 until January 2008. He was
also the Non-Executive Chairman of the Board of Deep Field Technologies, Inc. through February 13, 2007 and had been a director
of Deep Field Technologies from August 2004 through February 2007. Mr. Mahoney started at Executone Information Systems,
a telephone systems manufacturer, and was Director of National Accounts from 1988 to 1989. In 1989, Mr. Mahoney founded Voice
Express, Inc., a New York company that sold voicemail systems and telephone system service contracts and installed these systems.
Mr. Mahoney sold Voice Express Systems in 1993. From 1993 to 1997, Mr. Mahoney was President of IVS Corp., and on December 17,
1997, he established International Voice Technologies, with which iVoice merged on May 21, 1999. Mr. Mahoney received a B.A. in
finance and marketing from Fairleigh Dickinson University, Rutherford, NJ in 1983.
Frank
V. Esser.
Mr. Esser has served as a director of the Company since June 2005. He has also been a director
of iVoice since February 2004. Mr. Esser functioned as Transfer Agent and Head Bookkeeper in the Treasury Department
of Texaco Inc from 1959 to 1968. As a certified public accountant with Ernst & Young from 1968 to 1981, he participated
in the audits of major publicly traded companies such as J.P. Stevens & Co., Dynamics Corporation of America, and Phillips
- Van Heusen Corporation, along with law firms, banks, manufacturing companies and other organizations, and also participated
in the public offerings of equity and debt and the preparation of SEC filings. In 1981, Mr. Esser accepted the position
of Corporate Controller with Grow Group, Inc., a Fortune 500 manufacturer of paints, solvents, and household products and became
its Chief Financial Officer in 1987. During 1997 and 1998, Mr. Esser was Chief Financial Officer of a privately held
plastics injection molding company. In 1998, Mr. Esser accepted the position of Senior Associate at Beacon Consulting
Associates, adding the title of Vice President in 1999, and has been working in such capacities ever since. Mr. Esser
holds a BA degree from Baruch College of the City University of New York and is a Certified Public Accountant in New York State.
AUDIT
COMMITTEE
The
Audit Committee currently consists of Messrs. Esser and Mahoney, with Mr. Esser serving as the Chairman of the Audit Committee.
Mr. Esser is an independent member of the Board of Directors and may be deemed a financial expert as defined in §228.401(e)
of the regulations promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended. Management is responsible
for the Company's internal controls and the financial reporting process. The independent auditors are responsible for performing
an independent audit of the Company's consolidated financial statements in accordance with generally accepted accounting principles
and to issue a report thereon and as to management's assessment of the effectiveness of internal controls over financial reporting.
The Audit Committee's responsibility is to monitor and oversee these processes, although the members of the Audit Committee are
not engaged in the practice of auditing or accounting. The Audit Committee had no meetings in 2012. The Board of Directors approved
an Audit Committee Charter on March 30, 2006. As of this date, the Audit Committee operates pursuant to this Audit Committee Charter.
CORPORATE
GOVERNANCE
Director
Independence
B
Green Innovations’ board of directors consists of Jerome R. Mahoney and Frank V. Esser. Mr. Esser
is an “independent director” as such term is defined in Section 4200(a)(15) of the NASDAQ Marketplace Rules.
Audit
Committee
The
Company’s audit committee currently consists of Messrs. Esser and Mahoney. Mr. Esser is an independent member
of the audit committee under the independence standards set forth in Section 4350(d)(2) of the NASDAQ Marketplace Rules. Mr.
Mahoney is not an independent member of the audit committee.
Nominating
Committee
The
Company does not have a standing nominating committee or a committee performing similar functions, as the Board of Directors consists
of only two members. Due to the Company’s size, it finds it difficult to attract individuals who would be willing
to accept membership on the Company’s Board of Directors. Therefore, with only two members of the Board of Directors,
the full Board of Directors would participate in nominating candidates to the Board of Directors. The Company did not
have an annual meeting of shareholders in the past fiscal year.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As
the Company has no class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”) Forms 3,4 or 5, as required by Section 16(a) of the Exchange Act are not required to be filed.
Code
of Ethics
The
Board of Directors adopted a Code of Ethics for its chief executive officer and chief financial officer and was filed as Exhibit
14 to the Company’s Report on Form-10-KSB for the year ended December 31, 2005, filed on April 4, 2006. The Code of Ethics
will be provided to any person without charge, upon request. Requests should be directed to the Investor Relations Department
at the Company's corporate headquarters.
Compensation
of Directors
The
following table sets forth compensation information for services rendered by our directors during the last completed fiscal year. The
following information includes the dollar value of fees earned or paid in cash and certain other compensation, if any, whether
paid or deferred. Our directors did not receive any bonus, stock awards, option awards, non-equity incentive plan compensation,
or nonqualified deferred compensation earnings during the last completed fiscal year.
Director
Compensation
Name
|
|
Year
|
|
Fees
Earned or Paid in Cash
($)
|
|
|
All
Other Compensation
($)
|
|
|
Total
Compensation
($)
|
|
Frank V.
Esser(1)
|
|
2012
|
|
$
|
12,000
|
(2)
|
|
$
|
-0-
|
|
|
$
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Mr.
Esser had served as our outside director from June 2005 until May 2013 at a fee of $12,000 per year.
(2)
Mr.
Esser has received no cash compensation during this period.
ITEM
11. EXECUTIVE COMPENSATION
The
following table sets forth compensation information for services rendered by certain of our executive officers in all capacities
during the last three completed fiscal years. The following information includes the dollar value of base salaries, bonus awards,
the number of stock options granted, and certain other compensation, if any, whether paid or deferred.
Summary
Compensation Table
Name
and Position(s)
|
|
Year
|
|
Salary($)
|
|
|
Stock
Awards
|
|
|
All
other Compensation
|
|
|
Total
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerome R. Mahoney(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President,
Chief Executive
|
|
2012
|
|
$
|
197,363
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
197,363
|
|
Officer
and Director
|
|
2011
|
|
$
|
195,406
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
195,406
|
|
|
|
2010
|
|
$
|
158,302
|
(2)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
158,302
|
|
(1)
Mr.
Mahoney has been serving as our President, Chief Executive Officer and Director since August 31, 2006. Prior to that time, Mr.
Mahoney served as our Non-Executive Chairman of the Board from August 1, 2004 through August 31, 2006. Mr. Mahoney’s employment
contract is for a term of five-years at a base salary of $85,000 in the first year with annual increases based on the Consumer
Price Index every year thereafter. On March 9, 2009, the term of the employment agreement between the Company and Mr. Mahoney,
the Company’s CEO, was extended to July 31, 2016. The Company will compensate Mr. Mahoney with a base salary
of $85,000 for the first year with annual increases based on the Consumer Price Index. Mr. Mahoney had a consulting agreement
with the Company’s former subsidiary B Green Innovations for annual compensation of $24,000 and upon every annual anniversary
thereafter, at the rate based on the increase in the Consumer Price Index for All Urban Consumers (New York-Northern N.J.-Long
Island). Effective January 1, 2010, this amount was added to Mr. Mahoney’s base salary. On June 15, 2010, Mr. Mahoney’s
employment agreement was amended to increase the base salary to $195,000 effective July 1, 2010.
(2)
$24,597,
$23,228 and $105,000 was paid in salary and $172,766, $172,178 and $53,302 was accrued and unpaid for the years ended December
31, 2012, 2011 and 2010, respectively.
Aggregate
Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Name
|
|
Shares
Acquired on Exercise (#)
|
|
|
Value
Realized ($)
|
|
|
Number
of Securities Underlying Unexercised Options/SARs at FY-End (#) Exercisable/Unexercisable
|
|
|
Value
of Unexercised In-the-Money Options/SARs at FY-End ($) Exercisable/Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0 /
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Option Grants
The
Company did not issue any stock options for the years ended December 31, 2012 and 2011.
EMPLOYMENT
CONTRACTS
Jerome
R. Mahoney
The
Company entered into a five-year employment agreement with Mr. Mahoney as of August 1, 2004. Mr. Mahoney will serve as the Company’s
Non-Executive Chairman of the Board for a term of five years. On March 9, 2009, the term of the employment agreement between the
Company and Mr. Mahoney, the Company’s CEO, was extended to July 31, 2016. As consideration, the Company agreed
to pay Mr. Mahoney the sum of $85,000 the first year with an annual increase based on the Consumer Price Index every year thereafter.
The Company also agreed to pay Mr. Mahoney a bonus for each merger or acquisition completed by the Company equal to six percent
(6%) of the gross consideration paid or received by iVoice Technology in a merger or acquisition completed by the Company during
the term of the agreement. This bonus would be payable in the form of cash, debt or shares of our Class B Common Stock at the
option of Mr. Mahoney. Mr. Mahoney had a consulting agreement with the Company’s former subsidiary B Green Innovations for
annual compensation of $24,000 and upon every annual anniversary thereafter, at the rate based on the increase in the Consumer
Price Index for All Urban Consumers (New York-Northern N.J.-Long Island). Effective January 1, 2010, this amount was added to
Mr. Mahoney’s base salary. On June 15, 2010, Mr. Mahoney’s employment agreement was amended to increase the base salary
to $195,000 effective July 1, 2010. All other terms of the Employment Agreement shall remain in full force and effect.
For
the year ended December 31, 2012, Mr. Mahoney drew $24,597 of his salary. The remainder
of Mr. Mahoney’s
compensation shall be deferred until such time that the Board of Directors determines that the Company has sufficient financial
resources to pay his compensation in cash.
In
the event Mr. Mahoney's employment agreement is terminated by the Company for cause or due to Mr. Mahoney's disability or retirement,
the Company will pay him his full base salary for five years from the date of termination at the highest salary level under the
agreement. Under his agreement, "cause" means (1) the willful and continued failure of Mr. Mahoney to substantially
perform his duties to the Company after written demand for such performance is delivered to Mr. Mahoney by the Company's Board
of Directors, (2) the willful engaging by Mr. Mahoney in conduct that is demonstrably and materially injurious to the Company,
monetarily or otherwise, (3) the conviction of Mr. Mahoney of a felony, which is limited solely to a crime that relates to the
business operations of the Company or that results in his being unable to substantially carry out his duties as set forth in the
agreement, or (4) the commission of any act by Mr. Mahoney against the Company that may be construed as embezzlement, larceny,
and/or grand larceny. However, Mr. Mahoney will not be deemed to have been terminated for cause unless the Board of Directors
determines, by a vote of at least 75% of the members of the board of directors, that Mr. Mahoney was guilty of conduct described
in items (1), (2) or (4) above.
As
the board of directors consists solely of Mr. Mahoney and Mr. Esser, Mr. Mahoney, pursuant to his employment agreement, would
be required to recuse himself from any discussions or vote regarding any potential termination, Mr. Esser would be required to
determine, in accordance with his fiduciary duties as a board member, if Mr. Mahoney should be terminated for cause.
In
the event Mr. Mahoney's employment agreement is terminated due to Mr. Mahoney's death, iVoice Technology will pay to his estate
his full base salary for eight years from the date of termination at the highest salary level under the agreement. In the event
Mr. Mahoney's employment agreement is terminated by iVoice Technology within three years following a change in control, as defined
in the employment agreement, or by Mr. Mahoney for good reason within three years following a change in control, Mr. Mahoney will
be entitled to receive a severance payment equal to three hundred percent (300%), less $100, of the average amount of his gross
income for services rendered to iVoice Technology in each of the five prior calendar years (or shorter period during which Mr.
Mahoney shall have been employed by iVoice Technology). Under his employment agreement, "good reason" means, among other
things, (1) any limitation on Mr. Mahoney's powers as Chairman of the Board, (2) a reduction in compensation, (3) a relocation
of the Company outside New Jersey or (4) the failure of the Company to make any required payments under the agreement. The employment
agreement restricts Mr. Mahoney from competing with the Company during the term of the agreement and for one year after he is
no longer employed by the Company; provided that Mr. Mahoney is receiving severance or other compensation from the Company pursuant
to the employment agreement for at least one year (see Note 8 to the Financial Statements).
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The
following tables set forth certain information regarding the beneficial ownership of our voting securities as of December 31,
2012 of (i) each person known to us to beneficially own more than 5% of the applicable class of voting securities, (ii) our directors,
(iii) and each named executive officer and (iv) all directors and executive officers as a group. As of December 31, 2012, a total
of 1,361,164,699 shares of Class A common stock were outstanding. Each share of Class A common stock is entitled to one vote on
matters on which holders of common stock are eligible to vote. Each share of Class B common stock common stock is entitled to
100 votes on matters on which holders of common stock are eligible to vote. Each share of Class C common stock common stock is
entitled to 1,000 votes on matters on which holders of common stock are eligible to vote. The column entitled "Percentage
of Total Voting Stock" shows the percentage of total voting stock beneficially owned by each listed party.
The
number of shares beneficially owned is determined under rules promulgated by the Securities and Exchange Commission, and the information
is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual
has the right to acquire within 60 days of December 31, 2012 through the exercise or conversion of any stock option, convertible
security, warrant or other right. Unless otherwise indicated, each person or entity named in the table has sole voting power and
investment power (or shares that power with that person's spouse) with respect to all shares of capital stock listed as owned
by that person or entity.
Ownership
of Common Stock
Name
and Position(s)
|
|
Title
of Class
|
|
Common
Stock Beneficially Owned
|
|
|
Percentage
Ownership
(1)
|
|
|
|
|
|
|
|
|
|
|
Jerome R. Mahoney,
|
|
|
|
|
|
|
|
|
President
and Secretary
|
|
Class
A Common Stock
|
|
|
10,413,574,982
|
(2)
|
|
|
89.1
|
%
|
|
|
Class
B Common Stock
|
|
|
844,816
|
(3)
|
|
|
100.00
|
%
|
|
|
Class
C Common Stock
|
|
|
0
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Frank V. Esser,
|
|
Class
A Common Stock
|
|
|
100,086,870
|
|
|
|
7.4
|
%
|
Director
|
|
Class
B Common Stock
|
|
|
0
|
|
|
|
0.00
|
%
|
|
|
Class
C Common Stock
|
|
|
0
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
All directors and executive
|
|
Class
A Common Stock
|
|
|
10,513,661,852
|
|
|
|
90.0
|
%
|
Officers as a group (2
persons)
|
|
Class
B Common Stock
|
|
|
844,816
|
|
|
|
100.00
|
%
|
|
|
Class
C Common Stock
|
|
|
0
|
|
|
|
0.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Percentage ownership is based on shares outstanding plus the shares beneficially owned by the named individual or group for the
respective security as of December 31, 2012.
(2)
Includes 89,100,000 shares of Class A common stock, 46,014 shares of Class B common stock held and gives effect to the right of
Mr. Mahoney pursuant to the promissory note to be executed by the Company in favor of Mr. Mahoney in the amount of $798,802 ($639,188
of deferred compensation and unpaid interest of $159,614) to convert amounts owing under such promissory note to 798,802 shares
of Class B Common Stock together with the Class B common stock held, which are convertible into the number of shares of our Class
A Common Stock, determined by dividing the number of shares of our Class B Common Stock being converted by a 20% discount of the
lowest price at which the Company had ever issued its Class A Common Stock. There is no limitation
on the number of shares of our Class A Common Stock we may be required to issue to Mr. Mahoney upon the conversion of this indebtedness.
(3) Includes
46,014 shares held and gives effect to the right of Mr. Mahoney to, at his option, convert the $798,802 promissory note plus accrued
interest held by him into Class B Common Stock of the Company at a rate of one dollar per share into 798,802 shares of the Company’s
Class B Common Stock. Such Class B Common Stock is convertible at any time into shares of our Class A Common Stock
at a rate equal to 80% of the lowest price that the Company issues shares of Class A Common Stock subsequent to the date of the
note. Thus by virtue of Mr. Mahoney's right to convert $798,802 owing under such promissory note into 798,802 shares of the Company’s
Class B Common Stock, Mr. Mahoney is deemed to beneficially own such shares for the purpose of computing the percentage of ownership
by him, but such shares are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
The
Company has assumed an outstanding promissory demand note in the amount of $190,000 payable to Jerry Mahoney, President and Chief
Executive Officer. This amount is related to funds loaned to iVoice and is unrelated to the operations of B Green Innovations,
Inc. The note will bear interest at the rate of prime plus 2.0% per annum (5.25% at December 31, 2012) on the unpaid
balance until paid. Interest payments are due and payable annually. Under the terms of the Promissory Note, at the
option of the Note holder, principal and interest can be converted into either (i) one share of Class B Common Stock of B Green
Innovations, Inc., par value $.01, for each dollar owed, (ii) the number of shares of Class A Common Stock of B Green Innovations,
Inc. calculated by dividing (x) the sum of the principal and interest that the Note holder has requested to have prepaid by (y)
eighty percent (80%) of the lowest issue price of Class A Common Stock since the first advance of funds under this Note, or (iii)
payment of the principal of this Note, before any repayment of interest.
The
Board of Directors of the Company maintains control over the issuance of shares and may decline the request for conversion of
the repayment into shares of the Company. As of December 31, 2012 and 2011, the outstanding balances were $0 and $3,003, plus
accrued interest of $132,174 and $113,394, respectively.
On
May 8, 2007, the Company executed a Security Agreement providing Jerome Mahoney, President and Chief Executive Officer of the
Company, with a security interest in all of the assets of the Company to secure the promissory note dated August 5, 2005 and all
future advances including, but not limited to, additional cash advances: deferred compensation, deferred expense reimbursement,
deferred commissions and income tax reimbursement for the recognition of income upon the sale of common stock for the purpose
of the holder advancing additional funds to the Company.
The
Company entered into a five-year employment agreement with Jerome Mahoney to serve as Non-Executive Chairman of the Board of Directors,
effective August 1, 2004. On March 9, 2009, the term of the employment agreement between the Company and Mr. Mahoney, the
Company’s CEO, was extended to July 31, 2016. The Company will compensate Mr. Mahoney with a base salary of $85,000
for the first year with annual increases based on the Consumer Price Index. Mr. Mahoney had a consulting agreement with the Company’s
former subsidiary B Green Innovations for annual compensation of $24,000 and upon every annual anniversary thereafter, at the
rate based on the increase in the Consumer Price Index for All Urban Consumers (New York-Northern N.J.-Long Island). Effective
January 1, 2010, this amount was added to Mr. Mahoney’s base salary. On June 15, 2010, Mr. Mahoney’s employment
agreement was amended to increase the base salary to $195,000 effective July 1, 2010. All other terms of the Employment Agreement
shall remain in full force and effect.
For the year ended December
31, 2012, Mr. Mahoney drew $24,597 of his salary. The remainder
of Mr. Mahoney’s compensation
shall be deferred until such time that the Board of Directors determines that the Company has sufficient financial resources to
pay his compensation in cash.
The
Board has the option to pay Mr. Mahoney’s compensation in the form of Class B Common Stock. Mr. Mahoney will also be entitled
to certain bonuses based on mergers and acquisitions completed by the Company. Pursuant to the terms of the Class B Common Stock,
a holder of Class B Common Stock has the right to convert each share of Class B Common Stock into the number of shares of Class
A Common Stock determined by dividing the number of Class B Common Stock being converted by a 20% discount of the lowest price
for which the Company had ever issued its Class A Common Stock. As of December 31, 2012, total deferred compensation due to Mr.
Mahoney was $639,188.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
following table sets forth fees billed to the Company by the Company's independent auditors for the year ended December 31, 2012
and December 31, 2011 for (i) services rendered for the audit of the Company's annual financial statements and the review of the
Company's quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or
review of the Company's financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with
tax preparation, compliance, advice and assistance.
SERVICES
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
21,000
|
|
|
$
|
19,000
|
|
Audit - Related Fees
|
|
|
-0-
|
|
|
|
-0-
|
|
Tax fees
|
|
|
-0-
|
|
|
|
-0-
|
|
All Other Fees
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,000
|
|
|
$
|
19,000
|
|
Prior
to engaging our accountants to perform a particular service, our Audit Committee obtains an estimate for the service to be performed.
The Audit Committee in accordance with its procedures approved all of the services described above.
ITEM
15. EXHIBITS
(a)
List
of Documents Filed as Part of this Report
Financial
Statements. The following consolidated financial statements are incorporated by reference from Item 8 hereof:
Consolidated
Balance Sheets as of December 31, 2012 and 2011
Consolidated
Statements of Operations for the Years Ended December 31, 2012 and 2011
Consolidated
Statements of Changes in Stockholders’ Equity (Deficit) and Comprehensive Income for the Years Ended December 31, 2012 and
2011
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2012 and 2011
Notes
to Consolidated Financial Statements
(b)
Exhibits. The
following is a list of exhibits filed as part of this Annual Report on Form 10-K
Exhibits
No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate
of Incorporation of iVoice Technology, Inc. (filed as Exhibit 3.1 to iVoice Technology, Inc.’s Amendment No. 1 to Form
SB-2 Registration Statement, File No. 333-120490, filed on January 11, 2005, and incorporated herein by reference)
|
|
|
|
3.2
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on January 11, 2008 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated January 11, 2008 and incorporated herein by reference.)
|
|
|
|
3.3
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on March 10, 2008 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated March 5, 2008 and incorporated herein by reference.)
|
|
|
|
3.4
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on August 11, 2008 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated August 11, 2008 and incorporated herein by reference.)
|
|
|
|
3.5
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on March 6, 2009 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated March 6, 2009 and incorporated herein by reference.)
|
|
|
|
3.6
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on July 27, 2009 (filed with the Commission as Exhibit 3.1 on a Current
Report on Form 8-K dated July 27, 2009 and incorporated herein by reference.)
|
|
|
|
3.7
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on November 20, 2009 (filed with the Commission as Exhibit 3.1 on a Current
Report on Form 8-K dated November 17, 2009 and incorporated herein by reference.)
|
|
|
|
3.8
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on February 16, 2010 (filed with the Commission as Exhibit 3.1 on the
Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference.)
|
|
|
|
3.9
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on November 13, 2012 (filed with the Commission as Exhibit 3.1 on the
Form 8-K dated November 13, 2012 and incorporated herein by reference.)
|
3.10
|
|
By-laws of
iVoice Technology, Inc. (filed as Exhibit 3.2 to iVoice Technology, Inc.’s Amendment No. 1 to Form SB-2 Registration
Statement, File No. 333-120490, filed on January 11, 2005, and incorporated herein by reference)
|
|
|
|
10.1
|
|
Employment Agreement, dated
as of August 1, 2004, between iVoice Technology, Inc. and Jerome Mahoney (initially filed as Exhibit 10.9 to iVoice Technology,
Inc.’s Amendment No. 2 to Form SB-2 Registration Statement, File No. 333-120490, filed on April 7, 2005, incorporated
herein by reference) and amendment dated September 26, 2006 (filed as Exhibit 10.1 to iVoice Technology, Inc.’s Form
8-K, filed on September 28, 2006, incorporated by reference herein).
|
|
|
|
10.2
|
|
Amendment No. 1 to Employment
Agreement, dated April 1, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.23 to iVoice Technology,
Inc.’s Amendment No. 2 to Form SB-2 Registration Statement, File No. 333-120490, filed on April 7, 2005, and incorporated
herein by reference)
|
|
|
|
10.3
|
|
Amendment No. 2 to Employment
Agreement, dated June 15, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.24 to iVoice Technology,
Inc.’s Amendment No. 3 to Form SB-2 Registration Statement, File No. 333-120490, filed on June 24, 2005, and incorporated
herein by reference)
|
|
|
|
10.4
|
|
Amendment No. 3 to Employment
Agreement, dated July 18, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.26 to iVoice Technology,
Inc.’s Amendment No. 4 to Form SB-2 Registration Statement, File No. 333-120490, filed on July 28, 2005, and incorporated
herein by reference
|
|
|
|
10.5
|
|
Promissory Note from iVoice
Technology, Inc. to Jerome Mahoney, dated August 5, 2005 (filed as Exhibit 10.13 to iVoice Technology, Inc.’s Form SB-2
Registration Statement, filed on October 3, 2005, and incorporated herein by reference)
|
|
|
|
10.6
|
|
Amendment No. 4 to Employment
Agreement, dated September 29, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.33 to iVoice
Technology, Inc.’s Form SB-2 Registration Statement, filed on October 3, 2005, and incorporated herein by reference)
|
|
|
|
10.7
|
|
Amended Administrative
Services Agreement, dated March 5, 2005, between iVoice, Inc. and iVoice Technology, Inc. (filed as Exhibit 10.1 to iVoice
Technology, Inc.’s Form 8-K, filed on March 14, 2008, and incorporated herein by reference)
|
|
|
|
10.8
|
|
Amendment No. 5 to Employment
Agreement, dated September 26, 2006, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.1 on the Current
Report on Form 8-K dated August 31, 2006, and incorporated herein by reference)
|
|
|
|
10.9
|
|
Amendment No. 6 to Employment
Agreement, dated November 22, 2006, between iVoice Technology, Inc. and Jerome Mahoney filed herein.
|
|
|
|
10.10
|
|
Convertible Promissory
Note, dated March 5, 2008, payable to iVoice Technology, Inc. (filed as Exhibit 10.2 to iVoice Technology, Inc.’s Form
8-K, filed on March 14, 2008, and incorporated herein by reference)
|
|
|
|
10.11
|
|
Amendment No. 7 to Employment
Agreement, dated March 9, 2009, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.1 on the Current Report
on Form 8-K dated March 6, 2009 and incorporated herein by reference)
|
10.12
|
|
Agreement and
Plan of Merger by and between iVoice Technology, Inc. and B Green Innovations, Inc. dated November 17, 2009 (filed with the
Commission as Exhibit 3.1 on a Current Report on Form 8-K dated November 17, 2000 and incorporated herein by reference.)
|
|
|
|
10.13
|
|
Termination of Administrative
Services Agreement dated February 10, 2010 by and between B Green Innovations, Inc. and iVoice, Inc. (filed with the Commission
as Exhibit 10.1 on the Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference.)
|
|
|
|
10.14
|
|
Administrative Services
Agreement dated March 1, 2010 by and between B Green Innovations, Inc. and iVoice, Inc., (filed with the Commission as Exhibit
10.2 on the Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference.).
|
|
|
|
14
|
|
Code of Ethics (filed as
Exhibit
14 to iVoice Technology, Inc.’s Form 10-KSB for
the year ended December 31, 2005, filed on April 4, 2006, and incorporated herein by reference)
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 filed herein.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 filed herein.
|
|
|
|
______________________
*
Attached herein
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report on Form 10-K to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
B Green
Innovations Inc.
|
|
|
|
|
|
Dated: April 29, 2014
|
By:
|
/s/ Jerome
Mahoney
|
|
|
|
Jerome
Mahoney
|
|
|
|
President, CEO & CFO
|
|
|
|
|
|
In
accordance with the 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.
By:
/s/Jerome
Mahoney
Dated: April
29, 2014
Jerome
Mahoney
President
Chief
Executive Officer
Chief
Financial Officer
Director
EXHIBIT
INDEX
No.
|
|
Description
|
|
|
|
3.1
|
|
Amended and Restated Certificate
of Incorporation of iVoice Technology, Inc. (filed as Exhibit 3.1 to iVoice Technology, Inc.’s Amendment No. 1 to Form
SB-2 Registration Statement, File No. 333-120490, filed on January 11, 2005, and incorporated herein by reference)
|
|
|
|
3.2
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on January 11, 2008 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated January 11, 2008 and incorporated herein by reference.)
|
|
|
|
3.3
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on March 10, 2008 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated March 5, 2008 and incorporated herein by reference.)
|
|
|
|
3.4
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on August 11, 2008 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated August 11, 2008 and incorporated herein by reference.)
|
|
|
|
3.5
|
|
Amendment to the Certificate
of Incorporation of iVoice Technology, Inc. filed with the State of New Jersey on March 6, 2009 (filed with the Commission
as Exhibit 3.1 on a Current Report on Form 8-K dated March 6, 2009 and incorporated herein by reference.)
|
|
|
|
3.6
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on July 27, 2009 (filed with the Commission as Exhibit 3.1 on a Current
Report on Form 8-K dated July 27, 2009 and incorporated herein by reference.)
|
|
|
|
3.7
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on November 20, 2009 (filed with the Commission as Exhibit 3.1 on a Current
Report on Form 8-K dated November 17, 2009 and incorporated herein by reference.)
|
|
|
|
3.8
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on February 16, 2010 (filed with the Commission as Exhibit 3.1 on the
Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference.)
|
|
|
|
3.9
|
|
Amendment to the Certificate
of Incorporation filed with the State of New Jersey on November 13, 2012 (filed with the Commission as Exhibit 3.1 on the
Form 8-K dated November 13, 2012 and incorporated herein by reference.)
|
3.10
|
|
By-laws of
iVoice Technology, Inc. (filed as Exhibit 3.2 to iVoice Technology, Inc.’s Amendment No. 1 to Form SB-2 Registration
Statement, File No. 333-120490, filed on January 11, 2005, and incorporated herein by reference)
|
|
|
|
10.1
|
|
Employment Agreement, dated
as of August 1, 2004, between iVoice Technology, Inc. and Jerome Mahoney (initially filed as Exhibit 10.9 to iVoice Technology,
Inc.’s Amendment No. 2 to Form SB-2 Registration Statement, File No. 333-120490, filed on April 7, 2005, incorporated
herein by reference) and amendment dated September 26, 2006 (filed as Exhibit 10.1 to iVoice Technology, Inc.’s Form
8-K, filed on September 28, 2006, incorporated by reference herein).
|
|
|
|
10.2
|
|
Amendment No. 1 to Employment
Agreement, dated April 1, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.23 to iVoice Technology,
Inc.’s Amendment No. 2 to Form SB-2 Registration Statement, File No. 333-120490, filed on April 7, 2005, and incorporated
herein by reference)
|
|
|
|
10.3
|
|
Amendment No. 2 to Employment
Agreement, dated June 15, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.24 to iVoice Technology,
Inc.’s Amendment No. 3 to Form SB-2 Registration Statement, File No. 333-120490, filed on June 24, 2005, and incorporated
herein by reference)
|
|
|
|
10.4
|
|
Amendment No. 3 to Employment
Agreement, dated July 18, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.26 to iVoice Technology,
Inc.’s Amendment No. 4 to Form SB-2 Registration Statement, File No. 333-120490, filed on July 28, 2005, and incorporated
herein by reference
|
|
|
|
10.5
|
|
Promissory Note from iVoice
Technology, Inc. to Jerome Mahoney, dated August 5, 2005 (filed as Exhibit 10.13 to iVoice Technology, Inc.’s Form SB-2
Registration Statement, filed on October 3, 2005, and incorporated herein by reference)
|
|
|
|
10.6
|
|
Amendment No. 4 to Employment
Agreement, dated September 29, 2005, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.33 to iVoice
Technology, Inc.’s Form SB-2 Registration Statement, filed on October 3, 2005, and incorporated herein by reference)
|
|
|
|
10.7
|
|
Amended Administrative
Services Agreement, dated March 5, 2005, between iVoice, Inc. and iVoice Technology, Inc. (filed as Exhibit 10.1 to iVoice
Technology, Inc.’s Form 8-K, filed on March 14, 2008, and incorporated herein by reference)
|
|
|
|
10.8
|
|
Amendment No. 5 to Employment
Agreement, dated September 26, 2006, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.1 on the Current
Report on Form 8-K dated August 31, 2006, and incorporated herein by reference)
|
|
|
|
10.9
|
|
Amendment No. 6 to Employment
Agreement, dated November 22, 2006, between iVoice Technology, Inc. and Jerome Mahoney filed herein.
|
|
|
|
10.10
|
|
Convertible Promissory
Note, dated March 5, 2008, payable to iVoice Technology, Inc. (filed as Exhibit 10.2 to iVoice Technology, Inc.’s Form
8-K, filed on March 14, 2008, and incorporated herein by reference)
|
|
|
|
10.11
|
|
Amendment No. 7 to Employment
Agreement, dated March 9, 2009, between iVoice Technology, Inc. and Jerome Mahoney (filed as Exhibit 10.1 on the Current Report
on Form 8-K dated March 6, 2009 and incorporated herein by reference)
|
10.12
|
|
Agreement and
Plan of Merger by and between iVoice Technology, Inc. and B Green Innovations, Inc. dated November 17, 2009 (filed with the
Commission as Exhibit 3.1 on a Current Report on Form 8-K dated November 17, 2000 and incorporated herein by reference.)
|
|
|
|
10.13
|
|
Termination of Administrative
Services Agreement dated February 10, 2010 by and between B Green Innovations, Inc. and iVoice, Inc. (filed with the Commission
as Exhibit 10.1 on the Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference.)
|
|
|
|
10.14
|
|
Administrative Services
Agreement dated March 1, 2010 by and between B Green Innovations, Inc. and iVoice, Inc., (filed with the Commission as Exhibit
10.2 on the Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference.).
|
|
|
|
14
|
|
Code of Ethics (fil
ed
as Exhibit 14 to iVoice Technology, Inc.’s Form 10-KSB for the year ended December 31, 2005, filed on April 4, 2006,
and incorporated herein by reference)
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 filed herein.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 filed herein.
|
|
|
|
______________________
*
Attached herein
B
GREEN INNOVATIONS, INC.
FINANCIAL
STATEMENTS
DECEMBER
31, 2012 AND 2011
B
GREEN INNOVATIONS, INC.
FINANCIAL
STATEMENTS
CONTENTS
FINANCIAL STATEMENTS
|
Page
|
|
|
Balance Sheets
|
3
|
|
|
Statements of Operations
|
4
|
|
|
Statements of Changes in Stockholders' Equity (Deficit) and Comprehensive Income
|
5
|
|
|
Statements of Cash Flows
|
6
|
|
|
Notes to Financial Statements
|
8
|
|
|
EXPLANATORY
NOTE
These
Financial Statements are part of the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and do not contain
audited financial statements audited by an independent registered public accounting firm for the fiscal year ended December 31,
2012.
B
GREEN INNOVATONS, INC.
|
BALANCE
SHEETS
|
DECEMBER
31,
|
|
|
2012
|
|
2011
|
ASSETS
|
|
(Unaudited)
|
|
(Unaudited)
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
140,139
|
|
|
$
|
207,339
|
|
Marketable
securities, at fair value
|
|
|
—
|
|
|
|
910,845
|
|
Accounts
receivable, net of allowance for doubtful accounts of $8,483
|
|
|
29,650
|
|
|
|
54,910
|
|
Inventories
|
|
|
4,019
|
|
|
|
1,871
|
|
Prepaid
expenses and other current assets
|
|
|
4,641
|
|
|
|
12,320
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
178,449
|
|
|
|
1,187,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
|
7,568
|
|
|
|
10,090
|
|
Intangible
assets
|
|
|
50,491
|
|
|
|
52,657
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
236,508
|
|
|
$
|
1,250,032
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
472,619
|
|
|
$
|
598,961
|
|
Due
to related parties
|
|
|
798,802
|
|
|
|
670,961
|
|
Deferred
maintenance contracts
|
|
|
500
|
|
|
|
500
|
|
Notes
payable to related party
|
|
|
—
|
|
|
|
3,003
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
1,271,921
|
|
|
|
1,273,425
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity (deficit):
|
|
|
|
|
|
|
|
|
Series
A 3% Preferred Stock
|
|
|
761,922
|
|
|
|
1,605,546
|
|
Common
stock:
|
|
|
|
|
|
|
|
|
Class
A Common Stock
|
|
|
1,327,107
|
|
|
|
1,097,806
|
|
Class
B Common Stock
|
|
|
460
|
|
|
|
853
|
|
Class
C Common Stock
|
|
|
—
|
|
|
|
—
|
|
Accumulated
other comprehensive income
|
|
|
—
|
|
|
|
1,016
|
|
Additional
paid-in capital
|
|
|
10,005,633
|
|
|
|
9,901,681
|
|
Accumulated
deficit
|
|
|
(13,130,535
|
)
|
|
|
(12,630,295
|
)
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity (deficit)
|
|
|
(1,035,413
|
)
|
|
|
(23,393
|
)
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity (deficit)
|
|
$
|
236,508
|
|
|
$
|
1,250,032
|
|
See
accompanying notes to the financial statements
B GREEN INNOVATIONS, INC
.
STATEMENTS
OF OPERATIONS
|
|
|
|
For
the Years Ended
|
|
|
December
31, 2012
|
|
December
31, 2011
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
Net
sales
|
|
$
|
319,413
|
|
|
$
|
266,307
|
|
Cost
of sales
|
|
|
88,434
|
|
|
|
63,755
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
230,979
|
|
|
|
202,552
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
|
603,628
|
|
|
|
655,678
|
|
Impairment
of assets
|
|
|
—
|
|
|
|
19,582
|
|
Total
operating expenses
|
|
|
603,628
|
|
|
|
675,260
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(372,649
|
)
|
|
|
(472,708
|
)
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
508
|
|
|
|
3,510
|
|
Dividend
income
|
|
|
70,582
|
|
|
|
33,788
|
|
Interest
expense
|
|
|
(112,987
|
)
|
|
|
(18,781
|
)
|
Loss
on sale of securities
|
|
|
(66,205
|
)
|
|
|
(12,207
|
)
|
Other
income
|
|
|
—
|
|
|
|
161,500
|
|
Gain
on reduction of liabilities
|
|
|
54,269
|
|
|
|
173,571
|
|
Settlement
expense
|
|
|
(73,758
|
)
|
|
|
—
|
|
Total
other income (expense)
|
|
|
(127,591
|
)
|
|
|
341,381
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations before income taxes
|
|
|
(500,240
|
)
|
|
|
(131,327
|
)
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(500,240
|
)
|
|
$
|
(131,327
|
)
|
Basic
and diluted loss per common share
|
|
$ (
0.00)
|
$ (
0.00)
|
|
|
|
|
Weighted
average shares outstanding:
Basic
Diluted
|
|
790,017,247
790,017,247
|
606,349,594
606,349,594
|
See
accompanying notes to the financial statements
B
GREEN INNOVATIONS, INC.
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) AND COMPREHENSIVE INCOME
FOR
THE YEARS ENDED DECEMBER 31, 2012 and 2011(Unaudited)
|
Series
A
Preferred
Stock
|
Common
Stock A
|
Common
Stock B
|
Additional
Paid-In
Capital
|
Accumulated
Other
Comprehensive
Income
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
(Deficit)
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|
|
|
|
Balance
at January 1, 2011
|
2,663.44
|
$2,663,210
|
604,415,387
|
$1,090,306
|
115,025
|
$
1,150
|
$
8,888,090
|
-
|
$(12,498,968)
|
$
143,788
|
Common
stock issued for services received
|
-
|
-
|
5,842,856
|
7,500
|
-
|
-
|
-
|
-
|
-
|
7,500
|
Conversion
of note receivable for redemption of Series A Preferred Stock
|
(1,057.664)
|
(1,057,664)
|
-
|
-
|
-
|
-
|
991,560
|
-
|
-
|
(66,104)
|
Repurchase
of Series B Common Stock
|
-
|
-
|
-
|
-
|
(29,774)
|
(297)
|
(29,477)
|
-
|
-
|
(29,774)
|
Gain
on debt forgiveness - related party
|
-
|
-
|
-
|
-
|
-
|
-
|
51,508
|
-
|
-
|
51,508
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,016
|
-
|
1,016
|
Net
loss for the year ended
December,
31, 2011
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(131,327)
|
(131,327)
|
Balance
at December 31, 2011
|
1,605.776
|
$1,605,546
|
610,258,243
|
$1,097,806
|
85,251
|
$ 853
|
$ 9,901,681
|
$ 1,016
|
$(12,630,295)
|
$ (23,393)
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services received
|
-
|
-
|
152,000,000
|
75,100
|
-
|
-
|
-
|
-
|
-
|
75,100
|
Conversion
of Series A Preferred Stock
|
(843.624)
|
(843,624)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(843,624)
|
Repurchase
of Series B Common Stock
|
-
|
-
|
-
|
-
|
(39,237)
|
(393)
|
(38,844)
|
-
|
-
|
(39,237)
|
Common
stock issued for conversion of debt
|
-
|
-
|
598,906,456
|
154,201
|
-
|
-
|
142,796
|
-
|
-
|
296,997
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,016)
|
-
|
(1,016)
|
Net
loss for the year ended
December,
31, 2012
|
-
|
-
|
-
|
-
|
|
|
-
|
-
|
(500,240)
|
(500,240)
|
Balance
at December 31, 2012
|
762.152
|
$761,922
|
1,361,164,699
|
$1,327,107
|
46,014
|
$ 460
|
$10,005,633
|
$ -
|
$(13,130,535)
|
$ (1,035,413)
|
See
accompanying notes to the financial statements
B
GREEN INNOVATIONS, INC.
STATEMENTS
OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31,
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(500,240
|
)
|
|
$
|
(131,327
|
)
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
4,688
|
|
|
|
12,881
|
|
Issuance
of common stock for services
|
|
|
75,100
|
|
|
|
7,500
|
|
Impairment
of assets
|
|
|
—
|
|
|
|
19,582
|
|
Loss
on sale of securities
|
|
|
66,205
|
|
|
|
12,207
|
|
Beneficial
interest on conversion of debt
|
|
|
85,546
|
|
|
|
—
|
|
Settlement
expense on conversion of debt
|
|
|
73,758
|
|
|
|
—
|
|
Gain
on extinguishment of debt
|
|
|
(53,860
|
)
|
|
|
(173,571
|
)
|
|
|
|
|
|
|
|
|
|
Changes
in certain assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease
(increase) in accounts receivable
|
|
|
25,260
|
|
|
|
(50,626
|
)
|
Increase
in note receivable
|
|
|
—
|
|
|
|
(6,104
|
)
|
Increase
in inventories
|
|
|
(2,148
|
)
|
|
|
(765
|
)
|
Decrease
in prepaid expenses and other assets
|
|
|
7,679
|
|
|
|
12,657
|
|
(Decrease)
increase in accounts payable and accrued expenses
|
|
|
(10,158
|
)
|
|
|
127,436
|
|
Increase
in due to related parties
|
|
|
200,207
|
|
|
|
188,005
|
|
Decrease
in deferred maintenance contracts
|
|
|
—
|
|
|
|
(670
|
)
|
Net
cash provided by (used in) operating activities
|
|
|
(27,963)
|
|
|
|
17,205
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from sale of marketable securities
|
|
|
843,624
|
|
|
|
897,285
|
|
Purchases
of marketable securities
|
|
|
—
|
|
|
|
(1,819,321
|
)
|
Net
cash provided by (used in) investing activities
|
|
|
843,624
|
|
|
|
(922,036
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Conversion
of Series A Preferred Stock
|
|
|
(843,624
|
)
|
|
|
—
|
|
Repurchase
of Class B Common Stock
|
|
|
(39,237
|
)
|
|
|
(29,774
|
)
|
Net
cash (used in) financing activities
|
|
|
(882,861
|
)
|
|
|
(29,774
|
)
|
|
|
|
|
|
|
|
|
|
Net
(decrease) in cash and cash equivalents
|
|
|
(67,200
|
)
|
|
|
(934,605
|
)
|
Cash
and cash equivalents, beginning of year
|
|
|
207,339
|
|
|
|
1,141,944
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of year
|
|
$
|
140,139
|
|
|
$
|
207,339
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Schedule of Cash Flow Information::
|
|
|
|
|
|
|
|
|
During
the year, cash was paid for the following:
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the financial statements
B
GREEN INNOVATIONS, INC.
STATEMENTS
OF CASH FLOWS (Continued)
Supplemental
Schedule of Non-Cash Investing and Financing Activities:
For
the Year Ended December 31, 2012:
a)
The Company converted $59,193 of accounts payable into 598,906,456 shares of Class A common stock.
For
the Year Ended December 31, 2011:
a)
The
Company converted $66,104 of the principal amount and accrued interest of the
iVoice Note Receivable, dated April 30, 2010, for redemption of 1,057,664 shares of B Green innovations Series A 3% Preferred
Stock in accordance with the terms of the Promissory Note.
B
GREEN INNOVATIONS, INC,
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2011 AND 2010
NOTE
1 – BACKGROUND
B
Green Innovations, Inc., a Matawan, New Jersey-based corporation, (OTC Bulletin Board: BGNN), formerly iVoice Technology, Inc.,
(“B Green Innovations” or the “Company”) was incorporated under the laws of New Jersey on November 10,
2004 as a wholly owned subsidiary of iVoice, Inc. (“iVoice”). In May 2008, the Company formed B Green Innovations,
Inc. (“B Green”), a wholly-owned subsidiary to commercialize its “green” technology platforms.
On
November 17, 2009, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), B Green Innovations, Inc.,
a wholly owned subsidiary of iVoice Technology, Inc. (the “Company”), merged into iVoice Technology, Inc.
On
July 28, 2009, the Board of Directors and shareholders through written consent representing a majority of the total voting Class
A and Class B Common stock voted to change the name of the Company to B Green Innovations, Inc. On November 20, 2009,
the Company filed an Amendment to the Certificate of Incorporation with the State of New Jersey to officially change the name
of the Company.
NOTE
2 - BUSINESS OPERATIONS
The
B Green Innovations, Inc. ("B Green"), "Go Green" mission from its inception, is to create a "Green"
company for the development of solutions to eliminate waste from the world's environment. B Green offers consumers a realistic
and necessary solution to the problem of waste around the world. We believe that to truly have an impact on the planet, one must
be committed to the environment and seek out environmentally-friendly products.
The
first technology was to create new products from recycled tire rubber. EcoPod® and VibeAway® address important environmental
concerns and problems facing the planet today. EcoPod® and VibeAway® are 100% recycled rubber-based products that can
be utilized as support pads under any units that vibrate and make noise, including washing machines, dryers, compressors, commercial
condensers, and many other units that advantageously benefit from sound and vibration control. In addition, we announced that
we had filed a new patent application for a process described as “Recycled Tire Pod with Appliance Recess Guide.”
Additionally,
the Company released its 100% Degradable / Biodegradable Compactor Bags. These bags include oxo-biodegradable additive using the
latest technology that supports the 3 R’s of Packaging Reduce, Reuse, Recycle and provides a fourth R, Remove. Independent
Scientific Testing show that plastics incorporated with an additive called Renatura™ will degrade and then fully biodegrade,
without leaving behind harmful residues in the soil.
These
oxo-biodegradable plastic products are scientifically proven to be non-toxic and are FDA compliant, meaning they are safe for
food packaging applications and have been awarded approved food film contact ‘no migration’ status. Regular plastic
bags can take up to 100 years to break down causing plastic pollution and harm to both domestic and wild life. Standard plastics
are filling our landfills and greatly impacting our planet. Plastics incorporating this additive in the presence of oxygen disappear
when exposed to UV light or thermal heat. Our product is designed to allow plastics to degrade like a leaf, slowly yielding CO2
(which through photosynthesis becomes oxygen), water, bio-waste, and mineral salts that condition the soil in the process.
The
Company continues to evaluate additional products to its product line as well as expanding its distribution channels.
The
Company will also continue to support the Interactive Voice Response ("IVR"), software that was developed by iVoice.
The Company's Interactive Voice Response line is designed to read information from and write information to, databases, as well
as to query databases and return information.
IVR
is an application generator that allows full connectivity to many databases, including Microsoft Access, Microsoft Excel, Microsoft
Fox Pro, and Paradox, or to standard text files. The IVR software is sold as an application generator that gives the end user
the ability to develop its own customized IVR applications or as a customized turnkey system. IVR performs over 40 different customizable
commands. Examples of IVR range from simply selecting announcements from a list of options stored in the computer (also known
as audio text) to more complex interactive exchanges such as querying a database for information.
NOTE
3 - GOING CONCERN
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplates continuation of the Company as a going concern.
As
of December 31, 2012, the Company had recurring net operating losses and negative cash flow from operations since inception and
recurring net losses. These matters raise substantial doubt about the Company’s ability to continue as a going concern.
Therefore, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent
upon continued operations of the Company, which in turn, is dependent upon the Company’s ability to raise capital and/or
generate positive cash flow from operations.
Management
plans to increase the development, manufacture, and distribution of “green” products to generate a positive cash flow.
However, these plans are dependent upon obtaining additional capital. There can be no assurance that the Company will be able
to obtain the necessary capital, and achieve its growth objectives.
The
financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
NOTE
4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
accompanying unaudited financial statements included herein have been prepared, without audit, in conformity with accounting principles
generally accepted in the United States of America
for annual financial statements and with Form 10-K
and article 8 of the Regulation S-X of the United States
Securities and Exchange Commission ("SEC").
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
With
respect to IVR customer support services, the Company offers customers an optional annual software maintenance and support agreement
for subsequent periods. Sales of purchased maintenance and support agreements are recorded as deferred revenue and recognized
over the respective terms of the agreements.
For
the “green” products revenues are recognized at the time of shipment to, or acceptance by customer, provided title
and risk of loss is transferred to the customer. Provisions, when appropriate, are made where the right to return exists.
Shipping
and handling costs charged to customers are classified as revenue, and the shipping and handling costs incurred are included in
cost of sales.
The
Company estimates its warranty costs based on historical warranty claims experience. Due to the limited sales of the Company’s
products, management has determined that warranty costs are immaterial and has not included an accrual for potential warranty
claims. Presently, costs related to warranty coverage are expensed as incurred. Warranty claims are reviewed quarterly to verify
that warranty liabilities properly reflect any remaining obligation based on the anticipated expenditures over the balance of
the obligation period.
|
e)
|
Research
and Development
Costs
|
Research
and development costs are charged to expense as incurred. The Company has not incurred any research and development costs for
the years ended December 31, 2012 and 2011.
Advertising
costs are expensed as incurred and included in selling expenses. For the years ended December 31, 2012 and 2011, the Company incurred
advertising expenses of $4,415 and $4,750, respectively.
|
g)
|
Cash
and Cash
Equivalents
|
The
Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
There were no cash equivalents at December 31, 2012 and 2011. The Company maintains cash balances at a financial institution that
is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to federally insured limits. At times balances
may exceed FDIC insured limits. The Company has not experienced any losses in such accounts.
The
Company has evaluated its investment policies consistent with ASC 320-10-25, “Classification of Investment Securities”,
and determined that all of its investment securities are to be classified as available for sale securities. Available for sale
securities are carried at fair value, with the unrealized gains and losses reported in Stockholders' Equity (Deficit) under the
caption Accumulated Other Comprehensive Income.
|
i)
|
Concentration
of Credit Risk
|
Financial
instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable
and cash. As of December 31, 2012 the Company believes it has no significant risk related to its concentration within its accounts
receivable.
Accounts
receivable are non-interest bearing obligations due under normal trade terms. Senior management reviews accounts receivable on
a monthly basis to determine if any receivables will be potentially uncollectible. Historical bad debts and current economic trends
are used in evaluating the allowance for doubtful accounts. The Company includes any accounts receivable balances that are determined
to be uncollectible, along with a general reserve, in its overall allowance for doubtful accounts. After all attempts to collect
a receivable have failed, the receivable is written off against the allowance. Based on the information available, the Company
believes its allowance for doubtful accounts as of December 31, 2012 and 2011 is adequate.
|
k)
|
Property
and Equipment
|
Property
and equipment is stated at cost. Depreciation is computed using the straight-line method based upon the estimated useful lives
of the assets, generally five to seven years. Maintenance and repairs are charged to expense as incurred.
Registration
and maintenance costs associated with the filing and registration of patents are prepaid and amortized over the remaining life
of the patent, not to exceed 20 years.
The
Company accounts for income taxes using the asset and liability method described in FASB ASC 740. Deferred tax assets arise from
a variety of sources, the most significant being: a) tax losses that can be carried forward to be utilized against profits in
future years; b) expenses recognized in the books but disallowed in the tax return until the associated cash flow occurs; and
c) valuation changes of assets which need to be tax effected for book purposes but are deductible only when the valuation change
is realized.
Deferred
tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities
and are measured using enacted tax rates and laws that are expected to be in effect when such differences are expected to reverse. The
measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefit which is not more likely
than not to be realized. In assessing the need for a valuation allowance, future taxable income is estimated, considering the
realization of tax loss carryforwards. Valuation allowances related to deferred tax assets can also be affected by changes to
tax laws, changes to statutory tax rates and future taxable income levels. In the event it was determined that the Company would
not be able to realize all or a portion of our deferred tax assets in the future, we would reduce such amounts through a charge
to income in the period in which that determination is made. Conversely, if we were to determine that we would be able to realize
our deferred tax assets in the future in excess of the net carrying amounts, we would decrease the recorded valuation allowance
through an increase to income in the period in which that determination is made. In its evaluation of a valuation allowance
the Company takes into account existing contracts and backlog, and the probability that options under these contract awards will
be exercised as well as sales of existing products. The Company prepares profit projections based on the revenue and expenses
forecast to determine that such revenues will produce sufficient taxable income to realize the deferred tax assets.
The
Company adopted FASB ASC 740-10-50, Accounting for Uncertainty in Income Taxes. ASC 740-10-50 prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. ASC 740-10 requires that the Company determine whether the benefits of its tax positions are more-likely-than-not
of being sustained upon audit based on the technical merits of the tax position. The Company recognizes the impact of an uncertain
income tax position taken on its income tax return at the largest amount that is more-likely-than-not to be sustained upon audit
by the relevant taxing authority.
Despite
the Company’s belief that its tax return positions are consistent with applicable tax laws, one or more positions may be
challenged by taxing authorities. Settlement of any challenge can result in no change, a complete disallowance, or some partial
adjustment reached through negotiations or litigation.
Interest
and penalties related to income tax matters, if applicable, will be recognized as income tax expense. During the years ended December 31,
2012 and 2011 the Company did not incur any expense related to interest or penalties for income tax matters, and no such amounts
were accrued as of December 31, 2012 and 2011.
n)
|
Earnings (loss) per Share
|
FASB
ASC 260-10 requires the presentation of basic earnings per share ("basic EPS") and diluted earnings per share ("diluted
EPS").
The
Company’s basic income (loss) per common share is based on net income (loss) for the relevant period, divided by the weighted
average number of common shares outstanding during the period. Diluted income per common share is based on net income,
divided by the weighted average number of common shares outstanding during the period, including common share equivalents, such
as outstanding stock options and beneficial conversion of related party accounts. The computation of diluted loss per share for
the years ending December 31, 2012 and December 31, 2011, do not assume conversion, exercise or contingent exercise of warrants,
and securities as they would have an anti-dilutive effect on the earnings resulting from the Company’s net loss position
in that period.
The
computation of EPS is as follows:
|
|
Year
Ended
December
31, 2012
|
|
Year
Ended
December
31, 2011
|
Basic
net income (loss) per share:
|
|
|
|
|
Net
(loss) attributable to common stockholders
|
$
|
(500,240)
|
$
|
(131,327)
|
Weighted-average
common shares outstanding
|
|
790,017,247
|
|
606,349,594
|
Basic
net (loss) per share attributable to common
stockholders
|
$
|
(0.00)
|
$
|
(0.00)
|
Diluted
net income (loss) per share:
|
|
|
|
|
Net
(loss) attributable to common stockholders
|
$
|
(500,240)
|
$
|
(131,327)
|
Weighted-average
common shares outstanding
|
|
790,017,247
|
|
606,349,594
|
Incremental
shares attributable to: Series A Preferred Stock
and
Series B Common Stock
|
|
-
|
|
-
|
Total
adjusted weighted-average shares
|
|
790,017,247
|
|
606,349,594
|
Diluted
net (loss) per share attributable to common
stockholders
|
$
|
(0.00)
|
$
|
(0.00)
|
As
of December 31, 2012, the Company had common stock equivalents of 10,324,474,982 due on beneficial conversion of related party
accounts. As of December 31, 2011, the Company had common stock equivalents of 4,054,779,844 due beneficial conversion of related
party accounts.
o)
Reclassifications
Certain
prior year amounts have been reclassified to conform to the current year presentation. The reclassifications have had no effect
on the financial position, operations or cash flows for the year ended December 31, 2011.
p) Fair
Value of Instruments
The
carrying amounts reported in the balance sheets as of December 31, 2012 and December 31, 2011 for cash and cash equivalents, marketable
securities, accounts receivable, inventories, prepaid expenses and other current assets, accounts payable and accrued expenses
other current liabilities approximate the fair value because of the immediate or short-term maturity of these financial instruments.
The fair value of the debt approximates its carrying value at the stated discount rate of the debt to reflect recent market conditions.
q)
Impairment of Long-Lived Assets
The
Company assesses the recoverability of the carrying value of its long-lived assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future, undiscounted cash flows expected to be generated by an asset. If
such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. For the year ended December 31, 2011 the Company recorded an impairment loss
of $19,582 related to fixed assets no longer utilized in the amount of $17,258 and for patents rejected in the amount of $2,324.
Such amounts are reported in the accompanying statement of operations in operating expenses. No impairment
losses were recognized for the year ended December 31, 2012.
r) Accumulated
Other Comprehensive Income (Loss)
ASC
220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive income (loss) and
its components in the financial statements. The items of other comprehensive income (loss) that are typically required to be displayed
are foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt
and equity securities.
s)
Recent Accounting Pronouncements
There
were various other updates recently issued, most of which represented technical corrections to the accounting literature or application
to specific industries and are not expected to a have a material impact on the Company's financial position, results of operations
or cash flows.
NOTE
5 – NOTE RECEIVABLE – RELATED PARTY
The
Company had an administrative services agreement with iVoice, Inc. The Company provided iVoice, Inc. administrative and financial
services as well as providing office space. This agreement was terminated in December 2011. The terms of the agreement were as
follows:
a) Month-to-month
basis unless terminated by either party providing thirty (30) days advance notice to the non-terminating party. This agreement
can not be terminated until B Green has redeemed all of the B Green Series A 3% Preferred Stock that is held by the Company.
b) In
consideration of the services, iVoice, Inc. will pay B Green $15,000 per month.
c) B
Green shall receive payment by redeeming the number of B Green Series A 3% Preferred Stock shares held by iVoice using the formula
set below:
|
|
i.
calculate the number of
iVoice Class A Common
Stock shares by dividing
(x) the dollar value of
the fees that B Green
is to be paid by fifty
percent (50%) of the lowest
issue price of iVoice
Class A common Stock.
|
|
|
ii. The
iVoice
market
value
shall
be
equal
to
the
number
of
iVoice
Class
A
Common
Stock
shares
calculated
above
multiplied
by
the
highest
closing
ask
price
of
iVoice
Class
A
Common
stock
in
the
previous
thirty
(30)
trading
days
prior
to
the
date
of
the
calculation.
|
|
|
iii. The number of B Green Series A 3% Preferred Stock shares
to be redeemed hereunder shall be calculated by dividing the iVoice Market value calculated above
by the Series A Initial Value, as defined in the B Green Certificate of Incorporation.
|
On
January 5, 2011, the Company converted $66,104 of the principal amount and accrued interest of the iVoice Note Receivable, dated
April 30, 2010 for redemption of 1,057.664 shares of B Green Innovations Series A 3% Preferred Stock in accordance with the terms
of the Promissory Note. For the year ended December 31, 2011 the Company recorded income of $161,500 which is included in other
income in the accompanying statement of operations.
In
December 2011, iVoice paid the Company $127,956 in complete and full satisfaction of the Note Receivable and accrued interest
in the amount $158,868. The difference of $30,912 was forgiven by the Company, and charged to Additional Paid-In Capital in the
accompanying balance sheet at December 31, 2011.
As
of December 31, 2012 and December 31, 2011, the note receivable balance was $-0-. Additionally, the Company recorded interest
income of $0 and $2,368 for the years ended December 31, 2012 and 2011, respectively. Interest receivable was
$-0- as of December 31, 2012.
NOTE
6 – PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment consist of the following:
|
|
|
December
31, 2012
|
|
December
31, 2011
|
Machinery
and equipment
|
|
$
|
40,569
|
$
|
40,569
|
Less:
Accumulated depreciation
|
|
|
(33,001)
|
|
(30,479)
|
|
|
$
|
7,568
|
$
|
10,090
|
Depreciation
expense was $2,522 and $7,928 for the years ended December 31, 2012 and 2011, respectively.
For
the year ended December 31, 2011 the Company recorded an impairment loss of $17,258 related to fixed assets no longer utilized.
NOTE
7 – INTANGIBLE ASSETS
Intangible
assets consist of patents pending in the amounts of $50,491 and $52,657 for the years ended December 31, 2012 and 2011, respectively.
Amortization expense for the years ended December 31, 2012 and 2011 was $2,166 and $4,953, respectively. We assess the carrying
value of intangible assets for impairment annually. For the year ended December 31, 2011, the Company recorded an impairment expense
in the amount of $2,324.
NOTE
8 - RELATED PARTY TRANSACTIONS
The
Company has assumed an outstanding promissory demand note in the amount of $190,000 payable to Jerry Mahoney, President and Chief
Executive Officer of iVoice and Non-Executive Chairman of the Board of B Green Innovations, Inc. This amount is related
to funds loaned to iVoice and is unrelated to the operations of B Green Innovations, Inc. The note will bear interest
at the rate of prime plus 2.0% per annum (5.25% at December 31, 2012) on the unpaid balance until paid. Interest payments
are due and payable annually. Under the terms of the Promissory Note, at the option of the Note holder, principal and interest
can be converted into either (i) one share of Class B Common Stock of B Green Innovations, Inc., par value $.01, for each dollar
owed, (ii) the number of shares of Class A Common Stock of B Green Innovations, Inc. calculated by dividing (x) the sum of the
principal and interest that the Note holder has requested to have prepaid by (y) eighty percent (80%) of the lowest issue price
of Class A Common Stock since the first advance of funds under this Note, or (iii) payment of the principal of this Note, before
any repayment of interest. The Board of Directors of the Company maintains control over the issuance of shares and may decline
the request for conversion of the repayment into shares of the Company.
During
the year ended December 31, 2012, the Company issued 64,850,490 shares of Class A Common Stock as repayment of the outstanding
loan and a portion of the deferred compensation. As of December 31, 2012 and 2011, the outstanding balances were $0 and $3,003,
respectively
.
The
Company entered into a five-year employment agreement with Jerome Mahoney to serve as Non-Executive Chairman of the Board of Directors,
effective August 1, 2004. On March 9, 2009, the term of the employment agreement between the Company and Mr. Mahoney, the
Company’s CEO, was extended to July 31, 2016. The Company will compensate Mr. Mahoney with a base salary of $85,000
for the first year with annual increases based on the Consumer Price Index. Mr. Mahoney had a consulting agreement with the Company’s
former subsidiary B Green Innovations for annual compensation of $24,000 and upon every annual anniversary thereafter, at the
rate based on the increase in the Consumer Price Index for All Urban Consumers (New York-Northern N.J.-Long Island). Effective
January 1, 2010, this amount was added to Mr. Mahoney’s base salary. On June 15, 2010, Mr. Mahoney’s employment
agreement was amended to increase the base salary to $195,000 effective July 1, 2010. All other terms of the Employment Agreement
shall remain in full force and effect. A portion of Mr. Mahoney’s compensation shall be deferred until such time that the
Board of Directors determines that the Company has sufficient financial resources to pay his compensation in cash. For the year
ended December 31, 2012, Mr. Mahoney drew $24,597 of his salary and the remainder was accrued to deferred compensation.
The
Board has the option to pay Mr. Mahoney’s compensation in the form of Class B Common Stock. Mr. Mahoney will also be entitled
to certain bonuses based on mergers and acquisitions completed by the Company. Pursuant to the terms of the Class B Common Stock,
a holder of Class B Common Stock has the right to convert each share of Class B Common Stock into the number of shares of Class
A Common Stock determined by dividing the number of Class B Common Stock being converted by a 20% discount of the lowest price
for which the Company had ever issued its Class A Common Stock.
On
May 8, 2007, the Company executed a Security Agreement providing Jerome Mahoney, President and Chief Executive Officer of the
Company, with a security interest in all of the assets of the Company to secure the promissory note dated August 5, 2005 and all
future advances including, but not limited to, additional cash advances: deferred compensation, deferred expense reimbursement,
deferred commissions and income tax reimbursement for the recognition of income upon the sale of common stock for the purpose
of the holder advancing additional funds to the Company.
During
the year ended December 31, 2012, the Company issued 204,000,000 shares of Class A Common Stock as repayment due for deferred
compensation. As of December 31, 2012 and 2011, total deferred compensation due to Mr. Mahoney was $639,188 and $484,928 respectively.
In addition, amounts due to Mr. Mahoney for accrued interest is $159,614 as of December 31, 2012.
NOTE
9 - INCOME TAXES
The
tax effect of temporary differences, primarily net operating loss carryforwards, asset reserves and accrued liabilities give rise
to a deferred tax asset. Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted
tax rate expected to be in effect when the differences reverse. Because of the current uncertainty of realizing the benefit of
the tax carry forward, a valuation allowance equal to the tax benefit for deferred taxes has been established. The full realization
of the tax benefit associated with the carry forward depends predominantly upon the Company's ability to generate taxable income
during the carry forward period.
The components
of the Company’s deferred taxes at December 31, 2012 and 2011 are as follows:
|
|
|
2012
|
|
|
|
2011
|
|
Net operating loss carry forwards
|
|
$
|
1,034,000
|
|
|
$
|
853,000
|
|
Deferred compensation
|
|
|
255,000
|
|
|
|
215,000
|
|
Deferred tax asset
|
|
|
1,289,000
|
|
|
|
1,068,000
|
|
Less: valuation allowance
|
|
|
(1,289,000
|
)
|
|
|
(1,068,000
|
)
|
Deferred tax asset, net
|
|
$
|
-0-
|
|
|
$
|
-0-
|
|
At
December 31, 2012 and 2011, the Company had a federal net operating loss carry forward in the approximate amounts of $2,590,000
and $2,136,000, respectively, available to offset future taxable income. The Company established valuation allowances equal to
the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
NOTE
10 - CAPITAL STOCK
Pursuant
to the Company’s certificate of incorporation, as amended, the Company is authorized to issue 1,000,000 shares of Preferred
Stock, par value of $1.00 per share, 10,000,000,000 shares of Class A Common Stock, no par value per share, 50,000,000 shares
of Class B Common Stock, par value $0.01 per share, and 20,000,000 shares of Class C Common Stock, par value $0.01 per share.
Below is a description of the Company’s outstanding securities, including Preferred Stock, Class A Common Stock, Class B
Common Stock and Class C Common Stock.
a) Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of Preferred Stock, par value $1.00 per share.
Of
the 1,000,000 shares of Preferred Stock, 10,000 shares are designated Series A 10% Preferred Stock, par value $1.00 per share,
with a stated value of $1,000 (the “Series A Preferred Stock”). The stated value is used for calculation of dividends
and liquidation preferences. On March 12, 2008, the Company sold 1,444.444 shares of Series A 10% Preferred Stock to iVoice, Inc.
for $1,444,444. With consent of the holders of the Series A Preferred Stock, on March 6, 2009, the Company amended
its Certificate of Incorporation and amended the rights of the Series A Preferred by: (i) eliminating all voting rights for the
Series A Preferred Stock and (ii) eliminating the conversion feature of the Series A Preferred Stock.
In February
2010, the Company filed with the State of New Jersey an Amendment to the Certificate of Incorporation that revised the rights
of the holders of the Company’s Series A 10% Convertible Preferred Stock. The revisions included:
|
a.
|
The
preferred stock will be referred
to in the Company’s
Certificate of Incorporation
as: “Series A 3% Preferred
Stock”.
|
|
b.
|
The
holders of the preferred
stock will have a new dividend
rate of 3%.
|
|
c.
|
The
holders of the Series A 3%
Preferred Stock shall have
no voting rights.
|
|
d.
|
Series
A 3% Preferred Stock is convertible,
at the option of the holder
with the consent of the Corporation,
at any time after the date
of issuance of such share
into such number of fully
paid and non-assessable shares
of Common Stock as is determined
by dividing the Series A
Initial Value, as may be
adjusted from time to time,
by the Conversion Price applicable
to such share. The "Conversion
Price” per share shall
be calculated as the closing
bid price of the Class A
Common stock on the last
trading day immediately prior
to the date that the Notice
of Conversion is tendered
to the Corporation, subject
to certain adjustments.
|
|
e.
|
The
holders of shares of Series
A Preferred Stock shall be
prohibited from converting
shares of Series A Preferred
Stock, and the Corporation
shall not honor any attempted
conversion of Series A Preferred
Stock, if, and to the extent,
the shares of Common Stock
held by such converting holder
of Series A Preferred Stock
following any attempted conversion
would exceed 9.99% of the
outstanding shares of Common
Stock of the Corporation
after giving effect to such
conversion.
|
On
February 10, 2010, iVoice, Inc. agreed to purchase 1,100 shares of the Company’s 3% Preferred Stock for $1,100,000 in cash.
On February 10, 2010, the Company issued 119 shares of Series A Preferred Stock in exchange for $112,058 Convertible Promissory
Note and accrued interest of $6,708 to iVoice, Inc.
On
January 5, 2011, the Company converted $66,104 of the principal amount and accrued interest of the iVoice Note Receivable, dated
April 30, 2010 for redemption of 1,057.664 shares of B Green Innovations Series A 3% Preferred Stock in accordance with the terms
of the Promissory Note.
In
February 2011 the Board of Directors authorized the Company to sell up 350 shares of the Series A 3% Preferred Stock.
On
January 9, 2012, Jerome Mahoney exchanged a note issued by iVoice, Inc. for the sum of $972,203 for a new note issued by American
Security Resources Corporation (“ASRC”), an unrelated party to the Company (the “ASRC Note”). Thereafter,
pursuant to a Preferred Stock Exchange Agreement by and among, Jerome Mahoney, ASRC and the Company, Mr. Mahoney returned the
ASRC Note to ASRC in exchange for the Company cancelling an equal value of the Company’s Series A 3% Preferred Stock (“Preferred
Stock”), or 972.2 shares, held by iVoice, Inc. and the issuance of an equal number of Preferred Stock shares to Mr. Mahoney.
On
November 13, 2012 the Company filed with the State of New Jersey an Amendment to the Certificate of Incorporation that revised
the rights of the holders of the Company’s Series A 3% Preferred Stock which provided additional conversions rights. The
holder may convert, with the consent of the Corporation their stock into (b) such amount of marketable securities held by the
Corporation equal in value to the Series A Initial Value, as may be adjusted from time to time, or (c) cash equal in value to
the Series A Initial Value, as may be adjusted from time to time. During the year ended December 31, 2012
,
the holder converted 843.624 shares of Series A 3% Preferred Stock
for
marketable securities
at the Initial Value of $843,624.
As
of December 31, 2012 and 2011, 2663.444 shares were issued and 762.156 shares and 1,605.78 shares of Series A 3% Preferred Stock
are outstanding, respectively.
As
of December 31, 2012 and 2011, the Company had dividends in arrears on the Series A Preferred Stock in the amounts of $432,564
and $397,233, respectively.
b) Class
A Common Stock
As
of December 31, 2012, there are 10,000,000,000 shares of Class A Common Stock authorized, no par value, and 1,362,359,182 shares
were issued, 1,361,164,699 shares were outstanding, and 1,194, 483 shares were issued pending conversion by YA Global Investments.
During
the year ended December 31, 2011 the Company issued 5,842,856 shares of Class A common stock with a fair value of $7,500 for services.
During
the year ended December 31, 2012 the Company issued; (a) 152,000,000 shares of Class A common stock with a fair value of $75,100
for services; and (b) 598,906,456 shares of Class A common stock with a fair value of $296,997 for conversion of debt valued at
$137,693.
Each
holder of Class A Common Stock is entitled to receive ratably dividends, if any, as may be declared by the Board of Directors
out of funds legally available for payment of dividends. The Company has never paid any dividends on its common stock and does
not contemplate doing so in the foreseeable future. The Company anticipates that any earnings generated from operations will be
used to finance its growth objectives.
c) Class
B Common Stock
As
of December 31, 2012, there are 50,000,000 shares of Class B Common Stock authorized, par value of $.01 per share and 115,025
shares issued and 46,014 shares outstanding. Each holder of Class B Common Stock has voting rights equal to 100 shares of Class
A Common Stock. A holder of Class B Common Stock has the right to convert each share of Class B Common Stock into the number of
shares of Class A Common Stock determined by dividing the number of Class B Common Stock being converted by a 20% discount of
the lowest price that B Green Innovations, Inc. had ever issued its Class A Common Stock. Upon our liquidation, dissolution, or
winding-up, holders of Class B Common Stock will be entitled to receive distributions. On July 27, 2009, the Company amended its
Certificate of Incorporation as follows: a holder of Class B Common Stock has the right to convert each share of Class B Common
Stock into the number of shares of Class A Common Stock determined by dividing the number of Class B Common Stock being converted
by a 20% discount of the lowest price that B Green Innovations, Inc. had ever issued its Class A Common Stock. Each holder of
Class B common stock has voting rights equal to the number of Class A shares that would be issued upon the conversion of the Class
B shares, had all of the outstanding Class B shares been converted on the record date used for purposes of determining which shareholders
would vote. Previously, each holder of Class B Common Stock has voting rights equal to 100 shares of Class A Common Stock.
In February 2011, the Board of Directors authorized the Company to buyback up to 115,025 shares of Class B common stock at $1.00
per share. During the year ended December 31, 2012, the Company repurchased 39,237 shares of its Class B Common Stock at $1.00
per share which is the same price that it was purchased by the related party.
d) Class
C Common Stock
As
of December 31, 2012, there are 20,000,000 shares of Class C Common Stock authorized, par value $.01 per share. Each holder of
Class C Common Stock is entitled to 1,000 votes for each share held of record. Shares of Class C Common Stock are not convertible
into Class A Common Stock. Upon liquidation, dissolution or wind-up, the holders of Class C Common Stock are not entitled to receive
our net assets pro rata. As of December 31, 2012 and 2011, no shares were issued or outstanding.
NOTE
11 - STOCK OPTIONS
Stock
Option Plans
During
2005, the Company adopted the 2005 Stock Incentive Plan and the 2005 Directors’ and Officers’ Stock Incentive Plan
(“Plan”) in order to attract and retain qualified personnel. Under the Plan, the Board of Directors, in its discretion
may grant stock options (either incentive or non-qualified stock options) to officers, directors and employees. The Company did
not issue any stock options under the 2005 Stock Incentive Plan as of December 31, 2012.
NOTE
12 – FAIR VALUE MEASUREMENTS
FASB
Codification Topic 820-10, Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair
value under generally accepted accounting principles and expands disclosures about fair value measurements; however, it does not
require any new fair value measurements, rather, its application is made pursuant to other accounting pronouncements that require
or permit fair value measurements.
As
defined in FASB ASC 820-10, fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions
that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent
in the inputs to the valuation technique.
Fair
value measurements are generally based upon observable and unobservable inputs. Observable inputs reflect market data obtained
from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market
information. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable
inputs. FASB Codification Topic 820-10, Fair Value Measurements and Disclosures includes a fair value hierarchy that is intended
to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy consists
of the following three levels:
Level
1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets
are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information
on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities
and listed equities.
Level
2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly
observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation
methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward
prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments,
as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout
the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions
are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity
swaps, interest rate swaps, options and collars.
Level
3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may
be used with internally developed methodologies that result in management’s best estimate of fair value.
The
valuation techniques that may be used to measure fair value are as follows:
Market
approach — Uses prices and other relevant information generated by market transactions involving identical or comparable
assets or liabilities
Income
approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations
about those future amounts, including present value techniques, option-pricing models and excess earnings method
Cost
approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement
cost)
The
Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”)
No. 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-06”) which requires additional disclosures
about the various classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity
in Level 3 fair value measurements and the transfers between Levels 1, 2, & 3.
The
following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that
were accounted for at fair value as of December 31, 2011 and 2010. As required by FASB ASC 820-10, financial assets and liabilities
are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The
Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may
affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
December
31, 2012
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
Total Assets
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
December
31, 2011
|
|
Level
I
|
|
Level
II
|
|
Level
III
|
|
Total
|
Marketable Securities
|
$
|
910,845
|
$
|
|
$
|
|
$
|
910,845
|
Total Assets
|
$
|
910,845
|
$
|
-
|
$
|
-
|
$
|
910,845
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
NOTE
13 – SEGMENT DATA
FASB
ASC 280, “Disclosures about Segments of an Enterprise and related information”, establishes standards for reporting
information regarding operating segments in annual financial statements and requires selected information of those segments to
be presented in interim financial statements. Operating segments are identified as components of an enterprise for which separate
discrete financial information is available for evaluation by the chief operating decision maker (the Company’s President
and Chief Executive Officer) in making decisions on how to allocate resources and assess performance. In accordance with FASB
ASC 280 the Company has determined it has two reportable segments – “green” technology products, and support
of Interactive Voice Response (“IVR”) software. There are no inter-segment revenues.
The
Company is organized primarily on the basis of its “green” technology products. The “green” technology
segment is dedicated to the development, manufacture, and distribution of “green” products, focusing on acquiring
and identifying promising technologies that address environmental issues. The Company also continues to support its IVR business.
The Company currently has no plans to engage in future research and development, to launch any additional versions of the IVR
software or other products, or to continue to market this product.
Management
evaluates the performance of its segments by allocating resources to them based on gross margin. The Company’s general and
administrative costs are not segment specific. As a result, all operating expenses are not managed on a segment basis. Most costs
are related to the “green” technology segment. Costs associated with its IVR business are specifically allocated at
the gross profit level. Segment assets include accounts receivable and inventory.
The
tables below present information about reportable segments for the years ended December 31, 2012 and 2011.
2012
|
“Green”
Products
|
IVR
|
Corporate/
Reconciling
Items
|
Total
|
Net
sales
|
$
311,738
|
$ 7,675
|
$ -
|
$
319,413
|
Cost
of sales
|
88,434
|
-
|
-
|
88,434
|
Gross
profit
|
223,304
|
7,675
|
-
|
230,979
|
|
|
|
|
|
General
and administrative
|
35,804
|
-
|
567,824
|
603,628
|
Interest,
net
|
-
|
-
|
112,479
|
112,479
|
Dividend
income
|
-
|
-
|
(70,582)
|
(70,582)
|
Loss
on sale of securities
|
-
|
-
|
66,205
|
66,205
|
Loss
on settlement of debt, net
|
-
|
-
|
19,489
|
19,489
|
|
35,804
|
-
|
695,415
|
731,219
|
|
|
|
|
|
Loss
before taxes
|
$
187,500
|
$
7,675
|
$
(695,415)
|
$
(500,240)
|
|
|
|
|
|
Segment
assets
|
$ 41,237
|
$ -
|
$ 195,271
|
$
236,508
|
2011
|
“Green”
Products
|
IVR
|
Corporate/
Reconciling
Items
|
Total
|
Net
sales
|
$ 240,937
|
$ 25,370
|
$
-
|
$ 266,307
|
Cost
of sales
|
63,755
|
-
|
-
|
63,755
|
Gross
profit
|
177,182
|
25,370
|
-
|
202,552
|
|
|
|
|
|
General
and administrative
|
68,637
|
-
|
587,041
|
655,678
|
Impairment
of assets
|
-
|
-
|
19,582
|
19,582
|
Interest,
net
|
-
|
-
|
15,271
|
15,271
|
Dividend
income
|
-
|
-
|
(33,788)
|
(33,788)
|
Loss
on sale of securities
|
-
|
-
|
12,207
|
12,207
|
Gain
from extinguishment of debt
|
-
|
-
|
(173,571)
|
(173,571)
|
Other
income
|
-
|
-
|
(161,500)
|
(161,500)
|
|
68,637
|
-
|
265,242
|
333,879
|
|
|
|
|
|
Income
before taxes
|
$
108,545
|
$
25,370
|
$ (265,242)
|
$ (131,327)
|
|
|
|
|
|
Segment
assets
|
$ 66,871
|
$ -
|
$ 1,183,161
|
$1
,250,032
|
NOTE
14 – GAIN ON REDUCTION OF LIABILITIES
For
the year ended December 31, 2011 the Company recorded a gain on reduction of liabilities in the amount of $173,571 as a result
of amounts due which have exceeded the statute of limitations.
NOTE
15 – SUBSEQUENT EVENT
During
the year ended December 31, 2013, the Company issued 180,000,000 shares of common stock as compensation with a fair value of $18,000
to an employee of the Company.
During
the year ended December 31, 2013, the Company issued 1,471,707,226 shares of common stock for conversion of debt.
On
May 13, 2013 the Company received and accepted the resignation of the Company’s outside director because of ongoing family
health issues.