UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☑ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended September 30, 2014
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
File No. 333-120490
B
GREEN INNOVATIONS, INC.
(Exact
name of the Registrant as specified in Charter)
New
Jersey |
20-1862731 |
(State of Incorporation) |
(I.R.S. Employer
ID Number) |
|
|
750
Highway 34, Matawan, New Jersey |
07747 |
(Address of Principal
Executive Offices) |
(Zip Code) |
|
|
Registrant’s
Telephone No. including Area Code: 732-696-9333 |
Securities
registered under 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act: None
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 checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Act). 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 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
the number of shares outstanding of the issuer’s common stock, as of the latest practical date: 110,422,395 shares of
Class A Common stock, no par value per share, and 46,014 shares of Class B common, par value of $0.01 per share,
as of November 11, 2014.
B
GREEN INNOVATIONS, INC
TABLE
OF CONTENTS
EXPLANATORY
NOTE
These
Financial Statements are part of the Quarterly Report on Form 10-Q for the Nine months ended September 30, 2014 and do not contain
financial statements reviewed or audited by an independent registered public accounting firm for the Nine months ended September
30, 2014 or the fiscal year ended December 31, 2013.
Table of Contents
PART
I - FINANCIAL INFORMATION
Item
1. Condensed Financial Statements
B
GREEN INNOVATIONS, INC.
CONDENSED
BALANCE SHEETS
(Unaudited)
ASSETS |
|
September
30, |
|
|
December
31, |
|
|
|
2014 |
|
|
2013 |
|
Current assets: |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
84,105 |
|
|
$ |
101,323 |
|
Accounts receivable |
|
|
9,452 |
|
|
|
18,314 |
|
Inventories |
|
|
2,229 |
|
|
|
4,532 |
|
Prepaid expenses and
other current assets |
|
|
3,204 |
|
|
|
4,132 |
|
Total current assets |
|
|
98,990 |
|
|
|
128,301 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
- |
|
|
|
- |
|
Intangible assets,
net of accumulated amortization |
|
|
46,702 |
|
|
|
48,326 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
145,692 |
|
|
$ |
176,627 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’
EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and
accrued expenses |
|
$ |
167,298 |
|
|
$ |
363,861 |
|
Due to related party |
|
|
519,859 |
|
|
|
994,489 |
|
Promissory note payable |
|
|
- |
|
|
|
43,732 |
|
Convertible promissory
note payable, net of debt discount |
|
|
307,690 |
|
|
|
24,600 |
|
Total current liabilities |
|
|
994,847 |
|
|
|
1,426,682 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
(deficit): |
|
|
|
|
|
|
|
|
Series A 3% Preferred
Stock |
|
|
761,922 |
|
|
|
761,922 |
|
Common stock: |
|
|
|
|
|
|
|
|
Class A Common Stock |
|
|
2,067,118 |
|
|
|
1,583,228 |
|
Class B Common Stock |
|
|
1,944 |
|
|
|
460 |
|
Class C Common Stock |
|
|
- |
|
|
|
- |
|
Additional paid-in
capital |
|
|
10,676,645 |
|
|
|
10,029,733 |
|
Accumulated deficit |
|
|
(14,356,784 |
) |
|
|
(13,625,398 |
) |
Total stockholders'
equity (deficit) |
|
|
(849,155 |
) |
|
|
(1,250,055 |
) |
Total liabilities and
stockholders' equity (deficit) |
|
$ |
145,692 |
|
|
$ |
176,627 |
|
See
accompanying notes to condensed financial statements.
Table
of Contents
B
GREEN INNOVATIONS, INC.
CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Nine
months ended |
|
|
Three
months ended |
|
|
|
September
30,
2014 |
|
|
September
30,
2013 |
|
|
September
30,
2014 |
|
|
September
30,
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
79,948 |
|
|
$ |
122,194 |
|
|
$ |
24,120 |
|
|
$ |
37,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
30,896 |
|
|
|
31,205 |
|
|
|
8,904 |
|
|
|
9,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
49,052 |
|
|
|
90,989 |
|
|
|
15,216 |
|
|
|
27,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative expenses |
|
|
305,486 |
|
|
|
306,737 |
|
|
|
98,170 |
|
|
|
98,445 |
|
Impairment
of assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
|
305,486 |
|
|
|
306,737 |
|
|
|
98,171 |
|
|
|
98,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations |
|
|
(256,434 |
) |
|
|
(215,748 |
) |
|
|
(82,954 |
) |
|
|
(70,535 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
36 |
|
|
|
171 |
|
|
|
12 |
|
|
|
36 |
|
Amortization
of debt discount |
|
|
(6,250 |
) |
|
|
- |
|
|
|
(3,125 |
) |
|
|
- |
|
Interest
expense |
|
|
(44,163 |
) |
|
|
(29,375 |
) |
|
|
(13,284 |
) |
|
|
(10,443 |
) |
Settlement
expense |
|
|
(424,575 |
) |
|
|
(106,300 |
) |
|
|
- |
|
|
|
(106,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
(expense) |
|
|
(474,952 |
) |
|
|
(135,504 |
) |
|
|
(16,397 |
) |
|
|
(116,707 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations before provision
for income taxes |
|
|
(731,386 |
) |
|
|
(351,252 |
) |
|
|
(99,351 |
) |
|
|
(187,242 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
Net loss |
|
$ |
(731,386 |
) |
|
$ |
(351,252 |
) |
|
$ |
(99,351 |
) |
|
$ |
(187,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common share |
|
$ |
(1.95 |
) |
|
$ |
(2.48 |
) |
|
$ |
(0.24 |
) |
|
$ |
(1.23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted |
|
|
374,882 |
|
|
|
141,714 |
|
|
|
409,796 |
|
|
|
152,725 |
|
See
accompanying notes to condensed financial statements.
Table of Contents
B
GREEN INNOVATIONS, INC.
CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine
Months Ended |
|
|
|
September
30,
2014 |
|
|
September
30,
2013 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net
loss |
|
$ |
(731,386 |
) |
|
$ |
(351,252 |
) |
Adjustments
to reconcile net loss to net
cash
provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation
and amortization |
|
|
1,624 |
|
|
|
3,516 |
|
Amortization
of debt discount |
|
|
6,250 |
|
|
|
- |
|
Settlement
expense |
|
|
424,575 |
|
|
|
106,300 |
|
|
|
|
|
|
|
|
|
|
Changes in assets
and liabilities: |
|
|
|
|
|
|
|
|
Decrease
in accounts receivable |
|
|
8,862 |
|
|
|
13,400 |
|
Decrease (increase) in inventories |
|
|
2,303 |
|
|
|
(4,946 |
) |
Decrease in prepaid expenses |
|
|
928 |
|
|
|
1,185 |
|
Increase in accounts payable and accrued liabilities |
|
|
26,276 |
|
|
|
16,694 |
|
Increase in amounts due to related parties |
|
|
173,766 |
|
|
|
171,128 |
|
(Decrease)
in deferred maintenance contracts |
|
|
- |
|
|
|
(500 |
) |
Net cash (used in)
operating activities |
|
|
(86,802 |
) |
|
|
(44,475 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds
from new debt issued |
|
|
69,584 |
|
|
|
17,400 |
|
Net cash provided
by financing activities |
|
|
69,584 |
|
|
|
17,400 |
|
|
|
|
|
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
|
(17,218 |
) |
|
|
(27,075 |
) |
Cash and cash equivalents
at beginning of period |
|
|
101,323 |
|
|
|
140,139 |
|
Cash and cash equivalents
at end of period |
|
$ |
84,105 |
|
|
$ |
113,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the period,
cash was paid for the following: |
|
|
|
|
|
|
|
|
Taxes
paid |
|
$ |
- |
|
|
$ |
- |
|
Interest
paid |
|
$ |
- |
|
|
$ |
- |
|
See
accompanying notes to condensed financial statements.
Table of Contents
B
GREEN INNOVATIONS, INC.
CONDENSED
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Supplemental
Schedule of Non-Cash Financing Activities:
For
the nine months Ended September 30, 2014:
| a) | The
Company converted $200,788 of unpaid legal fees into Convertible Promissory Notes to
an unrelated party. |
| b) | The
Company was notified that the unpaid principal and accrued interest on the January 7,
2013 Promissory Notes was assigned to another unrelated party and concurrent with the
assignment, the Company consented to add conversion rights to the new owner. |
| c) | The
Company issued an aggregate of 97,130 (971,300,000 pre-reverse split) shares of Class
A Common Stock upon the conversion of $59,315 of debt owed to various debtors of the
Company pursuant to various Assignment of Debt Agreements. The market value of the shares
was $483,890. The difference between the market value and the debt reduction of $424,575
was charged to settlement expense. |
| d) | The
Company issued 148,396 shares of Class B Common Stock upon conversion $148,396 of debt
owed to an officer of the Company. |
| e) | The
Company received a forgiveness of debt for amounts due to an officer of the Company in
the amount of $500,000. |
For
the nine months Ended September 30, 2013:
| f) | The
Company converted $110,000 of unpaid legal fees into a Promissory Note to an unrelated
party. |
| g) | The
Company issued 49,950 (499,500,000 pre-reverse split) shares Class A Common Stock to
a Company upon the conversion of $49,500 of debt owed to a debtor of the Company pursuant
to an Assignment of Debt Agreement. The market value of the shares was $162,400. The
difference between the market value and the debt reduction of $112,900 was charged to
settlement expense. |
| h) | The
Company issued 1,300 (13,000,000 pre-reverse split) shares of Class A Common stock issued
to a debtor of the Company for payment of accounts payable with a market value of $3,900.
The stated value of the shares was $10,500 which resulted in a $6,600 gain from settlement. |
See
accompanying notes to condensed financial statements.
Table of Contents
B
GREEN INNOVATIONS, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
September
30, 2014 and 2013
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., 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.
On
September 9, 2014, pursuant to approval by a majority of voting shares as of August 28, 2014 an Amendment to the Certificate of
Incorporation, dated September 4, 2014 was accepted by the State of New Jersey to consolidate all of the Class A Common Stock
Shares pursuant to a reverse split in the ratio of One (1) new share for every Ten Thousand (10,000) shares currently held by
a stockholder.. The reverse split took effect on September 26, 2014 and the trading symbol of our Class A Common Stock was temporarily
changed to “BGNND”. The Amendment provided for the issuance of no fractional shares, but instead, all fractional shares
created by the reverse split were rounded up to one whole share. Prior to the reverse split, there were 4,110,242,408 Class A
Common Stock shares issued and 3,984,172,925 Class A Common Stock shares outstanding. Following the reverse split, there will
be an estimated 422,404 Class A Common Stock shares issued and an estimated 409,796 Class A Common Stock shares outstanding. Additional
shares may be issued upon finalization of the roundup of the fractional shares. Additionally, the number of authorized Class A
Common Stock was deduced from ten billion (10,000,000,000) no par value shares to five hundred million (500,000,000) no par value
shares.
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.”
The
Company also sells 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.
Table of Contents
In
2014, the Company announced the addition of two new products available to our distributors and direct customers. The 1st product
is the Ice Pack Sack which is specifically designed to provide a simple, comfortable, and effective method for applying Hot and
Cold Therapy. Hot and Cold Therapy is recognized medical treatment for everyday minor injuries. It provides relief
from sprains, strains and common muscle pain. The 2nd product is the Sock Pocket Organizer which holds paired socks
in place through the washing-machine and dryer cycles. The Sock Pocket Organizer is a mesh bag that has 9 individual pockets with
zipper closures.
In
May 2014, the Company was engaged by two developing companies (the “Consultee”) to provide consulting services related
to management, organization, short and long term strategic planning, and advice and recommendations regarding corporate financing.
According to the Consulting Agreements, a) for services related to raising funds in the form of debt and/or equity the Company
will receive 5% of the gross proceeds plus 2% of the Consultee’s common stock; and b) for all other services provided the
Company will receive 1% of the sales of the company for 7 years from the product release/launch date plus 1% of the Consultee’s
common stock.
The
Company continues to evaluate additional products to its product line as well as expanding its distribution channels.
Note
3
Going Concern
The
accompanying condensed 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 September 30, 2014, the Company had a net operating loss and negative working capital. 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
a) Basis
of Presentation
The
accompanying condensed unaudited interim financial statements included herein have been prepared, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC"). The condensed financial statements and notes
are presented as permitted on Form 10-Q and do not contain information included in the Company's annual statements and notes.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested
that these condensed financial statements be read in conjunction with the December 31, 2013 financial statements and the accompanying
notes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable,
the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished
by the Company later in the year. These results are not necessarily indicative of the results to be expected for the full year.
These
condensed unaudited financial statements reflect all adjustments, including normal recurring adjustments, which, in the opinion
of management, are necessary to present fairly the operations and cash flows for the periods presented.
Table of Contents
b) Use
of Estimates
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.
c) Revenue
Recognition
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 goods sold.
d) Product
Warranties
The
Company estimates its warranty costs based on historical warranty claims experience in estimating potential warranty claims. 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 when incurred. The Company has not incurred any research and development costs for
the nine months ended September 30, 2014 and 2013.
f) Advertising
Costs
Advertising
costs are expensed as incurred and are included in selling expenses. For the nine months ended September 30, 2014 the Company
incurred $0 as compared to $760 for the Nine months ended September 30, 2013.
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 September 30, 2014 and December 31, 2013. The Company maintains cash balances at financial institutions
that are 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.
h) 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 September 30, 2014 the Company believes it has no significant risk related to its concentration within
its accounts receivable.
Table of Contents
j) 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 September 30, 2014 and December 31, 2013 is adequate.
j) 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.
k)
Intangible Assets
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. Costs associated with such patents are not approved or abandoned.
l) Income
Taxes
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.
Table of Contents
Interest
and penalties related to income tax matters, if applicable, will be recognized as income tax expense. During the nine months ended
September 30, 2014 and 2013, the Company did not incur any expense related to interest or penalties for income tax matters, and
no such amounts were accrued as of September 30, 2014 and December 31, 2013.
m) Fair
Value of Financial Instruments
The
carrying amounts reported in the balance sheets as of September 30, 2014 and December 31, 2013 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.
n) 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. No impairment losses were recognized for the nine months ended September 30,
2014 and 2013.
o)
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 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 nine months ended September 30, 2014 and 2013 does 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 following table has been restated to reflect the results of the reverse stock split. The Basic and Diluted net
loss per share for the nine months ended September 30, 2014 and 2013 would have been $0.00 for each period.
|
|
Nine
Months Ended |
|
|
|
September
30,
2014 |
|
|
September
30,
2013 |
|
Basic
net loss per share: |
|
|
|
|
|
|
Net
loss attributable to common stockholders |
|
$ |
(731,386 |
) |
|
$ |
(351,252 |
) |
Weighted-average common shares
outstanding |
|
|
374,882 |
|
|
|
141,714 |
|
Basic
net loss per share |
|
$ |
(1.95 |
) |
|
$ |
(2.48 |
) |
Diluted net loss
per share: |
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders |
|
$ |
(731,386 |
) |
|
$ |
(351,252 |
) |
Weighted-average common shares
outstanding |
|
|
374,882 |
|
|
|
141,714 |
|
Incremental shares attributable
to the common stock equivalents |
|
|
- |
|
|
|
- |
|
Total
adjusted weighted-average shares |
|
|
374,882 |
|
|
|
141,714 |
|
Diluted
net loss per share |
|
$ |
(1.95 |
) |
|
$ |
(2.48 |
) |
Table of Contents
Note
6 Intangible
Assets
Intangible
assets consist of patents pending in the amount of $46,702 and $48,326 for the periods ended September 30, 2014 and December 31,
2013. The Company recorded amortization expense of $1,624 for the nine months ended September 30, 2014 and 2013. There was no
impairment expense for the nine months ended September 30, 2014 and 2013.
Note
7 Promissory Notes Payable
On
January 7, 2013, the Company executed a demand promissory note with an unrelated party to convert unpaid legal fees to a promissory
note. The note will bear interest at the rate of prime plus 1.0% per annum (4.25% at September 30, 2014), shall accrue interest
monthly on the unpaid balance and shall be paid annually. Additional amounts may be advanced by the holder and added to the principal
of the note and accrue interest from the date of the advance. During 2014, the Company was notified that the unpaid principal
and accrued interest on this note was assigned to another unrelated party and concurrent with the assignment, the Company consented
to add conversion rights to the new owner. Under the terms of the Securities and Settlement Agreement, the new owner can convert
amounts due into shares of Class A Common Stock at a conversion price of $.00005 (subsequently changed to $.50 per the reverse
stock split) per shares and the ownership cannot exceed 9.99% at any time. During the nine months ended September 30, 2014, the
Company issued an aggregate of 70,630 (706,300,000 pre-reverse split) shares of Class A Common Stock as repayment of $35,315 of
debt. As of September 30, 2014, the principal balance on the note was $24,331 and accrued interest is $1,091.
On May 15, 2013 the Company executed
a demand convertible promissory notes, with a value of $110,788, with an unrelated party to convert unpaid legal fees into various
promissory notes. The notes will bear interest at the rate of prime plus 1.0% per annum (4.25% at September 30, 2014), shall accrue
interest monthly on the unpaid balance and shall be paid annually. Additional amounts may be advanced by the holder and added
to the principal of the note and accrue interest from the date of the advance. Under the terms of these promissory notes, at the
option of the note holder, prepayment of 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 September 30, 2014, the principal balance on these notes was $107,840 and accrued interest is $6,825.
On
August 14, 2013, the Company executed a demand convertible promissory note with unrelated party to secure additional funding for
the Company’s financing. The note will bear interest at the rate of prime plus 1.0% per annum (4.25% at September 30, 2014),
shall accrue interest monthly on the unpaid balance and shall be paid annually. Additional amounts may be advanced by the holder
and added to the principal of the note and accrue interest from the date of the advance. Under the terms of the promissory note,
at the option of the note holder, prepayment of 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 balance of 2013 and 2014, additional amounts have been advanced by the holder. As of September 30,
2014, the principal balance on the note was $54,269 and accrued interest is $1,757.
On October 1, 2013 the Company
executed a demand convertible promissory notes, with a value of $90,000, with an unrelated party to convert unpaid legal fees
into various promissory notes. The notes will bear interest at the rate of prime plus 1.0% per annum (4.25% at September 30, 2014),
shall accrue interest monthly on the unpaid balance and shall be paid annually. Additional amounts may be advanced by the holder
and added to the principal of the note and accrue interest from the date of the advance. Under the terms of these promissory notes,
at the option of the note holder, prepayment of 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 September 30, 2014, the principal balance on these notes was $90,000 and accrued interest is $3,815.
On
April 1, 2014, the Company executed an Original Issue Discount Convertible Promissory Note with an unrelated party to secure additional
funding for the Company’s financing. The face amount of the note is $37,500 and the purchase price was $25,000. The debt
discount of $12,500 is being amortized monthly over the original term of the note. The note is due on March 28, 2015 and shall
accrue late fees of 22% per annum on all overdue unpaid principal. After the maturity date, the holder of the note can convert
amounts due for unpaid principal and accrued interest into shares of Class A Common Stock at a conversion price of $.00005 (subsequently
changed to $.50 per the reverse stock split) per share and their ownership cannot exceed 4.99% at any time. As of September 30,
2014, the principal balance on the note was $37,500 and unamortized debt discount was $6,250.
Table of Contents
Note
8
Related Party Transactions
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. This security interest expired in 2012, as the UCC Financing Amendment
was never filed to continue the security interest of the creditor for the additional period provided by applicable law.
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 nine
months ended September 30, 2014, Mr. Mahoney drew $3,000 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 September 15, 2014, the Company received a forgiveness of debt
in the amount of $500,000 from Mr. Mahoney. During the nine months ended September 30, 2014, the Company converted $149,396 of
deferred compensation into 149,396 shares of Class B Common Stock. As of September 30, 2014 and December 31, 2013, total deferred
compensation and accrued interest due to Mr. Mahoney was $519,859 and $994,489, respectively.
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.
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, 500,000,000 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.
Table of Contents
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 1,444.44 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 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
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 September 30, 2014 and December 31, 2013, 2,663.444 shares were issued and 762.156 shares of Series A 3% Preferred Stock are
outstanding.
As
of September 30, 2014 and December 31, 2013 dividends in arrears amounted to $473,072 and $455,739, respectively.
Table of Contents
b) Class
A Common Stock
As
of September 30, 2014, there are 500,000,000 shares of Class A Common Stock authorized, no par value, and 422,404 shares were
issued, and 409,796 shares were outstanding, and 12,608 shares that are being held in escrow pending resolution of funding issues.
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.
On
September 9, 2014, pursuant to approval by a majority of voting shares as of August 28, 2014, an Amendment to the Certificate
of Incorporation, dated September 4, 2014 was accepted by the State of New Jersey to consolidate all of the Class A Common Stock
Shares pursuant to a reverse split in the ratio of One (1) new share for every Ten Thousand (10,000) shares currently held by
a stockholder.. The reverse split took effect on September 26, 2014 and the trading symbol of our Class A Common Stock was temporarily
changed to “BGNND”. The Amendment provided for the issuance of no fractional shares, but instead, all fractional shares
created by the reverse split were rounded up to one whole share. Prior to the reverse split, there were 4,110,242,408 Class A
Common Stock shares issued and 3,984,172,925 Class A Common Stock shares outstanding. Following the reverse split, there will
be an estimated 422,404 Class A Common Stock shares issued and an estimated 409,796 Class A Common Stock shares outstanding. Additional
shares may be issued upon finalization of the roundup of the fractional shares. Additionally, the number of authorized Class A
Common Stock was deduced from ten billion (10,000,000,000) no par value shares to five hundred million (500,000,000) no par value
shares.
During
the nine months ended September 30, 2014, the Company issued the following shares of Class A Common stock:
a) The
Company issued an aggregate of 91,730 (917,300,000 pre-reverse split) shares of Class A Common Stock upon the conversion of $59,315
of debt owed to various debtors of the Company pursuant to various Assignment of Debt Agreements. The market value of the shares
was $483,890. The difference between the market value and the debt reduction of $24,575 was charged to settlement expense.
During
the nine months ended September 30, 2013, the Company issued the following shares of Class A Common stock:
a) The
Company issued 49,950 (499,500,000 pre-reverse split) shares Class A Common Stock to a Company upon the conversion of $49,500
of debt owed to a debtor of the Company pursuant to an Assignment of Debt Agreement. The market value of the shares was $162,400.
The difference between the market value and the debt reduction of $112,900 was charged to settlement expense.
| b) | The
Company issued 1,300 (13,000,000 pre-reverse split) shares of Class A Common stock issued
to a debtor of the Company for payment of accounts payable with a market value of $3,900.
The stated value of the shares was $10,500 which resulted in a $6,600 gain from settlement. |
c) Class
B Common Stock
As
of September 30, 2014, there are 50,000,000 shares of Class B Common Stock authorized, par value of $.01 per share, 263,421
shares issued and 149,410 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. During the nine months ended September 30, 2014, the Company converted
$149,396 of deferred compensation due to an officer of the Company into 149,396 shares of Class B Common Stock at $1.00 per
share.
Table of Contents
d) Class
C Common Stock
As
of September 30, 2014, 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 September 30, 2014, no shares were issued or outstanding.
Note
11 Stock
Options
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 has not issued any stock options as of September 30, 2014.
Note
12 Restatements
As
the result of the reverse stock split on September 26, 2014, the shares of Class A Common Stock issued, shares of Class A Common
Stock outstanding and the Loss Per Common Share has been restated.
Note
13 Subsequent Events
On
October 3, 2014, the Company was notified that a portion of the unpaid principal and accrued interest on one of the Company’s
promissory notes was assigned to Neoventive LLC and concurrent with the assignment, the Company consented to add conversion rights
to the new owner. Under the terms of the Promissory Note Conversion agreement, the new owner can convert amounts due into shares
of Class A Common Stock at a conversion price of $.0001 per share and the new owner cannot convert the Promissory Note into more
than 9.99% of the current issued and outstanding Class A Common Stock at any given time.
On
October 6, 2014, the Company issued 100,000,000 shares of Class A Common Stock for services rendered to the Company during the
past 12 months. The shares were issued with a restrictive legend which prohibits the holder from selling the shares until these
shares have been registered or an exemption from registration is available. The holder of these shares has signed an irrevocable
proxy in favor of the President of the Company and has agreed to restrict any transfer of these shares to no more than 4.99% of
the issued and outstanding common stock shares of the Company.
On
October 7, 2014, the Company issued 10,000,000 shares of Class A Common Stock upon conversion of the debt due to Neoventive LLC.
These shares were issued without any restrictions.
Table of Contents
Item
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
Forward
Looking Statements
A
number of the statements made by the Company in this report may be regarded as “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking
statements include, among others, statements concerning the Company’s outlook, pricing trends and forces within the industry,
the completion dates of capital projects, expected sales growth, cost reduction strategies and their results, long-term goals
of the Company and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar
expressions concerning matters that are not historical facts.
All
predictions as to future results contain a measure of uncertainty and accordingly, actual results could differ materially. Among
the factors that could cause a difference are: changes in the general economy; changes in demand for the Company’s
products or in the cost and availability of its raw materials; the actions of its competitors; the success of our customers; technological
change; changes in employee relations; government regulations; litigation, including its inherent uncertainty; difficulties in
plant operations and materials; transportation, environmental matters; and other unforeseen circumstances. For a discussion of
material risks and uncertainties that the Company faces, see the discussion in the Form 10−K for the fiscal year ended December
31, 2013 entitled “Risk Factors”.
Results
of Operations
Total
sales decreased $42,246 (34.6%) for the nine months ended September 30, 2014 to $79,948 as compared to $122,194 for the same period
in the prior year. Total sales decreased $13,750 (36.3%) for the three months ended September 30, 2014 as compared to the prior
year. These decreases were primarily due to the reduced demand for our “green” products offset by a small increase
in new product sales. The Company continues to evaluate additional products to its product line as well as expanding its distribution
channels.
Gross
profit decreased $41,937 (46.1%) for the nine months ended September 30, 2014 to $49,052 as compared to $90,989 for the same period
in the prior year. Gross profit decreased $12,694 (45.5%) for the three months ended September 30, 2014 as compared to the prior
year. These decreases were primarily the result the decreased volume of the “green” products and higher outbound shipping
costs from introducing free shipping on most products.
Total
selling, general and administrative expenses decreased $1,251 (.4%) and $$275 (.3%) for the nine months and three months ended
September 30, 2014, respectively, as compared to the same periods in the prior year. This small decrease was primarily the result
of management’s efforts to manage expenses on the lower sales.
For
the nine months and three months ended September 30, 2014, the Company had losses from operations of $256,434 and $82,954, respectively,
as compared to losses from operations of $215,748 and $70,535, respectively, for the nine months and three months ended September
30, 2013 as a result of the factors discussed above.
Total
other expense was $474,952 for the nine months ended September 30, 2014. Settlement expense on issuance of stock for debt conversion
is the primary component in the current period. In addition, interest expenses are higher when compared to the prior year due
to conversion of trade payables into debt.
The
net losses for the nine months and three months ended September 30, 2014 were $731,386 and $99,351, respectively. The unfavorable
change from prior year losses of $351,252 for the nine months ended September 30, 2013 was primarily due to increases in settlement
expense and lower gross margins on lower sales.
Table of Contents
Liquidity
and Capital Resources
To
date, the Company has incurred substantial operating 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 nine months ended September 30, 2014, the Company had a net decrease in cash of $17,218. The Company’s principal
sources and uses of funds were as follows:
Cash
(used in) operating activities. The Company used $86,802 in cash from operating activities for the nine months ended September
30, 2014. Management continues to carefully manage the cash account while facing lower billable sales.
Cash
provided financing activities. The Company received $69,584 from new debt financing activities for the nine months ended September
30, 2014.
There
was no significant impact on the Company’s operations as a result of inflation for the nine months ended September 30, 2014.
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 policy on revenue recognition, related to what we believe is the most critical to our business
operations and is discussed throughout Management’s Discussion and Analysis of Financial Condition or Plan of Operation
where such policy affects 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.
Table of Contents
Off
Balance Sheet Arrangements
During
the nine months ended September 30, 2014, the Company 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, the Company has not guaranteed any obligations of unconsolidated entities
nor do they have any commitment or intent to provide additional funding to any such entities.
Item
3. Quantitative and Qualitative Disclosures About Market Risk.
We
do not hold any derivative instruments and do not engage in any hedging activities.
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Management
of the Company has evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company,
the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated
by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer of the Company had concluded that the Company's disclosure controls and procedures as of the period
covered by this Quarterly Report on Form 10-Q were not effective for the following reasons:
a) The
Company has limited segregation of duties amongst its 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.
b) The
Company's has a limited number of external board members. This deficiency may give the impression to the investors that the board
is not independent from management. Management and the Board of Directors are required to apply their judgment in evaluating the
cost-benefit relationship of possible changes in the organization of the Board of Directors.
Changes
in internal control over financial reporting.
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 that occurred during the period covered by this Quarterly Report on Form 10-Q and determined
that there was no change in the Company’s internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
We
are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or
results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public
board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company,
threatened against or affecting our company, our common stock.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
There
were no unregistered sales of the Company’s equity securities during the nine months ended September 30, 2014.
Table of Contents
Item
3. Defaults Upon Senior Securities.
Not
applicable.
Item
4. Mine Safety Disclosures.
Not
applicable.
Item
6. Exhibits
31.1 |
Certification
required under Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1 |
Certification
required under Section 906 of the Sarbanes-Oxley Act of 2002.
|
Table of Contents
SIGNATURES
In
accordance with the requirements of the Exchange Act, the Registrant caused this report on Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
B GREEN INNOVATIONS, INC. |
|
|
|
|
|
Date: November
14, 2014 |
By: |
/s/ Jerome
Mahoney |
|
|
|
Jerome Mahoney |
|
|
|
President, Chief Executive Officer and |
|
|
|
Chief Financial Officer |
|
Table of Contents
INDEX
OF EXHIBITS
31.1 |
Certification
required under Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1 |
Certification
required under Section 906 of the Sarbanes-Oxley Act of 2002.
|
Exhibit
31.1
B
GREEN INNOVATIONS, INC
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO SECTION 302 OF
THE
SARBANES-OXLEY ACT OF 2002 PURSUANT TO
REGULATION
SS.240.15D-14 AS PROMULGATED BY
THE
SECURITIES AND EXCHANGE COMMISSION
CEO
AND CFO CERTIFICATION
I,
Jerome Mahoney, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
pursuant to Regulation ss.240.15d-14 as promulgated by the Securities and Exchange Commission, that:
1. I
have reviewed this report on Form 10-Q of B Green Innovations, Inc.
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. I
am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the
registrant and have:
a) Designed
such disclosure controls and procedures, or caused such control and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation, and
d) Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
| (a) | All
significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report financial information;
and |
| (b) | Any
fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant's internal control over financial reporting. |
|
|
|
|
Date: November
14, 2014 |
By: |
/s/ Jerome Mahoney |
|
|
|
Jerome Mahoney |
|
|
|
President, Chief Executive Officer and |
|
|
|
Chief Financial Officer |
|
Exhibit
32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of B Green Innovations, Inc. Inc. (the “Company”), on Form 10-Q for
the period ended September 30, 2014, as filed with the Securities Exchange Commission on the date hereof (the “Report”),
the undersigned, in the capacities and on the dates indicated below, hereby certify, pursuant to and solely for the
purpose of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of
my knowledge:
1. The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
2. The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
|
|
|
|
Date: November
14, 2014 |
By: |
/s/ Jerome Mahoney |
|
|
|
Jerome Mahoney |
|
|
|
President, Chief Executive Officer and |
|
|
|
Chief Financial Officer |
|