PART
I
ITEM
1. BUSINESS
Company
History
Green
Parts International Inc. was originally incorporated in Georgia under the name of Thrive Development Inc. in 1998. In 2005 the
company changed its name to the current Green Parts International Inc. through a reverse merger with Millennium Cellular Inc.
a Nevada company incorporated in the State of Nevada on March 19, 1998. Greenparts International formed a working subsidiary in
2009 called Greenparts, Inc. During 2010. Greenparts Inc. formed a wholly owned subsidiary Metal Max LLC. This combined entity
of Greenparts International. Inc., its wholly owned subsidiary Greenparts Inc. and its subsidiary Metal Max LLC are now “the
Company”. The Company has acquired various asset acquisitions including Booming in 2007 and Milton and US Auto parts in
2012 in an effort to capitalize on the growing need of recycling and turning these materials into multiple revenue streams and
expanded distribution which did not impact our financial position in a material way.
Green
Parts International is a salvage and reclamation company, dealing expressly with non-landfill materials through sorting, and recycling
of its salvaged materials. Green Parts feels high demand for cheaper parts and the need to recycle in today’s world will
allow the company, its shareholders, and well-wishers the ability to capitalize on the demand for these products while benefiting
the world with a cleaner environment. Millions of vehicles are considered salvaged by individuals and insurance companies, with
the ability to have various channels to distribute the products derived from the vehicles, Green Parts maximizes the return for
each salvaged vehicle by combining the efforts of the selling of used parts and selling of the rest of the vehicle as scrap material.
Currently
the company operates two salvage yards in the Atlanta Georgia area. Both locations allow the resale of auto parts and the sale
of raw materials. The bulk of our raw materials is sold out of our 844 Regina Drive, Atlanta GA location and our retail sales
are equally split between that location and Jonsboro, GA our other location.
The
issuer is not a shell company (as defined in Rule 12b-2 of the Exchange Act).
The
company and/or any predecessor have not, and are not currently in the process of filing bankruptcy, receivership or any similar
proceeding.
The
Issuer currently owns no trademark rights nor has any trademarks pending.
Suppliers
The
primary suppliers of salvage vehicles for the automotive recycling industry are insurance companies. After an automobile accident,
adjusters representing the insurance provider estimate the cost of repairing the vehicle and gather information to estimate the
vehicle’s pre-loss value. If the cost to repair is greater than the pre-loss value minus the estimated salvage value, the
vehicle is classified as a total loss (“totaled”). The insurance carrier then settles with the owner of the totaled
vehicle, receives title to the vehicle and either assigns the vehicle to a salvage vehicle auction company or sells it directly
to a reseller or a dismantler.
Other
suppliers of salvage vehicles include automobile rental companies, vehicle leasing companies and financial institutions. Rental
and leasing companies supply vehicles that have either been damaged or have exceeded an internally-determined mileage limit or
age. Financial institutions such as banks and other lenders also supply vehicles that have been repossessed. Vehicles from these
suppliers pass along the same distribution chain as those from insurance companies with a greater percentage being sold to resellers
(i.e. used car dealers).
Customers
Buyers
represent the final player in the distribution cycle and include both consumers and auto industry specialists. Do-it-yourself
vehicle owners often seek used parts from salvage yards due to the significant cost advantage. Likewise, many vehicle owners grant
permission to auto repair shops to use less expensive salvage parts.
Employees
As
of December 31, 2015, Green Parts had 9 full time employees and 3 part time employees.
ITEM
1A. RISK FACTORS.
RISK
FACTORS
An
investment in our Common Stock is highly speculative and involves a high degree of risk. Before making an investment decision,
you should carefully consider the risks described below together with all of the other information included in this Form 10. The
statements contained in or incorporated into this Form 10 that are not historic facts are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by
forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations
could be harmed. In that case, the value of our Common Stock could decline, and an investor in our securities may lose all or
part of their investment.
Risks
Related to the Issuer
The
prolonged downturn in the global economy could materially and adversely affect our business and results of operations.
The
global market and economic conditions during the years 2008 through 2015 are unprecedented and challenging, with recessions occurring
in most major economies. Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy
costs, geopolitical issues, and the availability and cost of credit have contributed to increased market volatility and diminished
expectations for economic growth around the world. The difficult economic outlook has negatively affected businesses and consumer
confidence and contributed to volatility of unprecedented levels.
The
economy faces challenges. The government has implemented various measures to curb inflation. If economic growth continues to slow
or the economic downturn continues, our business and results of operations may be materially and adversely affected.
We
may not maintain sufficient insurance coverage for the risks associated with our business operations.
Risks
associated with our business and operations include, but are not limited to, claims for wrongful acts committed by our officers,
directors, employees and other representatives, the loss of intellectual property rights, the loss of key personnel and risks
posed by natural disasters. Any of these risks may result in significant losses. We do not carry business interruption insurance.
In addition, we cannot provide any assurance that our insurance coverage is sufficient to cover any losses that we may sustain,
or that we will be able to successfully claim our losses under our insurance policies on a timely basis or at all. If we incur
any loss not covered by our insurance policies, or the compensated amount is significantly less than our actual loss or is not
timely paid, our business, financial condition and results of operations could be materially and adversely affected.
Requirements
associated with being a public company will increase our costs significantly, as well as divert significant company resources
and management attention.
We
are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
We are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be
made to our financial and management control systems to manage our growth and our obligations as a public company. These areas
include corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and
accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that will
be required in order to adequately prepare for being a public company could be material. Compliance with the various reporting
and other requirements applicable to public companies will also require considerable time and attention of management. In addition,
the changes we make may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis. We anticipate
our total additional cost to be around $50,000 per year, which we expect to be able to absorb out of our current operating income.
Should cost exceed these estimates or our operating be reduced for any reason we would look to raise funds from capital contributions
or additional debt.
In
addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including
directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult
for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
If
we are required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and are not able to implement
procedures in a timely manner or with adequate compliance, we may be subject to sanctions by regulatory authorities.
Section
404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal controls over
financial reporting, beginning with our annual report for fiscal year 2013, which provides a management report on the internal
controls over the Company’s financial reporting. If we have a material weakness in our internal controls over financial
reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. When
we are required to evaluate our internal control systems to allow management to report on, our independent auditors will have
to attest to our internal controls. When required, we will be performing the system and process evaluation and testing (and any
necessary remediation) required to comply with the management certification and auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act of 2002. We cannot be certain as to the timing of completion of our evaluation, testing and remediation
actions or the impact of the same on our operations. If we are unable to implement the requirements of Section 404 in a timely
manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the Securities
and Exchange Commission (the “SEC”) or the NASDAQ Stock Market (“NASDAQ”). Any such action could adversely
affect our financial results or investors’ confidence in us and could cause our stock price to fall. Moreover, if we are
not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting
firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we could be subject to sanctions
or investigations by NASDAQ, the SEC or other regulatory authorities, which would entail expenditure of additional financial and
management resources and could materially adversely affect our stock price.
Risks
Related to our Common Stock
Because
of his significant stock ownership, our chief executive officer be able to exert control over us and our significant corporate
decisions. Our other stockholders will have limited ability to influence corporate actions or decisions.
This
concentration of ownership may harm the value of our common stock by, among other things:
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impeding
a merger, consolidation, takeover or other business combination involving our company; or
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causing
us to enter into transactions or agreements that are not in the best interests of all stockholders
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Our
officer and director owns 60.13% of the outstanding common stock and all of the voting preferred shares of the Company. The result
of this ownership is our other stockholders will have limited ability to influence corporate actions or decisions on all matters
submitted to our shareholders for approval and he is able to control our management and affairs including extraordinary transactions
such as mergers and other changes in corporate control. Additionally this concentration of voting power could discourage or prevent
a potential takeover of Green Parts International, Inc. and any potential premium over the market price of your common stock in
during such an event. Also, these actions include the determination of his own compensation requirements or benefits associated
with his position and .additionally, our reliance on one individual may create internal control weaknesses from the lack of separation
of the duties involved and should he unable to continue in any or all of his functions our Company may not have the ability to
continue operating at its current capacity.
The
price of our common stock may be volatile, and you may not be able to resell your shares.
An
active and liquid trading market for our common stock may not develop or be sustainable. Shareholders may be unable to sell shares
of common stock at or above their purchase price due to fluctuations in the market price of our common stock. The market price
of our Common Stock may fluctuate significantly in response to factors, some of which are beyond our control. Factors that could
cause volatility in the market price of our common stock include, but are not limited to:
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loss
of significant clients or customers;
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loss
of significant strategic relationships;
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announcements
relating to future collaborations or our existing collaborations;
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our
failure to achieve and maintain profitability;
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changes
in earnings estimates and recommendations by financial analysts;
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changes
in market valuations of similar companies;
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general
economic conditions in the United States and abroad;
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acquisitions
and sales of new products, technologies or business;
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delays
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actual
and anticipated fluctuations in our quarterly operating results;
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introduction
of technological innovations or new products by us or our competitors;
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deviations
in our operating results from the estimates of analysts;
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the
outcome of any future legal actions to which we are a party;
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sales
of our common stock by our officer, director or significant stockholders;
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frequent,
irregular, under market, or large sales of shares of our common stock by any shareholder;
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additions
or departures of key personnel; and
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external
factors, including natural disasters and other crises.
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In
addition, the stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance
of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the
past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action
litigation suits against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial
costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.
Future
sales of our common stock or securities convertible or exchangeable for our common stock may depress our stock price.
If
our existing stockholders or indicate an intention to sell substantial amounts of our common stock in the public market, the trading
price of our common stock could decline. The perception in the market place that these sales may occur could also cause the trading
price of our common stock to decline.
If
we sell shares of our common stock in future financings, common stockholders may experience immediate dilution and, as a result,
our stock price may decline.
We
may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock.
As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold
at such a discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the
future, including the issuance of debt securities, preferred stock or common stock.
We
do not anticipate paying any cash dividends on our capital stock in the foreseeable future, therefore capital appreciation, if
any, of our common stock will be your sole source of gain for the foreseeable future.
We
have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital
stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development
and growth of our business. As a result, capital appreciation, if any, of the common stock will be your sole source of gain for
the foreseeable future.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our
stock price and trading volume could decline.
The
trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish
about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If
no securities or industry analysts commence coverage of our company, the trading price for our stock would likely be negatively
impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade
our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. In addition,
if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of these
analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which
might cause our stock price and trading volume to decline.
Our
shares are subject to the “penny stock” rules, which may subject you to restrictions on marketability and limit your
ability to sell your shares.
Broker-dealer
practices in connection with transactions in “Penny Stocks” are regulated by certain penny stock rules adopted by
the Securities and Exchange Commission (the “SEC”). Penny stocks generally are equity securities with a price of less
than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about penny stocks and the risk associated with the
penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market
value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior
to a transaction in a penny stock, the broker-dealer must make a written determination that the penny stock is a suitable investment
for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have
the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock
rules. The Company’s securities are be subject to the penny stock rules, and investors may find it more difficult to sell
their securities.
We
will seek additional capital for our expansion, which we may be unable to obtain; should we fail to obtain sufficient financing,
our potential revenues will be negatively impacted.
Our
expansion capital requirements will be determined by the individual opportunities that we encounter. There is no way to determine
the amounts of any financial needs until then. There is no guarantee that we will find any opportunities that fit our Company
needs. Furthermore, we may have insufficient revenues to cover our new increased operating costs due to increased legal and accounting
costs associated with being an SEC reporting company should our registration statement be declared effective. You should consider
the risks that we will be unable to find appropriate growth opportunities or obtain adequate capital financing if we do, which
will delay our operations, lead to accumulated losses, and negatively affect our ability to complete development of our services
and to generate revenues with the increased cost structure.
Our
Common Stock is quoted on the OTC Market, which may have an unfavorable impact on our stock price and liquidity.
Our
Common Stock is currently quoted on the OTC Market under the trading symbol “GNPT.” The OTC Market is a significantly
more limited market than the New York Stock Exchange or NASDAQ. The quotation of our shares on the OTC may result in a less liquid
market available for existing and potential shareholders to trade shares of our Common Stock, could depress the trading price
of our Common Stock and could have a long-term adverse impact on our ability to raise capital in the future.
If
we fail to remain current on our SEC reporting requirements, we could be removed from any market on which our common stock trades,
which may limit the liquidity of our stock and the price of our stock.
Companies
trading on the OTCQB or OTC Bulletin Board must be reporting issuers under Section 12 of the Exchange Act, and must be current
in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTCQB or OTC Bulletin
Board. If we fail to remain current on our reporting requirements, we could be removed from the OTCQB or OTC Bulletin Board. As
a result, the market liquidity and the stock price for our securities would be adversely affected by limiting the ability of broker-dealers
to sell our securities and the ability of shareholders to sell their securities in the secondary market.
We
may not be able to operate our business or implement our operating policies and strategies successfully.
The
results of our operations are dependent on many factors, including, without limitation, readily accessible funding in the financial
markets and our ability to cost-effectively manage and produce events and productions as well as overall economic conditions.
We may not be able to maintain any agreements with our lenders on favorable terms or at all. Furthermore, we may not be able to
operate our business successfully or implement our operating policies and strategies as described in this Form 10K, which could
result in the loss of some or all of your investment.
We
have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1)
of the JOBS Act.
This
election means that we can delay the adoption of new or revised accounting standards that have different effective dates for public
and private companies until such standards are applicable to private companies. As a result of our election, our financial statements
may not be comparable to companies that comply with public company effective dates.
Item
1B.
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Unresolved
Staff Comments.
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None.
The
Company leases its facilities from property owned by President and CEO Asif Balagamwala
Item
3.
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Legal
Proceedings.
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During
the year, the Company was involved in a number of court proceedings (both as a plaintiff and a defendant) arising in the ordinary
course of business. In the opinion of management, there are no current legal proceedings or other claims outstanding, which could
have a material effect on the result of operations or financial position of the Company. None of which were deemed material and
have not been accrued or disclosed in these financial statements.
PART
II
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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a.
Market information.
Green
Parts is currently traded on the Over the Counter Market (“OTC Market”). The Company’s ticker symbol is “GNPT”
To have our securities quoted on OTCQB or OTCBB we must: (1) be a company that reports its current financial information to the
Securities and Exchange Commission (“SEC”), banking regulators or insurance regulators; and (2) have at least one
market maker who completes and files a Form 211 with FINRA. Over the Counter Markets differ substantially from national and regional
stock exchanges because it: (a) operates through communication of bids, offers and confirmations between broker-dealers, rather
than one centralized market or exchange; and (b) securities admitted to quotation are offered by one or more broker-dealers rather
than “specialists” which operate in stock exchanges.
The
following table sets forth the high and low transaction price for each quarter within the two most recent fiscal years as provided
by OTC Markets Group, Inc. The information reflects prices between dealers, and does not include retail markup, markdown, or commission,
and may not represent actual transactions.
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Over
The Counter Pink
Sheets Market(1)
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Quarter
Ended
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High
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Low
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December 31, 2015
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$
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0.01
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$
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0.00
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September 30, 2015
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$
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0.02
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$
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0.00
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June 30, 2015
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$
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0.01
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$
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0.00
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March 31, 2015
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$
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0.02
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$
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0.00
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December 31, 2014
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$
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0.03
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$
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0.01
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September 30, 2014
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$
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0.19
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$
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0.03
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June 30, 2014
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$
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0.22
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$
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0.05
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March 31, 2014
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$
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0.35
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$
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0.06
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(1)
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Over
The Counter Market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent
actual transactions. The transfer agent and registrar for our common stock is Signature Stock Transfer Inc. As of the date
of this report, we had approximately 401 shareholders of record, not including those common shares held in street name.
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b.
Holders.
As
of May 16, 2015, there are 63 holders of the Company’s common stock and 1 preferred stock holder.
c.
Dividends.
The
Company has not issued any dividends.
Green
Parts International, Inc. has no plans of paying cash dividends in the future.
Recent
Sales of Unregistered Securities and Equity Purchases by Company
February 10, 2015
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Asher issued on conversion
of convertible note
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4,687,500
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March 11, 2015
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Asher issued on conversion of convertible
note
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6,691,304
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March 11, 2015
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Asher issued on conversion of convertible
note
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8,464,646
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March 13, 2015
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Asher issued on conversion of convertible
note
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4,242,424
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March 13, 2015
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LG Capital issued on conversion of convertible
note
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5,803,438
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March 16, 2015
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Asher issued on conversion of convertible
note
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4,395,838
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March 23, 2015
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JMJ Financial issued on conversion of
convertible note
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4,800,000
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April 10, 2015
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JMJ Financial issued on conversion of
convertible note
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5,610,000
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April 17, 2015
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LG Capital issued on conversion of convertible
note
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3,588,416
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April 24, 2015
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JMJ Financial issued on conversion of
convertible note
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6,000,000
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April 24, 2015
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LG Capital issued on conversion of convertible
note
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5,535,730
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May 6, 2015
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LG Capital issued on conversion of convertible
note
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3,650,648
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May 7, 2015
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JMJ Financial issued on conversion of
convertible note
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6,600,000
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May 27, 2015
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LG Capital issued on conversion of convertible
note
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5,973,073
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June 4, 2015
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JMJ Financial issued on conversion of
convertible note
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2,443,914
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June 4, 2015
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LG Capital issued on conversion of convertible
note
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6,443,168
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June 11, 2015
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LG Capital issued on conversion of convertible
note
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5,990,346
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November 4, 2015
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JMJ Financial issued on conversion of
convertible note
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3,000,000
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November 4, 2015
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LG Capital issued on conversion of convertible
note
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1,891,109
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November 5, 2015
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MH Investments issued on conversion
of convertible note
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6,173,437
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November 16, 2015
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JMJ Financial issued on conversion of
convertible note
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5,000,000
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November 16, 2015
|
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MH Investments issued on conversion
of convertible note
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7,088,020
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November 19, 2015
|
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LG Capital issued on conversion of convertible
note
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5,433,904
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November 24, 2015
|
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JMJ Financial issued on conversion of
convertible note
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5,500,000
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November 24, 2015
|
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MH Investments issued on conversion
of convertible note
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8,679,312
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November 25, 2015
|
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LG Capital issued on conversion of convertible
note
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8,083,100
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December 2, 2015
|
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MH Investments issued on conversion
of convertible note
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|
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8,652,553
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December 2, 2015
|
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Vis Vires issued on conversion of convertible
note
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12,000,000
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December 3, 2015
|
|
LG Capital issued on conversion of convertible
note
|
|
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8,345,074
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December 7, 2015
|
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JMJ Financial issued on conversion of
convertible note
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|
|
8,500,000
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December 7, 2015
|
|
Vis Vires issued on conversion of convertible
note
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17,515,464
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December 10, 2015
|
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Vis Vires issued on conversion of convertible
note
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17,512,195
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December 11, 2015
|
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JMJ Financial issued on conversion of
convertible note
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10,017,092
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December 15, 2015
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LG Capital issued on conversion of convertible
note
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12,497,832
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December 15, 2015
|
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MH Investments issued on conversion
of convertible note
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8,793,607
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December 15, 2015
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Vis Vires issued on conversion of convertible
note
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15,151,515
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December 18, 2015
|
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Vis Vires issued on conversion of convertible
note
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3,469,697
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December 21, 2015
|
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Union Capital issued on conversion of
convertible note
|
|
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9,090,909
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Item
6.
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Selected
Financial Data.
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Not
applicable.
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
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The
following discussion should be read in conjunction with our Consolidated Financial Statements and Notes thereto, included elsewhere
within this report. The Annual Report on Form 10-K/A contains forward-looking statements including statements using terminology
such as “can”, “may”, “believe”, “designated to”, “will”, “expect”,
“plan”, “anticipate”, “estimate”, “potential” or “continue”, or the
negative thereof or other comparable terminology regarding beliefs, plans, expectations or intentions regarding the future. You
should read statements that contain these words carefully because they:
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discuss
our future expectations;
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●
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contain
projections of our future results of operations or of our financial condition; and
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●
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state
other “forward-looking” information.
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We
believe it is important to communicate our expectations. However, forward looking statements involve risks and uncertainties and
our actual results and the timing of certain events could differ materially from those discussed in forward-looking statements
as a result of certain factors, including those set forth under “Risk Factors,” “Business” and elsewhere
in this report. All forward-looking statements and risk factors included in this document are made as of the date hereof, based
on information available to us as of the date thereof, and we assume no obligations to update any forward-looking statement or
risk factor, unless we are required to do so by law.
The
following is a discussion of certain factors affecting Registrant’s results of operations, liquidity and capital resources.
You should read the following discussion and analysis in conjunction with the Registrant’s consolidated financial statements
and related notes that are included herein under Item 1 above.
Overview
Greenparts
International is a salvage and reclamation company, dealing expressly with non-landfill materials through sorting, recycling,
and proper containment and disposal of bio-hazard. Green Parts feels high demand in emerging markets and the need to recycle in
today’s world will allow the company, its shareholders, and well-wishers the ability to capitalize on the demand for these
products while benefiting the world with a cleaner environment. Millions of vehicles are considered salvaged by individuals and
insurance companies, with the ability to have various channels to distribute the products derived from the vehicles, Green Parts
maximizes the return for each salvaged vehicle by combining the efforts of the selling of used parts with warranties and selling
the rest as scrap material to emerging markets.
The
Company will become the premier supplier of recycled auto parts through a strategy of consolidation and expanded distribution.
Connecting the Company’s salvage yards with a proprietary inventory system, Greenparts will leverage its salvage yards as
the core of its decentralized distribution system. Over the next five years, the Company will grow to approximately 36 salvage
yards and 30 retail stores in 10 key markets. The issuer is not a shell company (as defined in Rule 12b-2 of the Exchange Act).
The
company and/or any predecessor have not, and are not currently in the process of filing bankruptcy, receivership or any similar
proceeding.
The
Issuer currently owns no trademark rights nor has any trademarks pending.
Regulations
The
company does not foresee any substantial changes that could adversely affect the business of the company at this time. The market
for the Issuer’s product is intensely competitive. We believe that the principal competitive factors affecting the Issuer’s
targeted market are those companies offering auto parts under standard brands, none of-which market uniquely used and recycled
environmentally friendly parts. We believe we compete adequately with respect to these factors. The Issuer believes it has a competitive
edge in the Company’s diversity as a manufacturer and wholesaler of its unique products.
The
company conducts the business under the guidelines of the State of Nevada. The company, at this time does not need and has not
requested government approval on the products and services provided other than local operating business licenses.
Suppliers
The
primary suppliers of salvage vehicles for the automotive recycling industry are insurance companies. After an automobile accident,
adjusters representing the insurance provider estimate the cost of repairing the vehicle and gather information to estimate the
vehicle’s pre-loss value. If the cost to repair is greater than the pre-loss value minus the estimated salvage value, the
vehicle is classified as a total loss (“totaled”). The insurance carrier then settles with the owner of the totaled
vehicle, receives title to the vehicle and either assigns the vehicle to a salvage vehicle auction company or sells it directly
to a reseller or a dismantler.
Other
suppliers of salvage vehicles include automobile rental companies, vehicle leasing companies and financial institutions. Rental
and leasing companies supply vehicles that have either been damaged or have exceeded an internally-determined mileage limit or
age. Financial institutions such as banks and other lenders also supply vehicles that have been repossessed. Vehicles from these
suppliers pass along the same distribution chain as those from insurance companies with a greater percentage being sold to resellers
(i.e. used car dealers).
Customers
Buyers
represent the final player in the distribution cycle and include refineries, consumers and auto industry specialists. Do-it-yourself
vehicle owners often seek used parts from salvage yards due to the significant cost advantage. Likewise, many vehicle owners grant
permission to auto repair shops to use less expensive salvage parts so long as they carry similar warranties to that of newer
parts. Refineries purchase the remaining parts for recycling metals into its purest form for the re-production of materials derived
of steel, aluminum, and copper. Distribution methods of the products or services;
One
of the Company’s key business drivers is a robust inventory and distribution system tying together all of the Company’s
salvage yards, retail stores and call center. By maintaining an efficient decentralized system with centralized controls conforming
to the highest standard processes, much of the overhead that would be required in a centralized distribution operation is kept
in the Company’s gross profits.
Customers
will have a variety of methods to purchase high quality, warranted recycled automotive parts. Greenparts will have a number of
retail stores in high traffic, easily accessible areas for most consumers in their target markets to purchase parts. For those
who are close to the salvage yards, there will also be the option to go to the yard and purchase the same quality parts. Additionally,
there is also an option for consumers to purchase parts through the internet (PC or thin client devices) or through the Company’s
toll-free number, where inventories will be updated real-time through the Greenparts automated inventory system.
Products
Green
Parts International is a recycler of automobiles and appliances providing raw materials for manufactures in the United States,
China, Korea, and India. By separating the different materials and parts and shipping them to the end users Green Parts maximizes
the effectiveness of the recycling efforts. Parts from cars and office equipment are reused and do not end up in landfills. By
utilizing state of the art recycling equipment the parts not suitable for reuse are broken down to their base elements and sold
as raw materials for manufacturing. These materials include steel, aluminum, and copper. Automotive oils and greases are also
recovered and recycled. This “green” approach to total recycling is not only good for the environment but also offers
tremendous profit potential.
Raw
Material Availability
The
Company will accumulate its inventory of vehicles from a number of sources. In addition to individuals who sell the vehicles directly
to salvage yards, Greenparts will also purchase vehicles from a number of salvage auctions. As the Company becomes more established
and is able to generate sufficient volume, Greenparts anticipates that it will be able to deal directly with the larger insurance
companies to acquire their “totaled” vehicles at a more favorable price than through auctions.
Marketing
After
vehicles are purchased from a car owner at a Greenparts yard or from a salvage auction, the vehicles are stripped of the usable
hard parts (engines, transmissions, starters, compressors, windshields, etc.) and soft parts (mirrors, lights, seats, grilles,
etc.) These parts are then cleaned, refurbished if necessary, labeled and placed into the Greenparts inventory system.
Unless
these parts are immediately sold at the individual salvage yard, they are recycled and sold to refineries who recycle the commodities
(steel, aluminum, and copper) to resell. Every salvage yard will be linked to each other as well as to the retail stores and call
center through the Greenparts inventory system in order to maximize efficiency. Combining experience and research Greenparts has
manuals that will allow the company to aggressively franchise their operations and grow organically without affecting the standards
Greenparts wants to establish.
GEOS
(Greenparts Electronic Ordering System) is designed to elevate the recycled parts industry to new heights of service and customer
satisfaction. More than just an electronic ordering system for used parts, GEOS offers automotive service establishments and body
shops a complete solution for all of their parts and shop supply needs.
The
GEOS system is built on a web-based extranet platform. Service establishments and body shops receive, at no upfront cost, a web
terminal with LCD monitor that connects to the GEOS platform via the Internet. On the system, using only a mouse, the customer
can order used parts sourced from the salvage operator or new parts and supplies from established local vendors. Used parts are
delivered by the salvage operator, while new parts orders are fulfilled by the local vendors with commissions paid to the salvage
operator. A reciprocal commission structure is in place that rewards the local new parts vendors for developing new customer relationships
for the salvage operators using the GEOS system.
Results
of Operations
The
Company intends to operate its business primarily through its two main segments, as described above, as well as entities that
may be formed or acquired in the future. The table below is meant to give the reader some additional information into the detail
of some of the line items presented in the financial statements.
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For
the Years Ended
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12/31/2015
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12/31/2014
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Revenues
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$
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7,282,983
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$
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12,679,340
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Cost of Sales
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5,863,387
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10,264,686
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1)
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Wages
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832,112
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1,071,332
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Fuel
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136,409
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141,638
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Depreciation
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178,484
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174,060
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Maintenance
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105,715
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116,951
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Tools & Hardware
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65,133
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42,477
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Supplies
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85,522
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26,816
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Inventory write
down
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2,310,439
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0
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2)
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Other G & A
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461,110
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479,902
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Interest expense
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(641,246
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)
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(657,238
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)
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Tax Provisions
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0
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0
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Other Income(Expense)
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47,456
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(394,595
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)
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NET INCOME
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$
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(3,349,118
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)
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$
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(690,355
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)
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1)
Wages includes all wages, including subcontractor cost and commissions, general, administrative and operating wages.
2)
Other G&A expenses include travel, entertainment, supplies, postage and other general & administrative expenses incurred
in the day to day operations of the Company.
Results
of Operations 2015-2014
Analysis
of the years ended December 31, 2015 and 2014.
Revenues
For
the years ended December 31, 2015, revenues were approximately $7,282,983 compared to $12,679,340 for the years ended December
31, 2014, decreasing by $5,396,357. The company’s inability to secure financing for working capital combined with pricing
pressures have reduced sales.
Cost
of Goods Sold
Cost
of goods sold decreased to $5,863,387 for the year ended December31, 2015 from $10,264,686 for the year ended December 31, 2014,
a decrease of $4,401,299. Our cost of sales ratios have remained constant with the increases being a product of our decreased
sales volume for the year.
G
& A Expenses
G&A
expense increased to $4,154,643 for the year ended December 31, 2015 from $2,053,176 for the year ended December 31, 2014, an
increase of $2,101,467. The Company costs have remained relatively constant with the major change being a write off of inventory
for $2,310,439. During 2015 inventory was adjusted based on obsolete, slow moving items with decreasing sales as well as lower
market price adjustments below cost. The Company has managed to decrease other cost in proportion to its overall sales decrease.
Other
income and expenses
Other
items decreased to a net expense of $614,071 for the year ended December 31, 2015 from a net expense of $1,051,883 for the year
ended December 31, 2014, resulting in a total net other expense item decrease of $437,762. The major change here was a decrease
in derivative liability if $178,858 and an increase in derivative expenses.
Net
income (loss)
Net
Income decreased to a loss of $3,349,118 for the year ended December 31, 2015 from a net loss of $690,355 for the year ended December
31, 2014, an increase of $2,658,763. This increase was mostly the result of onetime items general and administrative cost.
Liquidity
and Capital Resources
On
December 31, 2015 we had cash and cash equivalents totaling $40,692. At this time, the Company feels this is adequate to fund
our operations in the short term future.
The
Company has continually restructured its financing last two years reducing cash flow and liquidity requirements and also feels
it has access to sufficient unused credit lines to bridge the gap of any cash flow deficiencies. We anticipate seeking additional
opportunities through potential acquisitions or investments. This and other such acquisitions or investments may consume cash
reserves or require additional cash or equity. Our working capital and additional funding requirements will depend upon numerous
factors to be determined on a case by case basis as these opportunities arise.
Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk.
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We
are a smaller reporting company as defined by Rule 12b-2 under the Exchange Act and are not required to provide the information
required under this item.
Item
8.
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Financial
Statements and Supplementary Data.
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The
financial statements and notes thereto and supplementary data required by this Item are presented beginning on page F-1 of this
annual report on Form 10-K.
Item
9.
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Changes
in and Disagreements With Accountants on Accounting and Financial Disclosure.
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None.
Item
9A.
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Controls
and Procedures.
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Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Exchange Act that are designed
to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such 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. We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures as of December 31, 2015. Based on the evaluation of these disclosure controls and procedures,
and in light of the material weaknesses found in our internal controls, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were not effective.
Management
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision
of 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, 2015 using the criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). A material weakness is a deficiency, or
combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a
material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our
assessment of the effectiveness of internal control over financial reporting as of December 31, 2015, we determined that control
deficiencies existed that constituted material weaknesses, as described below:
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lack
of documented policies and procedures.
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we
have no audit committee.
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●
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there
is a risk of management override given that our officers have a high degree of involvement in our day to day operations.
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●
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there
is no effective separation of duties, which includes monitoring controls, between the members of management.
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Management
is currently evaluating what steps can be taken in order to address these material weaknesses.
Accordingly,
we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or
interim financial statements will not be prevented or detected on a timely basis by our internal controls.
As
a result of the material weaknesses described above, management has concluded that we did not maintain effective internal control
over financial reporting as of December 31, 2015 based on criteria established in Internal Control—Integrated Framework
issued by COSO.
John
Scrudato CPA, an independent registered public accounting firm, was not required to and has not issued a report concerning the
effectiveness of our internal control over financial reporting as of December 31, 2015.
Changes
in Internal Control over Financial Reporting
There
was no change in internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
during our fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.
Item
9B.
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Other
Information.
|
None.
NOTES
TO FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2015
Note
1 - Company Background
The
consolidated financial statements include Greenparts International, Inc.(“GNPT”), Greenparts, Inc., and Metal Max
Recycling, LLC, and are referred collectively herein as “the Company”. Incorporated on March 19, 1998 in the state
of Nevada as Millennium Cellular Inc. The Company later became Thrive Development, Inc., and then Greenparts International, Inc.
Company’s principal activities include processing of salvage vehicles and trucks and other scrap material for the purpose
of recycling of metals, selling used parts and rebuilding of vehicles for resale. The Company’s manufacturing facilities
are primarily based in the vicinity of Atlanta, Georgia.
The
Company has acquired various acquisitions in an effort to capitalize on the growing need of recycling and turning these materials
into multiple revenue streams and expanded distribution.
Note
2 - Summary of Significant Accounting Policies
This
summary of significant account policies of the Company is presented to assist in understanding the Company’s financial statements.
The financial statements and the notes are the representation of the Company’s management, who are responsible for their
integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles (“US GAAP”)
and have been consistently applied in the preparation of the financial statements.
Basis
of Presentation
The
Consolidated Financial Statements include the accounts of the Company and its majority-owned and wholly-owned subsidiaries. All
significant intercompany account balances, transactions, profits and losses have been eliminated.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fair
Value of Financial Instruments
For
certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable,
the carrying amounts approximate fair value due to their short maturities.
Revenue
Recognition
The
majority of the Company’s revenue is derived from the sale of recycled OEM products and aftermarket products. Revenue is
recognized when the products are shipped, title and risk of loss transfer to the buyer, and collectability is reasonably assured,
subject to an allowance for estimated returns, discounts and allowances that management estimates based upon historical information.
Retail revenues are recognized when customers pay for parts, and wholesale product revenues are recognized when customer weight
certificates are received following shipments. Historically, there have been very few sales returns and adjustments that impact
the ultimate collection of revenues; therefore, no material provisions have been made when the sale is recognized.
Cash
and Cash Equivalents
Cash
comprise cash in hand and cash held on demand with banks. The Company considers all highly liquid investments with original maturities
of 90 days or less to be cash equivalents. Cash equivalents are carried at cost, which approximates market value. Cash and cash
equivalents comprise of the non-interest bearing checking accounts in US Dollars.
Note
2 - Summary of Significant Accounting Policies (Continued)
Accounts
Receivables, Net
Accounts
receivable represent amounts due from customers on product and other sales. These accounts receivable, which are reduced by an
allowance for doubtful accounts, are recorded at the invoiced amount and do not bear interest. The Company evaluates the collectability
of its accounts receivable based on a combination of factors, including whether sales were made pursuant to letters of credit.
In cases where management is aware of circumstances that may impair a specific customer’s ability to meet its financial
obligations, management records a specific allowance against amounts due, and reduces the net recognized receivable to the amount
the Company believes will be collected. For all other customers, the Company maintains an allowance that considers the total receivables
outstanding, historical collection rates and economic trends. Accounts are written off when all efforts to collect have been exhausted.
Inventory
A salvage vehicle product is a recycled vehicle
part suitable for sale as a replacement part. A core is a recycled mechanical part that is not suitable for sale as a replacement
part without further remanufacturing work. Salvage inventory and cores are recorded at the lower of cost or market using weighted
average method. Cost is established based upon the price the Company pays for a vehicle. Scrap inventory is inventory that is
considered for the purpose of recycling by mills that process metals. For all inventory, carrying value is reduced regularly to
reflect the age of the inventory and current anticipated demand. If actual demand differs from management estimates, additional
reductions to inventory carrying value would be necessary in the period such determination is made. During 2015 inventory was
adjusted based on obsolete, slow moving items with decreasing sales as well as lower market price adjustments below cost.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are
capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss thereon is recognized as operating expenses.
Depreciation
is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term
of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:
Buildings
|
40 years
|
Equipment
|
5-15 years
|
The
Company reviews property, plant and equipment and all amortizable intangible assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated
undiscounted cash flows. Measurement of the impairment loss, if any, is based on the difference between the carrying value and
fair value.
Impairment
of Long-Lived Assets and Amortizable Intangible Assets
The
Company follows ASC 360-10,
“Property, Plant, and Equipment,”
which established a
“primary asset”
approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting
for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived
asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Intangible
Assets - Goodwill
The
excess of the purchase price over net tangible and identifiable intangible assets of business acquired is carried as Goodwill
on the balance sheet. Goodwill is not amortized, but instead is assessed for impairment at least annually and upon the occurrence
of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired.
Note
2 - Summary of Significant Accounting Policies (Continued)
Measurement
of the impairment loss, if any, is based on the difference between the carrying value and fair value of reporting unit. The goodwill
impairment test follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying
value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for
purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets
and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s
goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to that excess.
There were no material impairments to the carrying value of long-lived assets and intangible assets subject to amortization during
the years ended December 31, 2015, and 2014.
Business
segments
ASC
280,
“Segment Reporting”
requires use of the
“management approach”
model for segment reporting.
The management approach model is based on the way a company’s management organizes segments within the company for making
operating decisions and assessing performance. The Company determined it has two operating segments as of December 31, 2015 and
December 31, 2014.
Acquisitions
The
Company recognizes the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition
date, measured at their fair values as of that date. Contingent purchase consideration is recorded at fair value at the date of
acquisition. Any excess purchase price over the fair value of the net assets acquired is recorded as goodwill. Within one year
from the date of acquisition, the Company may update the value allocated to the assets acquired and liabilities assumed and the
resulting goodwill balances as a result of information received regarding the valuation of such assets and liabilities that was
not available at the time of purchase. Measuring assets and liabilities at fair value requires the Company to determine the price
that would be paid by a third party market participant based on the highest and best use of the assets or interests acquired.
Acquisition costs are expensed as incurred.
Environmental
Liabilities
The
Company estimates future costs for known environmental remediation requirements and accrues for them on an undiscounted basis
when it is probable that the Company has incurred a liability and the related costs can be reasonably estimated but the timing
of incurring the estimated costs is unknown. The Company considers various factors when estimating its environmental liabilities.
Adjustments to the liabilities are recorded to selling, general and administrative expense and made when additional information
becomes available that affects the estimated costs to study or remediate any environmental issues or when expenditures are made
for which liabilities were established. Legal costs incurred in connection with environmental contingencies are expensed as incurred.
When only a wide range of estimated amounts can be reasonably established and no other amount within the range is a better estimate
than another, the low end of the range is recorded in the financial statements. In a number of cases, it is possible that the
Company may receive reimbursement through insurance or from other potentially responsible parties for a site. In these situations,
recoveries of environmental remediation costs from other parties are recognized when the claim for recovery is actually realized.
The amounts recorded for environmental liabilities are reviewed periodically as site assessment and remediation progresses at
individual sites and adjusted to reflect additional information that becomes available. Due to evolving remediation technology,
changing regulations, possible third party contributions, the subjective nature of the assumptions used and other factors, amounts
accrued could vary significantly from amounts paid.
Fair
Value Measurements
For
certain financial instruments, including accounts receivable, accounts payable, interest payable, advances payable and notes payable,
the carrying amounts approximate fair value due to their relatively short maturities.
On
January 1, 2008, the Company adopted ASC 820-10,
“Fair Value Measurements and Disclosures.”
ASC 820-10 defines
fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current
liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period
of time between the origination of such instruments and their expected realization and their current market rate of interest.
The three levels of valuation hierarchy are defined as follows:
Note
2 - Summary of Significant Accounting Policies (Continued)
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that
are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair
value in accordance with ASC 815.
In
February 2007, the FASB issued ASC 825-10
“Financial Instruments.”
ASC 825-10 permits entities to choose to
measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair
value option has been elected are reported in earnings. ASC 825-10 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. The Company adopted ASC 825-10 on January 1, 2008. The Company chose not to elect
the option to measure the fair value of eligible financial assets and liabilities.
Income
Taxes
Deferred
income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences
and operating loss and tax credit carry-forwards, and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred
tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the
changes in tax laws and rates of the date of enactment.
When
tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities,
while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately
sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available
evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions
that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50
percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax
benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing
authorities upon examination.
Applicable
interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of
operations.
Borrowings
Borrowings
are recognized initially at cost which is the fair value of the proceeds received, net of transaction costs incurred. In subsequent
periods, borrowings are stated at amortized cost using the effective yield method; any difference between fair value of the proceeds
(net of transaction costs) and the redemption amount is recognized as interest expense over the period of the borrowings.
Provisions
Provisions
are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable
that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where
the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as
a separate asset but only when the reimbursement is virtually certain.
Note
2 - Summary of Significant Accounting Policies (Continued)
The
Company recognizes the estimated liability to repair or replace products sold still under warranty at the balance sheet date.
This provision is calculated based on past history of the level of repairs and replacements.
Research
and Development
Research
expenditure is recognized as an expense as incurred. Costs incurred on development projects (relating to the design and testing
of new or improved products) are recognized as intangible assets to the extent that such expenditure is expected to generate future
economic benefits. Other development expenditures are recognized as an expense as incurred. Development costs previously recognized
as an expense are not recognized as an asset in a subsequent period. Development costs that have been capitalized are amortized
from the commencement of the commercial production of the product on a straight-line basis over the period of its expected benefit.
The amortization periods adopted do not exceed five years.
Legal
Matters
The
Company currently and from time to time is involved in litigation incidental to the conduct of the business. The damages claimed
in some of this litigation are substantial. Based on an internal review, the Company accrues reserves using management’s
best estimate of the probable and reasonably estimable contingent liabilities. The management does not currently believe that
any of these legal claims incidental to the conduct of the business, individually or in the aggregate, will result in liabilities
material to the combined financial position, results of operations or cash flows. However, if such estimates related to these
contingent liabilities are incorrect, the future results of operations for year could be materially adversely affected.
Special
Purpose Entities
The
Company does not have any off-balance sheet financing activities.
Net
Income per Share
The
Company computes net income (loss) per share in accordance with ASC 260-10,
“Earnings Per Share.”
The basic
net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted
net loss per share gives effect to all dilutive potential common shares outstanding during the period using the
“as if
converted”
basis.
Common
Stock
There
is currently only one class of common stock. Each share common stock is entitled to one vote. The authorized number of common
stock of Greenparts International Inc. at December 31, 2015 was 1,900,000,000 thousand shares with a nominal value per share of
$0.001. Authorized shares that have been issued and fully paid amounted to 363,318,084 thousand common stocks.
Preferred
Stock
On
June 4, 2007, the Company’s Board of Directors authorized the issuance of Series “A” Preferred stock of 3,000,000.
These shares had super voting rights of 100 common shares votes to each preferred share. The Company issued a total of 3,000,000
shares were issued on this date.
Derivative
Financial Instruments
The
Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company reviews
the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments,
including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial
instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion
option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative
instrument.
Note
2 - Summary of Significant Accounting Policies (Continued)
Bifurcated
embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair
value reported as non-operating income or expense. The Company uses a lattice model for valuation of the derivative. When the
equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as
liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The
remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being
recorded at a discount from their face value.
The
discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the
life of the instrument through periodic charges to interest expense, using the effective interest method.
Derivative
instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the
derivative instrument could be required within the 12 months of the balance sheet date.
Note
3 - Recent Accounting Pronouncements
The
Company has implemented all other new accounting pronouncements that are in effect and that may impact its consolidated financial
statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a
material impact on its financial position or results of operations.
Note
4 - Inventories
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
Processed and unprocessed scrap metal
|
|
$
|
506,250
|
|
|
$
|
1,154,617
|
|
Finished goods - parts
|
|
|
1,117,951
|
|
|
|
2,484,359
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
1,624,201
|
|
|
$
|
3,638,976
|
|
Note
5 - Property, Plant and Equipment
Property,
plant and equipment and related accumulated depreciation consist of the following:
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
Machinery and equipment
|
|
$
|
2,883,387
|
|
|
$
|
2,948,388
|
|
Land and building
|
|
|
135,000
|
|
|
|
135,000
|
|
Improvements
|
|
|
258,198
|
|
|
|
258,198
|
|
Property, plant and equipment, gross
|
|
|
3,276,585
|
|
|
|
3,341,586
|
|
Less: accumulated depreciation
|
|
|
(1,022,885
|
)
|
|
|
(866,058
|
)
|
Property, plant and equipment, net
|
|
$
|
2,253,700
|
|
|
$
|
2,475,528
|
|
Note
6 - Bank Loans and Long-Term Leases
Notes payable consist of the following for the periods ended;
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
Nine month convertible note with 8% stated interest rate, maturity date of April
17, 2016 and shares convert at 60% of market. This is recorded net of debt discount of $22,500.
|
|
$
|
22,500
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
Working capital loan unsecured with an interest rate of 18%, unsecured and payable on demand.
|
|
|
82,901
|
|
|
|
80,794
|
|
|
|
|
|
|
|
|
|
|
Working capital loan unsecured with an interest rate of 22%, unsecured and payable on demand.
|
|
|
54,058
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Nine month convertible note with 8% stated interest rate, maturity date of January 5, 2016 and
shares convert at 60% of market. This is recorded net of debt discount of $1,844.
|
|
|
5,156
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Equipment loan secured by Company Loader with an interest rate of 8%, and is fully amortizing
with principal payments of $1,580 per month.
|
|
|
68,794
|
|
|
|
87,888
|
|
|
|
|
|
|
|
|
|
|
Bank revolving line of credit with maximum $500, 000 limit. Annual interest rate at 6.5%, secured
by equipment
|
|
|
460,815
|
|
|
|
473,377
|
|
|
|
|
|
|
|
|
|
|
Note agreement for machine parts with no stated interest rate and a maturity date of February
1, 2013. The lender has confirmed this note is not considered in default.
|
|
|
0
|
|
|
|
32,927
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations secured by fencing equipment with a maturity date of June 1, 2015.
|
|
|
0
|
|
|
|
15,078
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations secured by weighting equipment with a maturity date of June 1, 2017.
|
|
|
40,812
|
|
|
|
62,013
|
|
|
|
|
|
|
|
|
|
|
Bank working capital loan unsecured with an interest rate of 12%, and and is payable on demand.
|
|
|
83,269
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
Six month convertible note with 8% stated interest rate, maturity date of June 18, 2016 and shares
convert at 60% of market. This is recorded net of debt discount of $127,575.
|
|
|
42,525
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Nine month convertible note with 8% stated interest rate, maturity date of April 7, 2016. Shares
convert at 40% of market value. This note is recorded net of debt discount of $12,830.
|
|
|
31,420
|
|
|
|
44,250
|
|
|
|
|
|
|
|
|
|
|
On March 27, 2014, the Company secured a senior note secured line of credit facility for a maximum
amount of $10 million. On September 11, 2014, the Company has drawn $2.3 million credit facility with the six months renewable
maturity at 15% interest. This note is secured by Company assets .
|
|
|
2,212,360
|
|
|
|
2,283,438
|
|
|
|
|
|
|
|
|
|
|
Twelve month convertible note with 8% stated interest rate, maturity date of March 1, and shares
convert at 60% of market. This is recorded is fully amortized.
|
|
|
50,000
|
|
|
|
8,337
|
|
|
|
|
|
|
|
|
|
|
Twelve month convertible note with 8% stated interest rate, maturity date of March 1, and shares
convert at 60% of market. This note has been converted to common stock.
|
|
|
0
|
|
|
|
13,056
|
|
|
|
|
|
|
|
|
|
|
On August 2014, the Company entered into an Accounts Receivables Advance Agreement for the advance
amount of $700 thousand with the 12 months maturity at 15% interest payable in daily installments of $3,096. Such credit facility
is secured by the Company’s tangible and intangible assets.
|
|
|
546,613
|
|
|
|
574,214
|
|
|
|
|
|
|
|
|
|
|
Twelve month convertible note with 12% stated interest rate, maturity date of October 31, 2014.
Initial proceeds were $25,000, shares convert at $0.25 per share. This note has been fully amortized.
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Total Notes Payable
|
|
|
3,726,223
|
|
|
|
3,750,372
|
|
|
|
|
|
|
|
|
|
|
Less Current Portion
|
|
|
3,704,995
|
|
|
|
3,707,943
|
|
|
|
|
|
|
|
|
|
|
Long Term Notes Payable
|
|
$
|
21,228
|
|
|
$
|
42,429
|
|
Note
7 - Business Combinations
During
fiscal 2015 and 2014, the Company did not make any acquisitions:
The
acquisition completed in fiscal 2013 was not material to the Company’s financial position or results of operations. Pro
forma operating results for the fiscal 2013 acquisition is not presented, since the aggregate results would not be significantly
different than reported results.
Note
8 - Note Receivable
During
the 2012 the company sold the assets of a business Booming (Valencia Motors LLC) which was previously acquired in 2007. The remaining
items that were sold were not material to the Company and therefore no additional detail is provided. The sale was for $425,000
in the form of a note which included $30,000 paid down and a note for the balance. There was $160,000 in notes receivable as of
December 31, 2015 $60,000 current and $85,000 long term, and $220,000 in notes receivable at December 31, 2014, $60,000 current
and $100,000 long term.
Note
9 - Commitments and Contingencies
Commitments
The
table below sets forth the Company’s future minimum obligations under non-cancelable operating leases as of December 31,
2015:
Non
Related Party Long Term Commitments
|
|
|
|
|
Capital
|
|
|
|
|
Twelve
|
|
|
|
|
Lease
|
|
|
|
|
months ending
|
|
Debt
|
|
|
Obligations
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
$
|
3,685,411
|
|
|
$
|
19,584
|
|
|
$
|
3,704,995
|
|
12/31/2017
|
|
|
0
|
|
|
|
19,584
|
|
|
|
19,584
|
|
12/31/2018
|
|
|
0
|
|
|
|
1,644
|
|
|
|
1,644
|
|
12/31/2019
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
12/31/2020 & Beyond
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
3,685,411
|
|
|
$
|
40,812
|
|
|
$
|
3,726,223
|
|
Note
9 - Commitments and Contingencies (Continued)
Guarantees,
Indemnifications and Warranties
Standard
Guarantees / Indemnifications
In
the ordinary course of business, the Company enters into a number of agreements that contain standard guarantees and indemnities
where the Company may indemnify another party for, among other things, breaches of representations and warranties. These guarantees
or indemnifications are granted under various agreements, including those governing (i) purchases and sales of assets or businesses,
(ii) leases of real property, (iii) licenses of intellectual property, (iv) long-term supply agreements, (v) employee benefits
services agreements and (vi) agreements with public authorities on subsidies for designated research and development projects.
These guarantees or indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements,
(ii) landlords or lessors in lease contracts, (iii) licensors or licensees in license agreements, (iv) vendors or customers in
long-term supply agreements, (v) service providers in employee benefits services agreements and (vi) governments or agencies subsidizing
research or development. In addition, the Company guarantees some of the payables of its subsidiaries to purchase raw materials
in the ordinary course of business. These parties may also be indemnified against any third party claim resulting from the transaction
that is contemplated in the underlying agreement. While some of these guarantees extend only for the duration of the underlying
agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless they are subject to a legal
statute of limitations). There are no specific limitations on the maximum potential amount of future payments that the Company
could be required to make under its guarantees, nor is the Company able to estimate the maximum potential amount of future payments
to be made under these guarantees because the triggering events are not predictable. With respect to some of these guarantees,
the Company maintains limited insurance coverage that mitigates the potential payments that may be required to be made.
Warranties
The
Company does not make express warranties on its products, other than that they comply with the Company’s specifications;
therefore, the Company does not record a warranty liability. Adjustments for product quality claims are not material and are charged
against net sales.
Environmental
Matters
The
Company periodically evaluates its obligations under environmental regulations. As obligations are determined, they are recognized
immediately. Potential liabilities, which might arise as a result of changes in existing regulations, civil litigation or legislation,
cannot be estimated but could be material. In the current enforcement climate under existing legislation, management believes
that there are no significant liabilities for environmental damage. The Company has had studies done in 2008 and 2009 and had
these studies further updated in 2012 in conjunction with requirements needed for refinancing. Based upon these studies, a provision
has been established. The liabilities relate to the potential future remediation of soil contamination, groundwater contamination
and storm water runoff issues and were not individually material to any site. No material environmental compliance enforcement
proceedings are currently pending related to these sites.
Legal
Proceedings
During
the year, the Company was involved in a number of court proceedings (both as a plaintiff and a defendant) arising in the ordinary
course of business. In the opinion of management, there are no current legal proceedings or other claims outstanding, which could
have a material effect on the result of operations or financial position of the Company. None of which were deemed material and
have not been accrued or disclosed in these financial statements.
Note
10 - Net Income Per Share
The
following table sets forth the information used to compute basic and diluted net income per share attributable to GNPT for the
years ended December 31:
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
(3,349,118
|
)
|
|
$
|
(690,355
|
)
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common stock basic
|
|
|
163,863,978
|
|
|
|
66,890,435
|
|
Equivalents
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
-
|
|
|
|
-
|
|
Warrants
|
|
|
-
|
|
|
|
-
|
|
Convertible Notes
|
|
|
837,750,000
|
|
|
|
138,133,293
|
|
Weighted-average common shares outstanding- Diluted
|
|
|
1,001,613,978
|
|
|
|
205,023,728
|
|
Note
11 - Income Taxes Payable
Income
from continuing operations before income taxes was as follows for the years ended December 31:
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
Net Operating Loss carryforward
|
|
|
(5,923,321
|
)
|
|
|
(2,574,203
|
)
|
Deferred Tax
|
|
|
(2,013,929
|
)
|
|
|
(875,229
|
)
|
Valuation allowance
|
|
|
2,013,929
|
|
|
|
875,226
|
|
Total deferred tax asset
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
12/31/2015
|
|
|
12/31/2014
|
|
Federal statutory rate
|
|
|
15
|
%
|
|
|
15
|
%
|
State taxes, net of credits
|
|
|
6
|
%
|
|
|
6
|
%
|
Foreign income taxed at different rates
|
|
|
0
|
%
|
|
|
0
|
%
|
Section 199 deduction
|
|
|
0
|
%
|
|
|
0
|
%
|
Other
|
|
|
0
|
%
|
|
|
0
|
%
|
Effective tax rate
|
|
|
0
|
%
|
|
|
0
|
%
|
In
fiscal 2015 the effective tax rate differed from the U.S. federal statutory rate of 34.0% primarily due to tax benefits from accelerated
depreciation deductions.
Note
12 - Related Party Transactions
For
the purposes of these financial statements, parties are considered to be related if one party has the ability to control the other
party or exercise significant influence over the other party in making financial or operational decisions. In considering each
possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.
Related
parties may enter into transactions which unrelated parties might not, and transactions between related parties may not be effected
on the same terms, conditions and amounts as transactions between unrelated parties. The Company currently pays rent of $15,000
per month on its main facility located at 844 Regina Drive in Atlanta which is owned by the President Asif Balagamwala.
During
the year ended December 31, 2014, the Company was relieved of liabilities from loans to Piedmont bank. This debt was assumed by
Asif Balagamwala and the Company did not have to repay the loan. Therefore a related party liability was recorded at that time.
Additionally,
balances and transactions with related parties of the Company consist of the following:
|
|
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
Notes Payable Related Party
|
|
Asif Balagamwala
|
|
$
|
2,239,669
|
|
|
$
|
113,700
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
$
|
2,239,669
|
|
|
$
|
298,700
|
|
Note
13 - Segment Information
The
accounting standards for reporting information about operating segments define operating segments as components of an enterprise
for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the Chief Executive
Officer. The Company is organized by line of business. While the Chief Executive Officer evaluates results in a number of different
ways, the line of business management structure is the primary basis for which the allocation of resources and financial results
are assessed. Under the aforementioned criteria, the Company operates in two operating and reporting segments: metal purchasing,
processing, recycling and selling, and used auto parts.
Metal
Max Recycling is one segment of the Company that derives its income from the sale of metals and recyclable materials both in the
United States and overseas. Our other business segment is Greenparts, which purchases used and salvaged vehicles, sells parts
from those vehicles through its retail facilities and wholesale operations, and sells the remaining portion of the vehicles to
metal recyclers, including Metal max Recycling.
The
information provided below is obtained from internal information that is provided to the Company’s chief operating decision
maker for the purpose of corporate management. The Company uses operating income (loss) to measure segment performance. The Company
does not allocate corporate interest income and expense, income taxes, other income and expenses related to corporate activity
or corporate expense for management and administrative services that benefit both segments. In addition, the Company does not
allocate restructuring charges to the segment operating income (loss) because management does not include this information in
its measurement of the performance of the operating segments. Because of this unallocated income and expense, the operating income
(loss) of each reporting segment does not reflect the operating income (loss) the reporting segment would report as a stand-alone
business and therefore we do not present indirect operating expenses.
The
table below illustrates the Company’s results by reporting segment for the years ended December 31:
Segment
Information
|
|
12/31/2015
|
|
|
12/31/2014
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts
|
|
$
|
5,200,028
|
|
|
$
|
6,697,885
|
|
Scrap Metal
|
|
|
2,082,955
|
|
|
|
5,981,455
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
$
|
7,282,983
|
|
|
$
|
12,679,340
|
|
|
|
12/31/2014
|
|
|
12/31/2014
|
|
Product Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts
|
|
$
|
4,694,564
|
|
|
$
|
5,879,184
|
|
Scrap Metal
|
|
|
1,168,823
|
|
|
|
4,385,502
|
|
|
|
|
|
|
|
|
|
|
Total Product Cost
|
|
$
|
5,863,387
|
|
|
$
|
10,264,686
|
|
|
|
12/31/2015
|
|
|
12/31/2014
|
|
Net Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parts
|
|
$
|
(2,575,014
|
)
|
|
$
|
(269,482
|
)
|
Scrap Metal
|
|
|
(590,467
|
)
|
|
|
630,960
|
|
|
|
|
|
|
|
|
|
|
Total Net Operating Income
|
|
$
|
(3,165,481
|
)
|
|
$
|
361,478
|
|
Note
14 - Goodwill
In
the fourth quarter of fiscal 2015, the Company performed its annual goodwill impairment testing by comparing the fair value of
each reporting unit with its carrying value, including goodwill.
As
a result of both tests, the Company determined that the fair value for which goodwill was allocated was in excess of its respective
carrying value and the goodwill balance was not impaired.
The
determination of fair value of the assets used to perform the first step of the impairment test requires judgment and involves
significant estimates and assumptions about the expected future cash flows and the impact of market conditions on those assumptions.
Future events and changing market conditions, including a sustained decline in the Company’s market capitalization, may
lead the Company to reevaluate its assumptions as to future growth rates, operating margins, capital expenditures, working capital
requirements, tax rates, terminal growth rates, appropriate discount rates and other factors that may result in changes in the
estimates of discounted future cash flows. Due to the inherent uncertainty associated with forming these estimates, actual results
could differ from those estimates.
The
carrying amount of goodwill for the years ended December 31, 2015 and 2014:
Goodwill Source
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
Samson
|
|
$
|
560,371
|
|
|
$
|
560,371
|
|
Booming
|
|
|
0
|
|
|
|
40,000
|
|
Jonsboro:
|
|
|
40,000
|
|
|
|
0
|
|
Impairment Charges
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Goodwill
|
|
$
|
600,371
|
|
|
$
|
600,371
|
|
Note
15 - Derivative Liability
The
Company evaluated their convertible note agreements pursuant to ASC 815 and due to there being no minimum or fixed conversion
price resulting in an indeterminate number of shares to be issued in the future, the Company determined an embedded derivative
existed and ASC 815 applied for all their convertible note with a cumulative balance of $420,693 and $246,910 at December 31,
2015 and 2014, respectively.
In
accordance with the option allowed in ASC 815, the Company has elected to value the derivatives separately at the fair value on
the issuance date using the Black-Scholes valuation model and bifurcate the instruments. The Company valued the embedded derivative
within the convertible note using the Black-Scholes valuation model. The result of the valuation is a derivative liability in
the amount of $420,693 as of December 31, 2015 and $246,910 as of December 31, 2014. We estimated the fair value of the derivative
using the Black-Scholes valuation method with assumptions including: (1) term of 0.75 years; (2) a computed volatility rate of
127.02% (3) a discount rate of 0.12% and (4) zero dividends. The valuation of this embedded derivative was recorded with an offsetting
gain/loss on derivative liability.
The
Company evaluated all convertible debt and outstanding warrants to determine whether these instruments may be tainted from the
aforementioned derivative. It was determined there was sufficient share authorization for all instruments.
Convertible note Derivative Liability at 12/31/14
|
|
$
|
246,910
|
|
|
|
|
|
|
(Gain) Loss on Derivative for the Year Ended December 31, 2014
|
|
|
(20,289
|
)
|
|
|
|
|
|
Conversions during the period
|
|
|
(298,729
|
)
|
|
|
|
|
|
Derivative liability from new notes
|
|
|
492,801
|
|
|
|
|
|
|
Convertible note Derivative Liability at 12/31/15
|
|
$
|
420,693
|
|
Note
16 - Going Concern
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Currently, the
Company has consistently incurred operating losses, and as of December 31, 2015 the Company had a working capital deficit and
an accumulated deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s
development efforts and its efforts to raise capital. Management also believes the Company needs to raise additional capital for
working capital purposes. There is no assurance that such financing will be available in the future. The conditions described
above raise substantial doubt about our ability to continue as a going concern. The financial statements of the Company do not
include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications
of liabilities that might be necessary should the Company be unable to continue as a going concern. At year-end management was
in process of finalizing $5 Million (see Note 17) refinance package. After securing this package the current liquidity gap of
approximately -$2.5 Million turned into a positive current liquidity gap of approximate +$1.2 Million. This event along with other
plans and initiatives, management believes the company is able to continue as an ongoing concern in foreseeable future.
Note
17 - Subsequent Events
On
January 7, 2016, as a prerequisite to the $5,000,000 refinance package, Green Parts International, Inc. President Asif Balag a
mwala transferred to the company from his personal holdings, two properties with an appraised value of more than $2,500,000. By
doing so the company was able to enter a 25-year term rather than a 10-year term on the loan.
On
January 7, 2016, Green Parts International, Inc. completed a $5,000,000 refinance package at Prime plus 2.75%. The package reduced
the company’s debt (principle and interest) expense by approximately 75%. The loan proceeds also resolved all pending creditor
litigations and various short-term loan obligations were paid.
Type
of Loan: SBA 25 Year term prime plus 2.75
Use
of Proceeds:
|
I)
|
$1,021,257.49
in working capital (working capital can be only used for day to day operations expenses only).
|
|
|
|
|
|
|
a. $630,000
of the working capital portion will be in reserve for 12 months
|
|
|
|
|
|
|
|
b.
$268,107
was used for closing cost items
|
|
|
|
|
|
II)
|
$3,971,892.30
was used to refinance current debt, along with adding additional collateral for the new lender.
|