UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
_____________________
 
FORM 10-Q
(Mark One)
 
 
X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES    EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2016
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________
 
Commission file number 000-54018
 
______________________
 
GREEN ENDEAVORS, INC.
 
(Exact Name of Registrant as Specified in Its Charter)
 
______________________
 
Utah
27-3270121
 
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
     
     
 
59 W 100 S, 2 nd Floor, Salt Lake City, UT
84101
 
(Address of Principal Executive Offices)
(Zip Code)
     
 
(801) 575-8073
 
Registrant's Telephone Number, including Area Code
 
______________________
     
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   X       No
     
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes X        No
     
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
 
 
Large accelerated filer
Accelerated filer
 
Smaller reporting company   X
Non-accelerated filer
 
(Do not check if a smaller reporting company)
     
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes        No  X
 
On August 3 2016, approximately 886,180 shares of the registrant's common stock, $0.0001 par value, were outstanding.


GREEN ENDEAVORS, INC. AND SUBSIDIARIES
INDEX


 
PAGE
PART I FINANCIAL INFORMATION
 
   
Item 1. Financial Statements (Unaudited):
 
   
Condensed Consolidated Balance Sheets – June 30, 2016 (unaudited) and December 31, 2015
1
   
Condensed Consolidated Statements of Operations – Three and Six Months Ended
 
June 30, 2016 and 2015 (unaudited)
2
   
Condensed Consolidated Statements of Cash Flows - Six Months Ended
 
June 30, 2016 and 2015 (unaudited)
3
   
Notes to Condensed Consolidated Financial Statements
4
   
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
10
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk
15
   
Item 4. Controls and Procedures
16
   
PART I OTHER INFORMATION
 
   
Item 1. Legal Proceedings
16
   
Item 1A. Risk Factors
16
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
16
   
Item 3. Defaults upon Senior Securities
17
   
Item 4. [Reserved]
17
   
Item 5. Other Information
17
   
Item 6. Exhibits
18
   
Signatures
19

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Green Endeavors, Inc. and Subsidiaries
 
Condensed Consolidated Balance Sheets
 
   
June 30,
   
December 31
 
   
2016
   
2015
 
     
(Unaudited)
       
Assets
 
Current Assets:
           
 Cash
 
$
132,513
   
$
150,459
 
Accounts receivable
   
8,977
     
15,967
 
Inventory
   
166,686
     
138,928
 
Prepaid expenses
   
24,040
     
31,513
 
Notes receivable - current
   
91,675
     
196,922
 
Total current assets
   
423,891
     
533,789
 
                 
Property, plant, and equipment, net of accumulated depreciation of $911,006 and $857,236, respectively
   
262,825
     
293,068
 
Other assets
   
24,475
     
24,475
 
Total Assets
 
$
711,191
   
$
851,332
 
                 
Liabilities and Stockholders' Deficit
 
Current Liabilities:
               
Accounts payable and accrued expenses
 
$
243,163
   
$
344,052
 
Deferred revenue
   
48,884
     
66,048
 
Deferred rent
   
81,659
     
86,818
 
Due to related parties
   
530,751
     
424,804
 
Derivative liability
   
91,835
     
209,610
 
Current portion of notes payable
   
511,833
     
44,094
 
Current portion of notes payable, related party
   
68,920
     
67,990
 
Current portion of capital lease obligations
   
-
     
10,038
 
Convertible notes payable, net of debt discount of $0 and $5,889, respectively
   
35,000
     
152,089
 
Total current liabilities
   
1,612,045
     
1,405,543
 
                 
Long-Term Liabilities:
               
Notes payable
   
77,271
     
152,028
 
Notes payable, related party
   
8,752
     
14,389
 
Convertible notes payable, net of debt discount of $0 and $30,390, respectively
   
-
     
8,110
 
Convertible debentures, related party, net of debt discount of $22,957 and $29,218, respectively
   
1,870,407
     
2,118,373
 
Total long-term liabilities
   
1,956,430
     
2,292,900
 
Total Liabilities
   
3,568,475
     
3,698,443
 
                 
Stockholders' Deficit:
               
Convertible super voting preferred stock, $0.001 par value, 10,000,000 shares authorized; 10,000,000 shares issued and outstanding at June 30, 2016 and December 31, 2015; no liquidation value
   
10,000
     
10,000
 
Convertible preferred series B stock - $0.001 par value, 2,000,000 shares authorized, 727,607 and 734,607 shares issued and outstanding at June 30, 2016 and December 31, 2015 respectively
   
728
     
735
 
Preferred, undesignated stock - $0.001 par value 3,000,000 shares authorized, no shares issued and outstanding at June 30, 2016, and December 31, 2015
   
-
     
-
 
Common stock, $0.0001 par value, 2,000,000,000 shares authorized; 886,180 and 618,174 shares issued and outstanding at June 30, 2016, and December 31, 2015, respectively
   
89
     
62
 
Subscription receivable
   
(38,400
)
   
(76,800
)
Additional paid-in capital
   
1,379,979
     
1,305,755
 
Accumulated deficit
   
(4,209,680
)
   
(4,086,863
)
Total stockholders' deficit
   
(2,857,284
)
   
(2,847,111
)
Total Liabilities and Stockholders' Deficit
 
$
711,191
   
$
851,332
 
                 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

1


Green Endeavors, Inc. and Subsidiaries
 
Condensed Consolidated Statements of Operations
 
(Unaudited)
 
 
                       
     
Three Months Ended
   
Six Months Ended
 
   
June 30, 2016
   
June 30, 2015
   
June 30, 2016
   
June 30, 2015
 
Revenue:
                       
Services, net of discounts
 
$
671,529
   
$
551,140
   
$
1,271,783
   
$
1,055,657
 
Product, net of discounts
   
193,218
     
207,252
     
384,472
     
404,491
 
Total revenue
   
864,747
     
758,392
     
1,656,255
     
1,460,148
 
                                 
Costs and expenses:
                               
Cost of services
   
426,656
     
326,869
     
751,082
     
624,312
 
Cost of product
   
90,575
     
118,516
     
212,896
     
228,801
 
Depreciation
   
26,735
     
35,622
     
53,770
     
68,270
 
General and administrative
   
326,077
     
422,605
     
648,478
     
887,098
 
Total costs and expenses
   
870,043
     
903,612
     
1,666,226
     
1,808,481
 
Loss from operations
   
(5,296
)
   
(145,220
)
   
(9,971
)
   
(348,333
)
                                 
Other income (expenses):
                               
Interest income
   
16,761
     
2,458
     
17,643
     
3,567
 
Interest expense
   
(30,129
)
   
(44,829
)
   
(83,815
)
   
(82,791
)
Interest expense, related parties
   
(47,730
)
   
(47,212
)
   
(86,875
)
   
(92,951
)
Gain (loss) on derivative fair value adjustment
   
45,510
     
(51,500
)
   
67,775
     
(81,880
)
Gain on settlement of debt
   
-
     
71,025
     
-
     
110,220
 
Loss on stock subscription receivable
   
(6,459
)
   
(139,304
)
   
(39,839
)
   
(139,304
)
Other income (expense)
   
12,265
     
(146
)
   
12,265
     
(1,052
)
Total other income (expenses)
   
(9,782
)
   
(209,508
)
   
(112,846
)
   
(284,191
)
Loss before income taxes
   
(15,078
)
   
(354,728
)
   
(122,817
)
   
(632,524
)
Provision for income taxes
   
-
     
-
     
-
     
-
 
Net loss
 
$
(15,078
)
 
$
(354,728
)
 
$
(122,817
)
 
$
(632,524
)
                                 
Loss per common share – basic and diluted
                               
Basic and diluted loss per common share
 
$
(0.02
)
 
$
(2.78
)
 
$
(0.16
)
 
$
(5.16
)
Weighted-average common shares outstanding
   
853,441
     
127,627
     
769,279
     
122,603
 
                                 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 

2


Green Endeavors, Inc. and Subsidiaries
 
Condensed Consolidated Statements of Cash Flows
 
(Unaudited)
 
       
Six Months Ended
 
   
June 30,
 
   
2016
   
2015
 
             
Cash Flows from Operating Activities:
           
Net loss
 
$
(122,817
)
 
$
(632,524
)
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation
   
53,770
     
68,270
 
Amortization of debt related costs
   
53,733
     
49,118
 
Stock-based compensation
   
-
     
124,405
 
Gain on settlement of debt
   
-
     
(110,220
)
(Gain) loss on derivative liability fair value adjustment
   
(67,775
)
   
81,880
 
Loss on stock subscription receivable
   
39,839
     
139,304
 
Initial derivative expense
   
-
     
6,018
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
6,990
     
4,246
 
Certificate of deposit
   
-
     
28,660
 
Inventory
   
(27,758
)
   
19,365
 
Prepaid expenses
   
-
     
170
 
Accounts payable and accrued expenses
   
(100,077
)
   
57,746
 
Due to (from) related parties
   
105,946
     
31,619
 
Deferred rent
   
(5,159
)
   
(4,458
)
Deferred revenue
   
(17,164
)
   
(2,362
)
Note receivable
   
-
     
(1,037
)
Net cash used in operating activities
   
(80,472
)
   
(139,800
)
Cash Flows from Investing Activities:
               
Purchases of property, plant, and equipment
   
(23,527
)
   
(8,567
)
Payments on related party note receivable
   
(310,000
)
   
-
 
Proceeds from related party note receivable
   
159,581
     
-
 
Net cash used in investing activities
   
(173,946
)
   
(8,567
)
Cash Flows from Financing Activities:
               
Payments made on notes payable
   
(180,733
)
   
(97,978
)
Payments made on convertible debt
   
(30,050
)
   
-
 
Payments made on related party notes payable
   
(4,707
)
   
(2,144
)
Payments made on capital lease obligations
   
(10,038
)
   
(10,382
)
Proceeds from issuance of notes payable
   
462,000
     
82,880
 
Proceeds from issuance of related party notes payable
   
-
     
35,082
 
Proceeds from issuance of stock options
   
-
     
26,196
 
Proceeds from issuance of convertible notes payable
   
-
     
98,000
 
Net cash provided by financing activities
   
236,472
     
131,654
 
Decrease in cash
   
(17,946
)
   
(16,713
)
Cash at beginning of period
   
150,459
     
100,628
 
Cash at end of period
 
$
132,513
   
$
83,915
 
Supplemental cash flow information:
               
Cash paid during the period for:
               
Interest
 
$
27,963
   
$
89,192
 
Non-cash investing and financing activities:
               
Debt discount on derivative liability, convertible notes
 
$
-
   
$
94,048
 
Return of Series B preferred stock
 
$
-
   
$
14
 
Exercised options for stock subscription
 
$
-
   
$
274,800
 
Conversion of debt
 
$
74,244
   
$
35,805
 
                 
The accompanying notes are an integral part of these condensed consolidated financial Statements.
 

3
Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1 – Nature of Operations and Basis of Presentation

Business Description

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

Organization

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

Green is a more than 50% controlled subsidiary of Sack Lunch Productions, Inc. ("SAKL"). Sack Lunch Productions, Inc. is listed at OTC Markets trading under the symbol SAKL and is not currently a reporting company. Previous to April 15, 2015, SAKL was known as Nexia Holdings, Inc. and was trading under its symbol NXHD.

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

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

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

Basis of Presentation

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

These statements should be read in conjunction with the Company's annual financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. In particular, the Company's significant accounting policies were presented as Note 2 to the consolidated financial statements in that Annual Report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements for the three and six months ended June 30, 2016, are not necessarily indicative of the results that may be expected for the 12 months ending December 31, 2016.

Use of Estimates in the Preparation of the Financial Statements

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Note 2 – Summary of Significant Accounting Policies

Cash and Cash Equivalents

Investments with original maturities of three months or less at the time of purchase are considered cash equivalents. As of June 30, 2016 and December 31, 2015, Green had no cash equivalents.
 
 
4
Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Inventory

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

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

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

As of June 30, 2016 and 2015, Green recorded depreciation expense of $53,770 and $68,270, respectively.

Long-Lived Assets

We periodically review the carrying amount of our long-lived assets for impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. There were no impairments of long-lived assets as of June 30, 2016 and December 31, 2015.

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

Revenue Recognition

There are two primary types of revenue for the Company: 1) providing hair salon services, and 2) selling hair salon products. Revenue is recognized at the time the service is performed or the product is delivered. All revenue sources are domestic. In some cases, such as the sale of gift cards, revenue is deferred until the gift card is redeemed.

Deferred Revenue

Deferred revenue arises when customers pay for products and/or services in advance of receiving the product or service. Green's deferred revenue consists solely of unearned revenue associated with the purchase of gift certificates for which revenue is recognized only when the service is performed or the product is delivered. As of June 30, 2016 and December 31, 2015, deferred revenue was $48,884 and $66,048, respectively.

Advertising

The Company expenses advertising production costs as they are incurred and advertising communication costs the first time the advertising takes place. For the six month period ended June 30, 2016 and 2015, advertising costs amounted to $47,278 and $63,603, respectively.
 

 
5
Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Stock-Based Compensation

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

Income Taxes

Deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Also, Green's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Green is 100% consolidated into its parent company, SAKL, and therefore does not file an income tax return. Its financial amounts are consolidated into the SAKL income tax returns. As of June 30, 2016 and December 31, 2015, a 100% valuation allowance has been placed against the deferred tax asset and therefore is not reflected on the balance sheets.

Net Loss Per Share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and potential common shares during the specified period. For the six months ended June 30, 2016 there were 1,030,394,266 potential common shares not included in the diluted net loss per share calculation as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share.

Recent Accounting Pronouncements

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

Note 3 – Inventory

Green's inventory consists of items held for resale and product that is used in services by the Landis and Landis II salons, and all are considered finished goods. Inventory is carried at the lower of cost or market. As of June 30, 2016 and December 31, 2015, inventory amounted to $166,686 and $138,928, respectively.

6
Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 4 – Property, Plant, and Equipment

The following is a summary of Green's Property, plant, and equipment by major category as of June 30, 2016:

   
Cost
   
Accumulated Depreciation
   
Net
 
Computer equipment and related software
 
$
44,400
   
$
32,545
   
$
11,855
 
Construction in process
   
-
     
-
     
-
 
Leasehold improvements
   
668,196
     
500,937
     
167,259
 
Furniture and fixtures
   
27,201
     
25,155
     
2,046
 
Leased equipment
   
76,298
     
61,691
     
14,607
 
Equipment
   
284,389
     
232,641
     
51,748
 
Vehicle
   
48,193
     
43,029
     
5,164
 
Signage
   
25,154
     
15,008
     
10,146
 
   
$
1,173,831
   
$
911,006
   
$
262,825
 

The following is a summary of Green's Property, plant, and equipment by major category as of December 31, 2015:

   
Cost
   
Accumulated Depreciation
   
Net
 
Computer equipment and related software
 
$
39,247
   
$
29,401
   
$
9,846
 
Construction in process
   
12,000
     
-
     
12,000
 
Leasehold improvements
   
639,253
     
476,652
     
162,601
 
Furniture and fixtures
   
27,201
     
24,661
     
2,540
 
Leased equipment
   
76,298
     
54,061
     
22,237
 
Equipment
   
282,957
     
219,071
     
63,886
 
Vehicle
   
48,193
     
39,587
     
8,606
 
Signage
   
25,155
     
13,803
     
11,352
 
   
$
1,150,304
   
$
857,236
   
$
293,068
 


Note 5 – Fair Value Measurements

Our financial assets and (liabilities) carried at fair value measured on a recurring basis as of June 30, 2016 and December 31, 2015, consisted of the following:

   
Total fair
   
Quoted prices
   
Significant other
   
Significant
 
   
value at
   
in active
   
observable
   
unobservable
 
   
June 30,
   
markets
   
Inputs
   
inputs
 
Description
 
2016
   
(Level)
   
(Level 2)
   
(Level)
 
Derivative liability (1)
 
$
91,835
   
$
-
   
$
91,835
   
$
-
 
                                 
   
Total fair
   
Quoted prices
   
Significant other
   
Significant
 
   
value at
   
in active
   
Observable
   
unobservable
 
   
December 31,
   
markets
   
Inputs
   
inputs
 
Description
   
2015
   
(Level)
   
(Level 2)
   
(Level)
 
Derivative liability (1)
 
$
209,610
   
$
-
   
$
209,610
   
$
-
 

(1) Derivative liability amounts are due to the embedded derivatives of certain convertible notes payable issued by the Company and are calculated using the Black Scholes pricing model (see Note 6 - Derivative liability)
 

 
7
Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 6 – Derivative Liability

As of June 30, 2016, the Company had a $91,835 derivative liability balance on the balance sheet, and for the six months ended June 30, 2016, the Company recorded a $67,775 net gain from derivative liability activity. The derivative liability activity comes from convertible notes payable as follows:

Eastshore Enterprises, Inc.
On June 30, 2016, Green marked-to-market the fair value of the derivative liability related to the Eastshore Note and determined an aggregate fair value of $91,835 and recorded a $1,679 loss from change in fair value of derivative for the six month period ended June 30, 2016. The fair value of the embedded derivative for the note was determined using the Black-Scholes option pricing model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 489.89%, (3) risk-free interest rate of 0.45%, (4) expected life of 1 year, and (5) estimated fair value of Green's common stock of $0.0001 per share.

Note 7 – Related Party Transactions

 
June 30,
   
December 31,
 
   
2016
   
2015
 
Convertible Debenture - Related Party
           
       Principal amount
   
2,147,591
     
2,147,591
 
       Debt discount
   
(22,957
)
   
(29,218
)
Note receivable – Related Party
   
(254,227
)
       
Convertible debenture, net of debt discount
   
1,870,407
     
2,118,373
 

As of June 30, 2016 and December 31, 2015, amounts due to related parties were $530,751 and $424,804, respectively.

Richard Surber, a related party, is providing his personal guaranty for several lines of credit and credit cards that are being utilized by the Company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of $355,354. Subsequent to June 30, 2016, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.

Note 8 –Debt

During the six month period ending June 30, 2016, the Company has entered into two new loan agreements in the total amount of $465,720.

As of June 30, 2016, Mr. Surber is a personal guarantor to various notes payable by the Company. Subsequent to June 30, 2016, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.
 
Note 9 – Stockholders' Deficit

Preferred Stock
Green is authorized to issue 15,000,000 shares of preferred stock (par value $.001 per share). Green's preferred stock may be divided into such series as may be established by the Board of Directors. As of June 30, 2016, Green has designated 12,000,000 of the preferred stock into two series as follows: 2,000,000 shares of Convertible Series B Preferred and 10,000,000 shares of Convertible Super voting Preferred.

The Preferred Stock is classified as equity as long as there are sufficient shares available to effect the conversion. In some instances certain contracts may pass the option to receive cash or common stock to the shareholder. In this case, it is assumed that a cash settlement will occur and balance sheet classification of the affected Preferred Stock and related preferred paid-in capital as a liability.

Convertible Super voting Preferred Stock
Each share of the Convertible Super voting Preferred Stock is convertible into 100 shares of Green's Common stock and has the voting rights equal to 100 shares of common stock.
 
 
8
Green Endeavors, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)

During the six month period ended June 30, 2016, there were no issuances or conversions of Convertible super voting preferred shares.

As of both June 30, 2016 and December 31, 2015, Green had 10,000,000 shares of Convertible super voting preferred stock issued and outstanding.

Convertible Series B Preferred Stock
Each share of Green's Convertible Series B Preferred Stock (Series B) has one vote per share and is convertible into $5.00 worth of common stock. The number of common shares received is based on the average closing bid market price of Green's common stock for the five days before conversion notice date by the shareholder. Series B shareholders, at the option of Green, can receive cash or common stock upon conversion.

On May 22, 2016 the Company approved the conversion of 7,000 Series B shares into 41,667 shares of common stock.

As of June 30, 2016 and December 31, 2015, Green had 727,607 and 734,607 shares of Series B issued and outstanding respectively.

Common Stock
Pursuant to an amendment to our articles of incorporation filed on June 27, 2016 the number of authorized common shares was reduced from 10,000,000,000 to 2,000,000,000 (par value $0.0001 per share) and the common stock was reversed 2000:1.

As of June 30, 2016 and December 31, 2015, and after giving effect to the reverse split, Green had 886,180 and 618,174 shares of common stock issued and outstanding respectively.

Note 10 – Stock-Based Compensation

No stock compensation was awarded during the six months ended June 30, 2016.

Note 11 – Litigation

There are no new matters of litigation during the six months ended June 30, 2016.

Note 12 – Concentration of Risk

Supplier Concentrations
The Company purchases most of its salon inventory that is used for service and product sales from Aveda(TM).  Aveda(TM) product purchases for the six months ended June 30, 2016 and for the year ended December 31, 2015 accounted for approximately 99% of salon products purchased.

Market or Geographic Area Concentrations
100% of the Company's sales are in the salon services and products market and are concentrated in the Salt Lake City, Utah geographic area.

Note 13 – Going Concern

Generally accepted accounting principles in the United States of America contemplate the continuation of Green as a going concern. As of and for the six months ended June 30, 2016, Green had negative working capital of $1,188,154 and a net loss of $122,817, which raises substantial doubt about Green's ability to continue as a going concern. Green's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to successfully fulfill its business plan. Management plans to attempt to raise additional funds to finance the operating and capital requirements of Green through a combination of equity and debt financings. While Green is making its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be sufficient for operations.

Note 14 – Subsequent Events

On June 27, 2016 we filed an amendment to our articles of incorporation to effect a 1-for-2000 reverse stock split of our common stock and to reduce the number of authorized common shares from 10,000,000,000 to 2,000,000,000.  All share and per share amounts relating to the common stock included in the financial statements have been restated to reflect the reverse stock split. This corporate action took effect on July 21, 2016.

In accordance with ASC 855-10 Company management reviewed all material events through the date of this report and there are no additional material subsequent events to report.
9

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

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included in this Quarterly Report on Form 10-Q, or this Quarterly Report, and in conjunction with our Form 10-K for the fiscal year ended December 31, 2015 and Form 10-Q for the quarter ended March 31, 2016. Certain of these statements, including, without limitation, statements regarding the extent and timing of future revenues and expenses, customer demand and other statements using words such as "anticipates," "believes," "could," "estimates," "expects," "forecast," "intends," "may," "plans," "projects," "should," "will" and "would," and words of similar import and the negatives thereof, constitute forward-looking statements. These statements are predictions based upon management's best judgment at the time they are made about future events that are not historical facts. Actual results could vary materially as a result of certain factors, including but not limited to, those expressed in these statements. We refer you to the "Risk Factors," "Results of Operations," and "Liquidity and Capital Resources" sections contained in this Quarterly Report, which identify important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.

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

Overview

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

As of June 30, 2016, we operate two high-quality hair care salons that feature Aveda(TM) products for retail sale. Landis Salons, Inc. ("Landis I") operates its business within a 4,000 square foot space located in the Liberty Heights District of Salt Lake City, Utah as an Aveda(TM) Lifestyle Salon. Landis Salons II, Inc. ("Landis II") operates within a 3,024 square foot space located in the Marmalade District of Salt Lake City, Utah under the Landis Lifestyle Salon brand as an Aveda(TM) Lifestyle Salon. A third location opened August 16, 2012, and operates as an Aveda(TM) Experience Center ("LEC") in the City Creek Mall in Salt lake City, Utah.

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

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

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

Critical Accounting Estimates

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

Results of Operations

The following discussion examines our results of operations and financial condition based on our Consolidated Financial Statements for the three and six months ended June 30, 2016 and 2015.

For the three and six months ended June 30, 2016, we owned and operated three wholly owned subsidiaries. Two of the subsidiaries, Landis Salons, Inc. and Landis Salons II, Inc., operate as full-service hair and retail salons featuring the Aveda(TM) line of products. The third subsidiary, Landis Experience Center, LLC, is a retail Aveda(TM) Experience Center.
 
 
10

Revenue

We generate revenue through the sale of services and products in the hair salon industry. For the three month periods ended June 30, 2016 and 2015, we had net revenue of $864,747 and $758,392, respectively.

Three months ended June 30, 2016 and 2015

The following table shows the change in service revenue by salon for the three month periods ended June 30, 2016 and 2015:

   
Three Months Ended June 30,
   
Increase (Decrease) over prior period
 
Salon
 
2016
   
2015
   
Dollar
   
Percentage
 
Liberty Heights
 
$
484,508
   
$
402,743
   
$
81,765
     
20
%
Marmalade
 
$
181,066
   
$
148,047
   
$
33,019
     
22
%
City Creek
 
$
5,955
   
$
350
   
$
5,605
     
1601
%
   
$
671,529
   
$
551,140
   
$
120,389
     
22
%

Our salons experienced an increase of 22% in service revenues for the three month period ending June 30, 2016 over the comparable period of service sales for 2015. This increase is mostly resulting from an increase in staff that are now producing at sustainable levels.

The following table shows the change in product revenue by salon for the three month periods ended June 30, 2016 and 2015:

   
Three Months Ended June 30,
   
Increase (Decrease) over prior period
 
Salon
 
2016
   
2015
   
Dollar
   
Percentage
 
Liberty Heights
 
$
107,445
   
$
116,857
   
$
(9,412
)
   
-8
%
Marmalade
 
$
36,754
   
$
46,378
   
$
(9,624
)
   
-21
%
City Creek
 
$
49,019
   
$
44,017
   
$
5,002
     
11
%
   
$
193,218
   
$
207,252
   
$
(14,034
)
   
-7
%


Our salons experienced a decrease of 7% in product revenues for the three month period ended June 30, 2016 over the comparable period of product sales for 2015. This decline in product revenue is primarily due to the Company's senior staff spending more time in our training programs for new artists.

Six months ended June 30, 2016 and 2015

The following table shows the change in service revenue by salon for the six month periods ended June 30, 2016 and 2015:

   
Six Months Ended June 30,
   
Increase (Decrease) over prior period
 
Salon
 
2016
   
2015
   
Dollar
   
Percentage
 
Liberty Heights
 
$
931,190
   
$
775,121
   
$
156,069
     
20
%
Marmalade
 
$
332,838
   
$
280,041
   
$
52,797
     
19
%
City Creek
 
$
7,755
   
$
495
   
$
7,260
     
1467
%
   
$
1,271,783
   
$
1,055,657
   
$
216,126
     
20
%
 

 
11
Our salons experienced an increase of 20% in service revenues for the six month period ending June 30, 2016 over the comparable period of service sales for 2015. This increase is mostly resulting from an increase in staff that are now producing at sustainable levels.

The following table shows the change in product revenue by salon for the six month periods ended June 30, 2016 and 2015:

   
Six Months Ended June 30,
   
Increase (Decrease) over prior period
 
Salon
 
2016
   
2015
   
Dollar
   
Percentage
 
Liberty Heights
 
$
217,790
   
$
225,124
   
$
(7,334
)
   
-3
%
Marmalade
 
$
73,549
   
$
88,876
   
$
(15,327
)
   
-17
%
City Creek
 
$
93,133
   
$
90,491
   
$
2,642
     
3
%
   
$
384,472
   
$
404,491
   
$
(20,019
)
   
-5
%


Our salons experienced a decrease of 5% in product revenues for the six month period ended June 30, 2016 over the comparable period of product sales for 2015. This decline in product revenue is primarily due to the Company's senior staff spending more time in our training programs for new artists.

Costs of Revenue

Three months ended June 30, 2016 and 2015

The following table shows cost of revenue by type as a percentage of related revenue for the three month periods ended June 30, 2016 and 2015:
 
   
Three Months Ended June 30,
 
Revenue Type
 
2016
   
2015
 
Service
   
63.5
%
   
59.3
%
Product
   
46.9
%
   
57.2
%

The cost of services revenue as a percentage of service revenue increased by 4% for the three month period ended June 30, 2016 over the comparable period for 2015. This increase in service cost is primary due to the Company having more new employees that generate less payroll expenses. The 11% decrease in product costs as a percentage of product sales for the same comparable periods is primarily due to inventory shrinkage.

Six months ended June 30, 2016 and 2015

The following table shows cost of revenue by type as a percentage of related revenue for the six month periods ended June 30, 2016 and 2015:
 
   
Six Months Ended June 30,
 
Revenue Type
 
2016
   
2015
 
Service
   
59.1
%
   
59.1
%
Product
   
55.4
%
   
56.6
%

The costs of services and product revenue as a percentage of service and product revenue remained steady for the six month period ended June 30, 2016 over the comparable period for 2015.

Operating Expenses

Three months ended June 30, 2016 and 2015

The following table shows general and administrative expenses for the three months ended June 30, 2016 and 2015:

   
Three Months Ended June 30,
       
   
2016
   
2015
   
Change
 
Salaries and wages
 
$
111,029
   
$
151,687
   
$
(40,658
)
Rent
   
43,488
     
52,927
     
(9,439
)
Advertising
   
23,863
     
38,495
     
(14,632
)
Finance charges
   
1,319
     
13,077
     
(11,758
)
Insurance
   
21,113
     
12,690
     
8,423
 
Utilities and telephone
   
13,224
     
12,420
     
804
 
Professional services
   
22,359
     
40,513
     
(18,154
)
Repairs and maintenance
   
13,647
     
7,565
     
6,082
 
Dues and subscriptions
   
7,477
     
9,457
     
(1,980
)
Office expense
   
47,586
     
14,636
     
32,950
 
Travel
   
4,556
     
1,827
     
2,729
 
Investor relations and company promotion
   
1,395
     
54,899
     
(53,504
)
Other
   
15,021
     
12,412
     
2,609
 
   Total general and administrative expenses
 
$
326,077
   
$
422,605
   
$
(96,528
)

 
12
 
General and administrative expenses decreased by $96,528 during the three months ended June 30, 2016. The largest contributors to this were reductions in salaries, company promotion and professional services. Salaries and wages decreased due to the hiring of less experienced stylists to replace the vacating experienced stylists.  Expenses related to professional services and investor relations and company promotions are not cyclical or recurring in nature and decreased due to the timing of strategic decisions.

Six months ended June 30, 2016 and 2015

The following table shows general and administrative expenses for the six months ended June 30, 2016 and 2015:

   
Six Months Ended June 30,
       
   
2016
   
2015
   
Change
 
Salaries and wages
 
$
243,635
   
$
333,594
   
$
(89,959
)
Rent
   
88,488
     
102,134
     
(13,646
)
Advertising
   
47,278
     
63,603
     
(16,325
)
Finance charges
   
3,240
     
25,285
     
(22,045
)
Insurance
   
41,767
     
25,449
     
16,318
 
Utilities and telephone
   
27,420
     
27,699
     
(279
)
Professional services
   
46,995
     
137,474
     
(90,479
)
Repairs and maintenance
   
22,305
     
10,714
     
11,591
 
Dues and subscriptions
   
15,145
     
17,971
     
(2,826
)
Office expense
   
77,103
     
29,340
     
47,763
 
Travel
   
6,427
     
3,216
     
3,211
 
Investor relations and company promotion
   
3,659
     
92,463
     
(88,804
)
Other
   
25,016
     
18,156
     
6,860
 
   Total general and administrative expenses
 
$
648,478
   
$
887,098
   
$
(238,620
)

General and administrative expenses decreased by $(238,620) during the six months ended June 30, 2016. The largest contributors to this were reductions in salaries, company promotion and professional services. Salaries and wages decreased due to the hiring of less experienced stylists to replace the vacating experienced stylists.  Expenses related to professional services and investor relations and company promotions are not cyclical or recurring in nature and decreased due to the timing of strategic decisions.

Depreciation expense for the three months ended June 30, 2016, was $26,735 compared to $35,622 for the comparable three months ended June 30, 2015. The decrease of $8,887 is primarily due to certain fixed assets being fully depreciated after reaching their estimated useful lives.

Other Income (Expense)

Three months ended June 30, 2016 and 2015
   
Three Months Ended June 30,
 
Other Income, (Expense)
 
2016
   
2015
   
Variance
   
%
 
Interest expense (net)
 
$
(61,098
)
 
$
(89,583
)
 
$
28,485
     
(32
)
Gain (loss) on derivative fair value adjustment
   
45,510
     
(51,500
)
   
97,010
     
(188
)
Loss on stock subscription receivable
   
(6,459
)
   
(139,304
)
   
132,845
     
(95
)
Gain on forgiveness of debt
   
-
     
71,025
     
(71,025
)
   
(100
)
Other income (expense)
   
12,265
     
(146
)
   
12,411
     
(8,501
)
Total
 
$
(9,782
)
 
$
(209,508
)
 
$
199,726
     
(95
)

The increase is primarily attributable to a change in derivative fair value adjustments of $97,010, a loss on subscription receivable of $132,845, offset by a gain on settlement of debt in the prior year of $71,025.


13

 
Six months ended June 30, 2016 and 2015
   
Six Months Ended June 30,
 
Other Income, (Expense)
 
2016
   
2015
   
Variance
   
%
 
                         
Interest expense (net)
 
$
(153,047
)
 
$
(172,175
)
 
$
19,128
     
(11
)
Gain (loss) on derivative fair value adjustment
   
67,775
     
(81,880
)
   
149,655
     
(183
)
Loss on stock subscription receivable
   
(39,839
)
   
(139,304
)
   
99,465
     
(71
)
Gain on forgiveness of debt
   
-
     
110,220
     
(110,220
)
   
(100
)
Other income (expense)
   
12,265
     
(1,052
)
   
13,317
     
(1,266
)
Total
 
$
(112,846
)
 
$
(284,191
)
 
$
171,345
     
(60
)

The increase of $171,345 is primarily attributable to a change in derivative fair value adjustments of $149,655, a loss on subscription receivable of $99,465, offset by a gain on settlement of debt in the prior year of $110,220.

Liquidity and Capital Resources

Cash and Investments in marketable securities
Our primary sources of cash during the three month period ended June 30, 2016 were customer payments for salon services and products. Our primary uses of cash were for payments relating to salaries, rent, inventory and other general operating expenses as well as payments on notes payable.

Working Capital

Working capital Deficit
 
June 30,
   
December 31,
             
Current Assets
 
2016
   
2015
   
Variance
   
%
 
Cash
 
$
132,513
   
$
150,459
   
$
(17,946
)
   
(12
)
Accounts receivable
   
8,977
     
15,967
     
(6,990
)
   
(44
)
Inventory
   
166,686
     
138,928
     
27,758
     
20
 
Prepaid expenses
   
24,040
     
31,513
     
(7,473
)
   
(24
)
Notes receivable - current
   
91,675
     
196,922
     
(105,247
)
   
(53
)
Total Current Assets
   
423,891
     
533,789
     
(109,898
)
   
(21
)
                                 
Current Liabilities
                               
Accounts payable and accrued expenses
   
243,163
     
344,052
     
(100,889
)
   
(29
)
Deferred revenue
   
48,884
     
66,048
     
(17,164
)
   
(26
)
Deferred rent
   
81,659
     
86,818
     
(5,159
)
   
(6
)
Due to related parties
   
530,751
     
424,804
     
105,947
     
25
 
Derivative liability
   
91,835
     
209,610
     
(117,775
)
   
(56
)
Current portion of notes payable
   
511,833
     
44,094
     
467,739
     
1,061
 
Current portion of notes payable, related party
   
68,920
     
67,990
     
930
     
1
 
Current portion of capital lease obligations
   
-
     
10,038
     
(10,038
)
   
(100
)
Convertible notes payable, net of debt discount of $0 and $5,889, respectively
   
35,000
     
152,089
     
(117,089
)
   
(77
)
Total Current Liabilities
   
1,612,045
     
1,405,543
     
206,502
     
15
 
                                 
Working Capital Deficit
 
$
(1,188,154
)
 
$
(871,754
)
 
$
(316,400
)
   
36
 

Working capital decreased by $316,400 as of June 30, 2016, compared to December 31, 2015 primarily due to the increase in notes payable.

Cash Flows from Operating Activities
   
Six Months Ended June 30,
 
   
2016
   
2015
   
Variance
   
%
 
Cash Flows from Operating Activities
 
$
(80,472
)
 
$
(139,800
)
 
$
59,328
     
(42
)

Cash flows from operating activities include net loss, adjusted for certain non-cash income statement items, as well as changes in the balances of certain operating assets and liabilities.
 
 
14

Cash Flows from Investing Activities
   
Six Months Ended June 30,
 
   
2016
   
2015
   
Variance
   
%
 
Cash Flows from Investing Activities
 
$
(173,946
)
 
$
(8,567
)
 
$
(165,379
)
   
1,930
 

The change in cash flows used in investing activities was due primarily to making a related party loan and the receipt of payments on the loan.

Cash Flows from Financing Activities
   
Six Months Ended June 30,
 
   
2016
   
2015
   
Variance
   
%
 
Cash Flows from Financing Activities
 
$
236,472
   
$
131,654
   
$
104,818
     
80
 

The increase is attributable to new debt issuances.

Other Factors Affecting Liquidity and Capital Resources

We have insufficient current assets to meet our current obligations due to negative working capital of $1,188,154 as of June 30, 2016. Historically, we have funded our cash needs from a combination of revenues, carried payables, sales of equity, and debt transactions. Since we are not currently realizing net cash flows from our business, we may need to seek financing to continue our operations. Prospective sources of funding could include shareholder loans, equity sales or loans from other sources though no assurance can be given that such sources would be available or that any commitment of support is forthcoming to date.

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

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

8% Series A Senior Subordinated Convertible Redeemable Debentures

On April 30, 2008, we entered into a stock transfer agreement with our parent company SAKL and SAKL's wholly-owned subsidiary DHI whereby they would each sell their holdings in Landis and Newby Salons LLC in exchange for an 8% Series A Senior Subordinated Convertible Debenture with a face amount of $3,000,000. Interest on the debenture commenced on December 30, 2008. The debenture holder has the option, at any time, to convert all or any amount over $10,000 of principal face amount and accrued interest into shares of Common stock, $0.0001 par value per share, at a conversion price equal to 95% of the average closing bid price of the common stock three days prior to the date we receive notice. In February of 2011, DHI transferred the Debenture to SAKL in exchange for the release of debt obligations owed to SAKL by DHI and SAKL is the current holder of the Debenture.

Going Concern

Our audit opinion for the year ended December 31, 2015 expressed substantial doubt as to our ability to continue as a going concern as a result of recurring losses and negative working capital. These conditions raise substantial doubt about our ability to continue as a going concern. Management's plans to address our ability to continue as a going concern include raising additional funds to finance the operating and capital requirements through a combination of equity and debt financings. While we are making our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

Impact of Inflation

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

Off-Balance Sheet Arrangements

As of June 30, 2016 and December 31, 2015, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies pursuant to Item 305 of Regulation S-K.
 
 
15

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer, or CEO, and the Chief Financial Officer, or CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2016.

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

Based on evaluation as of June 30, 2016, the CEO and CFO have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

Based on management's most recent evaluation of our company's internal control over financial reporting, management determined that there were no changes in our company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting that occurred during the most recent fiscal quarter.

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

No material change in any legal matter, as reported in the Annual Report on Form 10-K for the years ended December 31, 2015 and 2014, occurred during the six months ended June 30, 2016.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the years ended December 31, 2015 and 2014, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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

On May 22, 2016, 7,000 shares of Series B Preferred stock was converted into 41,667 shares of common stock.

In the above transactions, the Board of Directors relied upon Rule 506 of the Securities Act of 1933 in originally issuing the convertible notes or preferred stock and in the subsequent issuances resulting from conversions of the notes and preferred securities into common stock were done pursuant to Rule 4(2) of the Securities Act of 1933 and the resales by the holders were carried out in reliance on Rule 144.
 
 
16

Subsequent Events

On June 27, 2016 we filed an amendment to our articles of incorporation to effect a 1-for-2,000 reverse stock split of our common stock and to reduce the number of authorized common shares from 10,000,000,000 to 2,000,000,000.  All share and per share amounts relating to the common stock included in the financial statements have been restated to reflect the reverse stock split.  This corporate action took effect on July 21, 2016.

In accordance with ASC 855-10 Company management reviewed all material events through the date of this report and there are no additional material subsequent events to report.

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Reserved]

Item 5. Other Information

None



17
Item 6. Exhibits

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

 
 
Incorporated by Reference
 
Exhibit Number
Description
Form
File Number
Exhibit Number
Filing Date
Provided Herewith
 
 
 
 
 
 
 
3(i)
Amended and Restated Certificate of Incorporation
10-12G/A
000-54018
3(i)
8/23/2010
 
3(ii)
Bylaws
10-12G/A
000-54018
3(ii)
8/23/2010
 
3(iii)
Plan of Merger
8-K
000-54018
3(iii)
8/26/2010
 
3(iv)
Plan of Merger and Share Exchange
8-K
000-54018
3(iv)
8/31/2010
 
3(v)
Utah Articles of Incorporation
8-K
000-54018
3(v)
8/31/2010
 
4(i)
Certificate of Designation for Series B Preferred Stock.
10-12G/A
000-54018
4(i)
8/23/2010
 
4(ii)
8% Series A Senior Subordinated Convertible Redeemable Debenture issued to DHI dated April 30, 2008.
10-12G/A
000-54018
4(ii)
8/23/2010
 
4(iii)
8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates, Inc. dated January 15, 2010.
10-12G/A
000-54018
4(iii)
8/23/2010
 
4(iv)
8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Desert Vista Capital, LLC. dated January 15, 2010.
10-12G/A
000-54018
4(iv)
8/23/2010
 
4(v)
8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates, Inc. dated March 16, 2010.
10-12G/A
000-54018
4(v)
8/23/2010
 
4(vi)
8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates dated May 11, 2010.
10-12G/A
000-54018
4(vi)
8/23/2010
 
4(vii)
8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Desert Vista Capital, LLC dated May 11, 2010.
10-12G/A
000-54018
4(vii)
8/23/2010
 
4(viii)
Amended Certificate of Designation for Series B Preferred Stock.
10-12G/A
000-54018
4(viii)
9/22/2010
 
10(i)
         
 
     
 
 
 
 
31.01
Certification of the Registrant's Chief Executive Officer, Richard D. Surber, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.
 
 
 
 
X
32.01
Certification of the Registrant's Chief Executive Officer, Richard D. Surber, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
X

18


SIGNATURES

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

 
 
GREEN ENDEAVORS, INC.
 
(Registrant)
   
   
DATE: August 3, 2016
By: /s/ Richard D. Surber
 
Richard D. Surber
 
President, Chief Executive Officer, Chief Financial Officer, and Director
 
 
19