UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: ended December 31 2015
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR
For the transition period from ______ to ____
Commission file number: File Number: 000-55030
GREENWAY TECHNOLOGIES, INC.
(Exact name of Registrantregistrant as Specifiedspecified in Its Charter)
texas | 90-0893594 | |
(State or incorporation or | ( Identification |
1521 North Cooper Street, Suite 205
Arlington, Texas76011
(Address of principal executive offices) (Zip Code)
800-289-2515
(Registrant’s telephone number, including area code)
Securities registered underpursuant to Section 12(b) of the Exchange Act: None.
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0001 par value listed on the OTCQB.
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ ☒ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesþ ☒ 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, or an emerging growth company. See the definitions of "large“large accelerated filer", "accelerated filer"filer,” “accelerated filer,” “smaller reporting company,” and "smaller reporting company"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | |
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined inby Rule 12b-2 of the Act). Yes ☐No☑
The aggregate market value of the voting and non-voting common equitystock held by non-affiliates of the registrant computed by reference toon June 30, 2022, the price at whichlast business day of the common equity was last sold basedregistrant’s most recently completed second fiscal quarter, as reported on the closing priceOTCQB Market operated by the OTC Markets Group, Inc. on that dateday was approximately $6,974,090. On March 24, 2016, the registrant had outstanding 188,446,419 shares of Common Stock, $0.0001 par value per share.
Class | Outstanding as of April 14, 2023 | |
Common Stock, par value $0.0001 per share |
Documents Incorporated by Reference
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Form 10-K”) contains “forward-looking statements,” all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy and financial results. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed, and actual future results may vary materially.
Information regarding market and industry statistics contained in this Form 10-K is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of Securities and Exchange Commission (the “SEC”) filings or economic analysis. We have not reviewed or included data from all sources and cannot assure investors of the accuracy or completeness of the data included in this Form 10-K. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of our services. We do not assume any obligation to update any forward-looking statement. As a result, investors should not place undue reliance on these forward-looking statements.
In this Form 10-K, “we,” “our,” “us,” the “Company,” “GWTI” and similar terms in this report, including references to “UMED” and “Greenway” all refer to Greenway Technologies, Inc., and our wholly-owned subsidiary, Greenway Innovative Energy, Inc. (“GIE”), unless the context requires otherwise.
PART I
Item 1. | Business. |
Overview
We are engaged in the research and development of proprietary gas-to-liquids (“GTL”) was originally incorporated as Dynalyst Manufacturing Corporation on March 13, 2002synthesis gas (“Syngas”) conversion systems and adoptedmicro-plants that can be scaled to meet specific gas field production requirements. Our patented and proprietary technologies have been realized in our first commercial G-ReformerTM unit (“G-Reformer”), a name changeunique component used to Universal Media Corporation upon completion ofconvert natural gas into Syngas, which when combined with a reverse acquisition of Dynalyst Manufacturing Corporation in August of 2009. In March 2011, we changed our nameFischer-Tropsch (“FT”) reactor and catalyst, produces fuels including gasoline, diesel, jet fuel and methanol. G-Reformer units can be deployed to UMED Holdings, Inc. ("UMED").
Our GTL Technology
In August 2012, we acquired 100% of GIE, pursuant to that certain Purchase Agreement, by and between us and GIE, dated August 29, 2012, and filed as wholly-owned subsidiaries that meet some key requirements: (1) solid management that will not haveExhibit 10.5 to be replaced in the near future, (2) the ability to grow with steady growth to follow, and (3) an emphasis on emerging core industry markets, such as energy, metals and agriculture.
On June 26, 2017, we and the University of Texas at Arlington (“UTA”) announced that we had successfully demonstrated our GTL technology at our sponsored Conrad Greer Laboratory at UTA, proving the viability of the science behind the technology.
On March 6, 2018, we announced the completion of our first commercial scale G-Reformer, a critical component in what we call the Greer-Wright GTL system. The G-Reformer is the critical component of the Company’s innovative GTL system. A team consisting of individuals from our Company, UTA and our Company’s contracted G-Reformer manufacturer worked together to test and calibrate the newly built G-Reformer unit. The testing substantiated the units’ Syngas generation capability and demonstrated additional proficiencies within certain proprietary prior prescribed testing metrics.
On July 23, 2019, we announced that Mabert LLC, a Texas limited liability company (“Mabert”), 100% owned by Kevin Jones, acquired INFRA Technology Group’s U.S. GTL plant and technology located in Wharton, Texas (the “Wharton Plant”). Mabert purchased the entire 5.2-acre site, plant and equipment, including INFRA’s proprietary FT reactor system and operating license agreement.
On August 29, 2019, to further facilitate the commercialization process, we announced that Greenway entered into a joint venture with OPM Green Energy, LLC, a Texas limited liability company (“OPMGE”), for a 42.857% ownership interest in OPMGE. In exchange for its 42.857% ownership of seeking fundingOPMGE, Greenway agreed to buildcontribute a G-Reformer to the entity. The other members of OPMGE are Mabert, which owns 42.857% and Tom Phillips, our former Vice President of Operations for GIE, who owns 14.286%. Additionally, OPMGE entered a LEASE AGREEMENT with Mabert whereby OPMGE leased the Wharton Plant from Mabert. Our involvement in OPMGE was intended to facilitate third-party certification of our G-Reformer and related equipment and technology. In addition, we anticipated that OPMGE’s operations would demonstrate that the G-Reformer is a commercially viable technology for producing Syngas and marketable fuel products. As the first operating GTL unitsplant to use our proprietary reforming technology and beginequipment, the mining operationsWharton Plant was initially expected to yield a minimum of 75 - 100 barrels per day of gasoline and diesel fuels from converted natural gas.
Greenway never transferred the G-Reformer to OPMGE, as required by the LIMITED LIABILITY COMPANY AGREEMENT OF OPM GREEN ENERGY, LLC. Accordingly, it defaulted on its obligation under the agreement. Under the LEASE AGREEMENT between Mabert and OPMGE, OPMGE was required to pay rent and to pay the following expenses relating to the operation of the Wharton Plant:
● | Utilities | |
● | Trash removal and lawn maintenance | |
● | Taxes | |
● | Insurance | |
● | Maintenance, Repairs or Alterations |
The lease stated that this transaction was a “Triple Net Lease.”
If OPMG did not pay rent or the other expenses outlined above, it represented Events of Default, which allowed Mabert the right to terminate the lease. Based on the BLM land.
On April 28, 2020, the Company was issued a new U.S. Patent 10,633,594 B1 for syngas generation for gas-to-liquid fuel conversion. The Company staked the BLM placer mining claims on 1,440 acres in Arizona in September 2011,has several other pending patent applications, both domestic and since then, has maintained the claimsinternational, related to various components and processes involving our proprietary GTL methods, which when granted, will establish an explorationfurther complement our existing portfolio of issued patents and development plan, when capital is available.pending patent applications.
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On December 8, 2020, the Company acquired Greenway Innovative Energy, Inc. and has received two patents from the US Patent Office for its GTL technology. The Company's current plan is to concentrate on obtaining the capital needed to build the small scale model atannounced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and then the initial GTL field unit.
On December 15, 2020, the Company acquired 50%announced additional information regarding valuable outputs produced by the company’s proprietary G-Reformer™ catalyst reactor and Fischer-Tropsch (FT) technology which combine to form the “Greer-Wright” GTL solution. Originally developed to convert natural gas into ultra-clean synthetic fuel, recent research and development activity has shown that the technology can also allow the extraction of Rig Support Services, Inc. (nka Logistix Technology Systems, Inc.)high-value chemicals and alcohols. The chemical outputs include n-Hexane, n-Heptane, n-Octane, n-Decane, n-Dodecane, and n-Tridecane. Alcohols produced include ethanol and methanol. The company has identified worldwide industrial demand for these outputs which will significantly improve the economic return on investment (ROI) of GTL plants that are based on GWTI’s technology. GWTI is a development-stage company with plans to commercialize its unique and patented technology.
Ultimately, we believe that our proprietary G-Reformer is a major innovation in gas reforming and GTL technology in general. Initial tests have demonstrated that our Company’s solution appears to be superior to legacy technologies, which are more costly, have a larger footprint, and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas.
The technology for the G-Reformer is unique, because it permits for transportable (mobile) GTL plants with much smaller footprints, compared to legacy large-scale technologies. Thus, we believe that our technologies and processes will allow for multiple small-scale GTL plants to be built with substantially lower up-front and ongoing costs, resulting in more profitable results for oil and gas operators.
GTL Industry –Market
GTL converts natural gas – the cleanest-burning fossil fuel – into high-quality liquid products that would otherwise be made from crude oil. These products include transport fuels, motor oils, and the ingredients for everyday necessities like plastics, detergents, and cosmetics. GTL products are colorless, odorless, and contain almost none of the impurities, (e.g., sulphur, aromatics, and nitrogen) that are found in crude oil.
Our Company has developed a revolutionary and unique process that converts natural gas of various origins and compositions into a highly pure variety of chemicals, high cetane diesel fuel, industrial grade pure water and electrical energy. GTL technology has existed as a traditional process going back generations. This process consists of two steps. First, natural gas is converted into Synthesis Gas (Syngas) which is developing a uniquenon-naturally occurring blend of Hydrogen and valuableCarbon Monoxide. The front-end part of the GTL process is called “Gas Reformation.” The output of the Gas Reformer is compressed and fed through a secondary process, called Fischer-Tropsch (FT). This secondary process is widely used in many forms in the chemical and oil industries. While FT is a common process, Gas Reformation has been the most difficult step beyond an old and traditional process typically used in refineries. The invention of our software-controlled GTL process fronted by our patented and revolutionary gas reformation unit, the G-Reformer®, makes us the innovator in GTL technology. Our patents are based on scalability, transportability, flexibility and self-sustainment based on a wide variety of input gasses and output mixtures.
The Company’s process is made of small sized modularly scalable units which are portable and self-contained unlike other GTL solutions based on Steam Methane reformation. While many companies have tried to scale Steam Methane Reformation down for use in smaller, non-refinery-based GTL plants, they have been largely unsuccessful. As a result, we can build self-sufficient GTL plants at virtually any location capable of supplying wellhead or pipeline gas of sufficient ongoing volume. This gives us the ability to eliminate flaring at the source while keeping remote oil fields in production without flaring. The conversion of flaring gas to liquid allows trucks to easily move liquid chemicals, clean diesel fuel, highly clean water and the power grid to move electricity from virtually any location.
Our initial ROI studies of the market for high purity chemicals we produce can provide incredibly rapid payback of investments. It should be noted the vast majority of these chemicals produced are made in China. Further, because they originate from a barrel of oil at a refinery, they are much lower in purity.
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Products created by the GTL process include High Cetane Diesel, Naphtha, Technical Grade Water, and high value, high purity chemicals. The chemicals which would be produced in the GTL plant would be vital to many industries including pharmaceutical, cosmetics, fragrances, adhesives, and others. The vast majority of these chemicals are produced in China. Such dependency makes America captive to shortfalls whether they are manufacturing related or intentional. By making these chemicals in the USA, we reduce that dependency and keep the product, the jobs, and the profits in America.
Development of stringent environmental regulations by numerous governments to control pollution and promote cleaner fuel sources is expected to complement industry growth. For example, we believe that U.S. guidelines such as the Petroleum and Natural Gas Regulatory Board Act, 2006, Oilfields (Regulation and Development) Act of 1948, and Oil Industry (Development) Act, 1974 are likely to continue to encourage GTL applications in diverse end-use industries to conserve natural gas and other resources. Under the Clean Air Act (CAA), the EPA sets limits on certain air pollutants, including setting limits on how much can be in the air anywhere in the United States. The Clean Air Act also gives EPA the authority to limit emissions of air pollutants coming from sources like chemical plants, refineries, utilities, and steel mills. Individual states or tribes may have stronger air pollution laws, but they may not have weaker pollution limits than those set by EPA. Because our G-Reformer based GTL plants are not considered refineries, they do not fall under any related current EPA air quality guidelines. More information can be found under the EPA’s New Source Performance Standards which are published under 40 CFR 60.
Competition
Key industry players include: Chevron Corporation; KBR Inc, PetroSA, Qatar Petroleum, Royal Dutch Shell; and Sasol Limited. In terms of global production and consumption, Shell had the largest market share in 2021, with virtually all current production located overseas. Our technology is not designed to compete with the large refinery-size GTL plants operated by such large industry operators. Our plants are designed to be scaled to meet individual gas field production requirements on a distributed and asset management Toolmobile basis. According to a report released in July 2019 by the Global Gas Flaring Reduction Partnership (“GGFRP”), there are currently only 5 small-scale GTL plant technologies that have been proven and are now available for flared gas monetization available in the OilU.S., including: Greyrock (“Flare to Fuels”); Advantage Midstream (licensing Greyrock technology); EFT (“Flare Buster”); Primus GE and Gas Industry. In February 2013,GasTechno (“Methanol in a Box”). We were not a direct part of this study, as we had not received 3rd party certification of our proprietary technology as of the date of this report.
However, the GGFRP report mentioned us as follows, “Greenway Technologies announced on July 23, 2018 that Mabert LLC, a major investor in Greenway, acquired the remaining 50%whole INFRA plant including an operating license agreement. The purpose of the acquisition is the incorporation and commercial demonstration of Greenway’s ‘G-Reformer’ technology. We will see whether the new team will be able to make the plant with the new reformer operational. (Globe Newswire, Fort Worth, Texas, Aug 31, 2019).”
Mining Interests
In June 2015,December 2010, UMED acquired the Company wrote off its investmentrights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in LogistixMohave County, Arizona (such property, the “Arizona Property”), in an Assignment Agreement dated December 27, 2010, and filed as discussed in Note 6 in the financial statements included inExhibit 10.31 to this Form 10-K, filing.
Company History
We were originally incorporated as Dynalyst Manufacturing Corporation (“Dynalyst”) under the laws of the State of Texas on March 13, 2002. In connection with the merger with Universal Media Corporation (“UMC”), a Nevada corporation, on August 17, 2009, we changed our name to UMC. The transaction was accounted for as a reverse merger, and UMC was the acquiring company on the basis that UMC’s senior management became the entire senior management of the merged entity and there was a change of control of Dynalyst. The transaction was accounted for as recapitalization of Dynalyst’s capital structure. In connection with the merger, Dynalyst issued 57,500,000 restricted equity securities to the shareholders of UMC in exchange for 100% of UMC.
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On March 23, 2011, Universal Media Corporation approved and filed with the Texas Secretary of State an amendment to our Certificate to change our name to UMED Holdings, Inc.
On June 22, 2017, in recognition of our primary operational activity, we approved an amendment to our Certificate to change our name to “Greenway Technologies Inc.” We filed a certificate of amendment with the Texas Secretary of State to affect that name change on June 23, 2017.
On June 26, 2019, we held our annual shareholders meeting in Arlington, Texas. There were seven proposals presented for vote by our shareholders (the “Shareholders”), including to approve the Company’s slate of directors, to amend our Certificate, to amend our bylaws, and to ratify our then current independent public accounting audit firm. We disclosed the results of the vote of the Shareholders on our Current Report Form 8-K, filed with the SEC on July 2, 2019, which is incorporated herein by reference. On August 1, 2019, we filed a Current Report on Form 8-K/A, noting that due to a potential tabulation error, we were reviewing the results for Proposal 2, which was to amend our Company’s Certificate to increase the authorized shares of capital stock of the Company and Proposal 3, which was to amend the Company’s Certificate to permit the vote of the holders of the majority of shares entitled to vote on and represented in person or by proxy at a meeting of the Shareholders at which a quorum is present, to be the action of the Shareholders, including for “fundamental actions,” as such term is defined by the Texas Business Organizations Code (the “TBOC”) .. To resolve any such potential errors, we called a special meeting of the Shareholders to be held December 11, 2019, in Arlington, Texas.
On December 11, 2019, we held a special meeting of the Shareholders to approve four proposals. In connection with these four proposals, we filed a Certificate of Amendment to the Certificate with the Secretary of State of the State of Texas, which is attached as Exhibit 3.9 to our Company’s Current Report on Form 8-K filed with the SEC on December 16, 2019, and incorporated herein by reference. All four proposals passed overwhelmingly. For more information regarding these proposals, please see our Definitive Proxy Statement on Schedule 14A filed with the SEC on November 19, 2019 and incorporated herein by reference.
Employees
As of the filing date of this Form 10-K, we have two (2) full-time employees. Certain of these employees receive no compensation or compensation is deferred on a periodic basis by mutual agreement. None of our employees are covered by collective bargaining agreements. We consider our employee relations to be satisfactory.
Going Concern
The accompanying consolidated financial statement,statements to this Form 10-K (our “Financial Statements”) have been prepared on a going concern basis, which contemplates realization of assets and the Company has incurred a cumulative deficitsatisfaction of $12,450,131 80 asliabilities in the normal course of business. As of December 31, 2015.2022, we have an accumulated deficit of $36,278,869. For the year ended December 31, 2022, we incurred a net loss of $1,512,692 and used $496,654 in net cash for operating activities. The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary capital and financing to fund ongoing operations. While the Company is attempting to commence revenue generating operations and thereby generate sustainable revenues, the Company’s current cash position is not sufficient to support its ongoing daily operations and requires the Company to raise addition capital through debt and/or equity sources.
Accordingly, our ability to continue as a going concern is therefore in doubt and dependent upon achieving a profitable level of operations or on our ability to obtain necessary financing to fund ongoing operations. UMED does not haveManagement intends to raise additional funds by way of public or private offerings, or both. Management believes that the financial resources and does not have any commitments for funding from unrelated parties or any other firm agreements thatactions presently being taken to implement our business plan to generate revenues will provide working capitalus the opportunity to itscontinue as a going concern.
While we are attempting to commence operations and generate revenues, our cash position may not be enough to support our daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement our business segments. We cannot give any assurance that UMED will locate any funding or enter into any agreements that willplan and generate revenues provide the requiredopportunity for us to continue as a going concern. While management believes in the viability of our strategy to generate revenues and in our ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate revenues.
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Item 1A | Risk Factors. |
Risks Related to our Business and Operations
We may not be able to raise the additional capital necessary to execute our business strategy, which includes the production, sale and/or licensing of our proprietary GTL technology solutions to oil and gas operators in the United States and elsewhere.
Our ability to successfully execute the production, sale, or licensing of our GTL technology may depend on our ability to raise additional debt or equity capital. Our ability to raise additional capital is uncertain and dependent upon numerous factors beyond our control including, but not limited to, general economic conditions, regulatory factors, reduced retail sales, increased taxation, reductions in consumer confidence, changes in levels of consumer spending, changes in preferences in how consumers pay for goods and services, weak housing markets and availability or lack of availability of credit. If we are unable to obtain additional capital, or if the terms thereof are too costly, we may be unable to successfully execute our business strategy.
Our limited operating capital. UMED has been depended on the salehistory may not serve as an adequate basis to judge our future prospects and results of equityoperations.
We are a development-stage company and advances from shareholdershave a limited operating history upon which you can evaluate our business and prospects. We have yet to provide it with working capital to date.
We have historically incurred losses.
We are considered a pre-revenue or development stage company. We have incurred significant operating losses since inception. Due to the samples on its Arizona placer mining claims to determine the potential valueinherent risk of the various metals that maycommercializing new technology, there can be located on the claims.
Establishing revenues and achieving profitability will depend on our ability to fully develop, certify and commercialize our GTL Technology, including successfully compete.marketing our GTL Technology to our customers and complying with possible regulations.
Much of our ability to establish revenues, achieve profitability and create positive cash flows from operations will depend on the completion of third-party engineering certification and subsequent successful introduction of our proprietary GTL technology. Our prospective customers will not use our GTL technology unless they determine that the economic benefits provided by our GTL solution is greater than those available from competing technologies and providers. Even if the advantages derived from our proprietary GTL technology are well-established, prospective customers may elect not to use our GTL technology.
In addition, as this is a new technology and GTL processing method, we may be required to undertake time-consuming and costly additional development activities and seek regulatory clearance or approval for such new GTL technology. Such costs are not known by us as of the date of this report.
Lastly, the completion of the development and commercialization of our GTL technology remains subject to all the risks associated with the commercialization of any new GTL processing system with production based on innovative technologies, including unanticipated technical or other problems, manufacturing difficulties, and the possible insufficiency of the funds allocated for the completion of such development.
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We may encounter substantial competition in our industry and a failure to compete effectively may adversely affect our ability to generate revenue.
We expect that we will be required to continue to invest in product development and efficiency improvements to compete effectively in our markets. Our competitors could potentially develop a similar or more efficient GTL product or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our sales and marketing strategies and could have a material adverse effect on our business, results of operations, and financial condition. Important factors affecting our ability to compete successfully include:
● | current and future direct sales and marketing efforts by small and large competitors; | |
● | rapid and effective development of new, unique GTL techniques; and | |
● | new and aggressive pricing methodologies |
If substantial competitors enter our targeted markets, such as licensing of smaller independent oil and gas operators or the creation of blend stock for existing large refinery operations, we may be unable to compete successfully against such competition. Our potential competitors may have greater human and financial resources than we do at any given time, and there is significant competition for experienced personnel and financial capital to be deployed in the oil and gas extraction industries and mining and mineral extraction industries.industry. Therefore, it iscan be difficult for smaller companies such as UMEDours to attract the personnel and related investment for itsour various business activities.activities needed to succeed. We cannot give any assurances that we will be able to successfully compete for such personnel and capital funds, and withoutfunds. Without adequate financial resources, our management cannot assurebe certain that the companywe will be able to compete successfully in our business activities.
Although the longevity of December 31, 2015,patents in the Company's wholly-owned subsidiary Greenway Innovative Energy, Inc. (GIE) owns USUnited States are limited in duration to 21 years, this should not affect the Company’s long-term ability to successfully monetize the intellectual property it owns.
We own United States Patents Nos. 8,574,501 B1, originally issued November 5, 2013 and 8,795,597 B2, issued August 5, 2014, covering its mobile Gas-to-Liquids ("GTL")our GTL conversion unittechnology for the purpose of converting natural gas to clean synthetic fuels.
In February 2021, the United States,Company was issued Patent 10,907,104, the fourth patent relating to the company’s proprietary G-Reformer™ technology which allows for the conversion of natural gas into synthesis gas. The newly issued patent extends the methods and details of generating syngas using the apparatus described in a patent'spreviously issued patent No. 10,633,594, the company’s third patent. As described in the patent, methane, oxygen, and steam are continuously injected into the combustion section of the apparatus to generate carbon monoxide along with unreacted methane and steam. The carbon monoxide, unreacted methane, and steam then enter the catalyst chamber where these components react to generate syngas. The pressure inside the reaction vessel is controlled at no higher than 5 psig.
The term of each patent under U.S. law is 21 years. Accordingly, each of these patents will expire in the years 2034, 2035 and 2041 respectively, unless they are modified with “improvements to the current art” by us, in which case their useful lives may be upextended. There is no certainty that we will be able to 21 years if the earliest claimed filing date is that of a provisional application. Other legal provisionsmake such improvements to our currently held patents, and they therefore may however, shorten or lengthen a patent's term. In the United States, a patent's term may, in certain cases, be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in examining and granting a patent.expire at their respective terms. Alternatively, a patent'spatent’s term may be shortened if a patent is terminally disclaimed (litigated) over a commonly owned patent or a patent naming a common inventor and havinghas an earlier expiration date. There is no certainty that we will be able to successfully defend our patents if such claims are made, and they may expire prior to their respective terms.
We are currently dependent on one equipment fabricator, the loss of which could adversely impact our operations.
We contract our manufacturing production with a heavy equipment fabricator in Texas that has worked with us for several years and specializes in the type of base refractory equipment we use in our proprietary G-Reformer based GTL processes. Accordingly, they have developed certain manufacturing expertise specifically related to our equipment which may be hard to replicate with a new manufacturer if they go out-of-business or end manufacturing for us for any reason. While there are similar manufacturers elsewhere in the United States and overseas, they will take an unknown additional amount of time to gain the expertise necessary to produce our proprietary refractory equipment or may not be able to gain such expertise at all, limiting our production and related revenue capability.
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We currently employ twoare dependent on a limited number of key executives, consultants, the loss of any of which could negatively impact our Interim Chief Executive Officer, Ransom Jones,business.
Our business is led by our Chairman of the Board of Directors, Raymond Wright, President, Kent Harer, and our Chief Financial Officer, Randy Moseley. Mr. Moseley has a written employment agreement discussed in Note 15 to the financial statements.
If one or more of these senior executives, officers, or consultants are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted, along with our financial condition, such that our results of operations may be materially and adversely affected. In addition, if the GTL Unit, at such time as capital fundscompetition for senior management and senior officers in our industry is intense, the pool of qualified candidates is limited, and we may not be able to retain the services of our senior executives, key personnel, or consultants or attract and retain high-quality personnel in the future. Such failure could materially and adversely affect our future growth and financial condition, and the loss of one or more of these key personnel could negatively impact our business and operations.
If our research and development agreements with UTA are available.
In order to safeguard against this possibility, on December 8, 2020, the Company announced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and other functions,Trademark Office relating to GWTI’s natural gas reforming technologies developed under its sponsored research agreement with UTA.
To support our engineering efforts, we will hire persons under service agreementsalso continued our ongoing confidential Sponsored Research Agreement (“SRA”) with UTA which began in October 2009 and has continued in various forms through today, adding confidential Scope of Work addendums over this period to develop and enhance our patented GTL system with the goal of developing commercial GTL plants to convert natural gas into liquid fuels. We use UTA as consultants, part-timean external research and full time employees as necessary. We do not have any arrangementsdevelopment arm for the hiring of any persons at this time.
Our quarterly results may fluctuate substantially and if we fail to meet the expectations of our investors or analysts, our stock price could decline substantially.
Our quarterly operating results may fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our Common Stock could decline. Some of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet siteimportant factors that contains reports, proxycould cause our revenue and information statements,operating results to fluctuate from quarter to quarter include:
● | our limited operating history; | |
● | the limited scope of our sales and marketing efforts; | |
● | our ability to attract new customers, satisfy our customers’ requirements, and retain customers; | |
● | general economic conditions; | |
● | changes in our pricing capabilities; | |
● | our ability to expand our business and operations by staying current with the evolving requirements of our target market; | |
● | the effectiveness of our key personnel; | |
● | our ability to protect our proprietary GTL Technology; | |
● | new and enhanced products by us and our competitors; | |
● | unanticipated delays or cost increases with respect to research and development; and | |
● | extraordinary expenses such as litigation or other dispute-related settlement payments. |
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We may have difficulty in attracting and other information regarding issuers that file electronically with the Commission at (http://www.sec.gov). Our Internet site is www.umedholdings.com.
The directors and management of companies are increasingly concerned with the extent of their personal exposure to lawsuits and shareholder claims, as well as governmental and creditor claims that may be made against them, particularly in view of recent changes in securities laws imposing additional duties, obligations, and liabilities on management and directors. Due to these perceived risks, directors and management are also becoming increasingly concerned with the availability of directors’ and officers’ liability insurance to timely pay the costs incurred in defending such claims. We currently do not carry directors’ and officers’ liability insurance, since directors’ and officers’ liability insurance has recently become much more expensive and difficult to obtain. If we are unable to continue or provide liability insurance at affordable rates or at all, it may become increasingly more difficult to attract and retain qualified outside directors to serve on our Company's statusboard of directors.
We may lose potential independent board members and management candidates to other companies that have greater directors’ and officers’ liability insurance to insure them from liability or to companies that have revenues or have received greater funding to date which can offer more lucrative compensation packages. The fees of directors are also rising in response to their increased duties, obligations and liabilities as well as increased exposure to such risks. As a smallercompany with limited operating history and resources, we will have a more difficult time attracting and retaining management and outside independent directors than a more established company due to these enhanced duties, obligations and liabilities.
Our future success relies upon our proprietary GTL Technology. We may not have the resources to enforce our proprietary rights through litigation or otherwise. The loss of exclusive right to our GTL Technology could have a material adverse effect on our business, financial condition and results of operations.
We believe that our GTL technology does not infringe upon the valid intellectual property rights of others. Even so, third parties may still assert infringement claims against us. If infringement claims are brought against us, we may not have the financial resources to defend against such claims or prevent an adverse judgment against us. In the event of an unfavorable ruling on any such claim, a license or similar agreement to utilize the intellectual property rights related to the GTL technology in question, which we rely on in the conduct of our business, may not be available to us on reasonable terms if terms are offered at all.
Our ability to obtain field-related operating hazards insurance may be constrained by our limited operational history.
The oil and natural gas business involves a variety of operating risks, including the risk of fire, explosions, blow-outs, pipe failure, abnormally-pressured formations, and environmental hazards such as oil spills, natural gas leaks, ruptures or discharges of toxic gases. If any of these events should occur at our joint venture plant location, or at any future customer sites (none exist today), we could incur legal defense costs and could suffer substantial losses due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation and penalties, and suspension of operations. Such inability to defend ourselves or suffer catastrophic financial losses could cause us to cease operations and/or declare bankruptcy.
Our GTL Technology is subject to the changing of applicable U.S. laws and regulations.
Our business is particularly subject to federal and state laws and regulations with respect to the oil and gas and mining industries. Our success depends in part on our ability to anticipate, navigate and respond to any changes that might occur. Due to our currently limited financial resources, we might not be able to respond to unanticipated changes, should they occur and impact our operations, and therefore have to cease operations.
-8- |
Acts of terrorism, responses to acts of terrorism and acts of war may impact our business and our ability to raise capital.
Future acts of war or terrorism, national or international responses to such acts, and measures taken to prevent such acts may harm our ability to raise capital or our ability to operate, especially to the extent we depend upon activities conducted in foreign countries. In addition, the threat of future terrorist acts or acts of war may have effects on the general economy or on our business that are difficult to predict. We are not insured against damage or interruption of our business caused by terrorist acts or acts of war, and thus, our financial operations may be materially impacted by such events.
The massive and currently unknown short- and long-term economic impacts of COVID-19 may impact our business and ability to raise capital.
COVID-19 and its current extraordinary impact on the world economy has reduced oil consumption globally, decreasing crude oil prices, to levels not seen since the early 1980’s. The economics of GTL conversion rely in part on the arbitrage between oil and natural gas prices, with economic models for many producers, including our own models, using a range of $30-60/bbl (for WTI or Brent Crude as listed daily on the Nymex and ICE commodities exchanges) to determine relative profitability of their GTL operations. While to date the Company has not been required to stop operating, management is evaluating its use of its office space, virtual meetings and the like. The Company continues to monitor the impact of the COVID-19 outbreak closely. The extent to which the COVID-19 outbreak will impact our operations, and/or ability to obtain financing or future financial results is uncertain.
We may fail to establish and maintain strategic relationships.
We believe that establishing strategic industry partnerships and natural gas producer customer relationships will greatly benefit the growth of our business and the deployment of our GTL technology. To further such relationships, we have and will continue to seek out and enter into strategic alliances, joint ventures, and similar production relationships, including similar to those announced during the 2019 with INFRA Technologies, OPMGE and the ongoing relationship with UTA. Our affiliation with OPMGE was terminated. We continue to seek out and have discussions with potential gas producer on both a customer and financing basis. However, we may not be able to maintain our current or enter into new strategic partnerships on commercially reasonable terms, or at all, and may not be able to create financial or customer relationships with natural gas producers. Even if we enter new natural gas producer relationships, such financial partners and/or customers may not have sufficient production of location based natural gas to provide profitable revenues or otherwise prove advantageous to our business. Our inability to enter into such new relationships or strategic alliances could have a material and adverse effect on our business.
Risks Relating to Our Mining Properties
There is very limited risk, financial or otherwise, related to our mining leases and interests at this time.
Risks Relating to Our Common Stock
We may need to raise additional capital. If we are unable to raise additional capital, our business may fail, or our operating results and our share price may be materially adversely affected.
Because we have no record of profitable operations, we need to secure adequate funding on an ongoing basis. If we are unable to obtain adequate funding, we may not be able to successfully develop and market our GTL technology and our business will likely fail. We have limited commitments for financing. To secure additional financing, we may need to borrow money or sell more securities, which may reduce the value of our outstanding securities. We may be unable to secure additional financing on favorable terms, or at all.
Selling additional shares of Common Stock, either privately or publicly, would dilute the equity interests of our Shareholders. If we borrow money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail business operations, which would have a material negative effect on operating results and most likely result in a lower price per share of Common Stock.
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Issuance of additional Common Stock in exchange for services or to repay debt would dilute Shareholders’ proportionate ownership and voting rights and could have a negative impact on the market price of our Common Stock.
Our Board of Directors has previously and may continue to issue shares of our Common Stock to pay for debt or services rendered, without further approval by our Shareholders, based upon such factors as our Board of Directors may deem relevant in its sole discretion. It is likely that that we will issue additional securities to pay for services and reduce debt in the future. Such issuances may lower the market price of our stock and decrease our ability to raise additional equity funding for working or investment capital as may be needed at a later time.
Even though our shares of Common Stock are publicly traded, an investor’s shares may not be “free-trading” and investors may be unable to sell their shares of Common Stock at or above their purchase price, which may result in substantial losses to the investor.
Investors should understand that their shares of our Common Stock are not “free-trading” merely because we are a publicly traded company. Shares bought from the Company or received for services rendered or in conjunction with the issuance of debt require different holding periods, thereby creating a potential lack of liquidity and inability to sell such shares timely for any investor. In order for our shares of Common Stock to become “free-trading,” the offer and sale of shares of our Common Stock must either be registered pursuant to a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or be entitled to an exemption from registration under federal and state securities laws, after being held for statutory mandated periods.
In addition, an investor has no assurance that our stock price will rise after purchase or receipt in any manner, as our stock has shown significant volatility over the life of the Company. The following factors may add to the volatility in the price of our Common Stock in the future: (i) actual or anticipated variations in our quarterly or annual operating results; (ii) government regulations; (iii) announcements of significant acquisitions, strategic partnerships or joint ventures; (iv) our capital commitments; (v) additional dilutive stock issuances, and (vi) additions or departures of key personnel. Many of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our Common Stock will be at any time, including as to whether our Common Stock will sustain the current market price, or as to what effect the sale of shares of Common Stock or the availability of shares of Common Stock for sale at any time will have on the prevailing market price.
If we fail to remain current in our reporting company.requirements, we could be removed from the OTCQB marketplace, operated by the OTC Markets Group, Inc. (the “OTCMG”), which would limit the ability of broker-dealers to sell our securities and the ability of Shareholders to easily sell their securities in the secondary market.
Companies trading on the OTCQB must: (i) be reporting issuers under Section 12 of the Exchange Act of 1934, as amended (the “Exchange Act”); (ii) must be current in their reports under Section 13 of the Exchange Act; and must pay an annual fee to OTCQB, to maintain electronic price quotation privileges on the OTCQB. If we fail to remain current in our Exchange Act reporting requirements, we could be removed from the OTCQB and be forced to be traded on the Pink Sheets, which requires a more challenging stock purchase process. The OTCQB is recognized by the SEC as an established public market. This platform enables companies to provide current public information that investors use to analyze, value and trade a security. The OTC Pink Sheets is the lowest and most speculative tier of the three marketplaces for the trading of over-the-counter stocks. Companies traded on OTC Pink are not held to any particular disclosure requirements or financial standards, and due to the wide variety of companies listed on OTC Pink, including dark companies, delinquent companies and worse, they recommend only sophisticated investors with a high risk tolerance should consider it.
Pink Sheet shares generally trade thinly and infrequently making it hard to buy or sell when the investor wants to complete a transaction. In addition, trading in OTC Pink Sheet companies requires more paperwork because due the speculative nature of such stocks, the U.S. Congress prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Exchange Act and the rules promulgated thereunder.
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These SEC rules provide, among other things, that a broker-dealer must: (i) approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction; (ii) furnish the customer a disclosure document describing the risks of investing in penny stocks; (iii) disclose to the customer the current market quotation, if any, for the penny stock; and (iv) disclose to the customer the amount of compensation the firm and its broker will receive for the trade. In addition, after executing the sale, a broker-dealer must send to its customer monthly account statements showing the market value of each penny stock held in the customer’s account. With the added inconvenience and cost for brokers, various large brokerage firms, including Merrill Lynch, Capital One, Fidelity, E-Trade and even the new Robinhood, among others, have simply stopped providing brokerage services for Pink Sheet stocks for new customers. Accordingly, the market for our common stock would be significantly diminished if we were forced to trade on the OTC Pink Sheets market exchange.
Volatility in the share price for our Common Stock may subject us to securities litigation.
There is a limited market for the sale of shares of our Common Stock. The market for our Common Stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our Common Stock share prices will be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. In the future, we may be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources away from our daily operations, negatively impacting our financial results.
We do not intend to pay dividends on shares of our Common Stock.
We have not paid any cash dividends on shares of our Common Stock since our inception, and we do not anticipate that we will pay any cash dividends in the near future. Earnings, if any, that we may realize will be retained in the business for further development and expansion. Furthermore, our ability to pay dividends may be restricted under our debt agreements.
Our substantial level of indebtedness could adversely affect our financial condition.
We have a substantial amount of indebtedness, which requires significant interest payments. As of December 31, 2022, we had $10,765,118 of total accrued current liabilities and $3,664,941 of current debt (net of debt discounts totaling $1,991, which were fully amortized as of December 31, 2022), with interest rates ranging from 4.5% - 18%, some of our debt contains default interest rates at 18% when any such loans are not current. For more details on our indebtedness, please see Notes 3,4 and 5 of our Financial Statements.
Our substantial level of indebtedness could have important consequences, including the following:
● | We must use a substantial portion of our cash flow from operations to pay interest, which reduces funds available to use for other purposes, such as working capital, capital expenditures, and other general corporate purposes; | |
● | Our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impacted; and | |
● | Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions. |
Our ability to meet expenses and to make future principal and interest payments in respect of our debt, depends on, among other things, our future operating performance, competitive developments and financial market conditions. We are not able to control many of these factors. If industry and economic conditions deteriorate, our ability to raise debt or equity capital and/or cash flow may be insufficient to allow us to pay principal and interest on our debt and meet our other obligations, which could cause us to default on these obligations. In particular, the Mabert loans maintain a UCC-1 security interest in all of the collateral of the Company, including to our G-Reformer, technology and intellectual property (our patents, patents pending and licensed patents). If Mabert exercises its rights and remedies due to defaults under our secured loan agreements, our business, financial condition, and results of operations will be materially adversely affected.
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The market for penny stocks has suffered in recent years from patterns of fraud and abuse.
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
● | Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; | |
● | Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; | |
● | Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; | |
● | Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and | |
● | The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses. |
Management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the penny stock market, the Company’s management will strive to prevent the described patterns from being established with respect to our securities, as the occurrence of these patterns or practices could increase the volatility of the price per share of our Common Stock and/or diminish stockholders ability to trade our Common Stock.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price.
Section 404 of the Sarbanes-Oxley Act requires us to evaluate annually the effectiveness of our internal controls over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our internal controls over financial reporting in our annual report. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude, on an ongoing basis, that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.
While we continue to dedicate resources and management time to ensuring that we have effective controls over financial reporting, failure to achieve and maintain an effective internal control environment could have a material adverse effect on the market’s perception of our business and the price of our Common Stock.
Item 1B. | Unresolved Staff Comments. |
The Company received a letter dated November 15, 2021, from the Securities and Exchange Commission (“SEC”) asking for the Company for comments on disclosures made in the Form 10-K for the Year Ended December 31, 2020 and in the Form 10-Q for the Period Ended June 30, 2021. The inquiry pertained to disclosures under Items 307 and 308 of Regulation S-K. Item 1B. Unresolved Staff Comments
Item 2. | Properties. |
Our principal office is at 8851 Camp Bowie Blvd. West,1521 North Cooper St., Suite 240, Fort Worth,205, Arlington, Texas 76116, where it leases approximately 1,800 square feet of office space,76011, leased at a rate of $2,417$985 per month, plus the cost of utilities, which is generally less than $100.00 per month.
We have unpatented mining claims for the Arizona Property. An unpatented mining claim is one that is still owned by the federal government, but which the claimant has a right to possession to extracted minerals, provided the land is open to mineral entry. A description of the Arizona Property is included in Mohave County,“Item 1. Business” and is incorporated herein by reference. We believe that we have satisfactory title to the Arizona on BLM land (BLM file no. AMC 403533) covering approximately 1,440 acresProperty, subject to liens for taxes not yet payable, liens incident to minor encumbrances, liens for credit arrangements and easements and restrictions that do not materially detract from the value of these properties, our interests in Mohave County southeastthese properties, or the use of Kingman, Arizona.
Item 3. | Legal Proceedings. |
On September 7, 2021, the ordinary course of business, we may be subject to legal proceedings involving contractualCompany was served with a demand for mediation and employment relationships, liability claims andpotential arbitration by Gregory Sanders, a variety of other matters. Although the results of these other legal proceeding cannot be predicted with certainty, we do not believe that the final outcome of these matters should have a material adverse effect on our business, results of operations, cash flows or financial condition.
Item 4. | Mine Safety Disclosures. |
Not applicable.
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PART II
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market for Registrant'sInformation
Shares of our Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
2015 | 2014 | |||||||||||||||
HIGH | LOW | HIGH | LOW | |||||||||||||
First Quarter | $ | 0.2300 | $ | 0.1201 | $ | 0.20 | $ | 0.09 | ||||||||
Second Quarter | 0.1875 | 0.1000 | 0.325 | 0.111 | ||||||||||||
Third Quarter | 0.2000 | 0.1001 | 0.35 | 0.16 | ||||||||||||
Fourth Quarter | 0.1400 | 0.0510 | 0.28 | 0.155 |
Fiscal 2022 Quarter Ended: | High | Low | ||||||
March 31, 2022 | $ | 0.03 | $ | 0.01 | ||||
June 30, 2022 | $ | 0.01 | $ | 0.01 | ||||
September 30, 2022 | $ | 0.02 | $ | 0.01 | ||||
December 31, 2022 | $ | 0.01 | $ | 0.01 | ||||
Fiscal 2021 Quarter Ended: | ||||||||
March 31, 2021 | $ | 0.09 | $ | 0.01 | ||||
June 30, 2021 | $ | 0.07 | $ | 0.02 | ||||
September 30, 2021 | $ | 0.07 | $ | 0.04 | ||||
December 31, 2021 | $ | 0.05 | $ | 0.01 |
As of April 14, 2023, we had outstanding 188,219,085392,944,204 shares of Common Stock $0.0001 par value per share.
Dividend Policy
We have not paid or declared any dividends on our Common Stock, nor do we anticipate paying any cash dividends and we do not expect to declare or pay any cash dividendsother distributions on our Common Stock in the foreseeablenear future. Payment of any cashAny future dividends will be declared at the discretion of our Board of Directors and will depend, uponamong other things, on (i) our future earnings, if any, (ii) our financial condition,requirements for future operations and growth, and (iii) other factorsfacts as deemed relevant by theour Board of Directors.
Unregistered Sales of UnregisteredEquity Securities
For the three monthsyear ended December 31, 2015,2022, we issued 27,550,037 shares of the Company didCompany’s common stock as follows:
Stock issued as debt issued costs - 302,038
Stock issued for cash (PPM) – 20,667,999
Stock issued to settle accrued liabilities – 6,200,000
Stock issued for services – 380,000
We relied upon the safe harbor found in Rule 506(b) of Regulation D promulgated under the Securities Act (“Regulation D”) and the exemption from registration under Section 4(a)(2) of the Securities Act. Each investor took such investor’s shares of Common Stock for investment purposes, without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the offer and sale of our Common Stock. We sold our shares of Common Stock to only “accredited investors” as defined in Section 501(a) of Regulation D, with whom we had a direct personal, preexisting relationship, and after we had a thorough discussion with each accredited investor. Each certificate representing shares of our Common Stock contains a restrictive legend as required by the Securities Act. Finally, we have instructed our Transfer Agent not haveto transfer any salesrestricted shares of unregistered securities.our Common Stock, unless the offer and sale of such shares of Common Stock is registered pursuant to an effective registration statement under the Securities Act or is exempt from registration under federal and state securities laws.
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All of the above-described accredited investors who received shares of our Common Stock were provided with access to our filings with the SEC, including the following: information: (i) contained in our annual report on Form 10-K under the Exchange Act for Issuancethe fiscal year ended December 31, 2022; and (ii) contained in any reports or documents required to be filed by us under Equity Compensation Plans
Item 6. | Selected Financial Data. |
We are a smaller reporting company; as a result, we are not required to report selected financial data disclosures as required by Item 301 of our Company's status as a smaller reporting company.
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis of the financial condition andour results of operations ofand financial condition for the Companyfiscal years ended December 31, 2022 and 2021 should be read in conjunction with the financial statementsour Financial Statements and the related notes to those Financial Statements that are included elsewhere in this Form 10-K and were prepared assuming that we will continue as a going concern. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the discussionstiming of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under "Applicationthe “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Critical Accounting Policies," which describes key estimatesBusiness” sections and elsewhere in this Form 10-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions we makewithin the bounds of our knowledge of our business, our actual results could differ materially from those discussed in these statements. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the preparation offuture.
In the below discussion, “we,” “our,” “us,” the “Company” and similar terms in this report, as well as references to “UMED” and “Greenway” all refer to Greenway Technologies, Inc., and our financial statements.
Greenway Technologies, Inc. is engaged in the research and is conducting research on Gas-to-Liquid ("GTL") technology. The Technology is based upon the Fischer-Tropsch ("FT")development of proprietary gas-to-liquids syngas conversion systemsystems and micro-plants that has been operational in various locations throughout the world since the early 1930s. Thousands of FT systems have operated during the last 80 years, being most notably responsible for driving energy economies of wartime Nazi Germany and Imperial Japan. More recently, and for a more sustained period, FT has been responsible for providing much of the motive energy requiredcan be scaled to meet the needs of the Republic of South Africa,specific gas field production requirements. The company’s patented and proprietary technologies have been realized in its first commercial G-Reformer unit, a country recognized as having pushed FT technology much further than any other nation since the development of the process.
The Company believes that its proprietary G-Reformer is a major innovation in gas reforming and GTL technology in general. Initial tests have demonstrated that the Company’s solution appears to be superior to legacy technologies which are more costly, have a larger footprint and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas - all markets the Company seeks to service.
On April 28, 2020, the Company was issued a new U.S. Patent 10,633,594 B1 for syngas generation for gas-to-liquid fuel conversion. The Company has several other pending patent applications, both domestic and international, related to various components and processes involving our proprietary GTL methods, which when granted, will further complement our existing portfolio of building a GTL scale model unit at a local entity in conjunction with a sponsored researchissued patents and pending patent applications.
On December 8, 2020, the Company announced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and Trademark Office relating to GWTI’s natural gas reforming technologies developed under its sponsored research agreement with UTA.
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On December 15, 2020, the Company announced additional information regarding valuable outputs produced by the company’s proprietary G-Reformer™ catalyst reactor and Fischer-Tropsch (FT) technology which combine to form the “Greer-Wright” GTL solution. Originally developed to convert natural gas into ultra-clean synthetic fuel, recent research and development activity has shown that the technology can also allow the extraction of high-value chemicals and alcohols. The chemical outputs include n-Hexane, n-Heptane, n-Octane, n-Decane, n-Dodecane, and n-Tridecane. Alcohols produced include ethanol and methanol. The company has identified worldwide industrial demand for these outputs which will significantly improve the economic return on investment (ROI) of GTL plants that are based on GWTI’s technology. GWTI is a development-stage company with plans to continue its unique and patented technology.
In February 2021, the Company was issued Patent 10,907,104, the fourth patent relating to the company’s proprietary G-Reformer™ technology which allows for the conversion of natural gas into synthesis gas. The newly issued patent extends the methods and details of generating syngas using the apparatus described in a previously issued patent No. 10,633,594, the company’s third patent. As described in the patent, methane, oxygen, and steam are continuously injected into the combustion section of the apparatus to generate carbon monoxide along with unreacted methane and steam. The carbon monoxide, unreacted methane, and steam then enter the catalyst chamber where these components react to generate syngas. The pressure inside the reaction vessel is controlled at an estimated costno higher than 5 psig.
Further, the Company believes its technologies and processes will allow for multiple small-scale GTL plants to be built with substantially lower up-front and ongoing costs resulting in more profitable results for O&G operators. In addition, the proprietary technology based around the G-Reformer is unique in that it also allows for transportable (mobile) GTL plants with a much smaller footprint as compared to legacy large-scale technologies. Greenway is in discussions with a number of $1,500,000.
Mining Interest
In December 2010, UMED acquired the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona for 5,066,000 shares of restricted commonCommon A stock. ActualEarly indications, from samples taken and processed, provided reason to believe that the potential recovery value of the metals located on the 1,440 acres is significant, but only actual mining and processing will determine the ultimate value of the holdings.which may be realized from this property holding. The Company's current expectations are thatCompany is currently exploring strategic options to partner or sell its interest in this acreage, while it will need approximately $2,000,000 to begin certified assaying ($500,000), develop a mining plan with the BLM ($500,000)focuses on its emerging GTL technology sales and acquire exploration equipment ($1,000,000). The total requirement will not be known until reports from a consulting geologist are received. Due the Company not producing any revenues from its BLM mining leases since its acquisition of the leases, achieving a position of producing cash flow levels to fund the development of its BLM mining leases in December of 2010 and not having current resources for an appraisal, we recognized an impairment charge of $100,000 during the year ended December 31, 2014.
Going Concern
We remain dependent on outside sources of funding (debt and/or equity) for continuation of our operations. Our independent registered public accounting firm issued a going concern qualification in their report dated April 14, 2016,2023, which is included with our consolidated Financial Statements and raises substantial doubt about our ability to continue as a going concern.
$ | ||||||||||||||||||
December 31, | December 31, | Increase | ||||||||||||||||
2022 | 2021 | (Decrease) | % Change | |||||||||||||||
Net loss | $ | 1,512,692 | $ | 1,744,376 | $ | (231,684 | ) | -13.28 | % | 1 | ||||||||
Net cash used in operations | $ | 496,654 | $ | 791,906 | $ | (295,252 | ) | -37.28 | % | 2 | ||||||||
Working capital deficit | $ | 10,737,576 | $ | 9,886,820 | $ | 850,756 | 8.60 | % | 3 | |||||||||
Stockholders’ deficit | $ | 10,737,576 | $ | 9,886,820 | $ | 850,756 | 8.60 | % | 4 |
1 – Our net loss decreased primarily due to generate cash flows sufficient to support our operations and have been dependentrecording a gain on debt settlement of $70,377 and equity raiseddecreases in our operating expenses of $178,027, (both general and administrative expenses and research and development), from qualified individual investors$1,120,901 to $942,874.
2 – Our net cash used in operations in 2022 was less than 2021. The change was primarily due to the recognition of a gain on debt settlement of $70,377 and loansan increase in accounts payable and accrued expenses of $165,877.
3 – The increase in working capital deficit from a2021 to 2022 primarily relates to less cash in 2022 of $35,954, higher accounts payable and accrued expenses of $101,283, higher accounts payable and accrued expenses – related party. We experienced negative financial results as follows:
2015 | 2014 Restated | |||||||
Net loss | $ | (4,028,702 | ) | $ | (4,384,475 | ) | ||
Cash flow (negative) from operations | (1,304,347 | ) | (1,455,517 | ) | ||||
Negative working capital | (2,271,303 | ) | (4,262,530 | ) | ||||
Stockholders' deficit | (2,270,559 | ) | (2,418,120 | ) |
4 – The increase from 2021 to 2022 is based upon the current year net loss.
These factors raise substantial doubt about our ability to continue as a going concern.
The financial statements contained hereinFinancial Statements included in our Form 10-K do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence. Our ability to continue as a going concern is dependent upon our ability to generate sufficient new cash flows to meet our obligations on a timely basis, to obtain additional financing as may be required, andand/or ultimately to attain profitable operations. However, there is no assurance that profitable operations, financing, or sufficient new cash flows will occur in the future.
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Our ability to achieve profitability will depend upon our ability to finance, manufacture, and market/operate GTL units. Our growth is dependent on attaining profit from our operations and our raising additional capital either through the sale of stockour Common Stock or borrowing. There is no assurance that we will be able to raise any equity financing or sell any of our products at a profit.
We are currently evaluating strategic alternatives that include (i) raising new equity capital and/or (ii) issuing additional debt instruments. The process is ongoing, lengthy and has inherent costs. There can be no assurance that the exploration of these strategic alternatives will result in any specific action to alleviate our 12-month working capital needs or result in any other transaction.
While we are attempting to commence operations and generate revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds by way of an offering of our securities. Management believes that the actions presently being taken to further implement our business plan and generate revenues provide the opportunity for us to continue as a going concern. While we believe in the viability of our strategy to generate revenues and in our ability to raise additional funds, we may not be successful. Our ability to continue as a going concern is dependent upon our capability to further implement our business plan and generate revenues.
Results of Operations
For Year Ended December 31, 2022 as Compared to Year Ended December 31, 2021:
We had no revenues for consolidated operations for the years ended December 201531, 2022 and 2014 were $0 and $0, respectively. 2021.
We reported consolidated net losses during the years ended December 31, 20152022 and 20142021 of $4,028,702$1,512,692 and $4,384,475,$1,744,376, respectively.
The following table summarizes consolidated operating expenses and other income and expenses for the yearyears ended December 31, 20152022 and 2014:
2015 | 2014 Restated | |||||||
General and administrative | $ | 3,829,466 | $ | 2,241,076 | ||||
Research and development | 766,726 | 218,000 | ||||||
Depreciation and amortization | 396 | 396 | ||||||
Gain from debt forgiveness | 518,300 | 0 | ||||||
Write-off Logistix software | 73,500 | 0 | ||||||
Impairment on investment assets | 0 | 190,000 | ||||||
Gain (loss) on derivative | 139,397 | (91,395 | ) | |||||
Net interest expense | 218,105 | 928,774 | ||||||
Loss on discontinued operations | 561,412 | 714,834 |
$ | ||||||||||||||||||
December 31, | December 31, | Increase | ||||||||||||||||
2022 | 2021 | (Decrease) | % Change | |||||||||||||||
Revenues | $ | - | $ | - | $ | - | 0.00 | % | ||||||||||
General and administrative expenses | $ | 888,599 | $ | 962,901 | $ | (74,302 | ) | -7.72 | % | 1 | ||||||||
Research and development | $ | 54,275 | $ | 158,000 | $ | (103,725 | ) | -65.65 | % | 2 | ||||||||
Interest expense | $ | 591,963 | $ | 588,273 | $ | 3,690 | 0.63 | % | 3 | |||||||||
Amortization of debt discount | $ | 48,232 | $ | 35,202 | $ | 13,030 | 37.01 | % | 4 | |||||||||
Gain on debt settlement | $ | (70,377 | ) | $ | - | $ | (70,377 | ) | 0.00 | % | 5 |
Total operating expenses decreased by $178,027 from $1,120,901 in 2021 to $942,874 in 2022.
1 – The decrease was primarily due to a decrease of $3,829,466 consisted primarily of$59,726 in consulting fees and a decrease of $193,250, management$52,507 in salaries. The Company also had increases related to legal and professional fees of $605,400,$19,358.
2 – The decrease was related to less activity in 2022 due to lack of sufficient resources and inability to pursue additional R&D related activities.
3 – The increase is based on higher outstanding debt balances throughout the year.
4 – Amortization of discounts on debt instruments that were executed at various times throughout the current period.
5 – The Company settled a legal fees of $95,230, rent expense of $57,362, auditing expense of $28,500, travel expenses of $9,021, transfer agent expenses of $12,111,matter in 2022.
Net Loss and stock based compensation of $2,991,677.
Our consolidated general and administrative costs of $2,241,076 consisted primarily of consulting fees of $140,000, management fees of $663,750, legal fees of $77,100, rent expense of $76,800, auditing of $34,000, travel expenses of $11,654, transfer agent expenses of $10,823, and stock based compensation of $2,128,057.
The weighted-average number of shares of Common Stock used in the earnings per share for the basic and dilutive computation was 165,860,150371,601,679 for the year ended December 31, 20152022, and 138,442,759342,400,231 for the year ended December 31, 2014.2021.
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Liquidity and Capital Resources
We do not currently have sufficient working capital to fund our expected future operations. We cannot assure investors that we will be able to continue our operations without securing additional adequate funding. We had $0$24,595 in cash, total assets of $744$27,542, and total liabilities of $2,271,303$10,765,118 as of December 31, 2015.2022. Total stockholder'saccumulated deficit at December 31, 20152022, was $2,270,559.($36,278,869).
Liquidity is the ability of a company to generate adequate amounts of cash to meet all of its financial obligations. The following table provides certain selected balance sheet comparisons between December 31, 2022, and December 31, 2021:
$ | ||||||||||||||||||
December 31, | December 31, | Increase | ||||||||||||||||
2022 | 2021 | (Decrease) | % Change | |||||||||||||||
Cash | $ | 24,595 | $ | 60,549 | $ | (35,954 | ) | -59.38 | % | 1 | ||||||||
Prepaids and other | $ | 2,947 | $ | 56 | $ | 2,891 | 5162.50 | % | 2 | |||||||||
Total current assets | $ | 27,542 | $ | 60,605 | $ | (33,063 | ) | -54.55 | % | 3 | ||||||||
Total assets | $ | 27,542 | $ | 60,605 | $ | (33,063 | ) | -54.55 | % | 3 | ||||||||
Accounts payable and accrued expenses | $ | 3,317,225 | $ | 3,215,942 | $ | 101,283 | 3.15 | % | 4 | |||||||||
Accounts payable and accrued expenses - related party | $ | 3,799,452 | $ | 3,091,538 | $ | 707,914 | 22.90 | % | 4 | |||||||||
Note payable | $ | 672,500 | $ | 660,000 | $ | 12,500 | 1.89 | % | 5 | |||||||||
Notes payable - related parties - net | $ | 2,805,774 | $ | 2,745,264 | $ | 60,510 | 2.20 | % | 5 | |||||||||
Convertible note payable - net | $ | 166,667 | $ | 166,667 | $ | - | 0.00 | % | 5 | |||||||||
Advances - related parties | $ | 3,500 | $ | 68,014 | $ | (64,514 | ) | -94.85 | % | 6 | ||||||||
Total current liabilities | $ | 10,765,118 | $ | 9,947,425 | $ | 817,693 | 8.22 | % | 7 | |||||||||
Total liabilities | $ | 10,765,118 | $ | 9,947,425 | $ | 817,693 | 8.22 | % | 7 |
1 - Cash decreased in 2022 due to payment of accounts payable and less capital raised to sustain operations as compared to prior period.
2 - Insignificant change.
3 - See discussion regarding cash resources in #1 above.
4 – Lack of cash resources resulted in an increase in these liabilities.
5 – Increase in 2022 related to proceeds of $30,000 offset by repayments of $55,000.
6 - In 2022, there was a conversion of stockholder advances totaling $51,769 to notes payable – related parties.
7 – See discussions in 4, 5 and 6.
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To increase our working capital, we have considered completing additional private stock sales and entering into new debt instruments. During the yearsyear ended December 31, 20152022, we received advances of $3,500 from related parties and 2014,$30,000 in proceeds from the issuance of debt.
Cash Flows
$ | ||||||||||||||||
December 31, | December 31, | Increase | ||||||||||||||
2022 | 2021 | (Decrease) | % Change | |||||||||||||
Net cash used in operating activities | $ | 496,654 | $ | 791,906 | $ | (295,252 | ) | -37.28 | % | |||||||
Net cash used in investing activities | $ | - | $ | - | $ | - | 0.00 | % | ||||||||
Net cash provided by financing activities | $ | 460,700 | $ | 850,827 | $ | (390,127 | ) | -45.85 | % |
Operating Activities
Our net cash used by operatingin operations in 2022 was less than 2021. The change was primarily due to the recognition of a gain on debt settlement of $70,377, an increase in accounts payable and accrued expenses of $326,660 and accounts payable and accrued expenses – related parties of $707,914.
Investing activities was $1,304,347 and $1,455,517, respectively. Cash provided by
Net cash used in investing activities were $225,000 and $0 for the years endedyear ending December 31, 20152022 and 2014, respectively.
Financing Activities
In 2022, the Company had net cash provided by financing activities for the years ended December 31, 2015 and 2014 was $1,270,852 and $1,935,749, respectively, primarily from the sale of common stock and advances by shareholders.
Proceeds from advances – related parties - $3,500
Proceeds from issuance of maintaining and defending any patents obtained, our claims, and seeking further patents and claims to be able to garner sufficient area to make our operations more viable, once we have shown appropriate mineral deposits present in our claims, if at all. After building the first GTL Unit and determining the commercial viability of the mining claims, we will need substantial capital to build additional GTL Units, develop the mining claims, acquire plant and equipment and hire personnel.
Repayments on notes payable - $55,000
Proceeds from stock issued for any capital at this time. Additionally, equity capital for small companies generally and small companies in the oil and gas and mining segments in particular, have a difficult time competing for investors because of the high risk at this stage of development and the fact that the investment is long term. The market for the transportation fuel and metals that the company
Our accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. TheOur general business strategy of the Company is to first develop the natural gas to liquidour GTL technology to maintain the Company'sour basic viability, while seeking significant development capital and then explore and research its existing mining leases properties. for full commercialization.
As shown in the accompanying consolidated financial statement, the Company hasstatements, we have incurred a cumulativean accumulated deficit of $12,458,131$36,278,869 and $8,429,429$34,766,177 as of December 31, 20152022 and 2014,2021, respectively. The
Our ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations and on theour ability of the Company to obtain necessary financing to fund ongoing operations.
Commitments
Capital Expenditures - none
Operational Expenditures
Employment Contracts
In May 2011, the CompanyAugust 2012, we entered into an employment agreementsagreement with Kevin Bentley, its chief executive officer, Richard Halden, itsRaymond Wright, for the position of president and Randy Moseley, its chief financial officer. The Agreements areof GIE, for a term of 5 years with compensation of $180,000 the first year, $240,000 the second year, $300,000 the third year, $350,000 the four2th year and the fifth year at a salary commensurate with those in similar industries. The employment agreements also provide for the officers to receive 1,250,000 shares of restricted common stock annually for each year of the employment agreement. During the years ended December 31, 2015 and 2014, with consent of management, the Company accrued a total of $360,000 and $540,000, respectively, as management fees in accordance with the terms of these agreements. On April 8, 2015, the Company's chief executive officer resigned and relinquished his claim to receive $518,300 of deferred compensation.
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Effective May 10, 2018, we entered into identical employment agreements with John Olynick, as President, and 2014, respectively,Ransom Jones, as Chief Financial Officer, respectively. The terms and conditions of their employment agreements were identical. John Olynick elected not to renew his employment agreement and resigned as President on July 19, 2019. Ransom Jones, as Chief Financial Officer, earns a salary of $120,000 per year. Mr. Jones also serves as the Company’s Secretary and Treasurer. During each year that Mr. Jones’ agreement is in effect, he is entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year, such amount having been accrued for the period ended December 31, 2022. Both Mr. Olynick and Mr. Jones received a grant of common stock (the “Stock Grant”) at the start of their employment equal to 250,000 shares each of the Company’s Common Stock, par value $.0001 per share (the “Common Stock”), such shares vesting immediately. Mr. Jones is also entitled to participate in the Company’s benefit plans when such plans exist. The foregoing summary of Mr. Olynick’s and Mr. Jones’s employment agreement is qualified in its entirety by reference to the actual true and correct Employment Agreements by and between Mr. Olynick, Mr. Jones and our Company, dated May 10, 2018, copies of which are filed as Exhibits 10.39 and 10.40 to this Form 10-K and incorporated by reference herein.
Mr. Olynick elected not to renew his employment agreement and resigned as President on July 19, 2019. Upon his resignation, we agreed to pay the balance of his Employment Agreement then due and owing over time. Accordingly, we accrued $110,084 for the balance of his Employment Agreement, against which we have paid $35,000, leaving a balance remaining of $75,084 for the year ending December 31, 2022. In addition, Mr. Olynick had previously entered into a consulting agreement (the “Olynick Agreement”) to provide general advisory services with us on April 18, 2019, and which included terms for payment of billable time at $40.00 per hour, plus approved expenses. The Olynick Agreement was terminated when Mr. Olynick became President of the Company on May 10, 2018. We have accrued $191,250$25,510 in expenses related to such prior consulting agreement expenses. See Exhibit 10.42 incorporated by reference herein.
Effective April 1, 2019, we entered into an employment agreement with Thomas Phillips, Vice President of Operations, for a term of 12 months with compensation of $120,000 per year. Mr. Phillips reports to the President of GIE. Pursuant to his employment agreement, Mr. Phillips is entitled to a no-cost grant of common stock equal to 4,500,000 shares of the Company’s Rule 144 restricted common stock, par value $.0001 per share, with such shares having been issued in February 2020. In addition, Mr. Phillips resigned from the Company effective December 15, 2020. The foregoing summary of the Mr. Phillips’s employment agreement is qualified in its entirety by reference to the actual true and $168.700 towardscorrect Employment Agreement by and between Thomas Phillips and our Company, dated April 1, 2019, a copy of which is filed as Exhibit 10.53 to this Form 10-K and incorporated by reference herein.
Effective April 1, 2019, we entered into an employment agreement with Ryan Turner for a term of twelve (12) months with compensation of $80,000 per year, to manage our business development and investor relations. Mr. Turner reports to the President of Greenway Technologies and is entitled to a no-cost grant of common stock equal to 2,500,000 shares of the Company’s Rule 144 restricted common stock, par value $.0001 per share, valued at $.06 per share, or $150,000, which we expensed as of the effective date of the agreement. Mr. Turner’s employment agreements.was terminated on September 7, 2021. The foregoing summary of the Mr. Turner’s employment agreement is qualified in its entirety by its reference to the actual true and correct Employment Agreement by and between Ryan Turner and our Company, dated April 1, 2019, a copy of which is filed as Exhibit 10.58 to this Form 10-K and incorporated by reference herein.
Consulting Agreements
On September 7, 2018, Wildcat, a company controlled by Shareholder Marshall Gleason, filed suit against us alleging claims arising from the Gleason Agreement, seeking to recover monetary damages, interest, court costs, and attorney’s fees. In a separate lawsuit, Wildcat filed suit claiming that the Company breached that certain Promissory Note dated on or about November 13, 2017, entered into between Wildcat as lender and Greenway as borrower, and as a result Wildcat initiated an action in County Court at Law No. 2 of Tarrant County, Texas, Cause No. 2018-006416-2. On March 6, 2019, we entered into a Rule 11 Agreement with Gleason settling both disputes, a copy of which is filed as Exhibit 10.52 to this Form 10-K and incorporated by reference. Pursuant to the Rule 11 Agreement, the parties agreed to abate both cases until the earlier of a default of the performance of the Rule 11 Agreement or October 30, 2019, whichever be sooner. The Rule 11 Agreement provided that if we timely performed through October 15, 2019, the parties would file a joint motion for dismissal and present agreed orders of dismissal with prejudice for both lawsuits. The Company performed in all regards under the Rule 11 Agreement, however Gleason refused to sign the Wildcat Settlement Agreement at the point of the Company’s having performed its obligations. The parties’ respective counsels then mutually agreed to extend the original October 30, 2019 settlement date until at least the end of the year while the parties waited for Gleason’s signature. Gleason signed the Compromise Settlement and Release Agreement on February 4, 2020, and all litigation was dismissed by the Court on February 25, 2020. A copy of the Dismissal is incorporated by reference as Exhibit 10.59.
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Paul Alfano, a director and greater than five percent (5%) shareholder entered into a consulting agreement with us on April 19, 2018 via Alfano Consulting Services (the “Alfano Agreement”), to provide board and senior management advice, including but not limited to corporate strategy, SEC regulatory adherence, sales and marketing strategies, document and presentation preparation and fund-raising support. Terms included payment of billable time at $40.00 per hour, plus approved expenses, retroactive to January 1, 2017. A copy is available by Exhibit 10.44 incorporated by reference herein. The Company'sAlfano Agreement was terminated when Mr. Alfano became a director on June 26, 2019. The Company has accrued Consulting Fees and Expenses of $120,988 for all prior periods through the year ending December 31, 2021. During 2022, Mr. Alfano and the Company mutually agreed to issues Company shares to Mr. Alfano in full satisfaction of the $120,988 Consulting Fees and Expenses that were accrued as of December 31, 2021.
On October 19, 2020, the Company entered into a management consulting services agreement with Dean Goekel (the “Goekel Agreement” via “Analytical Professionals”), to manage engineering and vendor relationships, assist in defining the design and cost of certain capital equipment and to manage the direction of research, development and other related engineering activities. Mr. Goekel will also support the Company’s ongoing business operations, including assistance in commercialization and market implementation, strategic planning and other services. The agreed upon start date under the agreement is July 1, 2020 and the minimum commitmentengagement term was for 2016six (6) months. After the initial term the agreement automatically renews for subsequent six (6) month terms unless the Company or Mr. Goekel terminates the agreement. Under the agreement, in exchange for Mr. Goekel’s services he will receive a minimum monthly fee of $10,000 per month in deferred compensation until such time that adequate funds are available for payment. As of December 31, 2022, we have accrued $300,000 in compensation expense related to this agreement. Additionally, under the agreement Mr. Goekel was issued stock warrants for 3,000,000 shares at a strike price of $0.03 per share effective July 1, 2020 and expiring on June 30, 2022. The Company recognized valued and recognized compensation expense related to these warrants of $25,137 for the year ended December 31, 2020. Mr. Goekel did not exercise any of the stock warrant prior to June 30, 2022 and the warrants expired unexercised. After meeting certain deliverables set forth in the agreement, Mr. Goekel will be issued stock warrants for 1,000,000 shares at a strike price that is approximately $11,800an average of the stock price for the 90 days that the deliverables have been met. No such deliverables have been met to date, and currently management does not believe these 1,000,000 warrants will be earned by the service provider.
Other
Pursuant to the GIE Acquisition Agreement in annual maintenance fees,August 2012, we agreed to: (i) issue an additional 7,500,000 shares of Common Stock when the first portable GTL unit is built and becomes operational, and is capable of producing 2,000 barrels of diesel or jet fuel per day, and (ii) pay a 2% royalty on all gross production sales on each unit placed in production, or one percent (1%) each to the founders and previous owners of GIE. On February 6, 2018, and in connection with a settlement agreement dated April 5, 2018, by and between the Greer Family Trust and us, which are due September 1, 2016. Onceis the company enterssuccessor in interest one of the production phase,founders and prior owners of GIE, F. Conrad Greer (“Greer”), (the “Trust”, and such settlement agreement the “Trust Settlement Agreement”), we issued 3,000,000 shares of Common Stock and a convertible promissory note for $150,000 to the Trust in exchange for: (i) a termination of the Trust’s right to receive 3,750,000 shares of Common Stock in the future and 1% of the royalties owed to the Trust under the GIE Acquisition Agreement; (ii) the termination of Greer’s then current employment agreement with GIE; and (iii) the Trust’s waiver of any future claims against us for any reason. A copy of the Trust Settlement Agreement and related promissory note dated April 5, 2018, by us in favor of the Trust is filed as Exhibit 10.36 to this Form 10-K and incorporated by reference herein.
As a result of the transactions consummated by the Trust Settlement Agreement, we are committed to issue a reduced number of 3,750,000 shares of Common Stock and 1% of the royalties due on production of our GTL operational units to Ray Wright, the other founder and prior owner of GIE, pursuant to the GIE Acquisition Agreement.
Mining Leases
For 2022, our annual lease maintenance fees due to Bureau of Land Management (“BLM”) for the Arizona, were $16,200. There is no actual lease agreement with the BLM, are equalbut we file an annual maintenance fee form and pay fees to 10% of production.the BLM to hold our claims. The next payment will be due on August 31, 2023.
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Financing
Related parties
Financing to date has been provided by loans, advances from shareholdersShareholders and by issuing sharesDirectors and issuances of its common stockour Common Stock in various private placements to accredited investors, related parties and individuals. institutions.
For the year ended December 31, 2022 there was no related party financing. However, $51,769 in advances were converted to a related party note for Kevin Jones.
For the year ended December 31, 2021, we received $429,247 in related party loans from Mabert, acting as agent for various lenders to the Company.
As of December 31, 2021, we received $68,014 in cash and payment advances, net of repayments, from our director, Kevin Jones, a greater than 5% shareholder which has been accrued as “Advances - related parties” for the period.
Third-party financing
On various dates throughout the year ended December 31, 2022, the Company issued 20,667,999 shares of Rule 144 restricted Common Stock, par value $0.0001 per share pursuant to a private placement sale to various accredited investors, for $482,200 ($0.02 - $0.03/share).
On December 23, 2021, the Company 333,333 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $10,000, or $0.03 per share.
On December 22, 2021, the Company issued 1,500,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to two (2) accredited investors, for $45,000, or $0.03 per share.
On December 20, 2021, the Company issued 1,000,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $30,000, or $0.03 per share.
On December 2, 2021, the Company issued 166,667 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $5,000, or $0.03 per share.
On November 29, 2021, the Company issued 1,000,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $30,000, or $0.03 per share.
On November 24, 2021, the Company 166,667 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $5,000, or $0.03 per share.
On November 23, 2021, the Company 333,333 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $10,000, or $0.03 per share.
On November 18, 2021, the Company issued 1,666,667 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $50,000, or $0.03 per share.
On November 3, 2021, the Company issued 1,000,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $30,000, or $0.03 per share.
On November 1, 2021, the Company issued 666,667 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $20,000, or $0.03 per share.
On October 8, 2021, the Company issued 625,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $25,000, or $0.04 per share.
On September 7, 2021, the Company issued 62,500 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $2,500, or $0.04 per share.
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On September 3, 2021, the Company issued 125,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $5,000, or $0.04 per share.
On August 31, 2021, the Company issued 600,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $30,000, or $0.05 per share.
On August 30, 2021, the Company issued 200,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $10,000, or $0.05 per share.
On August 27, 2021, the Company issued 300,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to three (3) accredited investors, for $15,000, or $0.05 per share.
On August 13, 2021, the Company issued 400,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $20,000, or $0.05 per share.
On August 10, 2021, the Company issued 800,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to two (2) accredited investors, for $40,000, or $0.05 per share.
On August 9, 2021, the Company issued 100,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $5,000, or $0.05 per share.
On August 5, 2021, the Company issued 400,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to two (2) accredited investors, for $20,000, or $0.05 per share.
On August 3, 2021, the Company issued 500,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $25,000, or $0.05 per share.
On August 2, 2021, the Company issued 200,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to one (1) accredited investor, for $10,000, or $0.05 per share.
On June 22, 2021, the Company issued 382,500 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to an accredited investor, in lieu of cash payment for consulting fees of $11,475, or $0.03 per share.
On June 3, 2021, the Company issued 2,000,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to three (3) accredited investors, for $100,000, or $0.05 per share.
On May 7, 2021, the Company issued 100,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to an accredited investor, in lieu of cash payment for consulting fees of $3,000, or $0.03 per share.
On May 6, 2021, the Company issued 166,667 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to an accredited investor, for $5,000, or $0.03 per share.
On May 6, 2021, the Company issued 2,000,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to an accredited investor, for $50,000, or $0.025 per share.
On May 6, 2021, the Company issued 600,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to an accredited investor, for $18,000, or $0.03 per share.
On March 18, 2021, the Company issued 1,200,000 shares of Rule 144 restricted Common Stock, par value $.0001 per share pursuant to a private placement sale to an accredited investor, for $36,000, or $0.03 per share.
-22- |
Seasonality
We do not have any off balance sheet arrangementsanticipate that our business will be affected by seasonal factors.
Impact of Inflation
While we are reasonably likelysubject to general inflationary trends, including for basic manufacturing production materials, our management believes that inflation in and of itself does not have a current or futurematerial effect on our financial condition, revenues,operating results. However, inflation may become a factor in the future. However, the COVID-19 virus and resultsits current extraordinary impact on the world economy has reduced oil consumption globally, decreasing crude oil prices, to levels not seen since the early 1980’s. The economics of operations, liquidityGTL conversion rely in part on the arbitrage between oil and natural gas prices, with economic models for many producers, including our own models, using a range of $30-60/bbl (for WTI or capital expenditures.
Off-Balance Sheet Arrangements
During the year ended December 2019, we entered into a revenue interest research and development venture with Mabert and an employee, Tom Phillips, OPMGE. However, based on events of default in their agreement with the Company, Mabert no longer has any formal arrangements with OPMGE or Tom Phillips. Since inception of this arrangement, we have advanced a total of $412,885 to OPMGE. Given the uncertainty of the collectability of this receivable, the Company has fully reserved for this amount as of December 31, 2022 and 2021, respectively.
Critical Accounting Policies and Estimates
Our discussionFinancial Statements and analysis of our financial condition and results of operationsaccompanying notes are based upon financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statementsStates (“GAAP”). Preparing our Financial Statements requires usmanagement to make estimates and judgmentsassumptions that affectimpact the reported amounts of assets, liabilities, revenue, and expenses, and related
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We evaluate our long-lived assets for financial impairment on a regular basis in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for making judgments aboutthe Impairment or Disposal of Long-Lived Assets,” which evaluates the recoverability of long-lived assets not held for sale by measuring the carrying valuesamount of the assets and liabilitiesagainst the estimated discounted future cash flows associated with them. At the time such evaluations indicate that the future discounted cash flows of certain long-lived assets are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.
We believe that the following critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our financial statements.
Use of Estimates
Preparing financial statements in conformity with accounting principles generally acceptedU.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Changes in estimates are recorded in the United Statesperiod in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.
Significant estimates during the years ended December 31, 2022 and 2021, respectively, include valuation of stock-based compensation, uncertain tax positions, and the valuation allowance on deferred tax assets.
Equity Method Investment
On August 29, 2019, the Company entered into a Material Definitive Agreement related to the formation of OPMGE. The Company contributed a limited license to use its proprietary and patented GTL technology for no actual cost basis in exchange for 42.86% (300 of 700 currently owned member units) revenue interest in OPMGE, expected to be later reduced to a 30% interest upon the completion of certain expected third-party investments for the remaining 300 of 1,000 member units available. However, Greenway never transferred the G-Reformer to OPMGE, as required by the LIMITED LIABILITY COMPANY AGREEMENT OF OPM GREEN ENERGY, LLC. Accordingly, it defaulted on its obligation under the agreement. Since the Wharton Plant is owned by Mabert, OPMGE was no longer a viable entity as of December 31, 2022 and 2021, respectively.
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As of December 31, 2022 and 2021, respectively, there were no assets within OPMGE. Accordingly, the Company’s receivable with this entity is fully reserved for as of December 31, 2022 and 2021.
Cash and Cash Equivalents and Concentration of Credit Risk
For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At December 31, 2022 and 2021, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. At December 31, 2022 and 2021, respectively, the Company did not have any cash in excess of the insured FDIC limit.
Use of Estimates
The preparation of our Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statementsour Financial Statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.
Income Taxes
The Company accounts for mine exploration costs in accordance with Accounting Standards Codification 932, Extractive Activities. All exploration expenditures are expensed as incurred. Mine development costs are capitalized until production, other than production incidental toincome tax using the mine development process, commencesasset and are amortized on a units of productionliability method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. At December 31, 2015, the Company had not incurred any mine development costs.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial reporting purposesstatements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of December 31, 2022 and December 31, 2021, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax purposes consist primarily of timing differences such as deferred officers' compensationpositions in other expense. No interest and stock compensation accounting versuspenalties related to uncertain income tax differences.
Research and Development
The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has adopted Accounting Standards Codification Subtopic 260-10,been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.
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The Company incurred research and development expenses of $54,275 and $158,000 for the years ended December 31, 2022 and 2021, respectively.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
● | Exercise price, |
● | Expected dividends, |
● | Expected volatility, |
● | Risk-free interest rate; and |
● | Expected life of option |
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Basic and Diluted Earnings Per(Loss) per Share ("
Pursuant to ASC 260-10), specifying the computation, presentation and disclosure requirements of earning per share information. Basic260-10-45, basic loss per common share has beenis computed by dividing net loss available to common shareholders by the weighted average number of shares of common sharesstock outstanding for the period. Shares issuable upon conversion of the notes payable and exercise of warrants has been excluded as a common stock equivalent in the dilutedperiods presented. Diluted loss per share because their effect is anti-dilutive oncomputed by dividing net loss by the computation.
At December 31, 2022 and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
December 31, 2022 | December 31, 2021 | |||||||
Convertible debt | 3,689,400 | 2,083,338 | ||||||
Warrants | - | 3,000,000 | ||||||
3,689,400 | 5,083,338 |
Recent Accounting Standards
Changes to accounting principles are established by the Financial Accounting Standards Board ("FASB")in the form of Accounting Standards Codification ("ASC"Updates (“ASU’s”) 105-10, Generally Accepted Accounting Principles – Overall ("ASC 105-10"), which was formerly knownto the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as SFAS 168. ASC 105-10 establishes the FASB Accounting Standards Codification (the "Codification") as the source of authoritative accounting principles recognizedissued by the FASB to be applied by nongovernmental entities in the preparationform of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the Securities and Exchange Commission (the "SEC") under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards and all other non-grandfathered, non-SEC accounting literature not included in the Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates ("ASUs"(“ASU”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only through the date these financial statements were available to update the Codification, provide background information about the guidancebe issued and provide the basis of conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.
Subsequent Events
From January 1, 2023 through April 14, 2023, the Company issued 10,333,333 shares of common stock comprised of: 8,333,333 shares of Rule 144 restricted Common Stock issued in a private placement to three accredited investors at $0.015 - $0.020 per share $160,000 and 2,000,000 shares to our Chief Financial Officer for services rendered, having a fair value of $20,000 ($0.01/share), based upon the quoted closing trading price.
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
As a smaller reporting company, as defined by Rule12b-2 of the Securities Exchange Act of 1934 and Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. | Financial Statements and Supplementary Data. |
Our Financial Statements and Supplementary Data.
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
At no time have there been any disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures
The term disclosure controls and procedures (as definedmeans controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the Securitiesreports that it files or submits under the Exchange Act of 1934 Rules 13a-15(e)is recorded, processed, summarized and 15d-15(e)) as ofreported, within the
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internalreporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and our principal financial officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; | |
● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and | |
● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. |
Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the transactionsfact that there are resource constraints, and dispositionsthe benefits of our assets, (ii) provide reasonable assurance that
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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In the year ending December 31, 2022, we conducted an evaluation of the effectiveness of our internal controlcontrols over financial reporting as of December 31, 2015. In making this assessment, management usedbased on the criteria set forthframework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this evaluation, our principal executive officer and principal financial officer, have concluded that as of December 31, 2022, our internal control over financial reporting was ineffective.
Management’s Annual Report on Internal Control over Financial ReportingReporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
As of December 31, 2022, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control - Guidance for Smaller Public Companies.
We have identified at least the following deficiencies, which together constitute a material weakness in our assessment of the effectiveness of internal control over financial reporting as of December 31, 2015;
1. |
2. | During the year ended December 31, |
3. |
We are continuing the process of remediating itsour control deficiencies. However, the material weakness in internal control over financial reporting that hashave been identified will not be remediated until numerous new internal controls are implemented and operate for a period of time, are tested, and the Company iswe are able to conclude that such internal controls are operating effectively. The CompanyWe cannot provide assurance that these procedures will be successful in identifying material errors that may exist in the financial statements. The Companyour Financial Statements. We cannot make assurances that itwe will not identify additional material weaknesses in itsour internal control over financial reporting in the future. ManagementOur management plans, as capital becomes available to the Company,us, to increase the accounting and financial reporting staff and provide future investments in the continuing education and public company accounting training of our accounting and financial professionals.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control system, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Our management believes that the material weaknesses set forth above did not includehave a material effect on our financial results. However, the lack of a functioning audit committee and lack of a majority of independent directors on our Board of Directors results in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures and could potentially have an attestation report of the Company's registered public accounting firm regarding internal control overimpact our financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.
Changes in Internal Controls over Financial Reporting
There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our system of internal control over financial reporting to ensure we continue to work towards an effective internal control environment. There were no changes that occurred during the fourth quarter of the fiscal year covered by the Annual Report on Form 10-Kended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, the Company'sour internal control over financial reporting.
Item 9B. | Other Information. |
None.
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PART III
Item 10. | Directors, Executive Officers and Corporate Governance. |
The following table sets forth the names, ages, and Corporate Governance.
Name | Age | Position | Director | |||
Raymond Wright | 86 | Chairman of the Board, President of GIE, and Director | 2016 | |||
Ransom Jones | 74 | Director, Chief Financial Officer, Secretary and Treasurer | 2016 | |||
Kent Harer | 66 | Director and President | 2017 | |||
Paul Alfano | 67 | Director (Independent) | 2019 | |||
Michael Wykrent | 79 | Director (Independent) | 2019 |
The members of our Board of Directors are subject to serve untilchange from time to time by the vote of our Shareholders at special or annual meetings to elect directors. Our current Board of Directors consists of five directors, who have expertise in our business. No date for the next annual meeting of stockholdersShareholders is specified in our bylaws or has been fixed by the Board of Directors. Officers are elected annually by the directors. The term of office of each officer ends at the next annual meeting of our Board of Directors, expected to take place immediately after the next annual meeting of Shareholders, or until such time when such officer’s successor is elected and qualified.
The foregoing notwithstanding, except as otherwise provided in any resolution or resolutions of the board, directors who are elected at an annual meeting of Shareholders, and directors elected and/or appointed in the interim to fill vacancies and newly created directorships, will hold office for the term for which elected and/or appointed until their successors have beenare elected and have qualified. Officers serve atqualified or until their earlier death, resignation or removal.
Whenever the discretionholders of any class or classes of stock or any series thereof are entitled to elect one or more directors pursuant to any resolution or resolutions of the Board of Directors.
Kevin Jones served on the Board of Directors prior to his resignation on November 3, 2021. Ransom Jones and Kevin Jones are brothers.
We may employ additional management personnel, as our Board of Directors deems necessary. We have not identified or reached an agreement or understanding with any other individuals to serve in management positions.
Directors and Officers Biographies
Raymond Wright - Chairman of our Board of Directors, Co-Founder and President of our wholly owned subsidiary, GIE
Mr. Wright has been a Director since March 6, 2016 and was elected by the Board as Chairman in 2017, while also serving as the President of GIE since August 2012. Mr. Wright was the co-founder of DFW Genesis with F. Conrad Greer, in 2009, where he began working on current natural gas GTL processes until 2012, when he and the late Mr. Greer formed GIE to continue working on a new GTL solution, which has gone on to become the basis of our proprietary G-Reformer technology. Previously, Mr. Wright worked with Dallas-based Texas Instruments (TI) managing operations and opening up new markets for TI in England. He developed and built a materials manufacturing facility for TI’s European operation and introduced TI’s Light Sensor technology in Europe. Mr. Wright was asked to join the Board of Directors due to his specific experience in the GTL industry, his early contributions and leadership to our GTL technology, and his general business, experience duringmanagement and analytical skills. He received an undergraduate degree in Accounting from Southern Methodist University.
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Kenton Harer – Director and President (Interim)
Kenton J. Harer joined our Board of Directors on February 3, 2017 and was appointed by our Board of Directors serve as our interim President on July 19, 2019, as reported on our Current Report on Form 8-K, filed with the past fiveSEC on July 23, 2019, which is incorporated by reference herein. Mr. Harer has over 35 years of each directorindustrial gas experience, starting his career working for the oilfield division of LTV Corporation in 1981, and executive officerin 1984, began working with industrial gas, where he developed an extensive knowledge of the Company.
Ransom Jones – Director, Chief Financial Officer, Secretary and Treasurer
Ransom B. Jones has served as a director since March 6, 2016, was our Interim Chief Executive Officer and President from January 2016 to April 2017, and became our Chief Financial Officer, Secretary and Treasurer on January 14, 2016 and director on March 7, 2016.
Paul Alfano – Director (Independent)
Paul Alfano joined our Board of Directors June 26, 2019. Mr. Alfano is a greater than 5% Shareholder and Kevin Jones are brothers.
Michael Wykrent - Director (Independent)
Michael Wykrent was appointed president and director of UMED Holdings, Inc. on August 18, 2009. On January 14, 2016, Mr. Halden resigned as President of the Company but continueselected to serve as a director.member of our Board of Directors June 26, 2019. Mr. HaldenWykrent is a major Shareholder and has been an advisor to the Board since 2012. Mr. Wykrent retired from United Parcel Service (“UPS”) after a 27-year career working in Human Resources as a Region Communications Manager. When he began his career at UPS, the company was comprised of only a few thousand managers. By the end of his career, UPS had become a world-wide service provider, with over 481,000 employees. Mr. Wykrent helped open new operating areas as UPS was expanding and also headed up region employee opinion surveys and coordinated the charitable contributions throughout the southwest. His duties brought him into contact with management and employees working in package sorting and delivery operations, labor relations, engineering, accounting, air operations, fleet rentals, vehicle maintenance, legal, customer service, delivery information and loss prevention. Mr. Wykrent was asked to join the Board of Directors due to his sales, business, management and analytical skills. He served in the Navy for four years in communications and later graduated from Henry Ford College.
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Committees of the Board
On June 22, 2018, pursuant to the authority granted to our Board of Directors in Section 2.10 of Article Two of our bylaws, the Board of Directors created an executive committee (the “Executive Committee”). As of the date of this report, the designated directors comprising the Executive Committee include Ray Wright, Kent Harer, Paul Alfano and Ransom Jones. The Executive Committee may consider and review any and all such matters or issues it deems necessary coming before us and take such further lawful actions as it determines to be consistent with its responsibilities. Given our small size, with the exception of the Executive Committee, our entire Board of Directors participates in all of the considerations with respect to our audit, compensation and nomination deliberations.
The responsibilities of other committees now or to be adopted in the future are currently servesare fulfilled by our Board of Directors and all of our directors participate in such responsibilities, two of whom are “independent” as presidentdefined in the listing standards of Capital Equity Partners, LLC, (2007the Nasdaq Stock Market, Inc., which states in part, that, “that an independent director must not be an officer or employee of the company or its subsidiaries or any other individual having a relationship that, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.”
Audit Committee
Our entire Board of Directors currently performs the functions of an audit committee, but no written charter governs the actions of our Board of Directors when performing the functions of what would generally be performed by an audit committee. Our Board of Directors approves the selection of our independent accountants and meets and interacts with the independent accountants to present) adiscuss issues related to financial reporting. In addition, our Board of Directors reviews the scope and results of the audit with the independent accountants, reviews with management services firm providing corporateand the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. At the present time, Ransom Jones, our Chief Financial Officer and one of our directors, is considered to be our expert in financial and marketing servicesaccounting matters.
Nomination Committee
Due to public companies. Mr. Halden was co-founderour size and the size of Channel 28,our Board of Directors, we do not require a separate nominating committee at this time. When evaluating director nominees, our directors consider the following factors:
● | The appropriate size of our Board of Directors; | |
● | The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of our Board of Directors; | |
● | Experience in political affairs; | |
● | Experience with accounting rules and practices; and | |
● | The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new members of our Board of Directors. |
Our goal is to assemble a Board of Directors that brings together a variety of perspectives and skills derived from high-quality business and professional experience. In doing so, our Board of Directors will also consider candidates with appropriate non-business backgrounds.
Other than the foregoing, there are no stated minimum criteria for director nominees, although our Board of Directors may also consider such other factors as it may deem are in 2004,our best interests as well as the interests of our Shareholders. In addition, our Board of Directors identifies nominees by first evaluating the current members of our Board of Directors willing to continue in service. Current members of our Board of Directors with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of our Board of Directors does not wish to continue in service or if our Board of Directors decides not to re-nominate a Dallas, Texas independent television station airing programming provided by Urban Television Network Corporation, which contracted with Mr. Halden from 2001 to 2006. Prior tomember for re-election, our Board of Directors then identifies the foundingdesired skills and experience of Channel 28, Mr. Halden provided consulting services to American Independent Network Corporation, Hispanic Television Network, Inc. and American Tire from 1996 to 2001.
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As approved by our Shareholders at a Special Shareholders meeting (“Special Shareholders Meeting”) held on December 11, 2019, we amended our Certificate of Formation (Articles of Incorporation) to change the voting requirements specifying that the vote required to approve certain actions before our Stockholders, including “fundamental actions,” as defined by Texas Business Organizations Code (the “TBOC”) Section 21.364, and excavation subcontractors on an“fundamental business transactions,” as needed basis.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act (“Section 16(a)”) requires our officers, directors and persons who beneficially own more than 10% of our common stockCommon Stock to file reports of ownership and changes in ownership with the SEC. These reporting persons also are required to furnish us with copies of all Section 16(a) forms they file. Based solely on the reports
Communication with Directors
Shareholders and other interested parties may contact any of our directors by writing to them at Greenway Technologies, Inc. at 1521 N. Cooper Street, Suite 205, Arlington, TX 76011. Attention: Secretary.
Our Board of Directors has approved a process for handling letters received by us the transaction reportand addressed to any of Company transactions supplied by our transfer agentdirectors. Under that process, one of our officers reviews all such correspondence and our shareholders list as of March 31, 2016,regularly forwards to the bestdirectors a summary of our knowledge all required directors, officers and greater than 9.99% percent shareholders compliedsuch correspondence, together with applicable filing requirements duringcopies of all such correspondence that, in the fiscal year ended December 31, 2015.
Conflicts of Interest
With respect to transactions involving real or apparent conflicts of interest, we have adopted written policies and procedures, which require that the: (i) the fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who were electedauthorize or approve the transaction prior to such authorization or approval; and hold office until their successors are elected(ii) the transaction be fair and qualified.reasonable to us at the time it is authorized or approved by our directors.
Code of Ethics for Senior Executive officers are appointed by the BoardOfficers and Senior Financial Officers
We have adopted a written code of Directorsbusiness conduct and serve until their successors have been duly electedethics (our “Code of Ethics”), which applies to our principal executive officer, principal financial officer, principal accounting officer and qualified. Ransom Jonesall persons providing similar functions. Our Code of Ethics is designed to deter wrongdoing and Kevin Jones are brothers. Otherwise, there is no family relationship between anyto promote:
● | honest and ethical conduct; | |
● | full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements; | |
● | compliance with applicable laws, rules and regulations; | |
● | the prompt reporting violation of the code; and | |
● | Ongoing accountability for adherence to our Code of Ethics. |
A copy of our directors and executive officers.Code of Ethics is provided in Exhibit 14.1, incorporated by reference herein. We will also provide a copy of our Code of Ethics free of charge upon request to any person submitting a written request to our Secretary.
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Item 11. | Executive Compensation. |
Summary of Cash and Certain Other Compensation
At present, we have three executive officers, Messrs. Wright, Harer and R. Jones.
Summary Compensation Table
The following table sets forth the aggregate compensation paid for services rendered toour named executive officers for each of the Company during the last three fiscal years by the Named Executive Officers:
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified deferred compensation earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
Ray Wright (1) | 2021 | 180,000 | - | - | - | - | - | - | 180,000 | |||||||||||||||||||||||||||
2022 | 180,000 | 180,000 | ||||||||||||||||||||||||||||||||||
Ransom Jones (2) | 2021 | 120,000 | 35,000 | - | - | - | - | - | 155,000 | |||||||||||||||||||||||||||
2022 | 120,000 | 35,000 | 155,000 | |||||||||||||||||||||||||||||||||
Kent Harer (3) | 2021 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
2022 | - | - | - | - | - | - | - | - |
Name and Position | Year | Salary ($) | Bonus($) | Compensation ($) | Total ($) | |||||||
Ransom Jones, Interim Chief Executive Officer, effective January 14, 2016, Chief Operating Officer, April 1, 2015 – January 14, 2016 | 2015 | 20,400 | - | 37,500 | (1) | 57,900 | ||||||
Kevin Bentley, Chief Executive Officer, resigned April 6, 2105 | 2015 | 0 | - | 743,750 | (2) | 743,750 | ||||||
2014 | 165,000 | (3) | - | 165,000 | ||||||||
2013 | 0 | (4) | - | 0 | ||||||||
Richard Halden, President | 2015 | 180,000 | (5) | - | 603,750 | (6) | 783,750 | |||||
resigned on January 14, 2016 | 2014 | 165,000 | (7) | - | 165,000 | |||||||
2013 | 0 | (8) | 0 | |||||||||
Randy Moseley, Chief Financial Officer | 2015 | 180,000 | (9) | - | 603,750 | (10) | 783,750 | |||||
and Principal Financial Officer | 2014 | 165,000 | (11) | - | 165,000 | |||||||
2013 | 0 | (12) | 0 |
Mr. Wright is our President and Chairman of our Board of Directrors. | |||
(2) | On January 23, 2023, Mr. Jones our Chief Financial Officer and Secretary received 2,000,000 shares of | ||
Mr. Harer is our interim President. Mr. Harer has not taken a salary or any other form of | |||
Directors. |
Stock Options/SAR Grants
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding equity awards for our inception.
Director Compensation
Currently, our directors receive no compensation for their services asparticipation on our board, board committees or other activities related to the Company. There are no plans by the directors since our inception. Wepay retirement benefits to directors or executive officers.
Executive Compensation
Ray Wright and Ransom Jones each have employment agreements that automatically renew on each employment anniversary date unless a party provides notice of non-renewal before sixty (60) days before each annual period’s end. Mr. Jones was provided with 250,000 shares at the inception of his agreement, and he is due a bonus of $35,000 each year he is employed by us. There were no standard arrangement pursuant to which our directors are to be compensated for their services in their capacity as directors except for the granting from time to time of incentive stock options. The board of directors may award special remunerationchanges to any director undertaking any special services on behalf of our company other than services ordinarily required of a director. Other than indicated below,the named executives’ duties as described by their respective employment agreements. Kent Harer does not have an employment agreement and receives no director received and/or accrued any compensation for his services asmanagement roles and responsibilities. Mr. Harer has agreed to this arrangement until a director, including committee participation and/or special assignments.new chief executive is hired by us.
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Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Securities Authorized for Issuance under Equity Compensation Plans
None.
Securities Beneficial Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forthpresents information regarding the beneficial ownership of all shares of our Common Stock as of information concerning the number of shares of common stock owned beneficially as of March 24, 2016 which was 98,811,192 shares, by: (i) each person (including any group) known by us to own more than five (5%) of any class of our voting securities, (ii) each of our directors and executive officers, and (iii) our officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
Name and Address | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | ||||||
Randy Moseley (3) | 35,567,574 | 17.50 | % | |||||
Richard Halden (4) | 32,677,721 | 16.07 | % | |||||
Ransom Jones | 375,000 | .18 | % | |||||
Craig Takacs | 3,157,563 | 1.55 | % | |||||
Kevin Jones (5) | 15,333,334 | 7.54 | % | |||||
Raymond Wright | 7,000,000 | 3.44 | % | |||||
D. Patrick Six (6) | 4,700,000 | 2.31 | % | |||||
as a group (7 persons) | 98,811,192 | 48.59 | % |
Beneficial Ownership Table | ||||||||
Directors and Named Executive Officers (10) | Shares of Common Stock Beneficially Owned (1) | |||||||
Number | Percent | |||||||
Paul Alfano(2) | 29,450,000 | 7.7 | % | |||||
Kent Harer (5) | 70,000 | <1.0 | % | |||||
Kevin Jones (3) | 24,739,683 | 6.4 | % | |||||
Ransom Jones (6) | 6,181,867 | 1.6 | % | |||||
Raymond Wright (4) | 17,500,000 | 4.6 | % | |||||
Michael Wykrent (7) | 11,160,000 | 2.9 | % | |||||
All current Directors and Named Executive Officers as a group | 89,101,550 | 23.3 | % | |||||
(6 persons) (9) | ||||||||
0.0 | % | |||||||
5% or Greater Stockholders | ||||||||
Paul Alfano (2) | 29,450,000 | 7.7 | % | |||||
Kevin Jones (3) | 24,739,683 | 6.4 | % |
1) | Applicable percentages are based on 382,610,871 shares of Common Stock outstanding as of December 31, 2022. Beneficial ownership is determined by rules promulgated by the SEC and generally includes voting or investment power with respect to securities. Common Stock underlying options, warrants, and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days of year end are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table, we believe that each of the individuals named in the table has sole voting and investment power with respect to the Common Stock indicated as beneficially owned by such individual. The table includes Common Stock and options, warrants, and convertible notes exercisable or convertible into Common Stock that are either vested or may vest within 60 days of year end. | |
2) | Paul Alfano. Mr. Alfano is an independent director and greater than 5% Shareholder. | |
3) | Kevin Jones. Mr. Kevin Jones is a greater than 5% Shareholder and a former director. Mr. Jones resigned as a director during 2021. Kevin Jones and Ransom Jones are brothers. Mr. K. Jones has sole voting and dispositive power with respect to 8,364,683 shares. In addition, the amount of Common Stock beneficially owned by Mr. K. Jones includes: (a) 4,875,000 Shares held by Mabert, in which Mr. K. Jones has 100% ownership interest and for which he serves as sole manager; (b) 8,500,000 Shares owned by Mr. K. Jones’s late spouse, Ms. Christine Earley, in which Mr. K. Jones has a spousal interest; and (c) 1,867,843 Shares issuable to Mr. K. Jones pursuant to that certain Loan Agreement by and between Mabert and the Company, dated September 14, 2018, filed as Exhibit 10.49 to the Company’s Form 10-K/A, filed with the SEC on May 13, 2019; (c) 2,000,000 shares beneficially held for Mr. K. Jones by Equity Trust and (d) 1,000,000 shares owned by Topical Floors, LLC, in which Mr. K. Jones owns 100% ownership interest and for which he serves as sole manager. |
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4) | Raymond Wright. Mr. Wright is the chairman of our Board of Directors, and president of GIE our wholly owned subsidiary. | |
5) | Kent Harer. Mr. Harer is a director and our acting president, making him a named executive officer. The Common Stock beneficially owned by Mr. Harer are those shares immediately issuable upon Mr. Harer’s exercise of a Stock Purchase Warrant, dated January 8, 2018, by and between our Company and Mr. Harer, filed as Exhibit 10.37, and incorporated by reference herein. | |
6) | Ransom Jones. Mr. Ransom Jones is a director and our chief financial officer, secretary and treasurer, making him a named executive officer. Mr. Jones has sole voting and dispositive power with respect to 2,306,867 shares of Common Stock. In addition, the amount of Common Stock beneficially owned by Mr. Jones includes 3,875,000 shares owned by Mr. Jones’s spouse, Ms. Jan Jones, in which Mr. Jones has a spousal interest. Ransom Jones and Kevin Jones are brothers. | |
7) | Michael Wykrent. Mr. Wykrent is an independent director. | |
9) | All current directors and named executive officers as a group. This ownership includes only the ownership of our current named executive officers and directors. Mr. Jones is listed as he resigned from being a director during 2021. | |
10) | Unless otherwise indicated, the address for each of these |
Other than as stated herein, there are no present arrangements or understandings, known to the Company,us, including any pledge by any person of the Company's securities, the operation of which may at a subsequent date result in a change in control of the Company.
● | The operation of which may at a subsequent date result in a change in control of the registrant; or | |
● | With respect to the election of directors or other matters. |
Item 13. | Certain Relationships and Related Transactions and Director Independence. |
Other than as stated herein, there are no other agreements with any of our officers and Related Transactions,directors.
After approval given during a properly called special meeting of the Board of Directors, on September 14, 2018, Mabert, which is owned and Director Independence.
Mr. K. Jones and his late wife and Mabert have made advancesloaned a total $2,057,341 to the Company and four other Shareholders have loaned the balance of $793,433, pursuant to the Loan Agreement, through the year ending December 31, 2022. These loans are secured by the assets of our Company. A financing statement and UCC-1 have been filed according to Texas statutes. Should a default under the Loan Agreement occur, there could be a foreclosure or a bankruptcy proceeding filed by Mabert on behalf of the lenders party to the Loan Agreement. A foreclosure sale or distribution through bankruptcy could only result in the amountscreditors receiving a pro rata payment based upon the terms of $383,878the Loan Agreement. Mabert did not nor will it receive cash compensation for its efforts.
Mr. K. Jones, as the owner and $715,070 duringmanaging member of Mabert, was also the years ended December 31, 2015managing and 2014, respectively. The shareholders have electedcontrol member of OPMGE, a research and development venture in and to convert advances of $314,517 and $1,527,180 to shares of class A common stock at market value ($.173 and $.228 per share) and received repayments of $122,976 and $0 during the years ended December 31, 2015 and 2014, respectively.
Mr. Michael Wykrent, a director, made loans totaling $425,000 under the Mabert Loan Agreement to its former CEO, its President and Chief Financial Officer per their employment agreements. The shares were valued at $0.15 per share based on market value.
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Mr. Paul Alfano, a director, was contracted as a consultant by the Company in April 2018 prior to his being elected as a director of the Company, thereupon such consulting contract was terminated. In his consulting role, Mr. Alfano’s total fees never exceeded $120,000 for any prior period. We have accrued a total of 9,179,340 shares of restricted class A common stock to its President and Chief Financial Officer$120,988 for the conversion of 611,956 shares of class B stockfees and expenses that were remaining under his consulting agreement at the ratetime Mr. Alfano was elected as a non-executive director and the associated accrued interest on these fees. During 2022, the Company and Mr. Alfano agreed to issue shares in full satisfaction of fifteen sharesthe $120,988.
Director Independence
Mr. Alfano and Mr. Wykrent serve as our two independent directors. We use the definition of restricted common stock for each share“independent director” as defined in the listing standards of Class B stock, on terms set by the Company's predecessor, Dynalyst Manufacturing Corporation.
● | A director who is, or at any time during the past three years was, employed by the Company; | |
● | A director who accepted or who has a family member who accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence, other than the following: (i) compensation for board or board committee service; (ii) compensation paid to a family member who is an employee (other than as an executive officer) of the issuer; or (iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation; | |
● | A director who is a family member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer; | |
● | A director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed five percent of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following: (i) payments arising solely from investments in the company’s securities; or (ii) payments under non-discretionary charitable contribution matching programs; | |
● | A director of the issuer who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the issuer serve on the compensation committee of such other entity; or | |
● | A director who is, or has a family member who is, a current partner of the company’s outside auditor, or was a partner or employee of the registrant’s outside auditor who worked on the company’s audit at any time during any of the past three years. |
Under these standards required to an independent director, none of Mr. Harer, Mr. R. Jones, nor Mr. Wright qualify as independent directors.
We hope to add additional qualified independent members to our Board of Directors at a later date, depending upon our ability to reach and maintain financial stability and/or continuing operations.
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Item 14. | Principal Accounting Fees and Services. |
The following table presents fees for professional services rendered by itsAssurance Dimensions (“Assurance”), our independent auditors for the years ended December 31, 2022 and 2021, respectively:
2022 | 2021 | |||||||
Audit Fees | $ | 41,000 | $ | 35,906 | ||||
Audit Related Fees | -0- | -0- | ||||||
Tax Fees | -0- | -0- | ||||||
All Other Fees | -0- | -0- | ||||||
Total | $ | 41,000 | $ | 35,906 |
Audit fees billed were for professional services rendered for the audit of the Company'sour financial statements and review of our interim financial statements for the years ended December 31, 20152022 and 2014:
2015 | 2014 | |||||||
Audit Fees | $ | 28,500 | $ | 34,000 | ||||
Audit Related Fees | $ | 0 | $ | 0 | ||||
Tax Fees | $ | 0 | $ | 0 | ||||
All Other Fees | $ | 0 | $ | 0 | ||||
Total | $ | 28,500 | $ | 34,000 |
Pre-Approval Policy for Services of UMED HoldingsOur Independent Auditors
Our Board of Directors reviews theour Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K filings before their filing.we file them with the SEC. In addition, theour Board of Directors reviews the audit plans and anticipated fees for audit and tax work prior to the commencement of that work. All fees paid to the independent auditors are pre-approved by theour Board of Directors. These services may include audit services, audit-related services, tax services and other services.
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PART IV
Item 15. | Exhibits, Financial Statement Schedules. |
(a) | All financial statements are included in Item 8 of this report. | |
(b) | All financial statement schedules required to be filed by Item 8 of this report and the exhibits contained in this report are described in Item 8 of this report and are included as indexed in the appendix on page F-1, et seq. |
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-40- |
-41- |
* Filed in Form 10 filed on August 28, 2013.
** Filed in Form 10 filed on November 12, 2013Previously filed.
-42- |
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized in Houston, Texas.
GREENWAY TECHNOLOGIES, INC. | |||
Date: | April 14, 2023 | ||
By | /s/ Kent Harer | ||
Kent Harer, President | |||
By | /s/ Ransom Jones | ||
Ransom Jones, Chief Financial Officer and | |||
Principal Accounting Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | Title | Date | ||||
/s/ Kent Harer | ||||||
KENT HARER | Director, President | April 14, | ||||
/s/ Michael Wykrent | ||||||
MICHAEL WYKRENT | Director | April 14, 2023 | ||||
/s/ Ransom Jones | ||||||
RANSOM JONES | April 14, 2023 | |||||
/s/ Paul Alfano | ||||||
PAUL ALFANO | Director | April 14, | ||||
/ | ||
RAYMOND WRIGHT | ||||||
Chairman, President of Greenway Innovative Energy, Inc. |
April 14, | ||
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Greenway Technologies, Inc.
December 31, 20152022 and 2014
Contents
Report of Independent Registered Public Accounting Firm (PCAOB ID: 5036) | ||
Consolidated Financial Statements | ||
Consolidated Balance Sheets, December 31, 2022 and 2021 | F-3 | |
Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 | ||
Consolidated Statements of | ||
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 | ||
Notes to Consolidated Financial Statements |
F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To Thethe Board of Directors and shareholders
Stockholders of
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UMED Holdings,Greenway Technologies, Inc. and its subsidiaries (the "Company")Company) as of December 31, 20152022 and 20142021, and the related consolidated statements of operations, stockholders'stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 20152022, and 2014.the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had a net loss and net cash used in operating activities of $1,512,692 and $496,654, respectively, for the year ended December 31, 2022, and a working capital deficit and accumulated deficit of approximately $10,737,576 and $36,278,869, respectively, as of December 31, 2022. These consolidatedconditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these consolidatedthe Company’s financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, included considerationwe are required to obtain an understanding of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company'sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidatedpresentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for myour opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
We did not identify any critical audit matters that need to be communicated.
We have served as the Company’s auditor since 2019. | |
Margate, Florida | |
April 14, 2023 |
ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES
also d/b/a McNAMARA and ASSOCIATES, PLLC
TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053
JACKSONVILLE: 4720 Salisbury Road, Suite 223 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053
ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053
SOUTH FLORIDA: 2000 Banks Road, Suite 218 | Margate, FL 33063 | Office: 754.800.3400 | Fax: 813.443.5053
www.assurancedimensions.com
F-2 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2022 | December 31, 2021 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 24,595 | $ | 60,549 | ||||
Prepaids and other | 2,947 | 56 | ||||||
Total Current Assets | 27,542 | 60,605 | ||||||
Total Assets | $ | 27,542 | $ | 60,605 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 3,317,225 | $ | 3,215,942 | ||||
Accounts payable and accrued expenses - related parties | 3,799,452 | 3,091,538 | ||||||
Notes payable | 672,500 | 660,000 | ||||||
Notes payable - related parties - net | 2,805,774 | 2,745,264 | ||||||
Convertible note payable - net | 166,667 | 166,667 | ||||||
Advances - related parties | 3,500 | 68,014 | ||||||
Total Current Liabilities | 10,765,118 | 9,947,425 | ||||||
Commitments and Contingencies (Note 7) | - | |||||||
Stockholders’ Deficit | ||||||||
Common stock - $ par value, shares authorized and shares issued and outstanding, respectively | 38,262 | 35,506 | ||||||
Additional paid-in capital | 25,498,031 | 24,842,907 | ||||||
Common stock to be issued | 5,000 | 17,189 | ||||||
Subscription receivable | - | (16,245 | ) | |||||
Accumulated deficit | (36,278,869 | ) | (34,766,177 | ) | ||||
Total Stockholders’ Deficit | (10,737,576 | ) | (9,886,820 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 27,542 | $ | 60,605 |
The accompanying notes are an integral part of these consolidated financial statements referred to above present fairly, in all material respects, the
F-3 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
Operating expenses | ||||||||
General and administrative expenses | $ | 888,599 | $ | 962,901 | ||||
Research and development | 54,275 | 158,000 | ||||||
Total operating expenses | 942,874 | 1,120,901 | ||||||
Loss from operations | (942,874 | ) | (1,120,901 | ) | ||||
Other income (expense) | ||||||||
Interest expense | (591,963 | ) | (588,273 | ) | ||||
Amortization of debt discount | (48,232 | ) | (35,202 | ) | ||||
Gain on debt settlement | 70,377 | - | ||||||
Total other income (expense) - net | (569,818 | ) | (623,475 | ) | ||||
Net loss | $ | (1,512,692 | ) | $ | (1,744,376 | ) | ||
Loss per share - basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) | ||
Weighted average number of shares - basic and diluted | 371,601,679 | 342,400,231 |
The accompanying notes are an integral part of these consolidated financial positionstatements
F-4 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Deficit
For the Year Ended December 31, 2022
Additional | Common Stock | Total | ||||||||||||||||||||||||||
Common Stock | Paid-in | to be | Subscription | Accumulated | Stockholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Issued | Receivable | Deficit | Deficit | ||||||||||||||||||||||
December 31, 2021 | 355,060,834 | $ | 35,506 | $ | 24,842,907 | $ | 17,189 | $ | (16,245 | ) | $ | (34,766,177 | ) | $ | (9,886,820 | ) | ||||||||||||
Stock issued as debt issue costs | 302,038 | 30 | 14,150 | (12,189 | ) | - | - | 1,991 | ||||||||||||||||||||
Settlement of subscription receivable - warrants | - | - | - | - | 16,245 | - | 16,245 | |||||||||||||||||||||
Stock issued for cash | 20,667,999 | 2,068 | 480,132 | - | - | - | 482,200 | |||||||||||||||||||||
Stock issued to settle accrued liabilities | 6,200,000 | 620 | 154,380 | - | - | - | 155,000 | |||||||||||||||||||||
Stock issued for services | 380,000 | 38 | 6,462 | - | - | - | 6,500 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (1,512,692 | ) | (1,512,692 | ) | |||||||||||||||||||
December 31, 2022 | 382,610,871 | $ | 38,262 | $ | 25,498,031 | $ | 5,000 | $ | - | $ | (36,278,869 | ) | $ | (10,737,576 | ) |
The accompanying notes are an integral part of these consolidated financial statements
F-5 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Deficit
For the Year Ended December 31, 2021
Additional | Common Stock | Total | ||||||||||||||||||||||||||
Common Stock | Paid-in | to be | Subscription | Accumulated | Stockholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Issued | Receivable | Deficit | Deficit | ||||||||||||||||||||||
December 31, 2020 | 335,268,075 | $ | 33,527 | $ | 24,123,925 | $ | 36,384 | $ | (16,245 | ) | $ | (33,021,801 | ) | $ | (8,844,210 | ) | ||||||||||||
Stock issued as debt issue costs | 1,197,758 | 119 | 54,867 | (24,195 | ) | - | - | 30,791 | ||||||||||||||||||||
Stock issued for cash | 18,112,501 | 1,812 | 649,688 | 5,000 | - | - | 656,500 | |||||||||||||||||||||
Stock issued for services | 482,500 | 48 | 14,427 | - | - | - | 14,475 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (1,744,376 | ) | (1,744,376 | ) | |||||||||||||||||||
December 31, 2021 | 355,060,834 | $ | 35,506 | $ | 24,842,907 | $ | 17,189 | $ | (16,245 | ) | $ | (34,766,177 | ) | $ | (9,886,820 | ) |
The accompanying notes are an integral part of these consolidated financial statements
F-6 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
Operating activities | ||||||||
Net loss | $ | (1,512,692 | ) | $ | (1,744,376 | ) | ||
Adjustments to reconcile net loss to net cash used in operations | ||||||||
Amortization of debt discount | 48,232 | 35,202 | ||||||
Stock issued for services | 6,500 | 14,475 | ||||||
Gain on debt settlement | (70,377 | ) | - | |||||
Changes in operating assets and liabilities | ||||||||
(Increase) decrease in | ||||||||
Prepaids and other | (2,891 | ) | 11,179 | |||||
Increase (decrease) in | ||||||||
Accounts payable and accrued expenses | 326,660 | 160,783 | ||||||
Accounts payable and accrued expenses - related parties | 707,914 | 730,831 | ||||||
Net cash used in operating activities | (496,654 | ) | (791,906 | ) | ||||
Financing activities | ||||||||
Proceeds from advances - related parties | 3,500 | 354,327 | ||||||
Proceeds from issuance of note payable | 30,000 | - | ||||||
Repayments on notes payable | (55,000 | ) | (60,000 | ) | ||||
Repayments on notes payable - related parties | - | (100,000 | ) | |||||
Proceeds from stock issued for cash | 482,200 | 656,500 | ||||||
Net cash provided by financing activities | 460,700 | 850,827 | ||||||
Net increase (decrease) in cash | (35,954 | ) | 58,921 | |||||
Cash - beginning of year | 60,549 | 1,628 | ||||||
Cash - end of year | $ | 24,595 | $ | 60,549 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | 35,858 | $ | 49,046 | ||||
Cash paid for income tax | $ | - | $ | - | ||||
Supplemental disclosure of non-cash investing and financing activities | ||||||||
Stock issued as debt issue costs | $ | 1,991 | $ | 30,791 | ||||
Conversion of stockholder advances to notes payable - related parties | $ | 51,769 | $ | 429,249 | ||||
Stock issued in settlement of accrued liabilities | $ | 155,000 | $ | - | ||||
Settlement of subscription receivable - warrants | $ | 16,245 | $ | - | ||||
Shares issued for promissory note fees | $ | - | $ | 54,986 |
The accompanying notes are an integral part of these consolidated financial statements
F-7 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Note 1 - Organization and Nature of Operations
Organization and Nature of Operations
Greenway Technologies, Inc. (collectively, “we,” “us,” “our” or the “Company”), through its wholly owned subsidiary, Greenway Innovative Energy, Inc., is primarily engaged in the research, development and commercialization of a proprietary Gas-to-Liquids (GTL) syngas conversion system that can be economically scaled to meet individual natural gas field/resource requirements. The Company’s proprietary and patented technology has been realized in Greenway’s first generation commercial-scale G-ReformerTM unit (“G-Reformer”), a unique and critical component of the Company’s overall GTL technology solution. Greenway’s objective is to become a material direct and licensed producer of renewable GTL synthesized diesel and jet fuels, with a near term focus on U.S. market opportunities.
Both of the Company’s wholly-owned subsidiaries: Universal Media Corp and Logistix Technology Systems, Inc. are currently inactive.
Impact of COVID-19
The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The COVID-19 pandemic has the potential to significantly impact the Company’s supply chain, distribution centers, or logistics and other service providers.
In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including weakened demand for products and services and a decreased ability to raise additional capital when needed on acceptable terms, if at all. As the situation continues to evolve, the Company aswill continue to closely monitor market conditions and respond accordingly.
The ultimate impact of December 31, 2015the COVID-19 pandemic on the Company’s operations is unknown and 2014will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the consolidatedduration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption and reduced operations.
Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition, and results of its operationsoperations.
F-8 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Liquidity, Going Concern and its cash flows for the years ended December 31, 2015 and 2014, in conformity with accounting principles generally accepted in the United States of America.
These consolidated financial statements have been prepared assuming that the Company will continue ason a going concern. concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As describedreflected in Note 2 of the accompanying consolidated financial statements, for the year ended December 31, 2022, the Company has minimal revenues, has incurred losses since inception, and has a negative working capital balancehad:
● | Net loss of $1,512,692; and |
● | Net cash used in operations was $496,654 |
Additionally, at December 31, 2015, which raises2022, the Company had:
● | Accumulated deficit of $36,278,869 |
● | Stockholders’ deficit of $10,737,576; and |
● | Working capital deficit of $10,737,576 |
The Company has cash on hand of $24,595 at December 31, 2022. The Company does not expect to generate sufficient revenues or positive cash flows from operations sufficiently to meet its current obligations. However, the Company may seek to raise debt or equity-based capital at favorable terms, though such terms are not certain.
These factors create substantial doubt about itsthe Company’s ability to continue as a going concern. Management's plans in regardconcern within the twelve-month period subsequent to this matterthe date that these financial statements are described in Note 2.issued. The consolidated financial statements do not include any adjustments that might result frombe necessary if the outcome of this uncertainty.
December 31, | December 31, | |||||||
2015 | 2014 Restated | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 0 | $ | 77,504 | ||||
Total Current Assets | 0 | 77,504 | ||||||
Fixed assets | ||||||||
Property & equipment | 4,015 | 88,703 | ||||||
Less depreciation | 3,271 | 14,061 | ||||||
744 | 74,642 | |||||||
Other Assets | ||||||||
Mine properties, less impairment allowance of $100,000 in 2015 | 0 | 0 | ||||||
Investments, less impairment allowance of $90,000 in 2015 | 0 | 0 | ||||||
Assets related to discontinued operations | 0 | 1,757,643 | ||||||
Total Other Assets | 0 | 1,757.643 | ||||||
Total Assets | $ | 744 | $ | 1,909,789 | ||||
Liabilities & Stockholders' Deficit | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 85,545 | $ | 34,986 | ||||
Advances from stockholders | 102,214 | 181,272 | ||||||
Accrued management fees | 1,793,617 | 1,822,677 | ||||||
Accrued expenses | 229,763 | 153,592 | ||||||
Convertible note payable, net of discounts of $0 and $110,800) | 0 | 47,200 | ||||||
Derivative liability-warrants | 60,164 | 239,789 | ||||||
Liabilities related to discontinued operations | 0 | 1,860,518 | ||||||
Total Current Liabilities | 2,271,303 | 4,340,034 | ||||||
Total Liabilities | 2,271,303 | 4,340,034 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Deficit | ||||||||
Class B stock, 20,000,000 shares authorized, par value $0.0001, | ||||||||
15,126,938 issued and outstanding at December 31, 2015 and | ||||||||
15,738,894 at December 31, 2014 | 1,513 | 1,574 | ||||||
Class A stock 300,000,000 shares authorized, par value $0.0001, | ||||||||
183,882,132 and 145,559,835 issued and outstanding at | ||||||||
December 31, 2015 and December 31, 2014, respectively | 18,389 | 14,557 | ||||||
Additional paid-in capital | 10,167,670 | 5,983,053 | ||||||
Accumulated deficit | (12,458,131 | ) | (8,429,429 | ) | ||||
Total Stockholders' Deficit | (2,270,559 | ) | (2,430,245 | ) | ||||
Total Liabilities & Stockholders' Deficit | $ | 744 | $ | 1,909,789 |
Management’s strategic plans include the following:
● | Execute business operations more fully during the year ended December 31, 2023, | |
● | Explore and execute prospective strategic and partnership opportunities |
F-9 |
GREENWAY TECHNOLOGIES, INC.
2015 | 2014 Restated | |||||||
Loss from continuing operations | ||||||||
General and administrative | $ | 3,829,466 | $ | 2,241,076 | ||||
Research and development | 766,726 | 218,000 | ||||||
Depreciation | 396 | 396 | ||||||
Total Expense | 4,596,588 | 2,459,472 | ||||||
Operating loss | (4,596,588 | ) | (2,459,472 | ) | ||||
Other income (expenses) | ||||||||
Debt forgiveness | 518,300 | 0 | ||||||
Write off Logistix software | (73,500 | ) | 0 | |||||
Impairment on investment assets | 0 | (190,000 | ) | |||||
Gain (Loss) on change in fair value of derivatives | 139,397 | (91,395 | ) | |||||
Interest expense | (218,105 | ) | (928,774 | ) | ||||
Total other expenses | 366,092 | (1,210,169 | ) | |||||
Operating loss from continuing operations | (4,230,496 | ) | (3,669,641 | ) | ||||
Discontinued operations, net of tax (loss) from discontinued operations | (561,412 | ) | (714,834 | ) | ||||
Gain on disposal of discontinued operations | 763,206 | 0 | ||||||
Total gain (loss) discontinued operations | 201,794 | (714,834 | ) | |||||
Loss before income taxes | (4,028,702 | ) | (4,384,475 | ) | ||||
Provision for income taxes | 0 | 0 | ||||||
Net loss | $ | (4,028,702 | ) | $ | (4,384,475 | ) | ||
Basic loss per share; | ||||||||
Operating loss | $ | (0.02 | ) | $ | (0.03 | ) | ||
Loss from discontinued operations | $ | (0.00 | ) | $ | (0.00 | ) | ||
Net loss per share | $ | (0.02 | ) | $ | (0.03 | ) | ||
Weighted average shares | ||||||||
Outstanding; | ||||||||
Basic and diluted | 165,860,150 | 138,442,759 | ||||||
Stock | ||||||||||||||||||||||||||||
Class B Number of Shares | Par Value $0.0001 Amount | Class A Number of Shares | Par Value $0.0001 Amount | Additional Paid-In- Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
Balance December 31, 2013 | 15,798,894 | $ | 1,580 | 128,911,568 | $ | 12,892 | $ | 2,818,782 | $ | (4,044,954 | ) | $ | (1,211,700 | ) | ||||||||||||||
Sale of common stock | 2,310,118 | 231 | 336,269 | 336,500 | ||||||||||||||||||||||||
Conv of class B | ||||||||||||||||||||||||||||
Stock to class A common | (60,000 | ) | (6 | ) | 600,000 | 60 | (54 | ) | - | |||||||||||||||||||
Conv shareholders' advances to common stock | 6,703,915 | 670 | 1,526,509 | 1,527,179 | ||||||||||||||||||||||||
Shares issued for services | 7,034,234 | 704 | 1,301,547 | 1,302,251 | ||||||||||||||||||||||||
Net loss | (4,384,475 | ) | (4,384,475 | ) | ||||||||||||||||||||||||
Balance December 31, 2014, Restated | 15,738,894 | $ | 1,574 | 145,559,835 | $ | 14,557 | $ | 5,983,053 | $ | (8,429,429 | ) | $ | (2,430,245 | ) | ||||||||||||||
Sale of common stock | 10,915,101 | 1,091 | 1,081,502 | 1,082,593 | ||||||||||||||||||||||||
Class B common converted To class A common | (611,956 | ) | (61 | ) | 9,179,340 | 918 | (857 | ) | - | |||||||||||||||||||
Conv shareholders' advances to common stock | 1,817,746 | 182 | 314,335 | 314,517 | ||||||||||||||||||||||||
Shares issued for services | 16,410,110 | 1,641 | 2,403,087 | 2,404,728 | ||||||||||||||||||||||||
Warrants issued for services | 386,549 | 386,549 | ||||||||||||||||||||||||||
Net loss | (4,028,702 | ) | (4,028,702 | ) | ||||||||||||||||||||||||
Balance | ||||||||||||||||||||||||||||
December 31, 2015 | 15,126,938 | $ | 1,513 | 183,882,132 | $ | 18,389 | $ | 10,167,670 | $ | (12,458,131 | ) | $ | (2,270,559 | ) |
2015 | 2014 Restated | |||||||
Cash Flows from Operating Activities | ||||||||
Net Loss from Operations | $ | (4,230,496 | ) | $ | (3,669,641 | ) | ||
Adjustments to reconcile net loss to net cash used in | ||||||||
operating activities: | ||||||||
Depreciation | 398 | 395 | ||||||
Stock issued for services | 2,404,729 | 1,302,251 | ||||||
Interest and amortization of debt discounts | 102,700 | 64,836 | ||||||
Debt forgiveness | (518,300 | ) | 0 | |||||
Impairment provision on assets | 0 | 190,000 | ||||||
Warrants | 386,549 | 0 | ||||||
Debt issue costs amortized | 0 | 12,125 | ||||||
Write off of Logistix software | 73,500 | 0 | ||||||
Gain (loss) change in fair value of derivatives | (139,397 | ) | 91,395 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable | 50,559 | (19,819 | ) | |||||
Accrued management fees | 489,241 | 493,850 | ||||||
Derivative liability | 0 | 239,789 | ||||||
Accrued expenses | 76,171 | 22,092 | ||||||
Net Cash Used in Operating Activities | (1,304,347 | ) | (1,272,727 | ) | ||||
Cash Flows from Investing Activities | 0 | 0 | ||||||
Cash Flows from Financing Activities | ||||||||
Advances from shareholders converted to common stock | 314,517 | 1,527,180 | ||||||
Advances from shareholders | (79,058 | ) | 54,869 | |||||
Decrease in notes payable | 0 | (30,000 | ) | |||||
Decrease in convertible note payable | (47,200 | ) | 47,200 | |||||
Proceeds from sale of common stock | 1,082,593 | 336,500 | ||||||
Net Cash Provided by Financing Activities | 1,270,852 | 1,935,749 | ||||||
Cash Used in Discontinued Operations | (44,009 | ) | (585,613 | ) | ||||
Net (Decrease) Increase in Cash | (77,504 | ) | 77,409 | |||||
Cash Beginning of Period | 77,504 | 95 | ||||||
Cash End of Period | $ | 0 | $ | 77,504 | ||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Cash Paid during the period for interest | $ | 69,297 | $ | 49,009 | ||||
Cash Paid during the period for taxes | $ | 0 | $ | 0 | ||||
Conversion of class B common stock to class A common stock | $ | 918 | $ | 0 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015
Note 4. Due the Company not producing any revenues from its BLM mining leases since its acquisition of the leases, achieving a position of producing cash flow levels to fund the development of its BLM mining leases in December of 2010 and not having current resources for an appraisal, we recognized an impairment charge of $100,000 during the year ended December 31, 2014.
Principles of Consolidation
The accompanying consolidated financial statements include the financial statements of UMEDGreenway and its wholly-ownedwholly owned subsidiaries. The Company's investment in Jet Regulators is accounted for at cost due to its lack of significant influence. All significant inter-companyintercompany accounts and transactions wereare eliminated in consolidation.
Balance Sheet Accounts | As Previously Stated | Reclassify Mamaki | Correction of Derivative and Stock Valuations | As Restated | ||||||||||||
Cash | $ | 82.400 | $ | (4,896 | ) | $ | 77,504 | |||||||||
Accounts receivable | 780 | (780 | ) | 0 | ||||||||||||
Prepaid expenses | 32,700 | (32,700 | ) | 0 | ||||||||||||
Land | 150,000 | (150,000 | ) | 0 | ||||||||||||
Buildings | 871,842 | (871,842 | ) | 0 | ||||||||||||
Equipment | 1,084,755 | (996,052 | ) | 88,703 | ||||||||||||
Accumulated depreciation | (312,946 | ) | 298,885 | (14,061 | ) | |||||||||||
Mine Properties | 100,000 | (100,000 | ) | 0 | ||||||||||||
Investments | 90,000 | (90,000 | ) | 0 | ||||||||||||
Debt issue costs | 55,427 | (55,427 | ) | 0 | ||||||||||||
Assets related to discontinued operations | 0 | 1,757,643 | 1,757,643 | |||||||||||||
Total | $ | 2,155,214 | $ | 0 | $ | (233,302 | ) | $ | 1,909,789 | |||||||
Accounts payable | $ | 70,568 | $ | (35,582 | ) | $ | 34,986 | |||||||||
Advances from shareholders | 181,272 | 181,272 | ||||||||||||||
Accrued expenses | 733,316 | (579,725 | ) | 153,591 | ||||||||||||
Convertible note payable, net | 136,801 | (89,601 | ) | 47,200 | ||||||||||||
Derivative liability | 0 | 239,789 | 239,789 | |||||||||||||
Term notes | 1,245,211 | (1,245,211 | ) | 0 | ||||||||||||
Liabilities related to discontinued operations | 0 | 1,860,518 | 1,860,518 | |||||||||||||
Total | $ | 4,189,845 | $ | 0 | $ | 150,189 | $ | 4,340,034 | ||||||||
Class B common | $ | 1,574 | $ | 0 | $ | 0 | $ | 1,574 | ||||||||
Class A common | 14,557 | 0 | 0 | 14,557 | ||||||||||||
Additional paid-in-capital | 4,679,538 | 0 | 1,303,515 | 5,983,53 | ||||||||||||
Accumulated deficit | (6,730,300 | ) | 0 | (1,699,129 | ) | (8,429,429 | ) | |||||||||
Total | $ | 2,034,631 | ) | $ | 0 | $ | (383,489 | ) | (2,418,120 | ) |
Statement of Operations | As Previously Stated | Mamaki Reclassification | Correction of Derivative and Stock Valuations | As Restated | ||||||||||||
Sales | $ | 24,581 | $ | (24,581 | ) | 0 | $ | 0 | ||||||||
Cost of sales | 54,696 | (54,696 | ) | 0 | 0 | |||||||||||
Gross profit | (30,115 | ) | (30,115 | ) | 0 | 0 | ||||||||||
Expenses | ||||||||||||||||
General and administrative | 2,092,746 | (415,009 | ) | 563,339 | 2,241,076 | |||||||||||
Research and development | 218,000 | 0 | 0 | 218,000 | ||||||||||||
Depreciation | 119,350 | (118,954 | ) | 0 | 396 | |||||||||||
2,430,096 | (533,963 | ) | 563,339 | 2,459,472 | ||||||||||||
Operating loss Other expenses | (2,460,211 | ) | (564,078 | ) | (563,339 | ) | (2,459,472 | ) | ||||||||
Impairment on investments | 0 | 0 | (190,000 | ) | (190,000 | ) | ||||||||||
Loss on derivative | 0 | 0 | (91,395 | ) | (91,395 | ) | ||||||||||
Interest expense | (225,135 | ) | (150,756 | ) | (842,270 | ) | (928,774 | ) | ||||||||
Operating loss from continuing operations | (2,685,346 | ) | (714,834 | ) | (1,687,004 | ) | (3,669,641 | ) | ||||||||
Loss from discontinued operations | 0 | (714,834 | ) | 0 | (714,834 | ) | ||||||||||
Loss before income taxes | (2,685,346 | ) | 0 | (1,687,004 | ) | (4,384,475 | ) | |||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | ||||||||||||
Net loss | $ | (2,685,346 | ) | $ | (714,834 | ) | (1,687,004 | ) | $ | (4,384,475 | ) | |||||
Basic loss per share | ||||||||||||||||
Operating loss | $ | (0.03 | ) | |||||||||||||
Loss from discontinued operations | $ | (0.00 | ) | |||||||||||||
Statement of Cash Flows Accounts | As Previously Stated | Mamaki Reclassification | Correction of Derivative and Stock Valuations | As Restated | ||||||||||||
Net loss from operations | $ | (2,685,346 | ) | $ | (714,834 | ) | $ | (269,461 | ) | $ | (3,669,641 | ) | ||||
Depreciation | 119,350 | (118,955 | ) | 0 | 395 | |||||||||||
Interest and amortization of debt discounts | 0 | 64,836 | 64,836 | |||||||||||||
Stock issued for services | 738,842 | 0 | 563,409 | 1,302,251 | ||||||||||||
Impairment provisions | 0 | 0 | 190,000 | 19,000 | ||||||||||||
Warrants | 89,568 | 0 | (89,568 | ) | 0 | |||||||||||
Debt issue costs amortized | 0 | 0 | 12,125 | 12,125 | ||||||||||||
Accounts receivable | 900 | (900 | ) | 0 | 0 | |||||||||||
Prepaid expenses | 21,149 | (21,149 | ) | 0 | 0 | |||||||||||
Accounts payable | (9,287 | ) | (10,532 | ) | 0 | (19,819 | ) | |||||||||
Accrued management fees | 493,851 | 0 | 0 | 493,851 | ||||||||||||
Derivative liability | 0 | 0 | 239,789 | 239,789 | ||||||||||||
Accrued expenses | 262,332 | (240,240 | ) | 22,092 | ||||||||||||
Net Cash Provided by Operations | (968,641 | ) | 323,056 | 1,081,812 | (1,455,517 | ) | ||||||||||
Advances and conversions from shareholders | 729,029 | 0 | 798,151 | 1,582,049 | ||||||||||||
Proceeds from convertible note | 136,801 | 0 | (89,601 | ) | 47,200 | |||||||||||
Decrease in notes payable | (120,393 | ) | 90,393 | 0 | (30,000 | ) | ||||||||||
Proceeds from sale of common stock | 336,500 | 0 | 0 | 336,500 | ||||||||||||
Net Cash Provided by Financing | 1,049,855 | 90,393 | 157,859 | 1,935,749 | ||||||||||||
Cash used in discontinued operations | (402,823 | ) | (402,823 | ) | ||||||||||||
Net Increase in Cash | $ | 81,214 | $ | (3,805 | ) | $ | 77,409 |
Business Segments
The Company assessesuses the impairment of long-lived assets whenever events or changes in circumstances indicate that“management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the carrying amount may not be recoverable, in accordance with ASC Topic 360, "Property, Plant and Equipment." An asset or asset group is considered impaired if its carrying amount exceedsbasis for identifying the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized. Due the Company not producing any revenues from its BLM mining leases since its acquisition of the leases, achieving a position of producing cash flow levels to fund the development of its BLM mining leases in December of 2010 and not having current resources for an appraisal, we recognized an impairment charge of $100,000 during the year ended December 31, 2014. The Company will continue to pay the annual renewal fees of $11,160 based on obtaining encouraging results from samples on surface material. Due to reduced growth expectations and the Company not receiving any revenues from its ownership in Jet Tech described in Note 7, we recognized an impairment charge of $90,000 during the year ended December 31, 2014.
Use of Estimates
Preparing financial statements in conformity with accounting principles generally accepted in the United StatesU.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenuerevenues and expenses during the reported period. Actual results could differ materially from those estimates, and those estimates may be material.
Changes in estimates are recorded in the estimates.period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.
Significant estimates during the years ended December 31, 2022 and 2021, respectively, include valuation of stock-based compensation, uncertain tax positions, and the valuation allowance on deferred tax assets.
F-10 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
● | Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
● | Level 2 - Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
● | Level 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
The Company’s financial instruments, including cash, accounts payable and accrued expenses, accounts payable and accrued expenses – related parties, advances and various debt instruments are carried at historical cost. At December 31, 2022 and 2021, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
F-11 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Equity Method Investment
On August 29, 2019, the Company entered into a Material Definitive Agreement related to the formation of OPMGE. The Company contributed a limited license to use its proprietary and patented GTL technology for no actual cost basis in exchange for 42.86% (300 of 700 currently owned member units) revenue interest in OPMGE, expected to be later reduced to a 30% interest upon the completion of certain expected third-party investments for the remaining 300 of 1,000 member units available. However, Greenway never transferred the G-Reformer to OPMGE, as required by the LIMITED LIABILITY COMPANY AGREEMENT OF OPM GREEN ENERGY, LLC. Accordingly, it defaulted on its obligation under the agreement. Since the Wharton Plant is owned by Mabert, OPMGE was no longer a viable entity as of December 31, 2022 and 2021, respectively.
As of December 31, 2022 and 2021, respectively, there were no assets within OPMGE. Accordingly, the Company’s receivable with this entity is fully reserved for as of December 31, 2022 and 2021.
Cash and Cash Equivalent
For purposes of the statements of cash flows, the Company considers all highly liquid investments purchasedinstruments with an originala maturity of three months or less at the purchase date and money market accounts to be cash equivalents. There were
At December 31, 2022 and 2021, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash and cash equivalents atin the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. At December 31, 20152022 and 2014, respectively.2021, respectively, the Company did not have any cash in excess of the insured FDIC limit.
F-12 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 280, "Segment Reporting" requires360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the "management approach" model for segment reporting. The management approach modelassets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the way a company's management organizes segments withinassets’ carrying values and the companyundiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Property and Equipment
Expenditures for making operating decisionsrepair and assessing performance. maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.
Management reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Derivative Liabilities
The Company determined that is had one operating segment, Mamakianalyzes all financial instruments with features of Hawaii, Inc.both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in addition to its corporate activities, which the Company is presentingfair value recorded in the results of operations (other income/expense) as discontinued operations.
Upon conversion or repayment of a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine's production capacity and is not considered to shift the mine into the production phase. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. Due to the Company not producing any revenues from its BLM mining leases since its acquisition of the leases, achieving a position of producing cash flow levels to fund the development of its BLM mining leases in December of 2010 and not having current resources for an appraisal, we recognized an impairment charge of $100,000 during the year ended December 31, 2014. Through December 31, 2015, the Company had not incurred any mine development costs. During the year ended December 31, 2015, the Company incurred $9,166 in costs of obtaining surface samples. Through December 31, 2015, the Company had not incurred any mine development costs.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the leases, achievinginstrument on the reclassification date.
At December 31, 2022 and 2021, respectively, the Company had no derivative liabilities.
F-13 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Debt Discount
For certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded as a positiondebt discount, reducing the face amount of producing cash flow levelsthe note, and is amortized to fundinterest expense over the developmentlife of its BLM mining leasesthe debt, in Decemberthe Consolidated Statements of 2010Operations.
Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and not having current resources for an appraisal, we recognized an impairment chargeamortized to interest expense over the life of $100,000 during the year ended December 31, 2014.
Income Taxes
The Company accounts for income taxes in accordance with FASBtax using the asset and liability method prescribed by ASC 740, "Income Taxes," which requires that the Company recognize“Income Taxes”. Under this method, deferred tax assets and liabilities and assetsare determined based on the differencesdifference between the financial statement carrying amountsreporting and the tax bases of assets and liabilities using enacted tax rates that will be in effect in the yearsyear in which the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in netThe Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax liabilities. A valuation allowanceassets will not be realized. The effect on deferred taxes of a change in tax rates is recordedrecognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of December 31, 2022 and December 31, 2021, respectively, the Company had no uncertain tax positions that somequalify for either recognition or all deferred tax assets will not be realized.
The Company has adopted the provisions of FASB ASC 740-10-05 Accounting for Uncertainty in Income Taxes. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification,recognizes interest and penalties accounting in interim periods, disclosure and transition. Open tax-years subjectrelated to IRS examination include 2009 – 2014.
F-14 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, the Company did not have any issued or outstanding stock options.
Research and Development
The Company accounts for research and development costs in accordance with Accounting Standards CodificationASC subtopic 730-10, Research and Development (" (“ASC 730-10"730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.
The Company incurred research and development expenses of $766,726$54,275 and $218,000 during$158,000 for the years ended December 31, 20152022 and 2014,2021, respectively.
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
● | Exercise price, |
● | Expected dividends, |
● | Expected volatility, |
● | Risk-free interest rate; and |
● | Expected life of option |
F-15 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Stock Warrants
In connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of Common Stock
Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future.
Schedule Of Potentially Dilutive Equity Securities
December 31, 2022 | December 31, 2021 | |||||||
Convertible debt | 3,689,400 | 2,083,338 | ||||||
Warrants | - | 3,000,000 | ||||||
Potentially dilutive equity securities | 3,689,400 | 5,083,338 |
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.
Related parties also include principal owners of Newthe Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Recent Accounting Standards
Changes to accounting principles are established by the Financial Accounting Standards Board in the form of Accounting Standards Updates (“ASU’s”) to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management does not believe that any other recentlyhas evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, ifwhen adopted, wouldwill have a material impact on the financial statements of the Company.
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation.
The Company combined various accrued liabilities into one caption called accounts payable and accrued expenses.
The Company combined various accrued liabilities with related parties into one caption called accounts payable and accrued expenses – related parties.
The Company separately disclosed its notes payable and convertible notes payable.
The Company separately reflected amortization of debt discount from general and administrative expenses.
These reclassifications had no effect on the accompanying consolidated financial statements.results of operations, stockholders’ deficit, or cash flows.
F-16 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Note 3 – Notes Payable
Notes payable and related terms were as follows:
Schedule of Notes Payable and Related Terms
1 | 2 | 3 | ||||||||||
Terms | Note Payable | Note Payable | Note Payable | |||||||||
Issuance date of note | September 2019 | March 2019 | May 2022 | |||||||||
Maturity date | September 2022 | March 2024 | September 2022 | |||||||||
Interest rate | 7.70 | % | N/A | N/A | ||||||||
Default interest rate | 18.00 | % | N/A | N/A | ||||||||
Collateral | Unsecured | Unsecured | Unsecured | |||||||||
Original amount | $ | 525,000 | $ | 300,000 | $ | 67,500 |
1 | 2 | 3 | Total | In-Default | ||||||||||||||||
Total | In-Default | |||||||||||||||||||
Balance - December 31, 2020 | $ | 525,000 | $ | 195,000 | $ | - | $ | 720,000 | $ | - | ||||||||||
Repayments | - | (60,000 | ) | - | (60,000 | ) | ||||||||||||||
Balance - December 31, 2021 | 525,000 | 135,000 | - | 660,000 | - | |||||||||||||||
Beginning balance | 525,000 | 135,000 | - | 660,000 | - | |||||||||||||||
Proceeds | - | - | 67,500 | 67,500 | ||||||||||||||||
Debt discount | - | - | (37,500 | ) | (37,500 | ) | ||||||||||||||
Amortization of debt discount (interest expense) | - | - | 37,500 | 37,500 | ||||||||||||||||
Repayments | - | (55,000 | ) | - | (55,000 | ) | ||||||||||||||
Balance - December 31, 2022 | $ | 525,000 | $ | 80,000 | $ | 67,500 | $ | 672,500 | $ | 592,500 | ||||||||||
Ending balance | $ | 525,000 | $ | 80,000 | $ | 67,500 | $ | 672,500 | $ | 592,500 |
1 | The Company executed a settlement agreement with a third party for $525,000 in 2019. This note requires semi-annual interest payments. At December 31, 2022, the note is in default. |
2 | The Company executed a settlement agreement with a third party for $300,000 in 2019. This note requires sixty (60) monthly installments of $5,000 each until paid in full. |
3 | The Company executed a note for $67,500 and received net proceeds of $30,000. The balance of $37,500 was an original issue discount amortized over the life of the note. At December 31, 2022, the note is in default. |
F-17 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Note 4 – Notes Payable – Related Parties
The Company executed a loan agreement for up to $5,000,000 in advances with a Company owned by a stockholder and who is the brother of the Company’s Chief Financial Officer as well as a member of the Board of Directors.
The Company also has executed various loans with other stockholders and members of the Board Directors.
The notes bear interest ranging from 10% - 18%. The notes all have initial one-year (1) dates to maturity and are automatically renewed for one-year (1) periods upon maturity. As a result, none of the notes payable - related parties are in default.
Typically, with each of these notes, the Company has issued shares of common stock, which have been recognized as a debt discount and amortized over the life of the note.
During 2022, the Company issued 1,991. shares of common stock under these arrangements and recoded a corresponding debt discount of $
During 2021, the Company issued 30,791. shares of common stock under these arrangements and recorded a corresponding debt discount of $
Notes payable – related parties consist of loans from various members of management and the Board of Directors, typically for use as working capital. Related terms were as follows:
Schedule of Notes Payable – Related Parties and Related Terms
Balance - December 31, 2020 | $ | 2,411,605 | ||
Debt discount | (30,791 | ) | ||
Amortization of debt discount (interest expense) | 35,202 | |||
Conversion of stockholder advances to notes payable - related parties | 74,920 | |||
Proceeds | 354,328 | |||
Repayments | (100,000 | ) | ||
Balance - December 31, 2021 | 2,745,264 | |||
Beginning balance | 2,745,264 | |||
Conversion of stockholder advances to notes payable - related parties (see Note 6) | 51,769 | |||
Debt discount | (1,991 | ) | ||
Amortization of debt discount (interest expense) | 10,732 | |||
Balance - December 31, 2022 | $ | 2,805,774 | ||
Ending balance | $ | 2,805,774 |
F-18 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Note 5 – CONTRACT RECEIVABLE
Convertible note payable and related terms were as follows:
Schedule of Convertible note payable and Related terms
Convertible | ||||
Terms | Note Payable | |||
Issuance dates of note | 2017 | |||
Maturity date | 2019 | |||
Interest rate | 4.50 | % | ||
Default interest rate | 18.00 | % | ||
Collateral | Unsecured | |||
Conversion rate | $ | 0.08/share |
In-Default | ||||||||
Balance - December 31, 2020 | $ | 166,667 | $ | 166,667 | ||||
No activity in 2021 | - | |||||||
Balance - December 31, 2021 | 166,667 | 166,667 | ||||||
No activity in 2022 | - | |||||||
Balance - December 31, 2022 | $ | 166,667 | $ | 166,667 |
Note 6 – Advances – Related Parties
Advances – related parties and related terms were as follows:
Schedule of Advances – Related Parties and Related Terms
Advances | ||||
Terms | Related Parties | |||
Issuance date of advances | Prior to 2018 | |||
Maturity date | Due on Demand | |||
Interest rate | 0 | % | ||
Collateral | Unsecured | |||
Balance - December 31, 2020 | $ | 142,934 | ||
Conversion of stockholder advances to notes payable - related parties | (74,920 | ) | ||
Balance - December 31, 2021 | 68,014 | |||
Proceeds | 3,500 | |||
Conversion of stockholder advances to notes payable - related parties (see Note 4) | (51,769 | ) | ||
Subscription receivable - warrants | (16,245 | ) | ||
Balance - December 31, 2022 | $ | 3,500 |
During 2022, in connection with a settlement, the Company completedreduced amounts owed to a stockholder for $16,245 with a corresponding reduction to a subscription receivable for warrants.
Note 7 – Commitments
Legal Matters
On October 19, 2019, the sale (entered into on October 1, 2015)Company was served with a lawsuit by Norman Reynolds, a previously engaged counsel by the Company. The suit was filed in Harris County District Court, Houston, Texas, asserting claims for unpaid fees of its wholly owned subsidiary, Mamaki$90,377. While fully reserved, Greenway vigorously disputes the total amount claimed. Greenway has asserted counterclaims based upon alleged conflicts of Hawaii, Inc., ("Mamaki") to Hawaiian Beverages, Inc. ("HBI"). Under the agreement, HBI acquired 100%interest, breaches of fiduciary duty and violations of the common stock of Mamaki in exchange for seven hundred thousand dollars ($700,000)Texas Deceptive Trade Practices Act (“DTPA”).
On November 17, 2021, Greenway and Mr. Reynolds settled the assumption of eighty-four thousand two hundred seventy- five thousand dollars ($84,275) of UMED debts. HBI paid two hundred forty-five thousand five hundred dollars ($245,400) at closing towards the first installment due of two hundred fifty thousand ($250,000), resulting in a receivable of $454,600 at December 31, 2015. The Company has not received any payment on the $454,600 and has determined that collection is doubtful and wrote the account off at December 31, 2015 as a reductionmatter agreeing to the gain calculated on the sale.
Range of | ||||||||||||
Lives in | ||||||||||||
Years | 2015 | 2014 | ||||||||||
Equipment | 5 | 2,032 | 13,220 | |||||||||
Logistix software | 5 | 0 | 73,500 | |||||||||
Furniture and fixtures | 5 | 1,983 | 1,983 | |||||||||
4,015 | 88,703 | |||||||||||
Less accumulate depreciation | (3,271 | ) | (14,061 | ) | ||||||||
$ | 744 | 74,642 | ||||||||||
Depreciation expense for the year ended | $ | 396 | $ | 297 |
On September 7, 2021, the balance of its Logistix softwareCompany was served with a demand for mediation and $11,188
F-19 |
2015 | 2014 Restated | |||||||
Jet Tech LLC In October 2011, the Company acquired a 49% interest in JetTech LLC which is an aerospace maintenance operation located at Meacham Airport in Fort Worth, Texas -The Company has impaired the investment at December 31, 2015 and 2014, respectively, | $ | 0 | $ | 0 | ||||
TOTAL INVESTMENTS | $ | 0 | $ | 0 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Note 8 – CONVERTIBLE PROMISSORY NOTE
The Company has one (1) class of stock:
Common Stock
- | shares authorized | |
- | $ par value | |
- | Voting at 1 vote per share |
Equity Transactions for the Year Ended December 31, 2022
Stock Issued as Debt Issue Costs
The Company issued a $158,000 convertible promissory note bearing interest at 10.0% per annum to an accredited investor, payable July 23, 2015, in monthly installments of $31,600 plus accrued interest beginning 6 months after the date of this promissory note. The note was paid in full on July 22, 2015. The holder had the right under certain circumstances to convert the note into common stock of the Company at a conversion price equal to 70% of the average of the 3 lowest volume weighted average trading prices during the 20-day period ending on the latest complete trading day prior to the conversion date.
Stock Issued for Cash
The Company issued 482,200 ($ - $ /share). Of the Company recorded debt issue cost and discount as follows: shares of common stock for $
Stock Issued for Settlement of $158,000, resulting in a disbursement of $144,000 to the company.
2015 | 2014 Restated | |||||||
Accrued consulting fees | $ | 229,000 | $ | 144,500 | ||||
Bank overdraft | 763 | 0 | ||||||
Accrued interest expense | 0 | 9,091 | ||||||
Total accrued expenses | $ | 229,763 | $ | 153,591 |
The Company is authorized to issue 300,000,000issued shares of class A common stock with a parin settlement of accrued liabilities totaling $155,000 ($ /share). The fair value of $.0001 per share and 20,000,000these shares of class B stockwas based upon the quoted closing trading price. In connection with a par value of $.0001 per share. Each common stock share has one voting right and the right to dividends, if and when declared by the Board of Directors.
Stock Issued for Services
The Company issued 5,921,992 shares of restricted class A common stock to eighteen individuals through private placements for cash of $450,910 at average of $0.076 per share.
Stock to be Issued
The Company entered into subscription agreements with individuals and sold 550,000 shares of restricted class A common stock for $67,000 cash, or $0.122 per share.
Equity Transactions for the period from April 1, 2014 through June 30, 2014, theYear Ended December 31, 2021
Stock Issued as Debt Issue Costs
The Company issued 2,216,233 shares of restricted class A common stock valued at $613,762in connection with the issuance of notes payable – related parties. The fair value of these shares was $54,986 ($ /share), based upon the quoted closing trading price.
Stock Issued for conversion of advances from shareholder, or $0.277 per share.
The Company issued 1,645,000 shares of restricted class Acommon stock for $656,500 ($ - $ /share).
Stock Issued for Services
The Company issued rendered. The shares were valued at $385,050, or $0.234 per share. shares of common stock for services
F-20 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
2015 | 2014 | |||||||
Current | $ | - | $ | - | ||||
Deferred | - | - | ||||||
Total tax provision for (benefit from) income taxes | $ | - | $ | - |
Schedule of the provision for incomeWarrant Activity
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | Aggregate | ||||||||||||||
Number of | Average | Contractual | Intrinsic | |||||||||||||
Warrants | Exercise Price | Term (Years) | Value | |||||||||||||
Outstanding - December 31, 2020 | 7,000,000 | $ | 0.10 | $ | - | |||||||||||
Vested and Exercisable - December 31, 2020 | 7,000,000 | $ | 0.10 | $ | - | |||||||||||
Granted | - | $ | - | - | - | |||||||||||
Exercised | - | $ | - | - | - | |||||||||||
Cancelled/Forfeited | (4,000,000 | ) | $ | 0.15 | - | - | ||||||||||
Outstanding - December 31, 2021 | 3,000,000 | $ | 0.03 | $ | - | |||||||||||
Vested and Exercisable - December 31, 2021 | 3,000,000 | $ | 0.03 | $ | - | |||||||||||
Unvested - December 31, 2021 | - | $ | - | - | $ | - | ||||||||||
Granted | - | $ | - | - | ||||||||||||
Exercised | - | $ | - | - | ||||||||||||
Cancelled/Forfeited | (3,000,000 | ) | $ | 0.03 | - | |||||||||||
Outstanding - December 31, 2022 | - | $ | - | - | $ | - | ||||||||||
Vested and Exercisable - December 31, 2022 | - | $ | - | - | $ | - | ||||||||||
Unvested and non-exercisable - December 31, 2022 | - | $ | - | - | $ | - |
Note 10 – Income Taxes
The Company’s tax expense atdiffers from the federal statutory“expected” tax expense for the period (computed by applying the corporate tax rate of 34% for the years ended December21% to loss before taxes), are approximately as follows:
Schedule of Components of Income Tax Expense Benefit
December 31, 2022 | December 31, 2021 | |||||||
Federal income tax benefit - 21% | $ | (311,000 | ) | $ | (366,000 | ) | ||
Non-deductible items | (15,000 | ) | - | |||||
Subtotal | (326,000 | ) | (366,000 | ) | ||||
Change in valuation allowance | 326,000 | 366,000 | ||||||
Income tax benefit | $ | - | $ | - |
F-21 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015 and 2014 the Company's effective rate is as follows:
2015 | 2014 | |||||||
Federal statutory rate | (34.0 | ) % | (34.0 | ) % | ||||
State tax, net of federal benefit | (0.0 | ) | (0.0 | ) | ||||
Permanent differences and other including surtax exemption | 0.0 | 0.0 | ||||||
Valuation allowance | 34.0 | 34.0 | ||||||
Effective tax rate | 0.0 | % | 0.0 | % |
The nettax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities included in the financial statements consist of the following amounts at December 31, 20152022 and December 31, 2014:
2015 | 2014 Restated | |||||||
Deferred tax assets | ||||||||
Net operating loss carry forwards | $ | 4,028,702 | $ | 4,384,475 | ||||
Deferred compensation | 2,409,213 | 1,966,523 | ||||||
Stock based compensation | 4,898,968 | 1,887,431 | ||||||
Other | 1,121,248 | 191,000 | ||||||
Total | 12,458,131 | 8,429,429 | ||||||
Less valuation allowance | (12,458,131 | ) | (8,429,429 | ) | ||||
Deferred tax asset | - | - | ||||||
Deferred tax liabilities | ||||||||
Depreciation and amortization | $ | - | $ | - | ||||
Net long-term deferred tax asset | $ | - | $ | - |
Schedule of Deferred Tax Assets and Liabilities
December 31, 2022 | December 31, 2021 | |||||||
Deferred Tax Assets | ||||||||
Amortization of debt discount | $ | (10,000 | ) | $ | - | |||
Share based payments | (6,000 | ) | - | |||||
Other | (1,184,000 | ) | 1,184,000 | |||||
Net operating loss carryforwards | 4,910,000 | 5,785,000 | ||||||
Total deferred tax assets | 3,710,000 | 6,969,000 | ||||||
Less: valuation allowance | (3,710,000 | ) | (6,969,000 | ) | ||||
Net deferred tax asset recorded | $ | - | $ | - |
Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the valuation allowance was $4,028,702gross amounts of temporary differences and $4,384,475 for the years ended December 31, 2015 and 2014, respectively. The Company has recorded a 100% valuation allowance related toother tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax asset forassets will be realized, the loss from operations, interest expense, interest income and other income subsequent to the change in ownership, which amounted to $12,458,131 and $8,429,429 at December 31, 2015 and 2014, respectively.
During the scheduled reversalyear ended December 31, 2022 the valuation allowance decreased by approximately $3,259,000. The total valuation allowance results from the Company’s estimate of its uncertainty in being unable to recover its net deferred tax liabilities, historical taxable income including availableassets.
At December 31, 2022, the Company has federal net operating loss carry forwardscarryforwards, which are available to offset future taxable income, of approximately $23,380,000. The Company is in the process of analyzing their NOL and has not determined if the Company has had any change of control issues that could limit the future use of these NOL’s.
NOL carryforwards that were generated after 2017 of approximately $23,380,000 may only be used to offset 80% of taxable income and projectedare carried forward indefinitely.
These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in making this assessment.
If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, payment onwill not impact the $454,600Company’s effective tax rate.
The Company files corporate income tax returns in the United States and has determined thatTexas jurisdictions. Due to the collectionCompany’s net operating loss posture, all tax years are open and subject to income tax examination by tax authorities. The Company’s policy is doubtfulto recognize interest expense and wrote the receivable off atpenalties related to income tax matters as tax expense. At December 31, 2015 against2022 and 2021, respectively, there were no unrecognized tax benefits, and there are no significant accruals for interest related to unrecognized tax benefits or tax penalties.
As of December 31, 2022, the gain calculated onCompany had not filed any corporate tax returns since the sale.
Mamaki of Hawaii historical operations | $ | 2,008,794 | ||
Contract receivable from Hawaiian Beverages | 700,000 | |||
UMED note payable assumed by Hawaiian Beverages | 64,697 | |||
Write off Mamaki of Hawaii Intercompany receivable | (777,255 | ) | ||
Write off UMED investment in Mamaki of Hawaii stock | (778,430 | ) | ||
Write off contract receivable | (454,600 | ) | ||
Gain from discontinued operations for 2015 | $ | 763,206 |
2015 | 2014 | |||||||
Sales | $ | 47,275 | $ | 24,581 | ||||
Cost of sales | 8,407 | 54,696 | ||||||
Gross profit | 38,868 | (30,115 | ) | |||||
Operating Expenses: | ||||||||
General and administrative expenses | 395,824 | 415,009 | ||||||
Depreciation | 89,218 | 118,954 | ||||||
Total Operating Expenses | 485,042 | 533,963 | ||||||
Operating Loss | (446,174 | ) | (564,078 | ) | ||||
Other Income (Expense) | ||||||||
Interest expense | (115,238 | ) | (150,756 | ) | ||||
Loss from discontinued operations | $ | (561,412 | ) | $ | (714,834 | ) | ||
Loss per share – discontinued operations | $ | (0.00 | ) | $ | (0.00 | ) | ||
Note 11 – Subsequent Events
Subsequent to December 31, 2014;
12/31/2014 | ||||
Current assets relating to discontinued operations: | ||||
Cash | $ | 5,153 | ||
Accounts receivable | 780 | |||
Prepaid expenses and deposits | 32,700 | |||
Property, plant and equipment, net | 1,719,009 | |||
Total assets related to discontinued operations | $ | 1,757,643 | ||
Current liabilities relating to discontinued operations: | ||||
Bank overdrafts | $ | 4,896 | ||
Notes payable | 1,245,211 | |||
Accounts payable | 35,582 | |||
Accrued interest payable | 36,450 | |||
Accrued expenses | 538,380 | |||
Total liabilities related to discontinued operations | $ | 1,860,518 |
Stock Issued for Cash
The Agreements are for a term of 5 years with compensation of $180,000 the first year, $240,000 the second year, $300,000 the third year, $350,000 the four2th year and the fifth year at a salary commensurate with those in similar industries. The employment agreements also provide for the officers to receive 1,250,000Company issued shares of restricted common stock annually for each year of the employment agreement. During the years ended December 31, 2015 and 2014, with consent of management, the Company accrued a total of $405,000 and $360,000, respectively, as management fees in accordance with the terms of these agreements. On April 8, 2015, the Company's chief executive officer resigned and relinquished his claim to receive $518,300 of deferred compensation, which the Company treated as debt forgiveness.
The Company is obligated to pay approximately $11,800 in annual maintenance fees on its mining leases, in addition to 10% royalties based on production.
Stock Issued for Services
The Company currently is not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
F-22 |