SECURITIES AND EXCHANGE COMMISSION
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.(Mark one)
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. 2023or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to
COMMISSION FILE NO.: 33-55254-38
GENERAL ENVIRONMENTAL MANAGEMENT, INC.
(Exact name of small business issuer as specified in its charter)
__________Commission File Number: 000-56567
Nevada | | 87-0485313General Enterprise Ventures, Inc. |
(Exact name of registrant as specified in its charter) |
Wyoming | | 87-2765150 |
(State or other jurisdiction of incorporation or organization)incorporation) | | (I.R.S. Employer Identification No.) |
| | |
3191 Temple Ave., Suite 250, Pomona, CA | | 91768 |
(Address of principal executive offices) | | (Zip Code) |
(909) 444-9500
1740H Del Range Blvd., Suite 166
Cheyenne, WY 82009
(Registrant's Telephone Number, Including AreaAddress of principal executive offices) (Zip Code)
| |
Securities registered under Section 12(b) of the Act: | Securities registered under Section 12(g) of the Act: |
| |
None | Common Stock, Par Value $.001
(Title of Class)
|
(800) 401-4535
Registrant’s telephone number, including area code.
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock, $0.0001 par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. oYes x☐ 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. oYes x☐ 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. xYes o☒ No
☐Indicate by check mark if disclosure of delinquent filerswhether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to ItemRule 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part IIIS-T (§ 232.405 of this Form 10-K or any amendmentchapter) during the preceding 12 months (or for such shorter period that the registrant was required to this Form 10-K. o
submit such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated file,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"” “accelerated filer,” “smaller reporting company,” and "smaller reporting"emerging growth company" in Rule 12b-2 of the Exchange Act.
| | Accelerated filero | ☐ |
Non-accelerated filer o (Do not check if a smaller reporting company) | | Smaller reporting companyx | ☒ |
| | 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 Ex- change Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes x☐ No
The ☒At June 30, 2023, the aggregate market value of the registrant's shares ofregistrant’s common stock held by non-affiliates of the registrant was approximately $10,500,000 based on the closing sale price of the registrant’s common stock on June 30, 2009, based on $ 0.902023 of $0.4425 per share, the last price at which theshare.
The total number of shares of registrant’s common equity was sold by the registrantstock outstanding as of that date,April 2, 2024, was $11,368,018.
As of December 31, 2009 there were 14,557,653 shares of the issuer's $.001 par value common stock issued and outstanding.
Documents incorporated by reference. There are no annual reports to security holders, proxy information statements, or any prospectus filed pursuant to Rule 424 of the Securities Act of 1933 incorporated herein by reference.
GENERAL ENVIRONMENTAL MANAGEMENT, INC.
2009 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
36,302,150. | Part I | Page No. |
| Item 1Business | 3 |
Item 1A | Risk Factors | 10 |
Item 1B | Unresolved Staff Comments | 20 |
Item 2 | Properties | 20 |
Item 3 | Legal Proceedings | 21 |
Item 4 | Submission of Matters to a Vote of the Security Holders | 21 |
| | |
| Part II
|
|
TABLE OF CONTENTS
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Part IV | | 2 |
Item 15 | Exhibits and Financial Statement Schedules | 39 |
| Table of Contents | Signatures | 40 |
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Annual ReportThis report contains forward-looking statements. The Securities and Exchange Commission encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This report and other written and oral statements which are generally identifiablethat we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by useusing words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results.
We caution that the factors described herein, and other factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the words "believes," "expects," "intends," "anticipates," "plansdate on which such statement is made, and we undertake no obligation to" "estimates," "projects," update any forward-looking statement to reflect events or similar expressions. These forward-looking statements are subjectcircumstances after the date on which such statement is made or to certain risksreflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and uncertainties that couldit is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those reflectedcontained in theseany forward-looking statements. Factors
PART I
Item 1. Business.
General Enterprise Ventures, Inc., (“GEVI,” “we,” “us,” or the “Company”) was originally incorporated in Nevada on March 14, 1990. Our offices are located at 1740H Del Range Blvd., Suite 166, Cheyenne, Wyoming 82009. Our telephone number is (800) 401-4535. Our website is www.generalenterpriseventures.com and www.mightyfirebreaker.com.
We do not incorporate the information on or accessible through our website into this Registration Statement, and you should not consider any information on, or that might cause suchcan be accessed through, our website a difference include, butpart of this Registration Statement.
We are not limitedan environmentally sustainable flame retardant and flame suppression company for the residential home industry throughout the United States and international markets. Management is experienced at business integration and branding potential. The Company is bringing to those discussedthe marketplace unique, disruptive products with significant environmental impact potential.
We operate one line of business. The Company acquired Mighty Fire Breaker, LLC on April 13, 2022, and formed Mighty Fire Breaker UK Ltd. on November 14, 2022 (collectively, “MFB”). MFB owns 39 patents and patents pending for environmentally sustainable flame retardant and flame suppression industry. MFB’s products are currently being sold to fire departments in the section entitled “Management’s DiscussionState of California.
Our management is comprised of three individuals, Joshua Ralston, who acts as our President, Chief Executive officer, Chief Financial Officer and Analysis of Financial Condition and Results of Operations." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only asChairman of the date hereof. We undertake no obligationBoard of Directors, John Costa who serves on the Board of Directors, and Jeffery Pomerantz, who serves on the Board of Directors. It should also be noted that Mr. Ralston has sufficient voting power through his ownership of Series A Preferred Stock with super voting rights to revise or publicly releasecontrol the results of any revision to these forward-looking statements. Readers should carefully review the risk factors described in other documents General Environmental Management, Inc. files from time to time with the Securities and Exchange Commission (the "SEC").
PART I
ITEM 1. Description of Business
Company Background
General Environmental Management, Inc. formerly, vote on substantially all corporate matters.Corporate History
Ultronics Corporation (the "Company"“UC”) was incorporated under the laws of the State of Nevada on March 14, 1990. The Company did not haveUC never had operations from its inception until February 2005, as itand was formed to investigate potential companies that would be interested in merging with it.
On December 21, 2004, UC formed a subsidiary, Ultronics Acquisition Corporation (“UAC”) for the primary purpose of seekingfacilitating an appropriate merger candidate.
agreement and plan of merger. UAC was incorporated in the State of Nevada. On December 23, 2004, UC, UAC and General Environmental Management, Inc. (“GEM”) entered into an Agreement and Plan of Merger whereby UAC would be merged into GEM (“Merger”) with GEM to be the surviving corporation. On February 14, 2005,
we acquired all the outstanding sharesa Certificate of
General Environmental Management, Inc.,Merger was filed in Delaware; however, there is no evidence of a
Delaware corporation (“Certificate of Merger being filed in Nevada. As such, GEM
DE”)did not cease to exist in
exchange for 630,481 shares of our class A common stock and as a result, GEM DE became a wholly owned subsidiary of Ultronics. Nevada.The acquisition has beenwas treated as a reverse merger (recapitalization) with GEM DE deemed to be the accounting acquirer,acquiror, and UltronicsUAC the legal acquirer. We thenacquiror. UAC’s name was changed our parent name to General Environmental Management, Inc. (the “Company”) on March 16, 2005.
Prior to the merger, GEM DE acquired:
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| Hazpak Environmental Services, Inc. (HES), |
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| the assets of EnVectra, Inc. (EnV), |
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| the assets of Firestone Environmental Services Company (dba Prime Environmental Services Company), and Firestone Associates, Inc. (dba Firestone Energy Company), and |
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| 100% of the membership interest in Pollution Control Industries of California, LLC. |
Hazpak (HES) was organized as a partnership in February of 1991 specializing in packaging hazardous waste for other hazardous waste management companies. In July of 1992, HES incorporated under the laws of California as Hazpak, Inc. On August 7, 2002 Hazpak, Inc. changed is name to Hazpak Environmental Services, Inc. In March 2003, GEM DE acquired HES.
On June 23, 2004, we acquired all of the membership interest in Pollution Control Industries of California, LLC. The primary asset of Pollution Control Industries of California, LLC was the real property on which a fully permitted, Part B treatment, storage, disposal facility (TSDF) in Rancho Cordova, California was located. The facility provides service for other environmental service companies and allows us to consolidate waste for more cost effective outbound treatment. Pollution Control Industries of California, LLC changed its name to General Environmental Management of Rancho Cordova, LLC on June 25, 2004.
On July 18, 2003, we acquired the assets of EnVectra, Inc., which included internet-based integrated environmental management software now marketed by us as GEMWare.
On August 1, 2004, we acquired the assets of Prime Environmental Services, Inc. of El Monte, California which resulted in a significant increase in our revenues and a presence in the states of Washington and Alaska through Prime’s Seattle office along with additional clients and revenue in California. All Prime services are now offered under the “General Environmental Management, Inc.” name.
Prior to the acquisition of GEM DE by the Company, GEM DE focused its efforts in the second half of 2004 on integration of the above noted purchases and on continued internal growth. During the first quarter of 2005, we adjusted our operations to achieve greater efficiencies at the TSDF and at our field service locations.
MTS Acquisition and Sale
On March 10, 2006, the Company entered into aan Agreement with K2M Mobile Treatment Services, Inc. of Long Beach, California ("K2M"(“K2M”), a privately held company, pursuant to which the Company acquired all of the issued and outstanding common stock of K2M. K2M is a California-based provider of mobile wastewater treatment and vapor recovery services. In consideration of the acquisition of the issued and outstanding common stock of K2M Company paid $1.5 million in cash to the stockholders of K2M. As a result of the agreement, K2M became a wholly-owned subsidiary of the Company. For purposes of accounting for the acquisition of the business of K2M, the effective date of the agreement was March 1, 2006. On August 8, 2006 K2M changed its name to GEM Mobile Treatment Services, Inc.
On August 17, 2009, the Company entered into a Stock Purchase Agreement ("MTS Agreement") with MTS Acquisition Company ("MTS"), a privately held company, pursuant to which the Company sold all of the issued and outstanding common stock of GEM Mobile Treatment Services, Inc. (“GEM MTS”).
GEM MTS was purchased by MTS, a corporation owned by two former senior executives of the Company. Consideration for the sale was in the form of a promissory note in the aggregate amount of $5.6 million, the assumption by MTS of approximately $1.0 million of accounts payable and possible future royalties. The consideration was immediately assigned by Company to CVC California, LLC ("CVC"), the Company's senior secured lender. As the notes are paid to CVC, the Company's indebtedness to CVC will be reduced. Total reduction in indebtedness to CVC could amount to more than $7 million.
The promissory note for $5,600,000 bears interest at 8%. On the first day of each calendar month commencing September 1, 2009 through and including August 1, 2010, accrued interest on the outstanding principal is due and payable. Thereafter, principal and interest under this Note is payable in thirty-six (36) consecutive equal monthly installments of principal and interest of $174,321.50 each, with the first installment due and payable on September 1, 2010, and with subsequent installments due and payable on the first day of each calendar month thereafter through and including August 1, 2013.
All or any portion of the unpaid principal balance of this Note, together with all accrued and unpaid interest on the principal amount being prepaid, may at the MTS’s option be prepaid in whole or in part, without premium or penalty.
The Company also entered into a revolving credit agreement with MTS which is collateralized by accounts receivable. The revolving credit note has a maximum value of $700,000 and bears interest at the greater of (a) the Prime Rate as in effect from time to time plus two (2%) percent, or (b) ten (10%) percent.
Concurrent with the closing of the sale of GEM MTS, the Company assigned with full recourse and full representation and warranty of title and ownership the promissory note, the revolving credit agreement and the revolving credit note to CVC California, LLC, the Company’s senior lender.
The Company also entered into a subordinated collateral agreement with GEM MTS in order to secure potential obligations related to indemnification payments it may hereafter become obligated to make to MTS in accordance with the MTS Agreement.
Island Acquisition
On August 31, 2008, GEM DEthe Company entered into an agreement with Island Environmental Services, Inc. of Pomona, California ("Island"(“Island”), a privately held company, pursuant to which GEM DEThe Company acquired all of the issued and outstanding common stock of Island, a California-based provider of hazardous and non-hazardous waste removal and remediation services to a variety of private and public sector establishments. In consideration of the acquisition of the issued and outstanding common stock of Island, the Company paid $2.25 million in cash to the stockholders of Island and issued $1.25 million in three year promissory notes (“Island Notes”).
Island is a wholly owned subsidiary of GEM DE and is part of the assets of GEM DE being sold to the Buyer. However, the Company has assumed the obligation to pay the balance of the Island Notes.
Acquisition of California Living Waters Incorporated
CLW Business Description
History
On November 6, 2009, the Company entered into a Stock Purchase Agreement ("(“CLW Agreement"Agreement”) with United States Environmental Response, LLC, a California limited liability company pursuant to which the Company has purchased all of the issued and outstanding capital stock of California Living Waters, Incorporated ("CLW"(“CLW”), a privately held company. CLW ownsowned all of the issued and outstanding capital stock of Santa Clara Waste Water Company (SCWW"(“SCWW”) a California corporation. CLW's only operating subsidiary iswas SCWW.
Management at the Company has been aware of SCWW for the past three years. The Company has used SCWW as a vendor for treatment and disposal of certain non-hazardous waste streams during the past three years. During that time frame management developed a professional relationship with SCWW’s ownership. It became apparent to both companies that there was the potential for a closer relationship where the Company would acquire SCWW. However there were never any serious discussions until the end of 2008 as the Company was not in the position to make the acquisition. In November 2008 the Company and SCWW agreed to pursue further discussions regarding a potential acquisition and executed a Letter of Intent (LOI) for the acquisition contingent on financing. Because of the market collapse in the fourth quarter of 2008 no financing commitments were received and the LOI was withdrawn. In March of 2009 further discussions continued with another LOI executed, again contingent on financing which was not forthcoming and in April 2009 the discussions were abandoned and the LOI withdrawn. Finally discussions resumed in July and August 2009 culminating in an executed LOI on September 19, 2009 with the transaction closed on November 13, 2009, primarily due to internal financing.
Background
The high demands on water resources and landfills resulting from increased industrialization and population growth are problems facing the Southern California marketplace which SCWW serves and the global community. Santa Clara Waste Water Company ("SCWW"), was formed in 1959 for the treatment of non-hazardous wastewater in southern California.
SCWW's primary processing facility (the "Facility"), is located on a 4.87 acre parcel in Santa Paula, Ventura County, California and sits 65 miles north of downtown Los Angeles and approximately 70 miles southwest of California's oil and gas rich Kern County. The facility has the annual capacity to process 80 million gallons of domestic, industrial and oil and gas-related wastes generated by customers located within a 250 mile radius of the Facility. New customers receive approval after an independent laboratory tests the wastewater for compatibility with the Facility's treatment protocols. Once approved and scheduled, every shipment received is tested again prior to unloading to ensure compliance. Since 2007, the Facility received the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) designation, from the Federal Environmental Protection Agency making it the sole California disposal site for "Superfund" non-hazardous wastewater.
SCWW also owns and operates a 12.7 mile, 10" pipeline (the "Pipeline") that transports domestic wastewater which has been processed at the Facility to the municipal wastewater treatment facility located in Oxnard, California.
The Non-Hazardous Wastewater Business
General Background
According to US Department of Commerce statistics the water and wastewater industry is generally estimated to be around $90 billion to $100 billion per year with the world market being about five times larger, or around $500 billion annually. American industry and households produce a growing and significant volume of non-hazardous wastewater annually, all of which, depending on the effluent source, is required to be remediated and disposed of in compliance with some combination of federal, state and local regulation. The Company believes that SCWW has the required permits, treatment capabilities and staff to manage the high demands on water resources resulting from increased industrialization and population growth in the Southern California market.
The following categorization of wastewaters provides a partial listing of the breadth of non-hazardous waste streams that exist:
Non-Hazardous Wastewater Accepted for Treatment by SCWW
• Bilge/Ballast Water
• Boiler Blowdowns Water
• Boiler Sludge Water
• Brine Water
• Car Wash Wastewater
• Chemical Toilet Wastewater
• Clarifier Wastewater
• Construction Wastewater
• Cooling Tower Water
• Cutting/Polishing Water
• Equipment Decon Water
• Facility Cleaning Water
• Filtrate Water
• Filtration Media Water
• Floor Cleaning Water
• Graphite Wastewater
• Grey Water
• Groundwater
• Heater Mineral Sediment Water
• Hydroblast Wastewater
• Hydrocarbon Water
• Hydrostatic Test Water
• Injection Molding Water
• Muddy Wastewater
• Oilfield Wastewater
• Oily Wastewater
• Pipeline Flush Wastewater
• Process Water
• Produce Wash Water
• Rainwater Runoff
• Scrubber Wastewater
• Septic Wastewater
• Site Decon Water
• Soapy Waters
• Swimming Pool Water
• Tank Bottom Water
• Tank Cleaning Water
• Truck Wash Water
• Water Softener Wastewater
Unacceptable and Hazardous Wastewater Not Accepted for Treatment by SCWW
• | Highly Odorous |
• | High Oil/Solvent Content |
• | High Viscosity |
• | Sanitary Sources |
• | Biomedical Sources |
• | Plating Etching Sources |
• | Surface preparation Sources |
• | Alkaline or acid cleaning Sources |
• | Metal Finishing Sources |
• | Anodizing operations |
The Domestic Wastewater portion of SCWWs business is the treatment of human waste which SCWW provides for local area septic tank cleaners and port-a-potty companies which service Ventura County's largest business sector, the agricultural industry. SCWW also treats secondary sludge from municipalities and counties whose own facilities are unable to completely treat this waste stream.
In addition, SCWW is the only commercial treatment facility with the requisite permits to accept industrial wastewater on the central coast of California. Manufacturing businesses and power plants comprise the majority of the industrial waste accepted. Oil and gas companies, small business wastewater generators, and groundwater remediation services, are other businesses that SCWW provides water treatment services to.
SCWW Treatment Process
SCWW's treatment encompasses a seven-step process as follows:
| 1. | Customer Registration and Waste Screening: Customers enter into service contracts with SCWW for the treatment of their wastewaters. Before accepting a customer, samples of its wastewater streams are evaluated to determine whether the Facility will be able to handle the subject non-hazardous wastewater.
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| 2. | Receiving: The Facility is close to California's major freeway system with easy access and egress to the Facility's dual-lane, truck unloading bays. Before waste is unloaded, it is field tested and the quantity being unloaded is measured for billing purposes.
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| 3. | Dewatering Treatment: The unloaded waste stream undergoes a primary separation process of mastication, degritting, open pond storage settlement and dewatering that serves to separate the larger particulate solids contained in the waste stream from the liquids.
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| 4. | Primary Treatment: The various liquid streams are stored in holding tanks and subjected to electro-coagulation and ozone treatments to engender further separation of the solids from the liquids and begin the water purification process.
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| 5. | Secondary Treatment: In the final separation and purification process, the liquid held in the holding tanks is piped through (i) a carbon filtration unit, (ii) a 0.5 micron filtration unit and (iii) subjected to ultra-violet treatment
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| 6. | Water Shipping: The resulting effluent meets the federal regulation specified in Federal Regulation §437 and local discharge limits (established by POTW) and is shipped via the Pipeline (a single pump, gravity-aided system of transport), to the City of Oxnard water treatment facility 12.7 miles away.
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| 7. | Solids Handling: Given the waste streams that SCWW currently processes, it generates primarily (i) drilling mud, (ii) industrial sludge, and (iii) human waste solids. These solids are trucked to area landfills for ultimate disposal.
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Competition
SCWW's competes regionally as follows:
• | Domestic Wastewater: Local septic cleaning and chemical toilet operators have the choice of using the SCWW Facility or transporting their wastewaters to the nearest competing facility located 90-plus miles away at the Los Angeles County's facility. The Company estimates that it has 70-75% of the Ventura County septic and chemical toilet markets. Regionally, municipalities from as far as San Luis Obispo and as close as Santa Paula have been utilizing SCWW to treat their secondary digester sludge.
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• | Industrial Wastewater: There are a number of competitors in the broad spectrum of industrial waste treatment business. However, these competing facilities are located in the Los Angeles Metropolitan area. The industrial business is very specialized and, within it, SCWW competes by accepting only non-hazardous wastewater, by providing quick off-loading, and providing its convenient and accessible location to industrial waste generators along the Central Coast of California.
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• | Oil & Gas Wastewater: SCWW was initially developed to be a major service provider to this segment and continues to service the high oil content, low viscosity wastes from Los Angeles County north to Kern County. SCWW provides quicker acceptance and offloading of oil and gas wastewater then its single local competitor.
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Employees
SCWW employs 13 persons that handle the operations of the Facility and the Pipeline and 8 administrative persons who work in the front office handling the sales, marketing, general and administrative functions. SCWW has no collective bargaining agreements.
Regulation
Regulation of companies that treat non-hazardous wastewater streams are subject to far less onerous regulation than companies involved in the treatment of hazardous wastes. The following is a brief summary of the regulatory environment in which SCWW operates:
Federal Regulation:
• | Private water treatment facilities that discharge to a public municipal water treatment plant are subject to Federal Regulation §437, which (i) sets national discharge limits for each chemical contained in the discharge and (ii) compliance standards for sampling and maintaining records. |
State Regulation:
• | Under Title 14 and Title 17 of the California Code focuses solely on the solids recovered through the treatment process, how they may be disposed and on what basis they may and may not be recycled, with the recycling rules varying sharply depending on: |
o | If the waste is being recycled for resale, there is no regulation; or |
o | If the waste is being given away as compost, there is regulation. |
• | The State Water Resources Board monitors the adequacy of rainwater drainage. |
Ventura County:
• | The County Environmental Health Board is the agency charged with supervising all state regulations governing solid wastes and their disposal. |
| |
• | The County Planning Division monitors site land use and issues Conditional Use Permits. |
• | The County Air Pollution District monitors nuisance orders under Rule 95. |
SCWW is designated as a "critical and essential public service" by Ventura County. Having just completed several modernizations to the Facility, SCWW has filed the requisite notice updates to the County Planning Division, which has issued its Negative Declaration Document that certifies that the Company has a valid Conditional Use Permit for its Facility. The Company believes that SCWW is in compliance with all Federal, State and County regulations affecting SCWW's business.
Sale to Luntz Acquisition (Delaware) LLC
On November 25, 2009, the Company entered into an Agreement with Luntz Acquisition (Delaware), LLC. (“Buyer”) pursuant to which the Company has agreed to sellsold to Luntz all of the issued and outstanding stock of the Company's primary operating subsidiary, General Environmental Management, Inc. a Delaware corporation, ("GEM DE")subsidiaries for cash (the “Sale”). In connection with the Sale, the Company agreed : a) to form a Delaware corporation that shall be wholly-owned by the Company and named GEM NewCo, Inc. (“GEM NewCo”), b) to form a Delaware limited partnership, the sole limited partner of which shall be the Company, and the sole general partner of which shall be GEM NewCo, which limited partnership shall be named GEM Pomona LP (“GEM LP”), c) effect a merger between GEM LP and GEM DE, whereby GEM LP will be the surviving entity, d) sell to Luntz the limited partner interests of GEM LP and all of the outstanding shares of stock of GEM NewCo (the “Purchased Interests”). Luntz agreed to pay the Company $14 million for the purchased interests.
On February 26, 2010, after approval of the transaction by the Company’s shareholders at a special meeting held on February 19, 2010, the Company completed the sale of the entities created out of GEM DE. The net cash proceeds from the transaction were used by the Company to retire senior debt and other obligations of the Company. The Company
used $250,000was not merged out of Nevada pursuant to
pay its obligationsthis transaction.Subsequent to USER in conjunction with the acquisition of CLWLuntz transaction, the Company’s revenues and SCWW.
expenses, operations, assets and liabilities were discontinued from February 2010 until January 2021.On February 26, 2010, after approvalMarch 19, 2019, Small Cap Compliance, LLC was awarded custodianship of the transactionCompany by the Company’s shareholders at a special meeting held on FebruaryEighth Judicial District Court of Nevada. On May 19, 2010,2019, the Company completedwas revived in Nevada. On May 30, 2019, the salecustodian filed an Amendment to the Designations of the entities created outSeries A Convertible Preferred Shares of GEM DE. The net cash proceeds from the transaction were used by the Company, and filed a Custodian’s Certification of Amendment certifying the same.
On January 15, 2021, the Company filed a Certificate of Conversion from a Non-Delaware Corporation to retire senior debta Delaware Corporation, and other obligationsthe associated Certificate of Incorporation, to become a corporation in Delaware. Delaware recognized this domestication of the Company.
On March 31, 2021, the Company formed General Entertainment Ventures, Inc. (“GEVI”) in Delaware as a wholly owned subsidiary of the Company. The purpose of the formation of GEVI was to merge the Company into GEVI pursuant to Section 251(g) of the General Corporation Law of the State of Delaware.
On April 10, 2021, after approval by the board of directors and shareholders of the Company, the Company was merged into GEVI pursuant to an Agreement and Plan of Merger dated as of the same date. GEVI is the accounting and legal acquiror of the Company.
On June 3, 2021, after approval by the board of directors and shareholders of the Company, the Company was redomiciled to the State of Wyoming.
On October 11, 2021, after approval by the board of directors and shareholders of the Company, the Company was renamed General Enterprise Ventures, Inc., in the State of Wyoming.
Change of Control
On April 28, 2022, Jan Ralston transferred ownership of 10,000,000 Preferred A shares to CEO, Joshua Ralston, making Mr. Ralston the new Majority Shareholder
Series C Preferred Stock
On April 13, 2022, The Company designated 5,000,000 shares of Series C convertible Preferred Stock (“Series C Preferred Stock”), par value $0.0001. The Series C Preferred Stock is convertible into twenty (20) shares of Common Stock for each share of Series C Preferred Stock at the option of the stockholder. The Series C Preferred Stock does not have voting rights and is not eligible to receive dividends.
Corporate changes
On April 13, 2022, the Company acquired Mighty Fire Breaker, LLC, an Ohio Limited Liability company (“MFB”) and all associated IP, in exchange for 1,000,000 Preferred C Shares and a 10% royalty on the gross sales before taxes of products sold under the MFB family of products. MFB has 56 patents centered around its CitroTech MFB 31 Technology for the prevention and spread of wildfires. Its core products can be used $250,000for lumber treatments for fire prevention. It has been widely tested and is currently in testing at 3 major us government agencies. When CitroTech Science is sprayed and applied it takes flammable fuels like dry native vegetation and wood and makes them noncombustible. During the third quarter of 2022 the company received EPA Safer Choice status and UL Green-Guard Gold approval on its CitroTech fire inhibitor. It continues to paypursue additional accreditations such Missoula Testing approval for selling products to the government. Currently the Company’s subsidiary Mighty Fire Breaker LLC Ohio is involved in installing large home and facility Proactive Wildfire Prevention Systems.
Effective April 1, 2022, the Company implemented a plan to divest its obligationsCrypto Mining operations and focus resources on the operations of Mighty Fire Breaker LLC (“MFB”). We expanded our services by building upon its foundation of emerging technology development, by creating a Crypto-Currency mining operation (farm). Previously, the Company had 20 Bitmain Antminer SJ19 PRO 104t/h and 99 Mini-Doge 185 m/h miners deployed, which are mining, Bitcoin, Doge, and Litecoin through the F2Pool and utilized its 8,000 Sq Ft Commercial space to USERhouse these ASIC Miners.
Effective November 20, 2022, the Company. formed a UK branch of MFB, named Mighty Fire Breaker UK Limited. The new subsidiary, headquartered in the United Kingdom, will be used to direct the sales of the Mighty Fire Breaker line of products and technologies in Europe, the Middle East and Africa.
Current operations
Principal products, services and markets
The Company’s subsidiary MFB holds various intellectual property in the form of patents and trademarks in the fields of fire suppression, mapping and tracking of fire retardant dispersion and fire inhibition chemistry and technology. The Company and MFB have obtained multiple certification and accreditations in this industry, such as being the only EPA Safer Choice approved, long-term fire retardant, UL GreenGaurd Gold, California Bioassay water approval, LENS, and in the process of USDA approval.
The fire retardant market is forecast to be $13 billion dollars globally by 2025. MFB markets home, industrial and commercial proactive fire defense systems directly and in conjunction with large insurance companies, sells EPA products through various retailers and directly to large users such as Fire Departments and other countries.
Distribution methods
MFB ships directly from its Rohnert Park, California facility, can drop ship large volume orders through toll blenders and has product available at 12 regional retailers for smaller consumers.
Status of publicly announced product or service
To date, all publicly announced orders have been shipped and delivered, including the acquisitionSan Diego Fire Department, Brazil, various retailers and system installers.
Competitive business conditions and the Company’s competitive position in the industry
The fire retardant market has been status quo for many years without significant innovation. Typically, the market is regarded as having products that are not known for their environmental safety or sustainability, and are generally considered as not friendly toward humans, wildlife, fish, water, and plants. MFB’s CitroTech is the first all-green, food grade EPA approved fire retardant. MFB’s products are sold at substantial margins and can be competitive in many markets. The need for safer and sustainable chemistry should drive demand for MFB’s products.
Sources and availability of CLWraw materials
MFB’s products are food grade and SCWW.
ITEMreadily available from multiple sources. Significant inventory is kept on hand at all times.Dependence on one or a few customers
Use of fire retardant is spread widely over multiple markets. There is little likelihood that as the popularity of a green chemistry spreads that there will be a business concentration, until USDA approval is obtained, at which point the U.S. government could be could a significant customer.
Patents, trademarks and licenses and their duration
MFB currently holds 56 total patents and patents pending with 30 patents granted, including U.S. and international patents. The granted patents include MFB’s main chemistry and applications include technology patents. MFB has 21 trademarks and various copyrights, both in the United State and internationally. Granted patent offer up to 20 years from the application filing date infringement protection with additional continuation patents frequently filed. Plans are to file additional patents stemming from our research and development endeavors.
Need for government approval of principal products or services.
Use of MFB’s product on government land typically requires USDA approval which MFB is in the midst of. In many case entities such as Fire Departments can request a waiver. We have already sold to customers under the waiver process. MFB’s EPA approval helps with this process.
Effect of existing or probably government regulations on the business
MFB is ahead of the regulations that have been proposed by the U.S. government by already having EPA approval. MFB tracks all proposed regulatory changes and makes commercially reasonable efforts to comply in advance. MFB maintains an advisory board of retired high level fire officials that watch such changes for the Company. MFB also retains experienced legal counsel in this regard.
Cost and effects of compliance with environmental laws
All expenses for the USDA application and the EPA application and subsequent approval have been paid. MFB’s products are green and EPA approved, making the only significant maintenance cost the USDA QPL approval and EPA annual testing.
Employees
The Company currently employees, 8 people full-time and hosts several consultants, attorneys, and independent contractors that all perform tasks on behalf of the company.
Item 1A. Risk Factors
An investor in our securities should carefully considerFactors.Risks Relating to Our Business
Our results could be materially and adversely affected by the risks and uncertainties described below and the other information in this Annual Report on Form 10-K. If anyimpact of the following risks actually occur,COVID-19 pandemic.
A pandemic similar to COVID-19 could materially and adversely impact our business, operating resultsincluding as a result of the loss of adequate labor, whether as a result of high absenteeism or challenges in recruiting and financial conditionretention or otherwise, prolonged closures, or series of temporary closures, of one or more fulfillment centers as a result of a COVID-19 type of outbreak, a government order or otherwise, or supply chain or carrier interruptions or delays. Further, a COVID-19 type pandemic could be harmed and the value ofhave a negative impact on economic conditions, which may adversely impact consumer demand for our stock could go down.
Business Risk Factors
The company has a history of losses andproducts, which may need additional financing to continue its operations, and such financing may not be available upon favorable terms, if at all.
The Company experienced net losses of $14,952,442 and $7,149,709 for the fiscal years ended December 31, 2009 and December 31, 2008, respectively. There can be no assurances that the Company will be able to operate profitably in the future. In the event that the Company is not successful in implementing its business plan, the Company will require additional financing in order to succeed. There can be no assurance that additional financing will be available now or in the future on terms that are acceptable to the Company. If adequate funds are not available or are not available on acceptable terms, the Company may be unable to develop or enhance its products and services, take advantage of future opportunities or respond to competitive pressures, all of which could have a material adverse effect on the Company’sour business, financial condition, orand operating results.
We To the extent any of these events occur, our business, financial condition, and operating results could be materially and adversely affected. The extent to which a COVID-19 type pandemic impacts our business will depend on future developments not within our control, including the duration and severity of a COVID-19 type pandemic and surges, the timing of widespread availability of a vaccine in the United States, the length of time restrictions stay in effect and for economic and operating conditions to return to pre-pandemic levels, together with resulting consumer behaviors, and numerous other uncertainties, all of which remain uncertain. The unavailability and incapacity of Mr. Ralston, Mr. Costa and Mr. Pomerantz, our executive officers and directors, due to a COVID-19 type pandemic would have a material adverse effect of our business.Because we have a limited operating history, on whichit is difficult for potential investors to evaluate our potential for future success. Thisbusiness.
Our limited operating history makes it difficult for potential investors to evaluate our future prospectsbusiness or prospective operations. Since our formation in March of 1990, we have not generated enough revenues to exceed our expenses. We acquired Mighty Fire Breaker, LLC in April 2022 and entered the riskfire retardant and fire suppression industry. As a result of success or failure of our business.
Our short operating historyus recently entering into these business lines, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications, and
results of operations may not give youdelays inherent in new business lines. Investors should evaluate an
accurate indication of our future results of operations or prospects. You must consider our business and prospectsinvestment in us in light of the
risksuncertainties encountered by developing companies in a competitive environment. Our business is dependent upon the implementation of our business plan. We may not be successful in implementing such a plan and
difficultiescannot guarantee that, if implemented, we will
encounter as an early-stage companyultimately be able to attain profitability.We do not currently have sufficient cash flow to maintain our business.
We do not currently have enough cash flow to operate our business. Therefore, we will be dependent upon additional capital in a highly competitive market.the form of either debt or equity to continue our operations and expand our products to new markets. At present, we do not have arrangements to raise all of the needed additional capital, and we will need to identify potential investors and negotiate appropriate arrangements with them. We may not be able to successfully address thesearrange enough investment within the time the investment is required or that if it is arranged, that it will be on favorable terms. If we cannot get the needed capital, we may not be able to become profitable and may have to curtail or cease our operations.
Our management has limited experience operating a public company and is subject to the risks and difficulties, which could materially harmcommonly encountered by early-stage companies.
Although our business andmanagement has experience in operating results.
Investorssmall companies, our current management has not managed expansion while being a public company. Many investors may lose their entire investment iftreat us as an early-stage company. Also, our management has not overseen a company with considerable growth. Because we fail to reach profitability.
The Company was incorporated in September 1991 but did not engage in meaningful business operations until February 2005 when we acquired GEM DE. Ourhave a limited operating history, our operating prospects mustshould be considered in light of the risks uncertainties, expenses and difficultiesuncertainties frequently encountered by early-stage companies in their early stages of development. We cannot guarantee that we will be successful in accomplishing our objectives. To date, we have incurred only losses and may continue to incur losses in the foreseeable future. Our short operating history and results of operations may not give you an accurate indication of our future results of operations or prospects. Our business and prospects, in light of the risks and difficulties we will encounter as an early-stage company in a highly competitive market. We may not be able to successfully address these risks and difficulties, which could materially harm our business and operating results.
We are dependent upon a limited number of customers for a substantial percentage of our revenues. If we fail to retain these customer relationships, our revenues could decline.
We derive a significant portion of our revenues from a relatively small number of customers. Our largest customer during the year ended December 31, 2009 accounted for approximately 3% of total revenues; for the year ended December 31, 2008 one customer accounted for approximately 14% of total revenues. We anticipate that we will continue to rely on a limited number of customers for a substantial portion of our future revenues and we must obtain additional large orders from customers on an ongoing basis to increase our revenues and grow our business. In addition, the loss of any significant or well-known customer could harm our operating results or our reputation.
The assets of the Company are now pledged under the recent agreements with Secured Lenders and may prevent the Company from obtaining any additional asset based financing.
In conjunction with a secured convertible term note and a secured revolving note, all unsubordinated assets of the Company and its subsidiaries are secured under agreements with CVC California, LLC, a subsidiary of the Comvest Group (sometimes referred to as the “Secured Lenders”). Without any unsecured assets, the Company could be unable to obtain any future asset based financing.
The agreements with Secured Lenders contain terms that could place the Company in default related to the outstanding borrowings.
The agreements with the Secured Lenders include terms of default related to the funds borrowed. These include default due to non-payment, failure to pay taxes, failure to perform under the agreements, failure to disclose items of a material nature under certain representations and warranties, attachments to any secured assets or the indictment of the Company or its executive officers for any criminal acts. This default could result in the loss of the business.
The agreements with the Secured Lenders contain terms where the Secured Lenders can convert their notes to common shares and exercise warrants for common shares which could have an adverse affect upon the price of our common shares.
Secured Lenders' conversions of indebtedness to common shares and exercise of warrants at fixed conversion and exercise prices, would: i) dilute the current shareholders' equity in the Company; ii) limit the Company’s ability to raise additional equity capital; and iii) depress the price of our common shares in the market.
rapidly evolving markets.
We depend heavily on key personnel.
We believe our management team andsuccess depends heavily on the continued active participation of our current executive officers. If we were to lose our executive officers’ services, the loss of any or all of the members of such management team could materially adversely affect our business, results of operations and our financial condition.
Our success depends, to a significant extent, upon the efforts, the abilities and the business experience of Timothy J. Koziol, our chief executive officer, as well as on these same attributes of our other officers and management team. Loss of the services of any or all of our management team could materially adversely affect our business, results of operations and financial condition, and could cause us to fail to successfully implement our business plan.
There is intense competition for qualified technical professionals and sales and marketing personnel, and our failure to attract and retain these people could affect our ability to respond to rapid technological changes and to increase our revenues.
Our future success depends upon our ability to attract and retain qualified technical professionals and sales and marketing personnel. Competition for talented personnel, particularly technical professionals, is intense. This competition could increase the costs of hiring and retaining personnel. We may not be able to attract, retain, and adequately motivate our personnel or to integrate new personnel into our operations successfully.
Our industrial waste management services subject us to potential environmental liability.
Our business of rendering services in connection with management of waste, including certain types of hazardous and non-hazardous waste, subjects us to risks of liability for damages. Such liability could involve, without limitation, claims for clean-up costs, personal injury or damage to the environment in cases in which we are held responsible for the release of hazardous materials, and claims of employees, customers, or third parties for personal injury or property damage occurring in the course of our operations. We could also be deemed a responsible party for the cost of cleaning any property which may be contaminated by hazardous substances generated by us and disposed at such property or transported by us to a site selected by us, including properties we own or lease.
If we cannot maintain our government permits or cannot obtain any required permits, we may not be able to continue or expand our operations.
Our business is subject to extensive, evolving, and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state, and local environmental laws and regulations govern our activities regarding the treatment, storage, recycling, disposal, and transportation of hazardous and non-hazardous waste. We must obtain and maintain permits, licenses and/or approvals to conduct these activities in compliance with such laws and regulations. Failure to obtain and maintain the required permits, licenses and/or approvals would have a material adverse effect on our operations and financial condition. If we are unable to maintain our currently held permits, licenses, and/or approvals or obtain any additional permits, licenses and/or approvals which may be required as we expand our operations, we may not be able to continue certain of our operations.
Changes in environmental regulations and enforcement policies could subject us to additional liability which could impair our ability to continue certain operations due to the regulated nature of our operations.
Because the environmental industry continues to develop rapidly, we cannot predict the extent to which our operations may be affected by future enforcement policies as applied to existing laws, by changes to current environmental laws and regulations, or by the enactment of new environmental laws and regulations. Any predictions regarding possible liability under such laws are complicated further by current environmental laws which provide that we could be liable, jointly and severally, for certain activities of third parties over whom we have limited or no control.
Environmental regulation significantly impacts our business.
While our business has benefited substantially from increased governmental regulation of hazardous and non-hazardous waste transportation, storage and disposal, the environmental services industry itself has become the subject of extensive and evolving regulation by federal, state, provincial and local authorities. We are required to obtain federal, state, provincial and local permits or approvals for each of our hazardous waste facilities. Such permits are difficult to obtain and, in many instances, extensive studies, tests, and public hearings are required before the approvals can be issued. We have acquired all operating permits and approvals now required for the current operation of our business, and have applied for, or are in the process of applying for, all permits and approvals needed in connection with continued operation and planned expansion or modifications of our operations.
The most significant federal environmental laws affecting us are the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), also known as the Superfund Act, the Clean Air Act, the Clean Water Act and the Toxic Substances Control Act ("TSCA").
We make a continuing effort to anticipate regulatory, political and legal developments that might affect operations, but are not always able to do so. We cannot predict the extent to which any environmental legislation or regulation that may be enacted or enforced in the future may affect our operations.
If our operations expand, we may be subject to increased litigation which could have a negative impact on our future financial results.
Our operations are regulated by numerous laws regarding procedures for waste treatment, storage, recycling, transportation and disposal activities, all of which may provide the basis for litigation against us. In recent years, the waste treatment industry has experienced a significant increase in so-called "toxic-tort" litigation as those injured by contamination seek to recover for personal injuries or property damage. We believe that as our operations and activities expand, there will be a similar increase in the potential for litigation alleging that we are responsible for contamination or pollution caused by our normal operations, negligence or other misconduct, or for accidents which occur in the course of our business activities. Such litigation, if significant and not adequately insured against, could impair our ability to fund our operations. Protracted litigation would likely cause us to spend significant amounts of our time, effort and money. This could prevent our management from focusing on our operations and expansion.
If we cannot maintain adequate insurance coverage, we will be unable to continue certain operations.
Our business exposes us to various risks, including claims for causing damage to property and injuries to persons that may involve allegations of negligence or professional errors or omissions in the performance of our services. Such claims could be substantial. We believe that our insurance coverage is presently adequate and similar or higher than the coverage maintained by other companies in the industry of our size. However, if we are unable to obtain adequate or required insurance coverage in the future or, if our insurance is not available at affordable rates, we would violate our permit conditions and other requirements of the environmental laws, rules and regulations under which we operate. Such violations would render us unable to continue certain of our operations. These events would have a material adverse effect on our financial condition.
Our success is connected to our ability to maintain our proprietary technologies.
The steps taken by us to protect our proprietary technologies may not be adequate to prevent misappropriation of these technologies by third parties. Misappropriation of our proprietary technology could have an adverse effect on our operations and financial condition. Changes to current environmental laws and regulations also could limit the use of our proprietary technology.
We may have difficulty integrating future acquisitions into our existing operations.
Our intentions are to acquire existing businesses in our industry. To the extent that we make such acquisitions, of which there can be no assurance, the acquisitions will involve the integration of companies that have previously operated independently from us. We cannot assure that we will be able to fully integrate the operations of these companies without encountering difficulties or experiencing the loss of key employees or customers of such companies. In addition, we cannot assure that the benefits expected from such integration will be realized.
If environmental regulation or enforcement is relaxed, the demand for our services will decrease.
The demand for our services is substantially dependent upon the public's concern with, the continuation and proliferation of, the laws and regulations governing the treatment, storage, recycling, and disposal of hazardous and non-hazardous waste. A decrease in the level of public concern, the repeal or modification of these laws, or any significant relaxation of regulations relating to the treatment, storage, recycling, and disposal of hazardous waste would significantly reduce the demand for our services and could have a material adverse effect on our operationsbusiness, financial condition, or operation results. Also, to achieve our future growth plans, we will need to recruit, hire, train, and financial condition. We are not aware of any current federal or state government or agency efforts in which a moratorium or limitation has been, or will be, placed upon the creation of new hazardous waste regulations that wouldretain other highly qualified technical and managerial personnel. Competition for qualified employees is intense, and if we cannot attract, retain and motivate these additional employees, their absence could have a materialmaterially adverse effect on us.
Impairmentour business, financial condition, or results of
goodwilloperations.Increased operating costs and other intangible assets would result inobstacles to cost recovery due to the pricing and cancelation terms of our raw materials and support services contracts may constrain our ability to make a decrease in earnings.
Current accounting rules require that goodwill and other intangible assets with indefinite useful lives no longerprofit.Our profitability can be amortized, but instead be tested for impairment at least annually. These rules also require that intangible assets with definite useful lives be amortized over their respective estimated useful livesadversely affected to their estimated residual values, and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. To the extent we are faced with cost increases for raw materials, wages, other labor-related expenses, especially when we cannot recover such evaluation indicatesincreased costs through increases in the prices for our products and services. In some cases, we will have to absorb any cost increases, which may adversely impact our operating results.
Governmental regulations relating to environmental products may subject us to significant liability.
The regulations relating to each of product segments are numerous and complex. A variety of rules and regulations at various governmental levels relating to the handling, preparation, and serving of environmental products. We cannot assure you that we are in full compliance with all applicable laws and regulations at all times or that we will be able to comply with any future laws and regulations. Furthermore, legislation and regulatory attention to environmental safety is very high. Additional or amended rules and regulations in this area may significantly increase the useful livescost of intangible assets are different than originally estimated, the amortization period is reducedcompliance or extendedexpose us to liabilities.
If we fail to comply with applicable laws and accordingly, the quarterly amortization expense is increased or decreased.
We have substantial goodwill and other intangible assets, andregulations, including those referred to above, we may be requiredsubject to record a significant charge to earnings in our financial statements duringinvestigations, criminal sanctions, or civil remedies, including fines, penalties, damages, reimbursement, injunctions, seizures, or debarments from government contracts. The cost of compliance or the period in which any impairmentconsequences of our goodwill or amortizable intangible assets is determined. Any impairment charges or changes to the estimated amortization periodsnon-compliance, including debarments, could have a material adverse effect on our financialbusiness and operations results.
Continued economic downturn Also, governmental units may make changes in the regulatory frameworks within which we operate that may require either the Company as a whole or individual businesses to incur substantial increases in costs to comply with such laws and regulations.If we do not have sufficient product liability insurance, we may be subject to claims that are in excess of our net worth.
Before we market any product, we will need to purchase significant product liability insurance. However, in the event of major claims from the use of our products, it is possible that our product liability insurance will not be sufficient to cover claims against us. We cannot assure you that we will not face liability arising out of the use of our products which is significantly in excess of the limits of our product liability insurance. In such event, if we do not have the funds or access to the funds necessary to satisfy such liability, we may be unable to continue in business.
If our relationship with key business suppliers and distributors were to be disrupted, we could experience disruptions to our operations and cost structure.
If critical suppliers to our business were disrupted, it would affect our ability to source necessary raw materials needed to produce our products. If our relationship with any of these key suppliers or distributors were disrupted, if it was not already arranged, we would have to source and engage alternative suppliers and distributors. This disruption could affect our businessoperations and cost structure.
Risks Related to Mighty Fire Breaker
Changes in a negative manner, more so than other businesses generally causingconsumer preferences or discretionary consumer spending could harm our performance.
The success of our business prospects to suffer.
Although environmental compliance cannot be short circuiteddepends, in any economic environment, waste, generally, is viewed as trash and considered low onpart, upon the priority list when economic conditions bring cut backs in operational spending. Accordingly, our services may be in less demand during a time of economic downturn and our business may suffer.
We face substantial competition from better established companies that may have significantly greater resources which could lead to reduced salescontinued popularity of our products.
The marketconcepts, and shifts in these consumer preferences could negatively affect our future profitability.Negative publicity over certain environmental products may adversely affect demand for our services is competitiveproducts and is likely to become even more competitive in the future. Increased competition could result in a decrease in our revenues, which could materially harm our business. Additionally, our success depends, in part, on a builder preference for our products and to an extent on numerous factors affecting operational budgeting, including economic conditions and customer confidence.
A decline in operational budgeting or economic conditions could reduce guest traffic or impose practical limits on pricing, pressures, reduced sales, reduced marginseither of which could harm our business, financial condition, operating results, or the failurecash flow. We may be required to disclose third-party products we sell due to federal regulations, which may affect customer confidence.
We may become subject to potential claims for product liability.
Our business could expose us to claims for personal injury from contamination of our servicesproducts. We believe that our products’ quality is carefully monitored through regular product testing, but we may be subject to achieveliability as a result of customer or maintain market acceptance,distributor misuse or storage. The Company maintains product liability insurance against certain types of claims in amounts which it believes to be adequate. The Company also maintains an umbrella insurance policy that it considers to be sufficient to cover claims made above its product liability insurance limits. Although no claims have been made against the Company or its distributors to date and the Company believes its current level of insurance to be adequate for its current business operations, it is possible that such claims will arise in the future, and the Company’s policies may not be sufficient to pay for such claims.
Increases in prices of commodities needed to manufacture our product could adversely affect profitability.
The ingredients and materials needed to manufacture and package our products are subject to the commodities markets’ normal price fluctuations. Any increase in the price of those ingredients and materials that cannot be passed along to the consumer will adversely affect our profitability. Any prolonged or permanent increase in the cost of the raw ingredients to manufacture our products may in the long term make it more difficult for us to earn a profit.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
The Company has cloud based security, and their computers and servers are fire walled. In addition, the Company does not allow virtual log-in on their computers.
Item 2. Properties.
Our Company owns no real property. Our principal office is located at 2170 Allentown Rd, Lima, OH 45808 which is commercial space under on one year lease agreement at $500 per month In addition, the Company leases commercial space for retail and warehousing at 5050 Commerce Blvd., Rohnert Park, CA 90928, which is under a two year lease agreement at $5,200 per month.
Item 3. Legal Proceedings.
Currently, there are no legal proceedings pending or threatened against us. We are not presently party to any of which wouldpending or other threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results, although from time to time, we may become involved in legal proceedings in the ordinary course of operations and financial condition. Many of our current and potential competitors enjoy substantial competitive advantages, such as:
business.Item 4. Mine Safety Disclosures.
Not applicable.
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· | greater name recognition and larger marketing budgets and resources;9 |
| · | established marketing relationships and access to larger customer bases; |
| · | substantially greater financial, technical and other resources; andTable of Contents |
| · | larger technical and support staffs. |
AsPART II
Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our Common Stock is quoted on the OTC Pink under the symbol “GEVI.” Our stock is thinly traded on the OTC Markets and there can be no assurance that a result, they may be able to garner more clients than we can. For the foregoing reason, we may not be able to compete successfully against our current and future competitors.
The conversion of our convertible debt, the exercise of our outstanding warrants and options and the Company's various anti-dilution and price-protection agreements could cause theliquid market
price offor our common stock
to fall,will ever develop. For the periods indicated, the following table sets forth the high and may have dilutive and other effects on our existing stockholders.
The conversion of our outstanding convertible debentures and the exercise of our outstanding warrants and options could result in the issuance of up to an additional 15,916,481 shareslow bid prices per share of common stock
assuming all outstanding warrantsbased on inter-dealer prices, without retail mark-up, mark-down or commission and
options are currently exercisable,may not represent actual transactions. Fiscal Year 2023 | | High Bid | | | Low Bid | |
First Quarter | | $ | 0.50 | | | $ | 0.15 | |
Second Quarter | | $ | 0.50 | | | $ | 0.17 | |
Third Quarter | | $ | 1.11 | | | $ | 0.40 | |
Fourth Quarter | | $ | 0.98 | | | $ | 0.42 | |
Fiscal Year 2022 | | High Bid | | | Low Bid | |
First Quarter | | $ | 0.180 | | | $ | 0.049 | |
Second Quarter | | $ | 0.235 | | | $ | 0.175 | |
Third Quarter | | $ | 0.210 | | | $ | 0.125 | |
Fourth Quarter | | $ | 0.580 | | | $ | 0.208 | |
Security Holders
As of April 2,2024, we estimate there were approximately 721 holders of record and taken with the Company's various anti-dilution and price-protection agreements, are subject to adjustment pursuant to certain anti-dilution and price-protection provisions. Such issuances would reduce the percentage of ownership36,302,150 shares of our existing common stockholdersCommon Stock were issued and could, among other things, depress the price ofoutstanding.
Dividend Policy
We have not paid any dividends on our common stock. This result could detrimentally affect our ability to raise additional equity capital. In addition, the sale of these additional shares of common stock may cause the market price of our stock to decrease.
There are potential liabilities arising out of environmental lawssince inception and regulations.
Although the Company believeswe currently expect that, it generally benefits from increased environmental regulations and from enforcement of those regulations, increased regulation and enforcement also create significant risks for the Company. The assessment, analysis, remediation, transportation, handling and management of hazardous substances necessarily involve significant risks, including the possibility of damages or personal injuries caused by the escape of hazardous materials into the environment, and the possibility of fines, penalties or other regulatory action. These risks include potentially large civil and criminal liabilities to customers and to third parties for damages arising from performing services for customers. See "Environmental Regulation."
All facets of the Company's business are conducted in the context of a rapidly developing and changing statutory and regulatory framework. The Company's operations and services are affected by and subject to regulation by a number of federal agencies including the Environmental Protection Agency (the "EPA") and the Occupational Safety and Health Administration, as well as applicable state and local regulatory agencies.
The Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (the "Superfund Act"), addresses the cleanup of sites at which there has been a release or threatened release of hazardous substances into the environment. Increasingly, there are efforts to expand the reach of the Superfund Act to make hazardous waste management companies responsible for cleanup costs of Superfund sites not owned or operated by such management companies by claiming that such management companies are "owners" or "operators" (as those terms are defined in the Superfund Act) of such sites or that such management companies arranged for "treatment, transportation or disposal" (as those terms are defined in the Superfund Act) of hazardous substances to or in such sites. Several recent court decisions have accepted such claims. Should the Company be held responsible under the Superfund Act for cleanup costs as a result of performing services or otherwise, it might be forced to bear significantly more than its proportional share of such cleanup costs if other responsible parties do not pay their share. See "Business--Legal Proceedings."
The Resource Conservation and Recovery Act of 1976, as amended in 1984 ("RCRA"), is the principal federal statute governing hazardous waste generation, treatment, transportation, storage and disposal. RCRA or EPA approved state programs at least as stringent govern waste handling activities involving wastes classified as "hazardous." See "Environmental Regulation-- Federal Regulation of Hazardous Wastes." Substantial fees and penalties may be imposed under RCRA and similar state statutes for any violation of such statutes and regulations thereunder.
There are potential liabilities involving customers and third parties.
In performing services for its customers, the Company potentially could be liable for breach of contract, personal injury, property damage (including environmental impairment), and negligence, including claims for lack of timely performance or for failure to deliver the service promised (including improper or negligent performance or design, failure to meet specifications, and breaches of express or implied warranties). The damages available to a client, should it prevail in its claims, are potentially large and could include consequential damages.
Industrial waste management companies, in connection with work performed for customers, also potentially face liabilities to third parties from various claims including claims for property damage or personal injury stemming from a release of hazardous substances or otherwise. Claims for damage to third parties could arise in a number of ways, including: through a sudden and accidental release or discharge of contaminants or pollutants during transportation of wastes or the performance of services; through the inability, despite reasonable care, of a remedial plan to contain or correct an ongoing seepage or release of pollutants; through the inadvertent exacerbation of an existing contamination problem; or through reliance on reports prepared by such waste management companies. Personal injury claims could arise contemporaneously with performance of the work or long after completion of projects as a result of alleged exposure to toxic or hazardous substances. In addition, increasing numbers of claimants assert that companies performing environmental remediation should be adjudged strictly liable for damages even though their services were performed using reasonable care, on the grounds that such services involved "abnormally dangerous activities."
Customers of industrial waste management companies frequently attempt to shift various of the liabilities arising out of disposal of their wastes or remediation of their environmental problems to contractors through contractual indemnities. Such provisions seek to require the contractors to assume liabilities for damage or personal injury to third parties and property and for environmental fines and penalties (including potential liabilities for cleanup costs arising under the Superfund Act). Moreover, the EPA has increasingly constricted the circumstances under which it will indemnify its contractors against liabilities incurred in connection with cleanup of Superfund sites. There are other proposals both in Congress and at the regulatory agencies to further restrict indemnification of contractors from third party claims.
Although the Company attempts to investigate thoroughly each other company that it acquires, there may be liabilities that the Company fails or is unable to discover, including liabilities arising from non-compliance with environmental laws by prior owners, and for which the Company, as a successor owner, might be responsible. The Company seeks to minimize the impact of these liabilities by obtaining indemnities and warranties from sellers of companies which may be supported by deferring payment of or by escrowing a portion of the purchase price. However, these indemnities and warranties, if obtained, may not fully cover the liabilities due to their limited scope, amounts, or duration, the financial limitations of the indemnitors or warrantors or other reasons.
A leak in the pipeline, connecting SCWW’s Santa Paula site to the City of Oxnard's disposal system, which is owned and operated by SCWW would require immediate clean-up resulting in possible fines and even withdrawal of operating permits.
SCWW owns and operates a 12.7 mile long 10” pipeline connecting the SCWW Santa Paula site with the City of Oxnard’s disposal system. If the pipeline leaks it could result in immediate clean-up costs and possible fines and even withdrawal of operating permits. The cost for potential clean-up and repair of the pipeline could be significant. The loss of the operating permit would mean a significant loss in the operating capabilities of SCWW.
To the degree that regulators determine certain sold wastes unsuitable for recycling, it could have an adverse impact on the Company's profitability.
SCWW actively seeks to recycle the sold waste material from its treatment process both for a higher recycle/reuse value of treatment and financial profitability. If there is a change in regulations that do not allow certain waste streams to be recycled the financial impact would negatively impact the Company.
Our ability to raise capital in the future may affect our ability to retire long term debt.
If our future earnings and other cash resources are not sufficient to meet our long term debt obligations, we may need to raise additional capital to meet those commitments. In conjunction with the acquisition of California Living Waters, the Company anticipates converting certain notes into a percentage of the common stock of the Company. This conversion will occur when the Capital Restructuring Goal is achieved. This means the concurrent fulfillment of each of the following events: (i) the CLW Seller’s Note shall have been fully paid on the terms thereof as to all theretofore outstanding principal, interest, costs and expenses; (ii) Company shall have available, as properly reflected in Company’s books one million dollars ($1,000,000) in uncommitted working capital (not including any working capital lines of credit); and (iii) Company shall have invested into SCWW capital of at least one million dollars $1,000,000. If the Company is not able to achieve the Capital Restructuring Goal, the debt will not be converted and interest expense will remain at the current levels.
General Risk Factors
Risks Relating To Our Common Stock
We do not anticipate paying dividends in the foreseeable future.
We anticipate that wefuture, all earnings (if any) will retain all future earnings and other cash resourcesbe retained for the future operation and development of our business and we do not intend to declare or pay any cash dividends in the foreseeable future. Future payment of cashno dividends will be atdeclared or paid on our common stock. Any future dividends on our common stock will be subject to the discretion of our board of directors after taking into account many factors, includingand will depend upon, among other things, our earnings (if any), operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.
Rules, including those containedrequirements, general business conditions and other pertinent facts.Recent Sales of Unregistered Securities
During the past two years, we effected the following transactions in and issuedreliance upon exemptions from registration under the Sarbanes-Oxley ActSecurities Act:
Between September 27, 2023, and February 13, 2024, we issued 471,832 shares of 2002, may make it difficult for us to retain or attract qualified officers and directors, which could adversely affect our business and our ability to maintainSiers C Convertible Preferred Stock. The following table summarizes the listingoffering, including the number of our common stock on the OTC Bulletin Board.
We may be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the recent and currently proposed changes in the rules and regulations which govern publicly-held companies, including, but not limited to, certifications from executive officers and requirements for financial experts on boards of directors. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting these roles. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of a series of new rules and regulationsshares sold and the strengthening of existing rulesamount raised. The proceeds were used for general working capital and regulations by the Securitiesoperational purposes, including Legal Fees, Accounting and Exchange Commission, as well as the adoption of newAudit Fees, testing and more stringent rules by the Nasdaq Stock Market.
Further, certain of these recentcertification, and proposed changes heighten the requirements for board or committee membership, particularly with respectpreparation to an individual’s independence from the corporation and level of experience in finance and accounting matters. We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, our business and our ability to maintain the listing of our shares of Common stock on a national market could be adversely affected.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud, which could harm our brand and operating results.
Effective internal controls are necessary for us to provide reliable and accurate financial reports and effectively prevent fraud. We have devoted significant resources and time to comply with the new internal control over financial reporting requirements of the Sarbanes-Oxley Act of 2002. In addition, Section 404 under the Sarbanes-Oxley Act of 2002 requires that we assess and our auditors attest to the design and operating effectiveness of our controls over financial reporting. Our compliance with the annual internal control report requirement for our first fiscal year will depend on the effectiveness of our financial reporting and data systems and controls across our operating subsidiaries. We expect these systems and controls to become increasingly complex to the extent that we integrate acquisitions and our business grows. To effectively manage this growth, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. We cannot be certain that these measures will ensure that we design, implement and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation or operation, could harm our operating results or cause us to fail to meet our financial reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock and our access to capital.
Our stock could be the subject of short selling and, if this occurs, the market price of our stock could be adversely affected and, in turn, adversely effect our ability raise additional capital through the sale of our common stock.
It is conceivable that our stock could be subject to the practice of short owned directly by the seller; rather, the stock is "loaned" for the sale by a broker-dealer to someone who "shorts" the stock. In most situations, this is a short-term strategy by a seller, and based upon volume, may at times drive stock values down. If such shorting occurs in our common stock, there could be a negative effect on the trading price of our stock. If the trading price of our common stock decreases, this may negatively impact our ability to raise additional capital through the sale of our common stock.
If we fail to remain current on our reporting requirements, we could be removed from the OTC bulletin board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
Companies trading on the OTC Bulletin Board, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
Our common stock is subject to the "penny stock" rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
launch product offerings. | · | that a broker or dealer approve a person's account for transactions in penny stocks; and |
| · | the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person; and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of valuating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
| · | sets forth the basis on which the broker or dealer made the suitability determination; and |
| · | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Anti-takeover actions and/or provision could prevent or delay a change in control.
Provisions of our certificate of incorporation and bylaws and Nevada law may make it more difficult for a third party to acquire us, even if so doing would be beneficial to our stockholders. These include the following:
| · | Our board of directors are authorized to issue of up to 100,000,000 shares of preferred stock and to fix the rights, preferences, privileges and restrictions of those shares without any further vote or action by the stockholders, which may be used by the board to create voting impediments or otherwise delay or prevent a change in control or to modify the rights of holders of our common stock; and |
| · | Limitations on who may call annual and special meetings of stockholders. |
We may issue shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and could cause a change in control of our ownership.
Our Certificate of Incorporation authorizes the issuance of up to one billion (1,000,000,000) shares of common stock, par value $.001 per share, and one hundred million (100,000,000) shares of preferred stock, par value $.001 per share. There are approximately nine hundred eighty five million (985,000,000) authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of the shares upon full exercise of our outstanding stock options). One hundred million (100,000,000) shares of preferred stock are available for issuance.
The issuance of additional shares of our common stock or our preferred stock:
• | may significantly reduce the equity interest of investors; |
| |
• | may subordinate the rights of holders of common stock if we issue preferred stock with rights senior to those afforded to our common stock; |
| |
• | will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards; and |
| |
• | may adversely affect the market price for our common stock. |
| |
Similarly, if we issue debt securities, it could result in:
• | default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations; |
| |
• | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding. |
ITEM 1B. Unresolved Staff Comments
Not Applicable
ITEM 2. Description of Property
Facilities of GEM Delaware
We ownPurchaser | | Series C Preferred Shares Issued | | | Amount Raised | |
| | | | | | |
Peter Zilahy | | | 25,000 | | | $ | 100,000.00 | |
Alta Investments LLC | | | 20,833 | | | $ | 49,999.20 | |
Robert Dailey | | | 41,666 | | | $ | 99,998.40 | |
FEC Investments LLC | | | 75,000 | | | $ | 300,000.00 | |
East Shore Industries LLC | | | 12,500 | | | $ | 50,000.00 | |
Gerald Yanowitz | | | 14,000 | | | $ | 33,600.00 | |
Joel Yanowitz and Amy Metzenbaum Revocable Trust | | | 40,000 | | | $ | 96,000.00 | |
Super Eight Capital Holding Ltd. | | | 7,000 | | | $ | 28,000.00 | |
Loma LLC | | | 12,500 | | | $ | 50,000.00 | |
Hunts Road LLC | | | 25,000 | | | $ | 100,000.00 | |
Alta Investments LLC | | | 37,500 | | | $ | 90,000.00 | |
Super Eight Capital Holding Ltd. | | | 8,333 | | | $ | 19,999.20 | |
Michael Feigin | | | 20,000 | | | $ | 0.00 | |
Noonan 2006 Revocable Trust | | | 100,000 | | | $ | 300,000.00 | |
Jeffrey P. Bash | | | 12,500 | | | $ | 75,000.00 | |
JBCG Enterprises LLC | | | 20,000 | | | $ | 0.00 | |
Each investor was given adequate access to sufficient information about us to make an EPA permitted Part B TSDF in Rancho Cordova, California on 4.5 acres of land. The real estate is collateral for a secured convertible term note and a secured non-convertible revolving note with CVC California, LLC. (See Liquidity)
We also lease space for a waste transfer facility in Pomona, California comprising approximately 10,000 square feet of office space, warehouse space and additional yard space. This lease expires on August 31, 2018.
We lease space in Kent, Washington for a waste transfer facility, comprising approximately 12,500 square feet. This lease expires June 30, 2013. Of the 12,500 square feet leased, we sublease approximately 4,000 square feet on a six month lease which may be renewed for an additional six months.
In Northern California, we lease a waste transfer facility in Benicia. The lease for the 5,000 square feet of office and warehouse space expires in April, 2011. In January 2009 the company moved our facility to Hayward, California and executed a lease for approximately 13,500 square feet of industrial / warehouse space. The lease expires on December 31, 2012. We subleased the facility in Benecia for the remainderinformed investment decision. None of the lease.
We lease office space in Santee, California of approximately 800 square feet on a month-to-month basis.
On November 25, 2009, the Company entered intosecurities were sold through an
Agreement with Luntz Acquisition (Delaware), LLC pursuantunderwriter and accordingly, there were no underwriting discounts or commissions involved. No registration rights were granted to
which the Company has agreed to sell to Luntz allany of the
issued and outstanding stockpurchasers.Issuer Purchases of the GEM Delaware including the facilities described above. The sale was completed on February 26, 2010.
GEM Corporate
We currently lease approximately 4,557 square feetEquity SecuritiesNone.
Use of office space in one building located in Pomona, California. The lease terminates on December 31, 2010 and grants the Company the option to renew the lease for two additional one-year terms.
On November 13, 2009, the Company’s subsidiary GEM Environmental Management, Inc, a Nevada corporation, (“GEMEM”) entered into an agreement with United States Environmental Response, LLC, a California limited liability company (“USER”) pursuant to which the Company purchased all of the issued and outstanding capital stock of California Living Waters, Incorporated ("CLW"), a privately held company. CLW owns all of the issued and outstanding capital stock of Santa Clara Waste Water Company (“SCWW") a California corporation. CLW's only operating subsidiary is SCWW.
SCWW's primary processing facility is located on a 4.87 acre parcel in Santa Paula, Ventura County, California and sits 65 miles north of downtown Los Angeles and approximately 70 miles southwest of California's oil and gas rich Kern County.
ITEM 3. Legal Proceedings
On July 5, 2007, a lawsuit was instituted by Romic Environmental Technologies Corp. (“RET”) against the Company and four of its senior executives, all of whom were formerly employed by RET. The lawsuit was brought in the Superior Court of the State of California, County of Los Angeles. The lawsuit was settled by the Company in February 2010 with the majority of the settlement payment funded by insurance.
The Company is subject to legal proceedings and claims that arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have material adverse effect on its financial position, results of operations or liquidity.
ITEM 4. Submission of Matters to a Vote of the Security Holders
PART II
ITEM 5. Market for Common Equity and Restated Stockholder Matters
On February 14, 2007, the Company completed the reverse split of the outstanding common stock, par value $.001 per share, by a ratio of 1-for-30. All share and per share calculations and disclosures in this report have been retro-actively adjusted to reflect this reverse split as if it occurred at the beginning of the earliest period presented. GEM’s Common Stock, 0.001 par value, trades on the over the counter bulletin board maintained by the FINRA under the symbol “GEVI.OB" The following table sets forth, for the periods indicated, the range of high and low closing bid prices for GEM’s Common Stock as reported by the FINRA composite feed or other qualified inter-dealer quotation medium and obtained from the National Quotation Bureau, LLC. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions.
| Period 2009 | High | Low |
| 2009 First Quarter | 0.75 | 0.55 |
| 2009 Second Quarter | 0.99 | 0.35 |
| 2009 Third Quarter | 0.90 | 0.30 |
| 2009 Fourth Quarter | 0.60 | 0.21 |
| Period 2008 | High | Low |
| 2008 First Quarter | 1.99 | 1.31 |
| 2008 Second Quarter | 1.99 | 1.02 |
| 2008 Third Quarter | 1.15 | 0.88 |
| 2008 Fourth Quarter | 1.05 | 0.32 |
NUMBER OF HOLDERS OF COMMON STOCK
As of December 31, 2009, we had approximately 722 holders of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. The transfer agent of our common stock is Colonial Stock Transfer Company, Inc., 66 Exchange Place, Salt Lake City, Utah 84111.
Dividends
We have never paid any dividends, and we have no present intention of paying dividends in the foreseeable future. Our policy for the time being is to retain earnings and utilize the funds for operations and growth. The Board of Directors based on our earnings, financial condition, capital requirements and other existing conditions will determine future dividend policies.
Equity Compensation Plan Information
For information with reference to equity compensation arrangements, reference is made to Note 11 of the Notes to Financial Statements contained elsewhere in this report.
ITEMItem 6. Selected Financial Data
None
ITEM[Reserved]Item 7. Management’s Discussion and Analysis or Plan of Operation
In addition to historical information,Financial Condition and Results of Operations.The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual ReportReport. The Management’s Discussion and Analysis contains forward-looking statements whichthat involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are generally identifiable by usenot statements of historical fact are forward-looking statements. When used, the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects,"“believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions.expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results or events to differ materially from those reflectedexpressed or implied by the forward-looking statements in this Annual Report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements. Factors that might cause suchstatements as a difference include,result of several factors including, but are not limited to, those discussednoted under “Risk Factors” in this Annual Report.
We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report, except as required by U.S. federal securities laws.
Overview
The Company’s U.S. subsidiary, Mighty Fire Breaker LLC (“MFB”) is currently engaged in developing solutions to support the resolution of the insurance crisis in the section entitled "Management's Discussionwestern United States by use of it’s EPA approved CitroTech products. MFB has developed and Analysispatented addition intellectual property in this regard, such as a system for commercial properties and homes that puts fire inhibiting buffer zone around a property blocking blown in embers from igniting. The technology continues to work dry which unlike other products allows for early deployment and evacuation of Financial Conditionpeople. It also has developed a job site trailer allowing for the fire protection of the property during the construction phase and the fire hardening of the inner construction and installation of our patented system during that phase. Hopefully allow the owner to get insurance to start the project. The company also is continuing its USDA approval process. It has sold products to various fire departments and continues to demonstrate market its products.
Results of Operations." ReadersOperations
The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the years ended December 31, 2023, and 2022, which are cautioned notincluded herein.
Our results of operations for the years ended December 31, 2023, and 2022 are summarized below:
| | Years Ended | | | | |
| | December 31, | | | | |
| | 2023 | | | 2022 | | | Change | |
Revenue | | $ | 520,645 | | | $ | 62,732 | | | $ | 457,913 | |
Operating expenses | | | 10,237,828 | | | | 2,979,398 | | | | 7,258,430 | |
Other expenses | | | 4,328 | | | | 255 | | | | 4,073 | |
Net loss from continuing operations | | $ | (9,855,019 | ) | | $ | (2,918,814 | ) | | $ | 7,847,958 | |
| | | | | | | | | | | | |
Income from discontinued operations | | | - | | | | 13,016 | | | | (13,016 | ) |
Loss on disposition of digital currency and digital currency assets | | | - | | | | (2,030 | ) | | | 2,030 | |
Net income from discontinued operations, net of tax | | $ | - | | | $ | 10,986 | | | $ | (10,986 | ) |
| | | | | | | | | | | | |
Net loss | | $ | (9,855,019 | ) | | $ | (2,907,828 | ) | | $ | (6,947,191 | ) |
Revenue
Our Company generated $520,645 and $67,732 revenue for the years ended December 31, 2023, and 2022, respectively. The Company’s revenue is associated with revenue from Mighty Fire Breaker, LLC (“MFB”) which was acquired in April 2022.
Operating Expenses
For the year ended 31, 2023, the operating expenses consisted of stock-based management compensation of $180,000, professional fees - related party of $8,640,000, professional fees of $932,352, marketing expenses of $148,289 and general and administrative expenses of $337,187, compared to place undue reliance on these forward-looking statements, which reflect management’s opinions only asmanagement compensation of $2,100,000, professional fees of $500,875, marketing expenses of $96,553 and general and administrative of $281,970 in the year ended December 31, 2022.
During the year ended December 31, 2022, the Company recorded management compensation of $2,100,000 related to Chief Executive Officer (CEO) for 70,000,000 restricted stock awards (the holder of the restricted stock shall be entitled to vote but is not entitled to dividends or disposal).
During the year ended December 31, 2023, the Company issued 1,200,000 shares of Convertible Series C Preferred Stock to a related party for consulting services rendered to the Company from October 2021 through July 2023. The Company valued the 1,200,000 shares of Convertible Preferred Stock, as if converted to 24,000,000 shares of common stock, using the quoted stock price of the Company’s common stock at approval date hereof. We undertake no obligation(November 1, 2022), resulting in a value of $8,640,000.
On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to revise or publicly releaseeach of the resultstwo independent directors for their board services in support of any revision to these forward-looking statements. Readers should carefully review the risk factors described in other documents GEM files from time to time withCompany. As of December 31, 2023, the Securities and Exchange Commission (the "SEC").
Overview
Ultronics Corporation (“Ultronics”) was a non-operating company formed forCompany has not issued the purposeshares. During the year ended December 31,2023, the Company valued the 500,000 shares of evaluating opportunities to acquire an operating company. On February 14, 2005 Ultronics acquired General Environmental Management, Inc. through a reverse merger between Ultronics Acquisition Corp., (“UAC”) a wholly owned subsidiary of Ultronics and General Environmental Management, Inc., a Delaware corporation (“GEM DE”), whereby GEM DE wascommon stock at the surviving entity.
The acquisition was accounted for as a reverse merger (recapitalization) with GEM DE deemed to be the accounting acquirer, and Ultronics Corporation the legal acquirer. Accordingly, the historical financial information presented in the financial statements is that of GEM DE as adjusted to give effect to any difference in the parmarket value of the
issuer’sCompany’s common stock at approval date for the amount of $180,000.Other expenses
For the years ended December 31, 2023, and 2022, the other expenses consisted of interest expense of $4,328 and $255 related to convertible notes and loan payable to lenders.
Discontinuing Operating Income (Expenses)
During the year ended December 31, 2022, loss on discontinued operations of $2,030 was the result of a loss on disposition of the Company’s digital currency assets, including equipment and digital currency, against a note payable issued as consideration for the equipment when it was previously acquired.
During the year ended December 31, 2022, income from discontinued operations of $13,016 was the result of the net income from the operations of crypto mining and the accounting acquirer stock with an offset to capital in excessdisposition of par value. The basis of the assets, liabilities and retained earnings of GEM DE, the accounting acquirer, have been carried over in the recapitalization. Subsequent to the acquisition, Ultronics changed its name to General Environmental Management, Inc. GEM DE is a fully integrated environmental service firm structured to provide EHS compliance services, field services, transportation, off-site treatment, and on-site treatment services. Through its services GEM DE assists clients in meeting regulatory requirements for the disposal of hazardous and non-hazardous waste. GEM DE provides its clients with access to GEMWare, an internet based software program that allows clients to maintain oversight of their waste from the time it leaves their physical control until final disposition by recycling, destruction, or landfill. The GEM DE business model is to grow both organically and through acquisitions.
During 2003 and 2004 GEM DE acquired the assets of Envectra, Inc., Prime Environmental Services, Inc. (Prime) and 100% of the membership interest in Pollution Control Industries of California, LLC, now named General Environmental Management of Rancho Cordova, LLC. The assets of Envectra, Inc. included an internet based integrated environmental management software now marketed by the Company as GEMWare. The acquisition of the assets of Prime resulted in a significant increase in the revenue stream of the company and a presence in the Washington State and Alaska markets through Prime’s Seattle office. The primary asset of Pollution Control Industries of California, LLC was a fully permitted Part B Treatment Storage Disposal Facility (TSDF) in Rancho Cordova, California. The facility provides waste management services to field service companies and allows the Company to bulk and consolidate waste into larger more cost effective containers for outbound disposal.
During 2006, GEM DE entered into an agreement with K2M Mobile Treatment Services, Inc. of Long Beach, California ("K2M"), a privately held company, pursuant to which GEM DE acquired all of the issued and outstanding common stock of K2M. K2M is a California-based provider of mobile wastewater treatment and vapor recovery services. Subsequent to the acquisition in March 2006, K2M opened a vapor recovery service division in Houston, Texas. On August 8, 2006 K2M changed its name to GEM Mobile Treatment Services, Inc. (“GEM MTS”).
On August 31, 2008, GEM DE entered into an agreement with Island Environmental Services, Inc. ("Island"), a privately held company, pursuant tocrypto mining which the Company
acquired allimplemented a plan to divest its crypto mining operations to focus its resources on the MFB acquisition.Net Loss
As a result of the issued and outstanding common stockforegoing, we incurred a net loss of Island, a California-based provider of hazardous and non-hazardous waste removal and remediation services to a variety of private and public sector establishments.
On August 17, 2009, GEM DE divested the assets of GEM Mobile Treatment Services, Inc. (“GEM MTS”). GEM MTS was sold to MTS Acquisition Company, Inc., a holding company, and will be owned and operated by a former senior executive of GEM DE and a former senior executive of GEM MTS. Consideration of the sale was in the form of promissory notes in the aggregate amount of $5.6 million, the assignment of approximately $1.0 million of accounts payable and possible future royalties. The consideration was immediately assigned to CVC California, LLC, (“CVC”) the Company’s senior secured lender. As the notes are paid to CVC, the Company’s indebtedness to CVC will be reduced.
On November 13, 2009, the Company’s subsidiary GEM Environmental Management, Inc, a Nevada corporation, (“GEMEM”) entered into an agreement (the "USER Agreement") with United States Environmental Response, LLC, a California limited liability company (“USER”) pursuant to which the Company has purchased all of the issued and outstanding capital stock of California Living Waters, Incorporated ("CLW"), a privately held company. CLW owns all of the issued and outstanding capital stock of Santa Clara Waste Water Company (“SCWW") a California corporation. CLW's only operating subsidiary is SCWW.
SCWW, located in Ventura County, California, is a waste water management company that operates a 12.7 mile pipeline from its facility to the City of Oxnard water reclamation center. In consideration for the sale, the Company issued six promissory notes (individually a "Note" and collectively, the "Notes") in the aggregate principal amount of $9,003,000, and warrants to purchase 425,000 shares of the Company's common stock. The Notes bear interest at 6.5 per cent per annum. Two of the Notes, totaling $3,778,000 are convertible into a total of 15% of the Company's common stock on a fully diluted basis.
On November 25, 2009, the Company entered into an Agreement with Luntz Acquisition (Delaware), LLC. (“Buyer”) pursuant to which the Company has agreed to sell to Luntz all of the issued and outstanding stock of the Company's primary operating subsidiary, General Environmental Management, Inc. a Delaware corporation, ("GEM DE") for cash (the “Sale”). In connection with the Sale, the Company agreed : a) to form a Delaware corporation that shall be wholly-owned by the Company and named GEM NewCo, Inc. (“GEM NewCo”), b) to form a Delaware limited partnership, the sole limited partner of which shall be the Company, and the sole general partner of which shall be GEM NewCo, which limited partnership shall be named GEM Pomona LP (“GEM LP”), c) effect a merger between GEM LP and GEM DE, whereby GEM LP will be the surviving entity, d) sell to Luntz the limited partner interests of GEM LP and all of the outstanding shares of stock of GEM NewCo (the “Purchased Interests”). Luntz agreed to pay the Company $14 million for the purchased interests.
On February 26, 2010, after approval of the transaction by the Company’s shareholders at a special meeting held on February 19, 2010, the Company completed the sale of the entities created out of GEM DE. The net cash proceeds from the transaction were used by the Company to retire senior debt and other obligations of the Company. The Company used $250,000 to pay its obligations to USER in conjunction with the acquisition of CLW and SCWW.
Plan of Operation
The Company will continue to operate in the environmental services sector after the Sale. However our primary focus and point for development will center on the SCWW treatment facility and the treatment of non-hazardous waste water. SCWW has been treating non-hazardous waste water for the oil and gas industry, industrial clients, and domestic waste generators for 50 years. Current clients that generate non-hazardous waste for SCWW also have a wider range of waste streams that SCWW currently services, including solids, tank bottoms and drilling muds, and hazardous waste streams. We will continue to provide the full range of services to SCWW’s clientele that SCWW currently offers.
The Company will also research technological opportunities in the waste-to-energy (W-T-E) marketplace as a further resource for our non-hazardous waste water treatment facilities. A W-T-E solution for managing the treating waste provides a significant advantage for generators of the waste, the environment, and the Company.
The Company will continue to develop SCWW as the foundation of our core business in the non-hazardous waste water treatment sector. We intend to do this through internal growth by offering SCWW’s integrated solution for generators of non-hazardous waste water and by making strategic acquisitions of non-hazardous waste water treatment companies.
Year Ended December 31, 2009 as Compared to the Year Ended December 31, 2008
Discontinued Operations
On February 26, 2010, the Company completed the sale of GEM DE and its operating subsidiaries. On August 17, 2009, GEM DE divested the assets of GEM Mobile Treatment Services, Inc. Based on the completion of this divestiture subsequent to year end, the revenues and expenses of all of the GEM DE entities have been classified as discontinued operations and the assets and liabilities of GEM DE also have been classified as discontinued. The revenues and expenses in the accompanying financial statements reflect only the operations of CLW (and its operating subsidiary SCWW) for the two months ended December 31, 2009 and the operations of GEM Nevada, the corporate parent, for the twelve months ended December 31, 2009.
Revenues
Total revenues are presented in the income statement for only the continuing business (i.e., CLW and its only operating subsidiary SCWW) for the two months in 2009 subsequent to acquisition. Total revenues for 2009 were $880,758. Revenues for the two months were slightly below the 2008 levels for the same period.
Cost of Revenues
Cost of revenues are presented in the income statement for only the continuing business (i.e., CLW and its only operating subsidiary SCWW) for the two months in 2009 subsequent to acquisition. Cost of revenues for 2009 were $894,455 or 101.5% of revenue for the two months. It is anticipated that in a normal year that cost of sales will be approximately 65% of revenue (which represents the historical average for the latest 24 month period for SCWW).
Operating Expenses
Operating expenses for only the continuing business (i.e., CLW and its only operating subsidiary SCWW) for the two months subsequent to acquisition were $576,881 or 65% of revenue. It is anticipated that in a normal year operating expenses will be approximately 25% of revenue (which represents the historical average for the latest 24 month period for SCWW). Operating expenses for GEM Nevada were $583,686 for the twelve months ended December 31, 2009. Total operating expense for 2009 were $1,160,557 or 131.8% of revenue.
Depreciation and amortization expenses are included in operating expenses, and represent only the expenses of CLW (and its only operating subsidiary SCWW) for the two months subsequent to acquisition. Depreciation and amortization for 2009 was $153,448 or 17% of revenue.
Interest and Financing Costs
Interest and financing costs$9,855,019, for the year ended December 31,
2009 were $5,316,250, or 604%2023, compared to a net loss of
revenue. Interest costs are$2,907,828 for the corresponding year ended December 31, 2022.Liquidity and Capital Resources
| | December 31, | | | December 31, | | | | |
| | 2023 | | | 2022 | | | Change | |
Cash | | $ | 549,755 | | | $ | 55,434 | | | $ | 494,321 | |
| | | | | | | | | | | | |
Current Assets | | $ | 1,218,056 | | | $ | 170,319 | | | $ | 1,047,737 | |
Current Liabilities | | $ | 1,617,785 | | | $ | 1,060,918 | | | $ | 556,867 | |
Working Capital (Deficiency) | | $ | (399,729 | ) | | $ | (890,599 | ) | | $ | 490,870 | |
The decrease in working capital deficiency in 2023, was primarily attributablethe result of an increases in cash of $494,321, inventory of $115,552, accounts receivable of $427,433 and prepaid expenses of $10,431 offset by an increase in due to GEM Nevada and consist of:
a) interest on the line of credit and short and long term borrowings of $1,324,052; b) interest on advances from related parties of
$154,673;$409,924, promissory note of $120,000, convertible note of $19,000 and
c) amortizationcurrent portion of
deferred finance feesoperating lease liability of $40,769 and
amortizationa reduce in accounts payable and accrued liabilities of
valuation discounts$76,657.As of December 31, 2023, and 2022, the current assets consisted of cash of $549,755 and $55,434, inventory of $230,197 and $114,645, accounts receivable of $427,433 and $0, and prepaid expenses of $10,671 and 240, respectively.
As of December 31, 2023, and 2022, the current liabilities consisted of accounts payable and accrued liabilities of $54,572 and $87.398, due to related parties of $1,309,077 and $899,153, promissory note of $120,000 and $0, convertible note of $54,000 and $35,000, and current portion of operating lease liability of $80,136 and $39,367, respectively.
Cash Flows
| | Years Ended | |
| | December 31, | |
| | 2023 | | | 2022 | |
Cash used in operating activities | | $ | (1,211,764 | ) | | $ | (708,450 | ) |
Cash used in investing activities | | $ | (4,015 | ) | | $ | (5,349 | ) |
Cash provided by financing activities | | $ | 1,710,100 | | | $ | 763,764 | |
Net Change in Cash | | $ | 494,321 | | | $ | 49,965 | |
Cash Flows from Operating Activities
We have not generated positive cash flows from beneficial conversion features related to the fair value of warrants and conversion features of long term debt of $3,816,035.
Other Non-operating Income
The Company had other non-operating income foroperating activities. For the year ended December 31, 20092023, net cash flows used in operating activities was $1,211,764, consisting of $29,032 or 0.3% of revenue.
Net Loss
The net loss for the twelve months ended December 31, 2009 was $14,952,442 or 1,698% of revenue. The net loss from continuing operations of $7,561,689 was primarily attributable to the operating and interest expenses detailed above as well as a loss on extinguishment of debt of $4,039,358 which was offset by a gain on derivative financial instruments of $2,998,369. The balance of the net loss of $7,390,753 was from discontinued operations.
Liquidity$9,855,019, reduced by stock-based compensation of $8,966,850, non-cash lease expenses of $71,349, depreciation of $1,263 and Capital Resources
Cash
Our primary sourceincreased by changes in operating assets and liabilities of
liquidity is cash provided by operating, investing, and financing activities. Net cash used in operations for$396,207.For the year ended December 31, 20092022, net cash flows used in operating activities were $708,450, consisting of a net loss of $2,907,828, reduced by non-cash management compensation of $2,100,000, loss on disposition of digital currency and digital currency assets of $2,029, impairment loss on digital assets of $6,125, non-cash lease expense of $44,647, depreciation of $15,862 and reduced by an increase in changes in operating assets and liabilities of $30,175.
Cash Flows from Investing Activities
For the years ended December 31, 2023, and 2022, the cash flows used in investing activities were $4,015 and $5,350, which was $967,637 as comparedrelated to $1,586,386 for the same period in 2008.
Liquidity
purchase of equipment and reduced by $0 and $1 share capital of Mighty Fire Breaker UK Limited (MFB). respectively.Cash Flows from Financing Activities
For the year ended December 31, 2023, net cash provided by financing activities was $1,710,100, consisting of $307,500 received from a related party, $907,600 from issuance Convertible Series C Preferred Stock, $500,000 from stock subscriptions, $120,000 from promissory note and repayments of $125,000 to related party.
For the year ended December 31, 2022, net cash provided by financing activities was $763,764, consisting of $784,484 received from related parties, $35,000 from convertible note and repayments of $55,720 to related party.
Going Concern
The accompanying consolidated financial statements have been prepared (i) in accordance with accounting principles generally accepted in the United States, and (ii) assuming that the companyCompany will continue as a going concern.concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurredhas not generated significant income to date. The Company is subject to the risks and uncertainties associated with a net loss of $14,952,442 and used cash in operations and discontinued operations of $967,637 during the year ended December 31, 2009. Continuing operations used cash of $6,534,584 and discontinued operations provided cash of $5,566,947. As of December 31, 2009 the Company had current liabilities exceeding current assets by $21,080,137 primarily because of the reclassification of long term debt to current resulting from covenant provisions under the ComVest notes and had a stockholders’ deficiency of $15,787,835.business with no substantive revenue, as well as limitations on its operating capital resources. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In light of these matters, the Company’s ability to continue as a going concern.
Management completed a plan in February 2010concern is dependent upon the Company’s ability to
divest certain parts of the business in order to satisfy obligations of its senior lender. In conjunction with that strategy, the assets of GEM MobileTreatment Services (GEM MTS) were sold on August 17, 2009. GEM MTS was sold to MTS Acquisition Company, Inc., a holding company,raise capital and
will be ownedgenerate revenue and
operated by two former senior executives of GEM. Consideration for the sale wasprofits in the
formfuture. Off-balance sheet arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of promissory notesoperations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the aggregate amount of $5.6 million, the assignment of approximately $1.0 million of accounts payable and possible future royalties. The consideration was immediately assigned to CVC California, LLC, ("CVC") GEM's senior secured lender. As the notes are paid to CVC, GEM's indebtedness to CVC will be reduced. In conjunction with this transaction, all sources of cash from this entity have been classified in discontinued operations.
On November 25, 2009, the Company entered into an Agreement with Luntz Acquisition (Delaware), LLC. (“Buyer”) pursuant to which the Company has agreed to sell to Luntz all of the issued and outstanding stock of the Company's primary operating subsidiary, General Environmental Management, Inc. a Delaware corporation, ("GEM DE") for cash (the “Sale”). . Luntz agreed to pay the Company $14 million for the purchased interests. On February 26, 2010, after approval of the transaction by the Company’s shareholders at a special meeting held on February 19, 2010, the Company completed the sale of the entities created out of GEM DE. The net cash proceeds from the transaction were used by the Company to retire senior debt and other obligations of the Company (See Notes 4 and 16).
On November 13, 2009, the Company entered into a Stock Purchase Agreement with United States Environmental Response, LLC, a California limited liability company pursuant to which we purchased all of the issued and outstanding capital stock of California Living Waters, Incorporated ("CLW"), a privately held company. CLW owns all of the issued and outstanding capital stock of Santa Clara Waste Water Company (SCWW") a California corporation. SCWW, located in Ventura County, California, is a waste water management company that operates a 12.7 mile pipeline from its facility to the City of Oxnard' water reclamation center.
The Company’s current source of cash is earnings from the CLW operation and proceeds from the sale of its previous operating entities. The Company will continue to explore other sources of capital to expand and fund its current operations.
Cash Flows for the Year Ended December 31, 2009
Operating activities for the year ended December 31, 2009 used $967,637 in cash. The net assets of the discontinued operations produced $5,566,947 in cash from operations. The net loss of $14,952,442 included a number of non-cash items incurred by the Company including expenses of $767,042 representing the fair value of vested options, $2,755,580 representing amortization of discount on financing agreements, $458,476 representing shares and warrants issued for services, $109,324 representing amortization of note discounts, $8,464,724 representing a loss on extinguishment, a change in the fair value of derivative liabilities of $2,998,369 and extinguishment of derivative liabilities of $5,033,366.
The Company used cash for investment in plant, property and equipment totaling approximately $385,222 for the year ended December 31, 2009. Capital expenditures increased due to the acquisition of equipment at Santa Clara Waste Water. Financing activities produced $1,049,306 for the year ended December 31, 2009 resulting primarily from borrowings from the senior lender.
These activities resulted in a $466,891 increase in cash balances for year ended December 31, 2009.
Stockholder Matters
The Company held its annual meeting of shareholders on June 19, 2009 to elect the directors and approve Weinberg & Co. P.A. as the independent certified public accountants of the Company.
The Company held a special meeting of shareholders on February 19, 2010 and approved the purchase agreement dated as of November 25, 2009, by and between the Company and Luntz Acquisition (Delaware) LLC.
Critical Accounting Policies
Estimates
The preparation of our consolidatedAmerica. Preparing financial statements requires
usmanagement to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses.
TheThese estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following
are the areas that we believe require the greatest amount of estimates in the preparationaspects of our financial
statements: allowances for doubtful accounts, impairment testing, accruals for disposal costs for waste received at our TSDF, and the assumptions used in our option pricing models. Priorstatements is critical to
the filing of this Annual Report on Form 10-K, the Audit Committeean understanding of our
Board of Directors reviewed thesefinancial statements.Our most critical accounting policies and estimates and discussed themrelate to the following:
| ● | Revenue Recognition |
| ● | Incremental borrowing rate for Right of Use Assets |
| ● | Share based compensation |
Revenue Recognition
Revenue is recognized when performance obligations under the terms of the contracts with our management.
Allowancecustomers are satisfied. Our performance obligation generally of products used for doubtful accounts
We establish an allowancelumber products for
doubtful accounts to provide for accounts receivablefire prevention. Revenue is recognized at a point in time, that
may not be collectible. In establishingis which the
allowance for doubtful accounts, we analyze specific past due accountsrisks and
analyze historical trends in bad debts. In addition, we take into account current economic conditions. Actual accounts receivable written off in subsequent periods can differ materiallyrewards of ownership of the products transfer from the
allowanceCompany to the customer. All of our performance obligations under the terms of contracts with our customers have an original duration of one year or less.Incremental borrowing rate for doubtful accounts provided.
ImpairmentRight of Long-LivedUse Assets
StatementAs the Company’s operating leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate. The assessment of Financial Accounting Standards No. 144, “Accounting for the Impairment or DisposalCompany’s incremental borrowing rate involves judgment regarding the cost of Long-Lived Assets”, established guidelines regarding when impairment lossesborrowing funds on long-lived assets, which include propertya collateralized basis over a similar term and equipment, should be recognized and how impairment losses should be measured. This statement also providesin a single accounting model for long-lived assets to be disposed of and significantly changes the criteria that would have to be met to classify an asset as held-for-sale. similar economic environment.
Share-Based Compensation
The Company periodically reviews, at least annually, such assetsaccounts for possible impairmentemployee and expected losses.non-employee stock awards under ASC 718, Compensation – Stock Compensation, whereby equity instruments issued to employees for services are recorded based on the fair value of the instrument issued and those issued to nonemployees are recorded based on the fair value of the consideration received or the fair value of the equity instrument, whichever is more reliably measurable. Equity grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any losses are determined to exist they are recordedpreviously recognized compensation cost is reversed in the period when such impairment is determined
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collection is reasonably assured.
The Company is a fully integrated environmental service firm structured to provide field services, technical services, transportation, off-site treatment, on-site treatment services, and environmental health and safety (“EHS”) compliance services. Through our services, we assist clients in meeting regulatory requirements from the designing stagerelated to the
waste disposition stage. The technicians who provide these services are billed at negotiated rates. Transportationtermination of service.Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company,” this item is provided to a regulated disposal site or the Company’s regulated consolidation site. The Company provides comprehensive services including documentation and logistics. These services are billed and revenue recognized when the service is performed and completed. When the service is billed, client costs are accumulated and accrued.
Our field services consist primarily of handling, packaging, and transporting a wide variety of liquid and solid wastes of varying amounts. We provide the fully trained labor and materials to properly package hazardous and non-hazardous waste according to requirements of the Environmental Protection Agency and the Department of Transportation. Small quantities of laboratory chemicals are segregated according to hazard class and packaged into appropriate containers or drums. Packaged waste is profiled for acceptance at a client’s selected treatment, storage and disposal facility (TSDF) and tracked electronically through our systems. Once approved by the TSDF, we provide for the transportation of the waste utilizing tractor-trailers or bobtail trucks. The time between picking up the waste and transfer to an approved TSDF is usually less than 10 days. The Company recognizes revenue for waste picked up and received waste at the time pick up or receipt occurs and recognizes the estimated cost of disposal in the same period. For the Company’s TSDF located in Rancho Cordova, CA, costs to dispose of waste materials located at the Company’s facilities are included in accrued disposal costs. Due to the limited size of the facility, waste is held for only a short time before transfer to a final treatment, disposal or recycling facility.
Recent Accounting Pronouncements
In June 2009, the FASB issued authoritative guidance on accounting standards codification and the hierarchy of generally accepted accounting principles (“GAAP") effective for interim and annual reporting periods ending after September 15, 2009. The FASB accounting standards codification (“ASC, “Codification”) has become the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with GAAP. All existing accounting standard documents are superseded by the Codification and any accounting literature not included in the Codification will not be authoritative. However, rules and interpretive releases of the SEC issued under the authority of federal securities laws will continue to be sources of authoritative GAAP for SEC registrants. Beginning with the quarter ending September 30, 2009, all references made by the Company to GAAP in its condensed consolidated financial statements use the Codification numbering system. The Codification does not change or alter existing GAAP and, therefore, it does not have an impact on our financial position, results of operations and cash flows.
In June 2009, the FASB made an updated the principle for the consolidation of variable interest entities. Among other things, the update replaces the calculation for determining which entities, if any, have a controlling financial interest in a variable interest entity (VIE) from a quantitative based risks and rewards calculation, to a qualitative approach that focuses on identifying which entities have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. The update also requires ongoing assessments as to whether an entity is the primary beneficiary of a VIE (previously, reconsideration was only required upon the occurrence of specific events), modifies the presentation of consolidated VIE assets and liabilities, and requires additional disclosures about a company’s involvement in VIE’s. This update will be effective for fiscal years beginning after November 15, 2009. The Company does not currently believe that the adoption of this update will have any effect on its consolidated financial position and results of operations.
In October 2009, the FASB issued authoritative guidance on revenue recognition that will become effective for us beginning July 1, 2010, with earlier adoption permitted. Under the new guidance on arrangements that include software elements, tangible products that have software components that are essential to the functionality of the tangible product will no longer be within the scope of the software revenue recognition guidance, and software-enabled products will now be subject to other relevant revenue recognition guidance. Additionally, the FASB issued authoritative guidance on revenue arrangements with multiple deliverables that are outside the scope of the software revenue recognition guidance. Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We believe the adoption of this new guidance will not have a material impact on our financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
ITEMrequired.Item 8. Financial Statements
and Supplementary Data.General Enterprise Ventures, Inc.
Index to Audited Consolidated Financial Statements
December 31, 2023 and 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACOUNTINGACCOUNTING FIRM
The Board of Directors
General Environmental Management Inc.
To: | The Board of Directors and Stockholders of |
| General Enterprises Ventures, Inc. |
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheetssheet of General Environmental ManagementEnterprises Ventures, Inc. and Subsidiaries (the “Company”) as of December 31, 2009 and 2008,2023, and the related consolidated statements of operations stockholders' deficiencyand comprehensive loss, stockholders’ deficit, and cash flows for the yearsyear ended December 31, 2023, and 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, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred substantial losses during the year ended December 31, 2023. As of December 31, 2023, the Company had a working capital deficit. Accordingly, these factors give rise to substantial doubt that the Company will be able to continue as a going concern. Management closely monitors the Company’s financial position and has prepared a plan that is found in Note 1 that addresses this substantial doubt. These financial statements do not include any adjustments that might result from the outcome of this uncertainly.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, audits of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal controls over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion.
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 regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our 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.
The engagement team determined that the Company’s intangible assets and related impairment met the criteria to be considered a critical audit matter because the intangible assets comprised a material portion of the Company’s total assets, and they require a significant amount of judgment to estimate the carrying value and ensure the intangible assets are not impaired, and those assets are expected to contribute to the Company’s ability generate future profit. In order to the address this critical audit matter, we first gained an understanding of how management values these assets and reperformed the valuation on those assets, and considered the reasonableness of the inputs that management is using for their valuation.
The engagement team determined that the preferred stock, especially those with conversion features, met the criteria of a critical audit matter because it is substantial relative to the Company’s shareholders’ equity, and determining their valuation and allocation requires the engagement team to identify and understand the attributes of the securities, understand how those attributes go towards determining the value of those securities. Additionally, the disclosure regarding these securities are extensive and quite complex. The engagement team addressed the critical audit matters by gaining an understanding of management’s valuation, allocation, recognition and approach towards disclosure, and then ended. vouched certain details of those securities and reperformed the valuation and allocation of such preferred stock to determine if management had properly accounted for those securities.
/s/ WWC, P.C.
WWC, P.C.
Certified Public Accountants
PCAOB ID: 1171
We have served as the Company’s auditor since 2018.
San Mateo, California
April 15, 2024
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of General Enterprise Ventures, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of General Enterprise Ventures, Inc. as of December 31, 2022, the related statements of operations and comprehensive loss, stockholders' equity (deficit), and cash flows for the year then ended, and 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 the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidatedthe Company's financial statements based on our audits.
audit. We
conducted our audits in accordanceare a public accounting firm registered with
standards of the Public Company Accounting Oversight Board (United States)
. ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit 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. OurAs 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’s internal control over financial reporting. Accordingly, we express no such opinion. An
Our audit includesincluded 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. AnOur audit 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 provideaudit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters 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.
We determined that there are no critical audit matters.
/S/ BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company's auditor from 2022 to 2023
Lakewood, CO
March 31, 2023
General Enterprise Ventures, Inc.
Consolidated Balance Sheets
| | December 31, | | | December 31, | |
| | 2023 | | | 2022 | |
Assets | | | | | | |
Current Assets | | | | | | |
Cash | | $ | 549,755 | | | $ | 55,434 | |
Prepaid expenses | | | 10,671 | | | | 240 | |
Accounts receivable | | | 427,433 | | | | - | |
Inventory | | | 230,197 | | | | 114,645 | |
Total Current Assets | | | 1,218,056 | | | | 170,319 | |
| | | | | | | | |
Intangible assets | | | 3,948,106 | | | | 4,195,353 | |
Operating lease right-of-use asset | | | 129,683 | | | | 39,367 | |
Equipment, net | | | 7,299 | | | | 4,547 | |
Total Assets | | $ | 5,303,144 | | | $ | 4,409,586 | |
| | | | | | | | |
Liabilities and Stockholders' Equity | | | | | | | | |
Current liabilities | | | | | | | | |
Accounts payable and accrued liabilities | | $ | 54,572 | | | $ | 87,398 | |
Promissory note | | | 120,000 | | | | - | |
Convertible note payable | | | 54,000 | | | | 35,000 | |
Due to related parties | | | 1,309,077 | | | | 899,153 | |
Operating lease liability - current portion | | | 80,136 | | | | 39,367 | |
Total Current Liabilities | | | 1,617,785 | | | | 1,060,918 | |
| | | | | | | | |
Operating lease liability – noncurrent | | | 50,047 | | | | - | |
| | | | | | | | |
Total Liabilities | | | 1,667,832 | | | | 1,060,918 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
| | | | | | | | |
Stockholders' Equity | | | | | | | | |
Series A Preferred Stock, par value $0.0001, authorized 10,000,000 shares, | | | | | | | | |
10,000,000 shares issued and outstanding | | | 1,000 | | | | 1,000 | |
Series C Convertible Preferred Stock, par value $0.0001, authorized 5,000,000 shares, | | | | | | | | |
2,273,499 and 950,000 shares issued and outstanding, respectively | | | 227 | | | | 95 | |
Common Stock par value $0.0001, authorized 1,000,000,000 shares, | | | | | | | | |
97,545,388 and 93,945,388 shares issued and outstanding, respectively | | | 9,755 | | | | 9,395 | |
Additional paid-in capital | | | 72,427,996 | | | | 62,719,578 | |
Common Stock to be issued - 500,000 shares | | | 180,000 | | | | - | |
Subscription received – 183,333 shares of Series C Convertible Preferred stock to be issued | | | 500,000 | | | | - | |
Accumulated deficit | | | (69,483,666 | ) | | | (59,381,400 | ) |
Total Stockholders' Equity | | | 3,635,312 | | | | 3,348,668 | |
Total Liabilities and Stockholders' Equity | | $ | 5,303,144 | | | $ | 4,409,586 | |
See the accompanying Notes, which are an integral part of these Financial Statements.
General Enterprise Ventures, Inc.
Consolidated Statement of Operations and Comprehensive Loss
| | Years Ended | |
| | December 31, | |
| | 2023 | | | 2022 | |
| | | | | | |
Revenue | | $ | 520,645 | | | $ | 62,732 | |
Cost of revenue | | | 133,508 | | | | 1,893 | |
Gross Profit | | | 387,137 | | | | 60,839 | |
| | | | | | | | |
Operating Expenses | | | | | | | | |
General and administration | | | 584,434 | | | | 281,970 | |
Marketing | | | 148,289 | | | | 96,553 | |
Management compensation | | | 180,000 | | | | 2,100,000 | |
Professional fees- related party | | | 8,640,000 | | | | - | |
Professional fees | | | 932,352 | | | | 500,875 | |
Total operating expenses | | | 10,485,075 | | | | 2,979,398 | |
| | | | | | | | |
Loss from Operations | | | (10,097,938 | ) | | | (2,918,559 | ) |
| | | | | | | | |
Other Income (Expense) | | | | | | | | |
Interest expense | | | (4,328 | ) | | | (255 | ) |
Total other income (expense) | | | (4,328 | ) | | | (255 | ) |
| | | | | | | | |
Loss from continuing operations before taxes | | | (10,102,266 | ) | | | (2,918,814 | ) |
| | | | | | | | |
Provision for income taxes | | | - | | | | - | |
Loss from continuing operations | | $ | (10,102,266 | ) | | $ | (2,918,814 | ) |
| | | | | | | | |
Discontinued operations: | | | | | | | | |
Income from discontinued operations | | $ | - | | | $ | 13,016 | |
Loss on disposition of digital currency and digital currency assets | | | - | | | | (2,030 | ) |
Income (Loss) from discontinued operations, net of tax | | $ | - | | | $ | 10,986 | |
| | | | | | | | |
Net Loss | | $ | (10,102,266 | ) | | $ | (2,907,828 | ) |
Comprehensive loss | | | (10,102,266 | ) | | | (2,907,828 | ) |
| | | | | | | | |
Loss from continuing operations per Common Share – Basic and diluted | | $ | (0.10 | ) | | $ | (0.05 | ) |
Income from discontinuing operations per Common Share– Basic and diluted | | $ | - | | | $ | 0.00 | |
Net loss per common share - Basic and diluted | | $ | (0.10 | ) | | $ | (0.05 | ) |
| | | | | | | | |
Loss from continuing operations Per Common Share – Diluted | | $ | - | | | $ | (0.04 | ) |
Income (Loss) from discontinuing operations Per Common Share– Diluted | | $ | - | | | $ | 0.00 | |
Net loss per common share - Diluted | | $ | - | | | $ | (0.04 | ) |
Basic and Diluted Weighted Average Number of Common Shares Outstanding | | | 96,663,470 | | | | 62,254,977 | |
Diluted Weighted Average Number of Common Shares Outstanding | | | 96,663,470 | | | | 75,274,155 | |
See the accompanying Notes, which are an integral part of these Financial Statements.
General Enterprise Ventures, Inc.
Consolidated Statements of Change in Stockholders’ Deficit
| | Series A | | | Series C | | | | | | | | | Additional | | | Preferred | | | Common | | | | | | Total | |
| | Preferred stock | | | Preferred stock | | | Common Stock | | | Paid-In | | | Stock | | | Stock to | | | Accumulated | | | Stockholders' | |
| | Shares | | | Amount | | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | to be issued | | | be issued | | | Deficit | | | Equity (Deficit) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance - December 31, 2021 | | | 10,000,000 | | | $ | 1,000 | | | | - | | | $ | - | | | | 22,945,388 | | | $ | 2,295 | | | $ | 56,417,418 | | | $ | - | | | $ | - | | | $ | (56,473,572 | ) | | $ | (52,859 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | | | | - | | | | | | | | | |
Debt forgiveness - former related party | | | - | | | | - | | | | | | | | | | | | - | | | | - | | | | 9,355 | | | | - | | | | - | | | | - | | | | 9,355 | |
Shares issued for acquisition of Mighty Fire Breakers | | | - | | | | - | | | | 1,000,000 | | | | 100 | | | | - | | | | - | | | | 4,199,900 | | | | - | | | | - | | | | - | | | | 4,200,000 | |
Conversion of Convertible Series C Preferred stock of Common stock | | | - | | | | - | | | | (50,000 | ) | | | (5 | ) | | | 1,000,000 | | | | 100 | | | | (95 | ) | | | - | | | | - | | | | - | | | | - | |
Stock based compensation | | | - | | | | - | | | | - | | | | - | | | | 70,000,000 | | | | 7,000 | | | | 2,093,000 | | | | - | | | | - | | | | - | | | | 2,100,000 | |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | (2,907,828 | ) | | | (2,907,828 | ) |
Balance - December 31, 2022 | | | 10,000,000 | | | $ | 1,000 | | | | 950,000 | | | $ | 95 | | | | 93,945,388 | | | | 9,395 | | | | 62,719,578 | | | | - | | | | - | | | | (59,381,400 | ) | | | 3,348,668.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subscription received – Series C Preferred stock to be issued | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 500,000 | | | | - | | | | - | | | | 500,000 | |
Common stock to be issued - management | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 180,000 | | | | - | | | | 180,000 | |
Issuance Series C Preferred Stock in cash | | | - | | | | - | | | | 273,499 | | | | 27 | | | | - | | | | - | | | | 907,573 | | | | - | | | | - | | | | - | | | | 907,600 | |
Common stock issued for services | | | - | | | | - | | | | - | | | | - | | | | 600,000 | | | | 60 | | | | 146,790 | | | | - | | | | - | | | | - | | | | 146,850 | |
Conversion of Convertible Series C Preferred Stock in Common stock | | | - | | | | - | | | | (150,000 | ) | | | (15 | ) | | | 3,000,000 | | | | 300 | | | | (285 | ) | | | - | | | | - | | | | - | | | | - | |
Issuance Series C Preferred Stock for services -related party | | | - | | | | - | | | | 1,200,000 | | | | 120 | | | | - | | | | - | | | | 8,639,880 | | | | - | | | | - | | | | - | | | | 8,640,000 | |
Contribution inventory - related party | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 14,460 | | | | - | | | | - | | | | - | | | | 14,460 | |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (10,102,266 | ) | | | (10,102,266 | ) |
Balance - December 31, 2023 | | | 10,000,000 | | | $ | 1,000 | | | | 2,273,499 | | | $ | 227 | | | | 97,545,388 | | | $ | 9,755 | | | $ | 72,427,996 | | | $ | 500,000 | | | $ | 180,000 | | | $ | (69,483,666 | ) | | $ | 3,635,312 | |
See the accompanying Notes, which are an integral part of these Financial Statements.
General Enterprise Ventures, Inc.
Consolidated Statement of Cash Flows
| | Years Ended | |
| | December 31, | |
| | 2023 | | | 2022 | |
| | | | | | |
Cash Flows from Operating Activities: | | | | | | |
Net loss | | $ | (10,102,266 | ) | | $ | (2,907,828 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | |
Stock-based compensation | | | 8,966,850 | | | | 2,100,000 | |
Loss on disposition of digital currency and digital currency assets | | | - | | | | 2,029 | |
Impairment loss on digital assets | | | - | | | | 6,125 | |
Non-cash lease expenses | | | 71,349 | | | | 44,647 | |
Depreciation and amortization | | | 248,510 | | | | 15,862 | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (427,433 | ) | | | - | |
Inventory | | | (115,552 | ) | | | (114,645 | ) |
Contribution inventory - related party | | | 14,460 | | | | - | |
Digital currency | | | - | | | | 374 | |
Prepaid expense | | | (10,431 | ) | | | (240 | ) |
Related party advances funding operating expense | | | 246,425 | | | | 108,569 | |
Accounts payable and accrued liabilities | | | (32,827 | ) | | | 76,657 | |
Operating lease liabilities | | | (70,849 | ) | | | (40,000 | ) |
Net Cash used in Operating Activities | | | (1,211,764 | ) | | | (708,450 | ) |
| | | | | | | | |
Cash Flows from Investing Activities: | | | | | | | | |
Purchase of equipment | | | (4,015 | ) | | | (5,350 | ) |
Share capital - Mighty Fire Breaker UK Limited | | | - | | | | 1 | |
Net Cash used in Investing Activities | | | (4,015 | ) | | | (5,349 | ) |
| | | | | | | | |
Cash Flows from Financing Activities: | | | | | | | | |
Proceed from convertible note | | | - | | | | 35,000 | |
Proceeds from loan - related party | | | 307,500 | | | | 784,484 | |
Repayment of loan- related party | | | (125,000 | ) | | | (55,720 | ) |
Proceed from issuance Series C Preferred Stock | | | 907,600 | | | | - | |
Proceed from stock subscription | | | 500,000 | | | | - | |
Proceeds from promissory note | | | 120,000 | | | | - | |
Net Cash provided by Financing Activities | | | 1,710,100 | | | | 763,764 | |
| | | | | | | | |
Change in cash | | | 494,321 | | | | 49,965 | |
Cash, beginning of period | | | 55,434 | | | | 5,469 | |
Cash, end of period | | $ | 549,755 | | | $ | 55,434 | |
| | | | | | | | |
Supplemental Disclosure Information: | | | | | | | | |
Cash paid for interest | | $ | - | | | $ | - | |
Cash paid for taxes | | $ | - | | | $ | - | |
| | | | | | | | |
Non-Cash Financing Disclosure: | | | | | | | | |
Issuance of common stock for services | | $ | 146,850 | | | $ | 70,000 | |
Issuance of Series C Convertible Preferred stock for acquisition of Mighty Fire Breaker | | $ | - | | | $ | 4,200,000 | |
Common stock issued upon conversion of Series C Convertible Preferred stock | | $ | 300 | | | $ | 1,000 | |
Debt forgiveness - related party | | $ | - | | | $ | 9,355 | |
Reclassification of due to related party to convertible note | | $ | 19,000 | | | $ | - | |
Contribution inventory - related party | | $ | 14,460 | | | $ | - | |
Issuance Series C Convertible Preferred stock for services - related party | | $ | 8,640,000 | | | $ | - | |
Right -of-use assets obtained in exchange for new operating lease liabilities | | $ | 161,665 | | | $ | - | |
See the accompanying Notes, which are an integral part of these Financial Statements.
General Enterprise Ventures, Inc.
Notes to Consolidated Financial Statements
December 31, 2023 and 2022
Note 1 – Organization, Business and Going Concern
General Enterprise Ventures, Inc., (the “Company” “GEVI”), was originally incorporated under the laws of the State of Nevada on March 14, 1990.
In January 2021, Board of Directors of the Company approved redomiciling the Company in Delaware. On March 31, 2021, the Company formed General Entertainment Ventures, Inc. in Delaware as a wholly owned subsidiary of the Company. The purpose of the formation of GEVI was to merge the Company into GEVI pursuant to Section 251(g) of the General Corporation Law of the State of Delaware. On April 10, 2021, after approval by the board of directors and shareholders of the Company, the Company was merged into GEVI pursuant to an Agreement and Plan of Merger dated as of the same date. GEVI is the accounting and legal acquiror of the Company.
On October 17, 2021, the Board of Directors approved the corporate name change from General Entertainment Ventures, Inc. to General Enterprise Ventures, Inc.
Corporate Changes
On May 10, 2021, GEVI acquired all the issued and outstanding equity of Strategic Asset Holdings, LLC (“SAH”), a Wyoming limited liability company, for $50,000, pursuant to a promissory note dated as of the same date. SAH is an early-stage company in the home essentials technology space and owns a provisional patent for safe and secure night light. SAH is controlled by the Company’s former Chief Executive Officer. Effective October 19,2021 Strategic Asset Holdings, LLC., was divested completely as a wholly owned subsidiary of General Enterprise Ventures, Inc.
On June 3, 2021, after approval by the board of directors and shareholders of the Company, the Company was redomiciled to the State of Wyoming.
On April 13,2022 General Enterprise Ventures, Inc. acquired Mighty Fire Breaker, LLC, an Ohio Limited Liability company (“MFB”) and all associated IP, in exchange for 1,000,000 Preferred C Shares and a 10% royalty on the gross sales before taxes of products sold under the MFB family of products. MFB has 19 patents centered around its CitroTech MFB 31 Technology for the prevention and spread of wildfires. Its core products can be used for lumber treatments for fire prevention. It has been widely tested and is currently in testing at 3 major us government agencies. When CitroTech Science is sprayed and applied it takes flammable fuels like dry native vegetation and wood and makes them noncombustible. During the third quarter of 2022 the company received EPA Safer Choice status and UL Green-Guard Gold approval on its Citro-Tech fire inhibitor. It continues to pursue additional accreditations such Missoula Testing approval for selling products to the government.
Effective April 1, 2022, the Company implemented a plan to divest its Crypto Mining operations and focus resources on the operations of Mighty Fire Breaker LLC (“MFB”). We expanded our opinion,services by building upon its foundation of emerging technology development, by creating a Crypto-Currency mining operation (farm). Previously, the Company had 20 Bitmain Antminer SJ19 PRO 104t/h and 99 Mini-Doge 185 m/h miners deployed, which are mining, Bitcoin, Doge, and Litecoin through the F2Pool and utilized its 8,000 Sq Ft Commercial space to house these ASIC Miners.
Effective November 20, 2022 General Enterprise Ventures Inc. formed a UK branch of its US subsidiary Mighty Fire Breaker LLC, named Mighty Fire Breaker UK Limited. The new Subsidiary headquartered in the United Kingdom, will be used to direct the sales of the Mighty Fire Breaker line of products and technologies in Europe, the Middle East and Africa.
Change of Control
On April 14, 2021, Jan Ralston acquired 10,000,000 Series A Convertible Preferred Stock from our former Chief Executive Officer, in a private transaction. The transaction constituted a change of control in the Company, due to the preferred shares super voting and conversion rights, entitling the holder to one thousand (1,000) shares and votes of common stock for every one (1) share of Series A Convertible Preferred Stock owned.
On April 28, 2022, Jan Ralston transferred ownership of 10,000,000 Preferred A shares to CEO, Joshua Ralston, making Mr. Ralston the new Majority Shareholder.
Series C Preferred Stock
On April 13, 2022, The Company designated 5,000,000 shares of Series C Convertible Preferred Stock (“Series C Preferred Stock”). The Series C Preferred Stock is convertible into twenty (20) shares of Common Stock for each share of Series C Preferred Stock at the option of the stockholder. The Series C Preferred Stock does not have voting rights and is not eligible to receive dividends.
Business
We are a fully integrated technology company structured to provide mergers and acquisitions of new and available technology. Through our services, we incubate first-to-market products and help existing companies accelerate their product development within all regulatory requirements.
Going Concern
The accompanying consolidated financial statements referred to above present fairly,have been prepared (i) in all material respects, the consolidated financial position of General Environmental Management Inc. and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, in conformityaccordance with accounting principles generally accepted in the United States, of America.
The accompanying consolidated financial statements have been preparedand (ii) assuming that the Company will continue as a going concern. As discussedconcern, which contemplates the realization of assets and the satisfaction of liabilities in Note 1the normal course of business. The Company has generated limited revenues to date. The Company is subject to the consolidated financial statements, the Company has incurred recurring losses from operations sincerisks and uncertainties associated with a business with no substantive revenue, as well as limitations on its inception and has a stockholders’ deficiency at December 31, 2009.operating capital resources. These matters, among others, raise substantial doubt about the ability of the Company to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. In light of these matters, the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 2 to the consolidated financial statements, the Company changed the method in which it accounts for determining if certain instruments (or embedded features) are indexed to its own stock effective January 1, 2009.
Los Angeles, California
April 9, 2010
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
| | | 2009 | | | 2008 | |
| ASSETS | |
| CURRENT ASSETS: | | | | | | |
| Cash | | $ | 466,891 | | | $ | - | |
| Accounts receivable, net of allowance for doubtful accounts of $ 10,000 | | | 974,340 | | | | | |
| Prepaid expenses and other current assets | | | 56,196 | | | | - | |
| Total Current Assets | | | 1,497,427 | | | | - | |
| | | | | | | | | |
| Property and equipment – net of accumulated depreciation of $ 153,448 | | | 12,662,494 | | | | - | |
| Restricted cash | | | 900,122 | | | | 899,784 | |
| Permits and franchises | | | 1,455,534 | | | | - | |
| Deferred financing fees | | | 158,898 | | | | - | |
| Deposits | | | 184,920 | | | | - | |
| Assets of GEM Delaware held for sale | | | 2,922,639 | | | | 6,559,888 | |
| Assets of MTS held for sale | | | - | | | | 3,019,039 | |
| Due from buyer - MTS | | | 1,089,341 | | | | - | |
| TOTAL ASSETS | | $ | 20,871,375 | | | $ | 10,478,711 | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | |
| CURRENT LIABILITIES: | | | | | | |
| Accounts payable | | $ | 2,176,801 | | | $ | 564,637 | |
| Accrued expenses | | | 1,277,662 | | | | 31,438 | |
| Payable to related entities | | | 765,628 | | | | 706,868 | |
| Current portion of financing agreement | | | 12,461,780 | | | | 10,366,544 | |
| Current portion of long term obligations | | | 4,822,719 | | | | 1,239,604 | |
| Current portion of acquisition notes payable | | | 1,072,974 | | | | - | |
| TotaCurrent Liabilities | | | 22,577,564 | | | | 12,909,091 | |
| | | | | | | | | |
| LONG-TERM LIABILITIES : | | | | | | | | |
| Long term obligations, net of current portion | | | 3,238,420 | | | | 500,000 | |
| Acquisition Notes Payable, net of current portion | | | 7,921,674 | | | | - | |
| Derivative liabilities | | | 2,921,552 | | | | - | |
| Total Long-Term Liabilities | | | 14,081,646 | | | | 500,000 | |
| | | | | | | | | |
| STOCKHOLDERS’ DEFICIENCY | | | | | | | | |
| Common stock, $.001 par value, 1,000,000,000 shares authorized, 14,557,653 and 12,691,409 shares issued and outstanding, respectively | | | 14,570 | | | | 12,692 | |
| Additional paid in capital | | | 54,721,872 | | | | 53,585,035 | |
| Accumulated deficit | | | (70,524,277) | | | | (56,528,107) | |
| Total Stockholders' Deficiency | | | (15,787,835) | | | | (2,930,380) | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | | $ | 20,871,375 | | | $ | 10,478,711 | |
See accompanying notes to consolidated financial statements.
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | For the years ended December 31, | |
| | | 2009 | | | 2008 | |
| REVENUES | | $ | 880,758 | | | $ | - | |
| COST OF REVENUES | | | 894,455 | | | | - | |
| GROSS LOSS | | | (13,697) | | | | - | |
| OPERATING EXPENSES | | | 1,160,557 | | | | 1,705,806 | |
| OPERATING LOSS | | | (1,174,254) | | | | (1,705,806) | |
| | | | | | | | | |
| OTHER INCOME (EXPENSE): | | | | | | | | |
| Interest income | | | 1,776 | | | | - | |
| Interest and financing costs | | | (5,316,250) | | | | (3,988,274) | |
| Gain on derivative financial instruments | | | 2,998,369 | | | | - | |
| Loss on extinguishment of debt | | | (4,039,358) | | | | - | |
| Loss on disposal of fixed assets | | | (2,940) | | | | - | |
| Other non-operating income (expense) | | | (29,032) | | | | - | |
| LOSS FROM CONTINUING OPERATIONS | | | (7,561,689) | | | | (5,694,080) | |
| LOSS FROM DISCONTINUED OPERATIONS | | | (7,390,753) | | | | (1,455,629) | |
| NET LOSS | | $ | (14,952,442) | | | $ | (7,149,709) | |
| | | | | | | | | |
| | | | | | | | | |
| Net loss per common share, basic and diluted: | | | | | | | | |
| Continuing operations | | $ | (.55) | | | $ | (.45) | |
| Discontinued operations | | | (.54) | | | | (.12) | |
| Net loss | | $ | (1.09) | | | $ | (.57) | |
| | | | | | | | | |
| Weighted average shares of common stock outstanding, basic and diluted | | | 13,653,295 | | | | 12,578,104 | |
See accompanying notes to the consolidated financial statements
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
| | | | | | Preferred Stock | | | Additional | | | | | | | |
| | | Common Stock | | | Series B | | | Paid-in | | | Accumulated | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Total | |
| Balance, January 1, 2008 | | | 12,473,885 | | | $ | 12,474 | | | | - | | | $ | - | | | $ | 50,151,615 | | $ | (49,378,398 | ) | | $ | 785,691 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of stock to related party for extension of debt | | | 200,000 | | | | 200 | | | | - | | | | - | | | | 219,800 | | | - | | | | 220,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of warrants to related party for extension of debt, financial and advisory services | | | - | | | | - | | | | - | | | | - | | | | 459,887 | | | - | | | | 459,887 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of warrants issued for financing | | | - | | | | - | | | | - | | | | - | | | | 1,674,036 | | | - | | | | 1,674,036 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of warrants issued for services | | | - | | | | - | | | | - | | | | - | | | | 99,675 | | | - | | | | 99,675 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of stock on exercise of warrants | | | 5,000 | | | | 5 | | | | - | | | | - | | | | 2,995 | | | - | | | | 3,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of common stock for services | | | 12,524 | | | | 13 | | | | - | | | | - | | | | 13,137 | | | - | | | | 13,150 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of extension of warrants | | | - | | | | - | | | | - | | | | - | | | | 128,333 | | | - | | | | 128,333 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock compensation cost for value of vested options | | | - | | | | - | | | | - | | | | - | | | | 835,557 | | | - | | | | 835,557 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss for year 2008 | | | - | | | | - | | | | - | | | | - | | | | - | | | (7,149,709 | ) | | | (7,149,709 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2008 | | | 12,691,409 | | | | 12,692 | | | | - | | | | - | | | | 53,585,035 | | | (56,528,107 | ) | | | (2,930,380 | ) |
| Cumulative effect of change in accounting principle – January 1,2009 reclassification of embedded feature of equity-linked financial instruments to derivative liabilities | | | | | | | | | | | | | | | | | | | (1,674,036) | | | | 956,271 | | | | (717,765) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock compensation cost for value of vested options | | | | | | | | | | | | | | | | | | | 767,042 | | | | | | | | 767,042 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of warrants issued for services | | | | | | | | | | | | | | | | | | | 458,476 | | | | | | | | 458,476 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares on exercise of warrants and options | | | 6,500 | | | | 6 | | | | | | | | | | | | 3,931 | | | | | | | | 3,937 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares on conversion of debt | | | 1,009,744 | | | | 1,022 | | | | | | | | | | | | 639,456 | | | | | | | | 640,478 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of shares issued to secured lender | | | 600,000 | | | | 600 | | | | | | | | | | | | 449,400 | | | | | | | | 450,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of warrants issued on conversion of interest | | | | | | | | | | | | | | | | | | | 231,140 | | | | | | | | 231,140 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of shares issued for services | | | 250,000 | | | | 250 | | | | | | | | | | | | 114,750 | | | | | | | | 115,000 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fair value of warrants issued in connection with acquisition | | | | | | | | | | | | | | | | | | | 146,678 | | | | | | | | 146,678 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Loss | | | | | | | | | | | | | | | | | | | | | | | (14,952,442) | | | | (14,952,442) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2009 | | | 14,557,653 | | | $ | 14,570 | | | | - | | | $ | - | | | | 54,721,872 | | | $ | (70,524,277 | ) | | $ | (15,787,835) | |
See accompanying notes to the consolidated financial statements
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | Years Ended December 31, | |
| | | 2009 | | | 2008 | |
| OPERATING ACTIVITIES | | | | | | |
| Net loss | | $ | (14,952,442) | | | $ | (7,149,709 | ) |
| Adjustments to reconcile net loss to cash | | | | | | | | |
| used in operating activities: | | | | | | | | |
| Depreciation and amortization | | | 184,417 | | | | 1,226,178 | |
| Amortization of discount on notes | | | 2,755,580 | | | | 388,285 | |
| Amortization of valuation discount to related party | | | 109,324 | | | | - | |
| Fair value of warrants issued to related party for | | | | | | | | |
| financing services | | | | | | | 57,405 | |
| Fair value of extension of warrants | | | | | | | 128,333 | |
| Fair value of vested options | | | 767,042 | | | | 835,557 | |
| Fair value of shares and warrants issued for services | | | 458,476 | | | | 112,826 | |
| Fair value of common stock issued for services | | | 115,000 | | | | - | |
| Costs to induce conversion of notes payable | | | 157,196 | | | | - | |
| Costs to induce conversion of accrued interest to common stock | | | 231,140 | | | | - | |
| Change in fair value of derivative liabilities | | | (2,998,369) | | | | - | |
| Extinguishment of derivative liabilities | | | 4,039,358 | | | | - | |
| Accrued interest on notes payable | | | 237,604 | | | | 36,897 | |
| Amortization of discount on convertible debt | | | | | | | 2,439,863 | |
| Amortization of deferred financing fees | | | 3,956 | | | | 458,259 | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts Receivable | | | 356,883 | | | | - | |
| Prepaid and other current assets | | | 29,165 | | | | - | |
| Decrease in deposits and restricted cash | | | (5,550) | | | | - | |
| Increase (Decrease) in accounts payable | | | 780,113 | | | | - | |
| Fair value of warrants issued to modify debt | | | - | | | | - | |
| Accrued interest on notes payable | | | 156,692 | | | | - | |
| Accrued expenses and other liabilities | | | 1,039,831 | | | | - | |
| NET CASH USED IN CONTINUING OPERATIONS | | | (6,534,584) | | | | (1,466,106) | |
| NET CASH PROVIDED BY CHANGE IN NET ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS | | | 5,566,947 | | | | | |
| NET CASH USED IN OPERATING ACTIVITIES | | | (967,637) | | | | (1.586.386) | |
| | | | | | | | | |
| INVESTING ACTIVITIES: | | | | | | | | |
| Acquisitions including (net of) cash received | | | 492,193 | | | | (2,218,559) | |
| Additions to property and equipment | | | (106,971) | | | | (478,583) | |
| NET CASH USED IN INVESTING ACTIVITIES | | | 385,222 | | | | (2,697,142) | |
| | | | | | | | | |
| | | | | | | | | |
| FINANCING ACTIVITIES | | | | | | | | |
| Net advances from (repayment of) Laurus notes | | | - | | | | (6,413,605) | |
| Net advances from notes payable – financing agreement | | | 946,455 | | | | 11,642,908 | |
| Advances on letters of credit | | | 90,000 | | | | - | |
| Payments on deferred fees | | | | | | | (147,607) | |
| Payments on notes payable | | | (61,086) | | | | (1,289,964) | |
| Issuance of notes payable to related parties | | | | | | | 472,500 | |
| Payments on capital leases | | | | | | | (554,567) | |
| Payments on investor notes payable | | | (37,500) | | | | (67,500) | |
| Proceeds from issuance of common stock | | | | | | | - | |
| Proceeds from exercise of warrants | | | 3,937 | | | | 3,000 | |
| Advances from related parties | | | 107,500 | | | | 59,765 | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | | | 1,049,306 | | | | 3,704,930 | |
| | | | | | | | | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 466,891 | | | | (578,598) | |
| | | | | | | | | |
| Cash and cash equivalents at beginning of year | | | - | | | | 954,581 | |
| | | | | | | | | |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | | $ | 466,891 | | | $ | 375,983 | |
(continued)
GENERAL ENVIRONMENTAL MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
| | | Years Ended December 31, | |
| | | 2009 | | | 2008 | |
| | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |
| |
| Interest expense | | $ | 1,166,551 | | | $ | 1,159,526 | |
| | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES : | | | | | | | | |
| Fair value of warrants issued to related party for extension of debt | | $ | | | | $ | 222,500 | |
| Fair value of shares issued to related party for extension of debt | | | | | | | 220,000 | |
| Acquisition of leased equipment and capital lease obligations | | | | | | | 1,658,066 | |
| Valuation of warrants allocated to deferred fees | | | | | | | 179,982 | |
| Conversion of related party debt to common stock | | | 314,756 | | | | - | |
| Conversion of notes payable and accrued interest to common stock | | | 108,526 | | | | - | |
| Conversion of fees due to related party to common stock | | | - | | | | - | |
| Issuance of note payable on acquisition | | | | | | | 1,250,000 | |
| Value of warrants and beneficial conversion feature on notes | | | | | | | 1,674,035 | |
| Closing fees due to related party included as deferred financing fees | | | | | | | 250,000 | |
| Fair value of warrants and valuation discount after modification | | | 8,826,697 | | | | - | |
| Reclassification of net assets of GEM MTS held for sale to amount due from MTS | | | 1,089,341 | | | | | |
| Cumulative effect of adoption of accounting principle and establishment of derivative liability on: | | | | | | | | |
| Notes payable | | | 1,408,828 | | | | - | |
| Stockholders’ deficiency | | | 717,763 | | | | - | |
See accompanying notes to the consolidated financial statements
GENERAL ENVIRONMENTAL MANAGEMENT, INC AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
ORGANIZATION AND DESCRIPTION OF BUSINESS
Ultronics Corporation ( “the Company”) was incorporated in the state of Nevada on March 14, 1990 to serve as a vehicle to effect a merger, exchange of capital stock, asset acquisition or other business combination with a domestic or foreign private business. On February 14, 2005 the Company acquired all of the outstanding shares of General Environmental Management, Inc (“GEM”), a Delaware Corporation. The acquisition was accounted for as a reverse merger (recapitalization) with GEM deemed to be the accounting acquirer, and Ultronics Corporation the legal acquirer. Subsequent to the acquisition, the Company changed its name to General Environmental Management, Inc.
GEMconcern is a fully integrated environmental service firm structured to provide EHS compliance services, field services, transportation, off-site treatment, and on-site treatment services. Through its services GEM assists clients in meeting regulatory requirements for the disposal of hazardous and non-hazardous waste.
GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company incurred a net loss of $14,952,442 and utilized cash in operating activities of $967,637 during the year ended December 31, 2009, and as of December 31, 2009 the Company had current liabilities exceeding current assets by $21,080,137 and a stockholders’ deficiency of $15,787,835. These matters raise substantial doubt aboutdependent upon the Company’s ability to
continue as a going concern. raise capital and generate revenue and profits in the future.Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The Company is also in default of certain of its note payable obligations.
Management is executing a planFinancial Statements and related disclosures have been prepared pursuant to divest certain partsthe rules and regulations of the businessSecurities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in order to satisfy obligations of its senior lender. In conjunctionaccordance with that strategy, the assets of GEM Mobile Treatment Services (GEM MTS) on August 17, 2009 GEM MTS was sold to MTS Acquisition Company, Inc., a holding company, and will be owned and operated by two former senior executives of GEM. Consideration for the sale was in the form of promissory notes in the aggregate amount of $5.6 million, the assignment of approximately $1.0 million of accounts payable and possible future royalties. The consideration was immediately assigned to CVC California, LLC, ("CVC"Generally Accepted Accounting Principles (“GAAP”) GEM's senior secured lender. As the notes are paid to CVC, GEM's indebtedness to CVC will be reduced. Total reduction in indebtedness to CVC could amount to more than $7 million (See Note 4).
On November 25, 2009, the Company entered into an Agreement with Luntz Acquisition (Delaware), LLC. (“Buyer”) pursuant to which the Company has agreed to sell to Luntz all of the
issued and outstanding stock of the Company's primary operating subsidiary, General Environmental Management, Inc. a Delaware corporation, ("GEM DE") for cash (the “Sale”). Luntz agreed to pay the Company $14 million for the purchased interests. On February 26, 2010, after approval of the transaction by theUnited States.The Company’s shareholders at a special meeting held on February 19, 2010, the Company completed the sale of the entities created out of GEM DE. The net cash proceeds from the transaction were used by the Company to retire senior debt and other obligations of the Company (See Notes 4 and 16).
The Company will continue to operate in the environmental services sector after the Sale. However our primary focus and point for development will center on the SCWW treatment facility and the treatment of non-hazardous waste water. SCWW has been treating non-hazardous waste water for the oil and gas industry, industrial clients, and domestic waste generators for 50 years. Current clients that generate non-hazardous waste for SCWW also have a wider range of waste streams that SCWW currently services, including solids, tank bottoms and drilling muds, and hazardous waste streams. We will continue to provide the full range of services to SCWW’s clientele that SCWW currently offers.
The Company will also research technological opportunities in the waste-to-energy (W-T-E) marketplace as a further resource for our non-hazardous waste water treatment facilities. A W-T-E solution for managing the treating waste provides a significant advantage for generators of the waste, the environment, and the Company.
The Company will continue to develop SCWW as the foundation of our core business in the non-hazardous waste water treatment sector. We intend to do this through internal growth by offering SCWW’s integrated solution for generators of non-hazardous waste water and by making strategic acquisitions of non-hazardous waste water treatment companies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) fiscal year is December 31.Principles of Consolidation
The consolidated financial statements include the accounts of General Environmental Management,Enterprise Ventures, Inc., a Nevada corporation, and it’sits wholly owned subsidiaries, General Environmental Management, Inc., a Delaware corporation, GEM Mobile Treatment Services, Inc., a California corporation, Island Environmental Services, Inc., a California corporation, General Environmental Management of Rancho Cordova, LLCsubsidiaries. Intercompany transactions and California Living Waters Inc. Inter-company accounts and transactionsbalances have been eliminated.
EstimatesThe preparation of financial statements in conformity with accounting principles generally accepted in the United States of AmericaGAAP requires the Company’s management to make certain estimates and assumptions. These estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of the contingent assets and liabilities at the date of the financial statements. TheseThe estimates and assumptionsjudgments will also affect the reported amounts offor certain revenues and expenses during the reporting period. Actual results could differ materially based on any changes in thefrom these good faith estimates and assumptionsjudgments.
Business Combinations
In accordance with ASC 805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company usesholds in the preparation of its financial statements that are reviewed no less than annually. Actual results could differ materially from these estimates and assumptions dueacquired company prior to changesthe acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in environmental-related regulations or future operational plans,income for the difference between fair value and the inherent imprecision associated with estimating such future matters.
(c) Revenue Recognition
The Company recognizes revenue when persuasive evidenceexisting book value. Results of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collection is reasonably assured.
The Company is a fully integrated environmental service firm structured to provide field services, technical services, transportation, off-site treatment, on-site treatment services, and environmental health and safety (“EHS”) compliance services. Through our services, we assist clients in meeting regulatory requirements from the designing stage to the waste disposition stage. The technicians who provide these services are billed at negotiated rates, or the service is bundled into a service package. These services are billed and revenue recognized when the service is performed and completed. When the service is billed, client costs are accumulated and accrued.
Our field services consist primarily of handling, packaging, and transporting a wide variety of liquid and solid wastes of varying amounts. We provide the fully trained labor and materials to properly package hazardous and non-hazardous waste according to requirementsoperations of the
Environmental Protection Agency and the Department of Transportation. Small quantities of laboratory chemicals are segregated according to hazard class and packaged into appropriate containers or drums. Packaged waste is profiled for acceptance at a client’s selected treatment, storage and disposal facility (TSDF) and tracked electronically through our systems. Once approved by the TSDF, we provide for the transportation of the waste utilizing tractor-trailers or bobtail trucks. The time between picking up the waste and transfer to an approved TSDF is usually less than 10 days. The Company recognizes revenue for waste picked up and received waste at the time pick up or receipt occurs and recognizes the estimated cost of disposal in the same period. For the Company’s TSDF located in Rancho Cordova, CA, costs to dispose of waste materials located at the Company’s facilitiesacquired entity are included in
accrued disposal costs. Due to the
limited sizeCompany’s results from the date of the
facility, waste is held for only a short time before transferacquisition onward and include amortization expense arising from acquired tangible and intangible assets.Cash and Cash Equivalents
For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to a final treatment, disposal or recycling facility.
The Company's business activities also include providing wastewater treatment for companiesbe cash and haulers in Ventura County, California, and in adjacent counties.cash equivalents. The Company recognizes revenuedid not have any cash equivalents at the time its customers unload untreated wastewater at the Company's facility. Concurrent with the recognition of revenue, the Company records the estimated costs to treatDecember 31, 2023 and dispose of the wastewater on hand.
(d) Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk consist principally of cash and trade receivables.2022. The Company places itshad cash in what it believes to be credit-worthy financial institutions. However, cash balances have exceeded FDIC insured levelsof $549,755 and $55,434 at various times. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk in cash.
The Company’s trade receivables result primarily from removal or transportation of waste, and the concentration of credit risk is limited to a broad customer base located throughout the Western United States.
During the year ended December 31,
20092023 and
2008, one customer accounted for 3% and 14%2022, respectively.Inventory
Inventories consist of revenues, respectively.raw materials which are stated at lower cost or net realizable value, with cost being determined on the weighted average method. As of December 31, 20092023, and 2008, one customer accounted for 11% and 24% of accounts receivable, respectively.
(e) Fair Value of Financial Instruments
Fair Value Measurements are adopted by2022, the Company
based onheld inventories of $230,197and $114,645, respectively.During the authoritative guidance provided by the Financial Accounting Standards Board , with the exception of the application of the statement to non-recurring, non-financial assets and liabilities as permitted. The adoption based on the authoritative guidance provided by the Financial Accounting Standards Board did not have a material impact on the Company's fair value measurements. Based on the authoritative guidance provided by the Financial Accounting Standards Board defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB authoritative guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels as follows:
Level 1- Quoted prices in active markets for identical assets or liabilities. Level 2- Inputs, other than the quoted prices in active markets that are observable either directly or indirectly. Level 3- Unobservable inputs based on the Company's assumptions.
FASB issued authoritative guidance that requires the use of observable market data if such data is available without undue cost and effort.
The following table presents certain investments and liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s condensed consolidated balance sheets on a recurring basis and their level within the fair value hierarchy for the yearyears ended December 31, 2009 (unaudited):
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| Fair value of warrants and embedded derivatives | | | - | | | | - | | | $ | 2,921,552 | | | $ | 2,921,522 | |
See Notes 82023, and 11 for more information on these financial instruments.
(f) Derivative Financial Instruments
2022, the Company recorded cost of goods sold of $133,508 and $1,893 associated with the cost of inventories sold, respectively. The Company
evaluates alldid not write-off any inventories as unsalable during the years ended December 31, 2023, and 2022.Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make the required payments for services. Accounts with known financial instruments to determineissues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable that the receivable will not be recovered. During the years ended December 31,2023 and 2022, the Company had no allowance for doubtful accounts.
Intangible Assets
Intangible assets with an indefinite life are not amortized and are tested for impairment annually or more frequently if such instrumentsevents or changes in circumstances indicate that they might be impaired. Intangible assets with finite lives are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair valuecost and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated 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.
(g) Cash
Cash in bank and short term investments with maturities fewer than thirty days are recorded as cash balances.
(h) Trade Receivables
Trade receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as needed.
The Company uses the allowance method to account for uncollectible trade receivable balances. Under the allowance method, if needed, an estimate of uncollectible customer balances is made based upon specific account balances that are considered uncollectible. Factors used to establish an allowance include the credit quality of the customer and whether the balance is significant.
(i) Property and Equipment
Property and equipment is stated at cost. Depreciation is computed using the straight line method based on the estimated useful lives of the assets, generally as follows:
Transportation | 5 Years |
Equipment | 5 – 7 Years |
Furniture and fixtures | 5 – 7 Years |
Building and Improvements | 20 - 40 Years |
Leasehold improvements are amortized over the shorter of the useful lives of the related assets, or the lease term. In accordance with the Company’s operating permit for the fully permitted Treatment, Storage, and Disposal Facility in Rancho Cordova, California , the Company is liable for certain costs involving the ultimate closure of the facility. These expenses include costs of decommissioning, remediation, and incremental direct administration costs to close the facility. Current accounting guidance requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and capitalized as part of the carrying amount of the long-lived asset. When a liability is initially recorded, the Company capitalizes the cost by increasing the carrying value of the related facility (long-lived asset). Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the facility. Upon settlement of the liability, a gain or loss will be recorded. The Company recorded asset retirement liabilities of $2,013 in 2009 and $2,013 in 2008.
(j) Permits and Franchises
The Company accounts for intangible assets including permits and franchises pursuant to the guidance of Financial Accounting Standards Board. In accordance with this guidance, intangibles with definite lives continue to be amortized on a straight-line basis over the lesser of their estimated economic useful lives or contractual terms. Intangibles with indefinite lives are evaluated at least annually for impairment by comparing the asset’s estimated fair values with its carrying value, based on cash flow methodology. If any losses are determined to exist they are recorded in the period when such impairment is determined. Based upon management’s assessment, there are no indicators of impairment of its permits and franchises at December 31, 2009 and December 31, 2008.
(k) Impairment of Long-Lived Assets
The Company periodically reviews, at least annually, such assets for possible impairment and expected losses. If any losses are determined to exist they are recorded in the period when such impairment is determined. Based upon management’s assessment, there are no indicators of impairment of its long lived assets at December 31, 2009 or 2008.
(l) Deferred Rent
Certain of the
Company’s operating leases contain predetermined fixed increases inrespective assets. Acquired intangible assets from business combinations and asset acquisitions are recognized and measured at fair value at the
minimum rental rate during the initial lease term and/or rent holiday periods. For these leases, the Company recognizes the related rental expensetime of acquisition. Those assets represent assets with finite lives and are further amortized on a straight-line basis
beginningover the estimated economic useful lives of the respective assets.Property and Equipment
Property and equipment are stated at cost. Depreciation is computed on the straight-line method. Currently our assets consist solely of furniture and equipment which we amortize over a useful life of 5 years.
Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in the income.
Impairment of Long-lived Assets Other Than Goodwill
Long-lived assets with finite lives, primarily property and equipment, intangible assets, and operating lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.
Digital Assets
We account for all digital assets held as a result of these transactions as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. We have ownership of and control over our digital assets and we may use third-party custodial services to secure it. The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition.
We determine the fair value of our digital assets on a nonrecurring basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). We perform an analysis each quarter to identify whether events or changes in circumstances, principally decreases in the quoted prices on active exchanges, indicate that it is more likely than not that our digital assets are impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital asset. If the current carrying value of a digital asset exceeds the fair value so determined, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the price determined.
Impairment losses are recognized within other income (expense) on the statements of operations and comprehensive loss in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets held within other income (expense). In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
During the year ended December 31, 2022, the Company recorded an impairment loss of $6,125 associated with market value of digital currencies in excess of the Company’s cost basis. As of December 31, 2022, the Company has divested all of its digital currency holdings and the impairment loss has been recorded within the Company’s income from discontinued operations.
Leases
ASC 842 supersedes the lease requirements in ASC 840 “Leases”, and generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (“ROU”) assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Any lease with a term of 12 months or less is considered short-term. As permitted by ASC 842, short-term leases are excluded from the ROU assets and lease liabilities on the consolidated balance sheets. Consistent with all other operating leases, short-term lease expense is recorded on a straight-line basis over the lease term.
The Company determines the present value of minimum future lease payments for operating leases by estimating a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term, an amount equal to the lease payments and a similar economic environment (the “incremental borrowing rate” or “IBR”).The Company determines the appropriate IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific circumstances.
As of December 31,2023, and 2022, the Company’s lease agreement is accounted for as operating leases.
Fair Value of Financial Instruments
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 Company’s financial instruments, including cash, accounts payable and accrued liabilities, and loans payable, are carried at historical cost. At December 31, 2023 and 2022, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
Related Parties
The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions (see Note 5).
Segments
Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and all of the Company’s revenues and operations are currently in the United States.
Revenue
The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.
Revenue related to contracts with customers is evaluated utilizing the following steps:
| (i) | Identify the contract, or contracts, with a customer; |
| (ii) | Identify the performance obligations in the contract; |
| (iii) | Determine the transaction price; |
| (iv) | Allocate the transaction price to the performance obligations in the contract; |
| (v) | Recognize revenue when the Company satisfies a performance obligation. |
For the year ended December 31, 2023, our revenues currently consist of products used for lumber products for fire prevention. Revenue is recognized at a point in time, that is which the risks and rewards of ownership of the products transfer from the Company to the customer.
During the year ended December 31,2022, the Company earned cryptocurrency mining revenues. The Company earned its cryptocurrency mining revenues by providing transaction verification services within the digital currency networks of cryptocurrencies, for Bitcoin, Litecoin, and Dogecoin. The Company satisfied its performance obligations at the point in time that the Company was awarded a unit of digital asset through its participation in the applicable network and network participants benefit from the Company’s verification service. In consideration for these services, the Company received Bitcoin, Litecoin, and Dogecoin, net of applicable network fees, which was recorded as revenue using the closing U.S. dollar price of the digital asset on the date of receipt. Expenses associated with running the propertycryptocurrency mining operations, which consisted of utilities, equipment depreciation and monitoring services were recorded as cost of revenues.
There is delivered. The difference betweencurrently no specific definitive guidance in GAAP or alternative accounting frameworks for the amount charged to expenseaccounting for the production and mining of digital assets and management has exercised significant judgment in determining appropriate accounting treatment for the recognition of revenue for mining of digital assets. Management has examined various factors surrounding the substance of the Company’s operations and the rent paidguidance in ASC 606, including identifying the transaction price, when performance obligations are satisfied, and collectability is recordedreasonably assured being the completion and addition of a block to a blockchain and the award of a unit of digital currency to the Company. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies which could result in a change in the Company’s financial statements.
On April 1, 2022, the Company implemented a plan to discontinue its crypto mining operations and divest all related assets. As of December 31, 2022, all of the crypto mining assets had been discarded and as deferred rent,the Company no longer engages in crypto mining all revenue during the year ended December 31, 2022, has been reclassified to income from discontinued operations (see Note 4).
Basic and includedDiluted Net Loss Per Common Share
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.
For the years ended December 31, 2023 and 2022, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.
| | December 31 | | | December 31 | |
| | 2023 | | | 2022 | |
| | Shares | | | Shares | |
Convertible notes | | | 300,000 | | | | 194,444 | |
Convertible Series C Preferred Stock | | | 25,957,712 | | | | 650,959 | |
Convertible Series A Preferred Stock(1) | | | 10,000,000,000 | | | | 10,000,000,000 | |
| | | 26,257,712 | | | | 845,403 | |
(1) Series A Preferred Stock was amended in current liabilities.
(m) March 2024 to remove the conversion feature (Note 11).For the years ended December 31, 2023 and 2022 the reconciliation to net loss per common share basic and the anti-dilutive impact on net loss per share, are as follows:
| | Years Ended | |
| | December 31, | |
| | 2023 | | | 2022 | |
Numerator: | | | | | | |
Net Loss | | $ | (9,855,019 | ) | | $ | (2,907,828 | ) |
Net Loss - diluted | | $ | (9,855,019 | ) | | $ | (2,907,828 | ) |
| | | | | | | | |
Denominator: | | | | | | | | |
Weighted average common shares outstanding | | | 96,663,470 | | | | 62,254,977 | |
Effect of dilutive shares | | | | | | | | |
Convertible notes | | | 273,683 | | | | 69,954 | |
Preferred stock | | | 10,025,957,712 | | | | 10,013,019,178 | |
Diluted | | | 10,122,894,865 | | | | 10,075,344,109 | |
| | | | | | | | |
Net loss per common share: | | | | | | | | |
Basic | | $ | (0.10 | ) | | $ | (0.05 | ) |
Diluted | | $ | (0.00 | ) | | $ | (0.00 | ) |
Income Taxes
The Company accountsIncome taxes are accounted for income taxes usingunder the asset and liability method whereby deferred incomemethod. Deferred tax assets and liabilities are recognized for the future tax consequences of temporaryattributable to differences by applying statutory tax rates applicable to future years to the difference between the financial statement carrying amounts of existing assets and theliabilities and their respective tax bases of certainand operating loss and tax credit carry forwards. Deferred tax assets and liabilities. Changesliabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities include the impact of anya change in tax rate changes enacted during the year.
(n) Stock Compensation Costs
The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. Stock-based compensation is measured at the grant date, based on the fair value of the award, andrates is recognized as expense over the requisite service period. Options vest and expire according to terms established at the grant date.
(o) Net Loss per Share
Statement of Financial Accounting Standards No. 128, "Earnings per Share", requires presentation of basic earnings per share ("Basic EPS") and diluted earnings per share ("Diluted EPS"). Basicin income (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share gives effect to all dilutive potential common shares outstanding during the period.
These potentially dilutive securities were not included in the calculation of loss per share forperiod that includes the years ended December 31, 2009 and 2008 because the Company incurred a loss during such periods and thus their effect would have been anti-dilutive. Accordingly, basic and diluted loss per shareenactment date. A valuation allowance is the same for the years ended December 31, 2009 and 2008.
At December 31, 2009 and 2008, potentially dilutive securities consisted of convertible preferred stock, outstanding common stock purchase warrants, convertible debt and stock optionsrecorded to acquire an aggregate of 15,256,481 shares and 16,497,553 shares, respectively.
(p) Change in accounting principle
On January 1, 2009, the Company adopted authoritative guidance issued by the FASB which affects the accounting for warrants and many convertible instruments. The Company determined the warrants and convertible debt issued in 2008 and 2009 contained re-set provisions that preclude them from being indexed toreduce the Company’s own stock. As a result, the warrants and conversion feature previously classified in equity were reclassifieddeferred tax assets to derivative liabilities (see Note 10).
(q) Recentan amount that is more likely than not to be realized.Recently Issued Accounting Pronouncements
In June 2009,October 2021, the FASB issued authoritative guidance on accounting standards codificationASU No. 2021-08, Accounting for Contract Assets and the hierarchy of generally accepted accounting principles (“GAAP") effective for interim and annual reporting periods ending after September 15, 2009. The FASB accounting standards codification (“ASC, “Codification”) has become the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordanceContract Liabilities from Contracts with GAAP. All existing accounting standard documents are superseded by the Codification and any accounting literature not included in the Codification will not be authoritative. However, rules and interpretive releases of the SEC issued under the authority of federal securities laws will continue to be sources of authoritative GAAP for SEC registrants. Beginning with the quarter ending September 30, 2009, all references made by the Company to GAAP in its condensed consolidated financial statements use the Codification numbering system. The Codification does not change or alter existing GAAP and, therefore, it does not haveCustomers (Topic 805). This ASU requires an impact on our financial position, results of operations and cash flows.
In June 2009, the FASB updated the accounting principle for the consolidation of variable interest entities. Among other things, the update replaces the calculation for determining which entities, if any, have a controlling financial interestacquirer in a variable interest entity (VIE) from a quantitative based risksbusiness combination to recognize and rewards calculation, to a qualitative approach that focuses on identifying which entities have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. The update also requires ongoing assessments as to whether an entity is the primary beneficiary of a VIE (previously, reconsideration was only required upon the occurrence of specific events), modifies the presentation of consolidated VIEmeasure contract assets and contract liabilities and requires additional disclosures about a company’s involvement in VIE’s. This update will be effective for fiscal years beginning after November 15, 2009. The Company does not currently believe that(deferred revenue) from acquired contracts using the adoption of this update will have any effect on its consolidated financial position and results of operations.
In October 2009, the FASB issued authoritative guidance on revenue recognition that will become effective for us beginning July 1, 2010, with earlier adoption permitted. Under the new guidance on arrangements that include software elements, tangible products that have software components that are essential to the functionality of the tangible product will no longer be within the scope of the software revenue recognition guidance and software-enabled products will now be subject to other relevantin Topic 606. At the acquisition date, the acquirer applies the revenue recognition guidance. Additionally,model as if it had originated the FASB issued authoritative guidance on revenue arrangements with multiple deliverables that are outside the scopeacquired contracts. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the software revenue recognition guidance. Under the new guidance, when vendor specific objective evidence or third party evidence for deliverablesASU should be applied prospectively. Early adoption is also permitted, including adoption in an arrangement cannot be determined, a best estimateinterim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of the selling priceadoption. This ASU is requiredcurrently not expected to separate deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We believe the adoption of this new guidance will not have a material impact on our financial statements.
Other recentIn December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, additional disclosures primarily related to the income tax rate reconciliation and income taxes paid. The expanded annual disclosures are effective for our year ending December 31, 2025. The Company is currently evaluating the impact that ASU 2023-09 will have on our consolidated financial statements and whether we will apply the standard prospectively or retrospectively.
The Company has considered all other recently issued accounting pronouncements issued byand does not believe the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management toadoption of such pronouncements will have a material impact on the Company's present or future consolidatedits financial statements.
3. ACQUISITION
Reclassification
Certain accounts from prior periods have been reclassified to conform to the current period presentation.
Note 3 – Acquisition
On November 13, 2009,January 3, 2022, the Company entered into a Stock Purchase Agreement with United States Environmental Response,formed Mighty Fire Breaker, LLC, an Ohio limited liability company (“MFB Ohio”), to acquire all the intellectual property of Mighty Fire Breaker, LLC, a California limited liability company pursuant(“MFB California”) pertaining to which we purchased allthe fire suppression segment of the issuedenvironmental industry, including patents and outstanding capital stockpatents pending. On April 13, 2022, the transaction between the Company, MFB Ohio and MFB California closed. The transaction consideration to the equity holders of MFB California Living Waters, Incorporated ("CLW"), a privately held company. CLW owns allwas 1,000,000 shares of the issued and outstanding capital stockSeries C Convertible Preferred Stock of Santa Clara Waste Water Company (SCWW") a California corporation. SCWW, located in Ventura County, California, is a waste water management company that operates a 12.7 mile pipeline from its facility to the City of Oxnard' water reclamation center The Agreement is subject to a rescission if the Company does not pay certain indebtedness towith a value at closing of $4,200,000, and a 10% royalty on gross sales before taxes of the MFB Ohio family of products.
MFB has 19 patents centered around its senior lender by closeCitroTech MFB 31 Technology for the prevention and spread of business on March 12, 2010. wildfires. Its core products can be used for lumber treatments for fire prevention. It has been widely tested and is currently in testing at 3 major us government agencies. When CitroTech Science is sprayed and applied it takes flammable fuels like dry native vegetation and wood and makes them noncombustible.
The following table summarizes the consideration paid for MFB and the amounts of the assets acquired, and liabilities assumed at the acquisition date of April 13, 2022:
Consideration: | | | |
Convertible Series C Preferred stock | | $ | 4,200,000 | |
| | | | |
Assets acquired and liabilities assumed: | | | | |
Intangible assets | | $ | 4,195,353 | |
Operating lease right-of-use assets | | | 81,967 | |
Operating lease liabilities | | | (77,320 | ) |
Note 4 – Discontinued Operations
On February 26, 2010April 1, 2022, the Company paidimplemented a plan to divest its indebtednesscrypto mining operations to focus its resources on the senior lender and satisfiedMFB acquisition. The Company recognized a loss of $2,030 from the disposition of its obligations related to this rescission (see Note 16).
In consideration for the sale, GEM issued six promissory notes in the aggregate principal amount of $9,003,000, and warrants to purchase 425,000 shares of GEM's common stock valued at $146,678 based upon a black scholes valuation model. The Notes bear interest at 6.5 per cent per annum. Twocrypto mining operations, which consisted of the Notes, totaling $3,778,000 are convertible into a total of 15% of GEM's common stock on a fully diluted basis upon the occurrence of certain future events (see Note 10). The acquisition was accounted for as a purchase. As such, the results of SCWW operations have been included in the consolidated financial statements since November 13, 2009. The componentsrelinquishment of the purchase price and the allocationdigital currency assets in exchange for settlement of the purchase price are as follows:
| Purchase Price | | | |
| Issuance of Notes Payable | | $ | 9,003,000 | |
| Fair Value of Warrants Issued | | | 146,678 | |
| Total Purchase Price | | | 9,149,678 | |
| | | | | |
| Purchase price allocation | | | | |
| Fair value of net assets acquired | | $ | 7,218,360 | |
| Excess purchase price – allocated to acquired pipeline | | | 1,931,318 | |
| Total purchase price allocation | | | 9,149,678 | |
The Company allocatedrelated party note payable associated with the excessacquisition of net assets acquired to acquired pipeline and permits based upon a preliminary valuation. The Company has not yet finalized the purchase price allocation which may change upon the completion of a final analysis of assets and liabilities.
equipment.The following sets out the pro forma operating results for the year ended December 31, 2009 and 2008 for the Company had the acquisition occurred as of January 1, 2008:
| | | Pro Forma (Unaudited) Years ended December 31, | |
| | | 2009 | | | 2008 | |
| Net sales | | $ | 6,172,625 | | | $ | 7,615,880 | |
| | | | | | | | | |
| Cost of sales | | | 4,544,928 | | | | 4,593,040 | |
| | | | | | | | | |
| Gross profit | | | 1,627,697 | | | | 3,022,840 | |
| | | | | | | | | |
| Operating expenses | | | 2,148,816 | | | | 3,697,990 | |
| | | | | | | | | |
| Operating loss | | | (521,119) | | | | (675,150) | |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 2,189 | | | | - | |
| Interest expense and financing costs | | | (5,695,736) | | | | (4,510,156) | |
| Gain on derivative financial instruments | | | 2,998,369 | | | | - | |
| Loss on extinguishment of debt | | | (4,039,358) | | | | - | |
| Loss on disposal of fixed assets | | | (308,069) | | | | - | |
| Other non-operating income (expense) | | | (28,971) | | | | 5,256 | |
| Loss from operations | | | (7,592,695) | | | | (5,180,050) | |
| Loss from discontinued operations | | | (7,390,753) | | | | (1,455,629) | |
| Provision on income taxes | | | - | | | | (205,612) | |
| Net Loss | | $ | (14,983,448) | | | $ | (6,841,291) | |
| Loss per weighted average share, basic and diluted: | | | | | | | | |
| Continuing operations | | $ | (.55 | ) | | $ | (.43 | ) |
| Discontinued operations | | $ | (.54 | ) | | $ | (.11 | ) |
| | | | (1.09 | ) | | | (.54 | ) |
4. DISCONTINUED OPERATIONS
Sale of GEM Mobile Treatment
On August 17, 2009, the Company entered into a Stock Purchase Agreement ("Agreement") with MTS Acquisition Company ("MTS"), a privately held company, pursuant to which the Company sold all of the issued and outstanding common stock of GEM Mobile Treatment Services, Inc. (“GEM MTS”). GEM MTS is a provider of mobile wastewater treatment and vapor recovery services with locations in California and Texas.
GEM MTS was purchased by MTS, a corporation owned by two former senior executives of the Company. Consideration for the sale was in the form of a promissory note in the aggregate amount of $5.6 million, the assumption by MTS of approximately $1.0 million of accounts payable and possible future royalties. The consideration was immediately assigned by Company to CVC California, LLC, ("CVC") GEM's senior secured lender. As the notes are paid to CVC, GEM's indebtedness to CVC will be reduced. At the time of the sale, the net assets of MTS were $1,089,341.
The promissory note for $5,600,000 bears interest at 8%. On the first day of each calendar month commencing September 1, 2009 through and including August 1, 2010, accrued interest on the outstanding principal is due and payable. Thereafter, principal and interest under this Note is payable in thirty-six (36) consecutive equal monthly installments of principal and interest of $174,321.50 each, with the first installment due and payable on September 1, 2010, and with subsequent installments due and payable on the first day of each calendar month thereafter through and including August 1, 2013. All or any portion of the unpaid principal balance of this note, together with all accrued and unpaid interest on the principal amount being prepaid, may at the MTS’s option be prepaid in whole or in part, without premium or penalty. The Note is secured by liens on substantially all of assets and properties of MTS.
Concurrent with the closing of the sale of GEM MTS, the Company assigned with full recourse and full representation and warranty of title and ownership the promissory note to the Company’s senior lender (See Note 7). The Company also entered into a subordinated collateral agreement with GEM MTS in order to secure potential obligations related to indemnification payments it may hereafter become obligated to make to MTS in accordance with the Agreement.
The transaction resulted in the Company receiving $4,510,659 excess of consideration ($5.6 million note) over the $1,089,341 of net assets to be disposed. The Company analyzed the current accounting guidance and determined that the gain included in this transaction should not be recognized in the current period. In making this decision the Company determined that the buyers initial investment did not qualify for recognition of profit by the full accrual method as the company did not receive sufficient cash proceeds upon the consummation of the transaction, and collection of the amounts due are uncertain. Under this method the note receivable has not been recorded, and no profit will be recognized until cash payments by the buyer exceed the sellers cost of the assets. The transaction will be reassessed in the future to determine if it has met the criteria for the full accrual method, and at that time any unrecognized income will be recognized in the income statement. The Company has reflected the $1,089,341 of net assets of MTS sold at the date of the transaction as due from buyer as of December 31,2009 as no payment on the note have been received.
The Company has reclassified its December 31, 2008 balance sheet to segregate the net assets of Gem Mobile Treatment Services, Inc. Components of the net assets as of that date are as follows:
| | | December 31, 2008 | |
| Current assets | | $ | 1,822,860 | |
| Property and Equipment – net of accumulated depreciation | | | 1,952,410 | |
| Goodwill and Intangibles | | | 1,121,794 | |
| Other assets | | | 46,443 | |
| TOTAL ASSETS | | | 4,943,507 | |
| | | | | |
| Current liabilities | | | 1,019,278 | |
| Long-term liabilities | | | 905,190 | |
| TOTAL LIABILITIES | | | 1,924,468 | |
| ASSETS OF MTS HELD FOR SALE | | $ | 3,019,039 | |
Sale of General Environmental Management Inc.
On November 25, 2009, the Company entered into an Agreement with Luntz Acquisition (Delaware), LLC. (“Buyer”) pursuant to which the Company has agreed to sell to Luntz all of the issued and outstanding stock of the Company's primary operating subsidiary, General Environmental Management, Inc.) Luntz agreed to pay the Company $14 million for the purchased interests. On February 26, 2010, after approval of the transaction by the Company’s shareholders at a special meeting held on February 19, 2010, the Company completed the sale. The Company has classified the assets and liabilities of General Environmental Management Inc. as “Net Assets held for Sale” as of December 31, 2009, and reclassified the prior year financial statements to conform to the current year presentation.
A summary of the assets and liabilities of General Environmental Management Inc.the Company’s crypto mining operations as of December 31, 2009 and 2008 are as follows:
| | | Year ended December 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Current assets | | $ | 2,453,085 | | | | 5,820,155 | |
| Property and Equipment – net of accumulated depreciation | | | 4,901,641 | | | | 5,830,799 | |
| Goodwill and Intangibles | | | 612,615 | | | | 689,106 | |
| Other assets | | | 561,433 | | | | 1,058,193 | |
| TOTAL ASSETS | | | 8,528,774 | | | | 13,398,253 | |
| | | | | | | | | |
| Current liabilities | | | 4,928,153 | | | | 5,956,012 | |
| Long-term liabilities | | | 677,982 | | | | 882,353 | |
| TOTAL LIABILITIES | | | 5,606,135 | | | | 6,838,365 | |
| ASSETS OF GEM DELAWARE HELD FOR SALE | | $ | 2,922,639 | | | $ | 6,559,888 | |
April 1, 2022: | | April 1, | |
| | 2022 | |
Digital currency | | | 26,825 | |
Digital currency equipment, net | | | 276,379 | |
Total assets from discontinued operations | | $ | 303,204 | |
| | | | |
Due to related party | | | 301,175 | |
Total liabilities from discontinued operations | | $ | 301,175 | |
The operating resultsfollowing is a summary of these discontinued operations for the period ended April 1,2022:
| | April 1, | |
| | 2022 | |
Revenue | | $ | 46,976 | |
Cost of revenue | | | 27,835 | |
Gross Profit | | | 19,141 | |
| | | | |
Operating expenses: | | | | |
Impairment loss | | | 6,125 | |
Total operating expenses | | | 6,125 | |
| | | | |
Income from discontinued operations | | $ | 13,016 | |
Note 5 – Equipment, net
At December 31, 2023 and 2022, equipment consisted of the following:
| | December 31, | | | December 31, | |
| | 2023 | | | 2022 | |
Cost: | | | | | | |
Furniture and equipment | | $ | 9,365 | | | $ | 5,350 | |
Less: accumulated depreciation | | | (2,066 | ) | | | (803 | ) |
Property and equipment, net | | $ | 7,299 | | | $ | 4,547 | |
During the years ended December 31, 20092023 and 2008 were as follows:
| | | Year ended December 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net sales | | $ | 23,244,336 | | | | 34,864,714 | |
| | | | | | | | | |
| Cost of sales | | | 21,944,809 | | | | 28,981,325 | |
| | | | | | | | | |
| Gross profit (Loss) | | | 1,299,527 | | | | 5,883,389 | |
| | | | | | | | | |
| Operating expenses | | | 8,538,039 | | | | 6,691,549 | |
| | | | | | | | | |
| Operating loss | | | (7,238,512) | | | | (808,160) | |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest income | | | 134,003 | | | | 17,569 | |
| Interest expense and financing costs | | | (387,457) | | | | (706,768) | |
| Gain on disposal of fixed assets | | | 66,050 | | | | - | |
| Other non-operating income | | | 35,163 | | | | 41,730 | |
| Loss from discontinued operations | | $ | (7,390,753) | | | $ | (1,455,629) | |
5. PROPERTY AND EQUIPMENT
Property2022, the Company recorded depreciation of $1,263 and
Equipment consists$15,862, respectively.Note 6 – Intangible Assets, net
The Company has capitalized the costs associated with acquiring the intellectual property of the followingMFB (see Note 3) at a value of $4,195,353 as of December 31, 20092023, and 2008:
| | | | 2009 | | | | 2008 | |
| Land | | $ | 3,225,000 | | | $ | - | |
| Vehicles | | | 90,776 | | | | - | |
| Machinery and equipment | | | 818,606 | | | | - | |
| Land improvements | | | 310,131 | | | | - | |
| Plant and pipeline | | | 8,308,929 | | | | - | |
| Construction in progress | | | 62,500 | | | | - | |
| | | | 12,815,942 | | | | - | |
| Less accumulated depreciation and amortization | | | 153,448 | | | | - | |
| Property and equipment net of accumulated depreciation and amortization | | $ | 12,662,494 | | | $ | - | |
All property and equipment existing at December 31, 2008 has been reclassified to net assets net for sale. During 2009, property and equipment with2022, respectively.The amount capitalized consisted of a cost of $4,630,642 and accumulated depreciation of, $1,223,946 was sold as partportion of the sales to MTS (see Note 4). Subsequent to December 31, 2009, property and equipment with cost $7,897,399 and accumulated depreciationfair value of all $2,995,757 was sold as part1,000,000 shares of the sale to Luntz and has been reflected on the accompanying balance sheet as the Net Assets held for sale (see Note 4).
The Company recorded depreciation expenseConvertible Preferred C stock of
$153,448 for$4,200,000. During the year ended December 31,
2009.2023, no additional costs met the criteria for capitalization as an intangible asset.As of December 31, 2023 and 2022,finite lived intangible assets consisted of the following:
| | December 31 | | | December 31 | |
| | 2023 | | | 2022 | |
Patents | | $ | 4,195,353 | | | $ | 4,195,353 | |
Accumulated amortization | | | (247,247 | ) | | | - | |
Intangible assets, net | | $ | 3,948,106 | | | $ | 4,195,353 | |
Estimated future amortization expense for finite lived intangibles are as follows:
Year Ended December 31, | | | |
2024 | | $ | 247,931 | |
2025 | | | 247,931 | |
2026 | | | 247,931 | |
2027 | | | 247,931 | |
2028 | | | 247,931 | |
Thereafter | | | 2,708,451 | |
| | $ | 3,948,106 | |
As of December 31, 2023, the weighted-average useful life is 16.11 years.
During the year ended December 31, 2023 and 2022, the amortization expense was $247,247 and $0, respectively. The Company recorded depreciation expense oncommenced with amortization during 2023, when we started operations using the property and equipment related to its discontinued operations of $1,366,777 and $1,062,960 which is in included in net loss from discontinued operations foracquired assets.
Note 7 – Lease
In March 2022, the years ending December 31, 2009 and 2008, respectively.
6. PERMITS AND FRANCHISES
The Company acquired certain permit rights for construction of a pipeline as part of its acquisition of SCWW. The permits allow the pipeline to connect to the City of Oxnard water works system and have a five year life, although they are renewable indefinitely, in five year increments, at minimal costs. The franchises are related to the use of the pipeline and have a 20 year life. The total value of the permits and franchises are being amortized over a remaining contractual life of the franchise agreements of 12 years commencing at the date of acquisition.
Amortization of the permits and franchises for the next five years is expected to be as follows:
| Years ending December 31, | | | |
| 2010 | | $ | 160,904 | |
| 2011 | | | 160,904 | |
| 2012 | | | 160,904 | |
| 2013 | | | 160,904 | |
| 2014 | | | 160,904 | |
| Thereafter | | | 651,014 | |
| | | $ | 1,455,534 | |
7. RELATED PARTY TRANSACTIONS
The Company has entered into
several transactionsan operating lease for the office, with
General Pacific Partners (“GPP”),the term of 18 months. In July 2023, the Company amended the contract and extended the lease term to July 2025.The following summarizes right-of-use asset and lease information about the Company’s operating lease as of December 31, 2023, and 2022:
| | Years Ended | |
| | December 31, | |
| | 2023 | | | 2022 | |
The components of lease expense were as follows: | | | | | | |
Operating lease cost | | $ | 70,830 | | | $ | 40,000 | |
| | | | | | | | |
Supplemental cash flow information related to leases was as follows: | | | | | | | | |
| | | | | | | | |
Cash paid for operating cash flows from operating leases | | $ | 79,528 | | | $ | 40,000 | |
Right -of-use assets obtained upon acquisition | | $ | 161,665 | | | $ | 81,967 | |
Supplemental balance sheet information related to leases was as follows:
| | December 31, | | | December 31, | |
| | 2023 | | | 2022 | |
Operating lease right-of-use asset | | $ | 129,683 | | | $ | 39,367 | |
| | December 31, | | | December 31, | |
| | 2023 | | | 2022 | |
Operating lease liabilities: | | | | | | |
Current portion | | $ | 80,136 | | | $ | 39,367 | |
Non-current portion | | | 50,047 | | | | - | |
| | $ | 130,183 | | | $ | 39,367 | |
| | | | | | | | |
Weighted-average remaining lease term - operating leases (year) | | | 1.58 | | | | 0.67 | |
Weighted-average discount rate — operating leases | | | 6.5 | % | | | 5.5 | % |
The following table outlines maturities of our lease liabilities as of December 31, 2023:
2024 | | $ | 85,792 | |
2025 | | | 50,862 | |
Thereafter | | | - | |
| | | 136,654 | |
Less: Imputed interest | | | (6,471 | ) |
Operating lease liabilities | | $ | 130,183 | |
Note 8 – Convertible Note
On September 30, 2022, the Company entered into a company operated byconvertible note agreement for the amount of $54,000, with term of six (6) months from the date of receipt of the funds, at interest rate of 2% per annum. At the sole option of the Lender, all or part of unpaid principal then outstanding may be converted into shares of common stock at any time starting 24 hours after payment at a priorfixed conversion price of $0.18 per share. As of December 31, 2023 and 2022, following is the summary of funds received from the lender:
| | Principal | | | | | Interest | | | December 31, | | | December 31, | |
Payment date | | Amount | | | Maturity date | | Rate | | | 2023 | | | 2022 | |
August 11, 2022 | | $ | 18,000 | | | 2/11/2023 | | | 2 | % | | $ | 18,000 | | | $ | 18,000 | |
September 2, 2022 | | $ | 17,000 | | | 3/2/2023 | | | 2 | % | | | 17,000 | | | | 17,000 | |
April 1, 2023 | | $ | 19,000 | | | Due on demand | | | 2 | % | | | 19,000 | | | | - | |
Total Convertible notes | | | | | | | | | | | | $ | 54,000 | | | $ | 35,000 | |
Current portion | | | | | | | | | | | | | (54,000 | ) | | | (35,000 | ) |
Long -term portion | | | | | | | | | | | | $ | - | | | $ | - | |
On June 9, 2022, the lender paid $19,000 to the Company and it was recorded as an advance from a related party. On April 1, 2023, an amount owing to related party was reclassified to convertible note for $19,000.
During the years ended December 31, 2023, and 2022, the Company recognized interest expense of $1,311 and $255, respectively. As of December 31, 2023, and 2022, the Company owned principal of $54,000 and $35,000 and accrued interest of $1,567 and $255, respectively.
Note 9 – Promissory Note
On June 7, 2023, the Company entered into a promissory note agreement for the amount of $120,000, in terms of twelve (12) months and interest rate of 5% per annum. During the year ended December 31, 2023, the Company recognized $3,017 interest. As of December 31, 2023, the Company owed principal of $120,000 and accrued interest of $3,017.
Note 10 – Related Party Transactions
During the year ended December 31, 2022, our former officer forgave $9,355 in accrued salary and the Company recognized it as additional paid-in-capital.
During the year ended December 31, 2022, as part of the Company’s divestiture of its digital asset operations, a related party forgave loans payable of $301,175 in exchange for digital asset equipment with a net book value of $276,379 and digital currency intangible assets of $26,825, of which the Company recorded a loss on disposition of $2,030.
During the year ended December 31, 2022, a related party paid $1 for share capital - Mighty Fire Breaker UK Limited.
On June 13, 2022, the Company issued 70,000,000 Restricted Stock Award to a member of the board of directors and President of the Company. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company valued the voting rights associated with the awards at $2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022.
On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. As of December 31, 2023, the shares have not been issued, and the Company valued the 500,000 shares of common stock at market price on approval date and accrued $180,000.
On October 23, 2021, the Company entered into a consulting agreement with a related party. The consultant shall render to the Company, upon the request of any members of Board of Directors or the President of the Company, consulting services on matters relating to the business affairs of the Company. The agreement shall take effect of the date of agreement and shall terminate upon mutual agreement of the parties. The compensation of consultant is a number of Convertible Series C Preferred Shares which the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc. of Delaware. GPP owns 5% ofCompany may determine at its discretion. On November 1, 2022, the Company’s common stock at December 31, 2009.
During FebruaryBoard of Directors approved issuance of 1,200,000 shares of Convertible Series C Preferred Stock to consultant - related party for their past consulting services and
March 2008, General Pacific Partners made two unsecured advancescontinuing to
the Company totaling $472,500. The proceeds were used for working capital purposes. The rate of interest on the advances is 10% per annum. The funds were originally due six months from the date of issuance.July 2023. On
June 30, 2008, the maturity date was extended an additional six months to February 14, 2009 and March 19, 2009. In connection with the note extensionSeptember 5, 2023. the Company issued
(i) 200,0001,200,000 shares of
its common stock valued at $220,000 and, (ii) a warrantConvertible Series C Preferred Stock for consulting services rendered to
purchase up to 225,000 shares of its common stock at a price of $0.60 for a period of seven (7) years.the Company. The Company valued the
warrants1,200,000 shares of Convertible Preferred Stock at
$222,500 using a Black - Scholes option pricing model. For the Black - Scholes calculation,$8,640,000.On June 9, 2022, the Company assumed no dividend yield,received $19,000 cash from a risk free interest ratethird party, and it was recorded as an advance from a related party. On April 1, 2023, the Company recognized the error and the amount owing to the related party was reclassified to convertible note related to a lender for $19,000 (see Note 8).
During the years ended December 31, 2023, and 2022, a related party advanced to the Company an amount of 4.78 %, expected volatility$307,500 and $784,484 for working capital propose, respectively.
During the years ended December 31, 2023, and 2022, a related party advanced to the Company an amount of 75.88 %$246,425 and an expected term$108,569 for the warrants of 7 years. The valueoperating expenses on behalf of the common shares of $220,000Company, respectively.
During the years ended December 31, 2023, and value of the warrants of $222,500 has been reflected by2022, the Company asrepaid to a valuation discount at issuancerelated party $125,000 and offset to the face amount of the Notes. The Valuation discount is being amortized to interest expense over the life$55,720 owing of the loan, based uponrespectively.
During the effective interest method. Finance costs for the yearyears ended December 31, 2009 includes $109,324 for amortization2023, and 2022, the Company paid $150,500 and $126,500 consulting fee to an entity under common control of this discount. The valuation discount was fully amortized at September 30, 2009. On February 13, 2009 the maturity date was extended until March 31, 2010. a related party and $186,500 and $91,500 commission to a related party.
As of December 31, 2009, $534,129 remained outstanding (including accrued interest of $61,719).
In 2008, GPP provided services related to the financing completed with CVC California, LLC. Pursuant to these services2023, and 2022, the Company
agreedwas obliged to
pay GPP $250,000. related parties, for unsecured, non-interest-bearing demand loans with a balance of $1,309,077 and $899,153, respectively.Note 11 – Stockholders’ Equity
Preferred Shares
Shares Outstanding
The cash paid has been reflected as part of deferred financing fees on the accompanying balance sheet at December 31 2009 and December 31, 2008. During the year ended December 31, 2009, GPP agreedCompany is authorized to convert $150,000 of the cash owedissue up to them and $164,756 incurred for other fees and costs into 524,59415,000,000 shares of the Company’s commonPreferred Stock, par value $0.0001 per share.
Series A Preferred Stock
The Company originally designated 10,000,000 shares of its Preferred Stock as Series A Convertible Preferred Stock. Issued and outstanding Series A Convertible Preferred stock in settlement for amounts due. The balance due to GPP as of December 31, 2009 is $100,000.
During the year ended December 31, 2009 a related individual made an unsecured advance with no formal terms of repayment to2023 and 2022, was 10,000,000, respectively. On March 29, 2024, the Company
totaling $115,000.amended and restated its Series A Convertible Preferred Stock to designate 10,000,000 shares of its Preferred Stock as Series A Preferred Stock, par value $0.0001, with the following rights and privileges.Dividends. Holders of shares of Series A Preferred Stock are not entitled to receive dividends.
Voting Rights. Each share of Series A Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote of stockholders. Holders of shares of Series A Preferred Stock do not have cumulative voting rights. This means a holder of a single share of Series A Preferred Stock cannot cast more than one vote for each position to be filled on the Board.
Other Rights. Shares of Series A Preferred Stock are not entitled to a liquidation preference. The proceeds were used for working capital purposes. Duringholders of the year ended December 31, 2009Series A Preferred Stock may not be redeemed without the consent of the holders of the Series A Preferred Stock. The holder of the Series A Preferred Stock are not entitled to pre-emptive rights or subscription rights.
The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, made payments onbut will at all times in good faith assist in the advance totaling $7,500. At December 31, 2009carrying out of all the balance due onprovisions of its Charter and in the advance was $107,500.
Lettertaking of Credit Services
On July 1, 2008all such action as may be necessary or appropriate to protect the rights of the holders of the Series A Preferred Stock against impairment.So long as any shares of Series A Preferred Stock are outstanding, the Company entered into an agreement with GPP wherein GPP would provide letters of credit to support projects contracted to GEM. The fees undershall not, without first obtaining the agreement consisted of (i) a commitment fee of 2%approval (by vote or written consent as provided by the Wyoming Business Corporations Act) of the valueholders of at least a majority of the letter of credit, (ii) interest at a rate to be negotiated, and (iii) a seven year warrant to purchasethen outstanding shares of Series A Preferred Stock: (a) alter or change the Company’s commonrights, preferences or privileges of the Series A Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock at $0.60 per share.
Software Support
In 2008,of the Company
entered into a three year agreement with Lapis Solutions, LLC, (Lapis) a company managed by a prior memberso as to affect adversely the Series A Preferred Stock; (c) increase the authorized number of
shares of Series A Preferred Stock; or (d) authorize or issue any shares of senior securities.Fully Paid. The issued and outstanding shares of Series A Preferred Stock are fully paid and non-assessable. This means the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc. of Delaware, wherein Lapis would provide support and development servicesfull purchase price for the Company’s proprietary software GEMWARE. Service costs related tooutstanding shares of Series A Preferred Stock has been paid and the agreement total $10,800 per month. As of December 31, 2008, $92,555holders of such fees had been prepaid to Lapis and included in the accompanying balance sheet as part of prepaid expenses. During 2009, the Company made further advances of $224,454 to Lapis. At December 31, 2009, the Company determined that the total paid to Lapis no longer had continuing value to the Company given the divestiture of its recycling management business and recorded a charge of $317,009.
Related Party Lease Agreement
During the third quarter ended September 30, 2007, the Company entered into a leaseshares will not be assessed any additional amounts for $180,846 of equipment with current investors of the Company. The lease transaction was organized by General Pacific Partners, a related party, with these investors. The lease has been classified as a capital lease and included in property and equipment (See note 5) and requires payments of $4,000 per month beginning August 1, 2007 through 2012. As an inducement to enter into the lease, the Company issued the leasing entity 100,000 two year warrants to purchase common stock at $1.20. These warrants were valued at $187,128 using the Black - Scholes valuation model and such cost is being amortized to expense over the life of the lease. For the Black - - Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78 %, expected volatility of 56.60 % and an expected term for the warrants of 2 years. As of December 31, 2009, there was $20,000 of accrued payments due under these leases.
8. SECURED FINANCING AGREEMENTS
During the period 2008 through 2009, the Company entered into a series of financings with CVC California, LLC (“CVC”).
The amounts due under these financings at December 31, 2009 and December 31, 2008 are as follows:
| | | December 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| Secured Notes from CVC California | | $ | 14,658,365 | | | $ | 13,547,909 | |
| Valuation Discount | | | (2,196,585 | ) | | | (3,181,365 | ) |
| | | $ | 12,461,780 | | | $ | 10,366,544 | |
Note Agreements with CVC California
On September 4, 2008 General Environmental Management, Inc. (the “Company”) entered into a series of agreements with CVC California, LLC, a Delaware limited liability company (“CVC”), each dated as of August 31, 2008, whereby the Company issued to CVC (i) a secured convertible term note ("Note") in the principal amount of $6.5 million and (ii) a secured non-convertible revolving credit note ("Revolving Note") of up to $7.0 million; (iii) 6 year warrants to purchase 1,350,000 shares of our common stock at a price of $0.60 per share; (iv) 6 year warrants to purchase 1,350,000 shares of our common stock at a price of $1.19 per share; and, (v) 6 year warrants to purchase 300,000 shares of our common stock at a price of $2.25 per share. The principal amount of the Note carried an interest rate of nine and one half percent, subject to adjustment, with interest initially payable monthly commencing October 1, 2008. The Note further provided that commencing on April 1, 2009, the Company was to make monthly principal payments in the amount of $135,416 through August 31, 2011. Although the stated principal amount of the Term Loan was $6,500,000, the Lender was only required to fund $5,000,000, with the difference being treated as a discount to the note.
(i). The principal amount of the Note and accrued interest thereon was initially convertible into shares of our common stock at a price of $3.00 per share, subject to anti-dilution adjustments. Under the terms of the Note, the monthly principal payment amount of approximately $135,416 plus the monthly interest payment (together, the "Monthly Payment"), was payable in either cash or, if certain criteria are met, including the effectiveness of a current registration statement covering the shares of our common stock into which the Note is convertible, through the issuance of our common stock. shares.Series C Convertible Preferred Stock
The Company has agreed to register all of the shares that are issuable upon conversion of the Note and exercise of warrants. As of December 31, 2008 the Company had an outstanding balance of $6,500,000 under the note.
(ii). The revolving note allowed the Company to borrow a maximum amount of $7,000,000, based on a borrowing base of 90% of all eligible receivables, which are primarily accounts receivables under 90 days. The interest rate on this line of credit is in the amount of prime plus 2.0%, but in no event less than 7% per annum. The Revolving Note was secured by all assets of the Company and is subject to the same security agreement as discussed below. The note is due August 31, 2011. As of December 31, 2008 the Company had an outstanding balance of $7,047,909 (including accrued interest) under the revolving note. This note was subsequently exchanged and modified during 2009 as discussed below.
The Company was subject to various negative covenants with respect to the Revolving Credit and Term Loan Agreement (the "Agreement") with CVC California, LLC (the "Lender").
However, during the year the Company was not in compliance with certain covenants. The Agreement provided that upon the occurrence of any Event of Default, and at all times thereafter during the continuance thereof: (a) the Notes, and any and all other Obligations, shall, at the Lender’s option become immediately due and payable, both as to principal, interest and other charges, (b) all outstanding Obligations under the Notes, and all other outstanding Obligations, shall bear interest at the default rates of interest provided in certain promissory Notes (the "Notes"), (c) the Lender may file suit against the Company on the Notes and against the Company and the Subsidiaries under the other Loan Documents and/or seek specific performance or injunctive relief thereunder (whether or not a remedy exists at law or is adequate), (d) the Lender shall have the right, in accordance with the Security Documents, to exercise any and all remedies in respect of such or all of the Collateral as the Lender may determine in its discretion (without any requirement of marshalling of assets or other such requirement, all of which are hereby waived by the Company), and (e) the Revolving Credit Commitment shall, at the Lender’s option, be immediately terminated or reduced, and the Lender shall be under no further obligation to consider making any further Advances.
The Company had discussions with CVC to obtain a waiver of the Default and continued to operate in the normal course of business and receive advances under the Revolving Credit Commitment facility. On June 1, 2009, the Company and CVC entered into an Amendment to the Agreement to modify the terms of the agreement and relieve the events of default. CVC waived the Events of Default consisting of the non-payment by the Company of the principal installments due under the Term Note on May 1, 2009 and June 1, 2009, and further waived the Events of Default consisting of the failure of the Company to comply with Section 6.18 of the Loan Agreement for the periods ended December 31, 2008 and March 31, 2009, and waived all rights to collect the increased interest chargeable under the Notes by reason of the foregoing Events of Default. The Company is currently in default, as such the entire note has been shown as current in the accompanying balance sheet as of December 31, 2009.
The Company paid a fee in consideration of the waivers and amendments which consisted of issuing to CVC, (a) 600,000designated 5,000,000 shares of its
CommonPreferred Stock
valued at $450,000,as Series C Convertible Preferred Stock with the following rights and
(b) issuingprivileges.Dividends. Holders of shares of Series C Convertible Preferred Stock are not entitled to CVC a promissory note inreceive dividends.
Voting Rights. The holders of the principal amountSeries C Convertible Preferred Stock are not entitled to vote.
Conversion Rights. Each share of $164,000, bearing interestSeries C Convertible Preferred Stock outstanding as such time shall be convertible, at the rate of 7% per annum (which interest shall be payable monthly in arrears on the first day of each calendar month commencing June 1, 2009) and maturing in full on August 31, 2011.
On September 4, 2009, the Company entered into a series of agreements with CVC that amended these agreements, including an Amended and Restated Revolving Credit and Term Loan Agreement, an Amended and Restated Revolving Credit Note, an Amended and Restated Convertible Term Note, a new Term Note, and Amended and Restated Warrants to purchase sharesoption of the Company's common stock. Pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement, (the "Amended Agreement") dated as of September 4, 2009 the Company issued to CVC:
(i) an Amended and Restated secured convertible term note (“ Convertible Note”) in the principal amount of $6,314,700. The principal amount of the Convertible Note bears an interest rate of fourteen percent, subject to adjustment, with interest payable monthly commencing November 1, 2009. The principal of the convertible Note is payable on demand or, in the absence of demand, (i) in seven (7) equal monthly installments of $138,000 each, due and payable on the first day of each calendar month commencing December 1, 2009 and continuing through and including June 1, 2010, and (ii) a final installment due and payable on June 30, 2010 in an amount equal to the entire remaining principal balance of this note. In the event of a prepayment of the Convertible Note, the Company must pay a prepayment premium in an amount equal to (a) two (2%) percent of the principal amount being prepaid if the prepayment is made on or prior to February 28, 2010, and (b) one (1%) percent of the principal amount being prepaid if such prepayment is made subsequent to February 28, 2010 and prior to August 1, 2011, unless the prepayment is made with the proceeds received from the sale of any business unit or units of the Company. The balance of the note outstanding at December 31, 2009 was $6,314,700.
The principal amount of the Convertible Note and accrued interest thereon is convertible into shares of the Company's common stock at a price of $0.60 per share, subject to anti-dilution adjustments. The Company has agreed to register all of the shares that are issuable upon conversion of the Convertible Note.
(ii) an Amended and Restated Secured Non-convertible Revolving Credit Note in the principal amount of up to $1.7 million (the " Revolving Note"). The principal amount of the Revolving Note bears interest at the rate of 10% per annum and is payable on demand (or, in the absence of demand, on August 31, 2011, or sooner by reason of an Event of Default or other mandatory prepayment event. The balance of the note outstanding at December 31, 2009 was $1,700,000.
The Amended and restated Secured Non-convertible Revolving Credit Note was amended on November 25, 2009 with an Overadvance Note in the amount of $1,190,357.The principal amount of the Overadvance Note bears interest at the rate of 15% per annum and is payable on demand or, in the absence of demand, on August 31, 2011, or sooner by reason of an Event of Default or other mandatory prepayment event. The balance of the Overadvance Note outstanding at December 31, 2009 was $1,043,665.
Subsequent to December 31, 2009, the balance of the Convertible Note and the Amended and Restated Secured Non-convertible Revolving Credit Note was paid off. See Note 16.
(iii) a Term Note (“Term Note ”) in the principal amount of $5.6 million. The principal amount of the Term Note bears interest at the rate of 8% per annum and is payable as follows: on the first day of each calendar month commencing October 1, 2009 through and including August 1, 2010, accrued Interest on the outstanding principal shall be due and payable. Thereafter, principal and interest is payable in thirty-six (36) consecutive equal monthly installments of principal and interest of $174,321.50 each, with the first installment due and payable on September 1, 2010, and with subsequent installments due and payable on the first day of each calendar month thereafter through and including August 1, 2013. There is no pre-payment penalty in the event of a pre-payment. The balance of the Term Note outstanding at December 31, 2009 was $5,600,000. The Company is currently in default, as such in the entire note has been shown as current.
On August 17, 2009, the Company had entered into a Stock Purchase Agreement with MTS Acquisition Company ("MTS"), pursuant to which the Company sold all of the issued and outstanding common stock of GEM Mobile Treatment Services, Inc. (“GEM MTS”). Consideration for the sale of GEM MTS was in the form of a promissory note (“the MTS Note") in the aggregate amount of $5.6 million, (payable on the same dates and terms as the Term Note), the assignment of approximately $1.0 million of accounts payable and possible future royalties. The consideration was immediately assigned to CVC. As the MTS Note is paid to CVC by MTS, the Company's indebtedness to CVC will be reduced ..
(iv) an Amended and Restated Warrant to purchase Two Million Seven Hundred Thousand (2,700,000) fully paid and non-assessable shares (the “Warrant Shares”) of the Company’s common stock, for cash at a price of $0.01 per shareholder thereof, at any time and from time to time, from and afterwithout the date hereofpayment of additional consideration by the holder thereof, into 20 shares of the Common Stock of the Company (the “Conversion Ratio”). Such Conversion Ratio, and until 5:00 p.m. (Pacific time) on August 31, 2014.
CVCthe rate at which shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, shall
also have the right and option, exercisable effectivebe subject to adjustment.If at any time upon or after the consummation of a Sale of the Company’s revenue-generating business units, or upon and after the occurrence and during the continuance of an Event of Default or any other event or circumstance which causes, effects or requires any payment in full under the Loan Agreement and until the Expiration Date, to require the Company to redeem and purchase any or all Warrant Shares or rights to purchase Warrant Shares hereunder, for a cash purchase price of $0.75 per Warrant Share or per right to purchase a Warrant Share hereunder, such option purchase price to be subject to adjustment from time to time in respect of certain events. The total valuethere shall be (i) a merger or consolidation of the put if all shares are redeemed would be $2,025,000.
The Convertible Note andCompany with or into another corporation, (ii) the Revolving Note, are secured by all of our assets and the assets of our direct subsidiary, General Environmental Management, Inc. (Delaware) and its direct subsidiaries, General Environmental Management of Rancho Cordova LLC, a California Limited Liability Company (including the real property owned by General Environmental Management of Rancho Cordova LLC), Island Environmental Services, Inc. as well as by a pledge of the equity interests of General Environmental Management, Inc. (Delaware), General Environmental Management of Rancho Cordova LLC, and Island Environmental Services, Inc.
The Amended Agreement also provided that in the event that and at such time as the Company or any of its subsidiaries or stockholders enters into a binding agreement with respect to any sale of all or
any material portionsubstantially all of the Company’s
capital stock or assets
to any other person, (iii) any other form of business combination or reorganization in which the Company shall not be the continuing or surviving entity of such business combination or reorganization, or (iv) any transaction or series of transactions by the Company in which more than 50 percent (50%) of the Company’s voting power is transferred (each a “Reorganization”) then as a part of such Reorganization, the provision shall be made so that the holders of the Series C Convertible Preferred Stock shall thereafter be entitled to receive the same kind and amount of stock or other securities or property (including cash) of the Company, or the
successor corporation resulting from such Reorganization.Other Rights. The holders of the Series C Convertible Preferred Stockare not entitled to a liquidation preference. The holders of the Series C Convertible Preferred Stock may not be redeemed without the consent of the holders of the Series C Convertible Preferred Stock. The holder of the Series C Convertible Preferred Stock are not entitled to pre-emptive rights or subscription rights.
The Company will not, by amendment of its Charter or through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of its Charter and in the taking of all such action as may be necessary or appropriate to protect the rights of the holders of the Series C Convertible Preferred Stock against impairment.
So long as any shares of Series C Convertible Preferred Stock are outstanding, the Company shall not, without first obtaining the approval (by vote or written consent as provided by the Wyoming Business Corporations Act) of the holders of at least a majority of the then outstanding shares of Series C Convertible Preferred Stock: (a) alter or change the rights, preferences or privileges of the Series C Convertible Preferred Stock; (b) alter or change the rights, preferences or privileges of any capital stock or (if sooner) on that date which is thirty (30) days prior to any payment or required payment in full of the Company so as to affect adversely the Series C Convertible Preferred Stock; (c) increase the authorized number of shares of Series C Convertible Preferred Stock; or (d) authorize or issue any shares of senior securities.
Fully Paid. The issued and outstanding obligations to CVC, CVC shall haveshares of Series A Convertible Preferred Stock are fully paid and non-assessable. This means the rightfull purchase price for the outstanding shares of Series C Convertible Preferred Stock has been paid and option, exercisable effective at any time upon or after the consummationholders of such sale or payment, or upon and after the occurrence and during the continuance of an event of default, as defined in the Amended Agreement and the ancillary documents, to require the Company to redeem and purchaseshares will not be assessed any or all warrant shares or rights to purchase warrant shares hereunder,additional amounts for a cash purchase price of $0.75 per warrant share.
The Company incurred expenses of approximately $75,000 to various professional firms as reimbursement for CVC's due diligence and legal fees and expenses incurred in connection with the transaction.
The Company has also agreed to continue to pursuesuch shares.On April 13, 2022, the Company’s plan to restructure its operations by offering for saleboard of directors approved the Company’s revenue-generating business units at prices and on terms and conditions reasonably acceptable to the Company and CVC.
Valuation Discount and Modificationissuance of Debt
In connection1,000,000 Convertible Series C Preferred Stock, with the initial CVC financing during 2008, the Company paid closing fees of $405,000 and issued warrants to acquire an aggregate of 3,000,000 shares of our common stock as described above to CVC. The Company calculated that the faira value of $4,200,000 as consideration for the warrants issued was $1,674,036, based upon the relative valueacquisition of the Black Scholes valuationentity and intellectual property (see Note 3). The holder may exercise shares after an initial lock up period of six (6) months following the warrants and the underlying debt amount. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78%, expected volatility of 78.57% and an expected term for the warrants of 7 years. The closing fees of $405,000 paid to CVC, the relative value of the warrants of $1,674,036 and the $1,500,000 discount on issuance was reflected by the Company as a valuation discount at issuance and offset to the face amount of the Notes. The Valuation discount is being amortized to interest expense over the life of the loan based upon the effective interest method. The Company amortized $397,671 of note discount during the period ended December 31, 2008, resulting in valuation discount of $3,181,365 at December 31, 2008.
Concurrent with the cumulative adjustment as discussed in Note 11, the Company further recorded valuation discount of $1,408,828 at January 1, 2009. During the period January 1, 2009 through June 1, 2009, the Company amortized $717,220 of the note discount, leaving an unamortized note discount of 3,872,973 as of June 1, 2009.
As discussed above, on June 1, 2009, the Company and CVC entered into an Amendment to the Agreement to modify the termsdate of the agreement and
relievemay only exchange a maximum of four (4) million shares in a twelve (12) month period and may not hold or beneficially hold more than 10% of outstanding at any time.On June 7, 2022, the events of default. The Company analyzed the current accounting guidance and determined that the modifications constituted a substantial modification of debt terms, and thus, has considered the old loan and derivative liabilities to be extinguished and a new loan and derivative liabilities were incurred. As such, the balanceholder of the valuation discount of $3,872,973 and the fair value of derivative liabilities of $2,299,622 (gain) that existed on June 1, 2009 before modification, the valueConvertible Series C Preferred Stock converted 50,000 shares of the 600,000Company’s Convertible Series C Preferred Stock into 1,000,000 shares valued at $450,000 andof the issuance byCompany’s common shares.
On April 5, 2023, the holder of the Convertible Series C Preferred Stock converted 150,000 shares of the Company’s Convertible Series C Preferred Stock into 3,000,000 shares of the Company’s common shares.
During the year ended December 31, 2023, the Company issued 273,499 shares of a $164,000 promissory note were considered as debt modification expense, resultingConvertible Series C Preferred Stock in an aggregate chargeconnection with subscription agreements signed with investors at prices of $2,181,351 at June 1, 2009 relating to$2.40 and $4.00 per share for total amount of $907,600.
During the net loss on extinguishment of debt.
Concurrent with the accounting for the issuance of the new debt after the extinguishment on June 1, 2009,year ended December 31, 2023, the Company reflected a new valuation discount of $5,165,720 based upon the fair value of the derivative liability and warrants (see Note 11). During the period June 1, 2009 through June 30, 2009, the Company amortized $191,323 of the new note discount, leaving an unamortized note discount of $4,974,397 as of June 30, 2009.
The Company further amortized $382,646 of this discount during the period July 1, 2009 to September 4, 2009.
As discussed above, on September 4, 2009, the Company and CVC entered into a further Amendment to the Agreement to modify the terms of the agreement and relieve the events of default. The Company analyzed the current accounting guidance and determined that the modifications constituted a substantial modification of debt terms, and thus, has considered the old loan and derivative liabilities to be extinguished and a new loan and derivative liabilities to be incurred. As such, the balance of the valuation discount of $4,591,751 and the fair value of derivative liabilities of $2,733,744 (gain) that existed on September 4, 2009 before modification were considered as debt modification expense, resulting in an aggregate charge of $1,858,007 at September 4, 2009 relating to the net loss on extinguishment of debt.
Concurrent with the accountingreceived $500,000 for the issuance of the new debt after the extinguishment on September 4, 2009, the Company reflected a new valuation discount of $3,660,977 based upon the fair value of the derivative liability and warrants (see Note 10). During the period September 4, 2009 through December 31, 2009, the Company amortized $1,464,392 of the new note discount, leaving an unamortized note discount of $2,196,585 asstock subscriptions. As of December 31, 2009.
9. ACQUISITION NOTES PAYABLE
On November 6, 2009, Company entered into a Stock Purchase Agreement ("CLW Agreement") with United States Environmental Response, LLC, a California limited liability company pursuant to which the Company has purchased all of the2023, 183,333 shares were not yet issued and
outstanding capitalare recorded as preferred stock
of California Living Waters, Incorporated ("CLW"), a privately held company. . In consideration forto be issued in equity.During the sale,year ended December 31, 2023, the Company issued six promissory notes (individually1,200,000 shares of Convertible Series C Preferred Stock to a "CLW Note" and collectively, the "CLW Notes") in the aggregate principal amount of $9,003,000 as follows:
$2,000,000 CLW the Seller's Note-- Payment of the outstanding principal of the CLW the Seller’s Note is due and payable in four (4) installments as follows: (A) Two Hundred Fifty Thousand Dollars ($250,000) in November, 2009, (B) Five Hundred Thousand Dollars ($500,000) and accrued interest on June 30 2010; (C) One Million Dollars ($1,000,000) and accrued interest on January 1, 2011 (D) the balance of all residual principal and accrued interest on March 31, 2011. The balance of the Note at December 31, 2009 was $2,000,000.
$1,700,000 CLW Note One-- Payment of the outstanding principal of CLW Note One is due and payable in 120 installments commencing on December 1, 2009 and continuing on the first day of each calendar month through November 1, 2019. Installments are payable in the following amounts (subjectrelated party for consulting services rendered to the other termsCompany from October 2021 through July 2023. The Company valued the 1,200,000 shares of this Note): (A) the amount of principal and accrued interest payable in the first one hundred nineteen (119) Installments shall be equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note and (B) the one hundred twentieth (120th) Installment shall be a final, “balloon” payment. The balance of the Note at December 31, 2009 was $1,696,917.
$1,100,000 CLW Note Two-- Payment of the outstanding principal of this CLW Note Two is due and payable in sixty (60) installments commencing on December 1, 2009 and continuing on the first day of each calendar month through November 1, 2014. Installments are payable in the following amounts (subjectConvertible Preferred Stock, as if converted to the other terms of this Note): (A) the amount of principal and accrued interest payable in the first fifty-nine (59) Installments shall be equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note; and (B) the final, “balloon” payment on November 1, 2014. The balance of the Note at December 31, 2009 was 1,095,501.
$425,000 CLW Note Three-- Payment of the outstanding principal of the CLW Note is due and payable in 120 installments commencing on December 1, 2009 and continuing on the first day of each calendar month through November 1, 2019. Installments are payable in the following amounts (subject to the other terms of this Note): (A) the amount of principal and accrued interest payable in the first one hundred nineteen (119) Installments shall be equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note and (B) the one hundred twentieth (120th) Installment shall be a final, “balloon”. CLW Note Three is convertible at any time in full or in part (but if in part, then only in principal increments of $100,000 or an integral multiple thereof) into24,000,000 shares of common stock,
using the quoted stock price of
the Company’s common stock at approval date (November 1, 2022), resulting in a value of $8,640,000.As of December 31, 2023, and 2022, there were 2,273,499 and 950,000 shares of the Company’s Convertible Series C Preferred Stock issued and outstanding, respectively.
Common Stock
The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
During the years ended December 31, 2023, and 2022, the holder of the Convertible Series C Preferred Stock converted 150,000 and 50,000 shares of the Company’s Convertible Series C Preferred Stock into 3,000,000 and 1,000,000 shares of the Company’s common stock, respectively.
During the year ended December 31, 2023, the company issued 600,000 shares of common stock for services valued at $146,850.
As of December 31, 2023, and 2022, there were 97,545,388 and 93,945,388 shares of the Company’s common stock issued and outstanding, respectively.
Stock-Based Compensation
On June 13, 2022, the Company issued 70,000,000 Restricted Stock Awards (“RSAs”) to a member of the board of directors and President of the Company. Set out below is a summary of the changes in the Restricted Shares during the year ended December 31, 2023 and 2022:
| | Restricted Stock Award | | | Weighted-Average Grant Price | |
Balance, December 31, 2021 | | | - | | | $ | - | |
Granted | | | 70,000,000 | | | | 0.03 | |
Vested | | | - | | | | - | |
Forfeited | | | - | | | | - | |
Balance, December 31, 2022 | | | 70,000,000 | | | $ | 0.03 | |
Granted | | | - | | | | - | |
Vested | | | - | | | | - | |
Forfeited | | | - | | | | - | |
Balance, December 31, 2023 | | | 70,000,000 | | | $ | 0.03 | |
As of December 31, 2023, 70,000,000 shares issued to a member of the board of directors and President of the Company are restricted (the “Restricted Stock Award”) and shall be released only upon the Company achieving gross revenue in each of the calendar years ended December 31, 2023, 2024, 2025 and 2026, of not less than $100,000,000. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company valued the voting rights associated with the awards at $2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022.
Common Stock to be Issued
On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. As of December 31, 2023, the Company has not issued the shares. The Company valued the 500,000 shares of common stock at the conversion rate of Four Dollars ($4.00) per share, subject to adjustment. The balancemarket value of the NoteCompany’s common stock at December 31, 2009 was $424,230.
$1,600,000 CLW Note Four-- Payment of the outstanding principal of the CLW Note Four is due and payable in 41 installments commencing on July 1, 2010 and continuing on the first day of each calendar month through November 1, 2013. Installments are payable in the following amounts (subject to the other terms of this Note): (A)approval date for the amount of principal and accrued interest payable in$180,000.Note 12 - Income Taxes
Components of income tax expense (benefit) are as follows for the first forty Installments shall be equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note, provided that the first Installment shall also include all interest accrued during the first seven months from the date of this Note; Four and (B) the final, “balloon”, Installment shall be in the amount of all then-outstanding principal, interest and other amounts then outstanding. Note Four is convertible into 5% of the common stock of Company on a fully diluted basis until Company achieves a Capital Restructuring Goal. Capital Restructuring Goal means the concurrent fulfillment of each of the following events: (i) the CLW Seller’s Note shall have been fully paid on the terms thereof as to all theretofore outstanding principal, interest, costs and expenses; (ii) Company shall have available, as properly reflected in Company’s books one million dollars ($1,000,000) in uncommitted working capital (not including any working capital lines of credit); and (iii) Company shall have invested into SCWW capital of at least one million dollars $1,000,000. The balance of the Note atyears ended December 31, 2009 was $1,600,000.
$2,178,000 CLW Note Five-- Payment2023, and 2022: | | 2023 | | | 2022 | |
Current tax expense: | | | | | | |
Current Income Tax Expense - federal | | $ | - | | | $ | - | |
Current Income Tax Expense - state | | | - | | | | - | |
The tax effects of the outstanding principal of the CLW Note Five is due and payable in 41 installments commencing on July 1, 2010 and continuing on the first day of each calendar month through November 1, 2013. Installments are payable in the following amounts (subjecttemporary differences which give rise to the other termssignificant portions of this Note): (A) the amount of principal and accrued interest payable in the first forty Installments shall be equal Installments of principal and interest, calculated on the basis of a 30-year amortization of this Note, provided that the first Installment shall also include all interest accrued during the first seven months from the date of this Note; Four and (B) the final, “balloon”, Installment shall be in the amount of all then-outstanding principal, interest and other amounts then outstanding. Note Four is convertible into 10% of the common stock of Company on a fully diluted basis until Company achieves the Capital Restructuring Goal.The balance at December 31, 2009 was $2,178,000.
Future annual maturities under these notes payabledeferred tax assets or liabilities are as follows at December 31, 2009:
| Year Ended December 31, | | | |
| | | | |
| 2010 | | $ | 1,072,975 | |
| 2011 | | | 1,101,131 | |
| 2012 | | | 107,904 | |
| 2013 | | | 115,130 | |
| 2014 | | | 124,461 | |
| Thereafter | | | 6,473,047 | |
| | | $ | 8,994,648 | |
10. LONG TERM OBLIGATIONS
Long term obligations consist2023 and 2022: | | 2023 | | | 2022 | |
Deferred tax assets and liabilities | | | | | | |
Net Operating loss Carryforward | | $ | 5,780,000 | | | $ | 3,770,000 | |
Amortization | | $ | (103,000 | ) | | $ | (44,000 | ) |
Less: valuation allowance | | $ | (5,677,000 | ) | | $ | (3,726,000 | ) |
Net deferred tax assets | | $ | - | | | $ | - | |
The Company will have approximately $27.5 and $17.9 million of the followinggross net operating loss carry-forwards at December 31, 20092023 and 2008:
| | | December 31, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| | | | | | | |
| (a) Notes Payable, National Bank of California | | $ | 4,175,187 | | | $ | - | |
| (b) Notes Payable, Island Acquisition | | | 1,250,000 | | | | 1,250,000 | |
| (c) Notes Payable, Investors | | | 521,251 | | | | 489,605 | |
| (d) Note payable, Wiker Trust | | | 279,306 | | | | - | |
| (e) Note payable, Agua de Oro 2 | | | 47,969 | | | | - | |
| (f) Equipment Note payable, OMNI Bank | | | 19,442 | | | | - | |
| (g) Note payable, Individual | | | 27,900 | | | | - | |
| (h) Subordinated notes payable | | | 1,800,000 | | | | - | |
| Total Notes Payable | | | 8,121,055 | | | | 1,739,605 | |
| Less Note discount | | | 59,916 | | | | - | |
| Less current portion | | | 4,822,719 | | | | 1,239,605 | |
| Notes payable, net of current portion | | $ | 3,238,420 | | | $ | 500,000 | |
(a) Notes payable2022, respectively. Federal NOLs do not expire, but are subject to
National Bank80% income limitation on use; state and local laws may vary by jurisdiction. Net deferred tax assets are mainly comprised of
California consiststemporary differences between financial statement carrying amount and tax basis of assets and liabilities.ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the followingevidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2023 and 2022, respectively, a full valuation allowance was recognized.
In addition, the Company performed a comprehensive review of its uncertain tax positions and determined that no adjustments were necessary relating to unrecognized tax benefits at December 31, 2009
| (i) Note payable, National Bank of California 1 | | $ | 1,779,060 | |
| (ii) Note payable, National Bank of California 2 | | | 1,701,137 | |
| (iii) Note payable, National Bank of California 3 | | | 58,741 | |
| (iv) Note payable, National Bank of California 4 | | | 145,982 | |
| (v) Note payable , National Bank of California 5 | | | 490,267 | |
| Total | | $ | 4,175,187 | |
(i) Note payable to National Bank of California, 80% guaranteed by the USDA2023 and various related parties of the Company, bears interest at Prime plus 1%,2022. The Company’s federal and is payable over 20 years. (i) Note payable to National Bank of California, 80% guaranteed by the USDA and various related parties of the Company, bears interest at Prime plus 1%, and is payable over 20 years. The loan is secured by a first lien on all assets and commercial real estate of the Company, including the pipeline, and is due in 2026.
(ii) Note payable National Bank of California, 80% guaranteed by the USDA and various related parties of the Company, bears interest at Prime plus 1%, and is payable over 20 years. The loan is secured by a first lien on all assets and commercial real estate of the Company’s California Living Water Subsidiary, including the pipeline, and is due in 2026.
(iii) Note payable to National Bank of California, 80% guaranteed by the USDA and various insiders of the Company, bears interest at Prime plus 1%, and is payable over 5 years. The loan is secured by a first lien on all assets and commercial real estate of the Company’s California Living Water Subsidiary, and is due in 2011.
(iv) Note payable to National Bank of California, guaranteed by various related parties of the Company, interest at Prime plus 2%, payable over five years. This loan is secured by equipment and is cross collateralized to all other notes with National Bank of California.
(v) Note payable to National Bank of California, secured primarily by accounts receivable, bearing interest at Prime plus 2%. The note is due on March 5, 2010.
The above loansstate income tax returns are subject to
certain covenants withexamination by taxing authorities for three years after the
senior lender, National Bank of California. The affirmative covenants apply to the financial results of the Company’s subsidiary, SCWW, and include certain ratio requirements such as current ratio, Debt / Worth ratio and debt service. At December 31, 2009, SCWW was not in compliance with certain of these covenants,returns are filed, and as such the
notes are in default. Company’s federal and state income tax returns remain open to examination.The companyreconciliation of the income tax benefit is currently in discussions to resolvecomputed at the default,U.S. federal statutory rate as follows:
| | 2023 | | | 2022 | |
Federal statutory income tax at 21% | | | 21.00 | % | | | 21.00 | % |
Application of a full valuation allowance | | (21.00%) | | | (21.00%) | |
Provision for income taxes | | | 0.00 | % | | | 0.00 | % |
Note 13– Commitments and has classified the notes as current in the accompanying December 31, 2009 balance sheet.
(b) On August 31, 2008, the Company entered into a stock purchase agreement with Island Environmental. ContingenciesAs part of the consideration for the purchase,Company’s acquisition of Mighty Fire Breaker, LLC (“MFB’), the vendor will be entitled to a ten (10%) percent royalty on the gross sales before taxes of products sold under the MFB family of products (see Note 3).
Note 14 – Concentration
During years ended December 31, 2023 and 2022, customer and supplier concentrations (more than 10%) were as follows:
Revenue and accounts receivable
| | Percentage of Revenue | | | Percentage of | |
| | For Years ended | | | Accounts Receivable | |
| | December 31, | | | December 31, | |
| | 2023 | | | 2022 | | | 2023 | | | 2022 | |
| | | | | | | | | | | | |
Customer A | | | 32.65 | % | | | - | | | | 39.78 | % | | | - | |
Customer B | | | 44.19 | % | | | - | | | | 53.82 | % | | | - | |
Customer C | | | - | | | | 19.61 | % | | | - | | | | - | |
Customer D | | | - | | | | 19.61 | % | | | - | | | | - | |
Customer E | | | - | | | | 17.17 | % | | | - | | | | - | |
Total (as a group) | | | 76.84 | % | | | 56.39 | % | | | 93.60 | % | | | - | |
Purchase and accounts payable
| | Percentage of Purchase | | | Percentage of | |
| | For Years ended | | | Accounts Payable | |
| | December 31, | | | December 31, | |
| | 2023 | | | 2022 | | | 2023 | | | 2022 | |
Supplier A | | | 77.01 | % | | | 96.67 | % | | | - | | | | - | |
| | | | | | | | | | | | | | | | |
Total (as a group) | | | 77.01 | % | | | 96.67 | % | | | - | | | | - | |
To reduce risk, the Company issued two three year promissory notes totaling $1.25 million. The first note is payableclosely monitors the amounts due from its customers and assesses the financial strength of its customers through a variety of methods that include, but are not limited to, the former ownersengaging directly with customer operations and leadership personnel, visiting customer locations to observe operating activities, and assessing customer longevity and reputation in the amountmarketplace. As a result, the Company believes that its accounts receivable credit risk exposure is limited.
Note 15 – Subsequent Events
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure, except as follows:
The Company received subscriptions of $1,062,500. $165,000 in cash for 50,000 shares of Convertible Series C Preferred Stock in connection with subscription agreements signed with investors at prices of $2.40 and $6.00 per share.
The second note is payable to NCF Charitable Trustcompany had the following transactions in the amount of $187,500. The notes bear interest at eight percent (8%) with the entire balance of interest and principal payable August 31, 2011. In conjunction with the revisionCommon stock as follows:
· 250,000 shares issued to the agreements with CVC described in Note 7 an amendment to these notes was executed that all interest payments and principal payments due pursuant to the notes were deferred until August 31, 2011.
(c) During the period March 4, 2004 through June 22, 2004, the Company entered into a
Loan and Security Agreement with several investors to provide the funding necessary for the purchasedirector of the
Transfer Storage Disposal Facility (TSDF) locatedCompany.· 1,150,000 shares issued for MFB board advisory fees.
· 456,762 shares for conversion of debt and accrued interest.
· 1,900,000 shares issued to consultants for services.
· 65,000,000 shares were cancelled by our Chief Executive Officer.
The Company had the following transactions in Rancho Cordova, California. The notes were secured by the TSDF, carried an interest rate of eight percent (8%) per annum,Series C Preferred shares
· 108,333 shares for stock payable.
· 40,000 shares issued to consultants for services
Item 9. Changes in and principalDisagreements with Accountants on Accounting and interest are convertible at $30.00 per share into common stock. In addition,Financial Disclosure.
On January 29, 2024, the note holders were issued warrants to purchase common stock. The notes were initially due June 30, 2009, but were extended to September 30, 2011. As of December 31, 2008, notes payable of $422,500 plus accrued interest of $67,105 remained outstanding.
On July 1, 2009 three note holders entered into new promissory note agreements that replaced in full the principal of the Loan and Security Agreement dated June 1, 2004. The notes are unsecured and carry an interest rate of ten percent (10%) per annum. The principal of the notes is due December 31, 2010.
On August 1, 2009 accrued interest of $168,528 was converted into 485,150 shares of common stock. As an incentive to convert the accrued interest into shares of the Company's common stock, theCompany’s Board of Directors awarded 663,814 fully vested warrantsselected WWC Professional Corporation Limited (the “New Accountant”) to purchase common stockserve as the Company’s independent registered public accounting firm for the review of the Company to the three convertible note holders. The warrants are exercisable at $0.52 per share and have a forty (40) month term. The value of these warrants was calculated at $231,140 and included in the statement of operationsits Annual Report on Form 10-K for the year ending December 31, 2009 as2023. As a cost to induce conversion. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 1.72 % and expected volatility of 104.54 %. As of December 31, 2009, notes payable of $500,000 and accrued interest of $21,252 remained outstanding.
(d) The Wiker Trust obligation is interest only, bearing interest at 7.75% per annum, due August 1, 2012. This is an unsecured note that is subordinated to the National Bank of California notes.
(e) An unsecured four-year note, bearing interest at 15%, payable in monthly installments of $6,130, including interest. This note is subordinated to the National Bank of California notes.
(f) Note payable relating to the purchase of equipment. The note bears interest at 10.88% per annum, payable in 36 monthly installments of principal and interest at $2,456. This obligation is subordinated at the National Bank of California notes.
(g) An unsecured four-year note, bearing interest at 15%, payable in monthly installments of $6,130, including interest. This note is subordinated to the National Bank of California notes.
(h) The Company has two notes payable that are subordinated to the notes payable to National Bank of California. The subordinated Notes Payable consists of the following at December 31, 2009:
| (i) Note payable, Wiker Trust | | $ | 800,000 | |
| (ii) Note payable, US Environmental Response | | | 1,000,000 | |
| Total | | $ | 1,800,000 | |
(i) The Wiker Trust obligation is interest only, bearing interest at 7.75% per annum, due August 1, 2012. This is an unsecured note that is subordinated to the National Bank of California notes. The Wiker Trust is a charitable remainder trust who made the initial loan to the Company in order to fund the acquisition of SCWW in 2004. The CEO of SCWW is a trustee of the Wiker Trust.
(ii) The United States Environmental Response (“USER”) note, formerly held by Aqua de Oro, is a four year note, bearing interest at 7.75%, payable in monthly installments of $6,458 for 7 years, with all remaining principal and interest due on July 31, 2011. The CEO of SCWW is the President of USER. The balance due represents funds paid by Company to the court appointed disbursing agent for the benefit of approved creditors. This is an unsecured note that is subordinated to the National Bank of California notes and all debts allowed in the Company's bankruptcy reorganization.
Future annual maturities under these notes payable are as follows at December 31, 2009:
| Year Ended December 31, | | | |
| | | | |
| 2010 | | $ | 4,822,719 | |
| 2011 | | | 1,873,130 | |
| 2012 | | | 66,000 | |
| 2013 | | | 66,000 | |
| 2014 | | | 43,206 | |
| Thereafter | | | 1,190,085 | |
| | | $ | 8,061,140 | |
11. DERIVATIVE LIABILITIES
In June 2008, the FASB finalized its guidance on “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” This guidance instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion feature of the Company’s Secured Financing Agreements (described in Note 7), and the related warrants, do not have fixed settlement provisions because their conversion and exercise prices, respectively, may be lowered if the Company issues securities at lower prices in the future. The Company was required to include the reset provisions in order to protect the note holders from the potential dilution associated with future financings. In accordance with current guidance, the conversion feature of the notes was separated from the host contract (i.e., the notes) and recognized as an embedded derivative instrument. Both the conversion feature of the notes and the warrants have been re-characterized as derivative liabilities. Current guidance requires that the fair value of these liabilities be re-measured at the end of every reporting period with the change in value reported in the statement of operations.
The derivative liabilities were valued using a probability weighted Black-Scholes-Merton valuation technique with the following weighted average assumptions:
| | | December 31, 2009 | | | September 4, 2009 | | | June 1, 2009 | | | December 31, 2008 | |
| Conversion feature: | | | | | | | | | | | | |
| Risk-free interest rate | | | .40 | % | | | .42 | % | | | 1.14 | % | | | 1.66 | % |
| Expected volatility | | | 137.57 | % | | | 115.22 | % | | | 88.02 | % | | | 78.66 | % |
| Expected life (in years) | | | 0.75 | | | | 0.83 | | | | 2.25 | | | | 2.67 | |
| Expected dividend yield | | | 0.0 | % | | | 0.0 | % | | | 0.0 | % | | | 0.00 | % |
| | | | | | | | | | | | | | | | | |
| Warrants: | | | | | | | | | | | | | | | | |
| Risk-free interest rate | | | - | | | | - | | | | 2.66 | % | | | 4.78 | % |
| Expected volatility | | | - | | | | - | | | | 88.02 | % | | | 78.66 | % |
| Expected life (in years) | | | - | | | | - | | | | 5.25 | | | | 5.67 | |
| Expected dividend yield | | | - | | | | - | | | | 0.00 | % | | | 0.00 | % |
| | | | | | | | | | | | | | | | | |
| Fair Value: | | | | | | | | | | | | | | | | |
| Conversion feature | | $ | 896,542 | | | $ | 1,635,977 | | | $ | 3,637,437 | | | $ | 624,385 | |
| Warrants | | | 2,025,000 | | | | 2,025,000 | | | | 1,528,283 | | | | 1,502,205 | |
| | | $ | 2,921,542 | | | $ | 3,660,977 | | | $ | 5,165,720 | | | $ | 2,126,590 | |
| | | | | | | | | | | | | | | | | |
The risk-free interest rate was based on rates established by the Federal Reserve. The expected volatility is based on the Company’s historical volatility for its common stock. The expected life of the conversion feature of the notes was based on the term of the notes and the expected life of the warrants was determined by the expiration date of the warrants. The expected dividend yield was based on the fact that the Company has not paid dividends to common shareholders in the past and does not expect to pay dividends to common shareholders in the future.
The value of the 2.7 million warrants at September 4, 2009 and December 31, 2009 was based on the put option price of $0.75 per warrant share (see Note 7).
The change was implemented in the first quarter of 2009 and is reported as a cumulative change in accounting principles. The cumulative effect on the accounting for the conversion feature of the note and the warrants on January 1, 2009 are as follows:
| | | Additional | | | Accumulated | | | Derivative | | | Convertible | |
| Derivative Instrument: | | Paid-in Capital | | | Deficit | | | Liability | | | Note | |
| Conversion feature | | $ | - | | | $ | 393,875 | | | $ | 624,385 | | | $ | (1,018,261 | ) |
| Warrants | | $ | (1,674,036 | ) | | $ | 562,398 | | | $ | 1,502,205 | | | $ | (390,567 | ) |
| | | $ | (1,674,036 | ) | | $ | 956,273 | | | $ | 2,126,590 | | | $ | (1,408,828 | ) |
The warrants were originally recorded at their relative fair value as an increase in additional paid-in capital. The change in the accumulated deficit includes gains resulting from decreases in the fair value of the derivative liabilities through December 31, 2009. The derivative liability amounts reflect the fair value of each derivative instrument as of the January 1, 2009 date of implementation. The convertible note amount represents the discount recorded upon adoption of the accounting. This discount will be recognized on a monthly basis through the maturity date of the notes.
As of December 31, 2009, the derivative liabilities amounted to $2,921,552.
12. STOCKHOLDERS’ EQUITY
Common Stock for Services
On October 9, 2008, a consultant to the Company agreed to convert $13,150 in fees into 12,524 shares of common stock based upon the fair value of the stock at the date of the agreement.
During the year ended December 31, 2009, the Company issued 250,000 shares of its common stock valued at $115,000 based upon the trading price at that date of the agreement for consulting services.
Issuance of Common Stock on Exercise of Stock Options and Warrants
On March 27, 2009 one employee exercised 250 options granted under the Company’s 2007 Employee Stock Option Plan resulting in net proceeds to the Company of $187. On May 15, 2009 one stockholder exercised 6,250 warrants granted by the Company resulting in net proceeds to the Company of $3,750.
Issuance of Common Stock on Conversion of Debt
During the year ended December 31, 2009, GPP (a related entity – see Note 7) agreed to convert $150,000 of amounts owed to them and $164,756 incurred for other fees and costs into 524,594 shares of the Company’s common stock in settlement for amounts due. On August 1, 2009 accrued interest due under certain investor notes of $168,528 was converted into 485,150 shares of common stock (See Note 10).
As the trading price of the common shares issued on the date of settlement exceeded the amount of liabilities settled, the Company recognized additional interest expense of $157,193 which has been reflected as an expense in the accompanying statement of operations.
13. STOCK OPTIONS AND WARRANTS
Stock Options
Prior to acquisition by the Company, General Environmental Management, Inc. of Delaware’s Board of Directors approved and implemented the 2005 Stock Option Plan (the “2005 Plan”). The plan authorized option grants to employees and other persons closely associated with the Company for the purchase of up to 88,117 shares.
On March 28, 2007result, the Board of Directors
approved and implementeddetermined that BF Borgers CPA PC (the “Former Accountant”) would no longer serve as the
2007 Stock Option PlanCompany’s independent registered public accounting firm, effective as of March 21, 2023.On January 31, 2024, the Company filed a Current Report on Form 8-K (the “2007 Plan”“Form 8-K”). The plan authorized option grants to employees and other persons closely associated with the Company forSEC disclosing the purchase of up to 5,500,000 shares.
The Company issues stock options to employees, directors and consultants underchanges in its certifying accountant.As disclosed in the 2007 Stock Option Plan. Employee and Non-employee options vest according toForm 8-K, the terms of the specific grant and expire 8 years from date of grant. Stock option activityFormer Accountant’s audit report on our financial statements for the years ended December 31, 20092022 and 20082021 contained no adverse opinion or disclaimer of opinion, nor was it qualified or modified as follows:
| | | | | | Weighted Avg. | |
| | | Options | | | Exercise Price | |
| Options outstanding, January 1, 2008 | | | 5,000,193 | | | $ | 1.64 | |
| Options granted | | | 173,000 | | | | 1.35 | |
| Options exercised | | | - | | | | - | |
| Options cancelled | | | (385,853 | ) | | | 1.44 | |
| Options, December 31, 2008 | | | 4,787,340 | | | | 1.65 | |
| Options granted | | | 604,500 | | | | 0.75 | |
| Options exercised | | | (250 | ) | | | 0.75 | |
| Options cancelled | | | (1,991,435 | ) | | | 1.57 | |
| Options outstanding, December 31, 2009 | | | 3,400,155 | | | $ | 1.54 | |
| Options exercisable, December 31, 2009 | | | 2,850,776 | | | $ | 1.60 | |
Duringto uncertainty, audit scope or accounting principles, except that the audit report on the financial statements of the Company for the year ended December 31, 2022 and 2021 contained an uncertainty about the Company’s ability to continue as a going concern (the “Going Concern Opinion”).For the years ended December 31, 20092022 and 2008,2021 and through the date of the Form 8-K, the Company reflected $767,042 and $835,557, respectively, as the fair value of the vested stock compensation. As of December 31, 2009, the value of the remaining compensation to be recognized of $402,509 will be amortized as compensation expense over the next 27 months as the options vest. The options had no intrinsic value at December 31, 2009.
Options outstanding at December 31, 2009“disagreements” (as defined in Regulation S-K, Item 304(a)(1)(iv) and the related weighted average exercise price and remaining life information is as follows:
| | Range of exercise prices | | Total options outstanding | | | Weighted average remaining life in years | | | Total weighted average exercise price | | | Options exercisable | | | Exercisable weighted average exercise price | |
| $ | 48.00 | | | 134 | | | | 3.17 | | | $ | 48.00 | | | | 134 | | | $ | 48.00 | |
| | 39.00 | | | 9,335 | | | | 3.33 | | | | 39.00 | | | | 9,335 | | | | 39.00 | |
| | 35.10 | | | 117 | | | | 3.58 | | | | 35.10 | | | | 117 | | | | 35.10 | |
| | 30.00 | | | 19,229 | | | | 3.83 | | | | 30.00 | | | | 19,229 | | | | 30.00 | |
| | 25.80 | | | - | | | | - | | | | 25.80 | | | | - | | | | 25.80 | |
| | 6.60 | | | 1,535 | | | | 4.58 | | | | 6.60 | | | | 1,305 | | | | 6.60 | |
| | 2.50 | | | 262,000 | | | | 7.83 | | | | 2.50 | | | | 196,484 | | | | 2.50 | |
| | 1.99 | | | 6,000 | | | | 8.33 | | | | 1.99 | | | | 3,750 | | | | 1.99 | |
| | 1.70 | | | 214,000 | | | | 8.00 | | | | 1.70 | | | | 159,617 | | | | 1.70 | |
| | 1.19 | | | 2,373,375 | | | | 8.08 | | | | 1.19 | | | | 2,227,880 | | | | 1.19 | |
| | 1.10 | | | 56,498 | | | | 7.25 | | | | 1.10 | | | | 28,494 | | | | 1.10 | |
| | 1.05 | | | 23,810 | | | | 8.83 | | | | 1.05 | | | | 14,615 | | | | 1.05 | |
| | 0.75 | | | 434,122 | | | | 8.58 | | | | 0.75 | | | | 189,816 | | | | 0.75 | |
| $ | 0.75 - $48.00 | | | 3,400,155 | | | | 7.58 | | | $ | 1.25 | | | | 2,850,776 | | | $ | 1.25 | |
Warrants
During 2009,instructions) with the Company issued warrantsFormer Accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to acquire 1,234,200 shares of its common stock to related entities valued in the aggregate at $458,476 as follows:
On January 7, 2009 the Board of Directors awarded 70,000 fully vested warrants to a non-employee director serving on the Board of Directors. The warrants are exercisable at $0.75 per share and have a 7 year life as noted per the Company’s board approval. The value of these warrants was calculated at $37,743 and included in the statement of operations for the year ending December 31, 2009. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 1.66% and expected volatility of 78.66 %.
On September 2, 2009 the Board of Directors awarded 880,250 fully vested warrants to purchase common stocksatisfaction of the CompanyFormer Accountant would have caused them to three former Vice Presidents. A portion of the warrants are exercisable at $1.19 per share, a portion exercisable at $0.75 per share with the balance exercisable at $1.70 per share. All warrants have a five (5) year term. The value of these warrants was calculated at $235,543 and includedmake reference thereto in the statement of operations for the year ending December 31, 2009. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 2.33 % and expected volatility of 115.22%.
On June 30, 2009, the Company’s board of directors approved the grant of warrants to GPP, a related party, for its continued advisory services. The board approved issuance of warrants to purchase up to 185,000 of the Company’s shares at an exercise price of $0.60, with a term of 4 years (48 months). The value of these warrants was calculated at $117,541 and included in the statement of operations for the year ending December 31, 2009. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 2.33 % and expected volatility of 115.22%.
The Company’s board of directors also approved the issuance of warrants to a consultant to purchase up to 50,000 of the Company’s shares at $0.60, with a term of 4 years (48 months). The warrants were granted for research services provided to the Company. The value of these warrants was calculated at $31,768 and included in the statement of operations for the year ending December 31, 2009. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 2.33 % and expected volatility of 115.22%.
On January 1, 2009, the Company’s board of directors approved the grant of warrants to GPP, a related party, for agreeing to open a letter of credit facilitytheir reports on behalf of the Company. The board approved the issuance of warrants to purchase up to 48,950 of the Company’s shares at an exercise price of $0.60, with a term of 7 years (84 months). The value of these warrants was calculated at $35,881 and included in the statement of operations for the year ending December 31, 2009. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 2.33 % and expected volatility of 115.22%.
On December 31, 2008 the Board of Directors awarded 187,500 fully vested warrants to purchase common stock of the Company to a former Vice President. A portion of the warrants are exercisable at $1.19 per share with the balance exercisable at $1.70 per share. All warrants have a five (5) year term. The value of these warrants was calculated at $70,625 and included in the statement of operations for the year ending December 31, 2008. For the Black Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78 % and expected volatility of 78.66 %.
Previously issued warrants to acquire 242,137 shares of common stock at $.060 per share were set to expire on December 31, 2008. On December 31, 2008, the company extended the life of these warrants an additional 6.75 years. These warrants were valued at $128,333 using the Black - Scholes valuation model, and such cost was recognized as an additional finance cost during the year ended December 31, 2008. For the Black - Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78%, expected volatility of 78.66% and an expected term for the warrants of 6.75 years.
| | | Warrants | | | Range of Exercise Prices | | | Intrinsic Value | |
| Warrants outstanding, January 1, 2008 | | | 5,981,635 | | | $ | 0.60-$120.00 | | | | - | |
| Warrants granted | | | 3,762,000 | | | $ | 0.60-$2.25 | | | | - | |
| Warrants exercised | | | (5,000 | ) | | $ | 0.60 | | | | - | |
| Warrants expired | | | (210,741 | ) | | $ | 1.20-$120.00 | | | | - | |
| Warrants outstanding, December 31, 2008 | | | 9,527,894 | | | $ | 0.60-$37.50 | | | $ | 451,813 | |
| Warrants granted | | | 2,274,064 | | | $ | 0.52-$4.00 | | | | - | |
| Warrants exercised | | | (6,250 | ) | | | 0.60 | | | | - | |
| Warrants expired | | | (1,384,282 | ) | | $ | 0.60-$37.50 | | | | - | |
| Warrants outstanding, December 31, 2009 | | | 10,411,426 | | | $ | 0.52-$37.50 | | | $ | - | |
Warrants outstanding at December 31, 2009 and the related weighted average exercise price and remaining life information is as follows:
Range of exercise prices | | | Total warrants outstanding | | | Weighted average remaining life in years | | | Total weighted average exercise price | | | Warrants exercisable | | | Exercisable weighted average exercise price | |
| $ | 37.50 | | | | 667 | | | | 0.33 | | | $ | 37.50 | | | | 667 | | | $ | 37.50 | |
| | 26.10 | | | | 125,072 | | | | 3.17 | | | | 26.10 | | | | 125,072 | | | | 26.10 | |
| | 4.00 | | | | 425,000 | | | | 9.83 | | | | 4.00 | | | | 425,000 | | | | 4.00 | |
| | 2.75 | | | | 330,909 | | | | 4.83 | | | | 2.75 | | | | 330,909 | | | | 2.75 | |
| | 1.70 | | | | 170,250 | | | | 4.53 | | | | 1.70 | | | | 170,250 | | | | 1.70 | |
| | 1.38 | | | | 661,818 | | | | 4.83 | | | | 1.38 | | | | 661,818 | | | | 1.38 | |
| | 1.20 | | | | 312,770 | | | | 1.75 | | | | 1.20 | | | | 312,770 | | | | 1.20 | |
| | 1.19 | | | | 2,422,500 | | | | 4.38 | | | | 1.19 | | | | 2,422,500 | | | | 1.19 | |
| | 1.05 | | | | 35,000 | | | | 8.58 | | | | 1.05 | | | | 35,000 | | | | 1.05 | |
| | 0.75 | | | | 130,000 | | | | 5.47 | | | | 0.75 | | | | 130,000 | | | | 0.75 | |
| | 0.70 | | | | 1,350,000 | | | | 4.67 | | | | 0.70 | | | | 1,350,000 | | | | 0.70 | |
| | 0.60 | | | | 3,783,626 | | | | 4.56 | | | | 0.60 | | | | 3,783,626 | | | | 0.60 | |
| | 0.52 | | | | 663,814 | | | | 2.92 | | | | 0.52 | | | | 663,814 | | | | 0.52 | |
| $ | 0.52 - 37.50 | | | | 10,411,426 | | | | 4.19 | | | | 1.35 | | | | 10,411,426 | | | | 1.35 | |
The warrants had no intrinsic value at December 31, 2009.
14. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL
The Company is regulated as a hazardous waste transporter and TSDF operator and is subject to various stringent federal, state, and local environmental laws and regulations relating to pollution, protection of public health and the environment, and occupational safety and health. The Company is subject to periodic inspection by the Department of Toxic Substance Control, DOT, and EPA. The Company has not been subject to any contingencies pursuant to any environmental law or regulation. Although compliance with these laws and regulations may affect the costs of the Company’s operations, compliance costs to date have not been material.
ASSET RETIREMENT COSTS AND OBLIGATIONS
In accordance with its Part B operating permit, the Company is liable for certain costs involving the ultimate closure of its facilities. These expenses include costs of decommissioning, remediation, and incremental direct administration costs of closing the facilities.
Upon acquisition of General Environmental Management of Rancho Cordova, LLC in June 2004, the Company continued that subsidiary’s implementation of SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the related asset retirement costs. The statement which became effective January 1, 2003, requires that a fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred and capitalized as part of the carrying amount of the long lived asset. When a liability is initially recorded, the entity capitalizes the cost by increasing the carrying value of the related long lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. On an annual basis the liability to fulfill the retirement obligation is required to be reviewed and adjusted if necessary. Management’s review of the liability in 2007 determined no adjustment was necessary.
The Company determined the estimated obligation, based on current requirements and proposed regulatory changes and is intended to approximate fair value. The estimate of fair value is based on the best available information, including the results of present value techniques. Once the retirement costs were determined, the Company inflated those costs to the expected time of payments and discounts the expected future costs back to present value. The costs have been inflated in current dollars until the expected time of payment using an inflation rate of 2.5 percent and have discounted these costs to present value using a credit-adjusted risk-free interest rate of 5.5 percent. The accretion of the liability, based on the effective interest method, and amortization of the property and equipment, recognized over the estimated life of the location, will be included in the operating costs and expenses. The discount rate, which is based on the rates for the United States Treasury bonds, and the inflation rate is reviewed by the Company on an annual basis.
Upon acquisition of the Part B permit and facility, the Company’s share of obligation, was a present value liability of $35,846 and a net increase to plant and equipment of $35,846.
In the State of California, the environmental regulatory agencies overseeing the Company’s operations require the Company to provide assurance that funds will be available for these costs. The Company has a cash deposit of $900,122 to cover the ultimate cost of closure at its facility and is reflected as restricted cash in the accompanying balance sheet.
LEGAL PROCEEDINGS
On July 5, 2007, a lawsuit was instituted by Romic Environmental Technologies Corp. (“RET”) against the Company and four of its senior executives, all of whom were formerly employed by RET. The lawsuit was brought in the Superior Court of the State of California, County of Los Angeles. The lawsuit was settled by the Company in February 2010 with the majority of the settlement payment funded by insurance.
The Company is subject to legal proceedings and claims that arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have material adverse effect on its financial position, results of operations or liquidity.
OTHER CONTINGENCIES
The Company is subject to various regulatory requirements, including the procurement of requisite licenses and permits at its facilities and for its vehicles and drivers. These licenses and permits, without which the Company’s operations would be adversely affected, are subject to periodic renewal. The Company anticipates that, once a license or permit is issued with respect to a facility, the license or permit will be renewed at the end of its term if the facility’s operations are in compliance with the applicable regulatory requirements.
Under the Company’s insurance programs, coverage is obtained for catastrophic exposures, as well as those risks required to be insured by law or contract. The Company retains a certain amount of risk through per occurrence deductibles on its insurance policies.
15. INCOME TAXES
The Company's net deferred tax assets (using a federal corporate income rate of 34%) consisted of the following at December 31;
| | | 2009 | | | 2008 | |
| Deferred tax asset, net operating loss | | $ | 19,411,281 | | | $ | 14,184,661 | |
| Less valuation allowance | | | (19,411,281 | ) | | | (14,184,661 | ) |
| Net deferred tax asset | | $ | - | | | $ | - | |
As of December 31, 2009, the Company had federal net operating loss carry forwards of approximately $58,132,991 expiring in various years through 2025, which can be used to offset future taxable income, if any. No deferred asset benefit for these operating losses has been recognized in the financial statements due to the uncertainty as to their realizability in futurefor such periods.
As a result of the Company's significant operating loss carryforward and the corresponding valuation allowance,There were no income tax expense (benefit) has been recorded at December 31, 2009 and December 31, 2008.
Reconciliation of the effective income tax rate to the United States statutory income tax ratereportable events for the years ended December 31, 20092022 or 2021 and 2008 is as follows:
| | | 2009 | | | 2008 | |
| Tax expense at U.S. statutory income tax rate | | | (34.0) | % | | | (34.0) | % |
| Increase in the valuation allowance | | | 34.0 | | | | 34.0 | |
| Effective rate | | | - | | | | - | |
Effective January 1, 2007, the Company adopted a new accounting requirement to Account for Uncertainty in Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under the new accounting requirements, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The new requirements also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. Atthrough the date of
adoption, andthe Form 8-K, there were no reportable events as
defined in item 304(a)(1)(v) of
December 31, 2009,Regulation S-K.As also disclosed in the Form 8-K, prior to retaining the New Accountant, the Company did not have a liability for unrecognized tax uncertainties.
The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2002. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs and tax credit carry forwards may be utilized in future periods, they remain subject to examination.
The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2009 the Company has no accrued interest or penalties related to uncertain tax positions.
16. SUBSEQUENT EVENTS
On November 25, 2009, General Environmental Management, Inc., a Nevada corporation (“Company”) entered into a Stock Purchase Agreement ("Purchase Agreement") with Luntz Acquisition (Delaware), LLC, ("Luntz") a subsidiary of PSC Environmental Services, LLC (“PSC”), pursuant to which the Company agreed to sell General Environmental Management, Inc. (DE) and its subsidiaries (“GEM DE”), which include five service centers, the TSDF of GEM Rancho Cordova LLC, and the Island Environmental Services business. Consideration for the sale would be cash in the aggregate amount of $14 million and the assumption by Luntz of approximately $1.1 million of long term lease obligations. The final purchase price would be subject to an adjustment based on the computation of net working capital at closing. PSC is a leading provider of industrial cleaning, environmental, remediation, and transportation services. GEM DE, a subsidiary of the Company, is a full-service hazardous waste management and environmental services firm with locations in the western United States. On February 19, 2010, at a Special Meeting, stockholders approved the Purchase Agreement dated as of November 25, 2009, by and between the Company and Luntz. On February 26, 2010, the Company completed the sale of GEM DE and its subsidiaries.
Luntz retained $1.089 million for the one year period following the closing, to assure payment of certain of the Company’s indemnification obligations, if any, arising under the Purchase Agreement and the related ancillary agreements. The purchase price was further reduced by $1.8 million based on the computation of net working capital at closing.
Also in conjunctionconsult with the closing and the Amended and Restated Warrant to Purchase Shares of Common Stock, CVC of California, The Company's senior lender, exercised its put option related to its warrant for 2,700,000 shares for a cash purchase price of $0.75 per Warrant Share or $2,000,000. At closing, CVC was paid $500,000 and issued 3,750,000 shares of the Company’s common stock to satisfy the put option. Also in conjunction with the CVC agreement, General Pacific Partners agreed to convert $575,000 of its related party indebtedness into 1,437,500 shares of the Company’s common stock.
The following unaudited pro forma consolidated balance sheet was prepared from the Company’s consolidated financial statements and gives effect to the sale of the Company’s stock in its wholly owned subsidiary, GEM DE to Luntz as if the sale had been completed at December 31, 2009. The first adjustment column (A) represents the sale of GEM DE and related expenses. The second adjustment column (B) representsNew Accountant regarding either: (i) the application of
net proceeds fromaccounting principles to a specified transaction, either contemplated or proposed, or the
sale including paymentstype of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was the subject of a “disagreement” or a “reportable event” (as those terms are defined in Item 304(a)(1)(iv) and (a)(1)(v) of Regulation S-K, respectively).On January 29, 2024, the Company provided the Former Accountant with the disclosures contained in the Form 8-K disclosing the dismissal of the Former Accountant and requested in writing that the Former Accountant furnish the Company with a letter addressed to the senior lender.
General Environmental Management, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of December 31, 2009
| | | December 31, 2009 | | | Adjustment for Sale of GEM DE | | | Adjustment for Application of Proceeds | | | Adjusted December 31, 2009 | | |
| | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | | | |
| Cash | | $ | 466,891 | | | $ | 11,110,285 | | | $ | (10,283,332 | ) | | $ | 1,293,844 | | (a) |
| Accounts receivable, net of allowance for doubtful accounts | | | 974,340 | | | | - | | | | - | | | | 974,340 | | |
| Prepaid expenses and current other assets | | | 56,196 | | | | - | | | | - | | | | 56,196 | | |
| Total current assets | | | 1,497,427 | | | | 11,110,285 | | | | (10,283,332 | ) | | | 2,324,380 | | |
| | | | | | | | | | | | | | | | | | |
| Property and equipment, net of accumulated depreciation | | | 12,662,494 | | | | - | | | | - | | | | 12,662,494 | | |
| | | | | | | | | | | | | | | | | | |
| OTHER ASSETS | | | | | | | | | | | | | | | | | |
| Restricted cash | | | 900,122 | | | | - | | | | - | | | | 900,122 | | |
| Intangibles, net | | | 1,455,534 | | | | - | | | | - | | | | 1,455,534 | | |
| Deposits | | | 184,920 | | | | - | | | | - | | | | 184,920 | | |
| Deferred financing fees | | | 158,898 | | | | - | | | | - | | | | 158,898 | | |
| Assets of GM Delaware held for sale | | | 2,922,639 | | | | (2,922,639 | ) | | | - | | | | - | | |
| Due from buyer - MTS | | | 1,089,341 | | | | - | | | | - | | | | 1,089,341 | | |
| TOTAL ASSETS | | $ | 20,871,375 | | | $ | 8,187,646 | | | $ | 10,283,332 | | | $ | 18,775,689 | | |
| | | | | | | | | | | | | | | | | | |
| Liabilities and Stockholders’ Deficiency | | | | | | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | | | | | | |
| Accounts Payable | | $ | 2,176,801 | | | | 600,000 | | | | - | | | | 2,776,801 | | (b) |
| Payable to related entities | | | 765,628 | | | | - | | | | (572,500 | ) | | | 193,128 | | (c) |
| Accrued expenses | | | 1,277,662 | | | | - | | | | - | | | | 1,277,662 | | |
| Current portion of financing agreement | | | 12,461,780 | | | | | | | | (6,861,780 | ) | | | 5,600,000 | | |
| Current portion of long-term obligations | | | 4,822,719 | | | | - | | | | - | | | | 4,822,719 | | |
| Current portion of Acquisitions Notes Payable | | | 1,072,974 | | | | - | | | | - | | | | 1,072,974 | | |
| Total current liabilities | | | 22,577,564 | | | | 600,000 | | | | (7,434,280 | ) | | | 15,743,284 | | |
| | | | | | | | | | | | | | | | | | |
| LONG – TERM LIABILITIES | | | | | | | | | | | | | | | | | |
| Long term obligations, net of current portion | | | 3,238,420 | | | | - | | | | - | | | | 3,238,420 | | |
| Acquisition Notes Payable, net of current portion | | | 7,921,674 | | | | - | | | | - | | | | 7,921,674 | | |
| Derivative liabilities | | | 2,921,552 | | | | - | | | | (2,921,552 | ) | | | - | | (d) |
| Total long-term liabilities | | | 14,081,646 | | | | - | | | | (2,921,552 | ) | | | 11,160,094 | | |
| Stockholders’ equity (deficiency) | | | | | | | | | | | | | | | | | |
| Common stock, $.001 par value, 200,000,00 shares authorized 14,557,653 shares issued and outstanding | | | 14,570 | | | | - | | | | - | | | | 14,570 | | |
| Additional paid-in capital | | | 54,721,872 | | | | - | | | | - | | | | 54,721,872 | | |
| Accumulated deficit | | | (70,524,277 | ) | | | 7,587,646 | | | | 72,500 | | | | (62,864,131 | ) | (e) |
| Total stockholders’ equity (deficiency) | | | (15,787,835 | ) | | | 7,587,646 | | | | 72,500 | | | | (8,127,689 | ) | |
| Total liabilities and stockholders’ deficiency | | $ | 20,871,375 | | | $ | 8,187,646 | | | $ | (10,283,332 | ) | | $ | 18,775,689 | | |
Descriptions of Pro Forma adjustments:
(a) Cash proceeds from the sale ($11.14 million) are $14.0 million less $1.80 million which is the estimated amount needed to fund the working capital deficit relatedSEC stating whether or not they agree with such disclosures. The Former Accountant’s response was filed as Exhibit 16.1 to the
companies being sold, $0.6 million for transaction costs Form 8-K.Item 9A. Controls and $1.09 million being held by Buyer for estimated income tax liabilities resulting from the sale ($0.425 million), a lease payment holdback ($0.089 million) and potential contingencies post sale ($0.575 million).
(b) Transaction costs related to the sale
(c ) Conversion of related party debt to equity required by the senior lender as a condition to closing
(d) To remove the derivative liability related to the conversion feature of the retired convertible note
(e) The net change to equity consists of $2.07 million of lender obligations and related party debt converted to equity offset by a $2.0 million
expense generated by a put exercised by the senior lender related to the sale.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
ITEM 9A (T). Controls and Procedures
Procedures.Evaluation of Disclosure Controls and Procedures
We maintain disclosureDisclosure controls and procedures that(as defined in Exchange Act Rule 15d-15(e)) are designed to ensurewith the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, reportssuch as this report, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and formsforms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
As of December 31, 2023, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance that the controls and procedures would meet their objectives.
As required by SEC Rule 13a-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures asprocedures. Such evaluation was carried out under the supervision of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer, andwho is also our Chief Financial Officer, and our third party financial service provider, PubCo Reporting. Based on this evaluation, management concluded that our disclosure controls and procedures were, effective at the reasonable assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Internal control over financial reporting refersand continues to the process designed by, or under the supervisionbe, ineffective as of our Chief Executive Officer and Chief 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, and includes those policies and procedures that:
(1) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
(2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effectDecember 31, 2023. Based on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improperforegoing, our management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Management has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, management has concluded that our internal controlcontrols over the following financial reporting was effective as of December 31, 2008.
This Annual Report does not include an attestation report of our independent registered public accounting firm regardingareas to be material weaknesses: | ● | Due to our size and stage of development, segregation of all conflicting duties may not always be possible and may not be economically feasible. During the year, we lacked sufficient review procedures and segregation of duties such that a proper review had not been performed by someone other than preparer, including manual journal entries, and that process documentation is lacking for review and monitoring controls over financial statements close process and financial reporting. |
| | |
| ● | We identified findings related to overall information technology general controls (“ITGCs”) including issues with access and segregation of duties for systems supporting the Company’s internal control processes and controls. |
Changes in Internal Controls over financial reporting. Our internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this Annual Report.
Financial ReportingThere has been no change in ourthe Company’s internal controlscontrol over financial reporting during our most recent fiscal quarterthe three months ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting.
ITEMreporting on an ongoing basis and are committed to taking further action and implementing additional improvements as necessary.Item 9B. Triggering Events That Accelerate or Increase a Direct Financial Obligation
None
Other Information.None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
ITEMItem 10. Directors, Executive Officers and Corporate Governance
OurGovernance.Directors and Executive Officers
The following table sets forth the names, positions, and ages of our current executive officers and directors. All directors serve until the next annual meeting andof stockholders or until their successors are elected and qualified. Our officers
Directors are appointedelected to serve for one year until the next annual meeting of stockholders until their successors are elected and qualified. Directors are elected by a plurality of the board of directors followingvotes cast at the annual meeting of stockholders and hold office until their successors havethe expiration of the term for which they were elected and until a successor has been elected and qualified. There
A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all Board members individually or collectively consent in writing to the action.
Executive officers are no family relationships betweenappointed by and serve at the pleasure of the Company’s Board of Directors, subject to any contractual arrangements.
Name | | Age | | Title |
Joshua Ralston | | 36 | | Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, President and Secretary |
John Costa | | 55 | | Director |
Jeffery Pomerantz | | 79 | | Director |
Set forth below is a description of the background and business experience of our directors orand executive officers.
Joshua Ralston – Chairman, President, Secretary, Chief Executive Officer, ChairmanBrett M. Clark | 58 | Chief Financial Officer, Executive Vice President of Finance and Director |
James P. Stapleton | 50 | Director |
William J. Mitzel | 52 | President, Chief Operating Officer |
Douglas B. Edwards | 53 | Executive Vice President and Director |
Timothy J. Koziol. Mr. Koziol joined GEM in January 2002 and now serves as the Chief Executive Officer of the Company. Mr. Koziol implemented accounting controls and systems to monitor the day-to-day financial position of GEM, changed operational policies to improve efficiencies, and implemented new sales and marketing programs to increase revenue. Prior to joining GEM, Mr. Koziol was a principal of Fortress Funding, Inc., an asset based lending company, where he was responsible for business development and underwriting. Mr. Koziol was also a principal in Global Vantage, Ltd., an investment banking firm located in Newport Beach, CA. Prior to his work in the financial services industry, Mr. Koziol managed a marketing consulting firm for national and regional clients. He has a Bachelor of Arts from Wheaton College in Speech Communications and a Masters of Arts (Magma Cum Laude) from the Wheaton Graduate School in Mass Communications.
James P. Stapleton is currently a consultant and advisor to small public companies. From May 2004 through July 2007 Mr. Stapleton was the Chief Financial Officer of Bionovo (NASDAQ BNVI). Mr. Stapleton served as GEM.DE's Chief Financial Officer from November 2003 through April 2004, and is no longer employed by GEM.DE or the Company. He serves on GEM's Board of Directors. From 1996 through 2002 Mr. Stapleton was employed in a variety of positions for Auxilio, Inc. (OTC BB AUXO) and Prosoft Training (NASDAQ POSO), including Corporate Secretary, Vice President Investor relations, Chief Financial Officer and other positions.DirectorOn October 10, 2021, the majority voting stockholder appointed Joshua Ralston as a member of the Board of Directors and Chief Executive Officer. Mr. StapletonRalston is currently stationed at U.S. Coast Guard Base Cleveland ESD in Cleveland, Ohio. Prior to this station, Mr. Ralston was Chief Financial Officerstationed in Manama, Bahrain, and Kodiak, Alaska. His primary duties have been electronics support technical support for joint military operations and cyber security. His educational background is business marketing.
John Costa - Director
On April 25, 2022, the Board of BioTek Solutions, Inc.Directors appointed John Costa as a member of the Board of Directors. Mr. Costa has over 30-years of experience in the IT industry; which includes an employment history with several Fortune 100 and 500 companies. Mr. Costa’s areas of IT practice were diversified in Technological Development, Product Design, Modalities and Applications, Artificial Intelligence, Augmented Reality, Virtual and Practical Design, and Website Design. Mr. Costa has a deep understanding of what is capable and possible from 1995 through February 1996.
Brett M. Clark.a technical and usability standpoint.Jeffery Pomerantz - Director
On April 25, 2022, the Board of Directors appointed Jeffery Pomerantz as a member of the Board of Directors. Mr. Clark joined GEMPomerantz has over 50 years of experience in June 2005Consulting, Promotional Marketing, Manufacturing, Sales, and Distribution. Mr. Pomerantz has provided invaluable assistance with many IPO's and Corporate Up-Listings; additionally, he has a variety of international connections to resources and networks that create product distribution channels throughout the world.
Family Relationships
None of our directors and executive officers has been involved in any legal or regulatory proceedings, as set forth in Item 401 of Regulation S-K, during the Chief Financial Officer. From January 2005 to June 2005, he provided consulting services topast ten years.
Involvement in Certain Legal Proceedings
During the past ten years, no director, executive officer, promoter, or control person of the Company related to financial and accounting matters. From June 2005 to December 2006, Mr. Clark servedhas been involved in the Company as Vice President Finance and Chief Financial Officer. In December 2006 and continuing to the present, he was promoted to Executive Vice President of Finance and Chief Financial Officer. From January 2003 through November of 2004 Mr. Clark was the Vice President, Treasurer and Chief Financial Officer for Day Runner, Inc., a privately held consumer products distribution company where he was responsible for the restructuringfollowing:
| (1) | A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; |
| | |
| (2) | Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| | |
| (3) | Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
| i. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; |
| | |
| ii. | Engaging in any type of business practice; or |
| | |
| iii. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
| (4) | Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) below, or to be associated with persons engaged in any such activity; |
| | |
| (5) | Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; |
| | |
| (6) | Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated; |
| | |
| (7) | Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of: |
| i. | Any Federal or State securities or commodities law or regulation; or |
| | |
| ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or |
| | |
| iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| (8) | Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the finance, information technology,Exchange Act requires our executive officers and accountingdirectors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings. Based solely on our review of the copies of such forms furnished to us and written representations by our officers and directors regarding their compliance with applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that all Section 16(a) filing requirements for our executive officers, directors and 10% stockholders were not met during the year ended December 31, 2023.
Delinquent Section 16(a) Reports are as follows:
Name | | Late Reports | | Transactions Covered* | | Number of Shares | |
Joshua Ralston | | Form 3 and 5 | | Common stock/preferred stock | | | 70,000,000 | |
Corporate Governance
Our board of directors has not established any committees, including an audit committee, a compensation committee or a nominating committee, or any committee performing a similar function. The functions of those committees are being undertaken by our board. Because we do not have any independent directors, our board believes that the establishment of committees of our board would not provide any benefits to our company and could be considered more form than substance.
We do not have a policy regarding the consideration of any director candidates that may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our officers and directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our officers and directors have not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our board of directors.
Given our relative size and lack of directors’ and officers’ insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the company’s turnaround. Mr. Clark hasnear future. While there have been the Chief Financial Officer for Tru Circle Corporation (2000 – 2002), Adams Rite Aerospace, Inc. (1997 – 2000) and Chapman University. Prior to these companies, Mr. Clark was Group Controller for Fleetwood Enterprises, a publicly traded Fortune 500 manufacturing company and Corporate Controller and Assistant Secretary for Air Cal, Inc., a publicly traded airline. Prior to work in publicly traded firms and private enterprises, Mr. Clark worked for Deloitte & Touche, a “Big 4” CPA firm. He has a Bachelorno nominations of Science in Accounting from the University of Southern California and became a CPAadditional directors proposed, in the Stateevent such a proposal is made, all current members of Californiaour board will participate in 1975.
William J. Mitzel. Mr. Mitzel was formerly Vice Presidentthe consideration of Salesdirector nominees.As with most small, early stage companies until such time as we further develop our business, achieve a stronger revenue base and operations at Teris,have sufficient working capital to purchase directors’ and officers’ insurance, we do not have any immediate prospects to attract independent directors. When we are able to expand our board to include one or more independent directors, we intend to establish an audit committee of our board of directors. It is our intention that one or more of these independent directors will also qualify as an audit committee financial expert. Our securities are not quoted on an exchange that has requirements that a Texas-based environmental services company, which was acquired by Clean Harbors, Inc. While at Teris, Mr. Mitzel was responsible for the oversightmajority of Teris’ Western Region operationsour board members be independent and managed the sales and service for this 13 state region. From 2000 through 2005 he worked at Romic Environmental Technologies Corporation, serving as President until October 2005 at which point he was elected as Chairmanwe are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of the Board. Mr. Mitzel founded Safari Environmental Management Company in 1997 which he soldour board of directors include “independent” directors, nor are we required to U.S. Liquids. He worked as Regional Vice President for Rollins Environmental Inc from 1992 – 1997 and grew revenue from $38M to $98M in that period. While as Regional Vice President at Chemical Waste Management, Inc. from 1986 – 1992 he built the revenue from $20M to $40M. He has a BA in Biology from Occidental College.
Douglas B. Edwards. Mr. Edwards has been the Chief Executive Officerestablish or maintain an audit committee or other committee of SCWW since 2004. Prior to becoming the President and CEO of SCWW, Mr. Edwards was the Rector (President and Senior Priest) of St. Ambrose Episcopal Parish in Claremont, California from 1990 through 2005. He has over twenty years experience in financial and business management. He attended Claremont McKenna College and St. Clare's Hall, Oxford. He obtained a Masters of Divinity from The General Theological Seminary in New York and a Doctorate of Ministry at the Graduate Theological Foundation in Indiana in 1997.
CODE OF ETHICS
We have adopted a our board.Code of Ethics
We expect that we will adopt a code of business conduct and ethics that applies to all of our directors,employees, officers and employees,directors, including those officers responsible for financial reporting. Once adopted, we will make the code of business conduct and ethics available on our principal executive officer and principal financial officer.website at www.generalenterpriseventures.com. We intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Ethics by filing a Current Report on Form 8-K with the SEC, disclosing such information.
AUDIT COMMITTEE
The Audit Committee, which held 3 meetings during fiscal year 2009, recommends the selection of independent public accountants, reviews the scope of approach to audit work, meets with and reviews the activities of the Company's internal accountants and the independent public accountants, makes recommendations to management orpost any amendments to the Boardcode, or any waivers of Directors as to any changes to such practices and procedures deemed necessary from time to time to comply with applicable auditing rules, regulations and practices, and reviews all Form 10-K Annual and 10-Q interim reports.
The Audit Committee consists of James Stapleton and is an "Audit Committee" for the purposes of Section 3(a)(58) of the Securities Exchange Act of 1934. The Audit Committee has one "audit committee financial expert" as defined by its requirements, on our website.Item 401(e) of Regulation S-B under the Securities Exchange Act of 1934, James Stapleton, is "independent" as that term is defined in the rules of the NASDAQ stock market.
ITEM 11. Executive
Compensation.Summary Compensation
TableThe following table summarizes the compensation earned by or paid toof our principal executive officer, principal financial officer, a highly compensated executive officer, other highly compensated individuals who are not executive officers, directors and a Director; all who servedPresident during the fiscal year ended December 31, 2009.
The total compensation for the three fiscal years ended December 31,
20092023 and 2022. No other officers or directors received annual compensation in excess of
Timothy J. Koziol, our$100,000 during the last fiscal year. | | | | | | | | | | | | | | | | | | | Nonqualified | | | | | | | |
| | | | | | | | | | | | | | | | Non-Equity | | | Deferred | | | | | | | |
| | | | | | | | | | Stock | | | Option | | | Incentive Plan | | | Compensation | | | All Other | | | | |
| | Year Ended | | Salary | | | Bonus | | | Awards | | | Awards | | | Compensation | | | Earnings | | | Compensation | | | Total | |
Name and Principal Position | | December 31, | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
Joshua Ralston, President, Secretary, CEO, CFO and Chairman | | 2023 | | | - | | | | - | | | | 8,640,000 | | | | - | | | | - | | | | - | | | | - | | | | 8,640,000 | |
| | 2022 | | | - | | | | - | | | | 2,100,000 | | | | - | | | | - | | | | - | | | | - | | | | 2,100,000 | |
Stock-Based Compensation
On June 13, 2022, the Company issued 70,000,000 Restricted Stock Award to a member of the board of directors and President of the Company. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company valued the voting rights associated with the awards at $2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022.
During the year ended December 31, 2023, the Company issued 1,200,000 shares of Convertible Series C Preferred Stock to an entity under control of the Company’s Chief Executive Officer Brett M. Clark,for consulting services rendered to the Company from October 2021 through July 2023. The Company valued the 1,200,000 shares of Convertible Preferred Stock, as if converted to 24,000,000 shares of common stock, using the quoted stock price of the Company’s common stock at approval date (November 1, 2022), resulting in a value of $8,640,000.
Director Compensation
On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. As of December 31, 2023, the Company has not issued the shares. The Company valued the 500,000 shares of common stock at the market value of the Company’s common stock at approval date for the amount of $180,000.
Employment Agreement
We have no employment agreements with any of our Chief Financial Officer, William J. Mitzel, our Presidentofficers and James Stapleton, our Director is set forth below in the following Summaryhave not issued any incentive or other stock options, profit sharing or similar benefits.
Equity Compensation Table.
| | | | | Annual Compensation | | | Long-Term Awards | | | Compensation Payouts | |
Name & Principal Position | | Year | | Salary ($)(1) | | | Bonus ($) | | | Other Annual Compensation ($) | | | Restricted Stock Award(s) | | | Securities Underlying Options/ SARs | | | LTIP Payouts | | | All Other Compensation ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Timothy J. Koziol | | 2009 | | | 253,577 | | | | -0- | | | | -0- | | | | -0- | | | | 100,000(2) | | | | -0- | | | | -0- | |
| Chief Executive Officer | | 2008 | | | 303,308 | | | | 25,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | |
| | | 2007 | | | 249,279 | | | | 17,500 | | | | -0- | | | | -0- | | | | 1,425,000(3) | | | | -0- | | | | 82,810- | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Brett M. Clark | | 2009 | | | 201,750 | | | | -0- | | | | -0- | | | | -0- | | | | 100,000(4) | | | | -0- | | | | -0- | |
| Chief Financial Officer | | 2008 | | | 213,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | |
| | | 2007 | | | 210,000 | | | | -0- | | | | -0- | | | | -0- | | | | 1,175,000(5) | | | | -0- | | | | 85,085 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| William J. Mitzel | | 2009 | | | 147,346 | | | | -0- | | | | -0- | | | | -0- | | | | 100,000(6) | | | | -0- | | | | -0- | |
| President | | 2008 | | | 156,000 | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | |
| | | 2007 | | | 156,000 | | | | -0- | | | | -0- | | | | -0- | | | | 450,000(7) | | | | -0- | | | | -0- | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| James P. Stapleton | | 2009 | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 70,000(8) | | | | -0- | | | | -0- | |
| Director | | 2008 | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | -0- | |
| | | 2007 | | | -0- | | | | -0- | | | | -0- | | | | -0- | | | | 35,000 (9) | | | | -0- | | | | -0- | |
(1) | The compensation described in this table does not include medical, group life insurance or other benefits received by the named executive officers that are available generally to all of our salaried employees, and may not include certain perquisites and other personal benefits received by the named executive officers that do not exceed the lesser of $50,000 or ten percent (10%) of any such officer's salary and bonus disclosed in the table. |
(2) | Includes 100,000 incentive stock options exercisable at $0.75 per share. |
(3) | Includes 750,000 incentive options exercisable at $1.19 per share, 25,000 incentive stock options exercisable at $1.70 and 650,000 warrants, exercisable at $1.19 per share. |
(4) | Includes 100,000 incentive stock options exercisable at $0.75 per share. |
(5) | Includes 600,000 incentive stock options, exercisable at $1.19 per share, 75,000 incentive stock options exercisable at $1.70 per share and 500,000 warrants, exercisable at $1.19 per share. |
(6) | Includes 100,000 incentive stock options, exercisable at $0.75 per share. |
(7) | Includes 100,000 incentive stock options, exercisable at $1.70 per share and 350,000 incentive stock options exercisable at $1.19 per share. |
(8) | Includes 70,000 warrants exercisable at $0.75 per share. |
(9) | Includes 35,000 warrants exercisable at $1.19 per share. |
There werePlan InformationWe have no option exercises by our executive officers during fiscal 2009.
ITEMequity compensation plan, profit sharing or similar benefits.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
SECURITY OWNERSHIP
Matters.The following table and footnotes to it sets forth those stockholders whoinformation regarding the number of shares of Common Stock beneficially ownowned by (i) each director and named executive officer of our Company, (ii) named executive officers, executive officers, and directors of the Company as a group, and (iii) each person known by us to be the beneficial owner of 5% or more of our issued and outstanding shares of Common Stock. In calculating any percentage in the common stockfollowing table of Common Stock beneficially owned by one or more persons named therein, the Company,following table is based on 97,545,388 shares of Common Stock, 10,000,000 shares of Series A Preferred Stock, and 2,273,499 shares of Series C Convertible Preferred Stock outstanding as of December 31, 2023, and any shares of Common Stock, Series A Preferred Stock and Series C Convertible Preferred Stock the common stock ownershipperson has the right to acquire within the 60 days following the filing date of this filing. Unless otherwise further indicated in the directorsfollowing table, the footnotes to it or elsewhere in this report, the persons and entities named in the following table have sole voting and sole investment power concerning the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable. Unless as otherwise indicated in the following table and the footnotes, our named executive officers and directors’ address in the stock ownershipfollowing table is c/o General Enterprise Ventures Inc., 1740H Del Range Blvd, Suite 166, Cheyenne, Wyoming 82009.
Name and Address of Beneficial Owner (1) | | Common Stock Beneficially Held (2) | | | Percent of Class (3) | |
Named Executive Officers and Directors | | | | | | |
Joshua Ralston | | | 70,000,000 | | | | 71.76 | % |
Theodore Ralston | | | 3,149,258 | | | | 3.23 | % |
Steven Conboy | | | 3,900,000 | | | | 3.99 | % |
| | | | | | | | |
All Executive Officers and Directors as a group (1 Person) | | | 70,000,000 | | | | 71.98 | % |
| | | | | | | | |
5% or More Stockholders | | | | | | | | |
None | | | | | | | | |
Name and Address of Beneficial Owner | | Title of Class | | | Amounts and nature of Beneficial Owner | | | Percent of Class | |
5% Stockholder | | | | | Shares | | | % | |
Joshua Ralston Preferred A Shares | | | 10,000,000 | | | | 100 | % | | | |
TC Special Investments, LLC Preferred C Shares | | | 1,200,000 | | | | 52.78 | % | | | |
| (1) | Unless as otherwise indicated in the following table and the footnotes, our named executive officers and directors’ address in the following table is c/o General Enterprise Ventures, Inc., 1740H Del Range Blvd, Suite 166, Cheyenne, Wyoming 82009. |
| | |
| (2) | Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the directors and executive officers as a group: | | | No. of | | | % of Stock | | | | | Shares | | | Outstanding | | | Name and Address | | Owned | | | (1) | | | Kevin P. O’Connell(2) | | | | | | | | 660 Newport Center Drive, Suite 720 | | | | | | | | | | Newport Beach, CA 92660 | | | 1,342,483 | (3) | | | 9.22. | % | | | | | | | | | | | | Timothy J. Koziol | | | | | | | | | | 3191 Temple Ave., Suite 250 | | | | | | | | | | Pomona CA 91768 | | | 1,435,623 | (4) | | | 9.86 | % | | | | | | | | | | | | Douglas B. Edwards | | | | | | | | | | 3191 Temple Ave., Suite 250 | | | | | | | | | | Pomona CA 91768 | | | 284,750 | (5) | | | 2.51 | % | | | | | | | | | | | | James Stapleton | | | | | | | | | | 3191 Temple Ave., Suite 250 | | | | | | | | | | Pomona CA 91768 | | | 114,392 | (6) | | | 0.79 | % | | | | | | | | | | | | Brett M. Clark | | | | | | | | | | 3191 Temple Ave., Suite 250 | | | | | | | | | | Pomona CA 91768 | | | 1,169,163 | (7) | | | 8.03 | % | | | | | | | | | | | | William J. Mitzel | | | | | | | | | | 3191 Temple Ave., Suite 250 | | | | | | | | | | Pomona CA 91768 | | | 446,875 | (8) | | | 3.07 | % | | | | | | | | | | | | Laurus Capital Management, LLC | | | | | | | | | | 825 Third Avenue, 14th Floor | | | 1,099,994 | (9) | | | 7.56 | % | | New York, NY 10022 | | | | | | | | | | | | | | | | | | | | CVC California LLC | | | 4,804,900 | (10) | | | 33.01 | % | 1 N Clemente # 300 West Palm Beach, FL 33401 | | | | | | | | | | | | | | | | | | | | Directors and Officers as a Group (5 persons) | | | 3,450,803 | | | | 23.70 | % |
(1) | Based upon 14,557,653 shares outstanding. |
(2) | Kevin P. O’Connell is the Managing Member of Billington Brown Acceptance, LLC, Revete MAK, LLC, Revete Capital Partners LLC, Lapis Solutions, LLC and General Pacific Partners, LLC. |
(3) | Includes 1,140,525 warrants to purchase common stock at $0.60, 168,250 warrants to purchase common stock at $1.19 and 26,250 warrants to purchase common stock at $1.05. |
(4) | Includes 703,125 options to purchase common stock at $1.19 per share, 18,746 options to purchase common stock at $1.70 per share, 43,750 options to purchase common stock at $0.75 per share and 6,667 options to purchase common stock at $30.00 per share. Includes 650,000 warrants to purchase common stock at $1.19. |
(5) | Includes 284,750 warrants to purchase common stock at $4 per share. |
(6) | Includes 35,000 warrants to purchase common stock at $1.19 per share and 70,000 warrants to purchase common stock at $0.75 per share. |
(7) | Includes 562,500 options to purchase common stock at $1.19 per share, 56,246 options to purchase common stock at $1.70 per share, 43,750 options to purchase common stock at $0.75 per share and 6,667 options to purchase common stock at $39.00 per share. Includes 500,000 warrants to purchase common stock at $1.19. |
(8) | Includes 328,125 options to purchase common stock at $1.19 per share, 75,000 options to purchase common stock at $1.70 per share, and 43,750 options to purchase common stock at $0.75 per share. |
(9) | Laurus Capital Management, LLC, a Delaware limited liability company (“Laurus Capital”), serves as the investment manager of Laurus Master Fund, LTD., Valens U.S. SPV I, LLC and Valens Offshore SPV I, LTD (together, the “Laurus Funds”) and possesses the sole power to vote, or to direct the voting of shares; and (ii) investment power, which includes the sole power to dispose or direct the disposition of all securitiesshares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or dispose of the Company heldshares). In addition, shares are deemed to be beneficially owned by a person if the Laurus Funds, which, asperson has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date hereof, constitute an aggregateas of 1,099,994 shares upon exercise of warrants. Mr. Eugene Grin and Mr. David Grin, through other entities, arewhich the controlling principals of Laurus Capital. Laurus Capital, Mr. Eugene Grin and Mr. David Grin each disclaim beneficialinformation is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) because of these acquisition rights. As a result, the percentage of outstanding shares except toof any person as shown in the extentabove table does not necessarily reflect the person’s actual ownership or voting power concerning the number of its of his pecuniary interest therein, if any. |
(10) | Includes 1,350,000 warrants to purchase common stock at $0.60 per share and 1,350,000 warrants to purchase common stock at $0.70 and 2,104,900 shares of common stock issuableoutstanding on conversionthe date of debt. Mr. Gary Jaggard is the controlling principal of CVC California, LLC. Mr. Gary Jaggard disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein, if any.this filing. |
EQUITY COMPENSATION PLAN INFORMATION
Change of Control The following table provides information with respect to the equity securities that are authorized for issuance under our compensation plans asCompany is not aware of December 31, 2009: | Plan Category | Number of Securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | Equity compensation plans approved by security holders | 3,400,155 | $1.54 | 2,187,962 |
On February 14, 2007, the Company completed the reverse splitany arrangements which may at a subsequent date result in a change of control of the outstanding common stock, par value $0.001 per share, byCompany.Item 13. Certain Relationships and Related Transactions, and Director Independence. Related Party Transactions Unless described below, during the last two fiscal years, there were no transactions or series of similar transactions to which we were a ratio of 1-for-30. All share and per share calculations and option shares have been retro-actively adjusted to reflect this reverse split as if it occurred at the beginning of the earliest period presented. Prior to acquisition by the Company, General Environmental Management, Inc. of Delaware’s Board of Directors approved and implemented the 2005 Stock Option Plan (“The 2005 Plan”). The Plan authorized option grants to employees and other persons closely associated with the Company for the purchase of up to 88,117 shares.
During 2006, the Board of Directors of General Environmental Management, Inc. granted to employeesparty or will be a total of 12,587 options and cancelled 1,537 options. The exercise price for the options was the market value of the stock at the date of the grant.
During 2009, 2008 and 2007, the Board of Directors cancelled 1,852, 10,854 and 24,779 options respectively.
On March 28, 2007 the Board of Directors approved and implemented the 2007 Stock Option Plan (the “2007 Plan”). The plan authorized option grants to employees and other persons closely associated with the Company for the purchase of up to 5,500,000 shares. During 2007 the Stock Option Committee granted a total of 5,233,268 options, had exercises of 100 options, and cancelled 289,188. The exercise price of the options was the market value of the stock at the date of the grant.
party, in which:● | the amounts involved exceed or will exceed $120,000; and | | | ● | any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of any of the foregoing had, or will have, a direct or indirect material interest. |
During the year ended December 31, 20082022, our former officer forgave $9,355 in accrued salary and the Stock Option Committee granted a total of 173,000 options and cancelled 384,001 options.
Company recognized it as additional paid-in-capital.During the year ended December 31, 2009 the Stock Option Committee granted a total of 604,500 options, had an exercise of 250 options and cancelled 1,966,656 options. The weighted average exercise price2022, as part of the options atCompany’s divestiture of its digital asset operations, a related party forgave loans payable of $301,175 in exchange for digital asset equipment with a net book value of $276,379 and digital currency intangible assets of $26,825, of which the Company recorded a loss on disposition of $2,030.During the year ended December 31, 2009 was $1.54 per share.
ITEM 13. Certain Relationships2022, a related party paid $1 for share capital - Mighty Fire Breaker UK Limited.On June 13, 2022, the Company issued 70,000,000 Restricted Stock Award to a member of the board of directors and Related Transactions and Director Independence President of the Company. The holder of the Restricted stock shall be entitled to vote but is not entitled to dividends or disposal. The Company hasvalued the voting rights associated with the awards at $2,100,000 which is recorded as stock-based compensation during the year ended December 31, 2022.On November 1, 2022, the Company’s Board of Directors approved the issuance of 250,000 shares of common stock to each of the two independent directors for their board services in support of the Company. As of December 31, 2023, the shares have not been issued, and the Company valued the 500,000 shares of common stock at market price on approval date and accrued $180,000. On October 23, 2021, the Company entered into several transactionsa consulting agreement with General Pacific Partners (“GPP”), a company operated byrelated party. The consultant shall render to the Company, upon the request of any members of Board of Directors or the President of the Company, consulting services on matters relating to the business affairs of the Company. The agreement shall take effect of the date of agreement and shall terminate upon mutual agreement of the parties. The compensation of consultant is a prior membernumber of Convertible Series C Preferred Shares which the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc. of Delaware. GPP owns 5% ofCompany may determine at its discretion. On November 1, 2022, the Company’s common stock at December 31, 2009.
During FebruaryBoard of Directors approved issuance of 1,200,000 shares of Convertible Series C Preferred Stock to consultant - related party for their past consulting services and March 2008, General Pacific Partners made two unsecured advancescontinuing to the Company totaling $472,500. The proceeds were used for working capital purposes. The rate of interest on the advances is 10% per annum. The funds were originally due six months from the date of issuance.July 2023. On June 30, 2008, the maturity date was extended an additional six months to February 14, 2009 and March 19, 2009. In connection with the note extensionSeptember 5, 2023. the Company issued (i) 200,0001,200,000 shares of its common stock valued at $220,000 and, (ii) a warrantConvertible Series C Preferred Stock for consulting services rendered to purchase up to 225,000 shares of its common stock at a price of $0.60 for a period of seven (7) years.the Company. The Company valued the warrants1,200,000 shares of Convertible Preferred Stock at $222,500 using a Black - Scholes option pricing model. For the Black - Scholes calculation,$8,640,000.On June 9, 2022, the Company assumed no dividend yield,received $19,000 cash from a risk free interest rate of 4.78 %, expected volatility of 75.88 %third party, and it was recorded as an expected term for the warrants of 7 years. The value of the common shares of $220,000 and value of the warrants of $222,500 has been reflected byadvance from a related party. On April 1, 2023, the Company as a valuation discount at issuancerecognized the error and offsetthe amount owing to the face amount of the Notes. The Valuation discount is being amortizedrelated party was reclassified to interest expense over the life of the loan based upon the effective interest method. Finance costs for the year ended December 31, 2009 includes $109,324 for amortization of this discount. The valuation discount was fully amortized at September 30, 2009. On February 13, 2009 the maturity date was extended until March 31, 2010. As of December 31, 2009, $534,129 remained outstanding (including accrued interest of $61,719).
In 2008, GPP provided servicesconvertible note related to the financing completed with CVC California, LLC. Pursuant to these services the Company agreed to pay GPP $250,000. The cash paid has been reflected as part of deferred financing fees on the accompanying balance sheet at December 31 2009 and December 31, 2008. During the year ended December 31, 2009, GPP agreed to convert $150,000 of the cash owed to them and $164,756 incurreda lender for other fees and costs into 524,594 shares of the Company’s common stock in settlement for amounts due. The balance due to GPP as of December 31, 2009 is $100,000.
$19,000.During the year ended December 31, 2009 a related individual made an unsecured advance with no formal terms of repayment to the Company totaling $115,000. The proceeds were used for working capital purposes. During the year ended December 31, 2009 the Company made payments on the advance totaling $7,500. At December 31, 2009 the balance due on the advance was $107,500.
Letter of Credit Services
On July 1, 2008 the Company entered into an agreement with GPP wherein GPP would provide letters of credit to support projects contracted to GEM. The fees under the agreement consisted of (i) a commitment fee of 2% of the value of the letter of credit, (ii) interest at a rate to be negotiated, and (iii) a seven year warrant to purchase shares of the Company’s common stock at $0.60 per share.
Software Support
In 2008, the Company entered into a three year agreement with Lapis Solutions, LLC, (Lapis) a company managed by a prior member of the Board of Directors of the Company’s wholly owned subsidiary, General Environmental Management, Inc. of Delaware, wherein Lapis would provide support and development services for the Company’s proprietary software GEMWARE. Service costs related to the agreement total $10,800 per month. As of December 31, 2008, $92,555 of such fees had been prepaid to Lapis and included in the accompanying balance sheet as part of prepaid expenses. During 2009, the Company made further advances of $224,454 to Lapis. At December 31, 2009, the Company determined that the total paid to Lapis no longer had continuing value to the Company given the divestiture of its recycling management business and recorded a charge of $317,009.
Related Party Lease Agreement
During the third quarter ended September 30, 2007, the Company entered into a lease for $180,846 of equipment with current investors of the Company. The lease transaction was organized by General Pacific Partners, a related party, with these investors. The lease has been classified as a capital lease and included in property and equipment (See note 5) and requires payments of $4,000 per month beginning August 1, 2007 through 2012. As an inducement to enter into the lease, the Company issued the leasing entity 100,000 two year warrants to purchase common stock at $1.20. These warrants were valued at $187,128 using the Black - Scholes valuation model and such cost is being amortized to expense over the life of the lease. For the Black - - Scholes calculation, the Company assumed no dividend yield, a risk free interest rate of 4.78 %, expected volatility of 56.60 % and an expected term for the warrants of 2 years. As of December 31, 2009, there was $20,000 of accrued payments due under these leases.
ITEM 14. Principal Accountant Fees and Services
Independent Auditor Fees
Fees for professional services provided by GEM’s independent auditors, Weinberg & Company, for the years ended December 31, 20092023, and 20082022, a related party advanced to the Company an amount of $307,500 and $784,484 for working capital propose, respectively.During the years ended December 31, 2023, and 2022, a related party advanced to the Company an amount of $246,425 and $108,569 for operating expenses on behalf of the Company, respectively. During the years ended December 31, 2023, and 2022, the Company repaid to a related party $125,000 and $55,720 owing of the loan, respectively. During the years ended December 31, 2023, and 2022, the Company paid $150,500 and $126,500 consulting fee to an entity under common control of a related party and $186,500 and $91,500 commission to a related party. As of December 31, 2023, and 2022, the Company was obliged to related parties, for unsecured, non-interest-bearing demand loans with a balance of $1,307,077 and $899,153, respectively. Item 14. Principal Accountant Fees and Services. The following table shows the fees that were billed for the audit and other services provided by our principal auditor, for the periods presented, as follows: | | Fiscal Year Ended December 31, 2023 | | | Fiscal Year Ended December 31, 2022 | | Audit Fees: | | $ | 83,000 | | | $ | 93,500 | | Audit-Related Fees | | | - | | | | - | | Tax Fees: | | | - | | | | - | | All Other Fees | | | - | | | | - | | Total | | $ | 83,000 | | | $ | 93,500 | |
Audit Fees This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as follows:
| Fees | | 2009 | | | 2008 | | | Audit fees | | | 193,210 | | | | 152,490 | | | Audit related fees | | | 57,571 | | | | 40,042 | | | Tax fees | | | -0- | | | | -0- | | | All other fees | | | -0- | | | | -0- | | | Total fees | | | 250,781 | | | | 192,532 | |
Audit fees consista result of, feesthe audit or the review of interim financial statements.Audit-Related Fees This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to GEM’s year endthe performance of the audit or review of our financial statements and review of GEM’s quarterly reports on Form 10-Q. Audit relatedare not reported above under “Audit Fees.” The services for the fees principallydisclosed under this category include audits in connectionconsultation regarding our correspondence with the acquisition completed during 2009. ItSEC and other accounting consulting.Tax Fees This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. All Other Fees This category consists of fees for other miscellaneous items. Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of the Board. Any such approval by the designated member is the policy of GEM’s audit committee to approve all engagements of GEM’s independent auditors to render audit or non-audit services priordisclosed to the initiation of such services. entire Board at the next meeting.PART IV
ITEMItem 15. Exhibits,Exhibit and Financial Statement Schedules. (a) 1. Financial Statements Schedules
The followingfinancial statements and Report of Independent Registered Public Accounting Firm are exhibits filed as partlisted in Item 8. 2. Financial Statement Schedules All schedules for which provision is made in the applicable accounting regulations of GEM'sthe SEC are either not required under the related instructions, are not applicable (and therefore have been omitted), or the required disclosures are contained in the financial statements included herein. 3. Exhibits ________ * Filed herewith. Item 16. Form 10-K for the year ended December 31, 2009:
Summary.None. EXHIBIT NUMBER | | DESCRIPTION | 2.1 | | Articles of Incorporation of the Registrant *27 | 3.1 | | Articles of Amendment of Articles of Incorporation of the Registrant * | 3.2 | | BylawsTable of the Registrant *Contents | 31.1 | | CEO Certification ** | 31.2 | | CFO Certification ** | 32.1 | | CEO Certification ** | 32.2 | | CFO Certification ** |
* Previously Filed
** Filed Herewith
Reports on Form 8-K
(1) As filed with the commission on Form 8K dated September 24,2008
(2) As filed with the commission on Form 8K dated June 4, 2009
(3) As filed with the commission on Form 8K dated September 8, 2009
(4) As filed with the commission on Form 8K dated September 11, 2009
(5) As filed with the commission on Form 8K dated November 18, 2009
(6) As filed with the commission on Form 8K dated December 3, 2009
(7) As filed with the commission on Form 8K dated December 23, 2009
SIGNATURES
In accordance withSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | GENERAL ENVIRONMENTAL MANAGEMENT, INCGeneral Enterprise Ventures, Inc. | | | | | | Dated: April 15, 20102024 | By: | /s/ Timothy J. Koziol Joshua Ralston | | | | Timothy J. Koziol
President, CEOJoshua Ralston | | | | Chief Executive Officer and Chairman of the Board of Directors
Chief Financial Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Dated: April 15, 20102024 | By: | /s/ Brett M. Clark Joshua Ralston | | | | Brett M. Clark
| | | | Chief Executive Vice President Finance, Officer and Chief Financial Officer | |
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