Green Endeavors 10Q 2013 Q1 Quarterly report

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	_____________________
	FORM 10-Q
(Mark One)
	X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2013
	OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________
	Commission file number 000-54018
	______________________
	GREEN ENDEAVORS, INC.
	(Exact Name of Registrant as Specified in Its Charter)
	______________________
	Utah	27-3270121
	(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)


	59 W 100 S, 2nd Floor, Salt Lake City, UT	84101
	(Address of Principal Executive Offices)	(Zip Code)

	(801) 575-8073
	Registrant’s Telephone Number, including Area Code
	______________________

	Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X

	Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X No

	Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
	Large accelerated filer	Accelerated filer
	Smaller reporting company X	Non-accelerated filer
	(Do not check if a smaller reporting company)

	Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X
	On August 20, 2013, approximately 125,193,969 shares of the registrant’s common stock, $0.0001 par value, were outstanding.

GREEN ENDEAVORS, INC. AND SUBSIDIARIES
INDEX


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):	1

	Condensed Consolidated Balance Sheets - March 31, 2013 and December 31, 2012	1

	Condensed Consolidated Statements of Operations - Three Months Ended March 31, 2013 and 2012	2

	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2013 and 2012	3

	Notes to Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 3.	Defaults Upon Senior Securities	28

Item 4.	[Reserved]	28

Item 5.	Other Information	28

Item 6.	Exhibits	29

	Signatures	31

PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements

Green Endeavors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

	March 31,			December 31,
	2013			2012
	(Unaudited)
Assets
Current Assets:
Cash	$	155,227		$	86,586
Accounts receivable		11,427			2,608
Inventory		134,130			128,650
Prepaid expenses		3,722			8,919
Total current assets		304,506			226,763

Property, plant, and equipment, net of accumulated depreciation of $497,391 and $464,827, respectively		535,668			561,275
Other assets		58,656			57,485
Total Assets	$	898,830		$	845,523

Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable and accrued expenses	$	611,581		$	542,577
Deferred revenue		54,633			59,109
Due to related parties		343,251			310,349
Derivative liability		237,242			231,609
Current portion of notes payable		256,860			222,179
Current portion of related party notes payable		3,882			3,534
Current portion of capital leases payable		16,209			14,624
Convertible notes payable, net of debt discount of $0 and $9,626, respectively		168,000			158,374
Total current liabilities		1,691,658			1,542,355

Long-Term Liabilities:
Deferred rent		39,626			37,035
Notes payable related party		21,118			21,466
Notes payable		99,771			112,985
Capital lease obligations		48,704			47,878
Convertible notes payable, net of debt discount of $24,164 and $28,479, respectively		10,836			6,521
Convertible debentures related party, net of debt discount of $63,654 and $66,785, respectively		2,296,146			2,293,015
Convertible debentures, net of debt discount of $12,730 and $13,357, respectively		487,270			486,643
Total long-term liabilities		3,003,471			3,005,543
Total Liabilities		4,695,129			4,547,898

Stockholders’ Deficit:
Convertible supervoting preferred stock, $0.001 par value, 10,000,000 shares authorized; 10,000,000 and 10,000,000 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively; no liquidation value		10,000			10,000
Convertible preferred series B stock - $0.001 par value, 2,000,000 shares authorized; 547,478 and 547,478 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		548			548
Preferred, undesignated stock - $0.001 par value 3,000,000 shares authorized; no shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		-			-
Common stock, $0.0001 par value, 10,000,000,000 shares authorized; 22,265,197 and 22,265,197 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		2,226			2,226
Additional paid-in capital		(540,730	)		(540,730	)
Accumulated deficit		(3,268,343	)		(3,174,419	)
Total stockholders’ deficit		(3,796,299	)		(3,702,375	)
Total Liabilities and Stockholders’ Deficit	$	898,830		$	845,523


The accompanying notes are an integral part of these condensed consolidated financial statements.

Green Endeavors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

	Three Months Ended
	March 31, 2013			March 31, 2012
Revenue:
Services, net of discounts	$	621,482		$	553,367
Product, net of discounts		232,831			180,657
Total revenue		854,313			734,024

Costs and expenses:
Cost of services		350,961			316,234
Cost of product		137,250			105,909
Depreciation		32,568			23,605
General and administrative		336,814			368,094
Total costs and expenses		857,593			813,842
Loss from operations		(3,280	)		(79,818	)

Other income (expenses):
Interest income		201			204
Interest expense		(35,457	)		(73,144	)
Interest expense, related parties		(50,915	)		(51,511	)
Loss on default of convertible notes payable		-			(79,304	)
Loss on derivative fair value adjustment		(5,633	)		(27,747	)
Other income		1,160			2,152
Total other expenses		(90,644	)		(229,350	)
Net loss	$	(93,924	)	$	(309,168	)

Net loss per common share – basic and diluted	$	(0.00	)	$	(0.09	)

Weighted average common shares outstanding – basic and diluted		22,265,197			3,621,137

The accompanying notes are an integral part of these condensed consolidated financial statements.

Green Endeavors, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	Three Months Ended
	March 31, 2013			March 31, 2012


Cash Flows from Operating Activities:
Net loss	$	(93,924	)	$	(309,168	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		32,568			23,605
Debt discount amortization		17,699			60,424
Stock-based compensation		-			38,174
Loss contingency		-			79,304
Loss on derivative liability fair value adjustment		5,633			27,747
Changes in operating assets and liabilities:
Accounts receivable		(8,819	)		(6,028	)
Inventory		(5,480	)		2,154
Prepaid expenses		5,197			5,714
Other assets		(1,166	)		(5,596	)
Accounts payable and accrued expenses	��	68,868			62,048
Due to related parties		41,212			(17,727	)
Deferred rent		2,591			-
Deferred revenue		(4,476	)		(7,485	)
Net cash provided by (used in) operating activities		59,903			(46,834	)

Cash Flows from Investing Activities:
Purchases of property, plant, and equipment		(915	)		(1,286	)
Net cash used in investing activities		(915	)		(1,286	)

Cash Flows from Financing Activities:
Payments made on notes payable		(16,695	)		(7,333	)
Payments made on related party notes payable		(8,311	)		-
Payments made on capital lease obligations		(3,501	)		-
Proceeds from issuance of notes payable		38,160			50,000
Proceeds from issuance of convertible notes payable		-			42,500
Proceeds from exercising of stock options		-			15,938
Net cash provided by financing activities		9,653			101,105

Increase in cash		68,641			52,985

Cash at beginning of period		86,586			97,983

Cash at end of period	$	155,227		$	150,968

Supplemental cash flow information:
Cash paid during the period for:
Interest	$	15,340		$	1,462
Non-cash investing and financing activities:
Reduction of convertible debt due to conversions	$	-		$	35,000
Equipment purchased under capital lease	$	6,042		$	-
Debt discount on derivative liability, convertible notes	$	-		$	42,500
Conversion of series B preferred shares to common stock	$	-		$	153,881
Cashless exercise of stock options	$	-		$	95,999

The accompanying notes are an integral part of these condensed consolidated financial Statements.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2013 (Unaudited)

Note 1 – Organization and Basis of Financial Statement Presentation

Business Description

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

Organization

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

Green is a more than 50% controlled subsidiary of Nexia Holdings, Inc. (“Nexia”). Nexia is quoted on the Pink Sheets under the symbol NXHD and is not currently a reporting company.

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

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

Landis Experience Center, LLC (“LEC”), a Utah limited liability company, was organized on January 23, 2012 as a wholly-owned subsidiary of Green for the purpose of operating an Aveda retail store in the City Creek Mall in Salt Lake City, Utah. LEC opened its doors August 16, 2012.

Basis of Financial Statement Presentation

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

In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included. These condensed consolidated financial statements are unaudited. They should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K/A for the year ended December 31, 2012 as filed with the SEC. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that can be expected for the year ending December 31, 2013.

Note 2 – Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

Fair Value Measurements

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

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Cash and Cash Equivalents

Investments with original maturities of three months or less at the time of purchase are considered cash equivalents. As of March 31, 2013 and December 31, 2012, Green had no cash equivalents.

Inventory

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

Property, Plant, and Equipment

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

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

For the three month periods ended March 31, 2013 and 2012, Green recorded depreciation expense of $32,568 and $23,605, respectively.

Long-Lived Assets

We periodically review the carrying amount of our long-lived assets for impairment. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is not considered recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. There were no impairments of long-lived assets during the three month periods ended March 31, 2013 and 2012.

Revenue Recognition

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

Deferred Revenue

Deferred revenue arises when customers pay for products and/or services in advance of revenue recognition. Green’s deferred revenue consists solely of unearned revenue associated with the purchase of gift certificates for which revenue is recognized only when the service is performed or the product is delivered.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

Advertising

The Company expenses advertising production costs as they are incurred and advertising communication costs the first time the advertising takes place. For the three month period ended March 31, 2013 and 2012, advertising costs amounted to $13,402 and $16,467, respectively.

Stock-Based Compensation

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

Income Taxes

Deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Also, Green's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Green is 100% consolidated into its parent company, Nexia, and therefore does not file an income tax return. Its financial amounts are consolidated into the Nexia income tax returns. As of March 31, 2013 and December 31, 2012, a 100% valuation allowance has been placed against the deferred tax asset and therefore is not reflected on the balance sheets.

Net Loss Per Share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and potential common shares during the specified period. For the three months ended March 31, 2013, potential common shares are not included in the diluted net loss per share calculation as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. There were approximately 1,312,935,132 such potentially dilutive shares excluded as of March 31, 2013.

Reclassification of Financial Statement Accounts

Certain amounts in the December 31, 2012 financial statements have been reclassified to conform to the presentation in the March 31, 2013 financial statements.

Recent Accounting Pronouncements

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

Note 3 – Inventory

Green’s inventory consists of items held for resale and product that is used in services by the Landis and Landis II salons, and are all considered finished goods. Inventory is carried at the lower of cost or market. As of March 31, 2013 and December 31, 2012, inventory amounted to $134,130 and $128,650, respectively.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

Note 4 – Property, Plant, and Equipment

The following is a summary of Green’s Property, plant, and equipment by major category as of March 31, 2013:

	Cost		Accumulated Depreciation		Net

Computer equipment and related software	$	21,093	$	15,041	$	6,052
Leasehold improvements		624,154		280,612		343,542
Furniture and fixtures		25,347		23,419		1,928
Leased equipment		76,298		12,098		64,200
Equipment		212,820		139,328		73,492
Vehicle		48,193		20,654		27,539
Signage		25,154		6,239		18,915
Total	$	1,033,059	$	497,391	$	535,668

The following is a summary of Green’s Property, plant, and equipment by major category as of December 31, 2012:

	Cost		Accumulated Depreciation		Net

Computer equipment and related software	$	21,093	$	14,131	$	6,962
Leasehold improvements		624,154		262,146		362,008
Furniture and fixtures		25,347		21,028		4,319
Leased equipment		70,256		8,475		61,781
Equipment		211,905		134,565		77,340
Vehicle		48,193		18,933		29,260
Signage		25,154		5,549		19,605
Total	$	1,026,102	$	464,827	$	561,275

Note 5 – Other Assets

The following table shows other assets as of March 31, 2013 and December 31, 2012:

	March 31,		December 31,
	2013		2012
Lease and utility deposits	$	31,443	$	30,470
Certificate of deposit, restricted cash (1)		27,213		27,015
Total other assets	$	58,656	$	57,485

(1)

The certificate of deposit ("CD") is considered long-term, restricted cash because it is collateral for the June 18, 2010, $100,000 note payable to the Division of Economic Development of Salt Lake City Corporation (see item 4 of Note 10 below). The initial value of the CD was $25,000. As of March 31, 2013 and December 31, 2012, the CD has $2,213 and $2,015 of accrued interest, respectively.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

Note 6 – Fair Value Measurements

Our financial assets and (liabilities) carried at fair value measured on a recurring basis as of March 31, 2013 and December 31, 2012, consisted of the following:

Total fair

Quoted prices

Significant other

Significant

value at

in active

observable

unobservable

March 31,

markets

inputs

Description

2013

(Level)

(Level 2)

(Level)

Derivative liability (1)

237,242

Total fair

Quoted prices

Significant other

Significant

value at

in active

observable

unobservable

December 31,

markets

inputs

Description

2012

(Level)

(Level 2)

(Level)

Derivative liability (1)

231,609

(1)	Derivative liability amounts are due to the embedded derivatives of certain convertible notes payable issued by the Company and are calculated using the Black Scholes pricing model (see Note 7 - Derivative liability)

Note 7 – Derivative Liability

As of March 31, 2013 the Company had a $237,242 derivative liability balance on the balance sheet, and for the three months ended March 31. 2013, the Company recorded a $5,633 loss from derivative liability fair value adjustment. The derivative liability activity comes from convertible notes payable as follows:

Asher Enterprises, Inc.

As discussed in Note 10 – “Notes Payable”, during 2011 and 2012, Green issued an aggregate of $197,500 Convertible Promissory Notes to Asher Enterprises, Inc. (“Asher Notes”) that mature from January 9, 2012 to November 6, 2012. The Asher Notes bear interest at a rate of 8% per annum and can be convertible into Green’s common shares, at the holder’s option, at the conversion rates of 56% to 61% of the market price (a 44% to 39% discount) of the lowest three trading prices of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. Green analyzed the conversion feature of the agreement for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative because the exercise price of these convertible notes are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. The Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability.

The embedded derivative for the Asher Notes is carried on Green’s balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change. Green fair values the embedded derivative using the Black-Scholes option pricing model. The aggregate fair value of the derivative at the inception dates of the Asher Notes was $269,507. Of the total, $197,500 was recorded as a debt discount, which is up to but not more than the net proceeds of the notes. $72,007 was charged to operations as non-cash interest expense.

The debt discount for the Asher Notes is amortized over the life of the notes (approximately nine months each). On March 31, 2013, Green marked-to-market the fair value of the derivative liabilities related to the Asher Notes and determined an aggregate fair value of $169,932 and recorded an $8,917 loss from change in fair value of derivatives for the three month period ended March 31, 2013. The fair value of the embedded derivatives for the notes was determined using the Black-Scholes option pricing model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 434%, (3) risk-free interest rate of .07% to 0.11%, (4) expected life of 0.14 to 0.75 of a year, and (5) estimated fair value of Green’s common stock of $0.012 to $0.019 per share.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

On July 2, 2013, Asher and Green amended each of these convertible promissory notes to extend the beginning date of default interest from the maturity date of each note until after May 19, 2013, and also that 50% default fees may not be converted to equity until after May 19, 2013. As of March 31, 2013 and December 31, 2012, the default fees have not been included in the calculation of the derivative liability for these notes.

Eastshore Enterprises, Inc.

As discussed in Note 10 – “Notes Payable”, on August 17, 2012, Green issued a $35,000 Convertible Promissory Note to Eastshore Enterprises, Inc. (“Eastshore Note”) that matures August 17, 2014. The Eastshore Note bears interest at a rate of 8% per annum and can be convertible into Green’s common shares, at the holder’s option, at the conversion rate of 54% of the market price (a 46% discount) of the lowest trading price of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. Green analyzed the conversion feature of the agreement for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as a derivative because the exercise price of these convertible notes are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. The Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability.

The embedded derivative for the Eastshore Note is carried on Green’s balance sheet at fair value. The derivative liability is marked-to-market each measurement period and any unrealized change in fair value is recorded as a component of the income statement and the associated fair value carrying amount on the balance sheet is adjusted by the change. Green fair values the embedded derivative using the Black-Scholes option pricing model. The fair value of the derivative at the inception date of the Eastshore Note was $63,636. Of the total, $35,000 was recorded as a debt discount, which is up to but not more than the net proceeds of the note. $28,636 was charged to operations as non-cash interest expense. The fair value of $63,636 was recorded as a derivative liability on the balance sheet.

The debt discount for the Eastshore Note is amortized over the life of the note (approximately two years). On March 31, 2013, Green marked-to-market the fair value of the derivative liabilities related to the Eastshore Note and determined an aggregate fair value of $67,310 and recorded a $3,284 gain from change in fair value of derivative for the three month period ended March 31, 2013. The fair value of the embedded derivative for the note was determined using the Black-Scholes option pricing model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 434%, (3) risk-free interest rate of 0.25%, (4) expected life of 1.4 years, and (5) estimated fair value of Green’s common stock of $0.02 per share.

Note 8 – Related Party Transactions

On April 30, 2008, Green entered into a stock transfer agreement with its parent company Nexia and Nexia’s wholly-owned subsidiary DHI whereby they would each sell their holdings in Landis and Newby in exchange for an 8% Series A Senior Subordinated Convertible Debenture with a face amount of $3,000,000. Interest on the debenture commenced on December 30, 2008. DHI has the option, at any time, to convert all or any amount over $10,000 of principal face amount and accrued interest into shares of Common stock, $0.0001 par value per share, at a conversion price equal to 95% of the average closing bid price of the Common stock three days prior to the date notice is received by Green. Green determined that there is a beneficial conversion feature for the debt and recorded a debt discount of $150,000 on April 30, 2008, which is being amortized for 10 years to the maturity date of the debenture. In December 2009, Nexia converted $125,000 of the debenture into common stock of Green and during 2010 Green paid $15,200 of principal on the debenture. During 2010, Nexia sold $500,000 of its holdings of the debenture to unrelated parties for cash thus leaving the related and unrelated party portions of the debenture at $2,359,800 and $500,000, respectively for a total amount of $2,859,800. As of March 31, 2013 and December 31, 2012, the entire amount is considered long-term. The following table shows the related and unrelated party amounts of the debenture and their respective amortized debt discount amounts:

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

	March 31,			December 31,
	2013			2012
Convertible Debenture - Related Party
Principal amount	$	2,359,800		$	2,359,800
Debt discount		(63,654	)		(66,785	)
Convertible debenture, net of debt discount	$	2,296,146		$	2,293,015

Convertible Debenture - Unrelated Party
Principal amount	$	500,000		$	500,000
Debt discount		(12,730	)		(13,357	)
Convertible debenture, net of debt discount	$	487,270		$	486,643

Convertible Debenture - Totals
Principal amount	$	2,859,800		$	2,859,800
Debt discount		(76,384	)		(80,142	)
Convertible debenture, net of debt discount	$	2,783,416		$	2,779,658

The following table summarizes the related party amounts of principal and accrued interest on the Convertible Debentures as of March 31, 2013 and December 31, 2012:

	March 31,		December 31,
	2013		2012
Principal balance	$	2,359,800	$	2,359,800
Accrued interest		152,395		114,156
Total	$	2,512,195	$	2,473,956

As of March 31, 2013 and December 31, 2012, amounts due to related parties are $343,251 and $310,349, respectively. The $343,251 consists of $152,395 of accrued interest from the convertible debenture as shown in the table above, $2,065 of accrued interest for the note payable to Richard Surber, and $188,791 from various amounts owed to Nexia and its subsidiaries. The $310,349 consists of $114,156 of accrued interest from the convertible debenture as shown in the table above, $829 of accrued interest for the note payable to Richard Surber, and $195,364 from various amounts owed to Nexia and its subsidiaries.

On April 27, 2012, Nexia Holdings Inc., converted $144,558 of accrued interest into 4,150,000 shares of convertible preferred supervoting stock of the Company. The transaction was valued at $144,558 as per the conversion provisions of the convertible debt. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 4, 2012. The issuance results in Nexia holding 100% of the 10 million shares of Supervoting Preferred Stock authorized for the Company, resulting in Nexia holding 1 billion votes in any shareholder action. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On May 23, 2012, Nexia Holdings Inc., converted $400,000 of accrued interest into 10,526,316 shares of common stock. The transaction was valued at $400,000 as per the conversion provisions of the convertible debt. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The issuance of the shares took place on May 24, 2012. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On May 25, 2012, the Company and its parent company, Nexia Holdings, Inc., entered into a Security Agreement with Richard Surber, CEO of the Company. Mr. Surber has potential exposure created due to his serving as a guarantor of numerous debts and obligations of the Company and of Nexia, and the Company and Nexia have amounts owed to Mr. Surber personally. The total amount of these personal guarantees obligations owed to Mr. Surber is estimated to exceed $1.7 million. The Security Agreement provides that Mr. Surber is secured by assets of the Company, including the ownership of shares in the subsidiaries of the Company, to secure these debts and obligations of the Company that are owed to Mr. Surber.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

On June 5, 2012, Green entered into a secured agreement with Richard Surber, President, CEO and Director of Green, to provide him a record lien (UCC-1 file number 413621201234, Utah) on certain assets of the company for the debts and obligations of the company for which Mr. Surber is providing a personal guaranty to lenders of the Company. The assets included in the secured interest include: all inventory, equipment fixtures, stock ownership, including but not limited to the shares held by Green Endeavors Inc. in Landis Salons, Inc., Landis Salons II, Inc., Landis Salons III, Inc. and ownership rights in Landis Experience Center LLC and any other intangible property and all tangible personal property held by, granted to or owned by Green or that is later acquired by Green subject only to purchase money liens held by sellers or grantor. Subsequent to March 31, 2013, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.

Note 9 – Notes Payable

A summary of notes payable as of March 31, 2013 and December 31, 2012 is as follows:

	Interest			Maturity	March 31,			December 31,
Creditor	Rate			Date	2013			2012
Xing Investment Corp. (1)		10.00	%	5/12/2008	$	171,000		$	171,000
Salt Lake City Corporation (3)		3.25	%	8/1/2015		48,689			53,690
William and Nina Wolfson (4)		11.00	%	2/27/2016		39,540			42,279
Cyprus Credit Union (5)		2.69	%	12/5/2014		17,845			20,410
Salt Lake City Corporation (6)		5.00	%	9/1/2017		45,542			47,785
Express Travel Related Services (7)		6.00	%	2/19/2014		34,015			-
Total						356,631			335,164
Less: Current portion						(256,860	)		(222,179	)
Long-term portion					$	99,771		$	112,985

A summary of convertible notes payable as of March 31, 2013 and December 31, 2012 is as follows:

		Interest			Maturity	March 31,			December 31,
Creditor		Rate			Date	2013			2012
Asher Enterprises, Inc. (2)*			8.00	%	1/9/2012	$	-		$	-
Asher Enterprises, Inc. (2)*			8.00	%	3/16/2012		3,000			3,000
Asher Enterprises, Inc. (2)*			8.00	%	4/25/2012		25,000			25,000
Asher Enterprises, Inc. (2)*			8.00	%	9/12/2012		22,500			22,500
Asher Enterprises, Inc. (2)*			8.00	%	11/6/2012		42,500			42,500
Southridge Partners II, LP (8)			0	%	2/28/2013		75,000			75,000
Eastshore Enterprises, Inc. (9)			8.00	%	8/17/2014		35,000			35,000
Debt discount - convertible notes, net							(24,164	)		(38,105	)
	Total, net						178,836			164,895
	Less: Current portion						(168,000	)		(158,374	)
	Long-term portion					$	10,836		$	6,521
*	For all Asher notes payable, the interest rate increases from 8% to 22% after May 19, 2013 at the option of Asher.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

A summary of the related party note payable as of March 31, 2013 and December 31, 2012 is as follows:

	Interest		Maturity	March 31,			December 31,
Creditor	Rate		Date	2013			2012
Richard D. Surber (related party) (10)		20.00%	11/6/2017	$	25,000		$	25,000
Total, net					25,000			25,000
Less: Current portion					(3,882	)		(3,534	)
Long-term portion				$	21,118		$	21,466

(1)

On May 12, 2006, Green borrowed $171,000 from Xing Investment Corp with a convertible promissory note. The note is interest bearing at 10% per annum with no interest due until the note maturity date of May 12, 2008. Both principal and accrued interest, at the option of the note holder, may be converted into Common stock of Green at $0.01 per share. The note was not liquidated at the maturity date and is currently in default. No payments have been made on the obligation because Green is unable to locate Xing Investment Corp. or its representatives. As of March 31, 2013 and December 31, 2012, accrued interest reported in accounts payable and accrued expenses was $34,200.

(2)

During the period from April 5, 2011 through February 2, 2012, Green has issued a series of convertible promissory notes with an aggregate face amount of $197,500 to Asher Enterprises, Inc. that mature from January 9, 2012 to November 6, 2012. The transactions have been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The notes mature in approximately 270 days from issuance and bear interest at a rate of 8% per annum. At the holder’s option, the notes can be converted into Green’s common shares at the conversion rates of 56% to 61% discount to the market price of the lowest three trading prices of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. As amended, the interest rate increases to 22% after May 19, 2013 at the option of Asher. As of March 31, 2013, $107,500 of principal and interest on the notes had been converted into 3,863,077 shares of common stock. As of March 31, 2013, the notes are considered in default. Accordingly, a loss contingency of $46,500 has been recorded, which is calculated by multiplying the March 31, 2013 principal balance on the notes of $93,000 by 50%. As of March 31, 2013, the total of principal, interest, and default amount owed to Asher was $152,473. The Company is working on a cure for the default. On July 2, 2013, Asher and Green retroactively amended the notes to provide that the 50% default fee may not be converted to equity of Green until May 20, 2013.

The exercise price of these convertible notes are subject to “reset” provisions in the event the Company subsequently issues common stock, stock warrants, stock options or convertible debt with a stock price, exercise price or conversion price lower than conversion price of these notes. If these provisions are triggered, the conversion price of the note will be reduced. As a result, the Company has determined that the conversion feature is not considered to be solely indexed to the Company’s own stock and is therefore not afforded equity treatment. In accordance with AC 815, the Company has bifurcated the conversion feature of the note and recorded a derivative liability (see Note 7 - Derivative Liability).

(3)

On June 18, 2010, Landis Salons, Inc. received a loan in the amount of $100,000 from the Division of Economic Development of Salt Lake City Corporation. The loan includes a 1% origination fee and bears interest at the rate of 3.25% per annum. Principal and interest payments are made monthly over a five year term commencing June 2010. The loan is secured by a $25,000 certificate deposit held in the name of Landis Salons, Inc. and is personally guaranteed by Richard Surber, CEO of Green. The certificate of deposit is considered restricted because it is collateral for the loan. As of March 31, 2013, the note balance is $48,689. Principal payments made on the note during the three months ended March 31, 2013 amounted to $5,001.

(4)

On February 27, 2012, Green and Landis Experience Center, LLC issued an 11% note payable in the principal face amount of $50,000 to William and Nina Wolfson in exchange for a cash payment of the same amount. The note has a due date of February 27, 2016. The note provides for monthly payments in the amount of $1,292.28 of principal and interest. In addition to the Company’s guarantee to the note, Richard Surber has personally guaranteed the note. As of March 31, 2013, the note balance is $39,540. Principal payments made on the note during the three months ended March 31, 2013 amounted to $2,739.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

(5)

On September 5, 2012, Landis Salons, Inc. received a loan in the amount of $22,959 from Cyprus Credit Union for the refinancing of a Company truck. The loan replaced the loan for the truck to Chase bank (see loan #3 above). The loan has a maturity date of December 5, 2014 and bears interest at the rate of 2.69% per annum. Principal and interest payments of $899 are made monthly over 27 months commencing October 5, 2012. The loan is secured by a lien on the vehicle in addition to the corporate guarantee for the loan. Richard Surber, CEO of the Company has personally guaranteed the loan. As of March 31, 2013, the note balance is $17,845. Principal payments made on the note during the three months ended March 31, 2013 amounted to $2,565.

(6)

On August 20, 2012, the Board of Directors of LEC approved that LEC enter into a loan agreement with Salt Lake City Corporation in the amount of $50,000. Pursuant to the board approval, a note in the amount of $50,000 was issued on August 21, 2012. The note bears interest at 5% per annum and requires 60 monthly installments of $943.56 commencing October 1, 2012. In addition to corporate guarantees and the personal guarantee by Richard Surber, President, CEO, and Director of LEC, a certificate of deposit is being held as collateral for the loan. As of March 31, 2013, the note balance was $45,542. Principal payments made on the note during the three months ended March 31, 2013 amounted to $2,243.

(7)

On February 19, 2013, the Board of Directors of LEC approved that Landis Salons, Inc. enter into a loan agreement with Express Travel Related Services Company, Inc. in the amount of $36,000. The note is a merchant account financing arrangement wherein Landis repays the loan at the rate of 9% of the American Express credit card sales receipts that are due each month. The loan requires a prepaid interest charge that is 6% ($2,160) of the $36,000 loan amount. These financing costs are being amortized to interest expense during the one year term of the loan. The total amount due at the inception date is $38,160. As of March 31, 2013, the loan balance was $34,015. Payments made during the three months ended March 31, 2013 amounted to $4,145.

(8)

On August 15, 2012, Green issued a $75,000 promissory convertible promissory note to Southridge Partners II, LP as a condition of Southridge entering into an Equity Purchase Agreement with the Company (see Note 13). The transaction has been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The note bears no interest and matures on February 28, 2013 at which time a balloon payment of the entire principal amount is due. The holder of the note is entitled any time after the maturity date to convert the note into common stock of the Company at 70% of the average of the two lowest closing bid prices for the five day prior to the date of the conversion. The Company determined the note contained a beneficial conversion feature and therefore recorded a $32,143 debt discount. As of March 31, 2013, the balance of the note was $75,000 and the balance of the debt discount was $0. No payments have been made on the note as of March 31, 2013 and therefore the note is in default.

(9)

On August 17, 2012, Green issued a $35,000 convertible promissory note to Eastshore Enterprises, Inc. Green converted $15,000 of accounts payable to Eastshore to the note and also received $20,000 in cash for the loan. The transaction has been handled as a private sale exempt from registration under Rule 506 of the Securities Act of 1933. The note matures on August 17, 2014 and bear interest at a rate of 8% per annum. After one year from issuance, the holder can be convertible into Green’s common shares at the conversion rate of 54% of the market price of the lowest price of Green’s common shares during the ten-day period ending one trading day prior to the date of the conversion. As of March 31, 2013, none of the note had been converted into shares of common stock. As of March 31, 2013, the balance of the note was $35,000 and the balance of the debt discount was $24,164. No payments have been made on the note as of March 31, 2013.

(10)

On November 5, 2012, Landis Salons II, Inc. entered into a promissory note with Richard Surber, President, CEO and Director of Green, for the sum of $25,000 for funds loaned. The note bears interest at the rate of 20% per annum, with a term of five years and monthly payments of $662.35 and a demand feature by which the note can be called upon the demand of Mr. Surber. Landis Salons II as security for the note pledged all of its assets, stock in trade, inventory, furniture, fixtures, supplies, any intangible property and all tangible personal property of Landis Salons II and all and any other assets to which Landis Salons II holds title or claims ownership or that is hereafter acquired by Landis Salons II, subject only to purchase money liens held by sellers or grantors. As of March 31, 2013, the balance of the note was $25,000. No payments have been made on the note as of March 31, 2013. Mr. Surber is also providing his personal guaranty for several lines of credit and credit cards that are being utilized by the company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of $176,615. Subsequent to March 31, 2013, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

Note 10 – Lease Commitments

Operating Leases

Facilities are leased under operating leases expiring at various dates through September, 2020. Certain of these leases contain renewal options. For the three month periods ended March 31, 2013 and 2012, rent expense under operating leases was $58,714 and $39,791, respectively.

As of March 31, 2013, future minimum lease payments under non-cancelable operating leases were as follows:

	Operating Leases
For the fiscal years ending December 31:
2013 - remainder	$	153,183
2014		198,859
2015		188,415
2016		131,741
2017		137,801
Thereafter		348,724
Total operating lease payments	$	1,158,723

Capital Leases

The Company is has three non-cancelable capital leases for salon and office equipment. Two of them were entered into during 2012 and the third one was during the three months ended March 31, 2013. The Company evaluated the leases at the time of purchase and determined that the lease agreements each contain a beneficial by-out option wherein the Company has the option to buy the equipment for $1 at the end of the lease terms. Under the guidance in ASC 840, the Company has classified the leases as capital leases, accordingly, the salon equipment under the leases with a cost of $76,167 has been capitalized and included with the Company's property, plan, and equipment and is depreciated as such. The Company used the discounted value of future payments as the fair value of this asset and has recorded the discounted value of the remaining payments as a liability.

Capital leases payable outstanding were as follows:

	March 31,			December 31,
	2013			2012
Total, net	$	64,913		$	62,502
Less current portion		(16,209	)		(14,624	)
Long-term portion	$	48,704		$	47,878

As of March 31, 2013, future minimum lease payments under non-cancelable capital leases were as follows:

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

	Capital Leases
For the fiscal years ending December 31:
2013 - remainder	$	19,332
2014		25,776
2015		25,776
2016		12,042
2017		1,539
Thereafter		256
Total operating lease payments		84,722
Less interest for the terms		(19,809	)
Total, net	$	64,913

Note 11 – Stockholders’ Deficit

Preferred Stock

Green is authorized to issue 15,000,000 shares of preferred stock (par value $.001 per share). Green’s preferred stock may be divided into such series as may be established by the Board of Directors. As of March 31, 2013, Green has designated 12,000,000 of the preferred stock into two series as follows: 2,000,000 shares of Convertible Series B Preferred and 10,000,000 shares of Convertible Supervoting Preferred.

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

Convertible Supervoting Preferred Stock

Each share of the Convertible Supervoting Preferred Stock is convertible into 100 shares of Green’s Common stock and has the voting rights equal to 100 shares of Common stock.

During the three month period ended March 31, 2013, there were no issuances or conversions of Convertible Supervoting Preferred shares.

As of March 31, 2013 and December 31, 2012, Green had 10,000,000 and 10,000,000 shares of Convertible Supervoting Preferred stock issued and outstanding, respectively.

Convertible Series B Preferred Stock

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

During the three month period ended March 31, 2013, there were no issuances or conversions of Convertible Series B Preferred shares.

As of March 31, 2013 and December 31, 2012, Green had 547,478 and 547,478 shares of Convertible Series B Preferred stock issued and outstanding, respectively.

Common Stock

Green is authorized to issue 10,000,000,000 shares of common stock (par value $0.0001 per share).

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

On March 29, 2012, the Company filed with the State of Utah an Amendment to its Articles of Incorporation that increased the number of authorized shares of common stock from 2,500,000,000 to 10,000,000,000. This action was taken after notice to the shareholders and having consent from a majority of the voting rights.

During the three month period ended March 31, 2013, there were no issuances of common stock.

As of March 31, 2013 and December 31, 2012, Green had 22,265,197 and 22,265,197 shares of common stock issued and outstanding, respectively.

Note 12 – Stock-Based Compensation

On December 2, 2011, the Board of Directors approved a stock-based compensation program entitled The 2011 Benefit Plan of Green Endeavors, Inc. (the “Plan”) wherein common stock options are granted to employees. A total of 1,500,000 shares of the Green’s common stock (par value $0.0001) are authorized to be issued or granted to employees (“Employees”) under the Plan. Employees include actual employees or certain non-employee, consultants and advisors of Green, its subsidiaries, and parent company. The Plan is designed to attract and retain employees.

Under the Plan and during the year ended December 31, 2012, the company granted 730,000 stock options to five employees for services. For the year ended December 31, 2012, stock-based compensation expense of $71,775 was accounted for under the fair value method of accounting using a Black-Scholes valuation model to measure stock option expense at the date of grant. The weighted average components used for the calculation of the fair value for the options granted were approximately: $0.08 – exercise price, one year term, 502% volatility, and a .18% risk free rate. The income tax benefit related to the stock-based compensation expense during the period was $0. Also, the aggregate intrinsic value of all options outstanding and exercisable at December 31, 2012, was $0. As of December 31, 2012, 1,030,000 shares under the grants had been exercised and there were no unexercised grants. For the year ended December 31, 2012, there were no expired or cancelled grants. As of December 31, 2012, there were 470,000 shares available for future stock-based compensation grants.

There were no grants under the Plan and during the three months ended March 31, 2013. As of March 31, 2013, 1,030,000 shares under the grants had been exercised and there were no unexercised grants. For the three months ended March 31, 2013, there were no expired or cancelled grants. As of March 31, 2013, there were 470,000 shares available for future stock-based compensation grants.

Note 13 – Equity Purchase Agreement

On August 15, 2012, Green Endeavors Inc. (the “Company”) entered into an Equity Purchase Agreement (“Agreement”) with Southridge Partners II, LP (“Southridge”) wherein Southridge has committed to purchase up to $10,000,000 of the Company’s common stock over 36 months. The Company may draw on the facility from time to time in the form of puts, as and when it determines appropriate up to a maximum of less than 4.99% of the issued and outstanding shares of common stock of the Company per put notice. Southridge’s purchase price for each put is set at 91% of the lowest closing bid price of the common stock of the Company during the pricing period as defined in the Agreement as the period beginning on the Put Notice Date and ending on and including the date that is five Trading Days after such Put Notice Date. The option to draw down on the equity line is at the sole direction of the company. The Company is obligated to file one or more registration statements with the SEC to register the sale to Southridge of shares of common stock issued or issuable under the Agreement. The Company has agreed to file with the SEC an initial registration statement of From S-1 in order to carry out the terms of the Agreement. Upon the execution of the Agreement the Company issued to Southridge a $75,000 convertible promissory note as a condition to Southridge entering into the Agreement, which included preparation of the Agreement. As of March 31, 2013, there were no draws taken. The note has a maturity date of February 28, 2013 and is in default and the note is default as of February 28, 2013. (See Note 9 - Notes Payable, Item 8 for additional detail about this note.)

Note 14 – Depository Trust Company

On August 24, 2012, the Company received a notice from The Depository Trust Company (“DTC”) that is imposing a deposit transaction restriction (“Deposit Chill”) on the common stock of the Company. The notice states that the DTC is imposing the Deposit Chill in order to prevent additional deposits of the Company’s common stock with the DTC. The DTC serves as the depository trust for shares held in the majority of brokerage accounts; therefore, this action has prevented many brokerages from accepting new deposits of the Company’s common stock. The notice sets forth the DTC’s position that the Deposit Chill was imposed as a result of various unusually large deposits of shares during the period from October 18, 2011 through June 19, 2012. The Company filed an objection to the Deposit Chill and has retained legal counsel that is working with the DTC to remove the Deposit Chill and any restrictions on the deposit of additional shares with the DTC. The Deposit Chill was lifted on June 6, 2013.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

Note 15 – Concentration of Risk

Supplier Concentrations

The Company purchases most of its salon inventory that is used for service and product sales from Aveda. Aveda product purchases for the three months ended March 31, 2013 and for the year ended December 31, 2012 accounted for approximately 99.5% and 99.5%, respectively, of salon products purchased.

Note 16 – Going Concern

Generally accepted accounting principles in the United States of America contemplate the continuation of Green as a going concern. As of and for the three months ended March 31, 2013, Green had negative working capital of $1,387,152 and a net loss of $92,924, respectively, which raises substantial doubt about Green’s ability to continue as a going concern. Green’s ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to successfully fulfill its business plan. Management plans to attempt to raise additional funds to finance the operating and capital requirements of Green through a combination of equity and debt financings. While Green is making its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be sufficient for operations.

Note 17 – Subsequent Events

On April 15, 2013, Green issued a Promissory Note in the amount of $37,400 payable to Nexia for cash advanced to Green. Interest on the note is 10% per annum, monthly payments are $1,725.82 and the note is due 24 months from signing.

On May 16, 2013 the Board of Directors approved the issuance of 32,000 Series B Preferred Stock to two employees (16,000 each) for services performed on behalf of the Company pursuant to the 2008 Benefit Plan of the Company. The shares were issued with a restrictive legend.

On May 22, 2013, the Board of Directors approved the conversion of 2,772 shares of Series B Preferred Stock held by an investor into 1,000,000 shares of Common Stock. The shares were converted at $0.01386 per share based on the conversion provisions for the Series B Preferred Stock designation.

On May 22, 2013, the Board of Directors approved the conversion of $5,800 of the June 14, 2011 Convertible Note held by Asher Enterprises, Inc. into 733,333 shares of Common Stock. The shares were converted at $0.0075 per shares which was the conversion price provided for by the terms of the note. This conversion resulted in the final satisfaction of this note.

On or about March 22, 2013 the Company received the consent of a majority of the voting rights of the shareholders of the Company to carry out a reverse stock split of the common stock of the Company on the basis of one share for each two hundred shares of outstanding common stock and to change the par value of the common stock to $0.0001. The action as proposed was approved by the Board of Directors and notice was provided through the filing of a Form 14C Information Statement with the SEC and the reverse stock split was effective as of April 10, 2013. All common stock share quantities, prices, and par values contained in these financial statements and accompanying footnotes that occurred before April 10, 2013, have been retroactively restated to reflect the occurrence of the split and par value change.

On May 28, 2013, the Board of Directors approved the conversion of 2,772 shares of Series B Preferred Stock held by an investor into 1,000,000 shares of Common Stock. The shares were converted at $0.01386 per share based on the conversion provisions for the Series B Preferred Stock designation.

On May 28, 2013, the Board of Directors approved the conversion of 2,600 shares of Series B Preferred Stock held by an investor into 1,069,078 shares of Common Stock. The shares were converted at $0.01216 per share based on the conversion provisions for the Series B Preferred Stock designation.

Green Endeavors, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (continued)

March 31, 2013 (Unaudited)

On May 29, 2013 Asher Enterprises, Inc. submitted a conversion request for $3,800 of the July 19, 2011 note into 1,085,714 shares of Common Stock. The shares were converted at $0.0035 per share which was the conversion price provided for by the terms of the note.

On May 31, 2013, the Board of Directors approved the conversion of 2,000 shares of Series B Preferred Stock held by an investor into 1,035,197 shares of Common Stock. The shares were converted at $0.00966 per share based on the conversion provisions for the Series B Preferred Stock designation.

On June 6, 2013, the Company received a notice from The Depository Trust Company (“DTC”) that the deposit transaction restriction (“Deposit Chill”) on the common stock of the Company had been lifted.

On June 11, 2013, the Board of Directors approved the conversion of 2,797 shares of Series B Preferred Stock held by an investor into 1,280,678 shares of Common Stock. The shares were converted at $0.0146 per share based on the conversion provisions for the Series B Preferred Stock designation.

On June 27, 2013, the Board of Directors approved the conversion of $3,500 of the July 19, 2011 Convertible Note held by Asher Enterprises, Inc. into 1,093,750 shares of Common Stock. The Shares were converted at $0.0032 per share which was the conversion price provided for by the terms of the note.

On June 27, 2013, the Board of Directors approved the appointment of Scott C. Coffman as a Director of the Company and on July 2, 2013 as the Chief Financial Officer of the Company.

On July 2, 2013, Asher Enterprises, Inc. and the Company amended each of the Asher convertible promissory notes to extend the beginning date of default interest from the maturity date of each note until after May 19, 2013. The amendment and also provides that the 50% default fees may not be converted to equity until after May 19, 2013.

On July 31, 2013, Nexia Holdings Inc., converted $169,434 of debt into 84,716,865 shares of common stock. The transaction was valued at $169,434 with a stated value per share of $0.002 for the common stock. The shares were issued with a restrictive legend to Nexia, the parent corporation of the Company. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933.

On August 12, 2013, the Board of Directors approved the conversion of 4,600 shares of Series B Preferred Stock held by an investor into 5,502,392 shares of Common Stock. The shares were converted at $0.00418 per share based on the conversion provisions for the Series B Preferred Stock designation.

On August 13, 2013, the Board of Directors approved the conversion of 3,900 shares of Series B Preferred Stock held by an investor into 4,411,765 shares of Common Stock. The shares were converted at $0.00442 per share based on the conversion provisions for the Series B Preferred Stock designation.

On August 13, 2013, the Board of Directors approved the issuance of 10,000 shares of Convertible Preferred Series B Stock with a 50% discount to the $5 per share conversion value of the Series B Preferred Shares in exchange for $20,000.

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

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

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included in this Quarterly Report on Form 10-Q, or this Quarterly Report, and in conjunction with our Form 10-K for the fiscal year ended December 31, 2012 and Form 10-Q for the quarter ended March 31, 2012. Certain of these statements, including, without limitation, statements regarding the extent and timing of future revenues and expenses, customer demand and other statements using words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecast,” “intends,” “may,” “plans,” “projects,” “should,” “will” and “would,” and words of similar import and the negatives thereof, constitute forward-looking statements. These statements are predictions based upon management’s best judgment at the time they are made about future events that are not historical facts. Actual results could vary materially as a result of certain factors, including but not limited to, those expressed in these statements. We refer you to the “Risk Factors,” “Results of Operations,” and “Liquidity and Capital Resources” sections contained in this Quarterly Report, which identify important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.

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

Overview

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

As of March 31, 2013, we operate two high-quality hair care salons that feature Aveda™ products for retail sale. Landis Salons, Inc. (“Landis I”) operates its business within a 4,000 square foot space located in the Liberty Heights District of Salt Lake City, Utah as an Aveda Lifestyle Salon. Landis Salons II, Inc. (“Landis II”) operates within a 3,024 square foot space located in the Marmalade District of Salt Lake City, Utah under the Landis Lifestyle Salon brand as an Aveda Lifestyle Salon. A third location opened August 16, 2012, and operates as an Aveda Experience Center ("LEC") in the newly developed City Creek Mall in Salt lake City, Utah.

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

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

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

Additional information on Green can be found on its website at: www.green-endeavors.com

Critical Accounting Estimates

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

Results of Operations

The following discussion examines our results of operations and financial condition based on our Condensed Consolidated Financial Statements for the three month periods ended March 31, 2013 and 2012.

For the three months ended March 31, 2013, we owned and operated two wholly owned subsidiaries. Two of the subsidiaries, Landis Salons, Inc. and Landis Salons II, Inc., operate as full-service hair and retail salons featuring the Aveda™ line of products. The third subsidiary, Landis Experience Center, LLC, is a retail Aveda experience center.

Revenue

We generate revenue through the sale of services and products in the hair salon industry. For the three month periods ended March 31, 2013 and 2012, we had net sales of $854,313 and $734,024, respectively. Our net sales for the three months ended March 31, 2013 were $120,289 or 16.4% higher than net sales for the comparable period in 2012. This increase is primarily due to the continued client growth at the Liberty Heights and Marmalade salons as well as a the City Creek store having a complete quarter of sales for the three months ended March 31, 2013 that was not present for the comparable period in 2012 because the store was not open at that time.

The following table shows the change in service revenue by salon for the three month periods ended March 31, 2013 and 2012:

	Three Months Ended				Increase (Decrease)
	March 31,		March 31,		Over Prior Period
Salon	2013		2012		Dollar		Percentage
Liberty Heights	$	443,777	$	396,177	$	47,600		12.0	%
Marmalade		176,070		157,190		18,880		12.0	%
City Creek		1,635		-		1,635		n/a
Total Service Revenue	$	621,482	$	553,367	$	68,115		12.3	%

As can be seen from the above table our Liberty Heights and Marmalade salons both experienced a 12% growth of service revenues for the three month period ending March 31, 2013 over the comparable period of service sales for 2012. This increase in service revenue growth is almost all due to an increased client base rather than from the price charged for salon services. Service revenue for the City Creek store is $1,650 and $0 for the three month periods ended March 31, 2013 and 2012, respectively. The City Creek store is a product sales store that focuses predominantly on the sale of Aveda products. On occasion various services will be performed for product demonstration purposes. The City Creek store was not open for the three month period ended March 31, 2012.

The following table shows the change in product revenue by salon for the three month periods ended March 31, 2013 and 2012:

	Three Months Ended				Increase (Decrease)
	March 31,		March 31,		Over Prior Period
Salon	2012		2011		Dollar		Percentage
Liberty Heights	$	133,985	$	131,782	$	2,203		1.7	%
Marmalade		52,837		48,875		3,962		8.1	%
City Creek		46,009		-		46,009		n/a
Total Product Revenue	$	232,831	$	180,657	$	52,174		28.9	%

As can be seen from the above table our Liberty Heights salon experienced 1.7% growth of product revenues for the three month period ended March 31, 2013 as compared to the three month period ended March 31, 2012. This relatively small increase in product revenue growth is primarily due to increases in product prices for the comparable period. The 8.1% increase in salon product revenues for the same comparative periods for our Marmalade salon is primarily due to increased product sales due to an increased client base and also to increased prices as in the Liberty Heights salon. The product revenues for the Marmalade salon are growing faster than the Liberty Heights salon because it is a newer store and its client base is still developing. Product revenue for the City Creek store is $46,009 and $0 for the three month periods ended March 31, 2013 and 2012, respectively. Since the City Creek store is almost completely a product sales store it has had a significant impact on the overall percentage increase of product revenues for the comparative periods because this store was not open for the three month period ended March 31, 2012.

Costs of Revenue

The following table shows cost of revenue by type as a percentage of related revenue for the three month periods ended March 31, 2013 and 2012:

	Three Months Ended
	March 31,			March 31,
	2012			2011
Services		56.5	%		57.1	%
Product		58.9	%		58.6	%

The above table shows the cost of services revenue being 0.7% less for the three month period ended March 31, 2013 as compared to the three month period ended March 31, 2012. This decrease in service cost is primary due to better efficiencies product used for services. The 0.3% decrease in product costs for the same comparable period is primarily due to small inventory shrinkage.

Operating Expenses

The following table shows general and administrative expenses for the three months ended March 31, 2013 and 2012:

	Three Months Ended
	March 31,		March 31,
	2013		2012		Change
Salaries and wages	$	110,706	$	133,897	$	(23,191	)
Rent		58,714		39,791		18,923
Advertising		13,402		16,467		(3,065	)
Credit card merchant fees		16,934		17,918		(984	)
Insurance		14,051		12,849		1,202
Utilities and telephone		15,320		11,485		3,835
Professional services		72,171		48,322		23,849
Repairs and maintenance		8,086		3,693		4,393
Dues and subscriptions		5,373		5,419		(46	)
Office expense		10,654		17,850		(7,196	)
Travel		4,097		5,627		(1,530	)
Investor relations and company promotion		494		51,326		(50,832	)
Other		6,812		3,450		3,362
Total general and administrative expenses	$	336,814	$	368,094	$	(31,280	)

The above table shows a $31,280 decrease in general and administrative expenses. This is primarily due to $23,191 more of salaries and wages in the three month period ended March 31, 2012 as compared to the three month period ended March 31, 2013. In addition, investor relations and company promotion was $50,832 higher for the same comparable periods.

Depreciation expense for the three months ended March 31, 2013, was $32,568 as compared to $23,605 for the comparable three months ended March 31, 2012. The increase is primarily due to an increase in leasehold improvements of the new LEC store and also for depreciation from added equipment during the three months ended March 31, 2013.

Other Expense

Other expense for the three months ended March 31, 2013, decreased to $90,644 from $229,350 for the comparable three months ended March 31, 2012, a decrease of $138,706. This decrease over the comparable quarterly period is primarily due to expenses related to the initial recording of entries for the debt discounts and derivative liability changes from convertible debt instruments that were present in the three months ended March 31, 2012 and not in 2013. Specifically, for the three month period ending March 31, 2013 as compared to the same period in 2012, interest expense was $37,687 less, the loss on default of convertible notes was $79,304 less, and the loss on derivative fair value adjustment was $22,114 less.

Liquidity and Capital Resources

Cash and Investments in marketable securities

As of March 31, 2013, our principal source of liquidity consisted of $155,227 of cash, as compared to $86,586 as of December 31, 2012. Our primary sources of cash during the year ended December 31, 2012 were customer payments for salon services and products and cash proceeds from the issuance of convertible notes payable and notes payable. Our primary uses of cash in the year ended December 31, 2012 were payments relating to salaries, benefits, rent, and other general operating expenses as well as payments of notes payable.

Working Capital

We had a working capital deficit of $1,387,152 as of March 31, 2013. Our current assets were $304,506, which consisted of $155,227 in cash, $11,427 in accounts receivable, $134,130 in inventory, and $3,722 in prepaid expenses. Our total assets were $898,830, which included $535,668 in property and equipment (net), and $58,656 in other assets. Our current liabilities were $1,691,658, including $611,581 in accounts payable and accrued expenses, $343,251 in amounts due to related parties, $444,951 in the current portion of notes and capital leases payable, $54,633 in deferred revenue, and a $237,242 derivative liability. Our long-term liabilities were $3,003,471. Our total stockholders’ deficit at March 31, 2013 was $3,796,299.

Working capital increased by $71,560 as of March 31, 2013, as compared to December 31, 2012 primarily due to the various changes in current assets and current liabilities that net to the overall change in working capital for the three month period.

Cash Flows from Operating Activities

Cash flows from operating activities include net loss, adjusted for certain non-cash charges, as well as changes in the balances of certain assets and liabilities. Net cash provided by operating activities for the three month period ended March 31, 2013 was $59,903 as compared to $(46,834) used in operating activities for the three months ended March 31, 2012. This $106,737 change in cash provided by operating activities over the comparable period is primarily due to a $215,244 reduction in net loss for the comparable periods, which is partially offset by $38,174 of stock based compensation, and $79,304 of loss contingency, all of which were present in the prior period that were not present in the current period. Another contributing factor was a $58,939 change in amounts due to related parties, which provided additional cash from operations in the current period.

We expect that our cash provided by operating activities will decrease over the next twelve months as we purchase inventory and increase operating expenses as a result of opening one additional salon during the next 12 months.

Cash Flows from Investing Activities

Cash flow used in investing activities for the three months ended March 31, 2013 was $915 as compared to $1,286 for the three months ended March 31, 2012, a $371 difference.

We expect to continue our investing activities, including purchasing both property and equipment and making both short and long-term equity investments.

Cash Flows from Financing Activities

Cash flow provided by financing activities for the three months ended March 31, 2013 was $9,653 as compared to $101,105 that was provided by financing activities for the three months ended March 31, 2012. For the three months ended March 31, 2013 as compared to the three months ended March 3, 2012, there was $21,174 less in payments made for debt obligations and there was $70,278 less in proceeds from new issuances of debt obligations.

We expect to continue to use cash flow from financing activities in the near term as necessary to expand operations.

Other Factors Affecting Liquidity and Capital Resources

We have insufficient current assets to meet our current liabilities due to negative working capital of $1,387,152 as of March 31, 2013. Historically, we have funded our cash needs from a combination of revenues, carried payables, sales of equity, and debt transactions. Since we are not currently realizing net cash flows from our business, we may need to seek financing to continue our operations. Prospective sources of funding could include shareholder loans, equity sales or loans from other sources though no assurance can be given that such sources would be available or that any commitment of support is forthcoming to date.

8% Series A Senior Subordinated Convertible Redeemable Debentures

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

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

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

Going Concern

Our audit opinion for the year ended December 31, 2012 expressed substantial doubt as to our ability to continue as a going concern as a result of recurring losses and negative working capital. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans to address our ability to continue as a going concern include raising additional funds to finance the operating and capital requirements through a combination of equity and debt financings. While we are making our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

Impact of Inflation

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

Off-Balance Sheet Arrangements

As of March 31, 2013 and December 31, 2012, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, under the supervision and with the participation of our management, including the Chief Executive Officer, or CEO, and the Chief Financial Officer, or CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2013.

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

Based on evaluation as of March 31, 2013, the CEO and CFO have concluded that our disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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

Inherent Limitations on Effectiveness of Controls

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

No material change in any legal matter, as reported in the Annual Report on Form 10-K for the years ended December 31, 2012 and 2011, occurred during the three months ended March 31, 2013.

Item 1A. Risk Factors

Our business faces many risks. Described below are what we believe to be the material risks that we face. If any of the events or circumstances described in the following risks actually occurs, our business, financial condition or results of operations could suffer.

Our ability to continue as a going concern is in doubt absent obtaining adequate new debt or equity financing and achieving sufficient sales levels.

We have limited capital. Because we do not have sufficient working capital for continued operations for at least the next 12 months our continued existence is dependent upon us sustaining operating profitability or obtaining the necessary capital to meet our expenditures. Our operating capital requirements, in excess of what is generated from operations, for the next 12 months are approximately $500,000. This primarily consists of the costs associated with our financial statement reporting obligations. At this time, we are still in the process of identifying additional salon locations within the Salt Lake valley. The funding for our operations will primarily come from private investors purchasing our Preferred stock, making loans secured by convertible promissory notes, as well as obtaining traditional lines of credit and loans to finance equipment, furniture, leasehold improvements and operations. We cannot assure you that we will be able to generate sufficient sales or raise adequate capital to meet our future working capital needs.

The voting control held by Nexia Holdings Inc. creates an anti-takeover or change of control limitation. Nexia currently holds voting control of the Company through its ownership of Supervoting preferred stock.

As of March 31, 2013, the 10,000,000 shares of Supervoting Preferred Stock (100 votes for each share) held by Nexia combined with the 11,776,316 shares of common stock provide Nexia with voting control over any proposal requiring a vote of the shareholders. Through its ownership of the preferred voting shares and common stock it holds voting rights equal to 1,011,776,316 shares of common stock. This effectively gives Nexia a veto over any attempt to take over or change control of the Company. Such an event would include a vote by the board of directors to conduct a reverse or forward split of the common stock. The shares held by Nexia thus have a strong anti-takeover effect. The interests of Nexia may not always conform to the interests of the common stockholders, in general, and thus its voting rights may not always be exercised in the best interests of the common stockholders of the Company.

Our business and our industry are affected by cyclical factors in the State of Utah, including the risk of a prolonged recession.

Our financial results are substantially dependent upon overall economic conditions in the State of Utah. General economic factors that are beyond our control, such as interest rates, recession, inflation, deflation, tax rates and policy, energy costs, unemployment trends, and other matters that influence consumer confidence and spending, may impact our business. In particular, visitation patterns to our salons can be adversely impacted by increases in unemployment rates and decreases in discretionary income levels.

A prolonged or a deepening recession in the United States, specifically in Utah, could substantially decrease the demand for our products and services below current levels and adversely affect our business. Our industry has historically been vulnerable to significant declines in consumption and product and service pricing during prolonged periods of economic downturn such as at present.

Recessions and other periods of economic dislocation typically result in a lower level of discretionary income for consumers. To the extent discretionary income declines, consumers may be more likely to reduce discretionary spending. This could result in our salon customers foregoing salon treatments or using home treatments as a substitute.

We believe that the economic downturn slightly affected our product and service sales results for the three month periods ended March 31, 2013 and 2012. When there is an economic downturn, customers tend to wait longer periods of time between visits. However, we continue to have sales increases subsequent to March 31, 2013. If economic conditions result in negative sales in future periods and we are unable to offset the impact with operational savings, our financial results may be further affected.

If we cannot improve same-store sales our business and results of operations may be affected.

Our success depends, in part, upon our ability to improve sales, as well as both gross margins and operating margins. A variety of factors affect comparable sales, including fashion trends, competition, current economic conditions, changes in our product assortment, the success of marketing programs and weather conditions. These factors may cause our comparable store sales results to differ materially from prior periods and from our expectations. If we are unable to improve our comparable sales on a long-term basis or offset the impact with operational savings, our financial results may be affected.

Changes in our key relationships may adversely affect our operating results.

We maintain key relationships with certain companies, including Aveda™. Termination or modification of any of these relationships could significantly reduce our revenues and have a material and adverse impact on our business, our operating results and our ability to expand.

Changes in fashion trends may impact our revenue.

Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair may reduce the number of visits to, and therefore, sales at our salons.

We are dependent on key personnel, specifically Richard Surber, our President and CEO.

We are dependent on the services of Richard Surber, our President, CEO, and a Director. Green does not have an employment agreement with Mr. Surber, and losing his services would likely have an adverse effect on our ability to conduct business.

The salon operations are dependent on key personnel.

The operations of the two salons are dependent on the day to day management of current staff at those locations who work in the salons and train their personnel. Losing the services of these long term employees would likely have an adverse effect on the operations and business development of the salons.

Our success depends on our ability to attract and retain trained stylists in order to support our existing salon business and to staff future expansion.

The salons are actively recruiting qualified candidates to fill stylist positions. There is substantial competition for experienced personnel in this area, which we expect to continue. We will compete for experienced candidates with companies who have substantially greater financial resources than we do. If we fail to attract, motivate and retain qualified stylists, it could harm our business and limit our ability to be successful and hamper expansion plans. For example, we will depend upon the expertise and training abilities of our current staff and management at the salons. Since we do not maintain insurance policies on any of our employees, if we lose the services of any key officers or employees it could harm our business and results of operations.

Changes in regulatory and statutory laws may result in increased costs to our business.

Our financial results can be adversely impacted by regulatory or statutory changes in laws. Due to the number of people we employ, laws that increase costs to provide employee benefits may result in additional costs to our business. Compliance with new, complex and changing laws may cause our expenses to increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our ability to market certain products, which could adversely affect our business, financial condition and results of operations.

If we are not able to successfully compete in our business segments, our financial results may be affected.

Competition on a market by market basis remains strong. Therefore, our ability to raise prices in certain markets can be adversely impacted by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be impaired.

We face significant competition in the salon business, which could harm our sales and profitability.

The primary competition to our operations comes from salons offering excellent customer service in the Salt Lake Area market. We have identified our main competitors as Lunatic Fringe, Salon Zazou and Salon Keiji. We are also in competition with large scale hair cutting operations such as Great Clips, Supercuts, and Fantastic Sams, though these operations do not compete in offering the high-end services and products of our salons.

The loss of the Aveda™ line of products would damage the operation of our salons and have a significant and negative impact on our ability to operate and generate revenues.

Our salons offer the Aveda™ line of products, which are used exclusively in the services provided to customers of the salon and offered for retail sale at the salon location. Loss of the Aveda™ product line would have a significant and negative impact on the operation of the salons and their ability to generate revenues from either retail sales of health and beauty products or from providing services to consumers at the salon. We believe that the high quality and reputation of this line of products is key to our current operations and future success.

Changes in manufacturers' choice of distribution channels may negatively affect our revenues.

The retail products that we sell are licensed to be carried exclusively by professional salons. The products we purchase for sale in our salons are purchased pursuant to purchase orders, as opposed to long-term contracts, and generally can be terminated by the producer without much advance notice. Should the various product manufacturers decide to utilize other distribution channels, such as large discount retailers, it could negatively impact the revenue earned from product sales.

If we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions or private litigation and our reputation could suffer.

The nature of our business involves processing, transmission and storage of personal information about our customers. If we experience a data security breach, we could be exposed to government enforcement actions and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to stop visiting our salons altogether. Such events could lead to lost future sales and adversely affect our results of operations.

Our stock price may be volatile.

The market price of our common stock is highly volatile and fluctuates widely in price in response to various factors, many of which are beyond our control, including the following:

· significant dilution;

· our services or our competitors;

· additions or departures of key personnel;

· our ability to execute our business plan;

· operating results that fall below expectations;

· loss of any strategic relationship;

· economic and other external factors; and

· period-to-period fluctuations in our financial results.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

Investors bear a risk that a liquid market may never develop and as a result, you may not be able to buy or sell our securities at the times you may wish and market liquidity may be limited.

Even though our securities are quoted on the “Pink Sheets,” that may not permit our investors to sell securities when and in the manner that they wish. There is not currently a significant volume of shares trading in the Company’s common stock and there may never be sufficient volume to create a liquid market such as to allow all shareholders to sell or buy shares whenever they desire. A liquid market for the sale of shares of the Companies securities may never develop.

Our common stock is currently deemed to be “penny stock”, which makes it more difficult for investors to sell their shares.

Our common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

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

None during the three months ended March 31, 2013.

Subsequent Events

On May 22, 2013, the Board of Directors approved the conversion of 2,772 shares of Series B Preferred Stock held by an investor into 1,000,000 shares of Common Stock. The shares were converted at $0.014 per share based on the conversion provisions for the Series B Preferred Stock designation.

On May 28, 2013, the Board of Directors approved the conversion of 2,772 shares of Series B Preferred Stock held by an investor into 1,000,000 shares of Common Stock. The shares were converted at $0.014 per share based on the conversion provisions for the Series B Preferred Stock designation.

On May 28, 2013, the Board of Directors approved the conversion of 2,600 shares of Series B Preferred Stock held by an investor into 1,069,078 shares of Common Stock. The shares were converted at $0.012 per share based on the conversion provisions for the Series B Preferred Stock designation.

On May 31, 2013, the Board of Directors approved the conversion of 2,000 shares of Series B Preferred Stock held by an investor into 1,035,197 shares of Common Stock. The shares were converted at $0.01 per share based on the conversion provisions for the Series B Preferred Stock designation.

On June 11, 2013, the Board of Directors approved the conversion of 2,797 shares of Series B Preferred Stock held by an investor into 1,280,678 shares of Common Stock. The shares were converted at $0.011 per share based on the conversion provisions for the Series B Preferred Stock designation.

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

Item 3. Defaults Upon Senior Securities

None.

Item 4. [Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

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

		Incorporated by Reference
Exhibit Number	Description	Form	File Number	Exhibit Number	Filing Date	Provided Herewith

3(i)	Amended and Restated Certificate of Incorporation	10-12G/A	000-54018	3(i)	8/23/2010
3(ii)	Bylaws	10-12G/A	000-54018	3(ii)	8/23/2010
3(iii)	Plan of Merger	8-K	000-54018	3(iii)	8/26/2010
3(iv)	Plan of Merger and Share Exchange	8-K	000-54018	3(iv)	8/31/2010
3(v)	Utah Articles of Incorporation	8-K	000-54018	3(v)	8/31/2010
4(i)	Certificate of Designation for Series B Preferred Stock.	10-12G/A	000-54018	4(i)	8/23/2010
4(ii)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to DHI dated April 30, 2008.	10-12G/A	000-54018	4(ii)	8/23/2010
4(iii)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates, Inc. dated January 15, 2010.	10-12G/A	000-54018	4(iii)	8/23/2010
4(iv)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Desert Vista Capital, LLC. dated January 15, 2010.	10-12G/A	000-54018	4(iv)	8/23/2010
4(v)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates, Inc. dated March 16, 2010.	10-12G/A	000-54018	4(v)	8/23/2010
4(vi)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Akron Associates dated May 11, 2010.	10-12G/A	000-54018	4(vi)	8/23/2010
4(vii)	8% Series A Senior Subordinated Convertible Redeemable Debenture issued to Desert Vista Capital, LLC dated May 11, 2010.	10-12G/A	000-54018	4(vii)	8/23/2010
4(viii)	Amended Certificate of Designation for Series B Preferred Stock.	10-12G/A	000-54018	4(viii)	9/22/2010

10(i)	8% Convertible Promissory Note issued February 2, 2012, to Asher Enterprises, Inc.	10-K	000-54018	10(i)	4/16/2012
10(ii)	11% Promissory Note issued February 27, 2012 to William and Nina Wolfson	10-K	000-54018	10(ii)	4/16/2012
10(iii)	May 22, 2012 Security Agreement with Richard Surber, CEO of the Company	10-Q	000-54018	10(iii)	1/30/2012
31.01	Certification of the Registrant’s Chief Executive Officer, Richard D. Surber, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.					X
31.02	Certification of the Registrant’s Chief Financial Officer, Scott C. Coffman, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.					X
32.01	Certification of the Registrant’s Chief Executive Officer, Richard D. Surber, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.02	Certification of the Registrant’s Chief Financial Officer, Scott C. Coffman, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X

SIGNATURES

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

GREEN ENDEAVORS, INC.

(Registrant)

DATE: August 20, 2013

By: /s/ Richard D. Surber

Richard D. Surber

President, Chief Executive Officer and Director

DATE: August 20, 2013

By: /s/ Scott C. Coffman

Scott C. Coffman

Chief Financial Officer and Director

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Legalese
Litigous
Readability	8th grade Avg

Green Endeavors (GRNE) Inactive 10-Q2013 Q1 Quarterly report

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