Green Endeavors (GRNE) 10-Q 2017 Q2 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 June 30, 2017
	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   X      No
	Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes X       No
	Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
	Large accelerated filer	Accelerated filer
	Smaller reporting company   X	Non-accelerated filer
	(Do not check if a smaller reporting company)
	Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes        No  X
	On August 14, 2017, approximately 5,127,408 shares of the registrant’s common stock, $0.0001 par value, were outstanding.

1

GREEN ENDEAVORS, INC. AND SUBSIDIARIES

INDEX

		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):	3
	Condensed Consolidated Balance Sheets – June 30, 2017 (unaudited) and December 31, 2016	3
	Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2017 and 2016 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2017 and 2016 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16
Item 4.	Controls and Procedures	16
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults upon Senior Securities	17
Item 4.	[Reserved]	18
Item 5.	Other Information	18
Item 6.	Exhibits	19
Signatures		20

2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Green Endeavors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
			June 30,	December 31,
			2017	2016
			(Unaudited)
Assets
Current Assets:
	Cash		$188,347	$347,284
	Accounts receivable, net		12,313	15,397
	Inventory, net		126,323	152,790
	Prepaid expenses		-	124,167
	Notes receivable, related party		227,487	248,778
		Total current assets	554,470	888,416
Property, plant, and equipment, net of accumulated depreciation of $1,024,224 and $969,934, respectively			217,687	269,831
Other assets			21,405	21,405
	Total Assets		$793,562	$1,179,652
Liabilities and Stockholders’ Deficit
Current Liabilities:
	Accounts payable and accrued expenses		$377,337	$363,075
	Deferred revenue		71,096	86,223
	Deferred rent		70,953	74,636
	Due to related parties		689,869	632,802
	Derivative liability		64,590	108,297
	Current portion of notes payable, net of discount of $10,739 and $20,291, respectively		174,048	434,695
	Current portion of notes payable, related party		61,559	61,559
	Convertible note payable		35,000	35,000
		Total current liabilities	1,544,452	1,796,287
Long-Term Liabilities:
	Notes payable		42,992	50,397
		Total long-term liabilities	42,992	50,397
Total Liabilities			1,587,444	1,846,684
Commitments and contingent liabilities			-	-
Stockholders’ Deficit:
	Convertible super-voting preferred stock, $0.001 par value, 10,000,000 shares authorized; 10,000,000 shares issued and outstanding at June 30, 2017 and December 31, 2016; no liquidation value		10,000	10,000
	Convertible preferred series B stock - $0.001 par value, 2,000,000 shares authorized, 934,947 and 956,447 shares issued and outstanding at June 30, 2017 and December 31, 2016 respectively		935	956
	Preferred, undesignated stock - $0.001 par value 3,000,000 shares authorized, no shares issued and outstanding at June 30, 2017, and December 31, 2016		-	-
	Common stock, $0.0001 par value, 2,000,000,000 shares authorized; 5,127,408 shares issued and outstanding at June 30, 2017, and December 31, 2016.		511	511
	Subscription receivable		(38,400)	(38,400)
	Additional paid-in capital		3,745,245	3,745,224
	Accumulated deficit		(4,512,173)	(4,385,323)
		Total stockholders’ deficit	(793,882)	(667,032)
Total Liabilities and Stockholders’ Deficit			$793,562	$1,179,652
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Green Endeavors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
			Three Months Ended		Six Months Ended
			June 30, 2017	June 30, 2016	June 30, 2017	June 30, 2016
Revenue:
	Services, net of discounts		$690,345	$671,529	$1,361,735	$1,271,783
	Product, net of discounts		192,781	193,218	365,914	384,472
		Total revenue	883,126	864,747	1,727,649	1,656,255
Costs and expenses:
	Cost of services		382,463	426,656	762,196	751,082
	Cost of product		104,280	90,575	210,170	212,896
	Depreciation		24,969	26,735	54,292	53,770
	General and administrative		359,287	326,077	853,840	648,478
		Total costs and expenses	870,999	870,043	1,880,498	1,666,226
Income (Loss) from operations			12,127	(5,296)	(152,849)	(9,971)
Other income (expenses):
	Interest income		359	16,761	3,215	17,643
	Interest expense		(16,139)	(30,129)	(34,159)	(83,815)
	Interest income, related parties (net)		6,586	(47,730)	13,222	(86,875)
	Gain on derivative fair value adjustment		13,542	45,510	43,707	67,775
	Loss on stock subscription receivable		-	(6,459)	-	(39,839)
	Other income		-	12,265	12	12,265
		Total other income (expenses)	4,348	(9,782)	25,997	(112,846)
Income (loss) before income taxes			16,475	(15,078)	(126,852)	(122,817)
	Provision for income taxes		-	-	-	-
Net income (loss)			$16,475	$(15,078)	$(126,852)	$(122,817)
Net income (loss) per share
		Basic	$0.00	$(0.02)	$(0.02)	$(0.16)
		Diluted	$0.00	$(0.02)	$(0.02)	$(0.16)
Weighted-average common shares outstanding
		Basic	5,127,408	853,441	5,127,408	769,279
		Diluted	1,022,023,238	853,441	5,127,408	769,279
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Green Endeavors, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
					Six Months Ended June 30,
					2017	2016
Cash Flows from Operating Activities:
	Net loss				$(126,852)	$(122,817)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depreciation			54,292	53,770
		Amortization of debt issuance costs			12,370	53,733
		Loss on stock subscription receivable			-	39,839
		Gain on derivative liability fair value adjustment			(43,707)	(67,775)
		Changes in operating assets and liabilities:
			Accounts receivable		3,084	6,990
			Inventory		26,467	(27,758)
			Prepaid expenses		124,167	-
			Other assets		(16,702)	-
			Accounts payable and accrued expenses		14,261	(100,077)
			Due to (from) related parties		57,067	105,946
			Deferred rent		(3,683)	(5,159)
			Deferred revenue		(15,127)	(17,164)
				Net cash provided by (used in) operating activities	85,637	(80,472)
Cash Flows from Investing Activities:
	Purchases of property, plant, and equipment				(2,145)	(23,527)
	Payments on related party note receivable				-	(310,000)
	Proceeds from related party note receivable				37,993	159,581
		Net cash provided by (used in) investing activities			35,848	(173,946)
Cash Flows from Financing Activities:
	Payments made on notes payable				(280,422)	(180,733)
	Payments made on convertible debt				-	(30,050)
	Payments made on related party notes payable				-	(4,707)
	Payments made on capital lease obligations				-	(10,038)
	Proceeds from issuance of notes payable				-	462,000
		Net cash provided by (used in) financing activities			(280,422)	236,472
Decrease in cash					(158,937)	(17,946)
Cash at beginning of period					347,284	150,459
Cash at end of period					$188,347	$132,513
Supplemental cash flow information:
	Cash paid during the period for:
		Income Taxes			$-	$-
		Interest			$76,517	$27,963
	Non-cash investing and financing activities:
		Conversion of debt to common stock			$-	$74,244
		Return and cancellation of Preferred B shares			$21	$-
The accompanying notes are an integral part of these condensed consolidated financial Statements.

5

Note 1 – Basis of Financial Statement Presentation

Basis of Presentation

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

These statements should be read in conjunction with the Company’s annual financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In particular, the Company’s significant accounting policies were presented as Note 2 to the consolidated financial statements in that Annual Report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements for the three and six months ended June 30, 2017, are not necessarily indicative of the results that may be expected for the 12 months ending December 31, 2017.

Note 2 – Summary of Significant Accounting Policies

Use of Estimates in the Preparation of the Financial Statements

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

Cash and Cash Equivalents

Investments with original maturities of three months or less at the time of purchase are considered cash equivalents. As of June 30, 2017 and December 31, 2016, 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.  Management has determined that no reserve is required at June 30, 2017.

Property, Plant, and Equipment

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

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

6

The following is a summary of Green’s property, plant, and equipment by major category as of June 30, 2017:

	Cost	Accumulated Depreciation	Net
Computer equipment and related software	$            46,547	$            40,117	$              6,430
Leasehold improvements	732,690	560,215	172,476
Furniture and fixtures	27,201	26,145	1,056
Equipment	362,126	332,137	29,989
Vehicle	48,193	48,193	-
Signage	25,154	17,418	7,736
	$        1,241,911	$        1,024,224	$          217,687

The following is a summary of Green’s property, plant, and equipment by major category as of December 31, 2016:

	Cost	Accumulated Depreciation	Net
Computer equipment and related software	$            44,401	$            36,333	$              8,068
Leasehold improvements	732,690	530,039	202,651
Furniture and fixtures	27,201	25,650	1,551
Equipment	362,126	315,227	46,899
Vehicle	48,193	46,472	1,721
Signage	25,154	16,213	8,941
	$        1,239,765	$          969,934	$          269,831

As of June 30, 2017 and 2016, Green recorded depreciation expense of $54,292 and $53,770, respectively.

Derivative Liability

The Company has convertible notes that could be considered derivatives or contain embedded features subject to derivative accounting.   We have estimated the fair value of these embedded derivatives for convertible debentures using a multinomial lattice model.  

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. 

Basic and Diluted Income (Loss) Per Common Share

Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the specified period. Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares and potential common shares during the specified period. For the six months ended June 30, 2017, there were 1,016,895,830 potential common shares not included in the diluted net loss per share calculation as their effect would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. The three month period ended June 30, 2017 included these potentially dilutive shares as there was a net gain for that time period.

7

Deferred Revenue

Deferred revenue arises when customers pay for products and/or services in advance of receiving the product or service. Green’s deferred revenue consists solely of unearned revenue associated with the purchase of gift certificates for which revenue is recognized only when the service is performed or the product is delivered. As of June 30, 2017 and December 31, 2016, deferred revenue was $71,096 and $86,223, respectively.

Advertising

The Company expenses advertising production costs as they are incurred and advertising communication costs the first time the advertising takes place. For the six month period ended June 30, 2017 and 2016, advertising costs amounted to $49,886 and $47,278, respectively.

Income Taxes

Deferred income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Also, Green's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Green is 100% consolidated into its parent company, SAKL, and therefore does not file an income tax return. Its financial amounts are consolidated into the SAKL income tax returns. As of June 30, 2017 and December 31, 2016, a 100% valuation allowance has been placed against the deferred tax asset and therefore is not reflected on the balance sheets.

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 – Going Concern

Generally accepted accounting principles in the United States of America contemplate the continuation of Green as a going concern. As of and for the six months ended June 30, 2017, Green had negative working capital of $989,982 and a net loss of $126,852, 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 4 – Inventory

Green’s inventory consists of items held for resale and product that is used in services by the Landis and Landis II salons, and all are considered finished goods. Inventory is carried at the lower of cost or market. As of June 30, 2017 and December 31, 2016, inventory amounted to $126,323 and $152,790, respectively.

Note 5 – Derivative Liability

The Company has convertible notes that could be considered derivatives or contain embedded features subject to derivative accounting.   We have estimated the fair value of these embedded derivatives for convertible debentures using a multinomial lattice model.  As of June 30, 2017 and December 31, 2016, the Company has a $64,590 and $108,297 derivative liability respectively, related to convertible notes payable.  For the six months ended June 30, 2017 and 2016 the Company recorded gains of $43,707 and $67,775 from derivative liability fair value adjustments, respectively.

8

Note 6 – Fair Value Measurement

Our financial assets and (liabilities) carried at fair value measured on a recurring basis as of June 30, 2017 and December 31, 2016, consisted of the following:

	Total fair	Quoted prices	Significant other	Significant
	value at	in active	observable	unobservable
	June 30,	markets	inputs	inputs
Description	2017	(Level 1)	(Level 2)	(Level 3)
Derivative liability (1)	$64,590	$              -	$64,590	$              -

	Total fair	Quoted prices	Significant other	Significant
	value at	in active	observable	unobservable
	December 31,	markets	inputs	inputs
Description	2016	(Level 1)	(Level 2)	(Level 3)
Derivative liability (1)	$108,297	$              -	$108,297	$              -

(1)Derivative liability amounts are due to the embedded derivatives of certain convertible notes payable issued by the Company and are calculated usinga multinomial lattice model (see Note 5 - Derivative liability) 

Note 7 – Related Party Transactions

As of June 30, 2017 and December 31, 2016, amounts due from related parties were $227,487 and $248,778, respectively.  The balances represent notes and interest receivable from SAKL, the parent, and Color Me Rad Productions, Inc., an SAKL subsidiary. The SAKL note accrues interest at 18% per annum and matured on April 30, 2017. The Color Me Rad note was paid in full in April 2017.

As of June 30, 2017 and December 31, 2016, amounts due to related parties were $751,428 and $694,361, respectively.  The balances, represent advances from SAKL and SAKL subsidiaries, and certain notes payable to SAKL, Richard Surber and a company affiliated with Richard Surber. These notes have maturity dates from April 2015 to November 2017.

Richard Surber, a related party, is providing his personal guaranty for several lines of credit and credit cards that are being utilized by the Company and its operating subsidiaries. In addition to the above, Mr. Surber is a personal guarantor to notes payable by the Company with remaining principal balances of approximately $5,000. Subsequent to June 30, 2017, Mr. Surber continues to provide his personal guaranty for several lines of credit, credit cards, and loans that are being utilized by the Company and its subsidiaries. The total amount of these credit obligations could exceed the amount of $300,000 from time to time.

Note 8 – Equity

Preferred Stock

Green is authorized to issue 15,000,000 shares of preferred stock (par value $.001 per share). Green’s preferred stock may be divided into such series as may be established by the Board of Directors. As of June 30, 2017, Green has designated 12,000,000 of the preferred stock into two series as follows: 2,000,000 shares of Convertible Series B Preferred and 10,000,000 shares of Convertible Super voting Preferred.

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

9

Convertible Super voting Preferred Stock

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

As of June 30, 2017 and December 31, 2016, Green had 10,000,000 shares of Convertible Super voting Preferred stock issued and outstanding.

Convertible Series B Preferred Stock

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

As of June 30, 2017 and December 31, 2016, Green had 934,947 and 956,447 shares of Series B issued and outstanding respectively. During the six months ended June 30, 2017 the company received and cancelled 21,500 shares of Series B Preferred Stock.

Common Stock

Green is authorized to issue 2,000,000,000 shares of common stock (par value $0.0001 per share).

As of June 30, 2017 and December 31, 2016, Green had 5,127,408 shares of common stock issued and outstanding.

Note 9 – Litigation

TCA Global Credit Master Fund, L.P. vs Sack Lunch Productions, Green Endeavors, Inc., Landis Salons, Inc., Landis Salons II, Inc., Diversified Managements Services, Inc., Wasatch Capital Corporation, Downtown Development Corporation, WG Productions Company, Landis Experience Center, LLC, Redline Entertainment, Inc., Springbok Holdings, LLC, Color Me Rad, LLC, The Dirty Dash, LLC, Springbok Franchising LLC, and Springbok Management, LLC, Case CACE-17-011661 Division 12, in the Circuit Court of the 17th Judicial Circuit In and For Broward County, Florida. The suit seeks recovery for payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  Defendants have not yet filed responses to the complaint and discussions to resolve the matter are ongoing.

Note 10 – 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 six months ended June 30, 2017 and 2016 accounted for approximately 99% of salon products purchased.

Market or Geographic Area Concentrations

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

Note 11 – Subsequent Events

In accordance with ASC 855-10 Company management reviewed all material events through the date of this report.

On July 27, 2017, the Company entered into a loan agreement with a bank in the amount of $378,000. The note is a merchant account financing arrangement wherein Landis Salons INC. repays the loan at the rate of 75% of the American Express credit card sales receipts that are collected each month. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. The loan requires a prepaid interest charge that is 6% ($22,680) of the $378,000 loan amount. These financing costs are being amortized monthly to interest expense during the one year term of the loan. The total amount due at the inception date is $400,680.

On July 28, 2017 Landis Salon, Inc. entered into a Promissory Note agreement with The Lantern Fest Productions, Inc., to loan $165,000 with an interest rate of 20%. This sum is to be repaid in weekly payments of $4,328.16.

10

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, 2016 and Form 10-Q for the quarter ended March 31, 2017. Certain of these statements, including, without limitation, statements regarding the extent and timing of future revenues and expenses, customer demand and other statements using words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecast,” “intends,” “may,” “plans,” “projects,” “should,” “will” and “would,” and words of similar import and the negatives thereof, constitute forward-looking statements. These statements are predictions based upon management’s best judgment at the time they are made about future events that are not historical facts. Actual results could vary materially as a result of certain factors, including but not limited to, those expressed in these statements. We refer you to the “Risk Factors,” “Results of Operations,” and “Liquidity and Capital Resources” sections contained in this Quarterly Report, which identify important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.

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

Overview

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

As of June 30, 2017, 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 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.

Critical Accounting Estimates

Use of 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.

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Results of Operations

The following discussion examines our results of operations and financial condition based on our Consolidated Financial Statements for the three and six months ended June 30, 2017 and 2016.

For the six months ended June 30, 2017, we owned and operated three wholly owned subsidiaries. Two of the subsidiaries, Landis Salons, Inc. and Landis Salons II, Inc., operate as full-service hair and retail salons featuring the Aveda™ 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 six month periods ended June 30, 2017 and 2016, we had net revenue of $1,727,649 and $1,656,255, respectively.

Three months ended June 30, 2017 and 2016

The following table shows the change in service revenue by salon for the three month periods ended June 30, 2017 and 2016:

	Three Months Ended June 30,		Increase (Decrease) over prior period
Salon	2017	2016	Dollar	%
Liberty Heights	$       524,979	$       484,508	$     40,471	8.35
Marmalade	161,030	181,066	(20,036)	(11.07)
City Creek	4,336	5,955	(1,619)	(27.19)
	$       690,345	$       671,529	$     18,816	2.80

As can be seen from the above table our three locations experienced an increase of 2.80% in service revenues for the three month period ending June 30, 2017 over the comparable period of service sales for 2016. Several of the stylists that were servicing their clients at the Marmalade location have begun to service several of their clients at the Liberty heights location, this has resulted in the decrease and increase of revenues at those locations respectively when compared with the same time period in for 2016.

The following table shows the change in product revenue by salon for the three month periods ended June 30, 2017 and 2016:

	Three Months Ended June 30,		Increase (Decrease) over prior period
Salon	2017	2016	Dollar	%
Liberty Heights	$       104,168	$       107,445	$      (3,277)	(3.05)
Marmalade	37,637	36,754	883	2.40
City Creek	50,976	49,019	1,957	3.99
	$       192,781	$       193,218	$         (437)	(0.23)

As can be seen from the above table our three locations experienced a decrease of 0.23% in product revenues for the three month period ended June 30, 2017 over the comparable period of product sales for 2016. This decline in product revenue is primarily due to the Company's senior staff spending more time in our training programs for new artists.

Six months ended June 30, 2017 and 2016

The following table shows the change in service revenue by salon for the six month periods ended June 30, 2017 and 2016:

	Six Months Ended June 30,		Increase (Decrease) over prior period
Salon	2017	2016	Dollar	%
Liberty Heights	$   1,039,487	$          931,190	$                108,297	11.63
Marmalade	311,549	332,838	(21,289)	(6.40)
City Creek	10,699	7,755	2,944	37.96
	$   1,361,735	$       1,271,783	$                  89,952	7.07

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As can be seen from the above table our three locations experienced an increase of 7.07% in service revenues for the six month period ending June 30, 2017 over the comparable period of service sales for 2016. Several of the stylists that were servicing their clients at the Marmalade location have begun to service several of their clients at the Liberty heights location. This has resulted in the decrease and increase of revenues at those locations respectively when compared with the same time period in for 2016. This movement by our stylists has enabled them to retain more clients and increase sales for the six months ended June 30, 2017 as compared to the same period in 2016.

The following table shows the change in product revenue by salon for the six month periods ended June 30, 2017 and 2016:

	Six Months Ended June 30,		Increase (Decrease) over prior period
Salon	2017	2016	Dollar	%
Liberty Heights	$      197,399	$          217,790	$                (20,391)	(9.36)
Marmalade	64,431	73,549	(9,118)	(12.40)
City Creek	104,084	93,133	10,951	11.76
	$      365,914	$          384,472	$                (18,558)	(4.83)

As can be seen from the above table our three locations experienced a decrease of 4.83% in product revenues for the three month period ended June 30, 2017 over the comparable period of product sales for 2016. This decline in product revenue is primarily due to the Company's senior staff spending more time in our training programs for new artists.

Costs of Revenue

Three months ended June 30, 2017 and 2016

The following table shows cost of revenue by type as a percentage of related revenue for the three month periods ended June 30, 2017 and 2016:

	Three Months Ended June 30,
Revenue Type	2017	2016
Service	55.4%	63.5%
Product	54.1%	46.9%

The above table shows the cost of services revenue as a percentage of service revenue decreasing by 8.1% for the three month period ended June 30, 2017 over the comparable period for 2016. This decrease in service cost is primary due to our stylists becoming more effective sales people and providing higher revenue services for their clients. The 7.2% increase in product costs as a percentage of product sales for the same comparable periods is primarily due to normal fluctuations in the purchase price of product.

Six months ended June 30, 2017 and 2016

The following table shows cost of revenue by type as a percentage of related revenue for the six month periods ended June 30, 2017 and 2016:

	Six Months Ended June 30,
Revenue Type	2017	2016
Service	56.0%	59.1%
Product	57.4%	55.4%

The above table shows the cost of services revenue as a percentage of service revenue decreasing by 3.1% for the six month period ended June 30, 2017 over the comparable period for 2016. The 2% increase in product costs as a percentage of product sales for the same comparable periods is primarily due to normal fluctuations in the purchase price of product.

Operating Expenses

Three months ended June 30, 2017 and 2016

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The following table shows general and administrative expenses for the three months ended June 30, 2017 and 2016:

	Three Months Ended June 30,
	2017	2016	Change	% Change
Salaries and wages	$  145,474	$    111,029	$    34,445	31
Rent	46,299	43,488	2,811	6
Advertising	22,218	23,863	(1,645)	(7)
Credit card merchant fees	13,805	1,319	12,486	947
Insurance	3,018	21,113	(18,095)	(86)
Utilities and telephone	13,131	13,224	(93)	(1)
Professional services	9,502	22,359	(12,857)	(58)
Repairs and maintenance	12,838	13,647	(809)	(6)
Dues and subscriptions	9,053	7,477	1,576	21
Office expense	32,076	47,586	(15,510)	(33)
Travel	5,323	4,556	767	17
Investor relations and company promotion	30,233	1,395	28,838	2,067
Other	16,317	15,021	1,296	9
Total general and administrative expenses	$  359,287	$    326,077	$    33,210	10

The above table shows an increase of $33,210 in general and administrative expenses. As can be seen above there are several increases and decreases in the various categories the most notable of which are those of salaries and wages and investor relations and company promotion for an aggregate increase of $63,283 in the three month period ended June 30, 2017 compared to the three month period ended June 30, 2016.  Salaries and wages increased due to new management employment contracts.  Expenses related to professional services and investor relations and company promotions are not cyclical or recurring in nature and increased due to the timing of strategic decisions.

Depreciation expense for the three months ended June 30, 2017, was $24,969 compared to $26,735 for the comparable three months in 2016. The decrease of $1,766 is primarily due to certain fixed assets becoming fully depreciated after reaching the end of their estimated useful lives.

Six months ended June 30, 2017 and 2016

The following table shows general and administrative expenses for the six months ended June 30, 2017 and 2016:

	Six Months Ended June 30,
	2017	2016	Change	%
Salaries and wages	$   298,172	$   243,635	$      54,537	22
Rent	90,902	88,488	2,414	3
Advertising	49,886	47,278	2,608	6
Credit card merchant fees	28,082	3,240	24,842	767
Insurance	17,958	41,767	(23,809)	(57)
Utilities and telephone	27,830	27,420	410	1
Professional services	75,214	46,995	28,219	60
Repairs and maintenance	22,119	22,305	(186)	(1)
Dues and subscriptions	18,720	15,145	3,575	24
Office expense	73,284	77,103	(3,819)	(5)
Travel	10,142	6,427	3,715	58
Investor relations and company promotion	118,017	3,659	114,358	3,125
Other	23,514	25,016	(1,502)	(6)
Total general and administrative expenses	$   853,840	$   648,478	$     205,362	32

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The above table shows an increase of $205,362 in general and administrative expenses. As can be seen above there are several increases and decreases in the various categories the most notable of which are those of salaries and wages, professional services and investor relations and company promotion for an aggregate increase of $197,114 in the six month period ended June 30, 2017 compared to the six month period ended June 30, 2016.  Salaries and wages increased due to new management employment contracts.  Expenses related to professional services and investor relations and company promotions are not cyclical or recurring in nature and increased due to the timing of strategic decisions. Insurance expense decreased due to a decrease in health insurance costs in 2017.

Depreciation expense for the six months ended June 30, 2017, was $54,292 compared to $53,770 for the comparable six months ended June 30, 2016. The increase of $522 is primarily due to adding certain fixed assets that will be depreciated over their estimated useful lives.

Other Income (Expense)

Three months ended June 30, 2017 and 2016

Other income (expense) for the three months ended June 30, 2017 was $4,348 compared to ($9,782) for the three months ended June 30, 2016, an increase of $14,130. The increase is primarily attributable to a decrease in interest expense, and a reduction of the loss on stock subscription receivable, also the decrease in the gain on derivative fair value adjustment.

Six months ended June 30, 2017 and 2016

Other income (expense) for the three months ended June 30, 2017 was $25,997 compared to ($112,846) for the six months ended June 30, 2016, an increase of $138,843. The increase is primarily attributable to a decrease in interest expense, and a reduction of the loss on stock subscription receivable and the change in the fair value adjustment of derivative.  

Liquidity and Capital Resources

Cash and Investments in marketable securities

As of June 30, 2017, our principal source of liquidity consisted of $188,347 of cash, compared to $347,284 as of December 31, 2016. Our primary sources of cash during the three month period ended June 30, 2017 were customer payments for salon services and products. Our primary uses of cash were for payments relating to salaries, rent, general operating expenses and payments on notes payable.

Working Capital

We had a working capital deficit of $989,982 as of June 30, 2017. Our current assets were $554,470, which consisted of $188,347 in cash, $12,313 in accounts receivable, $126,323 in inventory, and $227,487 in notes receivable, related party. Our total assets were $793,562, which included $217,687 in property and equipment (net), and $21,405 in other assets. Our current liabilities were $1,544,452, including $377,337 in accounts payable and accrued expenses, $689,869 due to related parties, $270,607 in the current portion of convertible notes, and notes payable; $142,049 in deferred revenue and rents, and a $64,590 derivative liability. Our long-term liabilities were $42,992 consisting of notes payable. Our total stockholders’ deficit at June 30, 2017 was $793,882.

Working capital decreased by $82,111 as of June 30, 2017, compared to December 31, 2016 primarily due to the decrease in cash.

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 (used in) operating activities for the six month period ended June 30, 2017 was $85,637 compared to ($80,472) used in operating activities for the same period in 2016. This change was primarily due to a decrease in prepaid expenses, inventories, and amounts due to related parties, offset by the change in value of the derivative liability.

Cash Flows from Investing Activities

Cash flow from investing activities for the six months ended June 30, 2017 was $35,848 compared to $(173,946) for the six months ended June 30, 2016, a $209,794 difference. The change was due primarily to a reduction of payments made to related party note receivable offset by a decrease in proceeds from related party notes receivable.

Cash Flows from Financing Activities

Cash flow from financing activities for the three months ended June 30, 2017 was ($280,422) compared to $236,472 provided by financing activities for the six months ended June 30, 2016, a change of ($516894). The decrease is attributable to the issuance of notes payable in prior periods.

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Other Factors Affecting Liquidity and Capital Resources

We have insufficient current assets to meet our current liabilities due to negative working capital of $989,982 as of June 30, 2017. Historically, we have funded our cash needs from a combination of revenues, carried payables, sales of equity, and debt transactions. Since we are not currently realizing net cash flows from our business, we may need to seek financing to continue our operations. Prospective sources of funding could include shareholder loans, equity sales or loans from other sources though no assurance can be given that such sources would be available or that any commitment of support is forthcoming to date.

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

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

Going Concern

Our audit opinion for the year ended December 31, 2016 expressed substantial doubt as to our ability to continue as a going concern as a result of recurring losses and negative working capital. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans to address our ability to continue as a going concern include raising additional funds to finance the operating and capital requirements through a combination of equity and debt financings. While we are making our best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.

Impact of Inflation

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

Off-Balance Sheet Arrangements

As of June 30, 2017 and December 31, 2016, 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 June 30, 2017.

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

Based on evaluation as of June 30, 2017, 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.

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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

TCA Global Credit Master Fund, L.P. vs Sack Lunch Productions, Green Endeavors, Inc., Landis Salons, Inc., Landis Salons II, Inc., Diversified Managements Services, Inc., Wasatch Capital Corporation, Downtown Development Corporation, WG Productions Company, Landis Experience Center, LLC, Redline Entertainment, Inc., Springbok Holdings, LLC, Color Me Rad, LLC, The Dirty Dash, LLC, Springbok Franchising LLC, and Springbok Management, LLC, Case CACE-17-011661 Division 12, in the Circuit Court of the 17th Judicial Circuit In and For Broward County, Florida. The suit seeks recovery for payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  Defendants have not yet filed responses to the complaint and discussions to resolve the matter are ongoing.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the years ended December 31, 2016 and 2015, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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

There were no sales of equity securities during the second quarter of 2017.

Subsequent Events

In accordance with ASC 855-10 Company management reviewed all material events through the date of this report.  

On July 27, 2017, the Company entered into a loan agreement with a bank in the amount of $378,000. The note is a merchant account financing arrangement wherein Landis Salons INC. repays the loan at the rate of 75% of the American Express credit card sales receipts that are collected each month. In addition to the merchant account receivables, collateral for the loan includes all receivables, financial instruments, equipment assets, inventories, intangibles, deposits, and other assets as applicable. The loan requires a prepaid interest charge that is 6% ($22,680) of the $378,000 loan amount. These financing costs are being amortized monthly to interest expense during the one year term of the loan. The total amount due at the inception date is $400,680.

On July 28, 2017 Landis Salon, Inc. entered into a Promissory Note agreement with The Lantern Fest Productions, Inc., to loan $165,000 with an interest rate of 20%. This sum is to be repaid in weekly payments of $4,328.16.

Item 3. Defaults Upon Senior Securities

TCA Global Credit Master Fund, L.P. vs Sack Lunch Productions, Green Endeavors, Inc., Landis Salons, Inc., Landis Salons II, Inc., Diversified Managements Services, Inc., Wasatch Capital Corporation, Downtown Development Corporation, WG Productions Company, Landis Experience Center, LLC, Redline Entertainment, Inc., Springbok Holdings, LLC, Color Me Rad, LLC, The Dirty Dash, LLC, Springbok Franchising LLC, and Springbok Management, LLC, Case CACE-17-011661 Division 12, in the Circuit Court

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of the 17th Judicial Circuit In and For Broward County, Florida. The suit seeks recovery for payments that were due in accordance with the terms and provisions of the Senior Secured Credit Facility Agreement effective between the parties as of October 31, 2015.  Defendants have not yet filed responses to the complaint and discussions to resolve the matter are ongoing.

Item 4. [Reserved]

Item 5. Other Information

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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)	Employment Agreement with Richard Surber, January 1, 2017	10K	000-54018	10(i)	04/05/2017
10(ii)	Employment Agreement with Logan C. Fast, January 1, 2017	10K	000-54018	10(ii)	04/05/2017
31.01	Certification of the Registrant’s Chief Executive Officer, Richard D. Surber, pursuant to Rule 13a-14 of the Securities Exchange Act of 1934.					X
32.01	Certification of the Registrant’s Chief Executive Officer, Richard D. Surber, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X

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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 14, 2017	By: /s/ Richard D. Surber
	Richard D. Surber
	President, Chief Executive Officer, Chief Financial Officer, and Director

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