U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| (Mark One) | ||
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ |
For the quarterly period ended September 30, 2014
Commission file number 000-54548
| GREENTECH MINING INTERNATIONAL, INC. |
(Exact name of registrant as specified in its charter) |
| Delaware | 45-5553453 | |
| (State or other jurisdiction of incorporation) | (IRS Employer Identification No.) | |
951 Mariners Island Boulevard, Suite 300
San Mateo, California 94404
(Address of principal executive offices)(650) 283-2653
(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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act):
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company þ | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of the common stock, as of the latest practicable date: Common Stock, $0.0001 par value: 41,000,000 shares outstanding as of November 14, 2014.
TABLE OF CONTENTS
| Page | ||||
| PART I – FINANCIAL INFORMATION: | ||||
Item 1. | Financial Statements (unaudited): | 3 | ||
Condensed Balance Sheets as of September 30, 2014 (unaudited) and March 31, 2014 (audited) | 3 | |||
Condensed Statements of Operations for the three ended September 30, 2014 and June 30, 2013 | 4 | |||
Condensed Statements of Cash Flows for the three months ended September 30, 2014 and June 30, 2013 | 5 | |||
Notes to Condensed Financial Statements (unaudited) | 6 | |||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 14 | ||
Item 4T. | Controls and Procedures | 14 | ||
PART II – OTHER INFORMATION: | ||||
Item 1. | Legal Proceedings | 15 | ||
Item 1A. | Risk Factors | 15 | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 15 | ||
Item 3. | Defaults Upon Senior Securities | 15 | ||
Item 4. | (Reserved and Removed) | 15 | ||
Item 5. | Other Information | 15 | ||
Item 6. | Exhibits | 16 | ||
Signatures | 17 | |||
2
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREENTECH MINING INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
| Septemebr 30, | March 31, | |||||||
| 2014 | 2014 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 2 | $ | - | ||||
| Total current assets | - | - | ||||||
| Total assets | $ | 2 | $ | - | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Due to shareholders | $ | 106,288 | $ | 103,998 | ||||
| Accounts Payable | - | 2,000 | ||||||
| Bank Overdraft | - | 14 | ||||||
| Total Current liabilities | 106,288 | 106,012 | ||||||
| Preferred stock, $0.0001 par value, 10,000,000 shares authorized; none issued or outstanding | — | — | ||||||
| Common stock, $0.0001 par value, 100,000,000 shares authorized, 41,000,000 and 41,000,000 shares issued and outstanding as of September 30, 2014 and March 31, 2014, respectively | 4,100 | 4,100 | ||||||
| Additional paid-in capital | 1,500 | 1,500 | ||||||
| Accumulated deficit | (111,886 | ) | (111,612 | ) | ||||
| Total stockholders’ deficit | (106,286 | ) | (106,012) | |||||
| Total liabilities and stockholders’ deficit | $ | 2 | $ | - | ||||
The accompanying notes are an integral part of these condensed financial statements.
3
GREENTECH MINING INTERNATIONAL, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
| Three Month Periods Ended | Six Months Period Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||
| EXPENSES | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | $ | 149 | $ | 16 | 274 | 20 | ||||||||||
| Total operating expenses | 149 | 16 | 274 | 20 | ||||||||||||
| NET LOSS | $ | (149 | ) | $ | (16 | ) | (274 | ) | (20 | ) | ||||||
| BASIC AND DILUTED LOSS PER SHARE | $ | (0.00 | ) | $ | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF | ||||||||||||||||
| SHARES OUTSTANDING | 41,000,000 | 41,000,000 | 41,000,000 | 41,000,000 | ||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
4
GREENTECH MINING INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended September 30, 2014 | Six months ended September 30, 2013 | |||||||
| OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (274 | ) | $ | (20 | ) | ||
Change in assets and liabilities: | ||||||||
Accounts payable | (2,014 | ) | ||||||
Net cash used in operating activities | (2,288 | ) | (20 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Due to shareholder | 2,290 | - | ||||||
Bank overdraft | (0 | ) | - | |||||
Net cash provided by financing activities | 2,290 | - | ||||||
Net increase in cash | 2 | (20 | ) | |||||
Cash at beginning of period | - | 53 | ||||||
Cash at end of period | $ | 4 | $ | 33 | ||||
The accompanying notes are an integral part of these condensed financial statements.
5
GREENTECH MINING INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY:
Greentech Mining International, Inc. (“the Company” “GMI” and “Greentech”) was incorporated in the state of Delaware on February 6, 2012 under the name Accelerated Acquisitions XVIII, Inc. The Company was formed as a “shell company” with no operations while it sought new business opportunities. The Company changed its name to Greentech Mining International, Inc. on June 25, 2012. On September 17, 2012, we entered into an Operating, Exploration and Option to Purchase Agreement with Greentech Mining, Inc. a Delaware Corporation and Greentech Mining Utah, LLC a Utah limited liability company, (“Owners”), both entities are under common control, pursuant to which the Company received exclusive rights that consists of all 671 acres of Section 36, Township 29 South, Range 11 East, Salt Lake Base and Meridian, in Wayne County, Utah upon which an operating gravimetric circuit (system to separate minerals by weight) has been built on the private property. In addition, the agreement includes four Bureau of Land Management (“BLM”) mining claim groups totaling 3,940 acres. On June 15, 2014, Greentech Mining International, Inc. terminated the Operating, Exploration and Option to Purchase Agreement entered into with Greentech Mining, Inc. and Greentech Mining Utah on September 17, 2012. There was no disagreement between the parties and no legal action is pending between the parties.
On September 22, 2012, the registrant entered into a Mineral Claim Option Agreement with Union Gulf Resources Ltd. (“Optionor”). Pursuant to the agreement, the Optionor gave an option to purchase a 100% interest in certain mining claims located in the state of Arizona. In consideration of the option to purchase, Greentech Mining International, Inc. agreed to, provided that the Company has not abandoned the property, the Company will pay to the Optionor $3,500,000 US Dollars with the first payment of $750,000 on December 1, 2012, seven payments of $350,000 every three months starting March 1, 2013 and a final payment of $300,000 on December 1, 2014. The Company has entered into a verbal agreement with the Optionor to extend the payment terms that were to begin on December 1, 2012 to beginning on May 1, 2013, seven payments of $350,000 every three months starting August 1, 2013 and a final payment of $300,000 on May 1, 2015. On June 15, 2014, Greentech Mining International, Inc. terminated the Mineral Claim Option Agreement entered into with Union Gulf Resources Ltd. into on September 22, 2012. There was no disagreement between the parties and no legal action is pending between the parties.
(b) Emerging Growth Company
We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved.
Under the Jumpstart Our Business Startups Act, “emerging growth companies” can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements the Company has an accumulated deficit of $111,886, due to shareholder of $106,288 and had $2 cash as of September 30, 2014. The Company’s ability to continue as a going concern is dependent upon its ability to obtain financing necessary for it to meet its obligations, develop the products that it has licensed, and ultimately generate revenues from the sale of these products. The Company’s founder has agreed to fund certain administrative operating expenses of the Company until the Company succeeds in raising additional funds. Management’s plans include raising additional funds through an equity financing or licensing transaction in order to meet the Company’s obligations and develop its product candidates, but funding may not be available and the Company may be unsuccessful in raising additional capital of any type. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited financial statements do not include any adjustments that might arise as a result of this uncertainty.
NOTE - 3 SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION: The accompanying financial statements are prepared in accordance with generally accepted accounting principle in the United States of America.
6
GREENTECH MINING INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
(Unaudited)
USE OF ESTIMATES-The preparation of financial statements in conformity with accounting principles generally accepted in United States of America requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual result could differ from those estimates.
CASH AND CASH EQUIVALENTS - All cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of three months or less are considered to be cash equivalents. The Company does not have cash equivalents as of September 30, 2014 and September 30, 2013.
RESEARCH AND DEVELOPMENT EXPENSES - Expenditures for research, development, and engineering of products are expensed as incurred.
COMMON STOCK - The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.
REVENUE AND COST RECOGNITION - The Company has no current source of revenue; therefore the Company has not yet adopted any policy regarding the recognition of revenue or cost.
ADVERTISING COSTS - The Company's policy regarding advertising is to expense advertising when incurred.
INCOME TAXES - Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company adopted the provisions of FASB ASC 740-10 "Uncertainty in Income Taxes" (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
LOSS PER SHARE - Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. During the year ended March 31, 2014 and March 31, 2013, the Company did not have any potentially dilutive common shares.
FINANCIAL INSTRUMENTS - In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 "Fair Value Measurements and Disclosures" (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
7
GREENTECH MINING INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
(Unaudited)
| Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
| Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| Level 3 - Inputs that are both significant to the fair value measurement and unobservable. |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2014.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02). This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income. However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012. The Company is evaluating the effect, if any, the adoption of ASU 2013-02 will have on its financial statements. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
In December 2014, the FASB issued ASU 2014-10, Development Stage Entities: Elimination of Certain Financial Reporting Requirements. This guidance eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders' equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. We have elected early adoption of this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since inception.
NOTE 4 - STOCK-BASED COMPENSATION
The Company recognizes stock-based compensation expense in its statement of operations based on estimates of the fair value of employee stock option and stock grant awards as measured on the grant date. For stock options, the Company uses the Black-Scholes option-pricing model to determine the value of the awards granted. The Company amortizes the estimated value of the options as of the grant date over the stock options’ vesting period, which is generally four years.
During the year ended March 31, 2014, the Company issued Accelerated Venture Partner, LLC. 1,500,000 shares of common stock at par value of .0001 per share and the Company relinquished its rights to repurchase 1,000,000 share of common stock that was issued to Accelerated Venture Partners, LLC on June 28, 2012; and issued Matthew Neher 8,500,000 shares of common stock at par value of .0001 per share for additional services rendered to the Company from June 2012 to June 2013.
During the year ended March 31, 2013, the Company entered into an employment agreement under which it agreed to grant options to purchase 1,750,000 shares of common stock to its officer. Pursuant to the terms of each of the employment agreements, the options will vest over approximately four years from the date of the officer’s commenced employment and will have an exercise price of $0.0001 per share. The Company granted options to these officers at the $0.0001 per share exercise price, in part, because the employment agreements do not provide for the officers to receive any cash compensation until the Company secures at least $2 million in financing.
8
GREENTECH MINING INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
(Unaudited)
The Company has estimated the value of common stock into which the options are exercisable at $.0001 per share for financial reporting purposes at par value. Greentech Mining International common stock has never traded publicly, and no stock has traded in private markets either, except for privately negotiated sales to the founders of the company and the stock-based compensation was granted when the Company had no assets and was a shell company. No common stock has been sold in any transactions since the Company emerged from its shell-company status. The Company does not have any offers for purchase of its common stock in any stage, and no stock is registered for resale with the Securities and Exchange Commission.
The Company believes the only material estimate used in estimating the value stock options was the estimated fair value of the common stock, and that assumed volatility, term, interest rate and dividend yield changes would be not result in material differences in stock option valuations. Based on the assumed value of common stock, the grant-date fair value of options granted from February 6, 2012 (inception) through September 30, 2014 was $0.
The Company has reserved a total of 7,500,000 shares of common stock for issuance under its stock award plan, and issued 1,750,000 as of March 31, 2014 and per our Company’s Stock Plan the plan re-triggers to 25% of the total outstanding shares on January 1, 2014, therefore as of September 30, 2014, the Company has a reserve of 7,750,000 shares of common stock for issuance under its stock award plan.
NOTE 5 - STOCK AND STOCK TRANSACTIONS
Preferred Stock
The Company has authorized 10,000,000 shares of preferred stock, with a par value of $0.0001 per share. The Company’s Board of Directors has the ability to determine the rights and preferences of any series of preferred stock issued. There are no shares of preferred stock currently issued or outstanding.
Common Stock
The Company has authorized 100,000,000 shares of common stock, with a par value of $0.0001 per share.
At inception (February 6, 2012), the Company issued 5,000,000 shares of common stock to Accelerated Venture Partners, LLC (“AVP”) for $2,000.
On June 26, 2012, the Company issued 26,500,000, shares of common stock to Novus Aurum Trust at par value.
On June 26, 2012, AVP tendered 1,500,000 shares to the Company for cancellation.
On June 27, 2012, the Company granted AVP an option to purchase 1,000,000 shares of common stock at par value in exchange for certain consulting services, and AVP immediately exercised this option. The Company has the option to repurchase the shares exercised under the option at par value if the below milestones are not met within a specified time.
On June 3, 2013, the Company issued Accelerated Venture Partner, LLC. 1,500,000 shares of common stock at par value of .0001 per share and the Company relinquished its rights to repurchase 1,000,000 shares of common stock that were issued to Accelerated Venture Partners, LLC on June 28, 2012.
On June 3, 2013, The Company issued Matthew Neher 8,500,000 shares of common stock at par value of .0001 per share for additional services rendered to the Company from June 2012 to June 2013.
As of September 30, 2014, there were 41,000,000 common shares issued and outstanding and 7,500,000 shares of common stock were reserved for issuance under the Company’s Stock Option Plan and 5,500,000 of these shares remained available for future issuance as of September 30, 2014. There were 59,000,000 shares of common stock available for future issuance.
NOTE 6 - INCOME TAXES
The Company has incurred net operating losses since inception. The Company has not reflected any benefit of such net operating loss carry forward in the financial statements.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.
9
GREENTECH MINING INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
(Unaudited)
Based on the level of historical taxable losses and projections of future taxable income (losses) over the periods in which the deferred tax assets can be realized, management currently believes that it is more likely than not that the Company will not realize the benefits of these deductible differences. Accordingly, the Company has provided a valuation allowance against the gross deferred tax assets.
As of September 30, 2014, the Company had a net operating loss carry forward of approximately $111,886, which will begin to expire in the tax year 2034.
Federal tax laws impose significant restrictions on the utilization of net operating loss carry forwards and research and development credits in the event of a change in ownership of the Company, as defined by the Internal Revenue Code Section 382. The Company’s net operating loss carry forwards and research and development credits may be subject to the above limitations.
The relevant FASB standard resulted in no adjustments to the Company’s liability for unrecognized tax benefits. As of the date of adoption and as of March 31, 2014 there were no unrecognizable tax benefits. Accordingly, a tabular reconciliation from beginning to ending periods is not provided. The Company will classify any future interest and penalties as a component of income tax expense if incurred. To date, there have been no interest or penalties charged or accrued in relation to unrecognized tax benefits. The Company is subject to federal and state examinations for the year 2008 forward. There are no tax examinations currently in progress.
NOTE 7 - RELATED PARTY TRANSACTIONS
The President and majority stockholder of Greentech Mining Inc. and Greentech Mining Utah LLC is Matthew Neher, a director and CEO of the Company since June 26 2012. Mr. Neher was the principal developer of the processing plant and acquired the mining claims optioned by the Company on September 17, 2012. Matthew also controls Novus Aurum Trust the majority shareholder of the Company. From inception through December 31, 2012, the Company paid $0 cash to Matthew Neher and accrued $24,700 for expenses due to Matthew Neher and Novus Aurum Trust. See Note 4 for a description of the stock transaction involving Novus Aurum Trust and Matthew Neher. See Note 6 for a description of the Option Agreement with Greentech Mining Inc Greentech Mining Utah LLC. Also see Note 8 for a description of commitments to Greentech Mining Inc. and Greentech Mining Utah LLC under the Option Agreement.
The Managing Partner of AVP is Timothy Neher, a director of the Company and the only officer of the Company prior to June 26, 2012. For the year ended September 30, 2014, the Company paid $ 200 cash to AVP and accrued $79,298 for expenses due to AVP. See Note 5 for a description of the stock transactions involving AVP. See Note 9 for a description of commitments to AVP.
Matthew Neher and Timothy Neher are brothers and there is a family relationship between our officers and directors. Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.
Other.
Matthew Neher is the founder and Chief Executive Officer of Greentech Mining, Inc. and Greentech Mining Utah since 2010 and 2011, respectively. Although Mr. Neher does not have employment agreements with these companies, he has received approximately $150,000 in loans (with no formal written agreement) and expense reimbursements over the last 24 months from these affiliates. Mr. Neher will receive compensation of an estimated combined total of $10,000 per month from Greentech Mining, Inc. and Greentech Mining Utah until a new CEO is identified and hired by these companies. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts.
10
GREENTECH MINING INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
(Unaudited)
NOTE 8 - COMMITMENTS AND CONTINGENCIES
On June 28, 2012, the Company entered into a Consulting Services Agreement with AVP. The agreement requires AVP to provide the Company with certain advisory services that include reviewing the Company’s business plan, identifying and introducing prospective financial and business partners, and providing general business advice regarding the Company’s operations and business strategy. Cash compensation of $600,000 is due upon the Company securing $10 million in available cash from funding, and an additional $300,000 is due upon the Company securing $10 million in available cash from funding (inclusive of the first $5 million). The cash compensation is to be paid to AVP at the rate of $37,500 per month. The total cash compensation to be received by AVP is not to exceed $900,000 unless the Company receives an amount of funding in excess of
$15 million. If the Company receives equity or debt financing that is an amount less than $10 million, in between $10 million and $15 million, or greater than $15 million, the cash compensation earned by the AVP under its consulting services agreement will be prorated. The Company has the option to make a lump sum payment to AVP in lieu of the monthly cash payments. The Company will allow the Consultant to invest up to an additional $5 million in any future debt or equity offering of the Company on the same terms and conditions offered to other participants in such offerings. The Consultant will not be obligated to participate in any such offerings. Accelerated Venture Partners has executed ten consulting agreements with public shell companies it formally controlled. Of the ten consulting services agreements, one was terminated by Accelerated Venture Partners, one is expired and the company has not elected to terminate the agreement and repurchase the consulting share. Furthermore, the remaining eight companies have either renewed consulting agreements with Accelerated Venture Partners or are under the original consulting agreement.
As permitted under Delaware law and in accordance with its Bylaws, Greentech Mining International indemnifies its officers and directors for certain expenses incurred from legal or other proceedings that arise as a result of the director or officer’s service to the Company. There is no limitation on the term of the indemnification and the maximum amount of potential future indemnification is unlimited. The Company currently does not have a directors and officers insurance policy that could limit its exposure and enable it to recover a portion of any future amounts paid.
From time to time, the Company may be involved in claims and other legal matters arising in the ordinary course of business. Management is not currently aware of any matters that it believes are likely to have a material adverse effect on its financial position or results of operations.
11
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Except for the historical information contained herein, the matters discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Current Report on Form 10-Q are forward-looking statements that involve risks and uncertainties. The Company’s Annual Report on Form 10-K, filed with the SEC on August 12, 2014, and Form 8-K filed on September 19, 2012 provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those implied or projected in this Current Report on Form 10-Q. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this report.
Overview
We are an exploration-stage mining company that recently acquired options to explore and operate mining activities which include a processing plant, 3,940 acres of mining claims in Utah and 60 acres of patented mining claims in Arizona. On June 15, 2014, Greentech Mining International, Inc. terminated the Operating, Exploration and Option to Purchase Agreement entered into with Greentech Mining, Inc. and Greentech Mining Utah on September 17, 2012. There was no disagreement between the parties and no legal action is pending between the parties. Before we entered into the mining option agreements we were a “blank check” company and had no operations. Shares of our common stock are not registered for resale, and accordingly there is no public trading market for our common stock. We have a very limited amount of cash and will have to raise significant funds in order to further develop our product candidates. All activities of the Company to date relate to its organization and acquiring rights to explore and produce precious metals. The Company does not have any known ore reserves according to the definition of ore reserves under Industry Guide 7 promulgated by the Securities and Exchange Commission (“SEC”). The Company did not recognize any assets or liabilities related to the Option Agreement signed on September 17, 2012. The Owner did not pass the ownership of the related assets until the first payment of one million dollar has been paid in the future and this has not occurred. Also, the carrying value of the Option Agreement is not an arm’s length transaction due to the fact both the Company and Owners are commonly controlled by Mr. Matthew Neher. Therefore, the carrying value of the Option Agreement cannot be determined until actual consideration has been paid.
Going Concern
Because we only had $2 cash at March 31, 2014, our most recent fiscal year-end, the report of our independent registered public accounting firm on our financial statements for the period ended March 31, 2014 contained an explanatory paragraph regarding their substantial doubt about our ability to continue as a going concern. Our auditors’ opinion is based upon our operating losses and our need to obtain additional financing to sustain operations. The Company’s ability to continue as a going concern is dependent upon its ability to obtain financing necessary for it to meet its obligations, explore and produce precious metals, and ultimately generate revenues from the sale of these products. Although there are no formal dates or agreements with Company’s directors, they have agreed to fund certain administrative operating expenses of the Company until the Company succeeds in raising additional funds. Management’s plans include raising additional funds through an equity financing or licensing transaction in order to meet the Company’s obligations and develop its product candidates, but funding may not be available and the Company may be unsuccessful in raising additional capital of any type. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited financial statements do not include any adjustments that might arise as a result of this uncertainty.
Critical Accounting Policies and Use of Estimates
Our significant accounting policies are more fully disclosed in Note 1 to the financial statements we included in our Annual Report on Form 10-K for the period ended March 31, 2014, filed with the SEC on August 12, 2014. However, some of our accounting policies may be more particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management. To date, due to our limited operations, we believe the only accounting policy which has required significant judgment or use of estimates, other than our assumption that we will continue as a going concern, is our estimated charge for stock-based compensation. Our accounting for stock-based compensation does not impact our current financial position, but does have a major impact on our statement of operations.
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Stock-Based Compensation
We account for stock awards granted to recipients using an estimate of the fair value of the stock award on the date that the award is granted. This estimated fair value of the stock award is recognized as an expense in the statement of operations on a straight-line basis over the vesting period of the underlying stock award, which is generally four years for stock options granted to employees. There is a high degree of subjectivity involved in estimating the input values needed to estimate the fair value of stock options and other awards. For Greentech Mining international in particular, our stock has never traded and therefore it is difficult to determine the underlying fair value of our common stock on each date a stock award is made. Changes in the estimated value of the underlying stock will materially affect the resulting estimates of the fair values of the awards that are granted. Also, the expenses recorded for stock-based compensation in our financial statements may differ significantly from the actual value realized by the recipients, and these expenses are not adjusted to the actual amounts, if any, realized. Users of the financial statements should also understand that the expenses we recognize for stock-based compensation do not result in payments of cash by us.
Recent Accounting Pronouncements
We do not believe that there are any recently issued accounting pronouncements that we have not adopted which are likely to have a material impact on our financial position, results of operations or other disclosures.
Results of Operations
During the six months ended September 30, 2014, which was the second quarter of our fiscal year ending March 31, 2015, we had no revenue and incurred general and administrative expenses of $274.
To date, our general and administrative expenses have been funded by Accelerated Venture Partners, LLC, or AVP. Expenses include legal fees, accounting fees, costs associated with SEC filings and preparation of documents. The mining equipment has been funded by Matthew Neher and Novus Aurum Trust and there is no formal agreement in place with AVP or Novus Aurum Trust for the repayment of the expenditures.
We expect that, if we are successful in securing additional capital, future general and administrative expenses will increase significantly as compared to the period ended September 30, 2014. In addition, we expect to incur exploration and processing expenses as we seek to advance our operations.
Liquidity and Capital Resource
As of September 30, 2014, we had a cash balance of only $2 in cash and $0 in other assets due to shareholder is approximately $106,288 of which $81,223 is due to AVP and $25,025 due to Matthew Neher and Novus Aurum Trust related parties. We had a stockholders’ deficit of approximately $106,288 and no means to pay the liabilities in excess of our assets. AVP has agreed to fund certain administrative operating expenses of the Company until the financing is completed.
The following is a summary of the Company's cash flows from operating, investing, and financing activities:
For the three months ended September 30, 2014
Operating activities | $ | (2,274 | ) | |
Investing activities | - | |||
Financing activities | $ | 2,276 | ||
Net effect on cash | $ | 2 |
If the Company succeeds in raising additional funds, at which point the administrative operating expenses will be due. However, AVP may seek to force earlier payment of the amounts which we owe, or AVP may decide in the future not to continue funding costs on behalf of Greentech, although we are not aware of any plans for them to do so. If we are not successful in raising additional capital, we may not be able to pay our liabilities and may have to cease operations.
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We have a consulting agreement with AVP under which AVP has agreed to provide us with certain advisory services that include reviewing our business plan, identifying and introducing prospective financial and business partners, and providing general business advice regarding our operations and business strategy. Under the consulting agreement, cash compensation of $600,000 is due to AVP upon our securing $10 million in available cash from funding, and an additional $300,000 is due upon our securing $15 million in available cash from funding (inclusive of the first $10 million). The cash compensation is to be paid to AVP at the rate of $37,500 per month. The total cash compensation to be received by AVP under the consulting agreement is not to exceed $900,000 unless we receive an amount of funding in excess of $15 million. If we receive equity or debt financing that is an amount less than $10 million, in between $10 million and $15 million, or greater than $15 million, the cash compensation earned by the AVP under its consulting services agreement will be prorated. We have the option to make a lump sum payment to AVP in lieu of the monthly cash payments.
We plan to measure our future liquidity primarily by the cash and working capital available to fund our operations, if we are ever able to raise capital. To date we have not raised any capital and, accordingly; do not have any capital available to fund our operations, as stated above. We will not be able to commercialize operating. We are evaluating various means of raising our initial capital, including through the sale of equity securities, joint venture agreements or other means. We expect to incur losses until as we have a metal product for sale, and we are unable to estimate when, if ever, we will receive revenue or have a positive cash flow.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We do not currently believe we are currently subject to any material interest rate risk, foreign currency exchange rate risk, or commodity price risk. Our ability to fund operations in the future will be subject to our ability to raise capital, which may be through the sale of equity securities. While we believe the sale of equity securities is unlikely to expose us to any material loss, we may not be able to continue operations if we are unable to agree with a buyer on a future price for our equity securities.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer (our principal executive officer principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report.
Based on this evaluation, our chief executive officer (our principal executive officer principal financial officer and principle accounting officer) concluded that as of September 30, 2014 our disclosure controls and procedures were effective. Our procedures were designed to ensure that the information relating to our company required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer, as appropriate to allow for timely decisions regarding required disclosure. Management is currently evaluating the current disclosure controls and procedures in place to see where improvements can be made.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not currently party to any material legal proceedings, although from time to time we may be named as a party to lawsuits in the normal course of business.
ITEM 1A. RISK FACTORS.
There are no material changes to our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as filed with the U.S. Securities and Exchange Commission on August 12, 2014.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. (REMOVED AND RESERVED).
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS
| Exhibit No. | Description | |
31.1 | Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. | |
31.2 | Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. | |
32.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: November 14, 2014 | |||
| GREENTECH MINING INTERNATIONAL, INC. | |||
| By: | /s/ Matthew J. Neher | ||
| Matthew J. Neher | |||
| President and Chief Executive Officer | |||
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EXHIBIT INDEX
| Exhibit No. | Description | |
31.1 | Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. | |
31.2 | Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013. | |
32.1 | Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
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