We spent ten years on research and development, independent market validation, and financial analysis to determine the most advantageous business model for exploiting what we believe to be groundbreaking technologies. The result is our breakthrough patent-pending processing system, GlyEco TechnologyTM. Our proprietary technology removes challenging pollutants from waste glycol, including esters, organic acids, high dissolved solids and high-undissolved solids. Our technology also has the added benefit of clearing oil/hydrocarbons, additives and dyes that are typically found in used engine coolants. Our quality assurance and control program, which includes independent lab testing, seeks to ensure consistently high quality, American Society for Testing and Materials (“ASTM”) standard compliant recycled material.
We have received verification from multiple American Association for Laboratory accredited (A2LA) laboratories that our recycled glycol meets the specifications of the ASTM E1177 Type EG-1 standard, which is the official standard for refinery-grade glycol.
Corporate Information
Our principal executive offices are located at 10429 S. 51st Street, Suite 235, Phoenix, AZ 85044. Our telephone number is (866) 960-1539, and our website address is www.glyeco.com. The information contained on our website is not part of this prospectus.
The Offering
| Common stock outstanding prior to the offering | | 58,190,649 shares outstanding as of August 29 , 2014 . |
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| Common stock offered by selling shareholders | | 36,344,824 shares of our issued and outstanding shares of common stock. |
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| Common stock to be outstanding after the offering | | 58,190,649 |
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Use of proceeds | | We will not receive any proceeds from the sale of common stock by the selling stockholders participating in this offering. The selling stockholders will receive all of the net proceeds from the sale of their respective shares of common stock in this offering. |
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| OTCQB Symbol | | GLYE |
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| Risk Factors | | See “Risk Factors” on page 5 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock. |
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An investment in our common stock, any warrants to purchase our common stock, or any other security that may be issued by us involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could suffer. In that case, the trading price of our shares of common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward-Looking Statements” below for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this prospectus.
Risks Related to Our Business and Financial Condition
Our limited operating history may make it difficult for us to forecast accurately our operating results. Our planned expense levels are, and will continue to be, based in part on our expectations, which are difficult to forecast accurately based on our stage of development and factors outside of our control. We may be unable to adjust spending in a timely manner to compensate for any unexpected developments. Further, business development expenses may increase significantly as we expand operations. To the extent that any unexpected expenses precede, or are not rapidly followed by, a corresponding increase in revenue, our business, operating results, and financial condition may be materially and adversely affected.
We have a history of losses that may continue, which may negatively impact our ability to achieve our business objectives. We have incurred net losses since our inception. The Company had a net loss of approximately $4,013,127 during the fiscal year ended December 31, 2013. We cannot assure you that we can achieve or sustain profitability on a quarterly or annual basis in the future. There can be no assurance that future operations will be profitable. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.
Our success depends on our ability to expand, operate, and manage successfully our operations. Our success depends on our ability to expand, operate, and manage successfully our operations. Our ability to expand successfully will depend upon a number of factors, including the following:
• the continued development of our business;
• the hiring, training, and retention of additional personnel;
• the ability to enhance our operational, financial, and management systems;
• the availability of adequate financing;
• competitive factors;
• general economic and business conditions; and
• the ability to fully implement plans for additional revenue generation.
Our independent auditors included an emphasis-of-matter paragraph in their opinion about the Company’s ability to continue as a going concern, which may hinder our ability to obtain future financing. As of June 30 , 2014, the Company has yet to achieve profitable operations and is dependent on our ability to raise capital from stockholders or other sources to sustain operations. Ultimately, we hope to achieve viable profitable operations when operating efficiencies can be realized and production capacity is increased at facilities added in 2013. Recurring losses from operations raises substantial doubt about the Company's ability to continue as a going concern. In their report dated April 15, 2014, our independent registered public accounting firm included an emphasis-of-matter paragraph with respect to our financial statements for the fiscal year ended December 31, 2013, concerning the Company’s assumption that we will continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management plans to raise additional funds through offering our shares of capital stock in private and/or public offerings of our securities and through debt financing, if available and needed. Our continued net operating losses increases the difficulty in meeting our plans and we might not be able to obtain additional financing on favorable terms, if at all, which could materially adversely affect our business and operations .
You may suffer significant dilution if we raise additional capital. If we raise additional capital, we expect it will be necessary for us to issue additional equity or convertible debt securities. If we issue equity or convertible debt securities, the price at which we offer such securities may not bear any relationship to our value, the net tangible book value per share may decrease, the percentage ownership of our current stockholders would be diluted, and any equity securities we may issue in such offering or upon conversion of convertible debt securities issued in such offering, may have rights, preferences, or privileges with respect to liquidation, dividends, redemption, voting, and other matters that are senior to or more advantageous than our common stock.
We may need to obtain additional funding to continue to implement our business strategy. If we are unable to obtain additional funding, our business operations may be harmed. We may require additional funds to sustain our operations and institute our business plan. We anticipate incurring monthly operating expenses, which includes compensation to be paid to executives, additional employees, and consultants, and legal and accounting costs, at an approximate amount of $200,000 per month, for an indefinite period of time. Additional capital will be required to effectively support our operations and to otherwise implement our overall business strategy. Even if we do receive additional financing, it may not be sufficient to sustain or expand our development operations or continue our business operations. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our development plans.
Our business model is new and unproven, which makes it difficult to evaluate our future prospects. Our proposed operations are subject to all of the risks inherent in a new business enterprise. We have had limited revenues to date on which to base an evaluation of our business and prospects. Although our management has experience operating various businesses, there can be no assurance that we will perform in a manner similar to prior projects owned or operated by our management. In addition, such other businesses’ prior performance is not necessarily indicative of the results that may be experienced by the Company or our stockholders with respect to an investment in our securities. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the startup of new businesses and the environment in which we will operate. Some of these risks relate to the potential inability to:
| n | remain informed of and maintain compliance with federal, state, local, and foreign government regulations; |
| n | acquire a sufficient number of customers and generate adequate revenue to achieve profitability; and |
| n | overcome resistance to change by customers |
As a result of our limited operating history, our plan for growth, and the competitive nature of the markets in which we plan to compete, financial projections would be of limited value in anticipating future revenue, capital requirements, and operating expenses. Further, our planned capital requirements and expense levels are difficult to forecast accurately due to our current stage of development. To the extent that these expenditures precede or are not rapidly followed by a corresponding increase in revenue or additional sources of financing, our business, operating results, and financial condition may be materially and adversely affected.
If we do not achieve broad market acceptance of our products and services, we may not be successful. Although our products and services will serve existing needs, our delivery of these products and services is unique and subject to broad market acceptance. As is typical of any new product or service, the demand for and market acceptance of these products and services are highly uncertain. We cannot assure you that any of our products and services will be commercialized on a widespread basis. The commercial acceptance of our products and services may be affected by a number of factors, including the willingness of entities to provide us with waste glycol and businesses to be willing to pay a premium for our proprietary recycled output. If the markets for our products and services fail to develop on a meaningful basis, if they develop more slowly than we anticipate, or if our products and services fail to achieve sufficient market acceptance, our business and future results of operations could be adversely affected.
Our failure to protect our intellectual property rights may undermine our competitive position, and litigation to protect our intellectual property rights or defend against third-party allegations of infringement may be costly. Our success will depend in part on our ability to obtain and enforce patent protection for our production process in the United States and other countries. We have filed applications for patents covering our process. Patents may not be issued for any pending or future patent applications owned by or licensed to us, and the claims allowed under any issued patents may not be sufficiently broad to protect our technology. Any issued patents owned by or licensed to us may be challenged, invalidated, or circumvented, and the rights under these patents may not provide us with competitive advantages. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for competitors to capture increased market position. We could incur substantial costs to defend suits brought against us or suits in which we may assert our patent rights against others. An unfavorable outcome of any such litigation could materially adversely affect our business and results of operations.
We may also rely on trade secrets and proprietary know-how with which we seek to protect our processes, in part by confidentiality agreements with our collaborators, employees, and consultants. Nevertheless, these agreements afford only limited protection, and the actions we take to protect our intellectual property rights may not be adequate. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently developed by our competitors. As a result, third parties may infringe or misappropriate our proprietary technologies or other intellectual property rights, which could have a material adverse effect on our business, financial condition, or operating results.
In addition, policing unauthorized use of proprietary technology can be difficult and expensive. Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets, or determine the validity and scope of the proprietary rights of others. We cannot assure you that the outcome of any litigation will be in our favor. Intellectual property litigation may be costly and may divert management attention, as well as expend our other resources away from our business. An adverse determination in any such litigation will impair our intellectual property rights and may harm our business, prospects, and reputation. In addition, we have no insurance coverage against litigation costs and would have to bear all costs arising from such litigation to the extent we are unable to recover them from other parties. The occurrence of any of the foregoing could have a material adverse effect on our business, results of operations, and financial condition.
Our business plan and our growth rely on being able to procure significant waste glycol. Although we believe that waste glycol in excess of the quantities that we will need to support our growth will be available, we cannot be certain that we will be able to obtain such quantities. Any failure to obtain such quantities could have a material adverse effect on our business, prospects, or financial results.
Disruptions in the supply of feedstock or significant increases in the prices of feedstock could have an adverse effect on our business. We depend on the continuing availability of raw materials, including feedstock, to continue production and sales. A serious disruption in supply of feedstock, or significant increases in the prices of feedstock, could significantly reduce the availability of raw materials at our processing centers. Additionally, increases in production costs could have a material adverse effect on our business, results of operations and financial condition. For example, there are enough competitors vying for waste antifreeze from the automotive industry that supply can be difficult to find at times. Similar supply and feedstock cost issues have been seen in the waste lube oil market.
Operation of our New Jersey processing center and the GlyEco Technology™ at our New Jersey processing center are dependent upon a Manufacturing and Distribution Agreement entered into with Full Circle Manufacturing Group, Inc. Our New Jersey processing center is currently operated at our direction by Full Circle Manufacturing Group, Inc., a New Jersey corporation (“Full Circle”), pursuant to the terms of a Manufacturing and Distribution Agreement entered into on December 10, 2012, between Full Circle and GlyEco Acquisition Corp. #4, an Arizona corporation and wholly-owned subsidiary of the Company. Our operation of the New Jersey processing center and the implementation of the GlyEco Technology™ at our New Jersey processing center are dependent upon this agreement remaining in effect. The agreement is subject to termination by Full Circle should we materially breach any of its terms.
We can provide no assurance that the upgrades to our GlyEco Technology™ at our New Jersey processing center will go as planned. While we expect the upgrades to our GlyEco Technology™ to produce increased volumes of ASTM E1177 Type EG-1 material and other glycol products, the upgrades at our New Jersey processing center may fail to produce such increased volumes due to circumstances either within or outside of our control. Any such failure could have a material adverse effect on our business, prospects, or financial results.
Environmental, health and safety requirements could expose us to material obligations and liabilities and affect our profitability. We are subject to federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment, including those governing discharges to air and water, handling and disposal practices for solid and hazardous wastes, and occupational health and safety. The consequence for violating such requirements can be material. We have made and will continue to make capital and other expenditures to comply with environmental and health and safety requirements. In addition, if a release of hazardous substances occurs on or from our properties or any offsite disposal location where our wastes have been disposed, or if contamination from prior activities is discovered at any of our properties or third-party owned properties that we or our predecessors formerly owned or operated, we may be subject to liability arising out of such conditions and the amount of such liability could be material. Liability can include, for example, costs of investigation and cleanup of the contamination, natural resource damages, damage to properties and personal injuries.
Failure to obtain and/or maintain all necessary licenses and permits may significantly affect our profitability. The regulation of our industry varies from state to state. Some states require that a license or permit be obtained in order to process waste glycol. Failure to obtain and/or maintain such permits may significantly affect our profitably and could also expose us to material liabilities.
We are dependent upon our key personnel and our shares have no voting rights except as required by applicable law. Our success is largely dependent upon the personal efforts and abilities of our management and certain other key personnel as the recycled glycol industry is complex. We are substantially dependent upon the continued services of John Lorenz, our founder, and Chief Executive Officer. As a director and our Chief Executive Officer, Mr. Lorenz will have significant authority to control our business strategy and our other business decisions. The holders of any of our equity securities will have no right or power to take part in the management of the Company, unless required by applicable law or our governing documents. Accordingly, no prospective investor should acquire any of our equity securities without being willing to entrust all aspects of the management of the Company to Mr. Lorenz. Additionally, we are dependent upon Richard Geib, our Chief Technical Officer. Mr. Geib is one of the members of our team who has significant contacts and experience in the recycled glycol industry. To date, we have not entered into Employment Agreements with Messrs. Lorenz and Geib. The loss of Messrs. Lorenz or Geib could have a material adverse effect on our results of operations and financial condition. We intend to explore key-man insurance on such individuals, but we presently have no such insurance and there can be no assurance that such individuals are insurable or insurable at commercially reasonable rates.
Our ability to operate the Company effectively could be impaired if we fail to attract additional key personnel. Our ability to operate our businesses and implement our strategies depends, in part, on the efforts of our management and certain other key personnel. However, our future success will depend on, among other factors, our ability to attract and retain additional qualified personnel, including research professionals, technical sales professionals, and engineers. Our failure to attract or retain these additional qualified personnel could have a material adverse effect on our business or business prospects.
Messrs. Lorenz and Geib have agreed to certain invention assignment and confidentiality restrictions that we may not be able to enforce. Messrs. Lorenz and Geib are not parties to and are not restricted by any non-competition or non-solicitation agreement. As the primary members of our management team, Messrs. Lorenz and Geib will be exposed to all of our confidential information and will develop all of our corporate strategies. We cannot be certain that Messrs. Lorenz or Geib will not compete with the Company in the future. Moreover, we cannot be certain that the invention assignment and confidentiality restrictions set forth in the nondisclosure agreements will be enforceable under applicable law. Even if a dispute arises that is ultimately resolved in our favor, any litigation associated with such invention assignment, and confidentiality restrictions could be time consuming, costly, and distract our focus from effectuating our business plan.
Our inability to obtain other raw materials, component parts, and/or finished goods in a timely and cost-effective manner from suppliers would adversely affect our ability to process glycol. We purchase raw materials and component parts from suppliers to be used in the processing of our products. In addition, we purchase certain finished goods from suppliers. Changes in our relationships with suppliers or increases in the costs of purchased raw materials, component parts, or finished goods could result in processing interruptions, delays, inefficiencies, or our inability to market products. In addition, our profit margins would decrease if prices of purchased raw materials, component parts, or finished goods increase and we are unable to pass on those increases to our customers.
We may continue to grow through acquisitions, which would either dilute ownership of our existing stockholders or increase interest expense. In connection with any future acquisitions, we may have to pay cash, incur debt, or issue equity securities to pay for the acquisition, any of which could adversely affect our financial results. The issuance or sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders, perhaps significantly depending on the terms of such acquisition. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
Our efforts to grow through acquisitions may be affected by a decrease in qualified targets and an increase of cost to acquire. We may not be able to continue to identify attractive acquisition opportunities or successfully acquire those opportunities identified. Also, competition for acquisition targets may escalate, increasing our cost of making further acquisitions or causing us to refrain from making additional acquisitions.
Businesses we acquire may have undisclosed liabilities. In pursuing our acquisition strategy, our due diligence investigations of the acquisition candidates may fail to discover certain undisclosed liabilities. If we acquire a company having undisclosed liabilities such as environmental, remediation or contractual, as a successor owner we may be responsible for such undisclosed liabilities. We try to minimize our exposure to such liabilities when we can by conducting due diligence, by obtaining indemnification from each sellers of the acquired companies, by deferring payment of a portion of the purchase price as security for the indemnification and by acquiring only specified assets. However, we cannot assure you that we will be able to obtain indemnification or that any indemnification obtained will be enforceable, collectible or sufficient in amount, scope or duration to fully offset any undisclosed liabilities arising from our acquisitions.
Litigation brought by third parties claiming infringement of their intellectual property rights or trying to invalidate intellectual property rights owned or used by us may be costly and time consuming. We may face lawsuits from time to time alleging that our products infringe on third-party intellectual property, and/or seeking to invalidate or limit our ability to use our intellectual property. If we become involved in litigation, we may incur substantial expense defending these claims and the proceedings may divert the attention of management, even if we prevail. An adverse determination in proceedings of this type could subject us to significant liabilities, allow our competitors to market competitive products without a license from us, prohibit us from marketing our products or require us to seek licenses from third parties that may not be available on commercially reasonable terms, if at all.
We may not be able to manage our growth. We believe that our future success depends on our ability to manage the rapid growth that we have experienced, and the continued growth that we expect to experience organically and through acquisitions. Our growth places additional demands and responsibilities on our management to, among other things, maintain existing customers and attract new customers, recruit, retain and effectively manage employees, as well as expand operations and integrate customer support and financial control systems. The following factors could present difficulties to us: lack of sufficient executive-level personnel to the facility level, increased administrative burden, lead times associated with acquiring additional equipment; availability of suitable acquisition candidates; sufficient availability of trucks, rail cars, and processing equipment to receive and ship glycol; and the ability to provide focused service attention to our customers.
We are dependent on third parties for the manufacturing of our equipment. We do not manufacture our equipment. Accordingly, we rely on a number of third party suppliers to manufacture equipment. The supply of third party equipment could be interrupted or halted by operational problems of such suppliers or a significant decline in their financial condition. If we are not able to obtain equipment, we may not be able to compete successfully for new business, complete existing engagements profitably, or retain our existing customers. Additionally, if we are provided with defective equipment, we may be subject to reputational damage or product liability claims which may negatively impact our reputation, financial condition, and results of operations.
Our failure to keep pace with technological developments may adversely affect our operations and financial results. We believe that we have made a significant technological advance in the processing of waste glycol; however, others may be developing future technological advances. The introduction of products or processes utilizing new technologies we are not aware of or have considered could render our existing products or processes obsolete or unmarketable. Our success will depend upon our ability to take advantage of our technological developments and address increasingly sophisticated customer requirements. We may not be successful in identifying, developing, and marketing new products, applications, and processes and product or process enhancements. We may experience difficulties that could delay or prevent the successful development, introduction, and marketing of product or process enhancements or new products, applications, or processes. Our products, applications, or processes may not adequately meet the requirements of the marketplace and achieve market acceptance. Our business, operating results, and financial condition could be materially and adversely affected if we were to incur delays in developing new products, applications, or processes or product or process enhancements or if our products do not gain market acceptance.
We may face significant competition. Currently, there are approximately 25 to 30 small and mid-sized companies throughout North America that recycle glycol, antifreeze, and/or other glycol-based liquids. None of these companies presently are dominant in the industry and the industry is generally fragmented and in a preliminary stage of development. However, there can be no assurance that large, well-recognized companies with substantial resources and established relationships will not enter into our market and compete with us. It is possible that a group will attempt to purchase multiple glycol recycling companies as part of an overall roll-up business strategy. Additionally, potential competitors may have greater financial, technical, marketing, and sales resources that will permit them to (i) react more quickly to emerging product and service offerings and changes in customer requirements, and (ii) devote greater resources to the development, promotion, and sale of competing products or services. Accordingly, it is possible that new competitors or alliances among current and new competitors may emerge and rapidly gain significant market share.
We have limited control over the prices that we charge for our products. The prices of glycol in 2012 and 2013 were higher than the average sales price over the last nine or ten years. The primary force driving those high prices was a tight worldwide supply/demand balance and a shortage of supply/capacity in the United States. We expect that new plants throughout the world may be opened in the next few years for virgin glycol production. We expect that these new plants will return supply/demand to a reasonable balance. Accordingly, we expect that the prices that we will be able to charge for our products will decline over time, which could reduce our revenues and adversely affect our profitability. Additionally, if our products gain acceptance and attract the attention of competitors, we may experience pressure to decrease the prices we charge for our products, which could adversely affect our revenue and our gross margin. If we are unable to offer our products at acceptable prices, or if we fail to offer additional products with sufficient profit margins, our revenue growth will slow, our margins may shrink, and our business and financial results will suffer.
Due to the rising cost of ethylene glycol, antifreeze producers are offering base fluids other than ethylene glycol. The primary competing base fluid is glycerin. Glycerin is becoming more available in the market because it is a by-product of bio-diesel fuel production, which is growing rapidly in the United States. Companies such as Cummins produce and market a glycerin-based antifreeze. Glycerin has properties similar to those of ethylene glycol when it is diluted with water, as in antifreeze. Major changes would have to be made in the industry if it were to shift to an all glycerin base fluid. If such other base fluids, like glycerin, become accepted in the marketplace, competition could increase, demand could fall, and our prices could be adversely affected. Accordingly, if such a situation occurs, our revenue growth will slow, our margins will shrink, and our business and financial results will suffer.
If the use of our recycled glycol harms people or equipment, we could be subject to costly and damaging product liability claims. We could face costly and damaging claims arising from applicable laws governing our products and operations. Because our industry is highly regulated, if our products do not comply with regulatory requirements, we may be exposed to product liability risk. Our product liability insurance may not cover all potential liabilities or may not completely cover any liability arising from any such litigation. Moreover, we may not have access to liability insurance or be able to maintain the insurance on acceptable terms.
A continued downturn in the United States economy could have a material adverse effect on our ability to effectuate our business plan and our financial results. Our ability to achieve our goals depends heavily on varying conditions in the United States economy. The United States economy is currently experiencing a prolonged downturn and there can be no assurance that the United States economy will emerge from such downturn and experience significant levels of growth in the near future. Certain end-use applications for glycol experience demand cycles that are highly correlated to the general economic environment, which is sensitive to a number of factors outside of our control. Additionally, the industrial markets in which we compete are subject to considerable cyclicality, and move in response to cycles in the overall business environment. Therefore, downturns in the United States economy are likely to result in decreases in demand for our products. A continued downturn or deepening of the downturn could decrease demand for our products or could otherwise adversely affect the prices at which we charge for recycled glycol. Moreover, a continued downturn or deepening of the downturn in the specific areas of the economy in which we operate our business, could have a material adverse effect on our ability to effectuate our business plan and our financial results. We are not able to predict the timing, extent, and duration of the economic cycles in the markets in which we operate.
Market regulation may affect our business plan. We intend to conduct business in the glycol recycling industry in North America. We are unable to predict changes in governmental regulations or policies that may influence or inhibit our ability to deliver compliant products and services to market. The recycled glycol industry is highly regulated and is subject to changing political, regulatory, and other influences. Forced changes through legislation and regulations adopted by United States, state, or foreign governmental agencies may disrupt our business processes and strategies. Continued compliance with newly enacted rules and regulations could be costly and require complex changes in our products and operations. We are unable to predict future rules or regulations with any certainty or to predict the effect they would have on our business, products, or services. Accordingly, there is significant uncertainty concerning competitive pressures and the impact on our actual and prospective customers. There can be no assurance that heightened or new regulations will not come into effect or that such regulation will not have a detrimental impact on the Company and our planned business.
If we cannot maintain adequate insurance coverage, we will be unable to continue certain operations. Our business exposes us to various risks, including claims for causing damage to property and injuries to persons that may involve allegations of negligence or professional errors or omissions in the performance of our services. Such claims could be substantial. We believe that our insurance coverage is presently adequate and similar to, or greater than, the coverage maintained by other similarly situated companies in our industry. If we are unable to obtain adequate or required insurance coverage in the future, or if such insurance is not available at affordable rates, we could be in violation of permit conditions or the other requirements of environmental laws, rules, and regulations under which we operate. Such violations could render us unable to continue our operations. These events could result in an inability to operate certain assets and significantly impair our financial condition.
Our insurance policies do not cover all losses, costs, or liabilities that we may experience. We maintain insurance coverage, but these policies do not cover all of our potential losses, costs, or liabilities. We could suffer losses for uninsurable or uninsured risks, or in amounts in excess of our existing insurance coverage, which would significantly affect our financial performance. Our insurance policies also have deductibles and self-retention limits that could expose us to significant financial expense. Our ability to maintain adequate insurance may be affected by conditions in the insurance market over which we have no control. The occurrence of an event that is not fully covered by insurance could have a material adverse effect on our business, financial condition, and results of operations. In addition, our business requires that we maintain various types of insurance. If such insurance is not available or not available on economically acceptable terms, our business would be materially and adversely affected.
Current uncertainty in the global financial markets and the global economy may negatively affect our financial results. Current uncertainty in the global financial markets and economy may negatively affect our financial results. These macroeconomic developments could negatively affect our business, operating results or financial condition in a number of ways which, in turn, could adversely affect our stock price. A prolonged period of economic decline could have a material adverse effect on our results of operations and financial condition and exacerbate some of the other risk factors described herein. Our customers may defer purchases of our products, licenses, and services in response to tighter credit and negative financial news or reduce their demand for them. Our customers may also not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us or ultimately cause the customer to file for protection from creditors under applicable insolvency or bankruptcy laws. We rely upon timely payment by our customers in order to be able to make timely payments to our vendors and employees.
In addition, our operating results and financial condition could be negatively affected if, as a result of economic conditions, either:
| n | the demand for, and prices of, our products, licenses, or services are reduced as a result of actions by our competitors or otherwise; or |
| n | our financial counterparts or other contractual counterparties are unable to, or do not, meet their contractual commitments to us. |
Certain conflicts of interests exist. Certain persons or entities affiliated with the law firms that have acted as corporate counsel or securities counsel and accounting consultants to the Company, directly or indirectly, own shares of our capital stock and/or options or agreements to acquire shares of our capital stock. Potential conflicts exist by virtue of these ownership positions by legal service providers.
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer. In the ordinary course of business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of our customers and employees, in our data centers and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties, disrupt our operations and the services we provide to customers, and damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business/operating margins, revenues and competitive position.
Seasonal weather conditions and natural disasters could severely disrupt normal operations and harm our business. We currently operate in the northern, mid-western, and eastern United States. These areas are adversely affected by seasonal weather conditions, primarily in the winter and spring. During periods of heavy snow, ice, or rain, our customers may curtail their operations or we may be unable to move our trucks to provide services, thereby reducing demand for, or our ability to provide services and generate revenues. The regions in which we operate have in the past been, and may in the future be, affected by natural disasters such as hurricanes, windstorms, floods, and tornadoes. Future natural disasters or inclement weather conditions could severely disrupt the normal operation of our, or our customers’, business and have a material adverse effect on our financial condition and results of operations.
Operational and Structural Risks
The introduction of new accounting rules, laws or regulations could adversely impact our results of operations. Complying with new accounting rules, laws or regulations could adversely impact our results of operations or cause unanticipated fluctuations in our results of operations in future periods.
We can provide no assurances as to our future financial performance or the investment result of a purchase of our common stock. Any projected results of operations involve significant risks and uncertainty, should be considered speculative, and depend on various assumptions which may not be correct. The future performance of our Company and the return on our common stock depends on a complex series of events that are beyond our control and that may or may not occur. Actual results for any period may or may not approximate any assumptions that are made and may differ significantly from such assumptions. We can provide no assurance or prediction as to our future profitability or to the ultimate success of an investment in our common stock.
The compensation we pay to our executive officers and employees will likely increase, which will affect our future profitability. We believe that the compensation we have historically paid to our executive officers is within the lower quartile of compensation paid by peer companies. An increase in compensation and bonuses payable to our executive officers and employees could decrease our net income.
As a public reporting company, we are subject to corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business. We may face new corporate governance requirements under the Sarbanes-Oxley Act of 2002 (“SOX”), as well as new rules and regulations subsequently adopted by the SEC and the Public Company Accounting Oversight Board. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. We are required to evaluate our internal control over financial reporting under Section 404 of SOX (“Section 404”). We are a smaller reporting company as defined in Rule 12b-2 under the Exchange Act. Section 404 requires us to include an internal control report with our Annual Report on Form 10-K. The report must include management’s assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. The internal control report for the year ended December 31, 2013 included disclosure of a material weaknesses in internal control over financial reporting that we have identified and are currently working to remediate. Failure to comply, or any additional adverse results from such evaluation, could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading price of our securities. We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404. The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial. We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters. Failure to comply with these laws, rules, and regulations could materially adversely affect our reputation, financial condition, and the value of our securities.
As a public company, we will have significant operating costs relating to compliance requirements and our management is required to devote substantial time to compliance initiatives. Our management has only limited experience operating the Company as a public company. To operate effectively, we will be required to continue to implement changes in certain aspects of our business and develop, hire, manage, and train management level and other employees to comply with on-going public company requirements. Failure to take such actions, or delay in the implementation thereof, could have a material adverse effect on our business, financial condition, and results of operations.
SOX, as well as rules subsequently implemented by the SEC, imposes various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
Risks Related to our Common Stock
We have not paid cash dividends in the past and do not expect to pay cash dividends in the future. Any return on investment may be limited to the value of our common stock. We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant.
There is no active market for our common stock. One may never develop or if developed, be sustained and you could lose your investment in our common stock. Currently, our common stock is quoted on the OTCQB under the symbol “GLYE.” Our common stock currently trades in small volumes. There can be no assurance that any trading market will ever develop or be maintained on the OTCQB. Any trading market that may develop in the future for our common stock will most likely be very volatile; and numerous factors beyond our control may have a significant effect on the market. The market price of our common stock may also fluctuate significantly in response to the following factors, some which are beyond our control:
· actual or anticipated variations in our quarterly operating results;
· changes in securities analysts’ estimates of our financial performance;
· changes in market valuations of similar companies;
· increased competition;
· announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new products or product enhancements;
· loss of a major customer or failure to complete significant transactions;
· additions or departures of key personnel; and
· the number of shares in our public float.
In recent years, the stock market in general has experienced extreme price fluctuations that have oftentimes been unrelated to the operating performance of the affected companies. Similarly, the market price of our common stock may fluctuate significantly based upon factors unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock.
Our common stock is a "penny stock" under the rules of the SEC and the trading market in our securities will be limited, which makes transactions in our common stock cumbersome and may reduce the value of an investment in our common stock. The Securities and Exchange Commission (“SEC”) has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
| n | that a broker or dealer approve a person's account for transactions in penny stocks; and |
| n | the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
In order to approve a person's account for transactions in penny stocks, the broker or dealer must:
| n | obtain financial information and investment experience objectives of the person; and |
| n | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
| n | sets forth the basis on which the broker or dealer made the suitability determination; and |
| n | that the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our stock. In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements regarding the Company, which are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. Forward-looking statements in this prospectus may include, for example, statements about:
| · | any projections of earnings, revenue or other financial items; |
| · | any statements of the plans, strategies and objectives of management for future operations; |
| · | any statements concerning proposed new products, services or developments; |
| · | any statements regarding future economic conditions or performance; |
| · | any statements or belief; and |
| · | any statements of assumptions underlying any of the foregoing. |
These forward-looking statements involve various risks and uncertainties. Although we believe our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Our Business” and other sections in this prospectus. You should read this prospectus and the documents we refer to thoroughly with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance.
The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents we refer to in this prospectus and have filed as exhibits to this prospectus completely and with the understanding that our actual future results may be materially different from what we expect.
We will not receive any proceeds from the sale of common stock by the selling stockholders participating in this offering. The selling stockholders will receive all of the net proceeds from the sale of their respective shares of common stock in this offering.
MARKET PRICE OF OUR COMMON STOCK
Our common stock is listed on the OTCQB under the symbol “GLYE.” The closing price of our common stock on the OTCQB on August 29 , 2014, was $0. 75 per share. Our common stock has been listed on the OTCQB since February 2012. Prior to that time, there was no public market for our common stock.
The following table sets forth, on a per share basis for the periods indicated, the high and low sale prices for the common stock as reported by the OTC Bulletin Board system. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Stockholders
As of August 29 , 2014, there were approximately 970 shareholders of record for our common stock. This does not include shareholders holding stock in street name in brokerage accounts.
Stock Transfer Agent
The Company’s transfer agent is Olde Monmouth Stock Transfer Co. Inc. located at 200 Memorial Parkway, Atlantic Highlands, NJ 07716. The transfer agent’s phone number is (732) 872-2727, and its website is www.oldemonmouth.com.
Cash Dividends
We have never paid cash dividends on our common stock, and it is unlikely that we will pay any dividends in the foreseeable future. We currently intend to invest future earnings, if any, to finance expansion of our business. Any payment of cash dividends in the future will be dependent upon our earnings, financial condition, capital requirements, and other factors deemed relevant by our Board of Directors.
We are not offering any shares of our common stock by this prospectus. All shares of the common stock that are being registered are beneficially owned by the selling shareholders and are issued and outstanding. Accordingly, the sale of the registered shares will not have a dilutive effect to potential shareholders since the common stock to be sold will already be issued and outstanding.
As of June 30 , 2014, our net tangible book value per share is $0. 16 based on shares outstanding of 51, 922,009 and tangible assets of $ 11,165,461 and total liabilities of $2, 924,461 as reported in our latest unaudited financial statements for the quarter ended June 30 , 2014.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with our financial statements and related notes contained elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors,” and elsewhere in this prospectus.
Company Overview
We are a green chemistry company that collects and recycles waste glycol into a reusable product that is sold to third party customers in the automotive and industrial end-markets. Our proprietary technology, GlyEco TechnologyTM, allows us to recycle all five major types of waste glycol into a virgin-quality product usable in any glycol application. We are dedicated to conserving natural resources, limiting liability for waste generators, safeguarding the environment, and creating valuable green products.
We currently operate seven processing centers in the United States. These processing centers are located in (1) Minneapolis, Minnesota, (2) Indianapolis, Indiana, (3) Lakeland, Florida, (4) Elizabeth, New Jersey (the “NJ Processing Center), (5) Rock Hill, South Carolina, (6) Tea, South Dakota, and (7) Landover, Maryland.
Results of Operations
Fiscal Year Ended December 31, 2013 to Fiscal Year Ended December 31, 2012
Net Sales
For the fiscal year ended December 31, 2013, Net Sales were $5,538,005, compared to $1,266,295 for the year ended December 31, 2012, an increase of $4,271,710 or 337.3%. The increase in Net Sales was due to increased production capabilities and corresponding sales from new facilities added in 2013. New facilities added in 2013 accounted for 56% of the revenues for 2013 and 62% of the gallons sold for 2013. Facilities generating revenue in 2012 increased revenues by 93% in 2013 primarily due to a full year of activity included in 2013 and an increase in production and sales activities at these locations as compared to the prior year.
Cost of Goods Sold
For the fiscal year ended December 31, 2013, our Costs of Good Sold was $5,193,445, compared to $1,021,332 for the fiscal year ended December 31, 2012, representing an increase of $4,172,113, or approximately 408.5%. The increase in Cost of Goods Sold was due to the associated Cost of Goods Sold from increased production capabilities from new facilities added in 2013. New facilities added in 2013 accounted for 58% of the Cost of Goods Sold for the year ending 2013. Facilities generating revenue in 2012 increased Cost of Goods Sold by 115% in 2013 primarily due to a full year of activity included in 2013 and an increase in production costs at these locations as compared to the prior year. Cost of Goods Sold consists of all costs of sales, including costs to purchase, transport, store and process the raw materials, and overhead related to product manufacture and sale. We sometimes receive raw materials (used antifreeze) at no cost to the Company, which can have an impact on our reported consolidated gross profit.
Gross Profit
For the fiscal year ended December 31, 2013, we realized a gross profit of $344,560, compared to $244,963 for the year ended December 31, 2012, an increase of $99,597 or 40.7%. The increase in gross profit was primarily due to an increase in production capabilities from new facilities added in 2013 and related sales growth. Our gross profit margin for the year ended December 31, 2013 was approximately 6.2%, compared to approximately 19.3% for the year ended December 31, 2012. The decrease in gross profit margin is primarily attributable to additional, one-time costs for the integration, training, and process standardization at our facilities, which were expensed as incurred. These additional costs at times caused the production costs per unit to exceed the revenues per unit produced at certain facilities. We expect production costs per unit in the future to decrease as the integration of our facilities is completed through 2014.
Operating Expenses
For the year ended December 31, 2013, operating expenses increased to $3,763,352 from $1,930,439 for the year ended December 31, 2012, representing an increase of $1,832,913, or approximately 95.0%. Operating expenses consist of Consulting Fees, Salaries and Wages, Share-based compensation, Legal and Professional Fees and General and Administrative Expenses. This increase is attributable to our expansion through acquisition and the establishment of the necessary infrastructure for our current and planned future scope of operations.
Consulting Fees consist of marketing, administrative and management fees paid under consulting agreements. Consulting Fees increased to $680,196 for the fiscal year ended December 31, 2013, from $623,949 for the fiscal year ended December 31, 2012, representing an increase of $56,247, or approximately 9.0%. The increase is primarily attributable to our current year expansion into new markets and the desire to maintain continuity of leadership while integrating recent acquisitions.
Salaries and Wages consist of wages and the related taxes. Salaries and Wages increased to $830,677 for the year ended December 31, 2013, from $467,023 for the year ended December 31, 2012, representing an increase of $363,654, or 77.9%. The increase is due to the additional hiring of employees and salary increases attributable to the new operations and related administrative support for activities added in 2013.
Share-Based Compensation consists of options issued to consultants and employees in consideration for services provided to the Company. Share-Based Compensation increased to $1,065,288 for the year ended December 31, 2013, from $124,660 for the year ended December 31, 2012, representing an increase of $940,628, or 755.0%. The increase is due to an increase in the issuance of 1,787,400 compensatory options and 1,439,560 compensatory warrants to reward and provide an incentive to our consultants and employees and align their interest with our shareholders while conserving cash for expanding operations and investing activities.
Legal and Professional Fees consist of legal, outsourced accounting services, corporate tax and audit services. For the fiscal year ended December 31, 2013, Legal and Professional Fees decreased to $286,728 from $300,674 for the fiscal year ended December 31, 2012, representing a decrease of $13,946 or approximately 4.6%. The decrease is due to a reduction in the outsourcing of legal and professional work. This work is now increasingly performed in house as we expand our staff and add qualified personnel to support our current and planned scope of operations.
General and Administrative (G&A) Expenses consist of general operational costs of our business. For the fiscal year ended December 31, 2013, G&A Expenses increased to $900,463 from $414,133 for the fiscal year ended December 31, 2012, representing an increase of $486,330, or approximately 117.43%. This increase is primarily due to the amortization of intangible assets relating to new facilities in 2013, and the associated costs of building out our administrative infrastructure to support future growth of the Company.
Other Income and Expenses
For the fiscal year ended December 31, 2013, Other Income and Expenses increased to $594,335 from $184,355 for the fiscal year ended December 31, 2012, representing an increase of $409,980, or approximately 222.4%. Other Income and Expenses consist primarily of interest income, and interest expense.
Interest Income consists of the interest earned on the Company’s corporate bank account. Interest Income for the fiscal year ended December 31, 2013 increased to $2,496 from $1,206 for the fiscal year ended December 31, 2012, representing an increase of $1,290 or approximately 107%. The increase was due to increased cash to support increased working capital requirements associated with new facilities in 2013.
Interest Expense consists of interest on the Company’s outstanding indebtedness. For the fiscal year ended December 31, 2013, Interest Expense increased to $592,788 from $185,561 for the fiscal year ended December 31, 2012, representing an increase of $407,227 or approximately 219.4%. The increase was mainly due to the interest expense related to the Company's capital lease obligation and the expense associated with the warrants issued in 2013 for the Frenkel Conversion Agreement discussed under Liquidity and Capital Resources, which was partially offset by reduced interest expense associated with the convertible note payable.
Six Months Ended June 30 , 2014 to Six Months Ended June 30 , 2013
Net Sales
For the six -month period ended June 30 , 2014, Net Sales were $ 3,260,031 , compared to $ 2,650,140 for the six -month period ended June 30 , 2013, an increase of $ 609,891 , or 23 %. The increase in Net Sales was due to increased production capabilities and corresponding sales from new facilities added in 2013. The volume of recycled glycol sold increased by approximately 55 % while the average price decreased by approximately 8 % as compared to the same period in the prior year. New facilities added in 2013 accounted for 75 % of the revenues for the second quarter of 2014 and 79 % of the gallons produced for the second quarter of 2014.
Cost of Goods Sold
For the six -month period ended June 30 , 2014, our Costs of Good Sold was $ 3,290,680 , compared to $ 2,107,446 for the six -month period ended June 30 , 2013, representing an increase of $ 1,183,234 , or approximately 56 %. The increase in Cost of Goods Sold was due to the associated Cost of Goods Sold from increased production capabilities from new facilities added in 2013. In addition, the costs associated with the increases in staffing, fixed production costs, operations testing, quality control procedure development and proprietary production process implementation necessary to support our future expected production levels increased Cost of Goods Sold during the period. Cost of Goods Sold consists of all costs of sales, including costs to purchase, transport, store and process the raw materials, and overhead related to product manufacture and sale. We sometimes receive raw materials (used antifreeze) at no cost to the Company, which can have an impact on our reported consolidated gross profit.
Gross Profit
For the six -month period ended June 30 , 2014, we realized a gross loss of $( 30,649 ), compared to a gross profit of $542,694 for the six -month period ended June 30 , 2013, a decrease of $ 573,343 , or 106 %. The decrease in gross profit was primarily due to continued higher operating costs to support future T1 TM production prior to completion of production through put at our NJ facility of T1 material. Our gross profit margin for the six -month period ended June 30 , 2014, was approximately ( 1 )%, compared to approximately 20 % for the six -month period ended June 30 , 2013. We expect our gross profit margin to increase as construction in progress is finalized, output testing is completed and T1 TM production and sales begin at our NJ facility. Current operating results and margins were negatively impacted for the six months ended June 30, 2014 by the increased costs discussed above. These costs increase the average cost of producing recycled glycol without the associated increase in sales price that we anticipate once we achieve planned production levels of our T1 TM product. We have forecasted that T1 TM production capacity will be 4 to 6 million gallons at an expected gross margin in excess of 30% once production is fully operational at our New Jersey facility .
Operating Expenses
For the six -month period ended June 30 , 2014, operating expenses increased to $ 2,179,580 from $ 1,116,215 for the six -month period ended June 30 , 2013, representing an increase of $ 1,063,365 or approximately 95%. Operating expenses consist of Consulting Fees, Salaries and Wages, Share-based compensation ,, Legal and Professional Fees and General and Administrative Expenses. This increase is attributable to our expansion through acquisition and the establishment of the necessary infrastructure for our current and planned future scope of operations.
Consulting Fees consist of marketing, administrative and management fees paid under consulting agreements. Consulting Fees decreased to $ 285,910 for the six -month period ended June 30 , 2014, from $ 348,715 for the six -month period ended June 30 , 2013, representing a decrease of $62,805, or approximately 18%. The decrease is primarily attributable to the hiring of some consultants as employees.
Salaries and Wages consist of wages and the related taxes. Salaries and Wages increased to $ 515,154 for the six -month period ended June 30 , 2014, from $ 348,557 for the six -month period ended June 30 , 2013, representing an increase of $ 166,597 , or 48 %. The increase is due to the hiring of additional employees attributable to the new operations and related administrative support for activities added in 2013.
Share-Based Compensation consists of options issued to consultants and employees in consideration for services provided to the Company. Share-Based Compensation increased to $ 711,532 for the six -month period ended June 30 , 2014, from zero dollars for the six -month period ended June 30 , 2013, representing an increase of $ 711,532 , or 100%. The increase is due to the issuance of 537,172 compensatory options and 204,689 shares of common stock to reward and provide an incentive to our consultants and employees and align their interest with our shareholders while conserving cash for expanding operations and investing activities.
Legal and Professional Fees consist of legal, outsourced accounting services, corporate tax and audit services. For the six -month period ended June 30 , 2014, Legal and Professional Fees increased to $ 236,301 from $ 122,176 for the six -month period ended June 30 , 2013, representing an increase of $114,125, or approximately 93%. The increase is due to higher costs of the year-end audit arising from our expanded scope of operations and the filing of a Registration Statement on Form S-1 .
General and Administrative (G&A) Expenses consist of general operational costs of our business. For the six -month period ended June 30 , 2014, G&A Expenses increased to $ 430,684 from $ 296,767 for the six -month period ended June 30 , 2013, representing an increase of $ 133,917 , or approximately 45%. This increase is primarily due to the depreciation and amortization of assets relating to facilities added in 2013, and the associated costs of building out our infrastructure to support future growth of the Company.
Other Income and Expenses
For the six -month period ended June 30 , 2014, Other Income and Expenses decreased to $ 89,799 from $ 104,842 for the six -month period ended June 30 , 2013, representing a decrease of $15,043, or approximately 14%. Other Income and Expenses consist primarily of interest income, and interest expense.
Interest Income consists of the interest earned on the Company’s corporate bank account. Interest Income for the six -month period ended June 30 , 2014, decreased to $ 644 from $ 957 for the six -month period ended June 30 , 2013, representing a decrease of $ 313 or approximately 33%. The decrease was due to less cash being held in interest-bearing accounts.
Interest Expense consists of interest on the Company’s outstanding indebtedness. For the six -month period ended June 30 , 2014, Interest Expense decreased to $ 90,443 from $ 105,799 for the six -month period ended June 30 , 2013, representing a decrease of $15,356 or approximately 15%. The decrease was mainly due to interest expense no longer incurred from the convertible note payable.
We have received verification from multiple American Association for Laboratory Accredited (A2LA) laboratories that our recycled glycol meets the specifications of the ASTM E1177 Type EG-1 standard, which is the official standard for refinery-grade virgin glycol.
Our GlyEco Technology™ uses a tri-phase recycling process to remove all oil, hydrocarbons, dissolved solids, undissolved solids, color, and smell:
| (1) | Pre-Treatment - As waste glycol arrives, a sample is tested to determine the types and levels of impurities to be removed. Pre-treatment is custom scaled to each batch of material and consists of a unique chemical precipitation that removes sulfates and esters. Testing and pretreatment maximize efficiency and save overall processing costs, allowing cleaner material to be fed into primary treatment. |
| (2) | Primary Treatment – Our primary treatment uses distillation. |
| (3) | Post Treatment - Our proprietary post-treatment systems remove any remaining impurities in an innovative and proprietary application of ion exchange resins, removing the last traces of chlorides, sulfates, esters, glycolates, and formates. ASTM has established maximum allowable concentrations of chlorides and sulfates for automotive antifreeze grade recycled materials. Standards for maximum allowable levels of esters, glycolates, and formates are in development. We believe our GlyEco Technology™ will remove contaminants to meet future standards. Finally, the materials that we recycle pass through our GlyEco Quality Assurance Program, which includes in-house and independent lab purity testing. After successfully completing this testing, the recycled materials will be considered GlyEco Certified® recycled glycol and will be staged for delivery to our customers. |
Industry Overview1
Background on Glycol
Glycols are man-made liquid chemicals derived from natural gas and crude oil —non-renewable and limited natural resources. Glycols are used as a base chemical component in five primary industries: (1) Automotive; (2) Heating, Ventilation, and Air Conditioning (“HVAC”); (3) Textiles, (4) Airline, and (5) Medical.
| 1. | Automotive – Glycols are used as antifreeze in vehicles and other equipment with a combustion engine. |
| 2. | HVAC - Glycols are in the heat transfer fluids used to warm and cool buildings. |
| 3. | Textiles – Glycols are used as a raw material in the manufacturing of polyester fiber and plastics (e.g. water bottles). |
| 4. | Airline – Glycols are used in aircraft deicing fluid to avoid accumulation of moisture on aircraft wings. |
| 5. | Medical – Glycols are used for equipment sterilization in the medical industry. |
1 Any and all references to third parties herein represent our understanding based upon publicly available information.
During use in these industries, glycol becomes contaminated with impurities. Impurities in waste glycol vary depending on the industry source, with each waste stream containing different amounts of water, glycols, dirt, metals, and oils. Most waste glycol is landfilled, sent to waste water treatment, released to surface water, or disposed of improperly, wasting an important natural resource and causing a negative effect on our environment. Because of rapid biodegradability of glycol, the U.S. Environmental Protection Agency (“EPA”) allows disposal by “release to surface waters." However, when glycols break down in water they deplete oxygen levels, which kill fish and other aquatic life. Exposure to ethylene glycol can be hazardous and may cause death for humans, animals, birds, fish, and plants.
There are different types of glycol, including propylene glycol and ethylene glycol. Our GlyEco TechnologyTM focuses generally on ethylene glycol but can be modified to work with any type of glycol. Virgin ethylene glycol is produced in petrochemical plants using the ethane/ethylene extracted from natural gas or cracked from crude oil in refineries. Ethylene is oxidized in these petrochemical plants to ethylene oxide, which is then hydrated to form ethylene glycol. Glycols are also used in other applications such as paints and coatings, but these uses do not produce waste glycol, thus are not relevant to our business.
Glycol Market
World-wide consumption for ethylene glycol is over 5.5 billion gallons per year with an expected annual growth rate of approximately 6% from 2013 to 2018. China and the United States are the largest consumers of ethylene glycol. While the growth rate has slowed, demand continues to exceed supply for ethylene glycol, largely because of growth in polyester manufacturing used to make clothing, plastic containers, and plastic beverage bottles.2
Despite the negative effects waste glycol can have on people and the environment, the majority is disposed of rather than recycled. The EPA has estimated that only 12% of waste antifreeze is recycled, equaling around 25 to 30 million gallons recycled per year (EPA; WEBA Corporation).
Glycol Recycling
Companies began recycling waste glycol in the 1980s. Material technological advances and market acceptance of recycled glycol did not occur until the 1990s, but recyclers rarely processed any other type of glycol than waste automotive antifreeze. To this day, recyclers still generally focus on automotive antifreeze, as waste glycol from the other industries have unique impurities and are challenging to process. There are approximately 25-30 independent glycol recyclers in the United States. Additionally, a few used motor-oil recyclers who operate in multi-state regions also collect and recycle waste antifreeze. The most common methods of glycol recycling include distillation, nanofiltration, and electrodialysis.
Glycol Recycling Standards
The ASTM, Original Equipment Manufacturers (“OEM”), and various states have developed guidelines and regulations that govern the quality of virgin and recycled glycol. ASTM is recognized as the independent leader in creating standards for the composition of antifreeze and other glycol-based products. ASTM sets both performance standards (e.g., specifications for engine coolant used in light- and heavy-duty automobiles) and general purity standards. One standard, ASTM E1177, provides specifications on the purity level of glycol. ASTM has subdivided its ASTM E1177 glycol specification into two levels, Type I (“T1TM”) and Type II (“T2TM”). T1TM specifications are consistent with virgin glycol. Recycled glycol can also meet the T1TM standard, but none of the competitors that we are aware of meet this standard. Meeting the T1TM standard is important, as it determines what price customers are willing to buy the recycled product for. Customers in the polyester manufacturing industries generally require a product that is equivalent or exceeds T1TM standards, as do Original Equipment Manufacturers (“OEMs”) (e.g., automobile manufacturers). T2TM was established to define a product with more impurities than those in a T1TM product. Glycols that are T2TM can only be used in a limited number of applications (e.g. automotive antifreeze) and only certain customers are willing to purchase T2TM glycol (e.g. certain national automobile service chains). We believe that only a few ethylene glycol recycling companies currently meet T2TM requirements, and none meet T1TM requirements on a commercial scale.
2Ethylene Oxide Market and Ethylene Glycol Market: Global Industry Analysis, Raw Material and Consumption, Trends, Size, Share, and Forecast, 2012 – 2018, PR WEB, August 11, 2013, http://www.prweb.com/releases/2013/8/prweb11013470.htm.
Glycol Pricing3
Glycol is a commodity, and prices vary based upon supply, demand, and feedstock costs. On the supply side, there are a few companies that control the majority of virgin glycol production worldwide (e.g. MEGlobal, SABIC, and Formosa Group). These producers establish the market pricing of glycol with their sales to large polyester companies (e.g. Indorama, Sinopec, DAK Americas, and M&G Group) and antifreeze blenders (E.g. Old World, Prestone, and Valvoline). Large producers affect market pricing with short- and long-term supply and capacity. For example, month-to-month fluctuation in pricing often derives from planned and unplanned temporary shutdowns of refineries for maintenance and repair. Upstream feedstock costs, including the price of crude oil and natural gas, also have some influence on the price of glycol. On the demand side, the automotive antifreeze and polyester industries are the major drivers of downstream demand. Generally, the demand for glycol is highest in the months leading up to winter for use in automotive antifreeze and in the months leading up to summer for use in plastic bottles for water and other drinks.
Over the last ten years, the average sales price for virgin ethylene glycol shipped by truck or rail was approximately $4.69 per gallon. The current benchmark price for virgin ethylene glycol is approximately $5.40 per gallon. While demand for glycol often tapers in April and May due to decreased need in the antifreeze market, prices may stay higher than normal as supply is expected to be tight due to heavy maintenance and temporary shutdowns of multiple production facilities.
Glycerine – A Potential Substitute for Glycol
Antifreeze producers continue to evaluate base fluids other than ethylene glycol (or propylene glycol). The primary candidate is glycerine. Glycerine is becoming more available since it is a by-product of bio-diesel fuel production, which is growing rapidly in the United States. Glycerine has properties similar to those of ethylene glycol when it is diluted with water, as in antifreeze. Glycerine is being evaluated in blends of 10.0% to 20.0% with ethylene glycol and as a total replacement for ethylene glycol. Recently, ASTM finalized specifications on glycerin-based antifreeze, but adoption of the new base fluid has been limited. Major changes would have to be made in the industry for glycerin to make a major dent in the use of glycol. For example, pure glycerine starts to solidify at 62.6°F. 96.0% glycerine (the minimum concentration of which is used in antifreeze concentrate currently) begins to solidify at 46.4°F, versus about 0°F for ethylene glycol based antifreeze concentrate. To obtain the same freeze protection (-34°F) as 50/50 service strength ethylene glycol-based antifreeze, 60.0% glycerin would be required. Because glycerine from bio-diesel plants must be refined prior to use in antifreeze, since it must be used at higher ratios with water to obtain the same freeze protection as ethylene glycol-based antifreeze, and since glycerine would have to be shipped in a more dilute form than ethylene glycol-based antifreeze concentrate to avoid freezing at common winter temperatures, the actual cost advantages of glycerine over ethylene glycol is still being determined. In any event, we believe that our processing centers could be modified to recycle glycerine-based antifreeze. We will continue to monitor the evaluation of glycerine as a base fluid for antifreeze. Although we do not view glycerine as a significant threat to the achievement of our financial projections, we could make changes to our processing centers, as necessary.
Competitors
We face competition both in the recycling and virgin glycol sectors.
The glycol recycling industry is comprised primarily of independent recyclers who operate within their own geographic region. The industry is fragmented with approximately 25-30 independent recyclers spread out across the United States. Most operations are companies still owned by the original entrepreneur that founded the company, or a division of a larger chemical operation where glycol recycling is only a small portion of the business. Additionally, a few used motor-oil recyclers who operate in multi-state regions also collect and recycle waste antifreeze. These companies often use what we consider unsophisticated technologies and outdated equipment with limited capacity and poor quality control processes. Consequently, we believe that most operations (1) produce substandard products, (2) cannot be trusted to produce consistent batches of recycled product, and (3) do not have the capacity to provide product to major buyers. The majority of recycled glycol from these operations is sold into secondary markets as generic automotive antifreeze. This material is often mixed with refinery-grade glycol to dilute remaining impurities and because the quality does not meet the standards of many buyers and certain industries as a whole. These glycol recycling competitors actively seek to purchase waste glycol from local, regional, and national collectors, competition which can increase the price to obtain such waste.
Other competitors include refinery grade glycol manufacturers (e.g. MEGlobal and SABIC), antifreeze producers (e.g. Prestone and Old World), and waste collectors (e.g. Safety Kleen). While these competitors have a large footprint and access to resources, they have not traditionally focused on glycol and we believe that they do not have the recycling technology to produce high quality products–such that we receive waste glycol from some of these companies.
3 Pricing information in this section comes from ICIS Chemical Business and is based upon shipment of mono-ethylene glycol by rail or truck.
While there is a possibility of competitors (both from existing antifreeze glycol recyclers and from new entrants into the glycol recycling industry) producing recycled glycol that can meet ASTM Type 1 standards in commercial volumes, there are several barriers to entry. Potential competitors entering the Type 1 recycled glycol market would first need to develop technology that produces comparable quality recycled material without violating any of our intellectual property. We are not aware of any such systems currently in development. This solved, potential competitors would need to purchase or build sufficient facilities to service the North American territory. Finally, potential competitors would need to establish or build relationships with target customers to obtain waste glycol material in large volumes. While these challenges are not insurmountable, we believe they would take significant time and resources to overcome.
Competitive Strengths
We believe our business possesses the following competitive strengths which position us to serve our customers, grow our revenues and profits, and maintain a competitive edge over other companies in our sector:
Multiple Recycling Facilities. We operate seven processing centers servicing multiple waste glycol producing regions. Providing waste glycol disposal services to national and regional waste collectors has increased. We believe multi-region clients prefer a business partner who is experienced with hazardous waste disposal regulations, is a publically traded company, and has a large operating footprint with conveniently located disposal centers. We believe our sales growth with large disposal clients and national recycled glycol customers will continue due to our experience and larger footprint. We also believe having centralized management of multiple locations will streamline administrative functions, elevate our logistics and decrease costs such as transportation and personnel.
Proprietary Technology. We believe our GlyEco TechnologyTM gives us distinct advantages in servicing our clients, creating premium products, and controlling our costs. We can cost effectively process waste glycol created by industries who often pay to dispose of this hazardous waste. Many of our waste disposal clients are concerned with cradle-to-grave products liability. We believe that our GlyEco TechnologyTM will give them greater incentive to dispose of their material with a company that handles the waste responsibly and will recycle it into a quality product. We have begun producing T1TM recycled glycol and are selling it in our target price range, similar to refinery-grade pricing.
Diversified Feedstock Supply Network. We obtain our waste glycol supply through a combination of direct collection activities and aggregation from third-party collectors. We believe our balanced direct and indirect approach to obtaining waste is highly advantageous, maximizing total supply and minimizing infrastructure. We collect waste glycol directly from approximately 3,500 generators —including oil change service stations, automotive and heavy equipment repair shops, and brokers— which reduces our reliance on any single supplier. We also receive waste glycol from five or six large waste collectors, which allows us to benefit from large volumes of waste without the infrastructure needed to support collection and customer service management.
Relationships with Customers. All of the companies that we acquired have established and personal relationships with their feedstock and off take customers, having provided a high level of product and customer service to their clients for up to fifteen years. Because all general managers have continued with the Company and have a vested interest in the Company succeeding, we believe our relationships with these parties will be strong and could lead to expanded feedstock supply through customer referral and brand recognition in the local community.
Experienced Management Team. We are led by a management team with expertise in glycol recycling, waste management, finance, and operations. Each member of our executive management team has more than 10 years of industry experience, and have executed plans similar to GlyEco’s plan moving forward, including upgrading processing centers, consolidating industries through mergers and acquisitions, and expanding glycol recycling businesses through organic growth. Each plant manager has over 13 years of experience in the glycol recycling business. We believe the strength of our management team will help our success in the marketplace.
Strategy
Our strategy is to leverage our proprietary recycling process, increase production by continuing to expand our customer base, both in the regions we currently serve and in new regions across North America and abroad while realizing synergies from recent acquisitions. We will expand our waste glycol disposal services and waste glycol recycling services to additional industries within our regions. The principal elements of our business strategy are to:
Integrate and Increase Profits. We intend to continue integrating and implementing best practices across our recent acquisitions and all aspects of our processing centers, including financial, staffing, technology, products and packaging, and compliance. Our customers and partners require high levels of regulatory and environmental compliance, which we intend to emphasize through employee training, facility policies and procedures, and ongoing analysis of operating performance. We have begun to implement standardized accounting, invoicing, and logistics management systems across our operations.
We intend to implement computerized customer relationship management, dispatch and inventory control systems as practical to do so. We have implemented the initial phase of our GlyEco® brand strategy and will continue to build brand equity via marketing initiatives. We believe all of these measures will increase the quality service we can provide to customers, increase the visibility of the Company, and maximize profitability.
Expand Feedstock Supply Volume. We intend to expand our feedstock supply volume by growing our relationships with direct waste generators and indirect waste collectors. We plan to increase the volume we collect from direct waste generators in the following ways: stress segregation from other liquid wastes and a focus on waste glycol recovery to our existing customers; attract new waste generator customers by displacing incumbent waste collectors through product quality and customer service value propositions; and attract new waste generators in territories that we do not currently serve. We plan to increase the volume we collect from indirect waste collectors by implementing specific sales programs and increasing personnel dedicated to sales generation.
Expand the New Jersey Processing Center. We have completed the first phase of technology installation and are producing Type 1 compliant recycled glycol for commercial use. We have begun the second phase of expansion to our processing capacity in order to meet customer demand for larger quantities of our T1™ recycled glycol and to process additional types of glycol. This includes an investment in additional equipment and build-out services that leverage the existing facilities while increasing capacity, improving cost efficiencies and increasing throughput. We believe this expansion will over time increase the margins we obtain on our products and the amount of sales.
Pursue Selective Strategic Relationships or Acquisitions. We intend to grow our market share by consolidating feedstock supply through partnering with waste collection companies, leveraging recently acquired relationships, or acquiring other companies with glycol recycling operations. We plan to focus on partnerships and acquisitions that not only add revenue and profitability to our financials but those that have long-term growth potential and fit with the overall goals of the Company.
New Market Development. We have completed the initial processing center expansions necessary to diversify our customer base into new markets. During 2013, we began processing waste glycols from the textile, HVAC, and airline industries at some of our processing centers. We intend to continue this growth into new markets and underserved industries. We plan to implement additional capacity at our processing centers to allow them to process additional types of waste glycol streams and therefore to serve any prevailing new markets in their respective geographic areas.
Enter International Markets. We intend to explore opportunities to expand operations and technology into international markets. We have developed several relationships in markets where we believe glycol recycling is an underserved market, including Europe, Asia, Canada, Mexico, and South America. We believe that moving into international markets will further establish the Company as a leader in glycol recycling and will increase profitability.
Suppliers
We conduct business with a number of waste glycol generators, as well as waste collectors that have varied operations in solid, hazardous, special, and liquid waste. We collect waste glycol directly from over 3,300 generators, such as oil change service stations, automotive and heavy equipment repair shops, automotive dealerships, vehicle fleet operations, plastic bottle manufacturers, virgin glycol refineries, and other companies that generate waste glycol. We also receive waste glycol from five to ten waste collectors that act as a “one-stop shop” for companies generating a variety of waste including oil, glycol, solvents, and solid waste. At our processing centers, we receive the majority of our waste glycol from waste generators, with the balance coming from waste collectors. We normally collect waste glycol from waste generators in volumes between 50 to 100 gallons. We also receive waste glycol in 5,000 gallon tanker trucks from waste collectors. Our glycol concentrate processing centers generally receive their material from waste collectors, brokers, glycol manufacturers, and other larger waste sources; these processing centers receive the waste material by rail in 20,000 gallon loads or by truck in 5,000 gallon loads. Depending on the type of waste glycol and the chemical composition of that glycol, we can be paid by the generators to take the material, take it for free, or pay for the material. We plan to expand our feedstock sources at all processing centers as we increase capacity and storage.
Customers
We sell to a variety of customers including automotive garages, vehicle fleet operations, antifreeze blenders, the U.S. government, and others. Our processing centers most often sell their recycled antifreeze product back to their feedstock suppliers—including oil change service stations, automotive and heavy equipment repair shops, automotive dealerships, and vehicle fleet operations—in volumes of 50 to 100 gallons per order. However, they also sell material in volumes of 1,000 to 5,000 gallons per order to distributors who resell normally into the automotive industry. Our processing centers agree with their customers to a fixed pricing for recycled antifreeze which is below refinery grade pricing. Pricing at our processing centers will change from time to time based upon market conditions. Our T1TM processing center sells concentrated glycol, mainly to the military or government, antifreeze blenders, and distributors in volumes of 5,000 to 20,000 gallons per order. We normally sell this based on the spot price market for refinery grade glycol.
Seasonality
Our business is affected by seasonal factors, mainly the demand for automotive antifreeze and plastic bottles, which can affect our sales volume and the price point. Because the demand for automotive antifreeze is highest in winter months, our processing centers often see an increase in sales during the first and fourth quarters. Generally, our processing centers have slower second and third quarters, but this trend is not absolute and will depend on the climate in that facility’s region and how quickly the business is growing. As the Company diversifies recycling services in to additional industries, some of this seasonality may be reduced.
Our T1™ processing centers can be affected not only by the volume collected and sold in colder months but also by the spot and contract pricing of refinery grade glycol (e.g. what MEGlobal and SABIC are selling glycol for in domestic and international markets). Generally, the demand for glycol peaks in the months leading up to winter for the use in automotive antifreeze, heating systems and aircraft deicing fluids. Glycol demand is also high in the months leading up to summer as production increases for plastic food containers, water and beverage bottles, and increases in use of air conditioning system fluids. Because the finished products at our T1™ processing centers are normally based upon the spot market, the pricing can be influenced by seasonal demand for antifreeze and plastic bottles. However, there are many other variables that can affect the pricing of glycol, including supply being affected by refinery shutdowns and other upstream conditions.
National and International Regulation
Although glycol can be considered a hazardous material, there are few federal rules or regulations governing its characterization, transportation, packaging, processing, or disposal (e.g. handling). Typically any regulations that address such activities occur at either the state and/or county level and can vary significantly from region to region. For example, while a majority of states do not regulate the resale of recycled glycol in any manner, a few states do regulate the quality of recycled glycol that can be resold in the market as antifreeze by requiring that all branded recycled antifreeze be tested and approved before resale can occur.
Regarding the handling of waste glycol, most states have little to no regulation specifically regarding the handling of waste glycol. Instead, the handling of waste glycol is typically regulated under state-level hazardous waste and solid waste regulations. Waste glycol is not automatically characterized as a hazardous waste by the states, but it can be considered hazardous if the waste material is tested and contains a certain amount of contaminants, such as lead. For example, the State of Indiana published guidance explaining that used antifreeze is not a “listed” hazardous waste, but it can be identified as a hazardous waste if it is contaminated from use or mixture with other wastes. Importantly, a handful of states grant an exception to handlers of waste glycol allowing them to not have to test their waste material if its destination is a recycling facility. This is a notable exception that allows the glycol recycling industry to function without significant barriers. For example, the State of Minnesota does not require used antifreeze destined for recycling to be evaluated. Additionally, some states exempt the handling of waste glycol from the application of state-level hazardous waste regulations if the waste material is recycled according to certain best management practices (BMPs) identified by the states. BMPs often relate to the labeling and storage of waste glycol and to proper recordkeeping. For example, the State of Florida exempts used antifreeze generated by vehicle repair facilities from the application of the state’s hazardous waste regulations if it is recycled according to the BMPs outlined by the state. The handling of waste glycol is also often regulated by state-level solid waste regulations, as such regulations typically define “solid waste” to include spent liquids. However, similar to state-level hazardous waste regulations, an exception sometimes applies that exempts the handling of waste glycol from the application of state-level solid waste regulations if the waste glycol is being recycled and therefore does not pose any threat to public health or the environment.
A few states require a license or permit to process waste glycol. The cost of such licenses and permits to process waste glycol can vary from less than one hundred dollars to a few thousand dollars. Recyclers are often left with hazardous metals or chemicals as a byproduct of their process, for which they pay a nominal fee to register with the state and/or county as a hazardous waste generator and pay for the waste to be incinerated or disposed of in some other environmentally friendly way. In addition to taking the necessary precautions and maintaining the required permits/licenses, glycol recyclers generally take out environmental liability insurance policies to mitigate any risks associated with the handling of waste glycol. We do everything within our power to make sure that all permits, licenses, and insurance policies are in place to mitigate any risks stemming from the actions of our employees or third parties.
Internationally, the regulation of waste glycol varies from country to country. Some countries have strong regulations, meaning they specifically identify waste glycol as a hazardous waste that requires particular handling (e.g. transportation, collection, processing, packaging, resale, and disposal). Other countries have fewer regulations, meaning they do not specifically identify waste glycol as a hazardous waste that requires particular handling, allowing producers of waste glycol to dispose of the waste in ways that may harm the environment. Europe and Canada have strong regulations. Aside from the United States, Canada, and Europe, the remainder of the world generally has weak regulations. Despite strong regulations in certain parts of the world, we believe the United States is the only market with an established glycol recycling industry. Strong regulations are favorable for glycol recyclers because it causes waste generators to track their waste, resulting in more waste glycol supply for recyclers, and therefore potentially lower prices for raw material.
Environmental Compliance
Our activities involve the controlled use of hazardous materials and chemicals. We believe that our procedures for handling and disposing of these materials comply with all applicable government regulations. However, we cannot eliminate the risk of accidental contamination or injury from these materials. If an accident occurred, we could be held liable for damages, and these damages could severely impact our financial condition. We are also subject to many environmental, health and workplace safety laws and regulations. Violations and the cost of compliance with these laws and regulations could adversely affect us. However, we do not believe that compliance with environmental laws will have a material effect on us in the foreseeable future.
Intellectual Property
On March 15, 2013, we filed a utility patent application for our GlyEco Technology™ processes with the United States Patent and Trademark Office claiming priority to the provisional patent application that we filed in August of 2012. The patent application is currently pending review. We maintain and use several service marks including “GlyEco®”, “Innovative Green Chemistry®”, “GlyEco Certified®”, “GlyEco TechnologyTM”, “G-TECHTM”, “T1TM”, and “T2TM”. In addition, we have developed a website and have registered www.glyeco.com as our domain name, which contains information we do not desire to incorporate by reference herein.
Employees
We have thirty-one full-time employees, including John Lorenz, our Chief Executive Officer.
Of the thirty-one employees, ten are drivers and twenty-one are executive, sales, and administrative staff. In addition to the employees, we use five consultants on a monthly basis and engage other consultants on a project basis. We believe all of our employee relations to be good.
Corporate History
The Company was formed in the State of Nevada on October 21, 2011. On October 21, 2011, the Company became a wholly owned subsidiary of Environmental Credits, Inc. ("ECVL"). On November 21, 2011, ECVL merged itself into the Company (the "Reincorporation"). Upon the consummation of the Reincorporation, the Company was the surviving corporation and the Articles of Incorporation and Bylaws of the Company replaced the Certificate of Incorporation and Bylaws of ECVL.
On November 28, 2011, the Company consummated a reverse triangular merger (the "Merger" or "Transaction") as a tax-free reorganization within the meaning of Section 368 of the United States Internal Revenue Code of 1986, as amended, pursuant to an Agreement and Plan of Merger, dated November 21, 2011 (the "Merger Agreement"), with GRT Acquisition, Inc., a Nevada corporation and wholly-owned subsidiary of the Company, and Global Recycling Technologies, Ltd., a Delaware corporation and privately-held operating subsidiary ("Global Recycling"). Global Recycling was incorporated in Delaware on July 11, 2007.
GRT Acquisition, Inc. was incorporated in the State of Nevada on November 7, 2011 for the purpose of consummating the Merger. Pursuant to the Merger Agreement, GRT Acquisition, Inc. merged with and into Global Recycling, with Global Recycling being the surviving corporation and which resulted in Global Recycling becoming a wholly owned subsidiary of the Company.
On December 30, 2011, Global Recycling's wholly owned subsidiary, Global Acquisition Corp. #6 ("Global Sub #6"), a Delaware corporation, was dissolved. Global Sub #6 ceased operations on December 31, 2009, when the assets (including rights to additive formula and goodwill) were sold in an exchange for the common shares of Global Recycling. Prior to its sale, Global Sub #6 operated as a chemical company selling additives used in producing antifreeze and heat transfer fluid from recycled ethylene glycol. Sales of additives were discontinued upon the sale of the assets effective December 31, 2009.
On January 9, 2012, the Company, and its wholly owned subsidiary, Global Recycling, consummated a merger pursuant to which Global Recycling merged with and into the Company (the "Global Merger"), with the Company being the surviving entity.
The 11,591,958 shares of common stock of Global Recycling (constituting 100% of the issued and outstanding shares of Global Recycling on the effective date of the Global Merger) held by the Company pursuant to the reverse merger consummated on November 28, 2011, were cancelled upon the consummation of the Merger.
Properties
We maintain our principal executive offices at 10429 S. 51st Street, Suite 235, Phoenix, Arizona 85044. Our telephone number at that office is (866) 960-1539. The monthly base rent for this office space is $2,900. The lease term expires on February 28, 2015.
Our Minnesota processing center leases approximately 9,600 square feet of property located at 796 29th Avenue SE, Minneapolis, MN 55414. The monthly base rent for this location is currently $3,368. The base rent will gradually increase until the lease term expires on March 31, 2021.
Our Indiana processing center leases approximately 10,000 square feet of property located at 3455 E. St. Clair Street, Indianapolis, IN 46201. The monthly base rent for this location is currently $3,500. The base rent will gradually increase until the lease term expires on December 31, 2017.
Our Florida processing center leases approximately 4,200 square feet of property located at 4302 Holden Road, Lakeland, FL 33811. The monthly base rent for this location is $2,500. The lease term expires on August 31, 2018.
Our New Jersey processing center leases approximately 174,000 square feet of property at 534 S. Front Street, Elizabeth, NJ 07202. The monthly base rent for this location is $30,000. The lease term expires on December 31, 2017.
Our South Carolina processing center leases approximately 7,000 square feet of property located at 230 Gill Way, Rock Hill, SC 29730. The monthly base rent for this location is currently $2,800. The base rent will gradually increase until the lease term expires on October 28, 2017.
Our South Dakota processing center leases approximately 3,600 square feet of property located at 46991 Mindy Street, Tea, SD 57064. The monthly base rent for this location is $2,100. The lease term expires on December 31, 2017.
Our Maryland processing center leases approximately 12,000 square feet of property located at 8464 Ardwick-Ardmore Road, Landover, MD 20785. The monthly base rent for this location is currently $6,378. The rent will gradually increase until the lease term expires on December 31, 2017.
We believe our existing facilities are adequate to meet our present requirements. We anticipate that additional space will be available, when needed, on commercially reasonable terms.
Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition, or operating results.
As previously reported by the Company in the Current Report on Form 8-K filed by the Company with the Commission on July 16, 2013, on July 15, 2013, the Board of Directors of the Company (the “Board”) appointed Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountant. Concurrent with the appointment of Semple, Marchal & Cooper, LLP, on July 15, 2013, the Board dismissed Jorgensen & Co., which had served as the Company’s independent registered public accountant for the fiscal years ended December 31, 2012 and December 31, 2011.
Jorgensen & Co. furnished the Company with a letter, dated July 15, 2013, in which they agreed to the disclosures being made in the Current Report on Form 8-K filed by the Company with the Commission on July 16, 2013. A copy of this letter was filed as Exhibit 16.1 to the aforementioned Current Report on Form 8-K.
The reports provided by Jorgensen & Co. in connection with the Company’s financial statements for the fiscal years ended December 31, 2012 and December 31, 2011, did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles, except that they contained an explanatory paragraph in respect to the substantial doubt of the Company’s ability to continue as a going concern.
During the two fiscal years prior to dismissal and through July 15, 2013, there was only one disagreement between the Company and Jorgensen & Co. The disagreement was in connection with the audit of the Company’s financial statements for the fiscal year ended December 31, 2012, and concerned the fair market value of shares issued in non-monetary transactions. The view of Jorgensen & Co. was that market conditions for the cash sale of securities (at $0.50) weighed heavily in the valuation of the shares, notwithstanding contractual agreements (at $1.00) for the parties to the non-monetary exchanges. The Board did not directly discuss the subject matter of the disagreement with Jorgensen & Co., and the disagreement was ultimately resolved to the satisfaction of Jorgensen & Co. The Company authorized Jorgensen & Co. to respond fully to any inquiries of Semple, Marchal & Cooper, LLP concerning the subject matter of the disagreement.
Notwithstanding the disagreement disclosed above, there were no other disagreements between the Company and Jorgensen & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Jorgensen & Co., would have caused Jorgensen & Co. to make reference to the subject matter of the disagreements in connection with their reports on the Company’s financial statements, and there were no other reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K.
As previously reported by the Company in the Current Report on Form 8-K filed by the Company with the Commission on July 16, 2013, on July 15, 2013, the Board appointed Semple, Marchal & Cooper, LLP to be the Company’s independent registered public accountant. During the two fiscal years prior to appointment and through July 15, 2013, neither the Company nor anyone on its behalf consulted with Semple, Marchal & Cooper, LLP regarding any of the following: (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advice that Semple, Marchal & Cooper, LLP concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing, or financial reporting issue; or (iii) any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K.
On July 29, 2013, the Company’s stockholders ratified the appointment of Semple, Marchal & Cooper, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013.
The members of the Board of Directors of the Company serve for a period of one year or until his/her successor is elected and qualified. The officers of the Company are appointed by our Board of Directors and hold office until their death, resignation, or removal from office. A summary of the composition of the Company’s directors and executive officers, their ages, positions held, are as follows:
| Name | | Age | | Position | | Director Since | |
| John Lorenz | | 71 | | Chief Executive Officer, President and Chairman | | November 28, 2011 | |
| Michael Jaap | | 58 | | Director | | November 28, 2011 | |
| Richard Q. Opler | | 59 | | Director | | July 29, 2013 | |
| Keri Smith | | 49 | | Director | | July 29, 2013 | |
| Dwight Mamanteo | | 44 | | Director | | January 15, 2014 | |
| Alicia Williams Young | | 38 | | Chief Financial Officer, Secretary, and VP of Internal Operations | | - | |
| Richard Geib | | 67 | | Chief Technical Officer | | - | |
| Todd Smith | | 52 | | Chief Operating Officer | | - | |
| Janet Carnell Lorenz | | 52 | | Chief Business Development Officer | | - | |
John Lorenz – Chairman, Chief Executive Officer and President. Mr. Lorenz served as the Chief Executive Officer, President, and sole director of Global Recycling Technologies from its formation in May 2006 until the reverse triangular merger on November 28, 2011. Upon the consummation of the merger, Mr. Lorenz replaced Ralph M. Amato as the Chief Executive Officer, President and Chairman of the Board of Directors of the Company. Mr. Lorenz is experienced in identifying and managing new technologies, financing industry consolidations and acquisitions, and providing initial financing for such ventures. Mr. Lorenz has served as a founder and management, financial and strategic consultant to a number of emerging, public and private companies. Mr. Lorenz founded Environmental Waste of America, Inc. (“EWA”) in 1986, where he participated in virtually all management aspects of the solid waste industry, including acquisitions and integration. He served as President, Chief Executive Officer, and a director of EWA between 1986 and 1997 until its merger with Envirofil, Inc., a public company that is now Waste Management, Inc. In addition, Mr. Lorenz was formerly a founder, director, and Chief Executive Officer of Automotive Services of America. Earlier in his career, Mr. Lorenz worked as a financial, marketing, and political consultant, doing media, market, and public opinion research. Mr. Lorenz has articles on diachronic survey research, and is an author and editor of the book, The Political Image Merchants, published in 1971. Mr. Lorenz is an “inventor” on patents and is a frequent lecturer at Universities in the United States on capital, financial strategies, and equity development. Mr. Lorenz holds an Adjunct Professorship at Marylhurst University, and is preparing a book for publication in 2014 on financial strategies in challenging economic environments. Mr. Lorenz is an active triathlete and regularly competes in triathlons and marathons in the US. Mr. Lorenz holds an undergraduate degree with honors from the University of Portland, and a master’s degree from the University of Chicago.
Michael Jaap – Director. Mr. Jaap has had an extensive career in the field of nonferrous scrap metal recycling, including the areas of copper recycling and copper related raw material feed procurement. Mr. Jaap has worked with companies such as Amax Copper, where he held positions of purchasing copper and precious metal based scrap. Mike also worked for Commercial Metals, where he ran the yard operations of their Los Angeles facility. Mr. Jaap worked for Metal Traders, Warrenton Refining Company, owned by Phillip Anschutz. Mr. Jaap was involved with scrap copper procurement and copper ingot sales. Cyprus Copper Company acquired Warrenton, and Mr. Jaap worked for the Cyprus Copper Division in Phoenix, AZ. The sale of Warrenton by Cyprus prompted Mr. Jaap to set up his own companies over the next 19 years. These companies include Copper Consulting Industries, DeReelTech, Southwest Metals, Commodity Choppers, INTL Sieramet, Carbontech, JPH LLC and other ventures not specific to the recycling industry. Mr. Jaap currently owns and operates a copper recycling facility in Indiana, and is an active member of Southwest Metals in Glendale, AZ. Mr. Jaap is a graduate of Michigan State University with a BS in Microbiology and Public Health.
Richard Q. Opler – Director. Since 1998, Mr. Opler has worked in real estate development. Previously Mr. Opler held careers as a commercial real estate agent, VP of Finance for a technology startup firm, and VP of a business consulting and venture capital firm. From 1977 to 1985 he worked at World’s Finest Chocolate. Mr. Opler received a Bachelor’s degree from Duke University in 1977 and a Master’s degree in business from the University of Chicago in 1981.
Keri Smith – Director. Ms. Smith has 25 years of experience in Securities Services, during which she has occupied many significant operational and management positions. From 2009 to 2012, Ms. Smith served as the Executive Director of the WSS, Global Fund Services Division for JPMorgan Chase, Boston and JPMorgan Chase, London. From 2006 to 2008, she was the Global Head/Director – Worldwide Network Management for RBC Dexia Investor Services, London. From 1998 to 2006, Ms. Smith was the Director – Global Network Management of Investors Bank & Trust Company, and from 1995 to 1998, she was the Vice President – Global Network Management of BankBoston. Ms. Smith received a Bachelor’s degree from the Rhode Island College for Teaching in 1987.
Dwight Mamanteo – Director. Since November 2004, Mr. Mamanteo has served as a Portfolio Manager at Wynnefield Capital, Inc. Since March 2007, Mr. Mamanteo has served on the Board of Directors of MAM Software Group, Inc. (NASDAQ: MAMS), a provider of innovative software and data solutions for a wide range of businesses, including those in the automotive aftermarket. Mr. Mamanteo serves as the Chairman of the Compensation Committee and as a member of the Audit and Governance Committees. Since June 2013, Mr. Mamanteo has served on the Board of Directors of ARI Network Services, Inc. (NASDAQ: ARIS), a provider of products and solutions that serve several vertical markets with a focus on the outdoor power, power sports, marine, RV, and appliance segments. Mr. Mamanteo serves as the Chairman of the Governance Committee and as a member of the Compensation Committee. From March 2012 to April 2012, Mr. Mamanteo served on the Board of Directors of CDC Software Corp. (NASDAQ: CDCS), a provider of Enterprise CRM and ERP software designed to increase efficiencies and profitability. Mr. Mamanteo served as a member of the Audit Committee. From April 2009 to November 2010, Mr. Mamanteo served on the Board of Directors of EasyLink Services International Corp. (NASDAQ: ESIC), a provider of on demand electronic messaging and transaction services that help companies optimize relationships with their partners, suppliers and customers. Mr. Mamanteo served as a member of the Compensation and Governance & Nominating Committees. From December 2007 to November 2008, Mr. Mamanteo served on the Board of Directors and as the Chairman of PetWatch Animal Hospitals, Inc. (a private company), a provider of primary care and specialized services to companion animals through a network of fully owned veterinary hospitals. Mr. Mamanteo received an M.B.A. from the Columbia University Graduate School of Business and a B.Eng. in Electrical Engineering from Concordia University (Montreal).
Alicia Williams Young, Esq. – Chief Financial Officer, Secretary, and VP of Internal Operations. Ms. Williams Young was appointed as Chief Financial Officer of the Company by the Board of Directors on September 20, 2013. She had previously served as the Company’s interim principal financial officer since January 15, 2013. Ms. Williams Young was appointed as Secretary of the Company by the Board of Directors on November 30, 2011. From October 2008 until the date Global Recycling Technologies merged with and into the Company, Ms. Williams Young served as the Director of Internal Operations of Global Recycling Technologies. Upon the consummation of the merger of Global Recycling Technologies with and into the Company, Ms. Williams Young became the Controller and VP of Internal Operations of the Company. From August 2004 until she joined the Company, Ms. Williams Young was a full-time law student and/or part-time law clerk. From March 2000 to August 2004, Ms. Williams Young served as a Senior Systems Analyst/Data Lead at Intel Corporation in Chandler, Arizona. Ms. Williams Young holds a law degree (J.D.) from the University of Southern California Gould School of Law in Los Angeles, California (December 2007) and a Bachelor of Science in Management Information Systems & Accounting (December 1999). Ms. Williams Young was admitted to practice law in the state of Arizona (2008).
Richard Geib – Chief Technical Officer. Mr. Geib was appointed as the Chief Technical Officer of the Company upon the consummation of the merger. Mr. Geib served as Global Recycling Technologies’ Director of Technology and Development from July 2007 until the merger. Since 2002 through current, Mr. Geib has served as the President of WEBA, which develops advanced additive packages for antifreeze and heat transfer fluid and used glycol treatment processes, including re-distillation and recovery technology. Under Mr. Geib’s direction, WEBA launched its additive sales into Canada and Mexico. From 1998 through 2002, Mr. Geib served as President of Additives Inc., a former chemical division of Silco Distributing Co., where he developed new products, added many domestic customers, began industry trade show participation, became chairman of ASTM Coolants Committee, and established a laboratory, customer service, production, and sales department. From 1994 to 1998, Mr. Geib served as the Manager of the Chemical Division of Silco Distributing Company, where he developed and grew his division, developed products, designed a production plant, negotiated contracts for outside production, wrote marketing and technical literature, developed and implemented a sales program, arranged freight, and managed cash flow. From 1990 to 1994, Mr. Geib served as the President of Chemical Sales Company. From 1969 through 1989, Mr. Geib held several positions with Monsanto Company, including, Director of Sales, Detergents and Phosphates Division; Director, Process Chemicals, Europe/Africa Monsanto’s Europe/Africa Headquarters, Brussels, Belgium; Strategic and Financial Planning Director, Process Chemicals Division; Business Manager for Maleic Anhydride, Chlor-Alkali, Phosphate Esters, Fumaric Acid, etc.; Plant Manager Monsanto’s W.G. Krummrich Plant; Operations Superintendent Monsanto’s W.G. Krummrich Plant; Production Supervisor for the 4-Nitrodiphenylamine Chlorine and Caustic Soda/Potash plants; and Design and Plant Engineer World Headquarters.
Todd Smith – Chief Operating Officer. Mr. Smith was appointed as the Company’s Chief Operating Officer on January 8, 2014. Prior to being appointed as Chief Operating Officer, Mr. Smith served as Senior VP Sales, Mergers & Acquisitions of the Company since 2010. From 1995 to 2008, Mr. Smith served as President of Northeast Environmental Services, Inc. (“NES”), located in Cumberland, Rhode Island. NES specialized in the recycling of used engine coolants, and the distribution of recycled automotive antifreezes, as well as various other collection and disposal services offered to the customer base. Mr. Smith was responsible for all aspects of the NES operations, and by 2007, NES had gone from its infancy to achieving $5,000,000 in gross revenues. Mr. Smith supervised the daily operations, research and development, and finances of NES. Additionally, Mr. Smith was directly involved in the development of a sales force that led to a customer base of over 3,000 clients, maintaining account relations and retention, and the expansion of NES from a 100 mile radius to the entire Northeastern United States. In 2000 and 2003, Mr. Smith was nominated for the Small Business Association Entrepreneur of the Year Award.
Janet Carnell Lorenz– Chief Business Development Officer. Ms. Carnell Lorenz was appointed as the Company’s Chief Business Development Officer on January 14, 2014. Prior to being appointed as Chief Business Development Officer, Ms. Carnell Lorenz served as Senior VP of Corporate Development and Marketing of the Company since 2010. Ms. Lorenz founded CyberSecurity Group, Inc. (dba Market Tactics) in 2000 to assist developing technologies into innovative and marketable products. She has synthesized a twenty-one year background in computer systems engineering, corporate development and marketing into a resource for creativity and business acumen. Clients include Apple’s iPhone application developers center and Digital Ghost. She provides in-depth knowledge of corporate branding, market validation, product development and positioning, consumer sales, and viral marketing. She has placed dozens of successful product lines with retailers including Best Buy, Office Depot, Amazon.com and Costco Wholesale. Prior to founding CyberSecurity Group, Inc., she was a founding partner at a top ranked marketing representative's firm. She created the company’s international sales division, devising channel and localization strategies which grew sales to over $40 Million per year. Clients included Hewlett-Packard’s PC division, Hitachi Hard Drives, Creative Labs, Lexmark Printers, PNY Electronics, Umax Technologies, and Fuji Digital Cameras. She attended the University of Washington receiving her Bachelor of Arts in Business Administration, has earned several technical certifications, and is an authorized instructor for a number of computing platforms.
Family Relationships
John Lorenz and Janet Carnell Lorenz are married, and Keri Smith and Todd Smith are siblings. No other family relationship exists between the individuals listed above that is reportable under Item 401(d) of Regulation S-K.
Employment / Consulting Agreements
Richard Geib - On August 4, 2014, the Company entered into a Consulting Agreement with Richard Geib , the Company’s Chief Technical Officer. The Consulting Agreement superseded the terms of the Consulting Agreement previously entered into between Global Recycling Technologies, Ltd., a Delaware corporation (“Global Recycling”), and Mr. Geib on May 3, 2010, which the Company assumed upon the consummation of a reverse triangular merger with Global Recycling on November 28, 2011.
The Consulting Agreement is for a term of two years and may be extended for additional one-year terms by written agreement. Pursuant to the Consulting Agreement, Mr. Geib will assist in the further development and implementation of the Company’s proprietary technology for recycling glycol, the GlyEco TechnologyTM, and perform such other duties as requested by the Company’s Chief Executive Officer. In consideration for his services during the term, the Company will compensate Mr. Geib with an initial engagement fee of $50,000, a monthly consulting fee of $12,500 per month for the first year of the term, a to be determined monthly consulting fee for the second year of the term, and a total of 2,700,000 warrants to purchase shares of GlyEco common stock, par value $0.0001 per share, at an exercise price of $0.73 per share, of which half shall vest immediately and the remaining amount shall vest on August 4, 2015 .
Committees of the Board of Directors
Our Board of Directors has an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee, each of which has the composition and responsibilities described below.
Audit Committee . Our Audit Committee oversees a broad range of issues surrounding our accounting and financial reporting processes and audits of our financial statements, including the following:
| | ● | monitors the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent registered public accounting firm’s qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm; |
| | ● | assumes direct responsibility for the appointment, compensation, retention and oversight of the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review or attest services and for dealing directly with any such accounting firm; |
| | ● | provides a medium for consideration of matters relating to any audit issues; and |
| | ● | prepares the audit committee report that the rules require be included in our filings with the SEC. |
The members of our Audit Committee are Richard Q. Opler, Michael Jaap, and Dwight Mamanteo. Mr. Opler serves as chairperson of the committee.
The Board of Directors has determined that Mr. Opler meets the criteria of an “audit committee financial expert” (as defined under Item 407(d)(5)(ii) of Regulation S-K ). Mr. Opler is also an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules.
The Board of Directors has adopted a written charter for the Audit Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html.
Compensation Committee . Our Compensation Committee reviews and recommends policy relating to compensation and benefits of our directors and executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other senior officers, evaluating the performance of these persons in light of those goals and objectives and setting compensation of these persons based on such evaluations. The Compensation Committee reviews and evaluates, at least annually, the performance of the compensation committee and its members, including compliance of the Compensation Committee with its charter.
The members of our Compensation Committee are Michael Jaap, Richard Q. Opler, Dwight Mamanteo, and John Lorenz. Mr. Jaap serves as chairperson of the committee.
The Board of Directors has adopted a written charter for the Compensation Committee, a copy of which can be accessed online at www.glyeco.com/corporategov.html.
Governance and Nominating Committee . The Governance and Nominating Committee oversees and assists our Board of Directors in identifying, reviewing and recommending nominees for election as directors; evaluating our Board of Directors and our management; developing, reviewing and recommending corporate governance guidelines and a corporate code of business conduct and ethics; and generally advises our Board of Directors on corporate governance and related matters.
The members of our Governance and Nominating Committee are Dwight Mamanteo, Richard Q. Opler, Michael Jaap, John Lorenz, and Keri Smith. Mr. Mamanteo serves as chairperson of the committee.
The Board of Directors has adopted a written charter for the Governance and Nominating, a copy of which can be accessed online at www.glyeco.com/corporategov.html.
Code of Business Conduct and Ethics
On August 5, 2014, the Board of Directors of the Company adopted a Code of Business Conduct and Ethics (the “Code of Business Conduct and Ethics”), which sets forth legal and ethical standards of conduct applicable to all directors, officers, and employees of the Company.
The Code of Business Conduct and Ethics supersedes and replaces the Code of Ethics previously adopted by the Board of the Company on January 20, 2012 (the “Prior Code”). The adoption of the Code of Business Conduct and Ethics did not relate to, or result in, any waiver, explicit or implicit, of any provision of the Prior Code.
A copy of the Code of Business Conduct and Ethics may be requested, free of charge, by sending a written communication to Matt Hamilton, General Counsel, at the Company’s executive offices. The Code of Business Conduct and Ethics has also been posted on the Company’s website, www.glyeco.com .
Director Independence
The Board of Directors has determined that each of the following non-employee directors qualifies as an “independent director” as defined by Section 10A(m)(3)(ii) of the Exchange Act and Rule 5065(a)(2) of the NASDAQ Marketplace Rules: Michael Jaap, Richard Q. Opler, Keri Smith, and Dwight Mamanteo.
John Lorenz is not an “independent director” due to the fact that he is also an employee of the Company.
The following table sets forth all plan and non-plan compensation for the last two completed fiscal years paid to all individuals who served as the Company’s principal executive officer (“PEO”), principal financial officer (“PFO”) or acting in similar capacity during the last completed fiscal year, regardless of compensation level, and other individuals as required by Item 402(m)(2) of Regulation S-K. We refer to all of these individuals collectively as our “named executive officers.”
Summary Compensation Table
| Name & Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Warrant Awards ($) | | | | Option Awards ($)(15) | | | | Non-Equity Incentive Plan Compensation ($) | | | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | | | All Other Compensation ($) | | | | Total ($) | |
John Lorenz, President and CEO (PEO) | | | | $ | 175,000 | | | $ | 30,000 | | | $ | - | | | | $ | 198,090 | | (1) | | $ | - | | | $ | - | | | $ | 2,100 | | (8) | | $ | 405,190 | |
| | | | | | 137,500 | | | | - | | | | - | | | | | 36,135 | | (1) | | | - | | | | - | | | | 13,000 | | (9) | | | 186,635 | |
| | | | | - | | | | - | | | | - | | | | | | | | | | - | | | | - | | | | 31,775 | | (10) | | | 31,775 | |
| | | | | | - | | | | - | | | | - | | | | | 4,015 | | (2) | | | | | | | - | | | | 72,245 | | (10) | | | 76,260 | |
Alicia Williams Young, CFO | | | | | 100,500 | | | | 17,500 | | | | - | | | | | 132,060 | | (3) | | | - | | | | - | | | | | | | | | 250,060 | |
| | | | | | 58,500 | | | | 1,500 | | | | - | | | | | 28,507 | | (3) | | | - | | | | - | | | | 19,500 | | (11) | | | 108,007 | |
Richard Geib, Chief Technical Officer | | | | | - | | | | - | | | | 58,000 | | (4) | | | 44,020 | | (5) | | | - | | | | - | | | | - | | | | | 102020 | |
| | | | | | - | | | | - | | | | 4,940 | | (4) | | | - | | | | | - | | | | - | | | | - | | | | | 4,940 | |
Janet Carnell Lorenz, Chief Business Development Officer | | | | | - | | | | 5,000 | | | | - | | | | | 132,060 | | (6) | | | - | | | | - | | | | 108,000 | | (12) | | | 245,060 | |
| | | | | | - | | | | | | | | - | | | | | 28,105 | | (6) | | | - | | | | - | | | | 77,000 | | (13) | | | 105,105 | |
Todd Smith, Chief Operating Officer | | | | | 120,000 | | | | 5,000 | | | | - | | | | | 132,060 | | (7) | | | - | | | | - | | | | | | | | | 257,060 | |
| | | | | | 69,000 | | | | | | | | - | | | | | 34,128 | | (7) | | | - | | | | - | | | | 21,000 | | (14) | | | 124,128 | |
| (1) | The estimated value of the options issued to Mr. John Lorenz is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Years Ended December 31, 2012 and 2013.” |
| (2) | The estimated value of the options issued to Mr. Kevin Conner is based on the Black-Scholes method. See the disclosure below under “Option/SAR Grants in Fiscal Years Ended December 31, 2012 and 2013.” |
| (3) | The estimated value of options issued to Ms. Williams Young is based on the Black-Scholes method. See disclosure below under “Option/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (4) | The estimated value of the warrants issued to Mr. Geib is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (5) | The estimated value of the options issued to Mr. Geib is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (6) | The estimated value of the options issued to Ms. Carnell Lorenz is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Year Ended December 31, 2012 and 2013.” |
| (7) | The estimated value of the options issued to Mr. Smith is based on the Black-Scholes method. See disclosure below under “Options/SAR Grants in the Fiscal Years Ended December 31, 2012 and 2013.” |
| (8) | Consisted $2,100 paid to Mr. Lorenz as compensation for being a Director. |
| (9) | Consisted of consulting service fees paid to Mr. Lorenz by the Company. Mr. Lorenz provided management consulting services to the Company through Barcid Investment Group (Barcid), a corporation solely owned by Mr. Lorenz. Neither Barcid nor Mr. Lorenz has a formal written consulting agreement with the Company. Mr. Lorenz, by and through Barcid, was paid on a monthly basis and earned $12,500 for consulting services rendered to the Company in January of 2012. Mr. Lorenz became an employee of the Company in February of 2012. In addition, Mr. Lorenz was paid $500 for compensation for being a Director. |
| (10) | Consisted of consulting service fees paid to Mr. Conner by the Company. Mr. Conner provided accounting and management consulting services to the Company through Conner LLP. Conner LLP has a formal written consulting agreement with the Company, by which it is paid on a monthly basis. |
| (11) | Consisted of consulting service fees paid to Ms. Williams Young by the Company. Ms. Williams Young provided accounting and business management consulting services to the Company through AJile Concepts LLC, a company owned by Ms. Williams Young and her husband. Neither Ms. Williams Young nor AJile Concepts has a formal written consulting agreement with the Company. Ms. Williams Young, by and through AJile Concepts, was paid on a monthly basis and earned $6,500 for consulting services rendered to the Company from January 2012 to March 2012. Ms. Williams Young became an employee of the Company in April 2012. |
| (12) | Consisted of consulting service fees paid to Ms. Carnell Lorenz by the Company. Ms. Carnell Lorenz provided marketing consulting services to the Company through Market Tactics, Inc., a corporation solely owned by Ms. Carnell Lorenz. Neither Ms. Carnell Lorenz nor Market Tactics has a formal written consulting agreement with the Company. Ms. Carnell Lorenz, by and through Market Tactics, was paid on a monthly basis and earned $7,500 from January 2013 to March 2013 and $9,500 from April 2013 to December 2013. |
| (13) | Consisted of consulting service fees paid to Ms. Carnell Lorenz by the Company. Ms. Carnell Lorenz provided marketing consulting services to the Company through CyberSecurity, Inc., a corporation solely owned by Ms. Carnell Lorenz. Neither Ms. Carnell Lorenz nor CyberSecurity has a formal written consulting agreement with the Company. Ms. Carnell Lorenz, by and through CyberSecurity, was paid on a monthly basis and earned $5,500 in January 2013 and $6,500 from February 2013 to December 2013. |
| (14) | Consisted of consulting service fees paid to Mr. Smith by the Company. Mr. Smith provided operations consulting services to the Company through Ocean State Absorbents, a company owned solely by Mr. Smith. Neither Mr. Smith nor Ocean State Absorbents has a formal written consulting agreement with the Company. Mr. Smith, by and through Ocean State Absorbents, was paid on a monthly basis and earned $7,000 for consulting services rendered to the Company from January 2012 to March 2012. Mr. Smith became an employee of the Company in April 2012 . |
| (15) | These amounts represent full grant date fair value of these awards, in accordance with the Financial Accounting Standard Board’s (“FASB”) ASC Topic 718. Assumptions used in the calculation of dollar amounts of these awards are included in Note 11 of our audited financial statements for the fiscal year ended December 31, 2013. |
Option/SAR Grants in Fiscal Year Ended December 31, 2013
In 2013, our named executive officers were granted the following:
| | Mr. Lorenz was granted on September 20, 2013, 450,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 198,090. |
| | Ms. Williams Young was granted on September 20, 2013, 300 ,000 shares of Common Stock issuable upon the exercise of options at $ 1.00 per share until September 20, 2023. 150,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 132,060. |
| | Mr. Geib was granted on September 20, 2013, 100 ,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50 ,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 44,020. Pursuant to his consulting agreement, Mr. Geib was also issued 100 ,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2018. The aggregate grant date estimated fair value of these warrants , determined by the Black-Scholes method, was $ 58,000 . |
| | Ms. Carnell Lorenz was granted on September 20, 2013, 300 ,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 150 ,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 132,060. |
| | Mr. Smith was granted on September 20, 2013, 300,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225 ,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 132,060. |
Option/SAR Grants in Fiscal Year Ended December 31, 2012
In 2012, our named executive officers were granted the following:
| | Mr. Lorenz was granted on December 5, 2012, 450,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 225,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 36,135 . |
| | Mr. Conner was granted on December 5, 2012, 50,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 25,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 4,015 . |
| | Ms. Williams Young was granted on December 5, 2012, 355,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 177,500 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 28,507 . Mr. Geib was granted pursuant to his consulting agreement on May 3, 2012, 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2017. The aggregate grant date estimated fair value of these warrants, determined by the Black-Scholes method, was $4,940. |
| | Ms. Carnell Lorenz was granted on December 5, 2012, 350,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 175,000 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 28,105 . |
| | Mr. Smith was granted on December 5, 2012, 425,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022. Of these, 212,500 vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, was $ 34,128 . |
Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information for the named executive officer regarding the number of shares subject to both exercisable and unexercisable stock options, as well as the exercise prices and expiration dates thereof, as of December 31, 2013.
| Name | | Number of Securities underlying Unexercised Options (#) Exercisable | | | Number of Securities underlying Unexercised Unearned Options (#) Unexercisable | | | Option Exercise Price ($/Sh) | | Option Expiration Date | |
| John Lorenz | | | 119,172 | | | | - | | | $ | 1.00 | | 6/27/2021 | |
| | | | 318,356 | | | | - | | | $ | 1.00 | | 6/27/2021 | |
| | | | 488,750 | | | | 86,250 | | | $ | 0.50 | | 10/25/2021 | (1) |
| | | | 337,500 | | | | 112,500 | | | $ | 0.50 | | 12/5/2022 | (2) |
| | | | 225,000 | | | | 225,000 | | | $ | 1.00 | | 9/20/2023 | (3) |
| Kevin Conner | | | 63,750 | | | | 11,250 | | | $ | 0.50 | | 10/25/2021 | (1) |
| | | | 37,500 | | | | 12,500 | | | $ | 0.50 | | 12/5/2022 | (2) |
| Alicia Williams Young | | | 15,000 | | | | - | | | $ | 1.00 | | 6/27/2021 | |
| | | | 212,500 | | | | 37,500 | | | $ | 0.50 | | 10/25/2021 | (1) |
| | | | 266,250 | | | | 88,750 | | | $ | 0.50 | | 12/5/2022 | (2) |
| | | | 150,000 | | | | 150,000 | | | $ | 1.00 | | 9/20/2023 | (3) |
| Richard Geib | | | 60,000 | | | | - | | | $ | 1.00 | | 6/27/2021 | |
| | | | 127,500 | | | | 22,500 | | | $ | 0.50 | | 10/25/2021 | (1) |
| | | | 50,000 | | | | 50,000 | | | $ | 1.00 | | 9/20/2023 | (3) |
| Todd Smith | | | 255,000 | | | | 45,000 | | | $ | 0.50 | | 10/25/2021 | (1) |
| | | | 318,750 | | | | 106,250 | | | $ | 0.50 | | 12/5/2022 | (2) |
| | | | 150,000 | | | | 150,000 | | | $ | 1.00 | | 9/20/2023 | (3) |
| Janet Carnell Lorenz | | | 80,000 | | | | - | | | $ | 1.00 | | 6/27/2021 | |
| | | | 180,000 | | | | - | | | $ | 1.00 | | 6/27/2021 | |
| | | | 255,000 | | | | 45,000 | | | $ | 0.50 | | 10/25/2021 | (1) |
| | | | 262,500 | | | | 87,500 | | | $ | 0.50 | | 12/5/2022 | (2) |
| | | | 150,000 | | | | 150,000 | | | $ | 1.00 | | 9/20/2023 | (3) |
| (1) | The unearned options vest on October 25, 2014 |
| (2) | The unearned options vest on December 5, 2014 |
| (3) | The unearned options vest 50% on September 20, 2014 and 50% on September 20, 2015. |
Stock Option Plans
Third Amended and Restated 2007 Stock Incentive Plan
Upon the consummation of the merger, Global Recycling’s Third Amended and Restated 2007 Stock Incentive Plan (the “2007 Stock Plan”) was assumed by the Company.
The following is a summary of certain of the more significant provisions of the 2007 Stock Plan. The statements contained in this summary concerning the provisions of the 2007 Stock Plan are merely summaries and do not purport to be complete. They are subject to and qualified in their entirety by the actual terms of the 2007 Stock Plan. A copy of the 2007 Stock Plan has been incorporated by reference as Exhibit 4.4 to our Annual Report on Form 10-K for the year ending December 31, 2013 and is incorporated by reference herein.
Shares Reserved Under the 2007 Stock Plan
We have reserved 6,742,606 shares of our common stock issuable upon exercise of options granted under the 2007 Stock Plan to employees, directors, proposed employees and directors, advisors, independent contractors (and their employees and agents), and other persons who provide valuable services to the Company (collectively, “Eligible Persons”). As of August 2014, we have issued 6,647,606 options to purchase the shares of our common stock originally reserved under the 2007 Stock Plan. All previously granted options issued pursuant to the 2007 Stock Plan will be subject to the requirements set forth in the 2007 Stock Plan and are Non-Qualified Stock Options.
The aggregate number of shares that may be granted to any one Eligible Person in any year will not exceed 50.0% of the total number of shares that may be issued under the 2007 Stock Plan. At the discretion of the Plan Administrator (defined below), the number and type of shares of our common stock available for award under the 2007 Stock Plan (including the number and type of shares and the exercise price covered by any outstanding award) may be adjusted for any increase or decrease in the number of issued shares of our common stock resulting from any stock split, reverse stock split, split-up, combination or exchange of shares, consolidation, spin-off, reorganization, or recapitalization of shares.
Administration
The 2007 Stock Plan is currently being administered by our Board of Directors. Our Board of Directors may delegate its authority and duties under the 2007 Stock Plan to a committee. Our Board of Directors and/or any committee that has been delegated the authority to administer the 2007 Stock Plan is referred to as the “Plan Administrator.” Subject to certain restrictions, the Plan Administrator generally has full discretion and power to (i) determine all matters relating to awards issued under the 2007 Stock Plan, including the persons to be granted awards, the time of grant, the type of awards, the number of shares of our common stock subject to an award, vesting conditions, and any and all other terms, conditions, restrictions, and limitations of an award, (ii) interpret, amend, and rescind any rules and regulations relating to the 2007 Stock Plan, (iii) determine the terms of any award agreement made pursuant to the 2007 Stock Plan, and (iv) make all other determinations that may be necessary or advisable for the administration of the 2007 Stock Plan. All decisions made by the Plan Administrator relating to the 2007 Stock Plan will be final, conclusive, and binding on all persons.
Eligibility
The Plan Administrator may grant any award permitted under the 2007 Stock Plan to any Eligible Person. With respect to awards that are options, directors who are not employees of the Company, proposed non-employee directors, proposed employees, and independent contractors will be eligible to receive only Non-Qualified Stock Options (“NQSOs”). An award may be granted to a proposed employee or director prior to the date he, she, or it performs services for the Company, so long as the award will not vest prior to the date on which the proposed employee or director first performs such services.
Awards under the 2007 Stock Plan
Under the 2007 Stock Plan, Eligible Persons may be granted: (a) stock options (“Options”), which may be designated as NQSOs or Incentive Stock Options (“ISOs”); (b) stock appreciation rights (“SARs”); (c) restricted stock awards (“Restricted Stock”); (d) performance share awards (“Performance Awards”); or (e) other forms of stock-based incentive awards (collectively, the “Awards”). An Eligible Person who has been granted an Option is referred to in this summary as an “Optionee” and an Eligible Person who has been granted any other type of Award is referred to in this summary as a “Participant.”
No Award granted under the 2007 Stock Plan can be inconsistent with the terms and purposes of the 2007 Stock Plan. Additionally, the applicable exercise price for which shares of our common stock may be purchased upon exercise of an Award will not be less than (i) 100.0% of the Fair Market Value (as defined in the 2007 Stock Plan) of shares of our common stock on the date that the Award is granted, or (ii) 110.0% of the Fair Market Value if the Award is granted to an Eligible Person who, directly or indirectly, holds more than 10.0% of the total voting power of the Company.
The Plan Administrator may grant to Optionees NQSOs or ISOs that are evidenced by stock option agreements. A NQSO is a right to purchase a specific number of shares of our common stock during such time as the Plan Administrator may determine. A NQSO that is exercisable at the time an Optionee ceases providing services to the Company will remain exercisable for such period of time as determined by the Plan Administrator. Generally, Options that are intended to be ISOs will be treated as NQSOs to the extent that the Fair Market Value of the common stock issuable upon exercise of such ISO, plus all other ISOs held by such Optionee that become exercisable for the first time during any calendar year, exceeds $100,000.
An ISO is an Option that meets the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as an ISO under the Code, the Option generally must (among other things) (x) be granted only to employees, (y) have an exercise price equal to or greater than the Fair Market Value on the date of grant, and (z) terminate if not exercised within 10 years from the date of grant (or five years if granted to an Optionee who, at the time the ISO is granted, directly or indirectly, holds more than 10.0% of the total voting power of the Company). Except in certain limited instances (including termination for cause, death, or disability), if any Optionee ceases to provide services to the Company, the Optionee’s rights to exercise vested ISOs will expire within three months following the date of termination.
A SAR is a right granted to a Participant to receive, upon surrender of the right, payment in an amount equal to (i) the excess of the Fair Market Value of one share of common stock on the date the right is exercised, over (ii) the Fair Market Value of one share of common stock on the date the right is granted.
Restricted Stock is common stock that is issued to a Participant at a price determined by the Plan Administrator. Restricted stock awards may be subject to (i) forfeiture upon termination of employment or service during an applicable restriction period, (ii) restrictions on transferability, (iii) limitations on the right to vote such shares, (iv) limitations on the right to receive dividends with respect to such shares, (v) attainment of certain performance goals, and (vi) such other conditions, limitations, and restrictions as determined by the Plan Administrator.
A Performance Award grants the Participant the right to receive payment upon achievement of certain performance goals established by the Plan Administrator. Such payments will be valued as determined by the Plan Administrator and will be payable to or exercisable by the Participant for cash, shares of our common stock, other awards, or other property determined by the Plan Administrator.
Other Awards may be issued under the 2007 Stock Plan, which include, without limitation, (i) shares of our common stock awarded purely as a bonus and not subject to any restrictions or conditions, (ii) convertible or exchangeable debt or equity securities, (iii) other rights convertible or exchangeable into shares of our common stock, and (iv) awards valued by reference to the value of shares of our common stock or the value of securities or the performance of specified subsidiaries of the Company.
Exercise Price
The price for which shares of our common stock may be purchased upon exercise of a particular Award will be determined by the Plan Administrator at the time of grant. However, the applicable exercise price for which shares of our common stock may be purchased upon exercise of an Award will not be less than (i) 100.0% of the Fair Market Value (as defined in the 2007 Stock Plan) of shares of our common stock on the date that the Award is granted, or (ii) 110.0% of the Fair Market Value if the Award is granted to an Eligible Person who, directly or indirectly, holds more than 10.0% of the total voting power of the Company.
No Deferral Features
No Award granted under the 2007 Stock Plan will contain a deferral feature. Awards cannot be modified or otherwise extended. No Award will contain a provision providing a reduction in the applicable exercise price, an addition of a deferral feature, or any extension of the term of the award.
Payment / Exercise of Award
An Award may be exercised using as the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment, (c) cashless exercises, (d) the granting of replacement awards, (e) any combination of the above, or (f) such other means as the Plan Administrator may approve. No shares of our common stock will be delivered in connection with the exercise of any Award until payment in full of the exercise price is received by the Company.
Change of Control
The Stock Option provides that if a Change of Control (as defined in the 2007 Stock Plan) occurs, then the surviving, continuing, successor, or purchasing entity (the “Acquiring Company”), will either assume our rights and obligations under outstanding Awards or substitute for outstanding Awards substantially equivalent awards for the Acquiring Company’s capital stock. If the Acquiring Company elects not to assume or substitute for such outstanding Awards in connection with a Change of Control, our Board of Directors may determine that all or any unexercisable and/or unvested portions of outstanding Awards will be immediately vested and exercisable in full upon consummation of the Change of Control. Unless otherwise determined by our Board of Directors, Awards that are neither (i) assumed or substituted for by the Acquiring Company in connection with the Change of Control, nor (ii) exercised upon consummation of the Change of Control, will terminate and cease to be outstanding effective as of the date of the Change of Control. Upon the consummation of the Merger, the Company assumed the obligations of Global Recycling under the Plan.
Amendment
Our Board of Directors may, without action on the part of our stockholders, amend, change, make additions to, or suspend or terminate the 2007 Stock Plan as it may deem necessary or appropriate and in the best interests of the Company; provided, however, that our Board of Directors may not, without the consent of the Participants, take any action that disqualifies any previously granted Option for treatment as an ISO or which adversely affects or impairs the rights of the holder of any outstanding Award. Additionally, our Board of Directors will need to obtain the consent of our stockholders in order to (a) amend the 2007 Stock Plan to increase the aggregate number of shares of our common stock subject to the plan, or (b) amend the 2007 Stock Plan if stockholder approval is required either (i) to comply with Section 422 of the Code with respect to ISOs, or (ii) for purposes of Section 162(m) of the Code.
Term
The 2007 Stock Plan will remain in full force and effect through May 30, 2017, unless terminated earlier by our Board of Directors. After the 2007 Stock Plan is terminated, no future Awards may be granted under the 2007 Stock Plan, but Awards previously granted will remain outstanding in accordance with their applicable terms and conditions.
2012 Equity Incentive Plan
On February 23, 2012, subject to stockholder approval, the Company’s Board of Directors approved of the Company’s 2012 Equity Incentive Plan (the “2012 Plan”). By written consent in lieu of a meeting, dated March 14, 2012, Company stockholders owning an aggregate of 14,398,402 shares of Common Stock (representing approximately 66.1% of the 22,551,991 outstanding shares of Common Stock) approved and adopted the 2012 Plan. Also by written consent in lieu of a meeting, dated July 27, 2012, stockholders of the Company owning an aggregate of 12,676,202 shares of Common Stock (representing approximately 51.8% of the then 24,451,991 outstanding shares of Common Stock) approved an amendment to the 2012 Plan to increase the number of shares reserved for issuance under the 2012 Plan by 3,000,000 shares.
There are an aggregate of 6,500,000 shares of our Common Stock reserved for issuance upon exercise of awards granted under the 2012 Plan to employees, directors, proposed employees and directors, advisors, independent contractors (and their employees and agents), and other persons who provide valuable services to the Company. As of August 2014, we have issued 4,338,072 options under the 2012 Plan. The following description of the 2012 Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the 2012 Plan. A copy of the 2012 Plan has been filed as Exhibit 4.5 to our Annual Report on Form 10-K for the year ending December 31, 2013 and is incorporated by reference herein.
Purpose of the 2012 Plan
The purpose of the 2012 Plan is to attract, retain, and motivate employees, directors, advisors, independent contractors (and their employees and agents, or, in the Plan Administrator’s discretion, any of their employees or contractors), and other persons who provide valuable services to the Company by providing them with the opportunity to acquire a proprietary interest in the Company and to link their interest and efforts to the long-term interests of the Company’s stockholders. The Company believes that increased share ownership by such persons will more closely align stockholder and employee interests by encouraging a greater focus on the profitability of the Company. The Company has reserved and authorized the issuance of up to 6,500,000 shares of the Company’s Common Stock pursuant to awards granted under the 2012 Plan, subject to adjustment in the case of any stock dividend, forward or reverse stock split, split-up, combination or exchange of shares, consolidation, spin-off, reorganization, or recapitalization of shares or any like capital adjustment.
The 2012 Plan includes a variety of forms of awards, including (i) stock options intended to qualify as Incentive Stock Options (“Incentive Stock Options”) under the Section 422 of the United States Internal Revenue Code of 1986, as amended (the “Code”), (ii) stock options not intended to qualify as Incentive Stock Options under the Code (“Nonqualified Stock Options”), (iii) stock appreciation rights, (iv) restricted stock awards, (v) performance stock awards and (vi) other stock-based awards to allow the Company to adapt its incentive compensation program to meet the needs of the Company.
Plan Administration
The 2012 Plan will be administered by the Board of Directors of the Company (the “Board”). The Board may delegate all or any portion of its authority and duties under the 2012 Plan to one or more committees appointed by the Board and consisting of at least one member of the Board, under such conditions and limitations as the Board may from time to time establish. Notwithstanding anything contained in the 2012 Plan to the contrary, only the Board or a committee thereof composed of two or more “Non-Employee Directors” (as that term is defined in Rule 16b-3 of the Exchange Act may make determinations regarding grants of awards to executive officers, directors, and 10% stockholders of the Company (“Affiliates”).
The Board and/or any committee that has been delegated the authority to administer the 2012 Plan, as the case may be, will be referred to as the “Plan Administrator.”
The Plan Administrator has the authority, in its sole and absolute discretion, to grant awards as an alternative to, as a replacement of, or as the form of payment for grants or rights earned or due under the 2012 Plan or other compensation plans or arrangements of the Company or a subsidiary of the Company, including the 2012 Plan of any entity acquired by the Company or a subsidiary of the Company.
Eligibility
Any employee, director, proposed employee or director, independent contractor (or employee or agent thereof), or other agent or person who provides valuable services to the Company will be eligible to receive awards under the 2012 Plan. With respect to awards that are options, directors who are not employees of the Company, proposed non-employee directors, proposed employees, and independent contractors (and their employees and agents, or, in the Plan Administrator’s discretion, any of their employees or contractors) will be eligible to receive only Nonqualified Stock Options.
Change of Control
Unless otherwise provided by the Board, in the event of a Change of Control (as defined in the 2012 Plan), the surviving, continuing, successor, or purchasing entity or parent entity thereof, as the case may be (the “Acquiring Company”), will either assume the Company’s rights and obligations under outstanding awards or substitute for outstanding awards substantially equivalent awards for the Acquiring Company’s capital stock. In the event the Acquiring Company elects not to assume or substitute for such outstanding awards in connection with a Change of Control, the Board may, in its sole and absolute discretion, provide that all or any unexercisable and/or unvested portions of the outstanding awards will be immediately vested and exercisable in full upon consummation of the Change of Control. The vesting and/or exercise of any award that is permissible solely by reason of this section will be conditioned upon the consummation of the Change of Control. Unless otherwise provided by the Board, any awards that are neither (i) assumed or substituted for by the Acquiring Company in connection with the Change of Control, nor (ii) exercised upon consummation of the Change of Control, will terminate and cease to be outstanding effective as of the date of the Change of Control.
Exercise Price of Options
The price for which shares of Common Stock may be purchased upon exercise of a particular option will be determined by the Plan Administrator at the time of grant; provided, however, that the exercise price of any award granted under the 2012 Plan will not be less than 100% of the Fair Market Value (as defined in the 2012 Plan) of the Common Stock on the date such option is granted (or 110% of the Fair Market Value of the Common Stock if the award is granted to a stockholder who, at the time the option is granted, owns or is deemed to own stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any parent or subsidiary of the Company).
Term of Options; Modifications
The Plan Administrator will set the term of each stock option, but no Incentive Stock Option will be exercisable more than ten years after the date such option is granted (or five years for an Incentive Stock Option granted to a stockholder who, at the time the option is granted, owns or is deemed to own stock possessing more than 10% of the total combined voting power of all classes of capital stock of the Company or of any parent or subsidiary of the Company).
Payment; No Deferrals.
Awards granted under the 2012 Plan may be settled through exercise by (i) cash payments, (ii) the delivery of Common Stock (valued at Fair Market Value), (iii) the cashless exercise of such award, (iv) the granting of replacement awards, (v) combinations thereof as the Plan Administrator will determine, in its sole and absolute discretion, or (vi) any other method authorized by the 2012 Plan. The Plan Administrator will not permit or require the deferral of any award payment, including, without limitation, the payment or crediting of interest or dividend equivalents and converting such credits to deferred stock unit equivalents. No award granted under the 2012 Plan will contain any deferral feature.
Other Stock-Based Awards
Stock Appreciation Rights.
The Plan Administrator may grant stock appreciation rights, either in tandem with a stock option granted under the 2012 Plan or with respect to a number of shares for which no option has been granted. A stock appreciation right will entitle the holder to receive, with respect to each share of stock as to which the right is exercised, payment in an amount equal to (i) the excess of the Fair Market Value of one share of Common Stock on the date the right is exercised, over (ii) the Fair Market Value of one share of Common Stock on the date the right is granted; provided, however, that in the case of stock appreciation rights granted in tandem with or otherwise related to any award under the 2012 Plan, the grant price per share will be at least the Fair Market Value per share of Common Stock on the date the right was granted. The Plan Administrator may establish a maximum appreciation value payable for stock appreciation rights and such other terms and conditions for such rights as the Plan Administrator may determine, in its sole and absolute discretion.
Restricted Stock Awards.
The Plan Administrator may grant restricted stock awards consisting of shares of Common Stock or denominated in units of Common Stock in such amounts as determined by the Plan Administrator, in its sole and absolute discretion. Restricted stock awards may be subject to (i) forfeiture of such shares upon termination of employment or Service (as defined below) during the applicable restriction period, (ii) restrictions on transferability, (iii) limitations on the right to vote such shares, (iv) limitations on the right to receive dividends with respect to such shares, (v) attainment of certain performance goals, such as those described in Section 5.8(c) of the 2012 Plan, and (vi) such other conditions, limitations, and restrictions as determined by the Plan Administrator, in its sole and absolute discretion, and as set forth in the instrument evidencing the award. These restrictions may lapse separately or in combinations or may be waived at such times, under such circumstances, in such installments, or otherwise as determined by the Plan Administrator, in its sole and absolute discretion. Certificates representing shares of Common Stock subject to restricted stock awards will bear an appropriate legend and may be held subject to escrow and such other conditions as determined by the Plan Administrator until such time as all applicable restrictions lapse.
Performance Share Awards.
The Plan Administrator may grant performance share awards that give the award recipient the right to receive payment upon achievement of certain performance goals established by the Plan Administrator, in its sole and absolute discretion, as set forth in the instrument evidencing the award. Such payments will be valued as determined by the Plan Administrator and payable to or exercisable by the award recipient for cash, shares of Common Stock (including the value of Common Stock as a part of a cashless exercise), other awards, or other property as determined by the Plan Administrator. Such conditions or restrictions may be based upon continuous Service (as defined below) with the Company or the attainment of performance goals related to the award holder’s performance or the Company’s profits, profit growth, profit-related return ratios, cash flow, stockholder returns, or such other criteria as determined by the Plan Administrator. Such performance goals may be (i) stated in absolute terms, (ii) relative to other companies or specified indices, (iii) to be achieved during a period of time, or (iv) as otherwise determined by the Plan Administrator.
Other Stock-Based Awards.
The Plan Administrator may grant such other awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, as may be deemed by the Plan Administrator to be consistent with the purposes of the 2012 Plan and applicable laws and regulations. Such other awards may include, without limitation, (i) shares of Common Stock awarded purely as a bonus and not subject to any restrictions or conditions, (ii) convertible or exchangeable debt or equity securities, (iii) other rights convertible or exchangeable into shares of Common Stock, and (iv) awards valued by reference to the value of shares of Common Stock or the value of securities or the performance of specified subsidiaries of the Company.
Transferability
Any Incentive Stock Option granted under the 2012 Plan will, during the recipient’s lifetime, be exercisable only by such recipient, and will not be assignable or transferable by such recipient other than by will or the laws of descent and distribution. Except as specifically allowed by the Plan Administrator, any other award granted under the 2012 Plan and any of the rights and privileges conferred thereby will not be assignable or transferable by the recipient other than by will or the laws of descent and distribution and such award will be exercisable during the recipient’s lifetime only by the recipient.
Term of the 2012 Plan
The 2012 Plan will terminate on February 23, 2022, unless sooner terminated by the Board. After the 2012 Plan is terminated, no future awards may be granted under the 2012 Plan, but awards previously granted will remain outstanding in accordance with their applicable terms and conditions and the 2012 Plan’s terms and conditions.
Consideration
The Board or Committee will grant Stock Options under the 2012 Plan in consideration for services rendered. There will be no other consideration received or to be received by the Company or any of its subsidiaries for the granting or extension of Stock Option under the 2012 Plan.
For the first three quarters of 2013, our Directors were paid $500 per quarter for sitting on the Board of Directors. Beginning in the fourth quarter of 2013, Director compensation was increased to $600 per quarter.
The table below sets forth the Compensation paid to our Directors during the fiscal year ended December 31, 2013.
| Director | | Fees Earned or Paid in Cash | | | All Other Compensation | | | Stock Awards | | | Total | |
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| (1) | Mr. Lorenz was paid $205,000 in salaries and bonuses for his position as CEO, in addition to the $2,100 he was paid for sitting on the Board of Directors. Mr. Lorenz was granted on September 20, 2013, 450,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 225,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options , determined by the Black-Scholes method, in accordance with FASB ASC 718, was $ 198,090. |
| (2) | Mr. Flach was paid $1,000 as compensation for sitting on the Board of Directors. Mr. Flach served on the Board of Directors from November 28, 2011, to July 29, 2013. |
| (3) | Mr. Jaap was paid $2,000 in consulting services for his work on a special project, in addition to the $2,100 he was paid for sitting on the Board of Directors. Mr. Japp was granted on September 20, 2013, 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $ 44,020.. |
| (4) | Mr. Miller was paid $72,000 in consulting services for his work on a special project, in addition to the $1,000 he was paid for sitting on the Board of Directors. Mr. Miller served on the Board of Directors from November 28, 2011, to July 29, 2013. |
| (5) | Mr. Ioia, who until August 22, 2014, was a member of our Board of Directors, was paid $74,069 pursuant to his consulting agreement, in addition to his compensation of $2,100 for sitting on the Board of Directors. On September 23, 2013, Mr. Ioia was granted 100,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 50,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $ 44,020 . |
| (6) | Mr. Opler was paid $600 as compensation for sitting on the Board of Directors. On September 20, 2013, Mr. Opler was granted 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 25,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $ 22,010. |
| (7) | Ms. Smith was paid $600 as compensation for sitting on the Board of Directors. On September 20, 2013, Ms. Smith was granted 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. 25,000 of the options granted vested immediately upon grant with the balance of the options vesting fifty percent on each of the next two anniversaries of the grant date. The aggregate grant date estimated fair value of these options, determined by the Black-Scholes method, in accordance with FASB ASC 718, was $ 22,010. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
None reportable under Item 404 of Regulation S-K.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding our Common Stock beneficially owned on August 29 , 2014, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding common stock, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. In general, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days. Shares of Common Stock subject to options, warrants or convertible securities exercisable or convertible within 60 days of the date of determination are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person. To the best of our knowledge, subject to community and marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.
Name and Address of Beneficial Owner (1) | | Number of Shares Beneficially Owned | | | Percentage of Outstanding Common Stock (2) | |
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| Executive Officers and Directors | | | | | | |
John Lorenz --CEO, President, and Chairman of the Board of Directors | | | | | | | | |
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Alicia Williams Young --Chief Financial Officer, Secretary, and VP of Internal Operations | | | | | | | | |
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Richard Geib --Chief Technical Officer | | | | | | | | |
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Todd Smith --Chief Operating Officer | | | | | | | | |
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Janet Carnell Lorenz --Chief Business Development Officer | | | | | | | | |
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Richard Q. Opler --Director | | | | | | | | |
Dwight Mamanteo --Director | | | | | | | | |
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Executive Officers and Directors as a group ( 9 persons) | | | | | | | | |
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Leonid Frenkel 401 City Avenue, Suite 528 Bala Cynwyd, PA 19004 | | | | | | | | |
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Ralph M. Amato 2098 Cherry Creek Circle Summerlin, NV 89135 | | | | | | | | |
Wynnefield Capital Management, LLC 450 Seventh Avenue, Suite 509 New York, NY 10123 | | | | | | | | |
| (1) | Unless otherwise indicated, the business address of each individual named is 4802 East Ray Road, Suite 23-408, Phoenix, Arizona 85044 . |
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| (2) | Based on 58,190,649 shares of Common Stock of GlyEco, Inc. outstanding as of August 29 , 2014. |
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| (3) | Includes an aggregate of (i) 437,528 shares of Common Stock issuable upon the exercise of options at $1.00 per share until June 27, 2021, (ii) 488,750 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 337,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 337,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023 and (v) 156,000 shares of Common Stock issuable upon exercise of warrants at $1.25 per share until February 15, 2016. Also includes an aggregate of 3, 751,139 shares of Common Stock beneficially held by Mr. Lorenz’s wife, Janet Carnell Lorenz. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Mr. Lorenz is deemed to beneficially own shares of Common Stock held by his wife. |
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| (4) | Includes (i) 15,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021, (ii) 212,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 266,250 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 225 ,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023 , and (v) 21,521 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. |
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| (5) | Includes an aggregate of (i) 100,000 shares of Common Stock issuable upon the exercise of warrants at $0.50 per share until May 3, 2016, (ii) 40,000 shares of Common Stock issuable upon exercise of a warrant at $1.00 per share until June 27, 2021, (iii) 60,000 shares of Common Stock issuable upon exercise of options at $1.00 per share until June 27, 2021, (iv) 127,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (v) 1,350 ,000 shares of Common Stock issuable upon the exercise of warrants at $0. 73 per share until August 4 , 2017, and (vi) 50,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
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| (6) | Includes (i) 255,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (ii) 318,750 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, and (iii) 225 ,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
(7) | Includes (i) 180,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 255,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (iii) 262,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iv) 225 ,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. and (v) 21,521 shares of Common Stock issuable upon the exercise of options at $0.69 per share until June 30, 2024. Also includes an aggregate of 2, 401,612 shares of Common Stock beneficially held by Ms. Carnell Lorenz’s husband, John Lorenz. Pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, Ms. Carnell Lorenz is deemed to beneficially own shares of Common Stock held by her husband. |
| | |
| (8) | Includes (i) 85,000 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, (ii) 112,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until December 5, 2022, (iii) 75 ,000 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023, and (iv) 30,000 shares of Common Stock issuable upon the exercise of warrants at $1.25 until February 15, 2016. |
| | |
| (9) | Includes 37,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
| | |
| ( 10 ) | Includes (i) 20,000 shares of Common Stock issuable upon the exercise of warrants at $1.00 per share until June 27, 2021 (ii) 42,500 shares of Common Stock issuable upon the exercise of options at $0.50 per share until October 25, 2021, and (iii) 37,500 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023. |
| (11) | Includes 25,000 shares of Common Stock issuable upon the exercise of options at $1.04 per share until January 15, 2024. |
| | |
| (12) | Includes 7,266,120 shares that all Directors and Executive Officers as a group have the right to acquire within 60 days of the date of the table set forth above. The 6,152,751 shares of Common Stock that are deemed to be beneficially owned by both John and Janet Lorenz, and that are included in the total beneficial ownership of Common Stock reported for each of them, are only counted once in the total number of shares of Common Stock reported as beneficially owned by the Executive Officers and Directors. |
| ( 13 ) | Consists of (i) 1,000,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $0.0001 per share until May 25, 2015, (ii) 940,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 until February 15, 2016, (iii) 2,605,513 shares of Common Stock issuable upon exercise of a warrant at a purchase price of $1.00 until March 14, 2017, and (iv) 56,250 shares of Common Stock issuable upon the exercise of options at $1.00 per share until September 20, 2023 . |
| | |
| (14) | Includes (i) 100,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until September 1, 2015, (ii) 250,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until December 1, 2015, and (iii) 400,000 shares of Common Stock issuable upon the exercise of a warrant at a purchase price of $1.00 per share until December 10, 2015. |
| | |
| (15) | Entities included: Wynnefield Partners Small Cap Value, L.P.I, Wynnefield Partners Small Cap Value, L.P., and Wynnefield Small Cap Value Offshore Fund, Ltd. Mr. Mamanteo, a member of our Board of Directors, serves as a Portfolio Manager at Wynnefield Capital. |
Except as set forth in this prospectus, there are no arrangements known to us, the operation of which may at a subsequent date result in a change in control of the Company.
This prospectus relates to the registration of 36,344,824 shares of our common stock. The selling stockholders identified in this prospectus may offer the shares of our common stock at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale or at negotiated prices. See “Plan of Distribution” for additional information.
We believe, based on information supplied by the following persons, that the persons named in the table below have sole voting and investment power with respect to all shares of common stock which they beneficially own. The information presented in the columns under the heading “Beneficially Ownership After Offering” assumes the sale of all of our shares offered by this prospectus. The registration of the offered shares does not mean that any or all of the selling stockholders will offer or sell any of these shares. Except as set forth below, none of the selling shareholders (1) are a broker-dealer or are affiliates of a broker-dealer, or (2) have within the past three years had any position, office or other material relationship with our company or any of its predecessors or affiliates.
| Name | | No . of Shares Beneficially Owned | | | No. of Shares Offered | | | Beneficial Ownership After Offering(1) | | | Percentage of Beneficial Ownership After Offering | |
| | | | | | | | | | | | | |
| James Abel * | | | 3,000 | | | | 3,000 | | | | 0 | | | | 0 | |
| Susan Adair + | | | 50 | | | | 50 | | | | 0 | | | | 0 | |
| Jonathon Adams + | | | 75 | | | | 75 | | | | 0 | | | | 0 | |
| Alert Industries Defined Benefit Pension Plan * (2) | | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| Asghar Ali (3) | | | 20,000 | | | | 20,000 | | | | 0 | | | | 0 | |
| Byron A. Allen, Jr. (4) | | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
| Alpha Capital (5) | | | 175,000 | | | | 175 ,000 | | | | 0 | | | | 0 | |
| Alvin Fund (6) | | | 1,100,000 | | | | 1,100,000 | | | | 0 | | | | 0 | |
| Diana Amato + | | | 21 | | | | 21 | | | | 0 | | | | 0 | |
| Bradley C. Anderson (7) | | | 31,000 | | | | 31,000 | | | | 0 | | | | 0 | |
Nicholas Aristomenis Aretakis * | | | 8,000 | | | | 8,000 | | | | 0 | | | | 0 | |
| | | 28,000 | | | | 28,000 | | | | 0 | | | | 0 | |
| | | 400,000 | | | | 400,000 | | | | 0 | | | | 0 | |
| | | 295 | | | | 295 | | | | 0 | | | | 0 | |
| | | 50,000 | | | | 50 ,000 | | | | 0 | | | | 0 | |
Bank of Commerce FBO Steven Demko IRA + (10) | | | 25 | | | | 25 | | | | 0 | | | | 0 | |
Barcid Investment Group ( 11 ) | | | 156,000 | | | | 156,000 | | | | 0 | | | | 0 | |
Bard Micro-Cap Value Fund (12) | | | 200,000 | | | | 200,000 | | | | 0 | | | | 0 | |
| | | 1,600 | | | | 1,600 | | | | 0 | | | | 0 | |
| | | 25 | | | | 25 | | | | 0 | | | | 0 | |
| | | 25 | | | | 25 | | | | 0 | | | | 0 | |
Norman R. Beaudoin & Lorrie A. Beaudoin, JTWROS * | | | 10,000 | | | | 10,000 | | | | 0 | | | | 0 | |
Helmar and Kaarina Beregszaszy JTWROS * | | | 20,000 | | | | 20,000 | | | | 0 | | | | 0 | |
George E. Berkner Living Trust * (13) | | | 20,000 | | | | 20,000 | | | | 0 | | | | 0 | |
| | | 68,750 | | | | 68,750 | | | | 0 | | | | 0 | |
Todd M. Bernard Family Trust (15) | | | 200,000 | | | | 200,000 | | | | 0 | | | | 0 | |
| | | 7,500 | | | | 7,500 | | | | 0 | | | | 0 | |
| | | 8,000 | | | | 8,000 | | | | 0 | | | | 0 | |
Bourquin Family Trust (17) | | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
| | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
Cambridge Capital Holdings, Ltd .+ (19) | | | 125 | | | | 125 | | | | 0 | | | | 0 | |
| | | 2,000 | | | | 2,000 | | | | 0 | | | | 0 | |
| | | 150 ,000 | | | | 150,000 | | | | 0 | | | | 0 | |
| | | 10 | | | | 10 | | | | 0 | | | | 0 | |
| | | 2,000 | | | | 2,000 | | | | 0 | | | | 0 | |
| | | 2,000 | | | | 2,000 | | | | 0 | | | | 0 | |
Janet Lynn Carnell * (21 ) | | | 2,726,668 | | | | 2, 726 ,668 | | | | 0 | | | | 0 | |
| | | 2,000 | | | | 2,000 | | | | 0 | | | | 0 | |
| | | 8,000 | | | | 8,000 | | | | 0 | | | | 0 | |
Greg & Nola Casserly Trust (22) | | | 1,400,000 | | | | 1,400,000 | | | | 0 | | | | 0 | |
| | | 20,000 | | | | 20,000 | | | | 0 | | | | 0 | |
| | | 250 | | | | 250 | | | | 0 | | | | 0 | |
| | | 5 | | | | 5 | | | | 0 | | | | 0 | |
Jonathan L. Clarke & Margaret A. Clarke * | | | 6,000 | | | | 6,000 | | | | 0 | | | | 0 | |
| | | 53,500 | | | | 53 ,500 | | | | 0 | | | | 0 | |
Christina D. Collier, Trustee, Adam Boyd Sellers Irrevocable Trust (25) | | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
| | | 12,598 | | | | 12,598 | | | | 0 | | | | 0 | |
| | | 600 | | | | 600 | | | | 0 | | | | 0 | |
Mark & Jackeline Cooperman (27) | | | 30,770 | | | | 30,770 | | | 0 | | | | 0 | |
| | | 7,500 | | | | 7,500 | | | | 0 | | | | 0 | |
| | | 50 | | | | 50 | | | | 0 | | | | 0 | |
| | | 4,800 | | | | 4,800 | | | | 0 | | | | 0 | |
Daniel Long Fine Arts, LLC (28) | | | 50,000 | | | | 50 ,000 | | | | 0 | | | | 0 | |
| | | 400,000 | | | | 400,000 | | | | 0 | | | | 0 | |
William S. Daughterty (30) | | | 51,000 | | | | 51,000 | | | | 0 | | | | 0 | |
| | | 100 | | | | 100 | | | | 0 | | | | 0 | |
| | | 25 | | | | 25 | | | | 0 | | | | 0 | |
Bruce P. DeLaurentis (31) | | | 75,000 | | | | 75,000 | | | | 0 | | | | 0 | |
| | | 26,000 | | | | 26,000 | | | | 0 | | | | 0 | |
| | | 4,000 | | | | 4,000 | | | | 0 | | | | 0 | |
| | | 250 ,000 | | | | 250,000 | | | | 0 | | | | 0 | |
Katharine B. Dickson Mark A. Dickson JTWROS (34) | | | 200,000 | | | | 200,000 | | | | 0 | | | | 0 | |
| | | 75,000 | | | | 75,000 | | | | 0 | | | | 0 | |
| | | 8,000 | | | | 8,000 | | | | 0 | | | | 0 | |
Essex Capital Holdings, Ltd .+ (36) | | | 1,163 | | | | 1,163 | | | | 0 | | | | 0 | |
| | | 50 | | | | 50 | | | | 0 | | | | 0 | |
| | | 20,000 | | | | 20,000 | | | | 0 | | | | 0 | |
Fairfield Investment Group, LLC (38) | | | 25,000 | | | | 25,000 | | | | 0 | | | | 0 | |
The Jason H. Fane 2012 Irrevocable Trust (39) | | | 50,000 | | | | 50 ,000 | | | | 0 | | | | 0 | |
| | | 100 | | | | 100 | | | | 0 | | | | 0 | |
| | | 325,000 | | | | 325,000 | | | | 0 | | | | 0 | |
| | | 76,923 | | | | 76,923 | | | | 0 | | | | 0 | |
Judeth & Alfonso Frallicciardi * | | | 6,000 | | | | 6,000 | | | | 0 | | | | 0 | |
| | | 135 ,000 | | | | 135,000 | | | | 0 | | | | 0 | |
| | | 760,000 | | | | 760,000 | | | | 0 | | | | 0 | |
| | | 80,000 | | | | 80,000 | | | | 0 | | | | 0 | |
| | | 20 | | | | 20 | | | | 0 | | | | 0 | |
Richard S. & Jennifer S. Geib * (43 ) | | | 32,400 | | | | 32,400 | | | | 0 | | | | 0 | |
| | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| | | 227,500 | | | | 227,500 | | | | 0 | | | | 0 | |
| | | 100 | | | | 100 | | | | 0 | | | | 0 | |
Gold Mountain Management, LLC (46) | | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| | | 200,000 | | | | 200,000 | | | | 0 | | | | 0 | |
F.B. Gretsch, Inc .* (48) | | | 120,000 | | | | 120,000 | | | | 0 | | | | 0 | |
Fred B. Gretsch, Sr. Family Trust * (49) | | | 2,800 | | | | 2,800 | | | | 0 | | | | 0 | |
| | | 8 | | | | 8 | | | | 0 | | | | 0 | |
Jon D and Linda W Gruber Trust (50) | | | 750 ,000 | | | | 750,000 | | | | 0 | | | | 0 | |
Jon & Linda Gruber Trust (51) | | | 460,000 | | | | 460,000 | | | | 0 | | | | 0 | |
| | | 50 | | | | 50 | | | | 0 | | | | 0 | |
| | | 90,000 | | | | 90,000 | | | | 0 | | | | 0 | |
| | | 38 | | | | 38 | | | | 0 | | | | 0 | |
| | | 575,000 | | | | 575,000 | | | | 0 | | | | 0 | |
Leonard M. Herman, TTEE, Leonard M. Herman Trust UAD 5/3/1993 (55) | | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| | | 100 | | | | 100 | | | | 0 | | | | 0 | |
| | | 3, 443,554 | | | | 3, 443,554 | | | | 0 | | | | 0 | |
Integral Spine Solutions, Inc. (58) | | | 500 ,000 | | | | 500 ,000 | | | | 0 | | | | 0 | |
| | | 30,000 | | | | 30,000 | | | | 0 | | | | 0 | |
Jaidin Consulting Group LLC + (60) | | | 260 | | | | 260 | | | | 0 | | | | 0 | |
| | | 400,000 | | | | 400,000 | | | | 0 | | | | 0 | |
| | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| | | 108,000 | | | | 108 ,000 | | | | 0 | | | | 0 | |
| | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
John Yadegar & Associates + (64) | | | 88 | | | | 88 | | | | 0 | | | | 0 | |
T. Michael Johnson & Patricia R. Johnson (65) | | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
| | | 200,000 | | | | 200,000 | | | | 0 | | | | 0 | |
JR Sandell Wedbush Securities Inc. Ctdn. IRA Contributory 09/14/13 (67) | | | 25 ,000 | | | | 25,000 | | | | 0 | | | | 0 | |
| | | 36,842 | | | | 36,842 | | | | 0 | | | | 0 | |
Marco Antonio & Jessica Noelle Juarez * | | | 4,000 | | | | 4,000 | | | | 0 | | | | 0 | |
| | | 126 | | | | 126 | | | | 0 | | | | 0 | |
Jane L. Kaplan Revocable Trust UAD 9/6/2000 (69) | | | 50,000 | | | | 50,000 | | | | 0 | | | | 0 | |
| | | 25 | | | | 25 | | | | 0 | | | | 0 | |
| | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
William K. Kellogg 1992 Trust (71) | | | 100,000 | | | | 100,000 | | | | 0 | | | | 0 | |
| | | 75,000 | | | | 75,000 | | | | 0 | | | | 0 | |
| | | 217,500 | | | | 217,500 | | | | 0 | | | | 0 | |
| | | 60,000 | | | | 60 ,000 | | | | 0 | | | | 0 | |
Robert M. Laren & Norma C. Laren, JTWROS * | | | 4,002 | | | | 4 ,002 | | | | 0 | | | | 0 | |
| | | 8 | | | | 8 | | | | 0 | | | | 0 | |
| | | 1,000 | | | | 1,000 | | | | 0 | | | | 0 | |
| | | 40,000 | | | | 40 ,000 | | | | 0 | | | | 0 | |
| | | 30,000 | | | | 30,000 | | | | 0 | | | | 0 | |
Dwight Lorenz Trust * (77) | | | 8,000 | | | | 8,000 | | | | 0 | | | | 0 | |
John d'Arc Lorenz II * (78 ) | | | 488,334 | | | | 488,334 | | | | 0 | | | | 0 | |
Ronn & Patricia Lorenz, JTWROS * | | | 66,000 | | | | 66,000 | | | | 0 | | | | 0 | |
Kurt E. Maier & Jaina Maier 2001 Trust DTD 04/13/01 (79) | | | 75,000 | | | | | | | | 0 | | | | | |
| | | 150,000 | | | | | | | | 0 | | | | | |
| | | | | | | | | | | 0 | | | | | |
Gennaro J. Botta & Anna C. Marchese * | | | | | | | | | | | | | | | | |
Market Surveys International, Inc .+ (82) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | 0 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
David L. McLamb, Inc. (84) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | 58,960 | | | | | | | | 0 | | | | | |
Dale Merski & Lisa Merski * | | | | | | | | | | | | | | | | |
Glenn Michaels & Dionne M. Michaels * | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Brian M. & Samantha A. Miller, JTWROS * | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
MMT Technologies, Inc. (86) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | 0 | | | | | |
| | | 15,000 | | | | | | | | 0 | | | | | |
Nicholas Steven Morgenstern + | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | 0 | | | | | |
| | | | | | | | | | | 0 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Olde Monmouth Stock Transfer Co., Inc .+ (93) | | | | | | | | | | | | | | | | |
Olivenhein Holdings, LLC ( 94 ) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Osher Capital Partners, LLC (96) | | | | | | | | | | | | | | | | |
Stan F. Osofsky Trust + (97) | | | | | | | | | | | | | | | | |
James F. Palacek, TTEE FBO James F. Palacek + (98) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Charles John Philport & Gail Ann Philport, JTWROS * | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
RDA Equities, LLC ( 100 ) | | | | | | | | | | | 0 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | 0 | | | | | |
| | | | | | | | | | | | | | | | |
Philippe Y & Francoise J. Reyns Revocable Trust * (102) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
The Roberts Family Trust Agreement * (104) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Roy Rogers TTEE UTD 1/21/81 FBO The Rogers Family Trust (105) | | | | | | | | | | | | | | | | |
Roy Rogers TTEE UTD 9/28/89 FBO Roy & Ruth Rogers Uni Trust (106) | | | 150,000 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Sahag Consulting, LLC * (116) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
M. Edward Sellers Suzan D. Boyd JTWROS (118) | | | | | | | | | | | 0 | | | | | |
Edward W. & Maria Renee Serreze * | | | | | | | | | | | | | | | | |
Seville Enterprises, LP (119) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Todd Lester Smith * (121 ) | | | | | | | | | | | | | | | | |
Dale F. Snavely Trust UAD 3/30/1993 (122) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Jess and Sandra Starkey * | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
R. Steinbaum S. Garfinkle TTEE Catherine Konner Trust U/W C. Konner FBO H. Garfinkle (126) | | | | | | | | | | | | | | | | |
Steinbaum Family Trust (127) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Dana Zweig & Charles Syintsakos, JTWROS * | | | | | | | | | | | | | | | | |
Tech Valley Capital Group, Inc. (130) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | 0 | | | | | |
The Arthur V. Adams Trust + (133) | | | | | | | | | | | | | | | | |
Henry J. Underwood Trust (134) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | 22,500 | | | | | | | | 0 | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Winston Capital Partners, LP (138) | | | | | | | | | | | 0 | | | | | |
W.R. Valentine, LLC (139) | | | | | | | | | | | 0 | | | | | |
Wright Investment Partnership (140) | | | | | | | | | | | | | | | | |
Wynnefield Partners Small Cap Value, L.P.I. ( 141 ) | | | 1,593,675 | | | | | | | | 0 | | | | | |
Wynnefield Partners Small Cap Value, LP ( 142 ) | | | 1,016,213 | | | | | | | | 0 | | | | | |
Wynnefield Small Cap Value Offshore Fund, Ltd. ( 143 ) | | | 765,113 | | | | | | | | 0 | | | | | |
| | | | | | | | | | | 0 | | | | | |
| | | | | | | | | | | | | | | | |
Alicia Williams & John Young, CPWROS * (145 ) | | | | | | | | | | | | | | | | |
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* The shares being registered were formerly shares of common stock of Global Recycling Technologies, Ltd., a Delaware corporation (“Global Recycling”), and were exchanged for an equal amount of shares of common stock of the Company upon the reverse triangular merger with Global Recycling on November 21, 2011.
+ The shares being registered were formerly shares of common stock of Environmental Credits, Ltd., a Delaware corporation (“Environmental Credits”), and were exchanged for an equal amount of shares of common stock of the Company upon the merger of Environmental Credits into the Company on November 21, 2011.
(1) The numbers in this column assume each selling shareholder sells all of its shares being registered pursuant to this prospectus.
(2) Richard Whitman, Trustee, and Christina Whitman, Trustee, have shared voting and investment control over the shares being registered on behalf of Alert Industries Defined Benefit Pension Plan.
(3) The shares being registered were acquired on June 18, 2013, as consideration for consulting services at a price of $1.00 per share.
(4) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 50,000 warrants at an exercise price of $0.50 per share ($25,000 purchase price).
(5) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 175,000 warrants at an exercise price of $0.50 per share ($87,500 purchase price). Konrad Ackermann, Director, has voting and investment control over the shares being registered on behalf of Alpha Capital.
(6) Of the shares being registered, 200,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $200,000, and 900,000 shares were acquired on July 1, 2014, as a result of an exercise of 900,000 warrants at an exercise price of $0.50 per share ($450,000 purchase price). George Melas has voting and investment control over the shares being registered on behalf of Alvin Fund LLC.
(7) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $20,150.
(8) The shares being registered were acquired on December 10, 2012, in exchange for an aggregate purchase price of $200,000.
(9) The shares being registered were acquired on September 30, 2013, in exchange for an aggregate purchase price of $50,000.
(10) Steven Demko has voting and investment control over the shares being registered on behalf of Bank of Commerce FBO Steven Demko IRA.
(11 ) The shares being registered on behalf of Barcid Investment Group are deemed to be beneficially owned by Mr. John Lorenz, Chief Executive Officer, President , and Chairman of the Company, as Mr. Lorenz has voting and investment control over such shares. The shares were acquired on February 15, 2013, in exchange for an aggregate purchase price of $101,400.
(12) The shares were acquired on October 19, 2012, in exchange for an aggregate purchase price of $100,000. Timothy B. Johnson, Managing Partner, has voting and investment control over the shares being registered on behalf of Bard Micro-Cap Value Fund, LP.
(13) George E. Berkner, Trustee, has voting and investment control over the shares being registered on behalf of George E. Berkner Living Trust.
(14) The shares being registered were acquired on February 10, 2014, pursuant to a performance incentive plan at a price of $1.04 per share.
(15) The shares being registered were acquired on October 29, 2012, at a price of $0.50 per share, as consideration for the Company’s purchase of all of the glycol-related assets and business of Renew Resources, LLC, a South Carolina limited liability company. Todd M. Bernard, Trustee, has voting and investment control over the shares being registered on behalf of Todd M. Bernard Family Trust.
(16) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 7,500 warrants at an exercise price of $0.50 per share ($ 3 ,750 purchase price).
(17) The shares being registered were acquire on February 15, 2013, in exchange for an aggregate purchase price of $32,500. Kent R. Bourquin has voting and investment control over the shares being registered on behalf of Bourquin Family Trust.
(18) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(19) Wilfred Van Dam has voting and investment control over the shares being registered on behalf of Cambridge Capital Holdings, Ltd.
(20) Of the shares being registered, 100,000 shares were acquired on August 15, 2013, in exchange for a purchase price of $100,000, and 50,000 shares were acquired on July 1, 2014, as a result of an exercise of 50,000 warrants at an exercise price of $0.50 per share ($25,000 purchase price).
(21 ) Janet Lynn Carnell is currently the Chief Business Development Officer of the Company .
(22) Of the shares being registered, 1,000,000 shares were acquired on December 21, 2011, in exchange for a purchase price of $500,000, and 400,000 shares were acquired on September 4, 2012, in exchange for a purchase price of $200,000. Greg Casserly, Trustee, has voting and investment control over the shares being registered on behalf of Greg & Nola Casserly Trust.
(23) Carlos Duno, CEO, has voting and investment control over the shares being registered on behalf of Cduno Consulting.
(24) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 53,500 warrants at an exercise price of $0.50 per share ($26,750 purchase price).
(25) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500. Christina D. Collier, Trustee, has voting and investment control over the shares being registered on behalf of Christina D. Collier, Trustee, Adam Boyd Sellers Irrevocable Trust.
(26 ) Kevin J. Conner formerly served as Chief Financial Officer of the Company. The shares being registered were acquired on September 23, 2013, in consideration for consulting services at a price of $1.00 per share.
(27) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $20,000.
(28) The shares being registered were acquired on August 15, 2013, in exchange for an aggregate purchase price of $50,000. Daniel Long, Member, and Lauren Parmington, Member, have shared voting and investment control over the shares being registered on behalf of Daniel Long Fine Arts, LLC.
(29) Of the shares being registered, 200,000 shares were acquired on December 10, 2012, in exchange for an aggregate purchase price of $100,000, and 200,000 shares were acquired on July 1, 2014, as a result of an exercise of 200,000 warrants at an exercise price of $0.50 per share ($100,000 purchase price).
(30) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 51,000 warrants at an exercise price of $0.50 per share ($25,500 purchase price).
(31) Of the shares being registered, 50,000 shares were acquired on August 15, 2013, in exchange for a purchase price of $50,000, and 25,000 shares were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price).
(32 ) The shares being registered on behalf of DeReel Tech, LLC are deemed to be beneficially owned by Mr. Michael Jaap, a director of the Company , as Mr. Jaap has voting and investment control over such shares.
( 33) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 250,000 warrants at an exercise price of $0.50 per share ($125,000 purchase price).
(34) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $100,000.
(35) Of the shares being registered , 50,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $50,000, and 25,000 shares were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price).
(36) Wilfred Van Dam has voting and investment control over the shares being registered on behalf of Essex Capital Holdings, Ltd.
(37) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 20,000 warrants at an exercise price of $0.50 per share ($10,000 purchase price).
(38) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price). Mark Schalles, CFO, has voting and investment control over the shares being registered on behalf of Fairfield Investment Group, LLC.
(39) The shares being registered were acquired on September 30, 2013, in exchange for an aggregate purchase price of $50,000. Danielle Merritt has voting and investment control over the shares being registered on behalf of The Jason H. Fane Irrevocable Trust.
(40 ) James Flach formerly served as a director of the Company.
(41) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $50,000.
(42) Of the shares being registered, 90,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $90,000, and 45,000 shares were acquired on July 1, 2014, as a result of an exercise of 45,000 warrants at an exercise price of $0.50 per share ($22,500 purchase price).
(43 ) Richard S. Geib is currently the Chief Technical Officer of the Company.
(44) Richard S. Geib is currently the Chief Technical Officer of the Company.
(45) Of the shares being registered, 5,000 shares were acquired on February 20, 2013, as consideration for the purchase of equipment at a price of $0.50 per share, and 222,500 shares were acquired on September 27, 2013, as consideration for the Company’s purchase of the assets and business of GSS Automotive Recycling, Inc., a Maryland corporation.
(46) The shares being registered were acquired in a private transaction with Del Rey Management, L.P. The shares were originally acquired on July 1, 2014, as a result of an exercise of 100,000 warrants at an exercise price of $0.50 per share ($50,000 purchase price). Greggory Bied has voting and investment control over the shares being registered on behalf of Gold Mountain Management, LLC.
(47) Of the shares being registered, 100,000 shares were acquired on October 19, 2012, in exchange for a purchase price of $50,000, and 100,000 shares were acquired on July 1, 2014, as a result of an exercise of 100,000 warrants at an exercise price of $0.50 per share ($50,000 purchase price).
(48) Fred B. Gretsch has voting and investment control over the shares being registered on behalf of F.B. Gretsch, Inc.
(49) Fred B. Gretsch, Trustee, has voting and investment control over the shares being registered on behalf of Fred B. Gretsch, Sr. Family Trust.
(50) Of the shares being registered, 450,000 shares were acquired on September 30, 2013, in exchange for an aggregate purchase price of $450,000, and 300,000 shares were acquired on July 1, 2014, as a result of an exercise of 300,000 warrants at an exercise price of $0.50 per share ($150,000 purchase price). Jon D. Gruber, Trustee, and Linda W. Gruber, Trustee, have shared voting and investment control over the shares being registered on behalf of Jon D and Linda W Gruber Trust.
(51) The shares being registered were acquired on December 10, 2012, in exchange for an aggregate purchase price of $250,000. Jon D. Gruber, Trustee, and Linda W. Gruber, Trustee, have shared voting and investment control over the shares being registered on behalf of Jon & Linda Gruber Trust.
(52) The shares being registered were acquired on August 15, 2013, in exchange for an aggregate purchase price of $90,000.
(53) Don Miller, President, has voting and investment control over the shares being registered on behalf of Hawk Engineering.
(54) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 575,000 warrants at an exercise price of $0.50 per share ($287,500 purchase price).
(55) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $65,000. Leonard M. Herman, Trustee, has voting and investment control over the shares being registered on behalf of Leonard M. Herman, TTEE, Leonard M. Herman Trust UAD 5/3/1993.
(56) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $50,000
(57) Joseph A. Ioia served as a director of the Company until August 22, 2014. Of the shares being registered, 3,000,000 shares were acquired on December 10, 2012, as consideration for the Company’s transaction with Full Circle Manufacturing Group, Inc., a New Jersey corporation, 131,600 shares were acquired on February 1, 2013, as consideration for rent at a price of $0.50 per share, 123,077 shares were acquired on April 1, 2013, as consideration for rent at a price of $0.65 per share, and 188,877 shares were acquired on July 1, 2014, as a result of an exercise of 188,877 warrants at an exercise price of $0.50 per share ($94,438.50 purchase price).
(58) The shares being registered were acquired in a private transaction with RDA Equities, LLC on July 9, 2014, at a price of $0.70 per share. Herbert M. Mertens, Chief Executive Officer and President, has voting and investment control over the shares being registered on behalf of Integral Spine Solutions, Inc.
(59 ) The shares being registered on behalf of the Jaap Family Trust are deemed to be beneficially owned by Mr. Michael Jaap, a director of the Company , as Mr. Jaap has voting and investment control over such shares. The shares were acquired on February 15, 2013, in exchange for an aggregate purchase price of $19,500.
(60) Walter Wong has voting and investment control over the shares being registered on behalf of Jaidin Consulting Group , LLC .
(61) Of the shares being registered, 200,000 shares were acquired on October 19, 2012, in exchange for a purchase price of $100,000, and 200,000 shares were acquired on July 1, 2014, as a result of an exercise of 200,000 warrants at an exercise price of $0.50 per share ($100,000 purchase price). Al Ghelfi, Manager, has voting and investment control over the shares being registered on behalf of IVIP Capital, LLC.
(62) Jonathan A. Coury, Manager, has voting and investment control over the shares being registered on behalf of JCC, LLC.
(63) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(64) John Yadegar has voting and investment control over the shares being registered on behalf of Yadegar & Associates.
(65) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(66) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $100,000.
(67) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price). JR Sandell has voting and investment control over the shares being registered on behalf of JR Sandell Wedbush Securities Inc. Ctdn. IRA Contributory 09/14/13.
(68) The shares being registered were acquired on February 27, 2013, in consideration for equipment at a price of $0.95 per share
(69) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500. Jane L. Kaplan, Trustee, has voting and investment control over the shares being registered on behalf of Jane L. Kaplan Revocable Trust UAD 9/6/2000.
(70) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 100,000 warrants at an exercise price of $0.50 per share ($50,000 purchase price).
(71) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $65,000. William K. Kellogg, Trustee, has voting and investment control over the shares being registered on behalf of William K. Kellogg 1992 Trust.
(72) Of the shares being registered, 50,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $50,000, and 25,000 shares were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price).
(73) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 217,500 warrants at an exercise price of $0.50 per share ($108,750 purchase price).
(74) The shares being registered were acquired on August 15, 2013, in exchange for an aggregate purchase price of $60,000.
(75) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $26,000.
(76) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $19,500.
(77) Dwight Lorenz, Trustee, has voting and investment control over the shares being registered on behalf of Dwight Lorenz Trust.
(78 ) John d’Arc Lorenz II is currently the Chief Executive Officer, President and Chairman of the Company.
(79) Of the shares being registered, 50,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $50,000, and 25,000 shares were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price). Kurt E. Maier, Trustee, and Jaina Maier, Trustee, have shared voting and investment control over the shares being registered on behalf of Kurt E. Maier & Jaina Maier 2001 Trust DTD 4/13/01
(80 ) Dwight Mamanteo is currently a director of the Company. Of the shares being registered, 100,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $100,000, and 50,000 shares were acquired on July 1, 2014, as a result of an exercise of 50,000 warrants at an exercise price of $0.50 per share ($25,000 purchase price).
(81) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(82) Eric Monchecourt, CEO, has voting and investment control over the shares being registered on behalf of Market Survey International, Inc.
(83) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $130,000. David Karlin, Managing Director, has voting and investment control over the shares being registered on behalf of Matrix Advisors.
(84) The shares being registered were acquired on September 13, 2013, as consideration for the purchase of equipment at a price of $1.00 per share. David L. McLamb, President, has voting and investment control over the shares being registered on behalf of David L. McLamb, Inc.
(85) Of the shares being registered, 39,960 shares were formerly shares of common stock of Global Recycling and were exchanged for an equal amount of shares of common stock of the Company upon the reverse triangular merger with Global Recycling on November 21, 2011, 10,000 shares were purchased on September 30, 2013, in exchange for a purchase price of $10,000, and 9,000 shares were acquired on July 1, 2014, as a result of an exercise of 9,000 warrants at an exercise price of $0.50 per share ($4,500 purchase price).
(86) The shares being registered were acquired on March 21, 2014, as consideration for the Company’s purchase of the assets and business of MMT Technologies, Inc., a Florida corporation. Samantha Pratt, President, has voting and investment control over the shares being registered on behalf of MMT Technologies, Inc.
(87) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(88) Of the shares being registered, 10,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $10,000, and 5,000 shares were acquired on July 1, 2014, as a result of an exercise of 5,000 warrants at an exercise price of $0.50 per share ($2,500 purchase price).
(89) Of the shares being registered, 46,800 shares were formerly shares of common stock of Global Recycling and were exchanged for an equal amount of shares of common stock of the Company upon the reverse triangular merger with Global Recycling on November 21, 2011, and 20,000 shares were acquired on February 3, 2012, in exchange for a purchase price of $10,000.
(90) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500. Seth L. Pierrepont, Trustee, has voting and investment control over the shares being registered on behalf of MSP 32 Trust.
(91) The shares being registered were acquired on August 15, 2013, in exchange for an aggregate purchase price of $50,000.
(92) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(93) Matt Troster has voting and investment control over the shares being registered on behalf of Olde Monmouth Stock Transfer Co., Inc.
(94 ) The shares being registered on behalf of Olivenhein Holdings, LLC are deemed to be beneficially owned by Mr. Everett Alexander, who until August 22, 2014, was a director of the Company , as Mr. Alexander has voting and investment control over such shares. The shares being registered were acquired on August 15, 2013, in exchange for an aggregate purchase price of $100,000.
( 95 ) Richard Q. Opler is currently a director of the Company.
(96) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price). Ari Kluger, President, has voting and investment control over the shares being registered on behalf of Osher Capital Partners, LLC.
(97) Stan F. Osofsky, Trustee, has voting and investment control over the shares being registered on behalf of Stan F. Osofsky Trust.
(98) James F. Palacek, Trustee, has voting and investment control over the shares being registered on behalf of James F. Palacek, TTEE FBO James F. Palacek.
(99) Of the shares being registered, 100,000 shares were formerly shares of common stock of Environmental Credits and were exchanged for an equal amount of shares of common stock of the Company upon the merger of Environmental Credits into the Company on November 21, 2011, 200,000 shares were acquired on August 28, 2012, in exchange for an aggregate purchase price of $100,000, and 100,000 shares were acquired on July 1, 2014, as a result of an exercise of 100,000 warrants at an exercise price of $0.50 per share ($50,000 purchase price).
(100 ) The shares being registered on behalf of RDA Equities, LLC are deemed to be beneficially owned by Mr. Ralph Amato, a beneficial owner of 5% or more of the Company’s common stock , as Mr. Amato is the Managing Partner of RDA Equities, LLC, and has voting and investment control over such shares. Of the shares being registered, 200,000 shares were acquired on August 28, 2012, in exchange for an aggregate purchase price of $100,000, 250,000 shares were acquired on October 5, 2012, in exchange for an aggregate purchase price of $125,000, 400,000 shares were acquired on December 10, 2012, in exchange for an aggregate purchase price of $200,000, and the remaining shares being registered were formerly shares of common stock of Environmental Credits and were exchanged for shares of common stock of the Company upon the merger of Environmental Credits into the Company on November 21, 2011.
(101) The shares being registered were acquired on August 15, 2013, in exchange for an aggregate purchase price of $400,000. The shares are deemed to be beneficially owned by Mr. Everett Alexander, who until August 22, 2014 was a director of the Company, as Mr. Alexander has voting and investment control over such shares.
(102) Philippe Y. Reyns, Trustee, has voting and investment control over the shares being registered on behalf of Philippe Y & Francoise J. Reyns Revocable Trust.
(103) Of the shares being registered, 25,000 shares were acquired on February 15, 2013, in exchange for an aggregate purchase price of $16,250, and 20,000 shares were acquired on July 1, 2014, as a result of an exercise of 20,000 warrants at an exercise price of $0.50 per share ($10,000 purchase price).
(104) Dan Roberts, Member, has voting and investment control over the shares being registered on behalf of The Roberts Family Trust Agreement.
(105) Of the shares being registered, 400,000 shares were acquired on December 10, 2012, in exchange for an aggregate purchase price of $200,000, 400,000 shares were acquired on February 15, 2013, in exchange for a purchase price of $200,000, 200,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $200,000, and 500,000 shares were acquired on July 1, 2014, as a result of an exercise of 500,000 warrants at an exercise price of $0.50 per share ($250,000 purchase price). Roy Rogers, Trustee, has voting and investment control over the shares being registered on behalf of Roy Rogers TTEE UTD 1/21/81 FBO The Rogers Family Trust.
(106) Of the shares being registered, 100,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $100,000, and 50,000 shares were acquired on July 1, 2014, as a result of an exercise of 50,000 warrants at an exercise price of $0.50 per share ($25,000 purchase price). Roy Rogers, Trustee, has voting and investment control over the shares being registered on behalf of Roy Rogers TTEE UTD 9/28/89 FBO Roy & Ruth Rogers Uni Trust.
(107) Lewis Chin has voting and investment control over the shares being registered on behalf of Roma Cafй, Inc .
(108) Of the shares being registered, 181,250 were acquired on January 4, 2012, as a part of the consideration for the Company’s purchase of the assets and business of Recycool, Inc., a Minnesota corporation, 20,000 shares were acquired on December 23, 2011, in exchange for a purchase price of $10,000, and 45,313 shares were acquired on February 10, 2014, pursuant to a performance incentive plan at a price of $1.04 per share.
(109) Of the shares being registered, 163,750 were acquired on January 4, 2012, as a part of the consideration for the Company’s purchase of the assets and business of Recycool, Inc., a Minnesota corporation, and 45,313 shares were acquired on February 10, 2014, pursuant to a performance incentive plan at a price of $1.04 per share.
(110) The shares being registered were acquired on December 23, 2011, in exchange for an aggregate purchase price of $500.
(111) The shares being registered were acquired on December 23, 2011, in exchange for an aggregate purchase price of $500.
(112) The shares being registered were acquired on December 23, 2011, in exchange for an aggregate purchase price of $5,000
(113) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500.
(114) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 77,000 warrants at an exercise price of $0.50 per share ($38,500 purchase price).
(115) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 10,000 warrants at an exercise price of $0.50 per share ($5,000 purchase price).
(116) Grant Sahag has voting and investment control over the shares being registered on behalf of Sahag Consulting, LLC.
(117) Of the shares being registered, 181,250 were acquired on January 4, 2012, as a part of the consideration for the Company’s purchase of the assets and business of Recycool, Inc., a Minnesota corporation, 20,000 shares were acquired on January 17, 2012, in exchange for a purchase price of $10,000, and 45,313 shares were acquired on February 10, 2014, pursuant to a performance incentive plan at a price of $1.04 per share.
(118) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $100,000.
(119) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $50,000. Marvin K. Pollack, Partner, has voting and investment control over the shares being registered on behalf of Seville Enterprises, LP.
(120 ) Keri Smith is currently a director of the Company.
( 121 ) Todd L. Smith is currently the Chief Operating Officer of the Company.
(122) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $50,000. Dale F. Snavely, Trustee, has voting and investment control over the shares being registered on behalf of Dale F. Snavely Trust UAD 3/30/1993.
(123) The shares being registered were acquired on August 1, 2013, as consideration for consulting services at a price of $1.00 per share.
(124) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 125,000 warrants at an exercise price of $0.50 per share ($62,500 purchase price). Wilson Jaeggli, President, has voting and investment control over the shares being registered on behalf of Southwell Capital.
(125) Of the shares being registered, 5,000 shares were acquired on February 20, 2013, as consideration for the purchase of equipment at a price of $0.50 per share, and 222,500 shares were acquired on September 27 , 2013, as consideration for the Company’s purchase of the assets and business of GSS Automotive Recycling, Inc., a Maryland corporation.
(126) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $32,500. Robert S. Steinbaum, Trustee, and Stuart Garfinkle, Trustee, have shared voting and investment control over the shares being registered on behalf of R. Steinbaum S. Garfinkle TTEE Catherine Konner Trust U/W C. Konner FBO H. Garfinkle.
(127) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $65,000. Robert S. Steinbaum, Trustee, has voting and investment control over the shares being registered on behalf of Steinbaum Family Trust.
(128) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 80,000 warrants at an exercise price of $0.50 per share ($40,000 purchase price)
(129 ) Brian G. Swift is an affiliate of Security Research Associates, Inc., a broker dealer . The shares being registered were acquired on July 1, 2014, as a result of an exercise of 136,750 warrants at an exercise price of $0.50 per share ($68,375 purchase price).
(130) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 50,000 warrants at an exercise price of $0.50 per share ($25,000 purchase price). Denise Pallozzi, President, has voting and investment control over the shares being registered on behalf of Tech Valley Capital.
(131) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 30,000 warrants at an exercise price of $0.50 per share ($15,000 purchase price).
(132) The shares being registered were acquired on February 15, 2013, in exchange for an aggregate purchase price of $10,000.
(133) Arthur V. Adams, Trustee, has voting and investment control over the shares being registered on behalf of The Arthur V. Adams Trust.
(134) The shares being registered were acquired on October 19, 2012, in exchange for an aggregate purchase price of $50,000. Henry J. Underwood, Trustee, has voting and investment control over the shares being registered on behalf of Henry J. Underwood Trust.
(135) Wilfred Van Dam has voting and investment control over the shares being registered on behalf of Trafalgar Trust.
(136) Of the shares being registered, 15,000 shares were acquired on September 30, 2013, in exchange for a purchase price of $15,000, and 7,500 shares were acquired on July 1, 2014, as a result of an exercise of 7,500 warrants at an exercise price of $0.50 per share ($3,750 purchase price).
(137) Barry Belasco and Abbey Cottage have shared voting and investment control over the shares being registered on behalf of WFOULSHAM Fund A.
(138) The shares being registered were acquired on September 30, 2013, in exchange for an aggregate purchase price of $50,000. Michael Winston, Managing Partner, has voting and investment control over the shares being registered on behalf of Winston Capital Partners, LP.
(139) Of the shares being registered, 50,000 shares were acquired on October 9, 2012, in exchange for an aggregate purchase price of $25,000, and 100,000 shares were acquired on December 10, 2012, in exchange for an aggregate purchase price of $50,000.
(140) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 25,000 warrants at an exercise price of $0.50 per share ($12,500 purchase price). Sean Wright, Managing Member, has voting and investment control over the shares being registered on behalf of Wright Investment Partnership LP.
(141 ) The shares being registered on behalf of Wynnefield Partners Small Cap Value, L.P.I are deemed to be beneficially owned by Wynnefield Capital Management, LLC, a beneficial owner of 5% or more of the Company’s common stock. Of the shares being registered, 1,062,450 shares were acquired on September 30, 2013, in exchange for a purchase price of $1,062,450, and 531,225 shares were acquired on July 1, 2014, as a result of an exercise of 531,225 warrants at an exercise price of $0.50 per share ($265,612.50 purchase price). Nelson Obus has voting and investment control over the shares being registered on behalf of Wynnefield Partners Small Cap Value, L.P.I.
(142) The shares being registered on behalf of Wynnefield Partners Small Cap Value, LP are deemed to be beneficially owned by Wynnefield Capital Management, LLC, a beneficial owner of 5% or more of the Company’s common stock. Of the shares being registered, 677,475 shares were acquired on September 30 , 2013, in exchange for a purchase price of $677,475, and 338,738 shares were acquired on July 1, 2014, as a result of an exercise of 338,738 warrants at an exercise price of $0.50 per share ($169,369 purchase price). Nelson Obus has voting and investment control over the shares being registered on behalf of Wynnefield Partners Small Cap Value, LP.
(143) The shares being registered on behalf of Wynnefield Small Cap Value Offshore Fund, Ltd. are deemed to be beneficially owned by Wynnefield Capital Management, LLC, a beneficial owner of 5% or more of the Company’s common stock. Of the shares being registered, 510,075 shares were acquired on September 30, 2013, in exchange for a purchase price of $510,075, and 255,038 shares were acquired on July 1, 2014, as a result of an exercise of 255,038 warrants at an exercise price of $0.50 per share ($127,519 purchase price). Nelson Obus has voting and investment control over the shares being registered on behalf of Wynnefield Partners Small Cap Value Offshore Fund, Ltd.
(144) The shares being registered were acquired on July 1, 2014, as a result of an exercise of 10,000 warrants at an exercise price of $0.50 per share ($5,000 purchase price).
(145 ) The shares being registered on behalf of Alicia Williams & John Young, CPWROS are deemed to be beneficially owned by Ms. Alicia Williams Young, Chief Financial Officer of the Company.
The selling shareholders may sell our common stock covered by this prospectus (the “registered securities”) from time to time in one or more transactions at:
| | - | prevailing market prices at the time of sale; |
| | - | varying prices determined at the time of sale; or |
The selling shareholders will act independently of us in making decisions regarding the timing, manner and size of each sale. The selling shareholders may effect these transactions by selling the registered securities to or through broker-dealers or directly to investors. Broker-dealers engaged by the selling shareholders may arrange for other broker-dealers to participate in the sales.
The registered securities may be sold in one or more of the following transactions:
| | - | a block trade in which a broker-dealer attempts to sell the shares of the registered securities as agent but may resell a portion of the block as principal to facilitate the transaction; |
| | - | a purchase by a broker-dealer as principal and resale by the broker-dealer for its account under this prospectus; |
| | - | an exchange distribution in accordance with the rules of the exchange; |
| | - | ordinary brokerage transactions and transactions in which a broker solicits purchasers; |
| | - | privately negotiated transactions, including directly to investors; and |
| | - | a combination of any of the above transactions. |
We may amend or supplement this prospectus from time to time to describe a specific plan of distribution. If the plan of distribution involves an arrangement with a broker-dealer for the sale of the registered securities through a block trade, special offering, exchange distribution or secondary distribution, or a purchase by a broker-dealer, the amendment or supplement will disclose:
| | - | the name of the selling shareholders and the participating broker-dealer; |
| | - | the number of shares of the registered securities involved; |
| | - | the price at which the shares of the registered securities are sold; |
| | - | the commissions paid or discounts or concessions allowed to the broker-dealer; |
| | - | that the broker-dealer did not conduct any investigation to verify the information contained or incorporated by reference in this prospectus; and |
| | - | other facts material to the transaction. |
The selling shareholders may enter into hedging transactions with broker-dealers or affiliates thereof in connection with distributions of the registered securities. In these transactions, broker-dealers or affiliates may engage in short sales of the registered securities pursuant to this prospectus to offset the positions they assume with the selling shareholders and use shares of the registered securities received from the selling shareholders to close out their short positions. The selling shareholders also may sell the registered securities short, deliver this prospectus in connection with some or all of those sales and redeliver the registered securities to close out their short positions. The selling shareholders may enter into option or other transactions with broker-dealers which require the delivery to the broker-dealer or an affiliate thereof of shares of the registered securities. The broker-dealer may then resell or otherwise transfer the shares of the registered securities under this prospectus. The selling shareholders also may loan, pledge or grant a security interest in some or all of the registered securities covered by this prospectus to a broker-dealer or an affiliate thereof. The broker-dealer may sell the loaned or pledged registered securities under this prospectus.
Broker-dealers or agents may receive compensation from the selling shareholders in the form of commissions, discounts or concessions. Broker-dealers or agents may also receive compensation from the purchasers of the registered securities for which they act as agents or to whom they sell as principals, or both. A broker-dealer’s compensation will be negotiated in connection with the sale and may exceed the broker-dealer’s customary commissions. Broker-dealers, agents or the selling shareholders may be deemed to be “underwriters” within the meaning of the Securities Act in connection with sales of the registered securities. Any commission, discount or concession received by these broker-dealers or agents and any profit on the sale of the registered securities purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act.
Selling stockholders who are “underwriters” within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In addition, any securities covered by this prospectus, which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the registered securities. There is currently no coordinating broker acting in connection with the proposed sale of the registered securities by the selling shareholders.
We agree to keep this prospectus effective until the earlier of (i) the date on which all of the shares of the registered securities have been sold pursuant to this prospectus, (ii) the expiration of the holding period that would be applicable to the registered securities under Rule 144 under the Securities Act were it not held by an affiliate of ours, or (iii) the sale of all of the shares of the registered securities, pursuant to Rule 144. The registered securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states the registered securities may not be sold unless it has been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
In order to comply with the applicable securities laws of particular states, if applicable, the shares of registered securities will be sold in the jurisdictions only through registered or licensed brokers or dealers. In addition, in particular states, the shares of registered securities may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, or the Exchange Act, any person engaged in the distribution of the registered securities may not simultaneously engage in market making activities with respect to the registered securities for a period of two business days prior to the commencement of the distribution. In addition, the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the registered securities by the selling shareholders or any other person. We will make copies of this prospectus available to the selling shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.
We will pay all costs, expenses and fees associated with the registration of the registered securities, including without limitation, SEC filing fees and expenses of compliance with state securities or “blue sky” laws. The selling shareholders will pay all underwriting commissions and discounts, selling or placement agent fees or broker fees and commissions, and transfer taxes, if any, associated with the sale of the registered securities. The selling shareholders may agree to indemnify any broker-dealer or agent that participates in sales of the registered securities against specified liabilities, including liabilities arising under the Securities Act. The selling shareholders have agreed to indemnify certain persons against specified liabilities in connection with the offering of the registered securities, including liabilities arising under the Securities Act.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 300,000,000 shares of common stock, par value $0.0001 per share, of which 58,190,649 shares are issued and outstanding as of August 29 , 2014.
The holders of our common stock are entitled to receive dividends as may be declared by our Board of Directors; are entitled to share ratably in all of our assets available for distribution upon winding up of the affairs of our Company; and are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all meetings of the shareholders.
The shareholders are not entitled to preference as to dividends or interest; preemptive rights to purchase in new issues of shares; preference upon liquidation; or any other special rights or preferences.
As of the date of this prospectus, we have not paid any cash dividends to stockholders. The declaration of any future cash dividends, if any, will be at the discretion of the Board of Directors and will depend on our earnings, if any, capital requirements and financial position, general economic conditions and other pertinent conditions. It is our present intention not to pay any cash dividends in the near future.
The audited consolidated financial statements of the Company and its subsidiaries as of and for the years ended December 31, 2013, and 2012, were audited by Semple, Marchal & Cooper, LLP, and Jorgensen Co., respectively, each an independent registered public accounting firm, and to the extent set forth in their reports are included herein in reliance upon the authority of these firms as experts in accounting and auditing.
The validity of our common stock offered hereby will be passed upon for us by Squire Patton Boggs (US) LLP, Phoenix, Arizona.
This prospectus is part of a registration statement on Form S-1 we have filed with the SEC. We have not included in this prospectus all of the information contained in the registration statement and you should refer to our registration statement and its exhibits for further information.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at www.sec.gov.
Our website address is www.glyeco.com. The information on our website is not incorporated into this prospectus.
GLYECO, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2013 AND 2012
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Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders of
GlyEco, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of GlyEco, Inc. and subsidiaries as of December 31, 2013 and the related consolidated statement of operations, stockholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GlyEco, Inc. and subsidiaries at December 31, 2013, and the results of its operations, and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has yet to achieve profitable operations and is dependent on its ability to raise capital from stockholders or other sources to sustain operations and to ultimately achieve viable profitable operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Semple, Marchal & Cooper, LLP
Certified Public Accountants
Phoenix, Arizona
April 15, 2014
GlyEco, Inc.
We have audited the accompanying consolidated balance sheets of GlyEco, Inc., a Nevada corporation, as of December 31, 2012 and December 31, 2011, and the related consolidated statements of operations, shareholders' equity and cash flows for the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of GlyEco, Inc. as of December 31, 2012 and December 31, 2011, and the consolidated results of its operations and its cash flows for the two years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Jorgensen & Co.
Jorgensen & Co.
