|• FORM 10-Q • EXHIBIT 31.1 • EXHIBIT 32.1|
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
Definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
¨ Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
The number of shares outstanding of each of the issuer's classes of common equity as of July 31, 2012: 62,475,600
Part 1 Financial Information
Item 1 Financial Statements
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
Green Energy Renewable Solutions, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Note 1 – Basis of Presentation
The unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year. The interim financial statements should be read in conjunction with the financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2011.
The consolidated interim financial statements include our wholly owned subsidiaries. All significant inter-company transactions and balances have been eliminated.
On April 1, 2010, the Company entered into development stage accumulating a net loss of $5,780,877 from April 1, 2010 to June 30, 2012.
Note 2 – Going Concern
The accompanying consolidated interim financial statements have been prepared assuming that we will continue as a going concern. The Company has incurred a total accumulated deficit of $4,514,336 at June 30, 2012 and an accumulated deficit of $5,780,877 during development stage period from April 1, 2010 to June 30, 2012. Our ability to continue as a going concern is dependent upon the Company implementing its business plans resulting in profitable operations. The consolidated interim financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue in existence. The Company also intends to position itself so that it may be able to raise additional funds through the capital markets and to raise additional borrowings. However, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
Note 3 – Summary of Significant Accounting Policies
a) Basis of Presentation
The accompanying consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Significant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below.
b) Basis of Consolidation
The consolidated financial statements include the accounts of Green Energy Renewable Solutions and its wholly owned subsidiaries.
On May 24, 2010, the Company acquired 100% of the outstanding stock of Media and Technology Solutions, Inc. On the date of acquisition, Media and Technology was 95% owned by Blue Atelier, Inc., the majority shareholder of Green Energy Renewable Solutions, Inc. and the acquisition was accounted by means of a pooling of the entities from the date of inception of Media and Technology on February 1, 2010 because the entities were under common control.
On July 27, 2011, the Company incorporated a new wholly owned subsidiary, E World Corp. and by way of an assignment agreement, the Company assigned a number of letters of intent and various rights and obligations relating to rights held by Green Energy Renewable Solutions, Inc. to E World Corp. Inc. The Company also transferred 100% of its stock held in its wholly owned subsidiary Media and Technology Solutions, Inc. to E World Corp., and as a result Media and Technology, Inc became a wholly owned subsidiary of E World Corp.
On February 1, 2012, E World Corp., along with its subsidiary was spun-out as a separate private company by way of share dividend and the financial statements include the operations of E World Corp and its subsidiaries up to that date.
All significant inter-company transactions and balances have been eliminated.
c) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents
e) Significant Risks and Uncertainties
The Company's management believes that changes in any of the following areas could have a material adverse effect on the Company's future financial position, results of operations or cash flows: the Company's limited operating history; the Company’s ability to generate profits and cash flow; advances and trends in new technologies and industry standards; competition from other competitors; regulatory or related factors; risks associated with the Company's ability to attract and retain employees necessary to support its growth; and risks associated with the Company's growth strategies and the risks associated with the Company’s ability to raise finance on satisfactory terms to implement its business plan.
f) Basic and Diluted Net Earnings (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260-10, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive and is not presented in the accompanying statements.
g) Fair Value of Financial Instruments
The carrying value of the Company’s financial instruments, including cash, due to shareholders/related parties and accounts and other payables approximate their fair values due to the immediate or short-term maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.
h) Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash. The Company places its cash with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management also routinely assesses the financial strength and credit worthiness of any parties to which it extends funds and as such, it believes that any associated credit risk exposures are limited.
i) Recent Accounting Pronouncements
The Company has evaluated recent pronouncements through Accounting Standards Updates “ASU” 2012-2 and believes that none of them will have a material impact on the Company’s financial position, results of operations or cash flows.
j) Revenue Recognition
The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for warranty costs, sales returns, bad debts, and other allowances based on its historical experience.
j) Share-based Payments
The Company records stock-based compensation issued to non-employees or other external entities for goods and services at either the fair market value of the shares issued or the value of the services received, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30.
Note 4 – Related Party Transactions
The Company records transactions of commercial substance with related parties at amounts agreed to between the related parties and management, which are meant to approximate fair value. Amounts due to shareholders/related parties are non-interest bearing, unsecured, and due upon demand.
The following is a list of related party balances as of June 30, 2012 and December 31, 2011:
Related party transactions during the period include consultancy fee charges for the three month and six month periods ending June 30, 2012 and 2011 and for the Development Stage period from April 1, 2010 to June 30, 2012. Please see below:
On April 17, 2012, the Board approved the issue of common stock as a bonus incentive to company management with the issue of 5,200,000 shares of common stock to each of CEO Joe DuRant and Executive Vice President Business Development Frank O Donnell and 2,600,000 shares of common stock to CFO Gerry Shirren. The stock issued reflects the effect of the stock dividend/forward split.
The common stock issued as compensation during the six month period ending June 30, 2012 was as follows:
The stock issued reflects the effect of the stock dividend/forward split.
Note 5 Spin-out of E World Corp and Share Dividend
By way of an assignment agreement between E World Corp and Green Energy Renewable Solutions, a number of agreements, letters of intent and various rights and any obligations relating to these rights held by Green Energy Renewable Solutions, Inc. were assigned to and accepted by E World Corp. In addition, Media and Technology Solutions, Inc. became a wholly owned subsidiary of E World Corp. with the transfer of stock held by Green Energy Renewable Solutions Inc. to E World Corp. In an additional agreement between Green Energy Renewable Solutions, Inc. and E World Corp, E World Corp. assumed all the liabilities held by Green Energy Renewable Solutions, Inc. to various related parties and shareholders in return for full payment and a balancing payable amount due to E World Corp which will remain between the companies as an unsecured debt without interest.
These transactions were to facilitate the agreement entered into between Green Energy Renewable Solutions, Inc. and Green Renewable Energy Solutions, Inc. on August, 27, 2011 which was subsequently cancelled and replaced by a new agreement on September 17, 2011 (see Note 6).
E World Corp. completed a forward split of its common stock of 5 to 1 following which, E World Corp. had 9,252,526 shares outstanding, the same amount of stock outstanding of Green Energy Renewable Solutions, Inc. on January 31, 2012 to allow for the share dividend of one share in E World Corp for each Green Energy Renewable Solutions share held on that date.
Effective January 31, 2012, the spin-out of E World Corp was completed with the share distribution of 9,252,526 shares of E World Corp common stock. The effect on Green Energy Renewable Solutions Balance sheet is set fourth below and the book value of E World Corp’s net assets (liabilities) on the date of the spin-out was $(254,028).
As the net book value of E World Corp net assets was negative, the impact on the Green Energy Renewable Solutions Balance Sheet was in increase in Additional Paid-In Capital of $254,028.
Since the shareholders of Green Energy Renewable Solutions are also the shareholders of E World Corp. the spin-out transaction was recorded based on accounting for entities under common control.
The Consolidated Statement of Operations for the six months ended June 30, 2012 includes E World Corp and its subsidiaries for the period from January 1, 2012 to January 31, 2012. The Consolidated Statement of Operations includes the following relating to E World Corp:
On June 30, 2012 amounts owned by the Company to E World Corp totaled $268, 611.
Note 6 – Asset Purchase Agreement with Green Renewable Energy Solutions
On September 17, 2011, Green Energy Renewable Solutions, Inc. (“the “Company”) entered into a letter of intent (the “LOI”) with Green Renewable Energy Solutions, Inc. (“GRES”) the purpose of which was to cancel the Binding Letter of Intent entered into between the Parties on July 27, 2011 and to replace this with a new agreement. The effect of the Letter of Intent was completed with the execution of the Asset Purchase Agreement executed on February 4, 2012 following the completion on the reverse split and spin out set out in the Letter of Intent.
The Letter of Intent agreement is summarized below:
In a clarification and amendment to the LOI dated September 17, 2011 and the Green Renewable Energy Solutions, Inc. Asset Purchase Agreement, the Parties agreed the following:
That the capital structure on a 50/50 basis will be based on the ownership of Blue Atelier as the company controlling shareholder and exclude the non-related parties shareholding and the public float.
In recognition of the fact that E World Corp has provided and continues to provide funding to cover a number of expenses relating to the operation of the company and that Green Renewable Energy Solutions Inc. has not contributed proportionately to these expenses a temporary adjustment will be made to the 50/50 capital structure outlined above. The Parties agree that until amount funded for expense items is repaid in full to E World Corp and /or Blue Atelier as the provider of these funds and the new company operation achieves the “pro forma‟ projections, the Capital Structure will be on a 60/40 basis with the E World controlling shareholders and not the 50/50 as set out in 1 above. The adjustment in the capital structure outlined above resulted in the deferred consideration of 2,303,333 shares.
Asset Purchase Agreement: The Asset Purchase Agreement was completed on February 04, 2012 and the assets purchased consisted principally of certain contracts for the supply of waste and waste technology support and the consideration in respect of the asset purchase was the share issue set out below:
Forton Technologies LLC gave notice of termination of the Agreement to Co-operate on June 05, 2012. As of June 30, 2012, the proposed funding of the Highland Park waste conversion and recycling project is in progress and as the outcome of this is uncertain at this time, the value attributed to the intangible assets acquired has been fully impaired with a charge of $690,700 in the six month period ended June 30, 2012.
Note 7 – Operating Lease Commitments
The Company terminated its lease of office space on a month to month basis at 1001 Convention Center Drive, Las Vegas, 89109 on January 31, 2012 and its current offices at 2029 Paradise Road, Las Vegas 89104 are made available to the Company on a month to month basis without charge from parties related to Blue Atelier Inc., the Company’s largest shareholder.
The Company has agreed to purchase real estate at Highland Park, Michigan, 48203 and pending closure of the purchase, the company executed a lease agreement on November 11, 2011 to the real estate on a month to month basis, for a period not to exceed 6 months, at $5,000 per month with purchase price of the real estate to be reduced by 50% of the lease payments made. The company incurred lease payments up to and including April 2012 which were expensed in the period. Pending the outcome of an environmental study on the suitability of the property, uncertainty remains as to whether the Company will complete the purchase.
Note 8– Stockholders Equity
As of June 30, 2012, the Company had 150,000,000 shares of common stock authorized at a par value of $0.001.
On January 26, 2012, FINRA approved the 5 to 1 reverse stock split of its issued and outstanding common stock. The stock split has been retroactively applied to these financial statements resulting in a decrease in the number of shares of common stock outstanding with a corresponding increase in additional paid-in capital. All shares amounts have been retroactively restated to reflect this reverse stock split.
On April 3, 2012, the Company assigned and subsequently converted a number of accounts payable totaling $131,878 of amounts outstanding since 2009. On April 19, 2012, the accounts payable were settled through the issuance of 13,000,000 shares of common stock.
On the date of settlement of the transaction the closing price of the Company’s common stock was $0.10 per share, resulting in an additional charge to financing cost relating to the conversion of $518,122 in the period ending June 30, 2012.
The stock issued reflects the effect of the stock dividend/forward split.
On April 17, 2012 and as described in Note 4 above, the Board of the Company approved the issuance of 13,000,000 shares of restricted common stock to key executives and directors of the Company as a bonus incentive.
On June 27, 2012 the Company announced that its Board of Directors had approved a one share for one share stock dividend of the Company’s common stock, regarding this as an effective forward split. Each shareholder of record at the close of business on June 29, 2012 will receive one additional share for every outstanding share held on the record date. The Articles were amended to reflect this on July 16, 2012 and this received FINRA approval on July 27, 2012. All share amounts in the Financial Statements have been restated to reflect the dividend share/forward split.
Stock issued during the six months ended June 30, 2011 was valued at the closing market price of the shares on either the date approved by the Board of Directors, the date of settlement, or the date the services have been deemed rendered. Please see below for an outline of all shares issuances during the six month period ended June 30, 2012.
As of June 30, 2012 and December 31, 2011, the Company had 62,475,600 (31,237,800 shares prior to the stock dividend/forward split) and 18,505,052 (9,252,526 shares prior to the stock dividend/forward split) shares of common stock outstanding respectively.
Note 9 - Subsequent Events
On June 27, 2012, the Company entered into a stock purchase agreement with Diamond Transport Ltd. under which the company will sell one million shares of common stock at $0.50 per share with a closing of the sale on or before July 15, 2012 with $100,000 to be received as an advance payment on July 05, 2012. The advance payment of $100,000 was received on July 20, 2012 and the closing date of the transaction will be upon receipt of the outstanding balance of $400,000.
On July 03, 2012, the Company executed a letter of intent with Landfill Solutions Corporation, a Puerto Rico corporation under which both parties will develop a major waste diversion program and waste to energy development as part of a remediation project being undertaken as a municipal landfill in Puerto Rico. The project includes contracts for municipal solid waste from four municipal authorities for 500 tons per days at a rate starting at $17 per ton and escalating to $35 per ton after 5 years. The Company has commenced detailed environmental studies and preparation of development plan for full permitting of the landfill remediation works and the waste diversion program.
On July 12, 2012, the Company entered into a Convertible Promissory Note and Securities Purchase Agreement with Asher Enterprises, Inc. providing for the issuance of an 8% Convertible Promissory Note in the principal amount of $32,500 and under which Asher Enterprises, Inc. is entitled to convert the note under certain conditions to common stock at a 42% discount to market price as defined in the related agreements.
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations
This statement may include projections of future results and “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933 as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934 as amended (the “Exchange Act”). All statements that are included in this Quarterly Report, other than statements of historical fact, are forward looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.
The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.
There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
INTRODUCTION AND COMPANY UPDATE
Green Energy Renewable Solutions, Inc. (OTC QB: EWRL), a Florida corporation, is a publicly traded company. Its headquarters are located at 2029 Paradise Road, Nevada 89052.
On September 17, 2011 Green Energy Renewable Solutions entered into a letter of intent (the “LOI”) with Green Renewable Energy Solutions, Inc. (“GRES”) the purpose of which to acquire the assets of GRES which included certain contracts for the acceptance, processing and disposal of construction and demolition waste and as part of this agreement, the Company changed its name to Green Energy Renewable Solutions (“Green Energy Renewable Solutions” or “GERS”), effective December 12, 2011. As part of this LOI, on January 26, 2012 Green Energy Renewable Solutions completed a 5 to 1 reverse split, spun out its subsidiary company E World Corp and Media and Technology Solutions, Inc. and on February 4, 2012 completed the transaction with the issue of stock for the purchase of the assets of Green Renewable Energy Solutions, Inc.
Green Energy Renewable Solutions key area of business is focused on the development of waste conversion and waste to energy opportunities including landfill diversion, waste recycling and energy recovery from construction and demolition waste and municipal solid waste. The Company is currently in development on such opportunities in Michigan and Puerto Rico.
PLAN OF OPERATION
Green Energy Renewable Solutions Inc. (Green Energy Renewable Solutions) The key area of Green Energy Renewable Solutions business is that of waste conversion and waste to energy, a dynamic area of growth potential in the market place with the emphasis on waste conversion using recycling and new technologies that are creating valuable assets and income streams from waste materials.
The waste conversion and recycling operations can achieve high levels of profitability with relatively low investment and there is an existing and growing demand for the services offered by Green Energy. The company seeks out opportunities where there is a short window to positive cash-flow and revenues and where the waste conversion project can be extended to waste to energy generation creating long-term high value assets.
The Green Energy business model is summarized as follows:
Strategies employed include acquisition of existing landfills to internalize control of contracted and historical waste streams. By developing remediation action plans and other strategies the company is seeking acquisition opportunities where operating efficiencies and diversion tactics will allow increased revenue and improved margins. Introduction of recycling for incoming materials can reduce the volume of incoming materials landfilled by over 50% and over 90% with introduction of WTE strategies. Metals, plastics, cardboard/paper and other recyclable materials represent significant potential revenue and the conversion of the remaining material to refuse derived fuel (RDF) for gasification to create fuels and electricity provide further revenue enhancements. The diversion of incoming waste can substantially increase the life of the landfill while maintaining tipping fee income. Increased WTE output can further allow for increased intake of MSW and C&D and corresponding tipping fee income with minimal landfill impact.
Green Energy Renewable Solutions operates in a low risk manner with limited financial exposure on its downside risk while maintaining major upside potential. Green Energy Renewable Solutions’ key expertise from its Board members, its management and its associates gives it a major advantage to successfully exploit this ‘green energy’ business focus and it has a pipeline of opportunities, some of which have rights to proprietary technologies.
The Company is headquartered in Las Vegas, Nevada and is currently developing construction and demolition waste and municipal solid waste diversion, recycling and energy recovery operations in Highland Park, Michigan and in Puerto Rico with other projects in the early planning stages
Waste Diversion, Recycling and Energy Recovery
The Green Energy Business Model is a rapid growth multi-stage model which can be replicated over and over again. The initial construction and demolition waste processing is located on a 15 acre site at Highland Park, Michigan where the company acquired a parcel of real estate at Lincoln Ave. Highland Park, MI in November 2011 and is considering the purchase a further parcel of real estate at Oakman Blvd. Highland Park MI which is had previously leased. The Company is preparing the permit applications for its Highland Park C&D recycling operation and when permitted it will generate revenue from tipping fees and the sale of processed C&D recyclables; primarily metal, plastic, cardboard, asphalt, and wood. Ready markets exist for this sorted and processed waste material with metal waste achieving over $150 per ton. The company will process incoming unsorted C&D for recovery of valuable recycle materials, including metal, cardboard, paper, concrete, asphalt shingles and plastics. The recycling process is projected to increase the value of the waste by a factor of 4. Green Energy acquired contracts under LOI and asset purchase agreement with Green Renewable Energy Solutions, Inc. including a contract with Disposal Specialties, LLC (“Disposable Specialties”) for the supply of construction & demolition debris (C&D). Under the terms of the 20 year term C&D contract, Disposal Specialties will deliver up to 1000 tons of C&D per day to the Company’s Highland Park facility and the Company is guaranteed a minimum “tipping” fee of $10.00 per ton. Up to $3.5m will be required to complete the Highland Park C & D processing and recycling operation.
The eventual construction of an on-site waste-to-energy (WTE) processing plant will allow the Company use some of the C&D materials to produce electricity and sell it to local utilities and municipalities under power purchase agreements (PPAs). Additional revenue will come from the sale of synfuels and other diversified products generated from the WTE process. The WTE technology Green Energy will employ is efficient and clean providing renewable energy with a zero carbon emission impact. The recycling diversion programs from landfill not only provides reduced carbon impact by reusing valuable finite materials but also reduces landfill volume impact by 80+% for C & D and up to 50% for MSW. Further operations utilizing comparable recycling strategies where both C&D and Municipal Solid Waste (“MSW”) are diverted for recycling material recovery and RDF are planned for future growth.
Green Energy Renewable Solutions is in partnership to develop a waste diversion program and waste to energy development as part of a remediation project being undertaken as a municipal landfill in Puerto Rico. In July 2012, the Company entered into a letter of intent with Landfill Solutions Corporation, a Puerto Rico corporation to jointly develop the project and the parties have jointly commenced detailed environmental studies and preparation of development plans for full permitting of the landfill remediation works and the waste diversion program. Once operational, the project will accept and process 500 tons per day of MSW under the four long term municipal contracts at a rate starting at $17 per ton and escalating to $35 per ton after 5 years. The diversion program will also generate revenues from recyclable materials while the project plans the construction of the on-site waste to energy and waste to fuels operation.
RESULTS OF OPERATIONS
SIX MONTH PERIOD ENDED JUNE 30, 2012 COMPARED TO SIX MONTH PERIOD ENDED JUNE 30, 2011
Revenues for the six month period ended June 30, 2012 were $12 compared to $28 for the six month period ended June 30, 2011.
Total operating expense for the six month period ended June 30, 2012 increased by $5,172,591 from $116,782 for the six months ended June 30, 2011 to $5,289,373 for the same period in 2012. The increase was primarily due to an increase in professional fees, financing costs and losses on the settlement of accounts payable through the issuance of common stock.
Interest expense for the six months ended June 30, 2012 decreased from $6,000 for the six months ended June 30, 2011 to $1,054 for the same period in 2012. The interest arose from an 8% convertible note held by Media & Technology with Blue Atelier, Inc., the largest shareholder of Green Energy Renewable Solutions, issued in connection with the purchase of intangible assets and a 10% promissory note held by the Company with Blue Atelier, Inc. in respect of advances made to cover operating costs.
Due to the factors described above, the Company's net loss increased by $5,167,661 from net loss of $122,754 for the six months ended June 30, 2011 to a net loss of $5,290,415 for the same period in 2012.
THREE MONTH PERIOD ENDED JUNE 30, 2012 COMPARED TO THREE MONTH PERIOD ENDED JUNE 30, 2011
Revenues for the three month period ended June 30, 2012 were $0 compared to $28 for the three month period ended June 30, 2011.
Total operating expense for the three month period ended June 30, 2012 increased by $3,993,659 from $63,353 for the three months ended June 30, 2011 to $4,057,066 for the same period in 2012. The increase was primarily due to an increase in professional fees and operational activity.
Interest expense for the three months ended June 30, 2012 was $54 compared to $3,000 for the three months ended June 30, 2011. The interest arose from a 10% promissory note held by the Company with Blue Atelier, Inc. in respect of advances made to cover operating costs. The note matures on August, 31, 2012 with interest due on maturity.
Due to the factors described above, the Company's net loss increased by $3,993,741 from net loss of $63,325 for the three months ended June 30, 2011 to a net loss of $4,057,066 for the same period in 2012.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated interim financial statements have been prepared, assuming that the Company will continue as a going concern. The Company incurred a net loss of $5,290,415, used cash flow from operations of $68,270 for the six months ended June 30, 2012, had a working capital deficiency of $500,656, an accumulated deficit of $4,514,336 along with an accumulated deficit of $5,780,877 during development stage for the period from April 1, 2011 to June 30, 2012. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
Cash totaled $11 on June 30, 2012 compared to $316 as of December 31, 2011.
During the six months ended June 30, 2012, net cash used by operating activities totaled $68,270, compared to net cash used by operating activities of $ 50,316 for the comparable six month period in 2011. Net cash provided by investing activities for the six months ended June 30, 2012 totaled $0 compared to $0 for the comparable six month period in 2011. Net cash provided by financing activities for the six months ended June 30, 2012 totaled $67,965 compared to $49,603 for the comparable six month period in 2011.
The above cash flow activities yielded a net cash decrease of $305 during the six months ended June 30, 2012 compared to an increase of $713 during the comparable prior year period.
The consolidated interim financial statements have been prepared assuming that we will continue as a going concern. The Company had minimal operating revenue and our ability to continue as a going concern is dependent upon the company implementing its business plans resulting in profitable operations. The consolidated interim financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue in existence.
The Company also intends to position itself so that it may be able to raise additional funds through the capital markets and to raise additional borrowings. However, there are no assurances that the Company will be successful in this or any of its endeavours or become financially viable and continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2012. This evaluation was carried out under the supervision of the Company’s Principal Financial Officer, Gerry Shirren. Based upon that evaluation, the Principal Financial Officer concluded that, as of June 30, 2012, our disclosure controls and procedures were effective.
Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations, changes in stockholders’ deficit and cash flows for the periods presented.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Financial Officer, to allow timely decisions regarding required disclosure. Such disclosure controls and procedures are limited in their effect by the limitation of the numbers of staff available to allow for the desirable level of division of responsibilities and oversight of the controls and procedures.
Inherent Limitations on the Effectiveness of Controls
A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Controls
Our management, with the participation of our Principal Financial Officer, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three month period ended June 30, 2012. Based on that evaluation, our Principal Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the three months ended June 30, 2012 that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
None, for the three month period ending June 30, 2012.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The shares issued by the Company during the six months ended June 30, updated to reflect the issue of the dividend share/forward split were as follows:
Item 3. Defaults upon Senior Securities
None, for the six month period ending June 30, 2012.
Item 4. Submission of matters to a Vote of Security Holders
None, for the six month period ending June 30, 2012.
Item 5. Other Information
Item 6. Exhibits
Green Energy Renewable Solutions, Inc. includes by reference the following exhibits:
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.