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EWRL > SEC Filings for EWRL > Form 10-K on 16-Apr-2013All Recent SEC Filings

Show all filings for GREEN ENERGY RENEWABLE SOLUTIONS, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10-K for GREEN ENERGY RENEWABLE SOLUTIONS, INC.


16-Apr-2013

Annual Report


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Green Energy Renewable Solutions, Inc. common stock is quoted on the Over-The-Counter Bulletin Board under the symbol "EWRL.QB". The first available quotations on the Over-The-Counter Bulletin Board appear at the end of January 2007. The quotations provided are for the over the counter market which reflect interdealer prices without retail mark-up, mark-down or commissions, and may not represent actual transactions. The prices included below have been obtained from sources believed to be reliable:

                         Period Ending      High        Low
                        December 31, 2012   $ 0.027     $ 0.025
                       September 30, 2012   $ 0.120     $ 0.094
                            June 30, 2012   $ 0.440     $ 0.289
                           March 31, 2012   $ 0.500     $ 0.500

Holders

Total shares outstanding as of December 31, 2012 were 62,636,850; and were held by approximately 80 shareholders of record and an undetermined number of holders in street name.

Dividend Policy

Green Energy Renewable Solutions, Inc. has never paid a cash dividend on its common stock and does not anticipate paying any cash dividends on its common stock in the next 12 month period.

We intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on common stock will be the sole discretion of the Board of Directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.

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.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

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 Annual 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.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that affect the amounts reported. Note 2 of the accompanying notes to the consolidated financial statements describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:

We are required to make assumptions about matters that are highly uncertain at the time of the estimate; and

Different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

a) Impairment of Long-Lived Assets and Intangible Assets

Long-lived assets and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the recoverability of the long-lived assets and intangible assets (other than goodwill) by comparing the carrying amount to the estimated future undiscounted cash flow associated with the related assets. The Company recognizes impairment of long-lived assets and intangible assets in the event that the net book value of such assets exceeds the estimated future undiscounted cash flow attributed to such assets. The Company uses estimates and judgments in its impairment tests and if different estimates or judgments had been utilized, the timing or the amount of the impairment charges could be different.

b) 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.

Green Energy Renewable Solutions, Inc.

Plan of Operations

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.

Comparable operations in the waste conversion and recycling industry have achieved high levels of profitability with relatively low investment. There is an existing and growing demand for the services to be 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:

1. Secure existing large scale waste streams through acquisition of landfills, joint ventures and contracts with source generators (Acquired waste streams include both municipal solid waste ("MSW") and construction & demolition debris ("C&D").

2. Secure short term revenue and cash flow through landfill remediation plans, introduction of recycling strategies applicable to established waste streams.

3. Introduction of Waste to Energy ("WTE") technology to generate fuels and electricity for sale under long-term contracts.

4. Joint venture and Investment in conversion technologies will offer additional revenue opportunities and will reduce internal capital costs and capture future revenue from external technology sales.

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 Detroit, Michigan 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

Financial Condition and Results of Operations

Below is a comparison of results of operations for the years ending December 31, 2012 and December 31, 2011.

The Company reported a net loss of $5,876,863 for the year ending December 31, 2012 versus a net loss of $336,602 for the year ending December 31, 2011.

For the year ending December 31, 2012; the primary contributors to the net loss of $5,876,863 were executive compensation for the management team of $3,526,970, impairment of intangible assets of $690,700, loss on the settlement of accounts payable paid by stock of $518,122, financing costs of $365,582, professional fees of $493,643 and waste project development fees of $182,448. Interest expense for 2012 was $52,253. For the year ending December 31, 2011; primary contributors to the net loss of $336,602 included professional fees of $46,280; executive compensation of 195,000 other general and administrative expenses of $44,686; interest expense of $12,000 and loss on foreign currency exchange of $1,113.

Prior period comparisons of results are impacted by developing operations during the periods covered.

Liquidity and Capital Resources

During the year ending December 31, 2012 net cash used in operating activities totaled $377,372. Cash generated by financing activities was $378,063 resulting primarily from the sale of common stock for cash and cash used in investing activities totaled $-0-. Increase in cash for the period was $691.

During the year ending December 31, 2011 net cash used in operating activities totaled $180,841. Cash used by investing activities totaled $32,752 from the sales of subsidiary stock for cash prior to acquisition. Cash provided by financing activities totaled $213,188. Decrease in cash for the period was $405.

Convertible Notes

Asher Enterprises Promissory Note I August 7, 2012

On July 10, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $32,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 12, 2013. During the year period ended December 31, 2012 the Company accrued $1,239 in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 58% of the market price, where market price defined as "the average of the lowest three of the last ten closing trading prices on the OTCBB or applicable trading immediately prior to conversion date.

As of December 31, 2012 the convertible note payable was recorded net of unamortized debt and accrued interest discount of $8,316.

Asher Enterprises Promissory Note II August 28, 2012

On August 28, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $32,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 30, 2013. During the year period ended December 31, 2012 the Company accrued $890 in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 58% of the market price, where market price defined as "the average of the lowest three of the last ten closing trading prices on the OTCBB or applicable trading market immediately prior to conversion date.

As of December 31, 2012 the convertible note payable was recorded net of unamortized debt and accrued interest discount of $13,857.

Asher Enterprises Promissory Note III October 12, 2012

On October 12, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $27,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 16, 2013. During the year period ended December 31, 2012 the Company accrued $482 in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 58% of the market price, where market price defined as "the average of the lowest three of the last ten closing trading prices on the OTCBB or applicable trading market immediately prior to conversion date.

As of December 31, 2012 the convertible note payable was recorded net of unamortized debt discount and accrued interest of $14,073.

Asher Enterprises Promissory Note IV November 29, 2012

On November 29, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $27,500. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 3, 2013. During the year period ended December 31, 2012 the Company accrued $193 in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 58% of the market price, where market price defined as "the average of the lowest three of the last ten closing trading prices on the OTCBB or applicable trading market immediately prior to conversion date.

As of December 31, 2012 the convertible note payable was recorded net of unamortized debt discount and accrued interest of $18,764.

JMJ Financial Promissory Note IV October 21, 2012

On October 21, 2012, the Company received funding pursuant to a convertible promissory note in the amount of $35,000. The promissory note is unsecured, bears interest at 5% per annum, and matures on September 30, 2013. During the year period ended December 31, 2012 the Company accrued $292 in interest expense.

The note may be converted at the option of the holder into Common stock of the Company. The conversion price is 58% of the market price, where market price defined as "the average of the lowest three of the last ten closing trading prices on the OTCBB or applicable trading market immediately prior to conversion date.

As of December 31, 2012 the convertible note payable was recorded net of unamortized debt discount and accrued interest of $23,420.

As of December 31, 2012, the Company has reserved a total of 18,826,000 shares of common stock for the potential conversion the above promissory notes.

Blue Atelier Promissory Note

In May 2010, the Company acquired Media and Technology Solutions, Inc., and Media and Technology holds an 8% convertible note with Blue Atelier, Inc., the majority shareholder of Green Energy Renewable Solutions. The convertible note was issued by Media and Technology in connection with the purchase of intangible assets. The note matures on June 30, 2012 with interest due at maturity and may be converted to common stock at a price to be agreed. During the year, as part of an internal reorganization, the ownership of Media and Technology was assigned to E World Corp, a wholly owned subsidiary of Green Energy Renewable Solutions.

After the balance sheet date, E World Corp including its subsidiary company, Media and Technology Solutions, Inc. was spun out as a separate private company by way of share dividend. The convertible note with Blue Atelier, Inc. together with accrued interest remained with Media and Technology Solutions, Inc.

Material Impact of Known Events on Liquidity

Other than the general economic, financial and credit problems being experienced throughout the world markets and economies resulting in a general reduction of available credit and investment funds; we have not identified any known trends or any known demands, commitments, events or uncertainties that will result in or are reasonably likely to result in a material increase or decrease in our liquidity. We have historically financed our operations through the sale of our common equity and continue to experience the same difficulties in the current financial environment as we had in the past. Our limited operational history and lack of current revenues are more of an impact on financing efforts to sustain and expand our operations than the global economic condition.

Cash Flow Requirements for Operations

As of December 31, 2012 we had available cash of $1,007. Based on our historical cash needs and our business plan, we require approximately $945,000 for operations for the coming year. We currently have legal and accounting expenses with no revenue generating operations. We rely on sale of our common shares and advances from our majority shareholder to fund our operating needs.

Going Concern

Our continuation as a going concern is dependent upon obtaining the additional working capital necessary to sustain our current status. As shown in the accompanying financial statements, the Company has incurred an accumulated deficit of $4,514,336 from inception to April 1, 2010 and $6,367,325 during the development stage from April 1, 2010 through December 31, 2012. The future of the Company is dependent upon its ability to obtain additional financing. Management plans to seek additional financing through debt or the sale of its common stock through private placements. There is no assurance that the will raise sufficient funds to continue. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements or financing activities with special purpose entities.

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