Greenway Technologies, Inc. & Subsidiaries 10-K for FY2023
Greenway Technologies, Inc. & Subsidiaries (GWTI)
About this 10-K
Greenway Technologies, Inc. & Subsidiaries filed this 10-K on July 16, 2024, covering the fiscal year ended December 31, 2023 (FY2023).
Headline figures
Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $1.58M
- compared with a net loss of $1.51M a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
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WASHINGTON, D.C. 20549
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$
| Class | Outstanding as of July16, 2024 | |
| Common Stock, par value $0.0001 per share |
Documents
Incorporated by Reference:
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Form 10-K”) contains “forward-looking statements,” all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,” “forecasts,” “projects,” “intends,” “estimates,” and other words of similar meaning. One can identify them by the fact that they do not relate strictly to historical or current facts. These statements are likely to address our growth strategy and financial results. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed, and actual future results may vary materially.
Information regarding market and industry statistics contained in this Form 10-K is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of Securities and Exchange Commission (the “SEC”) filings or economic analysis. We have not reviewed or included data from all sources and cannot assure investors of the accuracy or completeness of the data included in this Form 10-K. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of our services. We do not assume any obligation to update any forward-looking statement. As a result, investors should not place undue reliance on these forward-looking statements.
In this Form 10-K, “we,” “our,” “us,” the “Company,” “GWTI” and similar terms in this report, including references to “UMED” and “Greenway” all refer to Greenway Technologies, Inc., and our wholly-owned subsidiary, Greenway Innovative Energy, Inc. (“GIE”), unless the context requires otherwise.
PART I
| Item 1. | Business. |
Overview
We are engaged in the research and development of proprietary gas-to-liquids (“GTL”) synthesis gas (“Syngas”) conversion systems and micro-plants that can be scaled to meet specific gas field production requirements. Our patented and proprietary technologies have been realized in our first commercial G-ReformerTM unit (“G-Reformer”), a unique component used to convert natural gas into Syngas, which when combined with a Fischer-Tropsch (“FT”) reactor and catalyst, produces fuels including gasoline, diesel, jet fuel, methanol and other high-value chemicals. We are also actively involved in producing G-Reformers to produce hydrogen. G-Reformer units can be deployed to process a variety of natural gas streams including pipeline gas, associated gas, flared gas, vented gas, coal-bed methane and/or biomass gas. When derived from any of these natural gas sources, the liquid fuels created are incrementally cleaner than conventionally produced oil-based fuels. Our Company’s objective is to become a material direct and licensed producer of renewable GTL synthesized gasoline, diesel, jet fuel, high-value chemicals, methanol and hydrogen, with a near-term focus on U.S. market opportunities. For more information about our Company, please visit our website located at https://gwtechinc.com/.
Our GTL Technology
In August 2012, we acquired 100% of GIE, pursuant to that certain Purchase Agreement, by and between us and GIE, dated August 29, 2012, and filed as Exhibit 10.5 to this Form 10-K, and incorporated by reference herein (the “GIE Acquisition Agreement”). GIE owns patents and trade secrets for proprietary technology to convert natural gas into Syngas. Based on a new, breakthrough process called Fractional Thermal Oxidation™ (“FTO”), we believe that the G-Reformer, combined with conventional FT processes, offers an economical and scalable method to converting natural gas to liquid fuels, high-value chemicals, methanol and hydrogen. On February 15, 2013, GIE filed for its first patent on this GTL technology, resulting in the issue of U.S. Patent 8,574,501 B1 on November 5, 2013. On November 4, 2013, GIE filed for a second patent covering other unique aspects of the design and was issued U.S. Patent 8,795,597 B2 on August 5, 2014. The Company has several other pending patent applications, both domestic and international, related to various components and processes relating to our proprietary GTL methods, complementing our existing portfolio of issued patents and pending patent applications.
On June 26, 2017, we and the University of Texas at Arlington (“UTA”) announced that we had successfully demonstrated our GTL technology at our sponsored Conrad Greer Laboratory at UTA, proving the viability of the science behind the technology.
On March 6, 2018, we announced the completion of our first commercial scale G-Reformer, a critical component in what we call the Greer-Wright GTL system. The G-Reformer is the critical component of the Company’s innovative GTL system. A team consisting of individuals from our Company, UTA and our Company’s contracted G-Reformer manufacturer, worked together to test and calibrate the newly built G-Reformer unit. The testing substantiated the units’ Syngas generation capability and demonstrated additional proficiencies within certain proprietary prior prescribed testing metrics.
On April 28, 2020, the Company was issued a new U.S. Patent 10,633,594 B1 for syngas generation for gas-to-liquid fuel conversion. The Company has several other pending patent applications, both domestic and international, related to various components and processes involving our proprietary GTL methods, which when granted, will further complement our existing portfolio of issued patents and pending patent applications.
| -1- |
On December 8, 2020, the Company announced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and Trademark Office relating to GWTI’s natural gas reforming technologies developed under its sponsored research agreement with UTA.
On December 15, 2020, the Company announced additional information regarding valuable outputs produced by the company’s proprietary G-Reformer™ catalyst reactor and Fischer-Tropsch (FT) technology which combine to form the “Greer-Wright” GTL solution. Originally developed to convert natural gas into ultra-clean synthetic fuel, recent research and development activity has shown that the technology can also allow the extraction of high-value chemicals and alcohols. The chemical outputs include n-Hexane, n-Heptane, n-Octane, n-Decane, n-Dodecane, and n-Tridecane. Alcohols produced include ethanol and methanol. The company has identified worldwide industrial demand for these outputs which will significantly improve the economic return on investment (ROI) of GTL plants that are based on GWTI’s technology. GWTI is a development-stage company with plans to commercialize its unique and patented technology.
Ultimately, we believe that our proprietary G-Reformer is a major innovation in gas reforming and GTL technology in general. Initial tests have demonstrated that our Company’s solution appears to be superior to legacy technologies, which are more costly, have a larger footprint, and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas.
The technology for the G-Reformer is unique, because it permits for transportable (mobile) GTL plants with much smaller footprints, compared to legacy large-scale technologies. Thus, we believe that our technologies and processes will allow for multiple small-scale GTL plants to be built with substantially lower up-front and ongoing costs, resulting in more profitable results for oil and gas operators.
GTL Industry –Market
GTL converts natural gas – the cleanest-burning fossil fuel – into high-quality liquid products that would otherwise be made from crude oil. These products include transport fuels, motor oils, and the ingredients for everyday necessities like plastics, detergents, and cosmetics. GTL products are colorless, odorless, and contain almost none of the impurities, (e.g., sulphur, aromatics, and nitrogen) that are found in crude oil.
Our Company has developed a revolutionary and unique process that converts natural gas of various origins and compositions into a highly pure variety of chemicals, high cetane diesel fuel, industrial grade pure water and electrical energy. GTL technology has existed as a traditional process going back generations. This process consists of two steps. First, natural gas is converted into Synthesis Gas (Syngas), which is a non-naturally occurring blend of Hydrogen and Carbon Monoxide. The front-end part of the GTL process is called “Gas Reformation.” The output of the Gas Reformer is compressed and fed through a secondary process, called Fischer-Tropsch (FT). This secondary process is widely used in many forms in the chemical and oil industries. While FT is a common process, Gas Reformation has been the most difficult step beyond an old and traditional process typically used in refineries. The invention of our software-controlled GTL process fronted by our patented and revolutionary gas reformation unit, the G-Reformer®, makes us the innovator in GTL technology. Our patents are based on scalability, transportability, flexibility and self-sustainment based on a wide variety of input gases and output mixtures.
The Company’s process is made of small sized modularly scalable units which are portable and self-contained unlike other GTL solutions based on Steam Methane reformation. While many companies have tried to scale Steam Methane Reformation down for use in smaller, non-refinery-based GTL plants, they have been largely unsuccessful. As a result, we can build self-sufficient GTL plants at virtually any location capable of supplying wellhead or pipeline gas of sufficient ongoing volume. This gives us the ability to eliminate flaring at the source while keeping remote oil fields in production without flaring. The conversion of flaring gas to liquid allows trucks to easily move liquid chemicals, clean diesel fuel, highly clean water and the power grid to move electricity from virtually any location.
Our initial ROI studies of the market for high purity chemicals that we produce can provide incredibly rapid payback of investments. It should be noted the vast majority of these chemicals produced are made in China. Further, because they originate from a barrel of oil at a refinery, they are much lower in purity.
| -2- |
Products created by the GTL process include High Cetane Diesel, Naphtha, Technical Grade Water, and high value, high purity chemicals. The chemicals which would be produced in the GTL plant would be vital to many industries including pharmaceutical, cosmetics, fragrances, adhesives, and others. The vast majority of these chemicals are produced in China. Such dependency makes America captive to shortfalls whether they are manufacturing related or intentional. By making these chemicals in the USA, we reduce that dependency and keep the product, the jobs, and the profits in America.
Development of stringent environmental regulations by numerous governments to control pollution and promote cleaner fuel sources is expected to complement industry growth. For example, we believe that U.S. guidelines such as the Petroleum and Natural Gas Regulatory Board Act, 2006, Oilfields (Regulation and Development) Act of 1948, and Oil Industry (Development) Act, 1974 are likely to continue to encourage GTL applications in diverse end-use industries to conserve natural gas and other resources. Under the Clean Air Act (CAA), the EPA sets limits on certain air pollutants, including setting limits on how much can be in the air anywhere in the United States. The Clean Air Act also gives EPA the authority to limit emissions of air pollutants coming from sources like chemical plants, refineries, utilities, and steel mills. Individual states or tribes may have stronger air pollution laws, but they may not have weaker pollution limits than those set by EPA. Because our G-Reformer based GTL plants are not considered refineries, they do not fall under any related current EPA air quality guidelines. More information can be found under the EPA’s New Source Performance Standards which are published under 40 CFR 60.
Competition
According to Research Nester in July 2023, key industry players include: Shell, Chevron, Exxon, PetroSA, Qatar Petroleum, Sasol, Velocys, ENI S.p.A.. In terms of global production and consumption, Shell had the largest market share in 2023, with virtually all current production located overseas. Our technology is not designed to compete with the large refinery-size GTL plants operated by such large industry operators. Our plants are designed to be scaled to meet individual gas field production requirements on a distributed and mobile basis. According to a report released in July 2019 by the Global Gas Flaring Reduction Partnership (“GGFRP”), there are currently only 5 small-scale GTL plant technologies that have been proven and are now available for flared gas monetization available in the U.S., including: Greyrock (“Flare to Fuels”); Advantage Midstream (licensing Greyrock technology); EFT (“Flare Buster”); Primus GE and GasTechno (“Methanol in a Box”). We were not a direct part of this study, as we had not received 3rd party certification of our proprietary technology as of the date of this report.
However, the GGFRP report mentioned us as follows, “Greenway Technologies announced on July 23, 2018 that Mabert LLC, a major investor in Greenway, acquired the whole INFRA plant including an operating license agreement. The purpose of the acquisition is the incorporation and commercial demonstration of Greenway’s ‘G-Reformer’ technology. We will see whether the new team will be able to make the plant with the new reformer operational. (Globe Newswire, Fort Worth, Texas, Aug 31, 2019).”
Mining Interests
In December 2010, UMED acquired the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona (such property, the “Arizona Property”), in an Assignment Agreement dated December 27, 2010, and filed as Exhibit 10.31 to this Form 10-K, between Melek Mining, Inc., 4HM Partners, Inc. and the Company, in exchange for 5,066,000 shares of our common stock. Early indications from samples taken and processed by Melek Mining provided reason to believe that the potential recovery value of the metals located on the Arizona Property could be significant, but only actual mining and processing will determine the ultimate value that may be realized from this property holding. While we are not currently conducting mining operations, we are exploring strategic options to partner or sell our interest in the Arizona Property, while we focus on our emerging GTL technology sales and marketing efforts.
Company History
We were originally incorporated as Dynalyst Manufacturing Corporation (“Dynalyst”) under the laws of the State of Texas on March 13, 2002. In connection with the merger with Universal Media Corporation (“UMC”), a Nevada corporation, on August 17, 2009, we changed our name to UMC. The transaction was accounted for as a reverse merger, and UMC was the acquiring company on the basis that UMC’s senior management became the entire senior management of the merged entity and there was a change of control of Dynalyst. The transaction was accounted for as recapitalization of Dynalyst’s capital structure. In connection with the merger, Dynalyst issued 57,500,000 restricted equity securities to the shareholders of UMC in exchange for 100% of UMC.
| -3- |
On March 23, 2011, Universal Media Corporation approved and filed with the Texas Secretary of State an amendment to our Certificate to change our name to UMED Holdings, Inc.
On June 22, 2017, in recognition of our primary operational activity, we approved an amendment to our Certificate to change our name to “Greenway Technologies Inc.” We filed a certificate of amendment with the Texas Secretary of State to affect that name change on June 23, 2017.
On June 26, 2019, we held our annual shareholders meeting in Arlington, Texas. There were seven proposals presented for vote by our shareholders (the “Shareholders”), including to approve the Company’s slate of directors, to amend our Certificate, to amend our bylaws, and to ratify our then current independent public accounting audit firm. We disclosed the results of the vote of the Shareholders on our Current Report Form 8-K, filed with the SEC on July 2, 2019, which is incorporated herein by reference. On August 1, 2019, we filed a Current Report on Form 8-K/A, noting that due to a potential tabulation error, we were reviewing the results for Proposal 2, which was to amend our Company’s Certificate to increase the authorized shares of capital stock of the Company and Proposal 3, which was to amend the Company’s Certificate to permit the vote of the holders of the majority of shares entitled to vote on and represented in person or by proxy at a meeting of the Shareholders at which a quorum is present, to be the action of the Shareholders, including for “fundamental actions,” as such term is defined by the Texas Business Organizations Code (the “TBOC”). To resolve any such potential errors, we called a special meeting of the Shareholders to be held December 11, 2019, in Arlington, Texas.
On December 11, 2019, we held a special meeting of the Shareholders to approve four proposals. In connection with these four proposals, we filed a Certificate of Amendment to the Certificate with the Secretary of State of the State of Texas, which is attached as Exhibit 3.9 to our Company’s Current Report on Form 8-K filed with the SEC on December 16, 2019, and incorporated herein by reference. All four proposals passed overwhelmingly. For more information regarding these proposals, please see our Definitive Proxy Statement on Schedule 14A filed with the SEC on November 19, 2019 and incorporated herein by reference.
Employees
As of the filing date of this Form 10-K, we have two (2) full-time employees. Certain of these employees receive no compensation or compensation is deferred on a periodic basis by mutual agreement. None of our employees are covered by collective bargaining agreements. We consider our employee relations to be satisfactory.
Going Concern
The accompanying consolidated financial statements to this Form 10-K (our “Financial Statements”) have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As of December 31, 2023, we have an accumulated deficit of $37,859,604. For the year ended December 31, 2023, we incurred a net loss of $1,580,735 and used $302,663 in net cash for operating activities. The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary financing to fund ongoing operations. While the Company is attempting to commence revenue generating operations and thereby generate sustainable revenues, the Company’s current cash position is not sufficient to support its ongoing daily operations and requires the Company to raise addition capital through debt and/or equity sources.
Accordingly, our ability to continue as a going concern is therefore in doubt and dependent upon achieving a profitable level of operations or on our ability to obtain necessary financing to fund ongoing operations. Management intends to raise additional funds by way of public or private offerings, or both. Management believes that the actions presently being taken to implement our business plan to generate revenues will provide us the opportunity to continue as a going concern.
While we are attempting to commence operations and generate revenues, our cash position may not be enough to support our daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement our business plan and generate revenues provide the opportunity for us to continue as a going concern. While management believes in the viability of our strategy to generate revenues and in our ability to raise additional funds, there can be no assurances to that effect. Our ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate revenues.
| -4- |
| Item 1A | Risk Factors. |
Risks Related to our Business and Operations
We may not be able to raise the additional capital necessary to execute our business strategy, which includes the production, sale and/or licensing of our proprietary GTL technology solutions to oil and gas operators in the United States and elsewhere.
Our ability to successfully execute the production, sale, or licensing of our GTL technology may depend on our ability to raise additional debt or equity capital. Our ability to raise additional capital is uncertain and dependent upon numerous factors beyond our control including, but not limited to, general economic conditions, regulatory factors, reduced retail sales, increased taxation, reductions in consumer confidence, changes in levels of consumer spending, changes in preferences in how consumers pay for goods and services, weak housing markets and availability or lack of availability of credit. If we are unable to obtain additional capital, or if the terms thereof are too costly, we may be unable to successfully execute our business strategy.
Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations.
We are a development-stage company and have a limited operating history upon which you can evaluate our business and prospects. We have yet to develop sufficient experience regarding actual revenues to be received from our GTL technology. You must consider the risks and uncertainties frequently encountered by early-stage companies in new and evolving markets. If we are unsuccessful in addressing these risks and uncertainties, our business, results of operations, and financial condition will be materially and adversely affected. The risks and difficulties we face include challenges in accurate financial planning as a result of limited historical data and the uncertainties resulting from a relatively limited period in which to implement and evaluate our business strategies as compared to older companies with longer operating histories.
We have historically incurred losses.
We are considered a pre-revenue or development stage company. We have incurred significant operating losses since inception. Due to the inherent risk of commercializing new technology, there can be no assurance that we will earn net income or generate positive cash flow in the future. We will require additional capital in order to fund our operations and we may not be able to source such capital on acceptable terms.
Establishing revenues and achieving profitability will depend on our ability to fully develop, certify and commercialize our GTL Technology, including successfully marketing our GTL Technology to customers and complying with possible regulations.
Much of our ability to establish revenues, achieve profitability and create positive cash flows from operations will depend on the completion of a third-party engineering certification and subsequent successful introduction of our proprietary GTL technology. Our prospective customers will not use our GTL technology unless they determine that the economic benefits provided by our GTL solution is greater than those available from competing technologies and providers. Even if the advantages derived from our proprietary GTL technology are well-established, prospective customers may elect not to use our GTL technology.
In addition, as this is a new technology and GTL processing method, we may be required to undertake time-consuming and costly additional development activities and seek regulatory clearance or approval for such new GTL technology. Such costs are not known by us as of the date of this report.
Lastly, the completion of the development and commercialization of our GTL technology remains subject to all the risks associated with the commercialization of any new GTL processing system with production based on innovative technologies, including unanticipated technical or other problems, manufacturing difficulties, and the possible insufficiency of the funds allocated for the completion of such development.
| -5- |
We may encounter substantial competition in our industry and a failure to compete effectively may adversely affect our ability to generate revenue.
We expect that we will be required to continue to invest in product development and efficiency improvements to compete effectively in our markets. Our competitors could potentially develop a similar or more efficient GTL product or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our sales and marketing strategies and could have a material adverse effect on our business, results of operations, and financial condition. Important factors affecting our ability to compete successfully include:
| ● | current and future direct sales and marketing efforts by small and large competitors; | |
| ● | rapid and effective development of new, unique GTL techniques; and | |
| ● | new and aggressive pricing methodologies |
If substantial competitors enter our targeted markets, such as licensing of smaller independent oil and gas operators or the creation of blend stock for existing large refinery operations, we may be unable to compete successfully against such competition. Our potential competitors may have greater human and financial resources than we do at any given time, and there is significant competition for experienced personnel and financial capital in the oil and gas industry. Therefore, it can be difficult for smaller companies such as ours to attract the personnel and related investment for our various business activities needed to succeed. We cannot give any assurances that we will be able to successfully compete for such personnel and capital funds. Without adequate financial resources, our management cannot be certain that we will be able to compete successfully in our operations.
Although the longevity of patents in the United States are limited in duration to 21 years, this should not affect the Company’s long-term ability to successfully monetize the intellectual property it owns.
We own United States Patents Nos. 8,574,501 B1, originally issued November 5, 2013 and 8,795,597 B2, issued August 5, 2014, covering our GTL conversion technology for the purpose of converting natural gas to clean synthetic fuels in a small-plant and mobile application. On April 28, 2020, the Company was issued a new U.S. Patent 10,633,594 B1 for syngas generation for gas-to-liquid fuel conversion. The Company has several other pending patent applications, both domestic and international, related to various components and processes involving our proprietary GTL methods, which when granted, will further complement our existing portfolio of issued patents and pending patent applications.
In February 2021, the Company was issued Patent 10,907,104, the fourth patent relating to the company’s proprietary G-Reformer™ technology which allows for the conversion of natural gas into synthesis gas. The newly issued patent extends the methods and details of generating syngas using the apparatus described in a previously issued patent No. 10,633,594, the company’s third patent. As described in the patent, methane, oxygen, and steam are continuously injected into the combustion section of the apparatus to generate carbon monoxide along with unreacted methane and steam. The carbon monoxide, unreacted methane, and steam then enter the catalyst chamber where these components react to generate syngas. The pressure inside the reaction vessel is controlled at no higher than 5 psig.
The term of each patent under U.S. law is 21 years. Accordingly, each of these patents will expire in the years 2034, 2035 and 2041 respectively, unless they are modified with “improvements to the current art” by us, in which case their useful lives may be extended. There is no certainty that we will be able to make such improvements to our currently held patents, and they therefore may expire at their respective terms. Alternatively, a patent’s term may be shortened if a patent is terminally disclaimed (litigated) over a commonly owned patent or a patent naming a common inventor has an earlier expiration date. There is no certainty that we will be able to successfully defend our patents if such claims are made, and they may expire prior to their respective terms.
We are currently dependent on one equipment fabricator, the loss of which could adversely impact our operations.
We contract our manufacturing production with a heavy equipment fabricator in Texas that has worked with us for several years and specializes in the type of base refractory equipment we use in our proprietary G-Reformer based GTL processes. Accordingly, they have developed certain manufacturing expertise specifically related to our equipment which may be hard to replicate with a new manufacturer if they go out-of-business or end manufacturing for us for any reason. While there are similar manufacturers elsewhere in the United States and overseas, they will take an unknown additional amount of time to gain the expertise necessary to produce our proprietary refractory equipment or may not be able to gain such expertise at all, limiting our production and related revenue capability.
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We are dependent on a limited number of key executives, consultants, the loss of any of which could negatively impact our business.
Our business is led by our Chairman of the Board of Directors, Raymond Wright, President, Kent Harer, and our Chief Financial Officer, Ransom Jones, all of whom are also members of our board of directors (our “Board of Directors”). We use outside consultants to support and perform the majority of the engineering and production work on our GTL technology. We have also contracted with consultants to provide financial reporting and governance support.
If one or more of these senior executives, officers, or consultants are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all, and our business may be disrupted, along with our financial condition, such that our results of operations may be materially and adversely affected. In addition, if the competition for senior management and senior officers in our industry is intense, the pool of qualified candidates is limited, and we may not be able to retain the services of our senior executives, key personnel, or consultants or attract and retain high-quality personnel in the future. Such failure could materially and adversely affect our future growth and financial condition, and the loss of one or more of these key personnel could negatively impact our business and operations.
If our research and development agreements with UTA are terminated, we may lose access to certain of the scientists that were instrumental in developing our technology.
In order to safeguard against this possibility, on December 8, 2020, the Company announced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and Trademark Office relating to GWTI’s natural gas reforming technologies developed under its sponsored research agreement with UTA.
To support our engineering efforts, we also continued our ongoing confidential Sponsored Research Agreement (“SRA”) with UTA which began in October 2009 and has continued in various forms through today, adding confidential Scope of Work addendums over this period to develop and enhance our patented GTL system with the goal of developing commercial GTL plants to convert natural gas into liquid fuels. We use UTA as an external research and development arm for the Company. If we or UTA were to terminate our relationship for some extenuating circumstances, we might lose access to the scientists most familiar with our unique technology. There is no assurance that we would be able to continue to improve on the technology we have developed thus far, potentially slowing down our future commercialization and financing efforts.
Our quarterly results may fluctuate substantially and if we fail to meet the expectations of our investors or analysts, our stock price could decline substantially.
Our quarterly operating results may fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our Common Stock could decline. Some of the important factors that could cause our revenue and operating results to fluctuate from quarter to quarter include:
| ● | our limited operating history; | |
| ● | the limited scope of our sales and marketing efforts; | |
| ● | our ability to attract new customers, satisfy our customers’ requirements, and retain customers; | |
| ● | general economic conditions; | |
| ● | changes in our pricing capabilities; | |
| ● | our ability to expand our business and operations by staying current with the evolving requirements of our target market; | |
| ● | the effectiveness of our key personnel; | |
| ● | our ability to protect our proprietary GTL Technology; | |
| ● | new and enhanced products by us and our competitors; | |
| ● | unanticipated delays or cost increases with respect to research and development; and | |
| ● | extraordinary expenses such as litigation or other dispute-related settlement payments. |
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We may have difficulty in attracting and retaining outside independent directors to our Board of Directors as a result of their concerns relating to potentially increased personal exposure to lawsuits and shareholder claims by virtue of holding those positions.
The directors and management of companies are increasingly concerned with the extent of their personal exposure to lawsuits and shareholder claims, as well as governmental and creditor claims that may be made against them, particularly in view of recent changes in securities laws imposing additional duties, obligations, and liabilities on management and directors. Due to these perceived risks, directors and management are also becoming increasingly concerned with the availability of directors’ and officers’ liability insurance to timely pay the costs incurred in defending such claims. We currently do not carry directors’ and officers’ liability insurance, since directors’ and officers’ liability insurance has recently become much more expensive and difficult to obtain. If we are unable to continue or provide liability insurance at affordable rates or at all, it may become increasingly more difficult to attract and retain qualified outside directors to serve on our board of directors.
We may lose potential independent board members and management candidates to other companies that have greater directors’ and officers’ liability insurance to insure them from liability or to companies that have revenues or have received greater funding to date which can offer more lucrative compensation packages. The fees of directors are also rising in response to their increased duties, obligations and liabilities as well as increased exposure to such risks. As a company with limited operating history and resources, we will have a more difficult time attracting and retaining management and outside independent directors than a more established company due to these enhanced duties, obligations and liabilities.
Our future success relies upon our proprietary GTL Technology. We may not have the resources to enforce our proprietary rights through litigation or otherwise. The loss of exclusive right to our GTL Technology could have a material adverse effect on our business, financial condition and results of operations.
We believe that our GTL technology does not infringe upon the valid intellectual property rights of others. Even so, third parties may still assert infringement claims against us. If infringement claims are brought against us, we may not have the financial resources to defend against such claims or prevent an adverse judgment against us. In the event of an unfavorable ruling on any such claim, a license or similar agreement to utilize the intellectual property rights related to the GTL technology in question, which we rely on in the conduct of our business, may not be available to us on reasonable terms if terms are offered at all.
Our ability to obtain field-related operating hazards insurance may be constrained by our limited operational history.
The oil and natural gas business involves a variety of operating risks, including the risk of fire, explosions, blow-outs, pipe failure, abnormally-pressured formations, and environmental hazards such as oil spills, natural gas leaks, ruptures or discharges of toxic gases. If any of these events should occur at our joint venture plant location, or at any future customer sites (none exist today), we could incur legal defense costs and could suffer substantial losses due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation and penalties, and suspension of operations. Such inability to defend ourselves or suffer catastrophic financial losses could cause us to cease operations and/or declare bankruptcy.
Our GTL Technology is subject to the changing of applicable U.S. laws and regulations.
Our business is particularly subject to federal and state laws and regulations with respect to the oil and gas and mining industries. Our success depends in part on our ability to anticipate, navigate and respond to any changes that might occur. Due to our currently limited financial resources, we might not be able to respond to unanticipated changes, should they occur and impact our operations, and therefore have to cease operations.
| -8- |
Acts of terrorism, responses to acts of terrorism and acts of war may impact our business and our ability to raise capital.
Future acts of war or terrorism, national or international responses to such acts, and measures taken to prevent such acts may harm our ability to raise capital or our ability to operate, especially to the extent we depend upon activities conducted in foreign countries. In addition, the threat of future terrorist acts or acts of war may have effects on the general economy or on our business that are difficult to predict. We are not insured against damage or interruption of our business caused by terrorist acts or acts of war, and thus, our financial operations may be materially impacted by such events.
We may fail to establish and maintain strategic relationships.
We believe that establishing strategic industry partnerships and natural gas producer customer relationships will greatly benefit the growth of our business and the deployment of our GTL technology. To further such relationships, we have and will continue to seek out and enter into strategic alliances, joint ventures, and similar production relationships, including similar to those announced during the 2019 with INFRA Technologies, OPMGE and the ongoing relationship with UTA. Our affiliation with OPMGE was terminated. We continue to seek out and have discussions with potential gas producer on both a customer and financing basis. However, we may not be able to maintain our current or enter into new strategic partnerships on commercially reasonable terms, or at all, and may not be able to create financial or customer relationships with natural gas producers. Even if we enter new natural gas producer relationships, such financial partners and/or customers may not have sufficient production of location based natural gas to provide profitable revenues or otherwise prove advantageous to our business. Our inability to enter into such new relationships or strategic alliances could have a material and adverse effect on our business.
Risks Relating to Our Mining Properties
There is very limited risk, financial or otherwise, related to our mining leases and interests at this time.
Risks Relating to Our Common Stock
We may need to raise additional capital. If we are unable to raise additional capital, our business may fail, or our operating results and our share price may be materially adversely affected.
Because we have no record of profitable operations, we need to secure adequate funding on an ongoing basis. If we are unable to obtain adequate funding, we may not be able to successfully develop and market our GTL technology and our business will likely fail. We have no commitments for financing. To secure additional financing, we may need to borrow money or sell more securities, which may reduce the value of our outstanding securities. We may be unable to secure additional financing on favorable terms, or at all.
Selling additional shares of Common Stock, either privately or publicly, would dilute the equity interests of our Shareholders. If we borrow money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail business operations, which would have a material negative effect on operating results and most likely result in a lower price per share of Common Stock.
| -9- |
Issuance of additional Common Stock in exchange for services or to repay debt would dilute Shareholders’ proportionate ownership and voting rights and could have a negative impact on the market price of our Common Stock.
Our Board of Directors has previously and may continue to issue shares of our Common Stock to pay for debt or services rendered, without further approval by our Shareholders, based upon such factors as our Board of Directors may deem relevant in its sole discretion. It is likely that that we will issue additional securities to pay for services and reduce debt in the future. Such issuances may lower the market price of our stock and decrease our ability to raise additional equity funding for working or investment capital as may be needed at a later time.
Even though our shares of Common Stock are publicly traded, an investor’s shares may not be “free-trading” and investors may be unable to sell their shares of Common Stock at or above their purchase price, which may result in substantial losses to the investor.
Investors should understand that their shares of our Common Stock are not “free-trading” merely because we are a publicly traded company. Shares bought from the Company or received for services rendered or in conjunction with the issuance of debt require different holding periods, thereby creating a potential lack of liquidity and inability to sell such shares timely for any investor. In order for our shares of Common Stock to become “free-trading,” the offer and sale of shares of our Common Stock must either be registered pursuant to a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), or be entitled to an exemption from registration under federal and state securities laws, after being held for statutory mandated periods.
In addition, an investor has no assurance that our stock price will rise after purchase or receipt in any manner, as our stock has shown significant volatility over the life of the Company. The following factors may add to the volatility in the price of our Common Stock in the future: (i) actual or anticipated variations in our quarterly or annual operating results; (ii) government regulations; (iii) announcements of significant acquisitions, strategic partnerships or joint ventures; (iv) our capital commitments; (v) additional dilutive stock issuances, and (vi) additions or departures of key personnel. Many of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our Common Stock will be at any time, including as to whether our Common Stock will sustain the current market price, or as to what effect the sale of shares of Common Stock or the availability of shares of Common Stock for sale at any time will have on the prevailing market price.
If we fail to remain current in our reporting requirements, we could be removed from the OTCQB marketplace, operated by the OTC Markets Group, Inc. (the “OTCMG”), which would limit the ability of broker-dealers to sell our securities and the ability of Shareholders to easily sell their securities in the secondary market.
Companies trading on the OTCQB must: (i) be reporting issuers under Section 12 of the Exchange Act of 1934, as amended (the “Exchange Act”); (ii) must be current in their reports under Section 13 of the Exchange Act; and must pay an annual fee to OTCQB, to maintain electronic price quotation privileges on the OTCQB. If we fail to remain current in our Exchange Act reporting requirements, we could be removed from the OTCQB and be forced to be traded on the Pink Sheets, which requires a more challenging stock purchasing and selling process. The OTCQB is recognized by the SEC as an established public market. This platform enables companies to provide current public information that investors use to analyze, value and trade a security. The OTC Pink Sheets is the lowest and most speculative tier of the three marketplaces for the trading of over-the-counter stocks. Companies traded on OTC Pink are not held to any particular disclosure requirements or financial standards, and due to the wide variety of companies listed on OTC Pink, including dark companies, delinquent companies and worse, they recommend only sophisticated investors with a high-risk tolerance should consider it.
Pink Sheet shares generally trade thinly and infrequently making it hard to buy or sell when the investor wants to complete a transaction. In addition, trading in OTC Pink Sheet companies requires more paperwork because due the speculative nature of such stocks, the U.S. Congress prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Exchange Act and the rules promulgated thereunder.
| -10- |
These SEC rules provide, among other things, that a broker-dealer must: (i) approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction; (ii) furnish the customer a disclosure document describing the risks of investing in penny stocks; (iii) disclose to the customer the current market quotation, if any, for the penny stock; and (iv) disclose to the customer the amount of compensation the firm and its broker will receive for the trade. In addition, after executing the sale, a broker-dealer must send to its customer monthly account statements showing the market value of each penny stock held in the customer’s account. With the added inconvenience and cost for brokers, various large brokerage firms, including Merrill Lynch, Capital One, Fidelity, E-Trade and even the new Robinhood, among others, have simply stopped providing brokerage services for Pink Sheet stocks for new customers. Accordingly, the market for our common stock would be significantly diminished if we were forced to trade on the OTC Pink Sheets market exchange.
Volatility in the share price for our Common Stock may subject us to securities litigation.
There is a limited market for the sale of shares of our Common Stock. The market for our Common Stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our Common Stock share prices will be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. In the future, we may be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources away from our daily operations, negatively impacting our financial results.
We do not intend to pay dividends on shares of our Common Stock.
We have not paid any cash dividends on shares of our Common Stock since our inception, and we do not anticipate that we will pay any cash dividends in the near future. Earnings, if any, that we may realize will be retained in the business for further development and expansion. Furthermore, our ability to pay dividends may be restricted under our debt agreements.
Our substantial level of indebtedness could adversely affect our financial condition.
We have a substantial amount of indebtedness, a significant amount which are interest-bearing notes payable. As of December 31, 2023, we had $12,030,443 of total liabilities, all of which is current. For more details on our indebtedness, please see Notes 3,4 and 5 of our Consolidated Financial Statements.
Our substantial level of indebtedness could have important consequences, including the following:
| ● | We must use a substantial portion of our cash flow from operations to pay interest, which reduces funds available to use for other purposes, such as working capital, capital expenditures, and other general corporate purposes; | |
| ● | Our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions, or general corporate purposes may be impacted; and | |
| ● | Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions. |
Our ability to meet expenses and to make future principal and interest payments in respect of our debt, depends on, among other things, our future operating performance, competitive developments and financial market conditions. We are not able to control many of these factors. If industry and economic conditions deteriorate, our ability to raise debt or equity capital and/or cash flow may be insufficient to allow us to pay principal and interest on our debt and meet our other obligations, which could cause us to default on these obligations. In particular, the Mabert loans maintain a UCC-1 security interest in all the collateral of the Company, including to our G-Reformer, technology and intellectual property (our patents, patents pending and licensed patents). If Mabert exercises its rights and remedies due to defaults under our secured loan agreements, our business, financial condition, and results of operations will be materially adversely affected.
| -11- |
The market for penny stocks has suffered in recent years from patterns of fraud and abuse.
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
| ● | Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; | |
| ● | Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; | |
| ● | Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; | |
| ● | Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and | |
| ● | The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses. |
Management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the penny stock market, the Company’s management will strive to prevent the described patterns from being established with respect to our securities, as the occurrence of these patterns or practices could increase the volatility of the price per share of our Common Stock and/or diminish stockholders ability to trade our Common Stock.
Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price.
Section 404 of the Sarbanes-Oxley Act requires us to evaluate annually the effectiveness of our internal controls over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our internal controls over financial reporting in our annual report. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude, on an ongoing basis, that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act.
While we continue to dedicate resources and management time to ensuring that we have effective controls over financial reporting, failure to achieve and maintain an effective internal control environment could have a material adverse effect on the market’s perception of our business and the price of our Common Stock.
| Item 1B. | Securities and Exchange Commission - Staff Comments. |
The Company received a letter dated November 15, 2021, from the Securities and Exchange Commission (“SEC”) asking for the Company for comments on disclosures made in the Form 10-K for the Year Ended December 31, 2020 and in the Form 10-Q for the Period Ended June 30, 2021. The inquiry pertained to disclosures under Items 307 and 308 of Regulation S-K. Item 307 of Regulation S-K addresses “Disclosure Controls and Procedures” and Item 308 of Regulation S-K addresses “Internal Control Over Financial Reporting.” The Company responded to the inquiry. In a letter to the Company from the Securities and Exchange Commission dated February 2, 2022, the SEC stated, “We have completed our review of your filings.” This action closed the matter.
The Company received a letter dated August 7, 2023 from the SEC stating that disclosure was not adequate for the Form 10-K for the Fiscal Year Ended December 31, 2022 and the Form 10-Q for the Quarterly Period Ended March 31, 2023. The SEC comments related to Evaluation of Disclosure Controls and Procedures under Items 307 and of Regulation S-X. In particular, the SEC suggested that it should be concluded that Disclosure Controls and Procedures are ineffective. The SEC requested the Company to provide this disclosure in future filings and the Company has complied with the SEC’s request. The Company issued a letter dated September 3, 2023 to the SEC stating its intention to provide adequate disclosure in future filings. The SEC accepted the letter on September 13, 2023.
| -12- |
| Item 2. | Properties. |
Our principal office is 1521 North Cooper St., Suite 205, Arlington, Texas 76011, leased at a rate of $1,064.57 per month, plus the cost of utilities, which is generally less than $100.00 per month. We believe these facilities are adequate for at least the next 12 months. We expect that we could locate to other suitable facilities at comparable rates, should we need more or less space.
We have unpatented mining claims for the Arizona Property. An unpatented mining claim is one that is still owned by the federal government, but which the claimant has a right to possession to extracted minerals, provided the land is open to mineral entry. A description of the Arizona Property is included in “Item 1. Business” and is incorporated herein by reference. We believe that we have satisfactory title to the Arizona Property, subject to liens for taxes not yet payable, liens incident to minor encumbrances, liens for credit arrangements and easements and restrictions that do not materially detract from the value of these properties, our interests in these properties, or the use of these properties in a business. We believe that the Arizona Property is adequate and suitable for the conduct of a mining business, should we decide to proceed with such operations in the future.
| Item 3. | Legal Proceedings. |
On September 7, 2021, the Company was served with a demand for mediation and potential arbitration by Gregory Sanders (“Plaintiff”), a previous employee of the Company. The demand claims Mr. Sanders had an employment agreement with the Company entitling him to certain compensation payments under the contract. No conclusion was met during mediation which occurred in the fourth quarter of 2021. On October 25, 2023, there was a hearing on Plaintiff’s motion for summary judgement. Plaintiff asserted 3 motions, all of which were denied by the court, as ordered on November 1, 2023. Plaintiff withdrew his action against the Company on January 11, 2024 and the court so ordered on the same date.
On November 8, 2023, the Company was served with a demand for payments under various agreements with the plaintiffs. The Plaintiffs are Ric Halden, Randy Moseley, Tunstall Canyon Group, LLC (“Tunstall Canyon”) and Chisos Equity Consultants, LLC (“Chisos”). Ric Halden and Randy Moseley were founders of the Company and served as officers and directors of the Company until 2017, when each of them resigned all positions with the Company. The Company believes that Tunstall Canyon and Chisos are majority-owned by Ric Halden. The Company has accrued liabilities to Ric Halden, Randy Moseley and Tunstall Canyon, which are all included in the liabilities reflected on the accompanying consolidated balance sheet. The Company is confident that it can settle all issues asserted in the lawsuit without going to trial. The court has set a trial date for November 24, 2024.
| Item 4. | Mine Safety Disclosures. |
Not applicable.
| -13- |
PART II
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market Information
Shares of our Common Stock are quoted on the OTCQB under the symbol “GWTI.” The table below sets forth the high and low bid prices for our common stock on the OTCQB as reported by various market makers. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not reflect actual transactions.
| Fiscal 2023 Quarter Ended: | High | Low | ||||||
| March 31, 2023 | $ | 0.01 | $ | 0.01 | ||||
| June 30, 2023 | $ | 0.01 | $ | 0.01 | ||||
| September 30, 2023 | $ | 0.01 | $ | 0.01 | ||||
| December 31, 2023 | $ | 0.05 | $ | 0.01 | ||||
| Fiscal 2022 Quarter Ended: | ||||||||
| March 31, 2022 | $ | 0.03 | $ | 0.01 | ||||
| June 30, 2022 | $ | 0.01 | $ | 0.01 | ||||
| September 30, 2022 | $ | 0.02 | $ | 0.01 | ||||
| December 31, 2022 | $ | 0.01 | $ | 0.01 | ||||
As of July 16,2024, we had 416,289,538 shares of Common Stock outstanding. Our shares of Common Stock are held by 549 Shareholders of record. The number of Shareholders of record was determined from the records of our transfer agent, Transfer Online, Inc. (our “Transfer Agent”), and does not include beneficial owners of our Common Stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies. The mailing address of our Transfer Agent is 512 SE Salmon Street, 2nd Floor, Portland, Oregon 97214, and its telephone number is (503) 227-2950.
Dividend Policy
We have not paid or declared any dividends on our Common Stock, nor do we anticipate paying any cash dividends or other distributions on our Common Stock in the near future. Any future dividends will be declared at the discretion of our Board of Directors and will depend, among other things, on (i) our earnings, if any, (ii) our financial requirements for future operations and growth, and (iii) other facts as our Board of Directors may then deem appropriate.
Unregistered Sales of Equity Securities
For the year ended December 31, 2023, we issued 21,233,333 shares of the Company’s common stock as follows:
Issuance of previously issuable shares – 250,000
Stock issued for cash (PPM) – 18,633,333
Stock issued to settle accrued liabilities – related parties - 2,350,000
We relied upon the safe harbor found in Rule 506(b) of Regulation D promulgated under the Securities Act (“Regulation D”) and the exemption from registration under Section 4(a)(2) of the Securities Act. Each investor took such investor’s shares of Common Stock for investment purposes, without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the offer and sale of our Common Stock. We sold our shares of Common Stock to only “accredited investors” as defined in Section 501(a) of Regulation D, with whom we had a direct personal, preexisting relationship, and after we had a thorough discussion with each accredited investor. Each certificate representing shares of our Common Stock contains a restrictive legend as required by the Securities Act. Finally, we have instructed our Transfer Agent not to transfer any restricted shares of our Common Stock, unless the offer and sale of such shares of Common Stock is registered pursuant to an effective registration statement under the Securities Act or is exempt from registration under federal and state securities laws.
| -14- |
All of the above-described accredited investors who received shares of our Common Stock were provided with access to our filings with the SEC, including the following: information: (i) contained in our annual report on Form 10-K under the Exchange Act for the fiscal year ended December 31, 2023; and (ii) contained in any reports or documents required to be filed by us under Sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act, since the distribution or filing of the reports specified above. In addition, such investors received a description of securities being offered for sale, and any material changes to our affairs that were not disclosed in the other documents furnished.
| Item 6. | Selected Financial Data. |
We are a smaller reporting company; as a result, we are not required to report selected financial data disclosures as required by Item 301 of Regulation S-K promulgated under the Exchange Act (“Regulation S-K”).
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
The following discussion and analysis of our results of operations and financial condition for the fiscal years ended December 31, 2023 and 2022 should be read in conjunction with our Financial Statements and the notes to those Consolidated Financial Statements that are included elsewhere in this Form 10-K and were prepared assuming that we will continue as a going concern. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and elsewhere in this Form 10-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, our actual results could differ materially from those discussed in these statements. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future.
In the below discussion, “we,” “our,” “us,” the “Company” and similar terms in this report, as well as references to “UMED” and “Greenway” all refer to Greenway Technologies, Inc., and our wholly-owned subsidiary, Greenway Innovative Energy, Inc., unless the context requires otherwise.
Greenway Technologies, Inc. is engaged in the research and development of proprietary gas-to-liquids syngas conversion systems and micro-plants that can be scaled to meet specific gas field production requirements. The company’s patented and proprietary technologies have been realized in its first commercial G-Reformer unit, a unique component used to convert natural gas into synthesis gas, which when combined with a Fischer-Tropsch reactor and catalyst, produces fuels including gasoline, diesel, jet fuel and methanol. G-Reformer units can be deployed to process a variety of natural gas streams including pipeline gas, associated gas, flared gas, vented gas, coal-bed methane and/or biomass gas. When derived from any of these natural gas sources, the liquid fuels created are incrementally cleaner than conventionally produced oil-based fuels. Greenway’s objective is to become a material direct and licensed producer of renewable GTL synthesized diesel and jet fuels, with a near term focus on U.S. market opportunities.
The Company believes that its proprietary G-Reformer is a major innovation in gas reforming and GTL technology in general. Initial tests have demonstrated that the Company’s solution appears to be superior to legacy technologies which are more costly, have a larger footprint and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas - all markets the Company seeks to service.
On April 28, 2020, the Company was issued a new U.S. Patent 10,633,594 B1 for syngas generation for gas-to-liquid fuel conversion. The Company has several other pending patent applications, both domestic and international, related to various components and processes involving our proprietary GTL methods, which when granted, will further complement our existing portfolio of issued patents and pending patent applications.
On December 8, 2020, the Company announced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and Trademark Office relating to GWTI’s natural gas reforming technologies developed under its sponsored research agreement with UTA.
| -15- |
On December 15, 2020, the Company announced additional information regarding valuable outputs produced by the company’s proprietary G-Reformer™ catalyst reactor and Fischer-Tropsch (FT) technology which combine to form the “Greer-Wright” GTL solution. Originally developed to convert natural gas into ultra-clean synthetic fuel, recent research and development activity has shown that the technology can also allow the extraction of high-value chemicals and alcohols. The chemical outputs include n-Hexane, n-Heptane, n-Octane, n-Decane, n-Dodecane, and n-Tridecane. Alcohols produced include ethanol and methanol. The company has identified worldwide industrial demand for these outputs which will significantly improve the economic return on investment (ROI) of GTL plants that are based on GWTI’s technology. GWTI is a development-stage company with plans to continue its unique and patented technology.
In February 2021, the Company was issued Patent 10,907,104, the fourth patent relating to the company’s proprietary G-Reformer™ technology which allows for the conversion of natural gas into synthesis gas. The newly issued patent extends the methods and details of generating syngas using the apparatus described in a previously issued patent No. 10,633,594, the company’s third patent. As described in the patent, methane, oxygen, and steam are continuously injected into the combustion section of the apparatus to generate carbon monoxide along with unreacted methane and steam. The carbon monoxide, unreacted methane, and steam then enter the catalyst chamber where these components react to generate syngas. The pressure inside the reaction vessel is controlled at no higher than 5 psig.
Further, the Company believes its technologies and processes will allow for multiple small-scale GTL plants to be built with substantially lower up-front and ongoing costs resulting in more profitable results for O&G operators. In addition, the proprietary technology based around the G-Reformer is unique in that it also allows for transportable (mobile) GTL plants with a much smaller footprint as compared to legacy large-scale technologies. Greenway is in discussions with a number of oil and gas operators and other interested parties to license and obtain joint venture or other forms of capital funding to build its first third-party customer gas-to-liquid plant.
Mining Interest
In December 2010, UMED acquired the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona for 5,066,000 shares of restricted Common A stock. Early indications, from samples taken and processed, provided reason to believe that the potential recovery value of the metals located on the 1,440 acres is significant, but only actual mining and processing will determine the ultimate value which may be realized from this property holding. The Company is currently exploring strategic options to partner or sell its interest in this acreage, while it focuses on its emerging GTL technology sales and marketing efforts.
Going Concern
We remain dependent on outside sources of funding (debt and/or equity) for continuation of our operations. Our independent registered public accounting firm issued a going concern qualification in their report dated July16, 2024, which is included with our consolidated Financial Statements and raises substantial doubt about our ability to continue as a going concern.
| $ | ||||||||||||||||||
| December 31, | December 31, | Increase | ||||||||||||||||
| 2023 | 2022 | (Decrease) | % Change | |||||||||||||||
| Net loss | $ | 1,580,735 | $ | 1,512,692 | $ | 68,043 | 4.50 | % | 1 | |||||||||
| Net cash used in operations | $ | 302,663 | $ | 496,654 | $ | (193,991 | ) | -39.06 | % | 2 | ||||||||
| Working capital deficit | $ | 12,029,311 | $ | 10,737,576 | $ | 1,291,735 | 12.03 | % | 3 | |||||||||
| Stockholders’ deficit | $ | 12,029,311 | $ | 10,737,576 | $ | 1,291,735 | 12.03 | % | 4 | |||||||||
1 – Our net loss decreased primarily due to the net effect of reductions in officers and directors liability insurance of $48,876, research and development by $54,275, amortization of debt discount by $48,232 and transfer agent expenses by $2,406 and increase in legal expenses of $82,552, mining leases of $48,493 and recognition of gain on debt settlements of $70,377 in 2022 compared to zero gain on debt settlements in 2023.
2 – Our net cash used in operations in 2023 was less than 2022. The change was primarily due to increases of accounts payable and accrued expenses by $178,453 and accounts payable and accrued expenses – related parties by $62,098.
3 – The increase in working capital deficit from 2022 to 2023 primarily relates to less cash in 2023 of $23,463, higher accounts payable and accrued expenses of $505,113, higher accounts payable and accrued expenses – related party of $750,013, reduction of notes payable of $20,000, and increase in advances relates parties and others of $30,200.
4 – The increase in working capital deficit from 2022 to 2023 results from the net effect of 2023 net loss of $1,580,735 and issuances of common stock of $289,000, which decreased the stockholders’ deficit.
These factors raise substantial doubt about our ability to continue as a going concern.
The Consolidated Financial Statements included in our Form 10-K do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence. Our ability to continue as a going concern is dependent upon our ability to generate sufficient new cash flows to meet our obligations on a timely basis, to obtain additional financing as may be required, and/or ultimately to attain profitable operations. However, there is no assurance that profitable operations, financing, or sufficient new cash flows will occur in the future.
| -16- |
Our ability to achieve profitability will depend upon our ability to finance, manufacture, and market/operate GTL units. Our growth is dependent on attaining profit from our operations and our raising additional capital either through the sale of our Common Stock or borrowing. There is no assurance that we will be able to raise any equity financing or sell any of our products at a profit. We will be unable to pay our obligations in the normal course of business or service our debt in a timely manner throughout 2024 without raising additional debt or equity capital. There can be no assurance that we will raise additional debt or equity capital.
We are currently evaluating strategic alternatives that include (i) raising new equity capital and/or (ii) issuing additional debt instruments. The process is ongoing, lengthy and has inherent costs. There can be no assurance that the exploration of these strategic alternatives will result in any specific action to alleviate our 12-month working capital needs or result in any other transaction.
While we are attempting to commence operations and generate revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds by way of an offering of our securities. Management believes that the actions presently being taken to further implement our business plan and generate revenues provide the opportunity for us to continue as a going concern. While we believe in the viability of our strategy to generate revenues and in our ability to raise additional funds, we may not be successful. Our ability to continue as a going concern is dependent upon our capability to further implement our business plan and generate revenues.
Results of Operations
For Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022:
We had no revenues for consolidated operations for the years ended December 31, 2023 and 2022.
We reported consolidated net losses during the years ended December 31, 2023 and 2022 of $1,580,735 and $1,512,692, respectively.
The following table summarizes consolidated operating expenses and other income and expenses for the years ended December 31, 2023 and December 31, 2022:
| December 31, | December 31, | $ Increase | ||||||||||||||||
| 2023 | 2022 | (Decrease) | % Change | |||||||||||||||
| Revenues | $ | - | $ | - | $ | - | 0.00 | % | ||||||||||
| General and administrative expenses | $ | 960,692 | $ | 888,599 | $ | 17,818 | 8.11 | % | 1 | |||||||||
| Research and development | $ | - | $ | 54,275 | $ | (54,275 | ) | 100.00 | % | 2 | ||||||||
| Interest expense | $ | 620,043 | $ | 591,963 | $ | 28,080 | 4.74 | % | 3 | |||||||||
| Amortization of debt discount | $ | - | $ | 48,232 | $ | (48,232 | ) | 100.00 | % | 4 | ||||||||
| Gain on debt settlement | $ | - | $ | (70,377 | ) | $ | 70,377 | 100.00 | % | 5 | ||||||||
Total operating expenses increased by $17,818 from $942,874 in 2022 to $960,692 in 2023.
1 – The increase was due to reductions in officers and directors liability insurance of $48,876, research and development of $54,275, amortization of debt discount of $48,233 and transfer agent expenses of $2,406 and increases in legal expense of $82,552, and mining leases of $48,493.
2 – The decrease was related to less activity in 2023 due to lack of sufficient resources and inability to pursue additional R&D related activities.
3 – The increase is based on higher interest rates.
4 – There was no amortization of debt discount in 2023.
5 – The Company settled a legal matter in 2022 resulting in a gain on debt settlement and had no comparable gain in 2023.
Net Loss and Net Loss per Share
Our consolidated net loss increased by $68,043 to $1,580,735 ($0.00) - basic and diluted earnings share for the year ended December 31, 2023, as compared to a net loss of $1,512,692 ($0.00), for the same period ended in 2022.
The weighted-average number of shares of Common Stock used in the earnings per share for the basic and dilutive computation was 397,741,921 for the year ended December 31, 2023, and 371,601,679 for the year ended December 31, 2022.
| -17- |
Liquidity and Capital Resources
We do not currently have sufficient working capital to fund our expected future operations. We cannot assure investors that we will be able to continue our operations without securing additional adequate funding. We had $1,132 in cash, total assets of $1,132, and total liabilities of $12,030,443 as of December 31, 2023. Total accumulated deficit at December 31, 2023, was ($37,859,604).
Liquidity is the ability of a company to generate adequate amounts of cash to meet all of its financial obligations. The following table provides certain selected balance sheet comparisons between December 31, 2023, and December 31, 2022:
| December 31, | December 31, | $ Increase |
||||||||||||||||
| 2023 | 2022 | (Decrease) | % Change | |||||||||||||||
| Cash | $ | 1,132 | $ | 24,595 | $ | (23,463 | ) | -95.40 | % | 1 | ||||||||
| Prepaids and other | $ | - | $ | 2,947 | $ | (2,947) | -100.00 | % | 2 | |||||||||
| Total current assets | $ | 1,132 | $ | 27,542 | $ | (26,410 | ) | -95.89 | % | 3 | ||||||||
| Total assets | $ | 1,132 | $ | 27,542 | $ | (26,410 | ) | -95.89 | % | 3 | ||||||||
| Accounts payable and accrued expenses | $ | 3,822,338 | $ | 3,317,225 | $ | 505,113 | 15.23 | % | 4 | |||||||||
| Accounts payable and accrued expenses - related party | $ | 4,549,465 | $ | 3,799,452 | $ | 750,012 | 16.49 | % | 4 | |||||||||
| Note payable | $ | 652,500 | $ | 672,500 | $ | (20,000) | -2.97 | % | 5 | |||||||||
| Notes payable - related parties - net | $ | 2,805,774 | $ | 2,805,774 | $ | - | - | % | ||||||||||
| Convertible note payable - net | $ | 166,667 | $ | 166,667 | $ | - | - | % | ||||||||||
| Advances - related parties | $ | 31,200 | $ | 3,500 | $ | 27,700 | 791.43 | % | 6 | |||||||||
| Advances - others | 2,500 | - | 2,500 | 100.00 | % | 6 | ||||||||||||
| Total current liabilities | $ | 12,030,443 | $ | 10,765,118 | $ | 1,265,325 | 11.75 | % | 7 | |||||||||
| Total liabilities | $ | 12,030,443 | $ | 10,765,118 | $ | 1,265,325 | 11.75 | % | 7 | |||||||||
1 - Cash decreased in 2023 due to payments of accounts payable.
2 – The prepaid of $2,947 at December 31, 2022 represented prepaid legal fees. The amount was applied in 2023 against legal fee billings.
3 - See discussion regarding cash resources in #1 above.
4 – Lack of cash resources resulted in an increase in these liabilities.
5 – In 2023, note payments in the amount of $20,000 were made resulting in a decrease of $20,000 in the note payable.
6 - In 2023, related parties and an unrelated party made advances in the amounts of $31,200 and $2,500, respectively.
7 – See discussions in 4, 5 and 6.
| -18- |
Cash Flows
| December 31, | December 31, | $ Increase | ||||||||||||||
| 2023 | 2022 | (Decrease) | % Change | |||||||||||||
| Net cash used in operating activities | $ | 302,663 | $ | 496,654 | $ | (193,991 | ) | -39.06 | % | |||||||
| Net cash used in investing activities | $ | - | $ | - | $ | - | - | % | ||||||||
| Net cash provided by financing activities | $ | 279,200 | $ | 460,700 | $ | (181,500 | ) | -39.40 | % | |||||||
Operating Activities
Our net cash used in operations in 2023 was less than 2022. The change was primarily due to the recognition of a gain on debt settlement in 2022 of $70,377 but no such gain recognition in 2023, amortization of debt discount of $48,232 in 2022 but no amortization of debt discount in 2023, stock issued for services in 2022 but no stock issued for services in 2023, an increase of $178,453 of accounts payable and accrued expenses and an increase of $62,098 in accounts payable and accrued expenses – related parties during 2023.
Investing activities
Net cash used in investing activities for the year ending December 31, 2023 and 2022 was $0.
Financing Activities
In 2023, the Company had net cash provided by financing activities of $279,200, consisting of the following:
Proceeds from advances – related parties - $31,700
Repayment of advances – related parties - $500
Proceeds of advances – others – $2,500
Repayments on notes payable - $20,000
Proceeds from stock issued for cash - $265,500
Repayments of advances – related parties - $500
Our accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. Our general business strategy is to first develop our GTL technology to maintain our basic viability, while seeking significant development capital for full commercialization.
As shown in the accompanying consolidated financial statements, we have incurred an accumulated deficit of $37,859,604 and $36,278,869 as of December 31, 2023 and 2022, respectively.
Our ability to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations and on our ability to obtain necessary financing to fund ongoing operations.
| -19- |
Commitments
Capital Expenditures - none
Operational Expenditures
Employment Agreements
In August 2012, we entered into an employment agreement with Raymond Wright, for the position of president of GIE, for a term of five years with compensation of $90,000 per year. In September 2014, Mr. Wright’s employment agreement was amended to increase his annual pay to $180,000. By its terms, Mr. Wright’s employment agreement automatically renewed on August 12, 2020, 2021, 2022 and 2023, for a successive one-year periods. During the twelve-months ended December 31, 2023, we paid and/or accrued a total of $180,000 for this calendar year under the terms of the agreement. Mr. Wright is also the chairman of our Board of Directors.
Effective May 10, 2018, we entered into an employment agreement with Ransom Jones, Chief Financial Officer, Secretary and a member of the board of directors. Mr. Jones earns a base salary of $120,000 per year. During each year that Mr. Jones’ agreement is in effect, he is entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year, such amount having been accrued for the period ended December 31, 2023. Mr. Jones received a grant of common stock (the “Stock Grant”) at the start of his employment equal to 250,000 shares each of the Company’s Common Stock, par value $.0001 per share (the “Common Stock”), such shares vesting immediately. Mr. Jones is also entitled to participate in the Company’s benefit plans when such plans exist. The foregoing summary of Mr. Jones’s employment agreement is qualified in its entirety by reference to the actual true and correct Employment Agreement by and between Mr. Jones and our Company, dated May 10, 2018, a copies of which are filed as Exhibit 10.40 to this Form 10-K and incorporated by reference herein.
Consulting Agreements
On September 7, 2018, Wildcat, a company controlled by Shareholder Marshall Gleason, filed suit against us alleging claims arising from the Gleason Agreement, seeking to recover monetary damages, interest, court costs, and attorney’s fees. In a separate lawsuit, Wildcat filed suit claiming that the Company breached that certain Promissory Note dated on or about November 13, 2017, entered into between Wildcat, as lender and Greenway as borrower, and as a result Wildcat initiated an action in County Court at Law No. 2 of Tarrant County, Texas, Cause No. 2018-006416-2. On March 6, 2019, we entered into a Rule 11 Agreement with Gleason settling both disputes, a copy of which is filed as Exhibit 10.52 to this Form 10-K and incorporated by reference. Pursuant to the Rule 11 Agreement, the parties agreed to abate both cases until the earlier of a default of the performance of the Rule 11 Agreement or October 30, 2019, whichever be sooner. The Rule 11 Agreement provided that if we timely performed through October 15, 2019, the parties would file a joint motion for dismissal and present agreed orders of dismissal with prejudice for both lawsuits. The Company performed in all regards under the Rule 11 Agreement, however Gleason refused to sign the Wildcat Settlement Agreement at the point of the Company’s having performed its obligations. The parties’ respective counsels then mutually agreed to extend the original October 30, 2019 settlement date until at least the end of the year while the parties waited for Gleason’s signature. Gleason signed the Compromise Settlement and Release Agreement on February 4, 2020, and all litigation was dismissed by the Court on February 25, 2020. A copy of the Dismissal is incorporated by reference as Exhibit 10.59.
| -20- |
Paul Alfano, a director and greater than five percent (5%) shareholder entered into a consulting agreement with us on April 19, 2018 via Alfano Consulting Services (the “Alfano Agreement”), to provide board and senior management advice, including but not limited to corporate strategy, SEC regulatory adherence, sales and marketing strategies, document and presentation preparation and fund-raising support. Terms included payment of billable time at $40.00 per hour, plus approved expenses, retroactive to January 1, 2017. A copy is available by Exhibit 10.44 incorporated by reference herein. The Alfano Agreement was terminated when Mr. Alfano became a director on June 26, 2019. The Company has accrued Consulting Fees and Expenses of $120,988 for all prior periods through the year ending December 31, 2021. During 2022, Mr. Alfano and the Company mutually agreed to issues Company shares to Mr. Alfano in full satisfaction of the $120,988 Consulting Fees and Expenses that were accrued as of December 31, 2021.
On October 19, 2020, the Company entered into a management consulting services agreement with Dean Goekel (the “Goekel Agreement” via “Analytical Professionals”), to manage engineering and vendor relationships, assist in defining the design and cost of certain capital equipment and to manage the direction of research, development and other related engineering activities. Mr. Goekel will also support the Company’s ongoing business operations, including assistance in commercialization and market implementation, strategic planning and other services. The agreed upon start date under the agreement is July 1, 2020 and the minimum engagement term was for six (6) months. After the initial term the agreement automatically renews for subsequent six (6) month terms unless the Company or Mr. Goekel terminates the agreement. Under the agreement, in exchange for Mr. Goekel’s services he will receive a minimum monthly fee of $10,000 per month in deferred compensation until such time that adequate funds are available for payment. As of December 31, 2023, we have accrued $420,000 in compensation expense related to this agreement. Additionally, under the agreement Mr. Goekel was issued stock warrants for 3,000,000 shares at a strike price of $0.03 per share effective July 1, 2020 and expiring on June 30, 2022. The Company recognized valued and recognized compensation expense related to these warrants of $25,137 for the year ended December 31, 2020. Mr. Goekel did not exercise any of the stock warrant prior to June 30, 2022 and the warrants expired unexercised. After meeting certain deliverables set forth in the agreement, Mr. Goekel will be issued stock warrants for 1,000,000 shares at a strike price that is an average of the stock price for the 90 days that the deliverables have been met. No such deliverables have been met to date, and currently management does not believe these 1,000,000 warrants will be earned by the service provider.
Other
Pursuant to the GIE Acquisition Agreement in August 2012, we agreed to: (i) issue an additional 7,500,000 shares of Common Stock when the first portable GTL unit is built and becomes operational, and is capable of producing 2,000 barrels of diesel or jet fuel per day, and (ii) pay a 2% royalty on all gross production sales on each unit placed in production, or one percent (1%) each to the founders and previous owners of GIE. On February 6, 2018, and in connection with a settlement agreement dated April 5, 2018, by and between the Greer Family Trust and us, which is the successor in interest one of the founders and prior owners of GIE, F. Conrad Greer (“Greer”), (the “Trust”, and such settlement agreement the “Trust Settlement Agreement”), we issued 3,000,000 shares of Common Stock and a convertible promissory note for $150,000 to the Trust in exchange for: (i) a termination of the Trust’s right to receive 3,750,000 shares of Common Stock in the future and 1% of the royalties owed to the Trust under the GIE Acquisition Agreement; (ii) the termination of Greer’s then current employment agreement with GIE; and (iii) the Trust’s waiver of any future claims against us for any reason. A copy of the Trust Settlement Agreement and related promissory note dated April 5, 2018, by us in favor of the Trust is filed as Exhibit 10.36 to this Form 10-K and incorporated by reference herein.
As a result of the transactions consummated by the Trust Settlement Agreement, we are committed to issue a reduced number of 3,750,000 shares of Common Stock and 1% of the royalties due on production of our GTL operational units to Ray Wright, the other founder and prior owner of GIE, pursuant to the GIE Acquisition Agreement.
Mining Leases
For 2023, our annual lease maintenance fees due to Bureau of Land Management (“BLM”) for the Arizona, were $20,400. There is no actual lease agreement with the BLM, but we file an annual maintenance fee form and pay fees to the BLM to hold our claims. The next payment will be due on August 31, 2024.
| -21- |
Financing
Related parties
Financing to date has been provided by loans, advances from Shareholders and Directors and issuances of our Common Stock in various private placements to accredited investors, related parties and institutions.
For the year ended December 31, 2023 there was $31,200 of related- party financing, reflected as a liability – Advances – related parties.
For the year ended December 31, 2023, we did not receive any proceeds from related-party loans.
Third-party financing
On various dates throughout the year ended December 31, 2023, the Company issued 18,633,333 shares of Rule 144 restricted Common Stock, par value $0.0001 per share pursuant to private placement sales to various accredited investors, for $265,500 ($.01 - $.02/share).
On various dates throughout the year ended December 31, 2022, the Company issued 20,667,999 shares of Rule 144 restricted Common Stock, par value $0.0001 per share pursuant to private placement sales to various accredited investors, for $482,200 ($0.02 - $0.03/share).
Seasonality
We do not anticipate that our business will be affected by seasonal factors.
Impact of Inflation
While we are subject to general inflationary trends, including for basic manufacturing production materials, our management believes that inflation in and of itself does not have a material effect on our operating results. However, inflation may become a factor in the future. The economics of GTL conversion rely in part on the arbitrage between oil and natural gas prices, with economic models for many producers, including our own models, using a range of $30-60/bbl (for WTI or Brent Crude as listed daily on the Nymex and ICE commodities exchanges) to determine relative profitability of their GTL operations.
Off-Balance Sheet Arrangements
The Company does not have any off balance sheet arrangements.
Critical Accounting Policies and Estimates
Our Consolidated Financial Statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Preparing our Financial Statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies include revenue recognition and impairment of long-lived assets.
| -22- |
We evaluate our long-lived assets for financial impairment on a regular basis in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which evaluates the recoverability of long-lived assets not held for sale by measuring the carrying amount of the assets against the estimated discounted future cash flows associated with them. At the time such evaluations indicate that the future discounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values.
We believe that the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our financial statements.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.
Significant estimates during the years ended December 31, 2023 and 2022, respectively, include uncertain tax positions, and the valuation allowance on deferred tax assets.
| -23- |
Cash and Cash Equivalents and Concentration of Credit Risk
For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At December 31, 2023 and 2022, respectively, the Company did not have any cash equivalents.
The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. At December 31, 2023 and 2022, respectively, the Company did not have any cash in excess of the insured FDIC limit.
Use of Estimates
The preparation of our Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Based on the uncertainty of future taxable income, the Company does not reflect deferred tax assets in its financial statements. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of December 31, 2023 and December 31, 2022, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded during the years ended December 31, 2023 and 2022, respectively.
Research and Development
The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.
| -24- |
The Company incurred research and development expenses of $-0- and $54,275 for the years ended December 31, 2023 and 2022, respectively.
Stock-Based Compensation
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and uses the Black-Scholes or an alternative option pricing model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
| ● | Exercise price, |
| ● | Expected dividends, |
| ● | Expected volatility, |
| ● | Risk-free interest rate; and |
| ● | Expected life of option |
| -25- |
Basic and Diluted Earnings (Loss) per Share
Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future.
At December 31, 2023 and 2022, respectively, the Company had the following common stock equivalents outstanding, which are potentially dilutive equity securities:
| December 31, 2023 | December 31, 2022 | |||||||
| Convertible debt | 4,064,400 | 3,689,400 | ||||||
| Warrants | - | - | ||||||
| 4,064,400 | 3,689,400 | |||||||
Recent Accounting Standards
Changes to accounting principles are established by the Financial Accounting Standards Board in the form of Accounting Standards Updates (“ASU’s”) to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company.
Subsequent Events
From January 1, 2024 through July 16, 2024, the Company issued 12,445,334 shares of Rule 144 restricted Common Stock in private placements to seven accredited investors at $0.01 - $0.02 per share.
| -26- |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
As a smaller reporting company, as defined by Rule12b-2 of the Securities Exchange Act of 1934 and Item 10(f)(1) of Regulation S-K, we are not required to provide information requested by this item.
| Item 8. | Financial Statements and Supplementary Data. |
Our Financial Statements and related notes are included as part of this Form 10-K as indexed in the appendix on page F-1, et seq.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
At no time have there been any disagreements with our accountants regarding any matter of accounting principles or practices, financial statement disclosure, auditing scope or procedure.
| Item 9A. | Controls and Procedures. |
Evaluation of Disclosure Controls and Procedures.
The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is 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 by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and our principal financial officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:
| ● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; | |
| ● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and | |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements. |
Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error 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 system 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 inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| -27- |
In the year ending December 31, 2023, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this evaluation, our principal executive officer and principal financial officer, have concluded that as of December 31, 2023, our internal control over financial reporting was ineffective.
Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
As of December 31, 2023, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this evaluation, management has concluded that as of December 31, 2023, our internal control over financial reporting was ineffective. We also concluded that our disclosure controls and procedures are ineffective.
We have identified at least the following deficiencies, which together constitute a material weakness in our assessment of the effectiveness of internal control over financial reporting as of December 31, 2023:
| 1. | We have inadequate segregation of duties within our cash disbursement control design. |
| 2. | During the year ended December 31, 2023, we internally performed all aspects of our financial reporting process including, but not limited to, the underlying accounting records and recording of journal entries and internally maintained responsibility for the preparation of the financial statements. Due to the fact these duties were often performed by the same people, a lack of independent review process was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected. |
| 3. | We do not have a sufficient number of independent or qualified directors for our Board of Directors and a qualified Audit Committee. We currently have only two (2) independent directors on our board, which is fully comprised of five directors, and accordingly we do not yet have a functioning audit committee, as the only otherwise qualified director is not independent. Further, as a publicly traded company, we should strive to have a majority of our board of directors be independent. |
We are continuing the process of remediating our control deficiencies. However, the material weakness in internal control over financial reporting that have been identified will not be remediated until numerous new internal controls are implemented and operate for a period of time, are tested, and we are able to conclude that such internal controls are operating effectively. We cannot provide assurance that these procedures will be successful in identifying material errors that may exist in our Financial Statements. We cannot make assurances that we will not identify additional material weaknesses in our internal control over financial reporting in the future. Our management plans, as capital becomes available to us, to increase the accounting and financial reporting staff and provide future investments in the continuing education and public company accounting training of our accounting and financial professionals.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control system, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.
Our management believes that the material weaknesses set forth above did not have a material effect on our financial results. However, the lack of a functioning audit committee and lack of a majority of independent directors on our Board of Directors results in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures and could potentially have an impact our financial statements.
Changes in Internal Controls over Financial Reporting
There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal control over financial reporting that occurred during the year ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Item 9B. | Other Information. |
None.
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PART III
| Item 10. | Directors, Executive Officers and Corporate Governance. |
The following table sets forth the names, ages, and positions of our executive officers, directors and key employees as of the date of this report. Executive officers are elected annually by our Board of Directors. Each executive officer holds his office until he resigns, is removed by the Board of Directors, or his successor is elected and qualified. Directors are elected annually by our Shareholders at the annual meeting of the Shareholders. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.
| Name | Age | Position | Director | |||
| Raymond Wright | 87 | Chairman of the Board, President of GIE, and Director | 2016 | |||
| Ransom Jones | 75 | Director, Chief Financial Officer, Secretary and Treasurer | 2016 | |||
| Kent Harer | 67 | Director and President | 2017 | |||
| Paul Alfano | 68 | Director (Independent) | 2019 | |||
| Michael Wykrent | 80 | Director (Independent) | 2019 |
The members of our Board of Directors are subject to change from time to time by the vote of our Shareholders at special or annual meetings to elect directors. Our current Board of Directors consists of five directors, who have expertise in our business. No date for the next annual meeting of Shareholders is specified in our bylaws or has been fixed by the Board of Directors. Officers are elected annually by the directors. The term of office of each officer ends at the next annual meeting of our Board of Directors, expected to take place immediately after the next annual meeting of Shareholders, or until such time when such officer’s successor is elected and qualified.
The foregoing notwithstanding, except as otherwise provided in any resolution or resolutions of the board, directors who are elected at an annual meeting of Shareholders, and directors elected and/or appointed in the interim to fill vacancies and newly created directorships, will hold office for the term for which elected and/or appointed until their successors are elected and qualified or until their earlier death, resignation or removal.
Whenever the holders of any class or classes of stock or any series thereof are entitled to elect one or more directors pursuant to any resolution or resolutions of the Board of Directors, vacancies and newly created directorships of such class or classes or series thereof may generally be filled by a majority of the directors elected by such class or classes or series then in office, or, by a sole remaining director so elected or by the unanimous written consent, or, the affirmative vote of a majority of the outstanding shares of such class or classes of stock or any series thereof, entitled to elect such director or directors.
We may employ additional management personnel, as our Board of Directors deems necessary. We have not identified or reached an agreement or understanding with any other individuals to serve in management positions.
Directors and Officers Biographies
Raymond Wright - Chairman of our Board of Directors, Co-Founder and President of our wholly owned subsidiary, GIE
Mr. Wright has been a Director since March 6, 2016 and was elected by the Board as Chairman in 2017, while also serving as the President of GIE since August 2012. Mr. Wright was the co-founder of DFW Genesis with F. Conrad Greer, in 2009, where he began working on current natural gas GTL processes until 2012, when he and the late Mr. Greer formed GIE to continue working on a new GTL solution, which has gone on to become the basis of our proprietary G-Reformer technology. Previously, Mr. Wright worked with Dallas-based Texas Instruments (TI) managing operations and opening up new markets for TI in England. He developed and built a materials manufacturing facility for TI’s European operation and introduced TI’s Light Sensor technology in Europe. Mr. Wright was asked to join the Board of Directors due to his specific experience in the GTL industry, his early contributions and leadership to our GTL technology, and his general business, management and analytical skills. He received an undergraduate degree in Accounting from Southern Methodist University.
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Kenton Harer – Director and President (Interim)
Kenton J. Harer joined our Board of Directors on February 3, 2017 and was appointed by our Board of Directors serve as our interim President on July 19, 2019, as reported on our Current Report on Form 8-K, filed with the SEC on July 23, 2019, which is incorporated by reference herein. Mr. Harer has over 35 years of industrial gas experience, starting his career working for the oilfield division of LTV Corporation in 1981, and in 1984, began working with industrial gas, where he developed an extensive knowledge of the industrial gas business and the various technologies of the diverse industries it serves. He has been and remains an instrumental part of the North Texas business operations of world-renowned French company Air Liquide in the United States. In his capacity at Air Liquide, Mr. Harer was directly involved in the development of the original G-Reformer technology and was instrumental in negotiating certain agreements between Air Liquide and us that allowed us to further develop and begin commercialization such technology. Mr. Harer was asked to join the Board of Directors due to his significant experience in the industrial gas industry, his early contributions and leadership to our GTL technology, and his general business, investment and analytical skills. He graduated from the University of South Dakota with a Bachelor of Science in Business Administration in 1980.
Ransom Jones – Director, Chief Financial Officer, Secretary and Treasurer
Ransom B. Jones has served as a director since March 6, 2016, was our Interim Chief Executive Officer and President from January 2016 to April 2017, and became our Chief Financial Officer, Secretary and Treasurer on May 10, 2018. Mr. Jones has over 45 years of diverse business experience. He is a retired partner of KPMG Peat Marwick and former Chief Financial Officer of two publicly traded corporations, Western Preferred Corporation and El Paso Refining, Inc. He has also served as an officer of some of the largest and most prestigious global financial institutions including Goldman Sachs, Citicorp, ABN-AMRO Bank, and AIG. Mr. Jones was asked to join the Board of Directors due to his significant senior executive management and deep accounting practice experience, general business, investment and superior analytical skills. He graduated from the University of Texas at El Paso in 1971 with a BBA, Accounting.
Paul Alfano – Director (Independent)
Paul Alfano joined our Board of Directors June 26, 2019. Mr. Alfano is a greater than 5% Shareholder and has served as a consultant to us since 2016, until he became a director in 2019. He has extensive leadership experience in Silicon Valley and currently runs his own consulting firm based in Rochester, NY. Mr. Alfano has led worldwide sales and business development teams, alliances and joint ventures while at Hewlett-Packard (“HP”), Network Appliance and Portal Software (acquired by Oracle). He has worked with “C-Level” Fortune 50 Executives throughout his career. Most notably Mr. Alfano had a successful 25-year career at HP Headquarters (Palo Alto, CA), with his last assignment as Director of Worldwide Sales & Business Development for the HP-Cisco Alliance, ending in 2007. He reported to the senior management teams at both HP & Cisco. Mr. Alfano also led HP’s SBC-PacBell account team for many years, which was one of HP’s largest and most profitable. Mr. Alfano was asked to join the Board of Directors due to his specific sales skills, and for his general business, management and analytical skills. He is a graduate of St. John Fisher College (Rochester, NY) having earned a BS in Marketing, as well as an MBA in Finance from Rochester Institute of Technology.
Michael Wykrent - Director (Independent)
Michael Wykrent was elected to serve as a member of our Board of Directors June 26, 2019. Mr. Wykrent is a major Shareholder and has been an advisor to the Board since 2012. Mr. Wykrent retired from United Parcel Service (“UPS”) after a 27-year career working in Human Resources as a Region Communications Manager. When he began his career at UPS, the company was comprised of only a few thousand managers. By the end of his career, UPS had become a world-wide service provider, with over 481,000 employees. Mr. Wykrent helped open new operating areas as UPS was expanding and also headed up region employee opinion surveys and coordinated the charitable contributions throughout the southwest. His duties brought him into contact with management and employees working in package sorting and delivery operations, labor relations, engineering, accounting, air operations, fleet rentals, vehicle maintenance, legal, customer service, delivery information and loss prevention. Mr. Wykrent was asked to join the Board of Directors due to his sales, business, management and analytical skills. He served in the Navy for four years in communications and later graduated from Henry Ford College.
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Committees of the Board
On June 22, 2018, pursuant to the authority granted to our Board of Directors in Section 2.10 of Article Two of our bylaws, the Board of Directors created an executive committee (the “Executive Committee”). As of the date of this report, the designated directors comprising the Executive Committee include Ray Wright, Kent Harer, Paul Alfano and Ransom Jones. The Executive Committee may consider and review any and all such matters or issues it deems necessary coming before us and take such further lawful actions as it determines to be consistent with its responsibilities. Given our small size, with the exception of the Executive Committee, our entire Board of Directors participates in all of the considerations with respect to our audit, compensation and nomination deliberations.
The responsibilities of other committees now or to be adopted in the future are currently are fulfilled by our Board of Directors and all of our directors participate in such responsibilities, two of whom are “independent” as defined in the listing standards of the Nasdaq Stock Market, Inc., which states in part, that, “that an independent director must not be an officer or employee of the company or its subsidiaries or any other individual having a relationship that, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.”
Audit Committee
Our entire Board of Directors currently performs the functions of an audit committee, but no written charter governs the actions of our Board of Directors when performing the functions of what would generally be performed by an audit committee. Our Board of Directors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, our Board of Directors reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. At the present time, Ransom Jones, our Chief Financial Officer and one of our directors, is considered to be our expert in financial and accounting matters.
Nomination Committee
Due to our size and the size of our Board of Directors, we do not require a separate nominating committee at this time. When evaluating director nominees, our directors consider the following factors:
| ● | The appropriate size of our Board of Directors; | |
| ● | The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of our Board of Directors; | |
| ● | Experience in political affairs; | |
| ● | Experience with accounting rules and practices; and | |
| ● | The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new members of our Board of Directors. |
Our goal is to assemble a Board of Directors that brings together a variety of perspectives and skills derived from high-quality business and professional experience. In doing so, our Board of Directors will also consider candidates with appropriate non-business backgrounds.
Other than the foregoing, there are no stated minimum criteria for director nominees, although our Board of Directors may also consider such other factors as it may deem are in our best interests as well as the interests of our Shareholders. In addition, our Board of Directors identifies nominees by first evaluating the current members of our Board of Directors willing to continue in service. Current members of our Board of Directors with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of our Board of Directors does not wish to continue in service or if our Board of Directors decides not to re-nominate a member for re-election, our Board of Directors then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of our Board of Directors are polled for suggestions as to individuals meeting the criteria described above. Our Board of Directors may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third-party search firm, if necessary. Our Board of Directors does not typically consider Shareholder nominees, because it believes that our current nomination process is sufficient to identify directors who serve our Shareholders’ best interests.
| -31- |
As approved by our Shareholders at a Special Shareholders meeting (“Special Shareholders Meeting”) held on December 11, 2019, we amended our Certificate of Formation (Articles of Incorporation) to change the voting requirements specifying that the vote required to approve certain actions before our Stockholders, including “fundamental actions,” as defined by Texas Business Organizations Code (the “TBOC”) Section 21.364, and “fundamental business transactions,” as defined by TBOC Section 1.002(32). See our Form 8-K filed December 16, 2019 for more detailed information, incorporated by reference herein.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act (“Section 16(a)”) requires our officers, directors and persons who beneficially own more than 10% of our Common Stock to file reports of ownership and changes in ownership with the SEC. These reporting persons also are required to furnish us with copies of all Section 16(a) forms they file.
Communication with Directors
Shareholders and other interested parties may contact any of our directors by writing to them at Greenway Technologies, Inc. at 1521 N. Cooper Street, Suite 205, Arlington, TX 76011. Attention: Secretary.
Our Board of Directors has approved a process for handling letters received by us and addressed to any of our directors. Under that process, one of our officers reviews all such correspondence and regularly forwards to the directors a summary of all such correspondence, together with copies of all such correspondence that, in the opinion of such officer, deal with functions of our Board of Directors or committees thereof or that he otherwise determines requires their attention. Directors may at any time review a log of all correspondence received by us that are addressed to members of the board and request copies of such correspondence.
Conflicts of Interest
With respect to transactions involving real or apparent conflicts of interest, we have adopted written policies and procedures, which require that the: (i) the fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who authorize or approve the transaction prior to such authorization or approval; and (ii) the transaction be fair and reasonable to us at the time it is authorized or approved by our directors.
Code of Ethics for Senior Executive Officers and Senior Financial Officers
We have adopted a written code of business conduct and ethics (our “Code of Ethics”), which applies to our principal executive officer, principal financial officer, principal accounting officer and all persons providing similar functions. Our Code of Ethics is designed to deter wrongdoing and to promote:
| ● | honest and ethical conduct; | |
| ● | full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements; | |
| ● | compliance with applicable laws, rules and regulations; | |
| ● | the prompt reporting violation of the code; and | |
| ● | Ongoing accountability for adherence to our Code of Ethics. |
A copy of our Code of Ethics is provided in Exhibit 14.1, incorporated by reference herein. We will also provide a copy of our Code of Ethics free of charge upon request to any person submitting a written request to our Secretary.
| -32- |
| Item 11. | Executive Compensation. |
Summary of Cash and Certain Other Compensation
At present, we have three executive officers, Messrs. Wright, Harer and R. Jones.
Summary Compensation Table
The following table sets forth the compensation for our named executive officers for each of the two completed fiscal years ended December 31, 2023, and December 31, 2022:
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified deferred compensation earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Ray Wright (1) | 2023 | 180,000 | - | - | - | - | - | - | 180,000 | |||||||||||||||||||||||||||
| 2022 | 180,000 | - | - | - | - | - | - | 180,000 | ||||||||||||||||||||||||||||
| Ransom Jones | 2023 | 120,000 | 35,000 | - | - | - | - | - | 155,000 | |||||||||||||||||||||||||||
| 2022 | 120,000 | 35,000 | - | - | - | - | - | 155,000 | ||||||||||||||||||||||||||||
| Kent Harer (2) | 2023 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2022 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| (1) | Mr. Wright is our President and Chairman of our Board of Directors. | |
| (2) | Mr. Harer is our Acting President. Mr. Harer has not taken a salary or any other form of compensation. Mr. Harer does not have an employment agreement and serves at the pleasure of our Board of Directors. |
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding equity awards for our named executive officers as of the end of our last completed fiscal year, December 31, 2023.
Director Compensation
Currently, our directors receive no compensation for their participation on our board, board committees or other activities related to the Company. There are no plans by the directors pay retirement benefits to directors or executive officers.
Executive Compensation
Ray Wright and Ransom Jones each have employment agreements that automatically renew on each employment anniversary date unless a party provides notice of non-renewal before sixty (60) days before each annual period’s end. Mr. Jones was provided with 250,000 shares at the inception of his agreement, and he is due a bonus of $35,000 each year he is employed by us. There were no changes to any of the named executives’ duties as described by their respective employment agreements. Kent Harer does not have an employment agreement and receives no compensation for his management roles and responsibilities. Mr. Harer has agreed to this arrangement until a new chief executive is hired by us.
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Securities Authorized for Issuance under Equity Compensation Plans
None.
Securities Beneficial Ownership Table
The following table presents information regarding the beneficial ownership of all shares of our Common Stock as of December 31, 2023:
Beneficial Ownership Table
| Directors and Named Executive Officers (9) | Shares of Common Stock Beneficially Owned (1) | |||||||
| Number | Percent | |||||||
| Paul Alfano(2) | 29,450,000 | 7.3 | % | |||||
| Kent Harer (5) | 1,270,000 | <1.0 | % | |||||
| Kevin Jones (3) | 24,739,683 | 6.1 | % | |||||
| Ransom Jones (6) | 6,181,867 | 1.5 | % | |||||
| Raymond Wright (4) | 16,000,000 | 3.9 | % | |||||
| Michael Wykrent (7) | 13,060,000 | 3.2 | % | |||||
| All current Directors and Named Executive Officers as a group (6 persons) (8) | 90,701,550 | 22.5 | % | |||||
| 5% or Greater Stockholders | ||||||||
| Paul Alfano (2) | 29,450,000 | 7.3 | % | |||||
| Kevin Jones (3) | 24,739,683 | 6.1 | % | |||||
| 1) | Applicable percentages are based on 403,844,204 shares of Common Stock outstanding as of December 31, 2023. Beneficial ownership is determined by rules promulgated by the SEC and generally includes voting or investment power with respect to securities. Common Stock underlying options, warrants, and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days of year end are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table, we believe that each of the individuals named in the table has sole voting and investment power with respect to the Common Stock indicated as beneficially owned by such individual. The table includes Common Stock and options, warrants, and convertible notes exercisable or convertible into Common Stock that are either vested or may vest within 60 days of year end. | |
| 2) | Paul Alfano. Mr. Alfano is an independent director and greater than 5% Shareholder. | |
| 3) | Kevin Jones. Mr. Kevin Jones is a greater than 5% Shareholder and a former director. Mr. Jones resigned as a director during 2021. Kevin Jones and Ransom Jones are brothers. Kevin Jones has sole voting and dispositive power with respect to 8,364,683 shares. In addition, the amount of Common Stock beneficially owned by Mr. Kevin. Jones includes: (a) 4,875,000 Shares held by Mabert, in which Mr. Kevin Jones has 100% ownership interest and for which he serves as sole manager; (b) 8,500,000 Shares owned by Mr. Kevin Jones’s late spouse, Ms. Christine Earley, in which Mr. Kevin Jones has a spousal interest; and (c) 1,867,843 Shares issuable to Mr. Kevin Jones pursuant to that certain Loan Agreement by and between Mabert and the Company, dated September 14, 2018, filed as Exhibit 10.49 to the Company’s Form 10-K/A, filed with the SEC on May 13, 2019; (c) 2,000,000 shares beneficially held for Mr. Kevin Jones by Equity Trust and (d) 1,000,000 shares owned by Topical Floors, LLC, in which Mr. Kevin Jones owns 100% ownership interest and for which he serves as sole manager. |
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| 4) | Raymond Wright. Mr. Wright is the chairman of our Board of Directors, and president of GIE our wholly owned subsidiary. | |
| 5) | Kent Harer. Mr. Harer is a director and our acting president, making him a named executive officer. The Common Stock beneficially owned by Mr. Harer are those shares immediately issuable upon Mr. Harer’s exercise of a Stock Purchase Warrant, dated January 8, 2018, by and between our Company and Mr. Harer, filed as Exhibit 10.37, and incorporated by reference herein. | |
| 6) | Ransom Jones. Mr. Ransom Jones is a director and our chief financial officer, secretary and treasurer, making him a named executive officer. Mr. Jones has sole voting and dispositive power with respect to 2,306,867 shares of Common Stock. In addition, the amount of Common Stock beneficially owned by Mr. Jones includes 3,875,000 shares owned by Mr. Jones’s spouse, Ms. Jan Jones, in which Mr. Jones has a spousal interest. Ransom Jones and Kevin Jones are brothers. | |
| 7) | Michael Wykrent. Mr. Wykrent is an independent director. | |
| 8) | All current directors and named executive officers as a group. This ownership includes only the ownership of our current named executive officers and directors. Mr. Jones is listed as he resigned from being a director during 2021. | |
| 9) | Unless otherwise indicated, the address for each of these shareholders is c/o Greenway Technologies, Inc., at 1521 N. Cooper Street, Suite 205, Arlington, TX 76011. |
Other than as stated herein, there are no arrangements or understandings, known to us, including any pledge by any person of our securities:
| ● | The operation of which may at a subsequent date result in a change in control of the registrant; or | |
| ● | With respect to the election of directors or other matters. |
| Item 13. | Certain Relationships and Related Transactions and Director Independence. |
Other than as stated herein, there are no other agreements with any of our officers and directors.
After approval given during a properly called special meeting of the Board of Directors, on September 14, 2018, Mabert, which is owned and controlled by our former director and Shareholder, Kevin Jones, and his late wife Christine Early, entered into a loan agreement with us (the “Loan Agreement”), for the purpose of funding working capital and general corporate expenses of up to $1,500,000 (the “Loan Amount”). With Board of Directors consent, the Loan Amount was subsequently increased to provide up to a total $5,000,000 of availability under the Loan Agreement for us. The Company’s bylaws provide no bar from transactions with Interested Directors, so long as the interested party does not vote on such transaction. Mr. Jones did not vote on this transaction.
Mr. Kevin Jones and his late wife and Mabert have loaned a total $2,057,341 to the Company and four other Shareholders have loaned the balance of $793,433, pursuant to the Loan Agreement, through the year ending December 31, 2023. These loans are secured by the assets of our Company. A financing statement and UCC-1 have been filed according to Texas statutes. Should a default under the Loan Agreement occur, there could be a foreclosure or a bankruptcy proceeding filed by Mabert on behalf of the lenders party to the Loan Agreement. A foreclosure sale or distribution through bankruptcy could only result in the creditors receiving a pro rata payment based upon the terms of the Loan Agreement. Mabert did not nor will it receive cash compensation for its efforts.
Mr. Kevin Jones, as the owner and managing member of Mabert, was also the managing and control member of OPMGE, a research and development venture in and to which the Company had a significant revenue member interest and has licensed its proprietary GTL technology and equipment. Any relationship between Greenway and OPMG has been terminated. Due to Mr. Kevin Jones’ family relationship as the brother of Mr. Ransom Jones, our CFO, and his control position over Mabert , Mr. Jones was not considered an independent director.
Mr. Michael Wykrent, a director, made loans totaling $425,000 under the Mabert Loan Agreement to us prior to his being elected as a director of the Company and has had $80,000 of loans subsequently. Mabert operates as an agent for various lenders, including Mr. Wykrent, and manages such loans on behalf of the various lenders under the Loan Agreement. Mr. Wykrent was elected as a non-executive director and we believe that Mr. Wykrent remains an independent director, despite having this lending relationship through Mabert, which, in the opinion of the Company’s Board of Directors, would not interfere with the exercise of his independent judgment in carrying out the responsibilities of a director.
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Mr. Paul Alfano, a director, was contracted as a consultant by the Company in April 2018 prior to his being elected as a director of the Company, thereupon such consulting contract was terminated. In his consulting role, Mr. Alfano’s total fees never exceeded $120,000 for any prior period. We have accrued a total $120,988 for the fees and expenses that were remaining under his consulting agreement at the time Mr. Alfano was elected as a non-executive director and the associated accrued interest on these fees. During 2022, the Company and Mr. Alfano agreed to issue shares in full satisfaction of the $120,988. This action eliminated the accrued amount payable of $120,988.
Director Independence
Mr. Alfano and Mr. Wykrent serve as our two independent directors. We use the definition of “independent director” as defined in the listing standards of the Nasdaq Stock Market, Inc. Under this standard, an “independent director” is a person other than an executive officer or employee of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In addition, the following persons shall not be considered independent:
| ● | A director who is, or at any time during the past three years was, employed by the Company; | |
| ● | A director who accepted or who has a family member who accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence, other than the following: (i) compensation for board or board committee service; (ii) compensation paid to a family member who is an employee (other than as an executive officer) of the issuer; or (iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation; | |
| ● | A director who is a family member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer; | |
| ● | A director who is, or has a family member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed five percent of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following: (i) payments arising solely from investments in the company’s securities; or (ii) payments under non-discretionary charitable contribution matching programs; | |
| ● | A director of the issuer who is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the issuer serve on the compensation committee of such other entity; or | |
| ● | A director who is, or has a family member who is, a current partner of the company’s outside auditor, or was a partner or employee of the registrant’s outside auditor who worked on the company’s audit at any time during any of the past three years. |
Under these standards required to be an independent director, none of Mr. Harer, Mr. Ransom Jones, nor Mr. Wright qualify as independent directors.
We hope to add additional qualified independent members to our Board of Directors at a later date, depending upon our ability to reach and maintain financial stability and/or continuing operations.
| Item 14. | Principal Accounting Fees and Services. |
The following table presents fees for professional services rendered by Assurance Dimensions (“Assurance”), our independent auditors for the years ended December 31, 2023 and 2022, respectively:
| 2023 | 2022 | |||||||
| Audit Fees | $ | 43,500 | $ | 41,000 | ||||
| Audit Related Fees | -0- | -0- | ||||||
| Tax Fees | -0- | -0- | ||||||
| All Other Fees | -0- | -0- | ||||||
| Total | $ | 43,500 | $ | 41,000 | ||||
Audit fees billed were for professional services rendered for the audit of our consolidated financial statements and review of our interim consolidated financial statements for the years ended December 31, 2023 and December 31, 2022.
Pre-Approval Policy for Services of Our Independent Auditors
Our Board of Directors reviews our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K filings before we file them with the SEC. In addition, our Board of Directors reviews the audit plans and anticipated fees for audit and tax work prior to the commencement of that work. All fees paid to the independent auditors are pre-approved by our Board of Directors. These services may include audit services, audit-related services, tax services and other services.
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PART IV
| Item 15. | Exhibits, Financial Statement Schedules. |
| (a) | All financial statements are included in Item 8 of this report. | |
| (b) | All financial statement schedules required to be filed by Item 8 of this report and the exhibits contained in this report are described in Item 8 of this report and are included as indexed in the appendix on page F-1, et seq. |
| -37- |
| -38- |
| -39- |
* Filed herewith.
** Previously filed.
| -40- |
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GREENWAY TECHNOLOGIES, INC. | |||
| Date: | July 16, 2024 | ||
| By | /s/ Kent Harer | ||
| Kent Harer, President | |||
| By | /s/ Ransom Jones | ||
| Ransom Jones, Chief Financial Officer and | |||
| Principal Accounting Officer | |||
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Kent Harer | ||||
| KENT HARER | Director, President | July 16, 2024 | ||
| /s/ Michael Wykrent | ||||
| MICHAEL WYKRENT | Director | July 16, 2024 | ||
| /s/ Ransom Jones | ||||
| RANSOM JONES | Director, Chief Financial Officer | July 16, 2024 | ||
| /s/ Paul Alfano | ||||
| PAUL ALFANO | Director | July 16, 2024 | ||
| /s/ Raymond Wright | ||||
| RAYMOND WRIGHT | Chairman, President of Greenway Innovative Energy, Inc. | July 16, 2024 |
| -41- |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Greenway Technologies, Inc. and Subsidiaries
December 31, 2023 and 2022
Contents
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Greenway Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Greenway Technologies, Inc. (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two-year periods ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had a net loss and net cash used in operating activities of $1,580,735 and $302,663, respectively, for the year ended December 31, 2023, and a working capital deficit and accumulated deficit of approximately $12,029,311 and $37,859,604, respectively, as of December 31, 2023. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
We did not identify any critical audit matters that need to be communicated.
 |
|
| We have served as the Company’s auditor since 2019. | |
| July 16, 2024 |
also d/b/a McNAMARA and ASSOCIATES, PLLC
TAMPA BAY: 4920 W Cypress Street, Suite 102 | Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053
JACKSONVILLE: 4720 Salisbury Road, Suite 223 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053
ORLANDO: 1800 Pembrook Drive, Suite 300 | Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053
SOUTH FLORIDA: 2000 Banks Road, Suite 218 | Margate, FL 33063 | Office: 754.800.3400 | Fax: 813.443.5053
www.assurancedimensions.com
| F-2 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaids and other | ||||||||
| Total Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accounts payable and accrued expenses - related parties | ||||||||
| Accounts payable and accrued expense | ||||||||
| Notes payable | ||||||||
| Notes payable - related parties - net | ||||||||
| Notes payable | ||||||||
| Convertible note payable - net | ||||||||
| Advances - related parties | ||||||||
| Advances - others | ||||||||
| Total Current Liabilities | ||||||||
| Commitments and Contingencies (Note 7) | ||||||||
| Stockholders’ Deficit | ||||||||
| Common stock - $ par value, shares authorized and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-3 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
| 2023 | 2022 | |||||||
| For the Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating expenses | ||||||||
| General and administrative expenses | $ | $ | ||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Amortization of debt discount | ( | ) | ||||||
| Gain on debt settlement | ||||||||
| Total other income (expense) - net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average number of shares - basic and diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-4 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Deficit
For the Year Ended December 31, 2023
| Shares | Amount | Capital | Issued | Deficit | Deficit | ||||||||||||||||||||
| Additional | Common Stock | Total | |||||||||||||||||||||||
| Common Stock | Paid-in | to be | Accumulated | Stockholders’ | |||||||||||||||||||||
| Shares | Amount | Capital | Issued | Deficit | Deficit | ||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Issuance of previously issuable shares | ( | ) | |||||||||||||||||||||||
| Stock issued for cash | |||||||||||||||||||||||||
| Stock issued in exchange for debt – related parties | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ||||||||||||||||||||
| December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial
| F-5 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Deficit
For the Year Ended December 31, 2022
| Shares | Amount | Capital | Issued | Receivable | Deficit | Deficit | ||||||||||||||||||||||
| Additional | Common Stock | Total | ||||||||||||||||||||||||||
| Common Stock | Paid-in | to be | Subscription | Accumulated | Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Issued | Receivable | Deficit | Deficit | ||||||||||||||||||||||
| December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| Stock issued as debt issue costs | ( | ) | ||||||||||||||||||||||||||
| Settlement of subscription receivable - warrants | - | |||||||||||||||||||||||||||
| Stock issued for cash | ||||||||||||||||||||||||||||
| Stock issued to settle accrued liabilities | ||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-6 |
Greenway Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
| 2023 | 2022 | |||||||
| For the Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||
| Amortization of debt discount | ||||||||
| Stock issued for services | ||||||||
| Gain on debt settlement | ( | ) | ||||||
| Changes in operating assets and liabilities | ||||||||
| (Increase) decrease in | ||||||||
| Prepaids and other | ( | ) | ||||||
| Increase (decrease) in | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable and accrued expenses - related parties | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Proceeds from advances - related parties | ||||||||
| Repayment of advances – related parties | ( | ) | ||||||
| Proceeds from advances - other | ||||||||
| Proceeds from issuance of note payable | ||||||||
| Repayments on notes payable | ( | ) | ( | ) | ||||
| Proceeds from stock issued for cash | ||||||||
| Net cash provided by financing activities | ||||||||
| Net decrease in cash | ( | ) | ( | ) | ||||
| Cash - beginning of year | ||||||||
| Cash - end of year | $ | $ | ||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Stock issued as debt issue costs | $ | $ | ||||||
| Conversion of stockholder advances to notes payable - related parties | $ | $ | ||||||
| Stock issued in settlement of accrued liabilities – related parties | $ | $ | ||||||
| Settlement of subscription receivable - warrants | $ | $ | ||||||
| Issuance of common stock issuable | $ | |||||||
The accompanying notes are an integral part of these consolidated financial statements
| F-7 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 1 - Organization and Nature of Operations
Organization and Nature of Operations
Greenway Technologies, Inc. (collectively, “we,” “us,” “our” or the “Company”), through its wholly owned subsidiary, Greenway Innovative Energy, Inc., is primarily engaged in the research, development and commercialization of a proprietary Gas-to-Liquids (GTL) syngas conversion system that can be economically scaled to meet individual natural gas field/resource requirements. The Company’s proprietary and patented technology has been realized in Greenway’s first generation commercial-scale G-ReformerTM unit (“G-Reformer”), a unique and critical component of the Company’s overall GTL technology solution. Greenway’s objective is to become a material direct and licensed producer of renewable GTL synthesized diesel and jet fuels, with a near term focus on U.S. market opportunities.
Both of the Company’s wholly-owned subsidiaries: Universal Media Corp and Logistix Technology Systems, Inc. are currently inactive.
Liquidity, Going Concern and Management’s Plans
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2023, the Company had:
| ● | Net
loss of $ |
| ● | Net
cash used in operations was $ |
Additionally, at December 31, 2023, the Company had:
| ● | Accumulated
deficit of $ |
| ● | Stockholders’
deficit of $ |
| ● | Working
capital deficit of $ |
The
Company has cash on hand of $
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
| ● | Execute business operations more fully during the year ended December 31, 2024, | |
| ● | Explore and execute prospective strategic and partnership opportunities |
| F-8 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the financial statements of Greenway and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.
Business Segments
The
Company uses the “management approach” to identify its reportable segments. The management approach requires companies to
report segment financial information consistent with information used by management for making operating decisions and assessing performance
as the basis for identifying the Company’s reportable segments. The Company has identified
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances.
Significant estimates during the years ended December 31, 2023 and 2022, respectively, include valuation of stock-based compensation, uncertain tax positions, and the valuation allowance on deferred tax assets.
| F-9 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
| ● | Level 1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
| ● | Level 2 - Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
| ● | Level 3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
The Company’s financial instruments, including cash, accounts payable and accrued expenses, accounts payable and accrued expenses – related parties, advances and various debt instruments are carried at historical cost. At December 31, 2023 and 2022, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
| F-10 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Cash and Cash Equivalents and Concentration of Credit Risk
For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents.
At
December 31, 2023 and 2022, respectively, the Company did
The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $
Impairment of Long-lived Assets
Management evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” Events and circumstances considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in the Company’s business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these assets.
If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Property and Equipment
Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations.
Management reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Derivative Liabilities
The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”), “Distinguishing Liabilities from Equity” and FASB ASC Topic No. 815, (“ASC 815”) “Derivatives and Hedging”. Derivative liabilities are adjusted to reflect fair value at each reporting period, with any increase or decrease in the fair value recorded in the results of operations (other income/expense) as change in fair value of derivative liabilities. The Company uses a binomial pricing model to determine fair value of these instruments.
Upon conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock at fair value, relieves all related debt, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment.
Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
At
December 31, 2023 and 2022, respectively, the Company had
| F-11 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Debt Discount
For certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded as a debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated Statements of Operations.
Debt Issue Cost
Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the underlying debt instrument, in the Consolidated Statements of Operations.
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using
that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of December 31, 2023 and December 31, 2022, respectively, the Company had
The
Company recognizes interest and penalties related to uncertain income tax positions in other expense.
| F-12 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Research and Development
The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.
The
Company incurred research and development expenses of $-- and $
The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments.
The Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair value of options.
The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
When determining fair value, the Company considers the following assumptions in the Black-Scholes model:
| ● | Exercise price, |
| ● | Expected dividends, |
| ● | Expected volatility, |
| ● | Risk-free interest rate; and |
| ● | Expected life of option |
| F-13 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Stock Warrants
In connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite service period or at the date of issuance if there is not a service period.
Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future.
Schedule of Potentially Dilutive Equity Securities
| December 31, 2023 | December 31, 2022 | |||||||
| Convertible debt | ||||||||
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company.
Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Recent Accounting Standards
Changes to accounting principles are established by the Financial Accounting Standards Board in the form of Accounting Standards Updates (“ASU’s”) to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these consolidated financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the consolidated financial statements of the Company.
| F-14 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 3 – Notes Payable
Notes payable and related terms were as follows:
Schedule of Notes Payable and Related Terms
| 1 | 2 | 3 | ||||||||||
| Terms | Note Payable | Note Payable | Note Payable | |||||||||
| Issuance date of note | ||||||||||||
| Maturity date | ||||||||||||
| Interest rate | % | N/A | N/A | |||||||||
| Default interest rate | % | N/A | N/A | |||||||||
| Collateral | ||||||||||||
| Original amount | $ | $ | $ | |||||||||
| Total | In-Default | |||||||||||||||||||
| Balance - December 31, 2021 | $ | $ | $ | |||||||||||||||||
| Proceeds | ||||||||||||||||||||
| Debt discount | ( | ) | ( | ) | ||||||||||||||||
| Amortization of debt discount (interest expense) | ||||||||||||||||||||
| Repayments | ( | ) | ( | ) | ||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Balance | $ | $ | $ | $ | $ | |||||||||||||||
| Repayments | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance – December 31, 2023 | $ | $ | $ | |||||||||||||||||
| Balance | $ | $ | $ | |||||||||||||||||
| 1 |
| 2 |
| 3 |
| F-15 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 4 – Notes Payable – Related Parties
The
Company executed a loan agreement for up to $
The Company also has executed various loans with other stockholders and members of the Board Directors.
The
notes bear interest ranging from
Typically, with each of these notes, the Company has issued shares of common stock, which have been recognized as a debt discount and amortized over the life of the note.
During 2023, the Company did not issue notes under this loan structure and therefore, did not issue shares in connection with such note structure.
During
2022, the Company issued shares of common stock under these arrangements and recorded a corresponding debt discount of $
Notes payable – related parties consist of loans from various members of management and the Board of Directors, typically for use as working capital. Related terms were as follows:
Schedule of Notes Payable - Related Parties and Related Terms
| Balance - December 31, 2021 | $ | |||
| Conversion of stockholder advances to notes payable - related parties (see Note 6) | ||||
| Conversion of stockholder advances to notes payable - related parties | ||||
| Debt discount | ( | ) | ||
| Amortization of debt discount (interest expense) | ||||
| Balance - December 31, 2022 | $ | |||
| Balance | $ | |||
| No activity in 2023 | ||||
| Balance – December 31, 2023 | $ | |||
| Balance | $ |
| F-16 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 5 – Convertible Note Payable
Convertible note payable and related terms were as follows:
Schedule of Convertible Notes Payable and Related Items
| Convertible | ||||
| Terms | Note Payable | |||
| Issuance dates of note | ||||
| Maturity date | ||||
| Interest rate | % | |||
| Default interest rate | % | |||
| Collateral | ||||
| Conversion rate | $ | |||
| In-Default | ||||||||
| Balance - December 31, 2021 | $ | $ | ||||||
| No activity in 2022 | ||||||||
| Balance - December 31, 2022 | $ | $ | ||||||
| Balance – December 31, 2023 | $ | $ | ||||||
Note 6 – Advances – Related Parties
Advances – related parties and related terms were as follows:
Schedule of Advances – Related Parties and Related Terms
| Advances | ||||
| Terms | Related Parties | |||
| Issuance date of advances | ||||
| Maturity date | ||||
| Interest rate | % | |||
| Collateral | ||||
| Balance - December 31, 2021 | $ | |||
| Proceeds | ||||
| Conversion of stockholder advances to notes payable - related parties (see Note 4) | ( | ) | ||
| Subscription receivable - warrants | ( | ) | ||
| Balance - December 31, 2022 | $ | |||
| Proceeds | ||||
| Repayment | ( | ) | ||
| Conversion of advances – related parties to stock | ( | ) | ||
| Balance – December 31, 2023 | $ | |||
During
2022, in connection with a settlement, the Company reduced amounts owed to a stockholder for $
Note 7 – Commitments and Contingencies
Legal Matters
On September 7, 2021, the Company was served with a demand for mediation and potential arbitration by Gregory Sanders (“Plaintiff”), a previous employee of the Company. The demand claims Mr. Sanders had an employment agreement with the Company entitling him to certain compensation payments under the contract. No conclusion was made during mediation which occurred in the fourth quarter of 2021. On October 25, 2023, there was a hearing on Plaintiff’s motion for summary judgement. Plaintiff asserted 3 motions, all of which were denied by the court, as ordered on November 1, 2023. Plaintiff withdrew his action against the Company on January11, 2024 and the court so ordered on the same date.
On November 8, 2023, the Company was served with a demand for payments under various agreements with the plaintiffs. The Plaintiffs are Ric Halden Randy Moseley, Tunstall Canyon Group, LLC (“Tunstall Canyon”) and Chisos Equity Consultants, LLC (“Chisos”). Ric Halden and Randy Moseley were founders of the Company and served as officers and directors of the Company until 2017, when each of them resigned all positions with the Company. The Company believes that Tunstall Canyon and Chisos are majority-owned by Ric Halden. The Company has accrued liabilities to Ric Halden, Randy Moseley and Tunstall Canyon, which are all included in the liabilities reflected on the consolidated balance sheet. The Company is confident that it can settle all issues asserted in the lawsuit without going to trial. The court has set a trial date for November 24, 2024.
| F-17 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 8 – Stockholders’ Deficit
The Company has one (1) class of stock:
Common Stock
| - | shares authorized | |
| - | $ par value | |
| - |
Equity Transactions for the Year Ended December 31, 2023
Stock Issued for Cash
The
Company issued shares of common stock for $
Stock Issued for Settlement of Liabilities
The
Company issued
shares of common stock in settlement of accrued liabilities totaling $
Issuance of Previously Issuable Shares
During 2023, the Company issued shares of issuable common stock for $ ($/share). These shares were purchased in 2022.
Equity Transactions for the Year Ended December 31, 2022
Stock Issued as Debt Issue Costs
The
Company issued shares of common stock in connection with the issuance of notes payable – related parties. The fair value
of these shares was $
Stock Issued for Cash
The
Company issued shares of common stock for $
Stock Issued for Settlement of Liabilities
The
Company issued shares of common stock in settlement of accrued liabilities totaling $
Stock Issued for Services
The
Company issued shares of common stock for services rendered, having a fair value of $
Stock to be Issued
The
Company sold shares of common stock for $
| F-18 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 9 – Warrants
Warrant activity for the years ended December 31, 2023 and 2022 is summarized as follows:
Schedule of Warrant Activity
| Weighted | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted | Remaining | Aggregate | ||||||||||||||
| Number of | Average | Contractual | Intrinsic | |||||||||||||
| Warrants | Exercise Price | Term (Years) | Value | |||||||||||||
| Outstanding - December 31, 2021 | $ | $ | ||||||||||||||
| Vested and Exercisable - December 31, 2021 | $ | $ | ||||||||||||||
| Unvested - December 31, 2021 | $ | $ | ||||||||||||||
| Granted | $ | - | ||||||||||||||
| Exercised | $ | - | ||||||||||||||
| Cancelled/Forfeited | ( | ) | $ | - | ||||||||||||
| Outstanding - December 31, 2022 | $ | $ | ||||||||||||||
| No activity in 2023 | - | - | - | - | ||||||||||||
| Outstanding – December 31, 2023 | ||||||||||||||||
Note 10 – Income Taxes
The
Company’s tax expense differs from the “expected” tax expense for the period (computed by applying the corporate tax
rate of
Schedule of Components of Income Tax Expense Benefit
| December 31, 2023 | December 31, 2022 | |||||||
| Federal income tax benefit - | $ | ( | ) | $ | ( | ) | ||
| Non-deductible items | ||||||||
| Subtotal | ( | ) | ( | ) | ||||
| Change in valuation allowance | ||||||||
| Income tax benefit | $ | $ | ||||||
| F-19 |
GREENWAY TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2023 and 2022 are approximately as follows:
Schedule of Deferred Tax Assets and Liabilities
| December 31, 2023 | December 31, 2022 | |||||||
| Deferred Tax Assets | ||||||||
| Deferred compensation and management fees | ||||||||
| Net operating loss carryforwards | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset recorded | $ | $ | ||||||
Deferred tax assets and liabilities are computed by applying the federal and state income tax rates in effect to the gross amounts of temporary differences and other tax attributes, such as net operating loss carryforwards. In assessing if the deferred tax assets will be realized, the Company considers whether it is more likely than not that some or all of these deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which these deductible temporary differences reverse.
During
the year ended December 31, 2023 the valuation allowance increased by approximately $
At
December 31, 2023, the Company has federal net operating loss carryforwards, which are available to offset future taxable income, of
approximately $
NOL
carryforwards that were generated after 2017 of approximately $
These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three- year period. The Company has not completed an IRC Section 382/383 analysis. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted.
If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.
The
Company files corporate income tax returns in the United States and Texas jurisdictions. Due to the Company’s net operating loss
posture, all tax years are open and subject to income tax examination by tax authorities. The Company’s policy is to recognize
interest expense and penalties related to income tax matters as tax expense. At December 31, 2023 and 2022, respectively, there were
As
of December 31, 2023, the Company had
Note 11 – Subsequent Events
Subsequent to December 31, 2023, the Company reflects the following:
Stock Issued for Cash
The
Company issued shares of common stock for $
The
Company issued shares of common stock for $
The Company issued shares of common stock for $
Stock Issued for Services
The
Company issued shares of common stock to its Chief Financial Officer for services rendered, having a fair value of $
| F-20 |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kent Harer, certify that:
1. I have reviewed this Form 10-K of Greenway Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 16, 2024 | |
| /s/ Kent Harer | |
| Kent Harer, President |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ransom Jones, certify that:
1. I have reviewed this Form 10-K of Greenway Technologies, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 16, 2024 | |
| /s/ Ransom Jones | |
Ransom Jones, Chief Financial Officer and Principal Accounting Officer |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Greenway Technologies, Inc. for the fiscal year ending December 31, 2023, I, Kent Harer, President and chief executive of Greenway Technologies, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:
1. Such Annual Report on Form 10-K for the fiscal year ending December 31, 2023, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such Annual Report on Form 10-K for the fiscal year ending December 31, 2023, fairly presents, in all material respects, the financial condition and results of operations of Greenway Technologies, Inc. and its Subsidiaries.
| Date: July 16, 2024 | |
| /s/ Kent Harer | |
| Kent Harer, President |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Annual Report on Form 10-K of Greenway Technologies, Inc. for the fiscal year ending December 31, 2023, I, Ransom Jones, Chief Financial Officer of Greenway Technologies, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:
1. Such Annual Report on Form 10-K for the fiscal year ending December 31, 2023, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in such Annual Report on Form 10-K for the fiscal year ending December 31, 2023, fairly presents, in all material respects, the financial condition and results of operations of Greenway Technologies, Inc. and its Subsidiaries.
| Date: July 16, 2024 | |
| /s/ Ransom Jones | |
| Ransom Jones | |
| Chief Financial Officer and Principal Accounting |
Exhibit 32.3
