GLEC Global Ecology Corporation (CE)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

     Commission File Number: 333-125678 (1933 Act)

(973) 655-9001

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.       R  Yes £ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                  R Yes £ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (check one)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       

                             £ Yes R No

    As of March 3, 2014 there were 499,900,351 shares of common stock of Global Ecology Corporation outstanding.

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EXPLANATORY NOTE

This Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 (the “Amended 10-Q”), amends our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed with the Securities and Exchange Commission (“SEC”) on November 20, 2013 (the “Original 10-Q”). This Amended 10-Q amends the Original 10-Q solely to furnish Exhibit 101 to the Original 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 to this report provides the consolidated financial statements and related notes from the Original 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Original 10-Q; however, due to the passage of time since the filing of the Original 10-Q, the entire Original 10-Q has been refiled with Exhibit 101. The Original 10-Q speaks as of the original filing date of our Form 10-Q for the quarter ended September 30, 2013, filed with the SEC on November 20, 2013, does not reflect events occurring after the filing of the Original 10-Q, and does not modify or update in any way disclosures made in the Original 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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GLOBAL ECOLOGY CORPORATION

(A Nevada Corporation)

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Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

EX-101 INSTANCE DOCUMENT

EX-101 SCHEMA DOCUMENT

EX-101 CALCULATION LINKBASE DOCUMENT

EX-101 LABELS LINKBASE DOCUMENT

EX-101 PRESENTATION LINKBASE DOCUMENT

EX-101 DEFINITION LINKBASE DOCUMENT

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The accompanying notes are an integral part of these financial statements.

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The accompanying notes are an integral part of these financial statements.

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GLOBAL ECOLOGY CORPORATION

Long-Lived Assets

We account for our long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , (“SFAS No. 144”) (now contained in FASB Codification Section 360-10, Property, Plant, and Equipment-- Accounting for the Impairment or Disposal of Long-Lived Asset subsections), which requires that long-lived assets be evaluated whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the total of the undiscounted future cash flows is less than the carrying amount of the asset or asset group, an impairment loss is recognized for the difference between the estimated fair value and the carrying value of the asset or asset group.

Fair Value of Financial Instruments

On September 15, 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”) (now contained in FASB Codification Section 825-10-65, Fair Value Measurements and Disclosures-Overall-Transition and Open Effective Date Information ), which addresses standardizing the measurement of fair value for companies who are required to use a fair value measure for recognition or disclosure purposes. The FASB Codification Section 825-10-65 defines fair value 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.”  The Company’s adoption of the required portions of FASB Codification Section 825-10-65 as of January 1, 2008 did not have a material impact on the Company’s financial position, results of operations and cash flows. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”), permitting entities to delay application of SFAS No. 157 to fiscal years beginning after November 15, 2008, for non-financial assets and non-financial liabilities, except for items recognized or disclosed at fair value on a recurring basis. The Company adopted the application of FASB Codification Section 825-10-65to non-financial assets and liabilities effective January 1, 2009; this did not have a material effect on the Company’s financial condition or results of operations.

FASB Codification Section 825-10-65established a fair value hierarchy to prioritize the inputs used in valuation techniques into three levels as follows. The hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

·

Level 1 – Observable inputs that reflect quoted prices in active markets for identical assets or liabilities in active markets.

·

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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·

Level 3 – Valuations based on inputs that are unobservable and not corroborated by market data.

At September 30, 2013, our assets and liabilities reported at fair value utilizing Level 1 inputs include cash and cash equivalents. For these items, quoted current market prices are readily available. We do not currently have any financial instruments utilizing Level 2 and Level 3 inputs.

The following table presents information about the Company’s fair value hierarchy for financial assets as of September 30, 2013:

The carrying amounts of trade receivables and payables, accrued expenses and other current liabilities approximate fair value due to their short-term nature.  

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”) (now contained in FASB Codification Topic 825-10, Financial Instruments-Fair Value Option subsections), which permits companies to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently measured at fair value.  Unrealized gains and losses on items for which the fair value option has been elected would be reported in earnings at each subsequent reporting date.  Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred.  The Company did not elect the fair value option for any of its existing financial instruments other than those already measured at fair value.  Therefore, our adoption of FASB Codification Topic 825-10 as of January 1, 2008 did not have an impact on our financial position, results of operations or cash flows.

Concentrations of Credit Risk

We maintain our cash with high credit quality financial institutions. The Federal Deposit Insurance Corporation secures each depositor up to $250,000.

Prior to January 1, 2006, we elected to follow Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees , and related interpretations to account for our employee and director stock options, as permitted by Statement of Financial Accounting Standards (SFAS) No. 123,  Accounting for Stock-Based Compensation (contained in FASB Codification Topic 718, Compensation-Stock Compensation ). We accounted for stock-based compensation for non-employees under the fair value method prescribed by Topic 718. Effective January 1, 2006, The Company adopted the fair value recognition provisions of Topic 718  for all share-based payment awards to employees and directors including stock options, restricted stock units and employee stock purchases related to our employee stock purchase plan. In addition, the Company has applied the provisions of Staff Accounting Bulletin No. 107 (SAB No. 107), issued by the Securities and Exchange Commission, in our adoption of Topic 718.

We adopted FASB Codification Topic 718 using the modified-prospective-transition method. Under this transition method, stock-based compensation expense recognized after the effective date includes: (1) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006,

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based on the measurement date fair value estimate in accordance with the original provisions of FASB Codification Topic 718, and (2) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the measurement date fair value estimate in accordance with the provisions of FASB Codification Topic 718. Results from prior periods have not been restated and do not include the impact of FASB Codification Topic 718. For the years ended December 31, 2012 and year ended December 31, 2010, we recognized no stock-based compensation expense under FASB Codification Topic 718 relating to employee and director stock options, restricted stock units or the employee stock purchase plan.

Stock-based compensation expense recognized each period is based on the greater of the value of the portion of share-base payment awards under the straight-line method or the value of the portion of share-based payment awards that is ultimately expected to vest during the period. FASB Codification Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Upon adoption of FASB Codification Topic 718, the Company elected to use the Black-Scholes-Merton option-pricing formula to value share-based payments granted to employees subsequent to January 1, 2006 and elected

to attribute the value of stock-based compensation to expense using the straight-line single option method. These methods were previously used for our pro forma information required under FASB Codification Topic 718.

On November 10, 2005, the Financial Accounting Standards Board (FASB) issued FASB Staff Position No. FAS 123(R)-3, Transition Election Related to Accounting for Tax Effects of Share-Based Payment Awards , which detailed an alternative transition method for calculating the tax effects of stock-based compensation pursuant to FASB Codification Topic 718. This alternative transition method included simplified methods to establish the beginning balance of the additional paid-in capital pool (APIC pool) related to the tax effects of employee stock-based compensation and to determine the subsequent impact on the APIC pool and Statement of Cash Flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of FASB Codification Topic 718. Due to the Company’s historical net operating losses, the Company has not recorded the tax effects of employee stock-based compensation and has no APIC pool. Prior to the adoption of FASB Codification Topic 718, all tax benefits of deductions resulting from the exercise of stock options were required to be presented as operating cash flows in the Consolidated Statement of Cash Flows. FASB Codification Topic 718 requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. Due to our historical net operating loss position, we have not recorded these excess tax benefits as of September 30, 2013.

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued an amendment to the Balance Sheet topic of the ASC, which requires entities to disclose both gross and net information about both financial instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting agreement. The objective of the disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of Generally Accepted Accounting Principles in the United States (“GAAP”) and those entities that prepare their financial statements on the basis of International Financial Reporting Standards. This standard is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. Retrospective presentation for all comparative periods presented is required. Accordingly, the company will adopt this amendment in the first quarter of fiscal year 2014. The company is currently evaluating the impact of adoption on the consolidated financial statements.

In September 2011 and July 2012, the FASB issued amendments to the Intangibles-Goodwill and Other topic of the ASC. Prior to these amendments the company performs a two-step test as outlined by the ASC. Step one of the two-step goodwill and indefinite-lived intangible asset impairment tests is performed by calculating the fair value of the reporting unit or indefinite-lived intangible asset and comparing the fair value with the carrying amount. If the carrying amount of a reporting unit or indefinite-lived intangible asset exceeds its fair value, then the company is required to perform the second step of the impairment test to measure the amount of the impairment loss, if any. Under the amendments, an entity has the option to first assess qualitative factors to determine whether it is necessary

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to perform the current two-step test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit or indefinite-lived intangible asset is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. An entity can choose to perform the qualitative assessment on none, some or all of its reporting units and indefinite-lived intangible assets. Moreover, an entity can bypass the qualitative assessment for any reporting unit or indefinite-lived intangible asset in any period and proceed directly to step one of the impairment test, and then resume performing the qualitative assessment in any subsequent period. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Accordingly, the company will adopt this amendment in fiscal year 2013. The amendment is effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. Accordingly, the company will adopt this amendment in fiscal year 2014. The company is currently evaluating the impact of adoption on the consolidated financial statements.

In June 2011, the FASB issued an amendment to the Comprehensive Income topic of the ASC. This amendment eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareowners’ equity and requires entities to present the components of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued an amendment to the Comprehensive Income topic of the ASC. This amendment deferred the requirement to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income while the FASB deliberates this aspect of the proposal. The amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments also do not affect how earnings per share is calculated or presented. The guidance, as amended, is effective for interim and annual periods beginning after December 15, 2011, with early adoption permitted. The company adopted this guidance for its annual reporting period ended December 31, 2012.

In May 2011, the FASB issued an amendment to the Fair Value Measurement topic of the ASC that includes some enhanced disclosure requirements. The most significant change in disclosures is an expansion of the information required for Level 3 measurements based on unobservable inputs. The amendment is effective for interim and annual periods beginning after December 15, 2011. The company adopted this guidance for its annual reporting period ended December 31, 2012.

Reclassifications

Certain reclassifications have been made to the prior period balances to conform to the current period presentation.

4. Going Concern Uncertainty

We have incurred operating losses for the nine months ended September 30, 2013 and 2012 of ($723,982) and ($881,423), respectively, and an operating loss of ($991,860) for the year just ended December 31, 2012. We also had working capital deficiencies in both periods. Our financial statements have been prepared on the assumption that the Company will continue as a going concern. We are seeking various types of additional funding such as issuance of additional common or preferred stock, additional lines of credit, or issuance of subordinated debentures or other forms of debt. The additional funding would alleviate our working capital deficiency and increase profitability. However, it is not possible to predict the success of management's efforts to achieve profitability or to secure additional funding.

If additional financing arrangements cannot be obtained, we would be materially and adversely affected and there would be substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and realization of assets and classifications of liabilities necessary if the Company becomes unable to continue as a going concern. Also, there can be no assurance that additional funding will be available when needed or, if available, that its terms will be favorable or acceptable. We are also seeking to renegotiate certain liabilities in order to alleviate the working capital deficiency.

5. Income (Loss) Per Share

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Basic profit / (loss) per share is computed on the basis of the weighted average number of common stock shares outstanding. At September 30, 2013 the Company had outstanding common stock shares of 499,900,351 used in the calculation of basic earnings per share. Basic Weighted average common stock shares and equivalents at September, 30, 2013 and 2012 were 499,358,058 and 473,737,013, respectively. As of September 30, 2013 and 2012 the Company had outstanding preferred shares which would have been assumed to be converted and have a dilutive effect of 21,500,000 shares on our common stock. For the nine months ended, September 30, 2013 and 2012, all of the Company's shares of common stock equivalents were excluded from the calculation of diluted loss per common stock share because they were anti-dilutive, due to the Company's net loss in those periods.

6. Property, Plant and Equipment

Property and equipment are stated at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets.  We follow the practice of capitalizing property and equipment purchased over $5,000. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets:

Furniture and fixtures

3 to 7 years

Equipment

7 to 10 years

Leasehold improvements

7 to 10 years

The principal executive office of the Company is located at 96 Park Street, Montclair, New Jersey 07042 75254. Approximately 1,000 square feet of leased premises are at this location. The rent is approximately $13,000 per year. The lease expires in January 2014.  We also lease 70 acres associated with our production facilities in Castleberry, Alabama.  The rent is approximately $60,000 per year. We had property, plant and equipment, net of depreciation of $304,230 for the nine months ended September, 2013, compared to $366,325 as of December 31, 2012 which was due to our leasehold interest and the purchase of equipment for our plant in Alabama used to produce our soil amendment.

7. Capitalized Software Costs

The Company accounts for the development cost of software intended for sale in accordance with Statement of Financial Accounting Standards No. 86, Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise Marketed , (“SFAS No. 86”) (now contained in FASB Codification 985-20, Accounting for Costs of Computer Software to be Sold, Leased, or Otherwise Marketed ). FASB Codification 985-20 requires product development costs to be charged to expense as incurred until technological feasibility is attained. Technological feasibility is attained when the Company’s software has completed system testing and been determined viable for its intended use. Accordingly the Company did not capitalize any development costs other than product development costs acquired through a third party purchase. The Company capitalizes software through technology purchases if the related software under development has reached technological feasibility or if there are alternative future uses for the software.

During the year ended December 31, 2007, the Company acquired new software to operate and enhance its GPS

system. The development costs of this software, which totaled $116,682, were capitalized and placed in service at the end of September 2007 and are being amortized over their estimate useful life of five years.  No such

Capitalized software costs and accumulated amortization were as follows as of September 30, 2013 and December 31, 2012:

8. O ther Intangible Assets

On June 6, 2008, we acquired a mobile water purification plant and computerized ballast water distribution system from Robert Elfstrom. We agreed to purchase these assets in consideration for 1,000,000 shares of the Company’s common stock to be issued as follows: 100,000 shares upon the execution of the Bill of Sale and the remaining balance of shares to be issued in increments of 300,000 shares each time we accumulate net revenues of $2,000,000 from the utilization of the technology. We initially recorded the asset at the fair value of the full 1,000,000 shares at the date of the sale, which was $215,000, and recorded a liability for the remaining 900,000 shares to be issued.  As of September 30, 2013, no revenues had been generated from this technology and thus no additional shares will be issued and all agreements with Mr. Elfstrom have been terminated.  We have retained all rights, title and interest in the Mobile Pure Water System (“MPWS”) and a new manufacturer has been engage to produce the MPWS as needed.

9.   Notes Payable to Related Parties

From time to time certain directors and/or officers advance funds to the Company in order for the Company to meet its operating needs or make payments directly on the Company’s behalf. Such advances were recorded as liabilities on the Company’s balance sheet in previous years. The amounts were loaned to the Company without any formal note agreement and did not bear interest. In December of 2011, we entered into master note agreements with the following individuals to consolidate the advances made by them and to formalize our arrangement with them.

10.  Notes Payable

11.  Defaults of Notes Payable

12. Related Party Transactions

Related Party Notes Payable as of September 30, 2013:

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13.  Stock Plans

We have a non-qualified stock option plan (the “Plan”) that was adopted by the Board of Directors in March 1997. The Plan, as authorized, provides for the issuance of up to 2,000,000 shares of our common stock.

Persons eligible to participate in the Plan as recipients of stock options include full and part-time employees of the Company, as well as officers, directors, attorneys, consultants and other advisors to the Company or affiliated corporations.

Options issued under the Plan are exercisable at a price that is not less than twenty percent (20%) of the fair market value of such shares (as defined) on the date the options are granted. The non-qualified stock options are generally non-transferable and are exercisable over a period not to exceed ten (10) years from the date of the grant. Earlier expiration is operative due to termination of employment or death of the issue. The entire Plan expired on March 20, 2007, except as to non-qualified stock options then outstanding, which will remain in effect until they have expired or have been exercised. As of December 31, 2009, 1,990,289 shares had been exercised and issued under the Plan.

On November 8, 2006, we filed a Non-Statutory Stock Option Plan, or the Plan, with the SEC. This Plan was intended as an employment incentive, to aid in attracting and retaining persons of experience and ability and whose services are considered valuable to encourage the sense of proprietorship in such persons, and to stimulate the active interest of such persons in our development and success. This Plan provides for the issuance of non-statutory stock options which are not intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. There were a total of 15,000,000 shares in the Plan at inception and 14,100,000 shares have been issued from the Plan as of September 30, 2013.

14. Stock Transactions

For the nine months ended September 30, 2013, we issued the following securities without registration under the Securities Act of 1933. These shares were issued under the Section 4(2) exemption of the Securities Act:

On April 16, 2012, we entered into a convertible promissory note with Asher Enterprises, Inc., an unaffiliated third party, for a principal amount of $78,500. The promissory note has an interest rate of 8.00% per annum, a default interest rate of 22.00%, and matured on January 2, 2013. Asher Enterprises may elect to convert the note in shares of our common stock any time after nine months from the date of the note at conversion rate equal to a 42.0% discount to the three lowest closing market prices for the 10 days preceding its election to convert. As a result we booked a beneficial conversion feature of $56,845. During the last quarter of 2012, conversions were made on October 17, 2012 and December 5, 2012, of 4,347,826 and 10,714,286 shares of common stock as recorded for the year end December 31, 2012. The Note holder elected to convert additional principal and interest and received 10,574,713 shares of the Company’s common stock on January 15, 2013.

15.  Commitments and Contingencies

Consulting and Employment Contracts

In May 2004, (amended and restated January 2005) we entered into an Employment Agreement (“Agreement”) with Peter Ubaldi. The Agreement provided that Mr. Ubaldi should serve as our president of through January 1, 2007. In January of 2007, the Company renewed Mr. Ubaldi’s Employment Contract for an

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additional two years under the same terms and conditions as the original agreement. At any time prior to the expiration of the Agreement, the Company and Mr. Ubaldi may mutually agree to extend the duration of employment under the terms of the Agreement for an additional period or periods. As payment for services, the Company agrees to pay Mr. Ubaldi, as the president, a minimum base salary of $250,000 per annum. As provided in the Agreement, Mr. Ubaldi is eligible to be paid bonuses, from time to time, at the discretion of the Company’s Board of Directors, of cash, stock or other valid form of compensation. Upon termination of and under the terms of the Agreement, Mr. Ubaldi shall be entitled to severance compensation in an amount equal to twenty-four months of base salary as shall exist at the time of such termination.  In January of 2010 we entered into a new Employment Agreement with Peter Ubaldi to continue as president and chief executive officer for the same base salary, medical benefits and expenses as previously agreed to in May 2004. The term of the agreement is for 5 years with renewal options for 5 additional 1 year terms.   

On January 1, 2010, we entered into a 5 year consulting agreement with Smith Street Holdings to provide business acquisition services.  Consulting fees to include a quarterly cash distribution in an amount to be determined by the

Board of Directors based on the net revenue generated by transactions initiated by the consultant.  In addition the consultant was granted 5,000,000 shares of company stock upon signing the agreement. Also in addition, each time the consultant accumulates $2,000,000 in net revenue less fees paid to the consultant in any given quarter, 3,000,000 shares of the company stock will be granted, not to exceed 10,500,000 shares.

On January 1, 2010, we entered into a twelve month consulting agreement with Advent Consulting Group, LLC to provide accounting services for a monthly retainer fee of $5,000, which may be paid in cash or company stock. In addition, we agreed to pay an upfront cash retainer fee of $3,000. This agreement was subsequently renewed on January 1, 2011 for an additional one-year terms.  We are currently negotiating a new contract for 2014.

Operating Leases

We currently lease approximately 1,000 sq. ft. of office space located at 96 Park Street, Montclair, New Jersey 07042 for $13,300 per year.  The lease automatically renews every year unless otherwise terminated pursuant to the terms of the lease. We also entered into a short term commercial lease for the 70 acres associated with our production facilities in Castleberry, Alabama, with an option to purchase the real estate. The lease expired on March 1, 2013 but the landlord has agreed to renew the lease for another nine months.  The payment to the landlord is $5,000 per month with $3,000 being applied to rent and $2,000 toward the purchase price.  The company is also currently attempting negotiate a finance arrangement to purchase the property which it anticipates closing by the end of the 2013.

19.  Pension Plans

The Company does not currently provide, administer or manage a 401(K) plan or any other pension plan.

16.  Legal Proceedings

As of September 30, 2013, the Company is presently a party to legal proceeding as follows:  

We entered into a convertible promissory note for $100,000 with Chris Verrone in May 2008. In June 2008, the note was converted into shares of common stock at the holder’s request. Subsequently, the individual requested additional consideration and even though the Company had no obligation to accommodate the request, the Chairman of the Company advanced him $25,000 of his own funds and the Company signed an agreement in September 2008 to pay him an additional $75,000 within 60 days. We have not been able to meet this deadline and the individual had commenced litigation and received a judgment. This amount has been provided for in the financial statements under the notes payable.

On March 28, 2011 we entered into a settlement agreement, whereby the company would issue 5,000,000 shares of its common stock in settlement of the outstanding balance of $338,459. However if the 5,000,000 shares; when liquidated were not sufficient to cover the outstanding balance then the shortfall would be covered by issuing additional shares of shares of common stock or paid in cash. The shares were issued on April 18, 2011 at a market value of $.02 per share. We booked a reduction in the principal balance of $100,000. Although as of December 31,

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2012 the outstanding balance was $0.00, this balance may be adjusted in the future due to the uncertainty of future stock prices and liquidated value of the stock.

In January of 2013, a dispute arose between the Company and Asher Enterprises, Inc. (“Asher”) concerning the conversion rights for the settlement of the Promissory Note dated March 29, 2012 in the amount of $78,500.  After the last conversion to common stock exercised by Asher on January 15, 2013 it was acknowledged by Asher that the balance on the Note dated March 29, 2012 owed by the Company was $44,300.00. Under their conversion rights, Asher had taken almost all the available authorized common stock of the Company which was 25,636,825 shares.

When the original Note was entered into and before it was funded, Asher was made aware by management and in writing by the Company’s Transfer Agent that the existing authorized but unissued shares was all the common stock available to settle this Note when it became due.  The Company’s management made it clear that they would not seek shareholder approval to increase the number of shares authorized to re-pay this obligation.  

Asher has sued the Company along with our President and CEO and Joseph Battiato, our Chairman, as individuals, in an attempt to force Ubaldi and Battiato to ask the stockholders to increase the authorized common stock. Ubaldi and Battiato believe that Asher systematically, unethically and illegally undertook activities to devalue the Company’s common stock in order to acquire an inordinate number of shares and profit by dumping the Company’s stock in the market.  Furthermore, by knowingly going forward with the funding of the Note, the Company believes that Asher had given up the right to seek additional shares which were not available. The Company has filed an answer to the lawsuit and plans to vigorously pursue this matter in court, in addition to filing complaints with FINRA and the SEC.  While we are unable to determine if the case will have a favorable outcome, management believes that the financial impact will be minimal as the amount owed is nominal; however, no assurance can be given that such would be the case.

In addition to the matter described above, we are involved in various legal actions and claims from time to time, which arise in the normal course of business

17.  Subsequent Events

None.

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Revenues

Product Sales

For the three and nine months ended September 30, 2013, we had $4,009 and $9,616, respectively, in sales as compared to $61,086 and $61,086 in sales for the three and nine months ended September 30, 2012 due to the sale of one of our Mobile Pure Water Systems during the first quarter of 2012 and limited sales of our soil amendment in the nine months ended September 30, 2012.

Cost of Sales

For the three and nine months ended September 30, 2013, cost of product sales were $19,485 and $12,648, respectively as compared to $60,045and 79,531 for the three and nine months ended September 30, 2012, respectively, due to the cost of sale of one of our Mobile Pure Water Systems during the first quarter of 2012 and costs of sales of our soil amendment in the three and nine months ended September 30, 2013.

General and Administrative Expenses

General and administrative expenses decreased by $236,863 and $270,340 for the three and nine months ended September 30, 2013compared to the same periods in 2012, mainly due to the decrease in consulting, expenses associated with building our production facility in Castleberry, Alabama  and other general operating expenses in connection with our subsidiary GEC Organics.

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Other Income (Expense)

We had other expense of ($13,193) for the nine months ended September 30, 2013 compared to other income of $197,369 for the nine months ended September 30, 2012 due to the loss on sale of equipment during three months ended September 30, 2013 compared to a gain we had recognized due to the forgiveness of debt with Market Connexxion for the same period in 2012 to the forgiveness of $96,325 of Principal and $101,807 in accrued interest.

Interest Expenses

Interest expense decreased by $25,405 for the nine months ended September 30, 2013, as compared to the same period in 2012 due to the conversion of some of our outstanding debt to common stock shares.

Liquidity

The Company's consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern. Management is seeking various types of additional funding such as issuance of additional common or preferred stock, additional lines of credit, or issuance of subordinated debentures or other forms of debt will be pursued. The funding should alleviate the Company's working capital deficiency and increase profitability. However, it is not possible to predict the success of management's efforts to achieve profitability. Also, there can be no assurance that additional funding will be available when needed or, if available, that its terms will be favorable or acceptable.

These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation. Management is seeking to raise additional capital and to renegotiate certain liabilities in order to alleviate the working capital deficiency.

Due to recurring operating losses and the Company's current working capital deficit, there is a need to obtain additional funding of working capital for the Company to operate as a going concern. The Company incurred operating losses of ($723,982) and ($881,423) for the nine month periods ended September 30, 2013 and 2012, respectively.

The Company's cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the following table:

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 Net cash used in operating activities for the nine months ended September 30, 2013 decreased to $(98,242) from ($364,734) for the nine months ended September 30, 2012, primarily due to decreased spending in the current period for the construction and development of our soil amendment production facility located in Castleberry, Alabama.

We had $35,693 in cash used by investing activities for the nine months ended September 30, 2013 compared to ($123,341) in the same period of 2012 primarily due to decreased investment in the current period for the construction and development of our soil amendment production facility located in Castleberry, Alabama.

Net cash provided by financing activities was $65,328for the nine months ended September 30, 2013 compared to net cash provided by financing activities of ($41,897) for the nine months ended September 30, 2012 due to decrease in financings and advances from related parties.  

Market for Common Stock; Volatility of Prices

There has been a limited public trading market for shares of our common stock.  There can be no assurance that a regular trading market for shares of our common stock will ever develop or, if developed, that it will be sustained. The market price of our shares of common stock could also be subject to significant fluctuations in response to such factors as variations in the anticipated or actual results of our operations or other companies in the business of environmental restoration, changes in conditions affecting the economy generally, analyst reports, general trends in industry, and other political or socioeconomic events or factors.

Off Balance Sheet Arrangements

We do not have any transactions, agreements or other contractual arrangements that constitute off-balance sheet arrangements.

Deferred Tax Valuation

We continue to incur tax net operating losses, which are available to carry forward and offset future taxable income. These net operating losses were generated, principally as a result of losses resulting from our operations.  A deferred tax asset results from the benefit of utilizing these net operating loss carry-forwards in future years.

Due to the current uncertainty of realizing the benefits of the tax NOL carry-forward, a valuation allowance equal to the tax benefits for the deferred taxes has been established. The full realization of the tax benefit associated with the carry-forward depends predominately upon our ability to generate taxable income during future periods, which is not assured.

Indemnification of Directors and Officers

Subject to and subsequent to an appointment or election as an officer or director, we provide contractually indemnification.

We agree to indemnify the positions of directors and officers as follows: A director or officer shall not be liable for any claim or demand on account of damages in any manner. We agree to indemnify and hold directors or officers, without limitation, harmless from any and all damages, losses (which shall include any diminution in value), shortages, liabilities (joint or several), payments, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or nature whatsoever, specifically including without limitation, fees, disbursements and expenses of attorneys, accountants and other professional advisors and of expert witnesses and cost of investigation and preparation.

Item 4.

 [Removed and Reserved.]

Item 5.

 Other Information

None.