As filed with the Securities and Exchange Commission on August 4, 2015. Registration No._______
 

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CODE GREEN APPAREL CORP.
(Name of small business issuer in its charter)

NEVADA
 
5699
 
  80-0250289 
(State or jurisdiction of
 
(Primary Standard Industrial
 
(I.R.S. Employer
incorporation or organization)
 
Classification Code Number)
 
Identification No.)

4739 S. Durfee Ave., Pico Rivera, CA. 90660
(Address and telephone number of principal executive offices and place of business)
 
George J. Powell, III, 4739 S. Durfee Ave., Pico Rivera, CA. 90660 tel (214) 497-9433
 (Name, address and telephone number of agent for service)
 
Copies of communication to:
Aaron D. McGeary, The McGeary Law Firm, P.C.
1600 Airport Fwy., Suite 300 Bedford, Texas 76022
Telephone (817)-282-5885 Fax (817)-282-5886

Approximate date of proposed sale to the public: The proposed date of sale will be as soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box. o
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):
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o (Do not check if a smaller reporting company)
Smaller reporting company
x
 
 
 
 

 
 
CALCULATION OF REGISTRATION FEE
                   
Title of each class of
Securities to be
Registered
 
Amount of
Shares to be
Registered (1)
 
Proposed
Maximum offering
Price per share (2)
 
Proposed
Maximum
Aggregate offering
Price
 
Amount of
Registration
Fee
 
Common Stock
 
72,858,608
 
$0.037
 
$2,695,768.50
 
$313.25
 
Total
 
72,858,608
 
$0.037
 
$2,695,768.50
 
$313.25
 
 
(1)
Pursuant to Rule 416 under the Securities Act of 1933, as amended, the shares being registered hereunder include such indeterminate number of shares of common stock, as may be issuable with respect to the shares being registered hereunder as a result of stock splits, stock dividends or similar transactions.

(2)
Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, using the average high and low price for the registrant’s common stock reported by the OTCQB of the OTC Markets Group Inc. on August 4, 2015.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 

 
 

 
The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement is filed with the Securities and Exchange Commission and becomes effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
 
PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION, DATED AUGUST 4, 2015

  CODE GREEN APPAREL CORP.
72,858,608 Shares of Common Stock

Certain existing shareholders are offering for sale 72,858,608 shares of common stock. There are no underwriters.

By means of this prospectus a number of our shareholders are offering to sell up to 72,858,608 shares of our common stock.

Our common stock is traded on the OTC Markets Group, Inc. under the symbol “JABA”. On July 27, 2015, the closing price of our common stock was $0.037.

The Company is not a shell company as defined in Rule 405 under the Securities Act (17 CFR 230.405) and Rule 12b-2 under the Exchange Act (17 CFR 240.12b-2).

There are no underwriters, discounts or commissions. All proceeds will be distributed to the existing selling shareholders. This prospectus will not be used before the effective date of the registration statement. Information in this prospectus will be amended or completed as needed. This registration statement has been filed with the securities exchange commission. These securities will not be sold until the registration statement becomes effective.

We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and, as such, have elected to comply with certain reduced public company reporting requirements for future filings. See "Description of Business: Government Regulations " contained herein and “Risk Factors” below.

THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. FOR A DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE UNDERSTAND “RISK FACTORS” STARTING ON PAGE 6 OF THIS PROSPECTUS .

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

The Company is not a blank check company because it has a specific business purpose and has no plans or intention to merge with an operating company.  None of the Company’s shareholders or management have plans to enter a change of control or change of management. 

The information in this Prospectus is not complete and may be changed. The Selling Security Holders may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This Prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such state.

 
 

 


TABLE OF CONTENTS

 
Page
PROSPECTUS SUMMARY
 
1
SUMMARY FINANCIAL INFORMATION
 
3
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
4
RISK FACTORS
 
5
USE OF PROCEEDS
 
11
DILUTION
 
11
SELLING SECURITY HOLDERS
 
12
PLAN OF DISTRIBUTION
 
13
DESCRIPTION OF SECURITIES
 
14
INTEREST OF NAMED EXPERTS AND COUNSEL
 
16
DESCRIPTION OF BUSINESS
 
17
DESCRIPTION OF PROPERTY
 
19
SHELL COMPANY STATUS
 
20
LEGAL PROCEEDINGS
 
20
MARKET FOR COMMON EQUITY AND OTHER RELATED STOCKHOLDER MATTERS
 
20
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
21
CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
28
DIRECTORS, EXECUTIVE OFFICER, AND CONTROL PERSONS
 
28
EXECUTIVE COMPENSATION
 
30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
30
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
30
REPORTS TO SECURITY HOLDERS
 
31
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES
 
31
FINANCIAL STATEMENTS
 
F-1



You should rely only on the information contained in this Prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted.
 
 
 

 
PART I

PROSPECTUS SUMMARY

The following is only a summary of the information, financial statements and the notes included in this Prospectus. You should read the entire Prospectus carefully, including “Risk Factors” and our Financial Statements and the notes to the Financial Statements before making any investment decision. Unless the context indicates or suggests otherwise, the terms “Company”, “we,” “our” and “us” means Code Green Apparel Corp.

Principal Offices

Our corporate headquarters is located at 4739 S. Durfee Ave., Pico Rivera, California 90660.

Our Business

Code Green Apparel (“Code Green” or the “Company”) was incorporated in Nevada on December 11, 2007 under the name Fluid Solutions, Inc. On May 6, 2009, Fluid Solutions, Inc. acquired all of the outstanding capital stock of GS Wyoming in exchange for 100,669,998 shares of its common stock pursuant to an Exchange Agreement dated May 6, 2009 with that corporation and its shareholders. On May 18, 2009, Fluid Solutions, Inc. changed its name to “Gold Standard Mining Corp.” and effected a 3.3-to-1 forward stock split.  On July 17, 2012, Gold Standard Mining Corp. changed its name to J.D. Hutt Corporation. On May 15, 2015, the Company changed its name to Code Green Apparel Corp.

The Company is engaged in the business of manufacturing, selling, marketing and outfitting companies of all sizes and industries with eco-friendly apparel made from recycled textiles. The corporate apparel market encompasses a wide variety of apparel products and accessories ranging from customized uniforms to caps, t-shirts and aprons. We believe that many of these companies are actively seeking ways to incorporate being more environmentally friendly into their company and would entertain mandating that all uniforms be manufactured from recycled fabrics. As all of our products are eco-friendly, our strategy is to emphasize the sustainability features while at the same time providing our products at market competitive rates.

Penny Stock Rules

Our common stock will be considered a “penny stock”, and subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended.  “Penny stock” is generally defined as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser's consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.

The required penny stock disclosures include the required delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market. In addition, various state securities laws impose restrictions on transferring "penny stocks" and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.
 
 
1

 

The Offering
 
Common stock offered by selling security holders
 
Common stock outstanding before the offering
 
Common stock outstanding after the offering
 
 
Terms of the Offering
 
 
 
 
 
Termination of the Offering
 
 
 
 
Trading Market
 
Use of proceeds
 
 
Need for Additional Financing:
 
 
Risk Factors
72,858,608 shares of common stock. This number represents 22 (%) percent of our current outstanding common stock as of August 4, 2015.
 
327,682,980 common shares as of August 4, 2015.
 
327,682,980 shares.
 
The selling stockholders will determine when and how they will sell the common stock offered in this prospectus.  The selling stockholders will sell at prevailing market prices through the OTCQB marketplace, or such other markets as may be offered by the OTC Markets Group or other national exchange that we may apply to following the effective date of the registration statement of which this prospectus is a part, or at privately negotiated prices in transactions that are not in the public market.
 
 
The offering will conclude upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) such time as all of the common stock becomes eligible for resale without volume limitations and without the requirement for the Company to be in compliance with the current public information requirement pursuant to Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), or any other rule of similar effect.
 
 
Our common stock is quoted on the OTCQB under the market symbol “JABA”.
 
We are not selling any shares of the common stock covered by this prospectus.
 
 
We believe that we may need to raise additional capital in the future.
 
 
An investment in our common stock involves a high degree of risk.  You should carefully consider the risk factors set forth under “Risk Factors” on page 5 and the other information contained in this prospectus before making an investment decision regarding our common stock
 
 
2

 
SUMMARY FINANCIAL INFORMATION

The following is a summary of our financial information and is qualified in its entirety by our unaudited financial statements as of June 30, 2015.

Balance Sheet Data

   
JUNE 30, 2015 (UNAUDITED)
   
DECEMBER 31, 2014
 
ASSETS
               
                 
Cash
 
$
116,543
   
$
10,009
 
Inventory
   
190,358
     
-
 
Fixed assets, net
   
1,799
     
2,024
 
                 
TOTAL ASSETS
 
$
308,700
   
$
12,033
 
                 
LIABILITIES
               
                 
Accounts payable
 
$
146,473
   
$
138,473
 
Accrued interest
   
58,602
     
33,777
 
Convertible debts payable
   
500,000
     
673,500
 
Derivative liability
   
1,114,300
     
200,337
 
                 
TOTAL LIABILITIES
   
1,819,375
     
1,046,087
 
                 
STOCKHOLDERS’ DEFICIT
               
                 
Preferred A stock, par value $0.001 per share, Authorized – 1,000 shares, Issued and outstanding – 1,000 and -0- shares, respectively
   
1
     
-
 
Common stock, par value $0.001 per share, Authorized – 500,000,000 shares, Issued and outstanding – 327,772,980 and 252,952,540 shares, respectively
   
327,773
     
252,953
 
Additional paid-in capital
   
9,466,704
     
8,56,025
 
Accumulated deficit
   
(11,305,153
)
   
(9,851,032
)
                 
TOTAL STOCKHOLDERS’ DEFICIT
   
(1,510,675
)
   
(1,034,054
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
$
308,700
   
$
12,033
 
 
 
 
3

 
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus may contain forward-looking statements. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs and other information that is not historical information. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue,” “seek” or the negative of these terms or other comparable terminology or by discussions of strategy.

All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and beliefs, but they are inherently uncertain. We may not realize our expectations and our beliefs may not prove correct. Actual results could differ materially from those described or implied by such forward-looking statements.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Except as required by applicable law, including the securities laws of the U.S. and the rules and regulations of the Securities and Exchange Commission, we do not plan to publicly update or revise any forward-looking statements after we distribute this prospectus, whether as a result of any new information, future events or otherwise. Consequently, forward-looking statements should be regarded solely as our current plans, estimates and beliefs. Potential investors should not place undue reliance on our forward-looking statements. Before investing in our common stock, investors should be aware that the occurrence of any of the events described in the “Risk Factors” section and elsewhere in this prospectus could have a material adverse effect on our business, results of operations, financial condition, cash flows, customer relationships and value of our proprietary products. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
 
 
 
 
 
 

 
 
4

 

RISK FACTORS

An investment in these securities involves an exceptionally high degree of risk and is extremely speculative in nature. Following are what we believe are all the material risks involved if you decide to purchase shares in this offering.

The risks described below are the ones we believe are most important for you to consider. These risks are not the only ones that we face. If events anticipated by any of the following risks actually occur, our business, operating results or financial condition could suffer and the price of our common stock could decline.

Risks Relating To Our Business

WE ARE A DEVELOPMENT STAGE COMPANY WITH LIMITED OPERATING HISTORY, AND AN INVESTMENT IN US IS CONSIDERED A HIGH RISK INVESTMENT WHEREBY YOU COULD LOSE YOUR ENTIRE INVESTMENT.

The Company is a developmental stage company with limited operating history. The Company is currently operating at a loss, and there is no assurance that the business development plans and strategies of the Company will ever be successful, or that the Company will ever be able to operate profitably. If we cannot operate profitably, you could lose your entire investment. We may not generate revenues in the next twelve months sufficient to support our operations and therefore may rely solely on the cash we raise from investments.

WE HAVE RECEIVED A GOING CONCERN OPINION FROM OUR AUDITORS AND WE ARE CURRENTLY OPERATING AT A LOSS, WHICH RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

We have received a “Going Concern” opinion from our auditors. As reflected in the accompanying financial statements, the Company is in the development stage having just begun operations and with no revenue earned since inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.

WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS.  IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN.

The Company has limited cash on hand. The Company will require additional funding in order to finance the full development of its business plan. If the Company is unable to raise the funds necessary, the Issuer may have to delay the implementation of its business plan. The Company does not have any alternate arrangements for financing and can provide no assurance that it will be able to obtain the required financing when needed.

IT IS LIKELY THAT WE WILL NEED TO SEEK ADDITIONAL FINANCING THROUGH SUBSEQUENT FUTURE PRIVATE OFFERING OF OUR SECURITIES.  

Because the Company does not currently have any financing arrangements, and may not be able to secure favorable terms for future financing, the Company may need to raise capital through the sale of its common stock. The sale of additional equity securities will result in dilution to our stockholders.

BECAUSE WE HAVE A LIMITED OPERATING HISTORY, WE FACE A HIGH RISK OF BUSINESS FAILURE.

The Company has a limited operating history upon which to base an evaluation of its business and prospects. The Company’s business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in an early stage of development, particularly companies in competitive and unpredictable industries like the apparel and uniform industry. As a result of the Company’s limited operating history, it is difficult to accurately forecast net profits and management has limited historical financial data upon which to base planned operating expenses.

 
5

 
IF THE COMPANY IS DISSOLVED, IT IS UNLIKELY THAT THERE WILL BE SUFFICIENT ASSETS REMAINING TO DISTRIBUTE TO OUR SHAREHOLDERS.

In the event of the dissolution of the Company, the proceeds realized from the liquidation of our assets, if any, will be used primarily to pay the claims of our creditors, if any, before there can be any distribution to the shareholders. In that case, the ability of equity investors to recover all or any portion of their investment will depend on the amount of funds realized and the claims to be satisfied therefrom.
 
IF WE ARE FORCED TO INCUR UNANTICIPATED COSTS OR EXPENSES, WE MAY HAVE TO SUSPEND OR CEASE OUR ACTIVITIES ENTIRELY WHICH COULD RESULT IN A TOTAL LOSS OF YOUR INVESTMENT.

Because we are a small business, with limited assets, we are not in a position to bear unanticipated costs and expenses. If we have to make changes in our structure or are faced with circumstances that are beyond our ability to afford, we may have to suspend or cease our activities entirely which could result in a total loss of your investment.

WE DEPEND ON KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY AND THEY MAY BE DIFFICULT TO REPLACE .

The Company’s performance substantially depends on the efforts and abilities of its management team and key employees. Furthermore, much of the Company’s success is based on the expertise, experience and know-how of its key personnel regarding the sourcing of sustainable textiles and the overall apparel industry . The loss of key employees could have a negative effect on the Issuer’s business, revenues, results of operations and financial condition.

KEY MANAGEMENT PERSONNEL MAY LEAVE THE COMPANY WHICH COULD ADVERSELY AFFECT THE ABILITY OF THE COMPANY TO CONTINUE ITS DEVELOPMENT.

Because we are almost entirely dependent on the efforts of our sole officer and director, George Powell, his departure or the loss of other key personnel in the future, could have a material adverse effect on our business. We do not maintain key man life insurance on Mr. Powell.  On April 26, 2014 we signed an employment agreement with Mr. Powell.  The agreement continues in effect until either party provides the other of written notice of their intent to terminate the arrangement.  As such, Mr. Powell may terminate his employment with us at any time for any reason.

WE FACE CORPORATE GOVERNANCE RISKS AND NEGATIVE PERCEPTIONS OF INVESTORS ASSOCIATED WITH THE FACT THAT WE CURRENTLY HAVE ONLY ONE OFFICER AND DIRECTOR.

George Powell is our sole officer and director.  As such, he has significant control over our business direction.  Additionally, as he is our only director, there are no other members of the Board of Directors available to second and/or approve related party transactions involving Mr. Powell, including the compensation Mr. Powell may be paid and the employment agreements we may enter into with Mr. Powell.  Additionally, there is no segregation of duties between officers because Mr. Powell is our sole officer, and as such, he is solely responsible for the oversight of our accounting functions.  Therefore, investors may perceive that because no other directors are approving related party transactions involving Mr. Powell and no other officers are approving our financial statements that such transactions are not fair to the Company and/or that such financial statements may contain errors.  The price of our common stock may be adversely affected and/or devalued compared to similarly sized companies with multiple officers and directors due to the investing public’s perception of limitations facing our Company due to the fact that we only have one officer and director.

 
6

 
THE RECENTLY ENACTED JOBS ACT WILL ALLOW US TO POSTPONE THE DATE BY WHICH WE MUST COMPLY WITH CERTAIN LAWS AND REGULATIONS AND TO REDUCE THE AMOUNT OF INFORMATION PROVIDED IN REPORTS FILED WITH THE SEC. WE CANNOT BE CERTAIN IF THE REDUCED DISCLOSURE REQUIREMENTS APPLICABLE TO “EMERGING GROWTH COMPANIES” WILL MAKE OUR COMMON STOCK LESS ATTRACTIVE TO INVESTORS.

We are and we will remain an "emerging growth company" until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a "large accelerated filer" (with at least $700 million in public float) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). For so long as we remain an "emerging growth company" as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" as described in further detail in the risk factors below. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. If we avail ourselves of certain exemptions from various reporting requirements, as is currently our plan, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.

THE COMPANY'S ELECTION NOT TO OPT OUT OF JOBS ACT EXTENDED ACCOUNTING TRANSITION PERIOD MAY NOT MAKE ITS FINANCIAL STATEMENTS EASILY COMPARABLE TO OTHER COMPANIES.
 
Pursuant to the JOBS Act, as an “emerging growth company”, the Company can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board (PCAOB) or the SEC. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an “emerging growth company”, can adopt the standard for the private company. This may make comparison of the Company's financial statements with any other public company which is not either an “emerging growth company” nor an “emerging growth company” which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
 
THE RECENTLY ENACTED JOBS ACT WILL ALSO ALLOW THE COMPANY TO POSTPONE THE DATE BY WHICH IT MUST COMPLY WITH CERTAIN LAWS AND REGULATIONS INTENDED TO PROTECT INVESTORS AND TO REDUCE THE AMOUNT OF INFORMATION PROVIDED IN REPORTS FILED WITH THE SEC.
 
The recently enacted JOBS Act is intended to reduce the regulatory burden on “emerging growth companies”. The Company meets the definition of an “emerging growth company” and so long as it qualifies as an “emerging growth company,” it will, among other things:
 
·
be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;

·
be exempt from the "say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the "say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers;
 
·
be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934, as amended and instead provide a reduced level of disclosure concerning executive compensation; and

·
be exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.
 
 
 
7

 
Although the Company is still evaluating the JOBS Act, it currently intends to take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”. The Company has elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act. Among other things, this means that the Company's independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company's internal control over financial reporting so long as it qualifies as an “emerging growth company”, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an “emerging growth company”, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.

Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”.  Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.  Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.

Risks Relating To Our Industry

WE ARE SUBJECT TO INTENSE AND SIGNIFICANT COMPETITION WITHIN OUR INDUSTRY, WHICH MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
 
We are subject to significant competition that could harm our ability to win business and increase price pressure on our products. The uniform sales industry is highly competitive. The principal methods of competition in the industry are quality of service and price. We face strong competition from a wide variety of firms, including large, firms. Leading competitors include Aramark Corporation, Cintas Corporation and G&K Services, Inc. The remainder of the market is divided among hundreds of smaller businesses, many of which serve one or a limited number of markets or geographic service areas. We compete with businesses that focus on selling uniforms and other related items. Most of these businesses possess substantially greater financial and other resources than we do. Additionally, our larger competitors are able to devote greater resources to manufacturing and selling their products. Certain competitors operate larger facilities and have longer operating histories and presence in key markets, greater name recognition and larger customer bases. As a result, these competitors may be able to adapt more quickly changes in customer requirements. They may also be able to devote greater resources to the promotion and sale of their products. Moreover, we may not have sufficient resources to undertake the continuing research and development necessary to remain competitive. We may also face increased competition due to the entry of new competitors. This competition would likely have an adverse effect on our results of operations and force us to curtail or abandon our current business plan.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY NATIONAL, REGIONAL OR INDUSTRY SPECIFIC ECONOMIC SLOWDOWNS.
 
National, regional or industry specific economic slowdowns, as well as events or conditions in a   particular area, such as adverse weather and other factors, may adversely affect our operating results. In addition, increases in interest   rates that may lead to a decline in economic activity, while simultaneously   resulting in higher interest expense to us under our credit facility, may adversely affect our operating results.
 
 
 
 
8

 
ECONOMIC AND BUSINESS CONDITIONS AFFECTING OUR CUSTOMER BASE COULD NEGATIVELY IMPACT OUR SALES AND OPERATING RESULTS.
 
We may supply uniform services to many industries that are subject to one or more of shifting employment levels, changes in worker productivity, uncertainty regarding the impacts of rehiring and a shift to offshore manufacturing. Economic hardship among a customer base could cause customers to reduce work forces, restrict expenditures or even cease to conduct business, all of which could reduce the number of employees utilizing our uniform services, which would negatively affect our sales and results of operations.

Risks Related To This Offering

WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.

Once our S-1 Registration Statement becomes effective, in order for us to remain in compliance with our on-going reporting requirements, we will require additional capital and/or future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to further capitalize the company or generate sufficient revenues to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all. There will be ongoing costs and expenses for SEC reporting, including the general booking and accounting costs for the preparation of the financial quarterlies (10Qs) and annual filings (10Ks), and auditor’s fees. Further, there will be processing costs in preparing and converting documents and disclosures through the EDGAR filing system, including certain cost for the new language XBRL that will be required as part of the EDGAR filing.  As such, there will be cost relating to the filing of all and any reporting of material changes in the company through the 8-K’s, S-8 registrations, disclosure Forms 3, 4 and 5, and any other SEC filing requirement in the corporate governance of a reporting issuer to the SEC.  We estimate that these costs could result up to $75,000 per year initial ongoing costs that would need to be included in the financing of the company.

INVESTING IN OUR COMPANY IS HIGHLY SPECULATIVE AND COULD RESULT IN THE ENTIRE LOSS OF YOUR INVESTMENT.

Purchasing the offered shares is highly speculative and involves significant risk. The offered shares should not be purchased by any person who cannot afford to lose their entire investment. Our business objectives are also speculative, and it is possible that we would be unable to accomplish them. Our shareholders may be unable to realize any return on their purchase of the offered shares and may lose their entire investment. For this reason, each prospective purchaser of the offered shares should read this prospectus and all of its exhibits carefully and consult with their attorney, business and/or investment advisor.

WE MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK OR DERIVATIVE SECURITIES THAT WILL DILUTE THE PERCENTAGE OWNERSHIP INTEREST OF OUR EXISTING SHAREHOLDERS AND MAY DILUTE THE BOOK VALUE PER SHARE OF OUR COMMON STOCK AND ADVERSELY AFFECT THE TERMS ON WHICH THE COMPANY MAY OBTAIN ADDITIONAL CAPITAL.

Our authorized capital consists of 1,000,000,000 shares of common stock par value $0.001 per share and 10,000,000 shares of preferred stock $0.001 par value per share. The Board of Directors has the authority, without action by or vote of our shareholders, to issue all or part of the authorized shares of common stock for any corporate purpose, including for the conversion or retirement of debt. We are likely to seek additional equity capital in the future as we develop our business and expand our operations. Any issuance of additional shares of common stock or derivative securities, such as convertible promissory notes, will dilute the percentage ownership interest of our shareholders and may dilute the book value per share of our common stock. Additionally, the exercise or conversion of derivative securities could adversely affect the terms on which the Company can obtain additional capital. Holders of derivative securities are most likely to voluntarily exercise or convert their derivative securities when the exercise or conversion price is less than the market price for the underlying common stock. Holders of derivative securities will have the opportunity to profit from any rise in the market value of our common stock or any increase in our net worth without assuming the risks of ownership of the underlying shares of our common stock. It is possible that, due to additional share issuances, you could lose a substantial amount, or all, of your investment.
 
 
 
9

 
Our Board of Directors may attempt to use non-cash consideration to satisfy obligations, which would likely consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.
 
Some investors favor companies that pay dividends, particularly in general downturns in the stock market. We have not declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings for funding growth, and we do not currently anticipate paying cash dividends on our common stock in the foreseeable future. Because we may not pay dividends, your return on this investment likely depends on selling our stock at a profit.

SHARES OF OUR COMMON STOCK ARE "PENNY STOCKS”.

At all times when the current market price per share of our common stock is less than $5.00, our shares of common stock will be considered "penny stocks" as defined in the Securities Exchange Act of 1934, as amended. As a result, an investor may find it more difficult to dispose of or obtain accurate quotations as to the price of the shares of our common stock being issued under this prospectus. In addition, the penny stock rules adopted by the Securities and Exchange Commission under the Exchange Act would subject the sale of shares of our common stock to regulations which impose sales practice requirements on broker-dealers. For example, broker-dealers selling penny stocks must, prior to effecting the transaction, provide their customers with a document which discloses the risks of investing in penny stocks.

Furthermore, if the person purchasing penny stocks is someone other than an accredited investor, as defined in the Securities Act, or an established customer of the broker-dealer, the broker-dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker-dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in penny stocks. Accordingly, the SEC's rules may limit the number of potential purchasers of shares of our common stock. Moreover, various state securities laws impose restrictions on transferring penny stocks, and, as a result, investors in our common stock may have their ability to sell their shares impaired.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which (i) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (ii) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of Securities' laws; (iii) contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and significance of the spread between the "bid" and "ask" price; (iv) contains a toll-free telephone number for inquiries on disciplinary actions; (v) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (vi) contains such other information and is in such form (including language, type, size and format), as the Commission shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in penny stock, the customer (i) with bid and offer quotations for the penny stock; (ii) the compensation of the broker-dealer and its salesperson in the transaction; (iii) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (iv) monthly account statements showing the market value of each penny stock held in the customer's account.
 

 
 
10

 
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. If any of the Company's securities become subject to the penny stock rules, holders of those securities may have difficulty selling those securities. Stockholders should be aware that, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

(i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

(ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

(iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons;

(iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and

(v) 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 consequent investor losses.

RESTRICTIONS ON THE USE OF RULE 144 BY FORMER SHELL COMPANIES MAY AFFECT SHAREHOLDERS ABILITY TO SELL THEIR SHARES PUBLICLY.

Historically, the SEC staff had taken the position that Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were shell companies. The SEC has codified and expanded this position by prohibiting the use of Rule 144 for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an important exception to this prohibition if certain conditions are met. As a result, it is likely if we do not meet those conditions then, resale will not be available pursuant to Rule 144.

FINANCIAL INDUSTRY REGULATORY AUTHORITY ("FINRA") SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT YOUR ABILITY TO BUY AND SELL OUR COMMON STOCK, WHICH COULD DEPRESS THE PRICE OF OUR SHARES.

FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.

USE OF PROCEEDS

We will not receive any proceeds from the sale of common stock by the selling security holders. All of the net proceeds from the sale of our common stock will go to the selling security holders as described below in the sections entitled “Selling Security Holders” and “Plan of Distribution”.  We have agreed to bear the expenses relating to the registration of the common stock for the selling security holders.
 
DILUTION

The shares offered for sale by the selling shareholders are already outstanding and, therefore, do not contribute to dilution.
 
 
11

 
SELLING SECURITY HOLDERS

The following table sets forth the names of the selling shareholders, the number of shares of common stock beneficially owned by the selling shareholders, the number of shares of common stock which may be offered for sale pursuant to this prospectus by such selling shareholders, the number of shares beneficially owned by such selling shareholders after the offering, and the percentage ownership after the offering. Because the selling shareholders may sell all or part of the shares of common stock offered hereby, the following table assumes that all shares offered under this prospectus have been sold by the selling shareholders. The offered shares of common stock may be offered from time to time by each of the selling shareholders named below. However the selling shareholders are under no obligation to sell all or any portion of the shares of common stock offered, neither are the selling shareholders obligated to sell such shares of common stock immediately under this prospectus.

Name Of Selling Stockholder (1)
Number Of
Shares
Beneficially
Owned
Prior To
Offering
Percentage Of
Outstanding
Shares
Owned
Prior To
Offering
Number Of
Shares
Offered
Pursuant
To This
Prospectus
Number Of
Shares
Beneficially
Owned After
The Offering (2)
Percentage of
Outstanding
Shares To Be
Owned After
The Offering(2)
Amanda Slayman
1,000,000
*
500,000
500,000
*
Bonita Merriam (3)
1,000,000
*
500,000
500,000
*
SJC Capital, LLC (4)
500,000
*
250,000
250,000
*
Bill Dowling
500,000
*
250,000
250,000
*
Bill Myers
1,000,000
*
500,000
500,000
*
Chin Cheong Wai
500,000
*
250,000
250,000
*
Chris Margaritas
400,000
*
200,000
200,000
*
Crossline Community Church (5)
1,000,000
*
500,000
500,000
*
Capistrano Valley Christian Schools, Inc. (5)
1,000,000
*
500,000
500,000
*
Danny Myers
500,000
*
500,000
-
-
Darren Novak
250,000
*
250,000
-
-
Demetrios Tataridas
1,666,666
*
833,333
833,333
*
Dennis Hennesey
500,000
*
250,000
250,000
*
Butera Family 1989 Trust (6)
500,000
*
250,000
250,000
*
Eric H. Scheffey
50,000,000
15.26%
40,000,000
10,000,000
3.05%
Eric Rose
1,562,500
*
781,250
781,250
*
George J Powell, III
79,115,016
24.14%
10,000,000
69,115,016
21.09%
George J. Powell, IV (7)
500,000
*
500,000
-
-
Gregory Judah
500,000
*
250,000
250,000
*
James Heydorff
250,000
*
250,000
-
*
Jim Lang
500,000
*
250,000
250,000
*
 
 
 
12

 
 
 
Jim Wand
1,000,000
*
1,000,000
-
-
Kelly Powell (7)
500,000
*
500,000
-
-
Kennedy Myers (7)
500,000
*
500,000
-
-
Luke Powell (8)
500,000
*
500,000
-
-
Kazarian Living Trust u/d/t 9/25/1990 (9)
2,000,000
*
1,000,000
1,000,000
*
Mary Travis
500,000
*
250,000
250,000
*
Mike Gevertz
250,000
*
250,000
-
-
Mike Warren
500,000
*
250,000
250,000
*
Nick Carbone
500,000
*
250,000
250,000
*
Nicolette Powell (7)
500,000
*
500,000
-
-
Niko Kabylafkas
3,806,168
1.16%
1,332,159
2,474,009
1.16%
Patrick A Langlais
291,666
*
291,666
-
-
Pete Contos
3,604,752
1.10%
1,802,376
1,802,376
1.10%
Randa Havorka
500,000
*
500,000
-
-
Randy Schriewer
500,000
*
250,000
250,000
*
Randy Travis
500,000
*
250,000
250,000
*
Sam Hitman
2,083,333
*
1,041,667
1,041,667
*
Scott Wellman
500,000
*
250,000
250,000
*
Steve Kabylafkas
2,806,166
*
982,158
1,824,008
*
Terri Miller
500,000
*
500,000
-
-
Themistocles Papadimitropoulos
4,610,000
1.41%
1,844,000
2,766,000
1.41%
Tiffany Powell (7)
500,000
*
500,000
-
-
Warm Whispers Ministries, Inc.(5)
1,500,000
*
500,000
1,000,000
*
Chen Young
500,000
*
250,000
250,000
*

(1)
The selling stockholders may be deemed to be “underwriters” in connection with any sales covered by this prospectus.
(2)
If all shares offered for sale are sold by the selling shareholder.
(3)
Bonita Merriam is the mother in law to Mr. Powell, our CEO.
(4)
Bill Cvengros is the acting President of the SJC Capital LLC
(5)
Non-profit organization qualified under Internal Revenue Section 501(c)(3).
(6)
Ed Butera is the Trustee for the Butera Family 1989 Trust
(7)
Adult son or daughter of Mr. Powell, our CEO.
(8)
Luke Powell is a minor son of Mr. Powell, our CEO.
(9)
Marc E. Kazarian is the Trustee for the Kazarian Living Trust u/d/t 9/25/1990
* less than 1%.
PLAN OF DISTRIBUTION
 
Following this registration statement becoming effective, the selling stockholders may from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.
 
 
13

 
Our shares of common stock offered hereby by the selling stockholders may be sold from time to time by such stockholders, or by pledges, donees, transferees and other successors in interest thereto. These pledgees, donees, transferees and other successors in interest will be deemed “selling stockholders” for the purposes of this prospectus. Our shares of common stock may be sold:
 
 
·
on one or more exchanges or in the over-the-counter market (including the OTC Bulletin Board); or
 
·
in privately negotiated transactions.

The shares may also be sold in compliance with Rule 144 of the Securities Act, after the end of the applicable holding periods, as then in effect, so long as Rule 144(i) is satisfied.
The selling stockholders may also sell their shares directly to market makers acting as principals or brokers or dealers, who may act as agents or acquire the common stock as principals. The selling stockholders and any broker-dealers or agents, upon completing the sale of any of the shares offered in this prospectus, may be deemed to be "underwriters" as that term is defined under the Securities Act, the Exchange Act and the rules and regulations of such acts.
 
Any broker or dealer participating in such transactions as agent may receive a commission from the selling stockholders, or if they act as agent for the purchaser of such common stock, from such purchaser. The selling stockholders will likely pay the usual and customary brokerage fees for such services. Brokers or dealers may agree with the selling stockholders to sell a specified number of shares at a stipulated price per share and, to the extent such broker or dealer is unable to do so acting as agent for the selling stockholders, to purchase, as principal, any unsold shares at the price required to fulfill the respective broker’s or dealer’s commitment to the selling stockholders. Brokers or dealers who acquire shares as principals may thereafter resell such shares from time to time in transactions in a market or on an exchange, in negotiated transactions or otherwise, at market prices prevailing at the time of sale or at negotiated prices, and in connection with such re-sales may pay or receive commissions to or from the purchasers of such shares. These transactions may involve cross and block transactions that may involve sales to and through other brokers or dealers. If applicable, the selling stockholders may distribute shares to one or more of their partners who are unaffiliated with us. Such partners may, in turn, distribute such shares as described above. We can provide no assurance that all or any of the common stock offered will be sold by the selling stockholders.
 
We are bearing all costs relating to the registration of the common stock. The selling stockholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.
 
The selling stockholders must comply with the requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, in the offer and sale of the common stock. In particular, during such times as the selling stockholders may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, they must comply with applicable law and we have informed them that they may not, among other things:
 
 
1.
engage in any stabilization activities in connection with the shares;
  
2.
effect any sale or distribution of the shares until after the prospectus shall have been appropriately amended or supplemented, if required, to describe the terms of the sale or distribution; and
  
3.
bid for or purchase any of the shares or rights to acquire the shares or attempt to induce any person to purchase any of the shares or rights to acquire the shares, other than as permitted under the Securities Exchange Act of 1934.

DESCRIPTION OF SECURITIES

The Company’s Articles of Incorporation, as amended (the “Articles of Incorporation”) authorize us to issue (a) 1,000,000,000 shares of Common Stock, par value $0.001 per share, of which, 327,682,980 shares are issued and outstanding as of the date of this prospectus, and (b) 10,000,000 shares of Preferred Stock, $0.001 par value per share, 1,000 of which are issued or outstanding.

Common Stock

Holders of Common Stock are entitled to one vote for each share on all matters submitted to a vote of shareholders. Holders of Common Stock do not have cumulative voting rights. Holders of Common Stock are entitled to share in all dividends that the Board of Directors, in its discretion, declares from legally available funds. In the event of our liquidation, dissolution or winding up, subject to the preferences of any shares of Preferred Stock which may then be authorized and outstanding, each outstanding share entitles its holder to participate in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the Common Stock.

 
14

 
Holders of Common Stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions for the Common Stock. The rights of the holders of Common Stock are subject to any rights that may be fixed for holders of Preferred Stock, when and if any Preferred Stock is authorized and issued. All outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable.

Preferred Stock

Our articles of incorporation authorized the issuance of up to 10,000,000 shares of Preferred Stock in one or more series with such designations, voting powers, if any, preferences and relative, participating, optional or other special rights, and such qualifications, limitations and restrictions, as are determined by resolution of our Board of Directors.  

On May 20, 2015, the Company filed a Certificate of Designation that authorized the issuance of up to one thousand (1,000) shares of a new series designated “Series A Preferred Stock,” and established the rights, preferences and limitations thereof.  The Holders of the Series A Preferred Stock will have the voting rights as described in this Section 4 or as required by law.   For so long as any shares of the Series A Preferred Stock remain issued and outstanding, the Holders thereof, voting separately as a class, shall have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Corporation and upon any action taken by stockholders of the Corporation with or without a meeting) equal to fifty-one percent (51%) of the total vote.

There are no rights to dividends, liquidation preferences or conversion rights associated with the Series A Preferred Stock.

Dividends
 
We have not declared dividends since our inception. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Anti-Takeover Effects of Our Articles of Incorporation and Bylaws
 
We are governed by the Nevada Revised statutes (referred to as the “NRS”). Our articles of incorporation and bylaws do not permit cumulative voting in the election of directors. Cumulative voting allows a stockholder to vote a portion or all of the stockholder’s shares for one or more candidates for seats on the board of directors. Without cumulative voting, a minority stockholder may not be able to gain as many seats on our board of directors as the stockholder would be able to gain if cumulative voting were permitted. The absence of cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board’s decision regarding a takeover or otherwise.
 
Nevada Anti-Takeover Statute
 
We have elected not to be governed by Section 78.378 to 78.3793 of the NRS or Section 78.411 to 78.444 of the NRS which impose additional requirements regarding acquisitions of a controlling interest, mergers and other business combinations.
 
 
 
15

 
Limitations of Liability and Indemnification
 
Our articles of incorporation and bylaws provide that we will indemnify our directors and officers, and other agents, to the fullest extent permitted by the NRS, which prohibits our articles of incorporation from limiting the liability of our directors for the following:

·
any breach of the director’s duty of loyalty to us or to our stockholders;
·
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
·
unlawful payment of dividends or unlawful stock repurchases or redemptions; and
·
any transaction from which the director derived an improper personal benefit.
  
If Nevada law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Nevada law, as so amended. Our articles of incorporation will not eliminate a director’s duty of care and, in appropriate circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Nevada law. This provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws or other state or federal laws. Under our bylaws, we will also be empowered to purchase insurance on behalf of any person whom we are required or permitted to indemnify.
 
In addition to the indemnification required in our articles of incorporation and bylaws, we may enter into indemnification agreements with our current director and executive officer. These agreements may provide for the indemnification of such persons for all reasonable expenses and liabilities, including attorneys’ fees, judgments, fines, and settlement amounts, incurred in connection with any action or proceeding brought against them by reason of the fact that they are or were serving in such capacity. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We may also maintain directors’ and officers’ liability insurance.
 
The limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our stockholders. A stockholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.
 
Listing
 
Trading of our common stock is traded on the OTC Markets Group, Inc. market under the symbol “JABA”

Transfer Agent and Registrar

The name and address of the Company’s Transfer Agent:

American Registrar & Transfer Co.
342 East 900 South
Salt Lake City, UT 84111
(801)-363-9065

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 
16

 
The McGeary Law Firm, P.C. located at 1600 Airport Fwy., Suite 300, Bedford, Texas 76022 will pass on the validity of the common stock being offered pursuant to this registration statement.

The financial statements of Code Green Apparel Corp., a Nevada corporation, included in this Prospectus and elsewhere in the registration statement have been audited by K. Brice Toussaint, C.P.A. who is a certified public accountant, to the extent and for the periods set forth in our report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

INFORMATION WITH RESPECT TO CODE GREEN APPAREL CORP.

DESCRIPTION OF BUSINESS

The Company was incorporated in Nevada on December 11, 2007 under the name Fluid Solutions, Inc. On May 6, 2009, Fluid Solutions, Inc. acquired all of the outstanding capital stock of GS Wyoming in exchange for 100,669,998 shares of its common stock pursuant to an Exchange Agreement dated May 6, 2009 with that corporation and its shareholders. On May 18, 2009, Fluid Solutions, Inc. changed its name to “Gold Standard Mining Corp.” and effected a 3.3-to-1 forward stock split.  On July 17, 2012, Gold Standard Mining Corp. changed its name to J.D. Hutt Corporation. On May 15, 2015, the Company changed its name to Code Green Apparel Corp.

The Company is engaged in the business of manufacturing, selling, marketing and outfitting companies of all sizes and industries with eco-friendly apparel made from recycled textiles. The corporate apparel market encompasses a wide variety of apparel products and accessories ranging from customized uniforms to caps, t-shirts and aprons. We believe that many of these companies are actively seeking ways to incorporate being more environmentally friendly into their company and would entertain mandating that all uniforms be manufactured from recycled fabrics. As all of our products are eco-friendly, our strategy is to emphasize the sustainability features while at the same time providing our products at market competitive rates.

Code Green reduces the environmental impact of the apparel industry by designing, manufacturing and distributing apparel products from eco-friendly and sustainable textiles. It supports both the uniform needs and sustainability initiatives of companies worldwide, by offering a complete line of recycled apparel in the form of T-shirts, hats, polo shirts, pants, shorts, aprons, jackets and accessories.  In addition, the company fulfills recycled clothing needs for organizations of all sizes hosting promotional, fundraising and special events. Its apparel collection is also available to distributors and screen printers through its wholesale distribution channel. 

Sourcing and Manufacturing

The Company currently uses a select number of vendors for the sourcing and manufacturing of its products. Through key relationships established by management spanning over 30 years, the Company has been able to gain access to those mills located overseas in Asia that can implement the closed loop production process as illustrated above. These vendors provide various services throughout the manufacturing process that include, but are not limited to, cutting, sewing, spinning, dyeing, and weaving. The Company is not dependent one vendor or contract manufacturer and, further, believes that there are several sources for its needed raw materials and contract manufacturers of its products available to the Company at competitive prices.

Strategy and Competitive Edge
 
The Company recognizes that there are many companies aggressively marketing and selling uniforms and other apparel products direct to corporations.  For this reason, Code Green has worked to inspire conscious consumerism by making available a line of apparel products that are constructed from recycled textiles.  Bridging the gap between apparel and sustainability while at the same time remaining affordable by offering competitive pricing and rates provides the Company with the competitive edge in the industry.

 
17

 
Employees

On April 26, 2014, the Company entered into an Employment Agreement with our CEO, George J. Powell, III. The Employment Agreement has no term and provides the CEO with an annual base salary of $180,000. Outside of the CEO, the Company does not have any employees.  However, we have engaged approximately five individuals who are involved in marketing, business development, product design, bookkeeping, and other administrative functions.   


Government Regulations

Jumpstart Our Business Startups Act
 
In April 2012, the Jumpstart Our Business Startups Act ("JOBS Act") was enacted into law. The JOBS Act provides, among other things:
 
·
Exemptions for “emerging growth companies” from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;

·
Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934, as amended;

·
Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;

·
Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and
 
·
Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.
 
In general, under the JOBS Act a company is an “emerging growth company” if its initial public offering ("IPO") of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an “emerging growth company” after the earliest of
 
(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,
 
(ii) the completion of the fiscal year of the fifth anniversary of the company's IPO;
 
(iii) the company's issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or
 
(iv) the company becoming a "larger accelerated filer" as defined under the Securities Exchange Act of 1934, as amended.
 
The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.
 
 
18

 
Financial Disclosure.  The financial disclosure in a registration statement filed by an “emerging growth company” pursuant to the Securities Act of 1933, as amended, will differ from registration statements filed by other companies as follows:
 
(i)  
audited financial statements required for only two fiscal years (provided that “smaller reporting companies” such as the Company are  only required to provide two years of financial statements);

(ii)  
selected financial data required for only the fiscal years that were audited (provided that “smaller reporting companies” such as the Company are not required to provide selected financial data as required by Item 301 of Regulation S-K); and

(iii)
executive compensation only needs to be presented in the limited format now required for “smaller reporting companies”.
 
However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs to include audited financial statements for its two most current fiscal years with no required tabular disclosure of contractual obligations.
 
The JOBS Act also exempts the Company's independent registered public accounting firm from having to comply with any rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after the date of the JOBS Act's enactment, except as otherwise required by SEC rule.
 
The JOBS Act further exempts an “emerging growth company” from any requirement adopted by the PCAOB for mandatory rotation of the Company's accounting firm or for a supplemental auditor report about the audit.
 
Internal Control Attestation.  The JOBS Act also provides an exemption from the requirement of the Company's independent registered public accounting firm to file a report on the Company's internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company's internal control over financial reporting.
 
Section 102(a) of the JOBS Act exempts “emerging growth companies” from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the Securities Exchange Act of 1934, as amended, to hold shareholder votes for executive compensation and golden parachutes.
   
Other Items of the JOBS Act.  The JOBS Act also provides that an “emerging growth company” can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The JOBS Act also permits research reports by a broker or dealer about an “emerging growth company” regardless of whether such report provides sufficient information for an investment decision. In addition the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of research reports on the “emerging growth company’s” IPOs.
 
Section 106 of the JOBS Act permits “emerging growth companies” to submit registration statements under the Securities Act of 1933, as amended, on a confidential basis provided that the registration statement and all amendments thereto are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow “emerging growth companies” to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.
 
Election to Opt Out of Transition Period.  Section 102(b)(1) of the JOBS Act exempts “emerging growth companies” from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended) are required to comply with the new or revised financial accounting standard.
 
The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of the transition period.
 
DESCRIPTION OF PROPERTY

Our corporate headquarters is located at 4739 S. Durfee Ave., Pico Rivera, Ca. 90660. We have been provided this space for no monthly cost and have not paid any monies towards rent to date. Management believes this facility is appropriate for our current needs. However, we do seek to expand at reasonable cost if our business required us to do so.
 
 
19

 
SHELL COMPANY STATUS

We believe we are a not a shell company as defined by Rule 405 of the Securities Act  which defines the term “shell company” as a registrant, other than an asset-backed issuer, that has (1)  No or nominal operations; and (2)  Either: (i)    No or nominal assets; (ii)   Assets consisting solely of cash and cash equivalents; or (iii)  Assets consisting of any amount of cash and cash equivalents and nominal other assets.

Likewise, we believe we are not a shell company pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), under which a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets.

Pursuant to Rule 144(i), securities issued by a current or former shell company that otherwise meet the holding period and other requirements of Rule 144 cannot be sold in reliance on Rule 144 until one year after the date on which the issuer filed current “Form 10 information” (as defined in Rule 144(i)) with the SEC reflecting that it ceased being a shell company, and provided that at the time of a proposed sale pursuant to Rule 144, the issuer has satisfied certain reporting requirements under the Exchange Act.

We believe the requirement to file Form 10 information has been satisfied by the filing of this registration statement on Form S-1.

LEGAL PROCEEDINGS

There are no current, past, pending or threatened legal proceedings or administrative actions either by or against the issuer that could have a material effect on the issuer’s business, financial condition, cash flows, or operations.

MARKET FOR COMMON EQUITY AND OTHER RELATED STOCKHOLDER MATTERS

Public Market for Common Stock

From July 2009 through April 17, 2012, our common stock traded on the OTC Bulletin Board.  The quotation of our common stock was dropped from the OTC Bulletin Board due to the lack of current reports with the Securities and Exchange Commission. Since April 18, 2012, shares of our common stock have been quoted on the OTC Markets Group, Inc. Bulletin Board (“OTC Pink”) under the symbol “JABA”

The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc. These quotations reflect inter-dealer prices, without adjustment for retail mark-up, mark down or commissions and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.
 
   
High
   
Low
 
Fiscal Year Ended December 31, 2014
           
Quarter ended December 31, 2014
 
$0.06
     
$0.02
   
Quarter ended September 30, 2014
 
$0.15
     
$0.0065
   
Quarter ended June 30, 2014
 
$0.015
     
$0.008
   
Quarter ended March 31, 2014
 
$0.018
     
$0.008
   
                 
Fiscal Year Ended December 31, 2013
               
Quarter ended December 31, 2013
 
$0.03
     
$0.012
   
Quarter ended September 30, 2013
 
$0.035
     
$0.008
   
Quarter ended June 30, 2013
 
$0.02
     
$0.006
   
Quarter ended March 31, 2013
 
$0.012
     
$0.01
   
 
 
20

 
Holders

We had approximately 51 record holders of our common stock as of August 4, 2015, according to the books of our transfer agent. The number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.
 
Dividends

We have not declared a dividend on our common stock, and we do not anticipate the payment of dividends in the near future as we intend to reinvest our profits to grow our business. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

·
we would not be able to pay our debts as they become due in the usual course of business; or
·
our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Except for historical information, the following Plan of Operation contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, (e) our anticipated needs for working capital, (f) our lack of operational experience and (g) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Management’s Discussion and Analysis or Plan of Operations” and “Description of Business,” as well as in this Prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this Prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Prospectus will in fact occur as projected.

Limited Operating History; Need for Additional Capital

There is no historical financial information about us on which to base an evaluation of our performance. We are a developmental stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources. To become profitable and competitive, we must receive additional capital. We have no assurance that future financing will materialize. If that financing is not available we may be unable to continue operations.
 

 
 
21

 
Results of Operations
 
The following discussion and analysis provides information which management believes is relevant for an assessment and understanding of the results of operations and financial condition.  Expectations of future financial condition and results of operations are based upon current business plans and may change.  The discussion should be read in conjunction with the audited financial statements and notes thereto.



Three Months Ended June 30, 2015
 
The following table presents the Company’s Statements of Operations for the three months ended June 30, 2015 and 2014
 
   
2015
   
2014
 
             
Revenue, net
 
$
-
   
$
-
 
                 
Operating expenses:
               
Selling, general and administrative
   
608,684
     
2,484,147
 
Total operating expenses
   
608,684
     
2,484,147
 
                 
Loss from operations
   
(608,684
)
   
(2,484,147
)
                 
Net loss
 
$
(608,684,
)
 
$
(2,484,147
)
 
 
Operating expenses
 
The Company incurred $608,684 in selling, general and administrative expenses for the three months ended June 30, 2015, a $1,875,463 decrease from $2,484,147 incurred during the three months ended June 30, 2014. Selling, general and administrative expenses consist of expenses the Company incurs during day to day operations.

During the three months ended June 30, 2015, operating expenses consisted of $225,572 of professional fees, $46,050 of travel expenses, $22,000 of warehouse expenses and $1,800 of marketing expenses all related to the redevelopment of the business plan.  During the three months ended June 30, 2014, operating expenses consisted of $528,779 of professional fees and $6,162 of travel expenses.

During the three months ended June 30, 2015, the Company recognized expense in the amount of $113,003 related to the revaluation of the derivative liability.

During the three months ended June 30, 2015 and 2014, the Company recorded $10,794 and $6,685 of interest expense related to the convertible debentures, respectively.  During the three months ended June 30, 2014 the Company recorded the initial derivative interest expense of $500,842.

Additionally, during the three months ended June 30, 2015, the Company recorded $180,000 of compensation related to the issuance of preferred A stock.  This is in comparison to the $1,412,110 of compensation related to the issuance of common stock during the three months ended June 30, 2014.
 
Net loss
 
The Company had a net loss for the three months ended June 30, 2015 of $608,684, a $1,875,463 decrease from $2,484,147 incurred during the three months ended June 30, 2014. The decrease in net loss was primarily due to the value of non-cash compensation paid in the three months ended June 30, 2014 offset by Company’s efforts to begin the new line of business and restate its filing with the Securities and Exchange Commission.
 
 
22

 
Results of Operations Six Months Ended June 30, 2015
 
The following table presents the Company’s Statements of Operations for the six months ended June 30, 2015 and 2014
 
   
2015
   
2014
 
             
Revenue, net
 
$
-
   
$
-
 
                 
Operating expenses:
               
Selling, general and administrative
   
1,454,121
     
2,484,150
 
Total operating expenses
   
1,454,121
     
2,484,150
 
                 
Loss from operations
   
(1,454,121
)
   
(2,484,150
)
                 
Net loss
 
$
(1,454,121,
)
 
$
(2,484,150
)
 
Operating expenses
 
The Company incurred $1,454,121 in selling, general and administrative expenses for the six months ended June 30, 2015, a $1,030,029 decrease from $2,484,150 incurred during the three months ended June 30, 2014. Selling, general and administrative expenses consist of expenses the Company incurs during day to day operations.

During the six months ended June 30, 2015, operating expenses consisted of $246,542 of professional fees, $51,046 of travel expenses, $22,000 of warehouse expenses and $3,050 of marketing expenses all related to the redevelopment of the business plan. During the six months ended June 30, 2014, operating expenses consisted of $528,779 of professional fees and $6,162 of travel expenses.

During the six months ended June 30, 2015, the Company recognized expense in the amount of $913,963 related to the revaluation of the derivative liability.

During the six months ended June 30, 2015 and 2014, the Company recorded $24,826 and $6,685 of interest expense related to the convertible debentures, respectively.  During the six months ended June 30, 2014 the Company recorded the initial derivative interest expense of $500,842.

Additionally, during the six months ended June 30, 2015, the Company recorded $180,000 of compensation related to the issuance of preferred A stock.  This is in comparison to the $1,412,110 of compensation related to the issuance of common stock during the six months ended June 30, 2014.
 
Net loss
 
The Company had a net loss for the six months ended June 30, 2015 of $1,454,121 a $1,030,029 decrease from $2,484,150 incurred during the six months ended June 30, 2014. The decrease in net loss was primarily due to the value of non-cash compensation paid in the six months ended June 30, 2014 offset by Company’s efforts to begin the new line of business and restate its filing with the Securities and Exchange Commission.
 
Liquidity and capital resources
 
The Company had accumulated deficit at June 30, 2015 of $11,305,153 The Company has incurred a loss of $1,454,121 in the six months ended June 30, 2015 and has negative working capital of $1,510,675 as of June 30, 2015. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required and, ultimately, to attain profitable operations. Management’s plans to eliminate the going concern situation include, but are not limited to, the raise of additional capital through issuance of debt and equity, improved cash flow management. Failure to raise additional capital or improve its performance in the next 12 months will cause the Company to significantly curtail its business activities and expansion plans within the next twelve months.
 
 
23

 
The Company has $116,543 in cash as of June 30, 2015 compared to $10,009 as of December 31, 2014 as a result of stock subscriptions issued during the six months ended June 30, 2015 offset by the payment of operating expenses.
 
Results of Operations for Fiscal year ended December 31, 2014
 
The following table presents the Company’s Statements of Operations for the years ended December 31, 2014 and 2013
 
   
2014
   
2013
 
             
Revenue, net
 
$
-
   
$
-
 
                 
Operating expenses:
               
Selling, general and administrative
   
2,371,038
     
57,949
 
Total operating expenses
   
2,371,038
     
57,949
 
                 
Loss from operations
   
(2,371,038
)
   
(57,949
)
                 
Net loss
 
$
(2,371,038
)
 
$
(57,949
)
  
Operating expenses
 
The Company incurred $2,371,038 in selling, general and administrative expenses for the year ended December 31, 2014, a $2,313,089 increase from $57,949 incurred during the year ended December 31, 2013. Selling, general and administrative expenses consist of expenses the Company incurs during day to day operations.

During the year ended December 31, 2014 the Company incurred $51,600 of consulting expense which is a $33,600 increase from the $18,000 incurred during the year ended December 31, 2013.  Consulting expenses relate to the new line of business the Company is pursuing.

During the year ended December 31, 2014 the Company reported $34,926 of interest expense compared to $-0- reported during the year ended December 31, 2013.  The interest expense relates to the convertible debts issued during the year ended December 31, 2014.

During the year ended December 31, 2014 the Company incurred $574,849 of legal, accounting and professional expense which is a $548,609 increase from the $26,240 incurred during the year ended December 31, 2013.  The main expense incurred related to an agreement entered into with a business advisor.  The agreement calls for monthly payments of $2,500 in service fees along with the issuance of a $500,000 fully earned convertible debt that accrues interest at 8%.  Legal, accounting and professional expense relates to the Company’s efforts to restate its filing status with the Securities and Exchange Commission.

During the year ended December 31, 2014 the Company incurred $22,967 of product development which is a compared to $-0- incurred during the year ended December 31, 2013.  Product development expenses relate to the new line of business the Company is pursuing.

During the year ended December 31, 2014 the Company incurred $57,807 of travel expense which is a $44,307 increase from the $13,500 incurred during the year ended December 31, 2013.  Travel expenses relate to the efforts by management to begin the new line of business.

During the year ended December 31, 2014, the Company recognized the intrinsic value of the convertible debt issuance in the amount of $500,842 as interest expense on the date of the issuance on May 1, 2014.  This expense was offset by the $300,505 gain the Company recognized during the year ended December 31, 2014 as the result of the revaluation of the derivative liability.

 
24

 
Additionally, during the year ended December 31, 2014, the Company recorded $1,412,110 of non-cash compensation related to the stock issuance to the Company’s CEO pursuant to an employment agreement.
 
Net loss
 
The Company had a net loss for the year ended December 31, 2014 of $2,371,038, a $2,313,089 increase from $57,949 incurred during the year ended December 31, 2013. The increase in net loss was primarily due to the Company’s efforts to begin the new line of business and restate its filing with the Securities and Exchange Commission.
 
Liquidity and capital resources
 
The Company had an accumulated deficit at December 31, 2014 of $9,851,032 The Company has incurred a loss of $2,371,038 in the year ended December 31, 2014 and has negative working capital of $1,034,054 as of December 31, 2014. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required and, ultimately, to attain profitable operations. Management’s plans to eliminate the going concern situation include, but are not limited to, the raise of additional capital through issuance of debt and equity, improved cash flow management. Failure to raise additional capital or improve its performance in the next 12 months will cause the Company to significantly curtail its business activities and expansion plans within the next twelve months.
 
The Company has $10,009 in cash as of December 31, 2014 compared to $15 as of December 31, 2013 as a result of stock subscriptions and convertible debentures issued during the year ended December 31, 2014.

Critical Estimates and Judgments
 
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates its estimates and judgments, including those related to receivables and accrued expenses. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable based on the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of the Company’s intangible assets, the amount of stock compensation, and the amount of accrued liabilities that are not readily attainable from other sources. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements.
 
Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Going Concern

Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements. The Company had a deficit accumulated during the development stage of $9,900,000 at December 31, 2014 and had a net loss of $2,389,309 for the period then ended, with no revenue earned since inception.
 
While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be significant enough to support the Company’s 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 its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

 
25

 
These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.

Significant Accounting Policies

Basis of Presentation and Going Concern
 
The Company is in the development stage and has had no revenues since inception.  Since inception, it has incurred significant losses to date, and as of December 31, 2014, has an accumulated deficit of approximately $9,900,000.  The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate a positive cash flow and/or raise capital to fund its operations. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.
 
Unclassified Balance Sheet
 
The Company has elected to present an unclassified condensed balance sheet.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company's historical results as well as management's future expectations. The Company's actual results could vary materially from management's estimates and assumptions. Additionally, interim results may not be indicative of the Company’s results for future interim periods, or the Company’s annual results.  

Cash and Cash Equivalents
 
Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.
 
Stock Based Compensation
 
The Company from time to time issues shares of common stock for services.  These issuances have been valued at the estimated fair market value of the services since its stock is thinly traded and the Company has raised minimal cash from sales of stock.
 
Disclosure about Fair Value of Financial Instruments
 
The Company estimates that the fair value of all financial instruments at December 31, 2014 and 2013 do not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
 
Derivative Financial Instruments
 
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
 
 
26

 
 
The Company has determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debentures have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period recorded in earnings as “Other income (expense) - gain (loss) on change in derivative liabilities .”
 
   
Carrying Value
 
   
Fair Value Measurements
Using Fair Value Hierarchy
         
 
Level 1
   
Level 2
   
Level 3
Derivative liability  – December 31, 2014
 
$
200,337
   
$
--
   
$
--
   
$
200,337
 
The following table represents the Company’s derivative liability activity for the year ended:
 
Balance at December 31, 2013
 
$
-
 
Initial measurement at issuance date of the notes
   
500,842
 
Change in derivative liability during the year ended December 31, 2014
   
(300,505)
 
Balance December 31, 2014
 
$
200,337
 

 
Net Income (Loss) Per Share
 
Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Any anti-dilutive effects on net income (loss) per share are excluded. The Company has no potentially dilutive securities outstanding as of the years ended December 31, 2014 and 2013.
 
Income Taxes
 
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
 
In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences such as loss carry-forwards and tax credits become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment and ensuring that the deferred tax asset valuation allowance is adjusted as appropriate.
 
 
27

 
Recent Pronouncements 
 
In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures.  ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted.  The adoption of ASU 2014-15 is not expected to have a material effect on our condensed financial statements or disclosures.

Emerging Growth Company

Section 107 of the JOBS Act provides that an ”emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.

DIRECTORS, EXECUTIVE OFFICER AND CONTROL PERSONS

The following table sets forth the names and ages of our current directors and executive officers. Also the principal offices and positions with us held by each person and the date such person became our directors and executive officers. Our executive officers were appointed by our Board of Directors. Our directors serve until the earlier occurrence of the election of his or her successor at the next meeting of stockholders, death, resignation or removal by the Board of Directors. There are no family relationships among our directors, and executive officer.

Name
Age
Position
Date
       
George J. Powell
63
Sole Director, Chief Executive Officer, Interim Chief Financial Officer, and Secretary
April 26, 2014
       

Set forth below is a brief description of the background and business experience of our executive officer and director for the past five years.

George Powell – Director, President and CEO
Mr. Powell has been the Sole Director and Chief Executive Officer of the Company since April 2014. Spanning more than three decades in the apparel industry, George Powell’s career encompasses all facets of this dynamic business. His journey began with JC Penney, where he spent 14 years as a corporate buyer and product development manager.  Such roles enabled Mr. Powell to hone his retail skills, and he eventually captured the attention of the prominent Zeppelin label, a young men’s brand that soon offered him the position of Vice President of Corporate Accounts.  Accepting Zeppelin’s offer in 1992, Mr. Powell soon developed business strategies leading to a fourfold expansion in market share in just two years. Synergy, a Company from China, commissioned Mr. Powell to lead the company as its Senior Vice President of Product Development and Sales.  The following eight years he gained firsthand experience in Chinese factories, and Mr. Powell proved integral to the development of the Direct-to-Retailer business model, which streamlined the process by eliminating the middleman from the purchasing equation.  The Direct-to-Retailer business model, commonly referred to as Factory Direct Marketing, is now the backbone of the international sourcing divisions of most major retailers.

 
28

 
Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
   
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.

Term of Office

Our directors are elected for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Code of Ethics

We do not have a code of ethics that applies to our officers, employees and directors.

Corporate Governance

The business and affairs of the company are managed under the direction of our board. We have a board consisting of one member. In addition to the contact information in this annual report, each stockholder will be given specific information on how he/she can direct communications to the officers and our director of the corporation. All communications from stockholders are relayed to our board.

 
29

 
EXECUTIVE COMPENSATION

Summary Compensation

The table set forth below summarizes the annual and long-term compensation for services in all capacities to us payable to our officer and sole Director for the period ending December 31, 2014.

Name and
Principal
Position
Title
Year (1)
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
All other
Compensation
($)
Total
($)
                 
George J. Powell, III
CEO, President and Chairman
2014
--
--
$1,412,110
--
--
$1,412,110


Employment Agreements

On April 26, 2014, the Company entered into an Employment Agreement with our CEO, George J. Powell, III. The Employment Agreement has a no term and provides the CEO with an annual base salary of $180,000.

Stock Option Plan

We have not stock option plan.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Shareholders

The following table presents certain information regarding the beneficial ownership of all shares of common stock at the date of this prospectus, for each executive officer and director of our Company and for each person known to us who owns beneficially more than five percent (5%) of the outstanding shares of our common stock. The percentage ownership shown in such table is based upon the 327,682,980 common shares issued and outstanding.

Name and Address Beneficial Owner (1)
No. of Shares Before Offering
No. of Shares After Offering
Percentage of Before Offering
Ownership After Offering
Eric H. Scheffey
1 Elm Street
Denver, CO 80220
50,000,000
10,000,000
15.26%
3.05%
George J Powell III
2300 Wing Point Lane
Plano, TX 75093
79,115,016
69,115,016
24.14%%
21.09%

(1) Each of the persons named above may be deemed to be a "parent" and “promoter" of the Company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his direct holdings in the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

Related Party Transactions

On April 8, 2013 a shareholder forgave $14,630 of unpaid debt and interest.  Due to the related nature of the transaction this amount has been recorded as Additional Paid-in Capital.
 
 
 
30

 
On December 31, 2013 a shareholder forgave $49,975 of unpaid debt and interest.  Due to the related nature of the transaction this amount has been recorded as Additional Paid-in Capital.

On October 13, 2014 a shareholder forgave $524,479 of unpaid debt and interest.  Due to the related nature of the transaction this amount has been recorded as Additional Paid-in Capital.

Director Independence

Currently, the Company does not have any independent directors serving on the board of directors. Further, at this time the Company does not have a policy that it’s directors or a majority be independent of management as the Company has at this time only three directors. It is the intention of the Company to implement a policy that a majority of the Board members be independent of the Company’s management as the members of the board of directors increases.

REPORTS TO SECURITY HOLDERS

1. The Company will furnish shareholders with audited annual financial reports certified by independent accountants if available, and, at its discretion, may furnish unaudited quarterly financial reports.

2. The Company is not a reporting company, and, therefore, we do not currently file reports with the SEC.

3. The public may read and copy any materials filed with the Commission at the SEC's Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m.  The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.  The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically at http://www.sec.gov .   Additionally, the Company may make its reports available on our website at www.codegreenapparel.com.

DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 
 

 
 
31

 
INDEX TO FINANCIAL STATEMENTS

                 
Reports of Independent Registered Public Accounting Firm of K. Brice Toussaint
F-2
                 
Balance Sheets at December 31, 2014 and 2013
F-3
                 
Statements of Operations for the year ended December 31, 2014 and 2013
F-4
                 
Statements of Cash Flows for the year ended December 31, 2014 and 2013
F-5
                 
Statements of Stockholders' Deficit for the year ended December 31, 2014 and 2013
F-6
                 
Notes to Financial Statements for the year ended December 31, 2014 and 2013
F-7 to F-12
   
Interim Financial Statements and Notes for the six months ended June 30, 2015 and 2014
F-13 to F-21

 
 

 
 
F-1

 

KBT

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Shareholders

Code Green Apparel Corporation:

I have audited the accompanying balance sheets of Code Green Apparel Corporation, (the “Company”) as of December 31, 2014 and 2013 and the related statements of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. I was not engaged to perform an audit of its internal control over financial reporting. My audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Code Green Apparel Corporation as of December 31, 2014 and 2013 and the results of its operations and cash flows the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the company will continue as a going concern. As discussed in Note 6 to the consolidated financial statements, the Company has suffered losses from operations and negative cash flows from operations.  These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 6. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/K.Brice Toussaint
K. Brice Toussaint

Dallas TX
July 17, 2015
 
 
F-2

 
CODE GREEN APPAREL CORP
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 2014 AND 2013
 

   
2014
   
2013
 
ASSETS
               
                 
Cash
 
$
10,009
   
$
15
 
Fixed assets, net
   
2,024
     
-
 
                 
TOTAL ASSETS
 
$
12,033
   
$
15
 
                 
LIABILITIES
               
                 
Accounts payable
 
$
138,473
   
$
103,141
 
Accrued interest
   
33,777
     
-
 
Convertible debts payable
   
673,500
     
-
 
Derivative liability
   
200,337
     
-
 
Notes payable, related party
   
-
     
516,479
 
                 
TOTAL LIABILITIES
   
1,046,087
     
619,620
 
                 
STOCKHOLDERS’ DEFICIT
               
                 
Common stock, par value $0.001 per share, Authorized – 500,000,000 shares, Issued and outstanding – 252,952,540 and 151,297,524 shares, respectively
   
252,953
     
151,298
 
Additional paid-in capital
   
8,564,025
     
6,709,091
 
Accumulated deficit
   
(9,851,032
)
   
(7,479,994
)
                 
TOTAL STOCKHOLDERS’ DEFICIT
   
(1,034,054
)
   
(619,605
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
$
12,033
   
$
15
 
 
 

 
F-3

 
CODE GREEN APPAREL CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
 
   
For the Years Ended December 31,
 
   
2014
   
2013
 
                 
REVENUE, net
 
$
-
   
$
-
 
                 
OPERATING EXPENSES
               
Selling, general and administrative
   
2,371,038
     
57,949
 
                 
TOTAL OPERATING EXPENSES
   
2,371,038
     
57,949
 
                 
LOSS FROM OPERATIONS
   
(2,371,038
)
   
(57,949
)
                 
LOSS BEFORE INCOME TAXES
   
(2,371,038
)
   
(57,949
)
                 
Income tax expense
   
-
     
-
 
                 
NET LOSS
 
$
(2,371,038
)
 
$
(57,949
)
                 
NET LOSS PER COMMON SHARE
               
Basic and diluted
 
$
(0.01
)
 
$
(0.00
)
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
               
Basic and diluted
   
221,704,960
     
151,297,524
 
 


 
F-4

 
CODE GREEN APPAREL CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

   
2014
   
2013
 
                 
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net loss
 
$
(2,371,038
)
 
$
(57,949
)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
               
Stock issued for services
   
1,412,110
     
-
 
Convertible debt issued for services
   
500,000
     
-
 
Non-cash interest
   
500,842
     
-
 
Gain on derivative revaluation
   
(300,505
)
   
-
 
Depreciation
   
225
     
-
 
Changes in operating assets and liabilities:
               
Accounts payable
   
35,332
     
(6,754
)
Accrued interest
   
33,777
     
-
 
                 
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
   
(189,257)
     
(64,703
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from the sale of common stock
   
20,000
     
-
 
Proceeds from loan payable – related party
   
8,000
     
64,718
 
Proceeds from convertible debts
   
173,500
     
-
 
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES
   
201,500
     
64,718
 
                 
NET INCREASE (DECREASE) IN CASH
   
9,994
     
15
 
                 
CASH AT THE BEGINNING OF THE PERIOD
   
15
     
-
 
                 
CASH AT THE END OF THE PERIOD
 
$
10,009
   
$
15
 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
                 
Interest paid
 
$
-
   
$
-
 
Taxes paid
 
$
-
   
$
-
 


 
F-5

 

CODE GREEN APPAREL CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

 
   
Common Stock
   
Additional
Paid-in
   
Accumulated
   
Total Stockholders’
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Equity (Deficit)
 
Balance, December 31, 2012
   
151,297,524
   
$
151,298
   
$
6,644,486
   
$
(7,422,045)
   
$
(626,261
)
                                         
Forgiveness of debts
   
-
     
-
     
64,605
     
-
     
64,605
 
                                         
Net loss
   
-
     
-
     
-
     
(57,949
)
   
(57,949
)
                                         
Balance, December 31,2003
   
151,297,524
     
151,298
     
6,709,091
     
(7,479,994
)
   
(619,605)
 
                                         
Issuance of shares for services
   
100,865,016
     
100,865
     
1,311,245
     
-
     
1,412,110
 
                                         
Issuance of shares for cash
   
790,000
     
790
     
19,210
     
-
     
20,000
 
                                         
Forgiveness of debts
   
-
     
-
     
524,479
     
-
     
524,479
 
                                         
Net loss
   
-
     
-
     
-
     
(2,371,038
)
   
(2,371,038
)
                                         
Balance, December 31, 2014
   
252,952,540
   
$
252,953
   
$
8,564,025
   
$
(9,851,032)
)
 
$
(1,034,054
)
 


 
F-6

 

CODE GREEN APPAREL CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
 
NOTE 1               ORGANIZATION AND BASIS OF PRESENTATION
 
Organization and Nature of Business
 
Code Green Apparel Corp, formerly known as Gold Standard Mining Corp. (the “ Company ”) was incorporated in Nevada on December 11, 2007 as Fluid Solutions, Inc.  On May 6, 2009, Fluid Solutions, Inc. acquired all of the outstanding capital stock of Gold Standard Mining Corp., a Wyoming corporation (“ GS Wyoming ”), in exchange for 100,669,998 shares of its common stock pursuant to an Exchange Agreement dated May 6, 2009 with that corporation and its shareholders.  Concurrently with the acquisition, Pantelis Zachos, its Chief Executive Officer and a director, tendered 59,400,000 shares of common stock back to Fluid Solutions, Inc. for retirement.  

On May 18, 2009, Fluid Solutions, Inc. changed its name to “Gold Standard Mining Corp.” and effected a 3.3 to 1 forward stock split.  This split has been retroactively reflected in these financial statements.  On July 17, 2012, Gold Standard Mining Corp. changed its name to J.D. Hutt Corporation. On May 15, 2015, J.D. Hutt Corporation changed its name to Code Green Apparel Corp.

As of the date that the Company acquired GS Wyoming, GS Wyoming’s principal asset was an Exchange Agreement, dated February 9, 2009, pursuant to which GS Wyoming had agreed to acquire Rosszoloto Co. Ltd., a limited liability company organized under the laws of Russia (“ Rosszoloto ”), in a stock exchange.  Rosszoloto is engaged in the business of gold mining in the Amur region of Russia near the border between Russia and China.  The Company completed the acquisition of Rosszoloto in June 2010.  The Company issued a total of 100,669,998   shares to the shareholders of GS Wyoming.

In the spring of 2011, during the course of preparation of financial statements of the Company, the Board of Directors concluded that the Company could not get the financial information regarding Rosszoloto necessary for the financial statements of the Company, including Rosszoloto, to be audited.  Based on this, in May 2011, the Company rescinded the acquisition of Rosszoloto and has treated the transaction as never having occurred.  In connection with such rescission, the Company received back 51,499,998 shares of its common stock that they issued to acquire GS Wyoming.  

The Company is a publicly held Nevada corporation, whose common stock trades on the OTC Market Group, Inc.’s Pink Sheets under the trading symbol, “JABA.”  

Basis of Presentation and Going Concern
The Company is in the development stage and has had no revenues since inception.  Since inception, it has incurred significant losses to date, and as of December 31, 2014, has an accumulated deficit of approximately $9,900,000.  The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate a positive cash flow and/or raise capital to fund its operations.

These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.

Unclassified Balance Sheet
 
The Company has elected to present an unclassified condensed balance sheet.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company's historical results as well as management's future expectations. The Company's actual results could vary materially from management's estimates and assumptions. Additionally, interim results may not be indicative of the Company’s results for future interim periods, or the Company’s annual results.  
 
 
F-7

 

Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Stock Based Compensation
The Company from time to time issues shares of common stock for services.  These issuances have been valued at the estimated fair market value of the services since its stock is thinly traded and the Company has raised minimal cash from sales of stock.

Disclosure About Fair Value of Financial Instruments
 
The Company estimates that the fair value of all financial instruments at December 31, 2014 and 2013 do not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company has determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debentures have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period recorded in earnings as “Other income (expense) - gain (loss) on change in derivative liabilities.”
 
   
Carrying Value
   
Fair Value Measurements
Using Fair Value Hierarchy
         
 
Level 1
   
Level 2
   
Level 3
Derivative liability  – December 31, 2014
 
$
200,337
   
$
--
   
$
--
   
$
200,337

The following table represents the Company’s derivative liability activity for the year ended:
Balance at December 31, 2013
 
$
-
 
Initial measurement at issuance date of the notes
   
500,842
 
Change in derivative liability during the year ended December 31, 2014
   
(300,505)
 
Balance December 31, 2014
 
$
200,337
 
 
 
 
F-8

 
 
Net Income (Loss) Per Share
 
Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Any anti-dilutive effects on net income (loss) per share are excluded. The Company has no potentially dilutive securities outstanding as of the years ended December 31, 2014 and 2013.
 
Income Taxes
 
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
 
In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences such as loss carry-forwards and tax credits become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment and ensuring that the deferred tax asset valuation allowance is adjusted as appropriate.
 
Recent Pronouncements  
 
In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures.  ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted.  The adoption of ASU 2014-15 is not expected to have a material effect on our condensed financial statements or disclosures.
 
 
NOTE 2               CONVERTIBLE NOTES
 
On May 1, 2014, the Company entered into an agreement with a business advisor.  The agreement calls for monthly payments of $2,500 in service fees along with the issuance of a $500,000 fully earned convertible debt that accrues interest at 8%.  At December 31, 2014 and 2013, $20,000 and $-0- was owed in services fees, accrued interest was $26,849 and $-0- and the outstanding convertible debt was $500,000 and $-0-, respectively.

In addition to the aforementioned convertible debt, the Company issued $173,500 of convertible debts during the year ended December 31, 2014.  These convertible debts carry interest at 10% per annum and are due in 24 months from the date of issuance, June 2016 through September 2016.  The note holder has the option to convert into shares of the Company’s common stock after 180 days at 50% of the market price.  Total outstanding convertible debt was $173,500 and $-0- at December 31, 2014 and 2013, respectively.  The accrued interest on the convertible debt was $6,928 and $-0- at December 31, 2014 and 2013, respectively.

Derivative Liability

On May 1, 2014, the Company secured $500,000 in the form of a convertible promissory note. The note bear interest at the rate of 8% until they mature, or until there is an event of default. The note matured on May 1, 2015. The holder has the option to convert any balance of principal and interest into common stock of the Company. The rate of conversion for these notes is calculated as the lowest of the 20 trading closing prices immediately preceding such conversion, discounted by 50%.

 
F-9

 
Due to the variable conversion price associated with these convertible promissory notes, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.

The initial fair value of the embedded debt derivative of $500,842 was charged to current period operations as interest expenses. The fair value of the described embedded derivative was determined using the Black-Scholes Model with the following assumptions:
 
(1) risk free interest rate of 
0.10%;
(2) dividend yield of
0%;
(3) volatility factor of
435%;
(4) an expected life of the conversion feature of 
365 days, and
(5) estimated fair value of the company’s common stock of
$0.008 per share.
During the year ended December 31, 2014, the Company recorded the loss (gain) in fair value of derivative ($300,505).
The following table represents the Company’s derivative liability activity for the year ended:
Balance at December 31, 2013
 
$
-
 
Initial measurement at issuance date of the notes
   
500,842
 
Change in derivative liability during the year ended December 31, 2014
   
(300,505)
 
Balance December 31, 2014
 
$
200,337
 
 
 
NOTE 3               RELATED PARTY TRANSACTION
 
Forgiveness of Debts
 
On April 8, 2013 a shareholder forgave $14,630 of unpaid debt and interest.  Due to the related nature of the transaction this amount has been recorded as Additional Paid-in Capital.
 
On December 31, 2013 a shareholder forgave $49,975 of unpaid debt and interest.  Due to the related nature of the transaction this amount has been recorded as Additional Paid-in Capital.

On October 13, 2014 a shareholder forgave $524,479 of unpaid debt and interest.  Due to the related nature of the transaction this amount has been recorded as Additional Paid-in Capital.
 
NOTE 4               STOCKHOLDERS’ EQUITY
 
On April 21, 2014 the Company issued 100,865,016 shares of its common stock to Mr. George Powell, the Company’s President and CEO in fulfillment of the terms of an employment agreement.  The shares had a fair market value of $1,412,110 on the date of issuance.

On September 22, 2014, the Company issued 390,000 shares of its common stock in connection with a stock subscription agreement and received $10,000.
 
On September 22, 2014, the Company issued 400,000 shares of its common stock in connection with a stock subscription agreement and received $10,000.

 
F-10

 
NOTE 5               INCOME TAXES
 
Deferred Tax Components
 
Significant components of the Company’s deferred tax assets are as follows at December 31, 2014:
 
Net operating loss carry-forward
 
$
1,565,039
 
Less valuation allowance
   
(1,565,039
)
Net deferred tax assets, December 31, 2014
 
$
-
 
  
Summary of valuation allowance:
 
Balance January 1, 2012
 
$
1,484,409
 
Additions for the year ended December 31, 2013
   
16,226
 
Balance, December 31, 2013
 
$
1,500,635
 
Additions for the year ended December 31, 2014
   
46,133
 
Balance, December 31, 2014
 
$
1,546,768
 
 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
 
Examination
 
The Company’s tax returns are open to examination for the prior three years for Federal purposes, and four years for State purposes. The Company recognizes and measures uncertain tax positions using a more-likely-than-not approach. The Company had no material uncertain tax positions at December 31, 2014.


NOTE 6               GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  The Company is in the development stage and has had no revenues since inception.  Since inception, it has incurred significant losses to date, and as of December 31, 2014, has an accumulated deficit of approximately $9,900,000.  The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate a positive cash flow and/or raise capital to fund its operations.  These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.

NOTE 7               SUBSEQUENT EVENTS

On March 9, 2015, the Company issued 2,610,000 shares of its common stock in connection with a stock subscription agreement and received $25,000.

On April 2, 2015, the Company entered into a subscription agreement with a 3 rd party investor to purchase 100,000,000 shares of the company’s common stock for an aggregate purchase price of $1,000,000 in cash and in accordance with the following investment schedule: $250,000 on or about April 1, 2015, $250,000 on or about July 1, 2015, $250,000 on or about October 1, 2015, and $250,000 on or about January 1, 2016. The agreement further allows for the investor to purchase an additional 100,000,000 shares for an additional $1,000,000 in cash at the investor’s sole discretion and in accordance with the following investment schedule: $500,000 on or about July 1, 2016 and $500,000 on or about October 1, 2016. In the event the investor misses any of the aforementioned investment payments in accordance with the funding schedules, the investor will not be allowed to purchase any additional shares at the price of $.01 per share. However, the investor may elect to accelerate the purchase the investment shares ahead of the proposed schedule at his sole discretion.

 
F-11

 
The investor has been issued 25,000,000 shares in consideration for his first $250,000 investment on April 2, 2015 and 25,000,000 shares in consideration for his second $250,000 investment on June 29, 2015.

On April 28, 2015, the Company issued 400,000 shares of its common stock in connection with a stock subscription agreement and received $10,000.

On May 15, 2015, the Circuit Court of the Twelfth Judicial Circuit in and for Sarasota County, Florida (the “Court") entered an Order Granting Approval of Settlement Agreement and Stipulation (the "Order") in the matter titled JPM Capital Advisors, LLC ("JPM") v. J.D Hutt Corporation. The Order and the Stipulation for Settlement of Claims, dated May 13, 2013, between the Company and JPM (the "Stipulation"), provides for the full and final settlement of JPM’s $530,000 claim against the Company in connection with past due amounts in connection with consulting fees and a Convertible Promissory Note owed to JPM (the "Claim").

Pursuant to the terms of the Order and Stipulation, the Company is required to initially issue and deliver to JPM, in one or more tranches as necessary, shares of Common Stock sufficient to satisfy the Claim at a fifty percent (50%) discount to market and based on the market price during the preceding twenty (20) days and free of restrictive legend pursuant to Section 3(a)(10) of the Securities Act (the “Settlement shares”). Further, the Company issued to JPM on May 18, 2015 Five Million (5,000,000) shares of Common Stock free of restrictive legend pursuant to Section 3(a)(10) of the Securities Act as a settlement fee.

On June 9, 2015, the Company issued 1,000,000 shares of its common stock in connection with a stock subscription agreement and received $10,000.

During the six months ended June 30, 2015, the Company issued 6,150,000 shares of common stock in payment of services received valued at $79,000.

During the six months ended June 30, 2015, the Company issued 14,660,440 shares of common stock in payment of $173,500 of principal related to the convertible debt.

Preferred A Stock

On May 22, 2015, the Company designated a series of Preferred A Stock.  The holders of the preferred A stock shall not be entitled to receive dividends paid on the Company’s common stock.  The holders of the preferred A stock shall not be entitled to any liquidation preferences.  The shares of the preferred A stock have no conversion rights.  Following the third anniversary of the original issuance of the preferred A stock, the Company shall have the option to redeem any and all outstanding shares of the preferred A stock by paying the holders a redemption price of $100 per share.

On May 22, 2015, the Company issued 1,000 shares of its preferred A stock to its President in payment of services received valued at $180,000.




 
F-12

 
CODE GREEN APPAREL CORP
 (A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

 
   
JUNE 30, 2015 (UNAUDITED)
   
DECEMBER 31, 2014
 
ASSETS
               
                 
Cash
 
$
116,543
   
$
10,009
 
Inventory
   
190,358
     
-
 
Fixed assets, net
   
1,799
     
2,024
 
                 
TOTAL ASSETS
 
$
308,700
   
$
12,033
 
                 
LIABILITIES
               
                 
Accounts payable
 
$
146,473
   
$
138,473
 
Accrued interest
   
58,602
     
33,777
 
Convertible debts payable
   
500,000
     
673,500
 
Derivative liability
   
1,114,300
     
200,337
 
                 
TOTAL LIABILITIES
   
1,819,375
     
1,046,087
 
                 
STOCKHOLDERS’ DEFICIT
               
                 
Preferred A stock, par value $0.001 per share, Authorized – 1,000 shares, Issued and outstanding – 1,000 and -0- shares, respectively
   
1
     
-
 
Common stock, par value $0.001 per share, Authorized – 500,000,000 shares, Issued and outstanding – 327,772,980 and 252,952,540 shares, respectively
   
327,773
     
252,953
 
Additional paid-in capital
   
9,466,704
     
8,56,025
 
Accumulated deficit
   
(11,305,153
)
   
(9,851,032
)
                 
TOTAL STOCKHOLDERS’ DEFICIT
   
(1,510,675
)
   
(1,034,054
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
$
308,700
   
$
12,033
 
 
 
 
F-13

 
CODE GREEN APPAREL CORP
 (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(UNAUDITED)
 
 
   
For the Three Months Ended
June 30,
   
For the Six Months Ended
June 30,
 
   
2015
   
2014
   
2015
   
2014
 
                         
REVENUE, net
  $ -     $ -     $ -     $ -  
                                 
OPERATING EXPENSES
                               
Selling, general and administrative
    608,684       2,484,147       1,454,121       2,484,150  
                                 
TOTAL OPERATING EXPENSES
    608,684 )     2,484,147       1,454,121       2,484,150  
                                 
LOSS FROM OPERATIONS
    (608,684 )     (2,484,147 )     (1,454,121 )     (2,484,150 )
                                 
LOSS BEFORE INCOME TAXES
    (608,684 )     (2,484,147 )     (1,454,121 )     (2,484,150 )
                                 
Income tax expense
    -       -       -       -  
                                 
NET LOSS
  $ (608,684 )   $ (2,484,147 )   $ (1,454,121 )   $ (2,484,150 )
                                 
NET LOSS PER COMMON SHARE
                               
Basic and diluted
  $ (0.00 )   $ (0.01 )   $ (0.01 )   $ (0.01 )
                                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                               
Basic and diluted
    292,559,475       228,885,998       273,071,502       190,091,761  
 


 
F-14

 
CODE GREEN APPAREL CORP
 (A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE SIX MONTHS ENDED JUNE 30, 2015
(UNAUDITED)

 
   
Preferred A
Stock
 
Common Stock
   
Additional
Paid-in
   
Accumulated
   
Total Stockholders’
 
   
Shares
 
Amount
 
Shares
 
Amount
   
Capital
   
Deficit
   
Equity (Deficit)
 
Balance, December 31, 2014
   
-
   
$
-
 
252,952,540
 
$
252,953
   
$
8,564,025
   
$
(9,851,032)
   
$
(1,034,054
)
                                                   
Issuance of shares for cash
   
-
     
-
 
54,010,000
   
54,010
     
490,990
     
-
     
545,000
 
                                                   
Issuance of shares for services
   
1,000
     
1
 
6,150,000
   
6,150
     
252,849
     
-
     
259,000
 
                                                   
Issuance of shares for convertible debt
   
-
     
-
 
14,660,440
   
14,660
     
158,840
     
-
     
173,500
 
                                                   
Net loss
   
-
     
-
 
-
   
-
     
-
     
(1,454,121
)
   
(1,454,121
)
                                                   
Balance, June 30, 2015
   
1,000
   
$
1
 
327,772,980
 
$
327,773
   
$
9,466,704
   
$
(11,305,153
)
 
$
(1,510,675
)
 





 
F-15

 
CODE GREEN APPAREL CORP
 (A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(UNAUDITED)

   
2015
   
2014
 
                 
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net loss
 
$
(1,454,121
)
 
$
(2,484,150
)
Adjustments to reconcile net loss to net cash (used) provided by operating activities:
               
Loss on derivative revaluation
   
913,963
     
-
 
Depreciation
   
225
     
-
 
Preferred A stock issued for services
   
180,000 
     
 
Common stock issued for services
   
79,000
     
1,412,110
 
Non-cash interest expense
   
-
     
500,842
 
Non-cash compensation
   
-
     
500,000
 
Changes in operating assets and liabilities:
               
Inventory
   
(190,358)
     
-
 
Accounts payable
   
8,000
     
18,329
 
Accrued interest
   
24,825
     
6,685
 
                 
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
   
(438,466)
     
(46,184
)
                 
CASH FLOWS USED BY INVESTING ACTIVITIES:
               
Purchase of fixed assets
   
-
     
(2,249
)
                 
NET CASH USED BY INVESTING ACTIVITIES
   
-
     
(2,249
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from the sale of common stock
   
545,000
     
-
 
Proceeds from the issuance of convertible debt
   
-
     
60,000
 
Proceeds from related party notes
   
-
     
8,000
 
                 
NET CASH PROVIDED BY FINANCING ACTIVITIES
   
545,000
     
68,000
 
                 
NET INCREASE (DECREASE) IN CASH
   
106,534
     
19,567
 
                 
CASH AT THE BEGINNING OF THE PERIOD
   
10,009
     
15
 
                 
CASH AT THE END OF THE PERIOD
 
$
116,543
   
$
19,582
 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
                 
Interest paid
 
$
-
   
$
-
 
Taxes paid
 
$
-
   
$
-
 
 
 
 
F-16

 
CODE GREEN APPAREL CORP
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1               ORGANIZATION AND BASIS OF PRESENTATION
 
Organization and Nature of Business
 
Code Green Apparel Corp, formerly known as Gold Standard Mining Corp. (the “ Company ”) was incorporated in Nevada on December 11, 2007 as Fluid Solutions, Inc.  On May 6, 2009, Fluid Solutions, Inc. acquired all of the outstanding capital stock of Gold Standard Mining Corp., a Wyoming corporation (“ GS Wyoming ”), in exchange for 100,669,998 shares of its common stock pursuant to an Exchange Agreement dated May 6, 2009 with that corporation and its shareholders.  Concurrently with the acquisition, Pantelis Zachos, its Chief Executive Officer and a director, tendered 59,400,000 shares of common stock back to Fluid Solutions, Inc. for retirement.  
 
On May 18, 2009, Fluid Solutions, Inc. changed its name to “Gold Standard Mining Corp.” and effected a 3.3 to 1 forward stock split.  This split has been retroactively reflected in these financial statements.  On July 17, 2012, Gold Standard Mining Corp. changed its name to J.D. Hutt Corporation. On May 15, 2015, J.D. Hutt Corporation changed its name to Code Green Apparel Corp.
 
As of the date that the Company acquired GS Wyoming, GS Wyoming’s principal asset was an Exchange Agreement, dated February 9, 2009, pursuant to which GS Wyoming had agreed to acquire Rosszoloto Co. Ltd., a limited liability company organized under the laws of Russia (“ Rosszoloto ”), in a stock exchange.  Rosszoloto is engaged in the business of gold mining in the Amur region of Russia near the border between Russia and China.  The Company completed the acquisition of Rosszoloto in June 2010.  The Company issued a total of 100,669,998   shares to the shareholders of GS Wyoming.
 
In the spring of 2011, during the course of preparation of financial statements of the Company, the Board of Directors concluded that the Company could not get the financial information regarding Rosszoloto necessary for the financial statements of the Company, including Rosszoloto, to be audited.  Based on this, in May 2011, the Company rescinded the acquisition of Rosszoloto and has treated the transaction as never having occurred.  In connection with such rescission, the Company received back 51,499,998 shares of its common stock that they issued to acquire GS Wyoming.  
 
The Company is a publicly held Nevada corporation, whose common stock trades on the OTC Market Group, Inc.’s Pink Sheets under the trading symbol, “JABA.”  
 
Basis of Presentation and Going Concern
 
The Company is in the development stage and has had no revenues since inception.  Since inception, it has incurred significant losses to date, and as of June 30, 2015, has an accumulated deficit of approximately $11,300,000.  The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate a positive cash flow and/or raise capital to fund its operations.
 
These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.
 
Unclassified Balance Sheet
 
The Company has elected to present an unclassified condensed balance sheet.
 
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on the Company's historical results as well as management's future expectations. The Company's actual results could vary materially from management's estimates and assumptions. Additionally, interim results may not be indicative of the Company’s results for future interim periods, or the Company’s annual results.  

 
F-17

 
Cash and Cash Equivalents
 
Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.
 
Stock Based Compensation
 
The Company from time to time issues shares of common stock for services.  These issuances have been valued at the estimated fair market value of the services since its stock is thinly traded and the Company has raised minimal cash from sales of stock.
 
Disclosure About Fair Value of Financial Instruments
 
The Company estimates that the fair value of all financial instruments at June 30, 2015 and December 31, 2014 do not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying condensed balance sheets. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses the Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The Company has determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debentures have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period recorded in earnings as “Other income (expense) - gain (loss) on change in derivative liabilities.”

   
 
Carrying Value
   
Fair Value Measurements
Using Fair Value Hierarchy
         
 
Level 1
   
Level 2
   
Level 3
Derivative liability  – December 31, 2014
 
$
200,337
   
$
--
   
$
--
   
$
200,337
Derivative liability – June 30, 2015
 
$
1,114,300
   
$
-
   
$
-
   
$
1,114,300


 
F-18

 

The following table represents the Company’s derivative liability activity for the year ended:
Balance at December 31, 2014
 
$
-
 
Initial measurement at issuance date of the notes
   
200,337
 
Change in derivative liability during the six months ended June 30, 2015
   
913,963
 
Balance June 30, 2015
 
$
1,114,300
 

 
Net Income (Loss) Per Share
 
Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Any anti-dilutive effects on net income (loss) per share are excluded. The Company has no potentially dilutive securities outstanding as of the six months ended June 30, 2015.
 
Income Taxes
 
Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
 
In assessing the recoverability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which temporary differences such as loss carry-forwards and tax credits become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment and ensuring that the deferred tax asset valuation allowance is adjusted as appropriate.
 
Recent Pronouncements  
 
In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures.  ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted.  The adoption of ASU 2014-15 is not expected to have a material effect on our condensed financial statements or disclosures.
 
 
NOTE 2               CONVERTIBLE NOTES
 
On May 1, 2014, the Company entered into an agreement with a business advisor.  The agreement calls for monthly payments of $2,500 in service fees along with the issuance of a $500,000 fully earned convertible debt that accrues interest at 8%.  At December 31, 2014 and 2013, $20,000 and $-0- was owed in services fees, accrued interest was $26,849 and $-0- and the outstanding convertible debt was $500,000 and $-0-, respectively.

In addition to the aforementioned convertible debt, the Company issued $173,500 of convertible debts during the year ended December 31, 2014.  These convertible debts carry interest at 10% per annum and are due in 24 months from the date of issuance, June 2016 through September 2016.  The note holder has the option to convert into shares of the Company’s common stock after 180 days at 50% of the market price.  Total outstanding convertible debt was $173,500 and $-0- at December 31, 2014 and 2013, respectively.  The accrued interest on the convertible debt was $6,928 and $-0- at December 31, 2014 and 2013, respectively.

 
F-19

 
Derivative Liability

On May 1, 2014, the Company secured $500,000 in the form of a convertible promissory note. The note bear interest at the rate of 8% until they mature, or until there is an event of default. The note matured on May 1, 2015. The holder has the option to convert any balance of principal and interest into common stock of the Company. The rate of conversion for these notes is calculated as the lowest of the 20 trading closing prices immediately preceding such conversion, discounted by 50%.

Due to the variable conversion price associated with these convertible promissory notes, the Company has determined that the conversion feature is considered a derivative liability. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date.

The initial fair value of the embedded debt derivative of $500,842 was charged to current period operations as interest expenses. The fair value of the described embedded derivative was determined using the Black-Scholes Model with the following assumptions:
 
(1) risk free interest rate of 
0.10%;
(2) dividend yield of
0%;
(3) volatility factor of
435%;
(4) an expected life of the conversion feature of 
365 days, and
(5) estimated fair value of the company’s common stock of
$0.008 per share.
During the six months ended June 30, 2015, the Company recorded the loss (gain) in fair value of derivative $913,963.
The following table represents the Company’s derivative liability activity for the six months ended:
Balance at December 31, 2014
 
$
200,337
 
Change in derivative liability during the six months ended June 30, 2015
   
913,963
 
Balance June 30, 2015
 
$
1,114,300
 
 
 
NOTE 3               STOCKHOLDERS’ EQUITY
 
On March 9, 2015, the Company issued 2,610,000 shares of its common stock in connection with a stock subscription agreement and received $25,000.

On April 3, 2015, the Company issued 25,000,000 shares of its common stock in connection with a stock subscription agreement and received $250,000.

On April 28, 2015, the Company issued 400,000 shares of its common stock in connection with a stock subscription agreement and received $10,000.

On May 15, 2015, the Circuit Court of the Twelfth Judicial Circuit in and for Sarasota County, Florida (the “Court") entered an Order Granting Approval of Settlement Agreement and Stipulation (the "Order") in the matter titled JPM Capital Advisors, LLC ("JPM") v. J.D Hutt Corporation. The Order and the Stipulation for Settlement of Claims, dated May 13, 2013, between the Company and JPM (the "Stipulation"), provides for the full and final settlement of JPM’s $530,000 claim against the Company in connection with past due amounts in connection with consulting fees and a Convertible Promissory Note owed to JPM (the "Claim").

Pursuant to the terms of the Order and Stipulation, the Company is required to initially issue and deliver to JPM, in one or more tranches as necessary, shares of Common Stock sufficient to satisfy the Claim at a fifty percent (50%) discount to market and based on the market price during the preceding twenty (20) days and free of restrictive legend pursuant to Section 3(a)(10) of the Securities Act (the “Settlement shares”). Further, the Company issued to JPM on May 18, 2015 Five Million (5,000,000) shares of Common Stock free of restrictive legend pursuant to Section 3(a)(10) of the Securities Act as a settlement fee.

 
F-20

 
On June 9, 2015, the Company issued 1,000,000 shares of its common stock in connection with a stock subscription agreement and received $10,000.

On June 29, 2015, the Company issued 25,000,000 shares of its common stock in connection with a stock subscription agreement and received $250,000.

During the six months ended June 30, 2015, the Company issued 6,150,000 shares of common stock in payment of services received valued at $79,000.

During the six months ended June 30, 2015, the Company issued 14,660,440 shares of common stock in payment of $173,500 of principal related to the convertible debt.

Preferred A Stock

On May 22, 2015, the Company designated a series of Preferred A Stock.  The holders of the preferred A stock shall not be entitled to receive dividends paid on the Company’s common stock.  The holders of the preferred A stock shall not be entitled to any liquidation preferences.  The shares of the preferred A stock have no conversion rights.  Following the third anniversary of the original issuance of the preferred A stock, the Company shall have the option to redeem any and all outstanding shares of the preferred A stock by paying the holders a redemption price of $100 per share.

On May 22, 2015, the Company issued 1,000 shares of its preferred A stock to its President in payment of services received valued at $180,000.

NOTE 4                                     GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business.  The Company is in the development stage and has had no revenues since inception.  Since inception, it has incurred significant losses to date, and as of June 30, 2015, has an accumulated deficit of approximately $11,300,000.  The Company’s ability to continue its operations is uncertain and is dependent upon its ability to implement a business plan sufficient to generate a positive cash flow and/or raise capital to fund its operations.  These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations in the normal course of business.
 
NOTE 5               SUBSEQUENT EVENTS

None




 
F-21

 
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses will be borne by the Selling Security Holders. All of the amounts shown are estimates, except for the SEC registration fee.

Securities and Exchange Commission registration fee
 
$
313.25 
 
Accounting fees and expenses
 
$
8,5000.00
 
Legal fees and expenses
 
$
18,000.00
 
TOTAL
 
$
26,813.25
 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under our Bylaws, we may indemnify an officer or Director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. The Company may advance expenses incurred in defending a proceeding. To the extent that the officer or Director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or Director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to Directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following list sets forth information regarding all unregistered securities sold by us since January 1, 20112 through the date of the prospectus that is a part of this registration statement (the "Prospectus").

On April 26, 2014, the Company approved an issuance of 100,865,016 shares to its President, CEO and sole board member George J. Powell, III, in connection with his employment agreement.

On September 22, 2014, the Company issued 400,000 shares of its common stock in consideration for $10,000 in cash.

On September 23, 2014, the Company issued 390,000 shares of its common stock in consideration for $10,000 in cash.

On March 6, 2015, the Company issued 1,000,000 shares of its common stock in consideration for $10,000 in cash.

On March 10, 2015, the Company issued 2,610,000 shares of its common stock in consideration for $25,000 in cash.

On March 31, 2015, the Company issued 400,000 shares of its common stock in consideration for $10,000 in cash.

During the 1 st Quarter 2015, the Company issued a total of 6,904,760 shares of common stock in connection with the conversion of $50,000 of convertible notes payable to various third party investors.

 
32

 
On April 2, 2015, the Company entered into a subscription agreement with a 3 rd party investor to purchase 100,000,000 shares of the company’s common stock for an aggregate purchase price of $1,000,000 in cash and in accordance with the following investment schedule: $250,000 on or about April 1, 2015, $250,000 on or about July 1, 2015, $250,000 on or about October 1, 2015, and $250,000 on or about January 1, 2016. The agreement further allows for the investor to purchase an additional 100,000,000 shares for an additional $1,000,000 in cash at the investor’s sole discretion and in accordance with the following investment schedule: $500,000 on or about July 1, 2016 and $500,000 on or about October 1, 2016. In the event the investor misses any of the aforementioned investment payments in accordance with the funding schedules, the investor will not be allowed to purchase any additional shares at the price of $.01 per share. However, the investor may elect to accelerate the purchase the investment shares ahead of the proposed schedule at his sole discretion.

To date, the investor has been issued 25,000,000 shares in consideration for his first $250,000 investment on April 2, 2015 and 25,000,000 shares in consideration for his second $250,000 investment on June 19, 2015.

On May 15, 2015, the Circuit Court of the Twelfth Judicial Circuit in and for Sarasota County, Florida (the “Court") entered an Order Granting Approval of Settlement Agreement and Stipulation (the "Order") in the matter titled JPM Capital Advisors, LLC ("JPM") v. J.D Hutt Corporation. The Order and the Stipulation for Settlement of Claims, dated May 13, 2013, between the Company and JPM (the "Stipulation"), provides for the full and final settlement of JPM’s $530,000 claim against the Company in connection with past due amounts in connection with consulting fees and a Convertible Promissory Note owed to JPM (the "Claim").

Pursuant to the terms of the Order and Stipulation, the Company is required to initially issue and deliver to JPM, in one or more tranches as necessary, shares of Common Stock sufficient to satisfy the Claim at a fifty percent (50%) discount to market and based on the market price during the preceding twenty (20) days and free of restrictive legend pursuant to Section 3(a)(10) of the Securities Act (the “Settlement shares”). Further, the Company issued to JPM on May 18, 2015 Five Million (5,000,000) shares of Common Stock free of restrictive legend pursuant to Section 3(a)(10) of the Securities Act as a settlement fee.

On May 22, 2015, the Company issued to its CEO, George J. Powell, III, 1000 shares of Series A Preferred Stock as Mr. Powell did nor receive any of his compensation due to him under his employment agreement dated April 26, 2014.

During the 2 nd Quarter 2015, the Company issued a total of 5,755,680 shares of common stock in connection with the conversion of $103,500 of convertible notes payable to various 3 rd party investors.

During the 2 nd Quarter 2015, the Company issued a total of 28,610,000 shares of common stock in consideration for $285,000 in cash from various 3 rd party investors.

ITEM 16.  EXHIBITS

Exhibit Number
 
Description of Exhibits
   
         
3.1
 
Articles and Restated By-Laws
 
Filed herewith
5.1
 
Form of Attorney’s Opinion and Consent
 
Filed herewith
23.1
 
Consent of Independent Auditor
 
Filed herewith


ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

1)
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

 
a)
Include any prospectus required by Section 10(a)(3) of the Securities Act;
 
 
 
33

 

 
 
b)
Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and,

 
c)
Include any additional or changed material information on the plan of distribution.

2)
That, for the purpose of determining any liability under the Securities Act, treat each post-effective amendment as a new registration statement relating to the securities offered herein, and to treat the offering of such securities at that time to be the initial bona fide offering thereof.

In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officer, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officer, or controlling person sin connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.

For determining any liability under the Securities Act, we shall treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by us under Rule 424 (b) (1), or (4), or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.

For determining any liability under the Securities Act, we shall treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that the offering of the securities at that time as the initial bona fide offering of those securities.
 
 
 
 
 
34

 

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Laguna Niguel state of California, on August 4, 2015.


CODE GEEN APPAREL CORP.


By: /s/ George J. Powell, III
George J. Powell, III
Sole Director, Chief Executive Officer, Interim Chief Financial Officer, and Secretary



In accordance with the requirements of the Securities Act of 1933, this Registration Statement on Form S-1 was signed by the following person in the capacities and on the date so indicated.

Signature
 
 
/s/ George J. Powell, III     
 
Title
 
Sole Director, Chief Executive Officer,
Interim Chief Financial Officer, and Secretary
Date
 
August 4, 2015
 
 

 
 
35

 


Exhibit 3.1
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 
 
 

 
 
Article 3. SHARES   of the Corporation’s Articles of Incorporation (as amended) is hereby amended and restated as follows, which shall not have any effect on the Corporation's previously designated series of preferred stock:

Article 3.       SHARES

Effective as of the effective date set forth under “ Effective date and time of filing ” on this Certificate of Amendment to Articles of Incorporation (or in the absence of such date, on the date such Amendment to the Articles of Incorporation is filed with the Secretary of State of Nevada) (the “ Effective Time ”), the Corporation shall have One Billion Ten Million (1,010,000,000) shares of capital stock authorized. The Corporation is authorized to issue two (2) classes of shares, designated “ Common Stock ” and “ Preferred Stock. ” The total number of shares of Common Stock authorized to be issued is One Billion (1,000,000,000) shares, $0.001 par value per share. The total number of shares of Preferred Stock authorized to be issued is Ten Million (10,000,000) shares, $0.001 par value per share.

Shares of Preferred Stock of the Corporation may be issued from time to time in one or more series, each of which shall have distinctive designation or title as shall be determined by the Board of Directors of the Corporation (“ Board of Directors ”) prior to the issuance of any shares thereof. Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock designation.”


 
 
     
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 

 
 
SECTION 1.  DESIGNATION OF SERIES; RANK.   The shares of such series of Series A Preferred Stock shall be designated as the “ Series A Preferred Stock ” and the number of shares initially constituting such series shall be up to One Thousand (1,000) shares.

SECTION 2.  DIVIDENDS.   The Holders of the Series A Preferred Stock shall not be entitled to receive dividends paid on the Corporation’s common stock (“ Common Stock ”). “ Holder ” shall mean the person or entity in which the Series A Preferred Stock is registered on the books of the Corporation.

SECTION 3.  LIQUIDATION PREFERENCE.   The Holders of the Series A Preferred Stock shall not be entitled to any liquidation preference.

SECTION 4.  VOTING.

4.1   Voting Rights.   The Holders of the Series A Preferred Stock will have the voting rights as described in this Section 4 or as required by law.   For so long as any shares of the Series A Preferred Stock remain issued and outstanding, the Holders thereof, voting separately as a class, shall have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Corporation and upon any action taken by stockholders of the Corporation with or without a meeting) equal to fifty-one percent (51%) of the total vote.  For example, if there are 10,000 shares of the Corporation’s common stock issued and outstanding at the time of a shareholder vote, the Holders of the Series A Preferred Stock, voting separately as a class, will have the right to vote an aggregate of 10,400 shares, out of a total number of 20,400 shares voting.  For the sake of clarity and in an abundance of caution, the total voting shares outstanding at the time of any and all shareholder votes (i.e., the total shares eligible to vote on any and all shareholder matters) shall be deemed to include (a) the total Common Stock shares outstanding; (b) the voting rights applicable to any outstanding  shares of preferred stock, other than the Series A Preferred Stock, if any; and (c) the voting rights attributable to the Series A Preferred Stock, as described herein, whether such Series A Preferred Stock shares are voted or not.

4.2   Amendments to Articles of Incorporation and Bylaws .  So long as the Series A Preferred Stock is outstanding, the Corporation shall not, without the affirmative vote of the Holders of at least 66-2/3% of all outstanding shares of Series A Preferred Stock, voting separately as a class (i) amend, alter or repeal any provision of the Articles of Incorporation or the Bylaws of the Corporation so as to adversely affect the designations, preferences, limitations and relative rights of the Series A Preferred Stock, (ii) effect any reclassification of the Series A Preferred Stock, or (iii) designate any additional series of preferred stock, the designation of which adversely effects the rights, privileges, preferences or limitations of the Series A Preferred Stock set forth herein.
 
 
 
 
 

 
 
 

 
4.3   Amendment of Rights of Series A Preferred Stock . The Corporation shall not, without the affirmative vote of the Holders of at least 66-2/3% of all outstanding shares of the Series A Preferred Stock, amend, alter or repeal any provision of this Certificate of Determination, PROVIDED, HOWEVER, that the Corporation may, by any means authorized by law and without any vote of the Holders of shares of the Series A Preferred Stock, make technical, corrective, administrative or similar changes in this Certificate of Determination that do not, individually or in the aggregate, adversely affect the rights or preferences of the Holders of shares of the Series A Preferred Stock.

SECTION 5.  CONVERSION RIGHTS.   The shares of the Series A Preferred Stock shall have no conversion rights.

SECTION 6.  REDEMPTION RIGHTS.   Following the third (3 rd ) anniversary of the original issuance date of the Series A Preferred Stock to any Holder, the Corporation shall have the option in its sole discretion, with (a) the unanimous consent or approval of all members of the Board of Directors of the Corporation; (b) the approval of the Holders of a majority of the outstanding shares of Series A Preferred Stock; and (c) the approval of any interest or option holder(s) of such Series A Preferred Stock, to redeem any and all outstanding shares of Series A Preferred Stock, by paying the Holders of such Series A Preferred Stock a redemption price of $100.00 per share for such Series A Preferred Stock shares redeemed (the “ Redemption Amount ”, each a “ Redemption ”).

(a)
Effect of Redemption .  The payment by the Corporation to the Holder (at such Holder’s address of record) of the Redemption Amount in connection with a Redemption, which shall be effective three (3) business days after the date the Corporation mails the Redemption Amount to the Holder (the “ Redemption Date ” and a “ Redemption Delivery ”), shall fully discharge the Corporation from any and all further obligations under the Series A Preferred Stock and shall automatically, and without any required action by the Corporation or the Holder (including the requirement that the Holder provide the Corporation or the Corporation’s transfer agent the Series A Preferred Stock Certificates evidencing such Series A Preferred Stock), result in the cancellation, termination and invalidation of any outstanding Series A Preferred Stock and Series A Preferred Stock Certificates held by Holder or his, her or its assigns.

(b)
Further Actions Following Redemption .  The Corporation and/or the Corporation’s Transfer Agent shall be authorized to take whatever action necessary, if any, following the payment of the Redemption Amount, to reflect the cancellation of the Series A Preferred Stock subject to the Redemption, which shall not require the approval and/or consent of any Holder, and provided that by agreeing to the terms and conditions of this Certificate of Determination and the acceptance of the Series A Preferred Stock, each Holder hereby agrees to release the Corporation and the Corporation’s Transfer Agent from any and all liability whatsoever in connection with the cancellation of the Series A Preferred Stock following a valid Redemption, regardless of the return to the Corporation or the Transfer Agent of any certificates representing such Series A Preferred Stock, which as stated above, shall be automatically cancelled upon the payment of the Redemption Amount (a “ Redemption Cancellation ”).
 
 
 

 
 
 

 
 
(c) 
Further Redemption Assurances .  Notwithstanding the above, each Holder, by accepting such Series A Preferred Stock Certificates hereby covenants that it will, whenever and as reasonably requested by the Corporation and the Transfer Agent, at its sole cost and expense, do, execute, acknowledge and deliver any and all such other and further acts, deeds, assignments, transfers, conveyances, confirmations, powers of attorney and any instruments of further assurance, approvals and consents as the Corporation or the Transfer Agent may reasonably require in order to complete, insure and perfect a Redemption Cancellation, if such may be reasonably required by the Corporation and/or the Corporation’s Transfer Agent.

 
(d) 
Additional Redemption Procedures .  In the event that any Redemption Delivery is unsuccessful, such Redemption Amount shall be held by the Corporation in trust and such Redemption Amount shall be released to such Holder upon reasonable evidence to the Corporation or the Transfer Agent that such Holder is the legal owner of such Redemption Amount, provided that the Holder’s failure to accept such Redemption Amount and/or the Corporation’s inability to affect a Redemption Delivery shall in no event effect the validity of the Redemption Cancellation.  Furthermore, the Holder shall be due no interest on the Redemption Amount while being held by the Corporation in trust and any and all interest, if any, which shall accrue on such amount shall be the sole property of the Corporation.

SECTION 7.  NOTICES.   Any notice required hereby to be given to the Holders of shares of the Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each Holder of record at his, her or its address appearing on the books of the Corporation.

SECTION 8.  PROTECTIVE PROVISIONS.   Subject to the rights of series of Series A Preferred Stock which may from time to time come into existence, so long as any shares of Series A Preferred Stock are outstanding, this Corporation shall not without first obtaining the approval (by written consent, as provided by law) of the Holders of a majority of the then outstanding shares of Series A Preferred Stock, voting together as a class:

 
(a) 
Increase or decrease the total number of authorized shares of Series A Preferred Stock;

 
(b) 
Effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock;

(c) 
Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Preferred Stock; or

(d) 
Alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in this Certificate of Determination.
 
 
 

 
 
 

 
PROVIDED, HOWEVER , that the Corporation may, by any means authorized by law and without any vote of the Holders of shares of the Series A Preferred Stock , make technical, corrective, administrative or similar changes in this Certificate of Determination that do not, individually or in the aggregate, adversely affect the rights or preferences of the Holders of shares of the Series A Preferred Stock .
 
SECTION 9. NO OTHER RIGHTS OR PRIVILEGES.     Except as specifically set forth herein, the Holders of the Series A Preferred Stock shall have no other rights, privileges or preferences with respect to the Series A Preferred Stock.

SECTION 10. MISCELLANEOUS .

 
(a) 
The headings of the various sections and subsections of this Certificate of Determination are for convenience of reference only and shall not affect the interpretation of any of the provisions of this Certificate of Determination.

 
(b) 
Whenever possible, each provision of this Certificate of Determination shall be interpreted in a manner as to be effective and valid under applicable law and public policy.  If any provision set forth herein is held to be invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions of this Certificate of Determination. No provision herein set forth shall be deemed dependent upon any other provision unless so expressed herein. If a court of competent jurisdiction should determine that a provision of this Certificate of Determination would be valid or enforceable if a period of time were extended or shortened, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law.

 
(c) 
Except as may otherwise be required by law, the shares of the Series A Preferred Stock shall not have any powers, designations, preferences or other special rights, other than those specifically set forth in this Certificate of Determination.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
AMENDED AND RESTATED
BYLAWS
OF
CODE GREEN APPAREL CORPORATION
(a Nevada corporation)
 


ARTICLE 1.
DEFINITIONS

1.1          Definitions .  Unless the context clearly requires otherwise, in these Bylaws:

 
(a)
" Board " means the board of directors of the Company.

 
(b)
" Bylaws " means these bylaws as adopted by the Board and includes amendments subsequently adopted by the Board or by the Stockholders.

 
(c)
" Articles of Incorporation " means the Articles of Incorporation of Code Green Apparel Corporation, as filed with the Secretary of State of the State of Nevada and includes all amendments thereto and restatements thereof subsequently filed.

 
(d)
" Company " means Code Green Apparel Corporation, a Nevada corporation.

 
(e)
" Section " refers to sections of these Bylaws.

 
(f)
" Stockholder " means stockholders of record of the Company.

1.2          Offices .  The title of an office refers to the person or persons who at any given time perform the duties of that particular office for the Company.

ARTICLE 2.
OFFICES

2.1           Principal Office .  The Company may locate its principal office within or without the state of incorporation as the Board may determine.

2.2           Registered Office .  The registered office of the Company required by law to be maintained in the state of incorporation may be, but need not be, the same as the principal place of business of the Company.  The Board may change the address of the registered office from time to time.

2.3            Other Offices .  The Company may have offices at such other places, either within or without the state of incorporation, as the Board may designate or as the business of the Company may require from time to time.
 
 

 
1 / 17
Bylaws of
Code Green Apparel Corporation

 
ARTICLE 3.
MEETINGS OF STOCKHOLDERS

3.1            Annual Meetings .  The Stockholders of the Company shall hold their annual meetings for the purpose of electing directors and for the transaction of such other proper business as may come before such meetings at such time, date and place as the Board shall determine by resolution.

3.2            Special Meetings .  The Board, the Chairman of the Board, the President or a committee of the Board duly designated and whose powers and authority include the power to call meetings may call special meetings of the Stockholders of the Company at any time for any purpose or purposes.  Special meetings of the Stockholders of the Company may also be called by the holders of at least 30% of all shares entitled to vote at the proposed special meeting.

3.3            Place of Meetings .  The Stockholders shall hold all meetings at such places, within or without the State of Nevada, as the Board or a committee of the Board shall specify in the notice or waiver of notice for such meetings.

3.4            Notice of Meetings .  Except as otherwise required by law, the Board or a committee of the Board shall give notice of each meeting of Stockholders, whether annual or special, not less than 10 nor more than 50 days before the date of the meeting.  The Board or a committee of the Board shall deliver a notice to each Stockholder entitled to vote at such meeting by delivering a typewritten or printed notice thereof to him personally, or by depositing such notice in the United States mail, in a postage prepaid envelope, directed to him at his address as it appears on the records of the Company, or by transmitting a notice thereof to him at such address by telegraph, telecopy, cable or wireless.  If mailed, notice is given on the date deposited in the United States mail, postage prepaid, directed to the Stockholder at his address as it appears on the records of the Company.  An affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent of the Company that he has given notice shall constitute, in the absence of fraud, prima facie evidence of the facts stated therein.

Every notice of a meeting of the Stockholders shall state the place, date and hour of the meeting and, in the case of a special meeting, also shall state the purpose or purposes of the meeting.  Furthermore, if the Company will maintain the list at a place other than where the meeting will take place, every notice of a meeting of the Stockholders shall specify where the Company will maintain the list of Stockholders entitled to vote at the meeting.

3.5            Stockholder Notice .  Subject to the Articles of Incorporation, the Stockholders who intend to nominate persons to the Board of Directors or propose any other action at an annual meeting of Stockholders must timely notify the Secretary of the Company of such intent.  To be timely, a Stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Company not less than 50 days nor more than 90 days prior to the date of such meeting; provided, however, that in the event that less than 75 days' notice of the date of the meeting is given or made to Stockholders, notice by the Stockholder to be timely must be received not later than the close of business on the 15th day following the date on which such notice of the date of the annual meeting was mailed.  Such notice must be in writing and must include a (i) a brief description of the business desired to the brought before the annual meeting and the reasons for conducting such business at the meeting; (ii) the name and record address of the Stockholder proposing such business; (iii) the class, series and number of shares of capital stock of the Company which are beneficially owned by the Stockholder; and (iv) any material interest of the Stockholder in such business.  The Board of Directors reserves the right to refuse to submit any such proposal to stockholders at an annual meeting if, in its judgment, the information provided in the notice is inaccurate or incomplete.
 
 

 
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3.6            Waiver of Notice .  Whenever these Bylaws require written notice, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall constitute the equivalent of notice.  Attendance of a person at any meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.  No written waiver of notice need specify either the business to be transacted at, or the purpose or purposes of any regular or special meeting of the Stockholders, directors or members of a committee of the Board.

3.7            Adjournment of Meeting .  When the Stockholders adjourn a meeting to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.  At the adjourned meeting, the Stockholders may transact any business which they may have transacted at the original meeting.  If the adjournment is for more than 30 days or, if after the adjournment, the Board or a committee of the Board fixes a new record date for the adjourned meeting, the Board or a committee of the Board shall give notice of the adjourned meeting to each Stockholder of record entitled to vote at the meeting.

3.8            Quorum .  Except as otherwise required by law, the holders of a majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes at any meeting of the Stockholders.  In the absence of a quorum at any meeting or any adjournment thereof, the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, or, in the absence therefrom of all the Stockholders, any officer entitled to preside at, or to act as secretary of, such meeting may adjourn such meeting to another place, date or time.
If the chairman of the meeting gives notice of any adjourned special meeting of Stockholders to all Stockholders entitled to vote thereat, stating that the minimum percentage of stockholders for a quorum as provided by Nevada law shall constitute a quorum, then, except as otherwise required by law, that percentage at such adjourned meeting shall constitute a quorum and a majority of the votes cast at such meeting shall determine all matters.

3.9            Organization .  Such person as the Board may have designated or, in the absence of such a person, the highest ranking officer of the Company who is present shall call to order any meeting of the Stockholders, determine the presence of a quorum, and act as chairman of the meeting.  In the absence of the Secretary or an Assistant Secretary of the Company, the chairman shall appoint someone to act as the secretary of the meeting.

3.10           Conduct of Business .  The chairman of any meeting of Stockholders shall determine the order of business and the procedure at the meeting, including such regulations of the manner of voting and the conduct of discussion as he deems in order.
 
 
 

 
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3.11           List of Stockholders .  At least 10 days before every meeting of Stockholders, the Secretary shall prepare a list of the Stockholders entitled to vote at the meeting or any adjournment thereof, arranged in alphabetical order, showing the address of each Stockholder and the number of shares registered in the name of each Stockholder.  The Company shall make the list available for examination by any Stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting will take place or at the place designated in the notice of the meeting.

The Secretary shall produce and keep the list at the time and place of the meeting during the entire duration of the meeting, and any Stockholder who is present may inspect the list at the meeting.  The list shall constitute presumptive proof of the identity of the Stockholders entitled to vote at the meeting and the number of shares each Stockholder holds.

A determination of Stockholders entitled to vote at any meeting of Stockholders pursuant to this Section shall apply to any adjournment thereof.

3.12            Fixing of Record Date .  For the purpose of determining Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or Stockholders entitled to receive payment of any dividend, or in order to make a determination of Stockholders for any other proper purpose, the Board or a committee of the Board may fix in advance a date as the record date for any such determination of Stockholders.  However, the Board shall not fix such date, in any case, more than 60 days nor less than 10 days prior to the date of the particular action.

If the Board or a committee of the Board does not fix a record date for the determination of Stockholders entitled to notice of or to vote at a meeting of Stockholders, the record date shall be at the close of business on the day next preceding the day on which notice is given or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held or the date on which the Board adopts the resolution declaring a dividend.

3.13            Voting of Shares .  Each Stockholder shall have one vote for every share of stock having voting rights registered in his name on the record date for the meeting.  The Company shall not have the right to vote treasury stock of the Company, nor shall another corporation have the right to vote its stock of the Company if the Company holds, directly or indirectly, a majority of the shares entitled to vote in the election of directors of such other corporation.  Persons holding stock of the Company in a fiduciary capacity shall have the right to vote such stock.  Persons who have pledged their stock of the Company shall have the right to vote such stock unless in the transfer on the books of the Company the pledgor expressly empowered the pledgee to vote such stock.  In that event, only the pledgee, or his proxy, may represent such stock and vote thereon.

A plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote shall determine all elections and, except when the law or Articles of Incorporation require otherwise, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote shall determine all other matters.
 
 
 

 
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Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class.

The Stockholders may vote by voice vote on all matters.  Upon demand by a Stockholder entitled to vote, or his proxy, the Stockholders shall vote by ballot.  In that event, each ballot shall state the name of the Stockholder or proxy voting, the number of shares voted and such other information as the Company may require under the procedure established for the meeting.

3.14            Inspectors .  At any meeting in which the Stockholders vote by ballot, the chairman may appoint one or more inspectors.  Each inspector shall take and sign an oath to execute the duties of inspector at such meeting faithfully, with strict impartiality, and according to the best of his ability.  The inspectors shall ascertain the number of shares outstanding and the voting power of each; determine the shares represented at a meeting and the validity of proxies and ballots; count all votes and ballots; determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots.  The certification required herein shall take the form of a subscribed, written report prepared by the inspectors and delivered to the Secretary of the Company.  An inspector need not be a Stockholder of the Company, and any officer of the Company may be an inspector on any question other than a vote for or against a proposal in which he has a material interest.

3.15            Proxies .  A Stockholder may exercise any voting rights in person or by his proxy appointed by an instrument in writing, which he or his authorized attorney-in-fact has subscribed and which the proxy has delivered to the Secretary of the meeting pursuant to the manner prescribed by law.

A proxy is not valid after the expiration of 13 months after the date of its execution, unless the person executing it specifies thereon the length of time for which it is to continue in force (which length may exceed 12 months) or limits its use to a particular meeting.  Each proxy is irrevocable if it expressly states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.

The attendance at any meeting of a Stockholder who previously has given a proxy shall not have the effect of revoking the same unless he notifies the Secretary in writing prior to the voting of the proxy.

3.16            Action by Consent .  Any action required to be taken at any annual or special meeting of stockholders of the Company or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Company by delivery to its registered office, its principal place of business, or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded.  Delivery made to the Company's registered office shall be by hand or by certified or registered mail, return receipt requested.

Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 50 days of the earliest dated consent delivered in the manner required by this section to the Company, written consents signed by a sufficient number of holders to take action are delivered to the Company by delivery to its registered office, its principal place of business or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded.  Delivery made to the Company's registered office shall be by hand or by certified or registered mail, return receipt requested.
 
 
 

 
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Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE 4.
BOARD OF DIRECTORS

4.1            General Powers .  The Board shall manage the property, business and affairs of the Company.

4.2            Number .  The number of directors who shall constitute the Board shall equal not less than 1 nor more than 5, as the Board or majority stockholders may determine by resolution from time to time.

4.3            Election of Directors and Term of Office .  The Stockholders of the Company shall elect the directors at the annual or adjourned annual meeting (except as otherwise provided herein for the filling of vacancies).  Each director shall hold office until his death, resignation, retirement, removal, or disqualification, or until his successor shall have been elected and qualified.

4.4            Resignations . Any director of the Company may resign at any time by giving written notice to the Board or to the Secretary of the Company.  Any resignation shall take effect upon receipt or at the time specified in the notice.  Unless the notice specifies otherwise, the effectiveness of the resignation shall not depend upon its acceptance.

4.5            Removal . Stockholders holding 2/3 of the outstanding shares entitled to vote at an election of directors may remove any director or the entire Board of Directors at any time, with or without cause.

4.6            Vacancies . Any vacancy on the Board, whether because of death, resignation, disqualification, an increase in the number of directors, or any other cause may be filled by a majority of the remaining directors, a sole remaining director, or the majority stockholders.  Any director elected to fill a vacancy shall hold office until his death, resignation, retirement, removal, or disqualification, or until his successor shall have been elected and qualified.
 
 
 
 

 
 
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4.7            Chairman of the Board .  At the initial and annual meeting of the Board, the directors may elect from their number a Chairman of the Board of Directors.  The Chairman shall preside at all meetings of the Board and shall perform such other duties as the Board may direct.  The Board also may elect a Vice Chairman and other officers of the Board, with such powers and duties as the Board may designate from time to time.

4.8            Compensation . The Board may compensate directors for their services and may provide for the payment of all expenses the directors incur by attending meetings of the Board or otherwise.

ARTICLE 5.
MEETINGS OF DIRECTORS

5.1            Regular Meetings .  The Board may hold regular meetings at such places, dates and times as the Board shall establish by resolution.  If any day fixed for a meeting falls on a legal holiday, the Board shall hold the meeting at the same place and time on the next succeeding business day.  The Board need not give notice of regular meetings.

5.2            Place of Meetings .  The Board may hold any of its meetings in or out of the State of Nevada, at such places as the Board may designate, at such places as the notice or waiver of notice of any such meeting may designate, or at such places as the persons calling the meeting may designate.

5.3            Meetings by Telecommunications .  The Board or any committee of the Board may hold meetings by means of conference telephone or similar telecommunications equipment that enable all persons participating in the meeting to hear each other.  Such participation shall constitute presence in person at such meeting.

5.4            Special Meetings .  The Chairman of the Board, the President, or one-half of the directors then in office may call a special meeting of the Board.  The person or persons authorized to call special meetings of the Board may fix any place, either in or out of the State of Nevada as the place for the meeting.

5.5            Notice of Special Meetings . The person or persons calling a special meeting of the Board shall give written notice to each director of the time, place, date and purpose of the meeting of not less than three business days if by mail and not less than 24 hours if by telegraph or in person before the date of the meeting.  If mailed, notice is given on the date deposited in the United States mail, postage prepaid, to such director.  A director may waive notice of any special meeting, and any meeting shall constitute a legal meeting without notice if all the directors are present or if those not present sign either before or after the meeting a written waiver of notice, a consent to such meeting, or an approval of the minutes of the meeting.  A notice or waiver of notice need not specify the purposes of the meeting or the business which the Board will transact at the meeting.

5.6            Waiver by Presence .  Except when expressly for the purpose of objecting to the legality of a meeting, a director's presence at a meeting shall constitute a waiver of notice of such meeting.
 
 
 

 
 
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5.7            Quorum .  A majority of the directors then in office shall constitute a quorum for all purposes at any meeting of the Board.  In the absence of a quorum, a majority of directors present at any meeting may adjourn the meeting to another place, date or time without further notice.  No proxies shall be given by directors to any person for purposes of voting or establishing a quorum at a directors’ meetings.

5.8            Conduct of Business .  The Board shall transact business in such order and manner as the Board may determine. Except as the law requires otherwise, the Board shall determine all matters by the vote of a majority of the directors present at a meeting at which a quorum is present.  The directors shall act as a Board, and the individual directors shall have no power as such.

5.9            Action by Consent .  The Board committee may take any required or permitted action without a meeting if all members of the Board or committee consent thereto in writing and file such consent with the minutes of the proceedings of the Board or committee.

ARTICLE 6.
COMMITTEES

6.1            Committees of the Board .  The Board may designate, by a vote of a majority of the directors then in office, committees of the Board.  The committees shall serve at the pleasure of the Board and shall possess such lawfully delegable powers and duties as the Board may confer.

6.2            Selection of Committee Members .  The Board shall elect by a vote of a majority of the directors then in office a director or directors to serve as the member or members of a committee.  By the same vote, the Board may designate other directors as alternate members who may replace any absent or disqualified member at any meeting of a committee.  In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or they constitute a quorum, may appoint by unanimous vote another member of the Board to act at the meeting in the place of the absent or disqualified member.

6.3            Conduct of Business .  Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as the law or these Bylaws require otherwise.  Each committee shall make adequate provision for notice of all meetings to members.  A majority of the members of the committee shall constitute a quorum, unless the committee consists of one or two members.  In that event, one member shall constitute a quorum.  A majority vote of the members present shall determine all matters.  A committee may take action without a meeting if all the members of the committee consent in writing and file the consent or consents with the minutes of the proceedings of the committee.

6.4            Authority .  Any committee, to the extent the Board provides, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the affixation of the Company's seal to all instruments which may require or permit it.  However, no committee shall have any power or authority with regard to amending the Articles of Incorporation, adopting an agreement of merger or consolidation, recommending to the Stockholders the sale, lease or exchange of all or substantially all of the Company's property and assets, recommending to the Stockholders a dissolution of the Company or a revocation of a dissolution of the Company, or amending these Bylaws of the Company.  Unless a resolution of the Board expressly provides, no committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger.
 
 
 

 
 
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6.5            Minutes . Each committee shall keep regular minutes of its proceedings and report the same to the Board when required.

ARTICLE 7.
OFFICERS

7.1            Officers of the Company .  The officers of the Company shall consist of a President, a Secretary, a Treasurer and such Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other officers as the Board may designate and elect from time to time.  The same person may hold at the same time any two or more offices.

7.2            Election and Term . The Board shall elect the officers of the Company.  Each officer shall hold office until his death, resignation, retirement, removal or disqualification, or until his successor shall have been elected and qualified.

7.3            Compensation of Officers .  The Board shall fix the compensation of all officers of the Company.  No officer shall serve the Company in any other capacity and receive compensation, unless the Board authorizes the additional compensation.

7.4            Removal of Officers and Agents .  The Board may remove any officer or agent it has elected or appointed at any time, with or without cause.

7.5            Resignation of Officers and Agents .  Any officer or agent the Board has elected or appointed may resign at any time by giving written notice to the Board, the Chairman of the Board, the President, or the Secretary of the Company.  Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified.  Unless otherwise specified in the notice, the Board need not accept the resignation to make it effective.

7.6            Bond .  The Board may require by resolution any officer, agent, or employee of the Company to give bond to the Company, with sufficient sureties conditioned on the faithful performance of the duties of his respective office or agency. The Board also may require by resolution any officer, agent or employee to comply with such other conditions as the Board may require from time to time.

7.7            President .  The President shall supervise and direct all of the business and affairs of the Company.  When present, he shall sign (with or without the Secretary, an Assistant Secretary, or any other officer or agent of the Company which the Board has authorized) deeds, mortgages, bonds, contracts or other instruments which the Board has authorized an officer or agent of the Company to execute.  However, the President shall not sign any instrument which the law, these Bylaws, or the Board expressly require some other officer or agent of the Company to sign and execute.  In general, the President shall perform all duties incident to the office of President and such other duties as the Board may prescribe from time to time.
 
 
 

 
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7.8            Vice Presidents .  In the absence of the President or in the event of his death, inability or refusal to act, the Vice Presidents in the order of their length of service as Vice Presidents, unless the Board determines otherwise, shall perform the duties of the President.  When acting as the President, a Vice President shall have all the powers and restrictions of the Presidency.  A Vice President shall perform such other duties as the President or the Board may assign to him from time to time.

7.9            Secretary .  The Secretary shall (a) keep the minutes of the meetings of the Stockholders and of the Board in one or more books for that purpose, (b) give all notices which these Bylaws or the law requires, (c) serve as custodian of the records and seal of the Company, (d) affix the seal of the corporation to all documents which the Board has authorized execution on behalf of the Company under seal, (e) maintain a register of the address of each Stockholder of the Company, (f) sign, with the President, a Vice President, or any other officer or agent of the Company which the Board has authorized, certificates for shares of the Company, (g) have charge of the stock transfer books of the Company, and (h) perform all duties which the President or the Board may assign to him from time to time.

7.10            Assistant Secretaries .  In the absence of the Secretary or in the event of his death, inability or refusal to act, the Assistant Secretaries in the order of their length of service as Assistant Secretary, unless the Board determines otherwise, shall perform the duties of the Secretary.  When acting as the Secretary, an Assistant Secretary shall have the powers and restrictions of the Secretary.  An Assistant Secretary shall perform such other duties as the President, Secretary or Board may assign from time to time.

7.11            Treasurer . The Treasurer shall (a) have responsibility for all funds and securities of the Company, (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever, (c) deposit all moneys in the name of the Company in depositories which the Board selects, and (d) perform all of the duties which the President or the Board may assign to him from time to time.

7.12            Assistant Treasurers .  In the absence of the Treasurer or in the event of his death, inability or refusal to act, the Assistant Treasurers in the order of their length of service as Assistant Treasurer, unless the Board determines otherwise, shall perform the duties of the Treasurer.  When acting as the Treasurer, an Assistant Treasurer shall have the powers and restrictions of the Treasurer.  An Assistant Treasurer shall perform such other duties as the Treasurer, the President, or the Board may assign to him from time to time.

7.13            Delegation of Authority . Notwithstanding any provision of these Bylaws to the contrary, the Board may delegate the powers or duties of any officer to any other officer or agent.

7.14            Action with Respect to Securities of Other Corporations .  Unless the Board directs otherwise, the President shall have the power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which the Company holds securities.  Furthermore, unless the Board directs otherwise, the President shall exercise any and all rights and powers which the Company possesses by reason of its ownership of securities in another corporation.
 
 
 

 
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7.15            Vacancies .  The Board may fill any vacancy in any office because of death, resignation, removal, disqualification or any other cause in the manner which these Bylaws prescribe for the regular appointment to such office.

ARTICLE 8.
CONTRACTS, LOANS, DRAFTS,
DEPOSITS AND ACCOUNTS

8.1            Contracts .  The Board may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the Company.  The Board may make such authorization general or special.

8.2            Loans .  Unless the Board has authorized such action, no officer or agent of the Company shall contract for a loan on behalf of the Company or issue any evidence of indebtedness in the Company's name.

8.3            Drafts .  The President, any Vice President, the Treasurer, any Assistant Treasurer, and such other persons as the Board shall determine shall issue all checks, drafts and other orders for the payment of money, notes and other evidences of indebtedness issued in the name of or payable by the Company.

8.4            Deposits .  The Treasurer shall deposit all funds of the Company not otherwise employed in such banks, trust companies, or other depositories as the Board may select or as any officer, assistant, agent or attorney of the Company to whom the Board has delegated such power may select.  For the purpose of deposit and collection for the account of the Company, the President or the Treasurer (or any other officer, assistant, agent or attorney of the Company whom the Board has authorized) may endorse, assign and deliver checks, drafts and other orders for the payment of money payable to the order of the Company.

8.5            General and Special Bank Accounts .  The Board may authorize the opening and keeping of general and special bank accounts with such banks, trust companies, or other depositories as the Board may select or as any officer, assistant, agent or attorney of the Company to whom the Board has delegated such power may select.  The Board may make such special rules and regulations with respect to such bank accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

ARTICLE 9.
CERTIFICATES FOR SHARES AND THEIR TRANSFER

9.1            Certificates for Shares .  Every owner of stock of the Company shall have the right to receive a certificate or certificates, certifying to the number and class of shares of the stock of the Company which he owns.  The Board shall determine the form of the certificates for the shares of stock of the Company.  The Secretary, transfer agent, or registrar of the Company shall number the certificates representing shares of the stock of the Company in the order in which the Company issues them.  The President or any Vice President and the Secretary or any Assistant Secretary shall sign the certificates in the name of the Company.  Any or all certificates may contain facsimile signatures.  In case any officer, transfer agent, or registrar who has signed a certificate, or whose facsimile signature appears on a certificate, ceases to serve as such officer, transfer agent, or registrar before the Company issues the certificate, the Company may issue the certificate with the same effect as though the person who signed such certificate, or whose facsimile signature appears on the certificate, was such officer, transfer agent, or registrar at the date of issue.  The Secretary, transfer agent, or registrar of the Company shall keep a record in the stock transfer books of the Company of the names of the persons, firms or corporations owning the stock represented by the certificates, the number and class of shares represented by the certificates and the dates thereof and, in the case of cancellation, the dates of cancellation.  The Secretary, transfer agent, or registrar of the Company shall cancel every certificate surrendered to the Company for exchange or transfer.  Except in the case of a lost, destroyed, stolen or mutilated certificate, the Secretary, transfer agent, or registrar of the Company shall not issue a new certificate in exchange for an existing certificate until he has canceled the existing certificate.
 
 
 

 
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9.2            Transfer of Shares .  A holder of record of shares of the Company's stock, or his attorney-in-fact authorized by power of attorney duly executed and filed with the Secretary, transfer agent or registrar of the Company, may transfer his shares only on the stock transfer books of the Company.  Such person shall furnish to the Secretary, transfer agent, or registrar of the Company proper evidence of his authority to make the transfer and shall properly endorse and surrender for cancellation his existing certificate or certificates for such shares.  Whenever a holder of record of shares of the Company's stock makes a transfer of shares for collateral security, the Secretary, transfer agent, or registrar of the Company shall state such fact in the entry of transfer if the transferor and the transferee request.

9.3            Lost Certificates .  The Board may direct the Secretary, transfer agent, or registrar of the Company to issue a new certificate to any holder of record of shares of the Company's stock claiming that he has lost such certificate, or that someone has stolen, destroyed or mutilated such certificate, upon the receipt of an affidavit from such holder to such fact.  When authorizing the issue of a new certificate, the Board, in its discretion may require as a condition precedent to the issuance that the owner of such certificate give the Company a bond of indemnity in such form and amount as the Board may direct.

9.4            Regulations .  The Board may make such rules and regulations, not inconsistent with these Bylaws, as it deems expedient concerning the issue, transfer and registration of certificates for shares of the stock of the corporation.  The Board may appoint or authorize any officer or officers to appoint one or more transfer agents, or one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.

9.5            Holder of Record .  The Company may treat as absolute owners of shares the person in whose name the shares stand of record as if that person had full competency, capacity and authority to exercise all rights of ownership, despite any knowledge or notice to the contrary or any description indicating a representative, pledge or other fiduciary relation, or any reference to any other instrument or to the rights of any other person appearing upon its record or upon the share certificate.  However, the Company may treat any person furnishing proof of his appointment as a fiduciary as if he were the holder of record of the shares.
 
 
 
 

 
 
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9.6            Treasury Shares .  Treasury shares of the Company shall consist of shares which the Company has issued and thereafter acquired but not canceled.  Treasury shares shall not carry voting or dividend rights.

ARTICLE 10.
INDEMNIFICATION

10.1
Definitions .  In this Article:

(a)            " Indemnitee " means (i) any present or former Director, advisory director or officer of the Company, (ii) any person who while serving in any of the capacities referred to in clause (i) hereof served at the Company's request as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and (iii) any person nominated or designated by (or pursuant to authority granted by) the Board of Directors or any committee thereof to serve in any of the capacities referred to in clauses (i) or (ii) hereof.

(b)           " Official Capacity " means (i) when used with respect to a Director, the office of Director of the Company, and (ii) when used with respect to a person other than a Director, the elective or appointive office of the Company held by such person or the employment or agency relationship undertaken by such person on behalf of the Company, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise.

(c)           " Proceeding " means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding.

10.2            Indemnification .  The Company shall indemnify every Indemnitee against all judgments, penalties (including excise and similar taxes), fines, amounts paid in settlement and reasonable expenses actually incurred by the Indemnitee in connection with any Proceeding in which he was, is or is threatened to be named defendant or respondent, or in which he was or is a witness without being named a defendant or respondent, by reason, in whole or in part, of his serving or having served, or having been nominated or designated to serve, in any of the capacities referred to in Section 10.1, if it is determined in accordance with Section 10.4 that the Indemnitee (a) conducted himself in good faith, (b) reasonably believed, in the case of conduct in his Official Capacity, that his conduct was in the Company's best interests and, in all other cases, that his conduct was at least not opposed to the Company's best interests, and (c) in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful; provided, however, that in the event that an Indemnitee is found liable to the Company or is found liable on the basis that personal benefit was improperly received by the Indemnitee the indemnification (i) is limited to reasonable expenses actually incurred by the Indemnitee in connection with the Proceeding and (ii) shall not be made in respect of any Proceeding in which the Indemnitee shall have been found liable for willful or intentional misconduct in the performance of his duty to the Company.  Except as provided in the immediately preceding proviso to the first sentence of this Section 10.2, no indemnification shall be made under this Section 10.2 in respect of any Proceeding in which such Indemnitee shall have been (a) found liable on the basis that personal benefit was improperly received by him, whether or not the benefit resulted from an action taken in the Indemnitee's Official Capacity, or (b) found liable to the Company.  The termination of any Proceeding by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, is not of itself determinative that the Indemnitee did not meet the requirements set forth in clauses (a), (b) or (c) in the first sentence of this Section 10.2.  An Indemnitee shall be deemed to have been found liable in respect of any claim, issue or matter only after the Indemnitee shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom.  Reasonable expenses shall, include, without limitation, all court costs and all fees and disbursements of attorneys for the Indemnitee.  The indemnification provided herein shall be applicable whether or not negligence or gross negligence of the Indemnitee is alleged or proven.
 
 
 
 

 
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10.3            Successful Defense .  Without limitation of Section 10.2 and in addition to the indemnification provided for in Section 10.2, the Company shall indemnify every Indemnitee against reasonable expenses incurred by such person in connection with any Proceeding in which he is a witness or a named defendant or respondent because he served in any of the capacities referred to in Section 10.1, if such person has been wholly successful, on the merits or otherwise, in defense of the Proceeding.

10.4            Determinations .  Any indemnification under Section 10.2 (unless ordered by a court of competent jurisdiction) shall be made by the Company only upon a determination that indemnification of the Indemnitee is proper in the circumstances because he has met the applicable standard of conduct.  Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of Directors who, at the time of such vote, are not named defendants or respondents in the Proceeding; (b) if such a quorum cannot be obtained, then by a majority vote of a committee of the Board of Directors, duly designated to act in the matter by a majority vote of all Directors (in which designated Directors who are named defendants or respondents in the Proceeding may participate), such committee to consist solely of two (2) or more Directors who, at the time of the committee vote, are not named defendants or respondents in the Proceeding; (c) by special legal counsel selected by the Board of Directors or a committee thereof by vote as set forth in clauses (a) or (b) of this Section 10.4 or, if the requisite quorum of all of the Directors cannot be obtained therefor and such committee cannot be established, by a majority vote of all of the Directors (in which Directors who are named defendants or respondents in the Proceeding may participate); or (d) by the shareholders in a vote that excludes the shares held by Directors that are named defendants or respondents in the Proceeding.  Determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, determination as to reasonableness of expenses must be made in the manner specified in clause (c) of the preceding sentence for the selection of special legal counsel.  In the event a determination is made under this Section 10.4 that the Indemnitee has met the applicable standard of conduct as to some matters but not as to others, amounts to be indemnified may be reasonably prorated.
 
 
 
 
 
 
 
 
 
 

 
 
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10.5            Advancement of Expenses .  Reasonable expenses (including court costs and attorneys' fees) incurred by an Indemnitee who was or is a witness or was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the Company at reasonable intervals in advance of the final disposition of such Proceeding, and without making any of the determinations specified in Section 10.4, after receipt by the Company of (a) a written affirmation by such Indemnitee of his good faith belief that he has met the standard of conduct necessary for indemnification by the Company under this Article and (b) a written undertaking by or on behalf of such Indemnitee to repay the amount paid or reimbursed by the Company if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Article.  Such written undertaking shall be an unlimited obligation of the Indemnitee but need not be secured and it may be accepted without reference to financial ability to make repayment.  Notwithstanding any other provision of this Article, the Company may pay or reimburse expenses incurred by an Indemnitee in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not named a defendant or respondent in the Proceeding.

10.6            Employee Benefit Plans .  For purposes of this Article, the Company shall be deemed to have requested an Indemnitee to serve an employee benefit plan whenever the performance by him of his duties to the Company also imposes duties on or otherwise involves services by him to the plan or participants or beneficiaries of the plan.  Excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall be deemed fines.  Action taken or omitted by an Indemnitee with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Company.

10.7           Other Indemnification and Insurance .  The indemnification provided by this Article shall (a) not be deemed exclusive of, or to preclude, any other rights to which those seeking indemnification may at any time be entitled under the Company's Articles of Incorporation, any law, agreement or vote of shareholders or disinterested Directors, or otherwise, or under any policy or policies of insurance purchased and maintained by the Company on behalf of any Indemnitee, both as to action in his Official Capacity and as to action in any other capacity, (b) continue as to a person who has ceased to be in the capacity by reason of which he was an Indemnitee with respect to matters arising during the period he was in such capacity, (c) inure to the benefit of the heirs, executors and administrators of such a person and (d) not be required if and to the extent that the person otherwise entitled to payment of such amounts hereunder has actually received payment therefor under any insurance policy, contract or otherwise.

10.8            Notice .  Any indemnification of or advance of expenses to an Indemnitee in accordance with this Article shall be reported in writing to the shareholders of the Company with or before the notice or waiver of notice of the next shareholders' meeting or with or before the next submission to shareholders of a consent to action without a meeting and, in any case, within the 12-month period immediately following the date of the indemnification or advance.
 
 
 
 
 

 
 
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10.9            Construction .  The indemnification provided by this Article shall be subject to all valid and applicable laws, including, without limitation, the Nevada General Corporation Law, and, in the event this Article or any of the provisions hereof or the indemnification contemplated hereby are found to be inconsistent with or contrary to any such valid laws, the latter shall be deemed to control and this Article shall be regarded as modified accordingly, and, as so modified, to continue in full force and effect.

10.10          Continuing Offer, Reliance, etc.   The provisions of this Article (a) are for the benefit of, and may be enforced by, each Indemnitee of the Company, the same as if set forth in their entirety in a written instrument duly executed and delivered by the Company and such Indemnitee and (b) constitute a continuing offer to all present and future Indemnitees.  The Company, by its adoption of these Bylaws, (a) acknowledges and agrees that each Indemnitee of the Company has relied upon and will continue to rely upon the provisions of this Article in becoming, and serving in any of the capacities referred to in Section 10.1 of this Article, (b) waives reliance upon, and all notices of acceptance of, such provisions by such Indemnitees and (c) acknowledges and agrees that no present or future Indemnitee shall be prejudiced in his right to enforce the provisions of this Article in accordance with its terms by any act or failure to act on the part of the Company.

10.11           Effect of Amendment .  No amendment, modification or repeal of this Article or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitees to be indemnified by the Company, nor the obligation of the Company to indemnify any such Indemnitees, under and in accordance with the provisions of the Article as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

ARTICLE 11.
TAKEOVER OFFERS

In the event the Company receives a takeover offer, the Board of Directors shall consider all relevant factors in evaluating such offer, including, but not limited to, the terms of the offer, and the potential economic and social impact of such offer on the Company's stockholders, employees, customers, creditors and community in which it operates.

ARTICLE 12.
NOTICES

12.1            General . Whenever these Bylaws require notice to any Stockholder, director, officer or agent, such notice does not mean personal notice.  A person may give effective notice under these Bylaws in every case by depositing a writing in a post office or letter box in a postpaid, sealed wrapper, or by dispatching a prepaid telegram addressed to such Stockholder, director, officer or agent at his address on the books of the Company.  Unless these Bylaws expressly provide to the contrary, the time when the person sends notice shall constitute the time of the giving of notice.
 
 
 
 

 
 
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12.2            Waiver of Notice . Whenever the law or these Bylaws require notice, the person entitled to said notice may waive such notice in writing, either before or after the time stated therein.

ARTICLE 13.
MISCELLANEOUS

13.1            Facsimile Signatures .  In addition to the use of facsimile signatures which these Bylaws specifically authorize, the Company may use such facsimile signatures of any officer or officers, agents or agent, of the Company as the Board or a committee of the Board may authorize.

13.2            Corporate Seal .  The Board may provide for a suitable seal containing the name of the Company, of which the Secretary shall be in charge.  The Treasurer, any Assistant Secretary, or any Assistant Treasurer may keep and use the seal or duplicates of the seal if and when the Board or a committee of the Board so directs.

13.3            Fiscal Year .  The Board shall have the authority to fix and change the fiscal year of the Company.

ARTICLE 14.
AMENDMENTS

14.1           Subject to the provisions of the Articles of Incorporation, the Stockholders or the Board may amend or repeal these Bylaws at any meeting.

The undersigned hereby certifies that the foregoing constitutes a true and correct copy of the Bylaws of the Company as adopted by the Directors on the 20 th day of May 20, 2015.



 
   
/s/ George J. Powell, III
By: George J. Powell, III
 
       
       
 

 
 
 

 

 
 
 
 
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Exhibit 5.1 Form of Attorney Opinion and Consent

The McGeary Law Firm, P.C.
1600 Airport Fwy., Suite 300
Bedford, Texas 76022
(817)-282-5885

_________________, 2015


Board of Directors
Code Green Apparel Corp.
Pico Rivera, California


Re: Code Green Apparel Corp. Registration Statement on Form S-1


Dear Board of Directors:

I have  been  requested  to issue my  opinion  as to the  legal  status  of 72,858,608 common shares of Code Green Apparel Corp. (the “Company”) which are being  registered on Form S-1 under the Securities Act of 1933 for sale by the Company.  This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act.

I  have,  in  connection  with  that  request,  examined  the  Articles of Incorporation as Amended  and  By-laws  of the Company, and a draft of the proposed registration statement on Form S-1, reviewed other documents and conducted other investigations as I have deemed necessary and appropriate to establish a basis for the opinions set forth herein.

In my  examination,  I have assumed the legal capacity of all natural persons, the genuineness  of all  signatures,  and  the  authenticity  of all documents  submitted  to me as originals or photo static copies.  I have also assumed that signing parties have had the power, corporate or other, to sign any and all documents that bear their signatures. As to any facts material to the opinions expressed herein which I have not independently established or verified, I have relied upon statements and representations of officers and other representatives of the Company and others.

Based upon my examination of relevant documents and other inquiries made by me it is my opinion that Code Green Apparel Corporation is duly organized, validly existing and in good standing as a corporation under the laws of the State of Nevada. The 72,858,608  common  shares  to be  offered  and  sold  by  existing  stockholders pursuant to the  Company's registration  statement  on Form  S-1  are duly and validly  authorized and issued,  fully-paid and non-assessable common shares of the Company. Those 72,858,608 shares will continue, after they have been offered, sold and delivered after sale, by their existing registered owners pursuant to the aforesaid registration statement, to be validly authorized and issued, fully paid, and non-assessable common shares of the corporation.

I will be available to respond to any questions the Staff of the Securities and Exchange Commission or the Company, may have about the opinions expressed herein or the facts upon which they are based.

CONSENT

I  hereby  consent  to  the  use  of  this  opinion  as an  exhibit  to the Registration Statement and in any amendment thereto.



Sincerely,


/s/                                 
Aaron D. McGeary
 
 
 
 

 


Exhibit 23.1
 
 

100 Crescent Court
Suite 700
Dallas TX 75201


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Code Green Apparel Corp.

We consent to the use in this Registration Statement on Form S-1 (Amendment No. 1) of our report dated July 17, 2015, relating to the financial statements of Code Green Apparel Corporation, appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under heading “Interest Of Named Experts And Counsel” in such Prospectus.

/s/ K. Brice Toussaint
K. Brice Toussaint

Dallas, Texas
July 29, 2015