NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2019

(Unaudited)

NOTE 1 – ORGANIZATION

Nature of Operations

Greenway Technologies, Inc., (“Greenway”, “GTI” or the “Company”) through its wholly owned subsidiary, Greenway Innovative Energy, Inc., is primarily engaged in the research, development and commercialization of a proprietary Gas-to-Liquids (GTL) syngas conversion system that can be economically scaled to meet individual natural gas field/resource requirements. The Company’s proprietary and patented technology has now been realized in Greenway’s recently completed first generation commercial-scale G-Reformer^TM unit, a unique and critical component to the Company’s overall GTL technology solution. Greenway’s objective is to become a material direct and licensed producer of renewable GTL synthesized diesel and jet fuels, with a near term focus on U.S. market opportunities.

Greenway was organized on March 13, 2002, under the laws of the State of Texas as Dynalyst Manufacturing Corporation. On August 18, 2009, in connection with a merger with Universal Media Corporation, a privately held Nevada company, the Company changed its name to Universal Media Corporation (“Universal Media”). The Company changed its name to UMED Holdings, Inc. on March 23, 2011, and to Greenway Technologies, Inc. on June 23, 2017.

Greenway’s GTL Technology

In August 2012, Greenway Technologies acquired 100% of Greenway Innovative Energy, Inc. (“GIE”) which owns patents and trade secrets for a proprietary technology to convert natural gas into synthesis gas (“syngas”). Based on its breakthrough process called Fractional Thermal Oxidation™ (“FTO”), the Company believes that the G-Reformer, combined with conventional Fischer-Tropsch (“FT”) processes, offers an economical and scalable method to converting natural gas to liquid fuel. On February 15, 2013, GIE filed for its first patent. On November 4, 2013, GIE filed for a second patent covering other unique aspects of the design. Subsequently, the Company received Patent Nos. 8,574,501 B1 and 8,795,597 B2 covering the GTL conversion technology for the purpose of converting natural gas to clean synthetic fuels. The Company has identified several other areas in its technology and has and is filing for multiple additional patents.

On June 26, 2017, Greenway and research partner, The University of Texas at Arlington (“UTA”), announced that they had successfully demonstrated Greenway’s GTL technology at the Company sponsored Conrad Greer Laboratory at UTA, proving the viability of the science behind the technology.

On March 6, 2018, the Company announced the completion of its first commercial scale G-Reformer. The G-Reformer is the critical component of the Company’s innovative Greer-Wright Gas-to-Liquids system. A team consisting of individuals from the Company, UTA and the Company’s contracted fabricator worked together to test and calibrate the newly built G-Reformer unit. The testing substantiated the units’ synthesis gas generation capability and demonstrated additional proficiencies within certain prior prescribed testing metrics.

The Company believes that its proprietary G-Reformer is a major innovation in gas reforming and GTL technology in general. Initial tests have demonstrated that the Company’s solution is superior to legacy technologies which are costly, have a larger footprint and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas, all markets the Company seeks to service. The proprietary technology based around the G-Reformer is unique in that it also allows for transportable GTL plants with a much smaller footprint when compared to legacy large-scale technologies. The Company believes its technologies and processes will allow for GTL plants to be built with substantially lower up-front and ongoing costs resulting in more profitable results for O&G operators. Greenway is now working to commercialize both its G-Reformer and its GTL solutions and is in discussions with a number of oil and gas companies, smaller oil and gas operators and other interested parties to license and obtain joint venture or other forms of capital funding to build its first complete gas-to-liquid plant.

Mining Interest

In December 2010, UMED acquired the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona for 5,066,000 shares of restricted Common A stock. Early indications, from samples taken and processed, provided reason to believe that the potential recovery value of the metals located on the 1,440 acres is significant, but only actual mining and processing will determine the ultimate value which may be realized from this property holding. The Company is currently exploring strategic options to partner or sell its interest in this acreage, while it focuses on its emerging GTL technology sales and marketing efforts.

NOTE 2 - BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, these unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the results of the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018

Principles of Consolidation

The accompanying consolidated financial statements include the financial statements of Greenway and its wholly owned subsidiaries. All significant inter-company accounts and transactions were eliminated in consolidation.

The accompanying unaudited consolidated financial statements include the accounts of the following entities:

Greenway’s investments in unconsolidated entities in which a significant, but less than controlling, interest is held and in variable interest entities (“VIE”) in which the Company is not deemed to be the primary beneficiary are accounted for by the equity method.

Going Concern Uncertainties

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying consolidated financial statements, as of September 30, 2019, we have an accumulated deficit of $29,435,460. For the nine-months ended September 30, 2019, we had no revenue, generated a net loss of $2,616,976 and used cash of $1,107,644 for operating activities. The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to continue to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern for the next twelve months.

The accompanying unaudited consolidated financial statements do not include any adjustment to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies applied in the presentation of the unaudited consolidated financial statements are as follows:

Property and Equipment

Property and equipment is recorded at cost. Major additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold, are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale or salvage value are recorded as a gain or loss on sale of equipment. Depreciation is computed using the straight-line method over the estimated useful life of the assets.

Impairment of Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with Accounting Standards Codification, ASC Topic 360, Property, Plant and Equipment. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.

Revenue Recognition

The FASB issued ASC 606 as guidance on the recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The company adopted the guidance on January 1, 2018 and applied the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’ deficit upon adoption of the new standard did not have a material effect upon the consolidated financial statements.

The Company has not, to date, generated any revenues.

Equity Method Investment

On August 29, 2019, the Company entered into a Material Definitive Agreement to form OPM Green Energy, LLC. The Company contributed a limited license to use its proprietary and patented GTL technology for no actual cost basis in exchange for 45% interest in OPMGE. The Company evaluated its interest in OPMGE and determined that the Company does not control OPMGE. The Company accounts for its interest in OPMGE via the equity method of accounting. At September 30, 2019, OPMGE had no income statement activity. As noted in Note 9, the Company maintains a related party receivable from OPMGE related to capital expenditures. The Company expects to fully recover the receivable once OPMGE operations ramp up in 2020.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three-months or less to be cash equivalents. There were no cash equivalents at September 30, 2019, or December 31, 2018. Unless otherwise indicated, all references to “dollars” in this Form 10-Q are to U.S. dollars.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

The Company has adopted the provisions of FASB ASC 740-10-05 Accounting for Uncertainty in Income Taxes. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Open tax years, subject to IRS examination include 2014 – 2017.

Net Loss Per Share, basic and diluted

Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares issued and outstanding for the period. Shares issuable upon the exercise of warrants (11,499,226), shares convertible for debt (2,083,333) and shares outstanding but not yet issued (9,476,870) have been excluded as a common stock equivalent in the diluted loss per share because their effect would be anti-dilutive.

Derivative Instruments

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

See Note 6 below for the related discussion regarding the Company’s current convertible notes payable and warrants.

Fair Value of Financial Instruments

Effective January 1, 2008, fair value measurements are determined by the Company’s adoption of authoritative guidance issued by the FASB, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities, as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three levels as follows:

Level 1 – Valuation based on unadjusted quoted market prices in active markets for identical assets or liabilities.

Level 2 – Valuation based on, observable inputs (other than level one prices), quoted market prices for similar assets such as at the measurement date; quoted prices in the market that are not active; or other inputs that are observable, either directly or indirectly.

Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at September 30, 2019 and December 31, 2018:

The following assets and liabilities are measured on the balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation of the beginning and ending balances of the liabilities:

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest income and expense in the accompanying consolidated financial statements.

The change in the notes payable derivative liabilities at fair value for the nine-month period ended September 30, 2019, is as follows:

Stock Based Compensation

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

At September 30, 2019, the Company did not have any outstanding stock options.

Concentration and Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash with high credit quality institutions. At times, such deposits may be in excess of the FDIC insurance limit. There are no uninsured balances as of September 30, 2019.

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company generated a net credit in research and development expenses of $87,357, after adjusting for an over-accrual of $120,000 in anticipated contract research expenses from the University of Texas at Arlington (this was originally treated prospectively as a change in estimate), and incurred expenses of $75,000 for the three months ended September 30, 2019 and 2018, respectively, and for the nine months ended September 30, 2019 and 2018, $441,320 and $616,283, respectively.

Issuance of Common Stock

The issuance of common stock for other than cash is recorded by the Company at market values based on the closing price of the stock on the date of any such grant.

Impact of New Accounting Standards

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Depreciation expense was $0 for the nine months ended September 30, 2019 and 2018.

(1) On September 14, 2018, the Company entered into a loan agreement with a private company, Mabert LLC, acting as Agent for various private lenders (the “Loan Agreement”) for the purpose of funding working capital and general corporate expenses up to $1,500,000, subsequently amended to a maximum of $5,000,000. Mabert LLC is a Texas limited liability company, owned by Director and stockholder, Kevin Jones, and his wife Christine Early (for each and all references herein forward, “Mabert”). Under the Loan Agreement, Mabert has loaned gross loan proceeds of $1,863,998 (excluding debt discount of $140,038) through September 30, 2019, and through which Mr. Jones, and his wife provided $528,868 through December 31, 2018. The loan is fully secured, Mabert having filed a UCC-1 with the State of Texas. The Loan Agreement, Security Agreement and UCC-1 filing are incorporated by reference as Exhibits 10.48–10.50. For each Promissory Note loan made under the Loan Agreement, as a cost to each note, the Company agreed to issue warrants and/or stock for Class A common stock valued at $0.01 per share on an initial one-time basis at 3.67:1 and subsequently on a 2:1 basis for each dollar borrowed. For the period ended September 30, 2019, the Company issued an additional 1,170,260 shares of Class A common stock, as compared to the Company having issued 1,624,404 warrants as of December 31, 2018. Of these warrants, 766,667 were converted to common stock in January 2019, with 857,737 warrants remaining outstanding related to the 2018 issuance. Pursuant to ACS 470, the fair value attributable to a discount on the debt is $140,038 for the period ended September 30, 2019, and $90,619 for the year ended 2018; this amount is amortized to interest expense on a straight-line basis over the terms of the loans.

On April 30, 2019, the Company executed a Promissory Note under the Loan Agreement with a shareholder for $25,000, at 18% interest per annum. As a cost of the note, the Company issued 50,000 shares of its Class A common stock at a market price of $0.05 per share for a total debt discount of $2,500, subject to standard Rule 144 restrictions.

On April 30, 2019, the Company executed a Promissory Note under the Loan Agreement with a financial institution for $225,000, at 18% interest per annum, advanced and guaranteed by Kevin Jones, a Director and shareholder. As a cost of the note, the Company issued 450,000 shares of its Class A common stock at a market price of $0.05 per share for a total debt discount of $22,500, subject to standard Rule 144 restrictions.

On May 31, 2019, the Company executed a Promissory Note under the Loan Agreement with a shareholder for $300,000, at 18% interest per annum. As a cost of the note, the Company issued 600,000 shares of its Class A common stock at a market price of $0.05 per share for a total debt discount of $30,000, subject to standard Rule 144 restrictions.

On June 10, 2019, the Company executed a Promissory Note under the Loan Agreement with a shareholder for $50,000, at 12.5% interest per annum. As a cost of the note, the Company issued 100,000 shares of its Class A common stock at a market price of $0.055 per share for a total debt discount of $5,666, subject to standard Rule 144 restrictions.

On August 4, 2019, the Company executed a Promissory Note under the Loan Agreement with a shareholder for $30,000, at 10% interest per annum. As a cost of the note, the Company issued 60,000 shares of its Class A common stock at a market price of $0.093 per share for a total debt discount of $5,578, subject to standard Rule 144 restrictions.

On September 30, 2019, the Company executed a Promissory Note under the Loan Agreement with Kevin Jones, a Director and shareholder for $505,130, at 18% interest per annum. As a cost of the note, the Company issued 1,010,260 shares of its Class A common stock at a market price of $0.076 per share for a total debt discount of $77,054, subject to standard Rule 144 restrictions.

(2) On December 20, 2018, the Company issued a convertible promissory note for $166,667, payable by December 20, 2020. This loan is in default for breach of payment. By its terms, the cash interest payable increased to 18% per annum on December 20, 2018 and continues at such rate until the default is cured or is paid at term. See Note 6 below.

(3) On January 16, 2018, the Company issued a convertible promissory note for $150,000, prior shown net a $6,000 principal payment at $144,000. This loan was in default for breach of payment during the period ending June 30, 2019. By its terms, the interest payable increased to 18% per annum on April 1, 2018. On July 24, 2019, the holder noticed the Company of its intent to convert and the note was converted to 3,906,610 shares of Class A common stock. See: Note 6 below.

NOTE 6 – 2018 CONVERTIBLE PROMISSORY NOTES

The Company issued a $166,667 convertible promissory note bearing interest at 4.50% per annum to an accredited investor, payable in equal installments of $6,000 commencing February 1, 2018 plus interest at rate of 4% per annum on December 20, 2018 and $80,000 plus accrued interest on December 20, 2019. The holder has the right to convert the note into common stock of the Company at a conversion price of $0.08 per share for each one dollar of cash payment which may be due, (which would be 1,083,333 shares for the $86,667 payment and 1,000,000 shares for the $80,000 payment). As of December 20, 2018, a material event of default occurred for breach of payment. The holder has the right but has not noticed the Company of its intent to convert. See Note 5 above.

The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note did not result in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. As of December 31, 2017, the discount related to the beneficial conversion feature on the note was valued at $27,083 based on the $0.013 difference between the market price of $0.093 and the conversion price of $0.08 times the 2,083,325 conversion shares. Due to the default, the full discount was expensed in 2018.

The Company issued a $150,000 convertible promissory note January 16, 2018 bearing interest at 4.50% per annum to an accredited investor, the Greer Family Trust (“Trust”), payable in equal installments of $6,000 plus accrued interest until the principal and accrued interest are paid in full. The note provided the Trust a right to convert the note into common stock of the Company at a conversion price of equal to seventy percent (70%) of the prior twenty (20) days average closing market price of the Company’s common stock. As of April 1, 2018, only one $6,000 payment had been made, creating a material event of default. At which time, the default interest rate became 18%. The Company accrued such default interest since the default.

On July 25, 2019, a Trustee for the Trust sent notice to the Company of their election to convert all unpaid principal and accrued interest of $183,220 due under the note. The conversion price as calculated according to the note’s terms is $0.0469 per share, resulting in a conversion of the Note and accrued interest into 3,906,610 shares of the Company’s common stock. Instructions to the transfer agent for the issuance of such shares shall be issued as soon as practicable by the Company.

The Company evaluated the terms of the original convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note resulted in a derivative. The discount related to the beneficial conversion feature on the note was valued at $58,494 based on the difference between the fair value of the 1,578,947 convertible shares at the valuation date and the $150,000 note value. The discount related to the beneficial conversion feature was being amortized over the term of the debt. The discount related to the beneficial conversion feature on the note was valued using the Black-Scholes Model. During the year ended December 31, 2018, the remaining discount was fully amortized. The derivative liability for this note at July 25, 2019 and December 31, 2018 was $168,375 and $103,476 respectively, calculated as described in Note 3 under the Black-Scholes Model parameters shown below.

Due to the conversion of the convertible note on July 25, 2019, the Company wrote off the prior total $103,476 derivative liability as of the conversion date, recording a $81,975 and $64,899 loss in the fair value of a derivative for the three and nine months ended September 2019, respectively. See Note 5.

NOTE 8 – CAPITAL STRUCTURE

The Company is currently authorized to issue 300,000,000 shares of Class A common stock with a par value of $.0001 per share and 20,000,000 shares of Class B stock with a par value of $.0001 per share. Each common stock share has one voting right and the right to dividends, if and when declared by the Board of Directors.

The Company has filed under Rule 14a-101 a PRE14A Schedule proxy and notice for a Special Shareholders Meeting to be held December 11, 2019 in Arlington, Texas. There are several proposals requesting shareholder vote. Proposal 1 seeks shareholder approval of an amendment to the Company’s certificate of formation (“Certificate”) to increase the number of authorized shares of Class A Shares of the Company, par value $0.0001 per share (“Class A Shares”), from 300,000,000 to 500,000,000, (such amendment, “Amendment No. 1”);

Proposal 2 seeks the approval of an amendment to the Certificate to change the name of the Company’s Class A Shares from “Class A” to “common stock” (“Common Stock”). The Common Stock would have the same par value $0.0001 per share, designations, powers, privileges, rights, qualifications, limitations, and restrictions as the current Class A Shares (such amendment, “Amendment No. 2”);

Proposal 3 seeks the approval of an amendment to the Certificate to eliminate Class B Shares of the Company, par value $0.0001 per share (the “Class B Shares”), as a class of capital stock of the Company (such amendment, “Amendment No. 3”). See Note 11 – Subsequent Events.

Class A Common Stock

At September 30, 2019, there were 296,815,547 total shares of class A common stock outstanding, including 9,126,870 shares not issued in the period reported.

During the three-months ended September 30, 2019, the Company: issued a net new 8,826,870 shares of restricted class A common stock, including 3,906,610 shares for a loan conversion at $0.047 per share (see Note 5 herein above), and to: three (3) individuals at a total 1,170,260 shares for $88,298 in loan origination fees; one (1) individual in a private placement of 1,250,000 shares at $0.08 per share and 2,500,000 shares valued at $200,000 to two (2) business entities related to legal settlements.

During the three-months ended June 30, 2019, the Company: issued 1,100,000 shares of restricted class A common stock to two (2) individuals as consideration for loan origination fees. The Company also updated and corrected its stockholder records generating a net decrease in common stock outstanding of 581,905 shares.

During the three-months ended March 31, 2019, the Company: issued 766,667 shares of restricted class A common stock to three (3) individuals holding warrants for 366,667, 200,000 and 200,000 shares respectively, priced at $0.01/converted share.

At December 31, 2018, there were 286,703,915 shares of Class A commons stock outstanding.

Class B Stock

At September 30, 2019 and December 31, 2018 respectively, there were no shares of class B stock issued and outstanding.

Stock options, warrants and other rights

At September 30, 2019 and December 31, 2018, the Company has not adopted any employee stock option plans.

As of September 30, 2019, the Company had total warrants issued and outstanding of 11,499,226, with current expiration periods of less than one to fifteen years.

On October 1, 2015, the Company issued 4,000,000 warrants for legal work. The warrants are exercisable at $0.20 per share for a period of five years from the date of issue. The Company valued the warrants as of December 31, 2015, at $386,549 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 189%, expected conversion term of 4.75 years and risk-free interest rate of 1.75%. These warrants were not exercised before September 30, 2019 and have expired by their terms on October 1, 2019.

On February 3, 2017, the Company issued 6,000,000 warrants (4,000,000 at $0.35 for two years and 2,000,000 at $0.45 for three years) as part of a separation agreement with a co-founder and former president. The Company valued the warrants as of March 31, 2017, at $639,284 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 455%, expected conversion term of two and three years and risk-free interest rate of 1.75%. Of these, 4,000,000 warrants were not exercised and have expired by their terms.

On November 30, 2017, the Company issued 1,000,000 warrants at $0.30 for three years as part of a settlement of a shareholder dispute with MTG Holdings, Inc. The Company valued the warrants as of December 31, 2017, at $95,846 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 116%, expected conversion term of two and three years and risk-free interest rate of 1.37%. These warrants were extinguished in the comprehensive settlement agreement reached in March 2019. See Note 10 – Legal.

On January 8, 2018, the Company issued 4,000,000 warrants at a purchase price of $0.15 per share to a director, Kent Harer, in exchange for his return of 3,000,000 shares of Class A common stock he had been prior granted. The 3,000,000 shares issued were valued and recorded for $490,000 during 2017. The value of $490,000 remained on the books as it reflects the event that occurred in 2017. The warrants shall be void and of no effect and all rights thereunder shall cease at 5:00 pm, Fort Worth, Texas time on January 8, 2021.

In conjunction with the Mabert LLC Loan Agreement described herein above, the Company issued a combined total of 1,624,404 warrants at a purchase price of $0.01 per share for fifteen (15) years in the year ending December 31, 2018. In the third quarter ending September 30, 2018, the Company issued 366,667 warrants. In the fourth quarter, the Company issued 1,257,737 warrants, including 1,057,737 warrants to Kevin Jones, a director, and his spouse for loans they each separately made totaling $428,868 and $100,000 respectively, and 200,000 warrants to a third-party lender. All such warrants, excluding Mr. Jones’ 857,737 remaining warrants were converted to common stock in January 2019.

There were 641,489 warrants issued to various unaccounted individuals prior to 2014 that are all believed to have fifteen-year expirations. The Company is attempting to determine the ownership for each of the prior warrant grants and will adjust its outstanding warrants accordingly at yearend 2019.

NOTE 9 - RELATED PARTY TRANSACTIONS

Kevin Jones, a director and greater than 5% shareholder, made net advances to the Company in the amount of $505,130 through the three months ending September 30, 2019, converted to a renewable one-year Promissory Note, at 18% interest-only for the first year. See Note 5.

After approval during a properly called special meeting of the board of directors, on September 14, 2018 Mabert, LLC, a Texas Limited Liability Company owned by a director and stockholder, Kevin Jones and his wife Christine Early, as an Agent for various private lenders including themselves, entered into a loan agreement (“Loan Agreement”) for the purpose of funding working capital and general corporate expenses for the Company of up to $1,500,000, which was subsequently amended to provide up to $5,000,000. The Company bylaws provide no bar from transactions with Interested Directors, so long as the interested party does not vote on such transaction. Mr. Jones as an Interested Director did not vote on this transaction. Since the inception of the Loan Agreement through September 30, 2019, a total of $1,863,998 (n.i. debt discount of $140,038 as described in Note 5 – Term Notes Payable and Notes Payable Related Parties herein above) has been loaned to the Company by six shareholders, including Mr. Jones. See Note 5.

Through Mabert, Mr. Jones along with his wife and his company have loaned $1,258,998, and four other shareholders have loaned the balance. These loans are secured by the assets of the Company. A financing statement and UCC-1 have been filed according to Texas statutes. Should a default under the loan agreement occur, there could be a foreclosure or a bankruptcy proceeding filed by the Agent for these Shareholders. The actions of the Company in case of default can only be determined by the Shareholders. A foreclosure sale or distribution through bankruptcy could only result in the creditors receiving a pro rata payment based upon the terms of the loan agreement. Mabert did not nor will it receive compensation for its work as an agent for the lenders.

In the three months ending September 2019, the Company advanced $131,120 to OPM Green Energy LLC (“OPMGE”), an affiliate that, as reported on Form 8-K on August 29, 2019, Entry into a Material Definitive Agreement, the Company now owns a non-consolidating forty-five (45%) joint venture interest, for expenses related to operating the OPMGE GTL plant located in Wharton, Texas. The amount advanced was booked as a related party receivable by the Company and expects to fully recover the receivable from OPMGE as it ramps up its operations in 2020.

Through September, 2019, other shareholders have made loans to the Company in the amount of $416,667, including Wildcat Consulting $100,000 (since paid down to $50,000 through the period ending September 30, 2019), Tunstall Canyon Group $166,667 and the Greer Family Trust $150,000 (for which one $6,000 principal payment was made in March 2018, and converted to stock on July 25, 2019).

NOTE 10 – COMMITMENTS and CONTINGENCIES

Employment Agreements

In August 2012, the Company entered into an employment agreement with Ray Wright, president of Greenway Innovative Energy, Inc., now chairman of the board for a term of 5 years with compensation of $90,000 per year. In July 2014, the president’s employment agreement was amended to increase his annual pay to $180,000. By its terms, the employment agreement automatically renewed on August 12, 2019 for a successive one-year period.

Effective May 10, 2018, the Company entered into employment agreements with John Olynick, as President, and Ransom Jones, as Chief Financial Officer, respectively. The terms and conditions of their employment agreements were identical. John Olynick elected not to renew his employment agreement and resigned as President on July 19, 2019. Ransom Jones, as Chief Financial Officer, earns a salary of $120,000 per year. Mr. Jones also serves as the Company’s Secretary and Treasurer. During each year that Mr. Jones agreement is in effect, he is entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year. He is also entitled to certain additional stock grants based on the performance of the Company during the term of their employment. Both Mr. Olynick and Mr. Jones received a grant of common stock (the “Stock Grant”) at the start of their employment equal to 250,000 shares each of the Company’s Common Stock, par value $.0001 per share (the “Common Stock”), such shares vesting immediately. Mr. Jones is also entitled to participate in the Company’s benefit plans when such plans become available. The foregoing summary of the Mr. Jones employment agreements is qualified in its entirety by reference to the actual true and correct Employment Agreement, a copy of which is incorporated by reference as Exhibit 10.40.

Effective January 1, 2019, the Company entered into an employment agreement with Thomas Phillips, Vice President of Operations, reporting to the President of Greenway Innovative Energy, Inc., for a term of fifteen (15) months with compensation of $120,000 per year. Phillips is entitled to a no-cost grant of common stock on the effective date equal to 5,000,000 shares of the Company’s Rule 144 restricted Class A common stock, par value $.0001 per share, such shares to be issued at such time as the Company has the ability to issue such number of shares pursuant to approval by two-thirds of the Company’s shareholders at a duly call meeting of the shareholders, the next meeting scheduled for December 11, 2019. Mr. Phillips has elected to waive such share issuance for an indefinite period, or until such increase in the Company’s authorized shares allows for the issuance of such shares. Mr. Phillips is also entitled to participate in the Company’s benefit plans, when such become available. The foregoing summary of the Phillips’ Employment Agreement is qualified in its entirety by reference to the actual true and correct employment agreement, a copy of which is incorporated by reference as Exhibit 10.53.

In the August 2012 acquisition agreement with Greenway Innovative Energy, Inc. (“GIE”), the Company agreed to: (i) issue an additional 7,500,000 shares of restricted common stock when the first portable GTL unit is built and becomes operational, and, is capable of producing 2,000 barrels of diesel or jet fuel per day, and (ii) pay a 2% royalty on all gross production sales on each unit placed in production. In connection with a settlement agreement with the Greer Family Trust (‘Trust”), the successor owner of one of the two founders and prior owners of GIE on February 6, 2018, the Company exchanged Greer’s half of the 7,500,000 shares (3,750,000 shares) to be issued in the future, Greer’s half of the 2% royalty, a termination of Greer’s then current Employment Agreement and the Trust’s waiver of any future claims against the Company for any reason, for the issuance and delivery to the Trust of three million (3,000,000) restricted shares of the Company’s common stock, and a convertible Promissory Note for $150,000, the balance of which the Trust has notified the Company of its intention to convert. As a result, the remaining 3,750,000 shares are committed to be later issued under the original 2012 acquisition agreement at the point the technology has been deemed of commercial readiness to satisfy the terms of the acquisition agreement. A copy of the Settlement Agreement and Promissory Note is incorporated by reference as Exhibit 10.36.

Consulting Agreements

On July 10, 2017, the Company entered into a one-year consulting agreement with an individual, Ryan Turner, to provide business development services, including but not limited to enhanced digital marketing, assistance with shareholder communications and help in establishing industry relationships. Terms included monthly payments of $5,000 per month, plus approved expenses. After the first twelve-month initial term, the agreement is automatically renewable for successive twelve-month terms, unless otherwise terminated with written notice by the parties, and has been subsequently renewed until July 10, 2020.

On November 28, 2017, the Company entered into a three-year consulting agreement with Chisos Equity Consultants, LLC for public relations, consulting and corporate communications services. The initial payment was 1,800,000 shares of the Company’s restricted common stock. Additional payments upon the Company’s common stock reaching certain price points as follows:

Due to a breach of the Agreement by Chisos, on June 22, 2018, the Board of Directors of the Company voted to terminate the Agreement. Based on the termination, all warrants to purchase the Company’s common stock were cancelled. The Company is currently in litigation over such termination action. See “Legal” matters description below in this Note 10.

Leases

In October 2015, the Company entered into a two-year lease for approximately 1,800 square feet a base rate of $2,417 per month. The Company terminated the lease effective August 31, 2018 and has no further financial obligations under the lease.

Greenway rents approximately 600 square feet of office space at 1521 North Cooper St., Suite 205, Arlington, Texas 76011, at a rate of $957 per month, under a one-year lease agreement, renewable for successive one-year terms in the Company’s sole discretion.

Each September, the Company pays $11,600 in annual maintenance fees on its Arizona BLM mining leases, under one-year lease agreements, renewable for successive one-year terms in the Company’s sole discretion in addition. These leases provide for 10% royalties based on production, if any. There has been no production to date.

Legal Matters

The Company was named as a co-defendant in an action brought against the Company and Mamaki Tea, Inc., alleging, among other things, that the Company was named as a co-guarantor on an $850,000 foreclosed note. On April 22, 2016, Greenway Technologies filed suit under Cause No. DC-16-004718, in the 193rd District Court, Dallas County, Texas against Mamaki of Hawaii, Inc. (“Mamaki”), Hawaiian Beverages, Inc.(“HBI”), Curtis Borman and Lee Jenison for breach of a Stock Purchase Agreement dated October 29, 2015, wherein the Company sold its shares in Mamaki to HBI for $700,000 (along with the assumption of certain debt). The Company maintained its guaranty on the original loan as a component of the sale transaction. The Defendants failed to make payments of $150,000 each on November 30, 2015, December 28, 2015 and January 27, 2016. On January 13, 2017, the parties executed a Settlement and Mutual Release Agreement (Agreement). However, the Defendants again defaulted in their payment obligations under this new Agreement. Curtis Borman and Lee Jennison were co-guarantors of the obligations of Mamaki and HBI. To secure their guaranties, each of Curtis Borman and Lee Jennsion posted 1,241,500 and 1,000,000 shares, respectively, of the Company. Under the Agreement, the shares were valued at $.20. Due to the default under the Agreement, these shares were returned to the Company’s treasury shares. Curtis Borman subsequently filed for bankruptcy and the property was liquidated for $600,000, applied against the prior loan amount, leaving a remaining guaranteed loan payment balance of approximately $700,000, including accrued interest and legal fees. The parties entered into a Settlement Agreement providing 1,000,000 shares of Class A common stock subject to standard Rule 144 restrictions, and a three (3) year Promissory Note for $525,000 to settle all claims (recorded in Long Term Liabilities), with copies of the Settlement Agreement and Promissory Note filed by the Company on Form 8-K on October 1, 2019, and a copy of which is incorporated herein as Exhibit 10.54.

On April 9, 2018, the Company and Tonaquint, Inc. agreed to settle on Tonaquint’s exercise of a warrant option with a one-time issuance from Greenway Technologies of 1,600,000 shares of our common stock subject to a weekly leak out restriction equal to the greater of $10,000.00 and 8% of the weekly trading volume. Such issuance of stock was completed in connection with a legal opinion pursuant to Rule 144.

On September 7, 2018, Wildcat Consulting Group, LLC (“Wildcat”), a company controlled by a shareholder, Marshall Gleason, filed suit against the Company alleging claims arising from a Consulting Agreement between the Parties, seeking to recover monetary damages, interest, court costs, and attorney’s fees. On September 27, 2018, Wildcat filed a second suit against the Company alleging claims arising from a Promissory Note between the Parties, seeking to recover monetary damages, interest, court costs, and attorney’s fees. On February 13, 2019, the Parties attended mediation which resulted in settlement discussions which resulted in a Rule 11 Agreement settling both disputes. Pursuant to the Rule 11 Agreement, the Parties have agreed to abate this case until the earlier of a default of the performance of the Rule 11 Agreement or October 30, 2019. The Rule 11 Agreement causes and allows the Parties time to draft and sign a Compromise Settlement and Mutual Release Agreement (“Settlement Agreement”), to make payments due on or before October 15, 2019, and to allow for the transfer of stock to effectuate the terms of the Rule 11 Agreement. As of the date of this report, the Company is in compliance with the Rule 11 Agreement, and the Parties have exchanged drafts of the Settlement Agreement to be completed before the abatement period ends. The material terms of the Rule 11 Agreement are as follows:

The Rule 11 Agreement provided that if the Company timely performs through October 15, 2019, the Parties will file a Joint Motion for Dismissal and present Agreed Orders of Dismissal with prejudice for both lawsuits. A copy of the Rule 11 Agreement is incorporated by reference as Exhibit 10.52.

The Company has performed in all regards under the Rule 11 Agreement, including issuance of the 1,500,000 restricted shares, and is currently waiting for Mr. Gleason to sign the Settlement Agreement. The expense for such share issuance was accrued on the Company’s Balance Sheet for the period ending September 30, 2019 and increased by $45,000 based upon the actual value of the shares on the date of issuance. [See Note 11: Subsequent Events]

The parties’ respective counsels have mutually agreed to extend the original October 15, 2019 settlement date until at least the end of the year while the parties wait for Mr. Gleason’s signature. Provided Gleason does not sign the Settlement Agreement, which further provides for the Motion for Dismissal and Agreed Orders of Dismissal with prejudice for both lawsuits, Greenway is confident in its defenses and intends to once again vigorously defend its interests.

On March 13, 2019, Chisos Equity Consultants, LLC (“Chisos”), a company controlled by a dissident shareholder, Richard Halden, filed suit against the Company alleging claims arising from a consulting agreement between the parties, seeking to recover monetary damages, interest, court costs, and attorney’s fees. The Company answered the lawsuit and asserted a number of affirmative defenses. Over the last several months, the parties have been in negotiations to abate or dismiss the lawsuit and have effectively stayed the proceedings for the reporting period. Provided the parties cannot reach agreement to abate or dismiss the lawsuit, Greenway is confident in its defenses and intends to vigorously defend its interests.

On March 13, 2019, Richard Halden (“Halden”), a dissident shareholder in his capacity as an individual, filed suit against the Company alleging claims arising from a confidential severance and release agreement between the parties, seeking to recover monetary damages, interest, court costs, and attorney’s fees. The Company answered the lawsuit and asserted a number of affirmative defenses. Over the last several months, the parties have been in negotiations to abate or dismiss the lawsuit and have effectively stayed the proceedings for the reporting period. Provided the parties cannot reach agreement to abate or dismiss the lawsuit, Greenway is confident in its defenses and intends to vigorously defend its interests.

On March 26, 2019, the Company filed a verified petition for Declaratory Judgement, Ex Parte Application for a Temporary Restraining Order and Application for Injunctive Relief against the members of a dissident shareholders group (including Richard Halden) named the “Greenway Shareholders Committee” in Dallas County. A Temporary Restraining Order was issued by the court enjoining the Defendants (and their officers, agents, servants, employees and attorneys) and those persons in active concert or participation from; holding the special shareholders meeting on April 4, 2019 or calling such meeting to order; attending or participating in the Special Meeting; voting the shares of Plaintiff owned by any Defendant at the Special Meeting, either directly or by granting a proxy to allow a non-defendant to vote said shares; voting any shares of Plaintiff owned by non-defendants with or by proxy at the Special Meeting; and serving as chairman at the Special Meeting. On April 8, 2019, the court issued such Temporary Injunction against the dissident shareholders who received notice. The Injunction will continue until the trial date of December 10, 2019.