UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-K


(Mark One)


þ
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934




For the fiscal year ended June 30, 2011




or




£
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934




For the transition period from _______________ to _______________




Commission File Number:  000-53797




GREEN EARTH TECHNOLOGIES, INC.


(Exact name of registrant as specified in its charter)




Delaware

26-0755102(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)




10 Bank Street, Suite 680, White Plains, New York

10532(Address of Principal Executive Office)

(Zip Code)





(877) 438-4761


Registrant’s Telephone Number Including Area Code





Securities registered under Section 12(b) of the Exchange Act: None





Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par value





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £  No þ





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes £  No þ





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





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





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes  ̈  No  ̈





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




Large accelerated filer
o
Accelerated filer
oNon-accelerated filer
o
Smaller reporting company
þ(Do not check if a smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes £  No þ





The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of December 31, 2010, was approximately $27,434,000.





As of September 1, 2011, there were 151,440,378 shares outstanding of the registrant’s common stock.





DOCUMENTS INCORPORATED BY REFERENCE





Portions of the registrant’s proxy statement for its 2011 annual meeting of stockholders, to be filed no later than October 28, 2011, are incorporated by reference into Part III of this Annual Report on Form 10-K.










GREEN EARTH TECHNOLOGIES, INC.





Form 10-K Annual Report





TABLE OF CONTENTS





PagePART IItem 1.
Business
1Item 1A.
Risk Factors
11Item 1B.
Unresolved Staff Comments
20Item 2.
Properties
20Item 3.
Legal Proceedings
20Item 4.
(Removed and Reserved)
20PART IIItem 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity Securities
21Item 6.
Selected Financial Data
22Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
22Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
29Item 8.
Financial Statements and Supplementary Data
29Item 9.
Changes in and disagreements with Accountants on Accounting and Financial Disclosure
29Item 9A.
Controls and Procedures
29Item 9B.
Other Information
30PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
31Item 11.
Executive Compensation
31Item 12.
Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters
31Item 13.
Certain Relationships and Related Transactions, and Director Independence
31Item 14.
Principal Accounting Fees and Services
31PART IVItem 15.
Exhibits and Financial Statement Schedules
31Signatures
34








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FORWARD LOOKING STATEMENTS





The discussions set forth in this Annual Report for the year ended June 30, 2011 on Form 10-K (this “Annual Report”) contain statements concerning potential future events. These forward-looking statements are based upon assumptions by management, as of the date of this Annual Report, including assumptions about the risks and uncertainties we face. In addition, we may make forward-looking statements orally or in writings, including, but not limited to, in press releases, in our annual report to shareholders and in our other filings with the U.S. Securities and Exchange Commission (the “SEC”). Readers can identify these forward-looking statements by the use of such verbs as “expects,” “anticipates,” “believes” or similar verbs or conjugations of such verbs. If any of our assumptions prove incorrect or should unanticipated circumstances arise, our actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in Part I, Item 1A, “Risk Factors” of this Annual Report, as well as our other periodic reports on Forms 10-Q and 8-K that we file with the SEC from time to time. Investors are strongly encouraged to consider those factors when evaluating any forward-looking statements about our business operation or financial condition. We will not update any forward-looking statements in this Annual Report to reflect future events or developments. Investors should also be aware that while we, from time to time, do communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information. Investors should not assume that we agree with any report issued by any analyst or with any statements, projections, forecasts or opinions contained in any such report.





Unless otherwise indicated, all references to the “Company,” “we,” “us,” “our,” and “Green Earth” include reference to our subsidiary as well.





ii





PART I





ITEM 1.  BUSINESS.





OVERVIEW





We market, sell and distribute an array of branded, environmentally-friendly, bio-based performance and cleaning products to the automotive aftermarket, outdoor power equipment and marine and markets.  The “green” base of our performance products is comprised of animal fats and plant oils, while our cleaning and oil spill products use plant and vegetable oils.  This biodegradable green base replaces traditional petroleum and chemical derived bases typically used to make motor oils, cleaning solutions and other consumer products without compromising performance or value.  We believe our products deliver comparable or superior performance at competitive prices, thus giving consumers the ability to “do their part” in protecting the environment.





Our G-brand family of products includes G-OIL®, G-FUELTM, G-CLEANTM, G-GLASSTM and G-MARINETM.  These products are offered in a wide range of automotive, outdoor power equipment and marine categories, primarily performance and cleaning solutions.  Our products are produced for us under supply and requirements contracts with domestic manufacturers.  We sell the majority of our products through master distribution agreements with wholesalers and contractual arrangements with independent sales professionals. Our products are available at a number of national retail outlets and chain stores including Walmart, The Home Depot, Menards, ACE Hardware and Canadian Tire Corporation. We are actively pursuing relationships with other wholesalers and retailers to include additional major national consumer purchase locations in the household goods, automotive aftermarket, outdoor power equipment market, oil and gas market and marine market.





INDUSTRY BACKGROUND





The industry in which we compete is highly competitive. Our products are part of the automotive aftermarket, outdoor power equipment market and the marine market, which includes automobiles, lawn mowers, power washers, chain saws, leaf blowers, hedge trimmers and boats.





Automotive Aftermarket





The automotive aftermarket refers to the maintenance, repair, parts, accessories, chemicals and fluids for vehicles after their original sale.  The addressable market for our automotive products in the United States is comprised of more than 200 million licensed drivers, as reported  in the Automotive Aftermarket Industry Association Digital Fact Book & Lang Annual – 21st Edition (2012) (the “AAIA Fact Book”).  Sales of multigrade engine oils were over 900 million gallons in 2010, as reported in the Kline and Company study.  According to the AAIA Fact Book, the size of the U.S. automotive aftermarket products market was roughly $286 billion in 2010. These figures include retail sales through do-it-yourself (“DIY”) and do-it-for-me (“DIFM”) outlets. DIY refers to when consumers perform the maintenance and repair work needed on their vehicles.  DIFM refers to when consumers use professionals to perform the maintenance and repair work needed on their vehicles.





According to the Fast Lube / Auto Oil Change Service Industry Profile Excerpt from First Research, Inc., the U.S. automotive oil change and lubrication industry includes about 4,000 companies with combined annual revenues of $4 billion.  Large chain stores include Jiffy Lube, Pennzoil 10-Minute Oil Change, Valvoline Instant Oil Change and Texaco Xpress Lube.  Despite the presence of large chains, the industry is highly fragmented with the largest companies representing less than 40% of the market.  Major services are oil changes, installation of new oil filters, chassis lubrication and preventative maintenance. Typically, more than 70% of revenue is from oil changes.





Motor Oil





According to National Oil & Lube News 2010 Fast Lube Operators Survey (September 2010), the overall breakdown of motor oil sales is as follows:





●
Conventional/Synthetic Blend  =  72%


●
Full Synthetic  =  10%


●
High Mileage  =  8%


●
Diesel  =  8%




1





According to Lubes ’n’ Greases 2011 Lubricants Industry Fact Book, the top motor oil grades and  Top 5 Fast-Lube and Oil-Plus Chains within the U.S. aftermarket channels are as follows:





Top Motor Oil Grades





●
5W-30:           47% share


●
5W-20:           18% share


●
10W-30:         17% shares


●
10W-40:         6% share





Top 5 Fast Lube





●
Jiffy Lube  -  1,963outlets


●
Valvoline Instant Oil Change  -  872 outlets


●
Pennzoil 10-Minute Oil Change  -  750 outlets


●
Kwik Kar  -  390 outlets


●
Havoline/Texaco Xpress Lube  -  350 outlets





Top 5 Oil-Plus





●
Wal-Mart Tire & Lube Express  -  2,450 outlets


●
Bridgestone Retail Operations  -  2,149 outlets


●
Goodyear Tire & Service  -  1,834 outlets


●
Midas Auto Service Experts  -  1,491 outlets


●
TBC Retail Group  -  1,245 outlets





API Engine Oil Guide





The American Petroleum Institute (“API) service symbol “DONUT” is for gasoline engine oil categories (for cars, vans and light trucks with gasoline engines) designed for gasoline engine service that fall under the API’s “S” (Service) categories.  Introduced in 2004, SM oils are designed to provide improved oxidation resistance, which means less oil thickening, improved deposit protection, so that the engine will not form harmful deposits as quickly, better engine wear protection and better low-temperature performance over the life of the oil.  For automotive gasoline engines, the engine oil service category (SM) includes the performance properties of each earlier category.  For instance, if an automotive owner’s manual calls for API “SJ” or “SL” oil, then API “SM” oil will provide full protection.





Effective October 2010, API has adopted two new engine oil performance standards for vehicles with gasoline engines: ILSAC GF-5 and API SN. ILSAC GF-5 represents the latest performance standard set by the International Lubricant Standardization and Approval Committee (ILSAC), a joint effort of U.S. and Japanese automobile manufacturers. Most automobile manufacturers recommend oils that meet ILSAC GF-5. API SN is the most recent service category issued by API’s Lubricants Group. Oils meeting API SN and the new “Resource Conserving” designation must meet all ILSAC GF-5 performance requirements.




2





Cleaning Products





Automotive cleaning products enhance a car’s appearance, inside and outside, including tires, wheels, seats, carpet, dashboard and trim.  These products fall into four categories: washes, waxes and polishes, touch-up paints and body fillers and protectants.  Most washes are simply detergents designed specifically for washing vehicle exteriors.  These products are formulated to be gentle on clear-coat finishes; some are even formulated to need no water.  There are also washes designed to clean wheels and tires, and others to clean glass.  All of these products have grown in popularity as consumers have become more aware of the need to care for clear-coat finishes and other vehicle components properly.  Detergents are cleaning products that are used in various cleaning applications such as power washing and degreasing fluids.





Outdoor Power Equipment Market





The size of the United States market for outdoor power equipment products was roughly $15 billion in 2010 according to the Outdoor Power Equipment Institute.  In 2010, annual U.S. shipments of power lawn mowers were about 6,500,000 units, 77% of which were walk behind mowers and 23% of which were riding mowers.  Power mowers require 4-cycle engine oil.  The total “hand-held” gas powered units shipped in 2010 was over 10,500,000 units with trimmers representing 50% of the volume, followed by chain saws (20%), hand held blowers (17%) and back pack blowers (5%).  Majority of these units require 2-cycle engine oil and chain saws also require bar and chain oil.Hand- held products with 4-cycle engines are growing as percentage of total and require 4-cycle engine oil.





Marine Market





The size of the recreational marine market was roughly $30 billion in 2010, according to the National Marine Manufacturers Association (“NMMA”).  The recreational marine market includes retail expenditures on new and used boats, motors and engines, trailers, accessories and other associated costs. The NMMA conducts various surveys of pleasure boat industry trends and the most recent surveys indicate that 75 million adults in the United States participated in recreational boating in 2010, an increase of 14 percent compared to the prior year.  There are currently approximately 17 million boats owned in the United States, including outboard, inboard, sailboats, personal watercraft, and miscellaneous (i.e., canoes, kayaks, rowboats, etc.).  Most boats require NMMA certified marine engine oil.





Surface Washing Agents





Surface washing agents are products that clean and remove oil once it has solidified on surfaces or migrated to the shoreline or beaches.  Surface washing agents are primarily used on solid surfaces and objects though if they are non toxic, they can be used on plants and/or animals (including humans.) These products are also the final line of defense in the abatement of oil spills.  Surface washing agents are required to be approved by the Environmental Protection Agency (“EPA”).





OUR PRODUTS





Our product categories include performance products, principally lubricants that substitute for petroleum-based motor oils, cleaning products, such as car washes, glass cleaners, tire-care cleaning solutions and outdoor cleaning solutions and surface washing agents.





All of our products are designed to be environmentally-friendly and most of them meet the “Ultimate Biodegradable” ranking of ASTM. “Ultimate Biodegradable” is ASTM’s highest ranking for biodegradability, meaning the product degrades in 28 days to the required levels.  For the fiscal year ended June 30, 2011, 66% of our revenues were generated by our performance products and 34% of our revenues were generated by our cleaning products.




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Performance Products





Our performance products include motor oils, engine oils and other lubricants that are sold under the G-OIL® brand, currently available in a number of formulations:





●
SAE 5W-30 and 5W-20 motor oil for automobiles;


●
2-cycle engine oil for 2-cycle outdoor air-cooled engines typically found in “hand-held” gasoline powered outdoor maintenance equipment like hedge trimmers and leaf blowers;


●
4-cycle SAE 30 and SAE 10W-30 engine oil for 4-cycle air-cooled engines such as those found in lawn mowers; and


●
TC-3W 2-cycle marine engine oil for boat engines


●
Fuel Stabilizer to treat gasoline


●
Bar and chain oil for chain saws.




Our “green” bio-base, when mixed with additives according to our specifications, enables the dual advantage of low temperature operation and high temperature stability.  Our G-OIL® SAE 5W-30 and SAE 5W-20 motor oils is capable of operating at temperatures as low as minus 40 degrees Fahrenheit.  For example, in cold weather, our oil allows for easy, minimal-engine-wear starts, cold engine operation and smooth flow through the engine, yet at higher temperatures, our oil retains sufficient thickness to ensure proper engine lubrication.  These findings are based on third-party tests conducted in accordance with industry guidelines provided by independent industry standards organizations, each with their own complex criteria for certifications that take into account numerous factors.





In August 2011, our new formulations of our  G-OIL® SAE 5W-30  and SAE 5W-20 motor oils were granted the service symbol “Donut” by the American Petroleum Institute (API) for use in all types of gasoline engines, including those found in automobiles and other motor vehicles.  We plan to formulate other grades of motor oil such as SAE 10W-30 by the end of our current calendar year.  API is an American National Standards Institute (ANSI) accredited standards developing organization and maintains some 500 standards covering all segments of the oil and gas industry.  Both retailers and consumers rely on API quality marks and ratings when choosing motor oils.  The “Donut” is an API “Engine Quality Mark” indicating that G-OIL® adheres to industry technical specifications for SAE 5W-30 and SAE 5W-20 motor oils. Engine oil marketers may only use the “Donut” on their products if specific requirements are met based on performance requirements, test methods and limits which are cooperatively established by vehicle and engine manufacturers, technical societies such as the Society of Automotive Engineers (SAE) and ASTM International (“ASTM”), one of the largest voluntary standards development organizations in the world and a source for technical standards for materials, products, systems, and services and industry associations like the American Chemistry Council and API.





Our G-OIL® SAE 5W-30 and SAE 5W-20 motor oils have met all of the engine test criteria for the API SM rating and we are currently testing our oil for the API SN rating.  The SN rating is an industry-recognized rating that is API’s newest and highest possible rating for oils designed for gasoline-engine service.  In order to receive the SM or SN ratings, our products undergo a series of testing by authorized third-party laboratories and must meet or exceed performance benchmarks.  The SN rating distinguishes gasoline-engine oils that are designed to provide (i) improved oxidation resistance, which means less oil thickening, (ii) improved deposit protection, so that the engine will not form harmful deposits as quickly, (iii) better engine wear protection, and (iv) better low-temperature performance over the life of the oil.





Cleaning Products





Our cleaning products are sold under the G-CLEANTM, G-GLASSTM and G-MARINETMbrands.




4





G-CLEANTM includes car washes, glass cleaners, tire care solutions and all-purpose detergents currently available in a number of formulations:





●
Car Wash is a heavy duty hydrophobic(water repelling)solution that is designed to cause water to “bead up” and “roll off,” leaving no spots.  Car Wash is not a detergent, soap or petroleum solvent, but a blend of natural plant based products (including soy, corn, grain and potatoes) that are designed to be safe for vegetation and groundwater.





●
Wheel Cleaner and Brake Dust Shield is a two-step wheel cleaner and brake dust repellent solution.  Step one (Wheel Cleaner) is designed to remove tough dirt buildup, while step two (Brake Dust Shield) is designed to leave a shine and protective coating that repels brake dust.





●
Ultimate Tire Shine is designed to remove dirt and road grime while shining tires and protecting their surface.





●
Rain Repellent & Anti-Fog are hydrophobic glass treatments.  The products are designed to disperse nano-sized particles that penetrate glass surfaces to form a bond that repels rain, ice and snow on the outside and smoke, fog and other types of moisture on the inside for up to several months.





●
All Purpose Cleaner is a multipurpose-multi surface cleaner is designed to easily lift away dirt and debris as well as keeping surfaces cleaner longer by creating an invisible anti-static residue that reduces future dust and dirt buildup.





●
Concrete Cleaner & Degreaser, Siding & All Purpose Cleaner and Mold & Mildew Stain Remover are “heavy duty” cleaning solutions designed to be used in power washers.  They are available in concentrated dissolvable packages and collapsible bags.





●
Foam Blaster and Oxy Form Blaster is a highly concentrated “foam" all purpose cleaner which gets applied at high pressure and is designed to leave long lasting thick foam that sticks, extending the dwell time for better cleaning.





●
Grill & Surface Cleaner is designed to lift and remove baked on grease, dirt and food particles on outdoor grills and cooking surfaces while leaving a lasting shine that shields the surface for future cooking and easier cleaning the next time.





●
Interior Protectant is a cleaning solution designed to shield and shine interior surfaces while protecting automobiles dashboard and other rubber surfaces against UVA and UVB sun rays.





We also sell G-CLEANTMelectric and gasoline powered pressure washing equipment.  Our pressure washers typically include pack-in of our concentrated cleaners and 4-cycle engine oils.





G-GLASSTM is designed to be an easy-to-use, no-streak organic formula that clings to glass and penetrates its surface, dissolving and removing dirt and forming an invisible anti-static residue that reduces dust and dirt build-up.




5





Cleaning products sold under the G-MARINETM brand include boat washes, hull and bottom cleaners, bilge cleaners, and glass cleaners currently available in a number of formulations:





●
Boat Wash is a heavy duty highly concentrated cleaner that is designed to penetrate dirt and oils, breaking them into little particles that constantly repel each other. This prevents the particles from sticking, resulting in a spot-free shine on a boat's surface.  Boat Wash will not harm the waterways like most other boat wash products and it’s safe to use while your boat is in the water.





●
Hull & Bottom Cleaner uses plant base oils and contains nano-enhanced emulsifiers that break down organic soils and hydrocarbons on the hull while cleaning and removing stains and grime on the bottom of a boat.





●
Bilge Cleaner & Deodorizer is a cleaner/degreaser that contains nano-enhanced emulsifiers that break down organic soils and hydrocarbon matter in the bilge, fish well or bait tank leaving behind a fresh scent.





●
Boat Glass Cleaner ammonia free organic formula keeps surfaces cleaner longer by creating an invisible anti-static coating that reduces dirt buildup while repelling water and resisting salt.





Surface Washing Agents





Our surface washing agents are sold under the G-CLEANTM and G-MARINETM brands.  Our initial product in this category is OSC-1809 Surface Washing Agent Oil and Fuel Spill Clean-Up!, which is a blend of water-based and ultimate biodegradable ingredients specifically formulated to emulsify and encapsulate fuel and oil by penetrating and breaking down long chain hydrocarbons bonds rendering them water soluble.  Surface Washing Agent Oil and Fuel Spill Clean-Up! has satisfied the regulatory requirements of the National Oil and Hazardous Substance Pollution Contingency Plan (NCP), allowing it to be listed on the NCP product schedule under the surface washing agent category, meaning it can be used by “Federal on-scene coordinators” in accordance with such regulations and is posted on the Environmental Protection Agency's website (www.epa.gov/emergencies/content/ncp/index.htm) in the Product Schedule and Technical Notebook.





GROWTH STRATEGY





Our growth strategy is designed to capitalize on our brand recognition and our position as a provider of environmentally-friendly, bio-based automotive, marine and outdoor power equipment performance, cleaning products and surface washing agents. We have launched a sales and marketing program for our performance and cleaning products, using product and corporate branding; promotional and advertising campaigns on television channels targeted toward our market; point of purchase marketing at auto parts retail stores, home improvement centers, marine stores, mass market retailers, and regional wholesalers; push-pull strategy; and public promotions. We believe that our aggressive sales and marketing effort together with our efficient distribution infrastructure will enable us to successfully and quickly place our products with retail and commercial customers.




6





Branding





We have embarked on creating a powerful consumer brand using the symbol “G”, which we hope will become the choice of consumers seeking products that are both green and effective.  We have also adopted an “umbrella” approach to product branding that allows the “G” brand to “crossover” multiple categories of products within a variety of trade channels.  For example, a consumer who replaces his or her own motor oil is also likely to mow his or her own lawn or clean the barbeque grill.  If that consumer is impressed by the product performance of one product, then he or she would be very likely to re-purchase and try other G-branded performance and cleaning products.   By addressing consumer consumption habits, we expect to appeal to all consumers, not only those whose choice of products is determined purely by their “green” attributes.





Strategic Relationships





The following are the relationships that we deem to be “strategic” and material to our business.





Under an agreement dated as January 25, 2009 with Inventek Colloidal Cleaners, LLC (“Inventek”) we acquired the:





(i)
Exclusive right in the United States and Canada and the non-exclusive right world-wide, outside the United States and Canada, to sell, market and distribute in retail channels of distribution any cleaning products manufactured by Inventek or by any person related to Inventek (“Inventek Products”);


(ii)
the non-exclusive right world-wide, to sell, market and distribute Inventek Products in all other non-retail distribution channels; and


(iii)
with respect to Inventek Products, the non-exclusive right world-wide to include all or selected portions of any certifications, products claims or descriptions, test results, safety or use instruction, or warnings, in labeling, packaging, documentation or any marketing materials or any other materials or media used in connection with the sale or distribution of Inventek Products.





In exchange for these rights, we agreed to market and distribute the Inventek Products under our line of “G” branded products and to refrain from distributing, promoting, marketing or selling any products that compete with Inventek Products.  There are no minimum purchase requirements under our agreement with Inventek.  Our agreement also provides that we and Inventek will work together to establish testing procedures and reporting to ensure quality and consistency in our product batches.  The Inventek agreement has a ten-year term after which it continues indefinitely until either party gives the other 90-days prior written notice of its intent to terminate the agreement.





In December 2008, we entered into a market distribution agreement with Techtronics Industries North America Inc. (TTI). TTI is a leading manufacturer of outdoor power equipment and The Home Depot’s largest supplier.  Under our agreement, TTI purchases our performance and cleaning products and distributes the products through their domestic and international networks.  In addition, TTI intends to co-brand and co-market various G-branded products with their products.





In July 2010, we entered into an arrangement with Delta Petroleum Company, to produce our performance products based on our specifications and formulations.  In September 2010, we formalized this arrangement by entering into a Product Production and Sale Agreement with Olympic Oil, Ltd., a wholly-owned subsidiary of Delta Petroleum.  (In this report, we refer to Olympic Oil and Delta Petroleum collectively as the “Delta Group.”)  Under this agreement, the Delta Group produces all our performance products based on our formulations and specifics, which we provide to them.  Delta Group also tests the finished product to ensure compliance with our specifications and performance standards and bottles, packages, warehouses and ships the final product to our customers.  The Delta Group purchases the ingredients and raw materials that are used to produce these products from its suppliers.  The Delta Group also has the right under the agreement, subject to our consent, to sell our products to its other customers either under our label or under the customers’ private label.   The agreement is for a three-year term and automatically renews for an unlimited number of one-year terms until one of the parties gives the other 60 days prior written notice that it does not want to renew the agreement.




7





Finally, we have an agreement with Marketiquette, Inc. (“Marketiquette”) under which Marketiquette provides us with marketing and branding services.  One of the principals of Marketiquette is our President, Chief Marketing Officer and a member of our Board of Directors (the “Board”).





Develop New Products and Services





Our development activities are performed for the most part by our suppliers, principally Inventek. We also have a full-time employee devoted to research and development efforts focused on developing our own formulations of our performance products, which includes submitting our independent test results to industry certification organizations.





We believe that we have successfully developed a method for converting animal fats and plant oils to a bio-base ingredient for our motor oil, bar and chain lubricants and our 2-cycle and 4-cycle engine oils. We have completed testing of our JASO FD 2-cycle and bar and chain oils and we are bench and engine testing our 4-cycle 10W-30 and SAE 30 OPE oils to determine their performance relative to comparable products from other suppliers, including the cost of producing these products through third-party manufacturers. We continue to work on formulations for other grades of lubricants and motor oils.





SALES AND MARKETING





We have launched a sales and marketing program for our performance and cleaning products, using product and corporate branding; promotional and advertising campaigns on television channels targeted toward our market; point of purchase marketing at auto parts retail stores, home improvement centers, grocery store chains, mass market retailers, and regional wholesalers; push-pull strategy; and public promotions.  We believe that our aggressive sales and marketing effort together with our efficient distribution infrastructure will enable us to successfully and quickly place our products with retail and commercial customers.





Our “go-to-market” strategy is based on our understanding of consumer behavior that drives decisions related to where to compete and how to compete.  It includes a profile of the consumer motivations determining who they are, what they want, what they need and where they go to satisfy these wants and needs.  This strategy is also a process of educating the consumer by making the products readily available and then motivating them to buy.





Our sales infrastructure includes master distribution agreements with a variety of wholesalers and contractual arrangements with approximately 100 sales professionals who sell to over 330,000 retail locations.  We are actively pursuing relationships with other wholesalers and retailers to include additional major national consumer purchase locations in the household goods, automotive aftermarket, and categories that include home improvement centers.





CUSTOMERS





A significant portion of our sales is derived from a limited number of customers.  For the fiscal year ended June 30, 2010, approximately 83% of our sales were made to  TTI and Ace Hardware Corp.  For the fiscal year ended June 30, 2011, approximately 88% of our sales were made to TTI, Walmart and Menards, Inc.  TTI beneficially owned approximately 21.4% of our outstanding shares as of September 1, 2011.





Our targeted customers are primarily in the automotive aftermarket (including Fast Lube/Auto Oil Change Services), outdoor power equipment markets and marine markets.  We are also pursuing customers in the industrial, municipality and military markets.  We sell to leading national and regional retailers.





COMPETITION





Motor oil marketers continue to look to higher-priced specialized and high-performance formulations to lessen the price-driven, commodity nature of the business.  Synthetic motor oils and synthetic blends remain the most promising development.  They have strong appeal to marketers and retailers alike because of the much higher prices they command.  Marketers are thus devoting much of their marketing and new product development efforts to synthetic and blended oils.  We believe that the next opportunity in marketing motor oil is the environmentally-friendly, non-petroleum based and fully biodegradable “green” oil or “bio-synthetic”.  We are not aware of any major provider of biodegradable lubricants.




8





Competition in cleaning products continues to expand, particularly in the protectants and wash segments, creating new products to protect both interior and exterior automotive parts.  The Black Magic brand of Shell’s (SOPUS) Blue Coral-Slick 50 unit is credited with creating an entire new sub-segment, tire dressing, which is now one of the largest and fastest growing.  Tire dressing, a protectant product, gives tires a like-new, high-gloss, wet-look finish and is particularly popular among young male vehicle owners.  Category leaders Armor All, Meguiar’s and Turtle Wax continually renew their offerings with extensions into tire care, exterior washes, carpet and upholstery care and odor removers, as well as updated formulations of protectants or waxes and polishes.





The retail and industrial market for marine supplies is highly competitive. Many competitors who sell marine products have their own supply stores, sell through catalogs, over the Internet and through distributors. The principal factors of competition in our marketplace are selection, quality, availability, price, convenience and access to a wide variety of merchandise.  The market for specialized service chemical programs for water and land clean-up, which includes the response to the April 2010 oil spill in the Gulf of Mexico, is also highly competitive.





Because we are a small company with a limited operating history, we are at a competitive disadvantage against the large and well-capitalized companies in the automotive aftermarket, outdoor power equipment, marine and disaster response industries.  In addition, our bio-based products are generally more expensive than traditional, non-biodegradable products.  Therefore, our primary method of competition involves promoting the benefits of using our products over those of our competitors, including the high quality and environmentally-friendly nature of our products based on independent tests.





INTELLECTUAL PROPERTY





Our business depends, in part, on our right to develop and protect our own intellectual property rights – including patents, know-how, trademarks and trade names – to obtain the necessary licenses and other agreements that enable us to use or exploit the intellectual property rights of others.  We cannot assure you that we can adequately protect our existing intellectual property rights or that we will be able to develop or obtain via contract any further intellectual property rights that are necessary to maintain and improve our competitive position in the markets in which we compete. In order to protect our rights to these assets, we file patent claims, trademark and trade name applications where appropriate and whenever we can we enter into confidentiality and/or non-use agreements with suppliers, vendors, distributors, contract-manufacturers, consultants and employees to protect against unauthorized use of our trade secrets, know-how and other proprietary information.





We believe that, at the present time, we own and/or license all of the intellectual property that is necessary for the conduct of our business.  These include the following:





●
We have developed our own formulations for motor oil, 2-cycle oil, 4-cycle oil and bar and chain lubricants.


●
We purchase our TC-3W marine engine oil from an additive supplier.


●
We have exclusive and non-exclusive rights to market, distribute and sell Inventek Products, which make up the bulk of our cleaning products and our surface washing agent.





We are in the process of filing a patent application for our motor oil with the United States Patent and Trademark Office under the accelerated patent application process.  Under this process, it is expected that we would have our application reviewed within 90 days and a patent could be issued within a year.  Since our inception we have invested significant amounts of capital into research and development of new products.





The following marks are registered to us in the United States Patent and Trademark Office:   G-OIL®,   SAVE THE EARTH– SACRIFICE NOTHING®, G OIL Design® and G.E.T. GREEN!®.





The following marks have trademark applications pending in the U.S. Patent and Trademark Office:  G-FUEL, G MARINE, G-GLASS and G CLEAN.





Foreign trademark registrations are held for G OIL in Costa Rica and for G CLEAN in the European Community and Costa Rica.  Applications are pending in Australia, Argentina, Brazil, China, Chile, European Community, Israel, Signapore and Taiwan for G OIL (and/or G OIL and Design).  Applications are pending in Argentina, Australia, Brazil, China, Chile, Israel and Signapore for G CLEAN.




9





SUPPLIERS





We rely on a limited number of suppliers for all of our products.  One of our strategic goals is to diversify our supply base in order to reduce the risk of depending on a limited number if suppliers.  However, we cannot assure you we will be able to expand our supply base as there are a limited number of producers of bio-based performance and cleaning products that would satisfy our standards for quality and performance.





Performance Products





We have successfully developed our own formulations for motor oil, 2- and 4-cycle engine oil and bar and chain oil.  Beginning in July 2010, we shifted production of our performance products to Delta Group.  In September 2010 we entered into a three-year Product Production and Sale Agreement with the Delta Group under which it produces our performance products for us based on our specifications and formulations.  The Delta Group purchases all the raw materials, including the bio-base, and ingredients for our performance produces, mixes and blends them to our specifications, tests the finished product to ensure that it meets our performance and other standards, and warehouses, bottles, packages and ships the finished product to our customers.  We have no direct relationship with any of the Delta Group’s suppliers.  Other than animal fat bio-solvents, which come from a limited number of independent meat processing plants, the raw materials used by our suppliers are readily available.  Notwithstanding the decreased number of suppliers of animal fat bio-solvents, our suppliers are able to obtain sufficient raw materials to fulfill our needs for the foreseeable future.





Cleaning Products





We purchase all our cleaning products in concentrated form from Inventek, and either bottle the products at Inventek or ship them to the Delta Group or another blender/bottles for blending and bottling and then to our distributors.





Marine Products





We currently purchase our TC-3W 2-cycle marine engine oil from Infineum USA L.P. (“Infineum”).  The combination of Infineum’s bio-base oil and additives create the necessary performance attributes that make our marine engine oil effective and biodegradable as determined by ASTM Standards.  Our marine cleaning products are purchased from Inventek.  Infineum and Inventek ship our marine products to the Delta Group or another vendor designated by us for blending and bottling, which then ships the finished product to our distributors and customers.





Surface Washing Agents





We purchase our surface washing agent from Inventek in concentrated form and either ship it directly to our distributors or customers or to the Delta Group for blending and bottling.  The Delta Group then ships the finished product to our distributors and retail customers.





DISTRIBUTION





We have a number of agreements with distributors in the United States and Canada, the most important of which is our five-year worldwide distribution agreement with TTI for G-branded products, which we entered into in December 2008.  TTI is the producer of RyobiTM and HomeliteTM hand-held gas and electric powered outdoor equipment, including grass and weed trimmers, power washers, blowers, chain saws and hedge trimmers.  Under our agreement with TTI, they have the non-exclusive right to distribute all of our products, including all G-OIL® 2-cycle, 4-cycle, Bar & Chain oils and G-CLEANTM biodegradable detergents, throughout its global distribution network.




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TTI has the exclusive right to distribute our non-automotive products through the following channels of distribution: (i) specific retail stores within the United States, Canada and Mexico, including all retailers with an average of at least 40,000 square feet per store, (ii) all marketing channels outside of the United States, Canada and Mexico, and (iii) all marketing channels with respect to any of our new products unless otherwise expressly agreed to in writing. TTI’s exclusive distribution rights are subject to TTI fulfilling a minimum purchase volume of $15,000 of our products during each calendar year following December 2010.  Our agreement with TTI also provides that we will collaborate to devise mutually beneficial marketing strategies and campaigns.  The term of our agreement with TTI will automatically renew for successive five year periods beginning on January 1, 2014, unless earlier terminated pursuant to the agreement or written notice of non-renewal is provided at least one year prior to the expiration of the then current term.  For the fiscal years ended June 30, 2009, 2010 and 2011, approximately 84%, 64% and 41% of our revenues, respectively, were derived from TTI.  TTI beneficially owned approximately 21.6% of our outstanding shares as of June 30, 2011.  Due to additional equity financings subsequent to year end, as of September 1, 2011, the percentage was reduced to 21.4%.





EMPLOYEES





As of September 1, 2011, we employed seven people. None of our employees are members of a union. We believe that we have good relations with our employees.





CORPORATE HISTORY





We were organized under the laws of the State of Delaware on August 7, 2007.





We have one wholly-owned subsidiary, GET Manufacturing, Inc., a Delaware corporation incorporated on June 3, 2008.  We do not own equity interests in any other entity.Our executive offices are located at 10 Bank Street, Suite 680, White Plains, New York 10606 and our telephone number is (877) 438-4761.





AVAILABLE INFORMATION





Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our web site at www.getg.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information posted on our web site is not incorporated into this Annual Report on Form 10-K.





The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.  The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.





In addition, we have made available on our web site under the heading “Investor Quick Facts.” our Code of Ethics and Code of Conduct. We intend to make available on our web site any future amendments or waivers to our Code of Ethics and Code of Conduct within four business days after any such amendments or waivers.





ITEM 1A.  RISK FACTORS.





The consolidated financial statements and notes thereto included in this report and the related discussion describe and analyze our business operations and financial performance and condition for the periods indicated. For the most part, this information is historical. Our prior results, however, are not necessarily indicative of our future performance and/or financial condition. We, therefore, have included the following discussion of certain factors which could affect our future performance and/or financial condition. These factors could cause our future performance or financial condition to differ materially from its prior performance or financial condition or from management’s expectations or estimates of our future performance or financial condition. These factors, among others, should be considered in assessing our future prospects and prior to making an investment decision with respect to our stock.





We have a history of losses and cash flow deficits and we expect to continue to operate at a loss and to have negative cash flow for the foreseeable future.





Since our inception in August 2007, we have incurred net losses in every quarter.  At June 30, 2011, we had cumulative net losses of approximately $57,446.  We also have negative cash flows from operations.    For the year ended June 30, 2011, we have an operating cash flow deficit of $4,189.  Historically, we have funded our operations with proceeds from the sale of debt and equity securities and by settling some of our outstanding obligations with issuances of common stock.  Our growth strategy is to increase our market share through a variety of sales and marketing initiatives, which require significant amounts of capital.  We will also need capital to expand our production capacity and distribution capability.  This is likely to result in additional losses and negative cash flow for the foreseeable future.




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If we do not raise additional capital, we will not be able to achieve our growth objectives and we may need to curtail or even discontinue operations.





We do not currently have sufficient financial resources to fund operations.  At June 30, 2011 we had a working capital deficit of $3,003.  Other than an equity credit line in the amount of $15,000, at the present time we have no firm commitments for investment capital and we have no debt facilities, such as a working line of credit or receivables factoring agreement.  However, our right to draw on the equity credit line is limited and subject to certain conditions.  We cannot assure you that we will be able to satisfy all of these conditions at the time we are in need of funds or that the equity credit line will provide us with sufficient working capital to meet all of our cash needs.  If we require additional capital, new sources for such capital may not be available to us when we need it or may be available only on terms that are unfavorable.  If capital is not available on satisfactory terms, or is not available at all, we may be unable to continue to fully develop our business or take advantage of new business opportunities.  In addition, our results of operations may decline from previous levels or may fail to meet expectations because of the higher cost of capital.  As a result, the price of our publicly traded securities may decline, causing you to lose all or part of your investment.





Our equity line of credit may not provide us with sufficient working capital to fund operations.





Under the terms of the equity line of credit provided to us by Lincoln Park Capital, LLC (“LPC”), we may direct LPC to purchase up to $15,000 worth of shares of our common stock over a 30 month period.  The per share purchase price is the lesser of (1) the lowest sale price of our common stock on the purchase date and (2) the lowest purchase price during the 10 consecutive business days prior to the purchase date.  However, our right to have LPC purchase shares of our common stock is limited and subject to certain conditions.  For example, we may not require LPC to purchase more than $50 every two days unless the quoted price of a share of our common stock, as reported on the Over the Counter Bulletin Board electronic trading market exceeds $0.40.  In addition, LPC is not under any obligation to purchase any shares of our common stock on any business day that the quoted price of a share of our common stock is less than $0.20.  The last sale price of a share of our common stock to LPC as quoted by the OTC BB on August 24, 2011 was $0.20.  Assuming LPC purchases all 20,000,000 shares that we have reserved for sale under the Purchase Agreement for a purchase price of $0.22 per share (the closing sale price of the common stock on September 1, 2011), the proceeds to us would only be $4,400.





The extent to which we rely on LPC as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and the extent to which we are able to secure working capital from other sources.  If obtaining sufficient funding from LPC were to prove unavailable or prohibitively dilutive and if we are unable to sell enough of our products, we will need to secure another source of funding in order to satisfy our working capital needs.  Even if we sell $15,000 worth of our common stock under our agreement with LPC, we may still need additional capital to fully implement our business, operating and development plans.  Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.





If we cannot continue as a going concern, you will lose your entire investment.





In their report in connection with our financial statements for the fiscal year ended June 30, 2011, our independent registered public accounting firm included an explanatory paragraph stating that because we have incurred net losses and have a net capital deficiency and because we require additional funds to meet our obligations, there is substantial doubt as to our ability to continue as a going concern.  If we cannot continue as a going concern, it is likely that your entire investment will be worthless.  Our ability to continue as a going concern will depend, in large part, on our ability to obtain additional financing and generate positive cash flow from operations, neither of which is certain.  If we are unable to achieve these goals, we may not be able to continue as a going concern.




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Our limited operating history makes it difficult for us to accurately forecast our revenues and appropriately plan our expenses.





Revenues and operating results are difficult to forecast because they generally depend on the volume and timing of orders, which, in our case, are uncertain.  Some of our expenses are fixed and, as a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected shortfall in revenues.  This inability could cause our net income in a given quarter to be lower than expected or our net loss to be higher than expected.  In addition, our limited operating history makes it difficult to evaluate our business and prospects.  You should consider our business and prospects in light of the risks, uncertainties and difficulties frequently encountered by early stage companies, including limited capital, marketing and sales obstacles and delays, inability to gain customer acceptance, inability to attract and retain high-quality and talented executives and other personnel and significant competition.  If we are unable to successfully address these risks, our business may not grow and/or we may be unable to continue operations.





We rely on a network of strategic partners for basic business critical services, and we have no control over their operations and if any of these relationships terminate, our business and operations may be adversely impacted.





Our strategic partners include (i) Inventek, which supplies us with our cleaning products and our surface washing agent, (ii) the Delta Group, which supplies us with our performance products and which also provides us with various other services such as bottling, packaging, warehousing and shipping, (iii) Infineum which supplies us with our marine oil (iv) Marketiquette Inc. for sales and marketing and (v) Techtronics Industries North America, Inc. (“TTI”) for distribution.  The loss of any one of these relationships could have an adverse material impact on our business because we do not have the internal resources to bring any of these functions in-house and we do not believe that we could quickly find a replacement for any of these strategic partners.  We cannot assure you that our relationship with any of these entities will continue or that the services they provide to us will be adequate.  If any of these relationships terminate or the level or quality of the services provided by any of our strategic partners is inadequate, our business, operations and financial condition may be adversely impacted.  Until December 2009, we relied on a single source, Bio Tec Fuel and Chemical LLC, to provide us with our performance products.  In December 2009, Bio Tec terminated our agreement forcing us to accelerate the development of our own proprietary formulation and to seek a new contract manufacturer.  It took us approximately eight months to complete the research, development and testing of our proprietary formulation and it was not until July 2010 that Delta Group started to produce our performance products.





We have granted the Delta Group a right of first refusal, which could adversely impact our ability to sell the company.





Under our agreement with the Delta Group, if we try to sell all or substantially all of our assets within one year following the expiration or termination of the agreement, we must provide notice of such a proposed sale to the Delta Group, which then has the right, exercisable within 30 days of its receipt of that notice, to purchase those assets at the price set forth in the notice.  This right of first refusal could adversely impact the price a buyer would be willing to pay for our assets.





We depend on a third party to effectively market and sell our products.





We depend on Marketiquette to market and sell our products. Marketiquette is owned and operated by our President and his wife.Marketiquette is particularly knowledgeable about the automotive and household products industries, our two principal markets in which we compete.  Over the last two years, Marketiquette has developed marketing programs for our products and built a sales force of approximately 100 sales professionals to sell and market our products.  Our agreement with Marketiquette, as amended to date, automatically renews for an unlimited number of three-year terms can be terminated by either party upon one year prior notice.  If the agreement is terminated or if Marketiquette is not able to continue to effectively market and sell our products, we will have to either engage a new marketing firm or develop our own internal sales and marketing department.  We cannot assure you that we will be able to achieve either of these alternatives.  In particular, building a sales and marketing department will take time and require significant amounts of capital.  This could force us to redirect our resources away from product development or other critical areas of our business.  It could also distract our senior executives from their other duties.  As a result, our revenue and results of operations could be adversely affected.




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We depend on a limited number of suppliers for our products and to provide us with ancillary supply chain services.  If our suppliers cannot provide us with a sufficient quantity of high quality products on a timely basis, our reputation may be impaired, which, in turn, could adversely impact our business, results of operations and financial condition.





We rely on Inventek to supply us with our cleaning products and our surface washing agent, on Infineum to provide us with our marine oil and on the Delta Group to supply us with our performance products.  We also rely on the Delta Group to provide us with testing, bottling, packaging, warehousing and shipping services.  If our relationship with our suppliers were to terminate, we may not be able to find another supplier that could provide us with comparable replacement product.  In addition, if any of these suppliers fail to provide us with product in a timely manner or in sufficient quantities or if the quality of the product they produce is below that which our customers expect, our ability to satisfy customer demand will be adversely impacted and our reputation will be harmed.  In turn, this may adversely impact our ability to generate revenues and profits. Both Inventek and Infineum use their own respective proprietary technology and know-how to produce these products and we have little or no control over its methods of operations, including its processes and production schedules.





A number of factors may affect the timely delivery of our performance and cleaning products, including production capacity, the availability of raw materials (i.e., beef tallow and plant oils), labor issues (such as strikes, slow-downs and lock-outs), natural phenomena (such as inclement weather, tornados and earthquakes) and service disruptions (such as gas leaks and power outages).  Similarly, the quality of our products may be adversely affected if our suppliers fail to blend the ingredients properly, if there are shortages of key ingredients or if we have to use a different supplier or suppliers.  For example, if we are unable to obtain the bio-base from our suppliers, and we are unable to remedy the disruption within a reasonable time, we may have to reformulate our performance products, which would divert resources from other projects and add to product costs.  This reformulation may take a substantial period of time, and we may be unable to maintain the “green” properties or performance qualities of our products or obtain necessary industry certifications on a timely basis, if at all.  We cannot assure you that there are other suppliers that have the know-how or capability to supply us with a sufficient quantity of products of comparable quality.  Products produced from a different bio-base or from a different supplier are likely to have a different formulation with different characteristics and may be inferior in terms of their performance. This could have a material adverse impact on our reputation, which could negatively affect our revenues.





There are a limited number of suppliers for the bio-base ingredient of our performance products.  Our business and results of operations would be adversely affected if we are unable to obtain sufficient quantities of this ingredient from those suppliers at favorable prices.





We use a substantial amount of rendered animal fat for the production of our performance products.  Rendered animal fat is a byproduct of the meat processing industry.  Due to recent consolidation within the meat processing industry, the number of independent meat processing plants that can supply us with rendered fat has decreased significantly.  As a result, we would have limited options if we are unable to negotiate supply agreements with the larger consolidated meat processors on favorable terms.  A significant decrease in the availability of rendered fat or increase in costs would materially and adversely affect our business and results of operations.





Our future success depends, in part, on our ability to obtain and retain various certifications for our products.  If we fail to do so, our reputation may suffer and our products may not be able to compete effectively.





We are required to comply with certain governmental guidelines in order to market our products as biodegradable.  The cost to comply with the Federal Trade Commission’s Guides for the Use of Environmental Marketing Claims is significant.  However, if we fail to comply with these guidelines, or any other applicable regulations, or if we fail to maintain required permits or licenses, we may be subject to substantial fines or revocation of our permits and authorities.  Further, we must achieve and maintain certain certifications on our performance products based on performance tests established by API and ASTM in order to compete with the petroleum-based products of our competitors.  Failure to achieve or maintain the proper API certifications could have a material adverse impact on our reputation and our ability to sell our products, which could negatively affect our business, financial condition and results of operations.




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Our future success depends on broad market acceptance of our products, which may not happen.





Our entire business is based on the assumption that the demand for non-toxic, environmentally-friendly performance and cleaning products will develop and grow.  We cannot assure you that this assumption is or will be correct.  The market for environmentally-friendly products is relatively new and currently is quite small.  As is typical of a new and rapidly evolving industry, the demand for, and market acceptance of, “green-based” products is highly uncertain.  In order to be successful, we must convince retailers to stock our products and educate consumers that our products perform as well as the petroleum- and chemical-based products they currently use and that the benefit of using our products is worth any additional cost.  We believe that one of the major obstacles we face is the lack of knowledge of the importance of reducing the use of petroleum- and chemical-based products from an environmental and health perspective.  We spend a considerable amount of our marketing budget educating consumers on the benefits associated with using our products as well as proving that our products work as well as the existing products they are accustomed to using.  We can provide no assurances that these efforts will be successful or result in increased revenue.  Similarly, we cannot assure you that the demand for our products will become widespread.  If the market for our products fails to develop or develops more slowly than we anticipate, our business could be adversely affected.





We may not succeed in establishing the “G” brand, which could prevent us from acquiring customers and increasing our revenues.





A significant element of our business strategy is to build market share by continuing to promote and establish our “G” brand.  If we cannot establish our brand identity, we may fail to build the critical mass of customers required to substantially increase our revenues.  Promoting and positioning our brand will depend largely on the success of our sales and marketing efforts and our ability to provide a consistent, high quality customer experience.  To promote our brand, we expect that we will incur substantial expenses related to advertising and other marketing efforts.  If our brand promotion activities fail, our ability to attract new customers and maintain customer relationships will be adversely affected, and, as a result, our financial condition and results of operations will suffer.  Gaining market share for our G-branded products may prove to be extremely difficult as many of our competitors – including major oil and consumer products companies – are larger and better capitalized.  Consequently, the rate of growth for sales of our G-branded performance and cleaning products may be slower than we have anticipated.  If we are unable to successfully achieve market acceptance of our products, our future results of operations and financial condition will be adversely affected.





As public awareness of the health risks and economic costs of petroleum- and chemical-based products grows, we expect competition to increase, which could make it more difficult for us to grow and achieve profitability.





We expect competition to increase as awareness of the environmental and health risks associated with petroleum- and chemical-based products increases and as we demonstrate the success of efficacy of our bio-based products.  A rapid increase in competition could negatively affect our ability to develop new and retain our existing clients and the prices that we can charge.  Many of our competitors and potential competitors have substantially greater financial resources, customer support, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition and more established relationships than we do.  We cannot be sure that we will have the resources or expertise to compete successfully.  Compared to us, our competitors may be able to:





●
develop and expand their products and services more quickly;


●
adapt faster to new or emerging technologies and changing customer needs and preferences;


●
take advantage of acquisitions and other opportunities more readily;


●
negotiate more favorable agreements with vendors and customers;


●
devote greater resources to marketing and selling their products or services; and


●
address customer service issues more effectively.





Some of our competitors may also be able to increase their market share by providing customers with additional benefits or by reducing their prices.  We cannot be sure that we will be able to match price reductions by our competitors.  In addition, our competitors may form strategic relationships to better compete with us.  These relationships may take the form of strategic investments, joint-marketing agreements, licenses or other contractual arrangements that could increase our competitors’ ability to serve customers.  If our competitors are successful in entering our market, our ability to grow or even sustain our current business could be adversely impacted.





If we fail to keep up with changes in our industry, we will become less competitive, limiting our ability to generate new business and increase our revenues.





In order to remain competitive, serve our customers effectively and increase our revenue, we must respond on a timely and cost-efficient basis to changes in technology, industry standards and procedures and customer preferences.  We need to continuously develop new products and technologies that address new developments in the market segments we serve and the regions in which we operate, as well as laws, regulations, rules, standards, guidelines, releases and other pronouncements that are periodically issued by legislatures, government agencies, courts, professional associations and others.  In some cases these changes may be significant and the cost to comply with these changes may be substantial.  We cannot assure you that we will be able to adapt to any changes in the future, that we will have the financial resources to keep up with changes in the marketplace or that we will be able to offset those costs with increases in revenues through price increases or additional product sales.  Our inability to keep pace with changes and developments in the markets we serve may have an adverse impact on our business, results of operation and financial condition.




15





A significant portion of our sales is derived from a limited number of customers.  If any of these customers decide they no longer will purchase our products, our financial performance will be severely and adversely impacted.





For the year ended June 30, 2011, we derived approximately 88% of our sales from three customers, TTI, Walmart and Menards, Inc.  We cannot assure you that we can sustain these levels of sales to these customers.  If we do not diversify our customer base and any of these customers eliminates or reduces its reliance on us, our losses will increase.





We rely on certain key personnel.  If any of our key employees leave and we cannot replace them with persons with comparable skills, our business will suffer.





Our performance depends, to a significant extent, upon the efforts and abilities of our senior executive officers.  The departure of any of our executive officers could have an adverse effect on our business and we cannot assure you that we would be able to find qualified replacements for any of those individuals if their services were no longer available for any reason.  In September 2010, our president, Simon Higgs resigned as an officer and director and in April 2011, our chairman and chief executive officer, William “Jeff” Marshall, also resigned as an officer and director.  Rather than hire new executives, the Board decided to reassign Mr. Higgs’ and Mr. Marshall’s duties to our two remaining senior executives, Jeff Loch and Greg Adams.





Our success will also depend upon our ability to recruit and retain qualified personnel to fill other positions.  Demand for highly skilled executives is still great and, accordingly, no assurance can be given that we will be able to hire or retain sufficient qualified personnel to meet our current and future needs.





We may not be able to manage our growth effectively, create operating efficiencies or achieve or sustain profitability.





Our revenue for the most recent fiscal year, which ended June 30, 2011, was $7,503, an increase of 209% over the revenues in the immediate preceding fiscal year.  For the current fiscal year we are anticipating similar growth.  The ability to manage and operate our business as we execute our growth strategy will require effective planning.  Significant rapid growth could strain our internal resources, leading to a lower quality of customer service, reporting problems and delays in meeting important deadlines, resulting in loss of market share and other problems that could adversely affect our reputation and financial performance.  Our efforts to grow have placed, and we expect will continue to place, a significant strain on our personnel, management systems, infrastructure and other resources.  Our ability to manage future growth effectively will also require us to continue to update and improve our operational, financial and management controls and procedures.  If we do not manage our growth effectively, we could be faced with slower growth and a failure to achieve or sustain profitability.





Our future success depends on our ability to utilize certain intellectual property rights, some of which belong to third parties and some of which we own.   If we cannot do so, or if we were found to be infringing on the proprietary rights of others, our business could be substantially harmed.





Our success depends on our ability to use and/or exploit the intellectual property of third parties as well as our ability to protect our own intellectual property.  For example, we rely on Inventek to provide us with high-quality bio-based cleaning products and our surface washing agent, based on its proprietary technology.  In addition, Inventek has granted us an exclusive right to market, sell and distribute our performance and cleaning products. None of the intellectual property used by Inventek to produce our products is protected by patents.  Thus, if another party were able to replicate the process or if there is a determination that they are infringing on the rights of others, our exclusive rights may be worthless.  Similarly, we may become aware of other products, technologies or processes that either enhance the performance of or complement our existing products or that will enable us to expand our product offerings.  Our ability to market, sell and distribute our products will depend on our ability to use the intellectual property of these companies.  We cannot assure you that we will be able to obtain the rights to those products, technologies or processes on terms that make economic sense.  If we are unable to obtain the licenses that are necessary for us to remain competitive, our business, results of operations and financial condition could be adversely impacted.




16





In addition, our business also depends on intellectual property rights that we own, including patent claims, trademarks and trade names.  In particular, our performance products are based on our own formulations and specifications, which we have provided to the Delta Group under the Product Production and Sale Agreement.  Despite our efforts to protect these rights, we cannot assure you that our intellectual property rights are adequately protected.  Our patent claims may not be recognized as valid and even if they are, they may be challenged by third parties.  Alternatively, third parties may be able to develop alternative processes and know-how enabling them to produce products that will compete with our products.  Finally, our competitors or other third parties may attempt to use our trademarks or trade names or develop similar marks and names despite our registrations.  In that case, our sole remedy may be to bring a legal action to enforce our rights, which could be costly and divert management’s time and effort away from our core business.





We cannot assure you that another party might claim that we are infringing on their proprietary rights.  If such a claim is upheld, we could incur significant penalties.





We may pursue acquisition opportunities, which may subject us to considerable business and financial risk.





We may pursue acquisitions of companies, assets or complementary technologies in the future. Acquisitions may expose us to business and financial risks that include, but are not limited to:





●
diverting management’s attention;


●
incurring additional indebtedness;


●
dilution of our common stock due to issuances of additional equity securities;


●
assuming liabilities, known and unknown;


●
incurring significant additional capital expenditures, transaction and operating expenses, and non-recurring acquisition-related charges;


●
the adverse impact on our earnings of the amortization of identifiable intangible assets recorded as a result of acquisitions;


●
the adverse impact on our earnings of impairment charges related to goodwill recorded as a result of acquisitions should we ever make such a determination that the goodwill or other intangibles related to any of our acquisitions was impaired;


●
failing to integrate and assimilate the operations of the acquired businesses, including personnel, technologies, business systems and corporate cultures;


●
poor performance and customer dissatisfaction with the acquired company;


●
entering new markets;


●
failing to achieve operating and financial synergies anticipated to result from the acquisitions; and


●
failing to retain key personnel of, vendors to and customers of the acquired businesses.





If we are unable to successfully address the risks associated with acquisitions, or if we encounter unforeseen expenses, difficulties, complications or delays frequently encountered in connection with the integration of acquired entities and the expansion of operations, our growth may be impaired, we may fail to achieve anticipated acquisition synergies and we may be required to focus resources on the integration of acquired operations rather than on our primary business.







17








Risks Relating to Ownership of Common Stock





There is, at present, only a limited trading market for our common stock and we cannot assure you that an active trading market for either or both of these securities will develop.





From August 2007 until March 8, 2011 our common stock was quoted on the OTC QB, an electronic quotation service for securities traded over-the-counter, under the symbol GETG.  Since March 9, 2011 our stock has been quoted on the OTCBB under the symbol GETG.OB.  Since our shares have been quoted on the OTCBB, daily trading volume has ranged from 1,100 shares to 333,800 shares, with a daily average of 67,776 shares.




There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.  There is currently only a limited trading market for our common stock, and there can be no assurance that a trading market will develop further or be maintained in the future.  We have not applied for listing on any national securities exchange and have no plans of doing so in the near term.  Accordingly, we cannot assure you that there will ever be an active trading market in our common stock.  If there is no active trading market, it may be difficult for you to sell your shares.  If an active trading market for our common stock does develop, the prices at which our common stock would trade will depend upon many factors, including the number of holders, investor expectations and other factors that may be beyond our control.




Generally, holders of securities not eligible for inclusion on a national exchange may have difficulty in selling their securities should they desire to do so.  In such event, due to the low price of the securities, many brokerage firms will not effect transactions in such securities and it is unlikely that any bank or financial institution will accept such securities as collateral, which would have an adverse effect in developing or sustaining any market for such securities.





We are subject to the “penny stock” rules, which could adversely affect the trading volume and market price of our shares.





Trades of our common stock are subject to the “penny stock” rules promulgated by the SEC under the Securities Exchange Act of 1934, as amended (“Exchange Act”), which imposes certain requirements on broker/dealers who sell securities subject to the rule to persons other than established customers and accredited investors.  For transactions covered by the rule, broker/dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale.  The SEC also has other rules that regulate broker/dealer practices in connection with transactions in “penny stocks.”  Penny stocks generally are equity securities with a price of less than $5.00 (other than securities listed on a national securities exchange, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system).  The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker/dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.  These disclosure requirements have the effect of reducing the level of trading activity for our common stock.  As a result of the foregoing, investors may find it difficult to sell their shares.




18





Our stock price is extremely volatile, which could result in substantial losses for investors and significant costs related to litigation.





The market price for our common stock is highly volatile.  Since August 2007, the price of a share of our common stock has traded from a low of $0.16 to a high of $4.59.  This extreme volatility could result in substantial losses for investors.  The market price of our securities may fluctuate significantly in response to a number of factors, some of which are beyond our control.  These factors include:





●
quarterly and seasonal variations in operating results;


●
changes in financial estimates and ratings by securities analysts;


●
announcements by us or our competitors of new product and service offerings, significant contracts, acquisitions or strategic relationships;


●
publicity about our company, our services, our competitors or business in general;


●
additions or departures of key personnel;


●
fluctuations in the costs of materials and supplies;


●
any future sales of our common stock or other securities; and


●
stock market price and volume fluctuations of publicly-traded companies in general and in the automotive aftermarket industry in particular.





In addition, this volatility may give rise to investor lawsuits diverting management’s attention and valuable company resources from our business.





We are controlled by a limited number of stockholders, which will limit your ability to influence the outcome of key decisions and which adversely impact the trading price of our stock.





At June 30, 2011, our executive officers and directors, in the aggregate, beneficially owned 8.9% of our common stock and TTI beneficially owned 21.6% of our common stock.  Due to stock issuance subsequent to June 30, 2011, these percentages have declined slightly.  As a result, each of these groups of stockholders have the ability to exercise substantial control over our affairs and corporate actions requiring stockholder approval, including electing and removing directors, selling all or substantially all of our assets, merging with another entity or amending our certificate of incorporation.  This de facto control could be disadvantageous to our other stockholders with interests that differ from those of the control group, if these stockholders vote together.  For example, the control group could delay, deter or prevent a change in control even if a transaction of that sort would benefit the other stockholders.  In addition, concentration of ownership could adversely affect the price that investors might be willing to pay in the future for our securities.





Future sales or the potential for sale of a substantial number of shares of our common stock could cause the trading price of our common stock to decline and could impair our ability to raise capital through subsequent equity offerings.





Sales of a substantial number of shares of our common stock in the public markets, or the perception that these sales may occur, could cause the market price of our stock to decline and could materially impair our ability to raise capital through the sale of additional equity securities.  As of September 1, 2011, we had 151,440,378 shares of common stock issued and outstanding.  In addition, as of September 1, 2011, we had reserved an additional 65,314,896 shares for issuance as follows:





●
40,000,000 shares reserved for issuance under our stock option plan, of which 25,458,750 underlie outstanding options at September 1, 2010;


●
7,689,722 shares underlying outstanding warrants; and


●
17,625,174 shares reserved for sale to LPC (originally 20,000,000 but reduced by shares issued to LPC under the Purchase Agreement on or before September 1, 2011).






19




Our outstanding common stock is subject to dilution.





We may finance our future operations or future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for common stock.  In addition, we may use our common stock or securities exercisable for common stock as a means of attracting or retaining employees and management for our business.  If we use our common stock for these purposes, our existing stockholders will experience dilution in the voting power of their common stock and the price of our common stock and earnings per share could be negatively impacted.





We have anti-takeover defenses that could delay or prevent an acquisition and could adversely affect the price of our common stock.





Our certificate of incorporation and by-laws include provisions, such as providing for three classes of directors, which are intended to enhance the likelihood of continuity and stability in the composition of our board of directors.  These provisions may make it more difficult to remove directors and management or could have the effect of delaying, deferring or preventing a future takeover or a change in control, unless the takeover or change in control is approved by our board of directors, even though the transaction might offer our stockholders an opportunity to sell their shares at a price above the current market price.  As a result, these provisions may adversely affect the price of our common stock.





ITEM 1B.UNRESOLVED STAFF COMMENTS.





None.





ITEM 2.  PROPERTIES.





Our current lease in White Plains, New York will expire on October 31, 2011.  We entered into a new lease for approximately 2,500 square feet of office space expiring September 30, 2013, whereby we will move our headquarters from White Plains, New York to Hawthorne, New York.





Our lease for approximately 5,045 square feet of warehouse and office space for our sales and marketing offices which are located in Celebration, Florida will expire in September 2012.





We also have a month to month lease of approximately 640 square feet of office space in Davis, California. This facility houses our lab and research and development personnel.





We believe that our physical properties are well maintained, in good operating condition and adequate for their intended purposes.





ITEM 3.  LEGAL PROCEEDINGS.





SEC Investigation





As previously reported, in December 2009, the SEC served us with a subpoena for the production of documents concerning issuances of our common stock, the removal of restrictive legends from certificates evidencing our common stock, the existence of restrictions on our common stock and documents supporting various press releases issued in 2008.  We complied with the subpoena by producing the requested documents.  On August 29, 2011 the SEC notified us that they have completed their investigation and do not intend to recommend any enforcement action against us.





From time to time, we may become involved in routine litigation incidental to our business.  Further, product liability claims may be asserted in the future relative to events not known to management at the present time.  Management believes that our risk management practices, including our insurance coverage, are reasonably adequate to protect against potential material product liability losses.





ITEM 4.  (REMOVED AND RESERVED)




20




PART II




ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS




AND ISSUER PURCHASES OF EQUITY SECURITIES.





Market Price for our Common Stock





Prior to March 9, 2011, our stock was quoted on the OTC Market Group Inc.’s OTC QB under the symbol “GETG”.  On March 9, 2011 the Financial Industry Regulatory Authority approved our common stock for quotation on the Over-the-Counter Bulletin Board (OTCBB) under symbol “GETG”.  The table below shows the high and low sales prices for our common stock for the periods indicated, as reported by the OTC Market Group Inc.’s OTC QB or the OTCBB.





Price Range Per ShareHigh ($)


Low ($)Year Ending June 30, 2011First Quarter


0.71



0.35Second Quarter


0.37



0.21Third Quarter


0.56



0.25Fourth Quarter


0.42



0.21Year Ending June 30, 2010First Quarter


0.78



0.20Second Quarter


1.06



0.14Third Quarter


0.45



0.27Fourth Quarter


0.67



0.27





On September 1, 2011, the last trade price of our common stock on the OTCBB was $0.22.





Holders





As of September 1, 2011, there were approximately 379 holders of record of our common stock.





Dividends





We have not declared or paid any cash dividends on our capital stock since inception. We intend to retain any future earnings to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.





Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities





In May 2011, we issued 126,000 shares of our common stock for gross proceeds of $35 in a private placement transaction.





Purchases of Equity Securities by the Issuer and Affiliated Purchasers





We made no repurchases of our equity securities during the fourth quarter of the fiscal year covered by this report.




21





Equity Compensation Plans





Our 2008 Stock Award and Incentive Plan, as amended (the “Plan”) was adopted for the purpose of (i) attracting, retaining, motivating and rewarding our employees and non-employee directors, (ii) providing for equitable and competitive compensation opportunities, recognize individual contributions and reward achievement of our goals, and (iii) promoting the creation of long-term value for stockholders by closely aligning the interests of Plan participants with those of stockholders. The terms of the Plan provide for the granting of both stock-based and cash-based incentives, including incentive and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock unit. The total number of shares of our common stock that may be awarded under the Plan and issued on the exercise of awards is equal to 40,000,000 shares, subject to adjustments in certain circumstances. In addition, the Plan limits the maximum amount of shares that may be subject to awards under the Plan granted to any one individual per year to 5,000,000 shares. The persons eligible to receive awards under the Plan are our employees, including any of our executive officer or non-employee directors, any person who has been offered employment by us, provided that such prospective employees may not receive any payments or exercise any rights relating to their awards until their commencement of employment with us, or our consultants. The Plan is administered by the Compensation Committee of the Board of Directors.





The Board may terminate the Plan without stockholder approval or ratification at any time. Unless sooner terminated, the Plan will terminate in 2018. The Board may also further amend the Plan, provided that no amendment will be effective without approval of our stockholders if stockholder approval is required to satisfy any applicable statutory or regulatory requirements.





The following table summarizes the options granted under the Plan as well as warrants granted outside the Plan as of June 30, 2011. The shares covered by outstanding options are subject to adjustment for changes in capitalization stock splits, stock dividends and similar events.





Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights


Weighted Average Exercise Price of Outstanding Options, Warrants and Rights


Number of Securities Remaining Available For Future IssuanceEquity compensation plans approved by stockholders


40,000,000
(1)

$
0.39



14,541,250
(2)Equity compensation plans not approved by stockholders


--



--



--Total


40,000,000
(1)

$
0.39



14,541,250
(2)


(1)
Includes 25,458,750 options issued and outstanding in the 2008 Stock Award and Incentive Plan with a weighted average exercise price of $0.39 per share.


(2)
Includes Common Stock available for issuance under the 2008 Stock Award and Incentive Plan.





ITEM 6.  SELECTED FINANCIAL DATA.





As a “smaller reporting company” we are not required to provide the information required by this Item.




ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND




RESULTS OF OPERATIONS.





The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Form 10-K. Certain statements in this discussion and elsewhere in this report constitute forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. See “Forward-Looking Statements” following the Table of Contents of this 10-K. Because this discussion involves risk and uncertainties, our actual results may differ materially from those anticipated in these forward-looking statements.




22





Overview of our Business





We market, sell and distribute an array of branded, environmentally-friendly, bio-based performance and cleaning products to the automotive aftermarket, outdoor power equipment and marine and markets.  The “green” base of our performance products is comprised of animal fats and plant oils, while our cleaning and oil spill products use plant and vegetable oils.  This biodegradable green base replaces traditional petroleum and chemical derived bases typically used to make motor oils, cleaning solutions and other consumer products without compromising performance or value.  We believe our products deliver comparable or superior performance at competitive prices, thus giving consumers the ability to “do their part” in protecting the environment.





Our G-brand family of products includes G-OIL®, G-FUELTM, G-CLEANTM, G-GLASSTM and G-MARINETM.  These products are offered in a wide range of automotive, outdoor power equipment and marine categories, primarily performance and cleaning solutions.  Our products are produced for us under supply and requirements contracts with domestic manufacturers.  We sell the majority of our products through master distribution agreements with wholesalers and contractual arrangements with independent sales professionals. Our products are available at a number of national retail outlets and chain stores including Walmart, The Home Depot, Menards, ACE Hardware and Canadian Tire Corporation. We are actively pursuing relationships with other wholesalers and retailers to include additional major national consumer purchase locations in the household goods, automotive aftermarket, outdoor power equipment market, oil and gas market and marine market.





We spent the first half of fiscal 2011 securing our working relationship with our new principal supplier, Delta Companies Group (“Delta”), building inventory to support sales growth for new and existing customers and continued our ongoing efforts to formulate and develop additional performance and appearance products.   During the second half of fiscal 2011 we shifted our focus to servicing and fulfilling customer orders, obtaining certifications and generating new sales opportunities. Fiscal 2011 has proved to be a qualification year that allowed us to establish a base to build our “G” brand for fiscal 2012, while also proving to us that consumers are willing to put bio-based biodegradable oil into their automobiles and home power equipment engines.





Key accomplishments during our fiscal year ended June 30, 2011 include:





●
In September 2010 we entered into a Product Production and Sales Agreement with the Delta. Under this agreement, Delta agreed to produce and sell to us performance products based on the formulations and specifications that we provide.  Delta purchases all the raw materials, including the bio-base as well as the various additives and other ingredients, blends, bottles, tests, warehouses and ships the finished products to our customers.





●
In December 2010 we expanded our relationship with Techtronic Industries North America, Inc. ("TTI-NA").  We work closely with TTI-NA to provide several outdoor power equipment oil solutions at varying weights and at several price points with Delta in order to provide a wide assortment of private label and co-branded engine oil options.





●
In February 2011 we commenced shipping certain products to Walmart.  Our G-OIL® 2 Cycle and 4 Cycle SAE 30 Bio-synthetic "green" Engine Oil and G-FUEL Fuel Stabilizer, are now available at over 2,800 Wal-Mart locations, with a targeted distribution of G-OIL® Bio-based "green" Bar & Chain Oil in select markets and our G-OIL 5W-30 Bio-based Full Synthetic Motor Oil is in over 2,100 stores.





●
In February 2011 we entered into a partnership with the U.S. Environmental Protection Agency's Design for the Environment (DfE) Program, promoting environmental, technological and efficiency benefits. Under the agreement, our line of appearance products (G-CLEANTM), have been recognized by the DfE for its minimized risk to users and to the environment.





●
In April 2011 our products were recognized by the U.S. Department of Agriculture (USDA) in their first certified bio-based label program. Bio-based products are those composed wholly or significantly of agricultural ingredients – renewable plant, animal, marine or forestry materials. Products recognized in the USDA bio-based label program include our 2-Cycle, 4-cycle SAE 30 and 10W-30 Bio-Synthetic Engine Oils and our 5W-30 Bio-Based Full Synthetic Motor Oil.





●
In May 2011 our G-CLEANTM concentrated cleaning products were approved to carry The Home Depot's Eco Options label, a certification for products that meet certain environmental performance criteria.  The Eco Options label identifies products that have less of an impact on the environment than competing products.  Specifically, Eco Options products offer one or more of the following benefits: energy efficiency, water conservation, healthy home, clean air, and sustainable forestry.




23




●
In May 2011 we entered into a multi-race partnership with RAB Racing to support NASCAR's "green" initiative. RAB Racing is a highly competitive team in the NASCAR Nationwide Series and has showcased G-OIL on the No. 09 Toyota Camry driven by Kenny Wallace.  In addition we sponsor the Dyson Racing Team, Inc. in the LMP1 class in the American Le Mans Series which consist of 11 races.





●
In June 2011 we commenced shipping automotive motor oil performance products and our full line of "G"-Branded appearance products to Strauss Auto stores. Our motor oil is sold in 24 New Jersey Strauss Auto locations and automotive appearance products are in 52 locations throughout New Jersey, New York and Pennsylvania. Also in June 2011 we started distributing a line of G-CLEANTM pressure washing equipment, including pack-in of our ultimate biodegradable concentrated cleaners and 4-cycle SAE 30 Bio-Synthetic Engine Oils, to Menards home improvement stores. Menards operates more than 250 home improvement stores with locations in Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin and Wyoming.





Results of Operations





Comparison of the years 2010 and 2011





Revenues





Our activities for the years ended June 30, 2010 and 2011 essentially included capital origination, product development, manufacturing, marketing and sales of our bio-degradable performance and cleaning products, development of mass market product distribution networks for the intended distribution of our products, recruiting personnel, development of an infrastructure to support the planned business and increasing of revenues.





Our results of operations for the years ended June 30, 2010 and 2011 are as follows:





Years Ended June 30,2010


2011($000’s)Net sales

$
2,430


$
7,503Loss from operations

$
(12,295
)

$
(9,672
)Settlement charges

$
(551
)

$
(2,528
)Other expense

$
(38
)

$
(8
)Net loss

$
(12,884
)

$
(12,208
)


Net Sales





Net sales for the year ended June 30, 2010 were $2,430 primarily attributed to sales of bar and chain lubricants, 4-cycle oil, grill & surface cleaners, pressure washer cleaners, all purpose cleaner and  fuel stabilizer.  Net sales for year ended June 30, 2011 were $7,503, primarily attributed to sales of 2-cycle and 4-cycle engine oils, G-CLEANTM pressure washing equipment, 5W-30 motor oil and grill cleaner.  The increase in net sales from 2010 to 2011 is a result of higher shipments of our 2-cycle and 4-cycle engine oils, 5W-30 motor oil and sales of the G-CLEANTM pressure washing equipment.




For the fiscal year ended June 30, 2010, approximately 83% of our sales were from two customers, TTI and Ace Hardware Corp.  For the fiscal year ended June 30, 2011, approximately 88% of our sales were from three customers, TTI, Walmart and Menards, Inc.  Net sales are comprised as follows:




24




Years Ended June 30,2010


2011($000’s)Performance products

$
1,297


$
4,917Cleaning products

$
1,133


$
2,586Total

$
2,430


$
7,503


Cost of Sales (exclusive of depreciation and amortization)





Cost of sales (exclusive of depreciation and amortization) primarily consists of the cost of obtaining bio solvents, plant oils, additives, packaging components and fees paid to our affiliates for the costs of salaries and benefits of operations employees.  Cost of sales (exclusive of depreciation and amortization) for the years ended June 30, 2010 and 2011 were approximately $1,990 and $6,320, respectively.  The increase in cost of sales (exclusive of depreciation and amortization) from 2010 to 2011 is primarily due to the increase in net sales.





Selling, General and Administrative Expenses





Selling, general and administrative expenses consist primarily of salaries and benefits, product development and testing fees, advertising and marketing expenses, public relations, insurance, fees for professional services and non-cash charges for stock compensation.  Selling, general and administrative expenses for the years ended June 30, 2010 and 2011 include the following:





Years Ended June 30,2010


2011($000’s)Salaries

$
1,175


$
854Selling, marketing, public relations and related

$
2,291


$
3,115Development, product release and testing

$
404


$
651Management and operating fees

$
853


$
617Legal and professional

$
839


$
401Occupancy, communications and all other, net

$
1,475


$
721Total selling, general and administrative  expenses

$
7,037


$
6,359


The decrease in salaries from fiscal 2010 to 2011 is due to prior year bonus accruals in February 2010 and the resignation of our former president and chief operating officer in September 2010.  The increase in sales and marketing expenses from the 2010 period to the 2011 period is primarily due to higher auto racing sponsorship fees, partially offset by decreased promotion and shipping costs.  The increase in development, product release and testing from the 2010 period to the 2011 period is primarily due to the independent testing fees to obtain the SN rating from the American Petroleum Institute (API) for our 5W-30 motor oil.  The decrease in management and operating fees from the 2010 period to the 2011 period is due to the termination of our agreement with Kwik Paint Products.  The decrease in legal and professional fees from the 2010 period to the 2011 period is primarily due to lower legal and audit fees, exclusive of legal fees incurred to settle the Zuckerman litigation (refer to “settlement and legal charges”).  The decrease in occupancy, communications and all other from the 2010 period to the 2011 period is primarily due to the prior year information system charges and lower expenses for travel, rent, board of director’s fees and telecommunication charges.





Stock-based compensation





Stock-based compensation expense for the years ended June 30, 2010 and 2011 was approximately $3,718 and $4,107, respectively.  The increase from the 2010 period to the 2011 period is primary due to an increase in the number of stock option grants in fiscal 2011 as compared to fiscal 2010 and the issuance of stock for consulting services rendered.




25




Impairment of Supplier Assets





On December 4, 2009 we received a notice from Bio Tec, at the time our principal supplier of performance products, that it was terminating its agreement with us.  As a result, we recorded charges of $1,546 for the year ended June 30, 2010.  On July 21, 2010 we entered into a settlement agreement with Bio Tec.  However, we determined that amounts owed to us may not be collectable and the carrying amounts of assets related to Bio Tec may not be recoverable.  As such for the fiscal year ended June 30, 2010, we recorded an impairment loss of $610 related to our exclusive rights to Bio Tec’s formulations, wrote off $596 for inventory, recorded a charge of $286 for fixed assets at the Bio Tec facility, and expensed other Bio Tec related assets totaling $54.  If we determine charges recorded are deemed collectable or recoverable we will reverse these amounts in future periods to the impairment of supplier assets.





Depreciation and amortization





Depreciation and amortization expense for the years ended June 30, 2010 and 2011 was approximately $434 and $389, respectively.  Depreciation charges totaled $39, and $25 for the years ended June 30, 2010 and 2011, respectively, and amortization expense for intangible assets totaled $395 and $364 for the years ended June 30, 2010 and 2011, respectively.  The decrease in amortization expense from the 2010 period to the 2011 period is primarily due to the impairment of certain intangible assets in 2010.Depreciation and amortization expense is excluded from cost of sales.





Settlement and legal charges





For the year ended June 30, 2010, we recorded legal charges of $551 in connection with the Zuckerman litigation.  For the year ended June 30, 2011, we recorded settlement and legal charges of $2,528 in connection with the Zuckerman litigation, which included (i) $1,435 for 3,500,000 of shares issued to the plaintiffs in the settlement, (ii) $100 cash paid to the plaintiffs and (iii) $993 of legal fees.





Interest expense, net





Net interest expense for the years ended June 30, 2010 and 2011 was approximately $38 and $8, respectively.  Interest expense consists of interest due on notes payable to related parties.  Interest income consists of interest earned on bank deposits and deposits in an institutional money market fund. The decrease in interest expense is due to the re-payment of notes payable to related parties and a reduction of the interest rate on the secured note dated December 28, 2007.  Interest expense is currently accruing at approximately $3 per quarter.





LIQUIDITY AND CAPITAL RESOURCES





At June 30, 2010 and 2011, we had $1,360 and $772, respectively, in cash and an accumulated deficit of $45,238 and $57,446, respectively.  At June 30, 2010 we had working capital of $371.  At June 30, 2011, we had a working capital deficit of $3,003.





Net cash used by operating activities was $7,816 and $4,189 for the years ended June 30, 2010 and 2011, respectively.  The decrease from the 2010 period to the 2011 period was primarily due to an increase in accounts payable, partially offset by payments made to vendors for the year ended June 30, 2011.




26





Net cash provided in financing activities was $8,534 and $3,601 for the years ended June 30, 2010 and 2011, respectively. The decrease in financing activities is primarily due to lower cash receipts from private placement transactions. The net proceeds from our financing activities were used to support our expansion, including purchases from suppliers, advertising and increased infrastructure costs.





We currently have no material commitments for capital expenditures.  Our capital requirements are not significant as the majority of our performance and cleaning products are outsourced to third party suppliers.  During the years ended June 30, 2010 and 2011, our cash used for investing activities (capital requirements) was $55, and $0, respectively.  In the foreseeable future, we will require capital for the growth of our business, including increases in personnel, advertising and packaging finished goods to fulfill orders.





Losses from operations are continuing subsequent to June 30, 2011 and we anticipate that we will continue to generate losses from operations in the near future.  Since inception, we have financed our operations by issuing securities (common stock and debt instruments) in various private placement transactions and from revenue generated by sales of our products.  From July 1, 2010 through June 30, 2011, we issued 11,751,000 shares of common stock for gross proceeds of $2,661 in private placement transactions and issued 200,000 shares of our common stock, with a market value on the date of issuance equal to $106, to pay a consultant for services rendered.





On March 7, 2011, we signed a $15,000 Purchase Agreement with Lincoln Park Capital Fund, LLC (“LPC”), an accredited investor.  At our sole discretion, over a 30-month period beginning on the effective date of the registration statement covering the sale of those shares, we can sell shares of common stock to LPC in amounts up to $50 per sale, subject to the satisfaction of certain conditions as set forth in the Purchase Agreement, up to the aggregate commitment of $15,000.





Under the Purchase Agreement, on any business day selected by us and as often as every two business days, we may direct LPC to purchase up to $50,000 worth of our common stock. The purchase price per share is equal to the lesser of:





●
the lowest sale price of our common stock on the purchase date; or





●
the average of the three lowest closing sale prices of our common stock during the 12 consecutive business days prior to the date of a purchase by LPC.





The purchase price will be equitably adjusted for any reorganization, recapitalization, non-cash dividend, stock split, or other similar transaction occurring during the business days used to compute the purchase price.





The amount that we may sell to LPC as often as every two business days will increase as follows:  (i) $75 if, on the purchase date, our share price is not below $0.40 per share; (ii) $150 if, on the purchase date, our share price is not below $0.60 per share; (iii) $150 if, on the purchase date, our share price is not below $0.90 per share; (iv) $250 if, on the purchase date, our share price is not below $1.50 per share.  The price at which LPC would purchase these accelerated amounts of our stock will be the lesser of (1) the lowest sale price of our common stock on the purchase date and (2) the lowest purchase price (as described above) during the 10 consecutive business days prior to the purchase date.





During the fiscal year ending June 30, 2011, we issued 1,045,000 shares of common stock for gross proceeds of $300 and 17,000 shares of common stock for commitment fees to LPC.  Total shares remaining to be purchased under the agreement are 18,955,000 shares.





Going Concern Consideration





Due to our limited amount of additional committed capital, recurring losses, negative cash flows from operations and our ability to pay outstanding liabilities, in their report for the fiscal year ended June 30, 2011, our independent auditors stated that there is substantial doubt about our ability to continue as a going concern. These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, assuming that we will continue as a going concern.





Since inception, we have incurred operating losses and negative cash flows from operations.  As of June 30, 2011, we had an accumulated deficit of $57,446, with total stockholders’ deficit of $1,640.  We had a working capital deficit of $3,003 at June 30, 2011.




27





We continue to have discussions with existing and potential new investors regarding an investment in us.  Although we do not have any firm commitments, we intend to continue these discussions.  Additionally, we believe revenues will increase as consumers learn of and experience the efficacy of our products.  Increased revenues will reduce, or eliminate our operating losses and enable us to meet our financial obligations. However, there can be no assurances that we can attract new investment or increase revenues.  Failure to obtain sufficient equity financing would have substantial negative ramifications to us.





Contractual Arrangements





Significant contractual obligations as of June 30, 2011 are as follows:





Amount Due inType of Obligation

Total Obligation


Less than 1 yearFacility Lease

$
150


$
89





Off Balance Sheet Arrangements





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





CRITICAL ACCOUNTING POLICIES AND ESTIMATES





We have identified critical accounting principles that affect our consolidated financial statements by considering accounting policies that involve the most complex or subjective decisions or assessments as well as considering newly adopted principals. They are:





Use of Estimates– The preparation of consolidated financial statements in accordance with U.S. GAAP requires that management 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management periodically assesses the accuracy of these estimates and assumptions. Actual results could differ from those estimates. Estimates are used when accounting for various items, including but not limited to allowances for doubtful accounts; derivative financial instruments; asset impairments; revenue recognition; depreciation and amortization; income taxes; and legal and other contingencies.





Share-Based Payments – We adhere with U.S. GAAP, which establishes standards for share-based transactions in which an entity receives employees’ or consultants’ services for (a) equity instruments of the entity, such as stock options or warrants, or (b) liabilities that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of such equity instruments.  We expense the fair value of stock options and similar awards, as measured on the awards’ grant date.  This applies to all awards granted after the date of adoption, and to awards modified, repurchased or cancelled after that date.





We estimate the value of stock option awards on the date of grant using the Black-Scholes option-pricing model (the “Black-Scholes model”). The determination of the fair value of share-based payment awards on the date of grant is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, expected term, risk-free interest rate, expected dividends and expected forfeiture rates.





Intangible Assets – Intangible assets are carried at cost less accumulated amortization. For financial reporting purposes, amortization of intangibles has been computed over an estimated useful life of seven years using the straight-line method.




28





Impairment of Long-Lived Assets – Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  Determination of recoverability is generally based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition, as well as specific appraisal in certain instances.  Measurement of an impairment loss for long-lived assets is based on the fair value of the asset as estimated using a discounted cash flow model.  Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. We are a new company with new “green” products in the market.  Sales of our cleaning products commenced in March 2008 and our performance products (2-cycle, 4-cycle and bar and chain lubricants) in August 2008.  In September 2009, sales of our motor oil commenced after we obtained the API certification and SM rating for our 5W-30 motor oil.  Since our products are new to market, we do not have any assurance that we will be successful.  However, our financial projections indicate a return and recoverability, based on an estimate of undiscounted future cash flows resulting from the sale of our product lines, well in excess of the $1.7 million in carrying value of our intangible assets. As such, we determined that the estimated fair value exceeds the carrying value of our long-lived assets groups.





We have considered our long-lived assets as one asset group.  In addition, we considered recent equity raises and our market capitalization.  On June 27, 2011, we issued stock in a private placement at $0.25 per share for a total market capitalization in excess of $38 million (150 million shares x $0.25) and at September 1, 2011 our market capitalization is in excess of $33 million (151 million shares x $0.22), well in excess of the asset’s carrying value. As such, our asset groups have estimated fair values that are in excess of the carrying value.





ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





As a “smaller reporting company” we are not required to provide the information required by this Item.





ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





The financial statements required by this Item 8 are set forth elsewhere in this Annual Report beginning on page F-1.





ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.





There were no changes in and disagreements with accountants on accounting and financial disclosure within the two most recent fiscal years or any subsequent interim period.





ITEM 9A. CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls and Procedures





We carried out an evaluation under the supervision and with the participation of our management, including our President and our Chief Financial Officer, of effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this Annual Report. Based on this evaluation, our Presidentand our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2011, to ensure that all material information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to them as appropriate, to allow timely decisions regarding required disclosure and that all such information is recorded, processed, summarized and reported as specified in the SEC rules and forms. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and can therefore only provide reasonable, not absolute, assurance that the design will succeed in achieving its stated goals.




29





Management’s Annual Report on Internal Control over Financial Reporting





Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Management has conducted, with the participation of our President and our Chief Financial Officer, an assessment of our internal control over financial reporting as of June 30, 2011. Management’s assessment of internal control over financial reporting was conducted using the criteria in Internal Control over Financial Reporting - Guidance for Smaller Public Companiesissued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).





We have concluded that we did maintain effective internal control over financial reporting as of June 30, 2011, based on Internal Control over Financial Reporting - Guidance for Smaller Public Companiesissued by COSO.





Changes in Internal Control Over Financial Reporting





There were no changes in our internal controls over financial reporting that occurred during the quarter ended June 30, 2011 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





Limitation of the Effectiveness of Internal Control





A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.








ITEM 9B.  OTHER INFORMATION.





None.




30





PART III





ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.





Incorporated herein by reference to our proxy statement for our 2011 annual meeting of stockholders, to be filed no later than October 28, 2011.





ITEM 11.  EXECUTIVE COMPENSATION





Incorporated herein by reference to our proxy statement for our 2011 annual meeting of stockholders, to be filed no later than October 28, 2011.





ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS





Incorporated herein by reference to our proxy statement for our 2011 annual meeting of stockholders, to be filed no later than October 28, 2011.





ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.





Incorporated by reference herein to our proxy statement for our 2011 annual meeting of stockholders, to be filed no later than October 28, 2011.





ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES.





Incorporated by reference herein to our proxy statement for our 2011 annual meeting of stockholders, to be filed no later than October 28, 2011.





PART IV





ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





(a)     The following documents are filed as part of this Report:





1.     Financial Statements.  The following financial statements and the report of our independent auditor thereon, are filed herewith.





●
Report of Independent Registered Public Accounting Firm





●
Consolidated Balance Sheets as of June 30, 2010 and 2011





●
Consolidated Statements of Operations for the years ended as of June 30, 2010 and 2011





●
Consolidated Statements of Cash Flows for the years ended June 30, 2010 and 2011





●
Consolidated Statements of Changes in Stockholders’ Equity for the years ended June 30, 2010 and 2011





●
Notes to Consolidated Financial Statements




31





2.
Financial Statement Schedules — See response to Item 15(c) below.





3.
Exhibits. — See response to Item 15(b) below.





(b)
Exhibits





Exhibit

Numbers

Description3.1(a)

Certificate of Incorporation(1)3.1(b)

Certificate of Amendment of Certificate of Incorporation(1)3.1(c)

Certificate of Merger of Foreign Corporation into a Domestic Corporation(1)3.1(d)

Certificate of Correction of Certificate of Incorporation(1)3.1(e)

Certificate of Correction of Certificate of Amendment(1)3.1(f)

Certificate of Correction of Certificate of Merger(1)3.1(g)

Certificate of Ownership and Merger(1)3.2

By-Laws(1)4.1

Specimen Stock Certificate(1)4.2

Form of Option Agreement(1)10.1

2008 Stock Award and Incentive Plan, as amended(1)10.2

**Employment Agreement with William J. Marshall(1)10.3

**Employment Agreement with Greg Adams(1)10.4

Agreement with Inventek Colloidal Cleaners, LLC(1)10.5

Distribution Agreement with Techtronics Industries North America, Inc.(1)10.6

Promissory Note in the aggregate principal amount of $300,000(1)10.7

Promissory Note in the aggregate principal amount of $125,000(1)10.8

Agreement with Bio Tec Fuel and Chemical, LLC(1)10.9

Letter Agreement with Kwik Paint Products(1)10.10

Agreement with Marketiquette, Inc.(1)10.11

Investment Agreement with Techtronics Industries Co., Inc.(1)10.12

**Amendment No. 1 to Employment Agreement with Greg Adams(1)10.13

Assignment of Invention, Priority Rights and Rights to Apply for Patents by Mathew Zuckerman(1)21.1

Subsidiaries of Green Earth Technologies(1)23.1

Consent of Friedman LLP*31.1

Certification of Chairman and Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002*31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002*32.1

Certification of Chairman and Chief Executive Officer and chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002*




*     Filed herewith.


**  This exhibit is a management contract or compensatory plan or arrangement.


(1)
Filed as an exhibit to the Company’s Securities and Exchange Act of 1934 Registration Statement on Form 10 on October 6, 2009, as amended.





(c)
Financial Statement Schedules.





See the attached Schedule II – Valuation and Qualifying Accounts.




32




SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS




GREEN EARTH TECHNOLOGIES, INC.


Financial Statement Schedule


Valuation and Qualifying Accounts





Description

Balance at

Beginning

of Period


Charged To

Costs and

Expenses


Deductions (1)


Balance at

End of Period(in thousands)Allowance for Doubtful Accounts ReceivableYear ended June 30, 2009

$
20



48



-


$
68Year ended June 30, 2010

$
68



32



(55
)

$
45Year ended June 30, 2011

$
45



60



(25
)

$
80Inventory ReserveYear ended June 30, 2009

$
-



348



-


$
348Year ended June 30, 2010

$
348



551



(129
)

$
770Year ended June 30, 2011

$
770



200



(245
)

$
725


__________________________


(1)   Write-offs




All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not required under the related instructions or are inapplicable, or because the information has been provided in the Financial Statement or the Notes thereto.




33





SIGNATURES




Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





Green Earth Technologies, Inc.By:
/ S /  JEFFREY LOCHJeffrey LochPresident and Chief Marketing Officer

Date: September 7, 2011




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been duly signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.





Signature

Title

Date/s/  DAVID M. BUICKO

Chairman of the Board of Directors

September 07, 2011David M. Buicko

Director/s/  GREG D. ADAMS

Chief Operating Officer,

September 07, 2011Greg D. Adams

Chief Financial Officer and Secretary/s/  JEFFREY LOCH

President, Chief Marketing Officer

September 07, 2011Jeffrey Loch

Director/s/  WILLIAM J. MARSHALL

Director

September 07, 2011William J. Marshall/s/  JANET JANKURA

Director

September 07, 2011Janet Jankura/s/  HUMBERT POWELL

Director

September 07, 2011Humbert Powell


34





GREEN EARCH TECHNOLOGIES, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





PageReport of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets as of June 30, 2010 and 2011


F-3Consolidated Statements of Operations for the Years Ended June 30, 2010 and 2011


F-4Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2010 and 2011


F-5Consolidated Statements of Cash Flows for the Years Ended June 30, 2010 and 2011


F-6Notes to Consolidated Financial Statements


F-7








F-1





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM










To the Board of Directors and Stockholders of


Green Earth Technologies, Inc.





We have audited the accompanying consolidated balance sheets of Green Earth Technologies, Inc. and subsidiaries (the “Company”) as of June 30, 2011 and 2010, and the related consolidated statements of operations, cash flows and stockholders’ equity (deficit) for the each of the two years in the period ended June 30, 2011. These consolidated financial statements are the responsibility of Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our 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, we express no such opinion. An audit also 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. We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and subsidiaries as of June 30, 2011 and 2010, and the results of their operations and their cash flows for each of the two years period ended June 30, 2011 and 2010, 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 1 to the consolidated financial statements, the Company's losses, negative cash flows from operations, working capital deficit and its ability to pay its outstanding liabilities through fiscal 2012 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 1.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.








Friedman LLP


East Hanover, New Jersey


September 7, 2011






F-2




GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(in thousands, except share data)June 30, 2010


June 30, 2011ASSETSCurrent assets:Cash and cash equivalents

$
1,360


$
772Trade receivables, less allowance of $45 and $80


419



2,428Inventories, net


1,788



957Prepaid expenses and current assets


183



543Total current assets


3,750



4,700Property and equipment, net


82



57Intangibles, net


1,670



1,306$
5,502


$
6,063LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities:Accounts payable

$
1,679


$
4,932Accrued expenses


1,093



1,251Deferred revenue, related party


407



380Notes payable, related party


200



1,140Total current liabilities


3,379



7,703Commitments and contingenciesStockholders’ equity (deficit)Common stock, $0.001 par value, 300,000,000 shares authorized, 140,018,153 and 150,042,965 shares issued and outstanding, as of June 30, 2010 and June 30, 2011


140



150Additional paid-in capital


47,221



55,656Accumulated deficit


(45,238
)


(57,446
)Total stockholders' equity (deficit)


2,123



(1,640
)$
5,502


$
6,063


See notes to consolidated financial statements.
  F-3


GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except share data)Year Ended June 30,2010


2011Net sales

$
2,430


$
7,503Operating expense:Cost of sales (exclusive of depreciation and amortization)


1,990



6,320Selling, general and administrative expense


7,037



6,359Stock-based compensation


3,718



4,107Impairment of Supplier Assets


1,546



-Depreciation and amortization


434



38914,725



17,175Loss from operations


(12,295
)


(9,672
)Settlement and legal charges


(551
)


(2,528
)Interest expense, net


(38
)


(8
)Loss from operations before income taxes


(12,884
)


(12,208
)Income tax


-



-Net loss

$
(12,884
)

$
(12,208
)Basic and diluted net loss per common share

$
(0.11
)

$
(0.09
)Basic and diluted weighted average common sharesoutstanding


115,687,087



140,460,591


See notes to consolidated financial statements.
  F-4




GREEN EARTH TECHNOLOGIES, INC
 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in thousands)


Common Stock


AdditionalPaid

In Capital


CommonStock

Subscription


Accumulated

DeficitShares


Amount








TotalBalance at June 30, 2009


85,745,486


$
86


$
30,964


$
2,000


$
(32,354
)

$
696Private placement of common stock (including 15,089,722 warrants and 325,000 shares issued for placement fees)


23,556,000



24



6,569



-



-



6,592Private placement of common stock from TTI


14,666,667



14



3,186



(2,000
)


-



1,200Product Liability Settlement


8,000,000



8



1,592



-



-



1,600Warrants Exercised – TTI


8,000,000



8



1,192



-



-



1,200Stock-based compensation expense


50,000



-



3,718



-



-



3,718Net loss


-



-



-







(12,884
)


(12,884
)Balance at June 30, 2010


140,018,153


$
140


$
47,221


$



$
(45,238
)

$
2,123Private placement of common stock


11,750,512



12



2,649



-



-



2,661Shares exchange


(6,000,000
)


(6
)


6



-



-



-Commitment shares from LPC financing


574,300



1



241



-



-



242Shares issued in settlement of Zuckerman litigation


3,500,000



3



1,432



-



-



1,435Stock-based compensation


200,000



-



4,107



-



-



4,107Net loss


-



-



-



-



(12,208
)


(12,208
)Balance at June 30, 2011


150,042,965


$
150


$
55,656


$
-


$
(57,446
)

$
(1,640
)


See notes to consolidated financial statements.
  F-5


GREEN EARTH TECHNOLOGIES, INC


CONSOLIDATED STATEMENT OF CASH FLOWS
 (in thousands)


Year Ended June 30,2010


2011Cash flows from operating activitiesNet loss

$
(12,884
)

$
(12,208
)Adjustments to reconcile net loss to net cash used in   operating activitiesDepreciation and amortization


434



389Shares issued in settlement of Zuckerman litigation


-



1,435Stock-based compensation expense


3,718



4,107Allowance for accounts receivable


(32
)


60Increase in allowance for inventory


551



200Impairment of intangibles


20



-Impairment of supplier assets


1,546



-Changes in assets and liabilitiesAccounts receivable


(108
)


(2,069
)Inventories


(445
)


631Prepaid expenses and other current assets


(11
)


(118
)Accounts payable


(585
)


3,253Accrued expenses


248



158Deferred revenue


(268
)


(27
)Net cash used in operating activities


(7,816
)


(4,189
)Cash flows used in investing activitiesAcquisition of equipment


(55
)


-Cash flows from financing activitiesProceeds from issuance of common stock, net of issuancecosts


8,992



2,661Proceeds from notes payable, related party


10



1,000Repayment of notes payable


(468
)


(60
)Net cash provided by financing activities


8,534



3,601Net increase (decrease) in cash


663



(588
)Cash and cash equivalentsBeginning of year


697



1,360End of year

$
1,360


$
772Interest payments

$
4


$
-Income taxes paid

$
21


$
6Supplemental information from non-cash investing and financing activitiesConversion of debt to equity

$
1,600


$
-Commitment shares for financing activity

$
-


$
242Conversion of accounts payables to notes payable

$
20


$
-


See notes to consolidated financial statements.
  F-6




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)




1.
SUMMARY OF BUSINESS AND BASIS FOR PRESENTATION





Organization and Business





Green Earth Technologies, Inc. and its wholly-owned subsidiary, GET Manufacturing, Inc., were formed on August 7, 2007 under the laws of the state of Delaware (collectively, the “Company”).  The Company, markets, sells and distributes bio-degradable performance and cleaning products.  The Company’s product line crosses multiple industries including the automotive aftermarket, marine and outdoor power equipment markets. The Company sells to home centers, mass retail outlets, automotive stores, equipment manufacturers and over the Internet.





Liquidity and Going Concern





Due to the Company’s limited capital, recurring losses and negative cash flows from operations, and the Company’s limited ability to pay outstanding liabilities, there is substantial doubt about its ability to continue as a going concern. These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, assuming that the Company will continue as a going concern.





As reflected in the accompanying consolidated financial statements, the Company had a net loss of $12,208 and net cash used in operations of $4,189 for the year ended June 30, 2011 and had a working capital deficit of $3,003 and stockholders’ deficit of $1,640. The Company has relied upon cash from financing activities to fund its ongoing operations as it has not been able to generate sufficient cash from operating activities in the past and there is no assurance that it will be able to do so in the future.





The Company cannot predict how long it will continue to incur further losses or whether it will ever become profitable, or if its business will improve.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.





The Company plans to increase revenues in order to reduce, or eliminate, its operating losses.  Additionally, the Company will attempt to obtain additional capital or through its agreement with Lincoln Park Capital Fund, LLC (“LPC”, see note 9) in order to enable it to continue to meet its financial obligations until it achieves profitability.  There can be no assurance that the Company will be able to raise additional capital, whether from the sale of equity, debt or convertible securities or otherwise, on favorable terms, or at all. Failure to obtain sufficient financing would have a substantial adverse effect on the Company’s business, operations and financial condition.





2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles of Consolidation – The accompanying consolidated financial statements include the accounts of Green Earth Technologies, Inc. and its wholly-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated in consolidation.





Use of Estimates – The preparation of consolidated financial statements in accordance with U.S. GAAP requires that management 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.  Management periodically assesses the accuracy of these estimates and assumptions. Actual results could differ from those estimates. Estimates are used when accounting for various items, including but not limited to allowances for doubtful accounts; net realizable value of inventory, provision for income taxes; derivative financial instruments; asset impairments; revenue recognition; depreciation and amortization; and other contingencies.




F-7




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


Cash and Cash Equivalents -Cash balances in banks are insured by the Federal Deposit Insurance Corporation subject to certain limitations.  For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.




Revenue Recognition – Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee is fixed and determinable and collectability is reasonably assured.  The Company recognizes revenue when product is shipped or when it is received by the customer, depending on the contractual terms.The Company’s revenue is comprised of the sale of its products to retailers and distributors.





Allowance for Doubtful Accounts – The Company maintains an allowance for uncollectible accounts receivable for estimated losses resulting from customers’ failure to make payments. Management determines the estimate of the allowance for uncollectible accounts receivable by considering a number of factors, including: (1) historical experience; (2) aging of the accounts receivable; and (3) specific information obtained by the Company on the financial condition and the current creditworthiness of its customers. The Company wrote-off $25 of uncollectible accounts receivable for the period ended June 30, 2011.





Inventories – Inventories are valued at the lower of cost or market. Cost is determined principally by the first-in, first-out method. The costs of finished goods and work-in-process inventories include material, manufacturing labor and overhead components. The Company periodically reviews the net realizable value of the inventory and, if necessary, records a reserve to reflect the net realizable value of the inventory.





Property and Equipment – Property and equipment is stated at cost less accumulated depreciation. Depreciation of property and equipment is provided using the straight-line method over the assets’ estimated useful lives. Leasehold improvements are amortized over the shorter of the assets’ economic lives or the lease term. In situations where the Company determines that the useful life of a long-lived asset should be revised, the Company depreciates the net book value in excess of the estimated residual value over its revised remaining useful life.





Intangible Assets – Intangible assets are carried at cost less accumulated amortization. For financial reporting purposes, amortization of intangibles has been computed over an estimated useful life of seven years using the straight-line method.  Amortization charges totaled $395 and $364 during the years ended June 30, 2010 and 2011, respectively.  Amortization expenses have been included in operating expenses.





Deferred Revenue – Deferred revenue is comprised of all unearned revenue that has been collected in advance, primarily for future performance and appearance product purchases, and is recorded as deferred revenue on the balance sheet until the revenue is earned.





Impairment of Long-Lived Assets – Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  When it becomes apparent that indicators such as a significant decrease in the market value of the long-lived asset group or if material differences between operating results and the Company’s forecasted expectations occur, then an impairment analysis is performed.





If indicators arise, an initial determination of recoverability is performed based on an estimate of the undiscounted future cash flows resulting from the use of the asset and its eventual disposition compared with the carrying value. If the carrying value of the asset group exceeds the undiscounted cash flows, a measurement of an impairment loss for long-lived assets is performed.  The impairment charge is the excess of the carrying value of the asset group over the fair value, as determined utilizing appropriate valuation techniques.




F-8




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


Segments – The Company has grouped its long-lived assets in accordance with the methodologies of how it manages the business.  Currently, the Company is one segment with multiple products, and as such the Company’s asset group is based upon this one segment methodology.





Stock Based Compensation – The Company accounts for stock-based awards to recipients in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options.  The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model.  For all employee stock options, the Company recognizes compensation expense over the requisite service period (generally, the vesting period of the stock-based aware).  The Company’s option pricing model requires the input of highly subjective assumptions, including the expected stock price volatility, expected term, and forfeiture rate.  Any changes in these highly subjective assumptions could significantly impact stock-based compensation expense.





Stock-based awards to non-employee in exchange for services are accounted for as variable awards in accordance with applicable accounting principles.  The awards are re-valued each reporting period until fully vested in accordance with the terms and conditions of the award.





Advertising and Promotional Costs – Advertising and promotion costs, which are included in selling, general and administrative expense, are expensed as incurred.  During the years ended June 30, 2010 and 2011, advertising and promotion costs totaled $1,855 and $2,824, respectively.





Shipping Costs – Shipping costs are included in selling, general and administrative expenses.  During the years ended June 30, 2010 and 2011, shipping cost totaled $436 and $291, respectively.





Research and Development Costs – Research and development costs, which are included in selling, general and administrative expense, consist primarily of salaries and employment related expenses, independent testing fees and allocated facility costs.  All such costs are charged to expense as incurred. During the years ended June 30, 2010 and 2011, research and development costs totaled $404 and $651, respectively.





Net Loss Per Share – Basic net loss per share is based upon the weighted average number of common shares outstanding.  Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised.  Dilution is computed by applying the treasury stock method.  Under this method, options, warrants and restricted stock are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.  Since the Company has incurred losses from all periods presented, the dilutive per share calculation is the same as the basic calculation.  Anti-dilutive securities not included in net loss per share calculation for the quarters include:





Years EndedJune 30,2010


2011Potentially dilutive securities:Outstanding time-based stock options


8,436,000



25,459,000Outstanding time-based restricted stock


4,000,000



-Warrants


7,690,000



7,690,000




Income Taxes – The Company accounts for income taxes by the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the recognition of tax effects for financial statement and income tax reporting purposes by applying enacted income tax rates applicable to future years to differences between the financial statement carrying amounts and tax bases of existing assets and liabilities. A valuation allowance has been recorded to reduce net deferred tax assets to only that portion that is judged more likely than not to be realized.




F-9




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


Fair Value Measurements–Accounting standards have been issued which define fair value, establishes a market-based framework or hierarchy for measuring fair value and expands disclosures about fair value measurements. The standard is applicable whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value. The standard does not expand or require any new fair value measures, however its application may change current practice.





Fair value is defined under the standard as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standard also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.





●
Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market





●
Level 2 — inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability





●
Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability





The Company’s financial instruments at June 30, 2011 consist of accounts receivable, accounts payable and notes payable.  The Company believes the reported carrying amounts of its accounts receivable, accounts payable and related party debt approximate fair value, based upon the short-term nature of these instruments.





3.             SETTLEMENT AND LEGAL CHARGES





The Company was the party defendant in action titled Mathew Zuckerman et. al. v. Green Earth Technologies, Inc. et. al. (the “Zuckerman Case”), filed in November 2009.  On March 30, 2011, the United States District Court for the Central District of California issued an order settling the Zuckerman Case.  Pursuant to the terms of the settlement, the Company paid the plaintiffs the sum of $100 and issued 3,500,000 shares of its common stock to the plaintiffs.  The Company recorded a charge of $1,435 related to the shares based on a closing price of $0.41 on the date of issuance.  In connection with the Zuckerman Case, the Company incurred legal charges of $551 and $993 for the years ended June 30, 2010 and 2011, respectively.  Total litigation settlement costs for June 30, 2011 was approximately $2,528.




F-10




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


4.             INVENTORIES, NET





Inventories consist of the following:





June 30, 2010


June 30, 2011Raw materials

$
1,377


$
402Finished goods


411



555$
1,788


$
957





Inventories are presented net of reserves of $770 and $725 at June 30, 2010 and 2011, respectively.  The Company wrote-off approximately $245 of worthless inventory during the period ended June 30, 2011.





5.
PROPERTY AND EQUIPMENT





Property and equipment consist of the following:




June 30,2010


June 30,2011


Estimated Useful LivesResearch & Development  equipment

$
93


$
93



5-10Furniture, fixtures and office equipment


23



4



3-5Total property and equipment, gross


116



97Less: accumulated depreciation


34



40$
82


$
57





Depreciation charges totaled $39 and $25 for the years ended June 30, 2010 and 2011, respectively.  The Company wrote-off approximately $19 of fixed assets that were fully depreciated.





6.
INTANGIBLE ASSETS





Intangible assets consist of the following:




June 30, 2010


June 30, 2011


Estimated Useful LivesPurchased Technology and exclusivity rights

$
2,550


$
2,550



7Less: accumulated amortization


880



1,244$
1,670


$
1,306





Expected amortization of intangible assets is as follows:





June 302012

$
3642013


3642014


3642015


214$
1,306





Amortization expenses included in depreciation and amortization totaled $395 and $364 for the years ended June 30, 2010 and 2011, respectively.




F-11




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


7.
ACCRUED EXPENSES





Accrued liabilities consist of the following:


June 30, 2010


June 30, 2011Accrued payroll and taxes

$
643


$
714Accrued interest


220



229Accrued board of director fees


103



133Other


127



175$
1,093


$
1,251





8.
NOTES PAYABLE, RELATED PARTY





Notes payable consist of the following:




June 30, 2010


June 30, 2011Secured note dated December 28, 2007

$
200


$
140Secured note dated May 20, 2011


-



1,000$
200


$
1,140





The secured note dated December 28, 2007, as amended is held by a former officer of the Company.  In April 2011, the note was extended to December 31, 2011 and the interest rate was changed to the Wall Street Journal Prime Rate (currently 3.25%) to be adjusted at the beginning of each month effective April 1, 2011.  As of June 30, 2010 and 2011, the balance due was $200 and $140, respectively, plus accrued interest of $220 and $228, respectively.





The secured note dated May 20, 2011, is held by TTI, a related party.  The due date is December 31, 2011 and the interest rate is 1% per month.   As of June 30, 2011, the balance due was $1,000,000 plus accrued interest of $1.





9.
STOCKHOLDERS DEFICIT





Private Placements





From July 1, 2010 through June 30, 2011, the Company issued 11,751,000 shares of common stock for gross proceeds of $2,661 in private placement transactions.





Restricted Stock





In December 2010, the Company granted stock options covering 4,000,000 shares of the Company’s common stock, vesting on January 5, 2011 to the Company’s former Chief Executive Officer upon his forfeiture of 4,000,000 unvested restricted shares of the Company’s common stock that was due to him.  The Company accounted for this exchange as a type I modification of a share-based award.  The Company assessed the fair value of the awards on the modification date and determined that no incremental value was present and therefore no additional compensation expense was recorded.




F-12




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)





Share Exchange





In September 2010, the Company exchanged stock options covering 6,000,000 shares of the Company’s common stock, vesting immediately to the Company’s former Chief Executive Officer upon his forfeiture of 6,000,000 restricted shares of the Company’s common stock previously issued to him.  The Company accounted for this exchange as a type I modification of a share-based award.  The Company assessed the fair value of the awards on the modification date and determined that no incremental value was present and therefore no additional compensation expense was recorded.





Stock Options





Common stock available for equity awards under the 2008 Employee Stock Award and Incentive Plan, as amended (the “2008 Plan”), is 40,000,000 shares as of June 30, 2011. Under the 2008 Plan, stock option grants may be exercised for a period up to ten years from the date of grant. Option awards are granted with an exercise price equal to the market price of the Company’s stock on the date of grant and generally vest over three years.  At June 30, 2011, 14,541,250 shares are available for future grants under the 2008 Plan.





Option activity for the year ended June 30, 2011 is as follows:





Number of

Options


Weighted

Average

Exercise Price

Weighted

Average Remaining

Contractual Term

Aggregate

Intrinsic

ValueOutstanding at June 30, 2010


8,436,250


$
0.43

9.0 yearsGranted


11,835,000


$
0.37Share Exchange


6,000,000


$
0.39Exercised


-0-Forfeited and Cancelled


(812,500
)

$
0.49Outstanding at June 30, 2011


25,458,750


$
0.39

9.0 years

$
240Exercisable at June 30, 2011


14,358,333


$
0.39

8.9 years

$
100




The aggregate intrinsic value represents the difference between the exercise price of the underlying awards and the market price of the Company’s common stock for those awards that have an exercise price below the market price at June 30, 2011.





The fair value of each time-based option award is estimated on the date of grant using a Black-Scholes option pricing model with the following assumptions:





For the Period Ended

June 30, 2010


For the Period Ended

June 30, 2011Average expected life (years)


6.0



6.0Average risk free interest rate


3.3
%


3.3
%Expected volatility


201
%


228
%Expected dividend rate


0
%


0
%Expected forfeiture rate


5
%


5
%





Stock Option expense for the year ended June 30, 2011 was $4,001





Unrecognized compensation expense of $4,776 is expected to be recorded over the next 1.7 years.




F-13




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)





Warrants




Number of Warrants


Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate IntrinsicValueOutstanding at June 30, 2010


7,689,722


$
0.28Granted


-0-Exercised


-0-Outstanding and exercisable at June 30, 2011


7,689,722


$
0.28

1.5 years

$
599




Other Uses – Common Stock





In July 2010, the Company issued 200,000 shares to pay a consulting firm for services rendered.  The value of the shares in connection with this transaction totaled $106 and was recorded for the period ended June 30, 2011.





Commitment Shares





On March 7, 2011, the Company signed a $15 million Purchase Agreement with LPC.  At the Company’s sole discretion, over a 30-month period beginning on the effective date of the registration statement covering the sale of those shares, the Company can sell shares of common stock to LPC in amounts up to $50,000 per sale, subject to the satisfaction of certain conditions as set forth in the Purchase Agreement, up to the aggregate commitment of $15 million.  In consideration for entering into the Purchase Agreement, the Company issued to LPC 574,300 shares of common stock as a commitment fee and will issue up to an additional 574,300 shares, when and if, LPC purchases at the Company’s discretion the first $10 million of the $15 million aggregate commitment.  The Purchase Agreement may be terminated by the Company at any time without any cost to the Company.As a result of the issuance of the initial shares to LPC, the Company recorded $242 as a deferred charge included in prepaid and other current assets.





During the fiscal year ending June 30, 2011, the company issued 1,045,000 shares of common stock for gross proceeds of $300 and 17,000 shares of common stock for commitment fees to LPC.  Total shares remaining to be purchased under the agreement are 18,955,000 shares.





10.           COMMITMENTS AND CONTINGENCIES





Zuckerman Case





On November 20, 2009, Mathew Zuckerman, the Company’s founder and its former president and chief operating officer, and other entities that Zuckerman controls or in which he claims a beneficial interest filed a lawsuit against the Company in the Superior Court of California, County of Los Angeles, alleging that they suffered damages of not less than $6 million as a result of the Company’s refusal to allow them to transfer the shares they allegedly owned or controlled at the time.  Mathew Zuckerman also sought declaratory relief that was not in violation of the non-compete provisions contained in his employment agreement with the Company.  Mathew Zuckerman is one of our founders and a former executive officer and director of the Company.  On February 19, 2010, the Company had the action moved to federal court.  On March 30, 2011, the United States District Court for the Central District of California issued an Order settling the case.  The terms of the Order are as follows:




F-14




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)





1.
The Company paid the plaintiffs the sum of $100.





2.
The Company issued 3,500,000 shares of its common stock (the “Settlement Shares”) to plaintiffs.





3.
On April 12, 2011 the Company filed a registration statement on form S-1 with the U.S. Securities and Exchange Commission registering these shares.  The registration statement was declared effective on May 12, 2011.





4.
The plaintiffs may not trade on the market in any one week more than 10% of the Company stock’s sales volume in the previous week’s sales.





5.
Other than the obligations contained in the terms of the settlement, the parties mutually released each other and their officers and directors from all claims and liabilities.





6.
The Company also released Alkane, Inc. and its officer and directors from all claims relating to or arising from any of the claims or counterclaims asserted in this action.  Zuckerman is an officer and a director of Alkane.





Employment Arrangements




Greg Adams, Chief Financial Officer and Chief Operating Officer




Mr. Adams employment agreement, as amended, is entitled to receive a base salary of $200, plus incentive compensation of $100 if he achieves $10,000 in financing for the Company, which was achirved in fiscal 2010.  In the event of termination for any reason other than for “cause,” death or disability or if the Company decides not to renew the agreement, Mr. Adams will receive, in addition to payment of accrued salary and benefits through the date of termination of employment, a severance payment equal to the sum of (i) twenty-four months of his then applicable annual base salary; and (ii) the average of his last two annual cash bonuses, and all stock options held by the executive shall immediately vest and remain exercisable for the lesser of their original term or five years.




Jeff Marshall Separation Agreement





On May 16, 2011, William J. Marshall resigned from his positions as chairman and chief executive officer of the Company.  Mr. Marshall will continue to serve as a member of the Company’s board of directors.  In connection with Mr. Marshall’s resignation, the Company and Mr. Marshall entered into a Separation Agreement (the “Agreement”) pursuant to which his employment agreement with the Company was terminated.  Under the Agreement, the parties, among other things, agreed that:





1.
The Company will continue to pay Mr. Marshall’s base salary in accordance with its normal payroll practices and for his current healthcare coverage through November 11, 2011.





2.
The Company will pay him all accrued and unpaid salary of $314 through May 15, 2011 in 48 equal installments every two weeks beginning November 25, 2011.





3.
All of Mr. Marshall’s stock options shall be exercisable in full in accordance with the terms of his original employment agreement.





For the year ended June 30, 2011 the Company recorded a charge of $97 related to this Agreement.




F-15




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)





Lease Commitments





The Company’s current lease for its White Plains, NY headquarters expires on October 31, 2011. The Company entered into a new lease in October 2011, expiring September 30, 2013, whereby the Company will move its headquarters from White Plains, NY to Hawthorne, NY.  Future minimum lease payments under the expiring and new lease through the termination date total $98.





The Company lease for its Celebration, FL sales office expires on September 31, 2012.   Future minimum lease payments through the termination date total $52.





The Company also has a month to month lease of office space in Davis, California for $1 per month. This facility houses the Company’s lab and research and development personnel.





Rent expense totaled $125 and $179 for the years ended June 30, 2010 and 2011, respectively.





11.
INCOME TAXES





The (provision) benefit for income taxes was $0 for the fiscal years ended 2009 and 2010, respectively. 
 The Company’s effective tax rate differs from the federal statutory rate of 34% as follows:




June 30, 2010


June 30, 2011Statutory federal tax (benefit) rate


(34
%)


(34
%)State and local taxes, net of federal benefit


-



(12
%)Loss of state NOL carryover


6
%


-Permanent Difference


1
%


(4
%)Valuation Allowance


27
%


50
%Effective Tax Rate


0
%


0
%
 The tax effects of temporary differences that give rise to deferred tax assets consist of the following:
  June 30,
2010


June 30,
2011Net Operating loss carry forwards - Federal

$
12,528


$
14,092Net Operating loss carry forwards – State


129



968Stock based compensation


2,400



5,910Long-term assets


165



209Preferred Compensation


226



343Reserves and allowances


280



372Total deferred assets


15,728



21,894Valuation allowance


(15,728
)


(21,894
)Net deferred tax assets

$
0


$
0




As of June 30, 2011, the Company had federal and state net operating loss carry forwards of approximately $41,444 and $7,949, respectively.  If not used, these carryforwards will expire between 2027 and 2031.





The Company maintains a valuation allowance of $15,728 and $21,894 on its deferred tax assets as of June 30, 2010 and 2011, respectively.  Until the Company achieves and sustains an appropriate level of profitability, it plans to maintain a valuation allowance on its net deferred tax assets on a fully reserved basis.





Compensation expense recognized attributable to non-qualified stationary stock options give rise to temporary timing differences and are not tax deductible by the Company for federal and state income tax purposes until they are exercised.  When stock options are cancelled, the Company does not receive any tax benefit and records a reduction of the deferred tax asset, with an offsetting reduction to the valuation allowance.  Such reductions in deferred tax assets related to awards that were cancelled were $54 and $283 during the fiscal years ended 2010 and 2011.





During the fiscal years ended 2010 and 2011, the Company did not have unrecognized tax benefits and accordingly did not recognized interest expense or penalties related to unrecognized tax benefits.





The Company’s tax returns for fiscal years 2006 through 2010, are currently open to audit by the tax authorities under the statute limitations for relevant federal and state jurisdictions.  The Company is currently in the process of preparing its tax return for fiscal 2011.




F-16
 
  GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


12.           RELATED PARTY TRANSACTIONS





Inventek





In February 2008, the Company entered into an agreement with Inventek under which Inventek granted the Company a royalty-free license and exclusivity rights to market, sell and distribute cleaning products. Inventek is owned by Yasmin Andrecola, whose husband Paul Andrecola, beneficially owns approximately 6.1% of the Company’s stock as of June 30, 2011.  Under the terms of the agreement, Inventek and the Company agreed to combine resources and work together collectively to formulate and manufacture products to be sold under the company’s brand names.  The Company purchased inventory from Inventek totaling $816 and $427 for the years ended June 30, 2010 and 2011, respectively.  As of June 30, 2010, there was a credit due from Inventek of $48.   As of June 30, 2011, the amount due to Inventek was $192.





Marketiquette





In July 2007, the Company entered into a services agreement, as amended, with Marketiquette which is owned and operated by Jeffrey Loch, the Company’s President, Chief Marketing Officer and one of its directors, and Carol Loch, his wife.  Mr. Loch does not receive any regular cash compensation from the Company for his services as the Company’s President, Chief Marketing Officer and director.  Carol Loch is the sole member of KeysKwest, LLC, which beneficially owns approximately 5.3% of the Company’s outstanding shares as of June 30, 2011.  Under the terms of the services agreement, the Company pays Marketiquette a monthly retainer of $36 as well as commissions from 5%-10% based on net sales it generates.  The commissions depend on the customer’s class of trade with a declining maximum scale based on volume.  Marketiquette uses the monthly retainer primarily for employees’ salaries, including four full-time and one part-time employee, and the commissions to primarily pay its sales representatives.  Fees for  services provided by  Marketiquette were $546 and $662 for the years ended June 30, 2010 and 2011, respectively, which are included in selling, general and administrative expenses.  As of June 30, 2010 and 2011, amounts due to Marketiquette were $76 and $194, respectively.





TTI





In December 2008, the Company entered into a five-year worldwide distribution agreement for G-branded products with TTI. TTI beneficially owns approximately 21.6% of the Company’s outstanding shares as of June 30, 2011.  For the years ended June 30, 2010 and 2011, approximately 63% and 41% of the Company’s revenues, respectively, were earned from TTI.  As of June 30, 2010 and 2011 there were no amounts due from TTI.  As of June 30, 2010 and 2011, amounts due to TTI, included in accounts payable, were $234 and $1,587, respectively.  As of June 30, 2010 and 2011 advances received from TTI for future sales of cleaning and performance products was $407 and $380, respectively.





Other





During the fiscal year ended June 30, 2011 the Company sold product to one customer in the amount of $125, of which this customer, in the aggregate, held less than 5% beneficial interest in the Company.




F-17




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)


13.
CONCENTRATIONS OF RISK





Cash





The Company maintains cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation subject to certain limitations.





Accounts Receivable





The Company distributes performance and appearance products to the entire U.S. market.  The following customers represent the majority of the Company’s sales:




June 30, 2010


June 30, 2011SalesTTI


64
%


41
%ACE Hardware


19
%


-Walmart


-



28
%Menards


-



19
%Accounts ReceivableACE Hardware


67
%


2
%Walmart


-



35
%Menards


-



60
%





Inventory and Accounts Payable





The Company purchases all of its performance products from Delta, its cleaning products from Inventek, a related party and its power washer equipment products from TTI, a related party.  The Company’s inventory on hand purchased from these vendors is as follows:





June 30, 2010


June 30, 2011Accounts PayableInventek


-



192Delta


-



2,071TTI


234



1,587Inventory purchasedInventek


816



427Delta


-



5,135TTI


-



1,278





F-18




GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share data)




14.
SUBSEQUENT EVENTS





SEC Investigation





As previously reported, in December 2009, the SEC served the Company with a subpoena for the production of documents concerning issuances of its common stock, the removal of restrictive legends from certificates evidencing its common stock, the existence of restrictions on its common stock and documents supporting various press releases issued by the Company in 2008.  The Company complied with the subpoena by producing the requested documents.  On August 29, 2011 the SEC notified the Company that they have completed their investigation and do not intend to recommend any enforcement action against the Company.