1.
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We note that you process waste at the West Virginia Facility without a formal written agreement but under the same terms as the original West Virginia Agreement. Please disclose here and in the risk factor on page 29 whether you are able to conduct your operations without the arrangement and the impact to your business if the arrangement was terminated.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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2.
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Please clarify what your role versus the facility owner’s role is at the West Virginia Facility. In the first paragraph, you say both that you process glycol and also that the facility owner will process glycol sourced by you to agreed upon specifications.
RESPONSE:
We have amended the disclosure to clarify the Company’s role versus the facility owner’s role at West Virginia Facility.
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3.
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Please revise the last paragraph to clarify what you mean by “strong” versus” moderate” and “weak” regulations in the different countries. Please also elaborate on the impact of regulation of waste glycol on the recycling industry. It is not clear whether you are suggesting that stronger regulations create more or less favorable conditions for glycol recyclers to operate their business.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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4.
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Please revise to identify your research sources in the second bulleted paragraph.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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5.
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Please revise your discussion about this chart to clearly indicate the significance of the shaded prices in the chart. Please also explain in the text accompanying the chart what the nature of the correlation is. Some of the information in the chart suggests an inverse relationship, while other information does not.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment. We did not intend to include shaded prices in the chart in the 8-K, thus we have removed such shading from the amended 8-K.
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6.
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Please revise the first paragraph to clarify whether your 14.5 million net gallon estimate by Year 5 is an annual figure (i.e., you will produce 14.5 million annually, rather than simple reaching the 14.5 million net gallon figure by year 5).
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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7.
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Please revise your discussion on page 16 to expand your discussion of your existing competitors. In this regard, we note your disclosure in the second paragraph on page 9 regarding the participants in the glycol recycling industry. Please refer to Item 101(h)(4)(iv) of Regulation S-K.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment. This section is meant to provide a competitive analysis of the Type I, commercial volume market, not the glycol recycling market as a whole. The full discussion of the glycol recycling market is covered in the second paragraph of the Glycol Regulations and Recycling section on page 9.
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8.
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Please revise your disclosure to state the effect of existing state or county regulations on your business as well as the impact on your business to the extent that any of your third-party transporters fail to obtain the necessary permits. Please also revise your disclosure to include the laws and regulations discussed in the fourth risk factor on page 30. Also, stat the costs and effects of compliance with environmental laws. See Items 101(h)(4)(ix) and Item 101(h)(4)(xi) of Regulation S-K.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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9.
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Please note that $100,000 is not a threshold amount that triggers executive compensation for smaller reporting companies who have elected to use the scaled disclosure requirements of Item 402(l) of Regulation S-K. Please revise your disclosure in the first sentence to state that your table includes compensation of your named executive officers and other individuals as required under Item 402(m)(2) of Regulation S-K.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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10.
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Please clarify whether the amount of consulting fees in the table represent amounts earned by Mr. Lorenz during 2009 and 2010. Please revise your disclosure to clearly indicate the relationship between the amount of consulting fees presented in the table and the amounts paid to and owed to Barcid Investment Group, which is owned by Mr. Lorenz, as disclosed in the text following the table.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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11.
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Please tell us whether Barcid Investment Group or Mr. Lorenz has a consulting agreement with you that covers Mr. Lorenz’s services to you. If so, please revise your disclosure to state the material terms of the contract. Please see Item 402(o)(1) of Regulation S-K. Please also file any such agreement as an exhibit to your Form 8-K. See Item 2.01(f) of Item 8-K and Item 601(b)(10) of Regulation S-K.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment. Neither Barcid, nor Mr. Lorenz have a formal written consulting agreement with the Company.
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12.
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Please file the convertible note and the forbearance agreement and amendments thereto as exhibits to your Form 8-K. See Item 601(b)(4) of Regulation S-K.
RESPONSE:
We have filed the convertible note and the forbearance agreement and amendments thereto as exhibits to the Form 8-K/A.
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13.
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Please revise this section to disclose the terms of the convertible note and the related forbearance agreement and, if material, any demand on your liquidity the note represents. See Item 303(a)(1) of Regulation S-K.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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14.
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Please not that Item 401(f) of Regulation S-K requires disclosure for ten years, not five years. Please revise your disclosure in this section accordingly.
RESPONSE:
We have amended the disclosure in the Form 8-K/A to comply with this comment.
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15.
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We note that you sold the operating assets of WEBA, including certain additive formula used as a principal value increment in your product sales during 2009 and your disclosure on page 41 of the 8-K which indicates that overall revenue was significantly impacted due to the disposition of your subsidiary. Please refer to ASC Topic 205-20-50 and tell us what consideration you gave to reporting discontinued operations. Also, please explain how you accounted for the sale of these assets.
RESPONSE:
We have reclassified certain accounts and amended the disclosures in the Form 8-K/A to comply with this comment. Please see the Explanatory Note in the Form 8-K/A which we have duplicated below:
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Global Recycling Technologies, Ltd.
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||||||||||||
Restated Consolidated Statements of Operations
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For the year ended December 31, 2009
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Restatements
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As filed
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(1) |
Restated
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||||||||||
Net Sales
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$ | 1,647,159 | $ | (1,521,293 | ) | $ | 125,866 | |||||
Cost of goods sold
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1,406,787 | (1,093,295 | ) | 313,492 | ||||||||
Gross profit (loss)
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240,371 | (427,999 | ) | (187,628 | ) | |||||||
Operating expenses
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||||||||||||
Executive consulting compensation
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699,480 | (343,815 | ) | 355,665 | ||||||||
Professional fees
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119,997 | (455 | ) | 119,542 | ||||||||
General and administrative
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181,044 | (106,467 | ) | 74,577 | ||||||||
Impairment charge
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2,000,000 | (2,000,000 | ) | - | ||||||||
Total operating expenses
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3,000,521 | (2,450,737 | ) | 549,784 | ||||||||
Loss from operations
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(2,760,150 | ) | 2,021,829 | (737,411 | ) | |||||||
Other income and expenses
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||||||||||||
Interest income
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2,725 | - | 2,725 | |||||||||
Interest expense
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(106,147 | ) | - | (106,147 | ) | |||||||
Loss from discontinued operations
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- | (21,829 | ) | (21,829 | ) | |||||||
Loss from disposal of assets
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- | (2,000,000 | ) | (2,000,000 | ) | |||||||
Total other income and expenses
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(103,421 | ) | (2,021,829 | ) | (2,125,250 | ) | ||||||
Loss before provision for income taxes
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(2,863,571 | ) | - | (2,863,571 | ) | |||||||
Provision for income taxes
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- | - | - | |||||||||
Net loss
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$ | (2,863,571 | ) | $ | - | $ | (2,863,571 | ) | ||||
Primary and fully diluted loss per share
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$ | (0.41 | ) | $ | - | $ | (0.41 | ) |
Global Recycling Technologies, Ltd.
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Restated Consolidated Statements of Cash Flows
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For the year ended December 31, 2009
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Restatements
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||||||||||||
As filed
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(1) |
Restated
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Net cash flow from operating activities
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Net loss
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$ | (2,863,571 | ) | $ | - | $ | (2,863,571 | ) | ||||
Adjustments to reconcile net loss to net cash used by
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used in operating activities
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Bad debt expense
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(714 | ) | - | (714 | ) | |||||||
Loss from discontinued operations
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- | 21,829 | 21,829 | |||||||||
Loss from disposal of assets
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- | 2,000,000 | 2,000,000 | |||||||||
Loss on impairment of long lived assets
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2,000,000 | (2,000,000 | ) | - | ||||||||
(Increase) decrease in accounts receivable
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30,081 | - | 30,081 | |||||||||
Increase (decrease) in accounts payable
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(26,811 | ) | - | (26,811 | ) | |||||||
Increase (decrease) in related party payable
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128,154 | (21,829 | ) | 106,325 | ||||||||
Increase (decrease) in accrued interest
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105,673 | - | 105,673 | |||||||||
Net cash used by operating activities
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(627,188 | ) | - | (627,188 | ) | |||||||
Cash flows from investing activities
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Net payments on disposal of assets
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- | - | - | |||||||||
Net cash used in financing activities
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- | - | - | |||||||||
Cash flows from financing activities
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Proceeds from the sale of common stock
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12,387 | - | 12,387 | |||||||||
Net cash provided by operating activities
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12,387 | - | 12,387 | |||||||||
Net decrease in cash
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(614,801 | ) | - | (614,801 | ) | |||||||
Cash at the beginning of the year
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700,975 | - | 700,975 | |||||||||
Cash at end of year
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$ | 86,174 | $ | - | $ | 86,174 |
1.
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The Company is responsible for the adequacy and accuracy of the disclosure in the Company’s Filings;
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2.
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Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the Company’s Filings; and
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3.
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The Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
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