10-Q 1 t305608.txt GREENSTREET UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: JUNE 30, 2009 Commission File Number: 0-19944 GREEN ST. ENERGY, INC. (Exact name of registrant as specified in its charter) DELAWARE 36-3809819 -------- ---------- (State or Jurisdiction of (IRS Employer ID No) Incorporation or Organization) 123 GREEN ST., TEHACHAPI, CALIFORNIA 93561 (Address of principal executive office) (zip code) (310) 556-9688 (Issuer's telephone number) 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 periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X 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 ( Section 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 [_] No [_]. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ X ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [X]. The number of shares outstanding of registrant's common stock, par value $0.005 per share, as of August 1, 2009, was 7,174,157 shares. GREEN ST. ENERGY, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) INDEX Page NO. Part I Financial Information Item 1: Condensed Consolidated Financial Statements (Unaudited) Balance Sheets as of June 30, 2009 (Unaudited) and December 31, 2008 3 Statements of Operations (Unaudited) - For the Three Months Ended June 30, 2009 and 2008 4 Statements of Operations (Unaudited) - For the Six Months Ended June 30, 2009 and 2008 5 Statements of Stockholders' Equity (Unaudited) - For the Six Months Ended June 30, 2009 6 Statements of Cash Flows (Unaudited) - For the Six Months Ended June 30, 2009 and 2008 7 Notes to Financial Statements (Unaudited) 9 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3: Quantitative and Qualitative Disclosure about Market Risk 18 Item 4: Controls and Procedures 18 Part II Other Information Item 6: Exhibits 19 PART I FINANCIAL INFORMATION

~~DECEMBER~~GREEN ~~31 SEPTEMBER 30 2002 2003 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents~~ST.~~..................................................~~ ~~$ 1~~ENERGY,~~514,509~~ ~~$ 790,719 Accounts receivable, net of allowance for doubtful accounts, 2002- $100,000: 2003- $100,000~~INC.~~............................................~~ ~~1,901,999~~and ~~2,527,191~~Subsidiary ~~Inventories.................................................................~~(A ~~1,756,641~~Development ~~834,956~~Stage ~~Refundable~~Company) ~~income~~Condensed ~~taxes.....................................................~~Consolidated ~~4,446,010~~Balance ~~822,619~~Sheets ~~Deferred~~June ~~income taxes....................................................... 748~~30,~~457~~ ~~616,785~~2009 ~~Prepaid~~(Unaudited) ~~expenses~~ and ~~other..................................................~~December 31,~~582~~ ~~17,311~~2008 ~~Restricted~~2009 ~~cash.............................................................~~2008 ~~348,731 0~~ ------------ ------------ ~~Total~~Assets ~~current~~Current assets~~....................................................~~: ~~10,747,929~~Cash ~~5,609,581~~and ~~PROPERTY,~~cash ~~PLANT~~equivalents ~~AND~~$ ~~EQUIPMENT:~~-- ~~Land,~~$ ~~buildings and improvements............................................ 5~~456,~~522,765~~000 ~~2,177,238~~Prepaid ~~Machinery~~expenses ~~and equipment..................................................... 9~~18,~~248,688~~000 125,~~928,600~~300 ------------ ------------ Total ~~property,~~current ~~plant~~assets ~~and equipment..................................... 14~~18,~~771,453~~000 4481,~~105,838~~300 ~~Less~~Land ~~accumulated depreciation............................................... (2~~250,~~760,441)~~000 0 --~~----------~~ ~~------------~~Land ~~Property,~~option ~~plant and equipment-net....................................... 12~~16,~~011~~250,~~012~~462 ~~4,105,838~~-- ~~ASSETS~~Deferred TOfinancing BEcosts ~~DISPOSED OF~~139,174 ~~NET...................................................~~-- ~~568,701 568,701~~ ------------ ------------ ~~TOTAL...........................................................................~~Total assets $ 2316,~~327~~657,~~642~~636 $ 10481,~~284,120~~300 ============ ============ ~~LIABILITIES~~Liabilities ~~AND~~and ~~STOCKHOLDERS~~Stockholders' ~~EQUITY~~Equity ~~CURRENT~~Current ~~LIABILITIES~~liabilities: Accounts payable~~............................................................~~ $ 3485,~~707,327~~820 $ 4284,~~578,653~~144 Accrued expenses~~............................................................~~ 1531,~~316~~057 98,~~579~~886 1Advance from shareholder 20,~~012,861~~320 ~~Current~~-- ~~portion~~Cash ofoverdraft ~~long~~159 -~~term~~- ~~debt...........................................~~Note ~~5,017,629~~payable 2300,~~782,198~~000 -- ------------ ------------ Total current liabilities~~...............................................~~ 101,~~041~~337,~~535~~356 8383,~~373~~030 Convertible debenture 12,~~712~~737,824 ~~DEFERRED~~-- ~~INCOME~~------------ ~~TAXES...........................................................~~------------ ~~616~~Total liabilities 14,~~785~~075,180 ~~616~~383,~~785~~030 ~~LONG~~-~~TERM~~----------- ~~DEBT..................................................................~~------------ 0Commitments 0and ~~STOCKHOLDERS~~contingencies Stockholders' ~~EQUITY~~equity: Preferred stock, $~~.01~~100 par value;: Series A authorized, 130,000~~,000~~ shares; noissued ~~shares~~and ~~issued..................................................~~outstanding 012,500 0shares ~~Common~~at ~~stock~~June 30, ~~$.01~~2009 ~~par~~and ~~value;~~December ~~authorized~~31, 102008,~~000,000~~ ~~shares~~respectively 6656,~~179~~800 656,~~112~~800 Series B authorized 70,000 shares; issued and 4outstanding 69,~~443,294~~648 shares ~~outstanding~~ at June 30, 2009 and December 31, ~~2002~~2008, respectively 6,~~179~~842,~~112~~797 6,842,797 Common stock: $0.005 par value; authorized 200,000,000 shares; 7,608,111 and 2,247,104 shares issued and 47,~~443~~174,~~294~~157 and 1,813,150 shares outstanding at ~~September~~June 30, ~~2003..................................~~2009 30and December 31,~~895~~ 302008,~~895~~ respectively 38,041 11,236 Additional paid-in capital~~..................................................~~ 818,~~439~~434,~~072~~550 814,~~439~~514,~~072~~556 ~~Retained~~Accumulated ~~earnings~~deficit ~~.......................................................... 6~~(19,~~484~~641,~~525~~949) (419,~~891~~641,~~174~~949) ~~Treasury~~Deficit ~~stock,~~accumulated atduring ~~cost,~~the development stage (1,~~735~~462,~~815~~613) ~~shares~~-- Treasury stock, at ~~December 31~~cost, ~~2002............. and 1~~433,~~735,815~~954 shares atin ~~September~~2009 ~~30,~~and ~~2003................................~~2008 (2,285,170) (2,285,170) ------------ ------------ Total stockholders' equity ~~............................................. 12~~2,~~669~~582,~~322~~456 198,~~293,623~~270 ------------ ------------ ~~TOTAL...........................................................................~~Total liabilities and stockholders' equity $ 2316,~~327~~657,~~642~~636 $ 10481,~~284,120~~300 ============ ============ See accompanying notes to condensed consolidated financial statements.

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GREEN ST. ENERGY, INC. and Subsidiary (A Development Stage Company) Condensed Consolidated Statements of Operations Three ~~months~~Months ~~ended~~Ended ~~September~~June 30, 2009 and 2008 (Unaudited) 2009 2008 ----------- ----------- Costs and expenses General and administrative expense $ 457,091 $ -- Stock option and warrant expense 14,599 -- ----------- ~~2002~~----------- ~~2003~~Total costs and expenses 471,690 -- ----------- ------------ Net ~~sales.......................................................................~~loss $from ~~3,787,531~~operations ~~$ 3~~(471,~~518,178~~690) ~~Cost of goods sold.............................................................. 6,537,287 3,614,003~~ -- ----------- ------------ ~~Gross~~Other ~~loss....................................................................~~income (~~2,749,756~~expense) ~~(95,825) Operating expenses~~: ~~General~~Interest and administrative.................................................... 545,830 513,975 Selling and marketing......................................................... 394,618 283,730 Impairment of building and equipment.......................................... 0 2,274,500 Restructuring expense~~.........................................................~~ 1(297,~~752,108~~663) 0 -- ----------- ------------ ~~Total~~Other ~~operating~~income ~~expenses....................................................~~(expense) 2(297,~~692,556~~663) ~~3,072,205~~ -- ----------- ------------ ~~Operating~~Net loss~~................................................................~~ ~~(5,442,312)~~before ~~(3,168,030) Other~~ income ~~(expense):~~taxes ~~Interest~~from ~~income...............................................................~~continunig ~~45,817~~operations ~~48,396 Interest expense..............................................................~~ (50769,~~518~~353) ~~(52,840)~~-- ~~Other~~Provision for income~~..................................................................~~ 0taxes ~~206,089~~-- ~~Gain (loss) on disposal of assets............................................. 0 16,682~~ -- ----------- ------------ ~~Total~~Net ~~other~~loss ~~income~~from ~~(expense)~~continuing operations (4769,~~701~~353) ~~218,327~~-- Loss from discontinued operations -- (200,871) ----------- ------------ ~~Loss~~Net ~~before~~loss ~~income taxes....................................................~~ (5769,~~447,013~~353) (2200,~~949,703~~871) ~~Provision~~Preferred ~~(credit)~~dividends ~~for~~-- ~~income taxes.............................................~~ (2264,~~114,422~~082) ~~131,672~~ ------------ ------------ Net loss~~........................................................................~~ (attributable to common shareholders $ 3(769,~~332,591~~353) ($ 3(464,~~081,375~~953) ============ ============ ~~Weighted~~Net ~~average~~loss ~~shares~~per ~~outstanding 4~~share,~~443,294~~ ~~4,443,294~~basic ~~Basic~~and ~~loss~~diluted ~~per~~Continuing ~~share~~operations $ (0.11) $ -- Discontinued operations -- (0.7526) ----------- ----------- $ (0.11) $ (0.6926) ~~Diluted~~=========== =========== Weighted average shares outstanding, 4basic and diluted 6,~~443~~813,~~294~~150 41,~~443~~813,~~294~~150 ~~Diluted~~=========== ~~loss~~=========== ~~per~~See ~~share~~accompanying ($notes ~~0.75)~~to ($condensed 0consolidated financial statements.~~69)~~

-4-

~~Nine~~GREEN ~~months~~ST. ~~ended~~ENERGY, ~~September~~INC. and Subsidiary (A Development Stage Company) Condensed Consolidated Statements of Operations Six Months Ended June 30, 2009 and 2008 and from inception (January 1, 2009) of Development Stage to June 30, 2009 (Unaudited) Development Stage Inception (January 1, 2009) until June 30, 2009 2008 2009 ------------ ------------ ------------ ~~2002~~Costs ~~2003~~and expenses General and administrative expense $ 733,311 $ -- $ 733,311 Stock option and warrant expense 89,238 -- 89,238 ------------ ------------ ~~Net~~------------ ~~sales.......................................................................~~Total $costs ~~19,397,654~~and ~~$10~~expenses 822,~~864,273~~549 ~~Cost~~-- ~~of goods sold.............................................................. 19~~822,~~611,629~~549 ~~12,885,354~~ ------------ ------------ ------------ ~~Gross~~Net loss~~....................................................................~~ from operations (~~213~~822,~~975~~549) -- (2822,~~021,081~~549) ~~Operating~~------------ ~~expenses:~~------------ ~~General~~------------ ~~and~~Other ~~administrative....................................................~~income ~~1,678,651~~(expense): ~~1,856,848~~Interest ~~Selling~~expense ~~and marketing......................................................... 1~~(640,~~227,920~~064) ~~1,027,542~~-- ~~Impairment of building and equipment.......................................... 0 7~~(640,~~452,235~~064) ~~Restructuring~~------------ ~~expense......................................................... 1,752,108 0~~ ------------ ------------ ~~Total~~Other ~~operating~~income ~~expenses....................................................~~(expense) 4(640,~~658,679~~064) 10-- (640,~~336,625~~064) ------------ ------------ ~~Operating~~------------ Net loss~~................................................................~~ ~~(4,872,654)~~before ~~(12,357,706) Other~~ income ~~(expense):~~taxes ~~Interest~~from ~~income...............................................................~~continunig ~~152,591~~operations ~~134,053 Interest expense..............................................................~~ (~~151~~1,~~542) (148~~462,~~478~~613) ~~Other~~- ~~income.................................................................. 0 206~~(1,~~089~~462,613 ~~Gain~~Provision ~~(loss)~~for onincome ~~disposal~~taxes of-- ~~assets.............................................~~-- 0-- ~~33,682~~------------ ------------ ------------ ~~Total~~Net ~~other~~loss ~~income..........................................................~~from continuing operations (1,~~049~~462,613) ~~225~~-- (1,~~346~~462,613) Loss from discontinued operations -- (321,752) -- ------------ ------------ ~~Loss~~------------ ~~before~~Net ~~income~~loss ~~taxes....................................................~~ (41,~~871~~462,~~605~~613) (321,752) 12(1,~~132~~462,~~360~~613) ~~Credit~~Preferred ~~for~~dividends ~~income~~-- ~~taxes......................................................... 1~~(528,~~891,060~~165) ~~756,661~~-- ------------ ------------ ------------ Net loss~~........................................................................~~ (attributable to common shareholders $ 2(1,~~980~~462,~~545~~613) $ (849,917) $11 (1,~~375~~462,~~699~~613) ============ ============ ~~Weighted~~============ ~~average~~Net ~~shares~~loss ~~outstanding~~per 4share,~~449,397~~ ~~4,443,294~~basic ~~Basic~~and ~~loss~~diluted ~~per~~Continuing ~~share~~operations $ (0.27) $ -- $ (0.6727) Discontinued operations -- (0.47) -- ------------ ------------ ------------ $2 (0.5627) ~~Diluted~~$ (0.47) $ (0.27) ============ ============ ============ Weighted average shares outstanding, 4basic and diluted 5,~~449~~382,~~397~~211 41,~~443~~813,~~294~~150 ~~Diluted~~5,382,211 ~~loss~~============ ~~per~~============ ~~share~~============ ($See ~~0.67)~~accompanying ($notes 2to condensed consolidated financial statements.~~56)~~

-5-

~~Nine~~GREEN ~~months~~ST. ENERGY, INC. and Subsidiary (A Development Stage Company) Condensed Consolidated Statements of Stockholders' Equity Six Months ended ~~September~~June 30, 2009 (Unaudited) Deficit Accumulated Additional During the Preferred Stock Common Paid-in Accumulated Development Treasury Series A Series B Stock Capital Deficit Stage Stock Total ---------------------------------- ~~2002 2003~~ ------------ --------------------------------------------------------------- ~~OPERATING~~Balance, ~~ACTIVITIES:~~December ~~Net~~31, ~~loss......................................................................~~2008 ($ 2656,~~980,545)~~800 ($116,~~375~~842,~~699)~~797 ~~Adjustments~~$ to11,236 ~~reconcile~~$14,514,556 ~~net~~$(19,641,949) ~~loss~~$ to-- ~~net cash flows from operating activities:~~ $(~~Gain~~2,285,170) ~~loss~~$ ~~on disposal of property~~98,270 ~~plant~~Common ~~and~~stock ~~equipment..................~~issued ~~986,108~~to ~~(33,682)~~acquire ~~Depreciation~~land ~~and~~-- ~~amortization.............................................~~-- 15,~~134,~~000 ~~506~~245,~~600~~000 ~~Impairment~~-- of-- ~~buildings~~-- ~~and equipment..................................... 0 7~~250,~~452,235~~000 ~~Deferred~~Common ~~income~~stock ~~taxes.....................................................~~issued ~~0 131,672 Changes~~ in ~~assets~~exchange ~~and~~for ~~liabilities:~~convertible ~~Accounts~~debenture ~~receivable~~-~~trade.................................................~~- ~~6,040,942~~-- ~~(625~~20,~~192)~~000 ~~Inventories............................................................... (609~~2,~~241) 921~~186,~~685~~800 ~~Income~~-- ~~taxes..............................................................~~-- ~~(3,121,060)~~-- 32,~~623~~206,~~391~~800 ~~Prepaid~~Beneficial ~~expenses~~conversion ~~and~~-- ~~other~~feature ~~assets.........................................~~of ~~44,720~~convertible ~~14,271~~debenture ~~Restricted~~-- ~~cash...........................................................~~-- ~~257,610~~-- ~~348~~1,~~731~~400,761 ~~Accounts~~-- ~~payable..........................................................~~-- ~~685,964~~-- ~~871~~1,~~326~~400,761 ~~Accrued~~Share ~~expenses..........................................................~~correction ~~(562~~-- 1,~~610)~~805 (~~303~~1,~~718~~805) -- -- --~~------~~ --~~----------~~ ~~Net~~Common ~~cash~~stock ~~flows~~options ~~provided~~and bywarrants ~~operating activities........................ 1,875,888 1,531,620~~ -- -- -- 89,238 -- -- -- 89,238 Net loss -- -- -- -- ---- ~~INVESTING ACTIVITIES: Purchase of property, plant and equipment.....................................~~ (21,~~902~~462,~~083~~613) -- (531,~~661~~462,613) ~~Proceeds from sale of property, plant and equipment........................... 0 33,682~~ ---------~~---~~ ------------ ~~Net cash flows used in investing activities............................ (2,902,083) (19,979)~~ ---------~~---~~ ------------ FINANCING ACTIVITIES: Long term debt................................................................ 2,302,623 0 Payments on short and long term debt......................................... (1,381,314) (2,235,431) Purchase treasury stock....................................................... (57,891) 0 ------------ ------------ ~~Net cash flows provided by (used in) financing activities.............. 863,418 (2,235,431)~~ ------------ ------------ ~~NET~~Balance, ~~DECREASE~~June IN30, ~~CASH~~2009 ~~AND~~$ ~~CASH EQUIVALENTS....................................... (162~~656,~~777)~~800 ~~(723~~$6,~~790)~~842,797 ~~CASH~~$ ~~AND~~38,041 ~~CASH~~$18,434,550 ~~EQUIVALENTS - Beginning of period................................. 2~~$(19,~~102~~641,~~784~~949) $(1,~~514~~462,~~509~~613) ~~------------ ------------ CASH AND CASH EQUIVALENTS - End of period.......................................~~ $ 1(2,~~940~~285,~~007~~170) $ ~~790~~2,~~719~~582,456 ========= ========== ========= =========== ============ =========== =========== =========== See accompanying notes to consolidated financial statements.

-6-

~~NINE~~GREEN ~~MONTHS~~ST. ~~ENDED~~ENERGY, ~~SEPTEMBER~~INC. and Subsidiary (A Development Stage Company) Condensed Consolidated Statements of Cash Flow Six Months ended June 30, 2009 and 2008 and from inception (January 1, 2009) (Unaudited) Development Stage Inception (January 1, 2009) until June 30, 2009 2008 2009 ----------- ----------- ----------- ~~2003~~Cash ~~2002~~flows from operating activities Net loss $(1,462,613) $ (321,752) $(1,462,613) Less loss from discontinued operations -- (321,752) -- ----------- ----------- ----------- ~~Net~~Loss ~~loss,~~from ascontinuing ~~reported~~operations $(111,~~375~~462,~~699~~613) $-- (21,~~980~~462,~~545~~613) ~~Deduct~~Adjustment to reconcile net loss to net cash used in operating activities: ~~Stock~~Interest accretion of beneficial conversion feature 345,385 -~~based~~- ~~employee~~345,385 ~~compensation~~Non-cash common stock options and warrants expense 89,238 ~~net~~-- 89,238 Amortization of ~~related~~deferred ~~tax~~financing ~~effects~~cost 21,883 ~~determined~~-- ~~under~~21,883 ~~fair~~Change in other assets and liabilities: Prepaid expenses 7,300 -~~value~~- ~~method~~7,300 ~~for~~Deferred ~~all~~financing ~~awards~~costs (~~191~~161,~~568~~057) (~~191~~161,~~568~~057) Accounts payable 201,676 -- 201,676 Accrued expenses 432,171 -- 432,171 Advances from shareholder 20,320 -- 20,320 ----------- ----------- ----------- ~~Pro~~Net ~~forma~~cash ~~net~~used ~~loss~~in $continuing operations (11505,~~567,267~~697) $-- (3505,~~172,113~~697) ~~============~~Net ~~============~~cash ~~EPS~~used in discontinued operations -- (866,276) as-- ~~reported~~----------- ~~Basic~~----------- $----------- Net cash used in operating activities (~~2.56~~505,697) $(866,276) (~~0.67~~505,697) ~~Diluted~~----------- ----------- ----------- Cash flows from investing activities Investment in land option (~~2.56~~250,462) -- (~~0.67~~250,462) ~~Pro~~----------- ~~forma~~----------- ~~EPS~~----------- ~~Basic~~Net $cash provided by investing activities (~~2.60~~250,462) $-- (~~0.71~~250,462) ~~Diluted~~----------- ----------- ----------- Cash flows from financing activities Loan proceeds 300,000 -- 300,000 Cash overdraft 159 -- 159 ----------- ----------- ----------- Net cash provided by financing activities 300,159 -- 300,159 ----------- ----------- ----------- Net decrease in cash and cash equivalents (~~2.60~~456,000) (~~0.71~~866,276) (456,000) Cash and cash equivalents, beginning of period 456,000 1,081,019 456,000 ----------- ----------- ----------- Cash and cash equivalents, end of period $ -- $ 214,743 $ -- =========== =========== =========== (Continued) See accompanying notes to condensed consolidated financial statements.

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~~EXHIBIT~~GREEN NOST. ~~DESCRIPTION~~ENERGY, ~~PAGE~~INC. ~~-------~~and ~~-----------~~Subsidiary ~~----~~(A ~~2.1~~Development ~~Exchange~~Stage ~~Agreement,~~Company) ~~dated~~Condensed asConsolidated Statements of ~~January~~Cash 31Flows, ~~1992,~~Continued ~~among~~Six ~~Poly~~Months ~~Circuits,~~Ended ~~Inc.,~~June ~~Joel S. Dryer~~30, ~~Joseph~~2009 A.and ~~Turek~~2008 and ~~the~~from ~~Company~~inception *(January 3.1, ~~Certificate~~2009) of ~~Incorporation~~Development ofStage ~~the~~to ~~Company~~June * 3.2 Bylaws of the Company * 10.1 Amended and restated M~Wave30, ~~Inc.~~2009 ~~1992~~(Unaudited) ~~Stock~~Development ~~Option~~Stage ~~Plan~~Inception *** 10.2 Construction Loan Note, dated (January 101, ~~1996,~~2009) byuntil ~~and~~June ~~among the Company~~30, P2009 C2008 ~~Dynamics~~2009 ~~and~~--------- ~~American~~---------- ~~National~~----------- ~~Bank~~Supplemental ~~and~~cash ~~Trust~~flow ~~Company.~~information ~~***~~Cash ~~10.3~~paid ~~Stock~~for ~~Purchase~~interest ~~Agreement dated December 18, 1998 by~~ and ~~between~~income ~~the~~taxes: ~~Company~~Interest ~~and~~$ ~~First~~-- ~~Chicago~~$ ~~Equity~~-- ~~Corporation.~~$ ~~*****~~-- ~~10.4~~Income ~~Stock~~taxes ~~Purchase~~-- ~~Agreement~~-- ~~dated~~-- ~~December~~Noncash ~~18,~~investing ~~1998 by~~ and ~~between~~financing ~~the~~activities: ~~Company~~Accrued ~~and~~divedends ~~Cross~~on ~~Creek~~preferred ~~Partners~~stock ~~II.~~-- ***** 10.5 Warrant dated December 18528,165 ~~1998~~-- ~~issued~~Land toacquired ~~First~~for ~~Chicago~~common ~~Equity~~stock ***** 10.6 Warrant dated December 18250,000 ~~1998~~-- ~~issued to Cross Creek Partners II ***** 10.7 Employment Agreement dated January 29~~250,000 ~~2001~~Land ~~between~~option ~~the~~acquired ~~Company~~for ~~and~~convertible ~~Joseph~~debenture ~~A. Turek ****** 10.8 Employment Agreement dated January 29~~16, ~~2001 between the Company and Paul H. Schmitt ****** 10.9 Loan Agreement dated July 1~~000,000 ~~2001~~-- ~~between the Illinois Development Finance Authority and the Company ******* 10.10 Forbearance Agreement dated November 8~~16,000,000 ~~2002~~Convertible ~~between~~debenture ~~the~~converted ~~Company~~to ~~and~~common ~~Bank~~stock ~~One~~2, ~~N.A.~~206,800 ~~formerly~~-- ~~known as American National Bank & Trust Company of Chicago ******** 10.11 Forbearance Agreement dated March 31~~2, ~~2003 between the Company and Bank One~~206,800 ~~N.A.,~~See ~~formerly~~accompanying ~~known~~notes asto ~~American~~condensed ~~National~~consolidated ~~Bank~~financial & Trust Company of Chicago *********statements.

-8- GREEN ST. ENERGY, INC. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1: GENERAL ORGANIZATION AND BUSINESS The condensed consolidated financial statements include the accounts of Green St. Energy, Inc. (formerly M-Wave, Inc.) ("Green St." or the "Company"), a Delaware corporation formed on January 31, 1992 and its wholly owned subsidiary Ocean Merger Sub. Green St. changed its name from M-Wave, Inc. on January 16, 2009. Until December 30, 2008, the Company provided supply chain services and sourced printed circuit boards, custom electronic components, extrusions assemblies and non-electronic products from Southeast Asia. The parts and components sourced were utilized in a wide range of commercial and industrial electronics, and other consumer products. On December 30, 2008, the Company sold substantially all of its assets and became a public shell on that date. On January 13, 2009, the Company changed its name to Green St. Energy, Inc. with the intent to enter into the alternative energy business. The Company became a development stage enterprise within the meaning of Statement of Financial Accounting Standards ("FAS") No. 7, "Accounting and Reporting by Development Stage Enterprises" on December 30, 2008. Accordingly, the costs associated with the development stage activities discussed below, have an inception date of January 1, 2009. Prior costs relating to the supply chain service business discussed above have been transferred to accumulated deficit. UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS BASIS OF PRESENTATION The condensed consolidated financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary to make the financial statements not misleading. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report for the year ended December 31, 2008, which is included in the Company's Form 10-K for the year ended December 31, 2008. The financial data for the interim periods presented may not necessarily reflect the results to be anticipated for the complete year. -9- In preparing the accompanying unaudited condensed consolidated financial statements, the Company has reviewed, as determined necessary by the Company's management, events that have occurred after June 30, 2009 up until the issuance of the financial statements, which occurred on August 19, 2009. Certain reclassifications of the amounts presented for the comparative period have been made to conform to the current presentation. GOING CONCERN As discussed above, the Company is in process of entering the alternative energy segment, focusing primarily on wind energy. In this regard, the Company has obtained land, has had prepared a feasibility study and has commenced raising funds and completing its business plan. The Company will require substantial funding to meet its goal of developing a wind energy farm. It is the Company's intention to raise capital through private placement of its common stock and through debt financing to meet the capital requirements of its business plan. The Company has no current revenues and expects it will require a substantial amount of time to develop its infrastructure and begin selling energy. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of Green St. and its wholly owned subsidiary, Ocean Merger Sub. Significant intercompany transactions and account balances have been eliminated. This subsidiary has no activity. CASH AND CASH EQUIVALENTS - Cash and cash equivalents comprise cash in banks and highly liquid investments that are both readily convertible to known amounts of cash or purchased with maturity of three months or less. -10- FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company has issued preferred stock and convertible debt with embedded conversion features and warrants to purchase common stock in connection with debt and equity raises. The Company has followed the accounting guidance of FAS's No. 133 and 150, EITF's 98-5, 00-27, 00-19, and 08-4 ASR 268, EITF Abstract Topic D-98 and related interpretations to determine whether these financial instruments should be accounted for as a liability or equity. If the Company determines that a financial instrument is to be recorded as a liability, the Company accounts for that liability at fair value. The liability is marked to market each reporting period with the resulting gains or losses shown on the consolidated statements of operations as a decrease or increase to interest expense. At June 30, 2009 and December 31, 2008, all of these financial instruments are classified as equity. The Company adopted FAS No. 157, "Fair Value Measurements", effective January 1, 2008. FAS No. 157 defines fair value, establishes a framework for measuring fair value and expands the disclosure requirements regarding fair value measurements. FAS No. 157 is effective for fiscal years beginning after November 15, 2007 for financial assets and liabilities as well as for non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis in the financial statements. In accordance with FSP No. 157-2, Effective Date of FASB Statement No. 157 (FSP 157-2), for all other non-financial assets and liabilities, FAS No. 157 is effective for fiscal years beginning after November 15, 2008. In October 2008, the Financial Accounting Standards Board ("FASB") issued FSP No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP 157-3), that clarifies the application of FAS No. 157 for financial assets in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. On January 1, 2009, in accordance with FSP 157-2, we adopted the provisions of FAS No. 157 on a prospective basis for our non-financial assets and liabilities that are not recognized or disclosed at fair value on a recurring basis. FAS No. 157 requires that we determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy established in FAS No. 157 and describes three levels of inputs that may be used to measure fair value, as follows: Level 1 inputs which include quoted prices in active markets for identical assets or liabilities; -11- Level 2 inputs which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and Level 3 inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation. The adoption of FAS No. 157 for our non-financial assets and liabilities that are not recognized or disclosed at fair value on a recurring basis had no effect on our consolidated net income for the three and six months ended June 30, 2009. The Company's financial instruments include cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities. The fair values of all financial instruments are not materially different from their carrying values. SHARE-BASED PAYMENT - The Company follows the provisions of FAS No. 123(R) which requires it to recognize compensation expense for equity awards over the requisite service period based on their grant date fair values. Compensation expense is recognized using a straight-line method only for share-based payments expected to vest. We estimate forfeitures at the date of grant based on our historical experience and future expectations. Estimated forfeitures are expected to be minor and not material to the financial statements. EARNINGS PER SHARE - Potentially dilutive common shares consist of the incremental common shares issuable upon conversion of convertible preferred shares, convertible debt and the exercise of common stock options and warrants for all periods. When dilutive, dividends on preferred shares are added back to the numerator of net loss when calculating earnings per share. For all periods ended June 30, 2009 and 2008, the basic and diluted shares reported are equal because the common share equivalents are anti-dilutive due to the net losses for each period. -12- INCOME TAXES - FAS No. 109, "Accounting for Income Taxes" (FAS 109), requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are also provided for carry forwards for income tax purposes. In addition, the amount of any future tax benefit is reduced by a valuation allowance to the extent such benefits are not expected to be realized. The Company follows the provisions of FIN 48. FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The interpretation applies to all tax positions related to income taxes subject to FAS 109. The Company has not recorded a reserve for any tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company files tax returns in all appropriate jurisdictions, which formerly included a federal tax return and an Illinois state tax return. Commencing on January 1, 2009, the Company no longer has operations in Illinois and will no longer be required to file an Illinois state tax return. Open tax years for both jurisdictions are 2005 to 2008, which statutes expire in 2009 to 2011, respectively. When and if applicable, potential interest and penalty costs are accrued as incurred with expenses recognized in selling, general and administrative expenses in the statements of operations. As of June 30, 2009, the Company has no liability for unrecognized tax benefits. NEW ACCOUNTING PRONOUNCEMENTS - There are several new accounting pronouncements issued by the FASB which are not yet effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company's financial position or operating results. The pronouncements issued during the current quarter follow. On April 9, 2009, the FASB issued Staff Position SFAS 107-1 and Accounting Principles Board ("APB") Opinion No. 28-1, "Interim Disclosures about Fair Value of Financial Instruments," to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. APB 28-1 amends APB Opinion No. 28, "Interim Financial Reporting," to require those disclosures in all interim financial statements. FSP 107-1 and APB 28-1 are effective for interim periods ending after June 15, 2009 and the Company has adopted them in the second quarter of 2009. -13- On April 9, 2009, the FASB issued Staff Position SFAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP 157-4"). FSP 157-4 provides additional guidance in estimating fair value under FAS 157, when the volume and level of transaction activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability. FSP 157-4 also provides additional guidance on circumstances that may indicate a transaction is not orderly. FSP 157-4 is effective for interim periods ending after June 15, 2009. FSP 157-4 did not have a significant impact on the Company's consolidated balance sheet, statement of operations, cash flows, or disclosures for the second quarter of 2009. On April 9, 2009, the FASB issued Staff Position SFAS 115-2 and SFAS 124-2 "Recognition and Presentation of Other Than-Temporary Impairments" ("FSP 115-2"). FSP 115-2 provides guidance in determining whether impairments in debt securities are other than temporary, and modifies the presentation and disclosures surrounding such instruments. FSP 115-2 is effective for interim periods ending after June 15, 2009, and the Company has adopted its provisions for second quarter 2009. FSP 115-2 did not have a significant impact on the Company's consolidated balance sheet, statement of operations, cash flows, or disclosures for the second quarter of 2009. In May 2009, the FASB issued Statement No. 165, "Subsequent Events" ("SFAS 165"). SFAS 165 modifies the definition of what qualifies as a subsequent event - those events or transactions that occur following the balance sheet date, but before the financial statements are issued, or are available to be issued - and requires companies to disclose the date through which it has evaluated subsequent events and the basis for determining that date. The Company adopted the provisions of SFAS 165 for the second quarter of 2009, in accordance with the effective date. See Note 1. In June 2009, the FASB issued Statement No. 167, "Amendments to FASB Interpretation No. 46(R)" ("SFAS 167"). Among other items SFAS 167 responds to concerns about the application of certain key provisions of FIN 46(R), including those regarding the transparency of the involvement with variable interest entities. SFAS 167 is effective for calendar year companies beginning on January 1, 2010. The Company has not yet determined the impact that adoption of SFAS 167 will have on its consolidated balance sheet, statement of operations, cash flows, or disclosures. -14- In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles--a replacement of FASB Statement No. 162 . This standard establishes only two levels of U.S. generally accepted accounting principles ("GAAP"), authoritative and non-authoritative. The FASB Accounting Standards Codification (the "Codification") will become the source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September 15, 2009. The Company will begin to use the new guidelines and numbering system prescribed by the Codification when referring to GAAP beginning in the period ended September 30, 2009. As the Codification was not intended to change or alter existing GAAP, it is not otherwise expected to have any impact on the Company's consolidated balance sheet, statement of operations, cash flows, or disclosures. In June 2009, the Securities and Exchange Commission released of Staff Accounting Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds portions of the interpretive guidance included in the Staff Accounting Bulletin Series in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and Securities and Exchange Commission rules and regulations. Specifically, the staff is updating the Series in order to bring existing guidance into conformity with recent pronouncements by the Financial Accounting Standards Board, namely, Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations, and Statement of Financial Accounting Standards No. 160, Non-controlling Interests in Consolidated Financial Statements. The Company has not yet determined the impact that adoption of SAB 112 will have on its consolidated balance sheet, statement of operations, cash flows, or disclosures, if any. -15- NOTE 3: DISCONTINUED OPERATIONS On December 30, 2008, the shareholders of the Company approved the sale of substantially all of its assets to M-Wave International, L.L.C., an Illinois limited liability company controlled by Joseph A. Turek, the Company's former Chief Executive Officer and Robert Duke, the Company's former President, pursuant to the terms set forth in the Asset Purchase Agreement dated September 9, 2008 (the "Asset Purchase Agreement"). As consideration for the acquisition, the Company received net cash proceeds of $455,000 at closing, less cash retained by the purchaser of $216,919. The Company recognized a loss on the sale of these assets of $604,915. Upon completion of the sale of the Company's assets, it effectively became a public shell as of December 30, 2008. Results for the three and six months ended June 30, 2008, which are included in discontinued operations, are as follows: Three Months Six Months Ended Ended June 30, 2008 June 30, 2008 ------------- ------------- Net sales $ 3,044,065 $ 6,075,769 Cost of goods sold 2,384,291 4,584,083 ----------- ----------- Gross profit 659,774 1,491,686 Operating expenses 860,645 1,813,438 ----------- ----------- Loss from discontinued operations $ (200,871) $ (321,752) =========== =========== NOTE 4: LAND On January 14, 2009, the Company entered into a Real Estate Purchase Contract with The Nacelle Corporation for the purchase of one hundred and sixty (160) acres of unimproved property near Tehachapi, California (the "Purchase Contract"). The terms of the Purchase Contract provide for a cash equivalent purchase price of $250,000 in the form of one million restricted shares of the Company's common stock, par value $0.005 based upon the closing price of $0.25 for the Company's common stock on January 12, 2009. The shares were subsequently issued on February 12, 2009. -16- NOTE 5: LAND OPTION AND CONVERTIBLE DEBENTURE On February 12, 2009, the Company entered into an Exclusive Option to Purchase Unimproved Land with The Nacelle Corporation (the "Agreement"). Pursuant to the terms of the Agreement, the Company obtained a three year option to purchase 4,840 acres of unimproved property near Tehachapi, California (the "Property"). In consideration for the option to purchase the Property, the Company issued a three year $16 million convertible debenture with interest at 5% per annum (the "Debenture"). The Debenture is convertible into shares of the Company's common stock six months following its issuance at the fixed conversion price of $0.5517 (subject to customary adjustment for stock splits or other capital changes) subject to the limitation that the holder may not acquire in excess of 19.99% of the Company's outstanding common stock at any given time without prior shareholder approval. In addition to the Debenture the Company agreed to pay the land owner or its assignees the sum of approximately $260,000. In the event the Company exercises the option to acquire the Property and the appraised fair market value of the Property as of February 12, 2009 is less than the face value of the Debenture and cash consideration tendered under the Agreement, then the value of the Debenture will be adjusted to reflect the value of the Property as of February 12, 2009 less the cash consideration paid by the Company in connection with the Agreement. In the event the Company does not exercise the option, The Nacelle Corporation would retain the Debenture and any cash proceeds. Should the Company exercise the option the cash consideration and Debenture would be applied toward the purchase price of the Property. Pursuant to the approval of the Board of Directors, the Holder converted $2,206,800 of the Debenture into 4 million shares of the Company's common stock on February 23, 2009. Upon issuance of the Debenture, the Company recorded a discount from beneficial conversion feature of $1,400,761 that is being amortized over the term of the debenture using the straight-line method which, is not materially different from the effective interest method promulgated by applicable accounting pronouncements. At June 30, 2009, the convertible debenture consisted of the following: Original face amount $ 16,000,000 Amount converted (2,206,800) ------------ Current face amount 13,793,200 Intrinsic value of beneficial conversion feature (1,400,761) Interest accretion 345,385 ------------ Convertible debenture $ 12,737,824 ============ Accrued interest $ 266,462 ============ NOTE 6: NOTE PAYABLE The Company borrowed $300,000 from an individual which is due May 1, 2010 and includes interest at the rate of 10% per annum. The note is secured by a Deed of Trust for the land. NOTE 8: COMMITMENTS AND CONTINGENCIES None. NOTE 9: RELATED PARTY TRANSACTION The Chief Executive Officer of the Company advanced the Company $20,320 during the three months ended June 30, 2009 for working capital. -17- ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This information statement contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue" or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. There are a number of factors that could cause our actual results to differ materially from those indicated by such forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this information statement to conform such statements to actual results. Management's discussion and analysis should be read in conjunction with our financial statements and the notes herein. GOING CONCERN The Company is in process of entering the alternative energy segment, focusing primarily on wind energy. In this regard, the Company has obtained land, has had prepared a feasibility study and has commenced raising funds and completing its business plan. The Company will require substantial funding to meet its goal of developing a wind energy farm. It is the Company's intention to raise capital through private placement of its common stock and through debt financing to meet the capital requirements of its business plan. The Company has no current revenues and expects it will require a substantial amount of time to develop its infrastructure and begin selling energy. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these uncertainties. -18- RESULTS OF OPERATIONS COMPARISON OF THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008 The Company is in the initial stages of acquiring unimproved property near Tehachapi, California to be used for generating distribution and sale of wind energy. The Company has acquired certain properties in exchange for its common stock, cash and debt and intends to make private placements of its common stock to raise capital to be used in implementing its business plan. In 2008, the Company was operating in a different business which was discontinued at the end of 2008. OUR PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS We plan to raise capital and acquire properties to be used to implement our business plan of developing a generating distribution and sale of wind energy business. Due to the longer term nature of this business plan, we do not expect to receive revenues during the next 12 months. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. ITEM 4: CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures The Company's Chief Executive Officer has reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of June 30, 2009. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the CEO concluded that the Company's current disclosure controls and procedures, as designed and implemented, are not effective in ensuring that information relating to the Company required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, -19- processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, including insuring that such information is accumulated and communicated to the Company's management, including the CEO, as appropriate, to allow timely decisions regarding required disclosure. As a result of a change in business, the Company was delayed in completing the necessary information to make a timely filing for its report as of March 31, 2009. The Company has initiated steps to insure it complies with the SEC requirements and expects to be more timely filing starting with the second quarter of 2009. (b) Changes in Internal Controls During the quarter ended June 30, 2009, the Company hired one consultant to maintain its financial records and a second consultant to assist in making required SEC filings. The Company's former CFO left the Company during the first quarter and has not yet been replaced. The hiring of the consultants is expected to minimize any significant deficiencies or material weaknesses in internal controls -20- PART II: OTHER INFORMATION ITEM 6: EXHIBITS The following exhibits are filed with this report on Form 10-Q. Exhibit 31 Certifications pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 32 Certifications pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002 -21- SIGNATURE Pursuant to the requirements 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 ST. ENERGY, INC. Date: August 19, 2009 By: /S/ ANTHONY CATALDO ----------------------------- Chief Executive Officer and Interim Financial Officer -22-

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