UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2016

~~FOR~~o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ~~QUARTERLY~~SECURITIES ~~PERIOD~~EXCHANGE ~~ENDED:~~ACT ~~DECEMBER~~OF ~~31,~~1934 ~~2015~~FOR THE TRANSITION PERIOD FROM TO

o 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.)

PO Box 4644 Greenwich CT 06831

(Address of principal executive offices)

(203) 918-1894

(Registrant’s telephone number, including area code)

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 o

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 þ No o~~~~

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

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

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

As of ~~February~~March 1316, 2016, the issuer had a total of ~~321~~330,~~284~~471,~~220~~536 shares of common stock, $0.001 par value, outstanding.

TABLE OF CONTENTS

		PAGE
	PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at December 31, 2015 and June 30, 2015	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2015 and 2014	2
	Condensed Consolidated Statement of Stockholders’ Deficit for the Six Months Ended December 31, 2015	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2015 and 2014	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 6.	Exhibits	23
SIGNATURES		24

PAGE

PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2016 and June 30, 2015	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2016 and 2015	2
	Condensed Consolidated Statement of Stockholders’ Deficit for the Nine Months Ended March 31, 2016	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2016 and 2015	4
	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 6.	Exhibits	24

SIGNATURES		25

PART I. FINANCIAL INFORMATION

GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	~~103~~83		$	34
Trade receivables, less allowance of $0 and $11		-			22
Deferred cost, related party		6,227			6,227
Prepaid expenses and other current assets		~~432~~516			391
Total current assets		6,~~762~~826			6,674
Property and equipment, net		21			3
Intangibles, net		4,~~635~~420			5,064
Total Assets	$	11,~~399~~247		$	11,741
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		~~475~~668			486
Accrued expenses		1,~~428~~472			1,509
Accrued expenses, related parties		~~803~~868			663
Deferred revenue, related party		6,000			6,000
Notes payable, related parties		5,605			5,605
Notes payable		1,232			1,232
Secured convertible debentures, net of debt discount		~~10,695~~-			9,393
Derivative liability		13,~~086~~243			3,951
Total current liabilities		2719,~~324~~088			28,839
Total Liabilities		27,324			28,839
Secured convertible debentures, net of debt discount		11,444			-
Total Liabilities		30,532			28,839
Commitments and contingencies
Stockholders’ deficit
Common stock, $0.001 par value, 750,000,000 shares authorized, 306,718,970 and 294,998,477 shares issued and outstanding, as of December 31, 2015 and June 30, 2015, respectively.		307			295
Common stock, $0.001 par value, 750,000,000 shares authorized, 321,284,220 and 294,998,477 shares issued and outstanding, as of March 31, 2016 and June 30, 2015, respectively.		321			295
Additional paid-in capital		73,~~176~~338			72,841
Accumulated deficit		(8992,~~408~~944	)		(90,234	)
Total stockholders' deficit		(1519,~~925~~285	)		(17,098	)
	$	11,~~399~~247		$	11,741
See notes to condensed consolidated financial statements.

See notes to condensed consolidated financial statements.

GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share data)

	Three Months Ended December 31,						Six Months Ended December 31,
	Three Months Ended March 31,						Nine Months Ended March 31,
	2015			2014			2015			2014
	2016			2015			2016			2015
Net sales	$	~~1,002~~31		$	~~176~~147		$	1,~~002~~033		$	~~570~~717
Operating expense:
Cost of sales (exclusive of depreciation and amortization)		~~810~~-			~~154~~112			810			~~495~~608
Selling, general and administrative expenses		~~146~~378			~~668~~510			~~285~~663			1,~~308~~818
Stock-based compensation		2			6160			68			~~122~~182
Depreciation and amortization		215			345			~~431~~646			~~674~~1,018
		1,173			1,228			1,532			2,599
		595			1,027			2,127			3,626
Loss from operations		(~~171~~564	)		(~~1,052~~880	)		(~~530~~1,094	)		(2,~~029~~909	)
Other income (expense):
Change in revaluation of derivatives		95(1,806	)		1(2,~~727~~142	)		31,~~128~~322			~~2,821~~678
Loss on issuance of convertible debt		(49176	)		-			(49225	)		-
Interest expense, net		(~~877~~990	)		(~~1,299~~701	)		(12,~~723~~713	)		(23,~~511~~211	)
Income (loss) before income taxes		(1,002	)		(624	)		826			(1,719	)
Loss before income taxes		(3,536	)		(3,723	)		(2,710	)		(5,442	)
Income tax		-			-			-			-
Net Income (loss)	$	(1,002	)	$	(624	)	$	826		$	(1,719	)
Net loss	$	(3,536	)	$	(3,723	)	$	( 2,710	)	$	(5,442	)
Basic and diluted net income (loss) per common share	$	(0.0001	)	$	(0.0001	)	$	(0.0001	)	$	(0.0102	)
Weighted average common shares outstanding (basic)		~~306~~321,~~625~~124,000			~~300~~296,~~850~~927,000			~~302~~308,~~340~~556,000			296,~~763~~817,000
See notes to condensed consolidated financial statements

See notes to condensed consolidated financial statements.

GREEN EARTH TECHNOLOGIES, INC CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Unaudited) (in thousand’s except share data)
	Common Stock				Additional
					Paid		Accumulated
	Shares		Amount		In Capital		Deficit			Total
Balance at June 30, 2015		294,998,477	$	295	$	72,841	$	(90,234	)	$	(17,098	)
Shares issued for interest		11,720,493		12		329		-			341
Stock-based compensation		-		-		6		-			6
Net income		-		-		-		826			826
Balance at December 31, 2015		306,718,970	$	307	$	73,176	$	(89,408	)	$	(15,925	)

GREEN EARTH TECHNOLOGIES, INC

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

(Unaudited)

(in thousands except share data)

	Common Stock				Additional
					Paid		Accumulated
	Shares		Amount		In Capital		Deficit			Total


Balance at June 30, 2015		294,998,477	$	295	$	72,841	$	(90,234	)	$	(17,098	)

Shares issued for interest		26,285,743		26		489		-			515
Stock-based compensation		-		-		8		-			8
Net loss		-		-		-		(2,710	)		(2,710	)
Balance at March 31, 2016		321,284,220	$	321	$	73,338	$	(92,944	)	$	(19,285	)

See notes to condensed consolidated financial statements.

GREEN EARTH TECHNOLOGIES, INC. AND SUBSIDIARY ~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)~~

	Six Months Ended December 31,
	2015			2014
Cash flows from operating activities
Net income (loss)	$	826		$	(1,719	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		431			674
Amortization of debt discount and deferred financing costs		1,241			2,071
Loss on issuance of convertible debt		49			-
Increase in allowance for inventory		-			58
Interest paid in common stock		341			303
Change in fair value of derivative liability		(3,128	)		(2,821	)
Bad debt expense		(11	)		9
Stock-based compensation expense		6			122
Amortization of prepaid expenses paid in stock		-			160
Changes in assets and liabilities:
Restricted cash		-			68
Accounts receivable		33			424
Inventories		-			20
Prepaid expenses and other current assets		(41	)		-
Accounts payable		(11	)		(315	)
Accounts payable, related parties		-			15
Accrued expenses		(82	)		3
Accrued expenses, related parties		140			122
Deferred revenue		-			77
Net cash used in operating activities		(206	)		(729	)
Cash flows from financing activities
Proceeds from issuance of secured convertible debentures		275			650
Net cash provided by financing activities		275			650
Net(decrease) increase in cash		69			(79	)
Cash and cash equivalent
Beginning of period		34			108
End of period	$	103		$	29
Supplemental information
Interest payments	$	-		$	-
Income taxes paid	$	3		$	2
Non-cash investing and financing activities
Issuance of common stock to settle trade payable	$	-		$	21
Issuance of common stock for purchased technology	$	-		$	700
Forgiveness of debt, related parties	$	-		$	430
See notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended March 31,
	2016			2015
Cash flows from operating activities
Net loss	$	(2,710	)	$	(5,442	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		646			1,018
Amortization of debt discount and deferred financing costs		1,990			2,534
Loss on issuance of convertible debt		225			-
Increase in allowance for inventory		-			79
Interest paid in common stock		515			464
Change in fair value of derivative liability		(1,322	)		(678	)
Bad debt expense		(11	)		14
Stock-based compensation expense		8			181
Amortization of prepaid expenses paid in stock		-			160
Changes in assets and liabilities:
Restricted cash		-			72
Accounts receivable		33			389
Inventories		-			26
Prepaid expenses and other current assets		(125	)		32
Accounts payable		182			(359	)
Accounts payable, related parties		-			7
Accrued expenses		(38	)		(103	)
Accrued expenses, related parties		206			338
Deferred revenue		-			77
Net cash used in operating activities		(401	)		(1,191	)

Cash flows from financing activities
Proceeds from issuance of secured convertible debentures		450			1,170

Net cash provided by financing activities		450			1,170

Net increase (decrease) in cash		49			(21	)
Cash and cash equivalent
Beginning of period		34			108
End of period	$	83		$	87

Supplemental information
Income taxes paid	$	3		$	3

Non-cash investing and financing activities
Issuance of common stock to settle trade payable	$	-		$	21
Shares cancelled due to terminated consulting services	$	-		$	(667	)
Issuance of common stock for purchased technology	$	-		$	700
Forgiveness of debt, related parties	$	-		$	430

See notes to condensed consolidated financial statements.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(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 Well! Inc., formally GET Manufacturing, Inc. (collectively, the “Company”), were each formed on August 7, 2007 under the laws of the state of Delaware. The Company markets, sells and distributes environmentally safe lubricants, cleaning products and oil well service products. The Company’s product line crosses multiple channels including the oil and gas well services, automotive aftermarket, marine and outdoor power equipment and cleaning markets. The Company sells to oil field service providers, home centers, mass retail outlets, automotive stores, equipment manufacturers and over the Internet.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company. All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments (consisting of normal recurring adjustments unless otherwise indicated) which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented.

Certain information in footnote disclosures normally included in the financial statements were prepared in conformity with accounting principles generally accepted in the United States of America and have been condensed or omitted pursuant to such principles and the financial results for the periods presented may not be indicative of the full year’s results. The Company believes the disclosures are adequate to make the information presented not misleading.

These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the fiscal year ended June 30, 2015 included in the Company’s Annual Report on Form 10K filed in October 2015 (the “2015 Annual Report”).

Significant Accounting Policies

Revenue Recognition

We recognize revenue when it is realized or realizable and earned. We consider revenue realized or realizable and earned when there is persuasive evidence of an arrangement, delivery has occurred, the sales price is determinable, and collection is reasonably assured. We derive revenue primarily from sales of well services products and cleaning products. We recognize revenue when title transfers to our customers, which is generally upon the delivery of these products to a customer’s designated location. These deliveries are made in accordance with sales commitments and related sales orders entered into with customers either verbally or in written form. The sales commitments and related sales orders provide quantities, pricing and conditions of sales. In this regard, we engage in two basic types of revenue generating transactions:

·- As a merchant . Sales as a merchant consist of sales to customers through purchases from third-party suppliers in which we may or may not obtain physical control of the well service or cleaning products in which shipments are directed from our suppliers direct to our customers but for which we accept the risk of loss in the transactions.

·- As an agent . Sales as an agent consist of sales to customers through purchases from third-party suppliers in which the risks and rewards of inventory ownership remain with third-party suppliers and we receive a predetermined service fee under these transactions.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

The following table shows our net sales generated as a merchant and as an agent for the ~~six~~nine months presented (in thousands):

	Six Months Ended December 31,
	Nine Months Ended March 31,
	2015		2014
	2016		2015
Merchant	$	900	$	~~570~~717
Agent	$	~~102~~133	$	-
Total	$	1,~~002~~033	$	~~570~~717

Revenue from sales of third-party products is recorded net of costs when we are acting as an agent between a customer and a supplier and gross when we are a principal to the transaction. Several factors are considered to determine whether we are acting as an agent or principal, most notably whether we are the primary obligor to the customer, whether we have inventory risk and related risk of loss.

When we act as an agent, we record revenues on a net basis, or our predetermined stated percentage of the amount billed to a customer and any associated freight. We record revenues based upon the gross amounts billed to our customers in transactions where we act as a merchant and obtain title to the products and therefore own the product and any related unmitigated inventory risk, regardless of whether we actually obtain physical control of the product.

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. The accompanying condensed 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.

Since inception, the Company has incurred operating losses and negative cash flows from operations. As of ~~December~~March 31, ~~2015~~2016, the Company had an accumulated deficit of $8992,~~408~~944, with total stockholders’ deficit of $1519,~~925~~285. The Company had a working capital deficit of $2012,~~562~~261 at ~~December~~March 31, ~~2015~~2016 and is currently in default of the 3.25% Secured Note and Promissory Note disclosed in note 5. These ~~note~~notes matured on December 31, 2013 and ~~has~~have not been extended and isare payable upon demand. The Promissory note ~~matures~~matured in February 2016 and ~~has~~have not been extended and isare payable upon demand.

The Company has undertaken, and will continue to implement, various measures to address its financial condition, including:

Continue discussions with existing and potential new investors regarding an investment in the Company.

Seek debt, equity and other forms of financing, including funding through strategic partnerships.

Attempt to increase revenues in order to reduce or eliminate the Company’s operating losses and enable it to meet its financial obligations.

Reduce expenses to conserve cash.

Defer certain marketing activities.

Investigate and pursue transactions with third parties, including strategic transactions and relationships.

The Company plans to increase revenues in order to reduce, or eliminate, its operating losses. Additionally, the Company will attempt to raise capital from external sources in order to enable it to continue to meet its financial obligations until it achieves profitability or generates positive cash flow.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

There can be no assurance that the Company will be able to secure the additional funding the Company needs. If the Company’s efforts to do so are unsuccessful, the Company will be required to further reduce or eliminate the Company’s operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of these uncertainties.

2.	DEFERRED COST, RELATED PARTY

In December 2012, the Company received an advance of $6,000 from E&B Green Solutions L.P., a Company owned by Francesco Galesi (“Galesi”), a related party, for the purchase of oil and gas well ~~service~~stimulation products from Inventek Collodial Cleaners, LLC (“Inventek”), also a related party. The Company advanced the $6,000 received from E&B Green Solutions L.P. and additional funds totaling $6,227 to Inventek for the production of the well service products in anticipation of future sales to E&B Green Solutions L.P. The Company did not report the receipt of the funds from E&B Green Solutions L.P. as revenue as of ~~December~~March 31, ~~2015~~2016 because the transaction did not meet the Company’s revenue recognition criteria in accordance with generally accepted accounting principles. As of ~~December~~March 31, ~~2015~~2016, $6,227 of Deferred Cost and $6,000 of Deferred Revenue was included on the accompanying condensed consolidated balance sheet as a result of this transaction. The anticipated proceeds from the sales of oil ~~field~~and ~~services~~gas well stimulation products are expected to be greater than the current value of the Deferred Cost.

In February 2016, the Company commenced litigation against Bariven S.A., PDVSA Services, Inc., PDVSA Gas S.A., Green Hook Supplies Corp and Alfredo E. Lovera-Aquique. The case is a result of a purchase of oil and gas well stimulation products by Green Hook Supplies Corp. for resale to the Bolivarian Republic of Venezuela state-run oil company, Petroleos de Venezuela, S.A. (PDVSA).

The Company has incurred $262 of legal expense to date pursuant to this litigation. The Company makes no representation as to the ultimate outcome of this litigation and has elected not to record this sale to Green Hook Supplies, Corp. due to the uncertainty of the outcome of the litigation.

3.	INTANGIBLE ASSETS

Oil Field Services

In fiscal 2014, the Company entered into an Intellectual Property Exclusive License and Distribution Agreement (the “Agreement”) with Inventek Colloidal Cleaners, LLC (“Inventek”) and Dr. Paul N. Andrecola (“Dr. Andrecola”) in support of the Company’s oil and gas well services product line. In consideration for the exclusive licenses and Inventek’s technology the Company issued 105,200,000 shares of its common stock to Inventek/ Dr. Andrecola. The initial term of the exclusive license expires May 20, 2039 (25 years) and also contains five automatic ten year renewal periods. These transactions were accounted for as a purchase business transaction. In July 2014 the Company was granted a patent by the U.S. Trademark and Patent Office for biodegradable non-reactive oil well stimulation and method of use based on nano-scale colloidal chemistry. In connection with the share issuances the Company recorded a purchase price allocation of $7,572, in the aggregate, as intangible assets. The Company is utilizing an expected life for the intangible assets of seven years. As of March 31, 2016 and June 30, 2015, the carrying value was $3,878 and $4,447, respectively

Natural Gas Well Services

In August 2014, the Company enter into a Strategic Relationship Agreement with Greentek Fluid Innovations LLC (“GFI”). In consideration for this agreement and for intellectual property purchased in support of the Company’s natural gas well services product line the Company issued 10,000,000 shares of Common Stock, with an aggregate fair market value of $700 to GFI. The agreement has an initial term through June 30, 2019 after which it continues annually until either party gives the other 60-days prior written notice of its intent to terminate the agreement. This transaction is accounted for as a purchase business transaction. The Company is utilizing an expected life for the intangible assets of seven years. The Company completed a valuation of the license, distribution rights and intellectual property related to the GFI Management Strategic Relationship Agreement. The company utilized financial projections based on current opportunities and relationships with existing customers and distributors. Based on the analysis of future discounted cash flows it was determined that the carrying amount of the intangible assets is recoverable at December 31, 2015.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

~~The~~Natural ~~final~~Gas ~~purchase~~Well price allocation is pending the finalization of valuations for the license, distribution rights and intellectual property which may ultimately impact the overall level of intangible assets associated with the acquisition. The Company will consider any additional information which existed as of the acquisition date but was unknown to the Company at that time, that may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date, and may result in a change in the purchase price allocation. While management believes that its preliminary estimates and assumptions underlying the value of intangible assets are reasonable, different estimates and assumptions could result in different valuations assigned which may change the amount of the purchase price allocations.Services

In August 2014, the Company enter into a Strategic Relationship Agreement with Greentek Fluid Innovations LLC (“GFI”). In consideration for this agreement and for intellectual property purchased in support of the Company’s natural gas well services product line the Company issued 10,000,000 shares of Common Stock, with an aggregate fair market value of $700 to GFI. The agreement has an initial term through June 30, 2019 after which it continues annually until either party gives the other 60-days prior written notice of its intent to terminate the agreement. This transaction is accounted for as a purchase business transaction. The Company is utilizing an expected life for the intangible assets of seven years. The Company completed a valuation of the license, distribution rights and intellectual property related to the GFI Management Strategic Relationship Agreement. The company utilized financial projections based on current opportunities and relationships with existing customers and distributors. As of March 31, 2016 and June 30, 2015, the carrying value was $542 and $617, respectively

Cleaning Products

In fiscal 2008, the Company entered into royalty-free license and exclusivity rights agreements with Inventek pursuant to which the Company was granted the exclusive right to sell, market and distribute any Inventek cleaning products in the United States and Canada and the non-exclusive right world-wide. In consideration for the exclusivity rights the Company issued 13,750,000 shares of its Common Stock to Inventek with an aggregate fair market value of $2,550. As of March 31, 2016 and June 30, 2015, the carrying value was $0, respectively

Impairment

When indicators of impairment exist the Company assesses the recoverability of its long lived assets. During Fiscal 2015, the Company recorded impairment losses of $1,909 and $560 associated with its oil field services and cleaning products intellectual property, respectively.

Intangible assets consist of the following:

	December 31, 2015		June 30, 2015		Estimated Useful Lives
	March 31, 2016		June 30, 2015		Estimated Useful Lives
Purchased technology and exclusivity rights
Oil field services	$	7,572	$	7,572		7
Natural gas well services		700		700		7
Cleaning products		2,550		2,550		7
		10,822		10,822
Less: accumulated amortization		3,~~718~~933		3,289
Less: Fiscal 2015 impairment		2,469		2,469
	$	4,~~635~~420	$	5,064

Expected amortization of intangible assets is as follows:

2016	$	~~429~~214
2017		859
2018		859
2019		859
2020		859
Thereafter		770
	$	4,~~635~~420

Amortization expense included in depreciation and amortization totaled $~~429~~644 and $~~668~~1,010 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

4.	ACCRUED EXPENSES

Accrued expenses consist of the following:

	December 31, 2015		June 30, 2015
	March 31, 2016		June 30, 2015
Accrued payroll and taxes	$	469	$	566
Accrued payroll	$	454	$	566
Accrued sponsorship fees		325		325
Accrued interest		287		282
Accrued advertising		161		161
Accrued board of director fees		170		155
Other		1674		20
	$	1,~~428~~471	$	1,509

Accrued expenses, related parties consist of the following:

	December 31, 2015		June 30, 2015
	March 31, 2016		June 30, 2015
Accrued interest	$	~~512~~579	$	377
Accrued other		~~291~~289		286
	$	~~803~~868	$	663

5.	NOTES PAYABLE

Notes payable consist of the following:

	December 31, 2015		June 30, 2015
	March 31, 2016		June 30, 2015
Promissory Note	$	1,172	$	1,172
3.25 % Secured note		60		60
3.25 % Secured Note		60		60
	$	1,232	$	1,232

Promissory Note

In October 2013 the Company entered into an agreement with its primary supplier of lubricants, Olympic Oil, owned by Delta Petroleum Company (“Delta”). Pursuant to the agreement, the Company executed and delivered a $1,211 promissory note to Delta, reflecting amounts due and owing by the Company to Delta. At ~~December~~March 31, ~~2015~~2016 and June 30, 2015 the balance of the promissory note is $1,172. In February 2014 the Company entered into a two year Intercreditor, Forbearance, Security and Account Control Agreements with Delta (the “Intercreditor Agreement”). The Intercreditor Agreement ~~provides~~provided that Delta ~~will~~would continue to ~~manufacturing~~manufacture and deliver the Company’s lubricant products to its customers. The receivables generated from these sales ~~will~~would be used as collateral and customer payments ~~will~~would be sent directly to a blocked bank account controlled by Delta. The profits generated from these sales ~~will~~would be applied to the promissory note. If by February 26, 2015 the balance of the promissory note iswas greater than $606 then the Company ~~will~~would have to pay Delta the difference between the outstanding balances of the note less $606. The full repayment of the promissory note iswas due in February 2016. The Company did not make the required installment of $566 in February 2015 or a full repayment in February 2016. The promissory note has not been extended and currently is in default and payable upon demand. The Company believes it has claims and offsets against the balance of this note which may reduce the outstanding balance.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

3.25% Secured note

At ~~December~~March 31, ~~2015~~2016 and June 30, 2015, the balance of the 3.25% secured note payable is $60. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2015, accrued interest was $~~243~~244 and $241, respectively. The note matured on December 31, 2013. It has not been extended and currently is in default and payable upon demand. Since the note is in default, the outstanding principal amount per the agreement bears default interest at a rate three percent (3.0%) greater than the stated rate per annum. Until the default is cured the note will accrue interest at a rate of 6.25%.

6.	NOTE PAYABLE, RELATED PARTY

Notes payable, related party, consist of the following:

	December 31, 2015		June 30, 2015
	March 31, 2016		June 30, 2015
6 % Secured Note	$	3,888	$	3,888
3.25% Promissory Note		1,717		1,717
	$	5,605	$	5,605

In September 2014, Techtronic Industries Inc. and certain of its wholly-owned subsidiaries (collectively, “TTI”), entered into a Confidential Settlement Agreement and Mutual Release (the “Settlement Agreement”) with the Galesi group of companies, Walter Raquet and FWD, LLC (collectively, “FWD”) and the Company. Under the Settlement Agreement TTI in effect sold to FWD for cash consideration their shares of the Company’s common stock, rights and claims arising under the Company’s 6% Secured Note, dated January 27, 2012, as amended, in the principal amount of $3,400 plus accrued interest of $488. In addition $1,717 due to TTI for accounts payable and accrued expenses and any other rights, title or interest against company assets were assigned to FWD.

In April 2015, FWD and the Company entered into a Second Amendment to the Loan Extension Agreement for the 6% Secured Note and Promissory Note. Under the Loan Extension Agreement the promissory note will bear interest at a rate of three and a quarter (3.25%) percent. The maturity date of the outstanding notes balances were extended to April 1, ~~2016~~2017. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2015, accrued interest was $~~382~~448 and $250, respectively

7.	DERIVATIVE LIABILITY

Secured Convertible Debentures Conversion Option

The Debentures (as defined in note 8) are convertible into shares of the Company’s Common Stock, $0.001 par value per share (“Common Stock”), at a conversion price of $0.01 to $0.1211 per share (the “Conversion Price”). The Conversion feature provides for weighted average anti-dilution protection in the event that any shares of Common Stock, or securities convertible into shares of Common Stock, are issued at less than the Conversion Price. The conversion feature was bifurcated from the Debenture because of price protection features and is accounted for as a derivative liability.

The table below summarizes the fair values of the Company’s financial liabilities:

Fair Value at

December 31,

Fair Value Measurement Using

March 31,

Fair Value Measurement Using

2015

Level 1

Level 2

Level 3

2016

Level 1

Level 2

Level 3

Derivative liability - Debentures

~~717~~2,737

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (Derivative liability - Debentures) for the periods ended ~~December~~March 31, ~~2015~~2016 and June 30, 2015:

	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
Balance at beginning of period	$	2,989		$	3,701
Additions to derivative instruments		~~221~~523			812
Change in fair market value of the derivative liability		(~~2,493~~775	)		(1,524	)
Balance at end of period	$	~~717~~2,737		$	2,989

These instruments were valued using pricing models that incorporate the price of a share of Common Stock (as quoted on the Over the Counter Bulletin Board), volatility, risk free rate, dividend rate and estimated life. The Company computed the fair value of the conversion feature using the Black-Scholes model.

The following are the key assumptions used in connection with this computation:

	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
Number of shares		~~140~~163,~~733~~915,000			118,842,000
Fair market value of stock	$	0.02		$	0.05
Conversion Price	$	0.01-$0.12		$	0.06-$0.13
Conversion price	$	0.01-$0.11		$	0.06-$0.13
Volatility		~~281~~237	%		194	%
Risk-free interest rate		0.27%-75	%		0.22	%
Expected dividend yield		0	%		0	%
Life of Debentures (years)		2.250			.75

Warrant Liability

In connection with the issuance of Debentures, the Company issued warrants to purchase up to 3336,~~794~~419,000 shares of Common Stock (the “Warrants”). The Warrants have an exercise price of $0.11-$0.21 per share (the “Exercise Price”). Warrants covering up to 18,382,000 shares of Common Stock are exercisable at any time on or before December 31, 2016 and Warrants covering up to 8,552,000, 1,010,000, 875,000, 2,413,000 and 25,~~563~~188,000 shares of Common Stock are exercisable at any time on or before March 31, 2018, June 30, 2018, September 30, 2018, March 31, 2019 and September 30, 2019, respectively. The Warrants are accounted for as derivative liabilities because the agreement provides for weighted average anti-dilution protection in the event that any shares of Common Stock, or securities convertible into Common Stock, are issued at less than the Exercise Price.

The table below summarizes the fair values of the Company’s financial liabilities:

Fair Value at

December 31,

Fair Value Measurement Using

March 31,

Fair Value Measurement Using

2015

Level 1

Level 2

Level 3

2016

Level 1

Level 2

Level 3

Derivative liability - Warrants

~~369~~506

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (warrant derivative liability) for the periods ended ~~December~~March 31, ~~2015~~2016 and June 2015:

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
Balance at beginning of period	$	962		$	1,435
Additions to derivative instruments		4291			133
Change in fair market value		(~~635~~547	)		(606	)
Balance at end of period	$	~~369~~506		$	962

The Company computed the value of the warrants using the Black-Scholes model.

The following are the key assumptions used in connection with this computation:

	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
Number of shares underlying the Warrants		3336,~~794~~419,000			31,231,000
Fair market value of stock	$	0.02		$	0.05
Exercise Price	$	0.11-$0.21		$	0.14-$0.21
Exercise price	$	0.11-$0.21		$	0.14-$0.21
Volatility		~~162~~198%-~~196~~304	%		151%-180	%
Risk-free interest rate		0.49%-1.3215	%		0.49%-1.15	%
Expected dividend yield		0	%		0	%
Warrant life (years)		1.0075-3.7550			1.5-3.75

8.	SECURED CONVERTIBLE DEBENTURE, NET OF DISCOUNT

Secured convertible debentures, net of debt discount, consist of the following:

	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
Convertible Debentures	$	11,444		$	11,169
Convertible debentures	$	11,619		$	11,169
Debt discount		(~~749~~175	)		(1,776	)
	$	1011,~~695~~444		$	9,393

During the ~~six~~nine months ending ~~December~~March 31, ~~2015~~2016 the Company received $175, $50 and $50225 from the issuance of $0.02, $0.015 and $0.01 6% secured convertible debentures (“6% Debentures) due on March 31, ~~2016~~2018, respectively.

~~Debt~~During the nine months ended March 31, 2016 the Company recorded $450 of debt discount related to the issuance of the $.02, $0.015 and $0.01 6% Debentures. Debt discount totaling $11,~~014~~189 is being amortized over the life of the 6% Debentures and is included in interest expense in the accompanying condensed consolidated statement of operations.

In ~~December~~March ~~2014~~2016, pursuant to an amendment, the holders of the Debentures in the aggregate principal of $~~7.5~~11,444 ~~million~~ due March 31, ~~2015~~2016, agreed to extend the maturity date of the Debentures to March 31, ~~2016~~2018. The aggregate principal payments of $11,~~444~~619 for the secured convertible debentures are due on March 31, ~~2016~~2018.

In October 2014 the Company filed a registration statement for the Debentures issued prior to October 1, 2014. The registration statement became effective in December 2014. All the Debentures after December 2014 are subject to a registration rights agreement and the Company has until ~~December~~March 31, ~~2015~~2016 to file. The Company has not filed the registration statement and is subject to default penalties.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

9. STOCKHOLDERS DEFICIT

Shares issued for interest

For the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016, the Company issued 1126,~~720~~285,~~493~~743 shares of Common Stock to pay the accrued interest from April 1, 2015 to ~~September~~December 3031, 2015 on the outstanding Debentures. The fair value of the shares in connection with this transaction totaled $~~341~~515.

1011. RELATED PARTY TRANSACTIONS

Inventek

For the three months and ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 the Company recorded $31 and $102 in net sales on cleaning products that were sold by Inventek. Under the Inventek Intellectual Property Exclusive License and Distribution Agreement the Company recognizes sales made by Inventek as an agent and records revenues on a net basis based on a predetermined percentage of the amount billed to the customer. The Company purchased inventory from Inventek totaling $~~810~~0 and $3612 for the three months ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively, and $810 and $5567 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2015, a credit of $~~427~~481 and $~~385~~423, respectively, was due from Inventek, which is recorded in prepaid expenses and other current assets. As of ~~December~~March 31, ~~2015~~2016, the owner of Inventek beneficially owned approximately 3634.48% of the Company’s issued and outstanding shares of Common Stock.

FWD, LLC (“FWD”)

In September 2014, TTI and the Galesi group of companies, Walter Raquet, the Company’s interim chief executive officer and FWD, LLC (collectively, “FWD”) and the Company entered into a Confidential Settlement Agreement and Mutual Release (the “Settlement Agreement”). Each of Galesi, Raquet and FWD LLC are affiliates of the Company. Under the Settlement Agreement TTI in effect sold to FWD for cash consideration (i) 30,600,778 shares of the Company’s common stock owned by TTI and its chairman, representing all of the shares of common stock owned by TTI and (ii) assigned all of their rights and claims arising under the Company’s 6% Secured Note, dated January 27, 2012, as amended, in the principal amount of $3,888 which includes $3,400 plus accrued interest of $488 held by TTI as well as $1,717 of accounts payable and accrued expenses due TTI and any other rights, title or interest against company assets (see note 7). In addition, as part of the settlement, TTI and FWD agreed to the forgiveness of $430 of claims due from the Company with respect to advances for future sales included in deferred revenue. The $430 is included in additional paid-in capital on the condensed consolidated financial statements. As of ~~December~~March 31, ~~2015~~2016 the amounts due to FWD for accrued interest was $~~410~~448.

Galesi

For the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, approximately 0% and 5% of the Company’s revenues, respectively, were generated from companies owned or controlled by Galesi. For the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, approximately 0% and 23% of the Company’s revenues, respectively, were earned from Galesi. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2015, there are no the amounts due from these entities, respectively. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2015, amounts due to Galesi included $34,~~924~~102 and $3,612 for the 6% Debentures, net of debt discount plus accrued interest and other expenses, respectively. Principal of $3,~~800~~875 on the Debentures is due March 31, ~~2016~~2018. As of ~~December~~March 31, ~~2015~~2016, Galesi beneficially owned approximately 2427.82% of the Company’s issued and outstanding shares of Common Stock.

In December 2012, the Company received $6,000 from Galesi for future sales of well service products, which is included in deferred revenue, related parties on the accompanying condensed consolidated balance sheet (See Note 2).

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

Walter Raquet (“Raquet”)

Walter Raquet is a Director, a member of the audit committee and interim chief executive officer. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2015, the amounts due to Mr. Raquet included $23,~~816~~030 and $2,449 for the 6% Debentures, net of debt discount plus accrued interest and other expenses, respectively. Principal of $23,~~954~~029 on the Debentures is due March 31, ~~2016~~2018. As of ~~December~~March 31, ~~2015~~2016, Mr. Raquet beneficially owned approximately 1922.71% of the Company’s issued and outstanding shares of Common Stock.

D&L Partners

Doug Von Allmen is the managing member of the D&L Partners. As of ~~December~~March 31, ~~2015~~2016 and June 2015, the amounts due to D&L Partners included $1,~~633~~668 and $1,508 for the 6% Debentures, net of debt discount plus accrued interest and other expenses, respectively. Principal of $1,805 on the Debentures is due March 31, 2016. As of ~~December~~March 31, ~~2015~~2016, Mr. Von Allmen beneficially owned approximately 910.62% of the Company’s issued and outstanding shares of Common Stock.

1112. 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.

Sales and Accounts Receivable

The following customers represent the majority of the Company’s sales for the ~~three~~nine months ended March 31, 2016 and March 31, 2015, respectively, and accounts receivable as of March 31, 2016 and June 30, 2015, respectively:

	December 31, 2015			December 31, 2014
	March 31, 2016			March 31, 2015
Sales
Suplitrol Continental Corporation		9087	%		-
TTI		-			6952	%
	December 31, 2015			June 30, 2015
	March 31, 2016			June 30, 2015
Accounts Receivable
Tractor Supply Company		-			63	%
Canadian Tire Corporation		-			28	%

Inventory and Accounts Payable

The Company purchases its performance products from Delta Petroleum Company (“Delta”) and its cleaning and well service products from Inventek. The Company’s inventory purchased from these vendors and accounts payable to these vendors is as follows for the nine months ended March 31, 2016 and March 31, 2015, respectively, and accounts payable as of March 31, 2016 and June 30, 2015, respectively:

	December 31, 2015		December 31, 2014
	March 31, 2016		March 31, 2015
Inventory Purchased
Inventek	$	810	$	2067
Delta		-		~~288~~484
	December 31, 2015		June 30, 2015
	March 31, 2016		June 30, 2015
Accounts Payable
Delta		1,172		1,172

Delta accounts payable is in the form of a promissory note of $1,172 (see note 5).

12. SUBSEQUENT EVENTS

In January 2016, the Company issued 14,565,250 shares of Common Stock to pay the accrued interest from October 1, 2015 to December 31, 2015 on the outstanding Debentures. The fair value of the shares in connection with this transaction totaled $175.

GREEN EARTH TECHNOLOGIES, INC.AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except share and per share data)

13.	SUBSEQUENT EVENTS

In April 2016, the Company issued 9,187,316 shares of Common Stock to pay the accrued interest from January 1, 2016 to March 31, 2016 on the outstanding 6% Debentures. The fair value of the shares in connection with this transaction totaled $175.

Special Note About Forward-Looking Statements

Certain statements in Management’s Discussion and Analysis (“MD&A”), other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933,as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”.) These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview of our Business

We create, develop, market, sell and distribute an array of G-branded, environmentally-friendly, bio-based well service, automotive, marine and residential enhancement, performance and cleaning products. Our products, including our G-CLEAN® Well Wake-UP!™, G-OIL® and G-CLEAN® brands, are used primarily in the oil and gas well service industry, automotive aftermarket and the outdoor power equipment.

Our technology platform for manufacturing innovative proprietary and patented high performing “green” products is the end result of company created or licensed intellectual property. These technologies replace traditional petroleum/hydrocarbon and chemical/solvents derived bases typically associated with conventional non-green products without compromising performance or value while delivering a more environmentally safer choice. We believe our products deliver comparable or superior performance at competitive prices, thus giving our customers and industries alike the ability to ‘do their part’ in protecting the environment without paying more.

In fiscal 2015 we shifted our strategy to focus on a full range of products specifically engineered to help overcome the oil and gas industry’s challenges of working in the world’s oil fields. As part of this strategy, we will focus on acquiring and/or developing new and patent-pending technologies and then leveraging our bio-based solutions into the growing markets for oil field services. We believe the new strategy will result in higher revenues and profit margins. Increased energy demands have expanded the obstacles faced by this industry as they try to preserve and do ‘no harm’ to the delicate eco-system when drilling wells. Both patented and patent-pending products have been tested by Petróleos de Venezuela, S.A (PDVSA), the Venezuelan national oil company, and E&B Green Solutions, L.P., a well services company based in Bakersfield, California, owned by Francesco Galesi, one of our largest stockholders. Our oil field products are a natural fit as they will clean, optimize and restore safety to this industry and our environment. We are actively pursuing opportunities and relationships domestically and worldwide with oil field services providers, oil and gas exploration and production companies and distributors.

Manufactured domestically under supply and requirement contracts, our proprietary environmentally preferred base oils are comprised of fatty acids procured from either plant and vegetable oils or animal fats and are on the USDA BioPreferred® list. We also have a BODA™ technology that accelerates the biodegradability of petroleum based lubricants which even further broadens the array of environment goals that our company is able to help end users procure.

Since inception in 2007, our goal has been to provide a superior green product at prices comparable to traditional products within the same category designation and to validate the proposition that by eliminating price and performance discrepancies, consumers and industries will usually go green. In oil and gas fields our products allow drillers, well operators, service providers and other potential customers to meet their production, maintenance and spill remediation challenges with green solutions that enhance production, eliminate unnecessary costs and keep their people and the environment safer. We trademarked the phrase “SAVE THE EARTH – SACRIFICE NOTHING®”, meaning that consumers and customers alike should not have to give up value or performance when choosing to go “green”.

1516

As of July 2015, we eliminated personnel to preserve capital and are relying on the Board of Directors and contacts to help run the company on a day to day basis.

Results of Operations

(All dollar amounts referred to herein are in thousands, except as otherwise indicated.)

Three Months Ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015

Our activities for the three months ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 essentially included 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, and development of an infrastructure to support the planned business and increasing of revenues.

Our results of operations are as follows:

	Three Months Ended December 31,
	Three Months Ended March 31,
	2015			2014
	2016			2015
Net sales	$	~~1,002~~31		$	~~176~~147
Loss from operations		(~~171~~564	)		(~~1,052~~880	)
Change in revaluation of derivatives		95(1,806	)		1(2,~~727~~142	)
Loss on issuance of convertible debt		(49176	)		-
Interest expense, net		(~~877~~990	)		(~~1,299~~701	)
Net Income (loss)	$	(1,002	)	$	(624	)
Net loss	$	(3,536	)	$	(3,723	)

Net Sales

Net sales for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 were $~~1,002~~31 and $~~176~~147, respectively. ~~The~~Net ~~increase~~Sales in 2016 was primarily attributed to ~~oil field service sales of $900 made to Suplitrol Continental Corporation and~~ cleaning product sales of $~~102~~31 made by Inventek, which we recognized as an agent and recorded revenues on a net basis based on a predetermined percentage of the amount billed to the customer. Net sales in ~~2014~~2015 were primarily attributed to sales of G-OIL® outdoor power equipment 4-cycle engine oils.

For the three months ended ~~December~~March 31, ~~2015~~2016, 90100% of our sales were from ~~one~~our ~~customer,~~agent ~~Suplitrol~~(as ~~Continental~~defined ~~Corporation~~in note 1). For the three months ended ~~December~~March 31, ~~2014~~2015, approximately 7056% of our sales were from ~~two~~three customers, ~~TTI~~Tractor ~~(The~~Supply ~~Home~~Company, ~~Depot)~~Canadian ~~and~~Tire ~~Gold~~Corporation ~~Edge~~and ~~Supply~~Howco, Inc.

Net sales are comprised as follows:

	Three Months Ended December 31,
	Three Months Ended March 31,
	2015		2014
	2016		2015
Performance products (oils)	$	-	$	~~128~~121
Oil field services	$	900	$	-
Cleaning products	$	31	$	26
Cleaning products	$	102	$	48
Total	$	31	$	147
Total	$	1,002	$	176

Cost of Sales (exclusive of depreciation and amortization)

Cost of sales (exclusive of depreciation and amortization) for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 were $~~810~~0, and $~~154~~112, respectively.

We will continue to evaluate other opportunities to improve gross margins on our existing product line. We intend to further increase profitability of our product base through various measures which may include changing product formulations, reducing components cost by increasing volume and reducing expenses by improving operations.

1617

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 and fees for professional services. Selling, general and administrative expenses include the following:

	Three Months Ended December 31,
	Three Months Ended March 31,
	2015		2014
	2016		2015
Salaries	$	-	$	8481
Selling, marketing, public relations and related		-		~~190~~96
Development, product release and testing		38		6972
Management and operating fees		-		93102
Legal and professional		60300		6953
Occupancy, communications and all other, net		4840		~~163~~106
Total selling, general and administrative expenses	$	~~146~~378	$	~~668~~510

The decrease in selling, general and administrative is primarily due to our overall efforts to reduce expenses, partially offset by higher legal expense related to litigation commenced in February 2016, which is disclosed in Part II other information.

Stock-based compensation

Stock-based compensation expense for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 was approximately $2 and $6160, respectively.

Depreciation and amortization

Depreciation and amortization expense totaled $215 and $345 for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. Depreciation charges totaled $1 and $3 for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively, and amortization expense for intangible assets totaled $214 and $342 for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. Depreciation and amortization expense is excluded from cost of sales.

Change in revaluation of derivatives

The change in fair value of our derivative liabilities resulted in aan ~~favorable~~unfavorable adjustment of $951,806 and $12,~~727~~142 for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~ 2015, respectively. The value of the derivative liabilities was determined using the Black-Scholes method. See note 7 to our financial statements for inputs used to calculate the fair value of our derivatives liabilities.

Loss on issuance of convertible debt

We recorded a charge of $49176 and $0 for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. The charge was in connection with the issuance of the secured convertible Debentures and associated warrants

Interest expense, net

Net interest expense for the three months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 was approximately $~~877~~990 and $1701,~~299,~~ respectively. Interest expense consists of $~~649~~749 in connection with the amortization of the debt discount on our outstanding secured convertible debentures, $~~175~~174 in connection with the accrued interest on the outstanding secured convertible debentures, $5266 for accrued interest on notes payable to related parties and $1 in connection with the deferred financing costs relating to the outstanding secured convertible debentures. Interest income, which was not significant, consists of interest earned on bank deposits and an institutional money market fund.

1718

Results of Operations

(All dollar amounts referred to herein are in thousands, except as otherwise indicated.)

~~Six~~Nine ~~Months~~months ~~Ended~~ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015

Our activities for the six months ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 essentially included 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, and development of an infrastructure to support the planned business and increasing of revenues.

Our results of operations are as follows:

	Six Months Ended December 31,
	Nine Months Ended March 31,
	2015			2014
	2016			2015
Net sales	$	1,~~002~~033		$	~~570~~717
Loss from operations		(~~530~~1,094	)		(2,~~029~~909	)
Change in revaluation of derivatives		31,~~128~~322			~~2,821~~678
Loss on issuance of convertible debt		(49225	)		-
Interest expense, net		(12,~~723~~713	)		(23,~~511~~211	)
Net Income (loss)	$	826		$	(1,719	)
Net loss	$	(2,710	)	$	(5,442	)

Net Sales

Net sales for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 were $1,~~002~~033 and $~~870~~717, respectively. The increase was primarily attributed to oil field service sales of $900 made to Suplitrol Continental Corporation and cleaning product sales of $~~102~~133 made by Inventek, which we recognized as an agent and recorded revenues on a net basis based on a predetermined percentage of the amount billed to the customer. Net sales in ~~2014~~2015 were primarily attributed to sales of G-OIL® outdoor power equipment 4-cycle engine oils.

For the ~~three~~nine months ended ~~December~~March 31, ~~2015~~2016, 9087% of our sales were from one customer, Suplitrol Continental Corporation. For the ~~six~~Nine ~~months~~Months ~~ended~~Ended ~~December~~March 31, ~~2014~~2015, approximately 6585% of our sales were from ~~one~~three ~~customer~~customers, TTI (The Home Depot), Menards and Walmart.

Net sales are comprised as follows:

	Six Months Ended December 31,
	Nine Months Ended March 31,
	2015		2014
	2016		2015
Performance products (oils)	$	-	$	~~426~~551
Oil field services	$	900		-
Cleaning products	$	~~102~~133	$	~~144~~166
Total	$	1,~~002~~033	$	~~570~~717

Cost of Sales (exclusive of depreciation and amortization)

Cost of sales (exclusive of depreciation and amortization) for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 were $810, and $~~495~~608, respectively.

1819

Selling, General and Administrative Expenses

	Six Months Ended December 31,
	Nine Months Ended March 31,
	2015		2014
	2016		2015
Salaries	$	25	$	~~165~~246
Selling, marketing, public relations and related		3		~~387~~483
Development, product release and testing		78116		~~137~~209
Management and operating fees		-		~~196~~298
Legal and professional		~~101~~400		~~150~~203
Occupancy, communications and all other, net		78119		~~273~~379
Total selling, general and administrative expenses	$	~~285~~663	$	1,~~308~~818

Stock-based compensation

Stock-based compensation expense for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 was approximately $68 and $~~122~~182, respectively.

Depreciation and amortization

Depreciation and amortization expense totaled $~~431~~646 and $~~674~~1,018 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. Depreciation charges totaled $2 and $79 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively, and amortization expense for intangible assets totaled $~~429~~644 and $~~667~~1,009 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. Depreciation and amortization expense is excluded from cost of sales.

Change in revaluation of derivatives

The change in fair value of our derivative liabilities resulted in a favorable adjustment of $31,~~128~~322 and $~~2,821~~678 for ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. The value of the derivative liabilities was determined using the Black-Scholes method. See note 7 to our financial statements for inputs used to calculate the fair value of our derivatives liabilities.

Loss on issuance of convertible debt

We recorded a charge of $49225 and $0 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. The charge was in connection with the issuance of the secured convertible Debentures and associated warrants.

Interest expense, net

Net interest expense for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015 was approximately $12,~~723~~713 and $23,~~511~~211, respectively. Interest expense consists of $~~1241~~1,989 in connection with the amortization of the debt discount on our outstanding secured convertible debentures, $~~347~~522 in connection with the accrued interest on the outstanding secured convertible debentures, $~~133~~199 for accrued interest on notes payable to related parties and $23 in connection with the deferred financing costs relating to the outstanding secured convertible debentures. Interest income, which was not significant, consists of interest earned on bank deposits and an institutional money market fund.

1920

Liquidity and Capital Resources

At ~~December~~March 31, ~~2015~~2016 and June 30, 2015, we had $~~103~~83 and $34 in cash and an accumulated deficit of $8992,~~408~~944 and $90,234, respectively. At ~~December~~March 31, ~~2015~~2016 and June 30, 2015, we had a working capital deficit of $2012,~~562~~261 and $22,165, respectively.

Net cash used in operating activities was $~~206~~401 and $~~729~~1,191 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. The decrease from ~~2014~~2015 to ~~2015~~2016 was primarily due to the decrease in overall expenses.

Net cash provided by financing activities was $~~275~~450 and $~~650~~1,170 for the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016 and ~~2014~~2015, respectively. The decrease in financing activities is primarily due to proceeds from the issuance of secured convertible debentures in the amount of ~~$275~~450 in ~~2015~~2016 compared to proceeds from athe ~~related~~issuance ~~party~~of ~~note~~secured ~~payable~~convertible debentures in the amount of $~~650~~1,170 in ~~2014~~2015. The net proceeds from our financing activities were used to support general and administrative expenses, purchases from suppliers and selling 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. In the foreseeable future, we will require capital for the growth of our business, including increases in personnel, sales and marketing, and purchasing finished goods to fulfill orders.

Losses from operations are continuing subsequent to ~~December~~March 31, ~~2015~~2016 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.

Debentures and Warrants

In fiscal 2012 and 2013, we realized gross proceeds of $7,500 ($2,250 in December 2011, $4,000 in October 2012 and $1,250 in March 2013), in fiscal 2014, we realized gross proceeds of $2,354 ($1,080 in November 2013, $870 in March 2014 and $404 in June 2014) in fiscal 2015, we realized gross proceeds of $1,315 ($350 in September 2014, $300 in December 2014, $520 in March 2015 and $145 in June 2015) and in fiscal 2016, we realized $~~275~~450 ($175 in September 2015, ~~and~~ $100 in December 2015 and $170 in March 2016) from the sale of additional 6.0% Secured Convertible Debentures, due March 31, ~~2016~~2018, and warrants to purchase 3336,~~794~~419,000 shares of Common Stock on or before December 31, 2019. The fiscal 2015 debentures have a conversion price of $0.06 per share. The fiscal 2016 debentures have a conversion price of $0.01-$0.02 share.

Due to the weighted average anti-dilution provision the conversion price of $7,500 of debentures was reduced from $0.17 to $0.1211 per share. In addition the attached warrants exercise price was reduced from $0.21 to $0.1413 per share. We may prepay the Debentures at any time without penalty upon ten business days prior written notice to the Investors provided there is, at that time, an effective registration statement covering the resale of the shares issuable upon conversion of the Debentures and exercise of the Warrants.

Management Change

In May 2015, Jeffrey Loch resigned as President and Chief Marketing Officer. In July 2015, Mr. Adams resigned from his positions as Chief Financial Officer, Chief Operating Officer and Secretary of the Company.

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, 2015, 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.

20Since inception, we have incurred operating losses and negative cash flows from operations. As of March 31, 2016, we had an accumulated deficit of $92,944 with total stockholders’ deficit of $19,285. We had a working capital deficit of $12,261 at March 31, 2016 and are currently in default of the 3.25% Secured Note, the Promissory Note and the 6% Secured Notes issued to related party disclosed in notes 5 and 6. These notes matured on September 30, 2013 and June 30, 2013, respectively, and have not been extended and are payable upon demand.

Since inception, we have incurred operating losses and negative cash flows from operations. As of December 31, 2015, we had an accumulated deficit of $89,408 with total stockholders’ deficit of $15,925. We had a working capital deficit of $20,562 at December 31, 2015 and are currently in default of the 3.25% Secured Note, the Promissory Note and the 6% Secured Notes issued to related party disclosed in notes 5 and 6. These notes matured on September 30, 2013 and June 30, 2013, respectively, and have not been extended and are payable upon demand.21

We have undertaken, and will continue to implement, various measures to address our financial condition, including:

Continue discussions with existing and potential new investors to invest in us.

Seek debt, equity and other forms of financing, including funding through strategic partnerships.

Attempt to increase revenues in order to reduce or eliminate our operating losses and enable us to meet our financial obligations.

Reduce expenses to conserve cash.

Defer certain marketing activities.

Investigate and pursue transactions with third parties, including strategic transactions and relationships.

There can be no assurance that we will be able to secure the additional funding we need. If our efforts to do so are unsuccessful, we will be required to further reduce or eliminate our operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of these uncertainties.

Contractual Arrangements

Significant contractual obligations as of ~~December~~March 31, ~~2015~~2016 are as follows:

			Amount Due in
Type of Obligation	Total Obligation		Less than 1 year
Sponsorship Agreements	$	325	$	325

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.

Summary of Significant Accounting Policies and new Accounting Pronouncements

For the ~~six~~nine months ended ~~December~~March 31, ~~2015~~2016, there have been no new significant accounting policies or accounting pronouncements from those disclosed in our Annual Report on Form 10-K for the year ended June 30, 2015.

Item 3. 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 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation with the participation of our chief executive officer who serves as our principal executive officer and principal financial officer, required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation our chief executive officer concluded that our disclosure controls and procedures were not effective at ~~December~~March 31, ~~2015~~2016 so as to ensure that the information relating to our company required to be disclosed in our SEC reports (i) is recorded, process, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer, to allow timely decisions regarding required disclosures due to the existence of material weaknesses.

2122

The material weaknesses are as follows:

·- A lack of sufficient resources including a designated chief financial officer and an insufficient level of monitoring and oversight, which restricted the Company’s ability to gather, analyze and report information relative to the financial statement assertions in a timely manner, including insufficient documentation and review of selection of generally accepted accounting principles. ·- The limited size of the accounting department makes it impractical to achieve an appropriate level of segregation of duties. Specifically, due to lack of personnel, effective controls were not designed and implemented to ensure accounting functions were properly segregated for and ·- Due to a lack of adequate staffing within the finance department and adequate staffing within operational departments that provide information to the finance department, we did not establish and maintain effective controls over certain of our period-end financial close and reporting processes. Specifically, effective controls were not designed and implemented to ensure that journal entries were properly prepared with sufficient support or documentation or were reviewed and approved to ensure the accuracy and completeness of the journal entries recorded.

The Company may add additional personnel and procedures, which we believe will remedy these weaknesses in disclosure controls and procedures in future periods. However, there are no assurances we will be able to devote the necessary capital to hire the additional personnel and institute the additional systems, policies and procedures to the level necessary. In that event, there are no assurances that the material weaknesses described above will be timely remediated or not result in errors in our financial statements in future periods.

Changes in Internal Control Over Financial Reporting

During the period covered by this report there have been material changes in our internal control over financial reporting as defined in Rule 13a-15(f). These changes have resulted from the resignation of our Chief Financial Officer. This may materially affect, or is reasonably likely to materially affect, our internal control over financial reporting. As part of our remediation efforts, the Company may hire qualified accounting personnel to implement a Company-wide improvement and remediation program.

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.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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. ~~We are not a party to any material legal proceeding not in the ordinary course of business at this time.~~

22In February 2016, the Company commenced litigation against Bariven S.A., PDVSA Services, Inc., PDVSA Gas S.A., Green Hook Supplies Corp and Alfredo E. Lovera-Aquique. The case is a result of a purchase of oil and gas well stimulation products by Green Hook Supplies Corp. for resale to the Bolivarian Republic of Venezuela state-run oil company, Petroleos de Venezuela, S.A. (PDVSA).

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. (All dollar amounts are in thousands)

In ~~October~~January ~~2015~~2016, we issued 814,~~630~~565,~~817~~250 shares of our common stock, with an aggregate fair market value of $~~173~~175, to pay the accrued interest on the outstanding Debentures.

The foregoing issuances were exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. An appropriate restrictive legend was imprinted on the back of each issued stock certificate.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Included in liabilities at ~~December~~March 31, ~~2015~~2016 is notes payable of $1,232,000 that are in default for lack of repayment by their due date.

Item 6. – Exhibits

Exhibit Numbers	Description	~~Description~~
31.1	Certification of President and Chief Marketing Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *	Certification of President and Chief Marketing Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *
31.2	Certification of Chief Operating Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *	Certification of Chief Operating Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 *
32.1	Certification of President and Chief Marketing Officer and Chief Operating 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*	Certification of President and Chief Marketing Officer and Chief Operating 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*
101.INS	XBRL Instance Document*	XBRL Instance Document*
101.CAL	XBRL Taxonomy Extension Schema Document*	XBRL Taxonomy Extension Schema Document*
101.SCH	XBRL Taxonomy Extension Calculation Linkbase Document*	XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*	XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*	XBRL Taxonomy Extension Definition Linkbase Document*
*	Filed herewith.

23* Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	GREEN EARTH TECHNOLOGIES, INC.
Date: February 16, 2016	By:	/s/ Walter Raquet
Date: May 16, 2016	By:	/s/ Walter Raquet
		Walter Raquet
		Chief Executive Officer (Principal Executive Officer)

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