Green Technology Solutions, Inc. - FORM 10-Q

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EX-32.1 - Green Technology Solutions, Inc.	v221774_ex32-1.htm
EX-31.1 - Green Technology Solutions, Inc.	v221774_ex31-1.htm

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, 2011

¨ 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 1-11248

GREEN TECHNOLOGY SOLUTIONS, INC.

(formerly Sunrise Energy Resources, Inc.)

(Exact name of Registrant as specified in its charter)

Delaware		84-0938688
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

2880 Zanker Road, Suite 203
San Jose, CA		95134
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (408) 432-7285

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 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 (§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 x No ¨

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

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

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

As of April 30, 2011, the Registrant had 25,133,745 shares of common stock issued and outstanding.

GREEN TECHNOLOGY SOLUTIONS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Balance Sheets – March 31, 2011 and December 31, 2010	3

	Statements of Operations - for the three months ended March 31, 2011 and 2010 and for the period from June 12, 2010 (date of re-entry to development stage) through March 31, 2011	4

	Statements of Changes in Stockholder’s Equity (Deficit) – for the period from June 12, 2010 (date of re-entry to development stage) through March 31, 2011	5

	Statements of Cash Flows - for the three months ended March 31, 2011 and 2010 and for the period from June 12, 2010 (date of re-entry to development stage) through March 31, 2011	6

	Notes to the Unaudited Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13

Item 4.	Controls and Procedures	13

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	14

Item 1A.	Risk Factors	14

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3.	Defaults upon Senior Securities	14

Item 4.	[Removed and Reserved]	14

Item 5.	Other Information	15

Item 6.	Exhibits	15

SIGNATURES		15

PART I.

GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

BALANCE SHEETS

	March 31, 2011			December 31, 2010
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	15,829		$	2,613
Total current assets		15,829			2,613

Investment in joint venture, net of allowance for impairment of $260,000		-			-

TOTAL ASSETS	$	15,829		$	2,613

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	16,631		$	14,820
Advances payable		872,823			661,683
Total current liabilities		889,454			676,503

Convertible notes payable		174,733			219,252

TOTAL LIABILITIES		1,064,187			895,755

STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock, $.001 par value, 75,000,000 authorized, 25,133,745 and 20,133,745 issued and outstanding as of March 31, 2011 and December 31, 2010, respectively		25,134			20,134
Additional Paid-in Capital		6,949,705			6,886,087
Accumulated deficit		(7,113,753	)		(7,113,753	)
Deficit accumulated during the development stage		(909,444	)		(685,610	)
Total stockholders' equity (deficit)		(1,048,358	)		(893,142	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	15,829		$	2,613

The accompanying notes are an integral part of these financial statements.

GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended						For the period from June 12, 2010 (date re- entered development stage) through
	March 31,						March 31,
	2011			2010			2011

OPERATING EXPENSES
Sales, general and administrative expenses	$	199,735		$	6,205		$	581,349

LOSS FROM OPERATIONS		(199,735	)		(6,205	)		(581,349	)

OTHER INCOME (EXPENSE)
Interest expenses, net		(24,099	)		-			(68,095	)
Impairment of joint venture		-			-			(260,000	)
Total other income (expense)		(24,099	)		-			(328,095	)

NET LOSS	$	(223,834	)	$	(6,205	)	$	(909,444	)

NET LOSS PER COMMON SHARE – Basic and fully diluted	$	(0.01	)	$	(0.05	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		21,744,856			118,450

The accompanying notes are an integral part of these financial statements.

GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

	Common Stock				Additional Paid-In		Accumulated			Deficit accumulated during the development
	Shares		Amount		Capital		Deficit			stage			Total
BALANCE, JUNE 12, 2010		118,745	$	119	$	6,650,294	$	(7,113,753	)	$	-		$	(463,340	)

Issuance of shares for conversion of note payable		15,000		15		29,985		-			-			30,000
Issuance of shares for conversion of note payable		20,000,000		20,000		180,000		-			-			200,000
Imputed interest expense		-		-		25,808		-			-			25,808
Net loss for the period from June 12, 2010 through December 31, 2010		-		-		-		-			(685,610	)		(685,610	)

BALANCE, DECEMBER 31, 2010		20,133,745	$	20,134	$	6,886,087	$	(7,113,753	)	$	(685,610	)	$	(893,142	)

Issuance of shares for conversion of note payable		5,000,000		5,000		45,000		-			-			50,000
Imputed interest expense		-		-		18,618		-			-			18,618
Net loss		-		-		-		-			(223,834	)		(223,834	)

BALANCE, MARCH 31, 2011		25,133,745	$	25,134	$	6,949,705	$	(7,113,753	)	$	(909,444	)	$	(1,048,358	)

The accompanying notes are an integral part of these financial statements.

GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended March 31,						For the period from June 12, 2010 (date re-entered development stage) through March 31,
	2011			2010			2011

CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net loss	$	(223,834	)	$	(6,205	)	$	(909,444	)
Adjustments to reconcile net loss to net cash in operating activities:
Impairment of investment in joint venture		-			-			260,000
Imputed interest expense		18,618			-			44,426
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		1,811			6,167			(25,992	)
Accrued interest payable		5,481			-			34,016
NET CASH (USED IN) OPERATING ACTIVITIES		(197,924	)		(38	)		(596,994	)

CASH (USED IN) INVESTING ACTIVITIES
Cash used in investment in joint venture		-			-			(260,000	)
NET CASH (USED IN) INVESTING ACTIVITIES		-			-			(260,000	)

CASH PROVIDED BY FINANCING ACTIVITIES:
Proceeds from advances		211,140			-			872,823
NET CASH PROVIDED BY FINANCING ACTIVITIES		211,140			-			872,823

NET INCREASE (DECREASE) IN CASH		13,216			(38	)		15,829
CASH, at the beginning of the period		2,613			38			-

CASH, at the end of the period	$	15,829		$	-		$	15,829

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest	$	-		$	-		$	-
Taxes	$	-		$	-		$	-

Noncash investing and financing transactions:
Refinancing of demand notes to convertible notes payable	$	-		$	-		$	420,717
Issuance of stock for conversion of convertible notes payable	$	50,000		$	-		$	280,000

The accompanying notes are an integral part of the financial statements.

GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)

1.	INTERIM FINANCIAL STATEMENTS

The accompanying unaudited interim financial statements include all adjustments, which in the opinion of management are necessary in order to make the accompanying financial statements not misleading, and are of a normal recurring nature. However, the accompanying unaudited financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows and stockholders’ equity in conformity with generally accepted accounting principles. Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in our annual financial statements for the period ended December 31, 2010 included in Form 10-K. Operating results for the period ended March 31, 2011 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2011.

2.	PRESENTATION OF FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation–The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

Going concern — The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the financial statements, the Company incurred a net loss of $223,834 during the three months ended March 31, 2011, while the Company’s current liabilities exceeded its current assets by $873,625.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis by raising additional funds through debt or equity financing. The Company expects to satisfy its cash requirements by obtaining additional loans; however, there is no assurance that additional capital will be available to the Company when needed and on acceptable terms. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Use of Estimates and Assumptions– The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 materially differ from these estimates.

Cash and Cash Equivalents – Cash includes petty cash and cash held on current bank accounts. Cash equivalents include short-term investments with an original maturity of three months or less that are readily convertible to known amounts of cash which are subject to insignificant risk of changes in value. Cash and cash equivalents as of March 31, 2011 and December 31, 2010 consisted mainly of U.S. dollar-denominated current accounts held at major banks.

Revenue Recognition – The Company is not currently generating revenue; however, revenue generated in the future will be recognized in accordance with SEC rules. The four criteria that must be met in order to recognize revenue are: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonable assured.

Earnings (Loss) per Share – Earnings (loss) per share are computed in accordance with current accounting literature. Basic earnings (loss) per share are calculated by dividing the net income (loss) available to common stockholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity. In a loss year, dilutive common equivalent shares are excluded from the loss per share calculation as the effect would be anti-dilutive.

3.	CONVERTIBLE NOTES PAYABLE

On February 18, 2011, holders of the 10% Subordinated Convertible Note Payable originally issued to Zaccam Trading Ltd. elected to convert principal in the amount of $20,000 into 2,000,000 shares of common stock in accordance with the terms of the note.

On February 18, 2011, holders of the 10% Subordinated Convertible Note Payable originally issued to Infox, Ltd. elected to convert principal in the amount of $30,000 into 3,000,000 shares of common stock in accordance with the terms of the note.

4.	ADVANCES PAYABLE

During the three months ended March 31, 2011, the Company has received working capital advances in the amount of $211,140. These advances are non-interest bearing and payable upon demand. The Company has imputed interest on these advances in the amount of $18,618 for the three months ended March 31, 2011. The imputed interest was recorded as an increase in additional paid-in capital.

5.	SHAREHOLDERS’ EQUITY

On March 2, 2011, the Company issued 5,000,000 shares of common stock for the conversion of $50,000 of principal of the 10% Subordinated Convertible Notes Payable.

The Company has imputed interest on advances in the amount of $18,618 for the three months ended March 31, 2011. The imputed interest was recorded as an increase in additional paid-in capital.

6.	COMMITMENTS AND CONTINGENCIES

Environmental remediation – Under Ukrainian law, the Company is obligated to meet certain environmental remediation obligations related to its former oil and gas production activities. This amount cannot be estimated at this time but is considered not to be a material amount. In accordance with the share purchase agreement executed by the Company and Millington Solutions LLC, Millington assumed all environmental remediation obligations relating to the oil and gas properties previously held by the Company through its former subsidiaries EskoPivnich and Pari.

Litigation– The Company has been and continues to be the subject of legal proceedings and adjudications from time to time. Management believes that the resolution of all business matters which will have a material impact on the Company’s financial position or operating results have been recorded.

7.	RISK MANAGEMENT POLICIES

Management of risk is an essential element of the Company’s operations. The main risks inherent to the Company’s operations are those related to credit risk exposures and market movements in interest rates. A description of the Company’s risk management policies in relation to those risks is provided below.

Credit risk–The Company is exposed to credit risk which is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.

Interest rate risk – Interest rate risk arises from the possibility that changes in interest rates will affect the value of a financial instrument.

Currently, the Company’s approach to the interest risk limitation is borrowing at fixed rates and for short periods.

8.	SUBSEQUENT EVENTS

On April 12, 2011, subsequent to the period covered by this report, we entered into a letter of intent to acquire REEM. According to the letter of intent, the final purchase price for REEM will be agreed upon pending independent evaluations of these sites’ mineral deposits currently underway. Subject to completion of due diligence and negotiation of final documentation, we estimate that the closing of the acquisition will occur approximately 50 days after the date of the letter of intent.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company's unaudited financial statements and associated notes appearing elsewhere in this Form 10-Q.

As used in this report, the terms "we", "us", "our", the "Company" and "GTSO" mean Green Technology Solutions, Inc., unless otherwise indicated.

Caution Regarding Forward-Looking Information

All statements contained in this Form 10-Q, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions . All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties described under “Risk Factors” under Part II Item 1A below and in the “Risk Factors” section of our Form 10-K for the fiscal year ended December 31, 2010 that may cause actual results to differ materially.

Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company's views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Discussion and Analysis of Financial Condition

Organization and Basis of Presentation

Green Technology Solutions, Inc. is in the business of identifying and acquiring rights in early stage, breakthrough green technologies, with the plan to develop these technologies into marketable products. To date, we have identified the following market segments: (1) the advancement of cleaner worldwide mining technologies, with an emphasis on rare earth mining applications, (2) the development of additional markets for existing environmentally friendly paint products that are currently being marketed in the United States and (3) smart grid technology. Our mission is to focus our resources on discovering the best available new innovative technologies in this industry space. We intend to work with young companies and inventors to deliver innovation in the real world.

In addition to the foregoing, we plan to focus our resources on successfully identifying new green technologies that have greatest potential to produce near term profits. Due to our limited management and employees, we expect to continue to form strategic joint venture relationships with early stage development technology companies whose goals and objectives are similar to ours. Moreover, we anticipate continued use of and reliance upon industry consultants who have the knowledge and expertise in the areas of our existing and future business ventures. We have located our new offices in the Silicon Valley city of Palo Alto, California, which management believes may increase access to cutting edge technologies. As of March 31, 2011, the Company has one employee.

Current Plan of Operations

We are currently identifying possible early stage, breakthrough green technologies for the purpose of acquiring rights to them and developing them into marketable products. We have already identified several potential new technology endeavors and management is studying these endeavors for their potential inclusion into our development process.

On January 29, 2011, we entered into a Profit Participation Agreement with Integrated Smart Solutions, Inc., a California corporation that is in the business of developing smart grid technologies. Smart grid technology is an electric network which uses two-way digital communication to control appliances at consumers' homes to achieve energy savings, reduced costs and increased reliability. Pursuant to the agreement, we will receive up to five percent of the net profits realized by ISS, if any, in exchange for six monthly payments of $10,000. We have no guarantee that ISS will achieve profitable operations.

On January 30, 2011, we entered into a Joint Venture Agreement with Rare Earth Exporters of Mongolia Pte.Ltd, (“REEM”), whose mission is to supply worldwide industrial and manufacturing economies with necessary rare earth minerals. Under the terms of our agreement, we will have a 50% interest in exchange for our agreement to provide operating capital. REEM is contributing its knowledge and product development skills in the market. Our initial task is to determine whether certain properties we have identified have mining claims with commercial viability. We will need to raise significant additional capital in order to fully realize the value of our claims in the joint venture if our claims reveal that they contain the rare earth minerals we are seeking to mine. We currently do not have any plan or efforts underway to raise such a significant amount of capital and are not sure when, if ever, we will be able to do so to pursue the exploitation of these mining claims if they prove to exist.

On April 12, 2011, subsequent to the period covered by this report, we entered into a letter of intent to acquire REEM. Since February, we have worked together with REEM to procure and develop rare earth mining claims and operations inside the nation of Mongolia. Agents of the joint venture signed letters of intent to undertake new rare earth mining operations at four sites in the developing Asian nation. By acquiring REEM as our subsidiary, we will position the Company to become the sole owner of these four Mongolian properties’ potentially lucrative mining rights. According to the letter of intent, the final purchase price for REEM will be agreed upon pending independent evaluations of these sites’ mineral deposits currently underway. Subject to completion of due diligence and negotiation of final documentation, we estimate that the closing of the acquisition will occur approximately 50 days after the date of the letter of intent.

Results of Operations and Going Concern

We incurred a net loss of $223,834 for the three months ended March 31, 2011, and had a working capital deficit of approximately $873,625 as of March 31, 2011. We do not anticipate having positive net income in the immediate future. Net cash used by operations for the three months ended March 31, 2011 was $197,924. These conditions create an uncertainty as to our ability to continue as a going concern.

We continue to rely on advances to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.

Results of Operations for the three months ended March 31, 2011 compared to the three months ended March 31, 2010

General and Administrative Expenses

General and administrative expenses increased in the three months ended March 31, 2011 as compared to the year ended March 31, 2010 from $6,205 to $199,735 due to increased professional expenses related to our increased operations in Mongolia.

Loss from Operations

The increase in our operating loss for the three months ended March 31, 2011 as compared to the comparable period of 2010 from $6,205 to $199,735 is due to the increase in general and administrative expenses described above.

Other Income (Expense)

Interest expense increased during the three months ended March 31, 2011 compared to the same period of 2010 from $0 to $24,099.

Net Income (Loss)

We recognized a net loss of $223,834 for the three months ended March 31, 2011 as compared to a net loss of $6,205 for the same period of 2010. Changes in net income (loss) are primarily attributable to changes in operating income as described above.

Liquidity and Capital Resources

Net cash used by operating activities was $197,924 and $38 for the three months ended March 31, 2011 and 2010, respectively. The increase is mainly attributable to the increased net loss as a result of the higher level of expenses related to our operations in Mongolia.

Cash provided by financing activities was $211,140 and $0 for the three months ended March 31, 2011 and 2010, respectively. The increase is mainly attributable to advances received which were required to fund the Company’s operations.

We had negative working capital of $873,625 as of March 31, 2011 compared to $673,890 as of December 31, 2010. Our cash position increased to $15,829 at March 31, 2011 compared to $2,613 at December 31, 2010.

Our monthly cash requirement amount is approximately $50,000, and as of March 31, 2011, cash on hand would fund operations for less than one month.

The Company anticipates it will require around $700,000 to sustain operations and effectively evaluate new business opportunities over the next twelve months. However, if our mining claims show significant deposits, then we may require several million dollars of additional financing. The Company intends to seek to raise these funds through equity and debt financing; however, there is no guarantee that funds will be raised and the Company has no agreements in place as of the date of this filing for any financing.

We do not have any material commitments for capital expenditures. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financings in addition to what is required to fund our present operations.

Additional Financing

Additional financing is required to continue operations. Although actively searching for available capital, the Company does not have any current arrangements for additional outside sources of financing and cannot provide any assurance that such financing will be available.

Off Balance Sheet Arrangements

None

Cash requirements

The Company anticipates it will require around $700,000 to sustain operations and effectively evaluate new business opportunities over the next twelve months. The Company intends to seek to raise these funds through equity and debt financing; however, there is no guarantee that funds will be raised and the Company has no agreements in place as of the date of this filing for any financing.

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

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2011. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2011, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of March 31, 2011, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

As of March 31, 2011, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control over Financial Reporting

During the quarterly period ended March 31, 2011, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no outstanding legal proceedings material to the Company to which the Company or any of its assets are subject, nor are there any such proceedings known to be contemplated. Management believes that the resolution of all business matters which would have a material impact on the Company’s financial position or operating results have been recorded.

Item 1A. Risk Factors

In addition to the other information set forth in this quarterly report, you should carefully consider the risks discussed in our 2010 Annual Report on Form 10-K including the Risk Factors set forth in Part I of our Annual Report, which risks could materially affect our business, financial condition or future results. There have been no material changes to the risk factors disclosed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2010. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

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

During the quarter ended March 31, 2011, we have issued and/or sold the following securities that were not registered under the Securities Act and have not been previously disclosed in a filing with the Securities and Exchange Commission.

Convertible Notes

The issuance of common stock upon conversion of the 10% Subordinated Convertible Notes Payable was exempt from the registration requirements of the Securities Act under Regulation D and Section 4(2) of the Securities Act as the conversion did not involve a public offering of securities. No underwriters were used in the offering, and there were no underwriting discounts or commissions. The issuances were made to accredited investors.

Item 3. Defaults upon Senior Securities

None

Item 4. [Removed and Reserved]

N/A

Item 5. Other Information

None

Item 6. EXHIBITS

Exhibit No.		Description of Exhibit

3.1		Amended and Restated Certificate of Incorporation of the Company (1)
3.2		Bylaws of the Company (1)
10.1		10% Subordinated Note Due March 30, 2009 (4)
10.2		10% Subordinated Note Due June 6, 2009 (4)
10.3		10% Subordinated Note Due March 30, 2009 (5)
10.4		10% Subordinated Note Due June 6, 2009 (5)
10.5		Joint Venture Agreement (6)
10.6		Sale and Assignment of Rights Under Joint Venture Agreement (6)
10.7		Profit Participation Agreement dated January 29, 2011 with Integrated Smart Solutions, Inc. (3)
10.8		Joint Venture Agreement dated January 30, 2011 with Rare Earth Exporters of Mongolia Pte. Ltd. (3)
10.9		Sale and Assignment of Rights Under Joint Venture Agreement dated November 8, 2010 (3)
14		Code of Ethics (2)
31.1		Section 302 Certification (7)
32.1		Section 906 Certification (7)

(1)

Incorporated by reference from the Form SB-2 filed on September 15, 2006.

(2)

Incorporated by reference from the Form 10-K for the Annual Period Ended December 31, 2009.

(3)

Incorporated by reference from the Form 10-K for the Annual Period Ended December 31, 2010.

(4)

Incorporated by reference from the 10-QSB for the Six Month Period Ended June 30, 2006.

(5)

Incorporated by reference from the 10-KSB for the Fiscal Year Ended December 31, 2006.

(6)

Incorporated by reference from the 8-K filed on December 13, 2010.

(7)

Filed herewith.

SIGNATURES

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 Technology Solutions, Inc.

	/s/ John Shearer
Date: May 10, 2011	John Shearer
	Chief Executive Officer
	(Principal Executive, Financial and Accounting Officer)

Green Technology Solutions, Inc. - FORM 10-Q - May 10, 2011

Attached files

Green Technology Solutions, Inc. Reports