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EX-31.1 - EXHIBIT 31.1 - Greenhouse Solutions, Inc.v231661_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - Greenhouse Solutions, Inc.v231661_ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - Greenhouse Solutions, Inc.v231661_ex32-1.htm
EX-32.2 - EXHIBIT 32.2 - Greenhouse Solutions, Inc.v231661_ex32-2.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 June 30, 2011

or

 
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: 333-167655

GREENHOUSE SOLUTIONS INC.
(Exact Name of Registrant as Specified in its Charter)

Nevada
45-2094634
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
   
4 Research Dr., Suite 402, Shelton, Connecticut
06484
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number including area code: (203) 242-3065

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 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 during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files.  Yes o  No  x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x
Applicable Only to Corporate Issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class
 
Outstanding as of August 10, 2011
Common Stock, $.001 par value
 
9,730,000
 
 
 

 

GREENHOUSE SOLUTIONS INC.

TABLE OF CONTENTS

 
Page
PART I - FINANCIAL INFORMATION
 
   
Item 1. Financial Statements
F-1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
3
Item 3. Quantitative and Qualitative Disclosures About Market Risk
5
Item 4. Controls and Procedures
6
   
PART II - OTHER INFORMATION
 
   
Item 1. Legal Proceedings
6
Item 1A. Risk Factors
6
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
6
Item 3. Defaults Upon Senior Securities
6
Item 4. Removed and Reserved
6
Item 5. Other Information
6
Item 6. Exhibits
6
SIGNATURES
7
 
 
2

 

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 and 2010
(Unaudited)

Financial Statements-
 
   
Consolidated Balance Sheets as of June 30, 2011 and 2010
F-2
   
Consolidated Statement of Operations for the Three Months Ended June 30, 2011 and 2010, and Cumulative From Inception
F-3
   
Consolidated Statement of Stockholders’ (Deficit) for the Period from April 8, 2009 (Inception) Through June 30, 2011
F-4
   
Consolidated Statement of Cash Flows for the Three Months Ended June 30, 2011 and 2010, and Cumulative From Inception
F-5
   
Notes to Consolidated Financial Statements June 30, 2011 and 2010
F-6
 
 
F-1

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(Unaudited)

   
June 30,
   
March 31,
 
   
2011
   
2011
 
             
ASSETS
           
Current Assets:
           
Cash
  $ 20,229     $ 15,214  
Prepaid expenses
    3,150       3,150  
      23,379       18,364  
                 
Total Assets
  $ 23,379     $ 18,364  
                 
LIABILITIES AND STOCKHOLDER'S EQUITY
               
                 
Current Liabilities:
               
Accounts payable and accrued liabilities
  $ 2,935     $ 10,953  
Due to related party
    10,978       3,600  
Payroll taxes payable
    1,098       1,090  
Loan payable
    30,121       -  
Total current liabilities
    45,132       15,643  
Total liabilities
    45,132       15,643  
                 
Commitments and Contingencies
               
                 
Stockholders' Equity:
               
Common stock, par value $0.001 per share, 75,000,000 shares authorized; 9,730,000 issued and outstanding
    9,730       9,730  
Additional paid-in capital
    31,770       31,770  
(Deficit) accumulated during the development stage
    (63,253 )     (38,779 )
                 
Total stockholders' equity (deficit)
    (21,753 )     2,721  
                 
Total Liabilities and Stockholder's Equity
  $ 23,379     $ 18,364  

The accompanying notes to financial statements are
an integral part of these balance sheets

 
F-2

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

               
For The Period
 
               
From
 
   
Three Months
   
Three Months
   
April 8, 2009
 
   
Ended
   
Ended
   
(Inception) Through
 
   
June 30,
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
 
                   
Revenues, net
  $ -     $ -     $ 40,034  
                         
Cost of Revenues
    -       -       15,065  
                         
Gross Profit
    -       -       24,969  
                         
Expenses:
                       
General and administrative-
                       
Accounting and audit fees
    4,325       4,750       21,575  
Consulting
    -       -       4,007  
Executive compensation
    600       600       4,200  
Filing
    -       -       4,275  
Organization costs
    -       -       838  
Other
    1,074       2,418       17,942  
Salaries and wages
    12,875       -       17,180  
Transfer agent
    5,600       -       18,205  
                         
Total operating expenses
    24,474       7,768       88,222  
                         
(Loss) from Operations
    (24,474 )     (7,768 )     (63,253 )
      -       -       -  
Provision for income taxes
    -       -       -  
                         
Net (Loss)
  $ (24,474 )   $ (7,768 )   $ (63,253 )
                         
(Loss) Per Common Share:
                       
(Loss) per common share - Basic and Diluted
  $ -     $ -          
                         
Weighted Average Number of Common Shares Outstanding - Basic and Diluted
    9,730,000       6,200,000          

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

 
F-3

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (APRIL 8, 2009)
THROUGH JUNE 30 , 2011
(Unaudited)

                     
(Deficit)
       
                     
Accumulated
       
               
Additional
   
During the
       
   
Common stock
   
Paid-in
   
Development
       
Description
 
Shares
   
Amount
   
Capital
   
Stage
   
Total
 
                               
Balance - April 8, 2009
    -     $ -     $ -     $ -     $ -  
                                         
Common stock issued for cash
    6,200,000       6,200       -       -       6,200  
                                         
Net (loss) for the period
    -       -       -       (6,202 )     (6,202 )
                                         
Balance -March 31, 2010
    6,200,000       6,200       -       (6,202 )     (2 )
                                         
Common stock issued for cash
    3,530,000       3,530       31,770       -       35,300  
                                         
Net (loss) for the year
    -       -       -       (32,577 )     (32,577 )
                                         
Balance -March 31, 2011
    9,730,000       9,730       31,770       (38,779 )     2,721  
                                         
Net (loss) for the period
    -       -       -       (24,474 )     (24,474 )
                                         
Balance -June 30, 2011
    9,730,000       9,730       31,770       (63,253 )     (21,753 )

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

 
F-4

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

               
For The Period
 
               
From
 
   
Three Months
   
Three Months
   
April 8, 2009
 
   
Ended
   
Ended
   
(Inception) Through
 
   
June 30,
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
 
                   
Operating Activities:
                 
Net (loss)
  $ (24,474 )   $ (7,768 )   $ (63,253 )
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
                       
Changes in Current Assets and Liabilities-
                       
Prepaid expenses
    -       -       (3,150 )
Accounts payable and accrued liabilities
    (8,018 )     3,735       2,935  
Payroll taxes payable
    8       -       1,098  
                         
Net Cash (Used in) Operating Activities
    (32,484 )     (4,033 )     (62,370 )
                         
Financing Activities:
                       
Proceeds form issuance of common stock
    -       -       41,500  
Loan payable
    30,121       -       30,121  
Loan from Director and stockholder
    7,378       600       10,978  
                         
Net Cash Provided by Financing Activities
    37,499       600       82,599  
                         
Net Increase in Cash
    5,015       (3,433 )     20,229  
                         
Cash - Beginning of Period
    15,214       3,932       -  
                         
Cash - End of Period
  $ 20,229     $ 499     $ 20,229  
                         
Supplemental Disclosure of Cash Flow Information:
                       
Cash paid during the period for:
                       
Interest
  $ -     $ -     $ -  
                         
Income taxes
  $ -     $ -     $ -  

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

 
F-5

 

GREENHOUSE SOLUTIONS INC.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

NOTE 1 – ORGANIZATION AND OPERATIONS

Greenhouse Solutions Inc. (the “Company” or “Greenhouse Solutions”) is a Nevada corporation in the development stage. The Company was incorporated under the laws of the State of Nevada on April 8, 2009.  The Company is involved in sale and distribution of urban gardening products and greenhouses on the North American market.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation - unaudited interim financial information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Unaudited interim results are not necessarily indicative of the results for the full fiscal year.  These unaudited interim consolidated financial statements should be read in conjunction with the financial statements of the Company for the fiscal year ended March 31, 2011 and notes thereto which were filed with the Securities and Exchange Commission on May 16, 2011.

Principle of Consolidation

The Company's consolidated financial statements include the accounts of Greenhouse Solutions Inc., an Ontario, Canada, based company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated on consolidation.

Development Stage Company

The Company is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification.  Although the Company has recognized nominal amount of revenue, the Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced.  All losses accumulated since inception have been considered as part of the Company’s development stage activities.

Cash and Cash Equivalents

For purposes of reporting within the statements of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 
F-6

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

Revenue Recognition

The Company is in the development stage and has realized minimal revenues from operations.  The Company recognizes revenues when the sale and/or distribution of products is complete, risk of loss and title to the products have transferred to the customer, there is persuasive evidence of an agreement, acceptance has been approved by its customer, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.  Net sales will be comprised of gross revenues less expected returns, trade discounts, and customer allowances that will include costs associated with off-invoice markdowns and other price reductions, as well as trade promotions and coupons. These incentive costs will be recognized at the later of the date on which the Company recognized the related revenue or the date on which the Company offers the incentive.

Loss per Common Share

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the periods.  Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  There were no dilutive financial instruments issued or outstanding for the three months ended June 30, 2011 and 2010.

Income Taxes

The Company accounts for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”).  Under SFAS No. 109, now encompassed under ASC 740, deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

The Company maintains a valuation allowance with respect to deferred tax assets.  Greenhouse Solutions establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period.  Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset.  Any change in the valuation allowance will be included in income in the year of the change in estimate.

 
F-7

 

GREENHOUSE SOLUTIONS INC.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

Fair value of financial instruments measured on a recurring basis

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.  To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3
Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid rent, accounts payable, accrued expenses, and payroll taxes payable approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not however, practical to determine the fair value of advances from stockholders due to their related party nature.

Deferred Offering Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed.  At the time of the completion of the offering, the costs are charged against the capital raised.  Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.

 
F-8

 

GREENHOUSE SOLUTIONS INC.
 (A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

Carrying value, recoverability and impairment of long-lived assets

The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which includes office equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.  If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

The impairment charges, if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).

Common Stock Registration Expenses

The Company considers incremental costs and expenses related to the registration of equity securities with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions.  As such, subsequent registration costs and expenses are reflected in the accompanying consolidated financial statements as general and administrative expenses, and are expensed as incurred.

 
F-9

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period.  Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

The Company’s significant estimates include income taxes provision and valuation allowance of deferred tax assets; the fair value of financial instruments; the carrying value and recoverability of long-lived assets, including the values assigned to and estimated useful lives of office equipment; and the assumption that the Company will continue as a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued.  Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently issued accounting pronouncements
 
From time to time, new accounting pronouncements are issued by the FASB that are adopted by the company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the company’s consolidated financial statements upon adoption.
 
In January 2010, the Financial Accounting Standards Board (FASB) issued ASU No. 2010-06 which amends ASC Topic 820, Fair Value Measurements and Disclosures, to add new disclosure requirements about recurring and nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. This guidance was effective for reporting periods beginning after December 15, 2009, except for the Level 3 reconciliation disclosures which were effective for reporting periods beginning after December 15, 2010. The guidance became effective for us on April 1, 2011. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations, or cash flows.

 
F-10

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

In December 2010, the FASB issued Accounting Standards Update (ASU) 2010-28: Intangibles — Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (Topic 350).  The amendments to the Codification in this update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. Goodwill of a reporting unit is required to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. This update is effective starting in the first quarter of 2011 with early adoption not permitted.  Adoption of this update had no impact on our financial statements.

In December 2010, the FASB issued ASU 2010-29: Business Combinations: Disclosure of Supplementary Pro Forma Information for Business Combinations (Topic 805).  The amendments to the Codification in this ASU apply to any public entity that enters into business combination that are material on an individual or aggregate basis and specify that the entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The update is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning in January 2011 with early adoption permitted. Adoption of this update had no impact on our financial statements.

In June 2011, the FASB issued ASU Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The amendments to the Codification in this ASU will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The standard does not change the items which must be reported in other comprehensive income, how such items are measured or when they must be reclassified to net income. This standard is effective for interim and annual periods beginning after December 15, 2011. Because this ASU impacts presentation only, it will have no effect on our financial condition, results of operations or cash flows.

NOTE 2 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As reflected in the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage of $63,253 at June 30, 2011, a net loss of $24,474 and net cash used in operating activities of $32,484 for the interim period then ended, respectively.

 
F-11

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations.  Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect.  The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.

The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – RELATED PARTY TRANSACTIONS

Advances from stockholder

From time to time, the president and a stockholder of the Company provide advances to the Company for its working capital purposes. These advances bear no interest and are due on demand. During the three months ended June 30, 2011, the President of the Company advanced $6,778 in aggregate to the Company and the Company did not make any repayment toward these advances as of June 30, 2011.

Consulting services from President
 
The President of the Company provides management consulting services to the Company. During the three months ended June 30, 2011, management consulting services of $600 (June 30, 2010: $600) were charged to operations.
 
As of June 30, 2011, the Company owed to Directors of the Company $4,200 (March 31, 2011: $3,600) for management consulting fees. Such amounts are unsecured, non-interest bearing, and have no terms for repayment.

NOTE 4 – LOAN PAYABLE

The loan payable is payable on demand, unsecured, bears interest at 4.75% per annum and consists of $30,000 of principal, and $121 of accrued interest payable.

NOTE 5 – STOCKHOLDERS’ EQUITY (DEFICIT)

Common stock

The total number of common shares authorized that may be issued by the Company is 75,000,000 shares with a par value of $0.001 per share.  No other class of stock is authorized.

 
F-12

 

GREENHOUSE SOLUTIONS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(Unaudited)

During the period from inception (April 8, 2009) to March 31, 2011, the Company issued:

 
a)
6,200,000 shares of common stock at $0.001 per share to its Directors and officers for total  proceeds of $6,200: and
 
b)
3,530,000 shares of common stock at $0.010 per share for total proceeds of $35,300.

As of June 30, 2011, the Company had not issued any shares, granted any stock options, or recorded any share-based compensation.

NOTE 6 – SUBSEQUENT EVENTS

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported.  The Management of the Company determined that there were no reportable subsequent events to be disclosed.

 
F-13

 

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

Forward-Looking Statements and Associated Risks.

The following discussion should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in the MD&A are forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in other sections of this Quarterly Report on Form 10-Q.

Plan of Operation

The Company was incorporated under the laws of the State of Nevada on April 8, 2009.  The Company is involved in the sale and distribution of gardening products and greenhouses in the North American market.  On September 2, 2009 we incorporated a wholly owned (ownership interest – 100%) subsidiary Greenhouse Solutions Inc. an Ontario, Canada, based company to facilitate our operations and  cross border goods transfer to and from Canada. In addition we expect to reduce our exposure to foreign currency exchange fluctuation between US and Canadian dollars that could adversely impact our operations. We conduct our operations in Canada through our Canadian subsidiary and our operations in USA through our parent corporation, Greenhouse Solutions Inc. (USA). References in this Report to “Greenhouse Solutions” refer to Greenhouse Solutions Inc. and its subsidiary, on a consolidated basis, unless otherwise indicated or the context otherwise requires.

As of June 30, 2011 we have generated $40,034 in revenues, and have incurred $63,253 in losses since our inception on April 8, 2009. We have relied upon revenues, the sale of our securities in unregistered private placement transactions, and cash advances from our directors to fund our operations during the period from inception on April 8, 2009 to June 30, 2011. 

Currently we generate revenues from sales of greenhouses and consulting services. In addition we plan to generate revenues from sales of urban gardening kits, our own line of products. The urban gardening line of products will be targeted to the recreational gardener with limited square footage available for the growing area. We started development of the urban gardening kits to be sold under our trademark “Greenhouse Life ™”.

We are a development stage company and we do not expect to generate revenue for the next 12 months which would be sufficient to sustain our operations.  Accordingly, for the foreseeable future, we will continue to be dependent on additional financing in order to maintain our operations and continue with our corporate activities.  Due to the uncertainty of our ability to meet our financial obligations and to pay our liabilities as they become due, in their report on our financial statements for the period from inception (April 8, 2009) to March 31, 2011, our registered independent auditors included additional comments indicating concerns about our ability to continue as a going concern.  Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our registered independent auditors.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
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Results of Operations

For the three months ended June 30, 2011 compared to the three months  ended June 30, 2010

During the three months ended June 30, 2011 and 2010 we have generated no revenues and incurred total operating expenses in the amount of $24,474 and $7,768 concurrently. The increase was primarily attributable to increases in payroll expenses of $12,875 and transfer agent fees of $5,600.Theses increases were offset by the decreases in accounting and audit fees of $425 and in other general and administrative expenses of $1,344.
 
The major components of our expenses for the three months ended June 30, 2011, and 2010 are outlined in the table below:
 
   
Three Months
Ended
June 30,
2011
   
Three Months
Ended
June 30,
2010
 
             
Accounting and audit fees
  $ 4,325     $ 4,750  
Executive compensation
    600       600  
Other
    1,074       2,418  
Salaries and wages
    12,875       -  
Transfer agent
    5,600       -  
    $ 24,474     $ 7,768  

We plan to continue sales and distribution of greenhouses and other gardening products. We started the development of the urban gardening kits under our trademark “Greenhouse Life ™”. Our Greenhouse Life Urban Gardening Kits can be used to grow vegetables, fruits and herbs in very small spaces. They are suitable for use on balconies, patios and small backyards. The kits are currently in development and will include three sizes:

 
-
“Kitchen Helper” - a growing kit for a small balcony with 3-6 square feet of available space;
 
-
“Gardener Solution” - a growing kit for a large balcony or patio set up with 10-15 square feet of available space;
 
-
“Chef's Inspiration” - a growing kit for a small backyard set up with 20-35 square feet of available space.

Our urban gardening line of products is targeted to the recreational gardener with a limited square footage for the growing area. Urban and backyard gardeners can use greenhouses to extend their growing seasons and keep plants protected from cooler night time temperatures. Greenhouses can also increase the yield from vegetable plants in a smaller space due to a warmer temperature inside the greenhouse than outside air. Urban gardeners with a limited space for growing vegetables, flowers and herbs may use greenhouses in their back yards as well as smaller versions on balconies and patios.

We do not own, either legally or beneficially, any patents or trademarks. We have applied for a U.S. trademark for “Greenhouse Life” with the U.S. Trademark and Patent Office (U.S.P.T.O.) on August 23, 2010. The serial number for the application is 85113305. We have applied for a trademark in an international class 006 (Metal greenhouse frames; Metal greenhouses; Transportable greenhouses of metal for household use) and international class 019 (Modular greenhouses not of metal; Non-metal greenhouse frames; Pre-fabricated greenhouses not of metal).

 
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On December 7, 2010 we have received a letter from the U.S.P.T.O.’s attorney advising us that “…The trademark examining attorney has searched the Office’s database of registered and pending marks and has found no conflicting marks that would bar registration under Trademark Act Section 2(d).TMEP §704.02; see 15U.S.C.§1052(d)…”. We will continue working with the U.S.P.T.O. on our trademark application. There is no guarantee that our application will be approved and the trade mark will be registered.

 We have reserved the domain name www.greenhouselife.com and have developed and launched a consumer focused website where we offer our products for sale to the general public.

Liquidity and Capital Resources

We have incurred $63,253 in operating losses since inception. As of June 30, 2011, we had $20,229 in cash, $3,150   in prepaid expenses compared to $15,214 in cash and $3,150 in prepaid expenses at March 31, 2011.  As of June 30, 2011, we had a working capital deficiency of $(21,753), compared to a working capital of $2,721 as of March 31, 2011.

Net cash used in operating activities for the three months ended June 30, 2011 was $32,484, compared with net cash used in operating activities of $4,033 for the prior year period.  The majority of the increase in net cash used was due to an increase in operating losses due to higher operating expenses. No cash was used in investing activities during the three months ended June 30, 2011 and 2010. Net cash provided by financing activities for the three months ended June 30, 2011 was $37,499 and consisted of loan from a third party of $30,000 (principal) and $121 of accrued interest and loans from directors of $7,378.  Net cash provided by financing activities for the period ended June 30, 2010 consisted of a loan from director of $600.

The Company must raise additional funds or increase revenues from sales of greenhouses, urban gardening kits and other related products in order to fund our continued operations.  We may not be successful in our efforts to raise additional funds or achieve profitable operations. Even if we are able to raise additional funds through the sale of our securities or through the issuance of debt securities, or loans from our directors or financial institutions our cash needs could be greater than anticipated in which case we could be forced to raise additional capital. At the present time, we have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to us on commercially acceptable terms or at all. These conditions raise substantial doubt as to our ability to continue as a going concern, which may make it more difficult for us to raise additional capital when needed. If we cannot get the needed capital, we may not be able to become profitable and may have to curtail or cease our operations.

Recent Accounting Pronouncements

See Note 2 to the Financial Statements.

Off Balance Sheet Arrangements

None.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 
5

 

ITEM 4. CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the end of the period covered by this report.  Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.

Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date.  We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.

PART II – OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Currently we are not involved in any pending litigation or legal proceeding.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following documents are filed as a part of this report or are incorporated by reference to previous filings, if so indicated:

 
6

 

Exhibit No.
 
Description
     
3.1
 
Articles of Incorporation (i)
3.2
 
Bylaws (i)
31.1
 
Section 302 Certification of Chief Executive Officer*
31.2
 
Section 302 Certification of Chief Financial Officer *
32.1
 
Section 906 Certification of Chief Executive Officer *
32.2
  
Section 906 Certification of Chief Financial Officer *
*filed herewith
(i) Incorporated by reference to the Form S-1 registration statement filed on June 21, 2010.

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.

August 10, 2011

 
GREENHOUSE SOLUTIONS INC.
   
 
By:
/s/  Michael Grischenko
   
Michael Grischenko
   
President, Chief Executive Officer (Principal
Executive Officer) and Director

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of Greenhouse Solutions Inc. and in the capacities and on the dates indicated.

SIGNATURES
 
TITLE
 
DATE
         
/s/ Michael Grischenko
 
President, CEO and Director
 
August 10, 2011
Michael Grischenko
       
         
/s/Natalya Lastovka
 
Treasurer, CFO, Principal
Accounting Officer, Principal
Financial Officer and Director
 
August 10, 2011
Natalya Lastovka
       
 
 
7