Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Greenhouse Solutions, Inc.Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - Greenhouse Solutions, Inc.v318543_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - Greenhouse Solutions, Inc.v318543_ex32-1.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

(Mark One) FORM 10-K  

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2012 or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________to _________________________

 

000-54759

Commission file number

 

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)

 

(203) 242-3065

Registrant’s telephone number, including area code

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common

Title of each class

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. £ Yes S No

 

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. x Yes ¨ 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 ¨ No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ 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 (Do not check if a smaller reporting company) [X] Smaller reporting company

 

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

 

The aggregate market value of the Company’s common shares of voting stock held by non-affiliates of the Company at March 31, 2012, computed by reference to the $0.010 Registration Statement per-share price was $35,300.

 

As of July 14, 2012 there were 7,230,000 common shares par value $0.001 issued and outstanding.

 

 
 

 

Table of Contents

 

Item 1. Business.          3
Function           4
Features           4
Types   4
Benefits            4
Item 1A. Risk Factors. 6
Item 1B. Unresolved Staff Comments.  6
Item 2. Properties.        6
Item 3. Legal Proceedings.        7
Item 4. (Removed and Reserved).         7
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.         7
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.          8
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.  8
Item 8. Financial Statements and Supplementary Data.  8
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.         21
Item 9A. Controls and Procedures.       21
Item 9B. Other Information.      22
Item 10. Directors, Executive Officers and Corporate Governance.       22
Item 11. Executive Compensation.        23
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 23
Item 13. Certain Relationships and Related Transactions, and Director Independence.   24
Item 14. Principal Accounting Fees and Services.          25
Item 15. Exhibits, Financial Statement Schedules.          25
SIGNATURES 25

 

2
 

 

PART I

 

FORWARD LOOKING STATEMENTS

 

This annual report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:

 

·the uncertainty of profitability based upon our history of losses;

 

·risks related to failure to obtain adequate financing on a timely basis and on acceptable terms to continue as going concern;

 

·risks related to our international operations and currency exchange fluctuations; and

 

·other risks and uncertainties related to our business plan and business strategy.

 

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements. Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares in our capital stock.

 

As used in this annual report, the terms “we”, “us”, “our”, the “Company” and “Greenhouse Solutions” mean Greenhouse Solutions Inc. and its subsidiary, unless otherwise indicated.

 

Item 1. Business.

 

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.

 

We are a development stage company. The Company to date has funded its initial operations through the issuance of 9,730,000 shares of capital stock for the net proceeds of $41,500 and revenue from sales of $40,034. We plan to generate our future revenues from sales of greenhouses and urban gardening kits under our trademark “Greenhouse Life ™”. The urban gardening line of products will be targeted to the recreational gardener with a limited square footage for the growing area. We have started the development of the urban gardening kits. The timeframe for completion of the first samples depends on available funds and our directors’ ability to procure appropriate products for the urban gardening kits.

 

Due to the uncertainty of our ability to generate sufficient revenues from our operating activities and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due, in their report on our financial statements for the year ended 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.

 

3
 

 

Trends and Economic Conditions

 

Management believes that there is number of new food gardeners emerging this year. More Americans are recognizing the benefits of growing their own produce, including improved quality, taste, and cost savings. Items of concern include the decline in global economic activity and expected slow recovery, a downturn in consumer discretionary spending and the unstable U.S. housing market. Gardening products is a non-essential purchase that consumers may choose to forgo or decrease spending on in uncertain economic times.

 

Urban Gardening and the Greenhouse Industry

 

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.

 

Greenhouses

 

                        Function

 

With a greenhouse, gardeners have the ability to control their plants' growing environment. The greenhouse helps maintain heat, which tropical plants and seedlings need; humidity, which several vegetables, such as peppers, grow well in; and keeps out pests and animals. In a greenhouse, the gardener can also regulate the amount of water the plants receive, so drought and flood are less of an issue. One benefit of owning a greenhouse is that the gardener can extend their growing season. This is desirable in cooler, northern climates where the growing season lasts only a few months, not nearly long enough for some vegetables to be harvested.

 

Features

 

Greenhouses work by sunlight entering through the windows and the resulting energy, or heat, is then trapped inside. Plants then benefit from the light and the warmth of the greenhouse. Most greenhouses also include some sort of opening window or fan to help keep the heat from becoming too excessive. Because the greenhouse is enclosed, the heat remains inside overnight, continuing to keep the plants warm and helping them grow without fighting frost or cold dew. There are also irrigation systems using drip tubes to water the plants. Monitors can be used to track temperature and humidity, turning the fan on or off when needed.

 

Types

 

There are four main types of greenhouse building styles: free standing, lean-to, window mount and even span. A freestanding greenhouse is a standalone building. Size and shape can vary, but it has the most exposure, with all four sides made from the chosen greenhouse material. Lean-tos are a good option for homeowners with limited back yard space. They offer a "half" green house; one side from the center attaches to an existing structure—a side of a house or garage —and the other is a traditional greenhouse structure. For homeowners with a great deal of property but restrictions on freestanding buildings, an even span greenhouse is a good option. An even-span is a full-size structure that has one end attached to another building. It is usually the largest and most costly option, but it provides more usable space and can be lengthened. A window mounted greenhouse can be used in a house or apartment setting. It is an elongated window that extends outward from the house a foot or so and can contain two or three shelves that can be used for growing plants.

 

Materials

 

Glass is relatively inexpensive and easy to maintain but breaks easily. It's also harder to control internal temperatures because glass magnifies heat and moisture. Clear fiberglass is a good alternative, only a little more expensive and stronger and more durable, but it has maintenance costs and will need re-surfacing with resin. Rigid, double-wall plastic (Plexiglas) is a great greenhouse material. It's more expensive than either glass or fiberglass but lasts longer than fiberglass with proper care and doesn't break like glass, although it suffers a little in transparency. Plastic film is a final greenhouse option. It's cheap and easy to use in construction but tears easy, is usually somewhat opaque and blocks a larger percentage of light.

 

Benefits

 

A greenhouse keeps out several garden pests, such as raccoons, rats and squirrels that can destroy a garden by digging up plants and eating flowers and vegetables. Another benefit to owning a greenhouse is the ability to start seeds earlier in the season under a controlled environment and extend the growing season further into fall by keeping the air inside a greenhouse warmer than outside air.

 

4
 

 

Greenhouse Accessories

 

Potting Benches

 

A Potting bench or gardening table is a kind of workbench used for small gardening tasks such as transplanting seedlings. A basic potting bench has a work surface at bench height, comfortable for a standing person; and storage for potting soil, pots, and tools. Since this type of furniture is often exposed to soil, water, and sunlight, it must be made from weather-resistant materials, such as cedar wood or plastic.

 

Grow Lights

 

Grow Lights are used in greenhouses when more sunlight is needed than occurs naturally. These lights emit a light that is similar to the sun and allows for photosynthesis. There are a few types of grow lights that are on the market. Fluorescent lights are inexpensive, accessible and small in size. Metal halide lights are good for use in the growing phases of plant growth. High pressure sodium lights are inexpensive and the most energy efficient types of grow lights.

 

Heaters

 

Heaters are a good way to ensure that plants are safe from cold nights and can extend the growing season in a greenhouse. Several types of heaters are available including electric heaters as well as heaters that run on natural gas or propane. Operating costs for each of these options are fairly similar, so it is simply a matter of what consumers find most convenient.

 

Gardening Pots

 

Gardening pots are used in greenhouses to hold the growing plants. They are made from a variety of materials including plastic, fiberglass, wood, concrete and stone. Plastic and fiberglass are lightweight and inexpensive but can crack easily. Wood pots are inexpensive and have a natural appearance but are susceptible to rot. Concrete pots are great for year round planting and hold water very well but extremely heavy. Stone pots have an attractive appearance and keep plant roots cool and aerated but are expensive and heavy.

 

Competition

 

The urban gardening trend continues to develop with media attention on local farming and community gardens. Our products address the need for growing vegetables, herbs and flowers in small urban spaces such as balconies, patios and backyards with limited space. We plan to target the North American garden hobbyists and health conscious people who are interested in growing fresh herbs and vegetables.

 

The urban gardening market is highly competitive and rapidly evolving, resulting in a dynamic competitive environment with several dominant national and multi-national leaders, both in up-scale and mass market urban gardening and greenhouse suppliers.  Competitive factors in the greenhouse and other urban gardening equipment manufacturing and distributing segments include product quality, marketing and distribution resources, customer service and support and price of product.  We will compete with a number of existing companies as well as new companies which may enter the market with new products.

 

Most of our competitors have longer operating histories, greater name recognition, larger and more established client bases and significantly greater financial and marketing resources than we do.  These competitors are able to undertake more extensive marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to potential clients.  In addition, many of our current or potential competitors, such as Palram and Rion Greenhouses, have broad recognition and distribution channels that may be used to distribute competing handcrafted outdoor garden products directly to end-users or purchasers.  

 

There are a number of manufacturers and distributors of greenhouses and other urban gardening products in North America.

 

One of the largest manufacturers of greenhouses is Palram, with manufacturing plants in the United States, China, England and Israel and corporate offices in over 12 countries. Palram produces several types of recreational greenhouses, the Master-Gro, HobbyGrower, Victorian Greenhouse, Lean-To Greenhouse and Snap and Grow, in a variety of sizes. In North America, Palram has distribution through major home improvement retailers such as Home Depot and Lowes, and online stores such as Amazon.com, Kmart.com and Sears.com.

 

5
 

 

Rion Greenhouses is another manufacturer of greenhouses as well as the largest distributor of greenhouses in the United States.  Rion Greenhouses produces greenhouses under fourteen different brands, including Julianna, EasyGrow, Halls and EcoGro. Greenhouses.com is Rion’s online store where all Rion’s brand greenhouses are sold. They also sell through other online stores such as Amazon.com, Garden.com and Walmart.com.

 

There are many other smaller independent manufacturers and distributors of greenhouses and gardening products in North America. Due to limited financing and fierce competition we may not be able to generate sustainable revenues and will have to cease operations. 

 

Research and Development Activities

 

Other than time spent researching our proposed business we have not spent any funds on research and development activities to date. We do not currently plan to spend any funds on research and development activities in the future.

 

Compliance with Environmental Laws

 

We are not aware of any environmental laws that have been enacted, nor are we aware of any such laws being contemplated for the future, that impact issues specific to our business. 

 

Employees

 

We have one full-time employee at the present time.  Our officers and directors are responsible for planning, developing and operational duties, and will continue to do so throughout the early stages of our growth. We have no intention of hiring additional employees until we have sufficient, reliable revenue from our operations.  Our officers and directors are planning to do whatever work is required until our business is at the point of having positive cash flow. We do not have any written employment agreements in place with our officers and directors.

 

Reports to Securities Holders

 

We provide an annual report that includes audited financial information to our shareholders. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including filing Form 10K annually and Form 10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

 

Item 1A. Risk Factors.

 

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

 

Item 1B. Unresolved Staff Comments.

 

None

 

Item 2. Properties.

 

We do not hold ownership or leasehold interest in any property.

 

6
 

 

Item 3. Legal Proceedings.

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suite, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 4. (Removed and Reserved).

 

PART II

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 

Our common stock is currently quoted on the Pink Sheets. Our common stock has been quoted on the Pink Sheets since November 24, 2010, under the symbol “GRSU”.  Because we are quoted on the Pink Sheets, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange.

 

The following table sets forth the high and low bid quotations for our common stock as reported on the OTC Bulletin Board for the periods indicated.

 

Fiscal 2012  High   Low 
First Quarter  $.25   $1.35 
Second Quarter  $.25   $1.35 
Third Quarter  $.25   $1.35 
Fourth Quarter  $.25   $1.35 

 

Fiscal 2011  High   Low 
         
Third Quarter   0.00    0.00 
           
Fourth Quarter   0.15    0.00 

 

Holders.

 

As of June 14, 2012, there are 30 record holders of 7,230,000 shares of the Company's common stock.

 

Dividends.

 

The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company's business.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

None.

 

7
 

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include by are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

 

Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial statements, as of March 31, 2012, we had an accumulated deficit totaling $69,503. This raises substantial doubts about our ability to continue as a going concern.

 

Results of Operations

 

For the year ended March 31, 2012 and 2011, we had $0 revenues as compared to revenues of $34,270 for the year ended March 31, 2011. Our operating expenses are $43,014 as compared to operating expenses of $50,221 for the year ended March 31, 2011. Operating expenses for the year ended March 31, 2012 consisted primarily of Accounting and audit fees totaling $19,846, advertising and marketing expense of $4,509, SEC filing fees of $8,742 and transfer agent fees totaling $7179 as compared to Accounting and audit fees totaling $13,750, advertising and marketing expense of $Nil, SEC filing fees of $4,275 and transfer agent fees totaling $4,275 for the year ended March 31, 2011. For the year ended March 31, 2012, we incurred a net loss of $43,014 as compared to a net loss of $32,577 for the year ended March 31, 2011.

 

Our auditor has expressed substantial doubt as to whether we will be able to continue to operate as a “going concern” due to the fact that the Company has incurred a net operating loss of $69,503 though the year ended March 31, 2012 and has not yet established an on going source of revenues sufficient to cover its operating costs and allow it continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining the adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

Liquidity and Capital Resources

 

As of March 31, 2012, we had cash of $1 and other current assets of $Nil as compared to cash of $15,214 and other current assets of $3,150 for the year ended March 31, 2011. We anticipate that our current cash and cash equivalents and cash generated from operations, if any, will be insufficient to satisfy our liquidity requirements for at least the next 12 months. We will require additional funds prior to such time and the Company will seek to obtain theses funds by selling additional capital through private equity placements, debt or other sources of financing. If we are unable to obtain sufficient additional financing, we may be required to reduce the scope of our planned operations, which could harm our business, financial condition and operating results. Additional funding to meet our requirements may not be available on favourable terms, if at all.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 

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

 

Item 8. Financial Statements and Supplementary Data.

 

8
 

 

GREENHOUSE SOLUTIONS INC.

(A Development Stage Company)

 

FINANCIAL STATEMENTS

 

March 31, 2012

 

(Audited)

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 10
   
BALANCE SHEETS 11
   
STATEMENTS OF OPERATIONS 12
   
STATEMENT OF STOCKHOLDER’S EQUITY 13
   
STATEMENTS OF CASH FLOWS 14
 
NOTES TO FINANCIAL STATEMENTS 15

 

9
 

 

RONALD R. CHADWICK, P.C.

Certified Public Accountant

2851 South Parker Road, Suite 720

Aurora, Colorado 80014

Telephone (303)306-1967

Fax (303)306-1944

  

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Board of Directors

Greenhouse Solutions Inc.

Shelton, Connecticut

 

I have audited the accompanying consolidated balance sheet of Greenhouse Solutions Inc. (a development stage company) as of March 31, 2012 and 2011 and the related consolidated statements of operations, stockholders' equity and cash flows for the years the ended, and for the period from April 8, 2009 (inception) through March 31, 2012. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.

 

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.

 

In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Greenhouse Solutions Inc. as of March 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for the years the ended, and for the period from April 8, 2009 (inception) through March 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements the Company has suffered a loss from operations and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Aurora, Colorado Ronald R. Chadwick, P.C.
July 12, 2012 RONALD R. CHADWICK, P.C.

  

10
 

 

GREENHOUSE SOLUTIONS INC.

(A Development Stage Company)

 

BALANCE SHEETS

 

   March 31,
2012
   March 31,
2011
 
   (Audited)   (Audited) 
ASSETS          
           
CURRENT ASSETS          
Cash  $1   $15,214 
Other current assets   -    3,150 
           
TOTAL ASSETS  $1   $18,364 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
           
CURRENT LIABILITIES          
Accounts payable and accrued liabilities  $1,965   $10,953 
Due to related parties (Note 3)   26,039    3,600 
Payroll taxes payable   -    1,090 
           
TOTAL CURRENT LIABILITIES   28,004    15,643 
           
GOING CONCERN (Note 2)          
           
STOCKHOLDERS’ EQUITY(DEFICIT) (Note 5)          
Common stock, 75,000,000 shares authorized with $0.001 par value Issued and outstanding          
7,230,000 common shares (March 31, 2011 –9,730,000)   7,230    9,730 
Additional paid-in-capital   34,270    31,770 
Deficit accumulated during development stage   (69,503)   (38,779)
           
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)   (28,003)   2,721 
           
TOTAL LIABILITIES & STOCK HOLDERS’ EQUITY (DEFICIT)  $1   $18,364 

 

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

 

11
 

 

GREENHOUSE SOLUTIONS INC.

(A Development Stage Company)

 

STATEMENTS OF OPERATIONS

 

   Year ended
March 31,
2012
   Year ended
March 31,
2011
   April 8, 2009
(inception) to
March 31,
2012
 
   (Audited)   (Audited)   (Audited) 
             
REVENUES  $-   $34,270    40,034 
Cost of revenues   -    11,940    15,065 
                
GROSS PROFIT   -    22,330    24,969 
                
GENERAL AND ADMINISTRATIVE EXPENSES               
                
Accounting and audit fees  $19,846   $13,750   $37,096 
Advertising and marketing   4,509    -    4,509 
Consulting   -    3,007    4,007 
Executive compensation   -    2,400    4,200 
Filing   8,742    4,275    13,017 
Organizational cost   -    -    838 
Other   2,738    14,184    17,787 
Transfer agent   7,179    12,605    19,784 
                
TOTAL OPERATING EXPENSES   43,014    50,221    101,238 
                
NET OPERATING LOSS   (43,014)   (27,891)   (76,269)
                
OTHER INCOME (EXPENSES)               
Other income   -    -    - 
Interest expense   -    -    - 
Loss from continued operations before income taxes   (43,014)   (27,891)   (76,269)
Provision for income taxes   -    -    - 
LOSS FROM CONTINUED OPERATIONS   (43,014)   (27,891)   (76,269)
                
DISCONTINUED OPERATIONS               
Loss from operations of discontinued wholly owned subsidiary, net of tax   (23,741)   (4,686)   (29,265)
Gain from disposal of discontinued wholly owned subsidiary, net of tax   36,031    -    36,031 
                
GAIN (LOSS) FROM DISCONTINUED OPERATIONS   12,290    (4,686)   6,766 
                
NET LOSS FOR THE YEAR  $(30,724)  $(32,577)  $(69,503)
                
BASIC LOSS PER COMMON SHARE  $(0.00)  $(0.00)     
                
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-BASIC   8,476,575    7,707,096      

 

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

 

12
 

 

GREENHOUSE SOLUTIONS INC.

(A Development Stage Company)

 

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM APRIL 8, 2009 (INCEPTION) TO MARCH 31, 2012

   Common Stock   Additional   Share   Deficit
Accumulated
During the
     
   Number of
shares
   Amount   Paid-in
Capital
   Subscription
Receivable
   Development
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 period   -    -    -    -    (32.577)   (32,577)
                               
Balance – March 31, 2011   9,730,000    9,730    31,770    -    (38,779)   2,721 
                               
Shares cancelled – September 12, 2011   (2,500,000)   (2,500)   2,500    -    -    - 
                               
Net loss for the period   -    -    -    -    (30,724)   (30,724)
                               
Balance, March 31, 2012   7,230,000   $7,230   $34,270   $-   $(69,503)  $(28,003)

 

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

 

13
 

 

GREENHOUSE SOLUTIONS INC.

(A Development Stage Company)

 

STATEMENTS OF CASH FLOWS

(Audited)

 

   Year ended
March 31,
2012
   Year ended
March 31,
2011
   April 8, 2009
(Inception) to
March 31,
2012
 
             
CASH FLOWS FROM OPERATING ACTIVITIES               
Net loss for the period  $(30,724)  $(32,577)  $(69,503)
Adjustments to reconcile net loss to net cash used in operating activities:               
Discontinued operations   (5,523)   4,686    - 
Changes in operating assets and liabilities:               
Decrease (increase) in prepaid expense   3,150    (3,150)   - 
Increase (decrease) in accounts payable & accrued liabilities   (5,434)   5,004    1,965 
                
NET CASH USED IN OPERATING ACTIVITIES   (38,531)   (26,037)   (67,538)
                
CASH FLOWS FROM INVESTING ACTIVITIES               
Due from related party company   16,093    (11,663)   - 
                
NET CASH USED IN INVESTING ACTIVITIES   16,093    (11,663)   - 
                
CASH FLOWS FROM FINANCING ACTIVITIES               
Loan from director and stockholder – related party   22,439    2,400    26,039 
Proceeds from issuance of common stock   -    35,300    41,500 
                
NET CASH PROVIDED BY FINANCING ACTIVITIES   22,439    37,700    67,539 
                
NET INCREASE IN CASH   1    -    1 
                
CASH, BEGINNING   -    -    - 
                
CASH, ENDING  $1   $-   $1 
                
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:               
                
Cash paid during the period for:               
Interest  $-   $-   $- 
                
Income taxes  $-   $-   $- 
                
Redemption of common stock and loan from related party  $-   $-   $- 

 

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

 

14
 

 

NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

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

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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 has been considered as part of the Company’s development stage activities.

 

Cash and Cash Equivalents

 

For purposes of the Statement 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 equivalent.

 

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. The 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.

 

Basic Income (Loss) Per Share

 

The Company computes loss per share in accordance with “ASC-260,” “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.

 

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 operation 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 estimate.

 

15
 

  

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

.Fair Value of Financial Instruments measured on a recurring basis

 

The Company follows paragraph 825-10-50-10 of 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 accept 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 in inputs to valuation techniques used to measure fail 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 1Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

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

 

Level 3Pricing 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 approximated 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. Representation 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 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.

 

Carrying Value, Recoverability and Impairment of Long-Lived Assets

 

The Company has adopted paragraph 360-10-35-17 of FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include office equipment, are reviewed for impairment whenever events or changes in circumstances indicate 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 valued of those assets. Fair valued is generally determined using the assets 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.

 

16
 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 

  

Carrying Value, Recoverability and Impairment of Long-Lived Assets (continued)

  

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 of 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 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 financial statements as general and administrative expenses, and are expensed as incurred.

  

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 statement 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 fail value of financial instruments; the carrying value and recoverability of long-lived assets, 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 Sections 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.

 

17
 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

  

Fair value of financial instruments

 

The estimated fair values of financial instruments were determined by management using available market information and appropriate valuation methodologies. The carrying amounts of financial instruments including cash approximate their fair value because of their short maturities.

 

Stock-based Compensation

 

The Company accounts for stock-based compensation issued to employees based on FASB accounting standard for Share Based Payment. It requires an entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award – the requisite service period (usually the vesting period). It requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. The scope of the FASB accounting standard includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

 

As at March 31, 2012 the Company had no stock-based compensation plans nor had it granted any stock options. Accordingly no stock-based compensation has been recorded to date.

 

Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred a net operating loss of $69,503 though the year ended March 31, 2012 and has not yet established an on going source of revenues sufficient to cover its operating costs and allow it continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining the adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources of the Company by obtaining capital form management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplish any of its plans.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary it the Company in unable to continue as a going concern.

 

Recent pronouncements

 

The Company has evaluated the recent accounting pronouncements through ASU 2012-09 and believes that none of them will have a material effect on the company’s financial statements.

 

NOTE 3 – RELATED PARTY TRANSACTIONS

 

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 year ended March 31, 2012, the President of the Company advanced $26,039 in aggregate to the Company and the Company did not make any repayment toward these advances as of March 31, 2012.

 

NOTE 4 – SALE OF DISCOUNTINUED OPERATIONS

 

On September 9, 2011, the Company entered into an agreement with 1850261 Ontario, Inc. (“BUYER”), a note holder, to sell 100% of the interest in Greenhouse Solutions, Inc., a wholly owned subsidiary incorporated under the laws of the Province of Ontario, Canada. The Buyer, in consideration for cash payment of $1.00 and other good and valuable consideration in had received. The BUYER accepted $10,979 in liabilities from the Company, as well the right to collect $3,150 of prepaid expense from a third party. The gain recorded from the disposal of the subsidiary is $36,031, net of assets minus liabilities transferred.

 

18
 

 

NOTE 5 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

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.

 

During the period inception, (April 8, 2009) to March 31, 2012, 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.

 

On September 12, 2011, a shareholder of the Company returned 2,500,000 restricted shares of common stock to treasury and the shares were cancelled by the Company. The shares were returned to treasury for no consideration to the shareholder. Following the cancellation the Company now has 7,230,000 shares of common stock outstanding.

 

As of March 31, 2012, the Company has not issued any shares, granted any options, or recorded any share-based compensation.

 

NOTE 6 – INCOME TAXES

 

A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

   March 31,
2012
   March 31,
2011
 
         
Net loss before income taxes per financial statements   $(30,724)  $(32,577)
Income tax rate   30%   30%
Income tax recovery   (9,217)   (9,773)
Non-deductible       - 
Valuation allowance change   9,217    9,773 
           
Provision for income taxes  $   $ 

 

The significant components of deferred income tax assets at March 31, 2012 and 2011 are as follows:

 

   March 31,
2012
   March 31,
2011
 
Net operating loss carryforward  $69,503   $38,779 
Valuation allowance   (69,503)   (38,779)
           
Net deferred income tax asset  $   $ 

 

The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.

 

Management has considered the likelihood and significance of possible penalties associated with its current and intended filing positions and has determined, based on their assessment, that such penalties, if any, would not be expected to be material.

 

No provision for income taxes has been provided in these financial statements due to the net loss for the years ended March 31, 2012 and 2011.

 

19
 

 

NOTE 7 – 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 to reportable subsequent events to disclose.

 

20
 

 

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

  

None

 

Item 9A. Controls and Procedures.

  

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

As of March 31, 2012, management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the audit of our financial statements as of March 31, 2012 and communicated the matters to our management.

 

Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an affect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company's determination to its financial statements for the future years.

 

We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

 

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.

 

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

 

21
 

 

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the small business issuer's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Item 9B. Other Information.

  

None

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance.

 

 

The Company does not, at present, have any employees other than the current officer and director. We have not entered into any employment agreements, as we currently do not have any employees other than the current officer and director.

 

Family Relations Identification of Directors and Executive Officers

 

Name   Age   Term Served   Title
Michael Grischenko   61   Since Inception1   President, Chief Executive Officer, and Director
Natalya Lastovka   56   Since Inception2   Chief Financial Officer, Secretary, Treasurer and Director
George Dory   42   Since September 9, 2011     President and Director 
            Principal Executive Officer
            Principal Financial Officer
            Principal Accounting Officer                                                          

  

There are no other persons nominated or chosen to become directors or executive officers, nor do we have any employees other than above mentioned officer and director.

 

Our director holds office until the next annual meeting of shareholders and the election and qualification of their successors. Directors receive no compensation for serving on the board of directors other than the reimbursement of reasonable expenses incurred in attending meetings. Officers are appointed by the board of directors and serve at the discretion of the board.

 

Officer and Director Background:

 

From February 26, 2010 until August 29, 2011, Mr. Dory served as President and a Director of Tuffnell Ltd. From January to April 2009, he was the Finance Director for manufacturing with Alstom Power Systems. From November 2006 to March 2008, he was the Finance Operational Controller with Honeywell Technologies Sarl. From September 2005 to November 2006, he was the Financial Controller for Honeywell Hotechnikai Kft., and between 1999 and 2005, he was the Financial Director/Controller of Tyco Electronics Hungary Kft.

 

In 1982, Mr. Dory received his bachelors of business administration from Concordia University, and in 1985 he received his MBA from Concordia University.

 

Significant Employees

 

There are no family relationships among the Directors and Officers of Greenhouse Solutions Inc.

 

Involvement in Legal Proceedings

 

No executive Officer or Director of the Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding that is currently pending.

  

 

1 Resigned as Officer and Director September 9, 2011

2 Resigned as Officer and Director September 9, 2011

 

22
 

 

No executive Officer or Director of the Company is the subject of any pending legal proceedings.

 

No Executive Officer or Director of the Company is involved in any bankruptcy petition by or against any business in which they are a general partner or executive officer at this time or within two years of any involvement as a general partner, executive officer, or Director of any business.

 

Item 11. Executive Compensation.

  

Name and
Principal
Position
  Year   Salary   Bonus
Awards
   Stock
Awards
   Other Incentive
Compensation
   Non-Equity
Plan
Compensation
  

 

Nonqualified

Deferred

Earnings

   All
Other
Compensation
   Total 
       ($)   ($)   ($)   ($)   ($)   ($)   ($)   ($) 
(a)  (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)   (j) 
                                     
Michael Grischenko1   2011    0    0    0    0    0    0    2,400    2,400 
Chief Executive Officer, President   2012                                         
Natalya Lastovka 2   2011    0    0    0    0    0    0    0    0 
Chief Financial Officer, Treasurer & Secretary   2012    0    0    0    0    0    0    0    0 
George Dory   2012    0    0    0    0    0    0    0    0 

  

There are no current employment agreements between the Company and its executive officer or director. Our executive officer and director have agreed to work without remuneration until such time as we receive revenues that are sufficiently necessary to provide proper salaries to the officer and compensate the director for participation. Our executive officer and director has the responsibility of determining the timing of remuneration programs for key personnel based upon such factors as positive cash flow, shares sales, product sales, estimated cash expenditures, accounts receivable, accounts payable, notes payable, and a cash balances. At this time, management cannot accurately estimate when sufficient revenues will occur to implement this compensation, or the exact amount of compensation.

 

There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of the corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by Company.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

  

The following table sets forth certain information with respect to the beneficial ownership of our common shares as it relates to our named director and executive officer, and each person known to the Company to be the beneficial owner of more than five percent (5%) of said securities, and all of our directors and executive officers as a group:

   

 

1 Resigned as Officer and Director September 9, 2011

2 Resigned as Officer and Director September 9, 2011

 

23
 

 

 

Name and Position  Shares   Percent   Security 
George Dory               
President and Director   3,700,000    51%   Common 

  

Officers and Directors as            
A Group   3,700,000    51%   Common 

 

There were no grants of stock options since inception to March 31, 2012. We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance.

 

The Board of Directors of the Company has not adopted a stock option plan. The company has no plans to adopt it but may choose to do so in the future. If such a plan is adopted, this may be administered by the board or a committee appointed by the board (the “Committee”). The committee would have the power to modify, extend or renew outstanding options and to authorize the grant of new options in substitution therefore, provided that any such action may not impair any rights under any option previously granted. The Company may develop an incentive based stock option plan for its officers and directors and may reserve up to 10% of its outstanding shares of common stock for that purpose.

 

The following table sets forth:

1.All compensation plans previously approved by security holders; and
2.All compensation plans not previously approved by security holders.

 

OPTION AWARDS      STOCK AWARDS   

 

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

   

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

   

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)

   

Option

Exercise

Price

($)

   

Option

Expiration

Date

   

Number

of

Shares

or Units

of Stock 

That

Have

Not

Vested

(#)

   

Market

Value

of Shares

or Units

of Stock

That

Have

NotVested

($)

   

Equity

Incentive

Plan

Awards:

Numberof

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

(#)

   

Equity

Incentive

Plan

Awards:

Market

or Payout

Value of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

(#)

 
Michael Grischenko     -       -       -       -       -       -       -       -       -  
lya Lastovka     -       -       -       -       -       -       -       -       -  
George Dory     -       -       -       -       -       -       -       -       -  

 

Item 13. Certain Relationships and Related Transactions, and Director Independence.

  

Currently, there are no contemplated transactions that the Company may enter into with our officer, director or affiliates. If any such transactions are contemplated we will file such disclosure in a timely manner with the Commission on the proper form making such transaction available for the public to view.

 

The Company has no formal written employment agreement or other contracts with our current officer and there is no assurance that the services to be provided by him will be available for any specific length of time in the future. Mr. Meyer anticipates devoting fifteen hours per week to the Company’s affairs. The amounts of compensation and other terms of any full time employment arrangements would be determined, if and when, such arrangements become necessary.

 

24
 

 

Item 14. Principal Accounting Fees and Services.

 

During the fiscal year ended March 31, 2012 we incurred approximately $10,500 in fees to our principal independent accountants for professional services rendered in connection with the audit of financial statements for the fiscal year ended March 31, 2012 For review of our financial statements for the quarters ended June 30, 2011, September 30, 2011and December 31, 2011, we incurred approximately $12,750 in fees to our principal independent accountants for professional services.

 

During the fiscal year ended October 31, 2012 we did not incur any other fees for professional services rendered by our principal independent accountants for all other non-audit services which may include, but not limited to, tax related services, actuarial services or valuation services.

 

PART IV

 

Item 15. Exhibits, Financial Statement Schedules.

 

The following exhibits are incorporated into this Form 10-K Annual Report:

 

Exhibit No.        Description
3.1   Articles of Incorporation [1]
3.2   By-laws of Greenhouse Solutions Inc. [2]
31.1   Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31.2   Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934*
32.1   Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2   Certification of Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

 

[1] Incorporated by reference from the Company’s S-1 filed with the Commission on June 21, 2010.

 

[2] Incorporated by reference from the Company’s S-1 filed with the Commission on June, 2010.

 

  * Included in Exhibit 31.1

** Included in Exhibit 32.1

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Greenhouse Solutions Inc.

 

BY: /s/ George Dory    
George Dory   President and Director
    Principal Executive Officer
    Principal Financial Officer
    Principal Accounting Officer

 

Dated: July 14, 2012

 

25