10-Q 1 greentechnology10q033116.htm 10-Q

UNITED STATES

SECURITY AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 1-11248

GREEN TECHNOLOGY SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

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

14173 Northwest Freeway #237 Houston, Texas		77040
(Address of principal executive offices)		(Zip code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ 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. Yes ☐ No ☑

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☑
(Do not check is smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 14,069,575 shares of common stock are issued and outstanding as of May 19, 2016.

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PART I — FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Consolidated Balance Sheets (Unaudited)	4
Consolidated Statements of Operations (Unaudited)	5
Consolidated Statement of Change In Stockholders’ Equity (Deficit) (Unaudited)	6
Consolidated Statements of Cash Flows (Unaudited)	7
Notes to the Unaudited Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	16
Item 4. Controls and Procedures	16

PART II — OTHER INFORMATION	17
Item 1. Legal Proceedings	17
Item 1A. Risk Factors	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults upon Senior Securities	17
Item 4. Mine Safety Disclosures	17
Item 5. Other Information	17
Item 6. Exhibits	17

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should”, “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors, which may cause actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to secure suitable financing to continue with our existing business or change our business and conclude a merger, acquisition or combination with a business prospect, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refers to Green Technology Solutions, Inc., a Nevada corporation.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GREEN TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

	March 31, 2016			December 31, 2015
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	634		$	844
Total current assets		634			844

TOTAL ASSETS	$	634		$	844

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	379,154		$	359,546
Accounts payable to related party		127,500			127,500
Advances payable		3,235			3,235
Current portion of convertible notes payable, net of discount of $310,613 and $286,267, respectively		538,145			482,814
Current portion of accrued interest payable		160,443			133,503
Total current liabilities		1,208,477			1,106,598

Convertible notes payable, net of discount of $549,173 and $578,194, respectively		26,002			21,586
Accrued interest payable		25,112			18,979
TOTAL LIABILITIES		1,259,591			1,147,163

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.001 par value; 480,000,000 shares authorized; 14,069,575 shares and 13,154,875 shares issued; 6,938,858 and 616,858 shares outstanding at March 31, 2016 and December 31, 2015, respectively		14,070			12,745
Preferred stock, $0.001 stated value; 20,000,000 shares authorized; 1,000,000 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively.		1,000			1,000
Treasury shares, 17 and 17 shares as of March 31, 2016 and December 31, 2015, respectively.		(19	)		(19	)
Additional paid-in capital		20,984,674			20,908,716
Common stock payable		5,000			9,100
Accumulated deficit		(22,263,682	)		(22,077,861	)
Total shareholders’ deficit (deficit)		(1,258,957	)		(1,146,319	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT (DEFICIT)	$	634		$	844

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three months ended March 31,
	2016			2015

REVENUE	$	—		$	—

OPERATING EXPENSES
General and administrative expenses		83,184			143,007

LOSS FROM OPERATIONS		(83,184	)		(143,007	)

OTHER INCOME (EXPENSE)
Interest expense		(102,637	)		(90,468	)
Impairment on investment		—			(5,000	)
Total other income (expense)		(102,637	)		(95,468	)

NET LOSS		(185,821	)		(238,475	)

NET LOSS PER COMMON SHARE – Basic and diluted	$	(0.01	)	$	(0.13	)

WEIGHT AVERAGE COMMON SHARES OUTSTANDING — Basic and diluted		13,964,832			1,773,086

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF CHANGE IN STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)

	Preferred stock				Common stock				Additional paid in		Common Stock			Treasury Shares					Accumulated
	Shares		Amount		Shares		Amount		capital		payable			Shares		Amount			deficit			Total

BALANCE, December 31, 2015		1,000,000	$	1,000		12,744,875	$	12,745	$	20,908,716	$	9,100			17	$	(19	)	$	(22,077,861	)	$	(1,146,319	)

Common stock issued for:
Conversion of notes payable		—		—		914,700		915		8,232		—			—		—			—			9,147
Payment of common stock payable		—		—		410,000		410		3,690		(4,100	)		—		—			—			—
Beneficial conversion discount on convertible note		—		—		—		—		63,365		—			—		—			—			63,365
Imputed interest expense		—		—		—		—		671		—			—		—			—			671
Net loss		—		—		—		—		—		—			—		—			(185,821	)		(185,821	)

BALANCE, March 31, 2016		1,000,000	$	1,000		14,069,575	$	14,070	$	20,984,674	$	5,000			17	$	(19	)	$	(22,263,682	)	$	(1,258,957	)

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Three months ended March 31,
	2016			2015

CASH FLOW FROM OPERATING ACTIVITIES:
Net loss	$	(185,821	)	$	(238,475	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount on convertible note payable		68,040			69,084
Imputed interest expense		671			725
Impairment of investment in Elevated Industries		—			5,000

Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		19,608			96,216
Accrued interest payable		33,927			20,659
NET CASH USED IN OPERATING ACTIVITIES		(63,575	)		(46,791	)

CASH FLOWS FROM INVESTING ACTIVITIES
Deposit paid for purchase of fixed assets		—			(50,000	)
Investment in Elevated Industries		—			(5,000	)
NET CASH USED IN INVESTING ACTIVITIES		—			(55,000	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances		63,365			87,970
NET CASH PROVIDED BY FINANCING ACTIVITIES		63,365			87,970

NET INCREASE (DECREASE) IN CASH		(210	)		(13,821	)

CASH, at the beginning of the period		844			15,173

CASH, at the end of the period	$	634		$	1,352

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

Noncash investing and financing transaction:
Refinance of advances into convertible notes payable	$	63,365		$	87,970
Beneficial conversion discount on convertible note payable	$	63,365		$	87,970
Conversion of convertible notes payable	$	9,147		$	6,920
Common stock issued for common stock payable	$	4,100		$	—
Deposit on purchase of fixed assets included in accounts payable	$	—		$	5,400,000

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016

Note 1. General Organization and Business

Green Technology Solutions, Inc. (“GTSO”, “we”, “us”, “our” or the “Company”) was incorporated as XCL Sunrise, Inc. in Delaware on June 12, 2010. We changed our name to Sunrise Energy Resources, Inc. on November 1, 2004. On October 26, 2010, we changed our name to Green Technology Solutions, Inc. On July 28, 2014, the Company reincorporated from Delaware to Nevada. Our principal executive offices are at 14173 Northwest Freeway #237, Houston, Texas. Our year-end is December 31.

GTSO is in the business of trying to keep the world a greener place to live. Having a greener environment is what we strive to provide so that we may live healthier lives. The corporate mission is to support the health and wellness sub-market of medical cannabis.

Note 2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended March 31, 2016, the Company had a net loss of $185,821 and negative cash flow from operating activities of $63,575. As of March 31, 2016, the Company had negative working capital of $1,207,843. Management does not anticipate having positive cash flow from operations in the near future.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to implement the Company’s business plan. Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations. There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable. The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company, which will be used to finance the Company’s future growth. However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability. The Company’s long-term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to achieve adequate profitability and cash flows from operations to sustain its operations.

Note 3. Summary of Significant Accounting Policies

Basis of presentations

The consolidated financial statements and related disclosures have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Interim Financial Statements

The accompanying these unaudited financial statements have been prepared in accordance with generally accepted accounting (“GAAP”) principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the fiscal year ended December 31, 2015 and notes thereto and other pertinent information contained in our Form 10-K the Company has filed with the Securities and Exchange Commission (the “SEC”).

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The results of operations for the three month period ended March 31, 2016 are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2016.

Consolidated Financial Statements

The consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries from the date of their formations. Significant intercompany transactions have been eliminated in consolidation.

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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For the purpose of the financial statements, cash equivalents include all highly liquid investments with maturity of three months or less. Cash and cash equivalents were $634 and $844 at March 31, 2016 and December 31, 2015, respectively.

Revenue Recognition

The Company follows ASC 605, Revenue Recognition recognizing revenue when persuasive evidence of an arrangement exists, product delivery has occurred or the services have been rendered, the price is fixed or determinable and collectability is reasonably assured.

Common Stock

The Company records common stock issuances when all of the legal requirements for the issuance of such common stock have been satisfied.

Income Taxes

The Company accounts for income taxes under ASC 740 Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of March 31, 2016 or December 31, 2015.

Earnings (Loss) per Common Share

The Company computes basic and diluted earnings per common share amounts in accordance with ASC Topic 260, Earnings per Share. The basic earnings (loss) per common share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per common share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no dilutive shares outstanding for any periods reported.

In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. The Company’s convertible debt is considered anti-dilutive due to the Company’s net loss for the three months ended March 31, 2016 and 2015. As a result, the Company did not have any potentially dilutive common shares for those periods. At March 31, 2016, the Company had 102,601,785 potentially issuable shares upon the conversion of convertible notes payable and interest.

Financial Instruments

The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period between the origination of these instruments and their expected realization.

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FASB Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2016. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms that is not significantly different from its stated value.

Beneficial Conversion Feature

Beneficial conversion feature is a non-detachable conversion feature that is in the money at the commitment date. The Company follows the guidance of ASC Subtopic 470-20 Debt with Conversion and Other Options to evaluate as to whether beneficial conversion feature exists. Pursuant to Section 470-20-30 an embedded beneficial conversion feature recognized separately under paragraph 470-20-25-5 shall be measured initially at its intrinsic value at the commitment date (see paragraphs 470-20-30-9 through 30-12) as the difference between the conversion price (see paragraph 470-20-30-5) and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible. When the Company issues a debt or equity security that is convertible into common stock at a discount from the fair value of the common stock at the date the debt or equity security counterparty is legally committed to purchase such a security (Commitment Date), a beneficial conversion charge is measured and recorded on the Commitment Date for the difference between the fair value of the Company’s common stock and the effective conversion price of the debt or equity security. If the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the debt or equity security, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds allocated to the debt or equity security.

Commitments and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. There are no known commitments or contingencies as of March 31, 2016 and December 31, 2015.

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.

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Recently Issued Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

Note 4. Advances

During the three months ended March 31, 2016, Vista View Ventures, Inc. advanced $63,365 to the Company for working capital. These advances are non-interest bearing and payable on demand. During the same period, the Company refinanced $63,365 of the advances into convertible notes payable with Vista View Ventures, Inc. As of March 31, 2016 and December 31, 2015, advances in the amount of $3,235 and $3,235, respectively, are included in current liabilities on the consolidated balance sheets.

During the three months ended March 31, 2016, we recognized imputed interest expense of $671 on these advances.

Note 5. Deposit for Clean Room

On March 4, 2015, the Company signed an asset purchase agreement with SRN Properties Corporation (“SRN Properties”) to acquire an approximately 1,300 square foot Class 5 clean room. The Company expects to install the clean room in Colorado, where it will serve as a center for hygienic testing and quality control services to cannabis growers and retailers. The agreement called for GTSO to pay 3,000,000 shares of common stock of the Company and $250,000 to be paid in cash installments. As of December 31, 2015, we had made cash payments of $122,500 and issued 3,000,000 shares of our common stock in satisfaction of this requirement. As of December 31, 2015, the remaining cash owed to SRN Properties of $127,500 was recorded as accounts payable to related party on the balance sheet. SRN Properties was not a related party prior to the acquisition; however, it is a significant shareholder after the acquisition. For accounting purposes, the shares issued for the purchase of the clean room were valued at $5,400,000 based on the fair market value of the stock on the date the agreement was signed.

As of December 31, 2015, the Company determined that the asset related to the deposit for the purchase of the clean room was impaired and should be written off. The Company has been unable to make the remaining cash payments required under the purchase agreement and does not expect to be able to make those payments in the near future. As a result, the Company recorded a loss on impairment of fixed assets of $5,650,000 during the year ended December 31, 2015.

On January 6, 2016, we amended the agreement with SRN Properties. The purchase price for the clean room consists of $250,000 in cash ($122,500 of which has been already been paid) and 9,000 restricted shares of our Series A preferred stock. As part of the amendment, SRN Properties agreed to return 3,000,000 shares of our common stock that were issued upon execution of the original agreement.

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Note 6. Convertible Notes Payable

Convertible notes payable consisted of the following at March 31, 2016 and December 31, 2015:

	March 31, 2016			December 31, 2015
Convertible note dated April 1, 2010, bearing interest at 10% per annum, matured on March 31, 2013 and convertible into shares of common stock at $0.01 per share. This note is in default.	$	14,491		$	14,138
Convertible note dated May 15, 2010, bearing interest at 10% per annum, matured on March 31, 2013 and convertible into shares of common stock at $0.01 per share. This note is in default.		7,429			7,249
Convertible note dated October 31, 2012, bearing interest at 10% per annum, matures on April 30, 2014 and convertible into shares of common stock at $0.02 per share. This note is in default.		64			64
Convertible note dated April 1, 2013, bearing interest at 10% per annum, matures on March 31, 2015 and convertible into shares of common stock at $0.01 per share. This note is in default.		1,147			1,147
Convertible note dated June 30, 2013, bearing interest at 10% per annum, matures on June 30, 2015 and convertible into shares of common stock at $0.01 per share.		60,242			69,068
Convertible note dated September 30, 2013, bearing interest at 10% per annum, matures on September 30, 2015 and convertible into shares of common stock at $0.01 per share.		312,310			312,310
Convertible note dated June 30, 2014, bearing interest at 10% per annum, matures on June 30, 2014 and convertible into shares of common stock at $0.01 per share.		162,946			162,946
Convertible note dated December 31, 2014, bearing interest at 10% per annum, matures on December 31, 2016 and convertible into shares of common stock at $2.00 per share.		202,160			202,160
Convertible note dated March 31, 2015, bearing interest at 10% per annum, maturing on March 31, 2017, and convertible into shares of common stock at $1.10 per share.		87,970			87,970
Convertible note dated June 30, 2015, bearing interest at 10% per annum, maturing on June 30, 2017, and convertible into shares of common stock at $0.15 per share.		81,813			81,813
Convertible note dated September 30, 2015, bearing interest at 10% per annum, maturing on September 30, 2018, and convertible into shares of common stock at $0.06 per share.		326,402			326,402
Convertible note dated December 31, 2015, bearing interest at 10% per annum, maturing on December 31, 2018, and convertible into shares of common stock at $0.01 per share.		103,595			103,595
Convertible note dated March 31, 2016, bearing interest at 10% per annum, maturing on March 31, 2019 and convertible into share of common stock at a 60% discount of the volume weighted average market price.		63,365			—
Total convertible notes payable	$	1,423,933		$	1,368,861

Less: current portion of convertible notes payable		(848,758	)		(769,081	)
Less: discount on noncurrent convertible notes payable		(549,173	)		(578,194	)
Convertible notes payable, net of discount	$	26,002		$	21,586

Current portion of convertible notes payable		848,758			769,081
Less: discount on current portion of convertible notes payable		(310,613	)		(286,267	)
Current portion of convertible notes payable, net of discount	$	538,145		$	482,814

All principal along with accrued interest is payable on the maturity date. The notes are convertible into common stock at the option of the holder. The holder of the notes cannot convert the notes into shares of common stock if that conversion would result in the holder owning more than 4.9% of the outstanding stock of the Company.

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Advances Refinanced into Convertible Promissory Notes

During the three months ended March 31, 2016, the Company has signed Convertible Promissory Notes that refinance non-interest bearing advances into convertible notes payable. The Convertible Promissory Notes bear interest at 10% per annum and are payable along with accrued interest. The Convertible Promissory Note and unpaid accrued interest are convertible into common stock at the option of the holder.

Date Issued	Maturity Date	Interest Rate			Conversion Rate	Amount of Note
March 31, 2016	March 31, 2019		10	%	40% of market	$	63,365
						$	63,365

Conversions to Common Stock

During three months ended March 31, 2016, the holders of the Convertible Note Payable dated June 30, 2013 elected to convert principal and accrued interest in the amounts show below into share of common stock at a rate of $0.01 per share. On the conversion date, the unamortized discount related to the principal amount converted was immediately amortized to interest expense. No gain or loss was recognized on the conversions as they occurred within the terms of the agreement that provided for conversion.

Date	Amount Converted		Number of Shares Issued		Discount Amortized
January 7, 2016	$	2,460		246,000	$	—
January 8, 2016		6,687		668,700		—
Total	$	9,147		914,700	$	—

Note 7. Debt Repayment Commitments

The following debt repayments are due within the next five years:

	Twelve months ending March 31,
	2016		2017		2018		2019		2020		Total
Convertible notes payable	$	848,758	$	81,813	$	493,362		—		—	$	1,423,933
Other debt		—		—		—		—		—		—
Total	$	848,758	$	81,813	$	493,362		—		—	$	1,423,933

Note 8. Stockholders’ Equity

Conversion of shares

During three months ended March 31, 2016, the holders of our convertible notes elected to convert $9,147 of principal and interest into 914,700 shares of common stock. See footnote 6.

Discount on Beneficial Conversion Feature of Convertible Notes Payable

During the three months ended March 31, 2016, the Company issued convertible notes payable. At the time of the conversion, we recorded a discount to convertible notes payable to reflect the beneficial conversion feature of the note.

Date Issued	Maturity Date	Interest Rate			Conversion Rate	Amount of Note
March 31, 2016	March 31, 2019		10	%	40% of market	$	63,365
						$	63,365

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The Company evaluated the application of ASC 470-50-40/55, Debtor’s Accounting for a Modification or Exchange of Debt Instrument as it applies to the note listed above and concluded that the revised terms constituted a debt modification rather than a debt extinguishment because the present value of the cash flow under the terms of the new instrument was less than 10% from the present value of the remaining cash flows under the terms of the original note. No gain or loss on the modifications was required to be recognized.

The Company evaluated the terms of the new note in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion features did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the note and was deemed to be less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized beneficial conversion features as show in the table above. The beneficial conversion features were recorded as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. Discounts to the Convertible Notes Payable are amortized to interest expense over the life of the note.

Imputed Interest

During three months ended March 31, 2016 and 2015, we recognized imputed interest of $671 and $725, respectively, as an increase to shareholders’ equity.

Note 9. Subsequent events

The Company evaluated activity through the filing of this report, and noted that there were no subsequent events to disclose.

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

Overview

Critical Accounting Policies

We prepare our Consolidated financial statements in conformity with GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends, and other factors that management believes to be important at the time the condensed Consolidated financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our condensed Consolidated financial statements.

While we believe that the historical experience, current trends and other factors considered support the preparation of our condensed consolidated financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.

For a full description of our critical accounting policies, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended December 31, 2015 on Form 10-K.

Results of Operations

Three months ended March 31, 2016 compared to the three months ended March 31, 2015.

General and Administrative Expenses

We incurred general and administrative expenses of $83,184 and $143,007 for the three months ended March 31, 2016 and 2015, respectively. The decline is due to lower professional fees during the current period.

Interest Expense

Interest expense increased from $90,468 for the three months ended March 31, 2015 to $102,637 for the three months ended March 31, 2016. Interest on our outstanding convertible promissory notes increased due to higher outstanding balances.

Interest expense for the three months ended March 31, 2016 included $68,040 for amortization of the discount on convertible notes, compared to $69,084 for the comparable period of 2015.

The interest expense on our convertible notes increased by $13,268, due to higher average balances on these notes. This was offset by a small decrease in imputed interest on advances that the company received.

Investment Impairment

We recorded a $5,000 impairment on our Elevated Industries investment during the three months ended March 31, 2015. We had no impairment expenses during the three months ended March 31, 2016.

Net Loss

We incurred a net loss of $185,821 for the three months ended March 31, 2016 as compared to $238,475 for the comparable period of 2015. The decrease in the net loss was primarily due to reduced professional fees.

Liquidity and Capital Resources

At March 31, 2016, we had cash on hand of $634. The company has negative working capital of $1,207,843 . Net cash used in operating activities for the three months ended March 31, 2016 was $63,575. Cash on hand is adequate to fund our operations for less than one month. We do not expect to achieve positive cash flow from operating activities in the near future. We will require additional cash in order to implement our business plan. There is no guarantee that we will be able to attain fund when we need them or that funds will be available on terms that are acceptable to the Company. We have no material commitments for capital expenditures as of March 31, 2016.

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Additional Financing

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

Off Balance Sheet Arrangements

We do not have any 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 is material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This item is not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Internal Control over Financial Reporting

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2016. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2016, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As of March 31, 2016, we did not maintain effective controls over the control environment. Specifically, we have not developed and effectively communicated to our employees our accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

As of March 31, 2016, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

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

Change in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

ITEM 1A. RISK FACTORS

This item is not applicable to smaller reporting companies.

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

There were no sales of unregistered equity securities during the three months ended March 31, 2016.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has not defaulted upon senior securities.

ITEM 4. MINE SAFETY DISCLOSURES

This item is not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

3.1	Articles of Incorporation¹
3.2	Bylaws¹
21	Subsidiaries of the Registrant²
31.1	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer and principal financial and account officer.²
32.1	Section 1350 Certification of principal executive officer and principal financial accounting officer.²
101*	XBRL data files of Financial Statement and Notes contained in this Quarterly Report on Form 10-Q.²

(1)	Incorporated by reference to our Form S-1 filed with the Securities and Exchange Commission on September 15, 2006

(2)	Filed or furnished herewith

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SIGNATURES

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

	Green Technology Solutions, Inc.


Date: May 23, 2016	BY: /s/ Kathleen Delaney
	Kathleen Delaney
	Trustee, Interim Director, and Interim President