ITEM 1. BUSINESS.
Overview
We were incorporated on December 21, 2000 under the laws of the State of Nevada. Effective June 22, 2012, we completed a 4-for-1 forward spit (the “Split”) of our common stock. As a result, our authorized capital increased from 100,000,000 shares of common stock, par value $0.001 per share, to 400,000,000 shares of common stock, par value of $0.001 per share.
We are a carbon offsets marketing company. Initially, we intend to sell carbon offsets through our website to voluntary markets where no verification is required. Once we are able to complete the verification process, we will sell verified carbon offsets through other markets. We intend to market and sell Verified Emission Reduction (VER) and Reduced Emissions from Deforestation and Degradation (REDD) carbon offsets through global restoration projects. The offsets will be validated and verified for sale to companies, foundations, and other entities that, for branding, policy and corporate social responsibility reasons, wish to offset their carbon footprints to support climate change mitigation efforts. Our focus is on reforestation, ideally with generators, similar to United Nature Inc. who provide work opportunities and benefits to the indigenous people.
In March 2012, we launched our updated consumer-based website and commenced our offering of carbon offsets for purchase. We are still in the process on improving our website. We have not sold any offsets on our website as of the date of this filing. We believe this is primarily a result of (i) website issues, including the fact that we do not have direct credit card payment processing, consumer reluctance to use our PayPal payment processing, and technical difficulties associated with our website coding and PayPal payment processing; (ii) the fact that we have been primarily focused on entering into a formal agreement for the acquisition of Advantag AG (see Advantag Acquisition below); and (iii) a lack of consumer awareness of our carbon offsets offering.
Recent Corporate Developments
The following corporate developments occurred since the filing of our Form 10-Q for the fiscal quarter ended December 31, 2011:
Consulting Agreement with Mirador Consulting LLC
On March 6, 2012, we entered into a consulting agreement (the “Mirador Agreement”), with Mirador Consulting LLC, (“Mirador”). Under the terms of the Mirador Agreement, Mirador has agreed to provide us with consulting services. The Mirador Agreement is effective March 6, 2012, is for a term of 6 months, and may be renewed in six-month increments upon the mutual written consent of the parties.
During the term of the Mirador Agreement, Mirador will (a) provide us with corporate consulting services on a best efforts basis in connection with mergers and acquisitions, corporate finance, corporate finance relations, introductions to other financial relations companies and other financial services; (b) use its best efforts to locate and identify to private and/or public companies for potential merger with or acquisition by us; (c) contact our existing stockholders, responding in a professional manner to their questions and following up as appropriate; and (d) use its best efforts to introduce us to various securities dealers, investment advisors, analysts, funding sources, and other members of the financial community with whom it has established relationships, and generally assist us in our efforts to enhance its visibility in the financial community (the “Services”).
In consideration of Mirador’s agreement to provide the Services, we issued 250,000 pre-Split (1,000,000 post-Split) shares of our common stock (the “Shares”) to Mirador. Mirador represented that it is an “Accredited Investor” as defined under Regulation D promulgated under the United States Securities Act, as amended (the “Securities Act”).
Advantag Letter of Intent
On March 27, 2012, we entered into a letter of intent (the “Letter of Intent”) for the acquisition of Advantag AG (“Advantag”), a German based company which is engaged in the business of marketing and trading carbon credits and is a member of a number of European carbon exchanges. See Advantag Acquisition below.
Adoption of 2012 Stock Incentive Plan
On March 30, 2012, our Board of Directors adopted our 2012 Stock Incentive Plan (the "2012 Plan"). The purpose of the 2012 Plan is to enhance the long-term stockholder value by offering opportunities to our directors, officers, employees and eligible consultants (“Participants”) to acquire and maintain stock ownership in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in our service.
The 2012 Plan allows us to grant options to its officers, directors and employees. In addition, we may grant options to individuals who act as consultants, so long as those consultants do not provide services connected to the offer or sale of our securities in capital raising transactions and do not directly or indirectly promote or maintain a market for our securities.
A total of 3,650,000 pre-Split (14,600,000 post-Split) shares of our common stock are available for issuance under the 2012 Plan. We may increase the maximum aggregate number of shares that may be optioned and sold under the 2012 Plan provided the maximum aggregate number of shares that may be optioned and sold under the 2012 Plan shall at no time be greater than 15% of the total number of shares of common stock outstanding.
The Plan provides for the grant of incentive stock options and non-qualified stock options. Incentive stock options granted under the Plan are those intended to qualify as “incentive stock options” as defined under Section 422 of the Internal Revenue Code. However, in order to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code, the Plan must be approved by our stockholders within 12 months of its adoption. The Plan has not been approved by our stockholders. Non-qualified stock options granted under the Plan are option grants that do not qualify as incentive stock options under Section 422 of the Internal Revenue Code.
Executive Services Agreement
On April 4, 2012, we entered into an executive services agreement (the “BlueWater Agreement”), with BlueWater Advisory Group, LLC (“BlueWater”) and Bryan Crane (“Crane”). Under the terms of the BlueWater Agreement, BlueWater agreed to provide the services of Crane to act as our Vice President and as a director and BlueWater was to receive $2,000 US each month the Agreement was in effect.
In addition, we issued 500,000 pre-Split (2,000,000 post-Split) shares of our common stock to BlueWater and granted Crane 400,000 pre-Split (1,600,000 post-Split) incentive options to purchase shares of our common stock at a price of $0.11 pre-Split ($0.0275 post-Split) per share until April 4, 2014 in accordance with our 2012 Stock Incentive Plan. BlueWater represented that it was an “accredited investor” as that term is defined under Rule 501 of Regulation D promulgated under the Securities Act.
On April 4, 2012, Crane we appointed Crane as our Vice President and as a director. On June 14, 2012, Crane resigned from his position as Vice President and as a director. As a result of his resignation, Crane’s stock options will expire on July 14, 2012.
Amendment to Articles of Incorporation: Reverse Stock Split.
We amended our Articles of Incorporation in accordance with Article 78.207 of Chapter 78 of the Nevada Revised Statutes by increasing our issued and authorized common stock on a four-for-one basis (the “Split”) to be effective June 22, 2012. Accordingly, on the effective date, our authorized common stock increased from 100,000,000 shares, par value $0.001 per share, to 400,000,000 shares, par value $0.001 per share and the issued and outstanding shares of common stock increased correspondingly from 25,166,666 shares to 100,666,664 shares.
Agreement with United Nature Inc.
On September 1, 2010, we entered into a carbon offset marketing agreement dated for reference August 14, 2010 (the “Carbon Offset Marketing Agreement”) with United Nature Inc. (“United Nature”) whereby United Nature granted us, the exclusive rights to market an sell all carbon offsets generated on Plantations owned by United Nature for a period of ten years. Under the terms of the Carbon Offset Marketing Agreement, we issued 3,000,000 pre-Split (12,000,000 post-Split) shares of our common stock to be distributed according to the following schedule:
i.
500,000 pre-Split (2,000,000 post-Split) shares on execution of the agreement;
ii.
500,000 pre-Split (2,000,000 post-Split) shares on the first anniversary of the agreement;
iii.
500,000 pre-Split (2,000,000 post-Split) shares on the second anniversary of the agreement;
iv.
500,000 pre-Split (2,000,000 post-Split) shares on the third anniversary of the agreement;
v.
500,000 pre-Split (2,000,000 post-Split) shares on the fourth anniversary of the agreement; and
vi.
500,000 pre-Split (2,000,000 post-Split) shares on the fifth anniversary of the agreement.
The term of the agreement commenced on the execution of the agreement and will continue for a period of ten years renewable at our option for an additional ten years.
Proceeds from the sales of carbon offsets will be split 50/50 after deduction of transaction costs incurred by us to have the carbon offsets certified by a credible certified verifier. United Nature has also agreed to assist us in signing up plantations managed by United Nature and other plantations within the Republic of Panama not owned or managed by United Nature. In such a case we will share net proceeds with United Nature on the same basis as proceeds from the sale of carbon offsets from the plantations owned by United Nature.
If we are unable to produce cumulative proceeds for United Nature of $100,000 USD by the fifth anniversary of the Carbon Offset Marketing Agreement, United Nature may grant non-exclusive distribution rights to other carbon offset marketers for the remainder of the term. If United Nature grants non-exclusive distribution rights to other carbon offset marketers pursuant to the terms of the Carbon Offset Marketing Agreement, United Nature must return 50% of all securities issued under the Carbon Offset Marketing Agreement to us.
United Nature’s Plantations
United Nature is located in the Republic of Panama. They manage sustainable teak plantations and invest in buying rainforest for conservation. United Nature has around 900 hectares of primary rainforest that they protect. United Nature is providing lumber from sustainable sources, in order to help save natural forests devastated by clear cut deforestation. United Nature employs indigenous peoples at the plantations, thus providing economic opportunities to them.
The location of the project is Canglon Abajo, County of Yaviza, District of Pinogana, Province of Darien, Panama. On the West it borders the Pan American Highway, on the East is the Chucunaque River. All reforested parcels consist of 1 hectare and have access roads of approximately 3 meters wide the trees are planted at 3x3 meter distance (10x10 ft), with 1,111 trees per hectare. The project has been duly registered and approved by ANAM (The Panama Ministry of Natural Resources).
Advantag Acquisition
On March 27, 2012, we entered into a letter of intent (the “Letter of Intent”) for the acquisition of Advantag AG (“Advantag”), a German based company which is engaged in the business of marketing and trading carbon credits and is a member of a number of European carbon exchanges, including the Carbon Trade Exchange London / Melbourne (a leading exchange for sale of voluntary credits), the Green Market Exchange of the Bavarian Exchange in Munich, Climex in the Netherlands and the KBB Bratislava. The combination with Advantag will assist us in marketing of the carbon offsets generated by the United Nature projects and will allow us to achieve its longer term plan to join carbon exchanges and market other forms of carbon credits.
Under the terms of the Letter of Intent, we will issue to the shareholders of Advantag such number of our shares as shall be equal to 60% of the number of our outstanding shares resulting in a reverse takeover of us. Of the shares to be issued to Advantag, 75% will be held in escrow to be released based on Advantag’s gross carbon credit sales over the next 5 years on the basis of one share for each 2 Euros of carbon credit sales.
Closing will be subject to satisfactory due diligence by us, preparation of U.S. GAAP financials of Advantag, and the entry into a formal agreement (the “Formal Agreement”) which was to occur no later than April 10, 2012. In addition, closing will be subject to us having cash of not less than $500,000 and no significant liabilities at closing (the “Financial Requirements”). At closing, Advantag’s management will assume management of us and a majority of our directors will be directors nominated by Advantag.
As of the date of this filing, we have not entered into the Formal Agreement. Advantag is reluctant to enter into the Formal Agreement until we have met the Financial Requirements. Advantag has agreed in principle to extend the closing deadline of the Letter of Intent in order to allow to arrange for financing that will enable us to meet the Financial Requirements.
There is no assurance that the parties will enter into the Formal Agreement. There are no assurances that the business combination with Advantag will result in sales or increased sales of carbon offsets by Greenlite. Greenlite has recently commenced to market carbon offsets through its website and there is no assurance that such marketing efforts will be successful.
Carbon Offset Marketing Business
We intend to generate revenue through the sale of carbon offsets. Carbon offsets will be generated through three separate methods:
Afforestation: Establishing forests on bare or cultivated land that has not been forested in recent history.
Reforestation: Re-growing forests in areas formerly forested that have been harvested.
Reducing emissions from Deforestation and Degradation "REDD": Deforestation refers to direct human-induced, long-term conversion of forests to non-forest land. Degradation refers to gradual, direct human-induced loss of forest carbon stocks.
Through these three methods we intend to generate carbon offsets which represent the carbon consumption capability of the planted and/or protected trees. The carbon offsets will be validated and verified to international standards for sale to various entities.
The carbon offsets are generated through a process called carbon sequestration. Carbon sequestration is the uptake and storage of carbon, especially by trees and plants that absorb carbon dioxide and release oxygen.
We are currently looking to form additional partnerships with other private landowners and municipalities in order to obtain the rights to exclusively market the carbon offsets generated on their property. We intend to do this by bearing all the initial costs of the carbon offset verification and marketing. With private landowners, we intend to create partnerships where profit sharing arrangements can be made.
Price of Carbon: According to recent publications forest carbon markets the average weighted price per tonne of CO2 sequestered went for $8.89 per tone. Prices ranged from $1 to $50 with data taken from 78 different forest-based carbon projects located around the world. A typical 21 year old teak tree will have stored just over one metric ton of carbon dioxide and removed almost five metric tons of carbon dioxide from the atmosphere just by growing. When a tree is burnt down for land clearance, or dies and rots, the carbon stored therein is released once more into the atmosphere.
Markets
There are two different markets for the sale of carbon offsets, the Voluntary Market and the Compliance Market.
The Voluntary Market: involves individuals, companies, and organizations that purchase carbon offsets voluntarily to mitigate or neutralize their own greenhouse gas emissions from transportation, electricity use, and other sources. These groups are not obligated to purchase carbon offsets, but choose to for various reasons. Carbon offset products used in voluntary markets are generally referred to as Verified Emissions Reductions (“VER’s”).
The Compliance Market (or regulated market) involves companies, governments or other entities that buy carbon offsets in order to comply with regulations on the total amount of carbon dioxide they are allowed to emit.
Initially, we intend to sell carbon offsets that have not yet been verified through our website that is currently under construction (www.greenlitecarboncredits.com). Once the carbon offsets are verified we will sell them through our website, in private transactions or on a regulated market or exchange.
Competition
The carbon credit industry is a competitive industry. We compete with numerous other participants in the search for properties and in the marketing of the sale of carbon offsets. Our competitors will include companies that have substantially greater financial resources, staff and facilities than those of the Company. Our failure to maintain a competitive position within the market could have a materially adverse effect on our business, financial condition and results of operations.
Government Regulations
The regulatory environment of carbon offsets is presently handled by third party organizations that verify the validity and quality of carbon offsetting projects. In order to sell Verified Emission Reduction credits (“VER's”) and Reduced Emissions from Deforestation and Degradation credits (“REDD's”) we will be required to have a third party verify the project with an onsite visit. We intend to verify any carbon offsets in a reputable standard meant to be applicable regardless of a country's current climate policy, and does not apply restrictions of project types, size, location and crediting period.
The verification process is still in its infancy stages and it is possible this process will become more regulated in the future causing increases in time delays and costs.
Research and Development Expenditures
We have not incurred any research expenditures since our incorporation.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
Employees
We have no employees other than our sole executive officer and director. We intend to conduct our business largely through consultants.
ITEM 1A.
ITEM 1A. RISK FACTORS.
The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.
We are at risk to changes in domestic and international carbon policy.
The supply and demand fundamentals of carbon offsets are determined by governments and international consortiums and are beyond the our control. Our ability to continue operations will be dependent on the level of adoption and observance of the Kyoto Protocol, the post Kyoto Protocol environment and other initiatives aimed at reducing greenhouse gas emissions. Changes in government and corporate priorities as a result of government deficits, domestic industries or as a result of changes in the prevailing views concerning the impact of greenhouse gases on climate change could adversely affect the observance of the Kyoto Protocol, the adoption of successor protocols, and corporate initiatives.
If we are unable to identify and contract with sufficient and suitable carbon offset generators or our business will fail
In order to achieve our business model we need to contract with organizations that generate a substantial amount of carbon offsets. If we are unable to contract with suitable generators our business will fail.
If we are unable to find a suitable buyer for carbon offsets our business may fail.
The carbon offsets we initially intend to sell are voluntary. Buyers of voluntary credits are not bound to purchase due to government regulations or international agreements. Buyers of voluntary credits purchase because they believe it is the socially responsible thing to do or in order to increase corporate image. The market for voluntary credits is still in the development stages. If we are unable to capture a portion of this relatively small market our business may fail.
We have not sold any carbon offsets to date. If we do not sell any carbon offsets in the future, our business may fail.
In March 2012, we launched our updated consumer-based website and commenced our offering of carbon offsets for purchase. We are still in the process on improving our website. We have not sold any offsets on our website as of the date of this filing. We believe this is primarily a result of (i) website issues, including the fact that we do not have direct credit card payment processing, consumer reluctance to use our PayPal payment processing, and technical difficulties associated with our website coding and PayPal payment processing; (ii) the fact that we have been primarily focused on entering into a formal agreement for the acquisition of Advantag AG (see Item 1. Business - Advantag Acquisition above); and (iii) a lack of consumer awareness of our carbon offsets offering. There is no assurance that we will ever sell any carbon offsets on our website. If we do not sell any carbon assets, our business may fail.
We have not entered into a formal agreement for the acquisition of Advantag AG.
Closing of the acquisition of Advantag AG (“Advantag”) is subject to satisfactory due diligence by us, preparation of U.S. GAAP financials of Advantag, and the entry into a formal agreement (the “Formal Agreement”) which was to occur no later than April 10, 2012. In addition, closing will be subject to us having cash of not less than $500,000 and no significant liabilities at closing (the “Financial Requirements”). As of the date of this filing, we have not entered into the Formal Agreement. Advantag is reluctant enter into the Formal Agreement until we have met the Financial Requirements. We Advantag has agreed in principle to extend the closing deadline of the Letter of Intent in order to allow to arrange for financing that will enable us to meet the Financial Requirements. There is no assurance that the parties will enter into the Formal Agreement. There are no assurances that the business combination with Advantag will result in sales or increased sales of carbon offsets by us.
Our sole executive officer and director, Howard Thomson, does not have experience in the forest restoration and carbon industry.
Howard Thomson, our sole executive officer and director, has no experience in the industry of ecosystem restoration and carbon credit validation. Because of his lack of expertise there is a chance that he will not be able to foresee and plan for all the uncertainties in the marketplace or have the required capacity to implement our plan of operation.
If prices of forest-based carbon offsets drop substantially our business could fail.
The principle factors affecting our revenues are those factors which affect the price of carbon offsets and are beyond our control. The actual market price of carbon offsets fluctuates drastically. If prices were to fall substantially our business could fail.
We are at risk to changes in regulations and verifications that could negatively affect our profitability.
The processes by which carbon offsets are created and verified are subject to change and beyond our control. Governments, lobby groups, private firms, and Environmental Non-Government Organizations "ENGO's" all work to create a more efficient and accountable system to bring carbon offsets available for market and to assure validity. As the industry matures the regulatory environment will as well. These changes could become more demanding in terms of time and costs and negatively affect our profitability.
We are subject to currency fluctuations that could negatively affect our profitability.
Our profitability may be adversely affected by fluctuations in the rate of exchange of the Canadian dollar and other currencies we may do business in. The company at this time does not expect to hedge against currency fluctuations and changes in exchange rates are beyond our control.
We operate in a competitive industry and will compete against other company's that could negatively affect our profitability.
The carbon credit industry is a competitive industry. We will compete with numerous other participants in the search for, and the acquisition of, properties and in the marketing of the sale of carbon offsets. Our competitors will include companies that have substantially greater financial resources, staff and facilities than those of the Company.
Projects will be at risk of fire, pests and diseases.
Our assets will be made up of the environmental rights attached to carbon stocks in forests. Forests are at risk to damage from fire, pests and diseases. The company will implements strategies including fuels management, species composition management and pathogen assessments as part of routine monitoring procedures but often forces of nature are outside the control of the company and could require the company to incur losses in order to replace lost carbon stocks.
We may not be able to obtain additional financing.
As at March 31, 2012, we had cash on hand of $11,194 and a working capital deficit of $40,206 As such, we will require substantial additional financing in order to continue as a going concern. We have not generated any revenue from operations to date. The specific cost requirements needed to maintain operations will depend upon the restoration projects we are able to procure. Specific costs include but are not limited to the following:
Travel and project selection
Feasibility studies
Consultants Registration and Validation Project Implementation
Measurement and Monitoring Marketing Sale Efforts
The amount of each of the specific costs described above will vary based on the project size, type and location. Reforestation projects have higher costs than do REDD projects due to the need to physically prepare and plant the site.
In order to expand our business operations, we anticipate that we will have to raise additional funding. If we are not able to raise the capital necessary to fund our business expansion objectives, we may have to delay the implementation of our business plan. If sufficient financing is not available or obtainable, we may not be able to continue as a going concern and investors may lose a substantial portion or all of their investment.
Because our executive officer has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business.
Our sole executive officer, Howard Thomson, expects to expend approximately ten hours per week on our business. Competing demands on his time may lead to a divergence between his interests and the interests of other shareholders.
Because our sole executive officer and director, Howard Thomson, owns 19.8% of our outstanding common stock, investors may find that corporate decisions influenced by Mr. Thomson are inconsistent with the best interests of other stockholders.
Howard Thomson, our sole executive officer and director, controls 19.8% of the issued and outstanding shares of our common stock. The interests of Mr. Thomson may not be, at all times, the same as those of other shareholders. Since Mr. Thomson is not simply a passive investor but is also our active executive, his interests as an executive may, at times, be adverse to those of passive investors. Where those conflicts exist, our shareholders will be dependent upon Mr. Thomson exercising, in a manner fair to all of our shareholders, his fiduciary duties as an officer or as a member of our board of directors. In addition, Mr. Thomson will have the ability to significantly influence the outcome of most corporate actions requiring shareholder approval, including the merger of our company with or into another company, the sale of all or substantially all of our assets and amendments to our Articles of Incorporation. This concentration of ownership with Mr. Thomson may also have the effect of delaying, deferring or preventing a change in control of Greenlite, which may be disadvantageous to minority shareholders.
Because our stock is a penny stock, shareholders will be more limited in their ability to sell their stock.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute “penny stocks” within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the trading price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Securities and Exchange Act of 1934 (the “Exchange Act”). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:
1.
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
2.
contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;
3.
contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
4.
contains a toll-free telephone number for inquiries on disciplinary actions;
5.
defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and
6.
contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing trading activity in the secondary market for our stock.
ITEM 2.
ITEM 2. PROPERTIES.
We have no real property holdings and, at this time, we have no agreements to acquire any properties. We rent office space at Suite 201, 810 Peace Portal Drive, Blaine, WA 98230, consisting of approximately 80 square feet, at a cost of $125 per month. This rental is on a month-to-month basis without a formal contract.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any other legal proceedings and, to our knowledge; no other legal proceedings are pending, threatened or contemplated.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES.
None.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common shares are quoted on the OTC Bulletin Board under the symbol “GLTV." The following table indicates the high and low bid prices of the common shares obtained during the periods indicated:
The above quotations have been adjusted to reflect our 4-for-1 forward split of our common stock effective June 22, 2012. The high and low price quotes of our common stock as set out in the table above are as quoted on the OTC Bulletin Board. The market quotations provided reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Registered Holders Of Our Common Stock
As of July 11, 2012, we had 113 registered shareholders and 100,466,664 shares of our common stock issued and outstanding. We believe that a large number of stockholders hold stock on deposit with their brokers or investment bankers registered in the name of stock depositories.
Dividends
We have neither declared nor paid any cash dividends on our capital stock since our inception and do not contemplate paying cash dividends in the foreseeable future. It is anticipated that earnings, if any, will be retained for the operation of our business. Our board of directors will determine future dividend declarations and payments, if any, in light of the then-current conditions they deem relevant and in accordance with the Nevada Revised Statutes.
There are no restrictions in our articles of incorporation or in our bylaws which prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of a dividend:
(a)
We would not be able to pay our debts as they become due in the usual course of business; or
(b)
Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving distributions.
Recent Sales Of Unregistered Securities
None.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
PLAN OF OPERATION
Over the next twelve months, we plan to develop our business as follows:
Engage Consultants
We are looking to engage consulting firms that specializes in overseeing the design and implementation of greenhouse gas reduction/sustainability plans, and managing the generation of carbon and renewable energy and energy efficiency credits. Through these consultants we hope to determine the eligibility, feasibility and marketing channels available to sell carbon offsets generated by United Nature’s Plantations. We have not entered into any formal agreements with any consultants.
Develop Website
We currently offer non-verified carbon offsets to the voluntary market through our website located at www.greenlitecarboncredits.com. We have not finished development of our website, Once the website development is finalized we will have an infrastructure in place for consumers to calculate their carbon usage and purchase non-verified offsets.
Our basic corporate website has now been replaced with a consumer oriented website. As a result we will no longer be posting any investor information on our website. We are still in the process on improving our website. We have not sold any offsets on our website as of the date of this filing. We believe this is primarily a result of (i) website issues, including the fact that we do not have direct credit card payment processing, consumer reluctance to use our PayPal payment processing, and technical difficulties associated with our website coding and PayPal payment processing; (ii) the fact that we have been primarily focused on entering into a formal agreement for the acquisition of Advantag AG (see Item 1. Business - Advantag Acquisition above); and (iii) a lack of consumer awareness of our carbon offsets offering. There is no assurance that we will ever sell any carbon offsets on our website.
Initiate Calculations
We are currently calculating the carbon offset potential of our initial project by growth and yield data. The carbon potential will be used to calculate revenues while costs will be determined by price of verification, overhead and monitoring costs.
Sale of Non-Verified Offsets
We intend to sell offsets via our website to generate revenue before we have the project verified. However, we plan to verify the offsets as soon as practicable as verified offsets command a premium.
Verification
We will obtain a review by a third party verifier. The verification process is required only once per project. Depending on the size and location of the project, the monitoring requirements may vary slightly. The reasons for variation are due to access, species diversity, and forest risks including pests, pathogens and fire. In a forest-based carbon-offsetting project all the credits are procured and registered for sale once the project has been verified.
Sale of Offsets
Once the carbon offsets have been verified we will have the ability to sell verified carbon offsets associated with the project. At present our website is not yet complete and we have no buyers for potential carbon offsets. There is no guarantee we will be able to source a buyer at a secured price to achieve profitable operations. If we are unable to find a suitable buyer for our potential carbon offsets our business may fail.
Our business is subject to risks inherent in a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.
Our cash on hand as of March 31, 2012 is $11,194. As such, we do not have sufficient cash to meet the anticipated costs of completing plan of operation or meeting our financial obligations over the next twelve months. Therefore, we will require additional financing. There is no assurance that we will be able to acquire such additional financing on terms that are acceptable to us, or at all.
RESULTS OF OPERATIONS
Revenue
We have not earned any revenues to date and we do not anticipate earning revenues in the near future. We have no business operations and are presently seeking alternative business opportunities, particularly in the reforestation and carbon credit trading areas.
We have not sold any offsets on our website as of the date of this filing. We believe this is primarily a result of (i) website issues, including the fact that we do not have direct credit card payment processing, consumer reluctance to use our PayPal payment processing, and technical difficulties associated with our website coding and PayPal payment processing; (ii) the fact that we have been primarily focused on entering into a formal agreement for the acquisition of Advantag AG (see Item 1. Business - Advantag Acquisition above); and (iii) a lack of consumer awareness of our carbon offsets offering. There is no assurance that we will ever sell any carbon offsets on our website.
Operating Expenses
Our operating expenses for the years ended March 31, 2012 and 2011 are outlined in the table below:
The increase in our operating expenses during our fiscal year ended March 31, 2012, is primarily a result of increases in accounting, amortization, consulting, impairment expense, legal, marketing expense, office administration and regulatory expenses. The increase was partially offset by decreases in bank charges and travel and entertainment.
Accounting, legal and regulatory expenses primarily relate to costs in connection with meeting our reporting requirements under the Exchange Act.
Amortization and Impairment Expense relates to prepaid consulting from our consulting agreement with Mirador Consulting LLC and carbon offset marketing rights from our carbon offset marketing agreement with United Nature Inc.
Consulting relates to consulting services relates to our engagement of third party consultants.
Marketing Expense relates to our website development and marketing efforts associated with our offering of carbon offsets.
Office administrative expenses consist of management consultant fees of $750 per month paid to Mr. Thomson for his services.
LIQUIDITY AND CAPITAL RESOURCES
The decrease in our working capital deficit at March 31, 2012 from our year ended March 31, 2011 is primarily due to the fact that we recorded prepaid consulting of $112,391 in relation to our consulting agreement with Mirador Consulting LLC and the fact that we completed our foreign private placement financings which resulted in the decrease in stock subscriptions payable. The funds from the private placement were also used to retire corporate indebtedness resulting in decreases in accounts payable and accrued expenses and loans payable.
Financing Requirements
Since our inception, we have used our common stock to raise money for our property acquisition, for corporate expenses and to repay outstanding indebtedness. We have not attained profitable operations and our ability to pursue any future plan of operation is dependent upon our ability to obtain financing.
We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our business.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant 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 stockholders.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.
Our significant accounting policies are also disclosed in the notes to our audited consolidated financial statements for the period ended March 31, 2012 included in this Annual Report on Form 10-K.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
See Notes to Financial Statements
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
* Adjusted for June 22, 2012 split
See Notes to Financial Statements
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY/<DEFICIT>
See Notes to Financial Statements
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY/<DEFICIT> (Continued)
See Notes to Financial Statements
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
During the year ended March 31, 2012 outstanding loans and accounts payable were reduced though stock issuance totaling $116,667
During the year ended March 31, 2011 the company acquired $60,000 of marketing rights by issuing stock
See Notes to Financial Statements
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
Greenlite Ventures Inc. was incorporated on December 21, 2000 in the state of Nevada. The Company markets carbon offsets.
Basis of Presentation
The Company reports revenue and expenses using the accrual method of accounting for financial and tax reporting purposes.
Development Stage Company
In accordance with guidelines established by FASB ASC 915, the Company is categorized as a development stage company.
Use of Estimates
Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.
Stock-Based Compensation
Stock-based compensation is accounted for using the Equity-Based Payments to Non-Employees Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company determines the value of stock issued at the date of grant. It also determines at the date of grant, the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.
Shares issued to employees are expensed upon issuance.
Stock based compensation for employees is accounted for using the Stock Based Compensation (FASB ASC Topic 718). The Company uses the fair value method for equity instruments granted to employees and will use the Black Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
No stock options have been issued by Greenlite Ventures, Inc.
Depreciation, Amortization and Capitalization
The Company records depreciation and amortization when appropriate using both straight-line and declining balance methods over the estimated useful life of the assets (generally five to seven years).
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Depreciation, Amortization and Capitalization - Continued
Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property's useful life are capitalized. Property sold or retired, together with the related accumulated depreciation, is removed from the appropriate accounts and the resultant gain or loss is included in net income.
Income Taxes
The Company accounts for income taxes under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the Company’s balance sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. The Company must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent the Company believes that recovery is not likely, the Company must establish a valuation allowance. Changes in the Company’s valuation allowance in a period are recorded through the income tax provision on the consolidated statements of operations.
The Company has adopted ASC 740-10 (formerly known as FIN No. 48, Accounting for Uncertainty in Income Taxes). ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the implementation of ASC 740-10, the Company recognized no material adjustment in the liability for unrecognized income tax benefits.
Fair Value of Financial Instruments
FASB ASC 825, “Financial Instruments”, requires the Company to disclose, when reasonably attainable, the fair market values of its assets and liabilities which are deemed to be financial instruments. The Company's financial instruments consist primarily of cash and certain investments.
Per Share Information
The Company follows FASB ASC 260 “Earnings Per Share” which establishes standards for the computation, presentation and disclosure requirements for basic and diluted earnings per share for entities with publicly-held common shares and potential common stock issuances. Basic earnings (loss) per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities, such as convertible notes, stock options, and warrants. Common stock equivalent shares are excluded from the computation if their effect is antidilutive.
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Subsequent Events
In June 2009, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 855-10 “Subsequent Events”, FASB ASC 855-10 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FASB ASC 855-10 applies to both interim financial statements and annual financial statements. FASB ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009. FASB ASC 855-10 did not have a material impact on these financial statements.
NOTE 2 - PREPAID CONSULTING AGREEMENT WITH MIRADOR CONSULTING LLC
On March 6, 2012, the Company entered into a consulting agreement (the “Mirador Agreement”), with Mirador Consulting LLC, (“Mirador”). Under the terms of the Mirador Agreement, Mirador has agreed to provide the Company with consulting services. The Mirador Agreement is effective March 6, 2012, is for a term of 6 months, and may be renewed in six-month increments upon the mutual written consent of the parties.
During the term of the Mirador Agreement, Mirador will (a) provide the Company with corporate consulting services on a best efforts basis in connection with mergers and acquisitions, corporate finance, corporate finance relations, introductions to other financial relations companies and other financial services; (b) use its best efforts to locate and identify to private and/or public companies for potential merger with or acquisition by us; (c) contact our existing stockholders, responding in a professional manner to their questions and following up as appropriate; and (d) use its best efforts to introduce us to various securities dealers, investment advisors, analysts, funding sources, and other members of the financial community with whom it has established relationships, and generally assist the Company in our efforts to enhance its visibility in the financial community (the “Services”).
In consideration of Mirador’s agreement to provide the Services, the Company issued 250,000 shares of our common stock (the “Shares”) to Mirador. Mirador represented that it is an “Accredited Investor” as defined under Regulation D of the United States Securities Act, as amended (the “Securities Act”).
Prepaid Consulting, Net of Amortization and Impairment
NOTE 3 - LOANS PAYABLE
These loans are unsecured, non-interest bearing, and are due upon demand.
NOTE 4 - PROVISION FOR INCOME TAXES
The provision for income taxes for the period ended March 31, 2012 represents the minimum state income tax expense of the Company, which is not considered significant. Tax returns are open to IRS examination for three years from date of filing.
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company currently rents administrative office space under a monthly renewable contract.
Litigation
The Company is not presently involved in any litigation.
NOTE 6 - GOING CONCERN
Future issuances of the Company’s equity or debt securities will be required in order for the Company to continue to finance its operations and continue as a going concern. The Company’s present revenues are insufficient to meet operating expenses.
The financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $691,456 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful completion of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
NOTE 7 - STOCK ISSUANCES
On June 2, 2009, the Company’s Board of Directors approved a private placement offering under Regulation “S” of up to 5,000,000 units at a price of $0.02 per unit, for total proceeds of up to $100,000. Each unit consists of one share of the Company’s common stock and one share purchase warrant entitling the subscriber to purchase an additional share of the Company’s common stock for a period of two years following the date of issuance at an exercise price of $0.05 per share.
On September 11, 2009, the Company received $25,000 as an advance on the purchase of 1,250,000 units under this private placement offering. The shares and the share purchase warrants had not been issued as of March 31, 2012, and the advance is included as a current liability in the financial statements.
On October 15, 2009, the Company received an additional $25,000 as an advance on the purchase of 1,250,000 units under this private placement offering. The shares and the share purchase warrants had not been issued as of March 31, 2012, and the advance is included as a current liability in the financial statements.
On July 12, 2010, the Company received an additional $13,333 as an advance on the purchase of 666,650 units under a private placement offering. The shares and the share purchase warrants had not been issued as of March 31, 2012, and the advance is included as a current liability in the financial statements.
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - STOCK ISSUANCES - CONTINUED
On October 18, 2010, the Company received an additional $20,000 as an advance under a private placement offering that was dated June 16, 2010. The shares and the share purchase warrants had not been issued as of March 31, 2012, and the advance is included as a current liability in the financial statements.
On September 1, 2010, the Company also issued 3,000,000 shares in accordance with its marketing agreement with United Nature Inc. As of March 31, 2012, 2,000,000 of these shares were in escrow.
On March 6, 2012, the Company issued 250,000 shares in accordance with its consulting agreement with Mirador.
NOTE 8 - AGREEMENT WITH UNITED NATURE INC.
On September 1, 2010, the Company entered into a carbon offset marketing agreement dated August 14, 2010 (the “Carbon Offset Marketing Agreement”) with United Nature Inc. (“United Nature”) whereby United Nature granted the Company the exclusive rights to market and sell all carbon offsets generated on Plantations owned by United Nature for a period of ten years. Under the terms of the Carbon Offset Marketing Agreement, the Company issued 3,000,000 shares of common stock to be distributed according to the following schedule:
a.
500,000 shares on execution of the agreement;
b.
500,000 shares on the first anniversary of the agreement;
c.
500,000 shares on the second anniversary of the agreement;
d.
500,000 shares on the third anniversary of the agreement;
e.
500,000 shares on the fourth anniversary of the agreement; and
f.
500,000 shares on the fifth anniversary of the agreement.
The term of the agreement commenced on the execution of the agreement and will continue for a period of ten years renewable at the Company’s option for an additional ten years.
Proceeds from the sales of carbon offsets will be split 50/50 after deduction of transaction costs incurred by the Company to have the carbon offsets certified by a credible certified verifier. United Nature has also agreed to assist the Company in signing up plantations managed by United Nature and other plantations within the Republic of Panama not owned or managed by United Nature. In such a case the Company will share proceeds with United Nature on the same basis as proceeds from the sale of carbon offsets from plantations owned by United Nature.
If the Company is unable to produce cumulative proceeds for United Nature of $100,000 USD by the fifth anniversary of the Carbon Offset Marketing Agreement, United Nature may grant non-exclusive distribution rights to other carbon offset marketers for the remainder of the term. If United Nature grants non-exclusive distribution rights to other carbon offset marketers pursuant to the terms of the Carbon Offset Marketing Agreement, United Nature must return 50% of all securities issued under the Carbon Offset Marketing Agreement to the Company.
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - AGREEMENT WITH UNITED NATURE INC. - CONTINUED
United Nature’s Plantation
United Nature is located in the Republic of Panama. They manage sustainable teak plantations and invest in buying rainforest for conservation. The location of the project is Canglon Abajo, County of Yaviza, District of Pinogana, Providence of Darien, Panama. On the West, it borders the Pan American Highway, on the East is the Chucunaque River.
Marketing Rights, Net of Amortization
NOTE 9 - ADVANTAG AQUISITION
Advantag Acquisition
On March 27, 2012, we entered into a letter of intent (the “Letter of Intent”) for the acquisition of Advantag AG (“Advantag”), a German based company which is engaged in the business of marketing and trading carbon credits and is a member of a number of European carbon exchanges, including the Carbon Trade Exchange London / Melbourne (a leading exchange for sale of voluntary credits), the Green Market Exchange of the Bavarian Exchange in Munich, Climex in the Netherlands and the KBB Bratislava. The combination with Advantag will assist us in marketing of the carbon offsets generated by the United Nature projects and will allow us to achieve its longer term plan to join carbon exchanges and market other forms of carbon credits.
Under the terms of the Letter of Intent, we will issue to the shareholders of Advantag such number of our shares as shall be equal to 60% of the number of our outstanding shares resulting in a reverse takeover of us. Of the shares to be issued to Advantag, 75% will be held in escrow to be released based on Advantag’s gross carbon credit sales over the next 5 years on the basis of one share for each 2 Euros of carbon credit sales.
Closing will be subject to satisfactory due diligence by us, preparation of U.S. GAAP financials of Advantag, and the entry into a formal agreement (the “Formal Agreement”) no later than April 10, 2012. In addition, closing will be subject to us having cash of not less than $500,000 and no significant liabilities at closing (the “Financial Requirements”). At closing, Advantag’s management will assume management of us and a majority of our directors will be directors nominated by Advantag.
As of the date of this filing we have not entered into the Formal Agreement. Advantag will not enter into the Formal Agreement until we have met the Financial Requirements. We have an agreement in principal with Advantag to extend the closing deadline of the Letter of Intent in order to allow arranging for financing that will enable us to meet the Financial Requirements.
There is no assurance that the parties will enter into the Formal Agreement. There are no assurances that the business combination with Advantag will result in sales or increased sales of carbon offsets by Greenlite. Greenlite has recently commenced to market carbon offsets through its website and there is no assurance that such marketing efforts will be successful.
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Recently issued accounting pronouncements will have no significant impact on the Company and its reporting methods.
NOTE 11 - SUBSEQUENT EVENTS
As of July 10, 2012, all stock had been issued in accordance with the stock subscription agreements in effect at March 31, 2012.
On June 22, 2012, the Company executed a 4:1 forward split of its authorized and outstanding stock.
As of the date of this filing, no formal agreement had been entered into with Advantag.
Executive Services Agreement
On April 4, 2012, the Companyentered into an executive services agreement (the “BlueWater Agreement”), with BlueWater Advisory Group, LLC (“BlueWater”) and Bryan Crane (“Crane”). Under the terms of the BlueWater Agreement, BlueWater agreed to provide the services of Crane to act as the Company’s Vice President and as a director and BlueWater was to receive $2,000 US each month the Agreement was in effect.
In addition, the Company issued 500,000 pre-Split (2,000,000 post-Split) shares of our common stock to BlueWater and granted Crane 400,000 pre-Split (1,600,000 post-Split) incentive options to purchase shares of the Company’s common stock at a price of $0.11 pre-Split ($0.0275 post-Split) per share until April 4, 2014 in accordance with the 2012 Stock Incentive Plan. BlueWater represented that it was an “accredited investor” as that term is defined under Rule 501 of Regulation D promulgated under the Securities Act.
On April 4, 2012, Crane we appointed Crane as the Company’s Vice President and as a director. On June 14, 2012, Crane resigned from his position as Vice President and as a director. As a result of his resignation, Crane’s stock options expired on July 14, 2012.
SUPPLEMENTAL STATEMENT
GREENLITE VENTURES INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATING EXPENSES
See Notes to Financial Statements
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We carried out an evaluation 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, 2012 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.
Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the year ended March 31, 2012 fairly present our financial condition, results of operations and cash flows in all material respects.
Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:
Insufficient Resources: We have an inadequate number of personnel with requisite expertise in the key functional areas of finance and accounting.
Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.
Lack of Audit Committee & Outside Directors on the Company’s Board of Directors: We do not have a functioning audit committee and outside directors on the Company’s Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) may consider appointing outside directors and audit committee members in the future.
Management, including our Chief Executive Officer and Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2012 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that the our controls and procedures will prevent all potential errors 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.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
As of the date of this filing, we have not entered into a formal agreement for the acquisition of Advantag under the Letter of Intent. Advantag has agreed in principle to extend the closing deadline of the Letter of Intent in order to allow to arrange for financing that will enable us to meet the financial requirements of having cash of not less than $500,000 and no significant liabilities at closing. See ITEM 1. BUSINESS: Advantag Acquisition above.
We have not sold any offsets on our website as of the date of this filing. We believe this is primarily a result of (i) website issues, including the fact that we do not have direct credit card payment processing, consumer reluctance to use our PayPal payment processing, and technical difficulties associated with our website coding and PayPal payment processing; (ii) the fact that we have been primarily focused on entering into a formal agreement for the acquisition of Advantag (see Item 1. Business - Advantag Acquisition above); and (iii) a lack of consumer awareness of our carbon offsets offering. There is no assurance that we will ever sell any carbon offsets on our website.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name and positions of our sole executive officer and director.
Name Age Positions
Howard Thomson Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director
Set forth below is a brief description of the background and business experience of our sole executive officer and director:
Howard Thomson has been our Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and our sole director since February 16, 2008. Mr. Thomson was employed from 1981 to 1998 in senior management positions with the Bank of Montreal, including 5 years as Branch Manager, 4 years as Regional Marketing Manager and 5 years as Senior Private Banker. Mr. Thomson retired from the Bank of Montreal in 1998. From February, 1999 to August 2006, Mr. Thomson served as a director and officer of Royalite Petroleum Company Inc. (formerly Worldbid Corporation), a company that specialized in international business-to-business and government-to-business facilitation service during Mr. Thomson’s term as a director and officer. Mr. Thomson currently serves as the sole executive officer and sole director of Terrace Ventures Inc., a public company quoted on the OTC Bulletin Board, engaged in the exploration of mineral properties.
SIGNIFICANT EMPLOYEES
We have no significant employees other than our sole executive officer and director.
TERMS OF OFFICE
Our sole director is elected to hold office until the next annual meeting of the shareholders and until his respective successor(s) has been elected and qualified. Our sole executive officer is appointed by our board of directors and holds office until removed by our board of directors or until his successor(s) is appointed.
AUDIT COMMITTEE
Mr. Thomson is our sole director. As a result, we do not maintain a separately-designated standing audit committee. As a result, our sole director acts as our audit committee. Mr. Thomson does not meet the definition of an “audit committee financial expert.” We believe that the cost related to appointing a financial expert to our board of directors at this time is prohibitive.
CODE OF ETHICS
We adopted a Code of Ethics applicable to our officers and directors which is a "code of ethics" as defined by applicable rules of the SEC. Our Code of Ethics was included as an exhibit to our Annual Report on Form 10-KSB for the fiscal year ended March 31, 2006, filed on June 29, 2006. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our Chief Executive Officer, Chief Financial Officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a current report on Form 8-K filed with the SEC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than 10% of a registered class of our securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of the copies of such forms received by us, we believe that, during the last fiscal year, all Reporting Persons complied with all Section 16(a) filing requirements applicable to them.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid or accrued to our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K, and to our directors, during our last two completed fiscal years.
Note:
(1) On February 16, 2008, we entered into a management consulting agreement with Mr. Thomson, our sole executive officer and director, pursuant to which Mr. Thomson agreed to provide us with consulting services in consideration of which we agreed to pay Mr. Thomson $750 per month.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
As at March 31, 2012, we did not have any outstanding equity awards.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
EQUITY COMPENSATION PLANS
The following table sets forth certain information concerning all equity compensation plans previously approved by stockholders and all previous equity compensation plans not previously approved by stockholders, as of the most recently completed fiscal year.
Equity Compensation Plan Information
Plan Category
Number of Securities to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(a) Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants and
Rights
(b)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding Securities
Reflected in column (a))
(c)
Equity Compensation Plans Approved By Security Holders Not Applicable Not Applicable Not Applicable
Equity Compensation Plans Not Approved By Security Holders
Not Applicable Not Applicable 3,650,000 pre-Split (14,600,000 post-Split)
2011 Stock Option Plan
Effective March 30, 2012, we adopted the 2012 Stock Incentive Plan (the “2012 Plan"). The 2012 Plan allows us to grant certain options to our directors, officers, employees and eligible consultants. The purpose of the 2012 Plan is to enhance our long-term stockholder value by offering opportunities to our directors, officers, employees and eligible consultants to acquire and maintain stock ownership in us in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in our service.
The 2012 Plan allows us to grant options to our officers, directors and employees. In addition, we may grant options to individuals who act as our consultants, so long as those consultants do not provide services connected to the offer or sale of our securities in capital raising transactions and do not directly or indirectly promote or maintain a market for our securities.
A total of 3,650,000 pre-Split (14,600,000 post-Split) shares of our common stock are available for issuance under the 2012 Plan. We may increase the maximum aggregate number of shares that may be optioned and sold under the 2012 Plan provided the maximum aggregate number of shares that may be optioned and sold under the 2012 Plan shall at no time be greater than 15% of the total number of shares of common stock outstanding.
The 2012 Plan provides for the grant of incentive stock options and non-qualified stock options. Incentive stock options granted under the 2012 Plan are those intended to qualify as “incentive stock options” as defined under Section 422 of the Internal Revenue Code. However, in order to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code, the 2012 Plan must be approved by our stockholders within 12 months of its adoption. The 2012 Plan has not been approved by our stockholders. Non-qualified stock options granted under the 2012 Plan are option grants that do not qualify as incentive stock options under Section 422 of the Internal Revenue Code.
Options granted under the 2012 Plan are non-transferable, other than by will or the laws of descent and distribution.
The 2012 Plan terminates on March 30, 2022, unless sooner terminated by action of our Board of Directors. No option is exercisable by any person after such expiration. If an award expires, terminates or is canceled, the shares of our common stock not purchased thereunder shall again be available for issuance under the 2012 Plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of July 11, 2012 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers (as defined under Item 402(m)(2) of Regulation S-K), and (iii) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
Note:
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding. As of July 11, 2012, there were 100,466,664 shares of the Company’s common stock issued and outstanding.
CHANGES IN CONTROL
We are not aware of any arrangement which may result in a change in control in the future.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
RELATED TRANSACTIONS
None of the following persons has any direct or indirect material interest in any transaction to which we were or are a party during the last two fiscal years, or in any proposed transaction to which we propose to be a party:
(a)
any director or executive officer;
(b)
any nominee for director;
(c)
any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or
(d)
any immediate family member, including any spouse, child, parent, step-child, step-parent, sibling or in- law, of any of the foregoing.
DIRECTOR INDEPENDENCE
Our common stock is quoted on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. Under NASDAQ Rule 5605(a)(2), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Our sole director, Howard Thomson, is also our sole executive officer. As a result, we do not have any independent directors.
As a result of our limited operating history and minimal resources, our management believes that it will have difficulty in attracting independent directors. In addition, we would likely be required to obtain directors and officers insurance coverage in order to attract and retain independent directors. Our management believes that the costs associated with maintaining such insurance is prohibitive at this time.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The aggregate fees billed for the two most recently completed fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal periods were as follows:
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
The following exhibits are either provided with this Annual Report or are incorporated herein by reference:
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GREENLITE VENTURES INC.
Date: July 12, 2012 By: /s/ Howard Thomson
HOWARD THOMSON
President, Secretary, Treasurer, Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive Officer and Principal Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: July 12, 2012 By: /s/ Howard Thomson
HOWARD THOMSON
President, Secretary, Treasurer, Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive Officer and Principal Accounting
Officer)