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EX-32.2 - Green Technology Solutions, Inc.v202666_ex32-2.htm
EX-31.1 - Green Technology Solutions, Inc.v202666_ex31-1.htm
EX-32.1 - Green Technology Solutions, Inc.v202666_ex32-1.htm
EX-31.2 - Green Technology Solutions, Inc.v202666_ex31-2.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
 
FORM 10-Q
 
x
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2010
 
o
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from ___ to ____
 
Commission File Number 1-11248
 
GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
(Exact name of Registrant as specified in its charter)
 
Delaware
 
84-0938688
 
(State or other jurisdiction of
 
(I.R.S. Employer
 
incorporation or organization)
 
Identification Number)
 

2880 Zanker Road, Suite 203
     
San Jose, CA
 
95134
 
(Address of principal executive offices)
 
(Zip Code)
 
       
 
Registrant’s telephone number, including area code: (408) 432-7285
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x   No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer                                         o                                           Accelerated filer o
Non-accelerated filer                                           o                                           Smaller reporting company x
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o  No x
 
As of November 15, 2010, the Registrant had 26,747,827 shares of common stock $.001 par value issued and outstanding.
 

 
GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
 
FORM 10-Q
TABLE OF CONTENTS
 
 
Page
PART I. FINANCIAL INFORMATION
3
     
Item 1.
Financial Statements (unaudited)
3
     
 
Balance Sheets – September 30, 2010 and December 31, 2009
3
     
 
Statements of Operations and Comprehensive Loss - for the three and nine months ended September 30, 2010 and 2009
4
     
 
Statements of Changes in Stockholder’s Equity (Capital Deficit) – September 30, 2010 and December 31, 2009
5
     
 
Statements of Cash Flows - for the six months ended September 30, 2010 and 2009
6
     
 
Notes to the Unaudited Financial Statements
7
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
14
     
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
17
     
Item 4.
Controls and Procedures
17
     
PART II.
OTHER INFORMATION
18
     
Item 1.
Legal Proceedings
18
     
Item 1A.
Risk Factors
18
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
18
     
Item 3.
Defaults upon Senior Securities
18
     
Item 4.
[Removed and Reserved]
18
     
Item 5.
Other Information
18
     
Item 6.
Exhibits
18
     
SIGNATURES
19
 
2

 
PART I.
 
GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
BALANCE SHEETS
(Expressed in US Dollars)

   
September 30,
2010
   
December 31,
2009
 
ASSETS
 
(UNAUDITED)
       
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 29,341     $ 38  
                 
TOTAL ASSETS
  $ 29,341     $ 38  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES
               
Accounts payable
  $ 52,597     $ -  
Other accounts payable – related party
    -       382,365  
Interest payable – related party
    -       22,476  
Advances payable – related party
    109,471       -  
Other accounts payable
    32,276       28,276  
Total current liabilities
    194,344       433,117  
                 
Convertible notes payable
    411,465       -  
                 
TOTAL LIABILITIES
    605,809       433,117  
                 
STOCKHOLDERS’ EQUITY
               
Common Stock, $.001 par value, 75,000,000 authorized, 26,747,827 and 23,690,037 issued and outstanding as of September 30, 2010 and December 31, 2009, respectively
    26,748       23,690  
Additional Paid-in Capital
    6,653,665       6,626,723  
Retained earnings (Accumulated deficit)
    (7,256,881 )     (7,083,492 )
Total stockholders' equity (deficit)
    (576,468 )     (433,079 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 29,341     $ 38  
 
See notes to condensed consolidated financial statements.

 
3


GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
STATEMENTS OF OPERATIONS
(Expressed in US Dollars except share amounts)
(UNAUDITED)

   
For the nine months ended
   
For the three months ended
 
   
September 30,
   
September 30,
 
   
2010
   
2009
   
2010
   
2009
 
OPERATING EXPENSES
                       
Sales, general and administrative expenses
  $ 152,641     $ 272,008     $ 132,727     $ 34,240  
                                 
LOSS FROM OPERATIONS
    (152,641 )     (272,008 )     (132,727 )     (34,240 )
                                 
OTHER INCOME (EXPENSE)
                               
Interest expense, net
    (20,748 )     (116,123 )     (10,401 )     -  
                                 
Net loss from continuing operations
    (173,389 )     (388,131 )     (143,128 )     (34,240 )
                                 
DISCONTINUED OPERATIONS
                               
Gain on disposal of discontinued segment
    -       3,302,948       -       -  
                                 
NET INCOME (LOSS)
  $ (173,389 )   $ 2,914,817     $ (143,128 )   $ (34,240 )
                                 
NET INCOME (LOSS) PER COMMON SHARE – Basic and fully diluted
                               
Continuing operations
  $ (0.01 )   $ (0.02 )   $ (0.01 )   $ -  
Discontinued operations
    -       0.14       -       -  
Net income (loss)
  $ (0.01 )   $ 0.12     $ (0.01 )   $ -  
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
    24,500,721       23,616,187       26,095,653       23,616,187  
 
See notes to condensed consolidated financial statements.
4

 
GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(CAPITAL DEFICIT)
(Expressed in US Dollars except share amounts)
UNAUDITED
 
   
Common Stock
     Additional Paid-In    
Accumulated  
   
Equity
 
   
Shares
   
Amount
   
Capital
   
Deficit
   
Total
 
BALANCE, DECEMBER 31, 2009
    23,690,037     $ 23,690     $ 6,626,723     $ (7,083,492 )   $ (433,079 )
                                         
Correction in number of outstanding shares
    57,790       58       (58 )     -       -  
Issuance of shares for conversion of note payable
    3,000,000       3,000       27,000       -       30,000  
Net loss for the six months
    -       -       -       (173,389 )     (173,389 )
                                         
BALANCE, SEPTEMBER 30, 2010
    26,747,827     $ 26,748     $ 6,653,665     $ (7,256,881 )   $ (576,468 )
 
See notes to condensed consolidated financial statements.
 
5

 
GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
STATEMENTS OF CASH FLOWS
(Expressed in US Dollars)
UNAUDITED

   
For the nine months ended
September 30,
 
   
2010
   
2009
 
             
CASH (USED IN) PROVIDED BY  OPERATING ACTIVITIES:
           
Net loss
  $ (173,389 )   $ 2,914,817  
Adjustments to reconcile net loss to net cash in operating activities:
               
Gain on disposal of discontinued segment
    -       (3,302,948 )
Changes in operating assets and liabilities:
               
  Accounts payable and accrued liabilities
    52,597       -  
  Accounts payable – related party
    -       19,995  
  Interest payable – related party
    -       116,123  
  Accrued interest payable
    20,748       -  
NET CASH USED IN OPERATING ACTIVITIES
    (100,044 )     (252,013 )
                 
CASH PROVIDED BY FINANCING ACTIVITIES:
               
Proceeds from issuance of loans to related parties
    19,876       86,925  
Proceeds from advances
    109,471       -  
Proceeds from issuance of common stock
    -       147,700  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    129,347       234,625  
                 
CASH USED IN INVESTING ACTIVITIES
    -       -  
                 
INCREASE (DECREASE) IN CASH
    29,303       (17,388 )
CASH, at the beginning of the period
    38       17,428  
                 
CASH, at the end of the period
  $ 29,341     $ 40  
                 
Supplemental Disclosures of Cash Flow Information:
               
Cash paid during the period for:
               
Interest
  $ -     $ -  
Taxes
  $ -     $ -  
                 
Noncash investing and financing transactions:
               
Refinancing of demand notes to convertible notes payable
  $ 420,717     $ -  
Issuance of stock for conversion of convertible notes payable
  $ 30,000          
 
See notes to condensed consolidated financial statements.
 
6


GREEN TECHNOLOGY SOLUTIONS, INC.
(formerly Sunrise Energy Resources, Inc.)
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
 
1.  INTERIM FINANCIAL STATEMENTS AND NATURE OF BUSINESS

The accompanying unaudited interim financial statements include all adjustments, which in the opinion of management are necessary in order to make the accompanying financial statements not misleading, and are of a normal recurring nature.  However, the accompanying unaudited financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows and stockholders’ equity in conformity with generally accepted accounting principles.  Except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in our annual financial statements for the period ended December 31, 2009 included in Form 10-K.  Operating results for the period ended September 30, 2010 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2010.

Until December 31, 2008 all operating activities of Green Technology Solutions, Inc. (formerly Sunrise Energy Resources Inc.) (the “Company”) were conducted through its wholly owned Ukrainian subsidiaries, TOV Energy-Servicing Company EskoPivnich (“EskoPivnich” or “EP”) and Pari(“Pari”) both formed as Ukrainian Closed Joint Stock Companies ("CJSC").EskoPivnich and Pari were engaged in oil and gas exploration and development in the country of Ukraine.  While the Company had 8 leases which were licensed to the Company’s wholly owned subsidiaries EskoPivnich and Pari, the production activities were limited to Karaikozovsk field in Eastern Ukraine. In addition to selling oil and gas produced from its Karaikozovsk lease, the Company purchased oil and gas from third parties. The purchased hydrocarbons were subsequently resold to third parties in order to enable EskoPivnich to fulfill its monthly delivery obligations.  On October 26, 2010, the Company changed its name to Green Technology Solutions, Inc.

Green Technology Solutions Inc. cultivates early stage, breakthrough green technologies and works to develop them into major market products that can capture maximum revenue. The company’s mission is to focus its resources on discovering the best new innovative technologies before the competition does. This allows Green Technology Solutions Inc. to work with the best young companies and inventors to deliver profitable innovation in the real world. The company concentrates its efforts on developing practical, useful products that make a real and measurable difference in the near term. The Company has located its new offices in the Silicon Valley city of Palo Alto, which is home to technology stalwarts such as Hewlett-Packard, VMware, and Facebook and is a proven synergistic center of successful cutting edge technology development.
 
The Company currently has its headquarters at 2880 Zanker Road, Suite 203, San Jose, California 95134. As of September 30, 2010 the Company has one employee.
 
2.  PRESENTATION OF FINANCIAL STATEMENTS
 
Basis of Presentation–The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
 
Going concern — The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As shown in the financial statements, the Company incurred a net loss of $173,389 during the nine months ended September 30, 2010, while the Company’s current liabilities exceeded its current assets by $165,003.
 
7

 
In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis by raising additional funds through debt or equity financing. The Company expects to satisfy its cash requirements by obtaining additional loans; however, there is no assurance that additional capital will be available to the Company when needed and on acceptable terms.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
 
Use of Estimates and Assumptions– The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.
 
3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounts Receivable – Accounts receivable are stated at their net realizable value after deducting provisions for uncollectible amounts.

Cash and Cash Equivalents – Cash includes petty cash and cash held on current bank accounts. Cash equivalents include short-term investments with an original maturity of three months or less that are readily convertible to known amounts of cash which are subject to insignificant risk of changes in value. Cash and cash equivalents as of September 30, 2010 and December 31, 2009 consisted mainly of USD denominated current accounts held at major banks.
 
Loans and Other Borrowings– All loans and borrowings are recorded at the proceeds received, net of direct issue costs.
 
Borrowing Costs– Borrowing costs are recognized as an expense in the period in which they are incurred.

Trade and Other Payables– Liabilities for trade and other amounts payable are stated at their nominal value.

Income Taxes– Income tax has been computed based on the results for the year as adjusted for items that are non-assessable or non-tax deductible.

The Company has adopted Financial Accounting Standards Board (“FASB”) authoritative guidance, under which the deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its tax assets and liabilities on a net basis.

Deferred tax is calculated at rates that are expected to apply to the period when the asset is realized or the liability is settled. It is charged or credited to the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

Fair Value of Financial Instruments – Authoritative guidance issued by the FASB requires disclosure of the fair value of certain financial instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of financial instruments approximate their carrying values due to the immediate or short term maturity of these financial instruments.
 
8


Earnings (Loss) per Share – Earnings (loss) per share are computed in accordance with authoritative guidance issued by the FASB . Basic earnings (loss) per share are calculated by dividing the net income (loss) available to common stockholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity. In a loss year, dilutive common equivalent shares are excluded from the loss per share calculation as the effect would be anti-dilutive.
 
Comprehensive Income (Loss) - Authoritative guidance issued by the FASB  establishes standards for reporting and displaying of comprehensive income, its components and accumulated balances. Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements. Foreign exchange translation gains and losses of the Company are reflected in comprehensive gains and losses.
 
4.  OTHER ACCOUNTS PAYABLE AND ACCRUALS
 
Other accounts payable and accruals as of September 30, 2010 and December 31, 2009 consisted of the following:

   
September 30,
2010
   
December 31,
2009
 
             
Professional Services
  $ 32,276     $ 28,276  
                 
Related parties
               
Advances from shareholders
    -       382,365  
                 
Total
  $ 32,276     $ 410,641  

The amounts of $32,276 and $28,276were due to the Company’s auditor, transfer agent and financial printer as of September 30, 2010 and December 31, 2009, respectively.  The amount of $382,365 owed as of December 31, 2009 represents advances from shareholders with no specific terms paid to the Company during 2005-2006 and 2009-2010. As discussed in Note 5 below, those amounts were converted into a convertible note payable during the nine months ended September 30, 2010.
 
9

 
5. CONVERTIBLE NOTE PAYABLE
 
On April 1, 2010, the lenders on the Company’s outstanding related party demand notes instructed the Company to repay those notes along with accrued interest at the earliest possible date.  The Company has been unable to obtain replacement financing to repay those notes.  Therefore the Company and the lenders agreed to refinance the debt as described below.
 
On May 23, 2010, the Company entered into a 10% Subordinated Convertible Note payable with Infox Ltd. (a related party) in the amount of $297,567 in repayment of demand notes in the amount of $275,091 and accrued interest of $22,476.  The note bears interest at 10% per annum, matures on March 31, 2013 and is convertible into shares of common stock at $0.01 per share.  The note requires quarterly payments of interest or, upon agreement of both parties, the interest may be capitalized to principal each quarter.  There have been no payments of interest on the note.  All interest accrued during the nine months ended September 30, 2010 was capitalized to principal.
 
On May 23, 2010, the Company entered into a 10% Subordinated Convertible Note payable with Zaccam Trading Ltd. (a related party) in the amount of $109,441 in repayment of demand notes in the same amount.  The note bears interest at 10% per annum, matures on March 31, 2013 and is convertible into shares of common stock at $0.01 per share.  The note requires quarterly payments of interest or, upon agreement of both parties, the interest may be capitalized to principal each quarter.  There have been no payments of interest on the note.  All interest accrued during the nine months ended September 30, 2010 was capitalized to principal.
 
On June 2, 2010, the Company entered into a 10% Subordinated Convertible Note payable with Zaccam Trading Ltd. (a related party) in the amount of $13,709 in repayment of demand notes in the same amount.  The note bears interest at 10% per annum, matures on March 31, 2013 and is convertible into shares of common stock at $0.01 per share.  The note requires quarterly payments of interest or, upon agreement of both parties, the interest may be capitalized to principal each quarter.  There have been no payments of interest on the note.  All interest accrued during the nine months ended September 30, 2010 was capitalized to principal.
 
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 three notes listed above and concluded that the revised terms constituted a debt modification rather than a debt extinguishment because the present value of the cash flows under the terms of each of the new instruments was less than 10% from the present value of the remaining cash flows under the terms of the original notes.  No gain or loss on the modifications was required to be recognized.
 
The Company evaluated the terms of the three notes 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 feature 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 notes and was deemed to be greater than the market value of underlying common stock at the inception of the note.  Therefore, no beneficial conversion feature was recognized.
 
On June 4, 2010, Infox Ltd. and Zaccam Trading Ltd. each assigned their outstanding 10% Subordinated Convertible Notes to two unrelated third parties.  No other terms of the notes were modified.
 
On July 20, 2010, the holder of the 10% Subordinated Convertible Note Payable originally issued to Infox Ltd. elected to convert principal in the amount of $30,000 into 3,000,000 shares of common stock.
 
6.      ADVANCES PAYABLE – RELATED PARTY
 
During the nine months ended September 30, 2010, the Company has received working capital advances in the amount of $109,471 from an entity which also provides back office support services to the Company.  These advances are non-interest bearing and payable upon demand.  The advances are expected to be converted into interest bearing notes payable during the fourth quarter of 2010.

10

 
7.      SHAREHOLDERS’ EQUITY
 
No dividends were declared or paid by the Company during the periods ended September 30, 2010 and December 31, 2009.

During the nine months ended September 30, 2010, the Company’s transfer agent noted an error in the number of outstanding shares.  As a result, the number of outstanding shares was increased by 57,790 shares.  The error in the number of outstanding shares was identified in the process of switching transfer agents during June 2010.  The Company does not consider the prior error material.

On July 20, 2010, the Company issued 3,000,000 shares of common stock for the conversion of $30,000 of principal of the 10% Subordinated Convertible Notes Payable.
 
8.      INCOME/LOSS PER COMMON SHARE
 
Basic net loss per common share has been computed based on the weighted-average number of shares of common stock outstanding during the applicable period. In accordance with SFAS No. 128 “Earnings per share”, diluted net income per common share is computed based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the applicable period, as if all potentially dilutive securities were converted into common stock. However, according to paragraph 16 of SFAS No. 128, no potential common shares shall be included in the computation of any diluted per share amount when a loss from continuing operations exists.

   
Nine Months Ended
September 30,
 
   
2010
   
2009
 
   
(Unaudited)
(in US dollars, except
Per share amounts)
 
             
Loss from continuing operations
  $ (173,389 )   $ (388,131 )
Income from discontinued operations
    -       3,302,948  
Net income/(loss) attributable to common stockholders
  $ (173,389 )   $ 2,914,817  
                 
Weighted average common shares outstanding, basic
    24,500,721       23,616,187  
Loss from continuing operations per common share, basic
    (0.01 )     (0.02 )
Income/(Loss) from discontinued operations per common share, basic
    0.00       0.14  
Income/(Loss) per common share, basic
  $ (0.01 )   $ 0.12  
                 
Weighted average common shares outstanding, diluted
    24,500,721       23,616,187  
Loss from continuing operations per common share, diluted
    (0.01 )     (0.02 )
Income/(Loss) from discontinued operations per common share, diluted
    0.00       0.14  
Loss per common share, diluted
  $ (0.01 )   $ 0.12  
                 
 
9.      RELATED PARTIES
 
Related parties include shareholders and entities under common ownership. Transactions with related parties are performed on terms that are comparable to those available to unrelated parties. For details of related party balances outstanding as of September 30, 2010 and December 31, 2009 see Notes 4 and 5. Our related parties are CJSC Infox, Zaccam Trading, Ltd.. and Burisma Holdings Limited.
 
11


On May 12, 2010, Mr. David A. Melman, the Сhairman of the Board of Directors of the Company, notified the Company of his decision to resign as director and Chairman of the Board of Directors of the Company. Mr. Melman’s resignation was effective immediately. Mr. Melman’s resignation was not based on any disagreement with the Company, known to any executive officer or director of the Company, on any matter relating to the Company’s operations, policies or practices.
 
10.     COMMITMENTS AND CONTINGENCIES
 
Environmental remediation – Under Ukrainian law, the Company is obligated to meet certain environmental remediation obligations related to its former oil and gas production activities. This amount cannot be estimated at this time but is considered not to be a material amount. In accordance with the share purchase agreement executed by the Company and Millington Solutions LLC, Millington assumed all environmental remediation obligations relating to the oil and gas properties previously held by the Company through its former subsidiaries EskoPivnich and Pari.
 
Litigation– The Company has been and continues to be the subject of legal proceedings and adjudications from time to time. Management believes that the resolution of all business matters which will have a material impact on the Company’s financial position or operating results have been recorded.
 
11.      RISK MANAGEMENT POLICIES
 
Management of risk is an essential element of the Company’s operations. The main risks inherent to the Company’s operations are those related to credit risk exposures and market movements in interest rates. A description of the Company’s risk management policies in relation to those risks is provided below.
 
Credit risk–The Company is exposed to credit risk which is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.
 
Interest rate risk – Interest rate risk arises from the possibility that changes in interest rates will affect the value of a financial instrument.
 
Currently, the Company’s approach to the interest risk limitation is borrowing at fixed rates and for short periods.
 
12.    CHANGE IN CONTROL
 
On June 12, 2010, five purchasers acquired control of 16,503,817 shares of the Company’s issued and outstanding common stock representing approximately 69.67% of the total shares issued and outstanding from Burisma Holdings Limited. The aggregate purchase price for the shares was $270,000. Cambridge Securities of Panama, a Panama Corporation, acquired 12,082,325 shares of common stock, and four other unrelated corporations each acquired control of 1,105,373 shares of common stock.  As a result of this transaction, there has been a change in control of the Company, and Cambridge Securities of Panama is now the Company’s majority shareholder.
 
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In accordance with the transaction described above, effective June 12, 2010 the Company’s directors Konstantin Tsiryulnikov and Leon Golden resigned from their positions. In addition, Konstantin Tsiryulnikov resigned as Chief Executive Officer of the Company and Roman Livson resigned as Chief Financial Officer of the Company. Their resignation was not based on any disagreement with the Company, known to any executive officer or director of the Company, on any matter relating to the Company’s operations, policies or practices. Upon their departure, Dean McCall was appointed as the Company’s sole director, Chief Executive Officer and Secretary.
 
Effective August 6, 2010, Dean McCall, sole Director, CEO and Secretary of the Company, resigned from all positions held with the Company, including resigning from Board service.  There was no disagreement, as defined in 17 CFR 240.3b-7, between the Registrant and Mr. McCall at the time of Mr. McCall's resignation from the Board of Directors.
 
Also on August 6, 2010, the Company appointed John Shearer as sole Director, CEO and Secretary to replace Mr. McCall.  Mr. Shearer will serve as a director until his successor has been elected at the next annual meeting of the Company's shareholders or until his earlier resignation, removal, or death, and Mr. Shearer has not been appointed to any committees of the Board as the Board does not presently have any committees.
 
12.    SUBSEQUENT EVENTS
 
In August 2010, the Company’s shareholders and Board of Directors approved a one-for-200 reverse stock split.  This reverse stock split will not be effective until it is approved by FINRA.  As of November 15, 2010, the reverse split has not been approved by FINRA.
 
On October 26, 2010, the Company changed its name to Green Technology Solutions, Inc.  The primary reason for the name change is to reflect a change in business focus by the Company. 
 
On November 8, 2010, the Company paid $250,000 to acquire the rights to a joint venture agreement with Bio Pulp Works, LLC, a manufacturer of products made from recycled paper products.  Under the terms of agreement, the Company will receive a 49% interest in the joint venture.  The purpose of the joint venture is to expand the sales of Bio Pulp Works into new sales areas or to develop new recycled products which will be manufactured by Bio Pulp Works.  The Company has agreed to contribute $10,000 per month for a term of six months to fund the operations of the joint venture.
 
In order to fund the acquisition, the Company borrowed an additional $250,000 of advances.  The Company is currently negotiating the conversion of these advances into interest bearing notes payable.
 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion should be read in conjunction with the Company's unaudited financial statements and associated notes appearing elsewhere in this Form 10-Q.

As used in this report, the terms "we", "us", "our", the "Company" and "Sunrise" mean Sunrise Energy Resources, Inc., unless otherwise indicated.

Caution Regarding Forward-Looking Information

All statements contained in this Form 10-Q, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions . All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.  These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties described under “Risk Factors” under Part II Item 1A below and in the “Risk Factors” section of our Form 10-K for the fiscal year ended December 31, 2009 that may cause actual results to differ materially.

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

Discussion and Analysis of Financial Condition
 
Change in control

On June 12, 2010, five purchasers acquired control of 16,503,817 shares of the Company’s issued and outstanding common stock representing approximately 69.67% of the total shares issued and outstanding from Burisma Holdings Limited. The aggregate purchase price for the shares was $270,000. Cambridge Securities of Panama, a Panama Corporation, acquired 12,082,325 shares of common stock, and four other unrelated corporations each acquired control of 1,105,373 shares of common stock.  As a result of this transaction, there has been a change in control of the Company, and Cambridge Securities of Panama is now the Company’s majority shareholder.
 
In accordance with the transaction described above, effective June 12, 2010 the Company’s directors Konstantin Tsiryulnikov and Leon Golden resigned from their positions. In addition, Konstantin Tsiryulnikov resigned as Chief Executive Officer of the Company and Roman Livson resigned as Chief Financial Officer of the Company. Their resignation was not based on any disagreement with the Company, known to any executive officer or director of the Company, on any matter relating to the Company’s operations, policies or practices. Upon their departure, Dean McCall was appointed as the Company’s sole director, Chief Executive Officer and Secretary.
 
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Current activities
 
The Company is currently identifying, selecting and cultivating early stage, breakthrough green technologies for the purpose of developing them into major market products that can capture maximum revenue. The Company has already identified several interesting and potentially lucrative new technology endeavors and management is studying these endeavors for their potential inclusion into the Company’s development process. The Company plans to focus its resources on successfully identifying new green technologies that may have the greatest potential to produce the most near term profits. The Company has located its new offices in Silicon Valley city of Palo Alto to increase access to the newest cutting edge technologies available.
 
Cash requirements
 
The Company anticipates it will require around $100,000 to sustain operations and effectively evaluate new business opportunities over the next twelve months. The Company intends to seek to raise these funds through equity and debt financing; however, there is no guarantee that funds will be raised and the Company has no agreements in place as of the date of this filing for any financing.
 
Critical Accounting Policies and Recent Accounting Pronouncements
 
We have identified the policies below as critical to our business operations and the understanding of our financial statements. The impact of these policies and associated risks are discussed throughout Management’s Discussion and Analysis where such policies affect our reported and expected financial results. A complete discussion of our accounting policies is included in Note 3 of the Notes to Financial Statements.
 
Going Concern
 
The accompanying financial statements have been prepared on a going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order for us to continue as a going concern, we require additional financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of financial statements. The Company’s limited revenue history, absence of revenue sources following the sale and discontinuation of its oil&gas business and limited ability to raise funding raise substantial doubt about the Company’s ability to continue as a going concern.

Accordingly, our independent auditors included an explanatory paragraph in their report on the December 31, 2009 financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional notes and disclosures describing the circumstances that lead to this disclosure by our independent auditors.
 
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Use of Estimates
 
The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from these estimates.
 
Revenue Recognition
 
For revenue from product sales, the Company recognizes revenue in accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements” (“SAB 104”). SAB 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured.
 
Criterion (1) is met as every delivery is covered by a separate contract and the title passes to the customer only upon customer’s acceptance at point of destination, which is in compliance with criterion (2). Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered and accepted by its customers. In accordance with the Company’s standard contract terms, once delivered and accepted the product cannot be returned and no claims can be presented to the Company. The Company recognizes revenue on gross basis.
 
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ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk
 
As a smaller reporting company, the Company is not required to provide Part I, Item 3 disclosure.
 
ITEM 4. CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2010. Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer, concluded that our disclosure controls and procedures were effective.The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.  However, management believes that our system of disclosure controls and procedures is designed to provide a reasonable level of assurance that the objectives of the system will be met.

Changes in internal control over financial reporting

Our Chief Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company's operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

The Company’s principal executive officer and principal financial officer has concluded that there were no changes in the Company’s internal controls over the financial reporting or disclosure controls and procedures or in other factors during the last quarter that have materially affected or are reasonably likely to materially affect these controls as of the end of the quarter covered by this report based on such evaluation.
 
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PART II – OTHER INFORMATION
 
ITEM 1.  LEGAL PROCEEDINGS
 
There are no outstanding legal proceedings material to the Company to which the Company or any of its assets are subject, nor are there any such proceedings known to be contemplated. Management believes that the resolution of all business matters which would have a material impact on the Company’s financial position or operating results have been recorded.
 
Item 1A. Risk Factors
 
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risks discussed in our 2009 Annual Report on Form 10-K including Risk Factors of Part I, which risks could materially affect our business, financial condition or future results. There have been no material changes to the risk factors disclosed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2009.  These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. [Removed and Reserved]

N/A

Item 5. Other Information

None
 
Item 6.  EXHIBITS
 
Exhibit
Number
 
Description
   
Incorporation by Reference
 
31.1
 
Rule 13a-14(a) Certification of Chief Executive Officer
 
Filed Herewith
 
         
31.2
 
Rule 13a-14(a) Certification of Chief Financial Officer
 
Filed Herewith
 
         
32.1
 
Section 1350 Certification of Chief Executive Officer
 
Filed Herewith
 
           
32.2
 
Section 1350 Certification of Chief Financial Officer
 
Filed 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.
 
 
Sunrise Energy Resources, Inc.
   
   
 
/s John Shearer
 
Date: November 15, 2010
John Shearer
 
Chief Executive Officer
(Principal Executive, Financial and Accounting Officer)

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