Green Technology Solutions, Inc. - FORM 10-K

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EX-31.1 - EX-31.1 - Green Technology Solutions, Inc.	ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2013

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.

(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 No.)

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common stock, $0.001 par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 þ 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 þ No o

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes o No þ

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	þ

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price on June 30, 2013 was $678,710.

There were 62,425,966 shares of the registrant’s common stock issued and outstanding as of March 27, 2014.

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IMPORTANT INFORMATION REGARDING THIS FORM 10-K

Unless otherwise indicated, references to “we,” “us,” “GTSO” and “our” in this Annual Report on Form 10-K refer to Green Technology Solutions, Inc.

Readers should consider the following information as they review this Annual Report:

Forward-Looking Statements

The statements contained or incorporated by reference in this Annual Report on Form 10-K that are not historical facts are “forward-looking statements” (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include any statement that may project, indicate or imply future results, events, performance or achievements. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expect,” “may,” “will,” “should,” “intend,” “plan,” “could,” “estimate” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.

Given the risks and uncertainties relating to forward-looking statements, investors should not place undue reliance on such statements. Forward-looking statements included in this Annual Report on Form 10-K speak only as of the date of this Annual Report on Form 10-K and are not guarantees of future performance. Although we believe that the expectations reflected in the forward-looking statements are reasonable, such expectations may prove to have been incorrect. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

Except to the extent required by applicable securities laws, we expressly disclaim any obligation or undertakings to release publicly any updates or revisions to any statement or information contained in this Annual Report on Form 10-K, including the forward-looking statements discussed above, to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any statement or information is based.

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GREEN TECHNOLOGY SOLUTIONS, INC.

FORM 10-K

TABLE OF CONTENTS

PART I	4
Item 1. Business	4
Item 1A. Risk Factors	5
Item 1B. Unresolved Staff Comments	5
Item 2. Properties	6
Item 3. Legal Proceedings	6
Item 4. Mine Safety Disclosure	6

PART II	7
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7
Item 6. Selected Financial Data	8
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 7A. Quantitative and Qualitative Disclosures about Market Risk	11
Item 8. Financial Statements and Supplementary	12
Balance Sheets	13
Statements of Operations	14
Statements of Changes in Stockholders’ Equity (Deficit)	15
Statements of Cash Flows	16
Notes to the Financial Statements	17
1. Nature of Business	17
2. Presentation of Financial Statements	17
3. Summary of Significant Accounting Policies	18
4. Chilerecicla Joint Venture	20
5. Convertible Note Payable	20
6. Advances Payable	22
7. Shareholders’ Equity (Deficit)	22
8. Income Taxes	24
9. Subsequent Events	24
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9A. Controls and Procedures	25
Item 9B. Other Information	26

PART III	27
Item 10. Directors, Executive Officers and Corporate Governance	27
Item 11. Executive Compensation	28
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	29
Item 13. Certain Relationships and Related Transactions, and Director Independence	30
Item 14. Principal Accountant Fees and Services	30
Item 15. Exhibits and Financial Statement Schedules	31

SIGNATURES	32

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PART I

ITEM 1. BUSINESS

Company History

Green Technology Solutions, Inc. (“GTSO”, “we”, “us”, “our” or the “Company”) was incorporated as XCL Sunrise, Inc. in the State of Delaware on April 1, 1991. We changed our name to Sunrise Energy Resources, Inc. on November 1, 2004. On October 26, 2010, we changed our name to Green Technology Solutions, Inc.

On September 20, 2012, GTSO formed two subsidiaries for its urban mining and traditional mining operations. The new subsidiaries are GTSO Urban Mining LLC and GTSO Resources LLC.

GTSO is in the business of identifying and acquiring rights in early stage, breakthrough green technologies, with the plan to develop these technologies into marketable products. To date, we have identified the following market segments: (1) the advancement of cleaner world-wide mining technologies, with an emphasis on rare earth and precious metals mining applications, (2) the development of additional markets for environmentally friendly methods of recovering minerals from electronic waste and (3) smart grid technology. Our mission is to focus our resources on discovering the best available new innovative technologies and processes in this industry space and we intend to work with young companies and inventors to deliver innovation in the real world.

In addition to the foregoing, we plan to focus our resources on successfully identifying new green technologies that have greatest potential to produce near term profits. Due to our limited management and employees, we expect to continue to form strategic joint venture relationships with early stage development technology companies whose goals and objectives are similar to ours. Moreover, we anticipate continued use of and reliance upon industry consultants who have the knowledge and expertise in the areas of our existing and future business ventures. As of March 27, 2014, the Company has one employee.

Current Plan of Operations

We are currently identifying possible early stage companies and technology across a range of green technologies and environmentally friendly practices for the purpose of acquiring rights to them, entering into joint venture partnerships and developing them into marketable products.

On June 8, 2012, we signed a joint venture agreement with Diamond V Associates, Inc. to fund the research, planning and development of tungsten and other rare earths and precious metals in North America and Africa. According to the agreement, all profits, losses and other allocations to the joint venture shall be allocated at the conclusion of each fiscal year on a 50:50 basis between GTSO and Diamond V Associates. We will contribute $2,000 per month to the joint venture for working capital for the joint venture’s operations. GTSO reserves the right to reduce or increase this contribution based on performance by Diamond V Associates. If we determine that additional funding is required after projects are identified, we will negotiate the amount of any contribution that we would make with Diamond V Associates. GTSO paid $10,000 during the year as working capital. As of December 31, 2012, we determined that it was necessary to write off the intangible asset related to this joint venture agreement due to the fact the joint venture will need to raise significant additional capital in order to fully realize the value of our claims in the joint venture.

On July 24, 2012, we entered into letter of intent (“LOI”) with CCI Capital SPA with offices in Santiago, Chile to explore acquisition opportunities in Latin America with a focus on urban mining and waste to energy projects. On September 5, 2012, this LOI was expanded into a one year consulting agreement to explore acquisition opportunities in Latin America and Canada. GTSO pays CCI Capital $2,000 per month as a retainer for nominal consulting, negotiation and market research studies in the pursuit of an acquisition focused on urban mining and waste to energy projects.

On October 30 2012, we entered into a purchase agreement with Global Cell Buyers, LLC regarding the acquisition of existing recycling and urban mining methods, brand name, and current operating plans. Global Cell Buyers was acquired by GTSO for the purchase price of $10,000 payable in cash and common stock. The purpose of this acquisition is to expand recycling and urban mining operations from cell phones to other electronic waste for the purpose of mineral and other reusable metal and plastic recovery. GTSO also plans to expand the brand name of Global Cell Buyers leveraging its parent operations Green Technology Solutions, Inc. On November 14, 2012, GTSO rebranded Global Cell Buyers under the name “Global Urban Mining” to build and expand its e-recycling platform within the United States and eventual global expansion plans.

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The purchase price was allocated entirely to intangible assets related to the Global Cell Buyers’ infrastructure plans related to mineral recovery from cell phone waste. Global Cell Buyers had no other tangible assets or liabilities. As of December 31, 2012, we determined that it was necessary to write off the intangible asset related to this acquisition due to the fact that Global Cell Buyers was in the early development stages and did not have adequate operating history to support retaining the intangible asset on the consolidated balance sheet.

On March 4, 2013 we entered into a letter of intent with Sociedad de Reciclaje de Materiales Metalicos, Electrico, Electronicos y Plasticas Limitada (“Chilerecicla”) to explore opportunities with Latin America electronic waste recyclers for the purpose of recovering precious metals, minerals and waste to energy possibilities. Chilerecicla is based near Santiago Chile with significant operations across the country and surrounding regions.

On June 6, 2013 GTSO and Chilerecicla signed a joint venture agreement to evaluate, explore and determine the feasibility of a waste management collection, processing and sales operation wherein GTSO will contribute funding and the initial development of a project to acquire electronics and plastic waste for the purpose of selling metals and plastics reuse while Chilerecicla manages the Latin America operations. Under the terms of the agreement, GTSO commits to fund a minimum of $2,500 of the cash flow requirements of the start-up phase of the operations. Chilerecicla agrees to reserve 30% of the gross proceeds of the business for repayment of the initial contribution. At the end of the start-up phase, Chilerecicla will provide GTSO with a detailed timeline, budget and operational plan for further development. Both parties will have 60 days to agree on an appropriate funding strategy for the next phase. GTSO will have no obligation to continue funding the business.

On September 1, 2013, GTSO and Chilerecicla signed a second joint venture agreement (“Chilerecicla JV”) to execute an initial spot and single operation as a way to test in practice the planning they have designed so far. Under the terms of this second agreement, GTSO will contribute $50,000 which is payable in two installments within 30 days. These funds will be used to purchase electronic and plastic waste in Chile and to export and sell minerals, metals and plastics for reuse. Chilerecicla will manage the process of purchasing and selling the e-waste materials. Under the terms of the agreement, GTSO will receive a minimum of 50% of the net profits of the Chilerecicla JV. The Chilerecicla JV operates under the name Chilerecicla E-Waste Limitada.

The Chilerecicla JV represents an investment in an unproven start-up operation and an emerging market. Therefore, the likelihood of the Chilerecicla JV to be able to realize profitable operations and positive cash flow is unknown at this time. As a result, GTSO has expensed all investments in this joint venture, although the Company still believes that it represents a positive business opportunity.

Through GTSO’s newest initiatives in traditional and urban mining, rare earth and precious metals sector, the Company plans to create the necessary processes, logistics and distribution channels to mine, recover, distribute and sell precious and other metals to the global marketplace. The Company intends to be a driving force behind a more competitive minerals and metals mining and recovery market. The Company’s alliances in South America, Asia and Africa provide a strategic advantage and access to one of the most plentiful rare earth and minerals deposits in the world. GTSO has also identified additional joint venture and acquisition targets in China, Africa and South America. The mission is to meet the growing demand for gold, silver, tungsten and other precious and rare metals, while introducing sustainable and environmentally friendly practices that also create new products and reduce greenhouse gas pollutants through the use of biomass and organic carbon sequestration.

GTSO will continue traditional mining operations through joint ventures such as Diamond V Associates, but the current acquisition and joint venture focus for 2014 will be building sustainable recovery methods of precious, rare and other metals and minerals through utilizing existing electronic waste with joint venture partnerships such as Chilerecicla. The first two quarters of 2014 will be focused on further developing our joint venture partnership model and optimizing business plans for US operations through the past purchase of Global Cell Buyers and branding strategy under the name “Green Urban Mining”. In addition, GTSO has identified several target companies in emerging market such as Latin America to leverage current collection and distribution of e-waste for the use of valuable metals they contain.

ITEM 1A. RISK FACTORS

As a smaller reporting company, we are not required to provide the information required by this Item.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

Executive Offices

Our executive offices are located at 2880 Zanker Road, Suite 203, San Jose, California. We rent office space on a month-to-month basis for $300 per month. The aforesaid property is in good condition and we believe it will be suitable for our purposes for the next 12 months. There is no affiliation between us and any of our principals or agents and our landlord or any of its principals or agents. Our CEO also rents office space in Houston, Texas on an as needed basis through a management agreement.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock began trading on the "Over the Counter" Bulletin Board ("OTC") under the symbol “GTSO” in December 2010. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by the OTC. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. There is an absence of an established trading market for the Company's common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.

	High		Low
Fiscal Year Ended December 31, 2012
First Quarter	$	10.36	$	2.00
Second Quarter	$	6.00	$	1.02
Third Quarter	$	2.37	$	0.17
Fourth Quarter	$	0.38	$	0.06

Fiscal Year Ended December 31, 2013
First Quarter	$	0.09	$	0.03
Second Quarter	$	0.09	$	0.02
Third Quarter	$	0.05	$	0.02
Fourth Quarter	$	0.04	$	0.01

The above prices have been adjusted to reflect the one-for-300 reverse stock split effected on January 21, 2012.

Common Stock

We are authorized to issue 100,000,000 shares of common stock, with a par value of $0.001. The closing price of our common stock on March 27, 2014, as quoted by the OTC, was $0.0184. There were 62,425,966 shares of common stock issued and outstanding as of March 27, 2014. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non- assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company's assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of common stock of the Company are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.

Record Holders

As of March 27, 2014, there were approximately 1,271 holders of record of our common stock.

Dividends on Common Stock

Since inception, no dividends have been paid on our common stock. We have incurred losses since inception. However, should we become profitable, we intend to retain any earnings for use in our business activities. Therefore, it is not expected that any dividends on our common stock will be declared and paid in the foreseeable future.

Any future dividends will be at the discretion of the Board of Directors, after taking into account various factors, including among others, operations, current and anticipated cash needs and expansion plans, the income tax laws then in effect, the requirements of Delaware law, and any restrictions that may be imposed by our future credit arrangements.

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Securities Authorized for Issuance under Equity Compensation Plans

The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of December 31, 2013.

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted average exercise price of outstanding options, warrants and rights

Number of securities remaining available for future issuance.

Equity compensation plans approved by security holders

—

Equity compensation plants not approved by security holders

—

Total

—

Changes in Securities

On October 13, 2011, the Company’s majority shareholders approved a one-for-300 reverse stock split and an increase in the authorized capital to 100 million post-split shares. These changes became effective upon approval by FINRA on January 10, 2012. All share and per share numbers in this Annual Report on Form 10-K have been restated to reflect the reverse split.

Recent Sales of Unregistered Securities

On April 1, 2013, we issued a Convertible Promissory Note in the amount of $96.463 to a private investor. This Note bears interest at 10% per annum and is convertible into shares of the company’s common stock at the rate of $0.01 per share.

On June 30, 2013, we issued a Convertible Promissory Note in the amount of $167,185 to a private investor. This Note bears interest at 10% per annum and is convertible into shares of the company’s common stock at the rate of $0.01 per share.

On September 30, 2013, we issued a Convertible Promissory Note in the amount of $312,310 to a private investor. This Note bears interest at 10% per annum and is convertible into shares of the company’s common stock at the rate of $0.01 per share.

On October 1, 2013, we issued 3,650,000 shares of common stock in a partial conversion and satisfaction of $36,500 of debt in accordance with the terms of the debt.

On November 6, 2013, we issued 2,000,000 shares of common stock in a partial conversion and satisfaction of $20,000 of debt in accordance with the terms of the debt.

On November 20, 2013, we issued 2,000,000 shares of common stock in a partial conversion and satisfaction of $20,000 of debt in accordance with the terms of the debt.

The issuance of each Convertible Promissory note was exempt from the registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act due to the limited number of purchasers and their status as accredited investors.

The issuance of common stock upon conversion of the Convertible Notes Payable was exempt from the registration requirements of the Securities Act under Section 4(a)(1) of the Securities Act and Rule 144 promulgated thereunder.

ITEM 6. SELECTED FINANCIAL DATA

As a smaller reporting company, we are not required to provide the information required by this Item.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

Caution Regarding Forward-Looking Information

All statements contained in this Form 10-K, 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 acquisitions, 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 Item 1A above that may cause actual results to differ materially.

Consequently, all of the forward-looking statements made in this Form 10-K 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.

The following discussion and analysis should be read in connection with the Company’s financial statements and related notes thereto, as included in this report.

The following is management's discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements, as well as information relating to the plans of our current management.

Results of Operations and Going Concern

We incurred a net loss of $909,691 for the year ended December 31, 2013, and had a working capital deficit of $150,052 as of December 31, 2013. We do not anticipate having positive net income in the immediate future. Net cash used by operations for the year ended December 31, 2013 was $290,234. These conditions create an uncertainty as to our ability to continue as a going concern.

We continue to rely on advances to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.

Results of Operations for the year ended December 31, 2013 compared to the year ended December 31, 2012

General and Administrative Expenses

General and administrative expenses increased in the year ended December 31, 2013 as compared to the year ended December 31, 2012 from $295,423 to $337,081. The increase in general and administrative expense was primarily related to increased professional fees.

Loss from Operations

The increase in our operating loss for the year ended December 31, 2013 as compared to the comparable period of 2012 from $295,423 to $337,081 is due to the increase in general and administrative expenses described above.

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Other Income (Expense)

Interest expense decreased during the year ended December 31, 2013 compared to the same period of 2012 from $1,101,889 to $522,610, primarily related to the decrease in amortization of discounts on notes payable from $1,031,468 in 2012 to $460,419 in 2013.

Net Income (Loss)

We recognized a net loss of $909,691 for the year ended December 31, 2013 as compared to a net loss of $1,417,312 for the same period of 2012. Changes in net income (loss) are primarily attributable to changes in operating income and interest expense, each of which is described above.

Liquidity and Capital Resources

Net cash used by operating activities was $290,234 and $253,755 for the years ended December 31, 2013 and 2012, respectively. The increase is mainly attributable to having more available cash to spend on operations.

Cash used by investing activities was $50,000 and $10,000 for the years ended December 31, 2013 and 2012, respectively. During the year ended December 31, 2013, we made additional investments in a joint venture.

Cash provided by financing activities was $343,560 and $263,648 for the years ended December 31, 2013 and 2012, respectively. The increase is mainly attributable to an increase in proceeds from advances received which were required to fund the Company’s operations.

We had negative working capital of $150,052 as of December 31, 2013 compared to $338,929 as of December 31, 2012. Our cash position increased to $4,198 at December 31, 2013 compared to $872 at December 31, 2012.

Our monthly cash requirement amount is approximately $25,000, and as of December 31, 2013, cash on hand would fund operations for less than one month.

The Company anticipates it will require around $500,000 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.

We do not have any material commitments for capital expenditures. However, should we execute our business plan as anticipated, we would incur substantial capital expenditures and require financings in addition to what is required to fund our present operations.

Additional Financing

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

Off Balance Sheet Arrangements

None

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. A complete discussion of our accounting policies is included in Notes 2 and 3 of the Notes to Financial Statements.

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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.

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.

As shown in the financial statements, the Company incurred a net loss of $909,691 for the year ended December 31, 2013, while the Company’s current liabilities exceeded its current assets by $150,052 as of December 31, 2013.

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.

Accordingly, our independent auditors included an explanatory paragraph in their report on the December 31, 2013 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

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ITEM 8. FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Green Technology Solutions, Inc.

(a development stage company)

We have audited the accompanying consolidated balance sheets of Green Technology Solutions, Inc (the “Company”) (a development stage company) as of December 31, 2013 and 2012 and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the years then ended and for the period the Company re-entered the development stage (June 12, 2010) through December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Green Technology Solutions, Inc. as of December 31, 2013 and 2012 and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company suffered a net loss from operations and has a net working capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

March 31, 2014

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GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2013			2012
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	4,198		$	872
Total current assets		4,198			872

TOTAL ASSETS	$	4,198		$	872

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable	$	123,000		$	76,153
Advances payable		31,250			263,648
Total current liabilities		154,250			339,801

Convertible notes payable, net of discount of $442,118 and $326,580, respectively		116,781			163,653

TOTAL LIABILITIES		271,031			503,454

STOCKHOLDERS’ DEFICIT
Common Stock, $0.001 par value, 100,000,000 authorized, 62,425,966 and 34,202,694 issued and outstanding as of December 31, 2013 and 2012, respectively		62,426			34,203
Additional Paid-in Capital		10,985,945			9,868,728
Common stock payable		5,000			5,000
Accumulated deficit		(7,113,753	)		(7,113,753	)
Deficit accumulated during the development stage		(4,206,451	)		(3,296,760	)
Total stockholders' deficit		(266,833	)		(502,582	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	4,198		$	872

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year ended December 31,						For the period from June 12, 2010 (date re-entered development stage) through December 31,
	2013			2012			2013

OPERATING EXPENSES
General and administrative expenses	$	337,081		$	295,423		$	2,009,558

LOSS FROM OPERATIONS		(337,081	)		(295,423	)		(2,009,558	)

OTHER INCOME (EXPENSE)
Interest expense, net		(522,610	)		(1,101,889	)		(1,866,893	)
Impairment of joint venture		(50,000	)		(20,000	)		(330,000	)
Total other income (expense)		(572,610	)		(1,121,889	)		(2,196,893	)

NET INCOME (LOSS)	$	(909,691	)	$	(1,417,312	)	$	(4,206,451	)

NET INCOME (LOSS) PER COMMON SHARE – Basic and fully diluted	$	(0.02	)	$	(0.05	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		51,016,951			31,000,752

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

													Deficit
													accumulated
					Additional			Common					during the
	Common Stock				Paid-In			Stock		Accumulated			development			Equity
	Shares		Amount		Capital			Payable		Deficit			stage			Total
BALANCE, JUNE 12, 2010		395	$	-	$	6,650,413		$	-	$	(7,113,753	)	$	-		$	(463,340	)

Correction in number of shares outstanding		1		-		-			-		-			-			-
Issuance of shares for conversion of note payable		50		-		30,000			-		-			-			30,000
Issuance of shares for conversion of note payable		66,667		67		199,933			-		-			-			200,000
Imputed interest expense		-		-		25,808			-		-			-			25,808
Net loss		-		-		-			-		-			(685,610	)		(685,610	)

BALANCE, DECEMBER 31, 2010		67,113	$	67	$	6,906,154		$	-	$	(7,113,753	)	$	(685,610	)	$	(893,142	)

Issuance of shares for conversion of note payable		70,000		70		209,930			-		-			-			210,000
Issuance of shares for consulting services		5,000		5		209,995			-		-			-			210,000
Share rounding on reverse split		3		-		-			-		-			-			-
Beneficial conversion feature on convertible note payable		-		-		1,179,356			-		-			-			1,179,356
Imputed interest expense		-		-		84,126			-		-			-			84,126
Net loss		-		-		-			-		-			(1,193,838	)		(1,193,838	)

BALANCE, DECEMBER 31, 2011		142,116	$	142	$	8,589,561		$	-	$	(7,113,753	)	$	(1,879,448	)	$	(403,498	)

Issuance of shares for conversion of notes payable		34,056,100		34,057		987,626			-		-			-			1,021,683
Share rounding on reverse split		4,478		4		(4	)		-		-			-			-
Beneficial conversion feature on convertible note payable		-		-		251,468			-		-			-			251,468
Imputed interest expense		-		-		40,077			-		-			-			40,077
Common stock payable on investment		-		-		-			5,000		-			-			5,000
Net loss		-		-		-			-		-			(1,417,312	)		(1,417,312	)

BALANCE, DECEMBER 31, 2012		34,202,694	$	34,203	$	9,868,728		$	5,000	$	(7,113,753	)	$	(3,296,760	)	$	(502,582	)

Issuance of shares for conversion of notes payable		28,223,272		28,223		517,212			-		-			-			545,435
Discount on convertible notes payable						575,958											575,958
Imputed interest expense		-		-		24,047			-		-			-			24,047
Net loss		-		-		-			-		-			(909,691	)		(909,691	)

BALANCE, DECEMBER 31, 2013		62,425,966	$	62,426	$	10,985,945		$	5,000	$	(7,113,753	)	$	(4,206,451	)	$	(266,833	)

On January 21, 2012, the Company effected a one-for-300 reverse stock split. All share and per share numbers have been restated to reflect the reverse split.

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the year ended						For the period from June 12, 2010 (data re-entered development stage) through
	December 31,						December 31,
	2013			2012			2013

CASH USED IN OPERATING ACTIVITIES:
Net loss	$	(909,691	)	$	(1,417,312	)	$	(4,206,451	)
Adjustments to reconcile net loss to net cash in operating activities:
Stock issued for services		-			-			210,000
Impairment of investment in joint venture		50,000			20,000			330,000
Imputed interest expense		24,047			40,077			174,058
Amortization of discount on convertible note payable		460,420			1,031,468			1,564,664
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities		46,847			41,668			75,377
Accrued interest payable		38,143			30,344			138,518
NET CASH USED IN OPERATING ACTIVITIES		(290,234	)		(253,755	)		(1,713,834	)

CASH USED IN INVESTING ACTIVITIES:
Investment in joint venture		(50,000	)		(10,000	)		(320,000	)
NET CASH USED IN FINANCING ACTIVITIES		(50,000	)		(10,000	)		(320,000	)

CASH USED IN FINANCING ACTIVITIES:
Proceeds from advances		343,560			263,648			2,038,032
NET CASH PROVIDED BY FINANCING ACTIVITIES		343,560			263,648			2,038,032

INCREASE (DECREASE) IN CASH		3,326			(107	)		4,198
CASH, at the beginning of the period		872			979			-

CASH, at the end of the period	$	4,198		$	872		$	4,198

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

Noncash investing and financing transactions:
Issuance of stock for consulting services	$	-		$	-		$	210,000
Refinancing of demand notes to convertible notes payable	$	575,957		$	261,468		$	2,427,498
Issuance of stock for conversion of convertible notes payable	$	486,202		$	1,021,683		$	1,947,885

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

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GREEN TECHNOLOGY SOLUTIONS, INC.

(a development stage company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS

Company History

On September 20, 2012 GTSO formed two subsidiaries for GTSO’s urban mining and traditional mining operations. The new subsidiaries are GTSO Urban Mining LLC and GTSO Resources LLC.

In accordance with ASC 915, the Company is considered to have re-entered into the development stage on June 12, 2010 as it discontinued its previous operations and did not have revenues for the period from June 12, 2010 through December 31, 2013.

2. PRESENTATION OF FINANCIAL STATEMENTS

Basis of Presentation — The accompanying condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).

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 $909,691 for the year ended December 31, 2013, while the Company’s current liabilities exceeded its current assets by $150,052as of December 31, 2013.

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.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 December 31, 2013 and 2012 consisted mainly of USD denominated current accounts held at major banks.

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

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

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.

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 accounting rules 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 – The Company follows the FASB standard related to fair value measurement. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s financial instruments are cash, accounts payable and long-term debt. The recorded values of cash and accounts payable approximate their fair values based on their short-term nature.

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The following table presents assets that were measured and recognized at fair value as of December 31, 2013 and 2012 and the years then ended on a recurring and nonrecurring basis:

Total

Realized

Description

Level 1

Level 2

Level 3

Loss

Totals

Revenue Recognition – The Company is not currently generating revenue; however, revenue generated in the future will be recognized in accordance with SEC rules. The four criteria that must be met in order to recognize revenue are: (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.

Earnings (Loss) per Share – Earnings (loss) per share are computed in accordance with current accounting literature. 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) – Current accounting literature 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, current accounting literature 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.

Recently Issued Accounting Pronouncements – In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

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In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

4. CHILERECICLA JOINT VENTURE

On March 4, 2013, we entered into a letter of intent with Sociedad de Reciclaje de Materiales Metalicos, Electrico, Electronicos y Plasticas Limitada (“Chilerecicla”) to explore opportunities with Latin America electronic waste recyclers for the purpose of recovering precious metals, minerals and waste to energy possibilities. Chilerecicla is based near Santiago Chile with operations across the country and surrounding regions.

On June 6, 2013, GTSO and Chilerecicla signed a joint venture agreement to evaluate, explore and determine the feasibility of a waste management collection, processing and sales operation wherein GTSO will contribute funding and the initial development of a project to acquire electronics and plastic waste for the purpose of selling metals and plastics reuse while Chilerecicla manages the Latin America operations. Under the terms of the agreement, GTSO commits to fund a minimum of $2,500 of the cash flow requirements of the start-up phase of the operations. Chilerecicla agrees to reserve 30% of the gross proceeds of the business for repayment of the initial contribution. At the end of the start-up phase, Chilerecicla will provide GTSO with a detailed timeline, budget and operational plan for further development. Both parties will have 60 days to agree on an appropriate funding strategy for the next phase. GTSO will have no obligation to continue funding the business.

On September 1, 2013, GTSO and Chilerecicla signed a second joint venture agreement (the “Chilerecicla JV”) to execute an initial spot and single operation as a way to test in practice the planning they have designed so far. Under the terms of this second agreement, GTSO will contribute $50,000 was paid in two installments within the 30 days after the agreement was signed. These funds will be used to purchase electronic and plastic waste in Chile and to export and sell minerals, metals and plastics for reuse. Chilerecicla will manage the process of purchasing and selling the e-waste materials. During the year ended December 31, 2013, GTSO paid 100% of the expenses of the Chilerecicla JV in the amount of $50,000. Under the terms of the agreement, GTSO will receive a minimum of 50% of the net profits of the Chilerecicla JV. No net profits were earned during the year ended December 31, 2013. The Chilerecicla JV operates under the name Chilerecicla E-Waste Limitada.

5. CONVERTIBLE NOTE PAYABLE

During the year ended December 31, 2013, the Company signed Convertible Promissory Notes which refinanced non-interest bearing advances in the amount of $575,958 into convertible notes payable. The Convertible Promissory Notes bear interest at 10% per annum and are payable along with interest. The Convertible Promissory Notes are convertible into common stock at the option of the holder at a rate of $0.01 per share.

Date Issued	Maturity Date	Note Amount		Balance as of December 31, 2013
April 1, 2013	March 31, 2015	$	96,463	$	25,613

June 30, 2013	June 30, 2015		167,185		167,185

September 30, 2013	September 30, 2015		312,310		312,310

Total		$	575,958	$	505,108

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The Company evaluated the terms of these 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 features did not meet the definition of a liability and therefore did not bifurcate the conversion features and account for them as a separate derivative liabilities. The Company evaluated the conversion features 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 less than the market value of underlying common stock at the inception of the note. Therefore, the Company recognized beneficial conversion features in the amounts of $96,463, $167,185, and $312,310 on April 1, 2013, June 30, 2013 and September 30, 2013, respectively. The beneficial conversion features were recorded as an increase in additional paid-in capital and a discount to the Convertible Notes Payable. The discounts to the Convertible Notes Payable will be amortized to interest expense over the life of the note.

The holders of the $517,673 Convertible Note Payable signed on October 7, 2011 elected to convert principal and interest as follows:

Date	Principal and Interest Converted		Common Stock Issued upon Conversion
January 14, 2013		84,000		2,800,000
February 28, 2013		18,000		600,000
March 11, 2013		57,000		1,900,000
March 18, 2013		36,303		1,210,088
Total	$	195,303		6,510,088

The unamortized discount related to this principal was $71,878. This amount was immediately amortized to interest expense. The converted principal amount and interest of $195,303 was recognized as an increase in stockholders’ equity as a result of this conversion. There was no gain or loss on the conversion, because it was effected in accordance with the terms of the convertible note agreement.

The holders of the $251,468 Convertible Note Payable signed on October 31, 2012 elected to convert principal and interest as follows:

Date	Principal and Interest Converted		Common Stock Issued upon Conversion
April 30, 2013	$	80,000	$	4,000,000
June 14, 2013		40,000		2,000,000
July 8, 2013		36,500		1,825,000
July 12, 2013		36,500		1,825,000
July 15, 2013		36,500		1,825,000
July 22, 2013		36,500		1,825,000
Total	$	266,000	$	13,300,000

The unamortized discount related to this principal was $208,102. This amount was immediately amortized to interest expense. The converted principal amount of $266,000 was recognized as an increase in stockholders’ equity as a result of this conversion. There was no gain or loss on the conversion, because it was effected in accordance with the terms of the convertible note agreement.

The holder of the $96,463 Convertible Note Payable issued on April 1, 2013 elected to convert principal and interest as follows:

Date	Principal and Interest Converted		Common Stock Issued upon Conversion
October 1, 2013	$	36,500	$	3,650,000
November 6, 2013		20,000		2,000,000
November 20, 2013		20,000		2,000,000
Total	$	76,500	$	7,650,000

The unamortized discount related to this principal was $50,395. This amount was immediately amortized to interest expense. The converted principal amount of $76,500 was recognized as an increase in stockholders’ equity as a result of this conversion. There was no gain or loss on the conversion, because it was effected in accordance with the terms of the convertible note agreement.

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On February 28, 2013, the holder of the 10% Subordinated Convertible Note Payable dated May 23, 2010 elected to convert principal in the amount of $7,632 into 763,184 shares of common stock. There was no gain or loss on the conversion, because it was effected in accordance with the terms of the convertible note agreement.

6. ADVANCES PAYABLE

During the year ended December 31, 2013, the Company received working capital advances in the amount of $343,560. These advances are non-interest bearing and payable upon demand. The Company has imputed interest on these advances in the amount of $24,047 for the year ended December 31, 2013. The imputed interest was recorded as an increase in Additional paid-in capital.

During the twelve months ended December 31, 2013, non-interest bearing advances in the amount of $575,958 were refinanced into Convertible Notes Payable. See Note 4.

7. SHAREHOLDERS’ EQUITY (DEFICIT)

Dividends

No dividends were declared or paid by the Company during the years ended December 31, 2013 and 2012.

Stock Splits

On November 19, 2010, the Company effected a one-for-200 reverse stock split.

On January 21, 2012, the Company effected a one-for-300 reverse stock split.

All share and per share numbers have been restated to reflect the reverse splits.

Conversion of Convertible Debt into Equity

The holders of the $517,673 Convertible Note Payable signed on October 7, 2011 elected to convert principal and interest as follows:

Date	Principal and Interest Converted		Common Stock Issued upon Conversion
January 12, 2012	$	270,000		9,000,000
October 15, 2012		90,000		3,000,000
January 14, 2013		84,000		2,800,000
February 28, 2013		18,000		600,000
March 11, 2013		57,000		1,900,000
March 18, 2013		36,303		1,210,088
Total	$	555,303		18,510,088

The unamortized discount related to this principal was $324,578 and $71,878 in 2012 and 2013, respectively. This amount was immediately amortized to interest expense. The converted principal amount of $360,00 and $157,673 in 2012 and 2013, respectively, was recognized as an increase in stockholders’ equity as a result of this conversion. There was no gain or loss on the conversion, because it was effected in accordance with the terms of the convertible note agreement.

The holders of the $251,468 Convertible Note Payable signed on October 31, 2012 elected to convert principal and interest as follows:

Date	Principal and Interest Converted		Common Stock Issued upon Conversion
April 30, 2013	$	80,000	$	4,000,000
June 14, 2013		40,000		2,000,000
July 8, 2013		36,500		1,825,000
July 12, 2013		36,500		1,825,000
July 15, 2013		36,500		1,825,000
July 22, 2013		36,500		1,825,000
Total	$	266,000	$	13,300,000

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The holder of the $96,463 Convertible Note Payable issued on April 1, 2013 elected to convert principal and interest as follows:

Date	Principal and Interest Converted		Common Stock Issued upon Conversion
October 1, 2013	$	36,500	$	3,650,000
November 6, 2013		20,000		2,000,000
November 20, 2013		20,000		2,000,000
Total	$	76,500	$	7,650,000

On March 2, 2011, the Company issued 16,667 shares of common stock for the conversion of $50,000 of principal of the 10% Subordinated Convertible Notes Payable.

On July 6, 2011, the Company issued 30,000 shares of common stock for the conversion of $90,000 of principal of the 10% Subordinated Convertible Notes Payable.

On September 20, 2011, the Company issued 23,333 shares of common stock for the conversion of $70,000 of principal of the 10% Subordinated Convertible Notes Payable.

On January 9, 2012, the Company issued 22,056,100 shares of common stock upon conversion of the $661,683 Convertible Note Payable. This issuance of common stock resulted in a change in control of the Company.

Imputed Interest

The Company has imputed interest on advances in the amount of $24,047 for the year ended December 31, 2013. The imputed interest was recorded as an increase in additional paid-in capital.

Other Changes to Shareholders’ Equity

On September 14, 2011, the Company issued 5,000 shares of common stock for consulting services. The stock was valued at $42 per share based on the market price of the stock on the date the agreement was made to issue the stock. The Company recognized stock-based compensation expense of $210,000 as a result of this issuance.

On October 30, 2012, the Company agreed to issue 41,667 shares of common stock for the acquisition of Global Cell Buyers, LLC. The shares have not been issued as of the filing of this report.

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8. INCOME TAXES

The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. The Company currently has net operating loss carryforwards aggregating approximately $9,935,961, which expire through 2032. The Company’s deferred income tax assets have been fully reserved as follows as of December 31, 2013 and 2012.

	2013			2012
Deferred tax asset	$	3,378,227		$	3,068,932
Valuation allowance for deferred tax assets		(3,378,227	)		(3,068,932	)
Net deferred tax asset	$	–		$	–

9. SUBSEQUENT EVENTS

On January 14, 2014, the holders of the $96,463 Convertible Note Payable dated April 1, 2013 elected to convert principal and interest in the amount of $20,000 into 2,000,000 shares of common stock. As a result of these conversions, unamortized discount in the amount of $10,450 was immediately amortized to interest expense. The converted amount of principal and accrued unpaid interest in the total amount of $20,000 was recognized as an increase in stockholders’ equity as a result of these conversions. There was no gain or loss on these conversions, because they were effected in accordance with the terms of the convertible note agreement.

On January 27, 2014, the holder of the $167,185 Convertible Note Payable dated June 30, 2013 elected to convert principal and interest in the amount of $20,000 into 2,000,000 shares of common stock. As a result of these conversions, unamortized discount in the amount of $7,348 was immediately amortized to interest expense. The converted amount of principal and accrued unpaid interest in the total amount of $20,000 was recognized as an increase in stockholders’ equity as a result of these conversions. There was no gain or loss on these conversions, because they were effected in accordance with the terms of the convertible note agreement.

On January 30, 2014, the holder of the $167,185 Convertible Note Payable dated June 30, 2013 elected to convert principal and interest in the amount of $20,000 into 2,000,000 shares of common stock. As a result of these conversions, unamortized discount in the amount of $14,044 was immediately amortized to interest expense. The converted amount of principal and accrued unpaid interest in the total amount of $20,000 was recognized as an increase in stockholders’ equity as a result of these conversions. There was no gain or loss on these conversions, because they were effected in accordance with the terms of the convertible note agreement.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Limitations on Systems of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses identified in our evaluation, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this annual report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Management’s 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 Exchange Act Rules 13a-15(f). Management is required to base its assessment of the effectiveness of our internal control over financial reporting on a suitable, recognized control framework, such as the framework developed by the Committee of Sponsoring Organizations (COSO). The COSO framework, published in Internal Control-Integrated Framework , is known as the COSO Report. Our principal executive officer and our principal financial officer, have has chosen the COSO framework on which to base its assessment. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2013.

This annual report on Form 10-K 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 our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report on Form 10-K. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material weaknesses:

As of December 31, 2013, we did not maintain effective controls over the control environment. Specifically we have not developed and effectively communicated to our employees its accounting policies and procedures. This has resulted in inconsistent practices. Further, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.

As of December 31, 2013, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.

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Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2013, based on the criteria established in "Internal Control-Integrated Framework" issued by the COSO.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The Directors and Executive Officers of the Company and certain information concerning them are set forth below as of December 31, 2013:

Name	Position	Age

Paul Watson	Chief Executive Officer and Director	38

Paul Watson. Mr. Watson, age 38, brings a wealth of experience in finance, corporate strategy and management to GTSO. From 2005 through 2009, Mr. Watson served as a mergers and acquisitions advisor and private equity group manager for KPMG Financial Advisory Services in Shanghai, China. From 2009 until 2011, he was Managing Director of Hermes Investment Group, a merchant bank focused on clean technology and environmental science established in Shanghai China, and headquartered in the United States; where he continues to advise portfolio operations and venture finance. Mr. Watson also currently serves as a director and CEO of OBJ Enterprises, Inc. He is a graduate of the University of Houston, Bauer College of Business with a bachelor’s degree in Finance. He speaks English, Chinese and Spanish.

Composition of the Board of Directors

The Board of Directors has responsibility for establishing broad corporate policies and reviewing our overall performance rather than day-to-day operations. The primary responsibility of our board of directors is to oversee the general direction and management of our Company and, in doing so, serve the best interests of the Company and our shareholders. The Board of Directors selects, evaluates and provides for the succession of executive officers and, subject to shareholder election, directors. It reviews and approves corporate objectives and strategies, and evaluates significant policies and proposed major commitments of corporate resources. Our Board of Directors also participates in decisions that have a potential major economic impact on our Company. Management is responsible for day-to-day operations of the Company.

Our Board of Directors currently consists of one member: Mr. Paul Watson. Each of our directors is elected annually at our annual meeting. All Board action requires the approval of a majority of the directors in attendance at a meeting at which a quorum is present.

Independence

As of the date hereof, the Company has not adopted a standard of independence nor does it have a policy with respect to independence requirements for its Board members or that a majority of its Board be comprised of “independent directors.” As of the date hereof, none of our directors would qualify as “independent” under any recognized standards of independence.

Board Committees

We do not currently have a standing audit, nominating or compensation committee of the board of directors, or any committee performing similar functions. Our Board of Directors performs the functions of audit, nominating and compensation committees. As of the date of this filing, no member of our Board of Directors qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act and our Board does not believe such an expert is necessary at this time due to the relatively simple nature of the Company’s operations. Since the Board of Directors currently consists of only one member, it does not believe that establishing separate audit, nominating or compensation committees are necessary for effective governance.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own beneficially more than ten percent of our common stock, to file reports of their stock ownership and changes of their stock ownership with the Securities and Exchange Commission. Based solely on our review of Forms 3, 4 and 5 furnished to us and on written representations from certain reporting persons, we believe that the directors, executive officers, and our greater than ten percent beneficial owners have complied in a timely manner with all applicable filing requirements for the fiscal year ended December 31, 2013, except as follows: Eastern Rim Funds (one Form 3 not Filed).

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Code of Ethics

Our Board of Directors has discussed the adoption of a code of business conduct and ethics for directors, officers and employees but has not yet adopted a Code of Ethics due to the extremely small size of our management team. It is anticipated that the Board of Directors will adopt a Code of Ethics meeting the requirements of Item 406 of Regulation S-K in the near future.

Procedure for Nominating Directors

In 2013, we have not made any material changes to the procedures by which security holders may recommend nominees to our Board of Directors.

Family Relationships

There are no family relationships among our directors, executive officers or persons nominated to become executive officers or directors.

Involvement in Certain Legal Proceedings

During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.

Arrangements

There are no arrangements or understandings between an executive officer, director or nominee and any other person pursuant to which he was or is to be selected as an executive officer or director.

ITEM 11. EXECUTIVE COMPENSATION

Mr. Watson received cash compensation of $60,000 during the year ended December 31, 2013. He received no other form of compensation.

Summary Compensation Table

Name	Fiscal Year End	Salary ($)		Total ($)
Paul Watson, Chief Executive Officer	2013	$	60,000	$	60,000
	2012	$	60,000	$	60,000

Employment Agreements & Retirement Benefits

None of our executive officers are subject to employment agreements, but we may enter into such agreements with them in the future. We have no plans providing for the payment of any retirement benefits.

Director Compensation

Our Board of Directors is comprised of Paul Watson. Mr. Watson also serves as the CEO of the Company. None of our directors has or had a compensation arrangement with the Company and for director services, nor have any of them been compensated for director services since the Company’s inception.

We reimburse our directors for all reasonable ordinary and necessary business related expenses, but we did not pay director's fees or other cash compensation for services rendered as a director in the year ended December 31, 2013 to any of the individuals serving on our Board during that period. We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. We may pay fees for services rendered as a director when and if additional directors are appointed to the Board of Directors.

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Compensation Committee Interlocks and Insider Participation

As a smaller reporting company, the Company is not required to provide this disclosure.

Compensation Committee Report

As a smaller reporting company, the Company is not required to provide this disclosure.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information as of March 27, 2014, with respect to the beneficial ownership of shares of the Company’s common stock by (i) each person known to us who owns beneficially more than 5% of the outstanding shares of the Company’s common stock, (ii) each of our Directors, (iii) each of our Executive Officers, and (iv) all of our Executive Officers and Directors as a group. Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares shown. As of March 27, 2014, there were 62,425,966 shares of the Company’s common stock issued and outstanding.

Name and address of beneficial owner	Relationship to Registrant	Number of Shares of Common Stock		Percentage of Common Stock (1)

Eastern Rim Funds Inc. San Francisco 65 E St House No 35 Panama City Panama	Shareholder		22,056,100		35.3	%

Paul Watson 2880 Zanker Road, Suite 203 San Jose, CA 95134	Sole Director and CEO	-nil-			0.0	%

All Officers and Directors as a group (total of 1)		-nil-			0.0	%

(1)

Under Rule 13d-3 promulgated under the Exchange Act, 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 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 on March 27, 2014.

As of December 31, 2013, there were convertible notes outstanding in the amount of $558,899, including accrued interest. These notes are convertible into 54,604,200 shares of common stock.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Transactions

None.

Director Independence

Using the standards of the NYSE Amex (which the Company is not subject to), the Company's Board has determined that Mr. Watson does not qualify under such standards as an independent director. The Company did not consider any relationship or transaction between itself and its sole director not already disclosed in this report in making this determination.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to the Company by its independent accountants, M&K CPAs PLLC, for the years ended December 31, 2013 and 2012:

Fee Category	2013		2012

Audit Fees	$	19,700	$	17,250

Audit-Related Fees (1)		—		—

Tax Fees (2)		—		—

All Other Fees (3)		—		—

Total Fees	$	19,700	$	17,250

Notes to the Accountants Fees Table:

(1)	Consists of fees for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported under "Audit Fees."

(2)	Consists of fees for professional services rendered by our principal accountants for tax related services.

(3)	Consists of fees for products and services provided by our principal accountants, other than the services reported under "Audit Fees," "Audit-Related Fees" and "Tax Fees" above.

As part of its responsibility for oversight of the independent registered public accountants, the Board has established a pre-approval policy for engaging audit and permitted non-audit services provided by our independent registered public accountants. In accordance with this policy, each type of audit, audit-related, tax and other permitted service to be provided by the independent auditors is specifically described and each such service, together with a fee level or budgeted amount for such service, is pre-approved by the Board. All of the services provided by M&K CPAs PLLC described above were approved by our Board.

The Company’s principal accountant did not engage any other persons or firms other than the principal accountant’s full-time, permanent employees.

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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibit No.		Description of Exhibit

3.1		Amended and Restated Certificate of Incorporation of the Company (1)
3.2		Bylaws of the Company (1)
10.1		Joint Venture Agreement (2)
14		Code of Ethics (1)
31.1		Section 302 Certification (3)
32.1		Section 906 Certification (3)
101		XBRL Interactive Data (3)

	(1)	Incorporated by reference from the Form SB-2 filed on September 15, 2006.
	(2) (3)	Incorporated by reference from the 8-K filed on June 14, 2012. Filed or furnished herewith.

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SIGNATURES

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

		Green Technology Solutions, Inc.

	By:	/s/ Paul Watson
		Paul Watson
		Sole Director and CEO
		(Principal Executive Financial Officer and
		Accounting Officer)

Date: March 31, 2014

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.

		Green Technology Solutions, Inc.

	By:	/s/ Paul Watson
		Paul Watson
		Sole Director and CEO
		(Principal Executive Financial Officer and
		Accounting Officer)

Date: March 31, 2014

Green Technology Solutions, Inc. - FORM 10-K - March 31, 2014

Attached files

Green Technology Solutions, Inc. Reports