Greenlite Ventures Inc.

What they do

Greenlite intends to sell carbon offsets, initially through its website to voluntary markets where no verification is required, and later verified offsets to other markets. It plans to market Verified Emission Reduction (VER) and Reduced Emissions from Deforestation and Degradation (REDD) offsets from global restoration projects to companies and foundations seeking to offset carbon footprints. The company launched an updated consumer website in March 2012 but has sold no offsets as of its 10-K filing due to website issues, payment processing problems, focus on the Advantag acquisition, and lack of consumer awareness.

Revenue drivers

• Unverified carbon offset sales via website — The company's initial plan is to sell carbon offsets through its website to voluntary markets where no verification is required, but it has not sold any offsets as of the 10-K date.
• Verified carbon offsets (VER and REDD) — Once it completes verification, the company intends to sell validated VER and REDD offsets from global restoration projects to companies, foundations, and other entities.
• Advantag AG acquisition (not completed) — The company pursued acquiring 66.67% of Advantag AG, a German carbon credit marketing and trading firm, but the letter of intent expired on December 31, 2012, and no acquisition closed.

Recent performance

For 2012, Greenlite reported revenue of $0 and a net loss of $199,794, compared to a net loss of $69,050 in 2011. Operating cash flow was negative $41,333 in 2012, and diluted EPS was $(0.01). As of December 31, 2012, total assets were $56,259, shareholders' equity was negative $224,526, and long-term debt was $0. Quarterly revenue for each quarter of 2012 was $0.

Strategy

On December 31, 2012, the Advantag letter of intent expired because Greenlite could not meet financial requirements, including having at least $500,000 in cash at closing. The company is pursuing other possible business arrangements with Advantag and considering a significant reverse split due to difficulty raising funds with a sub-$0.01 share price. In December 2012 and January 2013, the board approved three unsecured note offerings: $200,000 of 10% notes due 2015, $100,000 of 11% notes due 2016, and $100,000 of 12% notes due 2017. On January 31, 2013, the company issued notes for total proceeds of $174,000, primarily used to retire corporate indebtedness.

Risks

• No revenue and accumulated losses — The company has never generated revenue and reported a net loss of $199,794 in 2012, with negative shareholder equity of $224,526 as of December 31, 2012.
• Financing constraints — The company requires substantial financing to proceed with its carbon offset marketing business and failed to meet the $500,000 cash requirement for the Advantag acquisition.
• Failed acquisition and uncertain alternatives — The revised letter of intent to acquire 66.67% of Advantag AG expired on December 31, 2012, and there is no assurance that other business arrangements with Advantag will be completed.
• Website and payment processing issues — The company attributes its failure to sell any offsets to website coding and PayPal payment processing difficulties, lack of direct credit card processing, and consumer reluctance to use PayPal.

Outlook

Management states it is pursuing other possible business arrangements with Advantag and is considering a significant reverse split due to difficulty raising funds with a sub-$0.01 share price. The company has no assurance it can sell additional notes under its offerings and requires substantial financing to proceed with its carbon offset marketing business. It is also seeking other opportunities to enhance or complement its carbon offset marketing business.