ITEM 1.
BUSINESS.
EcoloCap Solutions Inc. is an integrated group of environmentally focused technologies that utilize nanotechnology to develop alternative energy products. That include: Emulsified HFO (M-Fuel). Bio_Diesel from high fatty acid sources. Old tires to syn-gas, diesel and Charcoal Conversion of low grade coal to syn-gas, methane and charcoal. Low emission conversion of Municipal Waste to steam.
History of the Business
We were incorporated in the State of Nevada on March 18, 2004, as Cygni Systems Corporation. We were originally formed with the intent of raising funds and entering into business as a software design company. From the date of our incorporation until June 17, 2005, we were in the development stage of online and network security management software and online and network security consulting services.
A change of control occurred on June 17, 2005. On August 19, 2005, we entered into and closed a Share Exchange Agreement (the "XL Share Exchange Agreement") with XL Generation AG. Pursuant to the terms of the XL Share Exchange Agreement, we acquired all of the issued and outstanding shares of common stock of XL Generation AG. On August 23, 2005, we filed a Certificate of Amendment with the State of Nevada, changing our name to "XL Generation International Inc."
XL Generation was the holding company of a Swiss entity, XL Generation AG, which was the marketer of an artificial sport surface called "XL Turf." We aspired to become a leading global force in the artificial turf and flooring markets by building both the strength of the XL brand and strategic partnerships with key regional turf and flooring providers. Due to market and other conditions, our board of directors decided that it was in our best interest to initiate a complete and total withdrawal from the artificial flooring sector, artificial turf, and all related business.
Following our withdrawal from the artificial flooring sector, artificial turf and all related business and after identifying new business opportunities, we changed our name from "XL Generation International Inc." to "Ecolocap Solutions Inc."
On November 13, 2007, we filed a Certificate of Amendment with the State of Nevada, changing our name to "EcoloCap Solutions Inc." Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol ECOS.
On September 10, 2009, the Company completed the acquisition of 55% of Micro Bubble Technologies (MBT), a provider of Nano technology, for a purchase price of $7,172,000 in common shares of the Company. This acquisition was funded from common stock.
Micro Bubble developed and manufactures M-Fuel, an innovative suspension fuel that far exceeds all conventional fuels' costs and efficiencies and the NPW machine that converts waste organic oils into biodiesel and pure glycerine.
Our Business
EcoloCap Solutions Inc. is an integrated group of environmentally focused technologies that utilize nanotechnology to develop alternative energy products. That include: Emulsified HFO (M-Fuel). Bio_Diesel from high fatty acid sources. Old tires to syn-gas, diesel and Charcoal Conversion of low grade coal to syn-gas, methane and charcoal. Low emission conversion of Municipal Waste to steam. Our business approach combines science, innovation, and market-ready solutions to achieve environmentally sustainable and economically advantageous, power and energy management practices in the following areas:
M-Fuel
EcoloCap Solutions Inc. developed and manufactures M-Fuel, an innovative emulsion fuel that far exceeds all conventional fuels' costs and efficiencies. This environmentally-friendly and economical product is designed to offer fully scalable and customizable fuel solutions that will increase efficiency, lower operating costs, and reduce emissions. M -Fuel is an emulsion of 60% heavy oil, 38%, and a 2% stabilizing additive for external combustion engines and 70% heavy oil, 28% water and 2% stabilizing additive. The production of M-Fuel takes place in our Nano Processing Units (NPU), a self-contained device that is sized for output. The NPU's can be configured to operate in conjunction with an engine or burner to sully M-Fuel on demand, or pre-manufactured for delivery.
NPW Machine
NPW Series biodiesel processing machines will allow customers to utilize cheaper waste feedstock (high free fatty acid organic oils such as trap grease, beef tallow, chicken fat, algae), reduce production cost /gallon, and produce biodiesel exceeding all ASTM specs. Most equipment providers must first approve feedstock to ensure biodiesel quality. We do not need to approve the biodiesel feedstock and there is no limit on the degree of waste oil that can be processed (up to 99.2% FFA Feedstock).
ECOS/Bio/ART
We are among the first public companies in North America to offer an effective and economical, fully integrated aerobic digestion technology called ECOS/Bio-ART which remediates all organic waste. ECOS/Bio-ART is a superior and less expensive process than the present anaerobic or aerobic digestion methods.
Our Current Operations
Ecolocap sold its first NPU system in 2010.
MBT has also developed a new process that blends non-miscible liquids (oil and water) on a submicron level in order to create a new non-emulsified fuel product that it calls EM-Fuel. Tests conducted in the City of Brisbane, Australia have verified all claims to emissions and savings.
Given the turmoil in the Mideast M-Fuel is being evaluated by African and Caribbean nations where the diesel is the main source of power generation as the immediate way to reduce costs, and as an ancillary benefit is the reduction of emission.
In April 2011, MBT announced the execution of a purchase agreement with Empresas Energy Partners Chile Generadora de Energia LTDA (EPC) for the shipment of an NPU-10 series fuel emulsion plant to Degan, Chile to produce M-Fuel.
In July 2011, MBT shipped to Empresas Energy Partners Chile Generadora de Energia LTDA (EPC), for testing purpose, an NPU-10 series fuel emulsion plant to Degan, Chile to produce M-Fuel.
In 2012, Michael Siegel CEO and Jeung Kwak, Chairman have travelled to Ukraine to meet with the Ministry of Energy and Coal. They have presented the non-emulsified fuel product M-Fuel.
In 2012, we have sent samples to Great Britain and Ireland for testing in furnace applications.
In October 2013, we received an investment that was used to supply potential orders of D-20 (kerosene, methanol and water emulsion for the heating of poultry aviaries) from chicken farms and duck farms in Korea
On February 17, 2015, 1 for 2,000 reverse-stock split would be announced on FINRA's daily list and this corporate action would take effect at the open of business February 18, 2015. The reverse-stock split has been presented retroactively in this filing.
On December 19, 2016, we entered into a Supply Agreement (the "Supply Agreement") with Lakeshore Recycling Systems LLC wherein we agreed to manufacture and supply equipment and products to LLC for resale or lease to Lakeshore and LLC's customers.
Our Vision
EcoloCap brings together the innovation, engineering, and industry knowledge to create products that have a significant-constructive and quantifiable-impact on the environment, while cost-effectively enhancing intrinsic performance characteristics. With these ground-breaking alternative energy products, EcoloCap is uniquely positioned to unleash the power of nanotechnology and revolutionize the world largest markets. That include: Emulsified HFO (M-Fuel). Bio_Diesel from high fatty acid sources. Old tires to syn-gas, diesel and Charcoal Conversion of low grade coal to syn-gas, methane and charcoal. Low emission conversion of Municipal Waste to steam.
EcoloCap Solutions Inc. is an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop, manufacture and sell cleaner alternative energy products. We bring together the technology, engineering, and operational management for the successful development of environmentally significant products and projects. Our business approach combines science, innovation, and market-ready solutions to achieve environmentally sustainable and economically advantageous, power and energy management practices in the following areas:
·
On-Road Transportation: EV/PHEV, trucks, buses, public fleets, mass transit fleets, private fleets
·
Off-Road Transportation: marine engines, locomotives, construction equipment
·
Industrial: power plants, manufacturing plants, boilers, furnaces, turbines, driers, kilns
·
Government: military, defense contractors, systems integrators, aerospace, propulsion systems
ECOS/Bio-ART is a cost-effective fermenter designed to continuously manage manure problems, farm animal mortality in an environmentally sound way. ECOS/Bio/ART is cost effective. We have programs for both small and large scale animal production areas and if offers the following benefits:
·
Reduces Odor and disease-causing organisms
·
Eliminate Lagoons
·
Eliminates ground and water contamination
·
Hides animal decomposition from public view
·
Produces a fertilizer that can be used as a soil enhancement
Competition
The M-Fuel technology is unique and is superior to any type of emulsion fuel at reduced selling process than the pre-processed fuel. In our process, we recover the free SOx and NOx present in fuel before processing. No other emulsion process eliminates heavy metals, S and N from the fuel prior to processing of the fuel. This process will also be marketed as a standalone process for the elimination of Sulphur from fuel oil.
The bio-diesel processing system makes diesel biodiesel from wasted fats. The MBT process is superior to competing process and at 25% of the cost. The MBT process is the only process that produces 99% pure glycerine by product.
The markets in which we do business are highly competitive. In the market in which we operate, there are many competitors, some of which are significantly larger, have access to much more important resources or capital than us, or have established reputations among potential customers.
ITEM 1A.
ITEM 1A.
RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 1B.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2.
PROPERTIES.
We do not own any real estate. We do not plan on investing in real estate in the near future. We are currently renting office space in Barrington IL on a month to month basis for $2,001 per month. The Company believes that its current office facilities will not be sufficient for the foreseeable future.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS.
We are not presently a party to any litigation.
ITEM 4.
ITEM 4.
MINE SAFETY DISCLOSURES.
None.
PART II
ITEM 5.
ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority (FINRA) under the symbol "ECOS".
The following table sets forth for the periods indicated the high and low close prices for the Common Shares in U.S. Dollars. These quotations reflect only inter dealer prices, without retail mark up, mark down or commissions and may not represent actual transactions.
Holders
As of June 30, 2015, we had forty-nine stockholders of record.
Dividends
We have never declared or paid cash dividends. There are currently no restrictions which limit our ability to pay dividends in the future.
Securities authorized for issuance under equity compensation plans
On March 31, 2008, we filed a new Equity Incentive Plan (the "Plan"), effective as of March 31, 2008. On March 30, 2006, we adopted the 2006 Equity Incentive Plan (the "Plan"), effective as of March 24, 2006. Under the Plan, we may issue options, stock appreciation rights, restricted shares, deferred shares or performance shares. The maximum number of such shares of our common stock that may be issued under the Plan is 2,000,000 shares. Our officers, directors, employees, and consultants, as well as those of our subsidiaries, may participate in the Plan, as our Compensation Committee may deem to be advisable and in our best interests. No one individual may be awarded options to purchase more than 500,000 shares in any one fiscal year. No one individual may be granted more than 250,000 shares in any one fiscal year. The terms and conditions of each grant shall be as set forth in an award agreement approved by the Compensation Committee.
Equity Compensation Plan Information
Registration Statement
On November 17, 2010, a Registration Statement on Form S-8 (the "Registration Statement") was filed by Ecolocap Solutions, Inc., a Nevada corporation (the "Company" or the "Registrant"), and the Ecolocap Solutions Inc. 2010 Non-Qualified Stock Option Plan (the "Plan") relating to 10,000,000 shares of its Common Stock, par value $0.00001 per share (the "Common Stock"), to be offered and sold to accounts of eligible persons of the Company under the Plan.
As of December 31, 2014, 10,000,000 shares of common stock have been issued pursuant to this Offering, in compensation for services.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Company and Affiliated Purchasers
None.
Section 15(g) of the Securities Exchange Act of 1934
Our company's shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as "bid" and "offer" quotes, a dealer's "spread" and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your shares.
ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 7.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Operations
The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K for the year ended December 31, 2014 (this "Report"). This Report contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words "believes", "anticipates," "expects" and the like, constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.
Business Plan
Ecolocap is negotiating with a factory in Korea that would enable the Company to build 6 NPU and NPW's machine per month.
Results of Operations
For the Years ended December 31, 2014 and 2013
Overview
We incurred net losses of $2,139,966 for the year ended December 31, 2014 as compared to a net loss of $2,024,207 for the year ended December 31, 2013. There has been a decrease of $1,544,819 in gain on derivatives liabilities at market, a decrease in compensation gain of $116,925 and a decrease in interest expenses of $1,384,063 mainly attributable to the interest expense resulting from derivative liabilities.
Sales
For the years ended December 31, 2014 and 2013, we recorded no sales.
Total Cost and Expenses
During the year ended December 31, 2014, we incurred Total Costs and Expenses of $682,315, a decrease of 10% from the year ended December 31, 2013.
Selling, General and Administration
During the year ended December 31, 2014, we incurred selling, general and administrative expenses of $682,315, as compared to $689,381 for the year ended December 31, 2013 for a decrease of 1%.
Interest
We calculate interest in accordance with the respective notes payable. For the year ended December 31, 2014, we incurred $953,918 as compared to $2,518,830 for the year ended December 31, 2013.The decrease is caused by interest expense on decreased borrowings and less interest expense recorded upon issuance of convertible debt in which the debt discount related to the conversion feature recorded as a derivative exceed the face value of the note.
Liquidity and Capital Resources
At December 31, 2014, we had $0 in cash, as opposed to $1,237 in cash at December 31, 2013. Total cash used in operations for the year ended December 31, 2014 was $595,547. As a result of its new business plan, management estimates that cash requirements through the end of the fiscal year ended December 31, 2015 will be between $2.0 million to $5.5 million. As of the date of this Report, we do not have available resources sufficient to cover the expected cash requirements through the end of the first quarter of 2015 or the balance of the year. As a result, there is substantial doubt that we can continue as an ongoing business without obtaining additional financing. Management's plans for maintaining our operations and continued existence include selling additional equity securities and borrowing additional funds to pay operational expenses. There is no assurance we will be able to generate sufficient cash from operations, sell additional shares of Common Stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue our existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.
We had total assets of $0 as of December 31, 2014. This was a decrease of 218,218, or 100%, as compared to total assets of $218,218 as of December 31, 2013. The increase was primarily attributable to a provision for bad debts on the note receivable.
We had total current liabilities of $5,310,283 as of December 31, 2014. This was an increase of $973,477 or 22%, as compared to current liabilities of $4,336,806 as of December 31, 2013. The net increase was attributable to note payables, note payables stockholders and accrued expenses and sundry current liabilities.
Our financial condition raises substantial doubt about our ability to continue as a going concern. Management's plan for our continued existence includes selling additional stock through private placements and borrowing additional funds to pay overhead expenses while maintaining marketing efforts to raise our sales volume. Our future success is dependent upon our ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue as a going concern.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Memorandum. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
We have only had operating losses which raise substantial doubts about our viability to continue our business and our auditors have issued an opinion expressing the uncertainty of our company to continue as a going concern. If we are not able to continue operations, investors could lose their entire investment in our company.
Limited Operating History
We have a history of operating losses, and may continue to incur operating losses. We incurred losses since inception. We had negative working capital as of December 31, 2014 of $5,310,283 (compared with $4,118,588 for the same period last year), and a stockholders' deficit of $5,310,283 as of December 31, 2014 (compared with a stockholders' deficit of $4,118,588 as of December 31, 2013). These factors, among others raise substantial doubt about our ability to continue as a going concern. As a result of these factors, our auditors have issued an opinion in their audit report for the year ended December 31, 2014 expressing uncertainty about the ability of our Company to continue as a going concern. This means that there is substantial doubt whether we can continue as an ongoing business without additional financing and/or generating profits from our operations.
Contractual Obligations
We were the party to a lease for the Company's Barrington office, at a minimum annual rent of approximately $24,000 per year. The Barrington lease expired in May 2013. The rent is on a month to month basis.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements other than as described above.
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
ITEM 7A.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 8.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
EcoloCap Solutions, Inc.
We have audited the accompanying consolidated balance sheet of EcoloCap Solutions, Inc. and its subsidiary (collectively, the "Company") as of December 31, 2014, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the entity's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of EcoloCap Solutions, Inc. and its subsidiary as of December 31, 2014, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
March 22, 2017
Paritz & Company, P.A.
15 Warren Street, Suite 25
Hackensack, New Jersey 07601
(201)342-7753
Fax: (201) 342-7598
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Ecolocap Solutions, Inc.
Barrington, Illinois
We have audited the accompanying consolidated balance sheet of Ecolocap Solutions, Inc. as of December 31, 2013, and the related statements of operations, changes in stockholders deficiency, and cash flow for the year than ended. Ecolocap Solutions Inc's management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ecolocap Solutions, Inc. as of December 31, 2013, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters are also described in Note 3. The financial statement does not include any adjustments that might result from the outcome of this uncertainty.
/s/ Paritz & Company, P.A.
Hackensack, NJ 07601
April 14, 2014
ECOLOCAP SOLUTIONS INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2014 and 2013
See Notes to Financial Statements
ECOLOCAP SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS (DEFICIT)
See Notes to Financial Statements
ECOLOCAP SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
See Notes to Financial Statements
ECOLOCAP SOLUTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
See Notes to Financial Statements
ECOLOCAP SOLUTIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS
The Company was an active business from 2005 through 2006 and was involved in the artificial sport surface. From 2007 through September 2010, the Company was looking for new business and commenced the Carbon Credits (CER'S) business. In the 2009, the Company acquired a participation in Micro Bubble Technologies Inc. and became an integrated and complementary network of environmentally focused technology company. The Company currently has operations but limited revenues.
EcoloCap Solutions Inc. is an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop and sell cleaner alternative energy products. We bring together the technology, engineering, and operational management for the successful development of environmentally significant products and projects. Our business approach combines science, innovation, and market-ready solutions to achieve environmentally sustainable and economically advantageous, power and energy management practices in the following areas:
M-Fuel
EcoloCap Solutions Inc. developed M-Fuel, an innovative suspension fuel that far exceeds all conventional fuels' costs and efficiencies. This environmentally-friendly and economical product is designed to offer fully scalable and customizable fuel solutions that will increase efficiency, lower operating costs, and reduce emissions. M -Fuel is a suspension mixture of 60% heavy oil, 40% H plus O2 molecules, and a 0.3% stabilizing additive. The production of M-Fuel takes place in our Nano Processing Units (NPU), a self contained device that is sized for output. The NPU's can be configured to operate in conjunction with an engine or burner to sully M-Fuel on demand, or pre-manufactured for delivery. M-Fuels unique burning process facilitates increased efficiency, resulting in reduced emissions by 60%, reduced fuel consumption by 40%, and cut costs by up to 25%.
ECOS/BIO-ART
ECOS/Bio-ART is a patented air injected high-speed aerobic biological fermentation technology, utilizing uniquely cultured Bacillus, and incorporated into a specifically designed in-vessel unit. The remediation process takes seven days and reduces moisture content to an average between 12%-25% on an output equal to 1/3 the input. The output can be used as organic fertilizer, animal feed, animal bedding or biomass. The computer controlled process monitors the temperature on 3 different levels. The technology reduces the costs associated with food waste disposal and in the process reduces the environmental impact or methane greenhouse gas production, provide a healthier life for all and create viable organic byproducts.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its subsidiary Micro Bubble Technologies Inc. All significant inter-company accounts and transactions have been eliminated.
CASH
The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company's accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company adopted the provisions of ASC Topic 820, "Fair Value Measurements and Disclosures", which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, deposits, prepaid expenses, notes payable, and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. 820 describes three levels of inputs that may be used to measure fair value:
-
level l - quoted prices in active markets for Identical assets or liabilities
-
level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable
-
level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The carrying amounts of cash, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying amounts of our short term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuance of warrants, are comparable to rates of returns for instruments of similar credit risk.asset or paid to transfer a liability (an exit
INCOME TAXES
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
USE OF ESTIMATES
In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the income statement. Actual results could differ from those estimates.
REVENUE RECOGNITION
The Company's business plan is to sell machinery used to prepare M-fuel. The machinery is manufactured for the Company by a third-party in Korea. Revenue is recognized when the following conditions are satisfied:
i) persuasive evidence that an agreement exists;
ii) the risks and rewards of ownership pass to the purchaser including delivery of the product;
iii) the selling price is fixed and determinable; or,
iv) collectively is reasonably assured.
CONVERTIBLE INSTRUMENTS
We evaluate and account for conversion options embedded in convertible instruments in accordance with ASC 815 "Derivatives and Hedging Activities".
Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
We account for convertible instruments (when we have determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: We record when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.
LOSS PER COMMON SHARE
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net loss, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities.
STOCK BASED COMPENSATION
We recognize compensation expense for stock-based compensation for employees in accordance with ASC Topic 718. For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based awards, we calculate the fair value of the award on the date of grant in the same manner as employee awards, however, the awards are revalued at the end of each reporting period in accordance with ASC 505 and the pro rata compensation expense is adjusted accordingly until such time the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based award as calculated on the measurement date, which is the date at which the award recipient's performance is complete. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.
LONG-LIVED ASSETS
Long-lived assets, including fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition. If such cash flows are not sufficient to support the asset's recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value. The determination of future cash flows, as well as the estimated fair value of long-lived assets, involves significant estimates on the part of management. In order to estimate the fair value of a long-lived asset, the Company may engage a third-party to assist with the valuation. If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows or fair value, the Company could be required to recognize impairment charges in the future.
IMPAIRMENT:
At each reporting date, the Company assesses whether there is any indication that its intangible assets, or property, plant and equipment are impaired. If any such indication exists, the Group estimates the recoverable amount of the asset and the impairment loss if any. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. If an asset does not generate cash flows that are independent from those of other assets or groups of assets, recoverable amount is determined for the cash-generating unit to which the asset belongs. The recoverable amount of an asset is the higher of its fair value less cost to sell and its value in use. Value in use is the present value of future cash flows from the asset or cash-generating unit discounted at a rate that reflects market interest rates adjusted for risks specific to the asset or cash- generating unit that have not been reflected in the estimation of future cash flows. If the recoverable amount of an intangible or tangible asset is less than its carrying value, an impairment loss is recognised immediately in profit or loss and the carrying value of the asset reduced by the amount of the loss. A reversal of an impairment loss on intangible assets (excluding goodwill) or property, plant and equipment is recognised as it arises provided the increased carrying value does not exceed that which it would have been had no impairment loss been recognised. Impairment losses on goodwill are not reversed.
The amounts recorded as fixed impairment loss during the year ended December 31, 2014 and 2013 are $0 and $302,750. This impairment loss relates to our testing equipment as our management has adjusted downward the carrying value of our testing equipment because the equipment has not been generated the income over the past year.
PROPERTY AND EQUIPMENT AND DEPRECIATION POLICY
Property and equipment are recorded at cost. Depreciation is provided for in amounts sufficient to amortize the costs of the related assets over their estimated useful lives on the straight-line basis over the estimated useful life of the asset ranging from 3 to 7 years.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to expense as incurred. For the year ended 2014 and 2013 the amounts charged to research and development expenses was $0 and $0.
NOTE 3 - GOING CONCERN
The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company incurred a net loss of $2,139,966 for the year ended December 31, 2014.The Company has negative working capital of $5,310,283 at December 31, 2014 and a stockholders' deficit of $5,310,283 at December 31, 2014. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.
Management's plans for the Company's continued existence include selling additional stock and borrowing additional funds to pay overhead expenses.
With the opportunities created by the Batteries and M Fuel, management has begun the process of redeploying its assets, identifying business strategies that offers above average profit potential and identifying the resources necessary to successfully execute it new strategic direction.
Recognizing the opportunity this new market represents, the Company has developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value.
The Company's future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds.
The Company's inability to obtain additional cash could have a material adverse effect on its financial position, results of operations and its ability to continue in existence. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE-4 - NOTE RECEIVABLE
On December 17, 2013, the Company signed a receivable note with a KMBT, a manufacturer of machinery, in the aggregate amount of $285,000, at an interest rate of eight percent (8%) per annum. The drawdown notes can be prepaid upon five days notice and is payable thirteen months following its issuance. The amount receivable from KMBT at December 31, 2014, is shown net of the remaining unearned interest of $0 and a provision for bad debt of $290,827 resulting in a balance of $0.
NOTE 5 - ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES
Accrued expenses consisted of the following at December 31:
NOTE 6 - CONVERTIBLE NOTES PAYABLE
During the years ended December 31, 2014 and 2013, the Company received the proceeds of various loans which are convertible at amounts ranging from 40% to 60% of the market price of the common shares of the Company at the time of conversion and bear interest at 8% per annum. The amounts received during the years ended December 31, 2014 and 2013 are $86,500 in cash, $140,000 in non-cash borrowings related to the default on Tonaquint loans in 2014 and $668,983, respectively.
The convertible feature of these loans, due to their potential settlement in an indeterminable number of shares of the Company's common stock has been identified as a derivative. The derivative component is fair value at the date of issuance of the obligation and this amount is allocated between the derivative and the underlying obligation. The difference is recorded as a debt discount and amortized over the life of the debt. The Redwood Management, LLC, Asher Enterprises Inc. and Tonaquint notes are in default as of December 31, 2014.
During the years ended December 31, 2014 and 2013, other convertible debts were converted into common shares of the Company. During the year ended December 31, 2014 and the year ended December 31, 2013, note payable of $186,312 plus accrued interests of $28,547 and $462,330 plus accrued interests of $29,984 were made into 1,841,012 shares and 1,117,497 shares respectively.
A summary of the amounts outstanding as of December 31, 2014 and 2013 is as follows:
NOTE 7 - NOTES PAYABLE - STOCKHOLDERS
The stockholders increase of $344,542, are additions for accrued salaries, net of payments made during the year. These were not actual cash proceeds. The amount owed to stockholders at December 31, 2014 is $1,311,180. These loans are non-interest bearing but interest is being imputed at 5.00% per annum and are payable on demand. An amount of $56,589 has been imputed in 2014.
The amount owed to Hanscom K. Inc. at December 31, 2014 and 2013 is $31,080. These loans are non-interest bearing and are payable on demand.
During 2014, the Company did not receive any loans from RCO Group Inc. The amount owed to RCO Group Inc. at December 31, 2014 and 2013 is $28,500. These loans are non-interest bearing and are payable on demand.
During the years ended December 31, 2014 and 2013, the Company received the proceeds of various loans which are convertible at amounts of 50% of the market price of the common shares of the Company at the time of conversion and bear interest at 8% per annum. The amounts received during the years ended December 31, 2014 and 2013 are $23,528 and $27,032, respectively.
The convertible feature of these loans, due to their potential settlement in an indeterminable number of shares of the Company's common stock has been identified as a derivative. The derivative component is fair valued at the date of issuance of the obligation and this amount is allocated between the derivative and the underlying obligation. The difference is recorded as a debt discount and amortized over the life of the debt.
During these same periods, other convertible debts were converted into common shares of the Company. During the years ended December 31, 2014 and 2013, total loan conversions of $48,616 plus accrued interests of $4,927 and $104,738 plus accrued interests of $482 were made into 655,621 and 126,149 shares respectively.
A summary of the amounts outstanding as of December 31, 2014 and 2013 is as follows:
NOTE 8 - DERIVATIVE LIABILITIES
During the years ended December 31, 2014 and 2013, the Company recorded various derivative liabilities associated with the convertible debts discussed in Notes 7 and 8. The Company computes the value of the derivative liability at the issuance of the related obligation using the Black Scholes Method using a risk free rate of 0.14%, volatility rates ranging between 228.63% and 352.00% and a forfeiture rate of 0.00%. The derivative liability at December 31, 2014 and 2013 is as follows:
Financial assets and liabilities recorded at fair value in our balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:
Fair Value of Financial Instruments
Level 1 - Quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.
Level 3 - Inputs reflecting management's best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2014
Financial assets and liabilities measured at fair value on a recurring basis are summarized below for the year ended December 31, 2013
The following table summarizes the derivatives liability from January 1st through December 31, 2014
NOTE 9 - CAPITAL STOCK
The Company is authorized to issue 10,000,000,000 shares of common stock (par value $0.0001) of which 3,934,026 were issued and outstanding as of December 31, 2014 and 1,437,393 shares of common stock issued and outstanding as of December 31, 2013.
During 2014, the following convertible debt owners converted loans plus accrued interests into common shares of the Company
During 2013, the following convertible debt owners converted loans plus accrued interests into common shares of the Company
NOTE 10 - INCOME TAXES
The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes under enacted tax laws and rates.
The tax effects of temporary differences that give rise to deferred tax assets are presented below:
Components of the Company's deferred tax liabilities and assets are as follows:
The income tax provision (benefit) consists of the following:
As of December 31, 2014 the company had net operating loss carry forwards of approximately $11,058,529 which are being carried forward for subsequent years. Such net operating loss carry forwards expire as follows;
The Company's federal and state income tax returns for the tax years 2010 and forward remain subject to examination.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company was party to a lease for its Barrington office, at a minimum annual rent of approximately $24,000 per year. The Barrington lease expired in May 2013 and the Company remains in these premises on a month to month basis. The rent expense charged to operations for the years ended December 31, 2014 and 2013 was $24,012 and $26,012, respectively.
NOTE 12 - RELATED PARTY TRANSACTIONS
The stockholders notes payable increase of $344,542, are additions for accrued salaries, net of payments made during the year. These were not actual cash proceeds. These loans carry an interest of 5.00% and are payable on demand.
For the years ended December 31, 2014 and 2013, interest paid to related party totaled $97,525 and $76,635.
NOTE 13 - SUBSEQUENT EVENTS
FINRA advised us that 1 for 2,000 reverse-stock split would be announced on February 17, 2015 on FINRA's daily list and the reverse split would take effect at the opening of business on February 18, 2015. The new symbol will be ECOSD. The D will be removed in 20 business days.
Accordingly, the market price of our common stock now reflects the 1 for 2,000 share reverse-stock split. The reverse-stock split has been retroactively applied to all shares amount in this filing.
During the six month period ended June 30, 2015, the following convertible debt owners converted loans into common shares of the Company
On December 19, 2016, we entered into a Supply Agreement (the "Supply Agreement") with Lakeshore Recycling Systems LLC wherein we agreed to manufacture and supply equipment and products to LLC for resale or lease to Lakeshore and LLC's customers.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Previous independent registered public accounting firm
From November 2, 2005 through February 9, 2017, Paritz & Company, P.A. ("Paritz") was the independent registered public accounting firm of Ecolocap Solutions Inc. (the "Company"). On February 9, 2017, we notified Paritz we were terminating it as our independent certifying accountant.
None of our previous audit reports, in particular the audit reports for the fiscal years ended December 31, 2013 and December 31, 2012, contained any adverse opinion or disclaimer of opinion, nor were qualified or modified as to uncertainty, audit scope, or accounting principles, except for a going concern qualification on the Company's financial statements for the fiscal years ended December 31, 2013 and December 31, 2012.
During the Company's two most recent fiscal years, the subsequent interim periods thereto, and through February 13, 2017, there were no disagreements (as defined in Item 304 of Regulation S-K) with the Paritz on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Paritz would have caused it to make reference in connection with its opinion to the subject matter of the disagreement. Further, during the Company's two most recent fiscal years, the subsequent interim periods thereto, and through February 13, 2017, there were no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
We furnished Paritz with a copy of this disclosure on February 14, 2017, providing Paritz with the opportunity to furnish the Company with a letter addressed to the Commission stating whether he agrees with the statements made by the Company herein in response to Item 304(a) of Regulation S-K and, if not, stating the respect in which he does not agree. A copy of Paritz's response is filed as Exhibit 16.1 to our Form 8-K filed with the SEC on February 17, 2017.
New independent registered public accounting firm
On February 9, 2017, we engaged MaloneBailey, LLP, 9801 Westheimer Road, Houston, Texas 77042, telephone 713-343-4200, an independent registered public accounting firm, as our principal independent accountant with the approval of our board of directors. MaloneBailey, LLP formerly Malone & Bailey, PC, was previously our independent certifying accountant from May 20, 2004 to November 2, 2005.
During the two most recent fiscal years and through the date of engagement, we have not consulted with MaloneBailey, LLP regarding either:
1.
The application of accounting principles to any specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us nor oral advice was provided that MaloneBailey, LLP concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or
2.
Any matter that was either subject of disagreement or event, as defined in Item 304(a)(1)(iv)(A) of Regulation S-K and the related instruction to Item 304 of Regulation S-K, or a reportable event, as that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-K.
ITEM 9A.
ITEM 9A.
CONTROLS AND PROCEDURES.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of December 31, 2014, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board were the lack of a functioning audit committee and segregation of duties, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. The aforementioned material weaknesses were identified by our management in connection with the review of our financial statements for the year ended December 31, 2014.
Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management's report in this annual report.
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Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
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Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
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Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2014 that have affected, or are reasonably likely to affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION.
On January 6, 2014, we issued 85,000 shares to Asher Enterprises Inc. in consideration of the conversion of $7,400 in debt owed plus $1,100 of interests to Asher Enterprises in exchange for 85,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On January 6, 2014, we issued 71,874 shares to AGS Capital Group LLC in consideration of the conversion of $2,156 in debt owed to AGS Capital Group LLC in exchange for 71,874 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On January 7, 2014, we issued 125,000 shares to Tonaquint Inc. in consideration of the conversion of $30,000 in debt owed to Tonaquint Inc. in exchange for 125,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On January 7, 2014, we issued 134,000 shares to AES Capital Group LLC in consideration of the conversion of $13,400 in debt owed to AGS Capital Group LLC in exchange for 134,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On January 14, 2014, we issued 65,000 shares to JMJ Financial in consideration of the conversion of $6,175 in debt owed to JMJ Financial in exchange for 65,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On January 17, 2014, we issued 95,918 shares to AGS Capital Group LLC in consideration of the conversion of $2,878 in debt owed to AGS Capital Group LLC in exchange for 95,918 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On January 29, 2014, we issued 134,583 shares to Tonaquint Inc. in consideration of the conversion of $16,150 in debt owed to Tonaquint Inc. in exchange for 134,583 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 6, 2014, we issued 107,443 shares to AGS Capital Group LLC in consideration of the conversion of $10,744 in debt owed to AGS Capital Group LLC in exchange for 107,443 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 10, 2014, we issued 100,000 shares to JMJ Financial in consideration of the conversion of $9,500 in debt owed to JMJ Financial in exchange for 100,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 10, 2014, we issued 47,500 shares to Panache Capital LLC in consideration of the conversion of $4,275 in debt owed to Panache Capital LLC in exchange for 47,500 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Panache Capital LLC was furnished with the same information that could be found in a Form S-1 registration statement and Panache Capital LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 20, 2014, we issued 165,646 shares to AES Capital Group LLC in consideration of the conversion of $10,616 in debt owed plus $5,949 of interests to AES Capital Group LLC in exchange for 165,646 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AES Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AES Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 21, 2014, we issued 34,593 shares to Panache Capital LLC in consideration of the conversion of $2,018 in debt owed plus $1,100 of interests to Panache Capital LLC in exchange for 34,593 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Panache Capital LLC was furnished with the same information that could be found in a Form S-1 registration statement and Panache Capital LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 24, 2014, we issued 128,958 shares to Tonaquint Inc. in consideration of the conversion of $15,745 in debt owed to Tonaquint Inc. in exchange for 128,958 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 24, 2014, we issued 145,243 shares to AGS Capital Group LLC in consideration of the conversion of $14,524 in debt owed plus $543 of interests to AGS Capital Group LLC in exchange for 145,243 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On February 26, 2014, we issued 105,000 shares to JMJ Financial in consideration of the conversion of $9,325 in debt owed plus $650 of interests to JMJ Financial in exchange for 105,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On March 3, 2014, we issued 134,000 shares to Asher Enterprises Inc. in consideration of the conversion of $13,400 in debt owed to Asher Enterprises in exchange for 134,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On March 3, 2014, we issued 46,803 shares to JMJ Financial in consideration of the conversion of $4,446 in debt owed to JMJ Financial in exchange for 46,803 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. JMJ Financial was furnished with the same information that could be found in a Form S-1 registration statement and JMJ Financial was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On March 14, 2014, we issued 134,000 shares to Asher Enterprises Inc. in consideration of the conversion of $13,400 in debt owed to Asher Enterprises in exchange for 134,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On March 19, 2014, we issued 134,550 shares to Tonaquint Inc. in consideration of the conversion of $16,146 in debt owed to Tonaquint Inc. in exchange for 134,550 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc.was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On March 28, 2014, we issued 18,000 shares to Asher Enterprises Inc. in consideration of the conversion of $700 in debt owed plus $1,100 of interests to Asher Enterprises in exchange for 18,000 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Asher Enterprises Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Asher Enterprises Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On April 9, 2014, we issued 122,138 shares to Tonaquint Inc. in consideration of the conversion of $14,657 in debt owed to Tonaquint Inc. in exchange for 122,138 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On May 2, 2014, we issued 153,050 shares to AGS Capital Group LLC in consideration of the conversion of $15,305 in debt owed to AGS Capital Group LLC in exchange for 153,050 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. AGS Capital Group LLC was furnished with the same information that could be found in a Form S-1 registration statement and AGS Capital Group LLC was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
On May 20, 2014, we issued 208,333 shares to Tonaquint Inc. in consideration of the conversion of $25,000 in debt owed to Tonaquint Inc. in exchange for 208,333 shares of our common stock. The foregoing transaction was made pursuant to the exemption contained in Section 4(2) of the Securities Act of 1933, as amended. Tonaquint Inc. was furnished with the same information that could be found in a Form S-1 registration statement and Tonaquint Inc. was a "sophisticated investor" as that term is defined in court cases and administrative decisions as well as the regulations promulgated by the Securities and Exchange Commission.
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table presents information with respect to our officers, directors and significant employees as of the date of this Report:
Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors.
Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present time, members of the board of directors are not compensated for their services to the board.
Biographical Information Regarding Officers and Directors
Michael Siegel, Chief Executive Officer and President Studied Electrical Engineering at the University of Illinois in Champaign, Illinois, and following college joined the Marine Corps. He has over 30 years of experience in the technology, real estate and international business operations. On September 10, 2009, Michael Siegel was appointed president and principal executive officer. Mr. Siegel is currently a member of the board of directors. Since May 2008, Mr. Siegel has been president of Micro Bubble Technologies Inc., a Nevada corporation located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. He served as President and CEO of International Lottery and Gaming Inc. and Vietnam Telephone Co (Vietelco). From June 1975 to May 2008, Mr. Siegel was president of Siegel Research and Development, Inc., which created gaming, video and other technologies. He was also a general partner in 5 Hotels in the Chicago area. Between 2006 and 2008 Mr. Siegel was president of C Line, Inc.
Robert Egger Jr., Chief Operating Officer. On September 10, 2009, Robert Egger, Jr. was appointed to our board of directors and principal operating officer since July 2008, Mr. Egger has been chief executive officer of Micro Bubble Technologies Inc., our subsidiary corporation, located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. From January 2007 to March 2009, Mr. Egger was partner and general manager of the Liquor Outlet located in Davenport, Iowa. The Liquor Outlet is a wholesale liquor distributor in the State of Iowa. From March 1995 to January 2007, Mr. Egger held various positions with Qwest Communications International located in Denver, Colorado. His responsibilities included lineman, switchman and central office technician before being promoted to management in 2000 when he became a manager for network operations in Iowa overseeing occupational union employees. Mr. Egger holds a Bachelor of Science degree in Business Administration, Magna Cum Laude, from St. Ambrose University, Davenport, Iowa.
Jeung Kwak, Chairman and Director. Since June 16, 2009, Mr. Kwak has been Chairman of EcoloCap Solutions Inc., Jeung Yeal Kwak has for over 25 years specialized in international trade in Korea, Asia, Russia, India, China, and the U.S. Since 1992, he is President of Hanscom K Inc, specialized in international trade in steel products, including steel castings and fabrications and also concrete forms. In May 2008, he co-founded Micro Bubble Technologies Inc., a Nevada corporation located in Barrington, Illinois. Micro Bubble Technologies Inc. is engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies. He attended Korea University and graduated in 1973 with a degree in Biology. Upon graduation, he immigrated to the United States and began his career in Chicago, Illinois.
Dr. Tri Vu Truong, Chief Executive Officer and President. Dr. Truong has served as a director since February 14, 2008. He was chief executive officer and president of the Company from February 14, 2008 until September 10, 2009. He has worked in the environmental sector since 1970, upon completion of his B. Engineering degree, complemented by a Master's degree in Chemical Engineering in 1971 and a Ph.D. degree in Civil Engineering with Environmental Option in 1975. His professional career includes the realization of many major scientific and technical studies and projects. Dr. Truong was responsible in 1977 for the creation and operation of the Permits & Inspections Division of the Montreal Urban Community--Environment Department. He has taught several post-graduate courses at the prestigious Universitéé de Montrééal's ÉÉcole Polytechnique. As President of the Sodexen Environmental Engineering Group since 1981, Dr. Truong has managed numerous major environmental impact projects, including: Comparative study of the environmental impact of dust-palliatives (MTQ 1988, 1989, 1990); Environmental decommissioning of a polystyrene production complex (BASF, 1988-1990); Solid waste management study relating to the closure of the Miron landfill (Montrééal, 1988-90), as well as various research & development projects in the area.
Albert Beerli, Director. Mr. Beerli has served as a director of the Company since March 2006. Mr. Beerli is a scientist, having received his Ph.D. in chemical engineering in 1969. Since 1988 Mr. Beerli has been the Chief Executive Officer of Zenwex AG in Zug, Switzerland. Zenwex AG provides consulting services on scientific and technical matters.
Michel St-Pierre, Acting Chief Financial Officer. Mr. St-Pierre has served as an officer of the Company since July 2006. Mr. St-Pierre is a registered chartered accountant in Quebec, Canada. Before working for the Company, Mr. St-Pierre has served as Chief Financial Officer of a public shell company, Tiger Renewable Energy Limited (formerly known as Tiger Ethanol International Inc. and Arch Management) since January, 2007 and held positions as the Finance Director (comparable to Corporate Treasurer) at SPB Canada Inc. from 2004-2006, Symbior Technologies Inc. from 2003-2004, and Boulangeries Comas Inc. from 2000-2003.
Compliance with Section 16(a) Of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended December 31, 2014 all such filing requirements applicable to our officers and directors were complied with.
Audit Committee
We have a separately-designated audit committee of the board. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of our audit committee charter is filed as an exhibit to this report. Up to February 25, 2009, our Audit Committee consisted of Lim Ping Wai whom was independent director; the full board has carried out the functions and responsibilities since her resignation.
Compensation Committee
The full board carries out the functions and responsibilities of this committee. This committee acts on behalf of our board of directors to approve compensation arrangements for our management and review the compensation paid to our board of directors. A copy of our Compensation Committee Charter was filed with our Form 10-KSB on March 31, 2008.
Nominating and Corporate Governance Committee
The full board carries out the functions and responsibilities of the Nominating and Corporate Governance Committee. This committee acts on behalf of our board of directors and generally to identify and recommend nominees for our board and our committees, identify and recommend candidates for senior management, review and recommend to the board, or independently take, action on various company corporate governance issues, receive and respond to certain complaints raised by our employees regarding alleged illegal acts or behavior-related conduct by board members in violation of our Code of Business Conduct and Ethics, supervise our chief financial officer in the context of the Ethics Code and carry-out other assignments as designated by our board. A copy of the Nominating and Corporate Governance Committee was filed with our Form 10-KSB on March 31, 2008.
Code of Ethics
We adopted a code of ethics on March 26, 2008. We adopted eight Corporate Values (Focus, Respect, Excellence, Accountability, Teamwork, Integrity, Very Open Communications and Enjoying Our Work) to provide a framework for all employees in conducting themselves in their jobs. These policies are not intended to substitute for those Values, but will serve as guidelines in helping employee to conduct our business in accordance with its Values. Compliance requires meeting the spirit, as well as the literal meaning, of the law, the policies and the Values. It is expected that employee will use common sense, good judgment, high ethical standards and integrity in all their business dealings.
As of March 31, 2015 we had five directors. We have adopted those standards for independence contained in the Nasdaq Marketplaces Rules, Rule 4350(d) and Rule 4200(a)(15). Messrs. Siegel, Kwak, Egger, Truong, and Beerli are not independent.
ITEM 11.
ITEM 11.
EXECUTIVE COMPENSATION.
Compensation of Officers
Option award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the grant using the Black-Scholes option-pricing model. The actual value received by the executives may differ materially and adversely from that estimated. A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and other executives for the most recent two years is as follows:
Executive Officer Compensation Table
(1)
Prior to the acquisition of XL Generation AG, the Company's fiscal year ended April 30th. XL Generation AG, our wholly-owned subsidiary, had a fiscal year ending December 31st. Following the acquisition of XL Generation AG, we adopted the fiscal year end of XL Generation AG.
(2)
Mr. Siegel has been appointed president and CEO on September 10, 2009.
(3)
Mr. Kwak has been appointed Chairman and director on June 16, 2009.
(4)
Mr. Egger has been appointed COO on September 10, 2009.
(5)
Mr. St-Pierre has been our chief financial officer since July 28, 2006.
Employment Contracts
None.
Other Executive Officers
During 2014, other than those disclosed above, no other employment contracts have been executed by our company for any other executive officer.
Retirement, Resignation or Termination Plans
We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.
Directors Compensation
The following table sets forth the compensation paid by us to our directors during our fiscal year ended December 31, 2014. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named directors.
Director's Compensation Table
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our sole director other than as described herein.
Indemnification
Pursuant to the articles of incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in its best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorneys fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted for directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is therefore unenforceable.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Report by (i) each of our directors, (ii) each of our officers named in the Summary Compensation Table, (iii) each person who is known by us to be the beneficial owner of more than five percent of our outstanding common stock, and (iv) all directors and executive officers as a group. Except as otherwise indicated below, each person named has sole voting and investment power with respect to the shares indicated. The percentage of ownership set forth below reflects each holder's ownership interest in the 4,327,026 shares of our common stock outstanding as of June 30, 2015.
Amount and Nature of Beneficial Ownership
(1)
The mailing address for each of the listed individuals is c/o Ecolocap Solutions International Inc., 1250 South Grove Avenue, Suite 308, Barrington, Illinois 60010.
(2)
Owner of 5% or more of our common stock. Mr. Siegel, is the President and Chief Executive Officer.
(3)
Owner of 5% or more of our common stock. Mr. Kwak, is Chairman of the Board of Directors.
(4)
Director. Mr. Egger is the Chief Operating Officer.
(5)
Director. Mr. Truong is the President and Chief Executive Officer of United Best Technology Limited.
(6)
Director
(7)
Chief Financial Officer.
(8)
Owner of 5% or more of our common stock.
Equity Incentive Plan
On March 31, 2006, our Board of Directors adopted the 2006 Equity Incentive Plan, which authorizes us to issue options for the purchase of up to 2,000,000 shares of our common stock, pursuant to the terms and conditions set forth therein. The Equity Incentive Plan authorizes the issuance of incentive stock options (ISO) and non-qualified stock options (NQOs) to our employees, directors or consultants.
During the year ended December 31, 2006, we issued 1,455,000 stock options to our officers and directors with an average exercise price of $1.05 per share. Of the stock options issued, 320,000 were vested on September 6, 2006, 150,000 were vested on September 7, 2006, 25,000 were vested on September 15, 2006, 150,000 were vested on December 25, 2006, 660,000 will vest on September 6, 2007 and the balance will vest on September 6, 2008.
These options expired on September 6, 2008 (240,000), September 15, 2008 (25,000), December 25, 2006 (150,000), September 6, 2013 (440,000) and September 6, 2016 (600,000). The options had a fair value of $1,526,989 at the date of grant.
During the month of December 2007, we issued 425,000 stock options to our officers and directors with an average exercise price of $1.25 per share. All of the stock options issued vested on December 12, 2007. The options had a fair value of $530,543 at the date of grant.
As of March 30, 2015, we had one officer eligible to receive options under the Equity Incentive Plan. Options to buy 600,000 shares of common stock were outstanding under the Equity Incentive Plan and 120,000 shares remained available for grants under this plan.
Outstanding Equity Awards at Fiscal Year End for Named Executives
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The stockholders increase of $344,542, are additions for accrued salaries, net of payments made during the year. These were not actual cash proceeds. These loans carry an interest of 5.00% and are payable on demand.
ITEM 14.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(1) Audit and Audit Related Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
(2) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
(3) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
(4)
Our audit committee's pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approved all accounting related activities prior to the performance of any services by any accountant or auditor.
(5)
The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full time, permanent employees was 0%.
Audit Committee Pre-Approval Policies
Our Audit Committee reviewed the audit and non-audit services rendered by Paritz & Company, P.A. during the periods set forth above and concluded that such services were compatible with maintaining the auditors' independence. All audit and non-audit services performed by our independent accountants are pre-approved by our Audit Committee to assure that such services do not impair the auditors' independence from us.
PART IV
ITEM 15.
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following is a complete list of exhibits filed as part of this annual report:
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer.
X
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Financial Officer.
X
99.1
Audit Committee Charter.
10-KSB
3/31/08
99.1
99.2
Executive Committee Charter.
10-KSB
3/31/08
99.2
99.3
Nominating and Corporate Governance Committee Charter.
10-KSB
3/31/08
99.3
99.4
Stock Option Plan.
10-KSB
3/31/08
99.4
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension - Schema.
101.CAL
XBRL Taxonomy Extension - Calculations.
101.DEF
XBRL Taxonomy Extension - Definitions.
101.LAB
XBRL Taxonomy Extension - Labels.
101.PRE
XBRL Taxonomy Extension - Presentation.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 21st day of March, 2017.
ECOLOCAP SOLUTIONS INC.
BY:
MICHAEL SIEGEL
Michael Siegel
President, Principal Executive Officer and a member of the Board of Directors
BY:
MICHEL ST-PIERRE
Michel St-Pierre
Principal Financial Officer, Principal Accounting Officer and a member of the Board of Directors
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated.
EXHIBIT INDEX