UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to
_______________
Commission File Number: 333-150463
ECOEMISSIONS SOLUTIONS INC.
(Exact Name of Registrant as Specified in its Charter) (Formerly known
as RESOURCE GROUP, Inc.)
Delaware
|
80-0154562
|
(State of other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
455 South 48
th
St., Suite 106,
Tempe, AZ 85281
(Address of Principal Executive Offices) (Zip Code)
Former Address
3250 Oakland Hills, Fairfield California
94534
928-474-4215
(Registrant's Telephone Number,
including Area Code)
Securities Registered Pursuant to Section 12(B) of the Act: None
Securities Registered Pursuant to Section 12(G) of the Act:
Common Stock, par value $.001 per share
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [x]
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes
[x] No [ ]
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate website, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
Yes [ ] No [x]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form
10-K.
[x]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller
reporting company. See definition of " large accelerated filer," or a smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ]
|
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
|
(Do not check if a
smaller reporting company)
|
Smaller reporting company [X]
|
Indicate by check mark if the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
State the aggregate market value
of the voting and non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the
registrants most recently completed first fiscal quarter. Aggregate Market
Value as of November 30, 2010: $17,304,876 based on common shares outstanding of
70,010,000
State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date.
70,010,000 shares of Common Stock, $0.001 par value, as of
January 19, 2011 Documents incorporated by reference - None
State issuer's revenues for its most recent fiscal year: Nil
PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
EcoEmissions Solutions, Inc. (Formerly known as Resource Group
Inc. (A Development Stage Company) Condensed Interim Financial Statements
(Unaudited)
The Companys outside firm of Certified Public Accountants have
not completed their review of our financial statements due to the complexity of
the transactions we entered into near the end of the quarter ended August 31,
2010.
EcoEmissions Solutions, Inc.
|
(formerly known as Resource Group Inc.)
|
(A Development Stage Company)
|
Condensed Balance Sheets
|
(Unaudited)
|
|
|
November 30,
|
|
|
February
|
|
|
|
|
|
|
28,
|
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash
|
$
|
19,776
|
|
$
|
1,376
|
|
Inventory
|
|
48,717
|
|
|
-0-
|
|
Prepaid Expenses
|
|
488,250
|
|
|
-0-
|
|
Total Current Assets
|
|
556,743
|
|
|
1,376
|
|
Intellectual Property (note 7)
|
|
-0-
|
|
|
-0-
|
|
Total Assets
|
|
556,743
|
|
|
1,376
|
|
LIABILITIES & STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Accounts Payable
|
|
16,422
|
|
|
|
|
Accounts Payable related party
|
|
786,274
|
|
|
758
|
|
Accrued Liabilities
|
|
2,500
|
|
|
3,500
|
|
Loans Payable Related Parties
-Principal(Note 5)
|
|
126,759
|
|
|
56,126
|
|
Loans Payable Related Parties Accrued Interest (Note 5)
|
|
14,311
|
|
|
7,888
|
|
Total Current Liabilities
|
|
946,266
|
|
|
68,272
|
|
Convertible Securities (note 8)
|
|
2,508,853
|
|
|
-0-
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
Capital Stock
|
|
|
|
|
|
|
Authorized:
Issued and outstanding at
November 30, 2010 and February 28, 2010
70,010,000 and 48,150,000
common shares,
|
|
68,120
|
|
|
48,150
|
|
Additional paid-in capital
|
|
6,549,647
|
|
|
13,597
|
|
Preferred Stock
|
|
3,600,000
|
|
|
-0-
|
|
Deficit Accumulated During the Development Stage
|
|
(13,117,979
|
)
|
|
(128,499
|
)
|
Accumulated OCI-Foreign Exchange
|
|
(144
|
)
|
|
(144
|
)
|
|
|
|
|
|
|
|
Total Shareholders Equity
|
|
(2,898,376
|
)
|
|
(66,896
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity
|
$
|
556,743
|
|
$
|
1,376
|
|
The accompanying notes are an integral part of these Financial
Statements
F-2
EcoEmissions Solutions Inc
|
(formerly known as Resource Group Inc)
|
(A Development Stage Company)
|
Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
Three
|
|
|
|
|
|
|
|
|
amounts
|
|
|
|
Three
|
|
|
Month
|
|
|
|
|
|
|
|
|
from
|
|
|
|
Month
|
|
|
Period
|
|
|
Nine Month
|
|
|
Nine Month
|
|
|
Inception
|
|
|
|
Period
|
|
|
Ending
|
|
|
Period
|
|
|
Period
|
|
|
April 2,
|
|
|
|
Ending
|
|
|
November
|
|
|
Ending
|
|
|
Ending
|
|
|
2007 to
|
|
|
|
November 30,
|
|
|
30,
|
|
|
November 30,
|
|
|
November 30,
|
|
|
November 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
$
|
55,398
|
|
$
|
-
|
|
$
|
55,398
|
|
$
|
-
|
|
$
|
55,398
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organization Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
Office and Administration
|
|
17,321
|
|
|
137
|
|
|
22,558
|
|
|
1,522
|
|
|
35,706
|
|
Professional Fees
|
|
248,000
|
|
|
4,326
|
|
|
284,500
|
|
|
43,938
|
|
|
361,463
|
|
Directors Compensation
|
|
-
|
|
|
-0-
|
|
|
-
|
|
|
-
|
|
|
247
|
|
Impairment Expense-Intellectual
|
|
-
|
|
|
-
|
|
|
12,675,235
|
|
|
-
|
|
|
12,700,488
|
|
|
|
265,321
|
|
|
4,463
|
|
|
12,982,293
|
|
|
45,460
|
|
|
13,102,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss from Operations
|
|
209,923
|
|
|
4,463
|
|
|
12,926,895
|
|
|
46,460
|
|
|
13,047,506
|
|
Other Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
59,373
|
|
|
1,187
|
|
|
62,585
|
|
|
2,740
|
|
|
70,473
|
|
Provision for Income Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Net Loss For The Period
|
$
|
(269,296
|
)
|
$
|
(5,650
|
)
|
$
|
(12,989,480
|
)
|
$
|
(47,482
|
)
|
$
|
(13,117,979
|
)
|
Basic And Diluted Loss Per Common Share
|
|
(0.038
|
)
|
|
(0.0001
|
)
|
|
(0.185
|
)
|
|
(0.0006
|
)
|
|
|
|
Weighted Average Number of Common Shares
Outstanding
|
|
70,010,000
|
|
|
108,000,000
|
|
|
70,010,000
|
|
|
108,000,000
|
|
|
|
|
* Less than 0.001 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these Financial
Statements
F-3
EcoEmissions Solutions, Inc
|
(formerly known as Resource Group, Inc)
|
(A Development Stage Company)
|
Condensed Statements of Cash Flows
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
from
|
|
|
|
Nine Month
|
|
|
Nine Month
|
|
|
Inception
|
|
|
|
period
|
|
|
period
|
|
|
April 2,
|
|
|
|
Ended
|
|
|
Ended
|
|
|
2007 to
|
|
|
|
November 30,
|
|
|
November 30,
|
|
|
November30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
$
|
|
|
$
|
|
|
$
|
|
Net Income (Loss)
|
|
(12,989,480
|
)
|
|
(47,482
|
)
|
|
(13,117,979
|
)
|
Adjustments To Reconcile Net Loss To Net
Cash
|
|
|
|
|
|
|
|
|
|
Provided by Operations
|
|
|
|
|
|
|
|
|
|
Stock Issued for services
|
|
-
|
|
|
-
|
|
|
500
|
|
Issue Dividend
|
|
-
|
|
|
|
|
|
247
|
|
|
|
|
|
|
-
|
|
|
|
|
Impairment
|
|
12,675,235
|
|
|
-
|
|
|
12,700,488
|
|
Change in Assets and Liabilities
|
|
-
|
|
|
-
|
|
|
-
|
|
Increase (decrease) in Accrued Liabilities
|
|
750
|
|
|
|
|
|
2,500
|
|
Increase (decrease) in
Accounts Payable
|
|
293,564
|
|
|
-
|
|
|
399,933
|
|
Increase (decrease) in Accrued Interest-Related Party
|
|
6,423
|
|
|
-
|
|
|
14,311
|
|
Net Cash Provided (Used) by Operating Activities
|
|
(13,508
|
)
|
|
(47,482
|
)
|
|
(56,869
|
)
|
Investing Activities Mining Property
|
|
|
|
|
-
|
|
|
(25,253
|
)
|
|
|
-
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Cash paid for notes payable - related
parties
|
|
|
|
|
2,771
|
|
|
37,898
|
|
|
|
-
|
|
|
|
|
|
|
|
Cash Received from issuance of stock
|
|
31,908
|
|
|
-
|
|
|
63,000
|
|
Net Cash Provided (Used) by Financing Activities
|
|
-
|
|
|
2,771
|
|
|
100,898
|
|
Increase (Decrease) in Cash from Continuing
Operations
|
|
18,400
|
|
|
(4,419
|
)
|
|
-
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
1,376
|
|
|
4,564
|
|
|
-
|
|
Cash and Cash Equivalents at End of Period
|
|
19,776
|
|
|
145
|
|
|
19,776
|
|
Supplemental Information
|
|
|
|
|
|
|
|
|
|
Cash Paid For: Interest
|
|
-
|
|
|
-
|
|
|
|
|
Income Taxes
|
|
-
|
|
|
-
|
|
|
-
|
|
Non-Cash Activities
|
|
|
|
|
|
|
|
|
|
Acquisition of Eco-IP
|
|
12,675,235
|
|
|
|
|
|
12,675,235
|
|
Acquisition of Eco-Inventory
|
|
15,148
|
|
|
|
|
|
15,148
|
|
Acquisition of Eco-Liabilities
|
|
670,100
|
|
|
|
|
|
670,100
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition & Assumption of Eco convertible
|
|
2,452,190
|
|
|
|
|
|
2,452,190
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
3,212
|
|
|
3,666
|
|
|
9,458
|
|
The accompanying notes are an integral part of these Financial
Statements
F-4
EcoEmissions Solutions, Inc.
|
(formerly known as Resource Group, Inc.)
|
(A Development Stage Company)
|
Condensed Statements of Stockholders Equity
|
(Unaudited)
|
|
|
Capital Stock
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Accumulated
|
|
|
During the
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-In
|
|
|
Preferred
|
|
|
OCI-Foreign
|
|
|
Exploration
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
stock
|
|
|
Exchange
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
Balance Forward (Inception) April 2, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 2007 shares issued for cash at
$0.0000333
|
|
90,000,000
|
|
|
90,000
|
|
|
(87,000
|
)
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 2008 Shares issued for cash at $0.000333
|
|
18,000,000
|
|
|
18,000
|
|
|
42,000
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
Deficit for Year Ended February 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
(18,501
|
)
|
|
(18,501
|
)
|
Balance February 29, 2008
|
|
108,000,000
|
|
|
108,000
|
|
|
(45,000
|
)
|
|
|
|
|
|
|
|
(18,501
|
)
|
|
(18,501
|
)
|
Deficit for Year Ended February 28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
(80,496
|
)
|
|
(86,496
|
)
|
Balance February 28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(98,997
|
)
|
|
(35,389
|
)
|
May 2009 Shares
issued for consulting services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 at $0.003333
|
|
150,000
|
|
|
150
|
|
|
350
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 2009 shares purchased from directors At
0.000333 and cancelled
|
|
(60,000,000
|
)
|
|
(60,000
|
)
|
|
58,000
|
|
|
|
|
|
|
|
|
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 2009 288,000 warrants issued as
additional consideration for shares returned to treasury
|
|
|
|
|
|
|
|
247
|
|
|
|
|
|
|
|
|
|
|
|
247
|
|
Accumulated OCI-Foreign Exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(144
|
)
|
Deficit for Year Ended February 28, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,502
|
)
|
|
(29,502
|
)
|
Balance February 28, 2010
|
|
48,150,000
|
|
|
48,150
|
|
|
13,597
|
|
|
|
|
|
(144
|
)
|
|
(128,499
|
)
|
|
(66,896
|
)
|
Purchase of Eco Assets
|
|
20,000,000
|
|
|
20,000
|
|
|
5,980,000
|
|
|
3,600,000
|
|
|
|
|
|
|
|
|
9,600,000
|
|
Shares for services
|
|
1,860,000
|
|
|
1,860
|
|
|
556,140
|
|
|
|
|
|
|
|
|
|
|
|
558,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit for Period
Ended August 31 2010 Balance,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12,989,480
|
)
|
|
(12,989,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30,
2010
|
|
70,010,000
|
|
|
70,010
|
|
|
6,549,737
|
|
|
|
|
|
(144
|
)
|
|
(13,117,979
|
)
|
|
(2,898,376
|
)
|
The accompanying notes are an integral part of these Financial
Statements
F-5
EcoEmissions Solutions, Inc.
|
(formerly known as Resource Group, Inc.)
|
(A Development Stage Company)
|
Notes to Unaudited Condensed Interim Financial
Statements as of November 30, 2010
|
NOTE 1 - BASIS OF PRESENTATION
While the information presented in the accompanying interim
financial statements is unaudited, it includes all adjustments, which are, in
the opinion of the management of EcoEmissions Systems Inc. (the Company),
necessary to present fairly the financial position, results of operations and
cash flows in the interim periods presented. Except as disclosed below, these
interim financial statements follow the same accounting policies and methods and
their application as the Companys audited February 28, 2010 annual financial
statements. It is suggested that these interim financial statements be read in
conjunction with the Companys February 28, 2010 audited financial statements.
The information as of February 28, 2010 is taken from the
audited financial statements of this date.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Concentrations
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents.
At November 30, 2010, the Company had $19,776 U.S.funds in deposits in a
business bank account, which are not insured by agencies of the U.S. Government.
Recent Accounting Pronouncements
The Company management has reviewed recent accounting
pronouncements issued through the date of the issuance of financial statements.
In managements opinion, except for those pronouncements detailed below, no
other pronouncements apply or will have a material effect on the Companys
financial statements.
In May 2009, the FASB issued ASC 855 Subsequent Events, which
establishes principles and requirements for subsequent events. In accordance
with the provisions of ASC 855, the Company currently evaluates subsequent
events through the date the financial statements are available to be issued.
NOTE 3 - BASIS OF PRESENTATION GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles (GAAP) in the United
States of America, which contemplates the Companys continuation as a going
concern. However, the Company has had increasing business operations to date
and losses of approximately $13,117,979 which includes an impairment of the
intellectual property acquired on August 31, 2010 in the amount of $12,675,235.
These matters raise substantial doubt about its ability to continue as a going
concern. In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon its ability to meet its financing
requirements, raise additional capital, and the success of its future operations.
The Company acquired operating capital through equity offerings to the public
and through the sale of notes to related parties, to fund its business plan.
There is no assurance that the funds received will be sufficient to assure the
Companys eventual profitability. Management believes that actions planned
and presently being taken to revise its operating and financial requirements
provide the opportunity for it to continue as a going concern. The financial
statements do not include any adjustments that might result from these uncertainties.
F-6
NOTE 4 - INCOME TAXES
The Company is subject to U.S. federal income taxes. It had
losses to date, and therefore, has paid no income tax.
Deferred income taxes arise from temporary timing differences
in the recognition of income and expenses for financial reporting and tax
purposes. The Companys deferred tax assets consist entirely of the benefit from
net operating loss (NOL) carry-forwards. Its deferred tax assets are offset by
a valuation allowance due to the uncertainty of the realization of the NOL
carry-forwards. NOL carry-forwards may be further limited by a change in Company
ownership and other provisions of the tax laws.
The deferred tax assets, valuation allowance and change in
valuation allowance are as follows:
|
|
Estimated
|
|
|
Estimated
|
|
|
NOL
|
|
|
Benefit
|
|
|
Changes in
|
|
|
Net Tax
|
|
|
|
NOL
|
|
|
|
|
|
|
|
|
from
|
|
|
and
|
|
|
|
|
Period Ending
|
|
Carry-
|
|
|
Tax
|
|
|
Expires
|
|
|
NOL
|
|
|
Valuation
|
|
|
Benefit
|
|
|
|
forward
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
|
|
|
|
|
February 28, 2009
|
$
|
98,997
|
|
|
|
|
|
2029
|
|
$
|
14,850
|
|
|
($14,850
|
)
|
|
0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2010
|
$
|
128,499
|
|
|
|
|
|
2030
|
|
$
|
29,502
|
|
|
($29, 502
|
)
|
|
0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2010
|
$
|
12,720,184
|
|
|
|
|
|
2031
|
|
$
|
3,816,055
|
|
|
($3,816,055
|
)
|
|
0-
|
|
Income taxes at the statutory rate are reconciled to the
Companys actual income taxes as follows:
Income tax benefit at statutory rate
resulting from NOL carry-forwards
|
|
(15%
|
)
|
Deferred income tax valuation allowance
|
|
15%
|
|
Actual tax rate
|
|
0%
|
|
F-7
NOTE 5 LOANS PAYABLE - RELATED PARTY LOANS
On May 29, 2009, an amount of $1,000 each, in aggregate $2,000
in additional notes payable were issued by the Company to the two
officers/directors to fund the repurchase cost of 60,000,000 post-split shares
of Companys common stock owned by these two directors. Following the
repurchase, the 60,000,000 shares were cancelled. On February 28, 2010 the total
amount owing on the note was $39,854, made up of principal in the amount of
$33,500 and accrued interest amounting to $7,333.
During this fiscal year ended February 28, 2010, the Company
received loans from shareholders and other related parties. These loans were
originally provided without defined interest and without defined payment terms.
On October 15, 2009, Loan Agreements were entered into which clarified and
confirmed the terms and conditions. Under the agreed terms the outstanding
amounts, are without interest up to November 30, 2009. Commencing December 1,
2009 the outstanding amounts and subsequent amounts, if any, are repayable on
demand, interest will accrue at a rate of 10% annum and if earlier demand for
payment is not made, the loans are payable November 30, 2011. At February 28,
2010 the total amount owing on these loans to shareholders and other related
parties was $23,182, made up of principal in the amount of $22,626 and accrued
interest amounting to $555.
As at November 30, 2010 the amount for Loans Payable - Related
Party, in aggregate, including shareholders and other related parties amounted
to$ 141,070 (Feb 2010-$64,014) made up of principal amounting to $126,759 (Feb
2010-$56,126) and accrued interest amounting to $14,311(Feb 2010--$7,888). In
addition related parties are owed $786,274.
NOTE 6 PURCHASE AND CANCELLATION OF COMMON SHARES ISSUANCE
OF SHARE PURCHASE WARRANTS
On May 29, 2009 the Company reached and agreement with two
officers/directors to purchase 30,000,000 post-split shares from each, in
aggregate 60,000,000 shares of the Companys $0.001 par value stock at the price
originally paid by them, plus future consideration. In settlement of the future
consideration provision of the transaction, the Company agreed to issue 144,000
two-year share purchase warrants each, in aggregate a total of 288,000 two-year
share purchase warrants, each of which grant the right to purchase one common
share of the Company for $0.50 per share. The transaction, in aggregate totaled
$2,247 consisting of $2,000 paid to the officers/directors for the post-split
60,000,000 shares and an amount of $247, which was expensed, on the income
statement as directors compensation. The deemed values of the share purchase
warrants were based on a Black Scholes Model calculation. The components used
were, Volatility of 200%, a Risk Free Rate of 2.34% and a stock price of
$0.00333. The Companys stock was not quoted on the date of warrant issuance nor
had it ever traded therefore we used $0.00333, the highest price used for any
previous stock issuances. No warrant have been exercised during this period up
to February 28, 2010, the total outstanding is 288,000.
F-8
In June 2009, the Company issued a 30 for 1 forward stock split
affected in the form of a stock dividend to all shareholders. The following
share values and numbers of shares reflect the result of the roll forward and
the Companys share purchase from its officers and directors:
December 2007 - Shares issued to directors
for cash at $0.000033333
|
|
90,000,000
|
|
February 2008 - Shares issued for cash to S-2 purchasers at
$0.0033333
|
|
18,000,000
|
|
May 2009 - Shares issued for consulting
services at $0.0033333
|
|
150,000
|
|
May 2009 - Shares purchased at $0.000033333 from directors
and cancelled
|
|
(60,000,000
|
)
|
NOTE 7ACQUISITION OF ASSETS FROM ECOEMISSIONS SYSTEMS,
INC
On August 31, 2010, the Company entered into a definitive Asset
Purchase Agreement (the Purchase Agreement) with EcoEmissions Systems, Inc., a
Nevada corporation. Pursuant to the Agreement, the Company agreed to acquire
100% of the assets, liabilities and operations of EcoEmissions Systems, Inc and
place those assets and liabilities into a newly formed subsidiary to be called
EcoEmissions Systems NV, Inc a corporation to be formed in the State of Nevada.
The Company agreed that it would pay an a total 20,000,000 restricted common
shares as well as provide 40,000,000 incentive restricted common shares in the
form of a preferred convertible series subject to achieving sales of $30,000,000
and technical performance targets.
Over 95% of the common and preferred shares were issued to
unrelated parties and therefore the purchase method of accounting has been
applied with the common and preferred shares issued as consideration being
recorded that being the value given up after considering price fluctuations,
liquidity issues and exchange rates.
At the date of the acquisition, the value of the identifiable
net assets of Eco was as follows:
Assets
|
|
Cash
|
|
$
|
31,907
|
|
|
|
|
|
|
Inventory
|
|
$
|
15,148
|
|
|
|
|
|
|
Intellectual Property (note 7A)
|
|
$
|
12,675,235
|
|
$
|
12,722,290
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
Liabilities
|
|
$
|
670,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase Price-Consideration
Paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
|
securities-
|
|
|
|
|
|
|
|
|
|
assumed
|
|
$
|
2,452,190
|
|
|
|
|
|
|
Common
|
|
|
|
|
|
|
|
|
|
Stock
|
|
$
|
6,000,000
|
|
|
|
|
|
|
Preferred
|
|
|
|
|
|
|
|
|
|
Stock
|
|
$
|
3,600,000
|
|
$
|
12,722,290
|
|
Note 7A The accounting rules for Intellectual property acquired
in this transaction are complex and are under review by the Companys outside
firm of Certified Public Accountants. The Company is currently expensing the
intellectual property acquired in this transaction
NOTE 8CONVERTIBLE SECURITIES
As part of the Asset Purchase Agreement with EcoEmissions Systems,
Inc. (Eco), a Nevada corporation, we agreed to assume the Convertible
Securities of Eco. Those securities will be convertible into our common stock
at prices determined at market at the time of conversion. The conversion time
frames vary from 12-24 months from the date of the purchase of Eco. The convertible
documentation varies and contains inconsistencies with some purchasers believing
the conversion or payment date was September 30, 2010. The Company has requested
clarification from each convertible owner stating the conversion process starts
on September 1, 2011 and proceeds through September 30, 2012.
F-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
EcoEmissions Solutions, Inc (referred to herein as we, us,
our and similar terms) was incorporated on April 2, 2007, in the State of
Delaware. Our principal executive offices are located at 455 South 48
th
St, Suite 106, Tempe, Arizona 85281. Our telephone number is 928 474 9151.
We are a development stage Company which started generating revenues in
September 2010 and have a limited operating history. Our fiscal year end is
February.
We manufacture and sell the EES Process which we acquired on
August 31, 2010. This process has been installed in over 100 engines since 2008
and has achieved remarkable and proven success.
The EES Process
|
|
The EES Process is comprised of two components
|
|
|
–
|
Platinum based catalyst
|
|
|
–
|
Catalyst delivery system.
|
|
|
Both components are part of EESs first generation
product portfolio
|
|
|
Currently we have three delivery systems and two catalyst
concentrations designed for use on various sized
engines.
|
How the EES Process works
-
Focusing on the pre-combustion stage, our engineers introduced a
platinum-based catalyst into the cylinder chamber before ignition to lower the
burn-point of the fuel.
-
The result is a shorter delay before ignition, a longer burn cycle, a
smoother power stroke and more complete burning of the fuel (Simply put, more
power, superior fuel efficiency and longer engine life.)
-
By burning fuel more efficiently, EcoEmissions reduces diesel costs in
real-life usage by 8-10%, while cutting emissions of particulate matter by
30-40%, and emissions of hydrocarbons and nitrous oxides (NOx) by 25% or more.
-
Additional benefits include a cleaner-running engine, superior engine
harmonics, cleaner engine oil, reduced friction and longer engine life.
The Company plans to expand the EES process to additional
proprietary products for the Marine Industry. The Company has already completed
successful testing on several marine products and will expand its product line.
These future products are complimentary to our existing CIS system and which
help address the fundamental needs of our customers; reducing costs while
reducing pollution.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Year ended February 28, 2010
In June 2009 we reached an Agreement to acquire EcoEmissions
Systems, Inc. of Tempe Arizona, a Nevada Corporation. The acquisition was
structured as an Asset Purchase and was completed on August 31, 2010 after an
extensive due diligence process.
On December 4, 2009 we filed an 8-K providing additional
information concerning the merger and EcoEmissions Systems, Inc.
During the year we changed our name to EcoEmissions Solutions,
Inc and decided that the focus of our business will be identical to that
conducted by Eco which is the pollution control business, Eco has proven
patented emissions-reducing Catalyst Injection System (CIS) offers a global
solution for diesel engines used in heavy industry and large marine applications
around the world. The pre-combustion system (the only patented system of its
type in the world), injects a platinum-based catalyst (nano) solution into
diesel engine cylinders producing a more complete burn of the diesel fuel.
Simply installed without modifications to the engine itself, the results are
more power, lower fuel consumption, dramatically reduced pollution and an
extension of engine life. The catalyst is then used and consumed as part of
normal diesel engine operation.
The catalyst is used once as part of normal diesel engine
operation and then needs to be replaced. The replacement of the catalyst
provides ECMZ an ongoing and ever increasing revenue stream as it continues to
increase the number of installed delivery units.
We believe our existing cash balances and non-related party
loans that have been committed are sufficient to carry our normal operations for
the next three (3) months. Our short and long-term survival is dependent on
funding from sales of securities as necessary or from loans from shareholder or
others and thus, to the extent that we require additional funds to support our
operations or the expansion of our business, we may attempt to sell additional
equity shares or issue additional debt. Any sale of additional equity securities
will result in dilution to our stockholders. There can be no assurance that
additional financing, if required, will be available to us or on acceptable
terms.
Interim Period ended November 30, 2010
On August 31, 2010, the Company entered into a definitive Asset
Purchase Agreement (the Purchase Agreement) with EcoEmissions Systems, Inc., a
Nevada corporation. Pursuant to the Agreement, the Company agreed to acquire
100% of the assets, liabilities and operations of EcoEmissions Systems, Inc and
place those assets and liabilities into a newly formed subsidiary to be called
EcoEmissions Systems NV, Inc a corporation to be formed in the State of Nevada.
The Company agreed that it would pay an a total 20,000,000 restricted common
shares as well as provide 40,000,000 incentive restricted common shares in the
form of a preferred convertible series subject to achieving sales of $30,000,000
and technical performance targets.
Results of Operations
The following results of operations compare the results of
the 2010 period to the 2009 period result.
Interim Periods
For the three month period September 1, 2010 to November 30,
2010 and comparable period in 2009
The acquisition of Eco was completed effective August 31, 2010.
Our first distributor was signed in that same time period and we started sales
in this quarter which totaled $55,398 which was 18% higher than our previous
estimate of approximately $45,500.
For the three months period September 1, 2010 to November 30,
2010 our net loss from operations was $269,296 compared to $12,501 during the
comparable three months ended August 31, 2009. The increase of losses in the
November 30, 2010 period was significantly impacted by expensing of consulting
fees of $248,000 as we completed the Asset Purchase Agreement.
For the nine month period March 1, 2010 to November 30, 2010
and comparable period in 2009
The acquisition of Eco was completed effective August 31, 2010
and we reported revenues of $55,398 for the nine months March 1, 2010 to August
31, 2010 compared to nil during the comparable period ending November 30, 2009.
Our first distributor was signed in that same time period and we started sales
in this quarter which totaled $55,398 which was 18% higher than our previous
estimate of approximately $45,500.
For the nine-month period March 1, 2010 to November 30, 2010,
our net loss from operations was $12,989,149 compared to $25,633 during the
comparable nine months ended November 30, 2009. The increase in the August 31,
2010 period was significantly impacted by expensing of the intellectual property of $12,675,236 as we completed the Asset
Purchase Agreement as well as consulting fees associated with the transaction.
At November 30, 2010 we had working capital of -$389,523
compared to working capital of -$66,896 at February 29, 2010. Included in the
negative working capital as of November 30, 2010 is debt due to related parties
of $929,844.
We do not have any lending arrangements in place with banking
or financial institutions and we do not anticipate that we will be able to
secure these funding arrangements in the near future.
Our short and long-term survival is dependent on additional
related party loans or sale of securities. Our short-term cash needs will have
to be arranged for through related, non-related party loans or sale of our
common stock to carry the Company for the next three months of operations,
although no arrangements are in currently in place.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements.
ITEM 3
CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we
conducted an evaluation, under the supervision and with the participation of our
chief executive officer and chief financial officer, of our disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon
this evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are ineffective to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Security and Exchange Commission's
rules and forms.
There has been no change in our internal control over financial
reporting during the current quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may be involved from time to time in ordinary litigation,
negotiation and settlement matters that will not have a material effect on our
operations or finances. We are not aware of any pending or threatened litigation
against us or our officers and directors in their capacity as such that could
have a material impact on our operations or finances.
We are not aware of any pending legal proceeding to which any
of our officers, directors, or any beneficial holders of 5% or more of our
voting securities are adverse to us or have a material interest adverse to us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
Solutions has issued the following shares as described in
elsewhere Purchase of Assets from EcoEmissions Systems, Inc for 20,000,000
commons shares and 2,000,000 preferred shares, which are convertible into
40,000,000 common shares based on achieving $30,000,000 in sales and achieving
certain technical performance targets..
On August 31, 2010 Solutions entered into a (6) six-month
consulting contract with ProActive NewsRoom to provide consulting and investor
relations services until February 28, 2011. As compensation ProActive will
receive $3,000 per month and 60,000 shares of common stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
ITEM 5. OTHER INFORMATION
Equity Compensation Plan Information
During our fiscal year ended February 28, 2011, we did adopt a
form of an incentive stock option plan.
As a collateral agreement to the Agreement, following the
completion of the acquisition of the assets of EcoEmissions Systems, Inc., the
Companys Board of Directors agreed to the adoption of the Stock Option Plan and
ratified it on January 17, 2011 effective as of September 1, 2010 providing for
the issuance of up to 10,000,000 shares of Common Stock of the Company to the
officers, directors, employees and consultants of the Company and/or its
subsidiaries. Pursuant to the Stock Option Plan, on January 17, 2011 the Company
granted options to purchase an aggregate of 7,200,000 shares of common stock at
$0.40 per share to the newly appointed directors and officers that held options
to purchase ordinary shares of ECMZ following the completion of the acquisition,
as well as to the current directors and officers of the Company.
The principal terms and conditions of the stock options granted
under the Stock Option Plan are that vesting of the options granted of the
Company occurs prorata over 48 months and have a life of 7 years. Furthermore, the stock options granted under the
Stock Option Plan are generally non transferable other than to a legal or
beneficial holder of the options upon the option holders death. The rights to
vested but unexercised options cease to be effective: (1) 18 months after death
of the stock options holder; (2) 6 months after Change of Control of the
Company; 12 months after loss of office due to health related incapacity or
redundancy; or (5) 12 months after the retirement of the options holder from a
position with ECMZ.
ITEM 6. EXHIBITS
Pursuant to Rule 601 of Regulation S-B, the following exhibits
are included herein or incorporated by reference.
*
Incorporated by reference to our Form S-1 Registration
Statement, file number 333-450463, filed on May 27, 2008.
**
Incorporated by reference to our Form 10K, file number
333-450463, filed on May 17, 2010.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
19
th
day of January, 2011.
EcoEmissions Solutions, Inc.
Date: January 19, 2011
By:
/s/ Larry Lorenz
Name: Larry
Lorenz
Title: President/Chief Executive Officer and Director
Date: January 19, 2011
By:
/s/ Thomas Crom
Name: Thomas Crom
Title: Secretary, Chief Financial Officer, Principal Financial Officer and
Director
NuTech Energy Resources (CE) (USOTC:NERG)
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