UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to
____________
ECOEMISSIONS SOLUTIONS INC
(Exact Name of Registrant as Specified in its Charter)
Formerly know as
RESOURCE GROUP, INC.
Delaware
|
333-150463
|
80-0154562
|
(State or Other Jurisdiction of
Incorporation)
|
(Commission File Number)
|
(I.R.S. Employer Identification
Number)
|
3250 Oakland Hills, Fairfield California, 94534
(Address of Principal Executive Offices) (Zip Code)
Former address
600 Parker Road, Fairfield California
94533
707 208-6368
(Registrant's Telephone Number,
including Area Code)
SECURITES REGISTERED PURUANT TO SECTION 12(b) OF THE ACT: None
SECURITES REGISTERED PURUANT TO SECTION 12(g) OF THE ACT:
Common
Stock, par value $.001 per share
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 ("Exchange
Act") during the past 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 [ ]
Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is a shell
company, as defined in Rule 12b-2 of the Exchange Act. Yes [ ] No [x ]
State issuer's revenues for its most recent fiscal year: Nil
Transitional Small Business Disclosure Format (check one): Yes [
] No [X]
Common Shares outstanding as of February 28, 2009 and June 15,
2010:
48,150,000
1
TABLE OF CONTENTS
PART I
ITEM 1: DESCRIPTION OF BUSINESS
COMPANY OVERVIEW
Resource Group, Inc. (the "Company") was incorporated in the
State of Delaware on April 2, 2007 to engage in the acquisition, exploration and
development of natural resource properties. We are an exploration stage Company
with no revenues and a limited operating history. The principal executive
offices have moved and are now located at 3250 Oakland Hills, Fairfield,
California 94534, formerly they were located at 600 Parker Road Fairfield,
California 94533.
In December 2007 we issued 1,500,000 @ $0.001 to each of our
two Directors, in aggregate 3,000,000
In February 2008 the Company offered up to 600,000 shares
offered for sale for cash at $0.10 per share. The offering was fully subscribed;
the Company realized a total of $60,000. The sales were made to friends and
family of the Officers and Directors.
We are authorized by our Articles of Incorporation to issue
250,000,000 shares of common stock and 10,000,000 shares of blank cheque
preferred stock, par value $0.001 per share. As of May 25, 2010, there were
48,150,000 shares of common stock issued and outstanding and no preferred stock.
As of the date of this 10K filing, we have not had any
revenues, have not begun operations and we have cash assets only. On April 25,
2008 the Company filed an S-1 Registration Statement which proposed to register
600,000 common shares of the Companys stock.
2
On May 27, 2008 our Registration Statement on Form S-1,
commission file number 333-150463, became effective and qualified 600,000 shares
of the Companys common sold in February 2008 in accordance with the
requirements of Section 4(2) offering under the Securities Act of 1933, as
amended and Rule 502 promulgated thereunder. There were no underwriters for this
offering.
In June 2008, the Company filed a 15c211 requesting a trading
symbol on the OTC Bulletin Board. On July 23, 2008 the Company received
confirmation from FINRA that the Companys 15C211 had been cleared for an
unpriced quotation on the OTC Bulletin Board and the Pink Sheets on trading
Symbol is RSOG.
As a consequence of the limited opportunities for funding
available to an exploration stage company in the resource industry, the
directors determined that better opportunities were available in the industrial
sector. In our May 31, 2009 10-Q filing were reported an opportunity had been
presented and was being studied by the board of directors.
On June 1, 2009 the directors voted to accept an offer from
EcoEmission Systems Inc of Tempe, AZ to enter into a Memorandum of Understanding
(MOU). On June 9, 2009 we filed an 8-K with the Securities and Exchange
Commission (SEC) disclosing the entry into the MOU, the resignation of our
officers James Geiskopf and Ken Greenlaw, the appointment of Mr. Thomas Crom and
Mr. Larry Lorenz as Directors of the Company and Mr. Lorenz was appointed to
positions of President and Chief Executive Officer, while Mr. Crom was appoint
Secretary, Treasurer and Chief Financial Officer. The merger is subject to
Ecoemissions Systems completing their audit and other requirements contained
within the MOU. On December 4, 2009 we filed an 8-K providing additional
information concerning the merger and EcoEmissions Systems, Inc.
On June 2, 2009, at a special meeting of shareholders, the
shareholders approved the Companys name change to EcoEmissions Solution Inc,
the increase of our authorized capital to 250,000,000 shares of common stock,
par value $0.001 per share and 10,000,000 shares of blank cheque preferred
stock, par value $0.001 per share, the Companys issued and outstanding shares
were rolled forward on a 30 for 1 basis and the number of directors were changed
to a minimum of 2 and a maximum of 7. Effective June 2009 our trading symbol
issued by FINRA is ECMZ.
On June 4, 2009 the Company sold its Strohn Creek mineral
property.
The Companys focus will be the business conducted by Eco. See
business description of Eco Emissions Systems below under
BUSINESS
DESCRIPTION OF ECOEMISIONS SYSTEMS. INC (ECO)
As at the date of this report there has been limited trading of
our shares. We do have stock available in the public float. Investors should be
aware their investment in our securities is not liquid; there is the probability
they will be unable to sell their shares and their investment will be lost.
Subsequent to the end of this fiscal year February 28, 2010,
the company filed an 8-K on May 3, 2010 stating that the escrow agreement
discussed in the SEC form 8K filing of December 8, 2009 concerning the sale of
the shares of the Company has been successfully completed, that the resignation
of Mr. Ken Greenlaw has been accepted as part of this agreement, and the Company
and EcoEmissions Solution Inc are continuing with the completion of other
portions of the previously disclosed agreement (MOU) relating to the purchase of
Ecoemissions Systems, Inc, a Nevada corporation.
At this time, we do not have sufficient funds on hand to carry
our normal operations for the next twelve (12) months, however, for the past
twelve months our operations have been funded from related party loans and we
have verbal commitment for the next 12 month period. Our short and long-term
survival is dependent on funding from sales of securities as necessary, loans
from related parties or from shareholder loans, 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 debt,
although there is no assurance that we will be successful. Any sale of
additional equity securities will result in dilution to our stockholders.
3
Current Business Description of EcoEmissions Solutions Inc.
Since June 2, 2009 the Company has been involved in the
pollution control business as a result of its agreements with EcoEmissions
Systems Inc of Tempe, AZ (Eco) to enter into a Memorandum of Understanding
(MOU). On June 9, 2009 we filed an 8-K with the Securities and Exchange
Commission (SEC) disclosing the entry into the MOU, the resignation of our
officers James Geiskopf and Ken Greenlaw, the appointment of Mr. Thomas Crom and
Mr. Larry Lorenz as Directors of the Company and Mr. Lorenz was appointed to
positions of President and Chief Executive Officer, while Mr. Crom was appoint
Secretary, Treasurer and Chief Financial Officer. The merger is subject to Eco
completing their audit and other requirements contained within the MOU. On
December 4, 2009 we filed an 8-K detailing the conditions to be meet prior to
the completion of the merger. Under Notes to Financial Statements - Note 9 -
Subsequent Events we reported that on May 10, 2010 the Company filed on Edgar
with the United States Securities and Exchange Commission an 8-K which provided
additional details precedent to the Companys completion of the acquisition of
EcoEmission Systems Inc. In this 8-K disclosure the Company announced that the
escrow agreement concerning the purchase of certain shares of the Companys
stock as disclosed in its SEC filing of December 8, 2009 has been completed.
As a result of the MOU (i) Eco will become a wholly-owned
subsidiary of the Company, (ii) the Company will have succeeded to the business
of Eco which is the design, supply, and manufacturing of innovative, easy to
install Catalyst Injection Systems providing performance benefits and exhaust
emissions reduction for diesel engines.
We include in this filing, information pertaining to Eco
including Business Description, Products and Services, Markets and Customers,
and Competition. All other information reflects the current status of
EcoEmissions Solutions, Inc the reporting Company.
BUSINESS DESCRIPTION OF ECOEMISIONS SYSTEMS. INC
(ECO)
Company Overview
. Eco
Emissions Systems, Inc ("Eco"), incorporated in the State of Nevada on June 16,
2008 intends to manufacture innovative, easy to install Catalyst Injection
Systems ("
CIS
")(trademark pending) for diesel engines providing
performance benefits and exhaust emissions reduction.
Industry and Product Overview.
Diesel owners and operators are continuously seeking better ways to harness
the maximum production from their equipment. Eco intends to improve the design
of existing combustion catalyst systems to provide a reliable solution to the
core problem of inefficient combustion inside the combustion chamber. Ecos
system will be designed to work with all internal combustion engines, from an
individual's personal diesel car or truck to the largest diesel engines in the
world.
Ecos primary strategy centers on
the development, manufacture and worldwide sale of products that support clean
air initiatives and increase fuel economy. In pursuing that objective, we are
committed to developing products that also improve engine performance and
justify their purchase both environmentally and economically.
Customers will be compelled to
use our products for one or two reasons: fuel savings and/or pollution
reduction. In most applications Eco believes the customer will save $2 to $4 per
year (in fuel costs) for every dollar spent on our system, enabling us to offer
users a solution that will literally pay for itself. In addition, Eco
anticipates customers will experience a substantial reduction in pollution
emissions.
Ecos basic products will be
specially formulated catalytic fluids that include certain noble metals in a
true solution, injected in mist form directly into a diesel or petrol engine's
combustion chamber via the air stream using a specially designed delivery
system. Eco will distinguish itself technologically by improving on existing
designs of delivery systems to more efficiently, effectively, and reliably
deliver the catalyst fluid into the engine prior to combustion
Market Overview.
Eco plans
to pursue an aggressive and systematic marketing and sales strategy to fully
exploit the market potential for our products.
4
The diesel engine market is
particularly suitable for the Ecos technology because such engines are largely
used for industrial purposes that require that the engines run for long periods
of time at a relatively constant speed. Under these conditions, end users
consistently obtain the benefits of catalyst combustion systems.
Product Testing and Success.
To serve some of the varied markets for its products and in particular the
State of California, the Company requires certain government and industry
verifications or certifications.
The applicable government and
industry standards are designed to insure products provide minimum emission
reductions in particulate matter ("
PM
") as well as provide incentives for
those products that reduce specific emissions of nitrous oxide ("
NOx
").
Each governmental agency (local,
federal, and foreign) will set the criteria for its own verification; however,
they all generally use the same test protocol (ISO 8178) for emission testing.
Each such agency will require independent testing at an approved laboratory. To
the extent that the Company can leverage any similarity its products have to
previously certified/verified offerings, it will do so to the fullest extent
allowable in an effort to minimize costs associated with such processes and
diminish the time required to obtain the regulatory findings it seeks.
Ecos products require
verification and certification from certain domestic regulatory agencies,
including the California Air Resource Board ("
CARB
"), the Environmental
Protection Agency ("
EPA
") and the Mine Safety Health Administration
("
MSHA
") prior to sales in certain states and/or to certain industries or
to qualify such sales for states environmental tax credits. Based upon our
knowledge of the technologies available today and how they have fared with
regulatory agencies coupled with our product design improvement strategies, Eco
is confident that its products will satisfy the applicable government standards,
but there is no assurance when or if verification or certification with these
various agencies will be obtained. Other industries such as off-road
construction, farming, mining industries, as well as marine applications, in
certain states and locations are currently able to use Ecos products without
further governmental verification or certification.
Eco will also apply for EPA and
MSHA verifications. EPA verification is handled through the Environmental
Technology Verification process, which tests technologies to verify that the
technologies achieve stated performance levels. MSHA tests products, documents
pollution reduction, and then shares information on the products and their
results with the U.S. mines it monitors. MSHA's goal is to promote technologies
that reduce pollution, in an effort to improve the harsh environment for mine
workers. MSHA results are viewed and acknowledged by mines around the world.
Products.
Combustion
catalyst systems use the same principle as a catalytic converter, but attack the
source of the problem inside the combustion chamber versus trying to catch the
problem in the exhaust occurring after the combustion event. The catalytic
properties of platinum and other noble metals, when delivered to the right place
at the right time and in the right form, significantly enhance the combustion
process in order to convert pollution into production. See, "RISK
FACTORS
Importance of Proprietary Rights
."
Diesel Fuel System.
The
Company intends to manufacture a full range of products applicable to any type
of diesel machineryoff-road construction equipment, marine, buses, delivery
trucks, drilling rigs, garbage trucks, generators, etc. Our diesel products will
be specifically designed for easy installation and limited maintenance.
Product Benefits
.
Combustion catalyst systems achieve low emissions levels and improved engine
performance by causing a greater percentage of fuel to burn in the combustion
chamber, where it is converted into power, rather than in the exhaust system,
where it is merely converted into pollutants. See, "RISK FACTORS
Increased
Competition
."
Specifically, the benefits offered by such systems include
reduced fuel costs and reduced pollutants.
Reduced fuel costs.
Fuel burning efficiencies caused by
the catalyst routinely allow the engine to do the same amount of work while
burning 10% less fuel. Ecos products are designed to provide significantly
greater fuel efficiency by causing more of the fuel to be burned within the
combustion chamber power stroke. Harmonic testing shows that a catalyst allows a
greater amount of the hydrocarbon chain to burn at a lower temperature, meaning
that more of the burn takes place during the "power stroke cycle" of the engine rotation and less
during the "smoldering after-burn" that occurs during the exhaust cycle. By
creating a higher, more efficient burn percentage during the "power stroke," the
user has the choice of increasing the torque or reducing the engines fuel
consumption.
5
Increased torque.
A more
complete combustion means more energy for the power stroke, resulting in
increased torque. This extra torque can be harnessed and used to increase
productivity, improve cycle time, and reduce costs per hour of operation.
Reduced exhaust emissions.
Reduced diesel emissions is a primary goal of the EPA, CARB, state governments,
and many international and other air quality regulatory agencies. Diesel engines
are cited with producing 26% of total hazardous particulate air pollution and a
surprising 66% of on-road particulate production. They are also credited as the
source of 20% of total indoor nitrogen oxides and as responsible for 26% of
on-road NOx. A study sponsored by the Boston-based Clean Air Task Force to study
diesel exhaust and its effects on humans came to the conclusion that 20,000
people die prematurely every year due to diesel fumes. Ecos solution will
enable any large diesel engine user to pollute less.
Reduced engine wear.
Incomplete combustion leaves unburned hydrocarbon deposits throughout an engine,
causing engine wear and increasing maintenance costs over time. Catalyst will
clean hydrocarbon residue by oxidizing pre-existing hydrocarbons and then will
inhibit future buildup, thereby extending engine life, reducing premature engine
rebuilds, and providing savings on parts, downtime, and labor.
Vibration also takes a toll on
engine efficiency and engine longevity. The more complete combustion achieved
with catalyst is smoother and more even, translating directly into less overall
vibration, less strain on rod bearings and main bearings, and, potentially,
longer engine life.
Competition.
Although
after-market products like catalytic fuel additives that attempt to increase
fuel combustion or to reduce emissions exist, they have not been very effective
since they do not introduce the catalyst in the right form, in the right amount,
in the right place, or at the right time in the combustion process. See, "RISK
FACTORS
Increased Competition
."
Eco believes it can secure a unique position in the marketplace
because it will manufacture and market a technology that reduces pollution and
improves engine performance. Specifically, Eco believes our products will have
the following competitive advantages:
-
They are not fuel additives. The fluid will be added directly to the
combustion chamber prior to combustion.
-
Ecos intent to improve upon a system design that catalyzes fuel
hydrocarbons during injection into the engine's combustion chamber is
intended, in part, to establish a price advantage over competitors and improve
the prospects for adoption at the OEM level.
-
Ecos products will provide superior performance in boosting torque,
improving fuel efficiency, and diminishing pollution emissions.
-
Ecos products will be designed to maximize service intervals, thereby
lowering maintenance costs.
Our primary known competitors can be categorized as follows:
Manufacturers of fuel
additives.
While these manufacturers may be competing for the same customer,
management does not believe they offer a comparable product. They are mixed in
the fuel in the tank and must remain inert in the fuel until the fuel begins to
burn. This greatly reduces the engine cleansing ability and the ability to speed
up the combustion processes.
Clean Diesel Technologies,
Inc.
Clean Diesel is a small, publicly traded company that will require
additional financing for a sustained rollout of its product, which is added to
the fuel before reaching the combustion chamber. Clean Diesel has obtained various regulatory
verifications with respect to its products. Clean Diesel's best results come
when using its fuel additive in combination with a post-combustion Diesel
Oxidation Catalyst ("
DOC
"). The fuel additive needs to be added with
every tank, while our product will be designed to last at least 400 hours before
a new bottle of catalyst would be required. When the price of the DOC is added
to the fuel additive, Clean Diesels solution would be
five
times more
costly than ours, based upon current projections.
6
Manufacturers of
post-combustion products
. These companies make products such as diesel
oxidation catalysts and diesel particulate filters. In general, they all focus
on reducing emissions
after combustion
has occurred. As a result, they
adversely affect fuel economy and horsepower. They do however provide the
opportunity to use our product, reducing the effect on fuel economy and
providing optimum results in emissions reductions.
Alternative Fuels
. These
consist primarily of ethanol and bio-diesel fuels. These produce some emission
reductions; however, there is also a power loss and increase in NOx that can be
associated with them. These fuels are not price competitive without great
government subsidies. The federal government is beginning to reduce these
subsidies at this time.
Market Development.
In
general, Ecos system will be designed for use with all diesel engine
applications. However, Eco anticipates that the most significant cost reductions
will be experienced in applications where the engine operates continuously at a
steady power level, such as electrical power generators. Therefore, Ecos key
target markets include the end-users/owners of:
-
Electrical Power Generators
-
Mining and Construction Equipment
-
Shipping and Transportation Equipment, including Buses
-
Marine Equipment
-
Agricultural Equipment, including Diesel-powered Irrigation Water Pumps
-
Military Equipment
-
Municipal Equipment and Trucks
The Ecos markets are worldwide
in scope. Governmental regulations requiring more stringent environmental
controls on vehicle and equipment operations continue to restrict permissible
pollutants. While domestic environmental regulations, including federal, state
and local laws, increase the necessity for products like ours, the growing trend
internationally toward more stringent pollution laws will expand our potential
customer base. For instance, China has announced that it will blacklist cities
that fail to reach the national air quality standard, according to a senior
official of the country's environmental agency. The list will be announced
regularly to warn cities of deteriorating air quality. As a penalty, they will
issue risk warnings to investors who consider investing in the cities that have
been blacklisted for several consecutive years.
This potential market overseas is
magnified by the fact that much of the equipment used in many foreign countries
is older with fewer currently existing pollution control mechanisms than
similarly used domestic equipment. See, "RISK FACTORS
Ability to Respond to
Regulatory Change.
"
Sales Strategy
. Eco plans
to market and sell its products and will implement distribution agreements with
reputable distributors that have proven themselves within their territories and
industry segments. See, "RISK FACTORS
Ability to Manage Change; Development-Stage Company; Limited
Operating History.
"
Governmental Regulation. Ecos
Management does not believe there are any significant governmental
regulations impacting or threatening to impact its operations. Furthermore, it
does not believe there are any material effects of complying with applicable
federal, state, or local laws and regulations that govern any anticipated
business activities of the Eco.
However, federal, state and
international government regulation could have a significant impact on the
desirability and acceptance of the Eco's products in the market place. Eco will
attempt to design our products to address certain pollution control mandates
from regulatory authorities. Accordingly, Eco will continue to monitor such
authorities to understand their requirements and also confirm that, when used
properly, Ecos products will continue to satisfy the same. In the event and to the extent such regulatory
requirements change, Eco may be required to modify or improve our products
accordingly. In addition, with respect to international regulation, Eco will
need to monitor the political climate to make sure that our products will be
acceptable and price competitive in foreign jurisdictions, where local companies
may be provided with advantages from their own governments. In such markets,
Ecos marketing and sales efforts will have to be designed to help Eco remain a
viable and competitive option to potential customers. See, "RISK FACTORS
Ability to Respond to Regulatory Change; Risks From
International Operations; Development-Stage Company; Limited Operating
History
."
7
The Technology
EcoEmissions Systems, Inc. (Eco) has the core management,
important customers and the distributor network for a revolutionary product that
has repeatedly been shown to be successful to significantly reduce fuel
consumption for diesel engines while simultaneously dramatically reducing
harmful exhaust emissions. EcoEmissions Systems, Inc. owns core knowledge of
design, manufacture, intellectual property, marketing and sales as well as a
strong distributor base and all important customers.
EcoEmissions Systems, Inc. provides cost-effective, emissions
compliance solutions for diesel fleet owners. Eco designs, manufactures and
sells proprietary products that reduce harmful exhaust emissions and increase
the fuel efficiency of off-road, on-road and stationary diesel engines.
Ecos flagship product, the EES Process, can generally be easily installed in
the field on virtually any diesel engine in less than three hours by a qualified
technician. Once installed, the EES Process has been shown to:
-
Reduce the amount of harmful pollutants exhausted by a diesel engine.
-
Decrease the amount of fuel consumed by a diesel engine.
-
Increase the amount of available power produced by a diesel engine.
-
Extend engine life by reducing internal soot buildup, improving engine
harmonics and reducing operating temperatures.
The EES Process has been shown to reduce harmful emissions and
fuel consumption. The EES Process is a pre-combustion emissions control device
that injects a platinum-based catalyst in the form of an aerosol mist directly
into the engines air intake duct via a catalyst delivery system. The intake air
mixes with the catalyst and is transported to the combustion chamber where it
begins a cleansing process in the engine. As the engine becomes free of carbon
buildup, the catalyst begins to react with the incoming fuel. Efficiencies in
this process reduce fuel necessary to do the job, reduce exhaust temperatures,
and greatly reduce unburned pollutants that enter the atmosphere. In addition,
the performance of power reducing products such as catalytic converters and
diesel particulate filters can be enhanced by the addition of the EES
Process.
BANKRUPTCY OR SIMILAR PROCEEDINGS
The Company has not been the subject of a bankruptcy,
receivership or similar proceedings.
MARKETS AND CUSTOMERS PERTAINING TO ECO
Market Development.
In general, Ecos system is be
designed for use with all diesel engine applications. However, Eco anticipates
that the most significant cost reductions will be experienced in applications
where the engine operates continuously at a steady power level, such as
electrical power generators. Therefore, Ecos key target markets include the
end-users/owners of:
8
-
Electrical Power Generators
-
Mining and Construction Equipment
-
Shipping and Transportation Equipment, including Buses
-
Marine Equipment
-
Agricultural Equipment, including Diesel-powered Irrigation Water Pumps
-
Military Equipment
-
Municipal Equipment and Trucks
The Ecos markets are worldwide
in scope. Governmental regulations requiring more stringent environmental
controls on vehicle and equipment operations continue to restrict permissible
pollutants. While domestic environmental regulations, including federal, state
and local laws, increase the necessity for products like ours, the growing trend
internationally toward more stringent pollution laws will expand our potential
customer base. For instance, China has announced that it will blacklist cities
that fail to reach the national air quality standard, according to a senior
official of the country's environmental agency. The list will be announced
regularly to warn cities of deteriorating air quality. As a penalty, they will
issue risk warnings to investors who consider investing in the cities that have
been blacklisted for several consecutive years.
This potential market overseas is magnified by the fact that
much of the equipment used in many foreign countries is older with fewer
currently existing pollution control mechanisms than similarly used domestic
equipment.
Sales Strategy
. Eco plans to market and sell its
products and will implement distribution agreements with reputable distributors
that have proven themselves within their territories and industry segments.
COMPETITION PERTAINING TO ECO
Eco understands that, although after-market products like
catalytic fuel additives that attempt to increase fuel combustion or to reduce
emissions exist, they have not been very effective since they do not introduce
the catalyst in the right form, in the right amount, in the right place, or at
the right time in the combustion process.
Eco believes it can secure a unique position in the marketplace
because it will manufacture and market a technology that reduces pollution and
improves engine performance. Specifically, Eco believes our products will have
the following competitive advantages:
-
They are not fuel additives. The fluid will be added directly to the
combustion chamber prior to combustion.
-
Ecos intent to improve upon a system design that catalyzes fuel
hydrocarbons during injection into the engine's combustion chamber is
intended, in part, to establish a price advantage over competitors and improve
the prospects for adoption at the OEM level.
-
Ecos products will provide superior performance in boosting torque,
improving fuel efficiency, and diminishing pollution emissions.
-
Ecos products will be designed to maximize service intervals, thereby
lowering maintenance costs.
Our primary known competitors can be categorized as follows:
Manufacturers of fuel
additives.
While these manufacturers may be competing for the same customer,
management does not believe they offer a comparable product. They are mixed in
the fuel in the tank and must remain inert in the fuel until the fuel begins to
burn. This greatly reduces the engine cleansing ability and the ability to speed
up the combustion processes.
Clean Diesel Technologies,
Inc.
Clean Diesel is a small, publicly traded company that will require
additional financing for a sustained rollout of its product, which is added to
the fuel before reaching the combustion chamber. Clean Diesel has obtained
various regulatory verifications with respect to its products. Clean Diesel's
best results come when using its fuel additive in combination with a
post-combustion Diesel Oxidation Catalyst ("
DOC
"). The fuel additive
needs to be added with every tank, while our product will be designed to last at
least 400 hours before a new bottle of catalyst would be required. When the
price of the DOC is added to the fuel additive, Clean Diesels solution would be
five
times more costly than ours, based upon current projections.
9
Manufacturers of
post-combustion products
. These companies make products such as diesel
oxidation catalysts and diesel particulate filters. In general, they all focus
on reducing emissions
after combustion
has occurred. As a result, they
adversely affect fuel economy and horsepower. They do however provide the
opportunity to use our product, reducing the effect on fuel economy and
providing optimum results in emissions reductions.
Alternative Fuels
. These
consist primarily of ethanol and bio-diesel fuels. These produce some emission
reductions; however, there is also a power loss and increase in NOx that can be
associated with them. These fuels are not price competitive without great
government subsidies. The federal government is beginning to reduce these
subsidies at this time.
RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY
RISK FACTORS
The purchase of Shares
involves various elements of risk including, but not limited to, the risk
factors discussed below. Prospective investors should carefully consider the
following risks before making an investment decision.
Need for Funding.
We
presently need additional financing to fund our immediate and future operations.
The Company currently has no cash available for its operations and is dependent
upon proceeds of the sale of its securities to fund its current and proposed
operations.
Need for Additional
Funding
. There can be no assurance that the financing offered in a public
traded company will be sufficient to fully fund the Ecos future operations.
Accordingly, we expect that we may need to continue raising funds to fully
develop and market our products. Future issuances of additional securities may
be on more favorable terms than the Shares offered in this offering. We may also
seek debt financing. We cannot, however, predict the timing or amount of our
capital requirements at this time. The amount of additional capital that may be
required is dependent upon, among other things, the expansion of existing
financial resources, the availability of other financing on favorable terms, and
future operating results. Of course, there can be no assurance that additional
financing will be available, or if available, on acceptable terms. The Company's
inability to raise financing when needed would have a material adverse effect on
our business, financial condition, and results of operations.
Development Stage Company;
Limited Operating History.
Eco is a development stage company formed in
2008. Thus, we have a limited operating history. Any potential investor should
evaluate the Company in light of the expenses, delays, uncertainties, and
complications typically encountered by early-stage businesses, many of which
will be beyond our control. Ecos planned expense levels are and will continue
to be based in part on Ecos expectations concerning future revenue, which is
difficult to forecast accurately based on our stage of development. Eco may be
unable to adjust spending in a timely manner to compensate for any unexpected
shortfall in revenue. To the extent that these expenses precede or are not
rapidly followed by a corresponding increase in revenue, our business, operating
results, and financial condition may be materially and adversely affected.
Because Eco is a small company with limited working capital, Eco outsourced
manufacturing activities to minimize costs. Currently, Ecos network for product
distribution is in the beginning stages of development both domestically and
internationally. Failure to obtain governmental certification or verification
could have a material adverse effect on Ecos business. Moreover, lobbying
efforts by other parties selling competing alternative products may succeed in
promulgating new federal, state and international regulations that could render
Ecosproducts less desirable.
Future revenues and operating results may fluctuate as a result
of our being a development stage company and other factors, including the demand
for the Company's products and services, the timing and cost of new product and
service introductions and product enhancements, changes in the mix of
products and services sold and in the mix of sales by distribution channels, the
size and timing of customer orders, changes in pricing policies by the Company
or its competitors, changes in foreign currency exchange rates, execution of new
agreements with distributors, regulatory conditions in the industry and general
economic conditions. Many of the factors that could impact our financial results
are not within the Company's control and could have a material adverse effect on
our business. Accordingly, there can be no assurance that the Company will be
profitable in the future. See, "BUSINESS
Market Development; Operations
."
10
Eco faces competition and technological advances by
competitors.
There is significant competition
among companies that provide solutions for pollutant emissions from diesel
engines. Several companies market products that compete directly with our
products. Other companies offer products that potential customers may consider
to be acceptable alternatives to our products and services. We face direct
competition from companies with greater financial, technological, manufacturing
and personnel resources. Newly developed products could be more effective and
cost efficient than our current or future products. We also face indirect
competition from vehicles using alternative fuels, such as methanol, hydrogen,
ethanol and electricity.
Other potential alternatives to
Ecos products may emerge. Our competitors may be able to respond more quickly
to new or emerging technologies and changes in customer requirements, or devote
greater resources to the development, promotion and sale of their products and
services than we can. While we believe our technology is widely regarded as
competitive at the present time, there can be no assurance that our competitors
will not succeed in developing products or technologies that are better or more
cost effective. In addition, current and potential competitors may make
strategic acquisitions or establish cooperative relationships among themselves
or with third parties, thereby increasing their ability to address the needs of
customers. Accordingly, it is possible that new competitors or alliances among
current and new competitors may emerge and rapidly gain significant market
share. In addition, if we achieve significant success it could draw additional
competitors into the market and new technology could be developed.
The Company's ability to compete
successfully in the sale of its products will depend in large part upon its
ability to implement successfully its strategy of leveraging the verification
and certification process which includes the development of a functional and
effective distribution system of productive sales agents and distributors. There
can be no assurance that the Company will be able to compete successfully in the
future, nor that future competition for product sales will not have a material
adverse effect on the business, results of operations and financial condition of
the Company. See, "BUSINESS
Competition
."
Eco depends on intellectual property and the failure to
protect our intellectual property could adversely affect our future growth and
success.
Eco relies on patent, trademark
and copyright law, trade secret protection, and confidentiality and other
agreements with employees, customers, partners and others to protect our
intellectual property. However, some of our intellectual property is not covered
by any patent or patent application, and, despite precautions, it may be
possible for third parties to obtain and use our intellectual property without
authorization.
We do not know whether any
patents will be issued from pending or future patent applications or whether the
scope of the issued patents is sufficiently broad to protect our technologies or
processes. Moreover, patent applications and issued patents may be challenged or
invalidated. We could incur substantial costs in prosecuting or defending patent
infringement suits. Furthermore, the laws of some foreign countries may not
protect intellectual property rights to the same extent as do the laws of the
U.S.
Some of our patents, including a
platinum fuel-borne catalyst patent, expired in 2008. However, we believe that
other longer lived patents, including those for platinum and other fuel-borne
catalyst materials in combination with after-treatment devices, will provide
adequate protection of our proprietary technology, but there can be no assurance
we will be successful in protecting our proprietary technology.
As part of our confidentiality
procedures, we generally have entered into nondisclosure agreements with
employees, consultants and corporate partners. We also have attempted to control
access to and distribution of our technologies, documentation and other
proprietary information. We plan to continue these procedures. Despite these procedures, third parties could copy or otherwise obtain and
make unauthorized use of our technologies or independently develop similar
technologies. The steps that we have taken and that may occur in the future
might not prevent misappropriation of our solutions or technologies,
particularly in foreign countries where laws or law enforcement practices may
not protect the proprietary rights as fully as in the U.S.
11
There can be no assurance that we
will be successful in protecting our proprietary rights. Any infringement upon
our intellectual property rights could have an adverse effect on our ability to
develop and sell commercially competitive systems and components.
Ecos results may fluctuate due to certain regulatory,
marketing and competitive factors over which we have little or no control.
The factors listed below, some of
which we cannot control, may cause our revenue and results of operations to
fluctuate significantly:
-
Actions taken by regulatory bodies relating to the verification,
registration or health effects of our products.
-
The extent to which our Platinum Plus fuel-borne catalyst and ARIS
nitrogen oxides reduction products obtain market acceptance.
-
The timing and size of customer purchases.
-
Customer concerns about the stability of our business which could cause
them to seek alternatives to our solutions and products.
-
Increases in raw material costs, especially platinum.
An extended interruption of the supply or a substantial
increase in the price of platinum could have an adverse effect on our business.
The cost of platinum or the
processing cost associated with converting the metal may have a direct impact on
the future pricing and profitability of Ecos platinum air-borne catalyst. The
market price for platinum increased from $ $910 per ounce at December 31, 2008.
On December 2, 2009, the London Metal Exchange afternoon fixing for platinum was
$1,491 per ounce. Although we may minimize this risk through various purchasing
and hedging strategies, there can be no assurance that this will be successful.
A shortage in the supply of platinum or a significant, prolonged increase in the
price of platinum, in each case, could have a material adverse effect on our
business, operating results and financial condition.
Ability to Respond to Regulatory Change
. The Ecos
success will depend significantly on its ability to manufacture and enhance its
current products and develop or acquire and market new products which keep pace
with technological regulatory requirements of federal and international
authorities, as well as respond to changes in customer needs. There can be no
assurance that Eco will be successful in marketing our products as the most
favorable or economical solution to past, present and future governmental
regulations or that the Company will be able to develop or acquire product
enhancements or new products to address changing technologies and regulatory
requirements adequately, that it can introduce such products on a timely basis,
or that any such products or enhancements will be successful in the marketplace.
Our delay or failure to develop or acquire technological improvements compatible
with applicable regulations or to adapt our products to regulatory change would
have a material adverse effect on the Company's business, results of operations
and financial condition. A significant shift in the way the authorities appear
to be regulating those environmental issues that our products attempt to address
may have a material adverse effect on our business. See, "BUSINESS
Government
Regulation
We depend on Key
Personnel
. Our success will depend in part upon the retention of key senior
management and the attraction and retention of key development and marketing
personnel. The market for these individuals has historically been, and the
Company expects that it will continue to be, intensely competitive. Our products
and industry require highly skilled personnel who understand the technical
aspects of the Company's business as well as the international scope of its
market. The loss of one or more of its key employees or the Company's inability
to attract and retain other qualified employees could have a material adverse
effect on the Company's business. See, "BUSINESS
Operations
."
12
If third parties claim that Ecos products infringe upon
their intellectual property rights, we may be forced to expend significant
financial resources and management time litigating such claims and our operating
results could suffer.
Third parties may claim that our
products and systems infringe upon third-party patents and other intellectual
property rights. Identifying third-party patent rights can be particularly
difficult, especially since patent applications are not published until up to 18
months after their filing dates. If a competitor were to challenge our patents,
or assert that our products or processes infringe its patent or other
intellectual property rights, we could incur substantial litigation costs, be
forced to make expensive product modifications, pay substantial damages or even
be forced to cease some operations. Third-party infringement claims, regardless
of their outcome, would not only drain financial resources but also divert the
time and effort of management and could result in customers or potential
customers deferring or limiting their purchase or use of the affected products
or services until resolution of the litigation.
We need to Manage Change
.
The Company expects its business and the industry as a whole to undergo rapid
change, in part due to the regulatory nature of the industry. The Company's
plans to expand international operations, together with ongoing required product
development activity in response to changes in the industry and customer needs,
will require the Company to manage effectively its operations in a rapidly
changing environment. The Company's future performance will depend in part on
its ability to manage change in both its domestic and international operations
and will require the Company to hire additional management and other personnel,
particularly in the marketing and distribution area. The failure of the
Company's management team to respond effectively to and manage changing
technological and business conditions as well as the growth of its own business,
should it occur, could have a material adverse impact on the Company's results
of operations. See, "BUSINESS
Governmental Regulations; Operations
."
Lack of Active Public Market
for the Securities
. The Shares are thinly traded and might represent an
illiquid investment. There is no active trading market for any of the Shares now
and perhaps in the foreseeable future. Each investor should, therefore, view his
investment as a long-term investment and should not rely upon his investment in
the Shares as a source for meeting any emergency or contingency in his or her
financial affairs. See, "SUITABILITY."
Limitation on Remedies;
Indemnification.
Our Bylaws provide that liability of our Board of Directors
and officers shall be eliminated to the fullest extent allowed under the
applicable laws of the State of Delaware. Thus, we may be prevented from
recovering damages for certain alleged errors or omissions by our Board of
Directors or officers. The Bylaws also provide that we will indemnify our Board
of Directors, officers, employees and members for liabilities for their acts on
behalf of the Company to the fullest extent permitted by law. It is the position
of the Securities and Exchange Commission that exculpation and indemnification
for liabilities arising under the Securities Act and Rules and Regulations
thereunder are against public policy and are therefore unenforceable. See,
"LIMITATIONS ON DIRECTOR LIABILITY."
Fluctuations in our operating results and announcements
and developments concerning our business affect our stock price.
Our quarterly operating results, the number of stockholders
desiring to sell their shares, changes in general economic conditions and the
financial markets, the execution of new contracts and the completion of existing
agreements and other developments affecting us, could cause the market price of
our common stock to fluctuate substantially.
Eco will need to increase the size of our organization,
and may experience difficulties in managing growth.
Eco is a small company with seven employees as of November 30,
2009. We hope to experience a period of expansion in headcount, facilities,
infrastructure and overhead and anticipate that further expansion will be
required to address potential growth and market opportunities. Future growth
will impose significant added responsibilities on members of management,
including the need to identify, recruit, maintain and integrate additional
independent contractors and managers. Our future financial performance and our
ability to compete effectively will depend, in part, on our ability to manage
any future growth effectively.
13
The most likely source of future funds presently available to
us is through the sale of equity capital. Any sale of share capital will result
in dilution to existing shareholders.
Changes to environmental considerations could have a
material adverse effect on the costs or the viability of our products. The
historical trend toward stricter environmental regulation may change, and, as
such, represents an unknown factor in our planning processes.
Demand for our product is driven in part by the customers
requirement to reduce air pollution as required by governmental regulations. A
change in those regulations may reduce demand for our product.
If we do not obtain additional financing or sales, our
business may fail.
We will need to obtain additional financing in order to
complete our business plan. Our current operations are not of sufficient size to
be profitable. Obtaining additional financing would be subject to a number of
factors, including investor acceptance and investor sentiment. These factors may
adversely affect the timing, amount, terms, or conditions of any financing that
we may obtain or make any additional financing unavailable to us.
RISKS RELATED TO OUR COMMON STOCK
There is no active trading market for our common
stock.
Our common stock is quoted on the Over the Counter Bulletin
Board. However, currently, there is no active trading market for any of our
securities, and we cannot assure you that a market for our stock will develop.
Consequently, our shareholders may not be able to use their shares for
collateral or loans and may not be able to liquidate at a suitable price in the
event of an emergency. In addition, our shareholders may not be able to resell
their shares at or above the price they paid for them or may not be able to sell
the shares at all. Accordingly, there can be no assurance as to the liquidity of
any markets that may develop for the securities, the ability of holders of the
securities to sell their securities, or the prices at which holders may be able
to sell their securities.
The shares of common stock eligible for future sale could
negatively affect the market price of our common stock
If the Company's stockholders sell substantial amounts of the
Company's common stock in the public market, including shares issued upon the
exercise of outstanding options or warrants, the market price of its common
stock could fall. These sales also may make it more difficult for the Company to
sell equity or equity-related securities in the future at a time and price that
the Company deems reasonable or appropriate. Stockholders who have been issued
shares in the Acquisition will be able to sell their shares pursuant to Rule 144
under the Securities Act of 1933, beginning one year after the stockholders
acquired their shares.
Our common stock may be deemed to be a penny stock and,
as such, we are subject to the risks associated with penny stocks. Regulations
relating to penny stocks limit the ability of our shareholders to sell their
shares and, as a result, our shareholders may have to hold their shares
indefinitely.
Our common stock is currently listed for trading on the OTCBB
quotation service, which is generally considered to be a less efficient market
than markets such as NASDAQ or other national exchanges, and which may cause
difficulty in obtaining future financing. Furthermore, our common stocks may be
deemed to be penny stock as that term is defined in Regulation Section
240.3a51 -1 of the Securities and Exchange Commission (the SEC). Penny
stocks are stocks: (a) with a price of less than U.S. $5.00 per share; (b) that
are not traded on a recognized national exchange; (c) whose prices are not
quoted on the NASDAQ automated quotation system (NASDAQ -where listed stocks
must still meet requirement (a) above); or (d) in issuers with net tangible
assets of less than U.S. $2,000,000 (if the issuer has been in continuous
operation for at least three years) or U.S. $5,000,000 (if in continuous
operation for less than three years), or with average revenues of less than U.S.
$6,000,000 for the last three years.
Section 15(g) of the United States Securities Exchange Act of
1934, as amended, and Regulation Section 240.15g(c) 2 of the SEC require
broker dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a penny stock for the investors account.
Potential investors in the Companys common shares are urged to obtain and read
such disclosure carefully before purchasing any common shares that are deemed to
be penny stock.
14
Moreover, Regulation Section 240.15g -9 of the SEC requires
broker dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker dealer to: (a) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (b) reasonably determine, based on that information, that
transactions in penny stocks are suitable for the investor and that the investor
has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (c) provide the investor with
a written statement setting forth the basis on which the broker dealer made the
determination in (ii) above; and (d) receive a signed and dated copy of such
statement from the investor confirming that it accurately reflects the
investors financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
the Companys common shares to resell their common shares to third parties or to
otherwise dispose of them. Stockholders should be aware that, according to
Securities and Exchange Commission Release No. 34-29093, dated April 17, 1991,
the market for penny stocks has suffered in recent years from patterns of fraud
and abuse. Such patterns include:
(i) control of the market for the
security by one or a few broker-dealers that are often related to the promoter
or issuer;
(ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases;
(iii) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons;
(iv) excessive and undisclosed bid-ask
differential and markups by selling broker-dealers; and
(v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated to
a desired level, along with the resulting inevitable collapse of those prices
and with consequent investor losses.
Our management is aware of the abuses that have occurred
historically in the penny stock market. Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities.
As an issuer of penny stock the protection provided by
the federal securities laws relating to forward looking statements does not
apply to us.
Although the federal securities law provide a safe harbor for
forward-looking statements made by a public company that files reports under the
federal securities laws, this safe harbor is not available to issuers of penny
stocks. As a result, if we are a penny stock we will not have the benefit of
this safe harbor protection in the event of any claim that the material provided
by us contained a material misstatement of fact or was misleading in any
material respect because of our failure to include any statements necessary to
make the statements not misleading.
Failure to achieve and maintain effective internal
controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a
material adverse effect on our business and operating results and stockholders
could lose confidence in our financial reporting.
Effective internal controls are necessary for us to provide
reliable financial reports and effectively prevent fraud. If we cannot provide
reliable financial reports or prevent fraud, our operating results could be
harmed. We may be required in the future to document and test our internal
control procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act, which requires increased control over financial reporting
requirements, including annual management assessments of the effectiveness of
such internal controls and a report by our independent certified public
accounting firm addressing these assessments. Failure to achieve and maintain an
effective internal control environment, regardless of whether we are required to maintain such controls
could also cause investors to lose confidence in our reported financial
information, which could have a material adverse effect on our stock price.
15
The Company does not expect to pay cash dividends in the
future. Any return on investment may be limited to the value of the Companys
stock.
The Company does not anticipate
paying cash dividends on its stock in the foreseeable future. The payment of
dividends on the Companys stock will depend on its earnings, financial
condition and other business and economic factors affecting the Company at such
time as the board of directors may consider relevant. If the Company does not
pay dividends, its stock may be less valuable because a return on your
investment will only occur if the Companys stock price appreciates.
RISK FACTORS
We do not presently have sufficient capital to operate our
business.
We have plans to raise additional
capital from related parties and/or current shareholders of the Company, but
there can be no assurances that such capital will be raised on a timely basis or
will be adequate to fund the Company through the merger with or acquisition of
an operating business. Any transaction by the Company to raise capital may
result in the dilution of existing investors who do not participate in the
transaction. Failure to raise adequate funds in timely fashion will likely
result in the termination of the Companys operations and the loss of investors
entire investment in the Company.
We are a development stage company with no operating history
and very limited resources.
We are a development stage
company with no operating results to date. Since we do not have an operating
history, you will have no basis upon which to evaluate our ability to achieve
our business objective, which is to merger with or acquire an operating
business. We are currently in the process of completing a business combination,
however there is no assurance that this will occur. We have no present revenue
and will not generate any revenue until, at the earliest, after the consummation
of a business combination. We cannot tell you when or if a business combination
will complete.
Because there are numerous companies with a business plan
similar to ours seeking to effectuate a business combination, it may be
difficult for us to complete a business combination.
There are a large number of
public shell companies, blank check companies and operating companies seeking to
acquire operating businesses and we are subject to competition from these and
other companies seeking to consummate a business combination. We cannot assure
you that we will be able to successfully compete for an attractive business
combination.
We cannot currently ascertain the merits or risks of the
business which we may ultimately acquire should we fail to complete the
transaction with Eco.
We may consummate a business combination with any entity that
has an operating business. We have not engaged or retained any agent or other
representative to identify or locate any suitable target, although we may do so
in the future. Accordingly, there is no current basis for you to evaluate the
possible merits or risks of the particular target business, which we may
ultimately acquire. To the extent we complete a business combination with a
financially unstable business or an entity in its development stage; we may be
affected by numerous risks inherent in the operations of that business. Although
our management will endeavor to evaluate the risks inherent in a particular
target business, we cannot assure you that we will properly ascertain or assess
all of the significant risk factors.
16
Initially, we will only be able to complete one business
combination, which will cause us to be solely dependent on a single business and
a limited number of products or services.
Because of our uncertain and
limited capital position, it is likely that any business combination we enter
into with an operating business will likely be for stock, or will be closed
simultaneously with an equity or debt transaction to raise additional capital
for the purchase transaction and possibly for working capital as well. Thus, we
expect that initially we will have the ability to complete only a single
business combination, although this may entail the simultaneous acquisitions of
several closely related operating businesses. By consummating a business
combination with only a single entity, our lack of diversification may subject
us to numerous economic, competitive and regulatory developments, any or all of
which may have a substantial adverse impact upon the security industry. Further,
we would not be able to diversify our operations or benefit from the possible
spreading of risks or offsetting of losses, unlike other entities, which may
have the resources to complete several business combinations in different
industries or different areas of a single industry. Accordingly, the prospects
for our success may be:
-
solely dependent upon the performance of a single business; or
-
dependent upon the development or market acceptance of a single or limited
number of products, processes or services.
Alternatively, if our business combination entails the
simultaneous acquisitions of several operating businesses and with different
sellers, each such seller will need to agree that the purchase of its business
is contingent upon simultaneous closings of the other acquisitions, which may
make it more difficult for us, and delay our ability, to complete the business
combination. If we were to consummate a business combination with several
operating businesses, we could also face additional risks, including burdens and
costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks
associated with the subsequent assimilation of the operations and services or
products of the acquired companies into a single operating business. If we are
unable to adequately address these risks, it could negatively impact our
profitability and results of operations.
Because of our limited resources and structure, we may not
be able to consummate an attractive business com
bination
.
We expect to encounter intense
competition from other entities with business objectives similar to ours
including blank check companies, venture capital funds, leveraged buyout funds
and operating businesses competing for acquisitions. Many of these entities are
well established and have extensive experience in identifying and effecting
business combinations directly or through affiliates. Many of these competitors
possess greater technical, human and other resources than we do and our
financial resources will be relatively limited when contrasted with those of
many of these competitors. Our ability to compete in acquiring certain sizable
target businesses will be limited by our available financial resources. This
inherent competitive limitation gives others an advantage in pursuing the
acquisition of certain target businesses. Any of these factors may place us at a
competitive disadvantage in successfully negotiating a business combination.
We may have insufficient capital or be unable to obtain
additional financing, if required, to complete a business combination or to fund
the operations and growth of the target business, which could compel us to
restructure the transaction or abandon a particular business combination.
We cannot ascertain the capital
requirements for any particular transaction. If the capital available to us
proves to be insufficient, either because of the size of the business
combination or the depletion of the available net proceeds in search of a target
business, we will be required to seek additional financing. We cannot assure you
that such financing would be available on acceptable terms, if at all. To the
extent that additional financing proves to be unavailable when needed to
consummate a particular business combination, we would be compelled to
restructure the transaction or abandon that particular business combination and
seek an alternative target business candidate. In addition, if we consummate a
business combination, we may require additional financing to fund the operations
or growth of the target business. The failure to secure additional financing
could have a material adverse effect on the continued development or growth of
the target business. None of our officers, directors or stockholders is required
to provide any financing to us in connection with or after a business
combination.
The report of the independent registered public accounting
firm that audited our financial statements includes a going concern
explanatory paragraph.
17
The audit report in our financial statements for the year ended
February 28, 2010, includes an explanatory paragraph that states that due to the
Companys limited capital and the possibility the Company will be unable to
raise the necessary capital to operate raises substantial doubt as to its
ability to continue as a going concern.
Item 2. Description of Property.
Principal Executive Offices-Solutions
Our sole office is located at 3250 Oakland Hills, Fairfield CA,
94534 and is presently provided free of charge by one of our directors. We
consider our current office space adequate for our current operations.
Principal Executive Offices-Eco
Eco currently holds an arrangement to rent its main office
comprising of 1,892 square feet which is located at 455 South 48
th
St., Suite 106, Tempe AZ 85281, at a cost of $1,842 per month. The lease expires
November 30, 2010.
Intellectual Property
Ecos technology is comprised of
patents, patent applications, trade or service marks, data and know-how. As
owner, we maintain the technology at our expense.
Eco has made substantial
investments in our technology and intellectual property and have incurred
development costs for engineering prototypes, pre-production models, and others
and field-testing of several products and applications. Ecos intellectual
property strategy has been to build upon our base of core technology that we
have developed. In many instances, Eco has incorporated the technology embodied
in our core patents into patents covering specific product applications,
including product design and packaging. Eco believes this building-block
approach provides greater protection to us and our licensees than relying solely
on the core patents.
Ecos core patents, advanced
patents and patent applications cover the means of controlling the principal
emissions from diesel engines:
-
nitrogen oxides (NOx);
-
particulate matter (PM);
-
carbon monoxide (CO);
-
hydrocarbon (HC); and
-
carbon dioxide (CO
2)
.
Ecos core patents, advanced patents and patent applications
include the following:
-
Air-borne catalysts;
-
Delivery systems.
Ecos key technologies include the following:
-
The cost effective means of controlling the principal emissions from
diesel engines (nitrogen oxides, particulate matter, carbon monoxide and
hydrocarbon).
-
Reduction of carbon dioxide and other greenhouse gas emissions by
enhancing combustion efficiency and by enabling long-term reliable performance
of emission control systems.
-
Effective utilization of strategic catalytic materials such as platinum
enables reduced emission control system costs, and low nitrogen dioxide
emission levels.
Eco relies on a combination of
patent, trademark, copyright and trade secret protection in the U.S. and
elsewhere as well as confidentiality procedures and contractual provisions to
protect our proprietary technology. Further, we enter into confidentiality and
invention assignment agreements with our employees and confidentiality
agreements with our consultants and other third parties. There can be no assurance
that pending patent applications will be approved or that the issued patents or
pending applications will not be challenged or circumvented by competitors.
Certain critical technology incorporated in our products is protected by patent
laws, trade secret laws, confidentiality agreements and licensing agreements.
There can be no assurance that such protection will prove adequate or that Eco
will have adequate remedies for disclosure of the trade secrets or violations of
the intellectual property rights.
18
Item 3. Legal Proceedings.
To the best knowledge of our officers and directors, the
Company is not a party to any legal proceeding or litigation.
Item 4: submission of matters to a vote of security holders
Special shareholders meeting, appointment of new
directors and officers
At a special meeting of all of the shareholders of the Company
held June 2, 2009 the name of the Company was changed to EcoEmissions Solutions
Inc, (formerly Resource Group Inc), the number of directors was changed to no
less than two and a maximum of seven, the authorized capital was increased to
260,000,000 shares consisting of 250,000,000 common shares and 10,000,000
preferred shares, and a stock dividend of 30 for 1 was approved. At a Board of
Directors meeting held on June 8, 2009 two additional directors; Larry Lorenz
and Thomas Crom were appointed, James Geiskopf and Ken Greenlaw resigned as
officers of the Company while still remaining on the board of directors, Mr.
Lorenz was appointed as President and Chief Executive Officer and Mr. Crom was
appointed Secretary, Treasurer and Chief Financial Officer.
PART II
Item 5. Market for Common Equity, Related Stockholder
Matters and Small Business Issuer Purchases of Equity Securities
Common Stock
Our Certificate of Incorporation authorizes the issuance of up
to 250,000,000 shares of common stock a (the Common Stock) and 10,000,000
share of preferred stock, par value $.0001 per share The Common Stock trades on
the OTC Bulletin Board. There has been no trading of our Common Stock up to
February 28, 2010, the current reporting period.
Dividend Policy
There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. Delaware General Corporation
Law, Chapter V, Section 170 however, do prohibit us from declaring dividends
where, after giving effect to the distribution of the dividend:
-
if the capital of the corporation, computed in accordance with Delaware
General Corporation Law, shall have been diminished by depreciation in the
value of its property, or by losses, or otherwise, to an amount less than the
aggregate amount of the capital represented by the issued and outstanding
stock of all classes having a preference upon the distribution of assets, the
directors of such corporation shall not declare and pay out of such net
profits any dividends upon any shares of any classes of its capital stock
until the deficiency in the amount of capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution of
assets shall have been repaired.
Securities Authorized for Issuance under Equity
Compensation Plans
The Company does not have any equity compensation plans or any
individual compensation arrangements with respect to its common stock or
preferred stock. The issuance of any of our common or preferred stock is within
the discretion of our Board of Directors, which has the power to issue any or
all of our authorized but unissued shares without stockholder approval.
19
Recent Sales of Unregistered Securities
In June 2009, the Company issued a 30 for 1 roll forward share
split to all shareholders. The following share values and numbers of shares
issued reflect the result of the roll forward.
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
|
)
|
Total common shares issued and outstanding
|
|
48,150,000
|
|
Issuer Purchases of Equity Securities
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 considerations. In settlement of the future
considerations provision of the transaction, the Company agreed to issue them
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 totalled $7,392 consisting of
$2,000 paid to the officers/directors for the post-split 60,000,000 shares and
an amount of $5,392 which was expensed on the income statement as directors
compensation, the deemed value of the share purchase warrants based on the
result of a Black-Scholes Model calculation.
Item 6. Selected Financial Data.
As a smaller reporting company as defined by Item 10 of
Regulation S-K, the Company is not required to provide this information
Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operation
Disclosure regarding forward-looking statements
All statements other than
statements of historical fact included in this Form 10-K including, without
limitation, statements under Managements Discussion and Analysis of Financial
Condition and Results of Operations regarding our financial position, business
strategy and the plans and objectives of management for future operations, are
forward looking statements. When used in this Form 10-K, words such as
anticipate, believe, estimate, expect, intend and similar expressions,
as they relate to us or our management, identify forward looking statements.
Such forward looking statements are based on the beliefs of management, as well
as assumptions made by, and information currently available to, our management.
Actual results could differ materially from those contemplated by the forward
looking statements as a result of certain factors detailed in our filings with
the Securities and Exchange Commission. All subsequent written or oral forward
looking statements attributable to us or persons acting on our behalf are
qualified in their entirety by this paragraph.
Overview
From an operational perspective,
the company had, and continues to have, no operating business. Expenses for the
year were in three categories: (i) required corporate legal and maintenance
expenses, e.g., SEC filings such as 10-Qs, 8-Ks and the 10-K, corporate
franchise taxes; (i) closing costs including accounting, legal and SEC document
preparation costs.
The Company currently does not engage in any business
activities that provide cash flow. During the next twelve months we anticipate
incurring costs related to:
(i) filing Exchange Act reports, and
(ii) investigating, analyzing and
consummating an acquisition.
20
2.
We believe we will be able to meet these costs through, loan
from related parties and additional amounts, as necessary, to be loaned to or
invested in us by our stockholders, management or other investors.
Other then our signed MOU with EcoEmissions Systems, Inc our
management has had no contact and discussions with other entities regarding a
merger or business combination with us. Any target business that is selected may
be a financially unstable company or an entity in its early stages of
development or growth, including entities without established records of sales
or earnings. In that event, we will be subject to numerous risks inherent in the
business and operations of financially unstable and early stage or potential
emerging growth companies. In addition, we may effect a business combination
with an entity in an industry characterized by a high level of risk, and,
although our management will endeavor to evaluate the risks inherent in a
particular target business, there can be no assurance that we will properly
ascertain or assess all significant risks.
The Company anticipates that the selection of a merger or
business combination will be complex and extremely risky. Because of general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, our management believes that there are
numerous firms seeking even the limited additional capital which we will have
and/or the perceived benefits of becoming a publicly traded corporation. Such
perceived benefits of becoming a publicly traded corporation include, among
other things, facilitating or improving the terms on which additional equity
financing may be obtained, providing liquidity for the principals of and
investors in a business, creating a means for providing incentive stock options
or similar benefits to key employees, and offering greater flexibility in
structuring acquisitions, joint ventures and the like through the issuance of
stock. Potentially available business combinations may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
As indicated in the accompanying financial statements, at
February 28, 2010, we had $1,376 in cash. We cannot assure you that our plan to
consummate a business combination or raise the necessary capital to fund
operations will be successful.
These factors, among others, raise substantial doubt as to our
ability to continue as a going concern.
Liquidity and Capital Resources
As of February 28, 2010 the Company had current assets equal to
$1,376, comprised of cash. This compares with current assets as of February 28,
2009, equal to $4,564, comprised of cash. The Companys current liabilities as
of February 28, 2010 totalled $68,272, made up of loans payable to related
parties amounting to $64,014, accrued liabilities amounting to $3,500 and
accounts payable amounting to $758. In the comparable period February 28, 2009
current liabilities totalled $39,953, made up of loans payable to related
parties amounting to $35,127, accrued liabilities amounting to $3,500 and
accounts payable amounting to $1,326.
The following is a summary of the Company's cash flows provided
by (used in) operating, investing, and financing activities for the years ended
December 31, 2009 and December 31, 2008 and for the cumulative period from April
2,2007 (Inception) to February 28, 2010.
|
|
|
|
|
|
|
|
For the
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
The Year
|
|
|
The Year
|
|
|
April 2, 2007
|
|
|
|
Ended
|
|
|
Ended
|
|
|
(Inception) to
|
|
|
|
February 28,
|
|
|
February 28,
|
|
|
February 28,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
Net Cash (Used in) Operating Activities
|
$
|
(25,670
|
)
|
$
|
(47,034
|
)
|
$
|
(90,353
|
)
|
Net Cash (Used in) Investing Activities
|
$
|
0
|
|
$
|
(25,253
|
)
|
|
(25,253
|
)
|
Net Cash Provided by Financing Activities
|
$
|
22,626
|
|
$
|
45,500
|
|
$
|
117,126
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
$
|
(3,044
|
)
|
$
|
4,564
|
|
$
|
1,376
|
|
21
Results of operations
He Company has restated its results for the Year ended February
28, 2009. This restatement increased our losses in an amount of $608. The
information reported below include the restated results.
For the year ended February 28, 2010, we had losses of $29,502,
comprised of professional fees totalling $20,615, office and administrative of
$4,974, directors compensation of $247 and interest totalling dollar sign $3,666
For the comparable period ending February 28, 2009 our restated losses totalled
$80,496, made up of professional fees of 46,334, office and administrative of
$5,525, impairment expenses were $25,253 as a result of the 100% write-down of
our mineral property, and interest totalling $3,384. Period inserted
No sales or income was recorded for the year ended February 28,
2010
Selected Financial Information February 28, 2010
|
|
February 28, 2010
|
|
|
|
|
|
Current Assets
|
$
|
1,376
|
|
Total Assets
|
$
|
1,376
|
|
Current Liabilities
|
$
|
68,272
|
|
Stockholders' Equity
|
$
|
(66,896
|
)
|
Selected Financial Information February 28,
2010
Results of Operations for the Year Ended February 28, 2009. No
Comparisons are available as the previous period ended February 29, 2008
included only the eleven-month cumulative period from April 2, 2007 to February
29, 2008
No sales or income was recorded for the year ended February 28,
2009
Operating Costs and Expenses
Costs incurred during the for the Year Ended February 28, 2009
totalling $80,496 were comprised of office and administration cost amounting to
$5,525 , professional fees amounting to $46,334 for the writing of the S-1
Registration Statement and filing of the 15c211 , including audit fees amounting
to $11,500, impairment expenses of $25,253 as a result of the 100% write-down of
our mineral property and interest cost totalling 3,384.
|
|
February 28, 2009
|
|
|
|
|
|
Current Assets
|
$
|
4,564
|
|
Total Assets
|
$
|
4,564
|
|
Current Liabilities
|
$
|
40,561
|
|
Stockholders' Equity
|
$
|
(35,997
|
)
|
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Contractual Obligations
22
As a smaller reporting company as defined by Item 10 of
Regulation S-K, the Company is not required to provide this information
Item 7A. Quantitative and Qualitative Disclosures about
Market Risk.
As a smaller reporting company as defined by Item 10 of
Regulation S-K, the Company is not required to provide this information.
Critical accounting policies
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make a wide variety of estimates and assumptions that
affect: (1) the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements,
and (2) the reported amounts of revenues and expenses during the reporting
periods covered by the financial statements. Our management routinely makes
judgments and estimates about the effect of matters that are inherently
uncertain. As the number of variables and assumptions affecting the future
resolution of the uncertainties increases, these judgments become even more
subjective and complex. We have identified certain accounting policies that are
most important to the portrayal of our current financial condition and results
of operations. Our significant accounting policies are disclosed in Note 1 of
the Notes to the Consolidated Financial Statements, and several of those
critical accounting policies are as follows:
Marketable Securities.
Marketable securities may consist of shares, bonds and other
negotiable instruments. Shares will be accounted for as securities held-for-sale
in accordance with ASC 320, Investments. Marketable securities will be stated
at fair value based on market quotes. Unrealized gains and losses are recorded
as other comprehensive income, a component of stockholders deficit in our
consolidated balance sheet.
Estimated costs associated with closure, reclamation and
environmental reclamation the Companys properties will be reflected in its
consolidated financial statements in accordance with generally accepted
accounting principles, including the adoption of SFAS 143,
Accounting
for Asset Retirement Obligations
, which the Company adopted.
Revenue Recognition.
The company has had no revenues to date. It is the Companys
policy that revenues will be recognized in accordance with ASC 605, "Revenue
Recognition." Under ASC 605, product revenues (or service revenues) are
recognized when persuasive evidence of an arrangement exists, delivery has
occurred (or service has been performed), the sales price is fixed and
determinable and collectibility is reasonably assured.
Stock-Based Compensation and Equity
Transactions
.
We account for stock-based compensation pursuant to ASC 505-50,
Equity Based Payments
, an amendment of FASB Statements 123 and 95, which
requires us to measure the compensation cost of stock options and other
stock-based awards to employees and directors at fair value at the grant date
and recognize compensation expense over the requisite service period for awards
expected to vest.
Except for transactions with employees and directors that are
within the scope of ASC 505-50, all transactions in which goods or services are
the consideration received for the issuance of equity instruments are accounted
for based on the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably measurable.
Additionally, in accordance with EITF 96-18, the Company has determined that the
dates used to value the transaction are either: (1) the date at which a
commitment for performance by the counter party to earn the equity instruments
is established; or (2) the date at which the counter partys performance is
complete.
23
Accounting Pronouncements
See Note 2 to the consolidated financial statements for
information concerning recent accounting pronouncements and the impact of those
standards.
Item 8: Financial Statements and Supplemental Data
Our fiscal year end is February 28. We will provide audited
financial statements to our stockholders on an annual basis. Our consolidated
audited financial statements for the fiscal years ended February 28, 2010 and
2009 follow. These financial statements also include
accumulated costs from inception on April 2, 2007 to February 28, 2010.
Audited financial statements begin on the following page of
this report.
24
EcoEmissions Solutions Inc
(formerly known as Resource
Group Inc)
(A Development Stage Company)
Financial Statements
February 28, 2010
F-1
25
SEALE AND BEERS, CPAs
PCAOB
&
CPAB
REGISTERED AUDITORS
www.sealebeers.com
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We consent to the use, in the statement on Form 10K of
EcoEmissions Solutions Inc. (A Development Stage Company), of our report dated
June 15, 2010 on our audit of the financial statements of EcoEmissions Solutions
Inc. (A Development Stage Company) as of February 28, 2010 and 2009 (Restated),
and the related statements of operations, stockholders' equity and cash flows
for the years ended February 28, 2010 and 2009 (Restated), and since inception
on April 2, 2007 through February 28, 2010, and the reference to us under the
caption "Experts."
/s/ Seale and Beers, CPAs
Seale and Beers,
CPAs
Las Vegas, Nevada
June 16, 2010
Seale and Beers, CPAs PCAOB
&
CPAB
Registered Auditors
50 S. Tones Blvd Suite 202 Las
Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351
EcoEmissions Solutions Inc
(formerly known as Resource
Group Inc)
(A Development Stage Company)
Balance Sheets
(Audited)
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
February 28, 2010
|
|
|
February 28, 2009
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash
|
$
|
1,376
|
|
$
|
4,564
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
1,376
|
|
|
4,564
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
1,376
|
|
$
|
4,564
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
$
|
758
|
|
$
|
1,326
|
|
Accounts Payable
|
|
|
|
|
|
|
|
|
3,500
|
|
|
3,500
|
|
Accrued Liabilities
|
|
|
|
|
|
|
Loans Payable Related Parties-Principal (Note 5)
|
|
56,126
|
|
|
31,500
|
|
Loans Payable Related Parties-Accrued
Interest (Note 5)
|
|
7,888
|
|
|
4,235
|
|
Total Current Liabilities
|
|
68,272
|
|
|
40,561
|
|
Total Liabilities
|
$
|
68,272
|
|
$
|
40,561
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Authorized:
250,000,000 common and 10,000,000 preferred shares
|
|
|
|
|
|
|
Issued and outstanding at February 28, 2010
and February 28, 2009,
48,150,000, and 108,000,000 common shares,
respectively
|
|
48,150
|
|
|
108,000
|
|
Additional paid-in capital
|
|
13,597
|
|
|
(45,000
|
)
|
Deficit Accumulated During the Exploration
Stage
|
|
(128,499
|
)
|
|
(98,997
|
)
|
Accumulated OCI Foreign Exchange
|
|
(144
|
)
|
|
-
|
|
Total Stockholders Equity
|
|
(66,896
|
)
|
|
(35,997
|
)
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders Equity
|
$
|
1,376
|
|
$
|
4,564
|
|
The accompanying notes are an integral part of these Financial
Statements
F-2
26
EcoEmissions Solutions Inc
(formerly known as Resource
Group Inc)
(A Development Stage Company)
Statements of Operations
(Audited)
|
|
|
|
|
Year Ended
|
|
|
Cumulative amounts
|
|
|
|
Year Ended
|
|
|
February 28,
|
|
|
from Inception April 2,
|
|
|
|
February 28,
|
|
|
2009
|
|
|
2007 to February 28
|
|
|
|
2010
|
|
|
(Restated)
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
Income
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Organization Expenses
|
|
-
|
|
|
-
|
|
|
5,000
|
|
Office and Administration
|
|
4,974
|
|
|
5,525
|
|
|
13,148
|
|
Professional Fees
|
|
20,615
|
|
|
46,334
|
|
|
76,949
|
|
Directors Compensation
|
|
247
|
|
|
-
|
|
|
247
|
|
Impairment Expense- Mining
Claim
|
|
-
|
|
|
25,253
|
|
|
25,253
|
|
Total Expenses
|
|
25,836
|
|
|
77,112
|
|
|
120,597
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss from Operations
|
|
(25,836
|
)
|
|
(77,112
|
)
|
|
(120,597
|
)
|
|
|
|
|
|
|
|
|
|
|
Other Income and Expenses
|
|
|
|
|
|
|
|
|
|
Interest Expense-Related
Party
|
|
(3,653
|
)
|
|
(3,384
|
)
|
|
(7,902
|
)
|
Interest Expense Other
|
|
(13
|
)
|
|
-
|
|
|
(14
|
)
|
Loss For The Period
|
$
|
(29,502
|
)
|
$
|
(80,496
|
)
|
$
|
(128,486
|
)
|
Basic And Diluted Loss Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
(0.00
|
)
|
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares Outstanding
|
|
62,743,562
|
|
|
108,000,000
|
|
|
|
|
The accompanying notes are an integral part of these Financial
Statements
F-3
27
EcoEmissions Solutions Inc
(formerly known as Resource
Group Inc)
(A Development Stage Company)
Statements of Cash Flows
(Audited)
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
Year Ended
|
|
|
amounts from
|
|
|
|
Year Ended
|
|
|
February 28,
|
|
|
Inception April 2
|
|
|
|
February 28,
|
|
|
2009
|
|
|
2007 to February
|
|
|
|
2010
|
|
|
|
|
|
28, 2010
|
|
|
|
|
|
|
(Restated
)
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
$
|
(29,502
|
)
|
$
|
(80,496
|
)
|
$
|
(133,644
|
)
|
|
|
|
|
|
|
|
|
|
|
Adjustments To Reconcile Net Loss To
Net Cash
|
|
|
|
|
|
|
|
|
|
Provided by
Operations
|
|
-
|
|
|
-
|
|
|
-
|
|
Stock Issued for services
|
|
500
|
|
|
-
|
|
|
500
|
|
Issue dividend
in Warrants
|
|
5,392
|
|
|
-
|
|
|
5,392
|
|
Change in Assets and Liabilities
|
|
-
|
|
|
-
|
|
|
-
|
|
(Increase)
decrease in Mining Property Value
|
|
-
|
|
|
25,253
|
|
|
25,253
|
|
(Increase) decrease in accrued
liabilities
|
|
-
|
|
|
3,500
|
|
|
3,500
|
|
(Increase) decrease in accounts payable
|
|
(568
|
)
|
|
1,326
|
|
|
758
|
|
Cash provided by (used for) Notes
Payable-Related Party
|
|
3,653
|
|
|
3,383
|
|
|
7,888
|
|
Net Cash Provided (Used) by Operating Activities
|
|
(27,670
|
)
|
|
(47,034
|
)
|
|
(90,353
|
)
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Cash Paid for Mining Property
|
|
-
|
|
|
-
|
|
|
(25,253
|
)
|
Net
Cash Provided (Used) by Investing Activities
|
|
-
|
|
|
-
|
|
|
(25,253
|
)
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Cash provided by (used) Notes
Payable-Related Party-Net
|
|
24,626
|
|
|
(45,500
|
)
|
|
54,126
|
|
Cash Received from issuance of stock
|
|
-
|
|
|
-
|
|
|
63,000
|
|
Net
Cash Provided (Used) by Financing Activities
|
|
24,626
|
|
|
(45,500
|
)
|
|
117,126
|
|
Increase (Decrease) in Cash
from Continuing Operations
|
|
(3,044
|
)
|
|
(92,534
|
)
|
|
1,520
|
|
Accumulated OCI-Foreign Exchange
|
|
(144
|
)
|
|
-
|
|
|
(144
|
)
|
Cash and Cash Equivalents at Beginning of Period
|
|
4,564
|
|
$
|
97,098
|
|
|
-
|
|
Cash and Cash Equivalents at End of Period
|
$
|
1,376
|
|
$
|
4,564
|
|
$
|
1,376
|
|
Supplemental Information
|
|
|
|
|
|
|
|
|
|
Cash Paid For:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
Income Taxes
|
|
-
|
|
|
-
|
|
|
-
|
|
Supplemental
|
|
|
|
|
|
|
|
|
|
Non-Cash Activities
|
|
|
|
|
|
|
|
|
|
Company Stock
repurchased, exchanged for warrants and stock cancelled
|
$
|
5,392
|
|
$
|
-
|
|
$
|
5,392
|
|
Notes Payable for Company Stock repurchased
|
|
2,000
|
|
|
|
|
|
2,000
|
|
Interest
|
|
3,666
|
|
|
3,384
|
|
|
7,888
|
|
The accompanying notes are an integral part of these Financial
Statements
F-4
28
EcoEmissions Solutions Inc
(formerly known as Resource
Group Inc)
(A Development Stage Company)
Statements of Stockholders
Equity
February 28, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated
|
|
|
During the
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-In
|
|
|
OCI-Foreign
|
|
|
Exploration
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Exchange
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance Forward (Inception) April 2, 2007
December 2007
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Shares issued for cash at $0.000033333 February 2008
|
|
90,000,000
|
|
|
90,000
|
|
|
(87,000
|
)
|
|
|
|
|
|
|
|
3,000
|
|
Shares issued for cash at $0.0033333
|
|
18,000,000
|
|
|
18,000
|
|
|
42,000
|
|
|
|
|
|
|
|
|
60,000
|
|
Deficit for Period Ended February 29, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,501
|
)
|
|
(18,501
|
)
|
Balance February 29, 2008
|
|
108,000,000
|
|
|
108,000
|
|
|
(45,000
|
)
|
|
-
|
|
|
|
|
|
44,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(18,501
|
)
|
|
|
|
Deficit for Period ended February 29, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(80,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(80,496
|
)
|
|
|
|
Balance February 29, 2009
|
|
108,000,000
|
|
|
108,000
|
|
|
(45,000
|
)
|
|
-
|
|
|
|
|
|
(35,997
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(98,997
|
)
|
|
|
|
May 2009 Shares issued for consulting Services
150,000 at 0.0033333
|
|
150,000
|
|
|
150
|
|
|
350
|
|
|
|
|
|
|
|
|
500
|
|
May 2009 Shares purchased from directors 60,000,000 at 0.000033333
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
|
)
|
|
(29,489
|
)
|
Balance February 28, 2010
|
|
48,150,000
|
|
|
48,150
|
|
|
13,597
|
|
|
(144
|
)
|
|
(128,499
|
)
|
|
(66,896
|
)
|
The accompanying notes are an integral part of these Financial
Statements
F-5
29
EcoEmissions Solutions Inc
(formerly known as Resource
Group Inc)
(A Development Stage Company)
Notes to Financial Statements
February 28, 2010
NOTE 1 - BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
a)
Basis of Presentation
The information presented in the accompanying financial
statements for the year ended February 28, 2010 and February 28, 2009, are
audited and includes all adjustments, which are, in the opinion of the
management of EcoEmissions Solutions Inc (formerly Resource Group Inc) (the
Company), necessary to present fairly the financial position, results of
operations and cash flows in the periods presented.
b)
Reclassifications
Certain reclassifications have been made to the prior years
financial statements to conform to the current year presentation. On the
Statement of Operation, we have consolidated expense item Filing Fees into
Office Administration, Legal and Consulting, and Audit Fees are now included
under Professional Fees. These reclassifications had no effect on previously
reported results of operations or retained earnings.
c)
Development Stage Activities
The Company is in the development stage and has not yet
realized any revenues from its planned operations. Based upon the Company's
business plan, it is a development stage enterprise. The Company presents its
financial statements in conformity with generally accepted accounting principles
(GAAP) in the United States of America that apply in establishing operating
enterprises. As a development stage enterprise, the Company discloses the
deficit accumulated during the development stage and the cumulative statements
of operations and cash flows from inception to the current balance sheet date.
d)
Organization
The Company was incorporated as Resource Group Inc, in the
State of Delaware, United States of America on April 2, 2007. The Companys
year-end is February 28.
We were originally structured and organized as a resource
company, planning to acquire mining properties in Canada while remaining open to
the acquisition of other base and precious metal property opportunities
worldwide. During the year ended February 28, 2009, the Company acquired a
Molybdenum Gold property located at Strohn Creek, British Columbia, Canada,
further described as the Meziadin Lake Project.
On June 1, 2009 the Company entered into a Memorandum of
Understanding with EcoEmissions System, Inc of Tempe Arizona (ECO) to acquire
100 % of ECO subject to ECO completing an independent audit of it financial
records and other conditions precedent. At the date of this report the financial
information and other conditions were incomplete. The parties continue to work
together in an effort to complete the transaction. EcoEmissions System, Inc owns
and manufactures a proprietary product which is adapted to all size diesel
combustion engines to reduce emissions, reduce maintenance, reduce fuel
consumption by about 8% and increase the life of the engine (the Eco
Technology).
F-6
30
NOTE 1 - BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
(CONTD)
At a special meeting of all of the shareholders of the Company
held June 2, 2009 the name of the Company was changed to EcoEmissions Solutions
Inc, (formerly Resource Group Inc), the number of directors was changed to no
less than two and a maximum of seven, the authorized capital was increased to
260,000,000 shares consisting of 250,000,000 common shares and 10,000,000
preferred shares, and a stock dividend of 30 for 1 was approved. At a Board of
Directors meeting held on June 8, 2009 two additional directors; Larry Lorenz
and Thomas Crom were appointed, James Geiskopf and Ken Greenlaw resigned as
officers of the Company while still remaining on the board of directors, Mr.
Lorenz was appointed as President and Chief Executive Officer and Mr. Crom was
appointed Secretary, Treasurer and Chief Financial Officer.
On June 4
th
, 2009 the Company sold its Strohn Creek
mineral property located near Strohn Creek to Skyhigh Resources Inc for
2,500,060 shares of Skyhigh Resources common stock. As a condition of the
transaction the director of EcoEmissions Solutions Inc required Skyhigh
Resources Inc to distribute these shares on a pro-rata basis, to the
shareholders of the Company. No gain/loss value was placed on the transaction,
as the property had previously been 100% impaired resulting in an expense of
$25,253 entered to the Statement of Operations.
On December 7, 2009 the Company filed an 8-K with the United
States Securities and Exchange Commission, which provided additional details
precedent to the Companys completion of the acquisition of EcoEmission Systems
Inc.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to
assist in understanding the Companys financial statements. The financial
statements and notes are representations of the Companys management who is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles in the United States of
America and have been consistently applied in the preparation of the financial
statements. The financial statements are stated in United States of America
dollars.
Organizational and Start-up Costs
Costs of start-up activities, including organizational costs,
are expensed as incurred in accordance with ASC 720-15.
Income Taxes
The Company uses the asset and liability method of accounting
of income taxes. Under the asset and liability method deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
temporary differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. 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
Basic and Fully-Diluted Loss Per Share
The basic
loss per common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding.
Fully-Diluted loss per common share is computed similar to basic loss per common
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
At February 28, 2010 and February 28, 2009 the Company had no stock equivalents
that were anti-dilutive and excluded in the earnings per share computation.
F-7
31
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTD)
Estimated Fair Value of Financial Instruments
The
carrying value of the Companys financial instruments, consisting of accounts
payable and accrued liabilities approximate their fair value due to the
short-term maturity of such instruments. Unless otherwise noted, it is
managements opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial statements.
Revenue Recognition
The company has had no revenues to date. It is the Companys
policy that product revenues (or service revenues) will be recognized when
persuasive evidence of an arrangement exists, delivery has occurred (or service
has been performed), the sales price is fixed and determinable and
collectibility is reasonably assured.
Concentrations
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents.
At February 28, 2010 and February 28, 2009, the Company had $1,376 and $4,564
respectively, in funds in deposits in a business bank account, which are not
insured by agencies of the U.S. Government.
Currency
The functional currency of the Company is the United States
Dollar.
Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles in the United States of America require
the use of estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities known to exist
as of the date the financial statements are published, and the reported amounts
of revenues and expenses during the reporting period. Uncertainties with respect
to such estimates and assumptions are inherent in the preparation of the
Companys financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions and could have a
material effect on the reported amounts of the Companys financial position and
results of operations.
Cash and Cash Equivalents
The Company considers all
highly liquid debt instruments with an original maturity of three months or less
to be cash equivalents.
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.
F-8
32
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 minimal business operations to date and losses
of approximately $133,644. 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.
NOTE 4 - INCOME TAXES
The Company is subject to U.S. federal income taxes. It has 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:
Period Ending
|
Estimated
NOL
Carry-forward
|
Estimated
Tax
|
NOL
Expires
|
Benefit from
NOL
|
Changes in and Valuation
Allowance
|
Net Tax
Benefit
|
|
|
|
|
|
|
|
February 28, 2009
|
$98,997
|
|
2029
|
($14,850)
|
($14,850)
|
|
|
|
|
|
|
|
|
February 28, 2010
|
$128,485
|
|
2030
|
($19,273)
|
($4,423)
|
|
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%
|
NOTE 5 LOANS PAYABLE - RELATED PARTY LOANS
In November 2007, the Company issued to two officers/directors
of the Company, secured one year, 10% Promissory Notes (the Notes), amounting
to in aggregate $80,000, due November 12, 2008. The notes pursuant to a Purchase
Agreement and Section 4(2) of the Securities Act of 1933, as amended, and Rule
506 promulgated thereunder and accrue interest at ten percent (10%) per annum,
compounded annually. Subsequent to the making of the Notes, on December 1, 2007,
the note holders agreed to convert $1,500 each, in aggregate $3,000 of the face
value of the Notes into 3,000,000 shares of common stock of the Company at a
price per share of $0.001, leaving $77,000 plus accrued interest outstanding.
F-9
33
NOTE 5 LOANS PAYABLE - RELATED PARTY LOANS (CONTD)
In March 2008, the Company repaid $49,500, leaving $27,500
principal plus accrued interest payable. On December 15, 2008, the note due
dates were extended to November 12, 2009. In December 2008 and January 2009,
$2,000 each, in aggregate $4,000 was loaned to the Company by two
officers/directors bringing the total principal amount to $31,500.On February
28, 2009, the principal payable amount to $31,500 plus accrued interest of
$4,235, in aggregate $35,735.
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 February 28, 2010 the amount for Loans Payable - Related
Party, in aggregate, including shareholders and other related parties amounted
to $64,014 made up of principal amounting to $56,126 and accrued interest
amounting to $7,888.
NOTE 6 COMMON STOCK AND 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 totalled
$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 5% and a stock price of $0.10. 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.
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)
|
F-10
34
NOTE 7 RESTATEMENTS OF FEBRUARY 28, 2009 COMPARATIVE
STATEMENTS
Deficit Accumulated During the Development Stage of February
28, 2009, has been increased by $608 to correct an error made in calculating
accrued interest on Related Party Loans. The amount, $608, had been corrected
during the subsequent period ended February 28, 2010 therefore the error had no
effect on the results for February 28, 2010.
|
|
February 28, 2009
|
|
Deficit Accumulated During the Development
Stage previously reported
|
$
|
98,387
|
|
Amount of additional Interest on Related Party Loans
|
|
608
|
|
Restated Deficit Accumulated During the
Development Stage
|
|
98,997
|
|
NOTE 8- SUBSEQUENT EVENTS
On May 10, 2010 the Company filed on Edgar with the United
States Securities and Exchange Commission an 8-K which provided additional
details precedent to the Companys completion of the acquisition of EcoEmission
Systems Inc. In this 8-K disclosure the Company announced that the escrow
agreement concerning the purchase of certain shares of the Companys stock as
disclosed in its SEC filing of December 8, 2009 has been completed. In addition,
the 8-K announced the resignation of its director Ken Greenlaw for personal
reasons. There were no disagreements between the Company and Mr Greenlaw.
The Company has reviewed subsequent events up to and including
the issuance date of these statements, and determined that except for those
events disclosed herein, no additional subsequent events have occurred.
F-11
35
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
There are not and have not been any disagreements between the
Company and its accountants on any matter of accounting principles, practices or
financial statement disclosure.
Item 9A (T). Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We evaluated the effectiveness of our disclosure controls and
procedures as of the date of this report. This evaluation was conducted by our
President and Chief Executive Officer, Larry Lorenz and our Secretary and Chief
Financial Officer, Thomas Crom.
Disclosure controls are controls and other procedures that are
designed to ensure that information that we are required to disclose in the
reports we file pursuant to the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported.
Limitations On Effective Controls
Our management does not expect that our disclosure controls or
our internal controls over financial reporting will prevent all error and fraud.
A control system, no matter how well conceived and operated, can provide only
reasonable, but no absolute, assurance that the objectives of a control system
are met. Further, any control system reflects limitations on resources, and the
benefits of a control system must be considered relative to its costs. These
limitations also include the realities that judgments in decision-making can be
faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people or by management override of a
control. A design of a control system is also based upon certain assumptions
about potential future conditions; over time, controls may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
may not be detected.
Conclusions
Based upon their evaluation of our controls, the Chief
Executive Officer has concluded that, subject to the limitations noted above,
the disclosure controls are ineffective in providing reasonable assurance that
material information relating to us is made known to management on a timely
basis during the period when our reports are being prepared. There were no
changes in our internal controls that occurred during the period covered by this
report that have materially affected, or are reasonably likely to materially
affect our internal controls.
Evaluation Of And Report On Internal Control Over
Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting for the company. Internal
control over financial reporting is to provide reasonable assurance regarding
the reliability of our financial reporting purposes accordance with accounting
principles generally accepted in the United States of America. Internal control
over financial reporting includes maintaining records that in reasonable detail
accurately and fairly reflect our transaction; providing reasonable assurance
that transactions are recorded as necessary for preparations of our financial
statements; providing reasonable assurance that receipts and expenditures of
company assets are made in accordance with management authorization; and
providing reasonable assurance that unauthorized acquisitions, use or
disposition of company assets that could have a material effect on our financial
statements would be prevented or detected.
Management conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the framework in Internal
Control Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation management
concluded that the Company's internal controls over financial reporting was ineffective as of February 28, 2010.
There where no changes in our internal control over financial reporting during
the period ended February 28, 2010 that have materially affected, or are
reasonable likely to materially affect, or are reasonably likely to material
affect, our internal control over financial reporting.
36
Item 9B. Other Information
.
PART III
Item 10: Directors, Executive Officers, Promoters And
Control Persons
The following table sets forth the names and ages of our
current directors and executive officers. Also the principal offices and
positions with us held by each person and the date such person became our
director, executive officer. Our Board of Directors appoints our executive
officers. Our directors serve until the earlier occurrence of the election of
his or her successor at the next meeting of stockholders, death, resignation or
removal by the Board of Directors. There are no family relationships among our
directors, executive officers, and director nominees.
|
Name
|
Age
|
Position
|
|
Larry N. Lorenz
|
58
|
President & Chief Executive
Officer, Director
|
|
Thomas L. Crom
|
55
|
Chief Financial Officer, Secretary and Director
|
|
Jimmy Gieskoff
|
48
|
Director
|
|
|
|
|
|
Ken Greenlaw-note 1
|
43
|
Director
|
|
|
|
|
Note 1-
Effective May 10, 2010 Ken Greenlaw resigned his
position as a director for personal reasons. There were no disagreements between
the Company and Mr. Greenlaw.
Larry N. Lorenz
, Chairman and President of EcoEmissions
Solutions, Inc., has over thirty years of international experience in business,
manufacturing, engineering, marketing and finance. Mr. Lorenz, focus is on
corporate strategy, global business development and managing overseas
operations.
In 1983 Mr. Lorenz signed one of the first Canadian based
International Joint Ventures Contracts with the People's Republic of China to
establish a manufacturing plant in the City of Xian. Mr. Lorenz has been active
in doing business in China since 1983. Mr. Lorenz is also a past member of the
Board of Directors for the B.C. Division of the "Canadian Manufacturers
Association". He represented the B.C. Manufacturers Association on the B.C.
Equipment Tax Committee, presented various "Briefs" and "Presentations" to the
British Columbia Government Cabinet. Project Coordinator for Baars Engineering,
(1988 - present), a Vancouver, B.C. based Consulting company providing
'Manufacturing and Engineering Services for the Manufacturing and Process
Industries'.
James P. Geiskopf
has 32 years of experience in the car
rental industry. From 1975 to 1986 he was the Chief Financial Officer of Budget
Rent a Car of Fairfield California. From 1986 to 2007 he has been the President
and Chief executive Officer of Budget Rent a Car of Fairfield California. Mr.
Geiskopf served on the board of directors of Suisun Valley Bank from 1986 to
1993. He also served on the board of Napa Valley Bancorp (NASDAQ) from 1991 to
1993.
Ken Greenlaw
has 16 years of experience with Microsoft
Corporation. From 1991 to 1997 he worked as a Test Lead in the IMG Community
Technology Group. Projects in clued the Chat Service analysis and Web Scale
Buddy List. This lead to the joining the MSN team I its early stages of
development. From 1997 to 1998 he worked in the role of a vertical Technical
Evangelist in ADCU. From 1998 to 2002 he worked in the GeoUnit as the Map Test
Lead responsible for up to 13 staff and all of the map data used in Map Pint,
Streets & Trips, Expedia World Atlas, ExpediaMaps.com, as well as the
European version for everything. From 2002 to 2003 he joined a division as the
8
th
employee and co-built a test team for the Release of NAS (Network
Attached Storage), which later came to be known as Windows Storage Server. From
2003 to 2005 he joined the Microsoft Speech Server group part way through the
1.0 release of the product. From 2005 to present he took on the role of Engineering Manager, tasked with
creating the Magik Product Team, and is currently working as Program Manager on
the Commerce Sever Oversight Team with 66 vendors reporting.
37
Executive Officers and Directors of EcoEmissions Systems,
Inc.
Below are the names and certain information regarding the Ecos
executive officers, directors and director nominees following the acquisition of
Eco:
|
Name
|
Age
|
Position
|
|
Thomas L. Crom
|
55
|
President & Chief Executive
Officer, Director
|
|
Thomas Bennett
|
60
|
VP Sales Director
|
|
Gary Miller
|
62
|
VP Technical Director
|
|
Brian Slagel
|
34
|
VP Operations
|
|
Russ Webster
|
42
|
VP Research & Development
|
|
Paul Masson
|
59
|
VP Field Operations
|
Following the acquisition of Eco, set forth below is a
biographical description of each director and senior executive officer of Eco
based on information supplied by each of them.
Thomas L. Crom, CEO & CFO
With over 20 years
experience in accounting and finance as a senior executive. Mr. Crom is a
Certified Public Accountant (CPA) and a Certified Management Accountant (CMA).
Currently, Thomas Crom is a director of three public U.S. companies and one
public Canadian company. He is also a director and management representative of
Eureka Ventures, Inc., a US-based investment consulting firm that provides
investment banking, as well as financial and consulting services to select
corporations and enterprises. These services include SEC quarterly and annual
filings, SEC initial public offerings and secondary offerings, budgeting,
forecasting, risk analysis, shareholder and public relations assistance,
development of strategic plans, and developing and maintaining strict financial
control. He has extensive international business development experience in
finance, SEC Offerings and the resource sectors in North America, South America
and Africa. Mr. Crom has a B.S. in Commerce cum laude from Santa Clara
University, and an M.S. in Taxation cum laude from Golden Gate University.
Tom Bennett, Vice President Sales & Marketing
Tom
Bennett was an Industrial Sales Manager for an emissions company for the past
four years. His primary responsibility has been the development of a strong and
loyal customer base and distributor network. Before joining the company, he had
worked in the construction equipment industry since 1972. For the last 10 years,
he served as the Senior Accounts Manager for RDO Equipment Company, the largest
John Deere dealer in the world. Mr. Bennett was one of the top John Deere
salesmen in the United States. Mr. Bennett attended the University of Arizona.
Brian Slagel, Vice President Operations
A hands-on
manufacturing and operations manager with 15 years of progressive experience in
the automotive manufacturing industry, Brian Slagel had previously worked for
another emissions device manufacturer as the Director of Operations. There, he
was responsible for planning and directing all manufacturing operations and
developing manufacturing processes and procedures. Prior to this, Mr. Slagel
served as Operations Manager for Intertek, a testing, engineering, and
manufacturing quality management firm. He was responsible for the profitability,
operations, safety compliance, and quality assurance for the testing and
engineering departments. Brian Slagel has extensive experience in process
analysis and production efficiency. He attended the University of Phoenix and
served in the US Air Force as an aircraft Crew Chief.
Gary Miller, Vice President Engineering and Technical
Services
Mr. Miller is a 32 year veteran of the General Motors Corporation.
During his tenure there, Gary worked as a Technical Writer, Resident Instructor
at a General Motors Training Center, Regional Service Manager, for fifteen years
as a Field Test Engineer/Engineering Facilities Manager (Domestic and
International),and finally as a Project Manager on Light and Medium Duty Trucks
and the H1-HUMMER platform at the GM Desert Proving Grounds. Mr. Miller has vast
technical, engineering and engineering management experience in multiple
industries He has a B.S. degree in Engineering from Northrop -Rice Aviation
Institute of Technology.
38
Russ Webster, Vice President Research &
Development
Bringing over 20 years experience in the heavy equipment
industry to the company, Russ Webster worked in various capacities with research
& development and product design. Mr. Webster has extensive experience with
emissions control devices and has worked with both the California Air Resources
Board and the Environmental Protection Agency to achieve accreditations. Mr.
Webster attended Eastern Arizona College.
Paul Masson, Vice President Field Operations &
Business Development
Paul Masson comes to Eco-Emissions Systems with over
37 years experience in highway and mining construction equipment from both the
sales and service sides of the business. He also benefits from a wealth of large
engine experience in the commercial marine industry. Mr. Masson worked for a
Caterpillar Tractor dealership for over 12 years before starting his own successful
company. Some of the business models and application engineering models he developed
are still being used today. With the advent of the Clean Air rules looming in
the future, Mr. Masson was excited by the opportunity to become part of the
EcoEmissions team that works to reduce our clients carbon footprint and
give back to the community. Mr. Masson has a B.S. Degree in Marketing Management
and other accreditations from California State University at Pomona, CA.
Advisory Board
Andy Nuzzi Corporate Advisor, Marine Operations
With
over 30 years in the international shipping industry, Andy Nuzzi brings an
extensive background to the companys marine operations. He held key managerial
positions with Furness Withy, a major international shipping company, where he
was instrumental in merging their U.S. interests into Kerr Steamship Company. In
1977, he became Corporate Vice President of Kerr, then the largest shipping
agency in North America. In 1983 he became Senior Vice President and ran the
Gulf and South Atlantic Operations. In the 90s, Mr. Nuzzi became Executive Vice
President of K Line. He is a former President of the U.S. Great Lakes Shipping
Association, and served on the Board of Directors of California United
Terminals, Coastal Maritime Services, Coastal Trailer Repairs, Fairway
Terminals, and numerous other organizations and companies.
Paul Rovey Advisor, Agriculture Equipment
A third
generation farmer and operator of Rovey Farms, Paul Rovey is a leader in the
agriculture industry, and is Chairman of Dairy Inc. He also sits on the Board of
the United Industry Association, is Vice Chairman of the United States Dairy
Export Council, and a Board Member of Farm Credit Services Southwest. In
Arizona, Mr. Rovey sits on the governing Council of The Salt River Project and
is a Board Member of The Center For Rural Leadership. He boasts an extensive
network within the American and international food production sectors.
Paul Edward Watts Advisor, Heavy Equipment industry
With over 50 years in engineering and heavy equipment, Ed Watts has a formidable
background in industries relying on diesel engines. He started as an Operating
Engineer in 1953, eventually becoming Field Superintendent for Kiewit, where he
oversaw construction of new harbors in Southern California. He held similar
duties with for Ets-Hokin & Galvin on the electrical power lines that
connected Americas power grid. He then ran his own company, working as a
subcontractor for Bechtel at the Anaconda Molybdenum Mine in Nevada. Thereafter,
he was responsible for all machinery support on two very large Bechtel Power
Plant Construction jobs including the Palo Verde Nuclear Generating Station
which is the largest nuclear facility in America. After retiring from
construction, Ed became an advisor to John Deere in their machine design
department and to RDO Equipment Company, which is John Deeres largest dealer.
His other realm of expertise is in recreational vehicles, which is a significant
market sector for the company.
(b) Significant Employees.
See above
(c) Family Relationships.
There are no family relationships among directors, executive
officers, or persons nominated or chosen by the issuer to become directors or
executive officers.
(d) Involvement in Certain Legal Proceedings.
39
There have been no events under any bankruptcy act, no criminal
proceedings and no judgments, injunctions, orders or decrees material to the
evaluation of the ability and integrity of any director, executive officer,
promoter or control person of Registrant during the past five years.
Code Of Ethics
The Company has a formally adopted a written code of ethics
that applies to the Company's principal executive officer, principal financial
officer or controller, or persons performing similar functions.
Committees
We do not have audit, nominating, or compensation committees
or committees performing similar functions nor a written nominating, compensation
of audit committee charter. Our Board of Directors as a whole decides such matters,
including those that would be performed by a standing nominating committee.
Our Board of Directors has not adopted any processes or procedures for considering
executive and director compensation. We have not yet adopted an audit, compensation,
or nominating committees because we have not sufficiently developed our operations
and have generated no revenues since we changed our business model to exploration
activities.
Additionally, we do not currently have any specific or minimum
criteria for the election of nominees to our Board of Directors nor do we have
any process or procedure for evaluating such nominees.
Shareholder Communications and Shareholders
meetings
Our Board of Directors does not have any defined policy or
procedure requirements for our stockholders to send communications to our Board
of Directors, including submission of recommendations for nominating directors.
We have not yet adopted a process for our security holders to communicate with
our Board of Directors because we have not sufficiently developed our operations
and corporate governance structure.
We have not yet held an annual shareholders meeting.
Compliance With Section 16(A) Of The Exchange Act
Section 16(a) of the Exchange Act, as amended, requires that
our directors, executive officers and persons who own more than 10% of a class
of our equity securities which are registered under the Exchange Act to file
with the Commission initial reports of ownership and reports of changes of
ownership of such registered securities.
To our knowledge, based solely on a review of copies of such
reports, no person required to file such a report failed to file a required
report with respect to the fiscal year covered by this report.
Item 11: Executive Compensation
The table below summarizes all compensation awarded to, earned
by, or paid to our executive officers by any person for all services rendered in
all capacities to us for the year ended February 28, 2010 Summary Compensation
Table
Name & Principle
Position
|
Year
|
Salary
($)
|
Other Annual
Compensation
Bonus ($)
|
Restricted
Stock ($)
|
Options
Awards
($)
|
LTIP
SARs
($)
|
Payouts
($)
|
All Other
Compensation
($)
|
Larry N. Lorenz.
President & CEO
|
2010
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Thomas L. Crom,
Secretary & CFO
|
2010
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
James P. Geiskopf,
Director
|
2010
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Ken Greenlaw
Director-note 1
|
2010
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
40
Note 1-
Effective May 10, 2010 Ken Greenlaw resigned his
position as a director for personal reasons. There were no disagreements between
the Company and Mr. Greenlaw.
There are no current employment agreements between the
Solutions and its executive officers.
Eco Employment and Consultancy Agreements
Effective October 1, 2008, Eco entered into an Employment
Agreements (the Employment Agreement) with each of its employees at that name:
Thomas L. Crom, Thomas Bennett, Gary Miller, Brian Slagel and Russ Webster. The
terms and conditions of the employment contact are identical except for the
personal information, job titles and duties. Eco entered a similar employment
contract with Mr. Masson effective August 1, 2009.
The following are the material terms of the Employment
Agreement:
|
i.
|
each person is entitled receive an annual salary of
$120,000 per year for a term of three years and renewable for an
additional three period. The retirement age is established at 72
years.
|
|
ii.
|
each person is entitle to receive the following Preferred
A and B shares
|
|
|
Preferred A Shares
|
|
|
1.
|
Once the gross annual sales of Eco have reached or
exceeded $3 million ($3,000,000), the then holders of the Preferred A
shares shall be entitled to convert 25%of such preferred shares into Five
Million (5,000,000) common shares of EcoEmissions Solutions,
Inc.
|
|
|
2.
|
Once the gross annual sales of Eco have reached or
exceeded $10 million ($10,000,000), the then holders of the Preferred A
shares shall be entitled to convert an additional 25%of such preferred
shares into Five Million (5,000,000) common shares of EcoEmissions
Solutions, Inc.
|
|
|
3.
|
Once the gross annual sales of Eco have reached or
exceeded $20 million ($20,000,000), the then holders of the Preferred A
shares shall be entitled to convert an additional 25%of such preferred
shares into Five Million (5,000,000) common shares of EcoEmissions
Solutions, Inc.
|
|
|
4.
|
Once the gross annual sales of Eco have reached or
exceeded $30 million ($30,000,000), the then holders of the Preferred A
shares shall be entitled to convert an additional 25%of such preferred
shares into Five Million (5,000,000) common shares of EcoEmissions
Solutions, Inc.
|
|
Preferred B Shares
|
|
1.
|
Following the successful testing of the new delivery unit
(post turbo) and confirmation of readiness for production, and the
preparation of patent submission material, the then holders of the
Preferred B shares (Series I) shall be entitled to convert Twenty Five
Thousand (25,000) of such shares into Two Million Five Hundred Thousand
(2,500,000) common shares of EcoEmissions Solutions, Inc. ;
|
|
|
|
|
2.
|
Upon documented description of modifications to the new
catalyst confirming the elimination of rhodium, or, if removal is not
practical, a sufficiently enhanced and differentiated design modification
which will improve quality and reduce cost, such that the modifications
and processes can be submitted for patent approval, the then holders of
the Preferred B shares (Series I) shall be entitled to convert a further
Twenty Five Thousand (25,000) of such shares into Two Million Five Hundred
Thousand (2,500,000) common shares of EcoEmissions Solutions,
Inc.;
|
|
|
|
|
3.
|
Upon completion of the final generation unit allowing the
injection of the catalyst directly into the engine completely post turbo,
and the preparation of the associated documentation for the purposes of
preparing applicable patent application(s), the then holders of the
Preferred B shares (Series I) shall be entitled to convert Fifty Thousand
(50,000) of such shares into Five Million (5,000,000) common shares of
EcoEmissions Solutions, Inc. and
|
41
|
4.
|
Upon receipt of appropriate product verification and
certification from a governmental agency, the then holders of the
Preferred B shares (Series I) shall be entitled to convert Fifty Thousand
(50,000) of such shares into Five Million (5,000,000) common shares of
EcoEmissions Solutions, Inc.
|
Item 12: Security Ownership Of Certain Beneficial Owners And
Management
The following table presents certain information regarding the
beneficial ownership of all shares of common stock at the date of this filing,
for each executive officer and director of our Company and for each person known
to us who owns beneficially more than five percent (5%) of the outstanding
shares of our common stock. The percentage ownership shown in such table is
based upon the 48,150,000 common shares issued and outstanding.
Name and Address Beneficial Owner (1)
|
Amount and Nature of Beneficial
Ownership
|
Percentage
of Ownership
|
|
|
|
James P. Geiskopf
3250 Oakland Hills Court Fairfield,
California 92534
|
15,000,000
|
31%
|
|
|
|
Ken Greenlaw
26127 N.E 25
th
Street
Redmond, Washington
98053
|
15,000,000
|
31%
|
|
|
|
All Officers and Directors as a Group
|
30,000,000
|
62%
|
(1) Each of the persons named above may
be deemed to be a "parent" and promoter" of the Company, within the meaning of
such terms under the Securities Act of 1933, as amended, by virtue of his direct
holdings in the Company.
Item 13: Certain Relationships and Related Transactions
Our management is involved in other business activities and
may, in the future become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between our business and their other business interests.
In the event that a conflict of interest arises at a meeting of our directors, a
director who has such a conflict will disclose his interest in a proposed
transaction and will abstain from voting for or against the approval of such
transaction.
Director Independence
The Company is not a listed issuer whose securities are listed
on a national securities exchange, or an inter-dealer quotation system which has
requirements that a majority of the board of directors be independent. Under
NASDAQ Rule 5605(a) (2) (A), a director is not considered to be independent if
he or she also is an executive officer or employee of the corporation. Under
such definition, our directors, Larry Lorenz and Thomas Crom would not be
considered independent as they also serve as executive officers of the Company.
Our directors James Geiskopf and Ken Greenlaw would be considered independent.
Item 14: Principal Accountant Fees And Services
Seale and Beers, CPAs, independent public accountants, are our
principal accountants. They billed the following fees for the services indicated
in the following fiscal years:
42
|
Fiscal year-ended
February 28, 2010
|
Fiscal year-ended
February 28, 2009
|
|
|
|
Audit fees
|
$
8,000
|
$
11,500
|
Audit-related fees
|
$ 0
|
$ 0
|
Tax
fees
|
$ 0
|
$ 0
|
All
other fees
|
$ 0
|
$ 0
|
Audit fees consist of fees related to professional services
rendered in connection with the audit of our annual financial statements. All
other fees relate to professional services rendered in connection with the
review of the quarterly financial statements.
Insomuch as we do not have an audit committee, our board of
directors performs the functions of an audit committee. Section 10A(i) of the
Securities Exchange Act of 1934 prohibits our auditors from performing audit
services for us as well as any services not considered to be "audit services"
unless such services are pre-approved by the board of directors (in lieu of the
audit committee) or unless the services meet certain de minimis standards.
Item 15 Exhibits And Reports
The following exhibits are included herein, except for the
exhibits marked with a footnote, which are incorporated herein by reference and
can be found in the appropriate document referenced.
* Incorporated by reference to the Registrant's Registration
Statement on Form S-1, filed on April 25, 2008.
** Filed herewith
43
SIGNATURES
In accordance with 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.
ECOEMISSIONS SOLUTIONS, INC.
By: /s/
Larry N. Lorenz
Larry N. Lorenz
President, Chief Executive and Director
By: /s/
Thomas L. Crom
Thomas L. Crom, Secretary Treasurer, Chief Financial
Officer, Principal Accounting Officer and Director
In accordance with the requirements of the Securities Act, this
Form 10-K has been signed by the following persons in the capacities and on the
dates stated.
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/:
Larry N.
Lorenz
|
|
Chief Executive Officer, Director
|
|
June 10, 2010
|
Larry Lorenz
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/:
Thomas
Crom
|
|
Chief Financial Officer
|
|
June 10, 2010
|
Thomas L. Crom
|
|
(Principal Financial and Accounting
|
|
|
|
|
Officer)
|
|
|
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