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There's half a trillion shares to dump! No news can erase that scary fact..
That is 500,000,000,000 ? I can't count that high.. Good luck to anyone holding this pos
Only thing is there was 950,000,000 A/S when he had faith.. There now is 25 BILLION!! Plus give or take a couple R/S..
Every experienced investor can read filings and see this is a share selling scam to line the pockets of Kay.
If you are an experienced investor you can see this. Stop throwing away your money and save some for your family!
I too thought this was going to the moon and all that..
Lol stocks don't move for no reason. Every experienced investor knows this!
Looking for a run here! Got my shoes on
Wow! Is there really half a trillion shares available? What is this share price doing above .0001?
Is it true the deal with Verizon fell through because when Kay met with the Verizon people, one of them tried to steal Kay's wallet?
Also I heard that Kay sneezed and no one said bless you.
These are just a couple of reasons the Verizon deal fell through IMO
Trips hit already? Sooner than I expected !
You do realize you can't even sell if you wanted too right? This is what myself and many others have been saying for a while.
This is a scam selling shares. They could have a golden goose, but all they do is sell shares. Good luck on your next investment.
How is that working out for you?
Kay treats his stock like a whore, and than wonders why people talk crap about her.
Kay has single handedly run the share structure and company into the ground.
CEOs don't get paid in real companies until the company is profitable. Yet Kay sells billions of shares to pay himself over $300,000 a year??
The company could be great, successful, student connect could be great... But not with a scum bag like Kay at the helm. He is added baggage at this point.
About 20 billion sold in the past 6 months. My calculations say R/S is on the horizon!
Good luck stuck holders! Can't say I didn't warn you.
What was the name of the trade show?
I have never seen A/S this high before! I have to take a pic because my business partner doesn't believe me lol
Good luck selling shares with 500 BILlION authorized eeeek
Last 6 months about 20 billion shares sold give or take a billion
500 BILLION shares
Lol do you know how many shares 500 BILLION is? That's a lot of shares to sell into hype.. Good luck with any gain here
USTC has 500 billion shares authorized. Good luck
Probably alot higher. Just be careful. When company starts selling its time to short IMO
Careful here! Bottom will fall out any minute IMO
Bounce alert from 52 week low! Huge potential gains from here
I have NEVER been notified by mail with the 4 R/S I have been through.
I didn't know until it was too late.
Even if you are told ahead of time, you will never be able to sell, there is no bid. And if you think about it, why would anyone want to buy any shares here with the history ?
Usually it's risk v reward, and the risk out ways the reward about 5-1 IMO
That is complete bs. Every experienced investor that has been through a R/S with a scam company, knows they arise without warning.
More like one week the CEO will say no R/S, while the next week he will pull a quick one.. That's why it works effectively.
Usually a person or group shows up swearing there will never be a R/S accompanied with emails from CEO or some BS story.
These are signs of the end times IMO
Expecting a major R/S By Aug 2014
Probably sooner if you guys don't start buying billions of shares lol
Lol you can have as many shares as you want at .0001
The people making money selling them to you are getting them at .000045
Good luck lol
I think what he's saying is there is no revenue. There will never be enough to pay Kay's salary, let alone debt, shareholders ect.
Are you serious?
I downloaded vir2o, used it for a couple days, and deleted it.
The reviews on there look fake. "No problems" "easy to use" "better than Facebook"
The 2 bad reviews look about right.
One even mentions scam! Lol funny
I challenge anyone to use vir2o for as long as you can. You might make it a week before getting frustrated and deleting IMO
What's going on with Vir2o?? Did Kay abandon it? I just looked on the App Store and there is only 7 reviews. 5 look fake, and the 2 bad reviews look real IMO
Not looking good..
Rogue paper...
Vir2o...
Lol you do realize there was a R/S a year ago. With 25 billion shares authorized. Kay already dumped what 15 billion to toxic lenders? Hence the .0001- no bid?
How is your statement factual?
They never have had a 25 billion os before. IMO this next reverse split will be the biggest yet
Company History
East Coast Diversified Corporation, the “Company”, was incorporated under the laws of the State of Florida on May 27, 1994 under the name Plantastic Corp. to engage in the business of purchasing and operating a tree farm and nursery. The Company was unsuccessful in this venture and in March 1997, the Company amended its articles of incorporation, reorganized its capital structure and changed its name to Viva Golf, USA Corp. The Company then acquired the assets of Viva Golf, USA Corp., a Delaware corporation, which consisted of a golf equipment marketing plan and other related assets. The Company unsuccessfully engaged in the business of golf club manufacturing and marketing and ceased those operations in 1998.
The Company acquired 100% of the issued and outstanding shares of common stock of Lifekeepers International, Inc. in exchange for 1,000,000 of its newly issued shares under an Agreement and Plan of Reorganization on October 22, 1998. In connection with this acquisition, the Company changed its name to Lifekeepers International, Inc. On May 29, 2003, the Company changed its name to East Coast Diversified Corporation and changed its domicile to Nevada. During the year 2001, the Company discontinued its operations, and remained inoperative until April 26, 2006.
On April 26, 2006, the Registrant entered into a definitive Share Exchange Agreement (the "Agreement") to acquire 100% of the issued and outstanding shares of Miami Renaissance Group, Inc. ("MRG"), a privately-owned Florida corporation, in exchange for the issuance of 4,635,000 restricted shares of the Registrant's common stock and 167,650 preferred stock designated as Series A Convertible Preferred Stock ("Preferred Stock"). The Registrant's officers and directors, who did not own any shares of common stock of the Registrant prior to this Agreement, were also the majority shareholders of MRG. The Agreement was adopted by the unanimous consent of the Board of Directors of the Registrant and written consent of the majority shareholders of the Registrant; and by unanimous consent of the Board of Directors of MRG and by written consent of the majority shareholders of MRG.
Pursuant to the Agreement, the Registrant issued a total of 4,635,000 shares of common stock and 158,650 shares of Preferred stock to the shareholders of the MRG in exchange for the 20,500,000 issued and outstanding shares of MRG. Following the closing of the Agreement, the shareholders of MRG shall own 63.75% of the issued and outstanding shares of common stock of the Registrant.
The Company entered into a Stock Sale Agreement, dated as of February 20, 2008 (“Stock Sale Agreement”), pursuant to which ECDC agreed to sell and MRG Acquisition Corp. (“MRGA is a Delaware corporation and was formed for the purpose of acquiring MRG") agreed to acquire 100% of the capital stock of MRG (“MRG Shares”) , representing substantially all of the assets of ECDC, in consideration for the forgiveness of liabilities in the amount of $1,051,471 owed by ECDC to certain affiliated persons.
On April 6, 2009 the Company’s Board of Directors unanimously adopted and the consenting stockholders approved a resolution to effect a one-for-hundred (1:100) reverse stock split (the "Reverse Split") of the Common Stock of the Company pursuant to clearance and final approval by FINRA. The resulting share ownership interest including resulting fractional shares for each individual shareholder shall be rounded up to the third whole integer in such a manner that every shareholder shall own at least 100 shares as a result of the Reverse Split.
On June 29, 2009 the Company was notified by NASDAQ that has it had received the necessary documentation to process the Reverse Split (1 for 100) and issue a new symbol (“ECDC”) and that this action would take effect at the open of business on June 30, 2009.
On October 23, 2011, (the “Effective Date”) the Company entered into a Share Exchange Agreement (the “Rogue Paper Share Exchange Agreement”)with Rogue Paper, Inc., a California corporation (“Rogue Paper”) and certain shareholders of Rogue Paper (the “Rogue Paper Shareholders”).
2
Pursuant to the Rogue Paper Share Exchange, the Company acquired fifty-one percent (51%) of the issued and outstanding shares of common stock of Rogue Paper (the “Rogue Paper Shares”) in exchange for two million five hundred thousand (2,500,000) shares of the Company’s Series A Convertible preferred stock, par value $0.001 per share (the “Preferred Shares”). No sooner than twelve months from the Effective Date, the Preferred Shares shall be convertible, at the option of the holder of such shares, into an aggregate of fifty million shares (50,000,000) of the Company’s common stock, par value $0.001 per share.
Beginning six months from the Effective Date, both the Company and holders of the Preferred Shares have the option to redeem any portion of such holders for Preferred Shares, for cash, at a price of sixty cents ($0.60) per share. Commencing twenty-four (24) months from the Effective Date, the holders of the remaining, unsold shares of Rogue Paper common stock may require the Company to redeem such shares, for cash, at a price of three cents ($0.03) per share. In 2012, the Company invested $90,000 in Rogue Paper, and on November 12, 2012 the Company discontinued working with Rogue Paper to focus on its core businesses.
On July 4th 2012, the Company created WetWinds, a Georgia corporation as a wholly owned subsidiary of the Company focused on social media technology that provides interactive social media experiences for users across the globe through its primary product, a social media platform called Vir2o.WetWinds is currently developing a virtual desktop-to-mobile technology in an attempt to try and change the way users socialize and interact on the web in real-time. WetWinds launched the beta site for Vir2o on April 5, 2013.
EarthSearch Transactions
On December 18, 2009, the Company's principal stockholders, Frank Rovito, Aaron Goldstein and Green Energy Partners, LLC ( the "Sellers") entered into a Securities Purchase Agreement (the “Purchase Agreement”) with KayodeAladesuyi (the “Buyer”) pursuant to which the Sellers, owners of record and beneficially of an aggregate of 6,997,150 shares of common stock, par value $0.001 per share of ECDC (the “Sellers’ Shares”), agreed to sell and transfer the Sellers’ Shares to the Buyer for total consideration of Three Hundred Thousand ($300,000) Dollars. The Purchase Agreement also provided that the Company would enter into a share exchange agreement with EarthSearch Communications International, Inc. ("EarthSearch").
On January 15, 2010, ECDC and EarthSearch executed a Share Exchange Agreement (the “Share Exchange Agreement”) pursuant to which the Company agreed to issue 35,000,000 restricted shares to the shareholders of EarthSearch. On April 2, 2010 EarthSearch consummated all obligations under the Purchase Agreement and the Share Exchange Agreement. In accordance with the terms and provisions of the Purchase Agreement, the Company acquired 93.49% of the issued and outstanding common stock of EarthSearch. As a result of the execution and closing of the Purchase Agreement and Share Exchange Agreement, our principal business became the business of EarthSearch. The board of directors of ECDC passed a resolution electing the board and management of the Company and effectively resigned from the board of ECDC.
The Stock Exchange was accounted for as an acquisition and recapitalization. EarthSearch was the acquirer for accounting purposes and, consequently, the assets and liabilities and the historical operations that were reflected in the consolidated financial statements were those of EarthSearch. The accumulated deficit of EarthSearch was also carried forward after the acquisition.
EarthSearch Communications International, Inc. was founded in November 2003 as a Georgia corporation. The Company subsequently re-incorporated in Delaware on July 8, 2005.
The operations of its former wholly-owned subsidiary, EarthSearch Localizacao de Veiculos, Ltda in Brazil, were discontinued during 2007.
On December 31, 2010, the Company acquired 1,800,000 additional shares of EarthSearch from a non-controlling shareholder in exchange for 439,024 of the Company’s common stock. The Company owns 94.66% of the issued and outstanding stock of EarthSearch at December 31, 2010.
3
EarthSearch, based in Atlanta, Georgia, has created an integration of RFID and GPS technology. EarthSearch is an international provider of supply chain management solutions offering real-time visibility in the supply chain with integrated RFID/GPS and other telemetry products. These solutions help businesses worldwide to increase asset management, provide safety and security, increase productivity, and deliver real-time visibility of the supply chain through automation.
We experienced a sudden reversal of our revenue growth in the 4th quarter of 2008 as the real estate market and global economy came to a halt. A significant number of our customers declared bankruptcy or defaulted on their account. New business opportunities ceased and our sales plummeted. These events forced us to take dramatic steps and business decisions that resulted in substantial reductions of revenue for the years 2009 and 2010.
Based on our internal research, the board and management made the decision to change the business focus and product portfolio. We concluded that simply offering GPS devices, which we believed would become a commodity, exposed the company and its shareholders to potential failure. We accelerated R&D operations and began the development of wireless communication between GPS and RFID devices. We shut down most of our commercial operations due to the economic conditions and expanded R&D.
Our internal research showed GPS solutions will become inadequate for business needs and the market would demand or require more sophisticated solutions for asset management, workforce optimization and security. RFID technology was growing at significant rate and a combination of both technologies seemed inevitable. Management seized the opportunity of the slow economy to develop the world’s first solution for continuous visibility of assets and become a global leader in offering such an integrated solution. We are also continuing to utilize the technology to provide other applications such as oil pipeline monitoring.
As part of our growth strategy, we launched an aggressive sales network development program in the summer of 2010. We now have more than 15 distribution partners in 5 geographic regions (Southeast, Asia, Africa, South and North America). We launched a new web site reflecting our new business, products and solutions.
Part of our strategy is to implement a merger and acquisition plan as a part of the 2013 growth strategy. We will focus on targeting those GPS firms with a concentration of clients with advanced supply chain solution needs. We will also seek joint venture opportunities where our technology will have significant impact on the success of the opportunities.
Products and Services
EarthSearch
LogiBoxx is the world’s first vehicle tracking device with an embedded RF Module. LogiBoxx provides the ability to perform the dual functions of an RFID solution by communicating directly with RF Tags while also creating a wireless gateway between mobile RFID solution and a backend server to function as a fleet management solution.
GATIS (Global Asset Tracking and Identification System) is a very advanced web based asset management platform. It incorporates several applications and vertical market that integrates GPS and RFID data into their operation and business GATIS is the only web-based application that allows for the management of integrated
GPS/RFID at hardware level. It is a necessary application for the management of assets in transit. EarthSearch’s LogiBoxx solution, when used with our GATIS application, utilizes integrated RFID and GPS data, delivered in real time, under the most complex data analysis and business logic process, to achieve decisions needed by governments and businesses to accomplish critical organization objectives.
Bridging the communication between GPS/RFID and integrating with sensor technology creates solutions that challenge the imagination. We are the creator of the world’s first wireless communication between GPS and RFID interrogators and we solve complex business security, logistics and operational issues.
4
We engage our customers from strategic planning to implementation to make the customer’s desired solution a reality. EarthSearch provides professional services in key areas to ensure successful delivery of the desired solution to the customer. We begin with a clearly defined project objective, creating easy to understand scope of work and project design that clearly explains how we will accomplish our customer’s desired solution.
Our solutions include RFID implementation for various industries and vertical markets utilizing global standards such as EPC Gen 2 standards, 2.4ghz active RFID platforms with proprietary protocols. We utilize passive and semi-passive, as well as active, tags to create integrated solutions for our clients that will meet the desired objectives. Our expertise in the integration of GPS with RFID allows us to create hybrid solutions that can result in solutions once considered impossible, such as implementation of Active/Passive RFID applications in the same solution.
Whatever the industry, EarthSearch uses its proprietary wireless communication between GPS and RFID, integrated with sensor technology, to deliver the most advanced Auto ID solutions in the market. Our proprietary GATIS software uses integrated RFID/GPS data with intelligent business logic to deliver solutions and information for business decisions.
Student Connect.
Additionally, EarthSearch has developed StudentlConnect - a school bus security solution with integrated GPS/RFID technology . StudentConnect offers school transportation monitoring technology which includes both software and hardware. The company utilizes its proprietary wireless communication between GPS and RFID to deliver real time notification to Parents and School transportation administrators regarding students getting on and off school buses in real time.
We install GPS and RFID interrogators on a school bus and provide RFID tags that are attached to the student’s school bags. The RFID is able to monitor and identify students getting on or off at right location and provide instant notification to both parents and schools. Parents are sent standard text messages to their phones notifying them of the student’s safe pick up and drop off.
All of our revenue related to this business shall be advertisement driven. Messages sent to school and parent are sponsored or paid for by an advertiser. All equipment and services are provided to the schools at no cost. A potential advertiser shall pay between $.07 and $0.10 per text message. The average student shall generate 4 messages per day.
We have developed a proprietary advertisement module “SCAAP” – StudentConnect Advertisement Aggregation Platform designed to automate the matching of advertisements with messages generated by the system installed on the school buses. SCAAP also provides Ad budget management tools to advertisers.
Intellectual Properties
Patents and Other Proprietary Properties
The Company has filed patent application with the USPTO for intellectual property rights related to Vir2o, a social media platform created by WetWinds.
Trademarks
The Company plans to register multiple trademarks with the USPTO. They are LogiBoxx, GATIS, TrailerSeal, RFSeal, MobileMANAGER, and has filed registration for Vir2o as well.
Copyrights
Although the Company does not hold registered copyrights, the Company does claim copyright protection on all text and graphics, software used in conjunction with our published digital media (web site) and published printed promotional materials as stated generally in Title 17 of the United States Code, Circular 92, Chapter 1, Section 102.
5
This company is a rinse repeat scam IMO
Go back to 1994 and tell me if any investors have made money.. When will Kay R/S??
Because a couple people are doing this..
GREAT NEWS,THIS IS OUR CHANCE- AFTER MIDNIGHT WE CAN GET (ECDC) ON THE MOST READ BOARD, JUST START READING ALL (ECDC) PREVIOUS POST, BY CLICK PREVIOUS READ OVER UNTIL ABOUT 5,000 POST HAVE BEEN COVERED, AGAIN JUST KEEP CLICKING PREVIOUS OVER AN OVER....IT WORKS EVERY TIME, BUT WAIT TILL AFTER MIDNIGHT TO COUNT FOR FRIDAY, SO WE WILL BE ON TOP OF MOST READ BOARD IN THE MORNING...
------------------------------------------------------------------
FOR NOW KEEP THE POST COMING....
I WILL ALSO BE MAKING A TON OF POST AFTER MIDNIGHT....WE COULD THOUSANDS OF DOLLARS PRETTY SOON..
Lol
Thank you for your response. I asked for a link confirming the deal with Verizon you are preaching.
My dad taught me to be weary of wolves in sheepskin.
Please post facts with links
Can you provide a link please? I'm pretty sure every company sells stock.
In my opinion the company is selling, along with shorts, but we will only blame the shorts ?
Between the company selling and shorts, this will be in trips in no time! IMO
I think I will go long with the short lol
Did you see the increase to 25 billion shares? If that is not enough to scare the pants off of you, you need to take an investment class.. Maybe on the weekend? Lol
Thank you for your service! Anyone who steals money from a veteran has some serious problems
Because we have groups doing this:
GREAT NEWS,THIS IS OUR CHANCE- AFTER MIDNIGHT WE CAN GET (ECDC) ON THE MOST READ BOARD, JUST START READING ALL (ECDC) PREVIOUS POST, BY CLICK PREVIOUS READ OVER UNTIL ABOUT 5,000 POST HAVE BEEN COVERED, AGAIN JUST KEEP CLICKING PREVIOUS OVER AN OVER....IT WORKS EVERY TIME, BUT WAIT TILL AFTER MIDNIGHT TO COUNT FOR FRIDAY, SO WE WILL BE ON TOP OF MOST READ BOARD IN THE MORNING...
------------------------------------------------------------------
FOR NOW KEEP THE POST COMING....
I WILL ALSO BE MAKING A TON OF POST AFTER MIDNIGHT....WE COULD THOUSANDS OF DOLLARS PRETTY SOON..
Lol covered at .055 and purchased shares. Don't worry, I am learning how to trade p&d. Long and short
.20 or .25 today?
On April 1, 2014, the Company issued 250,000,000 shares of its common stock in conversion of loans payable in the amount of $12,500.
On April 7, 2014, the Company issued 821,007,589 shares of its common stock in conversion of loans payable in the amount of $39,541.
On April 8, 2014, the Company issued a $4,200 unsecured convertible promissory note to Tangiers Investment Group, LLC. The note bears interest at 8% per annum, is due April 7, 2015, and is convertible at the lower of i) $0.0001, or ii) a 50% discount to the lowest trading price during the twenty day period prior to the conversion date.
On April 8, 2014, the Company issued a $12,500 unsecured convertible promissory note to Microcap Equity Group LLC. The note bears interest at 12% per annum, is due October 8, 2014, and is convertible at the lower of i) $0.0001, or ii) a 50% discount to the lowest bid price during the ninety day period prior to the conversion date.
On April 8, 2014, the Company issued 670,000,000 shares of the Company’s common stock to Ironridge for amounts payable in common stock of $43,550 in reliance on the private placement exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof. The shares issued to Ironridge were issued pursuant to a Stipulation for Settlement of Claims (the “Stipulation”) filed by the Company and Ironridge in the Superior Court for the State of California, County of Los Angeles (Case No. BC481395) on April 20, 2012 in settlement of claims purchased by Ironridge from certain creditors of the Company.
On April 10, 2014, the Company issued a $10,000 unsecured promissory note to Falmouth Street Holdings, LLC. The note bears interest at 10% per annum and is due October 10, 2014.
17
East Cost Diversified Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2014
(unaudited)
Note 8 – Subsequent Events (Continued)
On April 16, 2014, the Company issued 309,760,000 shares of its common stock in conversion of loans payable in the amount of $15,488.
On April 21, 2014, the Company issued 12,500,000 shares of its series A preferred stock in to Sammie Hill for $25,000 cash.
On April 21, 2014, the Company issued 300,000,000 shares of its common stock in conversion of loans payable in the amount of $15,000.
On April 23, 2014, the Company issued 580,000,000 shares of its common stock in conversion of loans payable in the amount of $29,000.
On April 29, 2014, the Company received $11,000 in cash for Series B preferred stock subscriptions receivable from Ironridge.
On May 1, 2014, the Company issued 241,600,000 shares of its common stock in conversion of loans payable in the amount of $12,080.
On May 8, 2014, the Company issued a $37,000 unsecured convertible promissory note to Frank Russo. The note is non-interest bearing, is due November 8, 2014, and is convertible at the closing market price on the day of conversion.
On May 14, 2014, the Company issued a $33,800 unsecured convertible promissory note to Frank Russo. The note is non-interest bearing, is due November 14, 2014, and is convertible at the closing market price on the day of conversion.
On May 14, 2014, the Company issued 10,000,000 shares of its series A preferred stock in to Calvin Mosley, Jr. for $20,000 cash.
The Company has evaluated subsequent events through the date the financial statements were issued and filed with Securities and Exchange Commission. The Company has determined that there are no other events that warrant disclosure or recognition in the financial statements.
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward Looking Statements
This quarterly report on Form 10-Q and other reports (collectively, the “Filings”) filed by East Coast Diversified Corporation (the “Company”) from time to time with the U.S. Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on April 15, 2014, relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.
Plan of Operation
Since acquiring EarthSearch in April of 2010, ECDC has embarked on developing its technology operations and improving its product offerings to the market. The company is currently in the research and development phase and has developed three distinct technology divisions, (i) EarthSearch Communication Inc., (ii) StudentConnect Inc. and (iii) WetWinds Inc. To date, we have completed the development of two proprietary technologies, (i) wireless communications between GPS & RFID (comprising of several GPS, RFID and cargo locking devices) and (ii) “nVite” which is a proprietary environment sharing application for our social media division. Additionally, we developed an entire group of web assets, comprised of five proprietary “Softwares” for the operation and management of our businesses, the following list represents proprietary software owned by the company:
1. GATIS – Global Asset Tracking & Identification Systems
2. CARAS – Customs And Revenue Authority Systems
3. StudentConnect – Student Transportation System
4. SCAAP – StudentConnect Advertisement Aggregation Platform
5. Vir2o – Online Social Media Platform
Halo2
On February 15, 2014, we created a prototype for a modified and less expensive version of our Halo device called Halo2, which we believe will allow us to be more competitive in 2014. We plan to distribute this product globally for small business applications. Our goal is to reenergize the EarthSearch business with Halo2 and create a mass market solution for small businesses. We believe the product will allow us to be more competitive globally where cheaper Chinese products have created significant competition for our business.
We completed the integration of Halo2 into our GATIS platform in May of 2014 and have begun the marketing efforts to deploy services with this product. Currently, we are continuing our discussion with several local police authorities regarding the sales of Halo2. Halo 2 is now deployed for commercialization.
We are offering Halo2 to resellers and distributors at wholesale pricing of $64.99 and to end user customers at $129.99.
19
StudentConnect
StudentConnect began commercial deployment in the first quarter of 2014. In February 2014, we deployed StudentConnect on school buses in school districts in Georgia, Arkansas, Kentucky, California, and South Carolina. In addition, Texas, Florida and North Carolina engaged us to implement systems on their school buses. Our objective is to secure as many schools as we can through the end of the current school year and the summer break to generate revenue for the 2015 school year. We plan to expend a significant amount of resources over the same period to train and distribute products for these schools and for our advertising team to continue to strengthen relationships with local chambers of commerce to enhance revenue in all of the districts we plan to offer our services. Additionally, we plan to launch our StudentConnect mobile application this quarter and implement a mobile advertising platform that we believe will also help enhance revenue for StudentConnect.
On January 15, 2014, we launched a licensing program for exclusive distributorship that would allow for rapid deployment of StudentConnect in key US markets. We have successfully deployed our StudentConnect product on the Verizon Network. We are currently conducting sales training and producing presentation material for the Verizon sales force to market StudentConnect. We plan to engage in joint sales and marketing activities during the summer school break.
Vir2o
Vir2o, our social media division, has launched its first marketing campaign in the US and North America. We executed a promotional agreement with CBS local Atlanta Radio Station WVEE as the first beta test for our marketing strategy for North America. On April 15, 2014, we launched Radio campaign on CBS Atlanta local Radio WVEE. If successful, we plan to introduce a similar strategy to key markets in North America to allow us to compete even more effectively in the social media space.
We plan to introduce commercial content and ecommerce into social media space. We have entered into agreement with Amazon, collegebooks.com and fanatics.com, an online retailer of sporting goods. We have begun integrating products from fanatics.com and collegebooks.com. We anticipate products from both of these companies to become available to users in the marketplace on June 1, 2014.
We believe the future of social media is to deliver movies, music, and shopping, in a live, engaging and interactive way, for users, their friends and family. Our goal is to join the next wave of innovation to transform social media. We plan to deliver content on mobile and cross platform that integrates mobile and desktop. We believe Vir2o brings everything from the web to social media including online games, video, movies, shopping, and music and live broadcast. It is imperative that we form strategic alliances with content providers for our strategy to be successful.
In May of 2014, we secured a music licensing agreement with Medianet that will give us access to 28 million songs and allow us to offer free music channels to users on Vir2o funded through advertising revenue.
We have reached terms with CES MMA sports and CES Boxing sports to published content and broadcast live event on Vir2o. We plan to have a finalized agreement by end of May 2014.
Rogue Paper
We do not have a management role in Rogue Paper or its operation. During the fourth quarter of 2012, the management of Rogue Paper effectively shut-down operations, denied the Company access to financial records, refused to participate in shareholder or management meetings and all members of Rogue Paper management resigned on January 25, 2013. No legal action has been taken by either Rogue Paper or the Company.
The Company maintains a 51% interest in Rogue Paper and considers it to be a discontinued subsidiary. For accounting purposes, the Company has treated its relationship with Rouge as a discontinued operation and has written off all net assets and contingent acquisition liabilities associated with Rogue paper.
Results of Operations
For the Three Months Ended March 31, 2014 and 2013
Revenues
For the three months ended March 31, 2014, our revenue was $18,107 compared to $43,334 for the same period in 2013, representing a decrease of 58%. This decrease is attributed to our focus on completing development of the StudentConnect and WetWinds divisions. Management believes these changes will result in greater stability and long term growth for the Company.
20
Revenues are generated from four separate but related offerings, RFID/GPS product sales, license fees, consulting services, and user fees for GATIS – our advanced web based asset management platform. We generated revenues from product sales of $8,769 and $38,913 for the three months ended March 31, 2014 and 2013, respectively. Revenues for license fees were $1,667 and $-0- for the three months ended March 31, 2014 and 2013. Revenues for consulting services were $-0- and $-0- for the three months ended March 31, 2014 and 2013. User fees were $7,671 and $4,421 for the three months ended March 31, 2014 and 2013, respectively.
Operating Expenses
For the three months ended March 31, 2014, operating expenses were $421,678 compared to $592,450 for the same period in 2013, a decrease of 29%.
Cost of revenues decreased $22,859 and is directly attributable to the decrease in related revenues for the three months ended March 31, 2014.
For the three months ended March 31, 2014, selling, general and administrative expenses were $414,659 compared to $562,572 for the same period in 2013, a decrease of 26%. This decrease was primarily caused by decreases in legal fees of $111,742 and salary expenses of $85,931; offset by increases in the distribution, installation and marketing of our StudentConnect products of $44,653.
Net Loss
We generated net losses from continuing operations of $512,369 for the three months ended March 31, 2014 compared to $753,373 for the same period in 2013, a decrease of 32%. Included in the net loss for the three months ended March 31, 2014 was interest expense of $108,798 (of which $97,519 represents accretion of embedded beneficial conversion features on notes payable). Included in the net loss for the three months ended March 31, 2013 was interest expense of $204,257 (of which $185,773 represents accretion of embedded beneficial conversion features on notes payable).
Net loss attributable to noncontrolling interests in EarthSearch were $4,492 and $6,021 for the three months ended March 31, 2014 and 2013, respectively. For the three months ended March 31, 2014, the Company recognized a gain from discontinued operations of $984,115 on the disposition of the net assets and liabilities associated with Rogue Paper.
Liquidity and Capital Resources
Overview
For the three months ended March 31, 2014 and 2013, we funded our operations through financing activities consisting of private placements of equity securities and loans from related and unrelated parties. Our principal use of funds during the three months ended March 31, 2014 and 2013 has been for working capital and general corporate expenses.
Liquidity and Capital Resources during the three months ended March 31, 2014 compared to the three months ended March 31, 2013
As of March 31, 2014, we had cash of $4,207 and a working capital deficit of $3,842,639. The Company generated a negative cash flow from operations of $212,497 for the nine months ended March 31, 2014, as compared to cash used in operations of $254,999 for the three months ended March 31, 2013. The negative cash flow from operating activities for the three months ended March 31, 2014 is primarily attributable to the Company's net income of $476,238, offset by noncash depreciation of $696, stock issued for services of $2,905, amortization of prepaid license fees of $12,500, accretion of beneficial conversion features on convertible notes payable of $97,519, accrued interest on loans payable of $11,279, changes in operating assets and liabilities of $175,783, and increased by a gain on disposal of discontinued operations of $984,115 and noncontrolling interests in the loss of EarthSearch of $4,492.
The negative cash flow from operating activities for the three months ended March 31, 2013 is primarily attributable to the Company's net loss of $747,352, offset by noncash depreciation and amortization of $1,296, issuance of loan payable for consulting services of $78,922, amortization of prepaid license fees of $12,500, accretion of beneficial conversion features on convertible notes payable of $185,773, accrued interest on loans payable of $18,438, changes in operating assets and liabilities of $201,445, and increased by noncontrolling interests in the loss of EarthSearch of $6,021.
No cash was used in investing activities for the three months ended March 31, 2014 and 2013.
Cash generated from our financing activities was $216,463 for the three months ended March 31, 2014, compared to $255,191 during the comparable period in 2013. The decrease was primarily attributed to the repurchase of common stock of $0 in 2014 compared to $5,000 in 2013, the proceeds from the issuance of preferred stock of $50,000 in 2014 compared to $185,000 in 2013, proceeds from the issuance of preferred stock subscriptions of $43,000 in 2014 compared to $6,191 in 2013, proceeds from loans payable of $60,150 in 2014 compared to $47,500 in 2013, and proceeds from loans payable – related parties of $63,313 in 2013 compared to $21,500 in 2013.
We will require additional financing during the current fiscal year. During the period from April 1, 2014 to May 16, 2014, we received proceeds of $97,500 from the issuance of convertible promissory notes and loans, $11,000 from the receipt of preferred stock subscriptions receivable, and $52,500 from the sale of preferred stock.
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Going Concern
Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the consolidated financial statements for the year ended December 31, 2013 regarding concerns about our ability to continue as a going concern. Our consolidated financial statements contain additional note disclosures describing the circumstances that lead to this conclusion by our independent auditors.
Our unaudited consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited consolidated financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited annual consolidated financial statements for the year ended December 31, 2013, included in our Annual Report on Form 10-K as filed on April 15, 2014, for a discussion of our critical accounting policies and estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We do not hold any derivative instruments and do not engage in any hedging activities.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of March 31, 2014. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company's management concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission's rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
(b) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A. Risk Factors
The disclosure required under this item is not required to be reported by smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On January 6, 2014, pursuant to a debt conversion notice, the Company issued 189,739,800 shares of the Company’s common stock to satisfy debt obligations of $9,487.
On January 8, 2014, pursuant to a debt conversion notice, the Company issued 200,000,000 shares of the Company’s common stock to satisfy debt obligations of $10,000.
On January 27 2014, pursuant to a debt conversion notice, the Company issued 220,844,765 shares of the Company’s common stock to satisfy debt obligations of $11,042.
On February 10, 2014, pursuant to a debt conversion notice, the Company issued 110,385,400 shares of the Company’s common stock to satisfy debt obligations of $4,967.
On February 11, 2014, pursuant to three debt conversion notices, the Company issued 462,812,001 shares of the Company’s common stock to satisfy debt obligations of $23,141.
On February 13, 2014, pursuant to a debt conversion notice, the Company issued 294,000,000 shares of the Company’s common stock to satisfy debt obligations of $14,700.
On February 14, 2014, pursuant to two debt conversion notices, the Company issued 231,904,000 shares of the Company’s common stock to satisfy debt obligations of $11,595.
On February 21, 2014, pursuant to a debt conversion notice, the Company issued 155,000,000 shares of the Company’s common stock to satisfy debt obligations of $6,975.
On February 24, 2014, pursuant to a debt conversion notice, the Company issued 280,000,000 shares of the Company’s common stock to satisfy debt obligations of $14,000.
On February 25, 2014, pursuant to a debt conversion notice, the Company issued 100,548,000 shares of the Company’s common stock to satisfy debt obligations of $5,027.
On February 28, 2014, pursuant to a debt conversion notice, the Company issued 293,519,800 shares of the Company’s common stock to satisfy debt obligations of $17,176.
On March 3, 2014, pursuant to a debt conversion notice, the Company issued 36,000,000 shares of the Company’s common stock to satisfy debt obligations of $1,800.
On March 5, 2014, pursuant to a debt conversion notice, the Company issued 169,000,000 shares of the Company’s common stock to satisfy debt obligations of $9,000.
On March 6, 2014, pursuant to a debt conversion notice, the Company issued 177,400,000 shares of the Company’s common stock to satisfy debt obligations of $7,096.
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On March 11, 2014, pursuant to a debt conversion notice, the Company issued 294,000,000 shares of the Company’s common stock to satisfy debt obligations of $14,700.
On March 21, 2014, pursuant to a debt conversion notice, the Company issued 194,000,000 shares of the Company’s common stock to satisfy debt obligations of $9,700.
On March 24, 2014, pursuant to a debt conversion notice, the Company issued 100,000,000 shares of the Company’s common stock to satisfy debt obligations of $7,000.
On March 25, 2014, pursuant to three debt conversion notices, the Company issued 572,190,277 shares of the Company’s common stock to satisfy debt obligations of $33,796.
On March 26, 2014, pursuant to two debt conversion notices, the Company issued 314,285,714 shares of the Company’s common stock to satisfy debt obligations of $16,400.
On March 28, 2014, pursuant to a debt conversion notice, the Company issued 369,872,800 shares of the Company’s common stock to satisfy debt obligations of $18,494.
On March 31, 2014, pursuant to a debt conversion notice, the Company issued 200,000,000 shares of the Company’s common stock to satisfy debt obligations of $5,904.
These securities were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities.
The Company is in default with several of its noteholders as reflected below and disclosed within this report in Note 3 of the Notes to the Consolidated Financial Statements dated March 31, 2014.
Panache Capital, LLC $ 7,189
Hanover Holdings I, LLC 88,344
Hanover Holdings I, LLC 19,797
Hanover Holdings I, LLC 7,934
Hanover Holdings I, LLC 18,113
Southridge Partners II LP 26,703
SC Advisors, Inc. 16,820
Azfar Hague 14,367
SC Advisors, Inc. 16,698
SC Advisors, Inc. 16,612
Asher Enterprises, Inc. 34,902
Andre Fluellen 8,500
WHC Capital, LLC 21,211
WHC Capital, LLC 21,434
Asher Enterprises, Inc. 34,681
Andre Fluellen 8,900
Sammie Hill 12,000
Andre Fluellen 3,500
Andre Fluellen 3,150
Bulldog Insurance 5,730
Robert Saidel 43,676
$ 430,261
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
There is no other information required to be disclosed under this item which was not previously disclosed.
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Item 6. Exhibits
Exhibit No. Description
31.1 Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
31.2 Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).
32.1 Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.