Form 10-Q/A for ECOLOCAP SOLUTIONS INC.
25-Feb-2014
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Operations
The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2013 (this "Report"). This Report contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words "believes", "anticipates," "expects" and the like, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, as we issue "penny stock," as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.
Business Plan
MBT is negotiating with a factory in Korea that would enable the Company to build 6 NPU and NPW's machine per month.
Results of Operations
For the Nine Month Period ended September 30, 2013
Overview
We incurred net losses of $195,316 and $601,492 for the three and nine month periods ended September 30, 2013 as compared to net losses of $501,459 and $1,702,126 for the comparable periods of 2012.
Development Stage Expenditures
Development stage expenditures for the nine month period ended September 30, 2013, were $363,238 in salaries, $18,009 in rent and $70,576 in professional fees. This is compared to development stage expenditures for the nine month period ended September 30, 2012, were $247,691 in salaries, $2,941 in travel, $11,544 in rent, $516,113 in debt conversion inducement expense and $58,019 in professional fees. The decrease in total cost and expenses resulted from the selling and administration expense and research and development.
Sales
For the three and nine month periods ended September 30, 2013, we had no gross revenues. This compared to gross revenues of $0 for the same periods of 2012.
Total Cost and Expenses
For the three and nine month periods ended September 30, 2013, we incurred Total Costs and Expenses of $195,316 and $601,492, a decrease of 61% for the three month period from the three month period of 2012 and a decrease of 65%for the nine month period from the same period of 2012. The decrease in total cost and expenses resulted from the selling and administration expense and research and development.
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Selling, General and Administration
For the three and nine month periods ended September 30, 2013, we incurred selling, general and administration expenses of $165,349 and $532,007, a decrease of 28% from the three month period last year and a decrease of 29.6% for the nine month period in 2012. The decrease resulted from the professional fees and fees to the Board of Directors members.
Interest
We calculate interest in accordance with the respective note payable. For the three and nine month periods ended September 30, 2013, we incurred a charge of $245,201 and $1,313,328. This compared to $192,515 and $444,996 for the same period of the previous year. The increase was caused by interest expense on increased borrowings and interest expense recorded upon issuance of convertible debt in which the debt discount related to the conversion feature recorded as a derivative exceed the face value of the note.
Gain on derivatives liabilities at market
For the three and nine month periods ended September 30, 2013, we incurred gain on derivatives liabilities at market of $232,659 and $1,180,493, an increase of 75% for the three month period from the three month period of 2012 and an increase of 93%for the nine month period from the same period of 2012. The increase was caused by increased borrowings of convertible debt.
Liquidity and Capital Resources
At September 30, 2013, we had $33 in cash, as compared to $6,910 in cash at December 31, 2012. Total cash requirements for operations for the nine month period ended September 30, 2013 was $390,118. As a result of certain measures implemented to reduce corporate overhead, management estimates that cash requirements through the end of the fiscal year ended December 31, 2013 will be between $2.0 million to $3.0 million. As of the date of this Report, we do not have available resources sufficient to cover the expected cash requirements through the balance of the year. As a result, there is substantial doubt that we can continue as an ongoing business without obtaining additional financing. Management's plans for maintaining our operations and continued existence include selling additional equity securities and borrowing additional funds to pay operational expenses. There is no assurance we will be able to generate sufficient cash from operations, sell additional shares of Common Stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue its existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.
We had total current assets of $33 as of September 30, 2013. This was a decrease of $6,877, or 99%, as compared to current assets of $6,910 as of December 31, 2012. The decrease was primarily attributable to operation expense of the Company.
We had total assets of $320,389 as of September 30, 2013. This was a decrease of 60,450, or 15.9%, as compared to total assets of $380,839 as of December 31, 2012. The decrease was primarily attributable to depreciation on fixed assets of $53,573.
We had total current liabilities of $3,174,030 as of September 30, 2013. This was an increase of $45,416, or 1.5%, as compared to current liabilities of $3,128,614 as of December 31, 2012. The net increase was attributable to an increase in current liabilities.
Our financial condition raises substantial doubt about our ability to continue as a going concern. Management's plan for our continued existence includes selling additional stock through private placements and borrowing additional funds to pay overhead expenses while maintaining marketing efforts to raise our sales volume. Our future success is dependent upon our ability to achieve profitable operations, generate cash from operating activities
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and obtain additional financing. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue as a going concern.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Memorandum. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
We have only had operating losses which raise substantial doubts about our viability to continue our business and our auditors have issued an opinion expressing the uncertainty of our company to continue as a going concern. If we are not able to continue operations, investors could lose their entire investment in our company.
Contractual Obligations
The Company was a party to a lease for its Barrington office, at a minimum annual rent of approximately $23,000 per year. The Barrington Lease expired in May, 2013.
Off-Balance Sheet Arrangements
The Company is not a party to any off-balance sheet arrangements.
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