UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-Qx
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934For the quarterly period ended: September 30, 2009 ̈
Transition Report under Section 13 or 15(d) of the Exchange Act of 1934For the transition period from toCommission File Number: 000-31165






ECOLOCAP SOLUTIONS INC.


(formerly known as XL GENERATION INTERNATIONAL INC.)


(Exact Name of Small Business Issuer as specified in its charter)




NEVADA


(State or other Jurisdiction of


Incorporation or Organization)




1250 S. Grove Ave


Suite 308


Barrington, Illinois, 60010


(Address of principal executive offices)




514-876-3907


(Issuer’s telephone number, including area code)






Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ̈




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act.




Large Accelerated Filer
 ̈

Accelerated Filer
 ̈Non-accelerated filer
 ̈

Smaller Reporting Company
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




The Issuer had 98,563,739 shares of Common Stock, par value $.001, outstanding as of November 14, 2009.






















TABLE OF CONTENTSPART IItem 1.
Financial Statements
3Balance Sheet
3Statements of Operations
4Statements of Cash Flows
5Notes to Financial Statements
6Item 2.
Management’s Discussion and Analysis or Plan of Operation
18Item 3.
Quantitative and Qualitative Disclosures about Market Risk
22Item 4.
Controls and Procedures
23PART II

23Item 1.
Legal Proceedings
23Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
23Item 3.
Defaults Upon Senior Securities
23Item 4.
Submission of Matters to a Vote of Security Holders
23Item 5.
Other Information
23Item 6.
Exhibits
24SIGNATURES

25Exhibit Index

26





























-2-





PART I: FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSECOLOCAP SOLUTIONS INC.(Formally known as XL GENERATION INTERNATIONAL INC.)CONSOLIDATED BALANCE SHEETSeptember 30,


December 31,2009


2008(unaudited)


(audited)ASSETSCURRENT ASSETS:Cash

$
29,129


$
23,787Accounts receivable


370,060



-Taxes receivable


8,318



31,658Prepaid expenses and sundry current assets


145,401



6,001TOTAL CURRENT ASSETS


552,908



61,446INTANGIBLE ASSETS (note 7 and note 14)


5,463,333



-Goodwill ( note 14 )


7,425,000



-PROPERTY AND EQUIPMENT, AT COST,LESS ACCUMULATED DEPRECIATION


14,834



19,652TOTAL ASSETS

$
13,456,075


$
81,098LIABILITIES AND STOCKHOLDERS’ DEFICIENCYCURRENT LIABILITIES:Note payables’ (note 9)


346,887



250,000Note payable-stockholder (note 10)


451,000



450,000Accrued expenses and sundry currentLiabilities (note 8)


764,859



218,524TOTAL CURRENT LIABILITIES

$
1,562,746


$
918,524STOCKHOLDERS' EQUITYCommon stock

$
160,737


$
106,737Additional paid in capital


29,865,967



22,747,967Accumulated Deficit


(23,966,808
)


(23,692,130
)Minority Interests


5,833,433



-TOTAL STOCKHOLDERS' DEFICIENCY

$
11,893,329


$
(837,426
)TOTAL LIABILITIES AND STOCKHOLDERS’DEFICIENCY

$
13,456,075


$
81,098










-3-






ECOLOCAP SOLUTIONS INC.(Formally known as XL GENERATION INTERNATIONAL INC.)CONSOLIDATED STATEMENTS OF OPERATIONSNine months ended September 30, 2009 and 2008 andThree months ended September 30, 2009 and 2008(unaudited)Nine Months


Nine Months


Three Months


Three Monthsended


ended


ended


endedSeptember 30,


September 30,


September 30,


September 30,2009


2008


2009


2008SALES

$
765,000

$
-

$
765,000

$
-COSTS AND EXPENSES:Cost of sales


406,000


-


406,000


-Selling, general and administrative


342,651


680,094


208,904


277,437Amortization (note 7)


26,667


-


26,667


-Reserve for compensation expense (note 12)


-


3,500,000


-


-Interest-stockholder


35,494


145,712


915


13,343Foreign exchange loss (gain)


7,030


4,209


(5,665
)

2,550TOTAL COSTS AND EXPENSES


817,842


4,330,015


636,821


293,330Minority interest


(221,836
)

-


(221,836
)

-NET(LOSS)

$
(274,678
)
$
(4,330,015
)
$
(93,657
)
$
(293,330
)Net Loss Per Share

$
(0.00
)
$
(0.11
)
$
(0.00
)
$
(0.01
)Average weighted Number of Shares


47,797,739


39,951,254


55,513,739


42,617,906






























-4-





ECOLOCAP SOLUTIONS INC.(Formally known as XL GENERATION INTERNATIONAL INC.)CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2009 and 2008(unaudited)September 30

September 302009

2008Net loss
$
(274,678)
$
(4,330,015)Adjustment to reconcile net income to net cash usedin operating activitiesDepreciation and amortization


31,485

3,096Reserve for compensation expense


-

3,500,000Issuance of common stock in exchange of debt


-

3,137Issuance of common stock


54,000

250Premium on issuance of common stock


7,118,000

3,208,913Loans payable stockholders


-

(3,019,332)Accrued interests-stockholder


34,324

27,000Intangible assets


(5,490,000)

-Goodwill


(7,425,000)

-Minority interest


5,833,433

-Changes in operating assets and liabilities:Accounts receivable


(370,060)

-Taxes receivable


23,340

-Prepaid expenses and sundry current assets


(139,400)

(6,001)Accrued expenses and sundry current liabilities


512,011

18,028Net cash used by operating activities

$
(92,545)
$
(594,924)Investing activitiesAcquisitions of property and equipment


-

(24,355)Net cash used in investing activities

$
-
$
(24,355)Financing activitiesStock payable


-

-Proceeds of loans payable stockholders


97,887

575,000Net cash provided by financing activities

$
97,887
$
575,000Increase (decrease) in cash


5,342

(44,279)Cash-beginning of period


23,787

166,470Cash-end of period

$
29,129
$
122,191











-5-








ECOLOCAP SOLUTIONS INC.


(Formally known as XL GENERATION INTERNATIONAL INC.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






NOTE 1- INTERIM FINANCIAL STATEMENTS




The unaudited consolidated financial statements as of September 30, 2009 and for the three and nine months ended September 30, 2009 and 2008 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Regulation S-X. In the opinion of
management, the unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2009 and the results of operations and cash flows for the periods ended September 30, 2009 and 2008. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited.
The results for the three and nine months ended September 30, 2009 is not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2009. The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date.




Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited consolidated financial statements
should be read in conjunction with our audited financial statements and notes thereto for the year ended December 31, 2008 as included in our report on Form 10-K.




NOTE 2- NATURE OF BUSINESS




EcoloCap Solutions Inc. is an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop, manufacture and sell cleaner alternative energy products. We bring together the technology, engineering, and
operational management for the successful development of environmentally significant products and projects. Our business approach combines science, innovation, and market-ready solutions to achieve environmentally sustainable and economically advantageous, power and energy management practices in the following areas:




MBT M-Fuel




EcoloCap Solutions Inc., through its subsidiary Micro Bubble Technologies Inc. (MBT), developed and manufactures M-Fuel, an innovative suspension fuel that far exceeds all conventional fuels’ costs and efficiencies.  This environmentally-friendly and economical product is designed to offer fully scalable and customizable
fuel solutions that will increase efficiency, lower operating costs, and reduce emissions. M -Fuel is a suspension mixture of 60% heavy oil, 40% H plus O2 molecules, and a 0.3% stabilizing additive.  The production of M-Fuel takes place in our Nano Processing Units (NPU), a self contained device that is sized for output.  The NPU’s can be configured to operate in conjunction with an engine or burner to sully M-Fuel on demand, or pre-manufactured for delivery. M-Fuels unique burning process
facilitates increased efficiency, resulting in reduced emissions by 60%, reduced fuel consumption by 40%, and cut costs by up to 25%.






-6-






MBT CNT-Battery




EcoloCap Solutions Inc., through its subsidiary Micro Bubble Technologies Inc. (MBT), developed and manufactures the Carbon Nano Tube Battery (CNT-Battery), a fully recyclable, rechargeable battery that far exceeds the performance capabilities of any existing battery on the market at this time.  This environmentally-friendly and
economical product is designed to offer fully scalable and customizable power solutions that will increase efficiency, lower operating costs, and reduce emissions. Our proprietary technology modifies the fabrication of lead acid batteries by applying a highly-conductive carbon nano tube coating to the anode and cathode cells.  As a result, conductive surface area is increased by a factor of billions and electricity is carried out more efficiently. The CNT-Battery’s advanced technology demonstrates
eight times the reserve capacity of traditional lead acid batteries, two and a half times the energy density of lithium-ion batteries, and a recharge time of just five minutes; all at a fraction of the cost of lithium-ion batteries.




CER




Recognizing the opportunities created by the Kyoto Protocol Exchange Mechanisms, EcoloCap Solutions Inc. (hereinafter ‘EcoloCap’ or the ‘Company’) has developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form
of tradable CERs. EcoloCap brings together the know-how, capital, technology.





EcoloCap has the resources and expertise necessary for the creation of CERs traded in the new Carbon Market. The Company brings together the know-how, capital, technology, engineering, and on-the-ground operators for the successful development of Greenhouse Gases capture and utilization projects under the Clean Development Mechanism.
The Carbon Credits (CERs) so created are then sold through established international markets.





EcoloCap has developed an integrated development approach that focuses on generating the Carbon Credits in developing countries to produce substantial new value in the form of tradable CERs while at the same time maximizing alternative energy generation co-products for additional revenues.









-7-




NOTE 3-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




PRINCIPLES OF CONSOLIDATION





The consolidated financial statements include the accounts of the Company and its subsidiaries EcoloCap Solutions Canada Inc. and Micro Bubble Technologies Inc. after the elimination of inter-company accounts and transactions.




CASH AND CASH EQUIVALENTS




The Company considers all highly liquid debt instruments with original maturities not exceeding three months to be cash equivalents.




INCOME TAXES




The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. The Company records a valuation allowance to reduce the deferred tax assets
to the amount that is more likely than not to be realized.




LOSS PER COMMON SHARE




The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.




Diluted net loss per common share is computed by dividing the net loss, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities.




USE OF ESTIMATES




In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenue and expenses in the income statement. Actual results could differ from those estimates.




STOCK BASED COMPENSATION




The Company accounts for stock options and similar equity instruments issued in accordance with SFAS No. 123(revised), " Share-Based Payment". Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period.
Transactions in which goods or services are received in exchange 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. SFAS No. 123(revised) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.




-8-




NOTE 4-SUBSEQUENT EVENTS




We have evaluated events after the date of these consolidatedfinancial statements through November 14 2009, the date that these statements were available to be issued. There were no material subsequent events as of that date.




NOTE 5-GOING CONCERN




The Company's consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. During the nine months ended September 30, 2009 and 2008 the Company has incurred loss of $274,678 and loss of $4,330,015
respectively. The Company has negative working capital of $1,009,838 compared to $857,078 at December 31, 2008 and a stockholders equity of $11,893,329 compared to a stockholders deficiency of $837,426 at December 31, 2008. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.




Management's plans for the Company's continued existence include selling additional stock and borrowing additional funds to pay overhead expenses.




With the opportunities created by the Kyoto Protocol Exchange Mechanisms, management has begun the process of redeploying its assets, identifying business strategies that offers above average profit potential and identifying the resources necessary to successfully execute it new strategic direction.




Recognizing the opportunity this new market represents, the Company has developed an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs.




The Company's future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds.




The Company's inability to obtain additional cash could have a material adverse effect on its financial position, results of operations and its ability to continue in existence. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.







-9-




NOTE 6 --PROPERTY & OFFICE EQUIPMENT




Equipment is stated at cost. Depreciation is computed using the straight-line method over 3 to 5 years.




September 30,2009Furniture & fixtures - 5 years

12,701Computer equipment - 3 years

11,654$
24,355Less : accumulated depreciation

9,521Balance September 30, 2009
$
14,834








NOTE 7 – INTANGIBLE ASSETS





The intangible assets are being amortized over periods ranging from ten to fifteen years.






September 30,2009Intangible assets – 15 years

2,130,000Intangible assets -- 10 years

3,360,000$
5,490,000Less : accumulated amortization

26,667Balance September 30, 2009
$
5,463,333






NOTE 8--ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES




Accrued expenses consisted of the following at September 30:




2009Accrued interest-stockholder
$
34,324Accrued operating expenses

730,535$
764,859





-10-




NOTE 9--NOTE PAYABLES’




In 2008, the Company received loans from Carnavon Trust REG in the amount of $250,000. These loans carry an interest of 10% and are payable on demand. In 2009, the Company received loans from Capex Investments Limited in the amount of $39,887. These loans carry an interest of 10% and are payable on demand. In 2009, the Company received
loans from an individual in the amount of $57,000. These loans carry an interest of 1,63% and are payable on demand.





NOTE 10--NOTE PAYABLE – STOCKHOLDER





In 2008, the Company received loans from POMA Management Inc., a shareholder, in the amount of $450,000. In 2009, the Company received additional loans from POMA Management Inc. in the amount of $1,000. These loans carry an interest of 10% and are payable on demand.





Amounts owed to stockholders at September 30, are as follows:





2009Payable POMA  Management Inc.
$
451,000Payable stockholder
$
451,000





NOTE 11 -CAPITAL STOCK




The company is authorized to issue 100,000,000 shares of common stock (par value $0.001) of which 98,563,739 were issued and outstanding as of September 30, 2009.




As of February 12, 2008, the Company entered into an agreement with United Best Technology Limited (“United”). The agreement is a five (5) year renewable Service Agreement (the “Agreement”) pursuant to which United shall provide advice to undertake for and consult with the Company concerning certain operational
areas and shall review and advise the Company regarding Carbon Credits (“CER”) and Clean Development Mechanism projects as well as the Company’s overall progress, needs and condition in those areas, find, negotiate and close contracts and projects for a minimum of Three Million Six Hundred Thousand (3,600,000) CERs that could be certified, traded and delivered and to assist the execution of said contracts or projects by the Company or one of its affiliates. United for the exclusivity of its
services was granted Three Million Five Hundred Thousand (3,500,000) restricted shares of the Company’s common stock, out of said Three Million Five Hundred Thousand (3,500,000) restricted shares, One Million (1,000,000) restricted shares will be put in escrow as provided in the executed Escrow Agreement.






-11-





On September 10, 2008, Webster Plus S.A. paid seventy-five thousand dollars ($75,000) to purchase from the Company (i) 250,000 shares of the Company's common stock; and (ii) Series A Warrants to purchase up to an additional 125,000 shares of the Company's common stock at an exercise price initially set at $2.50 per share.





On June 11, 2008, Larinton Investments S.A has elected to convert loans of $1,637,300 into 1,811,176 common shares of the Company. The price of the shares of the Company is equal to the average market price of the common shares of the Company during the 60 previous days of the date of the execution of the conversion.





On June 11, 2008, Toniland S.A has elected to convert loans of $1,500,000 into 1,659,295 common shares of the Company. The price of the shares of the Company is equal to the average market price of the common shares of the Company during the 60 previous days of the date of the execution of the conversion.





On October 9, 2008, the Company entered into an agreement with Lakeview Consulting LLC (“Lakeview”). The agreement is a one (1) year Service Agreement (the “Agreement”) pursuant to which Lakeview shall provide advice to undertake for and consult with the Company concerning management advisement, strategic planning
and marketing in connection with its business, together with advisory and consulting related to shareholder management and public relations. Lakeview for its services was granted One Million (1,000,000) restricted shares of the Company’s common stock.





On September 8, 2009, we issued 750,000 restricted shares of common stock to Tri Vu Truong, our former president and CEO as consideration for services rendered to us in the past.




On September 10, 2009, we completed our Securities Shares Exchange Agreement (the "Agreement") with shareholders of Micro Bubble Technologies Inc. and issued a total of 54,000,000 restricted shares of our common stock to nine shareholders of Micro Bubble Technologies Inc. ("Micro Bubble"). The foregoing nine shareholders delivered
1,100 shares of Micro Bubble which constituted 55% of the total outstanding shares of common stock of Micro Bubble. Micro Bubble thereby became a subsidiary corporation.




NOTE 12-STOCK-BASED COMPENSATION EXPENSE




As of February 12, 2008, the Company entered into an agreement with United Best Technology Limited (“United”). The agreement is a five (5) year renewable Service Agreement (the “Agreement”) pursuant to which United shall provide advice to undertake for and consult with the Company concerning certain operational
areas and shall review and advise the Company regarding Carbon Credits (“CER”) and Clean Development Mechanism projects as well as our overall progress, needs and condition in those areas, find, negotiate and close contracts and projects for a minimum of Three Million Six Hundred Thousand (3,600,000) CERs that could be certified, traded and delivered and to assist the execution of said contracts or projects by the Company or one of its affiliates. To devote all United’s intellectual property,
knowledge, technology and United’s contacts related to the CER and Clean Development Mechanism projects exclusively for the development of the Company business in an exclusive and define territory. United for the exclusivity of its services was granted Three Million Five Hundred Thousand (3,500,000) restricted shares of our common stock, out of said Three Million Five Hundred Thousand (3,500,000) restricted shares, One Million (1,000,000) restricted shares will be put in escrow as provided in the executed
Escrow Agreement.






-12-






The Company ability to value the United Best contract has been aversively affected by the following risks: the early stage development of the industry as a whole, the general political risk in China as well as non western business norms in effect were this contract is domicile. Accordingly, the Company has provided
a valuation reserve against the prepayments made under United Best contract.




On October 9, 2008, the Company entered into an agreement with Lakeview Consulting LLC (“Lakeview”). The agreement is a one (1) year Service Agreement (the “Agreement”) pursuant to which Lakeview shall provide advice to undertake for and consult with the Company concerning management advisement, strategic planning
and marketing in connection with its business, together with advisory and consulting related to shareholder management and public relations. Lakeview for its services was granted One Million (1,000,000) restricted shares of the Company’s common stock. For the year ended December 31, 2008, the Company recorded compensation expense of $3,839,000. As of September 30, 2009, there was no unrecognized compensation cost related to non-vested share-based compensation.




A summary of option activity for the six month period ended September 30, 2009 is presented below:




Weighted-Weighted-


AverageAverage


RemainingExercise


ContractualOptions

Shares


Price


TermOutstanding at December 31, 2008


1,465,000


$
1,10



5.24Granted


-



-



-Exercised, forfeited, or expired


-



-



-Outstanding at September 30, 2009


1,465,000


$
1.10



5.24Exercisable at September 30, 2009


1,465.000


$
1.10



5.24








-13-




NOTE 13 -INCOME TAXES




As of September 30, 2009 the company had net operating loss carryforwards of approximately $22,764,000.




Components of deferred tax assets and liabilities at September 30, 2009 are as follows:




Deferred tax asset
$
7,739,760Valuation allowance

(7,739,760)Net deferred tax asset
$
0







The Company has recorded a full valuation allowance against its deferred tax asset since it believes it is more likely than not that such deferred tax asset will not be realized.




NOTE 14 –ACQUISITION OF MICRO BUBBLE




On September 10, 2009, the Company completed the acquisition of 55% of Micro Bubble, a leading provider of reference data to the Italian financial industry, for a purchase price of $7,172,000 in common shares of the Company. This acquisition was funded from common stock. The final purchase price remains subject to post-closing working
capital adjustments. The purchase price allocation is considered preliminary; additional adjustments may be recorded during the allocation period specified by “SFAS 141”, as additional information becomes known or payments are made.




The acquisition was accounted for using the purchase method of accounting in accordance with SFAS 141. The purchase price has been assigned to the assets acquired and liabilities assumed based on their estimated fair values. The intangible assets are being amortized over periods ranging from ten to fifteen years. The weighted
average amortization period in total is 15.0 years. The weighted average amortization period by major asset class is: customer relationship 10.0 years; technology batteries 15.0 years and technology M-Fuel 15.0 years. In connection with the acquisition, the Company recorded $7,425,000 of goodwill. The Company’s financial statements include the results of operations of Micro Bubble subsequent to the acquisition date.




Micro Bubble, developed and manufactures M-Fuel, an innovative suspension fuel that far exceeds all conventional fuels’ costs and efficiencies. It also developed and manufactures the Carbon Nano Tube Battery (CNT-Battery), a fully recyclable, rechargeable battery that far exceeds the performance capabilities of any existing
battery on the market at this time. The acquisition of this business will enable the Company to expand its reference in an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop, manufacture and sell cleaner alternative energy products.






-14-




The acquisition was accounted for as follows (in thousands):




Assets:Other assets


5,490Goodwill


7,425$
12,915Liabilities:Minority interest

$
5,743Total Purchase Price

$
7,172






NOTE 15 - COMMITMENTS AND CONTINGENCIES




The Company is a party to a lease for its Montreal office, at a minimum annual rental of approximately $64,000 per year.




NOTE 16 -RELATED PARTY TRANSACTIONS





On December 31, 2008, the Company had received loans from POMA Management Inc., a shareholder, in the amount of $450,000.





In 2009, the Company received loans from POMA Management Inc., a shareholder, in the amount of $1,000. These loans carry an interest of 10% and are payable on demand.












-15-




NOTE 17 - RECENTLY ISSUED ACCOUNTING STANDARDS




In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities —Including an Amendment of FASB Statement No. 115”. This Statement provides companies with an option to measure, at specified election dates, many financial instruments and
certain other items at fair value that are not currently measured at fair value. A company that adopts SFAS 159 will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This Statement is effective for fiscal years
beginning after November 15, 2007. The Company is currently evaluating the effect that the adoption of SFAS 159 will have on its results of operations and financial position.





In December 2007, the FASB issued FAS No. 160, Non-Controlling Interest in Consolidated Financial Statements-an amendment of ARB No. 51 ("FAS 160"). FAS 160 requires that a non-controlling interest in a subsidiary be separately reported within equity and the amount of consolidated net income attributable to the non-controlling interest
be presented in the statement of operations. FAS 160 also calls for consistency in reporting changes in the parent's ownership interest in a subsidiary and necessitates fair value measurement of any non-controlling equity investment retained in a deconsolidation. FAS 160 is effective for fiscal periods beginning after December 15, 2008. Therefore, the Company is required to adopt FAS 160 on January 1, 2009. The Company is currently evaluating the requirements of FAS 160 and the potential impact on the Company's
financial position and results of operations.





In December 2007, FASB issued SFAS No. 141R (“SFAS 141R”), Business Combinations, which impacts the accounting for business combinations. The statement requires changes in the measurement of assets and liabilities required in favor of a fair value method consistent with the guidance provided in SFAS 157 (see above). Additionally,
the statement requires a change in accounting for certain acquisition related expenses and business adjustments which no longer are considered part of the purchase price. Adoption of this standard is required for fiscal years beginning after December 15, 2008. Early adoption of this standard is not permitted. The statement requires prospective application for all acquisitions after the date of adoption. The Company is currently evaluating the effect that the adoption of SFAS 141R will have on its results of operations
and financial position. However, the adoption of SFAS 141R is not expected to have a material impact on the Company’s financial statements.













-16-





In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities", an amendment of SFAS No. 133. SFAS 161 applies to all derivative instruments and non-derivative instruments that are designated and qualify as hedging instruments pursuant to paragraphs 37 and 42 of SFAS 133 and related hedged
items accounted for under SFAS 133. SFAS 161 requires entities to provide greater transparency through additional disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted  for under SFAS 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity's financial position, results of operations, and cash flows. SFAS 161 is effective as of the beginning of an entity's first fiscal
year that begins after November 15, 2008. The Company does not expect the adoption of SFAS 161 will have a material impact on its financial condition or results of operation.





In April 2008, the FASB issued FSP FAS 142-3, “ Determination of the Useful Life of Intangible Assets”.  This guidance is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142, “ Goodwill
and Other Intangible Assets”, and the period of expected cash flows used to measure the fair value of the asset under SFAS No. 141(R) when the underlying arrangement includes renewal or extension of terms that would require substantial costs or result in a material modification to the asset upon renewal or extension.  Companies estimating the useful life of a recognized intangible asset must now consider their historical experience in renewing or extending similar arrangements or, in the
absence of historical experience, must consider assumptions that market participants would use about renewal or extension as adjusted for SFAS No. 142’s entity-specific factors.  This standard is effective for fiscal years beginning after December 15, 2008, and is applicable to the Company’s fiscal year beginning January 1, 2009.  The Company does not anticipate that the adoption of this FSP will have an impact on its results of operations or financial condition.





In June 2009, the FASB issued the Codification and the Hierarchy of Generally Accepted Accounting Principles (“GAAP”) (“Codification”). The purpose of the Codification is to provide a single source of authoritative U.S. GAAP. The Codification was effective for the Company in the third quarter of 2009. As the
Codification was not intended to change or alter existing GAAP, the adoption of the Codification did not have a material effect on the Company’s financial statements.




NOTE 18 – LITIGATION




As of the filling of the present report on form 10Q, the Company considers there was no pending or threatened litigation, claims, or assessments against the Company for its acts or omission.









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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 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, 2009 (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.




On November 13, 2007, we changed our name from “XL Generation International Inc.” to “Ecolocap Solutions Inc.” Our shares of common stock are traded on the Bulletin Board operated by the Financial Industry Regulatory Authority under the symbol ECOS.




Business Plan




EcoloCap Solutions Inc. is an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop, manufacture and sell cleaner alternative
energy products. We bring together the technology, engineering, and operational management for the successful development of environmentally significant products and projects. Our business approach combines science, innovation, and market-ready solutions to achieve environmentally sustainable and economically advantageous, power and energy management practices in the following areas:




MBT M-Fuel





EcoloCap Solutions Inc., through its subsidiary Micro Bubble Technologies Inc. (MBT), developed and manufactures M-Fuel, an innovative suspension fuel that far exceeds all conventional fuels’ costs and efficiencies.  This environmentally-friendly and economical product is designed to offer fully scalable
and customizable fuel solutions that will increase efficiency, lower operating costs, and reduce emissions. M -Fuel is a suspension mixture of 60% heavy oil, 40% H plus O2 molecules, and a 0.3% stabilizing additive.  The production of M-Fuel takes place in our Nano Processing Units (NPU), a self contained device that is sized for output.  The NPU’s can be configured to operate in conjunction with an engine or burner to sully M-Fuel on demand, or pre-manufactured for delivery. M-Fuels unique
burning process facilitates increased efficiency, resulting in reduced emissions by 60%, reduced fuel consumption by 40%, and cut costs by up to 25%.






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MBT CNT-Battery





EcoloCap Solutions Inc., through its subsidiary Micro Bubble Technologies Inc. (MBT), developed and manufactures the Carbon Nano Tube Battery (CNT-Battery), a fully recyclable, rechargeable battery that far exceeds the performance capabilities of any existing battery on the market at this time.  This environmentally-friendly
and economical product is designed to offer fully scalable and customizable power solutions that will increase efficiency, lower operating costs, and reduce emissions. Our proprietary technology modifies the fabrication of lead acid batteries by applying a highly-conductive carbon nano tube coating to the anode and cathode cells.  As a result, conductive surface area is increased by a factor of billions and electricity is carried out more efficiently. The CNT-Battery’s advanced technology demonstrates
eight times the reserve capacity of traditional lead acid batteries, two and a half times the energy density of lithium-ion batteries, and a recharge time of just five minutes; all at a fraction of the cost of lithium-ion batteries.




CER





The Kyoto Protocol established various exchange mechanisms in order to achieve its targeted reduction in carbon emission. In addition to the targets set by Kyoto, countries and companies not bound by the Kyoto Protocol are voluntarily creating national schemes and offsetting their emissions associated to their normal
activities as part of their corporate responsibility.




Recognizing the opportunity these new mechanisms represent, we are developing an integrated development approach that focuses upon both existing and needed infrastructure facilities to produce substantial new value in the form of tradable CERs while at the same time maximizing alternative energy generation co-products.
Our partners with owners of facilities emitting the harmful greenhouse gas as well as with all other environmental projects’ owners in developing countries, to capitalize on the opportunities afforded by the emerging market in carbon credit trading turning potential liabilities into lucrative resources while maximizing available possibilities for clean and renewable energy production.




Our initial geographical focus is in Vietnam and China and will follow by expansions into Africa and Latin America. These areas have been identified by leading authorities as representing substantial opportunities for remediation of greenhouse gasses and therefore represent the greatest opportunities for the production
of CERs. They also represent geographies in which we have begun to develop efficient operating scale thereby enhancing potential profitability.








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In order to develop the Vietnamese market, EcoloCap Solutions Canada has identified a few Vietnamese potential partners. After various meetings, negotiations and telephone conversations, we retained the services of a scouting agency. A one year, renewable contract was signed with BEWTE, for identifying, negotiating and developing CDM projects in Vietnam. Since the signature of the scouting contract, BEWTE
has identified 40 potential CER projects in Vietnam. Ecolocap Solutions management has provided training session to the scouting agency personnel on the CDM and the CER business. Ecolocap Solutions CEO went to Vietnam and China to start discussions and negotiations for the projects with the best potential. After a few trips, discussions and negotiations that occurred over the past six months, 11 ERPA (Emission Reduction Purchase Agreement) contracts were signed in
Vietnam and 8 ERPA (Emission Reduction Purchase Agreement) contracts were signed in China.




Results of Operations


For the Three and Nine Month Period ended September 30, 2009




Overview




We posted net losses of $93,657 and $274,678 respectively for the three and the nine month periods ended September 30, 2009 as compared to net loss of $293,330 and $4,330,015 for the comparable period of 2008. The loss resulted from operating expenses. In 2008 the loss resulted from the signature of an exclusive
Service Agreement with United Best Technology Limited of Hong Kong. United will devote all its intellectual property, knowledge, technology and contacts related to the CER and Clean Development Mechanism projects exclusively for the development of EcoloCap business in an exclusive and define territory. United for the exclusivity of its services was granted Three Million Five Hundred Thousand (3,500,000) restricted shares of our common stock. The cost of the Agreement was accounted for under compensation expense.




Ecolocap Solutions CEO had many discussions and email exchange to follow up and update the status and development of the 11 ERPA (Emission Reduction Purchase Agreement) contracts signed in Vietnam.





The Company has started intense discussions with CANTOR CO2 LLC, a major CER broker, in order to accelerate the project development and to help CER project owners find financing though potential investors, brokers and CER buyers.





In September, 2009, EcoloCap Solutions Inc. (“ECOS”) and Micro Bubble Technologies Inc. (“MBT”) representatives entered into an Agreement for "ECOS" to acquire 55% of the paid and outstanding shares of Common Stock of "MBT". On September 10, 2009, we completed our Securities Shares Exchange
Agreement (the "Agreement") with shareholders of Micro Bubble Technologies Inc. and issued a total of 54,000,000 restricted shares of our common stock to nine shareholders of Micro Bubble Technologies Inc. ("Micro Bubble"). The foregoing nine shareholders delivered 1,100 shares of Micro Bubble which constituted 55% of the total outstanding shares of common stock of Micro Bubble. Micro Bubble thereby became a subsidiary corporation.





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Micro Bubble Technologies Inc. has signed a multi-million dollar distribution agreement with HALO Renewable Energy LLC ("Halo"), of Portland, OR. Halo has obtained distribution rights of the CNT-Battery for "non-wheeled" applications in North America, in addition to the U.S distribution rights to MBT's M-Fuel.




Sales




For the three and six month period ended September 30, 2009 we had revenues of $765,000. This compared to no gross revenues for the same periods of 2008.




Total Cost and Expenses




For the three and nine month periods ended September 30, 2009, we incurred total costs and expenses of $636,821 and $817,842. This compared to $293,330 and $4,330,015 for the same periods of 2008. The decrease in total cost and expenses resulted from the signature in 2008 of an exclusive Service Agreement with
United Best Technology Limited of Hong Kong. United will devote all its intellectual property, knowledge, technology and contacts related to the CER and Clean Development Mechanism projects exclusively for the development of EcoloCap business in an exclusive and define territory. United for the exclusivity of its services was granted Three Million Five Hundred Thousand (3,500,000) restricted shares of our common stock. The cost of the Agreement was accounted for under compensation expense.




Selling, General and Administration




For the three and nine month periods ended September 30, 2009, we incurred selling, general and administration expenses of $208,904 and $342,651. This compared to $277,437 and $680,094 for the same periods last year. The decrease was due to the layoff of all of the Company’s staff in 2008. We have undertaken
a review of corporate overhead and implemented measures to reduce corporate overhead to a level more sustainable in relation to current revenue volume and management’s expectations.




Interest




We calculate interest in accordance with the respective note payable. For the three and nine month periods ended September 30, 2009, we incurred a charge of $915 and $35,494. This compared to $13,343 and $145,712 for the same periods of the previous year. This increase mirrors the increase liabilities which we
have assumed to finance our operations.




Liquidity and Capital Resources




At September 30, 2009, we had $29,129 in cash, as opposed to $23,787 in cash at December 31, 2008. Total cash requirements for operations for the nine month period ended September 30, 2009 was $92,545. As a result of its new business plan, management estimates that cash requirements through the end of the fiscal
year ended December 31, 2009 will be between $1.0 million to $5.0 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 our existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.






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At September 30, 2009, we had total assets of $13,456,075 compared to total assets of $81,098 at December 31, 2008. The increase is mainly due to the intangible assets and goodwill from the acquisition of Micro Bubble Technologies inc.




At September 30, 2009, we had total current liabilities of $1,562,746 compared to total current liabilities of $918,524 at December 31, 2008. The liabilities are mainly due to (i) accrued operational costs and (ii) loan note.




We are party to a lease for our Montreal office (the “Montreal Lease”), at a minimum annual rent of approximately $64,000 per year. The Montreal Lease expires in February 15, 2014.





On December 31, 2008, we received loans from POMA Management Inc. , a shareholder, in the amount of $450,000. In 2009, the Company received loans from POMA Management Inc., a shareholder, in the amount of $1,000. These loans carry an interest of 10% and are payable on demand.




Our financial condition raises substantial doubt about our ability to continue as a going concern. Management's plan for our continued existence includes selling additional stock through private placements and borrowing additional funds to pay overhead expenses while maintaining marketing efforts
to raise our sales volume. Our future success is dependent upon our ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue as a going concern.




Off-Balance Sheet Arrangements




The Company is not a party to any off-balance sheet arrangements.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.




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ITEM 4.  CONTROLS AND PROCEDURES




Evaluation of Disclosure Controls and Procedures





Under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.
Based on that evaluation, the Principal Executive Officer and Principal  Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




PART II OTHER INFORMATION




ITEM 1.  LEGAL PROCEEDINGS




None.




ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




None.




ITEM 3.  DEFAULTS UPON SENIOR SECURITIES




None.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS




None.




ITEM 5.  OTHER INFORMATION




None.


















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ITEM 6.  EXHIBITS




(a) Exhibits




Exhibit No.

Description of Exhibits31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








































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SIGNATURES




In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




ECOLOCAP SOLUTIONS INC.Formerly, XL GENERATION INTERNATIONAL INC.November 16, 2009By:
MICHAEL SIEGELName:
Michael SiegelTitle:
Principal Executive OfficerBy:
MICHEL ST-PIERREName:
Michel St-PierreTitle:
Acting Principal Financial Officer andActing Principal Accounting Officer







































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Exhibit Index




Exhibit No.

Description of Exhibits31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.








































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