UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-Q




x

QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010. ̈

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934







Commission file number 000-31165




ECOLOCAP SOLUTIONS INC.


(Fomerly Known As XL GENERATION INTERNATIONAL INC.)


(Exact name of registrant 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, including zip code.)




866-479-7041


(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 last 90 days. YESxNO ̈




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 ̈NOx




The Issuer had 107,243,642 shares of Common Stock, par value$.001, outstanding as of May 19, 2010.




















TABLE OF CONTENTSPART IItem 1.

Financial StatementsBalance SheetStatements of OperationsStatements of Cash FlowsNotes to Financial StatementsItem 2.

Management’s Discussion and Analysis or Plan of OperationItem 3.

Controls and ProceduresPART IIItem 1.

Legal ProceedingsItem 2.

Unregistered Sales of Equity Securities and Use of ProceedsItem 3.

Defaults Upon Senior SecuritiesItem 4.

Submission of Matters to a Vote of Security HoldersItem 5.

Other InformationItem 6.

ExhibitsSIGNATURES
































-2-




PART I: FINANCIAL INFORMATION




Item 1.     Financial Statements




ECOLOCAP SOLUTIONS INC.


(Formally known as XL GENERATION INTERNATIONAL INC.)




(A Development Stage Company)


CONSOLIDATED BALANCE SHEETS


March 31,


December 31,2010


2009(unaudited)


(audited)ASSETSCURRENT ASSETS:Cash

$
13,780


$
1,944Taxes receivable


730



730Deposit on machinery


698,823



609,823Prepaid expenses and sundry current assets


5,704



14,578TOTAL CURRENT ASSETS


719,037



627,075INTANGIBLE ASSETS ( note 2 and 5)


5,924,669



6,056,252GOODWILL ( note 2)


7,008,721



7,008,721PROPERTY AND EQUIPMENT, AT COST,LESS ACCUMULATED DEPRECIATION


11,621



13,227TOTAL ASSETS

$
13,664,048


$
13,705,275LIABILITIES AND STOCKHOLDERS’ DEFICIENCYCURRENT LIABILITIES:Customer deposits


454,940



454,940Note payable ( note 7)


66,886



47,386Note payable-stockholders (note 8)


816,923



1,402,055Accrued expenses and sundry current liabilities(note 6)


337,823



391,177TOTAL CURRENT LIABILITIES

$
1,676,572


$
2,295,558STOCKHOLDERS' DEFICIENCYCommon stock

$
163,988


$
162,848Additional paid in capital


31,164,287



30,271,856Accumulated Deficit


(25,059,593
)


(25,059,593
)Earnings accumulated during development stage


197,422



460,412TOTAL STOCKHOLDERS' DEFICIENCY

$
6,466,104


$
5,835,523Non-controlling interest


5,521,372



5, 574,19411,987,476



11,409,717TOTAL LIABILITIES ANDSTOCKHOLDERS’ DEFICIENCY

$
13,664,048


$
13,705,275







-3-








ECOLOCAP SOLUTIONS INC.


(Formally known as XL GENERATION INTERNATIONAL INC.)




(A Development Stage Company)


CONSOLIDATED STATEMENTS OF OPERATIONS


Three months ended March 31, 2010 and 2009


(unaudited)




Three Months ended


Three Months ended


Beginning of development stage,January 1, 2007, throughMarch 31,


March 31,


March 20102010


2009SALES

$
-


$
-


$
-COSTS AND EXPENSES:Selling, general and administrative


171,301



87,232



1,918,808Depreciation and Amortization(note 5 )


133,189



-



308,064Gain on settlement of debts-foreign Subsidiary










(8,013,125
)Compensation expense


-







5,469,897Interest


11,155



15,743



406,480Foreign exchange loss (gain)


167



642



(165,918
)TOTAL COSTS AND EXPENSES


315,812



103,617



(75,794
)NET (LOSS)GAIN

$
(315,812
)

$
(103,617
)

$
75,794Attributable to :Ecolocap Solutions Inc.

$
(262,990
)

$
(103,617
)


197,422Non-controlling interest

$
(52,822
)

$
-



(121,628
)Net (Loss) Per Share

$
(0.00
)

$
(0.00
)


N/AAverage weighted Number of Shares


107,368,642



43,938,739



N/A
















-4-







ECOLOCAP SOLUTIONS INC.


(Formally known as XL GENERATION INTERNATIONAL INC.)




(A Development Stage Company)


CONSOLIDATED STATEMENTS OF CASH FLOWS


Three months ended March 31, 2010 and 2009


(unaudited)




March 31


March 31


Beginning of development stage, January 1, 2007, through2010


2009


March 2010Net loss

$
(262,990
)

$
(103,617
)

$
(23,041
)Adjustment to reconcile net income to net cash usedin operating activitiesDepreciation and amortization


133,189



1,606



308,064Imputed interests of shareholders loans


5,581







5,581Issuance of stock for services


-







3,269,600Stock based compensation










5,211,897Non cash adjustmentNon-controlling interest


(52,822
)






(121,628
)Changes in operating assets and liabilities:Prepaid expenses and sundry current assets


8,874







35,641Taxes receivable






25,481



(730
)Deposit on machinery


(89,000
)






(153,423
)Accrued expenses and sundry current liabilities


23,636



53,248



(2,946,551
)Net cash provided by (used in) operating activities

$
(233,532
)

$
(23,282
)

$
5,585,410Investing activitiesCash acquired during acquisition


-



-



38,115Acquisitions of property and equipment


-



-



4,997Net cash used in investing activities

$
-


$
-


$
43,112Financing activitiesStock payable










(1,000,000
)Issuance of common stock


110,000



1,000



325,250Sale of common stock










1,003,400Proceeds (Repayment) of loans payable


19,500







19,500Proceeds (Repayment) of loans payable shareholders


115,868







(6,091,499
)Net cash provided by financing activities

$
245,368


$
1,000



(5,743,349
)Increase (decrease) in cash


11,836



(22,282
)


(114,827
)Cash-beginning of period


1,944



23,787



128,607Cash-end of period

$
13,780


$
1,505


$
13,780










-5-






ECOLOCAP SOLUTIONS INC.


(Formally known as XL GENERATION INTERNATIONAL INC.)


NOTES TO FINANCIAL STATEMENTS




NOTE 1-NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




EcoloCap Solutions Inc. is an integrated and complementary network of environmentally focused technology companies that utilize advanced nanotechnology to design, develop 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 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%.




MBT -Batteries




EcoloCap Solutions Inc., through its subsidiary Micro Bubble Technologies Inc. (MBT), developed 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 and technology.





EcoloCap has the 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.







-6-


BASIS OF PRESENTATION





The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.  In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included,  Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may  be expected for the year ending December 31, 2010.  For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 2009.





DEVELOPMENT STAGE COMPANY





The Company was an active business from 2005 through 2006 and was involved in the manufacture and sales of an artificial sport surface. Commencing 2007, the Company was looking for new business and commenced the Carbon Credits (CER’S) business.  The Company currently has operations but no revenues and, in accordance with the relevant authoritive guidance is considered a Development Stage Enterprise. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from January 1, 2007 to the current balance sheet date.





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. (see Note 2) 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.




The Company maintains cash balances at various financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.




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.




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.




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.






-7-







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.




GOODWILL, OTHER INTANGIBLES AND LONG-LIVED ASSETS





The Company records as goodwill the excess of purchase price over the fair value of the tangible and identifiable intangible assets acquired.  Current authoritative guidance requires that goodwill not being amortized, but be tested for impairment annually as well as when an event or change in circumstance indicates an impairment may have occurred.  Goodwill is tested for impairment by comparing the fair value of the Company’s individual reporting units to their carrying amount to determine if there is potential goodwill impairment.  If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the goodwill of the reporting unit is less than its carrying value.





Long-lived assets, including fixed assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.  In reviewing for impairment, the carrying value of such assets is compared to the estimated undiscounted future cash flows expected from the use of the assets and their eventual disposition.  If such cash flows are not sufficient to support the asset’s recorded value, an impairment charge is recognized to reduce the carrying value of the long-lived asset to its estimated fair value.  The determination of future cash flows, as well as the estimated fair value of long-lived assets, involves significant estimates on the part of management.  In order to estimate the fair value of a long-lived asset, the Company may engage a third-party to assist with the valuation.  If there is a material change in economic conditions or other circumstances influencing the estimate of future cash flows or fair value, the Company could be required to recognize impairment charges in the future.





Impairment:




At each reporting date, the Company assesses whether there is any indication that its intangible assets, or property, plant and equipment are impaired. If any such indication exists, the Group estimates the recoverable amount of the asset and the impairment loss if any. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. If an asset does not generate cash flows that are independent from those of other assets or groups of assets, recoverable amount is determined for the cash-generating unit to which the asset belongs. The recoverable amount of an asset is the higher of its fair value less cost to sell and its value in use. Value in use is the present value of future cash flows from the asset or cash-generating unit discounted at a rate that reflects market interest rates adjusted for risks specific to the asset or cash- generating unit that have not been reflected in the estimation of future cash flows. If the recoverable amount of an intangible or tangible asset is less than its carrying value, an impairment loss is recognised immediately in profit or loss and the carrying value of the asset reduced by the amount of the loss. A reversal of an impairment loss on intangible assets (excluding goodwill) or property, plant and equipment is recognised as it arises provided the increased carrying value does not exceed that which it would have been had no impairment loss been recognised. Impairment losses on goodwill are not reversed.




RESEARCH AND DEVELOPMENT





Research and development costs are charged to expense as incurred.









-8-


NOTE 2- ACQUISITION OF MICRO BUBBLE TECHNOLOGIES INC.




On September 10, 2009, the Company completed the acquisition of 55% of MBT, engaged in the business of manufacturing, marketing, distributing, setting up sub-distributors, and selling products based on nano technologies, 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 the relevant authoritive guidance as additional information becomes known or payments are made.




The acquisition was accounted for using the purchase method of accounting in accordance with the relevant authoritive guidance. 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.




MBT 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.




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


Assets:Cash


38Technology Batteries


2,790Technology EM Fuel


80Customer Relationships


3,350Goodwill


7,009$
12,915Liabilities:Accrued liabilities


452Minority interest

$
5,643Total Purchase Price

$
7,172







Business Combinations





In 2008, prior to the acquisition of MBT, MBT had no income or expenses incurred and accordingly no pro-forma information are presented.






-9-


NOTE 3--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 three months ended March 31, 2010 and 2009 the Company has incurred losses of $315,812 and $103,617 respectively. The Company has negative working capital of $957,535 and $959,089 at March 31, 2010 and 2009, respectively and a stockholders’ deficiency of $6,466,104 and $941,043 at March 31, 2010 and 2009. 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.







NOTE 4 --PROPERTY & OFFICE EQUIPMENT




Equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful life of the assets ranging from 3 to 5 years.


March 312010Furniture & fixtures--5 yrs


11,621Balance March 31, 2010

$
11,621











-10-


NOTE 5 – INTANGIBLE ASSETS





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




March 31,2010Technology Batteries


2,790,000Technology EM Fuel


80,000Customer Relationships


3,350,000$
6,220,000Less : accumulated amortization


295,331Balance March 31, 2010

$
5,924,669






NOTE 6--ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES




Accrued expenses consisted of the following at March 31:2010Accrued interest

$
8,797Accrued operating expenses


329,026$
337,823





NOTE 7- NOTE PAYABLE




In 2008, the Company received loans from Carnavon Trust REG (“Carnavon”) in the amount of $250,000. These loans carry an interest of 10% and are payable on demand. On July 28, 2009, Carnavon and Larinton Investments S.A.(“Larinton”) signed an agreement whereby Carnavon transferred its loans plus the accrued interest ($287 500) to Larinton On July 28, 2009, Larinton  converted loans of $287 500 into 2,875,000 common shares of the Company. The common shares were issued on February 14, 2010.




In 2009, the Company received loans from Capex Investments Limited in the amount of $47,386. In 2010, the Company received loans from Capex Investments Limited in the amount of $19,500. The amount owed to Capex Investments Limited at March 31, 2010 is $66,886. These loans carry an interest of 10% and are payable on demand.







NOTE 8--PAYABLE – STOCKHOLDERS




In 2008, the Company received loans from POMA Management Inc.(“POMA”), a shareholder, in the amount of $450,000. In 2009, the Company received additional loans from POMA in the amount of $1,000. These loans carry an interest of 10% and are payable on demand. On July 28, 2009, POMA and Toniland S.A and DT Crystal Holdings Ltd (“DT Crystal”) signed an agreement whereby POMA transferred its loans plus the accrued interests ($490 490) to Toniland S.A ($220 720) and DT Crystal ($269 770). On July 28, 2009, Toniland S.A has elected to convert loans of $220 720 into 2,207 206 common shares of the Company and DT Crystal has elected to convert loans of $269 770 into 2,697 697 common shares of the Company. The common shares were issued on February 14, 2010.The amount owed to Toniland S.A at March 31 is $0. In 2009, the Company received additional loans from DT Crystal of $117,454. In 2010, the Company received loans from DT Crystal in the amount of $25,848. The amount owed to DT Crystal at March 31, 2010 is $143,302. These loans carry an interest of 10% and are payable on demand.




-11-


The amount owed to Larinton Investments S.A.at March 31 is $0.




In 2009, the Company received loans from a stockholder in the amount of $57,000. These loans carry an interest of 1.63% and are payable on demand.




In 2009, the Company received loans from stockholders in the amount of $447,096. In 2009, the Company received additional loans from stockholders of $70,500. The amount owed to stockholders at March 31 is $517,596. These loans carry an interest of 5.00% and are payable on demand.




In 2009, the Company received loans from Hanscom K. Inc. in the amount of $67,034. In 2010, the Company received additional loans from stockholders of $19,520. The amount owed to stockholders at March 31 is $86,554. These loans have no interest and are payable on demand.




In 2009, the Company received loans from SRD Inc. in the amount of $12,471. These loans have no interest and are payable on demand.







NOTE 9--CAPITAL STOCK




On November 30, 2009, at a special meeting of shareholders, our shareholders approved an amendment to our articles of incorporation whereby we increased our authorized shares of common stock from 100,000,000 shares to 500,000,000 shares with a par value of $0.001 per share.




The Company is authorized to issue 500,000,000 shares of common stock (par value $0.001) of which 107,243,642 were issued and outstanding as of March 31, 2010.




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.




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.






-12-




On May 1, 2009, the Company entered into an agreement with RMN Consulting LLC (“RMN”). The agreement is a one (1) year Service Agreement (the “Agreement”) pursuant to which RNM shall provide us with services including but not limited to prepare a report on us, produce a profile page and display the information on the various internet properties it owns, write updates about us when newsworthy events occur and disseminate the updates to the various databases and internet properties of RMN and handle part of our media relations, shareholder and investor communications.. RNM for its services was granted two hundred thousand (250,000) restricted shares of the Company’s common stock.




On June 24, 2009, we issued 650,000 restricted shares of common stock to Tri Vu Truong, our former president and CEO as consideration for services rendered to us.




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 issued 54,000,000 restricted shares of our common stock to acquire 55% of MBT.







NOTE 10-STOCK-BASED COMPENSATION EXPENSE




For the exclusivity of its services United Best 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.





A summary of option activity for the year ended March 31, 2010 is presented below:





Weighted-

Weighted-AverageAverage Exercise

RemainingOptions
Shares

Price

Contractual TermOutstanding at December 31, 2008
1,465,000

$
1.10

5.74Exercised, forfeited, or expired
-Outstanding at December 31, 2009
1,465,000

$
1.10

4.74Exercisable at December 31, 2009
1,465,000

$
1.10

4.74Granted
-


-

-Exercised, forfeited, or expired
-


-

-Outstanding at March 31, 2010
1,465,000

$
1.10

4.49Exercisable at March 31, 2010
1,465,000

$
1.10

4.49







For the exclusivity of its services United Best 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.






-13-




NOTE 11 -INCOME TAXES




As of March 31, 2010 the company had net operating loss carry forwards of approximately $8,691,000 of which $5,710,000 were generated through foreign transactions and were already taken into account in the tax filing of the Foreign Subsidiary and are not available for US tax purpose. The remaining  net operating losses are being carried forward for subsequent years.. This results in no tax expense or provision for the year.




Components of deferred tax assets and liabilities at March 31, 2010 are as follows:




2010Deferred tax asset

$
990,000Valuation allowance


(990,000
)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 12 -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. The Company has vacated the premises and according to the lease, a six month rent might have to be paid if the landlord intends a lawsuit against the Company. The six month rent amount has been accrued in the accompanying Financial Statements. The rent expense charged to operations for the three month period ended March 31, 2010 was $5,750.





NOTE 13 -RELATED PARTY TRANSACTIONS




In 2010, the Company received additional loans from DT Crystal Holdings Ltd in the amount of $25,848.




In 2010, the Company received loans from stockholders in the amount of $70,500. These loans carry an interest of 5.00% and are payable on demand.




In 2010, the Company received loans from Hanscom K. Inc. in the amount of $19,520. These loans have no interest and are payable on demand.







NOTE 14 - RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING GUIDANCE





Adopted





In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2010-06, Fair Value Measurements and Disclosures (topic 820) – Improving Disclosures about Fair Value Measurements.ASU 2010-06 requires new disclosures regarding transfers in and out of the Level l and 2 and activity within Level 3 fair value measurements.  ASU 2010-06 also includes conforming amendments to employers’ disclosures about postretirement benefit plan assets.  The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure of activity within Level 3 fair value measurements, which is effective for fiscal years beginning after December 15, 2010, and for interim periods within those years.  There was no impact upon adoption of ASU 2010-06 on January 1, 2010 to the Company’s financial position or results of operations.  The Company does not expect there will be an impact to its financial position or results of operations for the additional disclosure requirements in 2011.





In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855) – Amendments to Certain Recognition and Disclosure Requirements.  ASU 2010-09 requires an entity that is a Securities and Exchange Commission (“SEC”) filed to evaluate subsequent events through the date that the financial statements are issued and removes the requirement that an SEC filer disclose the date through which subsequent events have been evaluated.  ASC 2010-09 was effective upon issuance.  The adoption of this standard had no effect on the Company’s results of operation or its financial position.







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Issued





In October 2009, the FASB issued changes to revenue recognition for multiple-deliverable arrangements. These changes require separation of consideration received in such arrangements by establishing a selling price hierarchy (not the same as fair value) for determining the selling price of a deliverable, which will be based on available information in the following order: vendor-specific objective evidence, third-party evidence, or estimated selling price; eliminate the residual method of allocation and require that the consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement to each deliverable on the basis of each deliverable’s selling price; require that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis; and expand the disclosures related to multiple-deliverable revenue arrangements. These changes become effective on January 1, 2011. The Company has determined that the adoption of these changes will not have an impact on the consolidated financial statements, as the Company does not currently have any such arrangements with its customers.





In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance will become effective for the Company with the reporting period beginning July 1, 2011. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.





Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future consolidated financial statements.





NOTE 15 – SUBSEQUENT EVENTS





Management evaluated all activity of the Company through May 17, 2010 (the issue date of the Consolidated Financial Statements) and noted there were no material subsequent events as of that date.




Note 16 – LITIGATION




As of the filling of the present report on form 10QSB, 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




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-QSB for the period ended March 31, 2010 (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.




In January 2010, MBT delivered its first Lithium X batteries to Halo Renewable Energy of Seattle, WA. Halo will conduct preliminary testing in collaboration with a major potential customer.





In February 2010, MBT announced that it has signed an agreement with Exponent Inc. Engineering and Scientific Consulting of Phoenix, AZ to test EcoloCap's newly announced Lithium X battery.




Business Plan




MBT is in the process of locating a site to build its first battery factory in Korea.  MBT is also in discussion with various international companies for joint ventures in battery production.  MBT will be delivering 60 test batteries to an international communications company and a European bus company.  MBT plans to start testing M-Fuel in California by the third quarter of 2010 for approval of the California Air Resources Board.





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 will be Vietnam and China followed 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 can develop efficient operating scale thereby enhancing potential profitability.







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Results of Operations




For the Three Month Period ended March 31, 2010




Overview




We posted net losses of $315,812 for the three month period ended March 31, 2010 as compared to net losses of $103,617 for the comparable period of 2009.




Development Stage Expenditures





Development stage expenditures for the three month period ended March 31, 2010, were $107,600 in salaries, $7,600 in travel, $6,750 in rent and $23,200 in professional fees.




Sales




For the three month period ended March 31, 2010 we had no gross revenues. This compared to gross revenues of $0 for the same period of 2009.




Total Cost and Expenses




For the three month period ended March 31, 2010, we incurred total costs and expenses of $315,812. This compared to $103,617 for the same period of 2009. The increase in total cost and expenses resulted from the activities of Micro Bubble Inc. The subsidiary was not part of the operations in March 2009.




Selling, General and Administration




For the three month period ended March 31, 2010, we incurred selling, general and administration expenses of $171,301. This compared to $87,232 for the same period last year. The increase resulted from expenses from Micro Bubble Inc. the subsidiary acquired in September 2009.




Interest




We calculate interest in accordance with the respective note payable. For the three month period ended March 31, 2010, we incurred a charge of $11,155. This compared to $15,743 for the same period of the previous year. The decrease is caused by the conversion of $701,000 of debt into common shares.




Liquidity and Capital Resources




At March 31, 2010, we had $13,780 in cash, as opposed to $1,944 in cash at December 31, 2009. Total cash requirements for operations for the three month period ended March 31, 2010 was $233,532. 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, 2010 will be between $2.0 million to $5.5 million. As of the date of this Report, we do not have available resources sufficient to cover the expected cash requirements through the end of the second quarter of 2010 or 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.




At March 31, 2010, we had total assets of $13,664,048 compared to total assets of $13,705,275 at December 31, 2009.




At March 31, 2010, we had total current liabilities of $1,676,572 compared to total current liabilities of $2,295,558 at December 31, 2009. The liabilities are mainly due to (i) accrued operational costs and (ii) loan note from a shareholder. The decrease is mainly due to the conversion of $701,000 shareholders loans into common stock.




EcoloCap Solutions Inc. is a party to a lease for its Montreal (the “Montreal Lease”), at a minimum annual rent of approximately $64,000 per year. The Montreal Lease expires in February 15, 2014. The Company has vacated the premises and according to the lease, a six month rent might have to be paid if the landlord intends a lawsuit against the Company. The six month rent amount has been provisioned in the Financial Statements.






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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.




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.




Limited Operating History




We have a history of operating losses, and may continue to incur operating losses. During the three months ended March 31, 2009, we incurred losses of $315,812 (compared with losses of $103,617 for the same period last year). We had negative working capital of $957,535 compared to $1,668,483 at December 31, 2009, and a stockholders' deficiency of $6,466,104 compared with a stockholders' deficiency of $5,835,523at December 31, 2009. These factors among others raise substantial doubt about the Company's ability to continue as a going concern.




Contractual Obligations




The Company is a party to a lease for its Montreal office, at a minimum annual rent of approximately $64,000 per year. The Montreal Lease expires in February 15, 2014. The Company has vacated the premises and according to the lease, a six month rent might have to be paid if the landlord intends a lawsuit against the Company. The six month rent amount has been provisioned in the Financial Statements. The Company is a party to a lease for its Barrington office, at a minimum annual rent of approximately $23,000 per year. The Barrington Lease expires in May, 2013.




Off-Balance Sheet Arrangements




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




ITEM 4.     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 March 31, 2010 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 1A.     Risk Factors




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






Item 6.     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, as adopted 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, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

































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SIGNATURES




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities on this 18th day of May, 2010.





ECOLOCAP SOLUTIONS INC.BY:
MICHAEL SIEGELMichael SiegelPrincipal Executive Officer and a member of theBoard of DirectorsBY:
MICHEL ST-PIERREMichel St-PierrePrincipal Financial Officer and Principal AccountingOfficer










































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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, as adopted 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, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.














































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