­UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 20-F





ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE ACT OF 1934





For fiscal year ended: December 31, 2009


Commission File Number: 000-51180





Global Green Matrix Corp.


(formerly Poly-Pacific International Inc.)


(Exact Name of the Registrant as Specified in its Charter)





Alberta, Canada


(Jurisdiction of Incorporation or Organization)


943 Canso Drive


Gabriola, BC, V0R 1X2


(Address of Principal Executive Offices)





Securities registered or to be registered pursuant to Section 12(b) of the Act:NONE


Securities registered or to be registered pursuant to Section 12(g) of the Act:





Common  shares, no par value


(Title of Class)


Preferred  shares, no par value


(Title of Class)





Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE





The number of outstanding shares of each of the issuer's classes of capital or common shares as of the close of the period covered by the annual report:


5,844,722Common Shares and 0 (zero) Preferred Shares





Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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: No:





Indicate by check mark which financial statement item the registrant has elected to follow:





Item 17:Item 18:





Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.


Not applicable








1





TABLE OF CONTENTS





EXPLANATORY NOTE REGARDING FORM 20-F
5GENERAL
5FORWARD LOOKING STATEMENTS
5PART I
6ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
6A. Directors and Senior Management
6Table 1.1--Company Directors and Officers
6B. Advisers
6C. Auditors
6ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE
6ITEM 3. KEY INFORMATION
7A. Selected Financial Data
7Table 3.1--Summary of Financial Statements in United States GAAP
7Table 3.2--Effects of Currency Translation and Conversion
8B. Capitalization and Indebtedness
8C. Reasons for the Offer and Use of Proceeds
8D. Risk Factors
8ITEM 4. INFORMATION ON THE COMPANY
10A. History and Development of the Company
10B. Business Overview
11





2





ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
12Company's Critical Accounting PoliciesA. Operating Results
18Table 5.1--Summary of Operations
18B. Liquidity and Capital Resources
19D. Trend Information
21E. Off Balance Sheet Arrangements
21F. Tabular Disclosure of Contractual Obligations
21ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
21A. Directors and Senior Management
21B. Compensation
23C. Board Practices
27D. Employees
27E. Share Ownership
27ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
28A. Major Shareholders
28B. Related Party Transactions
28C. Interests of Experts and Counsel
28ITEM 8. FINANCIAL INFORMATION
29A. Consolidated Financial Statements and Other Financial Information
30Consolidated Financial Statements for December 31, 2009, 2008 and 2007
30B. Significant Changes
30ITEM 9. THE OFFER AND LISTING
52Table 9.1--History on TSX Venture Exchange (in Canadian Dollars)
52ITEM 10. ADDITIONAL INFORMATION
53A. Share Capital
53Common Shares
53Preferred Shares
54Stock options
54B. Memorandum and Articles of Association
56C. Disclosure controls and Procedures updateD. Material Contracts
57E. Exchange Controls
57F. Taxation
59G. Dividend and Paying Agents
60H. Statement by Experts
60I. Documents on Display
60J. Subsidiary Information
61





3





ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
63ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
63PART II
63ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
63ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
63ITEM 15. CONTROL AND PROCEDURES
63ITEM 16. RESERVED
63A. Audit Committee Financial Expert
63B. Code Of Ethics
63C. Principal Accountant Fees And Services
63D. Exemption From Listing Standards For Audit Committees
64E. Purchases Of Equity Securities By The Issuer And Affiliated Persons
64PART III
64ITEM 17. FINANCIAL STATEMENTS
64ITEM 18. FINANCIAL STATEMENTS
64ITEM 19. EXHIBITS
65SIGNATURE
66





4





EXPLANATORY NOTE REGARDING FORM 20-F





This Form 20-F is filed for the years ended December 31, 2009, 2008, and 2007.





GENERAL





Unless the context otherwise requires, the "Registrant" means Poly-Pacific International Inc. and the "Company" means the Registrant.





The Registrant uses the Canadian dollar as its reporting currency. Unless otherwise indicated, all references in this document to "dollars" or "$" are expressed in Canadian dollars. Also, see Item 3 "Key Information" Table 3.2 for more detailed currency and conversion information.





FORWARD LOOKING STATEMENTS





Some of the statements contained in this Report that are not historical facts, including, statements made in the sections entitled Item 3-"Key Information," Item 4-"Information on the Company," “New Opportunities/Direction for the Company,” and Item 5-"Operating and Financial Review and Prospects," are statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in the statements. Actual results, performance or events may differ materially from those in the statements due to, without limitation, (i) general economic conditions, (ii) performance of financial markets, (iii) interest rate levels, (iv) currency exchange rates, (v) changes in laws and regulations, (vi) changes in the policies of central banks and/or foreign governments, and (vii) competitive factors, in each case on a global, regional and/or national basis. See Item 5-"Operating and Financial Review and Prospects."





The forward looking statements contained herein are based on the Company's assumptions regarding world economic and market conditions the price and supply of raw materials. Among the factors that have a direct bearing on the Company's future results of operations and financial conditions are the successful development of the Company's projects and a change in government regulations, leverage and debt service, competition, cost of certain raw materials, currency fluctuations and restrictions, technological changes, and other factors discussed herein. The Company's actual results of operations may vary significantly from the performance projected in the forward looking statements.





5





PART I





ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS





A. Directors and Senior Management





Table 1.1—Company Directors and Officers





Name
Position
Business AddressRandy Hayward
President, Acting Chief Executive officer and Acting Chief Financial Officer and Director
943 Canso Drive

Gabriola, British Columbia,  V0R 1X2Greg Pendura
Director
Edmonton, AB, CANRichard Orate
Director
Greenwich, CT, USAPhilip Kempis
Director
New York, NY, USA





B. Advisers





The Company banks with the Bank of Nova Scotia (ScotiaBank) at 11508 Jasper Avenue, Edmonton, Alberta T5K 0M8. The telephone number for the ScotiaBank is 780-448-7930.  The Company’s Canadian corporate legal advisor is Roy Hudson who is a partner in Davis LLP. The address for Davis LLP is 1500 Livingston Place, 1000-250 2nd St. SW. Calgary, Alberta, Canada, and T2P. The telephone number for Roy Hudson is 403-698-8708.





C. Auditors





The Company’s auditor is K.R. Margetson Ltd. located at 5588 Inlet Avenue, Sechelt, British Columbia, Canada V0N 3A1.  The audit contact partner is Keith Margetson, C.A. and C.P.A.





ITEM 2. OFFER STATISTICS AND EXPECTED TIME TABLE





Not applicable.





6





ITEM 3. KEY INFORMATION





A. Selected Financial Data





The selected financial data set forth below have been derived from our audited financial statements. Our financial statements for fiscal years ended December 31, 2009, 2008 and 2007 have been audited by K.R.Margetson Ltd.  Financial statements for fiscal years ending December 31, prior to 2007 have been audited by Collins Barrow Edmonton LLP, Chartered Accountants. The selected financial data should be read in conjunction with and are qualified by reference to the Financial Statements and notes thereto for the years ended December 31, 2009 and 2008 included elsewhere in the Exhibits to this Report.





Our financial statements have been prepared in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) pursuant to generally accepted accounting principles (GAAP) in the United States.





All amounts are shown in Canadian dollars, unless otherwise specified.





Table 3.1—Summary of Financial Statements in United States GAAP





Summary of annual financial statements for the prior five years are presented in this table. All amounts are shown in Canadian dollars and prepared in accordance with U.S. GAAP.  The summaries for 2008, 2007, 2006, 2005 and 2004 are taken from the audited financial statements included elsewhere in this report.








Global Green Matrix Corp.Year ended

31/12/2009


Year ended

31/12/2008


Year ended

31/12/2007


Year ended

31/12/2006


Year ended

31/12/2005Total Consolidated Revenues


--



--



--



1,470,357



3,052,716Total Operating Expenses


930,892



2,171,689



2,975,383



2,281,996



4,389,138Income tax expense (recovery)


---



--



--



--



174,750Net Loss


(930,892)



(2,171,689)



(2,975,383)



(1,970,479)



(1,161,662)Discount on Redemption of Preferred Shares






--



--



--



--Net Income (Loss) available to Common Shareholders


(930,892)



(2,171,689)



(2,975,383)



(1,970,479)



(1,161,662)Net Income (Loss) per share


(0.17)



(0.51)



(0.95)



(1.30)



(1.39)Diluted Earnings (Loss) per share


(0.17)



(0.51)



(0.95)



(1.30)



(1.39)Total Assets


28,602



173,822



497,356



1,313,837



2,111,503Long term obligations


607,744



196,557



171.749



2,045,778



--Additional Paid in Capital


3,621,500



3,424,280



2,375,573



952,976



731,170Accumulated Comprehensive Income


53,195



53,195



53,195



53,195



53,195Common Shares Capital


5,855,261



5,678,396



4,903,756



2,293,422



1,998,538Preferred Shares Capital


---



--



--



--



--Accumulated Deficit


(10,109,498)



(9,178,606)



(7,006,917)



(4,031,534)



(2,061,055)Total Shareholders Equity


(579,142)



(22,735)



325,607



(731,941)



721,848Common Shares outstanding


5,844,722



5,107,329



3,914,685



1,682,516



1,259,030Weighted Average – Diluted Shares


5,607,680



4,232,869



3,143,119



1,521,149



835.749





7





Table 3.2--Effects of Currency Translation and Conversion





The following tables set forth: (i) the rates of exchange for the Canadian dollar, expressed in U.S. dollars, in effect at each of the periods indicated; (ii) the average exchange rates in effect on the last day of each period; (iii) the high and low exchange rate during such periods, in each case based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York; (iv) annual prices based for the period January 1 to December 31 yearly; and (v) monthly prices based for the first to last reported day each month for the most recent six months, and quoted in U.S. dollars.





Annual Periods

2009


2008


2007


2006


2005Rate at end of period


0.9469



0.8210



1.0120



0.8671



0.8576Average rate during period


0.8760



0.9371



0.9309



0.8700



0.8253High Rate


0.7916



0.8101



0.8437



0.8629



0.8672Low Rate


0.9469



1.0001



1.0908



0.8700



0.7853





Monthly Periods

May/10


Apr/10


Mar/10


Feb/10


Jan/10


Dec/09Rate at end of period


0.9613



0.9950



0.9772



0.9470



0.9583



0.9469Average rate during period


0.9616



0.9949



0.9775



0.9462



0.9588



0.9484High Rate


0.9547



0.9911



0.9739



0.9425



0.9552



0.9438Low Rate


0.9671



0.9989



0.9804



0.9505



0.9619



0.9519





On June 30, 2010, the noon buying rate in New York City for cable transfer in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York as $.9429 USD = $1.00 CDN.





B. Capitalization and Indebtedness





Capitalization of Global Green Matrix Corp. in Canadian DollarsDescription
Authorized
Balance at  December 31, 2009Debentures
N/A
$127,500Common Shares
Unlimited

(5,844,722  issued and outstanding

as of December 31, 2009)
$5,855,661





C. Reasons for the Offer and Use of Proceeds





Not applicable.





D. Risk Factors





The following is a brief discussion of those distinctive or special characteristics of the Company's operations and industry which may have a material impact on the Company's business development, or constitute risk factors in respect of the Company's financial performance.





We are authorized to issue preferred shares which, if issued, may reduce the price of the common shares.





Although no preferred shares are currently issued and outstanding, our directors are authorized by our Articles of Incorporation, as amended, to issue preferred shares in series without the consent of our shareholders. Our preferred shares, if and when issued, may rank senior to common shares with respect to payment of dividends and amounts received by shareholders upon liquidation, dissolution or winding up. The issuance of preferred shares in series and the preferences given the preferred shares must be made by a Resolution of Directors, but do not need the approval of our shareholders. The existence of rights, which are senior to common shares, may reduce the price of our common shares.





8





Because we do not have a compensation committee, shareholders will have to rely on the entire board of directors, one member of which is not independent, to perform this function.





We do not have a compensation committee comprised of independent directors.  Indeed, we do not have a compensation committee.  This function is performed by the board of directors as a whole in respect of compensation of officers of the corporation.  Mr. Randy Hayward, President as a member of the board of directors is not an independent directors.  The Board of Directors does not have a formally appointed compensation committee, but performs this function as a whole in respect of compensation of officers of the corporation, with any officer who is also a director being excluded from the deliberations of the other directors in respect of that officer’s compensation.  Thus, there is a potential conflict in that board members who are not independent may participate in discussions concerning management compensation other than their compensation and other issues that may affect management decisions.





Penny Stocks.





Because our common shares are a penny stock, trading in the common shares involves increased risks­­ concerning price fluctuation, additional disclosure requirements and a lack of a liquid market.





Our shares will be "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00.  Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.





Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.





Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market.  These additional sales practice and disclosure requirements could impede the sale of our securities.  This lower trading volume can cause price fluctuations.  In addition, the liquidity for our securities will be decreased, with a corresponding decrease in the price of our securities.  Accordingly, our shareholders will, in all likelihood, find it difficult more to sell their securities.





Because a portion of convertible debentures issued in 2003 remains outstanding as at the date of this  report, there is a potential for some dilution in share values.





The holders of the $127,500 in convertible debentures outstanding as at the date of this report might decide to act on the conversion if the common shares value rises above the conversion price.  If this event was to occur it would have the effect of diluting the earnings per share by about 0.2% which could decrease the value of the Company’s common shares.  This amount is comprised of $102,000 in principal and $25,500 in accrued interest.





9





ITEM 4. INFORMATION ON THE COMPANY





A. History and Development of the Company





The Company had changed its name to Global Green Matrix Corp. (referred to as “Global Green”) from Poly-Pacific International Inc. on February 25, 2010.  Global Green is an innovator in eco-friendly solutions to Industrial Waste by-products.  The Company is actively pursuing the reclamation of industrial polymers throughout the world. The significance and importance of recycling and reclaiming industrial waste has become an important global issue. Poly-Pacific is focused on benefiting our planet by exploring and pursuing new environmentally sound methods and technologies in recycling, while creating significant value for our shareholders as the leading company in the reclamation sector.





In the past, the Company’s wholly owned subsidiary, Poly-Pacific Technologies Ltd. (“PPT”) was a key player in the Green Industry and a leading manufacturer of plastic media blast and plastic lumber.  PPT produced plastic media blast from scrap plastic designed for the rapid removal of paints and coatings from sensitive surfaces that could be used on aircrafts, automobiles, composites, and electronic components.  Plastic media blast was a proven, environmentally friendly alternative to harsh chemical stripping agents and other hard abrasive materials.   In addition, the Company had another owned subsidiary, Everwood Agricultural Products International Inc. (“Everwood”), which recycled the spent media and disposed plastic containers into plastic lumber for the agricultural industry.





At December 31, 2006, as a result of continued losses and Everwood’s inability to obtain an adequate supply of raw materials to make posts and attain cost-efficient production, the Company decided to permanently cease its operations in St. Thomas, Ontario, in order to manage costs and to focus its efforts in the plastic media market and to develop the McAdoo Nylon Reclamation Project in Kingston, Ontario.





On November 1, 2007, due to the continuing losses as a result of decreasing market share and lack of demand for plastic media, the Company announced the closure of its wholly owned subsidiary, Poly-Pacific Technologies Inc. and its operations in Ontario, California.





On July 8, 2008, the Company completed a feasibility study on the McAdoo landfill site in Kingston, Ontario.  The McAdoo landfill site proved not to be economically.  Then on November 10, 2008, the Company had signed a License Agreement with Energy Quest Inc. Under the terms of this agreement, the Company will have the exclusive rights to commercialize and/or or manufacture, market and distribute Energy Quest's Gasification Technologies in the People's Republic of China, which includes Mainland China, Hong Kong and Macau.





On February 25, 2010, the Company changed its name to Global Green Matrix Corp. from Poly-Pacific International Inc. and consolidated its common shares on the basis of one (1) new post consolidation share for every fifteen (15) pre consolidation common shares.  The significance and importance of recycling and reclaiming industrial waste has become an important global issue. Global Green is focused on benefiting our planet by exploring and pursuing new environmentally sound methods and technologies in recycling.





Stock listing Information:





As discussed above, Global Green Matrix Corp. is a junior industrial company that was first listed in Canada in 1995 and trades as a Tier 1 company on the TSX Canadian Venture Exchange (TSX-V:GGX).  Poly-Pacific was also listed on the USA on December 30, 2005, on the NASDAQ Over The Counter Bulletin Board (OTCBB: GGXCF.OB), on the Frankfurt Stock Exchange in January 2007 (POZG.F), and the Berlin Stock Exchange (AOLGDN) also in January 2007.





The address of our principal executive offices is 943 Canso Drive, Gabriola, British Columbia, V0R 1X2:  (604) 324-2110.   The name and address of our registered agent in Canada is:  Davis LLP, Livingston Place, 1000-250 2nd St. SW, Calgary, Alberta, T2P 0C1.





10





B. Business Overview




Since inception, the Company has worked to refine its MultiCut TM plastic blasting media by developing the technology to provide consistent, high quality products for military, commercial and industrial customers.




As worldwide demand for plastic blast media declined coupled with rising costs and declining demand for plastic media, management at Global Green has concluded that being a manufacturer of plastic blast media is no longer economically viable. Recognizing this, they have made the decision to redirect the company from being a buyer of plastics to being a provider of the commodity.




Global Green has a long history in recycled plastics, purchasing the majority of its scrap plastic from China. As such, it has identified the worldwide shortage in certain types of plastics, specifically petroleum based polymers. As a result of this decision, the company is had focused its efforts in the reclamation of polymers, specifically nylon, that have strategically been buried in landfill sites around the world.




Utilizing its expertise in the recycling of plastics, Global Green has sought out several landfill sites in North America that contain vast quantities commercial grade of nylon. These nylon deposits were as a result of over-production by the various manufactures during the 1950’s, 60’s and 70’s. Nylon, being a synthetic fibre, takes hundreds of years to decompose. Nylon which was deposited underground thirty to forty years ago will still retain most of its virgin commercial value. As a commodity, nylon is one of the most popular polymers in use today. When first invented in the 1940’s, nylon was mainly used for parachutes, toothbrushes and stockings. Nylon was also a principle component in the manufacturing of automotive tires up until the 1960’s. Today, nylons largest market, motor vehicles, accounted for 45% of total demand. Other major markets include electrical and electronics, consumer and institutional goods, packaging and industrial products. Advances in the motor vehicle market will fuel gains, as nylon will continue to penetrate new applications in engine and mechanical areas. Electrical and electronic markets will be bolstered by gains in wire, cable and electronic component uses. Worldwide nylon demand is estimated to increase by 40% by 2015.




With growing landfill sites becoming a worldwide problem, landfill reclamation projects provided Global Green with a unique opportunity to assist in cleaning our environment, while earning revenue for the Company and enhancing shareholder value. The Company will continue to pursue its business model to include the reclamation of landfill sites and industrial polymer fibre throughout North America.  The first property to be assessed was the McAdoo Landfill Site in the City of Kingston, Ontario.  The feasibility study for McAdoo which was completed in 2008 proved to be economically unviable, however, the company was able to gain experience and knowledge that it will be able to leverage in other properties it continues to assess.




Currently, the Company is investigating various environmental and other business opportunities to enhance shareholder value.




Property, Plants and Equipment





Not applicable





11





ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS




Nature of Business





Poly-Pacific International Inc. was incorporated under the Alberta Business Corporations Act on October 25, 1995.  On February 25, 2010, the Company changed its name to Global Green Matrix Corp. (“Global Green”) or the “Company”. Global Green is focused on exploring and pursuing new environmentally sound methods and technologies in recycling, and in particular, the reclamation sector.





Going Concern





These financial statements have been prepared in accordance with U.S. generally accepted accounting principles on a going concern basis, which presumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.





The Company incurred a net loss for the year ended December 31, 2009 of $930,892 with a total accumulated deficit of $10,109,498.  There is substantial doubt about the Company’s ability to continue as a going concern.  The Company’s continuation as a “going concern” is dependent upon its ability to achieve profitable operations, upon the continued financial support of its shareholders and upon its ability to obtain additional financing or equity.  Management is implementing a plan to obtain additional equity financing in amounts sufficient to sustain operations.  The outcome of this matter cannot be determined at this time.





These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.




Significant Accounting Policies





Basis of Presentation





These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP).  All amounts herein are expressed in Canadian dollars unless otherwise noted.  These financial statements conform in all material respects with Canadian generally accepted accounting principles (“Canadian GAAP”), except as discussed in Note 12.





Consolidation





In 2007, the Company had two wholly owned subsidiaries, Everwood Agricultural Products International Inc. (“Everwood”) and Poly-Pacific Technologies Inc. (“PPT”).  As discussed in Note 11, these companies have been classified as discontinued operations, the Company no longer has control over their operations and the accounts of those entities are not included in these financial statements.





Cash and cash equivalents





The Company considers all highly liquid investments and short term debt instruments with original maturities of three months or less to be cash equivalents.  As at December 31, 2009 and 2008, there were no cash equivalents.  All amounts were deposited in accounts that were federally insured.





12





Measurement uncertainty





The preparation of financial statements is in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Revenue Recognition





Revenue is recorded when significant risks and rewards of ownership have been transferred to the customer.  Revenues are recognized only when title to the products transfers, the amount is fixed and determinable, evidence of an agreement exists, there is reasonable assurance of collection of the sales proceeds, the Company has no future obligations and the customer bears the risk of loss.





Equipment





Equipment is recorded at cost and amortized over its estimated useful life.  Amortization is calculated at the following annual rates:




Computer equipment
-   30% declining balanceOffice equipment
-   20% declining balance




Fair Value Measurements




Effective January 1, 2008, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Code (“ASC”) topic 820 “Fair Value Measurements and Disclosures” (formerlyFAS 157), for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis.  ASC 820 establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing guidance as to whether or not an instrument is carried at fair value.





The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.  The Company has adopted ASC 825, “Financial Instruments”,which allows companies to choose to measure eligible financial instruments and certain other items at fair value that are not required to be measured at fair value.The Company has not elected the fair value option for any eligible financial instruments.




13





Financial Instruments




Fair Value:




The fair value of cash and cash equivalents, loan receivable and accounts payable and accrued liabilities were estimated to approximate their carrying values due to the immediate short-term maturity of these financial instruments.The convertible debentures are being carried at amortized value on the balance sheet but were recognized at fair value at the date of issuance.




Risks:




Financial instruments that potentially subject the Company to credit risk consist principally of cash. Management does not believe the Company is exposed to significant credit risk.




The Company’s convertible debentures payable are subject to interest rate price risk.   Management believes the degree of risk to be insignificant.





The Company is subject to currency risks, which management believes are insignificant.





The accompanying financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above.





Impairment of Long-Lived Assets





The Company reviews, at least annually, the carrying values of long-lived assets for existence of facts or changes in circumstances that might indicate a condition of impairment.  If estimates of undiscounted cash flows expected to result from the use of an asset and its eventual disposition are less than the carrying amount then the carrying amount of the asset is written down to its fair value.





Translation of Foreign Currency





The functional currency of the Company is the Canadian dollar.  Foreign currency balances are translated into Canadian dollars as follows:





Monetary assets and liabilities of are translated into Canadian dollars at the rate of exchange in effect at the balance sheet date.  Revenue and expense items are translated at average rates of exchange in effect at the respective transaction months.  The resulting exchange gains or losses are included in earnings.  Non-monetary assets and liabilities, arising from transactions denominated in foreign currencies, are translated at rates of exchange in effect at the date of the transaction.





Comprehensive Income





In accordance with ASC topic 220 “Comprehensive Income”(formerlyFAS130), comprehensive income (loss) consists of net income and other gains and losses affecting stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency translation gains and losses and minimum pension liability.  Other comprehensive income all represented foreign currency translation adjustments.





14





Deferred Taxes





The Company accounts for and measures deferred tax assets and liabilities in accordance with the asset and liability method.  Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment of the change.  When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no net asset is recognized.





Stock-Based Compensation Plan





Effective January 1, 2006, the Company adopted ASC topic 718 “Stock Compensation” (formerly FAS 123(R) This accounting standard requires the Company to recognize in the income statement the grant date fair value of share-based compensation awards granted to employees over the requisite service period.  Compensation expense recognized reflects estimates of award forfeitures and any change in estimates thereof are reflected in the period of change.  The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the Company’s employee stock options.  The Company used its historical volatility as a basis to estimate the expected volatility assumption used in the Black-Schools model consistent with ASC 718. The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.  The expected life of employee stock options is based on historic forfeiture rates.  Transactions in which goods and services are received from non employees in exchange for the issuance of shares are accounted for on the basis of the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measured.





Net Income (loss) Per Common Share





Net income (loss) per common share is calculated using the weighted average number of common shares outstanding during the period.  Diluted net income (loss) per common share is calculated using the treasury stock method which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of potentially assumable common shares.  Dilutive net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented where the effect is anti-dilutive.





General and Administrative





General and administrative costs consist primarily of office expenses, management salaries, administrative salaries, consulting fees and other expenses.





15





Derivative Instruments





The Company follows ASC topic 815, “Derivatives and Hedges”. This standard established accounting and reporting requirements for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.  In general, this standard requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (I) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.  The Company has not entered into derivative contracts to hedge existing risks or for speculative purposes.





This standard also recognizes instances where derivatives, including embedded derivates, may be recognized as equity.  The Company follows sub-topic 815-40, “Contract in entity’s own entity”whichsets forth conditions which must be met where contracts requiring settlement in shares are recorded as equity instruments.  The Company issues share units, which include both a share and an embedded warrant.  Under this standard the shares and warrants are bifurcated and recorded on a proportionate fair value basis.





Recent Pronouncements





In June 2009, the FASB issued new accounting standards (FAS 166 and 167) amending the accounting and disclosure requirements for transfers of financial assets. This accounting standard requires greater transparency and additional disclosures for transfers of financial assets and the entity’s continuing involvement with them and changes the requirements for derecognizing financial assets. In addition, it eliminates the concept of a qualifying special-purpose entity (“QSPE”). This accounting standard is effective for financial statements issued for fiscal years beginning after November 15, 2009. The Company has not completed the assessment of the impact this new standard will have on the Company’s financial condition, results of operations or cash flows.





In October 2009, the FASB published ASU 2009-13, “Revenue Recognition” (Topic 605) “Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.





16





Recent Pronouncements(continued)





In January 2010, the FASB issued Accounting Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic 820, adding new requirements for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements relating to Level 3 measurements and clarification of existing fair value disclosures.  ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010 (the Company’s fiscal year 2012); early adoption is permitted.  The Company is currently evaluating the impact of adopting ASU 2010-06 on its financial statements.





17





Table 5.1—Summary of Operations




2009


2008


2007Revenues from continuing operations

$
-


$
-


$
-Loss from continuing operations


(930,892
)


(2,171,689
)


(2,761,927
)Loss from discontinued operations


-



-



(213,546
)Net Loss for the year


(930,892
)


(2,171,689
)


(2,975,473
)Net loss per share


(0.17
)


(0.03
)


(0.06
)Loss per share from operations


(0.17
)


(0.03
)


(0.06
)Loss per share from discontinued operations


-



-



-Total assets


28,602



173,822



497,356Bank loan, Long term debt and Debentures payable of continuing operations


607,744



196,557



171,749Non-controlling interest of variable interest entity


-



-



-Total liabilities


607,744



196,557



171,749Working Capital (Deficiency) of continuing operations


(585,296
)


(30,988
)


9,888
 
 Results of Operations





Overall, operating losses from continuing operations were $930,892 for the year ended December 31, 2009 compared to $2,171,689 for the year ended December 31, 2008.  The decrease of $1,240,747 in operating expenses for the years ending December 31, 2009 and 2008 are attributed to the following:





General and administrative expenses decreased by $195,329 from $787,686 for the year ended December 31, 2008 to $592,357 for the year ended December 31, 2009 as there was an overall decrease in corporate activity during the year as compared to 2008.





Occupancy costs decreased by $16,100 from $38,345 to $22,245 as the Company had closed its office in Burnaby, British Columbia in 2009.


Professional fees decreased by $133,495 from $231,745 to $98,250.  Lower legal fees were incurred as the Company had less general corporate matters to deal with in 2009 as compared to the same period in 2008.  The Company also had only one private placement during the year.





Amortization of equipment decreased by $765 from $2,864 to $2,099.   There were no additions or disposals of any capital assets during the year.





Foreign exchange loss for the year ended December 31, 2009 was $3,801 as compared to a loss of $7,554 in the year ended December 31, 2008.  The exchange rate loss is due to timing differences (difference in the amount recorded as compared to the amount paid) in the foreign exchange rate between the Canadian dollar and the US dollar.





Interest expense increased by $437 to $8,986 for the year ended December 31, 2009 as compared to $8,549 for the year ended December 31, 2008.  This is primarily due to the interest accrued for loans received from related parties and on the convertible debenture.


Engineering fees were $130,250 for the year ended December 31, 2009 as compared to $149,569 for the year ended December 31, 2008.  During 2009, the Company had done investigative and engineering work for reclamation project in Eastern USA as compared to the 2008 engineering fees relates to the McAdoo project in Kingston, Ontario.





18





Stock compensation expense also decreased by $861,908 from $919,458 to $57,550 as the Company issued less stock options in 2009 than it had in 2008 and the fair value of these options were much lower in 2009 than those issued in 2008.





Income taxes:





The Company had a $nil balance for current taxes due to losses for year ended December 31, 2009.  The Company recognized a deferred income taxes expense of $nil for the year ended December 31, 2009.





Measurement uncertainty





The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Through the ordinary course of business, a number of claims are pending in which the Company or its subsidiaries may be the plaintiff or defendant.  The likely outcome of these claims cannot be determined at this time and no provision has been made in the consolidated financial statements.  The range of measurement uncertainty is not determinable.





B. Liquidity and Capital Resources





The following table presents Major Company financial data in summary form, as reported pursuant to U.S. GAAP, as at the years ended December 31, 2009, 2008 and 2007:





Year
Current assets
Total assets
Current liabilities2009
22,448
28,602
607,7442008
165,569
173,822
196,5572007
181,637
497,356
171,749





As at December 31, 2009, there was a working capital deficiency of $585,296compared to working capital of $30,988 as at December 31, 2008.   The decrease in working capital was due to the reduction of private placements the company was able to close during the fiscal year.





The Company’s cash position decreased by $93,286 to $1,232 as at December 31, 2009, as compared to a cash balance of $94,518 as at December 31, 2008. The Company used $410,221 to fund operations and received cash of $316,935 from financing activities for the year ended December 31, 2009.  During the year, the Company did not use or receive any funds from investing activities.





19





The following table delineates the sources and uses of cash by the Company during the most recent three years covered by the financial statements.


2009


2008


2007Operating ActivitiesNet loss for the year

$
(930,892
)

$
(2,171,689
)

$
(2,761,927
)Items not involving cashAmortization of equipment


2,099



2,864



3,922Interest on debentures payable


8,500



8,500



8,500Expenses paid by share issuance


-



121,200



171,438Stock-based compensation


57,550



919,458



1,012,280Net change in non-cash operating assets and liabilities (Note 9)


452,522



330,108



(627,264
)Funds used in continuing operations


(410,221
)


(789,559
)


(2,193,051
)Funds used in discontinued operations (Note 11)


-



-



(638,276
)Cash used in operating activities


(410,221
)


(789,559
)


(2,831,327
)Financing ActivitiesIssuance of common stock, net of share issue costs


316,935



782,688



2,932,716Cash provided by financing activities


316,935



782,688



2,932,716Increase (decrease) in cash


(93,286
)


(6,871
)


101,389Cash, beginning of year


94,518



101,389



-Cash, end of year

$
1,232


$
94,518


$
101,389


20





Capital commitments:





The Company has no commitments for property and equipment expenditures for 2009.  The Company has forecasted that any property and equipment expenditures incurred in 2010, based on future needs, will be funded from working capital and/or from operating or capital leases.





C. Research and Development, Patents and Licenses





The company has not incurred any research and development since 2005.   The last costs incurred for research and development was in 2004 in the amount of $115,340.


D. Trend Information





No trends that will impact upon the Company’s results this year are known at this time.





E. Off Balance Sheet Arrangements





There are no off balance sheet arrangements.





F. Tabular Disclosure of Contractual Obligations





No contractual obligations exist as of December 31, 2009.





ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES





A. Directors and Senior Management





Randy Hayward, B.Comm, LLB. – President, Chief Executive Officer, Acting Chief Financial officer, and Director





Randy Hayward maintained a successful law practice in Edmonton, Alberta for 20 years.   During the latter phase of his law practice, he founded and managed Canadian Dispute Resolution (Alberta) Ltd and marketed the service of mediation to the legal community and the insurance industry. Mr. Hayward also earned his Diploma in Counseling at P.D. Seminars from the Haven Institute on Gabriola Island, B.C. After relocating to the west coast from Edmonton, he has worked with numerous private and public companies for 15 years. Recently, Mr. Hayward has been a consultant to 4 successful public companies trading on the TSX –Venture, raising investment capital and working in corporate communications, business development and investor relations. In March of this year, Mr. Hayward became involved with Poly-Pacific as a major shareholder and consultant and has worked with the company in a variety of capacities since then until assuming the office of President on August 22nd, 2006.





Mr. Philip Kempis - Director


Mr. Kempis is a Certified Public Accountant, based in New York, New York where he is the managing partner of Kempis & Company Certified Public Accountants, established in 1990. Mr. Kempis brings almost 40 years of diverse accounting experience to the Board of Directors, which industries include: banking, securities broker-dealers, mining, oil and gas exploration, construction, manufacturing, pharmaceuticals and entertainment.
 
 21
 
 Richard Orate, Director


Mr. Richard Oravec, a resident of New York, holds an MBA from Fordham University and a BA from Boston University. Mr. Oravec is a seasoned financial engineer of emerging technology companies, having successfully structured corporate finance syndications and private placements in small and medium sized public and private companies. Through his diverse network in the public and private sectors, Mr. Oravec brings to Poly-Pacific his experience and resources in the raising of capital, creating investment structures, strategic planning, marketing and development, and developing strategic business alliances for accelerated growth.
  Greg Pendura, Director
  Mr. Pendura has more than 35 years of experience in founding, financing and advising emerging private and public companies. Mr. Pendura has spent the last 12 years in the public sector with Resin Systems Inc. An original founder of the company, he recently retired as President, CEO and Chairman of the Board. During his tenure with Resin Systems Inc., Mr. Pendura was instrumental in the company achieving a market capitalization of over $200 million as well as raising more than $100 million of investment capital during its formative years.
 
 22
 
 B. Executive Compensation





Summary Compensation Table





The following table sets forth all annual and long-term compensation for the three (3) most recently completed financial years for services in all capacities to the Corporation and its subsidiaries in respect of individual(s) who were acting as, or were acting in a capacity similar to, a chief executive officer or chief financial officer and the three most highly compensated executive officers whose total salary and bonus exceeded $150,000 per annum (the “Named Executive Officers”).




SUMMARY COMPENSATION TABLEName and Principal Position
Period Ended December 31
Annual Compensation
Long-term Compensation
All Other Compensation

($)Salary ($)
Bonus ($)
Other

Annual Compensation

($)
Awards
PayoutsSecurities Under Options/ SARS (1)

Granted (#)
Shares or Units Subject to Resale Restrictions ($)
LTIP (2) Payouts ($)D. Randy Hayward (3)
2009
120,000
Nil
Nil
Nil
Nil
Nil
NilPresident and
2008
120,000
Nil
Nil
133,333
Nil
Nil
NilActing CFO
2007
166,000
Nil
Nil
33,333
Nil
Nil
Nil(4)


(5)





Notes:


(1)
“SAR” or “Stock Appreciation Right” means a right, granted by the Corporation or its subsidiaries as compensation for employment services or office to receive cash or an issue or transfer of securities based wholly or in part on changes in the trading price of publicly traded securities of the Corporation.


(2)
“LTIP” or “Long-term Incentive Plan” means a plan providing compensation intended to motivate performance over a period greater than one financial year. LTIP’s do not include option or SAR plans or plans for compensation through shares or units that are subject to restrictions on resale.


(3)
Randy Hayward was appointed President of the Corporation on November 4, 2006.


(4)
$26,500 relates to amounts for 2006, which were paid in 2007.


(5)
Number of securities have been restated to reflect the 15:1 effective on February 25, 2010








Long-Term Incentive Plans - Awards in Most Recently Completed Fiscal Year





As of the date hereof, the Corporation does not have any long-term incentive plans and no long-term incentive plan awards were granted to the Named Executive Officers during the Corporation’s most recently completed financial year ended December 31, 2009.  A “Long-Term Incentive Plan” is a plan under which awards are made based on performance over a period longer than one fiscal year, other than a plan for options, SARs or restricted share compensation.





Stock Options and Stock Option Plan





General





For a description of the stock option plan of the Corporation (the “Plan”) see “PARTICULARS OF MATTERS TO BE ACTED UPON – Approval of Stock Option Plan”.





23





Options





The Company had cancelled all unexercised options during 2009.




Stock Appreciation Rights and Restricted Shares





No stock appreciation rights or restricted shares were granted by the Corporation to, or exercised by, the Named Executive Officers of the Corporation since incorporation. Furthermore, no stock appreciation rights have been exercised.




24





Pension and Retirement Plans and Payments Made Upon Termination of Employment





The Corporation does not have in place any pension or retirement plan. The Corporation has not provided compensation, monetary or otherwise, during the preceding fiscal year, to any person who now acts or has previously acted as a Named Executive Officer of the Corporation, in connection with or related to the retirement, termination or resignation of such person and the Corporation has provided no compensation to such persons as a result of a change of control of the Corporation, its subsidiaries or affiliates. The Corporation is not party to any compensation plan or arrangement with Named Executive Officers resulting from the resignation, retirement or the termination of employment of such person.




Employment Contracts





During the fiscal year ended December 31, 2009, the Corporation did not have in place any employment contract between the Corporation or any subsidiary or affiliate thereof and any Named Executive Officer.




Other Compensation





Other than as set forth herein, the Corporation did not pay any other compensation to executive officers or directors (including personal benefits and securities or properties paid or distributed which compensation was not offered on the same terms to all full-time employees) during the last completed financial year other than benefits and perquisites which equaled less than $50,000 and 10 percent of the total of the annual salary and bonus for each individual.





Compensation of Directors





At December 31, 2009, the Corporation had four (4) directors, one (1) of whom was also an executive officer.  In the most recently completed financial year, the Corporation paid each director, other than the President an annual retainer of $5,000.  The President did not receive any compensation for serving as a director.  Directors were also reimbursed for reasonable expenses.




25





SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS





The following table sets forth securities of the Corporation that are authorized for issuance under equity compensation plans as at the end of the Corporation’s most recently completed financial year.  Numbers of securities reflect the 15:1 rollback.





Plan Category
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
Weighted average exercise price of outstanding options, warrants and rights
Number of securities remaining available for issuance under equity compensation plans (excluding outstanding securities reflected in Column 1)Equity compensation plans approved by securityholders
Nil
Nil
381,132Common SharesEquity compensation plans not approved by securityholders
Nil
Nil
NilTotal
Nil
Nil
381,132 Common Shares




MANAGEMENT CONTRACTS





Other than as set forth herein, during the most recently completed financial year, no management functions of the Corporation were to any substantial degree performed by a person or company other than the directors or executive officers (or private companies controlled by them, either directly or indirectly) of the Corporation.




INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS





Other than advances for expected travel expenses to be incurred on behalf of the Corporation, no director, executive officer, former director, or employee of the Corporation or its subsidiaries nor any of their associates or affiliates, is, or has been at any time since the beginning of the last completed financial year, indebted to the Corporation or its subsidiaries nor has any such person been indebted to any other entity where such indebtedness is the subject of a guarantee, support agreement, letter of credit or similar arrangement or understanding, provided by the Corporation.




INTERESTS OF INFORMED PERSONS IN MATERIAL TRANSACTIONS





Other than as set forth herein and below, or as previously disclosed, the Corporation is not aware of any material interests, direct or indirect, of any director or executive officer, proposed nominee for election as a director or any shareholder holding more than 10% of the voting rights attached to the Common Shares or any associate or affiliate of any of the foregoing in any transaction in the preceding financial year or any proposed or ongoing transaction of the Corporation which has or will materially affect the Corporation.




INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON





Except as otherwise set out herein, no director or executive officer of the Corporation or any proposed nominee of management of the Corporation for election as a director of the Corporation, nor any associate or affiliate of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in matters to be acted upon at the Meeting.





26





C. Board Practices





National Policy 58-201 Corporate Governance Guidelines (the “National Policy”) recommends that boards of directors of reporting issuers be composed of a majority of independent directors.  The Board of Directors is currently comprised of four (4) directors, each of whom is proposed for election at the Meeting.  Pursuant to the Terms of Reference, the Board is responsible for assessing director independence.  The Board of Directors has assessed the independence of each director in accordance with National Instrument 58-101 – Disclosure of Corporate Governance Practices and MI 52-110.  Following this assessment, the Board concluded that three of four directors, being Messrs. Oravec, Sharples and Pendura are independent.  Mr. Hayward is not considered independent by virtue of his executive positions with the Corporation.





The Corporation and the Board of Directors recognize the significant commitment involved in being a member of the Board of Directors.  The Board of Directors generally meets as the need arises.  The frequency and length of meetings and the nature of agenda items depend upon the circumstances. When held, meetings are generally lengthy, detailed and well attended, and are conducted in an atmosphere that encourages participation and independence.  In order to promote candid discussion among the independent directors, the independent directors determine at every board meeting whether an in-camera session is required, from which Mr. Hayward, the non-independent director, and any management invitees in attendance are excused.





In accordance with the Articles of the Company the number of directors shall be such number not less than one as the Company by ordinary resolution may from time to time determine and each director shall hold office until the next annual general meeting following his or her election or until his or her successor is elected. The Company has five directors.





The officers of the Company are elected by the Board of Directors as soon as possible following each annual general meeting and shall hold office for such period and on such terms as the board may determine.





The members of the Company Audit Committee are appointed by the Board of Directors as soon as possible following each annual general meeting.   The current audit committee members are Randy Hayward, Gren Pendura (independent) and Richard Oravec (independent). The Board of Directors does not have a formally appointed compensation committee, but performs this function as a whole in respect of compensation of officers of the corporation, with any officer who is also a director being excluded from the deliberations of the other directors in respect of that officer’s compensation.





D. Employees





As at December 31, 2009, the Company had the following full-time employees (or under contract providing management, accounting and administrative):





Poly-Pacific International Inc. - 1 management, 3 consultants, 1 accounting and 1 administration





E. Share Ownership





The authorized capital of the Company consists of an unlimited number of common shares without nominal or par value and an unlimited number of preferred shares.





Common Shares and Warrants:


As at December 31, 2009, the numbers of issued common shares are 5,844,722 as compared to 5,307,330 as at December 31, 2008.  No preferred shares have been issued.





As of December 31, 2009, all directors, officers and key employees of the Company as a group own and control approximately 1% of the Company's common shares outstanding and could own and control approximately 2% of the Company's common shares if all outstanding options and warrants were to be exercised.





27





ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS





A. Major Shareholders





The Company is not owned or controlled, either directly or indirectly, by any other corporation or by any government. There are no arrangements, known to the Company, the operation of which may at a future date result in a change of control of the Company.  The people identified in the table below are the only registered owners of more than 10% of the Company’s voting securities, as of December 31, 2009.





Identity of Owner
Amount Owned and

Controlled
Percent of ClassNow Outstanding
Fully Diluted(3)None
-
-
-





B. Related Party Transactions





During the year, the Company entered into the following transactions with related parties:





a) Paid or accrued management fees of $120,000 in 2009 (2008 - $120,000) to the president and director of the Company.  In 2008, the expense was partially extinguished through the issuance of 34,000 shares at $0.75 per share.





b) Paid or accrued consulting fees of $60,000 (2008 - $ nil) for business development to a director of the Company.





c) Paid or accrued director fees of $5,000 (2008 - $5,000) to each of three individual directors of the Company.





As at December 31, 2009 amounts due to related parties represent unpaid management fees, consulting fees and director fees of $166,139.  The remaining balance of $22,264 represents a loan from the president and director.  The loan is payable on demand and bears interest at 10%.





These transactions were in the normal course of operations and were measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.





C. Interests of Experts and Counsel





Not applicable.





28





ITEM 8. FINANCIAL INFORMATION





A. Consolidated Financial Statements and Other Financial Information





The following financial statements of Poly-Pacific International Inc. for the years ended December 31, 2009, 2008 and 2007 are incorporated with this Item 8 to this report:






Management Responsibility for Financial Reporting.
Auditors' Report.



Consolidated Balance Sheet at period end date.
Consolidated Statement of Operations.



Statement of Retained Earnings and Deficit.
Consolidated Statement of Cash Flows.



Notes to Consolidated Financial Statements.





The Company has neither declared nor paid any dividends to date on its outstanding shares. The Company intends to retain any future earnings to finance the development of its properties, and accordingly, does not anticipate paying any dividends in the foreseeable future.





The financial statements are presented on the immediately following pages.








GLOBAL GREEN MATRIX CORP.


Formerly known as “POLY-PACIFIC INTERNATIONAL INC.”


(Expressed in Canadian Dollars)





Financial Statements





December 31, 2009 and 2008










29




MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS





The accompanying financial statements of Global Green Matrix Corp, (formerly Poly-Pacific International Inc.) for the years ended December 31, 2009 and 2008 have been prepared by management in accordance with U.S. generally accepted accounting principles.





Management maintains systems of internal control designed to provide reasonable assurance that the assets are safeguarded, all transactions are authorized and duly recorded, and financial records are properly maintained to facilitate the preparation of the financial statements in a timely manner.  The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements.  The Board carries out their responsibility principally through its Audit Committee.





The Audit Committee of the Board of Directors has reviewed the financial statements with management and the external auditors.  K.R. Marge son Ltd, an independent firm of chartered accountants (British Columbia, Canada) and a Certified Public Accountant (Illinois, US), appointed as external auditors by the shareholders, have audited the financial statements and their report is included herein.








“Randy Hayward”





Rand Hayward


President, Acting Chief Executive Officer





April 30, 2010





30





K. R. MARGETSON LTD.
Chartered AccountantKeith@krmargetson.comPO Box 45, 5588 Inlet Avenue
331 East 5th StreetSechelt BC  V0N 3A0
North Vancouver BC  V7L 1M1Tel:  604.885.2810
Tel: 604.929.0819Toll Free Fax: 1.877.874.9583
 
 Report of Independent Registered Public Accounting Firm





To the Shareholders of


Global Green Matrix Corp. (formerly Poly-Pacific International Inc.)





We have audited the accompanying balance sheets of Global Green Matrix Corp. (formerly Poly-Pacific International Inc.), referred to as the “Company”) as at December 31, 2009 and 2008 and the related statements of operations, stockholders’ equity and cash flows the years ended December 31, 2009 and 2008.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.





In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and 2008 and the results of its operations and its cash flows for each of the years in the three year period ended December 31, 2009  in accordance with U.S. generally accepted accounting principles.





The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net working capital deficiency that raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.








/s/ K.R. Margetson Ltd.





Chartered Accountant


North Vancouver, Canada


April 30, 2010





31





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Balance Sheets


As at December 31, 2009 and 2008





2009


2008ASSETSCurrent AssetsCash and cash equivalents

$
1,232


$
94,518Sales tax receivable


5,661



16,107Loans receivable (Note 3)


15,555



13,000Prepaid expenses


-



41,944Total current assets


22,448



165,569Equipment(Note 4)


6,154



8,253Total assets

$
28,602


$
173,822LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable and accrued liabilities

$
287,765


$
77,557Due to related parties (Note 10)


188,403



-Demand loan payable, interest at 10%


4,076



-Convertible debentures payable (Note 5)


127,500



119,000Total current liabilities


607,744



196,557Total liabilities


607,744



196,557Going concern (Note 1)Subsequent events(Note 13)STOCKHOLDERS' EQUITY (DEFICIENCY)Capital stock (Note 6)


5,855,661



5,678,396Authorized:Unlimited common and preferred sharesCommon shared issued and outstandingDecember 31, 2009 - 5,844,722December 31, 2008 - 5,307,330Additional paid in capital (Note 13)


3,621,500



3,424,280Accumulated deficit


(10,109,498
)


(9,178,606
)Accumulated other comprehensive income


53,195



53,195Total stockholders' equity


(579,142
)


(22,735
)Total liabilities and stockholders' equity

$
28,602


$
173,822
  The accompanying notes to the financial statements are an integral part of the statements.





Approved on behalf of the Board




“Randy Hayward”

“Richard Oravec”/s/ Randy Hayward

/s/ Richard OravecDirector

Director




32





GLOBAL GREEN MATRIX CORP.


(Formerly known as Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Statements of Operations


For the Years Ended December 31, 2009, 2008 and 2007


2009


2008


2007ExpensesGeneral and administrative

$
592,357


$
787,686


$
1,050,664Occupancy costs


22,245



38,345



94,769Professional fees


98,250



231,745



347,444Amortization of equipment


2,099



2,864



3,922Engineering


130,250



149,569



182,239Foreign exchange loss


3,801



7,554



17,889Regulatory costs


15,909



33,960



175,998Stock Compensation Expense


57,550



919,458



1,012,280922,461



2,171,181



2,885,205Loss from operations before other items


(922,461
)


(2,171,181
)


(2,885,205
)Other Items:Other income


-



-



148,894Interest income


555



8,041



5,059Interest expense


(8,986
)


(8,549
)


(30,675
)Loss from continuing operations before income taxes


(930,892
)


(2,171,689
)


(2,761,927
)Income taxes


-



-



-Loss from continuing operations


(930,892
)


(2,171,689
)


(2,761,927
)Loss from discontinued operations (Note 11)


-



-



(213,456
)Net loss for the year

$
(930,892
)

$
(2,171,689
)

$
(2,975,383
)Loss per share from operations

$
(0.17
)

$
(0.51
)

$
(0.88
)Loss per share from discontinued operations

$
nil


$
nil


$
(0.07
)Net loss per share

$
(0.17
)

$
(0.51
)

$
(0.95
)Weighted average of shares oustanding, basic and diluted (Note 7)


5,609,152



4,232,869



3,143,119





The accompanying notes to the financial statements are an integral part of the statements.





33





GLOBAL GREEN MATRIX CORP.


(Formerly known as Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Statement of Stockholders’ Equity


For the Years Ended December 31, 2009, 2008 and 2007




Number of Shares


Number of Warrants


Capital Stock


Additional Paid in Capital


Accumulated Deficit


Accumulated Other Comprehensive Income


Shareholders' Equity (Deficit)Balance at December 31, 2006
1,682,516


373,019


$
2,293,422


$
952,976


$
(4,031,534
)

$
53,195


$
(731,941
)-Issuance of common shares
1,092,399


1,092,399



883,034



757,243



-



-



1,640,277Exercise of Options
210,233


-



583,190



(267,840
)


-



-



315,350Exercise of Warrants
184,723


(184,723
)


372,671



(79,086
)


-



-



293,585Shares for debt settled
211,481


-



171,438



-



-



-



171,438Shares for Polyran
533,333


-



600,000



-



-



-



600,000Stock based compensation
-


-



-



1,012,280



-



-



1,012,280Loss for the period
-


-



-



-



(2,975,383
)


-



(2,975,383
)Balance at December 31, 2007
3,914,685


1,280,695


$
4,903,756


$
2,375,573


$
(7,006,917
)

$
53,195


$
325,607Issuance of common shares
1,029,438


1,029,438



317,199



241,546



-



-



558,745Exercise of Options
56,667


-



165,609



(74,409
)


-



-



91,200Exercise of Warrants
88,496


(88,496
)


170,632



(37,888
)


-



-



132,744Expired Warrants
-


(99,800
)


-



-



-



-



-Shares for debt settled
218,044


-



121,200



-



-



-



121,200Stock based compensation
-


-



-



919,458



-



-



919,458Loss for the period
-


-



-



-



(2,171,689
)


-



(2,171,689
)Balance at December 31, 2008
5,307,330


2,121,837


$
5,678,396


$
3,424,280


$
(9,178,606
)

$
53,195


$
(22,735
)Issuance of common shares
537,392


537,392



177,265



139,670











316,935Expired Warrants



(1,092,399
)


















-Stock based compensation











57,550











57,550Loss for the period















(930,892
)






(930,892
)Balance at December 31, 2009
5,844,722


1,566,830


$
5,855,661


$
3,621,500


$
(10,109,498
)

$
53,195


$
(579,142
)


The accompanying notes to the financial statements are an integral part of the statements.





34





GLOBAL GREEN MATRIX CORP.


(Formerly known as Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Statement of Cash Flows


For the Years Ended December 31, 2009, 2008 and 2007




2009


2008


2007Operating ActivitiesNet loss for the year

$
(930,892
)

$
(2,171,689
)

$
(2,761,927
)Items not involving cashAmortization of equipment


2,099



2,864



3,922Interest on debentures payable


8,500



8,500



8,500Expenses paid by share issuance


-



121,200



171,438Stock-based compensation


57,550



919,458



1,012,280Net change in non-cash operating assets and liabilities (Note 9)


452,522



330,108



(627,264
)Funds used in continuing operations


(410,221
)


(789,559
)


(2,193,051
)Funds used in discontinued operations (Note 11)


-



-



(638,276
)Cash used in operating activities


(410,221
)


(789,559
)


(2,831,327
)Financing ActivitiesIssuance of common stock, net of share issue costs


316,935



782,688



2,932,716Cash provided by financing activities


316,935



782,688



2,932,716Increase (decrease) in cash


(93,286
)


(6,871
)


101,389Cash, beginning of year


94,518



101,389



-Cash, end of year

$
1,232


$
94,518


$
101,389
  Supplemental cash flow information (Note 9)




The accompanying notes to the financial statements are an integral part of the statements.





35





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







1.         Nature of Business and Going Concern





Nature of Business





Poly-Pacific International Inc. was incorporated under the Alberta Business Corporations Act on October 25, 1995.  On February 25, 2010, the Company changed its name to Global Green Matrix Corp. (“Global Green”) or the “Company”. Global Green is focused on exploring and pursuing new environmentally sound methods and technologies in recycling, and in particular, the reclamation sector.





Going Concern





These financial statements have been prepared in accordance with U.S. generally accepted accounting principles on a going concern basis, which presumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.





The Company incurred a net loss for the year ended December 31, 2009 of $930,892 with a total accumulated deficit of $10,109,498.  There is substantial doubt about the Company’s ability to continue as a going concern.  The Company’s continuation as a “going concern” is dependent upon its ability to achieve profitable operations, upon the continued financial support of its shareholders and upon its ability to obtain additional financing or equity.  Management is implementing a plan to obtain additional equity financing in amounts sufficient to sustain operations.  The outcome of this matter cannot be determined at this time.





These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.





2.
Significant Accounting Policies





Basis of Presentation





These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP).  All amounts herein are expressed in Canadian dollars unless otherwise noted.  These financial statements conform in all material respects with Canadian generally accepted accounting principles (“Canadian GAAP”), except as discussed in Note 12.





Consolidation





In 2007, the Company had two wholly owned subsidiaries, Everwood Agricultural Products International Inc. (“Everwood”) and Poly-Pacific Technologies Inc. (“PPT”).  As discussed in Note 11, these companies have been classified as discontinued operations, the Company no longer has control over their operations and the accounts of those entities are not included in these financial statements.





Cash and cash equivalents





The Company considers all highly liquid investments and short term debt instruments with original maturities of three months or less to be cash equivalents.  As at December 31, 2009 and 2008, there were no cash equivalents.  All amounts were deposited in accounts that were federally insured.





36





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007









2.
Summary of Significant Accounting Policies (continued)





Measurement uncertainty





The preparation of financial statements is in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.





Revenue Recognition





Revenue is recorded when significant risks and rewards of ownership have been transferred to the customer.  Revenues are recognized only when title to the products transfers, the amount is fixed and determinable, evidence of an agreement exists, there is reasonable assurance of collection of the sales proceeds, the Company has no future obligations and the customer bears the risk of loss.





Equipment





Equipment is recorded at cost and amortized over its estimated useful life.  Amortization is calculated at the following annual rates:




Computer equipment
-   30% declining balanceOffice equipment
-   20% declining balance




Fair Value Measurements




Effective January 1, 2008, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Code (“ASC”) topic 820 “Fair Value Measurements and Disclosures” (formerlyFAS 157), for all financial instruments and non-financial instruments accounted for at fair value on a recurring basis.  ASC 820 establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurement and expands disclosures about fair value measurements required under other accounting pronouncements. It does not change existing guidance as to whether or not an instrument is carried at fair value.





The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.  The Company has adopted ASC 825, “Financial Instruments”,which allows companies to choose to measure eligible financial instruments and certain other items at fair value that are not required to be measured at fair value.The Company has not elected the fair value option for any eligible financial instruments.





37





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







2.
Summary of Significant Accounting Policies (continued)





Financial Instruments




Fair Value:




The fair value of cash and cash equivalents, loan receivable and accounts payable and accrued liabilities were estimated to approximate their carrying values due to the immediate short-term maturity of these financial instruments.The convertible debentures are being carried at amortized value on the balance sheet but were recognized at fair value at the date of issuance.




Risks:




Financial instruments that potentially subject the Company to credit risk consist principally of cash. Management does not believe the Company is exposed to significant credit risk.




The Company’s convertible debentures payable are subject to interest rate price risk.   Management believes the degree of risk to be insignificant.





The Company is subject to currency risks, which management believes are insignificant.





The accompanying financial statements do not include any adjustments that might result from the eventual outcome of the risks and uncertainties described above.





Impairment of Long-Lived Assets





The Company reviews, at least annually, the carrying values of long-lived assets for existence of facts or changes in circumstances that might indicate a condition of impairment.  If estimates of undiscounted cash flows expected to result from the use of an asset and its eventual disposition are less than the carrying amount then the carrying amount of the asset is written down to its fair value.





Translation of Foreign Currency





The functional currency of the Company is the Canadian dollar.  Foreign currency balances are translated into Canadian dollars as follows:





Monetary assets and liabilities of are translated into Canadian dollars at the rate of exchange in effect at the balance sheet date.  Revenue and expense items are translated at average rates of exchange in effect at the respective transaction months.  The resulting exchange gains or losses are included in earnings.  Non-monetary assets and liabilities, arising from transactions denominated in foreign currencies, are translated at rates of exchange in effect at the date of the transaction.





38





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







2.
Summary of Significant Accounting Policies (continued)




Comprehensive Income





In accordance with ASC topic 220 “Comprehensive Income”(formerlyFAS130), comprehensive income (loss) consists of net income and other gains and losses affecting stockholder's equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency translation gains and losses and minimum pension liability.  Other comprehensive income all represented foreign currency translation adjustments.





Deferred Taxes





The Company accounts for and measures deferred tax assets and liabilities in accordance with the asset and liability method.  Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment of the change.  When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no net asset is recognized.





Stock-Based Compensation Plan





Effective January 1, 2006, the Company adopted ASC topic 718 “Stock Compensation” (formerly FAS 123(R) This accounting standard requires the Company to recognize in the income statement the grant date fair value of share-based compensation awards granted to employees over the requisite service period.  Compensation expense recognized reflects estimates of award forfeitures and any change in estimates thereof are reflected in the period of change.  The risk-free interest rate assumption is based upon observed interest rates appropriate for the expected term of the Company’s employee stock options.  The Company used its historical volatility as a basis to estimate the expected volatility assumption used in the Black-Schools model consistent with ASC 718. The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.  The expected life of employee stock options is based on historic forfeiture rates.  Transactions in which goods and services are received from non employees in exchange for the issuance of shares are accounted for on the basis of the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measured.





Net Income (loss) Per Common Share





Net income (loss) per common share is calculated using the weighted average number of common shares outstanding during the period.  Diluted net income (loss) per common share is calculated using the treasury stock method which uses the weighted average number of common shares outstanding during the period and also includes the dilutive effect of potentially issuable common shares.  Dilutive net income (loss) per share on the potential exercise of the equity-based financial instruments is not presented where the effect is anti-dilutive.




39





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007









2.
Summary of Significant Accounting Policies (continued)




General and Administrative





General and administrative costs consist primarily of office expenses, management salaries, administrative salaries, consulting fees and other expenses.





Derivative Instruments





The Company follows ASC topic 815, “Derivatives and Hedges”. This standard established accounting and reporting requirements for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities.  In general, this standard requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (I) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.  The Company has not entered into derivative contracts to hedge existing risks or for speculative purposes.





This standard also recognizes instances where derivatives, including embedded derivates, may be recognized as equity.  The Company follows sub-topic 815-40, “Contract in entity’s own entity”whichsets forth conditions which must be met where contracts requiring settlement in shares are recorded as equity instruments.  The Company issues share units, which include both a share and an embedded warrant.  Under this standard the shares and warrants are bifurcated and recorded on a proportionate fair value basis.





Recent Pronouncements





In June 2009, the FASB issued new accounting standards (FAS 166 and 167) amending the accounting and disclosure requirements for transfers of financial assets. This accounting standard requires greater transparency and additional disclosures for transfers of financial assets and the entity’s continuing involvement with them and changes the requirements for derecognizing financial assets. In addition, it eliminates the concept of a qualifying special-purpose entity (“QSPE”). This accounting standard is effective for financial statements issued for fiscal years beginning after November 15, 2009. The Company has not completed the assessment of the impact this new standard will have on the Company’s financial condition, results of operations or cash flows.





40





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007









2.
Summary of Significant Accounting Policies (continued)





Recent Pronouncements(continued)





In October 2009, the FASB published ASU 2009-13, “Revenue Recognition” (Topic 605) “Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.





In January 2010, the FASB issued Accounting Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures which amends ASC Topic 820, adding new requirements for disclosures for Levels 1 and 2, separate disclosures of purchases, sales, issuances, and settlements relating to Level 3 measurements and clarification of existing fair value disclosures.  ASU 2010-06 is effective for interim and annual periods beginning after December 15, 2009, except for the requirement to provide Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will be effective for fiscal years beginning after December 15, 2010 (the Company’s fiscal year 2012); early adoption is permitted.  The Company is currently evaluating the impact of adopting ASU 2010-06 on its financial statements.




3.         Loans Receivable





The loan is unsecured and bears interest of 6% annually.  It is repayable, principal and interest in full, ten days after the Company provides the borrower with a written notice of demand.





41





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007









4.         Equipment




December 31, 2009Cost


Accumulated Amortization


NetComputer equipment

$
61,419


$
58,281


$
3,138Office equipment


31,785



28,769



3,016$
93,204


$
87,050


$
6,154
  December 31, 2008Cost


Accumulated Amortization


NetComputer equipment

$
61,419


$
56,936


$
4,483Office equipment


31,785



28,015



3,770$
93,204


$
84,951


$
8,253


5.         Convertible Debentures Payable





The debentures are convertible at the option of the debenture holder into fully paid, non-assessable common shares without par value in the capital of the Company at a conversion price in the range of $2.25 to $3.00 per common share.  The balance includes accrued interest.




6.         Capital Stock





Subsequent to the year end, the Company consolidated its common shares on the basis of one (1) new post consolidation share for every fifteen (15) pre consolidation shares.  Where the exchange results in a fractional share, the number of common shares will be rounded to the nearest whole common share. These financial statements give retroactive effect to this reverse split.





42





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







6.         Capital Stock - Continued




Authorized





Unlimited number of common voting shares and unlimited number of preferred non-voting shares





For the fiscal year ended December 31, 2009





Pursuant to the private placement Agreement dated June 9, 2009, the Company issued 537,392 units at a price of $0.60 per unit by way of a non-brokered private placement for total proceeds of $316,935 (net of share issuance costs of $5,500).  Each unit comprises one common share and one share purchase warrant.  Each share warrant entitles the holder to purchase one common share at $1.50 for the first 12 months from the date of issuance thereof, and at a price of $3.00 for the next 12 months, and will expire on June 9, 2011.  Based on the relative fair value of each of the components, the net proceeds from the sale of these units have been allocated as follows: $177,265 to capital stock with respect of the shares and $139,670 to additional paid in capital with respect of the warrants.   The warrants were valued using the Black-Schools option valuation model assuming no expected dividends and the weighted average assumptions as per the stock based compensation plan noted below.





For the fiscal year ended December 31, 2008





Pursuant to the private placement agreement dated March 10, 2008, the Company issued 124,167 units at a price of $1.20 per unit by way of a non-brokered private placement for net proceeds of $137,920 (net of share issuance costs of $11,080). Each unit comprises one common share and one share purchase warrant of the Company.  Each share warrant entitles the holder to purchase one common share at $2.25 until March 10, 2010.  Based on the relative fair value of each of the components, the net proceeds from the sale of these units have been allocated as follows: $81,829 to capital stock with respect of the shares and $56,091 to additional paid in capital with respect of the warrants. The warrants were valued using the Black-Schools option valuation model assuming no expected dividends and the weighted average assumptions as per the stock based compensation plan noted below.





Pursuant to the private placement agreement dated August 27, 2008, the Company issued 86,667 units at a price of $0.75 per unit by way of a non-brokered private placement for net proceeds of $65,000 (net of share issuance costs of $nil). Each unit comprises one common share and one share purchase warrant of the Company.  Each share warrant entitles the holder to purchase one common share at $1.50 until August 27, 2010.  Based on the relative fair value of each of the components, the net proceeds from the sale of these units have been allocated as follows: $37,329 to capital stock with respect of the shares and $27,671 to additional paid in capital with respect of the warrants. The warrants were valued using Black-Schools option valuation model assuming no expected dividends and the weighted average assumptions as per the stock based compensation plan noted below.





On October 17, 2008, the Company settled debts with various creditors in the total amount of $32,200 by issuing 42,933 shares of the Company at a price of $0.75 per share.





43





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







6.         Capital Stock (continued)





Pursuant to the private placement agreement dated December 24, 2008, the Company issued 818,604 units at a price of $0.45 per unit by way of a non-brokered private placement for net proceeds of $355,825 (net of share issuance costs of $12,547.20).  Each unit comprises of one common share and one share purchase warrant of the Company.  Each share warrant entitles the holder to purchase one common share at $1.50 until December 24, 2009 or $3.00 thereafter until December 24, 2010.  Based on the relative fair value of each of the components, the net proceeds from the sale of these units have been allocated as follows: $204,780 to capital stock with respect of the shares and $151,045 to additional paid in capital with respect of the warrants. The warrants were valued using Black-Schools option valuation model assuming no expected dividends and the weighted average assumptions as per the stock based compensation plan noted below.





On December 31, 2008, the Company settled additional debt with various creditors in the total amount of $89,000 by issuing 141,111 shares of the Company at a price of $0.45 per share and 34,000 shares at a price of $.75 per share.  The 34,000 shares were issued to the president and director.





Stock-Based Compensation Plan





a)
Summary of the stock option transactions are as follows:




Number of Options


Weighted Average Exercise PriceOutstanding at December 31, 2006


172,047



1.50Granted


436,667



3.15Exercised


(210,233
)


1.50Cancelled


(47,813
)


1.50Balance at December 31, 2007


350,667



3.45Granted


680,333



1.65Exercised


(56,667
)


1.65Cancelled


(294,000
)


1.95Balance at December 31, 2008


680,333



2.40Granted


20,000



1.50Exercised


-



-Cancelled


(700,333
)


2.25Balance at December 31, 2009


-


$
-


The Company cancelled all outstanding stock options on October 9, 2009; as a result, there were no outstanding stock options as of December 31, 2009.





44





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007










6.         Capital Stock (continued)





On December 31, 2008, there were 680,333 (2007 – 350,667) stock options outstanding at the weighted average exercise price of $2.40 (2007 - $3.45).





The Black-Schools option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and is fully transferable.  In addition, the valuation model calculates the expected stock price volatility based on highly subjective assumptions.





Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimates, in management opinion, the existing model does not necessarily provide a reliable single measure of the fair value of its employee stock options.





During the year ended December 31, 2009, the Company recognized $57,550 (2008 - $919,458, 2007 - 1,012,280) in stock-based compensation expense and the balance of unrecognized compensation costs related to non-vested stock options were $nil (2008 - $47,705, 2007 - $434,388).





The fair value for stock options expensed was estimated using the Black-Schools option pricing model assuming no expected dividends and the following weighted average assumptions:




December 31, 2009


December 31, 2008


December 31, 2007


December 31 2006Expected volatility


201
%


181
%


215
%


224
%Interest rate


0.83
%


2.05
%


4.39
%


4.15
%Expected life options (years)


2



2



2



4.53Fair value

$
0.49


$
0.75


$
3.15


$
0.07


Warrants





A summary of warrant transactions is as follows:


Number of Warrants


Weighted Average Exercise PriceBalance at December 31, 2007


1,280,695


$
3.60Issued:


1,029,438



1.65Expired:


(99,800
)


3.30Exercised:


(88,496
)


1.50Balance at December 31, 2008


2,121,837


$
2.76Issued:


537,392



1.65Expired:


(1,092,399
)


3.30Exercised:


-



-Balance at December 31, 2009


1,566,829


$
2.00


45





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







7.         Net Loss per Common Share





Diluted net loss per common share is calculated using the treasury stock method.  The effects of the potential exercise of options, warrants and conversion of the convertible debentures are anti-dilutive for the year ended December 31, 2009, 2008 and 2007 and were excluded from the calculation of diluted net loss per common share.




8.         Income Taxes





The difference between the computed expected income tax provision based on a statutory tax rate of 30.0% (2008 – 31.0%; 2007 – 34.12%) and the actual income tax provision are summarized as follows:








2009


2008


2007Computed expected incometaxes (recovery)

$
(279,268
)

$
(673,224
)

$
(1,015,200
)Increase (decrease) in tax resulting from:Non-deductible permanent costs


19,760



285,941



354,026Capital cost allowance for tax in excessof amortization


(2,592
)


(3,108
)


(4,495
)Loss on discontinued operations


-



-



72,831Unutilized loss carry forwards


262,100



390,391



592,838Total income taxes

$
---


$
---


$
---




As at December 31, 2009 the tax effect of temporary timing differences that give rise to significant components of deferred income tax asset are noted below.  A valuation allowance has been recorded as management believes it is more likely than not that the deferred tax asset will not be realized.  For the year ended December 31, 2009 the valuation allowance increased by $167,432 (2008 - $228,121; 2007 – $634,509).
  2009


2008


2007Assets:Tax benefits of losses carry forwardNon–capital

$
1,955,016


$
1,778,713


$
1,528,050Capital


159,320



164,630



181,200Difference between tax value andbook value of capital assets


26,436



29,997



35,969Valuation allowance


(2,140,772
)


(1,973,340
)


(1,745,219
)Net future tax assets

$
---


$
---


$
---




46





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







8.         Income Taxes(continued)





As at December 31, 2009, the Company has $6,616,720 in non-capital losses that may be used to reduce future Canadian income taxes otherwise payable.  The non – capital losses expire as follows:




2010

$
394,9012014

$
696,8402015

$
685,6942026

$
871,1482027

$
1,736,1422028

$
1,258,3282029

$
873,667


In addition, the Company has $531,066 in taxable capital losses that have no expiry date but may only be utilized to reduce future taxable capital gains.




9.         Supplemental Cash Flow Information




2009


2008


2007Sales tax receivable

$
10,446


$
33,126


$
(35,487
)Loan receivable


(2,555
)


4,149



(17,149
)Prepaid expenses and advances


41,944



(28,078
)


(13,866
)Security deposit


-



304,603



(304,603
)Accounts payable and accrued liabilities


210,208



16,308



(256,159
)Amounts due to related parties


188,403



-



-Demand loan payable


4,076



-



-Net change in non-cash operating assets and liabilities

$
452,522


$
330,108


$
(627,264
)b)  InterestInterest paid

$
486


$
49


$
22,175Taxes paid

$
nil


$
nil


$
nil


Significant non-cash transactions during the year ended December 31, 2009, 2008 and 2007 were as follows:





a)  2009 – no significant non-cash transaction





b)  2008 - settlement of debt in the amount $121,200 by issuing 218,044 common shares





c)  2007- settlement of debt in the amount of $171,438 by issuing 211,481 common shares





d)  2007 – issue of 533,333 shares for all outstanding shares of Polyran Reclamation Inc.





47





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







10.         Related Party Transactions and Balances





During the year, the Company entered into the following transactions with related parties:





a) Paid or accrued management fees of $120,000 in 2009 (2008 - $120,000) to the president and director of the Company.  In 2008, the expense was partially extinguished through the issuance of 34,000 shares at $0.75 per share.





b) Paid or accrued consulting fees of $60,000 (2008 - $ nil) for business development to a director of the Company.





c) Paid or accrued director fees of $5,000 (2008 - $5,000) to each of three individual directors of the Company.





As at December 31, 2009 amounts due to related parties represent unpaid management fees, consulting fees and director fees of $166,139.  The remaining balance of $22,264 represents a loan from the president and director.  The loan is payable on demand and bears interest at 10%.





These transactions were in the normal course of operations and were measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.





48





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







11.         Discontinued Operations





During fiscal 2007, due to the continuing losses as a result of decreasing market share and lack of demand for plastic media and plastic lumber, the Company closed and ceased operations of its wholly owned subsidiaries in Ontario, California and St. Thomas, Ontario.





As a result of these discontinued operations, the Company is focused on exploring and pursuing new methods and technologies in recycling, especially within the reclamation sector.





Discontinued operations and their results of operations, financial position and cash flows are shown separately for all periods presented.  Selected summarized financial information for discontinued operations is set forth below:





Summarized Statement of operations of discontinued operations:




TOTAL

2009


2008


2007Revenues

$
-


$
-


$
300,632Cost of sales


-



-



453,157Expenses


-



-



60,931Net loss

$
-


$
-


$
(213,456
)


Summarized Balance Sheet of discontinued operations:




2009


2008


2007Current Assets

$
-


$
-


$
-Equipment

$
-


$
-


$
-Current Liabilities

$
-


$
-


$
-


49





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007







11.       Discontinued Operations(continued)





Summarized Statement of Cash Flow of discontinued operations:




2009


2008


2007Operating ActivitiesCash used in operating activities

$
-


$
-


$
(638,276
)Net loss

$
-


$
-


$
(638,276
)


12. Differences Between United States and Canadian Generally Accepted Accounting Principles





The financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles which, as they apply to the Company, differ in certain material respects from those applicable in Canada.  Significant differences between U.S. GAAP and Canadian GAAP are set forth below:




2009


2008


2007Balance Sheet Adjustments:Additional Paid In CapitalBalance under U.S. GAAP

$
3,648,204


$
3,424,280


$
2,375,573Adjustment for stock compensationfor employees (a)


(58,396
)


(58,396
)


(58,396
)Balance under Canadian GAAP

$
3,589,808


$
3,365,884


$
2,317,177Accumulated Comprehensive IncomeBalance under U.S. GAAP

$
53,195


$
53,195


$
53,195Translation adjustments (b)


(53,195
)


(53,195
)


(53,195
)Balance under Canadian GAAP

$
-


$
-


$
-


50





GLOBAL GREEN MATRIX CORP.


(Formerly Poly-Pacific International Inc.)


(Expressed in Canadian Dollars)


Notes to the Financial Statements


December 31, 2009, 2008 and 2007










12.
Differences Between United States and Canadian Generally Accepted Accounting Principles (continued)




Retained earnings (deficit)Balance under U.S. GAAP

$
(10,136,532
)

$
(9,178,606
)

$
(7,006,917
)Translation adjustment (b)


53,195



53,195



53,195Cumulative adjustment of priorYears' differences


58,396



58,396



58,396Balance under Canadian GAAP

$
(10,024,941
)

$
(9,067,015
)

$
(6,895,326
)Effect on statement of operationsNet loss under U.S. GAAP

$
957,926


$
2,171,689


$
2,975,383Net loss under Canadian GAAP

$
957,926


$
2,171,689


$
2,975,383


There are no other differences between U.S. GAAP and Canadian GAAP in amounts reported as cash flows provided by (used in) operating, financing or investing activities.





a)
Stock Based Compensation





Under Canadian GAAP, the Company did not adopt the policy of expensing stock options until January 1, 2002.  Prior to this, no stock based compensation expense was required to be recorded.





b)
Translation Adjustment





Under former Canadian GAAP, the foreign currency translation adjustment would be recorded as a cumulative translation adjustment rather than as accumulated other comprehensive income




13.
Subsequent events





On February 24, 2010, the Company announced that effective February 25, 2010, the Company has changed its name to Global Green Matrix Corp.  The common shares of the Company will trade on the TSX Venture Exchange under the symbol “GGX”.





In addition, the Company also consolidated its common shares on the basis of one (1) new post consolidation share for every fifteen (15) pre consolidation shares.  Where the exchange results in a fractional share, the number of common shares will be rounded to the nearest whole common share. These financial statements give retroactive effect to this reverse split.





The name change and share consolidation were approved by the shareholders of the Company at the Annual General and Special Meeting held on February 18, 2010.




51





ITEM 9. THE OFFER AND LISTING





Not applicable except for Item 9.A.4. and Item 9.C.





The principal trading market for the Company's Common Shares is the TSX Venture Exchange (TSX-V) under the symbol "GGX". The following table sets forth, for the periods indicated, the high and low sales prices per share of the Company's Common Shares on the TSX-V.





Table 9.1—History on TSX Venture Exchange (in Canadian Dollars)





Historical share prices have been adjusted to reflect the 15:1 rollback.


Year
Period
High
Low2000
1 Year
6.00
2.252001
1 Year
5.25
2.102002
1 Year
4.35
1.652003
1 Year
3.60
1.652004
1 Year
2.62
1.122005
1 Year
1.95
0.672006
1 Year
1.95
0.752007
1 Year
9.75
0.902008
1 Year
2.10
0.152009
Quarter 1
0.90
0.45Quarter 2
0.75
0.45Quarter 3
0.60
0.30Quarter 4
0.60
0.15Annual
0.90
0.152010
Jan-10

Feb-10
0.30

0.30
0.15

0.15Mar-10

Apr-10
0.23

0.12
0.08

0.08May-10
0.09
0.08Jun-10
0.09
0.08





52





ITEM 10. ADDITIONAL INFORMATION





A. Share Capital





The following description is a summary of the material terms of the provisions of our Articles of Incorporation.  The Articles of Incorporation have been filed as exhibits to the registration statement.





Common Shares





The Company is authorized to issue an unlimited number of common shares with no par value. As of December 31, 2009, there were 5,844,722 common shares issued and outstanding that were held by approximately 66 shareholders of record.





Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common shares who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of the such directors. The vote of the holders of a majority of the issued and outstanding common shares entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.





Holders of common shares are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.





Holders of our common shares have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common shares will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation that would prevent or delay change in our control.





The authorized capital of the Company consists of an unlimited number of common shares without nominal or par value and an unlimited number of preferred shares.





Common Shares and Warrants:





As at December 31, 2009, the numbers of issued common shares are 5,844.722 as compared to 5,307,330 as at December 31, 2008.  No preferred shares have been issued.





During fiscal year 2009, the Company had the following private placements:





Pursuant to the private placement Agreement dated June 9, 2009, the Company issued 537,392 units at a price of $0.60 per unit by way of a non-brokered private placement for total proceeds of $316,935 (net of share issuance costs of $5,500).  Each unit comprises one common share and one share purchase warrant.  Each share warrant entitles the holder to purchase one common share at $1.50 for the first 12 months from the date of issuance thereof, and at a price of $3.00 for the next 12 months, and will expire on June 9, 2011.  Based on the relative fair value of each of the components, the net proceeds from the sale of these units have been allocated as follows: $177,265 to capital stock with respect of the shares and $139,670 to additional paid in capital with respect of the warrants.   The warrants were valued using the Black-Schools option valuation model assuming no expected dividends and the weighted average assumptions as per the stock based compensation plan noted below.





53





Preferred Shares





The Company is authorized to issue an unlimited number of preferred shares in series as fixed by the Directors without par value. As of the date of this registration statement, there are no preferred shares outstanding.





Preferred shares may be issued in series with preferences and designations as the Board of Directors may from time to time determine. The board may, without shareholders approval, issue preferred shares with voting, dividend, liquidation and conversion rights that could dilute the voting strength of our common shareholders and may assist management in impeding an unfriendly takeover or attempted changes in control.  There are no restrictions on our ability to repurchase or reclaim our preferred shares while there is any arrearage in the payment of dividends on our preferred shares.





During 2003, a total of 3,030,200 preferred shares were redeemed at a value of $2,353,230 in exchange for an unsecured, non-interest bearing debenture in the amount of $1,586,250 USD.  There have been no preferred shares issuances or redemptions by the Company since December 31, 2003.  The authorization for preferred shares remains unlimited.





There is a convertible debenture remaining as at the date of this report, for a total principal value of $102,000, held by a subscriber who was a former director of the Company, which is convertible to common shares of the Corporation at the rate of $0.15 to $0.20 per share.




Stock Options





The Company cancelled all outstanding stock options on October 9, 2009; as a result, there were no outstanding stock options as of December 31, 2009





54





Consolidated Statement of Shareholders’ Equity


For the Years Ended December 31, 2009, 2008 and 2007




Number of Shares


Number of Warrants


Capital Stock


Additional Paid in Capital


Accumulated Deficit


Accumulated Other Comprehensive Income


Shareholders' Equity (Deficit)Balance at December 31, 2006
1,682,516


373,019


$
2,293,422


$
952,976


$
(4,031,534
)

$
53,195


$
(731,941
)-Issuance of common shares
1,092,399


1,092,399



883,034



757,243



-



-



1,640,277Exercise of Options
210,233


-



583,190



(267,840
)


-



-



315,350Exercise of Warrants
184,723


(184,723
)


372,671



(79,086
)


-



-



293,585Shares for debt settled
211,481


-



171,438



-



-



-



171,438Shares for Polyran
533,333


-



600,000



-



-



-



600,000Stock based compensation
-


-



-



1,012,280



-



-



1,012,280Loss for the period
-


-



-



-



(2,975,383
)


-



(2,975,383
)Balance at December 31, 2007
3,914,685


1,280,695


$
4,903,756


$
2,375,573


$
(7,006,917
)

$
53,195


$
325,607Issuance of common shares
1,029,438


1,029,438



317,199



241,546



-



-



558,745Exercise of Options
56,667


-



165,609



(74,409
)


-



-



91,200Exercise of Warrants
88,496


(88,496
)


170,632



(37,888
)


-



-



132,744Expired Warrants
-


(99,800
)


-



-



-



-



-Shares for debt settled
218,044


-



121,200



-



-



-



121,200Stock based compensation
-


-



-



919,458



-



-



919,458Loss for the period
-


-



-



-



(2,171,689
)


-



(2,171,689
)Balance at December 31, 2008
5,307,330


2,121,837


$
5,678,396


$
3,424,280


$
(9,178,606
)

$
53,195


$
(22,735
)Issuance of common shares
537,392


537,392



177,265



139,670











316,935Expired Warrants



(1,092,399
)


















-Stock based compensation











57,550











57,550Loss for the period















(930,892
)






(930,892
)Balance at December 31, 2009
5,844,722


1,566,830


$
5,855,661


$
3,621,500


$
(10,109,498
)

$
53,195


$
(579,142
)


55





B. Memorandum and Articles of Association





The Articles of Association of the Company, as amended to date, has been filed as Exhibit 1.0 to the Company's Registration Statement on Form 20-F, filed with the Securities and Exchange Commission. The Articles of Association were approved by shareholders on October 25, 1995.  Amendments were registered on April 23, 1999 and on June 12, 2003.





The Company is incorporated pursuant to the Companies Act, Chapter 21, Revised Statutes of Alberta 2000 (Companies Act), which provides for the powers, rights and responsibilities of all corporations registered within the jurisdiction of the Province of Alberta.





The primary requirements and provisions of the Company’s articles of association are included in the Companies Act and apply to the Company, subject only to changes that have been made through Directors’ Resolutions that have been filed as certificates and amendment and registration of restated articles, as included in Exhibit 1.0.  Pursuant to the Companies Act, (a) a director may not vote on a proposal, arrangement or contract in which the director has a material interest; (b) the directors may not, in the absence of an independent quorum, vote compensation to themselves or any members of their body; (c) the directors may only exercise borrowing powers, or vary those powers, through the approval of a majority of their number attendant at a duly convoked meeting of directors, with the vote results being recorded in the minutes of the meeting; (d) there is no age limit requirement in respect of retirement or non-retirement of directors; and (e) ownership of shares is not required for director’s qualification.





Any change in the rights of holders of the stock, however proposed, must be approved by at least a two-thirds majority vote of the common shareholders.  Pursuant to the Companies Act and the regulations of the Alberta Securities Commission, the vote may be conducted through a formal polling of shareholders, or it may be taken at a duly convoked general or special meeting of shareholders.   The law requires that at least one general meeting of shareholders must be convoked each year.  The notice for a general or extraordinary meeting must be promulgated at least 45 days in advance of the meeting date through delivery to all shareholders of record as at a date, prior to the date of issuance of the notice, which must be published with the notice.





C.   Disclosure Controls and Procedures Update





Disclosure controls and procedures have been designed to ensure that information required to be disclosed by the Company is accumulated and communicated to its management as appropriate to allow timely decisions regarding disclosure. The Company’s Acting Chief Executive Officer and Acting Chief Financial Officer have concluded, based on their evaluation as of the date of this Management’s Discussion and Analysis that disclosure controls and procedures provide reasonable assurance that material information is made known to them by others within the Company.   It should be noted that while the Company’s Acting Chief Executive Officer and Acting Chief Financial Officer believe that disclosure controls and procedures provide a reasonable level of assurance and that they are effective, they do not expect that the disclosure controls and procedures would prevent all errors and fraud.  A control system, no matter how well conceived or operated, can only provide reasonable assurance that the objectives of the control system are met.





Internal Controls over Financial Reporting





The Acting Chief Executive Officer and Acting Chief Financial Officer of the Company are responsible for designing internal controls over financial reporting or causing them to be designed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles.





56





Further, because the Company is a registrant under US securities legislation, the Acting Chief Executive Officer and Acting Chief Financial Officer of the Company are responsible for assessing the effectiveness of the internal controls over financial reporting or causing them to be assessed under their supervision in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian and United States generally accepted accounting principles.





The Company has assessed the design of its internal controls over financial reporting and during this process.  The company has taken further steps to segregate duties to achieve an authorization and approval process for transactions and payments.  All material transactions and related accounting records are reviewed by senior management, including the Acting Chief Executive Officer and Acting Chief Financial Officer.  In addition, the Audit Committee continues to review the financial statements on a quarterly basis.





It should be noted that while the Company’s Acting Chief Executive Officer and Acting Chief Financial Officer believe that internal control over financial reporting provides a reasonable level of assurance, they do not expect that the internal controls over financial reporting would prevent all errors and fraud.  A control system, no matter how well conceived or operated, can only provide reasonable assurance that the objectives of the control system are met.





D. Material Contracts





Material contracts, other than contracts entered into during the ordinary course of business, entered into during the two years immediately preceding the date of this submission are:





None.





E. Exchange Controls





There are no government laws,decrees or regulations in Canada relating to restrictions on the import/export of capital, or affecting the remittance of interest, dividends or other payments to non-residential holders of the Company's shares. Any such remittances to United States residents, however, may be subject to a 15% tax pursuant to Article X of the reciprocal tax treaty between Canada and the United States. The applicable rate is dependent on the type of entity receiving the dividends. See Item 10 E - Taxation, below.





Except as provided in the Investment Canada Act (the "Act"), there are no limitations under the laws of Canada, the Province of Alberta or in the charter or any other constituent documents of the Corporation on the right of foreigners to hold and/or vote the shares of the Company.





The purpose of the Act is to provide for the review of significant investments in Canada by non-Canadians in order to ensure benefit to Canada. The legislation describing the "review function" and associated rules are complex and any non-Canadian considering an investment to which the Act might apply can obtain information about the Act and regulations from the Government of Canada athttp://strategis.ic.gc.ca/epic/internet/inica-lic.nsf/en/Home.





57





The provisions of the Act apply to any person who is not a Canadian citizen or a permanent resident, within the meaning of the Immigration Act (ie. a person who has been ordinarily resident in Canada for not more than one year after the time at which he/she first became eligible to apply for Canadian citizenship).  For the purposes of the Act, a non-Canadian includes any entity that is not controlled or beneficially owned by Canadians.





Non-Canadians must either file a Notification or an Application for Review of an investment unless a specific exemption applies pursuant to section 10 of the Act.  The determination of which action is required is dependent upon the following conditions:





1.
A Notification must be filed by a non-Canadian when commencing a new business activity in Canada and when acquiring control of an existing Canadian business where the establishment or acquisition of control is not a reviewable transaction.  Pursuant to the Act, a Notification must be filed no later than thirty days after the implementation of the investment.





2.
An Application for Review of the investment must be submitted when it is for an acquisition of a Canadian business and the asset value of the Canadian business being acquired equals or exceeds any of the following thresholds:





(a)
For an investor who is not from a World Trade Organization country, the threshold is $5 million for a direct acquisition and $50 million for an indirect acquisition; the $5 million threshold will apply, however, for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50% of the total assets of the business.





(b)
Except as specified in paragraph (c) below, a threshold is calculated annually for reviewable direct acquisitions by investors who are from a World Trade Organization country, such as the United States of America. The threshold that was set for 2004 was $237 million. Pursuant to Canada's international commitments, indirect acquisitions by investors who are from World Trade Organization countries are not reviewable.





(c)
The limits set out in paragraph (a) apply to all non-Canadian investors for acquisitions of a Canadian business that:





(i)
engages in the production of uranium and owns an interest in a producing uranium property in Canada;





(ii)
provides any financial service;





(iii)
provides any transportation service; or





(iv)
is a cultural business.





58





3.
Notwithstanding the above, any investment for which only a Notification is usually required, including the establishment of a new Canadian business, and which falls within a specific business activity listed in Schedule IV of the Regulations Respecting Investment in Canada, may be reviewed if an Order-in-Council from the Government of Canada directing a review is made and a notice is sent to the non-Canadian investor within 21 days following the receipt of a certified complete notification.  The types of businesses included in Schedule IV are those involved in:





(a)
The publication, distribution or sale of books, magazines, periodicals or newspapers in print or machine readable form.(b)
The production, distribution, sale or exhibition of film or video products.





(c)
The production, distribution, sale or exhibition of audio or video music recordings.





(d)
The publication, distribution or sale of music in print or machine readable form.





F. Taxation





The discussion under this heading summarizes the material Canadian federal income tax consequences of acquiring, holding and disposing of common shares of the Registrant for a shareholder of the Registrant who is not resident in Canada and who is resident in the United States. It is based on the current provisions of the Income Tax Act (Canada) (the "Tax Act") and the regulations thereunder. The provisions of the Tax Act are subject to income tax treaties to which Canada is a party, including the Canada-United States Income Tax Convention (1980) (the Convention). Generally, dividends paid by Canadian corporations to non-resident shareholders are subject to a withholding tax of 25% of the gross amount of such dividends. However, Article X of the reciprocal tax treaty between Canada and the United States reduced to 15% the withholding tax on the gross amount of dividends paid to residents of the United States. A further 9% reduction, in 1996, and a 10% reduction in 1997 and thereafter, in the withholding tax rate on the gross amount of dividends is applicable when a US corporation owns at least 10% of the voting  shares of the Canadian corporation paying the dividends.





A non-resident who holds shares of the Company as capital property will not be subject to tax on capital gains realized on the disposition of such shares unless such shares are "taxable Canadian Property" within the meaning of the Income Tax Act (Canada)("Tax Act'), and no relief is afforded under any applicable tax treaty. The shares of the Company would be taxable Canadian property of a non-resident ifat any time during the five year period immediately preceding a disposition by the non-resident of such shares (a) not less than 25% of the issued shares of any class of the Company belonged to the non-resident (b) the person with whom the nonresident dealt did not deal at arm's length, or (c) to the non-resident and any person with whom the non-resident did not deal at arm's length.





As a foreign corporation with US shareholders, the Company could be treated as a passive foreign investment Corporation ("PFIC"), as definedin Section 1296 of the Internal Revenue Code. This determination is dependent upon the percentage of the Company's passive income, or the percentage of the Company's assets, which are producing passive income. US shareholders owning shares of a PFIC may defer the U.S. tax with respect to that investment until the US holder disposes of the PFIC shares or receives certain distributions. At that time, the U.S. holder is subject to US tax, plus interest, based on the value of the tax deferral for the period during which the shares of the PFIC are owned, in addition to treatment of any gain realized on the disposition of the shares of the PFIC as ordinary income rather than as a capital gain.





59





Gain from a disposition of PFIC shares or certain distributions are treated as income earned ratably over the period during which the shareholder has held the shares. That portion allocable to the current year and to years when the corporation was not a PFIC is included in the shareholder's gross income in the year of distribution as ordinary income, rather than as a capital gain. That portion of the distribution or disposition which is not allocable to the current year is subject to deferred U.S. tax (the amount of tax that wouldhave been owed if the allocated amount had been included in income in the earlier year), plus interest.





However, if the U.S. shareholder makes a timely election to treat a PFIC as a qualified electing fund ("QEF") with respect to such shareholder's interest therein, the above-described rules generally will not apply. Instead, the electing U.S. shareholder would include annually in his gross income his pro-rata share of the PFIC's earnings and profits and any net capital gain, regardless of whether such income or gain was actually distributed. A U.S. Holder of a QEF can, however, elect to defer the payment of United States Federal Income tax on such income inclusions income not currently received. Special rules apply to U.S. shareholders who own their interests in a PFIC through intermediate entities or persons.





This section describes the material United States federal income tax consequences of owning shares. The United States Taxation subsection applies to you only if you hold your shares as capital assets for tax purposes. The United States Taxation subsection does not apply to you if you are a member of a special class of holders subject to special rules, including:





●
a dealer in securities;





●
a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;





●
a tax-exempt organization;





●
a life insurance company;





●
a person liable for alternative minimum tax;





●
a person that actually or constructively owns 10% or more of our voting stock;





●
a person that holds shares as part of a straddle or a hedging or conversion transaction; or,





●
a US holder (as defined below) whose functional currency is not the US dollar.





60





This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions These laws are subject to change, possibly on a retroactive basis.





You are a "U.S. holder" if you are a beneficial owner of shares and you are:





●
a citizen or resident of the United States;





●
a domestic corporation;





●
an estate whose income is subject to United States federal income tax regardless of its source; or,




●
a trust, if a United States court can exercise primary supervision over the trust's administration and one or more United States persons are authorized to control all substantial decisions of the trust.





Taxation of dividends





Under the United States federal income tax laws, and subject to the passive foreign investment company, or PFIC, rules discussed below, if you are a United States holder, you must include in your gross income the gross amount of any dividend paid by us out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes). This includes any supplementary dividend or any additional dividends that we may elect to distribute to shareholders not tax resident in Canada, as explained in the Canada Taxation subsection. Dividends paid by us will not constitute qualified dividend income that would be eligible for the special tax rate applicable to qualified dividend income. Withholding tax is deducted from the ordinary dividend, any supplementary dividend and any additional dividend. You should include any supplementary dividend and any additional dividends and Canada tax withheld from the dividend payments in this gross amount even though you do not in fact receive the withholding tax. Any dividend is taxable to you when you receive the dividend, actually or constructively. Any such dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. The amount of the dividend distribution that you must include in your income as a United States holder will be the US dollar value of the Canada dollar payments made, determined at the spot Canada dollar/US dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into US dollars will be treated as ordinary income or loss. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes. Distributions in excess of current and accumulated earnings and profits, as determined for United States federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the shares and thereafter as capital gain.





Subject to certain limitations, the Canada tax withheld and paid over to Canada should be creditable against your United States federal income tax liability However, it is not certain that withholding tax deemed paid from a supplementary dividend will be creditable, because that tax may not be considered withheld or may be considered a non-creditable subsidy.





61





Dividends will be income from sources outside the United States. Dividends paid in taxable years beginning before January 1, 2007 generally will be "passive" or "financial services" income, and dividends paid in taxable years beginning after December 31, 2006 will, depending on your circumstances, be "passive" or "general" income which, in either case, is treated separately from other types of income for purposes of computing the foreign tax credit allowable to you.





Taxation of capital gains





Subject to the PFIC rules discussed above, if you are a United States holder and you sell or otherwise dispose of your shares, you will recognize capital gain or loss for United States federal income tax purposes equal to the difference between the US dollar value of the amount that you realize and your tax basis, determined in US dollars, in your shares. Capital gain of a non-corporate United States holder that is recognized on or after May 6, 2003 and before January 1, 2009 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year.





The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.





G. Dividend and Paying Agents





The Company has not declared any dividends in any of its years of operations, and has therefore not appointed a dividend paying agent.  The Company’s articles of association do not contain any provision to prohibit the payment of dividends to its shareholders.  However, the Companies Act stipulates that no dividend shall be declared if a company is insolvent, if the dividend would render the company insolvent, or if the dividend would impair the capital of the company.  Further, if a dividend was to be declared and paid by a company under the preceding stated conditions, the directors of the company would be jointly and severally liable to the company and its creditors for the debts that would exist after the declaration and payment of such a dividend.





H. Statement by Experts





Included as Exhibit 10.1 in respect of the audited financial statements of the Company for the year ending December 31, 2009.





I. Documents on Display





It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC's public reference room located at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges.





Other documents concerning the Company, which are referred to in this report, or which are otherwise deemed to be public information, may be inspected during normal business hours at the Principal Executive Offices of the Company located 943 Canso Drive; Gabriola, BC; V0R 1X2 Requests for documents from the Company may be made at (604) 324-2110, by fax to (604) 677-6200, or by e-mail to info@poly-pacific.com.





62





J. Subsidiary Information





Not applicable, since it is included in the financial statements pursuant to generally accepted accounting principles.





ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not applicable.








ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES





Not applicable.





PART II





ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES





Not applicable.





ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS





Not applicable.





ITEM 15. CONTROL AND PROCEDURES





Not applicable.





ITEM 16. RESERVED





A. Audit Committee Financial Expert





Not applicable.





B. Code Of Ethics





Not applicable.





63





C. Principal Accountant Fees And Services





External Auditor Service Fees


The aggregate fees billed by the Corporation’s external auditors in each of the last two fiscal years for audit and other fees are as follows:





Financial Year Ending
Audit Fees
Audit Related Fees
Tax Fees
All Other Fees2009
$15,000
Nil
$5,000
Nil2008
$15,000
Nil
$5,000
Nil





D. Exemption From Listing Standards For Audit Committees





Not applicable.





E. Purchases Of Equity Securities By The Issuer And Affiliated Persons





Not applicable.





PART III





ITEM 17. FINANCIAL STATEMENTS





Incorporated by Reference to Item 8.





ITEM 18. FINANCIAL STATEMENTS





Not applicable.





64





ITEM 19. EXHIBITS





Number
Description of Exhibit10.1
Consent of accountants pursuant to Item 10.G99.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14 of  the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200299.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14 of     the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200299.3
Certification of Chief Executive Officer pursuant to 18 U.S.C section 135099.4
Certification of Chief Financial Officer pursuant to 18 U.S.C section 1350




65





SIGNATURE





The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.





Poly-Pacific International Inc.

(Registrant)

Pursuant to the requirements of the Securities Act of 1933, this Form 20-F Filing has

been signed by the following person in the capacity and on the date indicated.Date

Name and Signature

TitleRandy Hayward

PresidentJune 30, 2010

Signed  “Randy Hayward”