UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




FORM 10-Q/A


Amendment #2




(Mark One)


x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the quarterly period ended December 31, 2012




o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
  For the transition period from _____________ to _____________
  Commission file number:000-53875
  Eco Building Products, Inc.
 (Exact name of small business issuer as specified in its charter)


Colorado
20-8677788(State or other jurisdiction of

incorporation or organization)
(IRS Employer

Identification No.)




909 West Vista Way


Vista, California 92083


(Address of principal executive offices)




(760) 732-5826


(Registrants telephone number, including area code)






(Former name, former address and former fiscal year, if changed since last report)






Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.   x Yes    o No




Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   x Yes    o No




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company; as defined within Rule 12b-2 of the Exchange Act.




o Large accelerated filer       o Accelerated filer       o Non-accelerated filer       x Smaller reporting company




Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes    x No




The number of shares outstanding of each of the issuer's classes of common equity as of August 6 , 2013: 459,913,569 shares of common stock.













Eco Building Products, Inc.
   Contents


PageNumberPART I
FINANCIAL INFORMATION
1Item 1
Unaudited Condensed Consolidated Financial Statements December 31, 2012
1Condensed Consolidated Balance Sheet
1Condensed Consolidated Statement of Operations
2Condensed Consolidated Statement of Cash Flows
3Notes to the Interim Financial Statements
4Item 2
Management's Discussion and Analysis of Financial Condition and Results of Operations
25Item 3
Quantitative and Qualitative Disclosures About Market Risk
29Item 4
Controls and Procedures
29PART II
OTHER INFORMATION
31Item 1
Legal Proceedings
31Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
31Item 3
Defaults Upon Senior Securities
31Item 6
Exhibits and Reports
32SIGNATURES
34














ii






PART I -FINANCIAL INFORMATION
  Item 1 - Financial Statements




ECO BUILDING PRODUCTS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)RESTATED


RESTATEDDecember 31


June 302012


2012ASSETSCURRENT ASSETSCash

$
100,049


$
111,251Accounts receivable, net of allowance for doubtful accounts of $10,099 atDecember 31, 2012 and June 30, 2012


766,675



666,223Inventories


1,077,205



922,646Prepaid loan facility fee - related party, current portion


-



1,008,383Prepaid expenses


58,030



7,297Deposits


-



7,100Other current assets


19,100



-Total current assets


2,021,059



2,722,900PROPERTY AND EQUIPMENT, net


1,145,842



1,207,035OTHER ASSETSNotes receivable - related party - long-term portion


135,063



-Intangible assets


14,616



16,325Prepaid loan facility fee - related party


-



1,078,861Total other assets


149,679



1,095,186TOTAL ASSETS

$
3,316,580


$
5,025,121LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIESAccounts payable

$
567,260


$
426,179Payroll and taxes payable


2,084,431



1,594,848Other payables and accrued expenses


516,250



336,287Deferred revenue


-



33,640Current maturities of notes payable


1,528,099



6,067Line of credit payable - related party


5,000,000



1,666,667Loans payable - related party


543,976



201,480Loans payable - other


530,351



44,500Total current liabilities


10,770,368



4,309,668LONG TERM LIABILITIESLine of credit payable - related party


-



3,333,333Notes payable, less current maturities


12,121



17,295Total long term liabilities


12,121



3,350,628TOTAL LIABILITIES


10,782,489



7,660,296STOCKHOLDERS' EQUITYCommon stock, $0.001 par value, 500,000,000 shares authorized,351,648,553 and 290,961,669 shares issued and outstanding at December 31, 2012and June 30, 2012


295,536



240,262Subscription receivable


25,000



-Additional paid-in capital


22,487,770



18,564,613Accumulated deficit


(30,274,215
)


(21,440,050
)Total stockholders' equity


(7,465,909
)


(2,635,175
)TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$
3,316,580


$
5,025,121




See accompanying notes to condensed consolidated financial statements


1






ECO BUILDINGPRODUCTS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)RESTATED





RESTATED3-month ended


3-month ended


6-month ended


6-month endedDecember 31


December 31


December 31


December 312012


2011


2012


2011REVENUEProduct sale

$
1,362,733


$
996,845


$
2,423,159


$
1,687,524License saleEquipment and other sales

$
-






$
-


$
-TOTAL REVENUE

$
1,362,733


$
996,845


$
2,423,159


$
1,687,524COST OF SALES


1,225,303



907,371



2,036,985



1,530,975GROSS PROFIT


137,430



89,474



386,174



156,549OPERATING EXPENSESResearch and development


36,802



37,585



132,018



56,206Marketing


197,506



44,079



289,974



74,032Goodwill/Donation


9,233



13,730



18,558



13,730Compensation and related expenses


635,077



649,145



1,109,988



1,255,599Rent - facilities


207,858



96,037



418,478



174,992Professional fees


679,021



226,784



1,101,914



519,974Consulting


(367,300
)


32,461



(44,886
)


111,017Other general and administrative expenses


1,154,475



619,840



1,529,077



953,636Total operating expenses


2,552,672



1,719,661



4,555,122



3,159,186LOSS FROM OPERATIONS


(2,415,242
)


(1,630,187
)


(4,168,948
)


(3,002,637
)OTHER INCOME (EXPENSE)Interest income


-



16,834



-



20,199Interest expense


(863,627
)


(38,810
)


(3,530,829
)


(258,974
)Loss on modification of debt


(694,887
)


(75,000
)


(1,143,324
)


(75,000
)Other Income


1,381



-



8,936



--Total other income (expense)


(1,557,133
)


(96,976
)


(4,665,217
)


(313,775
)LOSS BEFORE PROVISION FOR INCOME TAXES


(3,972,375
)


(1,727,162
)


(8,834,165
)


(3,316,411
)NET LOSS

$
(3,972,375
)

$
(1,727,162
)

$
(8,834,165
)

$
(3,316,411
)NET LOSS PER COMMON SHARE - BASIC


(0.02
)


(0.01
)


(0.03
)


(0.01
)WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING


259,034,327



178,432,839



262,514,007



179,068,887




See accompanying notes to condensed consolidated financial statements


2






ECO BUILDING PRODUCTS, INC.CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)RESTATED6-month ended


6-month endedDecember 31


December 31Cash flows from operating activities

2012


2011Net Loss

$
(8,834,165
)

$
(3,316,411
)Adjustments to reconcile net income to net cash usedby operating activities:Interest on amortization of loan fees






-Loss on modification of debt by issuance of common stock


1,161,150



75,000(Gain) loss on settlement of debt


-Interest on amortization of debt discountAmortization of loan fees


1,078,861



982,931Common stock issuance for prepaid loan interest for convertible notes


350,000Amortization of debt discount related to convertible loans


949,319Common stock issuance for services


1,279,250



-Common stock issuance for payment of rent and lease settlement



-Stock Based Compensation


14,190



-Depreciation and amortization expense


84,425



75,463Bad debt expense






-Changes in operating assets and liabilities:(Increase) in accounts receivable


(100,452
)


(417,333
)(Increase) in other receivable






-(Increase) in inventory


(154,559
)


(717,783
)(Increase) in prepaid expenses & other current assets


945,552



25,105Decrease (Increase) in deposits






-Increase in accounts payable


141,081



(20,631
)Increase in Payroll and taxables payable






-Increase in rent payable






-Increase in other payable and accrued expenses


346,539



337,178Increase in deferred rent expense(Decrease) in other payables and accrued expenses






-Increase in accrued interest added to principle


289,367



24,118Net cash used by operating activities


(2,449,443
)


(2,952,363
)Cash flows from investing activitiesPurchase of property and equipment


(21,523
)


(244,376
)Purchase of software licenses


-



(25,000
)Payments for equipment deposits - related party


-



(43,134
)Payments for prepaid trademark costs






-Net cash provided (used) by investing activities


(21,523
)


(312,510
)Cash flows from financing activitiesProceeds from related party line of credit advances


-



5,000,000Proceeds from debt issuance


632,511



-Proceeds from related party advances and notes


307,432



26,270Proceeds from third party convertible notes payable


1,519,821



-Repayments of related party advances and notes


-



(1,770,246
)Net cash provided by financing activities


2,459,764



3,256,024Net change in cash and cash equivalent


(11,202
)


(8,849
)Cash and cash equivalent at the beginning of year


111,251



81,648Cash and cash equivalent at the end of year

$
100,049


$
72,799Supplemental disclosures of cash flow Information:Cash Paid for Interest

$
310,751


$
46,000Supplemental disclosure of non-cash investing and financing activities:Issuance of common stock in connection with the convertible notes payable

$
224,523


$
-


See accompanying notes to condensed consolidated financial statements




3






ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   1. Organization and Basis of Presentation


Organization
 Eco Building Products, Inc. (the “Company”) was incorporated in the state of Colorado under the name N8 Concepts, Inc. on March 27, 2007.
  On October 19, 2009, the Company merged with Ecoblu Products, Inc., a Nevada Corporation (“ECOBLU”). For financial reporting purposes, the acquisition was treated as a reverse acquisition whereby ECOBLU’s operations continue to be reported as if it had actually been the acquirer. Assets and liabilities continue to be reported at the acquiree’s historical cost because before the reverse acquisition; the Company had nominal assets, liabilities and operations, and accordingly, the fair value of the assets approximated their carrying value and no goodwill was recorded.
  ECOBLU was organized May 20, 2009 in Nevada as a wholesale distributor and manufacturer of proprietary wood products coated with an eco-friendly chemistry that is designed to protect against mold, rot, decay, termites and fire. The Company has also developed an affiliate coating program that allows lumber companies to coat commodity lumber at their facilities contingent upon their stocking the Company’s inventory and supporting the Company’s products.
  Through December 2010, the Company was deemed to be in the development stage, as defined in Accounting Codification Standard (“ACS”) topic 915 Development Stage Entities. During year ended June 30, 2011, management determined that the Company exited the development stage. Thus, the Company is no longer required to report its stock issuances from inception, nor include inception-to-date information in its statements of operations and cash flows.
  On April 8, 2011, the Company formed Red Shield Lumber, Inc. (“Red Shield”) in British Columbia, Canada. Red Shield was formed for the purpose of opening a plant in Canada utilizing the Company’s red coating process for sale and distribution.  As of December 31, 2012 the wholly owned subsidiary has had little operating activity.
  On May 31, 2011, the Company formed E Build & Truss, Inc. (E Build) on May 31, 2011 in the State of California. E Build was formed for the purpose of operating the Company’s Truss manufacturing activities. This wholly-owned subsidiary commenced operations during the 3 months ended December 31, 2011.
  Liquidity and Going Concern
 During the six months ended December 31, 2012, and the year ended June 30, 2012, the Company incurred net losses of $7,709,469 and $11,173,883, respectively.  As of December 31, 2012, the Company has an accumulated deficit of $30,274,215.  The Company's cash balance at December 31, 2012 was $100,049.  At December 31, 2012, the Company's balance sheet at December 31, 2012 has a current ratio (current assets divided by current liabilities) of 0.19 to 1.0, and a working capital deficit of $8,749,309 (current assets less current liabilities).  These circumstances raise concern about the Company's ability to continue as a going concern.
 
 In the last couple years the Company has taken actions to reduce its expense and to align its cost structure with economic conditions. The Company has the ability to further reduce expenses if necessary.
  During the year ended June 30, 2011, the Company entered into an investment agreement and a revolving credit and warrant purchase agreement with Manhattan Resources Limited, a Singapore Corporation (“MRL”) and Dato’ Low Tuck Kwong (“LTK”), a controlling shareholder of MRL. Under investment agreement, the Company received $5,000,000 in exchange for issuing 81,000,000 shares of its common stock. Subsequently, upon the effective date of the revolving credit and warrant purchase agreement the Company has the ability to borrow up to an additional $5,000,000. Besides the $3,000,000 was borrowed in July, 2011 the remaining $2,000,000 was borrowed between October and November 2011. With the infusion of the initial $5,000,000 under the investment agreement and up to an additional $5,000,000 under the revolving credit and warrant purchase agreement, management believes it the funding provides
   4
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   sufficient capital to continue operating the Company and allow it to become profitable, however; no assurances can be made that current or anticipated future sources of funds will enable the Company to finance future periods’ operations. As of  December 31, 2012, the Company had cash on hand of $100,049 and $5,000,000 of capital available to them under the MRL line of credit, of which the entire $5,000,000 was borrowed during July and December, 2011 and the Company paid $310,751interest and accrued $104,277 interest as of December 31, 2012. Since the Company had borrowed the entire $5,000,000 line of credit during the first and second quarters of December 31, 2011, which made no available credit under this agreement during this period.  Subsequently, the Company was assigned a $100 million standby letter of credit from the Bank of China to support current debt and any additional debt the company may acquire subject to conditions and limitations.  On September 20, 2012, Eco has sent a proposal to MRL and related others to give up the rights and interests in Eco and no longer can claim they own securities in Eco in order to exchange for Eco supplying the concurrent promise to pay the sum of $10,500,000 by June 13, 2014.
  If current and projected revenue growth does not meet Management estimates, the Management may continue to choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, and settle liabilities through negotiation. Currently, the Company does not have any commitments or assurances for additional capital, nor can the Company provide assurance that such financing will be available to it on favorable terms, or at all. If, after utilizing the existing sources of capital available to the Company, further capital needs are identified and the Company is not successful in obtaining the financing, it may be forced to curtail its existing or planned future operations. The Company has already taken steps to reduce expenses. The Company has increased the sales price of the Eco Red Shield coatings as applied to finished good lumber sales. The Company feels that it now has gained good traction in the market place with our technology therefore can command a higher premium which will equate to greater margins and increased cash flows. Orders continue to increase as demand and market acceptance for Eco Red Shield increases. Nevertheless the Company experiences cash flow difficulties and there is no assurance of when it may be profitable.
  The Company estimates the current burn rate of approximately two hundred thousand dollars a month is required to continue to operate. Either through profit on sales or via management seeking additional financing through the sale of its common stock and or through private placements the minimum burn rate must be met in order to relive the threat of the company’s ability to continue as a going concern.. There is no assurance that our current operations will be profitable or we will raise sufficient funds to continue operating. The Company continues to trim overhead expenses to meet revenues. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
  Basis of Presentation
 The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position of the Company as of December 31, 2012, and the results of its operations and cash flows for the six months ended December 31, 2012 and 2011. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission (the “Commission”). The Company believes that the disclosures in the unaudited condensed consolidated financial statements are adequate to make the information presented not misleading. The operating results of the Company on a quarterly basis may not be indicative of operating results for the full year. For further information, refer to the financial statements and notes included in the Company’s Form 10-K for the year ended June 30, 2012.
   5
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
  2. Summary of Significant Accounting Policies
  There have been no changes in the Company's significant accounting policies for the six months ended December 31, 2012 as compared to those disclosed in the Company's Annual Report on Form 10-K for the year ended June 30, 2012.
  Recent Accounting Pronouncements
 Comprehensive income.In June 2011, the FASB issued guidance which requires that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. This requirement should be applied retrospectively and is effective for the Company in its first quarter of fiscal year 2013. The adoption of this standard had no effect on the Company's condensed consolidated statements of operations.
   3. Inventories
  As of December 31, 2012, inventories consisted of the following:
  Chemicals

$
228,263Truss Plate


31,507Lumber


817,435$
1,077,205
  In addition, inventory is considered finished goods as the Company sells and markets the chemical and treated lumber.  All of the Company’s inventories are pledged as collateral for the Company’s $5,000,000 Loan Facility (see Note 6).
   4. Prepaid Loan Facility Fee
  As discussed in Note 6, as consideration for a $5,000,000 Loan Facility, the Company issued MRL a 5-year warrant to subscribe for 50,000,000 common shares at an exercise price of $0.10 per share (the “Warrant”). The warrants were valued at $3,025,148 on July 26, 2011 and expire on July 26, 2016. The valuation of these warrants was determined using a Proprietary Multinomial Lattice Model option pricing model taking into account the following variables such as using an exercise period of 5 years, risk free rate of 1.51%, volatility of 166.52%, and a trading price of the underlying shares of $0.26. The Company has recorded the $3,025,148 value of the warrants as a prepaid loan fee and is amortizing the balance to interest expense over the 3-year availability period of the Loan Facility.  As discussed in September 30, 2012 Form 10-QA filed on June 19, 2013, the Company did not have sufficient cash flow to pay the outstanding $5.0 million loan to MRL.  Instead the Company issued 4,412,517 shares in the amount of $260,339 to MRL to pay off the accrued interest owe to MRL.  MRL had 45 days until November 5, 2012 to response whether it accepted the shares provided by ECO.  However, in December 2012, MRL replied to the Company that it rejected ECO's proposal.  As MRL rejected ECO's proposal and the loan was in default, the Company had to write off the outstanding prepaid loan fee in connection with the MRL $5 million line of credit in the amount of $2,087,244 as of September 30, 2012.  Amortization charged to interest expense for the years ended December 31, 2012 was $2,087,244.  As of December 31, 2012, the current and non-current prepaid loan facility fee was $0. 
     6
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
  5. Property and Equipment
  Property and equipment as of December 31, 2012 consisted of the following:
  Machinery and equipment (useful life of five to seven years)

$
1,143,873Furniture (useful life of five years)


20,408Computer equipment and software (useful life of three years)


83,999Displays (useful life of three years)


59,475Vehicles (useful life of five years)


44,095Leasehold improvements (useful life of three years)


183,3631,535,213Less accumulated depreciation


(389,371
)$
1,145,842
 
 The Company had a deposit for machinery and equipment in the amount of $259,315 as of December 31, 2012.  Depreciation charged to operations for the three months ended December 31, 2012 and 2011 amounted to $40,610 and $31,671, respectively.  All of the Company’s property and equipment are pledged as collateral for the Company’s $5,000,000 Loan Facility (see Note 6).
   6. Notes Payable
  Loan Facility and Credit and Warrant Agreement with MRL
 On February 14, 2011, the Company entered into a revolving credit and warrant purchase agreement (the “Credit and Warrant Agreement”) with MRL. The Credit and Warrant Agreement did not go into effect until it is ratified by the shareholders of MRL, on July 26, 2011.
  Pursuant to the terms of the Credit and Warrant Agreement, MRL extended a $5,000,000 revolving loan facility (the “Loan Facility”). Interest accrues on the unpaid principal amount of each advance at a rate of 6% per annum. Under the terms of the Loan Facility the Company is allowed to borrow in $500,000 increments for a period of three years and is due with accrued interest at 6% per annum three months from the date of borrowing but not later than the expiration date of the agreement of February 14, 2014. So long as no events of defaults exist any loan may be rolled with another loan upon approval by the lender. The available credit under the loan facility can be reduced by the like amount of cash received through the exercise of warrants noted below. The Loan Facility is secured by substantially all the assets of the Company.
  As of December 31, 2012, the Company drew down $5,000,000 on the Loan Facility.  As the $5.0 million loan from MRL was in default, refer to Note 4, Prepaid Loan Facility Fee in the Notes to Condensed Consolidated Financial Statements, the Company reclassified the $5.0 million due to MRL as current liability and continue to accrue interest on the $5.0 million due to MRL.  As of December 31, 2012, the Company paid a total of $260,339 towards the interest by issuing 4,412,517 shares to MRL.  As MRL rejected ECO's proposal and the loan was in default, the Company reverse the shares the shares issued to MRL and continue to accrue interest expense on the $5,000,000 loan facility from MRL.  As of December 31, 2012, the Company accrued $369,028 interest expense on the $5,000,000 loan facility from MRL for the six months ended December 31, 2012.
   7
  ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 Convertible Note - $1,080,000  Financing
  On August 13, 2012, Eco Building Products, Inc., and subsidiaries entered into a Securities Purchase Agreement (the “Purchase Agreement”) wherein the Company agreed to privately issue and sell (the “Offering”) and the purchaser identified on the signature page to the Purchase Agreement (the “Purchaser”) agreed to purchase (i) $1 million, in the aggregate, of Original Issue Discount Senior Secured Convertible Debenture due on November 13 ,2012 (the “Debenture”) and (ii) an aggregate of 3,500,000 shares (the “Shares”) of the Company’s common stock (the “Common Stock”). The closing of the Offering occurred on August 13, 2012 (“Original Issue Date”).
  The Company sold to the Purchaser the Debenture having a principal amount of $1,080,000. At any time after the six month anniversary of the Original Issue Date until the Debenture is no longer outstanding, the Debenture shall be convertible, in whole or in part, into shares of Common Stock at the option of holder, subject to certain conversion limitations set forth in the Debenture, at a conversion price equal to the lesser of (i) $0.08, subject to adjustment thereunder, and (ii) 80% of the average of the lowest 3 closing prices during the 3 trading days immediately prior to any such date of conversion.
  Upon any Event of Default (as defined in the Debenture), the outstanding principal amount of the Debenture, plus liquidated damages, interest and other amounts owing in respect thereof through the date of acceleration, shall become, at holder's election, immediately due and payable in cash. Commencing after the occurrence of any Event of Default, the interest rate on the Debenture shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. The Company is also subject to certain non-financial covenants under the Debenture.
 
 To secure the Company’s obligations under the Debenture, the Company granted a security interest in substantially all of its property to secure the prompt payment, performance and discharge in full of all of the Company’s obligations under the Debenture in accordance with that certain security agreement between the Company and the Purchaser, dated as of August 13, 2012 (the “Security Agreement”). Furthermore, the Company’s subsidiaries entered into a subsidiary guarantee, dated as of August 13, 2012 (the “Subsidiary Guarantee”), to guarantee the prompt and complete payment and performance when due of all of the obligations pursuant to the Debenture and transaction documents.
 
 Chardan Capital Markets acted as placement agent and received compensation in the amount of 1,500,000 restricted shares of Common Stock.
  The Company received net proceeds of $970,000 as a result of  paying origination fees totaling $30,000 and the $80,000 Original Issue Discount (the "OID"). Pursuant to ASC 470-20-25, the Company recorded a debt discount related to the 5 million share issuance, beneficial conversion feature and origination fees. The Company first allocated between the Debenture and the 5 million shares issued based upon their relative fair values. The fair value of the stock issued with the Loan of $400,000 was calculated based on the closing price of our common stock. This resulted in allocating $291,892 to the issued shares and $788,108 to the Loan.
  Next, the intrinsic value of the beneficial conversion feature was computed as the difference between the fair value of the common stock and the total price to convert based on the effective conversion price. The calculated intrinsic value was $561,892.
  Finally, the sum of the origination fees and OID, or $110,000 was added to the value allocated to the share issuance and beneficial conversion feature for a total loan discount of $963,784, and included $853,784 recorded to equity. The debt discount is being accreted over the three month term of the note using the effective interest method from the Closing Date of the Loan on August 13, 2012.
  During the three and six months ended December 31, 2012, the Company recognized $835,665 and $963,784, respectively of accretion related to the debt discount.
   8
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
  
 In November 16, 2012, the notes holder sold the $1.08 million senior convertible notes to Redwood Management for $1.25 million at a rate of 10% per annum due in February 13, 2013.  The gross proceeds of the loan was $1.25 million with $250,000 prepaid origination fee.  As $80,000 prepaid origination loan fee has been capture in the previous $1.08 million notes, the remaining $170,000 prepaid loan origination will be due in February 16, 2013.   For the three months and six months ended, the amortization of prepaid origination fee was $36,170.  For the three and six months ended December 31, 2012, the Company accrued $65,860 interest on the $1,250,000 senior convertible notes.
 Convertible Note - $220,000 Financing
 On July 12, 2012, the Company issued a 10% Convertible Note Due March 1, 2013 (the "Note") to an accredited investor pursuant to which the Company borrowed $220,000. The Note matures approximately 7.5 months from the date of issue, bears interest of ten percent (10%) per annum on the face amount and is payable in full upon maturity. In the event of default, the note is subject to an increase in the interest rate to eighteen percent (18%) per annum. Upon issuance of the Note, the Creditor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of our common stock at a conversion price equal to the lesser of (a) $0.15 (“Fixed Price”) and (b) 70% of the lowest daily VWAP occurring during the ten(10) consecutive Trading Days immediately preceding the applicable Conversion Date.
  Pursuant to ASC 470-20-25, the Company recorded a debt discount related to $20,000 of origination fees and the beneficial conversion feature of $66,410. The Company is accreting the debt discount over the term of the Note from the date of issuance using the effective interest method.
 
 During the six months ended December 31, 2012, the investor converted $51,288, including $50,000 of principle and $1,288 of accrued interest payable into 1,607,764 shares of common stock.
 
 During the three and six months ended December 31, 2012, the Company recognized $904 and $5,666, respectively, of interest expense related to this Note. During the three and six months ended December 30, 2012, the Company recognized $39,662 and $57,404 of accretion related to this Note.
  Convertible Note- $55,000 Financing
 
 On September 26, 2012, the Company issued a 10% Convertible Note Due June 1, 2013 (the "Note") to an accredited investor pursuant to which the Company borrowed $55,000. The Note matures approximately 8 months from the date of issue, bears interest of ten percent (10%) per annum on the face amount and is payable in full upon maturity. In the event of default, the note is subject to an increase in the interest rate to eighteen percent (18%) per annum. Upon issuance of the Note, the Creditor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of our common stock at a conversion price equal to the lesser of (a) $0.08 (“Fixed Price”) and (b) 70% of the lowest daily VWAP occurring during the ten (10) consecutive Trading Days immediately preceding the applicable Conversion Date.
 
 Pursuant to ASC 470-20-25, the Company recorded a debt discount related to $5,000 of origination fees and the beneficial conversion feature of $12,522. The Company is accreting the debt discount over the term of the Note from the date of issuance using the effective interest method.
 
 During the three and six months ended December 31, 2012, the Company recognized $1,386 and $1,447, respectively, of interest expense related to this Note. During the three and six months ended December 30, 2012, the Company recognized $5,112 of accretion related to this Note.
   9
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   Convertible Notes - $55,000 Financing
 
 On July 12, 2012, the Company issued a 10% Convertible Note Due March 1, 2013 (the "Note") to an accredited investor pursuant to which the Company borrowed $55,000. The Note matures one year from the date of issue, bears interest of ten percent (10%) per annum on the face amount and is payable in full upon maturity. In the event of default, the note is subject to an increase in the interest rate to eighteen percent (18%) per annum. Upon issuance of the Note, the Creditor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of our common stock at a conversion price equal to the lesser of (a) $0.08 (“Fixed Price”) and (b) 70% of the lowest daily VWAP occurring during the ten(10) consecutive Trading Days immediately preceding the applicable Conversion Date.
 
 Pursuant to ASC 470-20-25, the Company recorded a debt discount related to $5,000 of origination fees and the beneficial conversion feature of $16,602. The Company is accreting the debt discount over the term of the Note from the date of issuance using the effective interest method.
 
 During the six months ended December 31, 2012, the investor converted $20,515, including $20,000 of principle and $515 of accrued interest payable into 643,106 shares of common stock.
 
 During the three and six months ended December 31, 2012, the Company recognized $964 and $2,155, respectively, of interest expense related to this Note. During the three and six months ended December 30, 2012, the Company recognized $11,194 and $15,630 of accretion related to this Note.
 Convertible Notes - $55,000 Financing
 On September 26, 2012, the Company issued a 10% Convertible Note Due June 1, 2013 (the "Note") to an accredited investor pursuant to which the Company borrowed $55,000. The Note matures approximately 8 months from the date of issue, bears interest of ten percent (10%) per annum on the face amount and is payable in full upon maturity. In the event of default, the note is subject to an increase in the interest rate to eighteen percent (18%) per annum. Upon issuance of the Note, the Creditor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of our common stock at a conversion price equal to the lesser of (a) $0.08 (“Fixed Price”) and (b) 70% of the lowest daily VWAP occurring during the ten (10) consecutive Trading Days immediately preceding the applicable Conversion Date.
 
 Pursuant to ASC 470-20-25, the Company recorded a debt discount related to $5,000 of origination fees and the beneficial conversion feature of $12,522. The Company is accreting the debt discount over the term of the Note from the date of issuance using the effective interest method.
 During the three months and six months ended December 31, 2012, the Company recognized $60 and $1,447, respectively, of interest expense related to this Note.  During the three and six months ended December 31, 2012, the Company recognized $0 and $5,112 of accretion related to this Note, respectively.
 
 Convertible Notes - $100,000 Financing
 
 On June 11, 2012, the Company entered into a definitive agreement with accredited investors to borrow $100,000 in gross proceeds before fees and expenses through the issuance of Senior Secured Convertible Notes (the “Notes”) originally due June 11, 2013.
    10
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 
 The Notes bear interest at an annual rate of 4% payable.  At the Company's option, the interest can be paid in either cash or, subject to the satisfaction of certain customary conditions, registered shares of the Company’s common stock.  The effective conversion price for a payment in shares is determined from a computation based on 85% of the volume weighted average price of the Company’s common stock for each of the twenty (20) consecutive Trading Days immediately preceding the applicable installment date.
 
 Pursuant to the original terms, the holders were able convert the Notes into shares of common stock at a conversion price of $0.70 at any time which upon full conversion of the Notes would have resulted in the issuance of 1,388,889 shares of common stock.   In connection with the issuance of the original Notes, the Company issued seven different series of warrants to the investors to purchase a total of 26,250,000 shares of its common stock at exercise prices ranging from $0.40 per share to $0.60 per share. The majority of the warrants expire five years from their respective date of issuance.  The warrants allowed for cashless exercise.
 
 In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the Senior Note were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance.  As of June 30, 2012 the Company recorded the relative fair values of the warrants issued to ICG USA in connection with the Senior Note in the amount of $100,000 as a debt discount upon each issuance, and expensed each debt discount as interest expense upon issuance.  Additionally, as a result of issuing the warrants with the convertible promissory notes, a beneficial conversion option was recorded as a debt discount on each note reflecting the incremental intrinsic value benefit totaling $99,980, at the time of each issuance provided to JTR in connection with the Senior Note up to an including September 30, 2012.
 
 Pursuant to ASC 470-20-25, the Company did not record a debt discount related to the origination fees and the beneficial conversion feature.
 
 During the three months and six months ended December 31, 2012, the Company recognized $973 and $2,189 of interest expense, respectively related to this Note.   During the three months and six months ended December 31, 2012, the Company recognized $25,245 and $25,265 of accretion related to this Note, respectively.
 
 In December 2012, the Company issued 1,246,758 common stocks at $0.02 conversion price to converted $25,000 notes payable and as of December 31, 2012, the outstanding notes payable was $75,000.  Due to the timing difference, the stock conversion did not record on the shareholders report until January 2013, the Company recorded the $25,000 as subscription receivable under Equity of the Consolidated Balance Sheet as of December 31, 2012.
 
 Convertible Notes - $285,000 Financing
 
 On December 10, 2012, the Company issued a 8% Convertible Note Due June 10, 2013 (the "Note") to an accredited investor pursuant to which the Company borrowed $285,000. The Note matures one year from the date of issue, bears interest of eight percent (8%) per annum on the face amount and is payable in full upon maturity. In the event of default, the note is subject to a penalty of 5% of the then outstanding balance of the Note.  Starting on the 6 month anniversary of the Note issuance date, the Creditor may elect, in its sole discretion, to convert all or any portion of the outstanding principal amount of the Loan, and any or all accrued and unpaid interest thereon into shares of our common stock at a conversion price equal to $0.06 subject to adjustment
 
 Pursuant to ASC 470-20-25, since the conversion price is higher than the fair value of the stock issuance price, no beneficial conversion features would be recognized.   The Company recorded a debt discount related to $10,000 of origination fees and $25,000 of original issue discount. The Company is accreting the debt discount over the term of the Note from the date of issuance using the effective interest method.
 
 During the three ended December 31, 2012, the Company recognized $1,312, respectively, of interest expense related to this Note. During the three months ended December 31, 2012, the Company did not recognize any of accretion related to this Note.
   11
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   The following is the summary of convertible notes payable as of December 31, 2012:
 Balance as of July 1, 2012

$
100,000Additions from new convertible notes issued


1,695,000Debt discount on convertible notes issued


(180,179
)Conversion of convertible notes to common stocks


(95,000
)Balance as of December 31, 2012

$
1,519,821
 Loan Payable for AR financing-$385,851
  On November 19, 2012 the company entered into an accounts receivable financing agreement with Gemini Finance Corp. in the amount of 383,400.00. The maturity date of the original note is February 18, 2013, due to the Companies customer delays the note was amended and restated into a convertible note as follows; the amended and restated secured promissory note is being issued in exchange for the secured promissory note due February 18, 2013 which was originally issued on November 19, 2012 in the original principal amount of $383,400.00. The new note carries a gross face value of 413,729.70 which includes a prepaid loan origination fee of 28,400.00 through the issuance of Senior Secured Convertible Notes (the “Notes”) now due on May 31, 2013 with a 6% per annum interest rate. For purposes of rule 144, this amended and restated note shall be deemed to have been issued on November 19, 2012.  As of December 31, 2012, the outstanding convertible notes with accrued interest was $385,851.  As of December 31, 2012, the outstanding loan payable for AR financing with accrued interest was $385,851.
  Loan Payable – Related Party
 At December 31, 2012,the Company had a non interest bearing note payable due to its Chief Executive Officer who is also a Director and significant shareholder with a balance of$543,976.
  Loan Payable - Other
 At December 31, 2012, the Company has a $144,500 liability for advances from a third party.  As of the date these financial statements were issued, no terms for repayment have been agreed to between the Company and this third party.
  The Company entered in an auto loan agreement on November 7, 2011 to purchase a Ford 150 pickup truck.  The principal amount of the loan is $21,886 and the interest rate 9.99%.  The loan will be matured on October 7, 2015.  The Company is currently paying $675 auto payment per month.
   12
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 The following table summarizes the notes payable for the period ended December 31, 2012.
  As of December 31, 2012Description

Short term


Long termAuto notes payable

$
8,278


$
12,121MRL line of credit


5,000,000



-Loan payable related party


543,976



-Loan payable other


530,351



-Convertible notes


1,519,821Total notes payable

$
7,602,426


$
12,121
 
 Moreover the following table summarizes the future minimum payment for 5-year commitments of the notes payable:
  Principal6/30/2013

$
6,913,9506/30/2014


690,3116/30/2015


7,5856/30/2016


2,7016/30/2017


-Thereafter


-Total

$
7,614,547
 Employment Agreement – President and Chief Executive Officer
 Effective April 1, 2011, the Company entered into an employment agreement with its President and Chief Executive Officer for a term of two years. Key provisions of the agreement include:
 (a)
Annual salary of $300,000(b)
Cash bonus of $300,000 in the event that gross sales for the fiscal year ending June 30, 2012 exceed $34,000,000, subject to certain limitations.
 (c)
Additional cash bonus of $300,000 in the event that gross sales for the fiscal year ending June 30, 2012 exceed $92,000,000, subject to certain limitations. In the event that gross sales for the prior fiscal year are with 35% of the $92,000,000 target, the target shall be adjusted up so that a minimum sales increase must be achieved for the bonus to vest. (d)
Option grants to purchase 800,000 shares of the company’s common stock at an exercise price of $0.10 per share, expiring April 1, 2016 (five-year life). Such options will vest over a two-year period. These options were valued at $75,680, as determined using the Black-Scholes option-pricing model using a risk free rate of 2.24%, volatility of 169.83% and a trading price of the underlying shares of $0.10.(e)
Severance pay is due the President upon separating from service, with or without cause, equaling his then current monthly salary multiplied by the number of full years that the President has been employed with the Company prior to separation.
 
 Accrued compensation due the President at December 31, 2012 totaled $445,513.  Severance pay accrued and charged to operations during the six months ended December 31, 2012 totaled $0.  Compensation charged to operations during the six months ended December 31, 2012  totaled $75,000.
  During the six months ended December 31, 2012, the Company did not make any repayments of accrued compensation to the President and Chief Executive Officer.
   13
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   Employment Agreement – Chief Technical Officer
 
 Effective April 1, 2011, the Company entered into an employment agreement with its Chief Technical Officer for a term of two years. Key provisions of the agreement includes:
 (a)
Annual salary of $250,000(b)
Cash bonus of $250,000 in the event that gross sales for the fiscal year ending June 30, 2012 exceed $34,000,000, subject to certain limitations.
 (c)
Additional cash bonus of $250,000 in the event that gross sales for the fiscal year ending June 30, 2012 exceed $92,000,000, subject to certain limitations. In the event that gross sales for the prior fiscal year are with 35% of the $92,000,000 target, the target shall be adjusted up so that a minimum sales increase must be achieved for the bonus to vest.(d)
Option grants to purchase 400,000 shares of the company’s common stock at an exercise price of $0.10 per share, expiring April 1, 2016 (five-year life). Such options will vest over a two-year period. These options were valued at $37,840, as determined using the Black-Scholes option-pricing model using a risk free rate of 2.24%, volatility of 169.83% and a trading price of the underlying shares of $0.10.
 (e)
Severance pay is due the CTO upon separating from service, with or without cause, equaling his then current monthly salary multiplied by the number of full years that the President has been employed with the Company prior to separation.
  Accrued compensation due the Chief Technical Officer at December 31, 2012 totaled $330,976.  Severance pay accrued and charged to operations during the six months ended December 31, 2012 totaled $0.  The Company made repayments of accrued compensation totaling $27,692 to the Chief Technical Officer during the six months ended December 31, 2012.
  7 . Fair Value of Assets and Liabilities
  The Company uses a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
  Line of Credit Payable – Related Party.The Company assessed that the fair value of this liability to approximate its carrying value based on the effective yields of similar obligations.
  Notes Payable.The Company assessed that the fair value of this liability to approximate its carrying value based on the effective yields of similar obligations.
  Loans Payable - Other. The Company assessed that the fair value of this liability approximates its carrying value due to its short-term nature.  The methodology described above may produce a current fair value calculation that may not be indicative of net realizable value or reflective of future fair values. If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. The Company believes its method of determining fair value is appropriate and consistent with other market participants. However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value.
  Assets and Liabilities Measured at Fair Value on a Recurring Basis
 The following table presents the fair value of financial instruments that are measured and recognized on a non-recurring basis classified under the appropriate level of the valuation hierarchy described above, as of December 31, 2012:
   14
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 December 31, 2012Fair value measured usingLevel 1


Level 2


Level 3

Total BalanceAssetCash

$
100,491







$
100,491Total assets measured at fair value


100,491








100,491LiabilitiesLine of credit - related party





$
5,000,000




$
5,000,000Notes payable





$
2,070,571




$
2,070,571Loan payable - related party and other





$
543,976




$
543,976Total liabilities measured at fair value

$
-


$
7,614,547




$
7,614,547
   8 . Stockholders' Deficit
  Investment Agreement with MRL
 On February 14, 2011, the Company entered into an investment agreement (the “Investment Agreement”) with MRL and LTK, a controlling shareholder of MRL (the “Investment Agreement”).
  On February 16, 2011, pursuant to the terms of the Investment Agreement, LTK subscribed for 81,000,000 shares in the Company, representing approximately 21.77 percent of the Company’s resulting total issued and outstanding common equity, for an aggregate consideration of $5,000,000. The agreement called for LTK to sell the Shares to MRL, for the same consideration, subject to approval from shareholders of MRL, which occurred on July 26, 2011.
  On February 14, 2011, the Company also entered into a revolving credit and warrant purchase agreement with MRL. The Credit and Warrant Agreement did not go into effect until it was ratified by the shareholders of MRL, which occurred on July 26, 2011. See Notes 4 and 6 for material terms of the Credit and Warrant Agreement.
  In the event MRL fully exercises the Warrant which was granted upon MRL shareholder approval of the Credit and Warrant Agreement on July 26, 2011, MRL would acquire an aggregate of 131,000,000 Shares representing approximately 30.62 percent of the resulting total issued and outstanding common equity of the Company, for an aggregate consideration of $10,000,000.
  Options
 In April 2011, the Company granted options to its President to purchase 800,000 shares of its common stock and options to its Chief Technical Officer to purchase 400,000 shares of its common stock. The 1,200,000 options have an exercise price of $0.10 per share and expire in five years. The options were valued at $113,520 using the Black-Scholes Option Model with a risk-free interest rate of 2.24%, volatility of 169.83%, and trading price of $0.10 per share. The $113,520 is being charged to operations over their two year vesting period. Compensation charged to operations for the  six months ended December 31, 2012 on these options amounted to $14,190. As of December 31, 2012, a total of 450,000 of the 1,200,000 options were vested.
   15
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   Common Stocks
 During the six months ended December 31, 2012, the Company issued a total of 59,686,884 shares of its common stock, of which 20,900,000 were issued to compensate outside law firms, calculated for accounting at a stock closing price at the end of each trading date, being compensation for legal services, for a total exercise of $1,125,500 as a legal expense for legal services.  Moreover, the Company issued 24,636,745 shares of its common stock to the third party lender to settle the debt that has been outstanding in prior years. The Company recorded $1,161,150 loss on modification of debt under other expense in the Condensed Consolidated Statements of Operations.  The Company issued 7,087,622 shares of its common stock to the third party convertible notes holder for the prepaid loan fee in connection with the convertible notes and recorded $511,273 as an interest expense.  The Company also issued4,412,517 shares in the amount of $264,751 were issued to Manhattan Resources Limited was paid towards the accrued interest.  However, Mahattan Resources Limited rejected the Company's issuance of common stock as a method to pay off the outstanding accrued interest, the Company reversed 4,412,517 shares in the amount of $264,751 as an interest expense as of December 31, 2012.
  Debt conversion
 During the six months ended December 31, 2012, the Company issued 20,077,251 shares of its common stock to the third party lender with a conversion price of $0.05 per share to settle the debt that has been outstanding in prior years. The Company recorded $777,766 loss on modification of debt under other expense in the Condensed Consolidated Statements of Operations.  Moreover, in November 2012, Alpha Capital sold its notes payable in the amount of $1.25 million which included $1 million outstanding loan and $250,000 prepaid loan fee to Redwood Management.  The $250,000 prepaid loan fee will be amortized in one year and will be ended in October 2013.  Redwood Management replaced Alpha Capital as one of the investors by note assignment during December, 2012.
   9 . Commitments and Contingencies
  Purchase, Distribution & Services Agreement #1
 On July 26, 2009, the Company entered into an AF21 Product, Purchase, Sales, Distribution & Service Agreement, (the “Agreement”), with Megola, Inc., the owner of technical data and intellectual property for a protective coating in order to obtain an exclusive supply of the product, together with certain distribution, marketing and sales rights. The product is a non-toxic non-corrosive fire inhibitor. Pursuant to the Agreement, the Company guaranteed it will purchase a minimum of four hundred fifty five (455) two hundred and forty five (245) gallon totes of product in the first twelve month period. The Company was required to increase the minimum quantities in the second year, to 842 totes and in the third year to 1,263 totes.
  The current agreement expired on November 11, 2010. In December 2010, the Company purchased 37,500 gallons of AF21 at a total price of $303,750. This inventory was used as partial security for the Company’s $570,500 short-term borrowing from Manhattan Resources Limited (see Note 6). As of the date of these financial statements, the Company has no obligation to purchase additional inventory from Megola, Inc.
  Purchase, Distribution & Services Agreement #2
 On January 18, 2011, the Company entered into an AF21 Product, Purchase, Sales, Distribution & Service Agreement, (the “Agreement”), with Newstar Holding Pte Ltd, a Singapore Corporation, and Randall Hart, an Indonesian National, the inventors and owners of technical data and intellectual property for a protective coating in order to obtain an exclusive supply of the product, together with certain distribution, marketing and sales rights. In addition, a significant shareholder of Newstar Holding Pte Ltd is also a significant shareholder of MRL. The product is a non-toxic non-corrosive fire inhibitor. Pursuant to the Agreement, the Company guaranteed it will purchase a minimum of six hundred fifty (650) XXX gallon totes of product in the first two-year period at a cost of $XX.XX per gallon, making the total purchase commitment $1,815,450 for the first two years. The Company is required to increase the minimum quantities in the third year to 842 totes at $XX.XX per gallon, making the total purchase commitment $2,351,706 for year three. In the fourth year the Company is required to increase the minimum quantities to 1,264 totes at $XX.XX per gallon, making the total purchase commitment $3,530,352 for year four.
 
 
 
 16
 
  ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 
 
 There are no penalty clauses other than cancellation of the agreement if the minimum purchase commitments are not met. If the agreement were to be cancelled it would have a significant impact on the Company's operations until a replacement product could be arranged.
  Vehicle Lease – Ford Credit
 In September 2011, the Company entered into a two year automobile lease with scheduled payments of $390 per month.
  Legal Proceedings
 On August 23, 2010, EcoBlu Products Inc., now known as Eco Building Products, Inc. filed a legal action against Bluwood USA and Adolph Morando in the Superior Court of California, San Diego County, for breach of a Purchase, Distribution and Services Agreement, dated August 24, 2009.
  On November 28, 2010, Bluwood USA filed a demand for arbitration with the American Arbitration Association asserting claims against Eco for breach of the same Purchase, Distribution and Services Agreement.
  On January 5, 2011, Eco filed an amended complaint in the California Superior Court action naming as additional defendants, Edgefield Lumber Co., Mason McGowin, Bluwood International Corp. and Robert Seaman.
  On July 1, 2011, the California Superior Court action was stayed by Order of the Court and arbitration before the American Arbitration was compelled. On September 12, 2011, Eco filed claims in arbitration against Bluwood USA, Edgefield Lumber Co. and Mason McGowin.
  On or about February 18, 2013, the litigation between Eco, Bluwood USA, Edgefield Lumber Co. and Mason McGowin was resolved in a manner acceptable to each party and the California Superior Court action and the Arbitration proceedings were dismissed.
  The resolution shall not have any material effect on the Company's financial positions. Any and all business relationships and issues which may have existed between the parties prior to this resolution have been terminated. Each party has put the disputes behind it and will concentrate on developing its respective businesses.
  On or about September 7, 2012, a law firm claiming to represent MRL supplied a letter to Eco. On September 19, 2012 Eco obtained the advice of litigation counsel which, after review and consultation, concluded to the effect that the letter is material, notwithstanding current or recently past communications impacting upon the veracity of the contents of the letter, or the intention of the letter. The contents of the letter include statements advising Eco that Eco is in breach of the Revolving Credit and Warrant Purchase Agreement referenced above ("Revolving Agreement"), and the Investment Agreement dated February 14, 2011 referenced above. It is not clear if that law firm (the firm that sent the letter) also represents the other parties noted in the agreements other than MRL. The letter claims the transactions, previously reported, by Eco relating to the Purchase Agreement and granting of a security interest, August 13, 2012, per the previously filed Form 8K of Eco August 22, 2012, was a breach of various provisions of the agreements relating to MRL, they (MRL) will enforce their rights, and reserve rights, and that an Event of Default has happened under Section 6(a) of Revolving Agreement, in that Eco failed to pay the $5,000,000 allegedly due. The same claims of default as to interest, and that they do not agree that MRL agreed to forebear from individually
 
 
 17
 
  ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 
 enforcing rights or remedies. Eco takes the position that an agreement, altering the rights of MRL and related others, was previously offered and accepted and that it means that MRL and noted affiliates surrendered to Eco rights and interests in Eco and no longer can claim they own securities in Eco, and this was in exchange for Eco supplying the concurrent promise to pay the sum of $10,500,000 by June 13, 2014; that the securities held by MRL and affiliates are or should be deemed cancelled or retired; and that Eco is willing to negotiate and entertain, though not obligated, repaying the sum with interest, as well as any "amendment" or terms for orderly procedures of the parties. This would mean that Eco also believes the Past Agreements no longer apply. Eco is now seeking the advice of counsel and has believes that MRL is open to settle and resolve the differences and demands of MRL communicated to Eco and while it plans to vigorously defend and protect its interests, it also continues to express the interest to reach an amicable resolution with MRL. No assurance can be given that Eco will be successful in the resolution, if possible, of such claims.
  ECO Building Products, Inc. (“ECO”) and Manhattan Resources Limited (“MRL”) entered into an Investment Agreement on or about February 14, 2011, wherein MRL agreed to purchase 81,000,000 shares of Common Stock and MRL agreed to pay ECO $5,000,000.  Additionally, ECO and MRL executed a Revolving Credit and Warrant Purchase Agreement on or about February 14, 2011 wherein MRL loaned ECO $5,000,000. MRL claims that their percentage of ownership of shares has been diluted. MRL claims ECO is in default on the loan.
   10. Restatement of financial statements
  The Company has restated the financial statements as originally presented in its initial registration statement filed on February 27, 2013.  The changes and explanation of such are as follows:
  Originally Reported





Restatement Adjustment

As restatedBalance Sheet Items:Prepaid expense


191,860




A


133,830

(d)


58,030




BPrepaid loan facility fee - related party, current portion


1,008,383




A


(1,008,383
)
(a)


-




BPrepaid loan facility fee - related party, long term portion


574,670




A


(574,670
)
(a)


-




BLine of credit payable - related party, current portion


1,666,667




A


3,333,333

(b)


5,000,000




BCurrent maturities of notes payable


2,196,537




A


(668,438
)
(d)


1,528,099Loans payable - other


144,500




A


385,851

(f)


530,351




BLine of credit payable - related party, noncurrent portion


3,333,333




A


(3,333,333
)
(b)


-




BCommon stocks


275,849




A


19,687

(c)


295,536




BAdditional paid-in capital


21,810,744




A


677,026

(d),(e)


22,487,770




BAccumulated deficit


(27,962,725
)



A


(2,311,490
)



(30,274,215
)



B
   18
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
    3-month ended December 31, 2012











3-month ended December 31, 2012Statements of operations items:

Originally Reported






Restatement Adjustment

As restatedProfessional fees


608,866




A


70,155

(e)


679,021




BConsulting


99,700




A


(467,000
)
(e), (h)


(367,300
)



BOther general and administrative expenses


899,475




A


255,000

(d)


1,154,475




BInterest expense


367,474




A


496,153

(a),(d)


863,627




BStatements of Cashflows items:

Originally Reported






Restatement Adjustment

As restatedCash flows from operating activitiesLoss on modification of debt by issuance of common stock


1,312,712




A


(151,562
)
(e)


1,161,150




BAmortization of loan fees


504,191




A


574,670

(a)


1,078,861




BAmortization of debt discount related to convertible loans


-




A


949,319

(d)


949,319




BCommon stock issuance for services


897,372




A


381,878

(e)


1,279,250




BCommon stock issuance for prepaid loan interest for convertible notes


-




A


350,000

(d)


350,000




BIncrease in accrued interest added to principle


187,811




A


101,556

(g)


289,367




BCash flows from financing activitiesProceeds from debt issuance


2,423,939




A


(1,791,428
)
(d), (f)


632,511




BProceeds from third party convertible notes payable


-




A


1,519,821

(d)


1,519,821




B
 A – Per December 31, 2012 Form 10-QA issued on February 27, 2013
 B– Per December 31, 2012 Form 10-QA issued on August 5, 2013
   19
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
   (a)  In September 2011, the Company issued 50,000,000 warrants in exchange for the payment of the $3.0 million prepaid loan fees in connection with the MRL $5 million line of credit.  The $3,025,000 total prepaid loan fees were amortized using the straight line method over the three year terms of the underlying notes.  On October 25, 2012, the Board of Directors of the Corporation determined it is in the best interests of the Corporation to issue 4,412,512 restricted common stock shares to Manhattan Resources Limited (MRL) in lieu of a cash interest payment as part of an offer or resolution it is seeking to cure the default as stated above. Subsequently the stock certificate was rejected by MRL. The stock certificate was held by MRL attorney and never in the possession of MRL and MRL has 45 days until November 5, 2012 to response.  In December 2012, MRL replied to ECO that they rejected ECO's proposal.  As MRL rejected ECO's proposal and the loan is in default, the Company decided to write off the outstanding prepaid loan fee in connection with the MRL $5 million line of credit to interest expense.  Amortization charged to interest expense for the year ended September 30, 2012 totaled $2,087,244.
  (b) As of December 31, 2012, the Company drew down $5,000,000 on the Loan Facility.  As MRL rejected ECO's proposal and the loan is in default, the Company reclassified the $5.0 million due to MRL as current liability.
  (c)  Reflects restatement due to the recording of the 74.8 million at $0.001 par value = $74,800 on June 5, 2012  less 75% retirement of 74.8 million shares because of the Transfer Agent error.
 74.8 million shares issuance


74,800Less cancelation of 50.7 million shares


(50,700
)Net changes


24,100
 Per Board minutes dated on January 5, 2012, the Board approved to issue 75 million shares to employees, officers and consultants.  On June 5, 2012, ECO decided to issue 74.8 million shares per the Stock issuance resolution to officers, employees and consultants.  Among the 74.8 million shares, 7.2 million shares were issued to the consultants which vested 100% immediately on June 5, 2012 issuance date.  The rest of the 67.6 million shares (74.8 million - 7.2 million) are vested 25% per year.  However, the Transfer Agent made the mistake and issued the entire 74.8 million shares to officers, employees and consultants.  ECO has already notified the Transfer Agent to cancel the 75% of 67.6 million shares issuance in the amount of 50.7 million shares to employees and officers.
  (d) Reflects restatement due to correction of errors on convertible notes calculation.  The convertible notes are considered as equity and beneficial conversion features need to be calculated in accordance with ASC 470-20.  The convertible promissory notes have similar conversion terms and that include the following:
 ●
Conversion price – Fixed or VWAP based with a discount●
Conversion Settlement – must be settled in stock
 Thus, the debt discount derived from the BCF calculation is recorded as a debit to liabilities as a debt discount and a credit to additional-paid-in-capital. The discount is then accreted using the effective interest method (in accordance with ASC 835-30-55-2) over the term of the note in accordance with ASC 470-20-35-7.  Upon conversion of all or a portion of each CPN, the following entry would be recorded:
 
 Dr. Note payable - for the amount of the principle converted
 
 Dr. Accrued interest payable - for the portion of accrued interest being converted
 
  20
 
  ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 
 
 Dr. Interest expense – for any unrecognized debt discount related to the portion of debt converted
  Cr. Debt discount – for any unrecognized debt discount related to the portion of debt converted
  Cr. Common stock - for the par value of the shares issued
  Cr. APIC - For the difference between the par value of shares issued and the total debt and accrued interest converted.
  Due to the changes in the calculation of the convertible notes, the convertible notes, net of discount, additional paid in capital and interest expense are subject to change.
  (e) Reflects restatement due to pricing the shares at the fair value at the stock grant date.  In accordance with ASC 718, shares need to be priced at fair value at the grant date and the changes in the stock based compensation expense of $10,000.  ECO priced the shares per the Stock Issuance Notice and the share price might not be equal to the fair value at the grant date.
  (f) On November 19, 2012 the company entered into an accounts receivable financing agreement with Gemini Finance Corp. in the amount of 383,400.00. The maturity date of the original note is February 18, 2013, due to the Companies customer delays the note was amended and restated into a convertible note as follows; the amended and restated secured promissory note is being issued in exchange for the secured promissory note due February 18, 2013 which was originally issued on November 19, 2012 in the original principal amount of $383,400.00. The new note carries a gross face value of 413,729.70 which includes a prepaid loan origination fee of 28,400.00 through the issuance of Senior Secured Convertible Notes (the “Notes”) now due on May 31, 2013 with a 6% per annum interest rate. For purposes of rule 144, this amended and restated note shall be deemed to have been issued on November 19, 2012.  As of December 31, 2012, the outstanding convertible notes with accrued interest was $385,851. As of December 31, 2012, the outstanding loan payable for AR financing with accrued interest was $385,851.
  The total proceeds from debt issuance and from third party convertible notes payable issued on Form 10QA dated on February 27, 2013 was $2,423,939 and the total proceeds from debt issuance and from third party convertible notes payable issued on Form 10QA dated on August 8, 2013 was $2,152,332, the difference represents the debt discount on convertible notes issued and conversion of convertible notes to common stocks.  For detail, please refer to footnote 6 – Notes Payable on condensed consolidated footnote.
  (g) Reflect restatement due to the rejection of ECO’s proposal on issuing 4,412,517 shares in the amount of $260,339 to MRL to pay off the accrued interest owe to MRL.  As MRL rejected ECO’s proposal, the Company had to continue to accrue interest on the $5 million line of credit.  The Company accrued additional $101,556 interest for the 3 months ended December 31, 2012.
  (h) Reflect restatement due to the reclassification of $350,000 from consulting to prepaid loan fee as it is related to the prepaid loan fee for one of the convertible notes issued in the three months ended December 31, 2012.
   11. Subsequent Events
  On January 14, 2013, 2.5 million of non-restricted common stocks in the amount of $0.02/share equivalent to $50,000 were issued to Neil Dolgin for Debt Conversion from Irv Minnaker per Assignment and Assumption Agreement between Irving Minnaker (Assignor) and Neil Dolgin (Assignee).  The Company agreed to pay 12% interest on $50,000 and the loan will be matured on January 14, 2013.  On January 28, 2013, Certificate to be originally issued free trading on 2.5 million of common stocks was issued.
  On January 29, 2013, Redwood Management LLC converted $200,000 principal amount to 14,814,814 amounts of common stocks at 0.135 conversion price.  The balance of principal after conversion is $880,000.   On January 30, 2013, Redwood Management LLC converted $64,750 principal amount to 4,796,296 amounts of common stocks at 0.135 conversion price.  The balance of principal after conversion is $815,250.
    21
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 The Company issued shares of common stocks to different recipients.  On January 1, 2013, 1,000,000 shares of restricted common stock were issued to Royal Hudson, LLC with no cost basis for binding MOU between parties. On January 14, 2013, 1,000,000 shares of restricted common stocks with no cost basis were issued to Peter Kuhn for binding MOU between parties.  2,000,000 shares of restricted common stocks with $0.03/share were issued to Arthur Douglas for five months service based on existing contract.  On February 4, 2013, 3,000,000 restricted common stocks with no cost were issued to Tonaquint, Inc with no cost basis for debenture between parties.
  On February 6, 2013, Eco issued 2,000,000 shares of non-restricted stocks with $0.05/share for investment agreement dated and funded on July 9, 2012.  On the same date, Eco removed the restriction on trading on a total of 2,000,000 common stocks issued to Alpha Capital Analyst for a debt conversion which last for six months.
  On or about February 18, 2013, the litigation between Eco, Bluwood USA, Edgefield Lumber Co. and Mason McGowin was resolved in a manner acceptable to each party and the California Superior Court action and the Arbitration proceedings were dismissed. The resolution shall not have any material effect on the Company's financial positions. Any and all business relationships and issues which may have existed between the parties prior to this resolution have been terminated. Each party has put the disputes behind it and will concentrate on developing its respective businesses. The Company received a refund amount from the American Arbitration Association in the amount of 79,332.50 as a result of the above settlement.
  On April 2, 2013, Redwood Management LLC converted $84,000 principal amount to 24,000,000 shares of common stock at 0.0035 conversion price.  On April 18, 2013, Redwood Management LLC converted $60,000 principal amount to 24,000,000 shares of common stock at 0.0025 conversion price. On May 2, 2013, Redwood Management LLC converted $45,000 principal amount to 18,750,000 shares of common stock at 0.0024 conversion price. The balance of principal after conversions is $339,750.
  On June 5, 2013 the President & CEO of the Corporation has determined that it is in the best interests of the Corporation and its shareholders that the stock issuance approved by the board and transacted on June 5th 2012 providing employee stock options shall be cancelled effective immediately. Furthermore the board confirms that the share certificates issued were never presented, promised or distributed to the employee’s or otherwise and all stock certificates were held in the possession of the company at all times per the list attached as exhibit A. The board consents to take the following action to retire SIXTEEN MILLION NINE HUNDRED THOUSAND (16,900,000) shares of common stock into the authorized but unissued treasury of the corporation. This action reverses the employee compensation stock option plan adopted on June 5, 2012.
  On or about May 14, 2013, Alpha Capital Anstalt initiated an action against Eco Building Products, Inc., E Build and Truss, Inc. and Seattle Exchange Coffee in the United States District Court, Southern District of New York.  The suit seeks $1,080,000.  Plaintiff alleges Eco Building sold a debenture in the principal amount of $1,080,000 to Alpha and that Eco Building failed to pay off the debenture on the maturity date.  Alpha agreed to assign the debenture to a third party.  Upon information and belief, this third party has paid Alpha $960,000 to date.
  On or about June 7, 2013 a settlement to the above mentioned action from Alpha Capital Anstalt was agreed upon by all parties involved. The agreement settles the dispute in full providing for final payment to Alpha Capital Anstalt and a dismissal of the action in the United States District Court, Southern District of New York.
  On May 15, 2013 the President & CEO of the Corporation has determined that it is in the best interests of the Corporation and its shareholders that the shareholder Irving Minnaker loan and retire Five Million (5,000,000) shares of common stock into the authorized but unissued treasury of the corporation.  Furthermore the shares were fully owned and held by Irving Minnaker and have been loaned and retired into treasury in order to facilitate pressing business matters.  The Company will reissue shares to Irving Minnaker at a future date to be determined.
    22
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
 On May 15, 2013 the President & CEO of the Corporation has determined that it is in the best interests of the Corporation and its shareholders that the shareholder Mark Vuozzo loan and retire One Million Seven Hundred Fifty Thousand (1,750,000) shares of common stock into the authorized but unissued treasury of the corporation.  Furthermore the shares were fully owned and held by Mark Vuozzo for over a period of two years, and have been loaned and retired into treasury in order to facilitate pressing business matters.  The Company will reissue shares to Mark Vuozzo at a future date to be determined.
  On May 15, 2013 the President & CEO of the Corporation has determined that it is in the best interests of the Corporation and its shareholders that the shareholder Steve Conboy loan and retire Twenty Six Million Four Hundred Eighty Seven Thousand Nine Hundred Two (23,487,902) shares of common stock into the authorized but unissued treasury of the corporation.  Furthermore the shares were fully owned and held by Steve Conboy for over two years period, and have been loaned and retired into treasury in order to facilitate pressing business matters.  The Company will reissue shares to Steve Conboy at a future date to be determined.
  On May 31, 2013, The Company (“ECOB”) entered into a Debt Assumption and Equity Cancellation Agreement (the “Agreement”) with Redwood Management, LLC (“Redwood”) and Manhattan Resources, Ltd (“MRL”). Terms of the Agreement are as set out below:
  1) Subject to the terms and conditions of the Agreement, MRL sells, assigns and transfers to Redwood, all of its liabilities, obligations and commitments with respect to the loan and all interest payable thereon amounting in aggregate to US$5,488,083 (the “Debt”) owing by ECOB to MRL under the Revolving Credit and Warrant Purchase Agreement dated 14 February 2011 between ECOB and MRL (the “Credit Agreement”).
 2) In consideration of the assignment of the Debt by MRL to Redwood, Redwood agrees to pay MRL an aggregate amount of US$3,300,000 (the “Aggregate Consideration”) as follows:
 (i) US$350,000 payable upon execution of the Agreement;
 (ii) US$125,000 payable on each of 17 June 2013, 15 July 2013 and 15 August 2013, unless the Authorization Event (as defined in (iii) below) has previously occurred;
 (iii) US$950,000 payable on the earlier of (a) the date that is thirty (30) days following the date on which ECOB’s shareholders approve an amendment to ECOB’s articles of incorporation providing for the increase of its authorized common shares (“Common Shares”) to 1,500,000,000 authorized Common Shares (the “Authorization Event”), if such approval occurs pursuant to an action by written consent of shareholders in lieu of a meeting which is subsequently noticed to all shareholders through an information statement filed with the Securities and Exchange Commission on Schedule 14C (for purposes of clarification, the measurement of the thirty (30) days shall begin with the taking of the action by written consent and not the effectiveness of the information statement on Schedule 14C) (or the next business day thereafter, if such date falls on a Saturday or Sunday); (b) the date of the Authorization Event, if such Authorization Event occurs pursuant to vote of shareholders at a shareholder meeting held pursuant to a notice and proxy statement filed with the Securities and Exchange Commission on Schedule 14A; or (c) 16 September 2013; and
 (iv) US$300,000 per month commencing on the earlier of (a) the 15th of the month (or the next business day thereafter, if such date falls on a Saturday or Sunday) following the Authorization Event; or (b) 15 October 2013, and continuing until the balance of the Aggregate Consideration has been paid to MRL. In the event that ECOB repays any or all of the Debt, 100% of the proceeds received by Redwood with respect thereto shall be immediately paid to MRL, up to a maximum of US$3,300,000.
 3) On the terms and subject to the conditions of the Agreement, upon execution of the Agreement, MRL shall surrender for cancellation 40,500,000 of its Common Shares (the “Cancelled Equity”). Upon receipt of the balance of the final payment of the Aggregate Consideration, MRL shall surrender for cancellation its remaining 40,500,000 Common Shares and all of its warrants (“Warrants”) to purchase Common Shares.
 4) In the event any payment of the Aggregate Consideration is not paid within 5 days of the due date, for any reason, then, at the option of the Company, the Agreement may be terminated by MRL by providing written notice to Redwood, with a copy to ECOB (a “Termination Notice”). Upon receipt of a Termination Notice, Redwood shall assign and transfer the Debt back to MRL, less the aggregate amount paid by Redwood to MRL prior to such default, and MRL shall be entitled to retain any payments previously paid to it. In addition, upon termination of the Agreement, ECOB shall issue to MRL a number of Common Shares in an amount equal to the number of Common Shares that constitute the Cancelled Equity, with the same terms and conditions of the Common Shares that had previously been cancelled.
   23
   ECO BUILDING PRODUCTS, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2012
 (Unaudited)
  5) Prior to the Authorization Event, provided that there has been no breach of the Agreement by Redwood, MRL agrees to vote all its Common Shares in favor of any amendment to ECOB’s articles of incorporation providing for the increase of ECOB’s authorized Common Shares.
 6) ECOB grants to Redwood a security interest in, all of ECOB’s right, title and interest in and to all of the personal property of ECOB whether now or hereafter existing, whether tangible or intangible, whether now owned or hereinafter acquired and wherever the same may be located. In the event that MRL exercises its termination right and the Debt is reassigned and returned to MRL, ECOB agrees that the foregoing security interest shall also be assigned and transferred to MRL in connection with the reassignment and return of the Debt.
 7) Conditioned on the satisfactory payment of the Aggregate Consideration by Redwood, and provided that the Agreement is not earlier terminated by MRL as set out in Paragraph 4 above, MRL shall release and discharge ECOB and each of its respective affiliates, representatives, advisors, partners, officers, directors and employees and their respective successors and assigns from any and all claims, demands, causes of action and rights of every kind, nature or character arising or existing on or before the date of the Agreement; whether determined or undetermined, known or unknown, proven or unproven; whether asserted or subject to assertion in any jurisdiction, in any court or other forum or with any federal, state, county, municipal or other governmental authority, agency or official; and whether arising at law, in equity or otherwise, arising out of or from or in any way related to the Common Shares or Warrants.
  On May 31, 2013, The Company (“ECOB”) entered into a Securities Settlement Agreement (the “Agreement”) with Redwood Management, LLC (“Redwood”). Terms of the Agreement are as set out below:
  1) The Principal value of the note is Five Million Dollars ($ 5,000,000.00) with an annual interest rate of 12%. The term of the agreement is twelve months. Description of Debt: See above Debt Assumption and Equity Cancellation Agreement Dated May 31, 2013.
 2) The COMPANY promises to pay to Redwood the Principal and Interest on the Maturity Date, or sooner if required hereby, unless to the extent of any completed conversion of Principal and or Interest as stated herein.   THE COMPANY MAY PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT AT 130% OF SUCH AMOUNT FOR THE FIRST SIX (6) MONTHS ON $3,300,000 OR MAXIMUM ALLOWED PER LAW, WHICHEVER IS LOWER, ALONG WITH ANY ACCRUED INTEREST AT ANY TIME UPON SEVEN DAYS WRITTEN NOTICE TO REDWOOD, PROVIDED THE COMPANY IS NOT IN DEFAULT OF THIS AGREEMENT, SUBJECT TO THE TERMS HEREIN.  AFTER SIX MONTHS THE REDEMPTION STAYS ON AT 130% BUT ON THE FULL FACE VALUE OF $5,000,000.
 3) At such time this note is satisfied the COMPANY will relieve from the balance sheet 3,025,148 in accrued liability for the value of the 50,000,000 warrants to be cancelled and MRL shall surrender for cancellation 40,500,000 of its remaining Common Shares all to be surrendered by Manhattan Resources, Ltd in connection with this Agreement and the Debt Assumption and Equity Cancellation Agreement Dated May 31, 2013.




24






Eco Building Products, Inc.




Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations




The following management's discussion and analysis should be read in connection with the information presented in our unaudited condensed consolidated financial statements and related notes for the three months ended December 31, 2012 included in this report and our audited consolidated financial statements and related notes for the year ended June 30, 2012 included in our Annual Report on Form 10-K /A filed on July 22, 3013, with the Securities and Exchange Commission.




Forward-Looking Statements




Certain statements concerning our plans and intentions included herein may constitute forward-looking statements. There are a number of factors that may affect our future results, including, but not limited to, (a) our ability to obtain additional funding for operations, (b) the continued availability of management to develop the business plan and (c) successful development and market acceptance of our products.




This annual report may contain both historical facts and forward-looking statements. Any forward-looking statements involve risks and uncertainties, including, but not limited to, those mentioned above. Moreover, future revenue and margin trends cannot be reliably predicted.




Overview


Eco Building Products, Inc., or "ECOB", has developed a line of eco-friendly protective wood coatings that extend the life of framing lumber and other wood used in the construction of single-family homes, multi-story buildings as well as The Eco ShelterTM which serves as cost-effective housing for the world.
  Eco Building Products wood coatings are topically applied to lumber protecting the wood surface from mold, mildew, fungus, decay, wood rot, termites and Formosan termites. Eco’s newest product, Eco Red ShieldTM also serves as a fire inhibitor, now meeting class A – one hour ratings on structural lumber (Doug Fir), protecting lumber from fire, slowing ignition time and reducing the amount of smoke produced.
  The ECOB system of coatings is eco-friendly and remains chemically stable over time. The coatings emit virtually zero volatile organic compounds (VOCs), do not leech heavy metals or toxins into groundwater, and inhibit the growth and propagation of various molds that have the potential to contaminate occupant indoor air quality. More importantly, ECOB coatings prevent the degradation of structural lumber that potentially requires existing homes to be periodically rebuilt due to rot and/or wood ingesting insects/termite damage preserving our forests.
  The following milestones contribute to the viability and acceptance of the Company’s flag ship product Eco Red Shield;
  On July 2nd 2012 the Company was granted an Engineering Services Report (ESR 3255) from the International Code Commission (ICC-ES) providing evidence that Eco Red Shield meets building code requirements for wood ingesting organisms including Formosan termites and Wood-Rot Decay. This new certification renders Eco Red Shield equivalent to traditional pressure treated lumber typically used for sill plates, mounting against concrete, in above ground applications.
  On September 4th, 2012 the Company achieved QAI Laboratories (QAI) listing B1053-1, providing evidence that Eco Red Shield’s fire protection qualities now meets building code requirements for Class “A” structural performance on all dimensional Douglas Fir lumber, making Eco Red Shield protected lumber equivalent to the traditionally accepted fire retardant treated wood (FRTW) for interior use.
  On October 29th ,2012 Eco Red Shield has been approved for use in Hawaii by the Department of Planning and Permitting Building Division, City and County of Honolulu. The basis of approval for use is in conjunction with the ICC-ES Engineering Services Report (ESR-3255) currently in effect. Hawaii approval MM2012-0060 will remain in effect for three years and subject to standard building department regulations.
  The Eco Building Products line includes dimensional lumber, wall and floor panels, I-joists, GluLam Beams, LVL beams, truss lumber and trim. These products can be coated at our production facilities and at the mill or distributor with our proprietary formula and coating machines. Additionally the company has six authorized affiliates producing Eco Red Shield coated products. The Company sells concentrated coating materials to the affiliate network creating additional revenue streams.
   25
   Eco Building Products, Inc.
   By supporting and providing value added lumber materials direct from our facilities and/or our affiliates, ECOB can create a compelling value package. Eco Red Shield has obtained industry certifications never before combined into a single product. The overall treatment methodology is cost effective making Eco Red Shield a low cost alternative with greater value.





Critical Accounting Policies




Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis, including those related to revenue recognition, stock-based compensation, inventories, income taxes, warranty obligations and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, such as demand for our products and economic conditions.  Accordingly, our estimates and judgments may prove to be incorrect and actual results may differ, perhaps significantly, from these estimates.





We believe the following critical accounting policies reflect our more significant judgments used in the preparation of our consolidated financial statements.




Lines of Credit with Detachable Warrants


Warrants issued to obtain a line of credit are recorded at fair value at contract inception.  When warrants are issued to obtain a line of credit rather than in connection with the issuance, the warrants are accounted for as equity, at the measurement date in accordance with ASC 505-50-25 “Equity-Based Payments to Non-Employees”. The issuance of these warrants is equivalent to the payment of a loan commitment or access fee, and, therefore, the offset is recorded akin to debt issuance costs. The deferred fee is amortized on a straight-line basis over the stated term of the line of credit




Issuances Involving Non-cash Consideration


All issuances of the Company’s stock for non-cash consideration have been assigned a dollar amount equaling the market value of the shares issued on the date the shares were issued for such services.




Stock Based Compensation


The Company accounts for stock options issued to employees and consultants under ASC 718“Share-Based Payment”. Under ASC 718, share-based compensation cost to employees is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee's requisite vesting period.




The Company accounts for stock-based compensation under ASC Topic 505-50 “Equity-Based Payments to Non-Employees”. This standard defines a fair value based method of accounting for stock-based compensation. In accordance with ASC Topic 505-50, the cost of stock-based compensation is measured at the grant date based on the value of the award and is recognized over the vesting period. The value of the stock-based award is determined using the Black-Scholes option-pricing model, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the stock. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.Options are granted at a price not less than the fair market value of the stock on the date of grant. Generally, options vest over periods not exceeding four years and are exercisable for up to ten years from the grant date.




Revenue Recognition and Concentration Risk


We recognize revenue in accordance with Financial Accounting Standards Board (“FASB”) – Accounting Standards Codification (“ASC”) 605-10-S25 Revenue Recognition – Overall – Recognition. ASC 605-10-S25 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is






26






Eco Building Products, Inc.








reasonably assured. Determination of criteria (3) and (4) are based on management's judgment regarding the fixed nature of the fee charged for products delivered and the collectability of those fees. The application of these criteria has resulted in our generally recognizing revenue upon shipment (when title passes) to customers. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely impacted.




All items sold, we sell to end users, job sites and distributors are sold as is.  We offer a replacement warranty for items that are deemed not acceptable at the time of delivery.  We will offer the customer a maximum of a 30 day period of time to request a replacement item period. Any items that a customer wants to return for credit we charge a 25% restocking fee as this is stated in every quotation.




These arrangements do not include any special payment terms (our normal payment terms are 30-45 days for our distributors), price protection or exchange rights. Returns are limited to our standard product warranty. Certain of our distributors have contracts that include limited inventory rotation rights that permit the return of a small percentage of the previous six months' purchases.




Warranty Reserves.  We offer customer a 10 year replacement warranty against Mold, wood-Rot and Termite damage for the value added portion of company’s service such as the coating applied to the raw lumber.  This warranty is backed by an 11 million dollar product liability policy in which the company maintains a deductible policy on it.  As of current, the company has not yet experienced any warranty claim against this stated warranty policy.




Inventory Valuation. We currently value our inventory at the average cost.  We write down inventory for obsolescence or lack of demand, based on assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. On the contrary, if market conditions are more favorable, we may be able to sell inventory that was previously reserved.




Going Concern




The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. To date the Company has generated minimal operating revenues, losses from operations, significant cash used in operating activities, and is dependent upon its ability to obtain future financing and successful operations.




Our continuation as a going concern is dependent upon obtaining the additional working capital necessary to sustain our operations. Our future is dependent upon our ability to obtain financing and upon future profitable operations. The Company estimates the current burn rate of approximately two hundred thousand dollars a month is required to continue to operate. Either through profit on sales or via management seeking additional financing through the sale of its common stock and or through private placements the minimum burn rate must be met in order to relive the threat of the company’s ability to continue as a going concern.. There is no assurance that our current operations will be profitable or we will raise sufficient funds to continue operating. The Company continues to trim overhead expenses to meet revenues. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue in existence. These factors raise substantial doubt about the Company’s ability to continue as a going concern.








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Eco Building Products, Inc.






Financial Condition and Results of Operations




The table below sets forth the data from our Condensed Consolidated Statement of Operations as a percentage of revenue for the periods indicated:




Results of Operations for the Three Months Ended December 31, 2012 as Compared to the Three Months Ended December 31, 2011




Revenues and Cost of Sales - For the three months ended December 31, 2012 we had total revenues of $1,362,733 from product sales, as compared to $996,845 in revenues from product and equipment sales for three month period ended December 31, 2011.  Our cost of sales and gross profit for the three months ended December 31, 2012 was $1,225,303 and$137,430, respectively. This is compared to our cost of sales and gross profit for the three months ended December 31, 2011 of $907,371 and $89,474, respectively. Sales margins have improved however gross sales have not yet developed to sufficient levels to improve efficiencies.
 
 Operating Expenses - For the three months ended December 31, 2012, our total operating expenses were $2,552,672 as compared to $1,719,661 for the three month period ended December 31, 2011. Included in our operating expenses for the three months ended December 31, 2012 were compensation and related costs of $635,077 . Professional fees included in our operating expenses for the three months ended December 31,2012 amounted to $679,021 .  Other significant operating costs we incurred during the three months ended December 31, 2012 included rent of $207,858, consulting fees of $(367,300) , marketing of $197,506, research and development of $36,802 , and other general and administrative costs of $1,154,475 .  Our operating expenses for the three months ended December 31, 2011 consisted of $649,145 of compensation and related costs, $226,784 of professional fees, $96,037 of rent expense, $32,461 of consulting fees, $37,585 of research and development expense, $44,079 of marketing expense, and $619,840 of other general and administrative expenses.
 
 Other Income and Expenses - For the three months ended December 31, 2012 we had other expenses that included interest expense of $863,627 .  We incurred $694,887 for the loss on modification of our convertible notes payable as the Company issued 11.1 million shares for the three months ended December 31, 2012 in order to offset the loan that owed to the third party lender in prior years. This is compared to the three months ended December 31, 2011, in which our other income and expenses included interest income of $16,834 and interest expense of $38,810 and loss on modification of 75,000.
 
 Liquidity and Capital Resources
 
 On December 31, 2012, we had $100,049 cash on hand.  During the six months ended December 31, 2012, net cash used in our operating activities amounted to $2,449,443 . Net cash used during the same period for our investing activities totaled $21,523 which was used for the purchase of property and equipment.  During the six month ended December 31, 2012, net cash provided by our financing activities totaled $2,459,764 , of which $307,432 was received from related party advances and notes and $1,913,950 was received from debt issuance of convertible notes .  In January and February 2013, the note holders completed the six months holding periods and start the conversion of the note to common stock thereby terminating the requirement to collateralize the note (see "NOTE 12 - Subsequent event" for more information.
 
 During the six months ended December 31, 2011, net cash used in our operating activities amounted to $2,952,363.  Cash of $312,510 was used by investing activities during the same period, which consisted of $244,376 of purchasing of property and equipment, $25,000 of purchasing of software license and $43,134 payments for equipment deposits – related party.  Cash of $3,256,024 was provided by financing activities during the same period, which consisted of $5,026,270 proceeds from related party line of credit advances, less repayment of related party advances and notes of $1,770,246.
 
 During the year ended June 30, 2011, we entered into an investment agreement and a revolving line of credit and warrant purchase agreement with Manhattan Resources Limited, a Singapore Corporation (“MRL”) and Dato’ Low Tuck Kwong (“LTK”), a controlling shareholder of MRL. Under the investment agreement, we received $5,000,000 in exchange for issuing 81,000,000 shares of its common stock. Effective July 26, 2011, we obtained the ability to borrow up to an additional $5,000,000 on the revolving credit and warrant purchase agreement, in exchange for the issuance of warrants to purchase 50,000,000 shares of our common stock at $0.10 per share to MRL as a loan facility fee.  Of this amount $3,000,000 was borrowed in July 2011 and $2,000,000 was borrowed subsequent
 
 
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 Eco Building Products, Inc.
 
 
 to November 30, 2011.  As of the date of this filing we had cash on hand of $100,049 andthe entire $5,000,000 of capital available under the MRL line of credit was borrowed during July and December, 2011.As of December 31, 2012, the Company drew down the entire $5.0 million dollars of the Loan Facility.  The $5.0 million dollar loan from MRL was in default, refer to Note 4, the Prepaid Loan Facility Fee in the Notes to Condensed Consolidated Financial Statements, the Company reclassified the $5.0 million dollars loan due to MRL as current liability and continue to accrue interest on the $5.0 million dollars due to MRL.  As of December 31, 2012, the Company paid a total of $260,339 towards the interest by issuing 4,412,517 shares to MRL.  As MRL rejected the Company’s proposal and the loan was in default, the Company retired the shares issued to MRL and continues to accrue interest expense on the $5.0 million dollar loan facility from MRL.  As of December 31, 2012, the Company accrued $369,028 interest expense on the $5.0 million dollar loan facility from MRL for the six months ended December 31, 2012.
 
 If current and projected revenue growth does not meet management estimates and proceeds received from MRL are insufficient, we may choose to raise additional capital through debt and/or equity transactions, reduce certain overhead costs through the deferral of salaries and other means, and settle liabilities through negotiation. Currently, we do not have any commitments or assurances for additional capital, other than MRL, nor can we provide assurance that such financing will be available to us on favorable terms, or at all. If, after utilizing the existing sources of capital available to us, further capital needs are identified and we are not successful in obtaining the financing, we may be forced to curtail our existing or planned future operations.
 
 We may continue to incur operating losses over the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in our stage of development. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
 
 Off Balance Sheet Arrangements
 
 We have no off-balance sheet arrangements or financing activities with special purpose entities.
 
 
 Item 3 - Quantitative and Qualitative Disclosures About Market Risk
 
 We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
 
 
 Item 4 - Controls and Procedures


Effectiveness of internal control over financial reporting
 
 During the period ended December 31, 2012 we determined that because of the limited personnel, lack of segregation of duties and manual process related to the tracking and valuation of our inventory, management determined that a material weakness existed in the processes, procedures and controls related to the preparation of our financial statements.  This material weakness could result in the reporting of financial information and disclosures in future consolidated annual and interim financial statements that are not in accordance with generally accepted accounting principles.
 
 The Company expects to take the following steps to remedy these weaknesses:
 
 1.      Continue the implementation and training of an ERP system in which will improve the segregation of duties issues and automate the tracking of costs related to inventory.
 
 2.      Hire additional staff to assist the Controller to implement procedures improving the transaction processing, reconciliation and reporting process of inventory.
 
 
 
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 Eco Building Products, Inc.
 
 
 3.      Hire a Principle Financial Officer to solely act in the capacity of CFO and relieve the current duties as performed by the Principle Executive Officer.
 
 The Company expects to remediate these weaknesses prior to the completion of the quarter ended September 30, 2013.
 
 The Company deemed that the internal control over financial reporting for the Company as of December 31, 2012 is not effective.
 
 Changes in Internal Controls
 
 During the quarter ended December 31, 2012, there were no changes in our internal control over financial reporting that occurred during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 
 Status of Remediation of Significant Deficiencies or Material Weaknesses in Internal Control over Financial Reporting
 We intend to continue our remediation of the material weaknesses disclosed in our Fiscal 2012 10-KA. For example, We will continue to hire or train sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of U.S. GAAP commensurate with our financial reporting requirements.
 
 Additionally, management is investing in ongoing efforts to continuously improve our internal control over financial reporting and has committed considerable resources to the improvement of the design, implementation, documentation, testing and monitoring of our internal controls. As of the date of this filing, we believe that we have made substantial progress in the implementation of the corrective actions, noted above, toward remediation of the material weakness.
 
 We believe that these corrective actions, taken as a whole, when fully implemented, will mitigate the material weaknesses identified above. However, we will continue to monitor the effectiveness of these actions and will make any changes that management deems appropriate. As of the Evaluation Date, the design and testing of the effectiveness of our remediation efforts has not been completed.






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Eco Building Products, Inc.






PART II - OTHER INFORMATION




Item 1 - Legal Proceedings




On August 23, 2010, EcoBlu Products Inc., now known as Eco Building Products, Inc. filed a legal action against Bluwood USA and Adolph Morando in the Superior Court of California, San Diego County, for breach of a Purchase, Distribution and Services Agreement, dated August 24, 2009.




On November 28, 2010, Bluwood USA filed a demand for arbitration with the American Arbitration Association asserting claims against Eco for breach of the same Purchase, Distribution and Services Agreement.




On January 5, 2011, Eco filed an amended complaint in the California Superior Court action naming as additional defendants, Edgefield Lumber Co., Mason McGowin, Bluwood International Corp. and Robert Seaman.




On July 1, 2011, the California Superior Court action was stayed by Order of the Court and arbitration before the American Arbitration was compelled. On September 12, 2011, Eco filed claims in arbitration against Bluwood USA, Edgefield Lumber Co. and Mason McGowin.




On or about February 18, 2013, the litigation between Eco, Bluwood USA, Edgefield Lumber Co. and Mason McGowin was resolved in a manner acceptable to each party and the California Superior Court action and the Arbitration proceedings were dismissed.




The resolution shall not have any material effect on the Company's financial positions. Any and all business relationships and issues which may have existed between the parties prior to this resolution have been terminated. Each party has put the disputes behind it and will concentrate on developing its respective businesses.




Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds




None.




Item 3 - Defaults Upon Senior Securities


On or about September 7, 2012, a law firm claiming to represent Manhattan Resources Limited, or MRL, supplied a letter to Ecob. On September 19, 2012 Ecob obtained the advice of litigation counsel which, after review and consultation, concluded to the effect that the letter is material, notwithstanding current or recently past communications impacting upon the veracity of the contents of the letter, or the intention of the letter. The contents of the letter include statements advising Ecob that Ecob is in breach of the Revolving Credit and Warrant Purchase Agreement referenced above ("Revolving Agreement"), and the Investment Agreement dated February 14, 2011 referenced above. It is not clear if that law firm (the firm that sent the letter) also represents the other parties noted in the agreements other than MRL. The letter claims the transactions, previously reported, by Ecob relating to the Purchase Agreement and granting of a security interest, August 13, 2012, per the previously filed Form 8K of Ecob August 22, 2012, was a breach of various provisions of the agreements relating to MRL, they (MRL) will enforce their rights, and reserve rights, and that an Event of Default has happened under Section 6(a) of Revolving Agreement, in that Eco failed to pay the $5,000,000 allegedly due.  The same claims of default as to interest, and that they do not agree that MRL agreed to forebear from individually enforcing rights or remedies.
  Ecob takes the position that an agreement, altering the rights of MRL and related others, was previously offered and accepted and that it means that MRL and noted affiliates surrendered to Ecob rights and interests in Ecob and no longer can claim they own securities in Ecob, and this was in exchange for Ecob supplying the concurrent promise to pay the sum of $10,500,000 by June 13, 2014; that the securities held by MRL and affiliates are or should be deemed cancelled or retired; and that Ecob is willing to negotiate and entertain, though not obligated, repaying the sum with interest, as well as any "amendment" or terms for orderly procedures of the parties. This would mean that Ecob also believes the Past Agreements no longer apply.
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   Eco Building Products, Inc.
 
 
 Ecob is now seeking the advice of counsel and has believes that MRL is open to settle and resolve the differences and demands of MRL communicated to Ecob and while it plans to vigorously defend and protect its interests, it also continues to express the interest to reach an amicable resolution with MRL. No assurance can be given that Ecob will be successful in the resolution, if possible, of such claims.
 As of December 31, 2012, the Company paid a total of $260,339 towards the interest by issuing 4,412,517 shares to MRL.  As MRL rejected the Company’s proposal and the loan was in default, the Company retired the shares issued to MRL and continue to accrue interest expense on the $5.0 million dollar loan facility from MRL.  As of December 31, 2012, the Company accrued $369,028 interest expense on the $5.0 million dollar loan facility from MRL for the six months ended December 31, 2012.
  
 Item 6 - Exhibitsand Reports




Exhibits




Eco Building Products, Inc. includes by reference the following exhibits:




3.1
Articles of Incorporation, filed as exhibit 3.1.1 with the registrant’s Registration Statement on Form SB-2, as amended; filed with the Securities and Exchange Commission on August 23, 2007.3.2
Bylaws, filed as exhibit 3.2 with the registrant’s Registration Statement on Form SB-2, as amended; filed with the Securities and Exchange Commission on August 23, 2007.3.3
Amended  Articles of Incorporation ; filed as exhibit 3.1 with the registrant’s Current Report on Form 8-K; filed with the Securities and Exchange Commission on October 22, 20093.4
Amended  Articles of Incorporation ; filed as exhibit 3.3 with the registrant’s Annual Report on Form 10-K; filed with the Securities and Exchange Commission on September 28, 2011 4.1
Convertible Promissory Note, dated December 22, 2009; filed as exhibit 10.5 with the registrant’s Current Report on Form 10-Q; filed with the Securities and Exchange Commission on February 22, 20104.2
Convertible Promissory Note, dated February 11, 2010; filed as exhibit 10.6 with the registrant’s Current Report on Form 10-Q; filed with the Securities and Exchange Commission on February 22, 201010.1
Investment Agreement – between Ecoblu Products, Inc.,  Manhattan Resources Limited and Dato’ Low Tuck Kwong , dated February 14, 2009, filed as exhibit 10.1 with the registrant’s Current Report on Form 8-K; filed with the Securities and Exchange Commission on February 16, 2011.10.2
Revolving Credit and Warrant Agreement – between Ecoblu Products, Inc. and Manhattan Resources Limited, dated February 14, 2009, filed as exhibit 10.2 with the registrant’s Current Report on Form 8-K; filed with the Securities and Exchange Commission on February 16, 2011.10.3
Warrant Termination Agreement – between Ecoblu Products, Inc. and SLM Holding PTE, Ltd., dated January 12, 2011; filed as exhibit 10.3 with the registrant’s Current Report on Form 8-K; filed with the Securities and Exchange Commission on February 16, 2011.10.4
Hartindo AF21 Product, Purchase, Sales,  Distribution & Service Agreement, between Ecoblu Products, Inc. and Newstar Holdings Pte Ltd, dated January 18, 2011;filed as exhibit 10.8 with the registrant’s Current Report on Form 10-Q; filed with the Securities and Exchange Commission on February 22, 2011.10.5
Employment Agreement – between Ecoblu Products, Inc. and Steve Conboy, Effective April 1, 2011.filed as exhibit 10.5 with the registrant’s Current Report on Form 10-Q; filed with the Securities and Exchange Commission on May 23, 2011.10.6
Employment Agreement – between Ecoblu Products, Inc. and Mark Vuozzo, Effective April 1, 2011filed as exhibit 10.6 with the registrant’s Current Report on Form 10-Q; filed with the Securities and Exchange Commission on May 23, 2011.21.1
Subsidiaries List filed as exhibit 21.1 with the registrant’s Current Report on Form 10-Q; filed with the Securities and Exchange Commission on November 15, 2011.
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   Eco Building Products, Inc.


Eco Building Products, Inc. includes herewith the following exhibits:




31.1
Certification of Principal Executive Officer andPrincipal Financial Officer (Rule 13a-14(a)/15(d)-14(a))32.1
Certification of Principal Executive Officerand Principal Financial Officer (18 U.S.C. 1350)












































33






Eco Building Products, Inc.






SIGNATURES




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




Eco Building Products, Inc.Date: August 8, 2013
By:
/s/ Steve ConboySteve Conboy, PresidentPrincipal Executive OfficerDate: August 8, 2013
By:
/s/ Steve ConboySteve Conboy, Principal Financial Officer